BlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
London, May 28
The information contained in this release was correct as at 30 April 2020. 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 30 April 2020 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* | 13.4 | -24.5 | -13.9 | -3.6 | 33.0 |
| Share price* | 17.0 | -23.7 | -10.2 | 14.2 | 57.1 |
| Numis ex Inv Companies + AIM Index | 12.9 | -22.5 | -18.6 | -20.7 | -5.3 |
*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): | 1,297.94p |
| Net asset value Capital only (debt at fair value): | 1,276.62p |
| Net asset value incl. Income (debt at par value)1: | 1,322.52p |
| Net asset value incl. Income (debt at fair value)1: | 1,301.20p |
| Share price | 1,310.00p |
| Discount to Cum Income NAV (debt at par value): | 0.9% |
| Discount to Cum Income NAV (debt at fair value): | -0.7% |
| Net yield2: | 2.4% |
| Gross assets3: | £715.3m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 6.6% |
| 2019 Ongoing charges ratio4: | 0.7% |
| Ordinary shares in issue5: | 48,829,792 |
includes net revenue of 24.58p.
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 19.20 pence per share, (announced on 03 May 2019, ex-dividend on 16 May 2019) and the interim dividend of 12.8 pence per share (announced on 5 November 2019, ex-dividend on 14 November 2019).
includes current year revenue.
As reported in the Annual Financial Report for the year ended 28 February 2019 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 shares held in treasury.
| Sector Weightings | % of portfolio |
| Industrials | 31.6 |
| Financials | 21.4 |
| Consumer Services | 16.9 |
| Consumer Goods | 10.7 |
| Technology | 6.6 |
| Health Care | 6.0 |
| Basic Materials | 3.5 |
| Oil & Gas | 1.9 |
| Telecommunications | 0.9 |
| Materials | 0.5 |
| ----- | |
| Total | 100.0 |
| ===== |
| Ten Largest Equity Investments | |
| Company | % of portfolio |
| YouGov | 2.3 |
| Avon Rubber | 2.1 |
| IntegraFin | 2.0 |
| Breedon | 1.9 |
| Games Workshop | 1.7 |
| Stocks Spirits Group | 1.6 |
| Impax Asset Management | 1.6 |
| IG Design Group | 1.5 |
| Treatt | 1.5 |
| 4imprint Group | 1.5 |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:
During April the Company's NAV per share rose by 13.4%1 to 1,297.94p, outperforming our benchmark index, Numis ex Inv Companies + AIM Index, which returned 12.9%1; for comparison the FTSE 100 Index rose by 4.0%1 (all calculations are on a capital only basis).
Markets globally rebounded during April, despite the significant contraction in global economic activity and sharp rise in unemployment as a result of the lockdowns around the world. Rather than the inevitable economic slowdown, investor sentiment was driven more by a focus on the appearance of a flattening curve of new cases, with many countries beginning to announce measures to remove restrictions. Meanwhile governments around the world continued to announce monetary stimulus packages aimed at supporting their economies during such a marked slowdown in activity.
Performance in absolute terms during the month benefitted from the reversal in many shares that had been impacted during the market falls in the first quarter. However, in relative terms the portfolio benefitted from the outperformance of many companies that are best placed to navigate through these challenging times. The largest contributor to performance was Games Workshop, the creator of the Warhammer miniatures game. The shares rose in response to a positive trading update where the company confirmed that online orders would recommence in May following assessments to ensure health and safety for staff. Robert Walters rallied during the month, recouping some of the recent falls. In a trading update covering the first quarter of 2020, the company highlighted the challenges facing the business for the second quarter, with all markets except mainland China in varying forms of lockdown. However, balance sheet strength and the inherent operational gearing within the business provides confidence that the business will be well positioned to capitalise on opportunities as restrictions begin to ease. Within financials, Impax Asset Management and Tatton Asset Management were strong contributors to performance, with the former reporting net inflows during the first quarter and Tatton confirming another year of growth in revenues and profits ahead of its final results due to be released in June.
The largest detractor to performance was defence business, QinetiQ, which warned that global restrictions to prevent the spread of COVID-19 would negatively impact revenues and announced the decision to suspend the full year dividend. Other detractors were in many cases shares that simply failed to keep pace with the market rebound, for example 4imprint and IG Design Group. However, on the last day of the month IG did warn that exceptional costs related to COVID-19 would impact full year results.
While the market appears to be bouncing between taking the positives from signs of countries beginning to lift lockdown restrictions, and negatives from fears of the extent of a recession, it still goes without saying that the outlook for the global economy has never been more uncertain. There is no historical parallel to current events. Even the Global Financial Crisis of 2008 was, at its heart a banking crisis, something investors had seen before. Our immediate outlook is therefore that volatility remains high as COVID-19 continues to dominate global events. While we are beginning to see lockdowns lifting, shops reopening and children returning to school, no one knows what the ultimate duration of the pandemic will be, the duration of restrictive public health measures, nor the lasting damage that both will do to the economy as a whole. We certainly don't pretend to have the answers and therefore we have not materially changed positioning.
The impact of COVID-19 is unpredictable, unavoidable and unprecedented. But it will get better. And this provides us with confidence in our strategy on a medium-term view. Market volatility presents us with a fantastic investment opportunity. The Company's investment strategy is focussed on quality growth investment opportunities in smaller companies, a style that has demonstrably worked for the long-term, and historically periods of sudden underperformance, such as this, have proven to be excellent investment opportunities.
1Source: BlackRock as at 30 April 2020
28 May 2020
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.
