BlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
London, September 21
The information contained in this release was correct as at 31August2022. Information on the Company's up to date net asset values can be found on the London Stock Exchange Website at
https://www.londonstockexchange.com/exchange/news/market-news/market-news-home.html.
BLACKROCK SMALLER COMPANIES TRUST PLC (LEI:549300MS535KC2WH4082)
All information is at 31 August 2022 and unaudited.
Performance at month end is calculated on a Total Return basis based on NAV per share with debt at fair value
| One month % | Three months % | One year % | Three years % | Five years % | |
| Net asset value | -6.3 | -9.7 | -29.3 | 13.8 | 20.6 |
| Share price | -7.3 | -9.1 | -36.1 | 1.8 | 20.5 |
| Numis ex Inv Companies + AIM Index | -3.9 | -8.7 | -22.6 | 13.9 | 7.6 |
Sources: BlackRock and Datastream
At month end
| Net asset value Capital only (debt at par value): | 1,511.86p |
| Net asset value Capital only (debt at fair value): | 1,546.93p |
| Net asset value incl. Income (debt at par value)1: | 1,536.94p |
| Net asset value incl. Income (debt at fair value)1: | 1,572.01p |
| Share price: | 1,344.00p |
| Discount to Cum Income NAV (debt at par value): | 12.6% |
| Discount to Cum Income NAV (debt at fair value): | 14.5% |
| Net yield2: | 2.6% |
| Gross assets3: | £820.0m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 2.1% |
| Ongoing charges ratio (actual)4: | 0.7% |
| Ordinary shares in issue5: | 48,829,792 |
- Includes net revenue of 25.08p
- Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise the first interim dividend of 13.0 pence per share (announced on 2 November 2021, ex-dividend on 11 November 2021, and pay date 2 December 2021), and the final ex-dividend of 22.00 pence per share (announced on 29 April 2022, ex-date on 12 May 2022, and pay date 17 June 2022).
- Includes current year revenue.
- As reported in the Annual Financial Report for the year ended 28 February 2022 the Ongoing Charges Ratio (OCR) was 0.7%. The OCR is calculated as a percentage of net assets and using operating expenses, excluding performance fees, finance costs and taxation.
- Excludes 1,163,731 ordinary shares held in treasury.
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| Ten Largest Equity Investments Company | % of portfolio |
| 4imprint Group | 3.1 |
| CVS Group | 3.0 |
| Gamma Communications | 2.6 |
| Watches of Switzerland | 2.1 |
| Bloomsbury Publishing | 2.1 |
| Qinetiq Group | 2.1 |
| Auction Technology | 1.9 |
| Spirent Communications | 1.9 |
| Oxford Instruments | 1.9 |
| Ergomed | 1.9 |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:
During August the Company's NAV per share fell by -6.3%1 to 1,572.01p on a total return basis (with debt at fair value), while our benchmark index fell -3.9%1. The trend that has been a key feature during 2022 of large caps outperforming small and mid-caps resumed in August, with the FTSE 100 Index falling by only -1.1%1.
Equity markets fell in August as the global economy and policymakers faced a sharper inflation-growth trade-off. Markets initially marched higher in the first half of the month as they priced in a slowing Federal Reserve (Fed) hiking cycle on a softer-than-expected US CPI (Consumer Price Index) inflation, and then fell later when both the Fed and ECB (European Central Banks) made it clear that there is more tightening to come. In the US, headline CPI including food and energy is still running at a near four-decade high of 8.5% and there has been no evidence of a turn in some difficult and stickier parts of the inflation problem such as wage growth. Meanwhile in Europe, markets fell as another looming interruption to Russian gas supplies hit the region, raising the prospects of recession and energy rationing. The Bank of England hiked rates 50 bps to 1.75%, its largest hike in almost three decades. UK inflation hit double-digit figures for the first time in four decades, mainly driven by a combination of supply shocks pushing up sequential gains in core inflation. This prompted the market to price in a more urgent pace of Bank of England rate hikes. Sterling weakness provided some support to large-cap US Dollar earners in the UK market, while small & mid-caps suffered as a result of the ongoing challenging economic outlook.
The largest detractor was ingredients manufacturer Treatt, which warned that profits for the full year would be c.30% lower than guidance as a result of rising costs, slowing demand for iced tea in the US and the weaker pound. While disappointing in the short term, the company believes that demand across all of its categories and geographies remains strong and it has offset rising input costs with price increases, however, this has been limited due to its long-term contracts with customers. Shares in XP Power fell after the company warned that full year results would come in at the lower end of analyst expectations due to supply chain challenges impacting their ability to deliver to customers and also inflationary pressures. Other detractors included Auction Technology Group and Watches of Switzerland which were sold-off as investors sentiment turned back to more defensive and value areas of the market.
The largest positive contributor was 4imprint which rallied after the company reported very strong results showing a 58% increase in first half sales and improving margins as investment in marketing has continued to drive market share gains within their highly fragmented end markets. Oil services provider Hunting reported strong revenue growth for the first half of the year with a positive outlook for the second half of the year where management expect to see a further acceleration in earnings, supported by a forward sales order book which now exceeds 2019 levels. Shares in veterinary group CVS remained resilient during the month which we think makes sense given the defensive nature of pet spend not to mention the longer term positive structural trends that the industry is exposed to.
The brief relief rally that the markets experienced during July turned out to be very short-lived and small and mid-caps once again were the victims of the risk-off trade. The upcoming months are likely to remain highly uncertain, with heightened volatility as investors continue to focus on the path for monetary policy, inflation data, the oil price and geopolitics. While the macro environment is likely to present its fair share of challenges for lots of companies, it is important to remember that the effects of the challenging environment will not be felt evenly. We are therefore sticking to our core beliefs and focusing on bottom-up company specific analysis to identify high quality, nimble businesses, operated by entrepreneurial management teams, with strong market positions and resilient cash-flows. These are the types of businesses that we believe will be best placed to manage and thrive in the current environment. Historically these periods have been followed by strong returns for the strategy and presented excellent investment opportunities. We thank shareholders for their ongoing support and look forward to providing further confirmation of the investment cases that we are exposed to within the portfolio in the coming months.
1Source: BlackRock as at 31 August 2022
21 September 2022
ENDS
Latest information is available by typing www.blackrock.com/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.
