Company Announcements

23 February 2026

Brown Advisory US Smaller Companies PLC (the 'Company' or 'BASC')

Half Yearly Financial Results for the Six Months Ended 31 December 2025 (unaudited)

Legal Entity Identifier: 549300HKKL9K1NY4TW55

Financial highlights for the six months ended 31 December 2025

Ordinary Share Performance

*For definitions of the above Alternative Performance Measures please refer to the Glossary of Terms

Contact:

Chairman's Statement

Dear Fellow Shareholder,

US equity markets performed well over the six-month period to 31 December 2025, encouraged by a resilient economy, very strong corporate reports, particularly from the technology sector, and latterly by steady cuts in interest rates as the Federal Reserve (FED) loosened monetary policy again. It was also a good period for smaller companies which benefited from a return of investor interest and a broadening in their buying activity. This was reflected in the performance of our benchmark, the sterling-adjusted Russell 2000 index, which returned 17.1%, comfortably ahead of the large cap indices. However, our own portfolio of US smaller companies did not keep pace with the broader market. For the six months ended 31 December 2025, your Company's net asset value (NAV) per share rose from 1416.7p to 1476.1p, a total increase of 4.2%, which was positive in absolute terms, but disappointing when compared to the benchmark. Most of the underperformance accrued in the third calendar quarter of 2025 as the market turned more speculative and our Portfolio Manager's rigorous approach of focussing on quality companies and avoiding those with weaker fundamentals was less aligned with market dynamics.

Over the six months, the Company's share price rose from 1270.0p to 1390.0p, up 9.4%. This resulted in a narrowing of the discount from 10.4% to 5.8%.

Market Review

Having moved largely sideways in the first six months of calendar 2025 on concerns over President Trump's trade war and fears of a bubble in the Artificial Intelligence (AI) sector, US equities opened our 2025/6 financial year on an upbeat note. They responded positively to the passing in the Senate in early July of President Trump's One Big Beautiful Bill Act.

The latter represented a significant stimulus for US companies, through tax cuts and incentives for business investment, that would more than offset the potential drag on the economy from the wide range of tariffs then being announced. Indeed, in the event many of the tariffs announced over the summer proved less damaging than thought at first, such as the 15% trade deal reached with Japan and South Korea. Thereafter, despite occasional bouts of volatility US equities climbed steadily higher, closing each month in positive territory and our half year end at around their all-time highs.

News on the US economy was generally supportive throughout the period as growth remained strong and underlying demand firm. GDP for the third quarter 2025 came in comfortably ahead of expectations, at an annualised rate of 4.3%, its fastest in two years, driven by consumer spending, exports and government spending. The US economy maintained its vigour to the end of the period, even if the data releases became more difficult to read given the delays in publication with the government shutdowns.

However, while business activity remained firm, signs emerged as of the late summer of a softening in the labour market. The payroll numbers started to come in well below expectations and the unemployment rate rose to 4.3%, its highest level in the current cycle. With the inflation numbers remaining benign, albeit still above the Fed's target range, this prompted a very open division within the Fed as to when the central bank should resume cutting interest rates. For much of the period, the chair, Jerome Powell, maintained his more hawkish stance and wait-and-see position, but he too was obliged to soften his stance in response to the changing dynamics. At the Jackson Hole conference in late August, Powell admitted that the 'shifting balance of risks may warrant adjusting our policy stance.' In the event, the Fed cut interest rates three times in the last months of 2025, at a quarter point each time, lowering the benchmark overnight interest rate in December to a range of between 3.5% and 3.75%. It was generally agreed that a slowdown in monthly job creation and rising unemployment warranted a less restrictive monetary policy, and the moves were well received by both the bond and equity markets.

The shift in monetary policy by the Fed over the summer, the start of interest rate cuts in September and the expectation of more to come, coupled with the strong results from the corporate sector, particularly in AI and technology-related areas, gave renewed stimulus to the US equity markets in the autumn. Within the markets, however, there was something of a change of leadership as investors looked for asset classes that had lagged. They became more selective in their choice of mega-cap stocks or what had become known as the 'Magnificent Seven' and looked to seek out companies in more traditional domains that were also beneficiaries of the massive AI capex boom underway, as for example providing electricity to data centres or telecom equipment.

Especially sought after as a result were small and mid-cap stocks given their long prior period of underperformance relative to the large and mega-caps. As a result, over the period under review small and mid-cap stocks performed better than their larger counterparts. Over the half year, the Russell 2000 in US dollar terms returned a gross 14.9%, compared to 11.0% from the S&P 500 and 14.4% from the Nasdaq. The US dollar strengthened a little against sterling over the period, rising from 1.37 to 1.34 which added slightly to the returns for sterling-based investors.

Portfolio Performance

As mentioned above, our performance over the past six months relative to our benchmark was disappointing. Our Portfolio Manager's focus on quality companies and avoiding more speculative situations, often loss-making, with weaker financials was a hindrance to performance in such a momentum theme-driven market. This was particularly true in the case of our stock picks in the more highly rated sectors of healthcare and information technology, swept up by AI euphoria, and in industrials.

A more detailed coverage on the development of the US smaller company sector over the past six months and our activity and performance is included in the Portfolio Manager's Review within the Company's Half Year Report.

The Board continues to monitor closely investment performance and in accordance with the Portfolio Management Agreement (PMA), carries out a detailed formal appraisal of the Portfolio Manager annually. Despite the recent bout of underperformance in what was a difficult period for many active small cap investors, we continue to have confidence in our Portfolio Manager's philosophy and process to identify successful, quality companies and in their ability to deliver positive results over the long term, as they have done in the past.

However, the Board is conscious of performance challenges and also has regard to the Company's three-yearly continuation vote which falls due at the AGM later this year. The Board will therefore be seeking shareholder views on these challenges.

Tender Offer

The Board decided a year ago that should long-term performance not be satisfactory for shareholders there should be a mechanism for them to realise close to their NAV in the Company. Accordingly, the Board offered shareholders the opportunity to tender some or all their shares at close to NAV, less costs, if NAV performance has not outperformed the benchmark for the period 1 July 2023 to 30 June 2028 (ie a total period of five years with two and a half remaining). This redemption option sits alongside the existing 3-year continuation vote.

Continuation Vote

In accordance with the three-year cycle prescribed in the Company's Articles of Association, the next continuation vote will be held at our Annual General Meeting (AGM) in November 2026.

Management Fee

The Board also reviews the management fees paid to the Portfolio Manager, Brown Advisory, on an annual basis. The aim is to ensure that the fees continue to represent good value to shareholders, that they are competitive with similar products and consider the quality and experience of the teams involved.

Following engagement with Brown Advisory a year ago, the Board agreed a reduction in their management fees which took effect as of 1 January 2025. The Board believes that the current fee structure is fair, offers good value to shareholders and being based on the lower of market capitalisation and NAV more clearly aligns the interests of the Portfolio Manager with those of our shareholders.

Share Price and Discount

The Board also remains committed to using share buybacks with the aim of reducing discount volatility and working to reduce any discount should it become significantly wider than those of similar investment trusts, rather than at a fixed discount level. In accordance with our share buyback policy as revised three years ago we bought in 202,417 shares over the half-year. The average price paid was 1326.8p and at an average discount of 9.5%.

On 31 December 2025, the number of shares held in treasury was 6,892,043 and the total number in public hands was 11,331,370.

Gearing

With markets at high levels and taking into consideration the views of the Portfolio Manager regarding investment opportunities in the smaller company sector at the relevant times the Board held back from gearing the portfolio. However, the situation with regards to gearing remains under regular review.

Shareholder Communications

The Board encourages shareholders to visit the Company's website (www.brownadvisory.com/basc) for the latest information, podcasts and monthly factsheets.

Outlook

As reported above, investors in US equities enjoyed another strong year in 2025, with double digit gains for the third year running. A healthy economy, restrained inflation, cuts in interest rates and much hype surrounding Artificial Intelligence (AI) provided all the necessary ingredients for the markets to rally. Given these factors still remain largely in place, US markets could well generate positive returns again in 2026.

The main risks are also much as before. First, interest rates may not fall as quickly as many investors now expect given the Fed's continuing concern over the inflation risks caused by the introduction of tariffs and the risk of them becoming entrenched. Indeed, while the Fed as a whole voted for the quarter point cut in December, its third move in 2025, the subsequent minutes of the meeting revealed three members voted against with the decision reported to be 'finely balanced'. Not since 2019 has the Fed seen such a level of dissent, and this, coupled with the likely member changes to the Board in 2026, will make interest rates and monetary policy that more difficult to forecast.

Secondly, the rally of the past couple of years leaves much of the markets looking increasingly expensive. Stocks are trading at well above their long-term averages, even if flattered by the hefty presence of fast-growing tech stocks, with the greater risk therefore of disappointment. Finally, there is always the risk of a major setback in the technology sector on possible earnings disappointments or concern over the scale of the capex spend and the low returns on investment.

What is new this year, however, is the massive rise in geopolitical risk as a new world order begins to take shape with the US, China and Russia at the fore. Markets have taken the extraordinary world events of the past couple of months within their stride but are likely to become more volatile as they realise the world to have become more changeable, more unpredictable, and more dangerous.

In conclusion, therefore, despite the caveats mentioned above the US domestic background remains in good health and should continue to support US equities going forward. Smaller companies should benefit even more from the fiscal measures and other corporate incentives the Trump administration has announced given their greater domestic exposure. With some signs that the technology and AI story may have run its course, investors may look to revisit their smaller company exposure given the sector's lagged performance till recently, its attractive array of businesses and its undemanding valuations. Our performance should also benefit from the market's return to a more fundamentals-based approach and less a theme and momentum driven one. We believe that our Portfolio Manager is well placed to take full advantage of such opportunities, while being also prepared to navigate the portfolio safely through periods of geopolitical turbulence.

Stephen White

Chairman

20 February 2026

Related Party Transactions

During the first six months of the current financial year no transactions with related parties have taken place which have materially affected the financial position or performance of the Company. Details of related party transactions are contained in the Annual Report and Financial Statements for the year ended 30 June 2025 and in the Half Year Report.

Principal and emerging risks and uncertainties

The Board, through the Audit and Risk Committee, carries out a regular review of the risk environment in which the Company operates, changes to the environment and individual risks. The Board also considers emerging risks which might affect the Company. The Board has carried out a robust assessment of the Company's principal and emerging risks, which include those that would threaten its business model, future performance, solvency, liquidity or reputation.

Details of the principal and emerging risks and uncertainties associated with the Company's business are set out in the Annual Report and Financial Statements for the year ended 30 June 2025. In the view of the Board, these principal and emerging risks and uncertainties continue to apply and they are constantly under review.

Going Concern

The Half Yearly Financial Statements have been prepared on a going concern basis. The Directors consider that this is the appropriate basis as they have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. In considering this, the Directors took into account the Company's investment objective, risk management policies and capital management policies, the diversified portfolio of readily realisable securities which can be used to meet short-term funding commitments and the ability of the Company to meet all of its liabilities and ongoing expenses.

In determining the appropriateness of the going concern basis, the Directors gave particular focus to the operational resilience and ongoing viability of the Portfolio Manager, the AIFM and other key third-party suppliers.

Statement of Directors' Responsibilities

Each of the Directors confirms to the best of their knowledge that:

a)    the condensed set of financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Company at, or, as applicable, for the period ended 31 December 2025.

b)    in their opinion the Chairman's statement, the Portfolio Manager's review and the interim management report include a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties that the Company faces; and

c)    the interim management report includes a fair review of the information required by Disclosure Guidance and Transparency Rule 4.2.8R on related party transactions.

The Half Yearly Financial Report has not been audited or reviewed by the Company's auditors.

For and on behalf of the Board

Stephen White

Chairman

20 February 2026

Income Statement

for the six months ended 31 December 2025 (unaudited)

The 'Total' column of this statement is the profit and loss account of the Company.

The 'Revenue' and 'Capital' columns represent supplementary information prepared under guidance issued by the Association of Investment Companies. The Company has no other comprehensive income, and therefore the net return after taxation is also the total comprehensive income for the year.

All items in the above statement derive from continuing operations. No operations were acquired or discontinued in the period.

The financial information does not constitute 'accounts' as defined in section 434 of the Companies Act 2006.

Statement of Financial Position

as at 31 December 2025 (unaudited)

The Financial Statements were approved by the Board of Directors and signed on its behalf on 20 February 2026.

Stephen White

Chairman

Company Registration Number 02781968

Statement of Changes in Equity

for the six months ended 31 December 2025 (unaudited)

Retained earnings               

† Retained earnings comprise the total of Capital reserve and Revenue reserve.

* Under the Company's Articles of Association any dividends may be distributed only from the revenue reserve element of retained earnings and, as at 31 December 2025, there were no available earnings of this type.

Statement of Cash Flows

for the six months ended 31 December 2025

Notes to the Financial Statements for the six months to 31 December 2025

The Notes to the Financial Statements form part of the above Financial Statements.

1.  Accounting policies

The accounting policies applied for the condensed financial statements are as set out in the Company's Annual Report & Accounts for the year ended 30 June 2025. They have been applied consistently during the period ended 31 December 2025.

FRS 104, 'Interim Financial Reporting', issued by the FRC in March 2015 has been applied in preparing the financial statements included in this half yearly report.

Basis of accounting

The accounts of the Company are prepared on a going concern basis under the historical cost convention, modified to include fixed asset investments at fair value through profit or loss and in accordance with the Companies Act 2006, UK GAAP and with the Statement of Recommended Practice ('SORP') for Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies ('AIC') in November 2014 and updated in April 2021.

The functional and reporting currency of the Company is pounds sterling because that is the currency of the primary economic environment in which the Company operates.

In accordance with the SORP, the Income Statement has been analysed between a revenue account (dealing with items of a revenue nature) and a capital account (relating to items of a capital nature).

Revenue returns include, but are not limited to, dividend income, operating expenses and tax. Net revenue returns are allocated via the revenue account to the retained earnings, out of which dividend payments may be made. Capital returns include, but are not limited to, profits and losses on the disposal and revaluation of fixed asset investments and currency profits and losses on cash and borrowings. Net capital returns may not be distributed by way of dividend and are allocated via the capital account to the retained earnings.

2.  Gains on investments held at fair value through profit or loss

3.  Return per Ordinary share

4.  Transaction Costs

During the period, expenses were incurred in acquiring or disposing of investments classified as fair value through profit or loss. These have been expensed through capital and are included within gains on investments in the Income Statement. The total costs were as follows:

5.  Comparative information

The financial information contained in this interim report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the six months to 31 December 2025 and 31 December 2024 has not been audited.

The information for the year ended 30 June 2025 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 30 June 2025 have been filed with Companies House. The report of the auditors on those accounts contained no qualification or statement under section 498(2) or (3) of the Companies Act 2006.

6.  Net asset value per Ordinary share

The net asset value per Ordinary share as at 31 December 2025, calculated in accordance with the Articles of Association, was as follows:

Net asset value per Ordinary share on the balance sheet is based on net assets of £167,265,000 (30 June 2025: £163,399,000) and on 11,331,370 (30 June 2025: 11,533,787) Ordinary shares, being the number of Ordinary shares in issue at the end of the period.

7.  Fair valuation of investments

The fair value hierarchy analysis for investments held at fair value at the period end is as follows:

Financial instruments include fixed asset investments, derivative assets and liabilities.

Accounting standards recognise a hierarchy of fair value measurements for financial instruments which gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (level 1) and the lowest priority to unobservable inputs (level 3). The classification of financial instruments depends on the lowest significant applicable input, as follows:

Level 1 - Unadjusted, fully accessible and current quoted prices in active markets for identical assets or liabilities. Included within this category are investments listed on any recognised stock exchange.

Level 2 - Quoted prices for similar assets or liabilities, or other directly or indirectly observable inputs which exist for the duration of the period of investment. Examples of such instruments would be those for which the quoted price has been recently suspended, forward exchange contracts and certain other derivative instruments.

Level 3 - External inputs are unobservable. Value is the Directors' best estimate, based on advice from relevant knowledgeable experts, use of recognised valuation techniques and on assumptions as to what inputs other market participants would apply in pricing the same or similar instruments. Included within this category are unquoted investments.

8.  Related parties and transactions with the manager

FundRock Partners Limited (FundRock) has been appointed as AIFM to the Company pursuant to an Alternative Investment Fund Management Agreement between FundRock and the Company. FundRock has also been appointed to provide company secretarial services to the Company.

Brown Advisory has been appointed to provide portfolio management services pursuant to a Portfolio Management Agreement between the Company, FundRock and Brown Advisory.

Up until 31 December 2024, the management fee has been calculated at an annual rate of 0.7% on the first £200 million; 0.6% of the next £300 million; and 0.5% thereafter of the Company's adjusted net assets.

With effect from 1 January 2025, the revised management fee has been calculated at an annual rate of 0.65% on the first £200 million; 0.6% of the next £300 million; and 0.5% thereafter of the Company's adjusted net assets.

The management fee is payable by the Company to FundRock, who shall deduct from the management fee the amounts due to it as AIFM and for company secretarial services and shall pay the balance to Brown Advisory.

The management fee is calculated and payable on a quarterly basis.

The investment management fee payable to FundRock for the period 1 July 2025 to 31 December 2025 was £551,000. For the period 1 July 2024 to 31 December 2024 the fee payable was £628,000.

The appointment of Brown Advisory and FundRock may be terminated by not less than six months' notice.

There are no transactions with the directors other than the remuneration paid to the directors as disclosed in the Directors' Remuneration Report on pages 64 to 67 of the 2025 Annual Report & Accounts and as set out in Note 5 to the Accounts on page 89 and the beneficial interests of the directors in the ordinary shares of the Company as disclosed on page 67 of the 2025 Annual Report & Accounts.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

END