BlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
London, February 12
BLACKROCK SMALLER COMPANIES TRUST PLC (LEI: 549300MS535KC2WH4082)
All information is at 31 January 2019 and unaudited.
Performance at month end is calculated on a capital only basis
| One month % | Three months % | One year % | Three years % | Five years % | |
| Net asset value* | 4.9 | -2.0 | -10.5 | 37.0 | 44.6 |
| Share price* | 7.9 | -1.1 | -4.1 | 42.9 | 42.2 |
| Numis ex Inv Companies + AIM Index | 5.2 | -2.5 | -12.0 | 18.6 | 8.1 |
*performance calculations based on a capital only NAV with debt at par, without income reinvested. Share price performance calculations exclude income reinvestment.
Sources: BlackRock and Datastream
| At month end | |
| Net asset value Capital only(debt at par value): | 1,361.80p |
| Net asset value Capital only(debt at fair value): | 1,353.70p |
| Net asset value incl. Income(debt at par value)1: | 1,382.11p |
| Net asset value incl. Income(debt at fair value)1: | 1,374.02p |
| Share price | 1,295.00p |
| Discount to Cum Income NAV (debt at par value): | 6.3% |
| Discount to Cum Income NAV (debt at fair value): | 5.8% |
| Net yield4: | 2.2% |
| Gross assets2: | £703.9m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 4.3% |
| 2018 Ongoing charges ratio (actual)3 | 0.7% |
| 2018 Ongoing charges ratio (restated)3: | 0.8% |
| 2018 Ongoing charges ratio (including performance fees)3 | 1.0% |
| Ordinary shares in issue5: | 47,879,792 |
includes net revenue of 20.31p
includes current year revenue
As reported in the Annual Financial Report for the year ended 28 February 2018, the ongoing charges ratio is calculated as a percentage of net assets and using operating expenses, excluding performance fees, finance costs and taxation. As announced on 17 April 2018, with effect from 1 March 2018 the Company's management fee arrangements have changed. Under the new fee basis BlackRock receives an annual fee which is calculated based on 0.60% in respect of the first GBP 750 million of the Company's total assets less current liabilities, reducing to 0.50% thereafter. The performance fee has been removed. This will impact the Ongoing Charges ratio for the Company. The restated Ongoing Charges Ratio for the year to 28 February 2018 had the new fee arrangements been in place for the full year is estimated to have been 0.77% on this basis.
Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise of the final dividend of 16.00 pence per share, (announced on 27 April 2018, ex-dividend on 17 May 2018) and the interim dividend of 12.00 pence per share (announced on 29 October 2018 and gone ex-dividend on 8 November 2018)
excludes 2,113,731 shares held in treasury.
| Sector Weightings | % of portfolio |
| Industrials | 32.0 |
| Financials | 23.8 |
| Consumer Services | 14.1 |
| Health Care | 7.8 |
| Basic Materials | 6.2 |
| Consumer Goods | 5.6 |
| Technology | 5.3 |
| Oil & Gas | 4.9 |
| Utilities | 0.3 |
| ----- | |
| Total | 100.0 |
| ===== |
| Ten Largest Equity Investments | |
| Company | % of portfolio |
| 4imprint Group | 2.3 |
| IntegraFin | 2.1 |
| YouGov | 2.0 |
| Big Yellow | 1.9 |
| Robert Walters | 1.9 |
| Central Asia Metals | 1.8 |
| Advanced Medical Solutions | 1.8 |
| Zotefoams | 1.6 |
| Fuller Smith & Turner - A Shares | 1.6 |
| Liontrust Asset Management | 1.6 |
Commenting on the markets, Mike Prentis and Roland Arnold, representing the Investment Manager noted:
During January the Company's NAV per share rose by 4.9%1 to 1,361.80p on a capital only basis, whilst our benchmark index, Numis ex Inv Companies + AIM Index, rose by 5.2%1; the FTSE 100 Index rose by 3.6%1 (all performance figures are on a capital only basis).
Markets rebounded globally in January, with the UK making a strong start to the year (the best January since 2013), as investors appeared to shrug off fragile economic data, focussing more on the dovish tone from the Federal Reserve and signs of progress with US/China trade disputes.
The Company lagged the rising market during the month, impacted in particular by one stock specific disappointment, and the reversal of one or two holdings which gave back some of their recent strong performance, notably Zotefoams.
Gear4Music, the UK's leading supplier of musical instruments and accessories, was the largest stock specific detractor during the month after the company warned that earnings for the 2019 fiscal year are expected to be "slightly below" those of 2018. The company delivered strong sales growth of 41%, however the company's focus on gaining market share came at the cost of gross margins. In addition, capacity issues in its York distribution centre between Black Friday and Christmas, where Gear4Music failed to meet demand, held back further sales growth. Robert Walters fell in response to the recruiter cautioning of a slowdown in hiring in the UK as Britain prepares to leave the EU. Net fee income from the UK rose just 2% for the three months to 31 December 2018 compared to 22% in Europe, where the group had notable contributions from France and Belgium, and 19% revenue growth in Asia Pacific, the Company's largest regional market.
On the positive side we continued to see positive updates from a number of our long term core holdings despite the difficult environment faced by many businesses. Workspace Group rallied in response to a strong third quarter trading update. The company has seen continued strong demand during the quarter which has historically been quiet, and conversions to lettings has been very strong. Workspace remains well placed to benefit from the structural shift in office space from fixed to flexible, which has been central to our long-term thesis for the holding. Fuller Smith & Turner rose after it announced the sale of its beer business to Asahi Europe. A long-term supply agreement will allow Fuller's to continue providing high quality beer and ciders to its customers while allowing the business to focus on its core business of operating stylish pubs and hotels.
Markets have made a strong start to the year, however we continue to believe that elevated levels of volatility may persist as economic uncertainty increases and the range of possible outcomes remains wide. Gearing within the portfolio therefore remains below historical average levels, something that we began reducing in the final quarter of 2018. We also recognise that in the current environment, the shares of companies that are priced for growth and miss expectations are being severely punished. We have therefore been further reviewing the holdings within the portfolio and trimming or selling holdings where we see increased earnings risk.
12 February 2019
1Source: BlackRock as at 31 January 2018
ENDS
Latest information is available by typing www.blackrock.co.uk/brsc on the internet, "BLRKINDEX" on Reuters, "BLRK" on Bloomberg or "8800" on Topic 3 (ICV terminal). Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on the Manager's website (or any other website) is incorporated into, or forms part of, this announcement.
