BlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
London, January 28
The information contained in this release was correct as at 31 December 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 31 December 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* | 10.6 | 24.5 | 2.9 | 15.5 | 65.2 |
| Share price* | 17.3 | 42.6 | 1.6 | 33.3 | 74.9 |
| Numis ex Inv Companies + AIM Index | 8.3 | 21.2 | 3.4 | 0.6 | 30.5 |
*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): | 1,734.27p |
| Net asset value Capital only (debt at fair value): | 1,714.87p |
| Net asset value incl. Income (debt at par value)1: | 1,738.06p |
| Net asset value incl. Income (debt at fair value)1: | 1,718.66p |
| Share price: | 1,740.00p |
| Premium to Cum Income NAV (debt at par value): | 0.1% |
| Premium to Cum Income NAV (debt at fair value): | 1.2% |
| Net yield2: | 1.9% |
| Gross assets3: | £928.3m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 6.2% |
| Ongoing charges ratio (actual)4: | 0.7% |
| Ordinary shares in issue5: | 48,829,792 |
Includes net revenue of 3.79p
Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise the second interim dividend of 19.7 pence per share (announced on 3 June 2020, ex-dividend on 11 June 2020) and the first interim dividend of 12.8 pence per share (announced on 5 November 2020, ex-dividend on 12 November 2020, paid on 26 November 2020).
Includes current year revenue.
As reported in the Annual Financial Report for the year ended 29 February 2020 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 |
| YouGov | 2.4 |
| Watches of Switzerland | 2.4 |
| Ergomed | 1.9 |
| Treatt | 1.9 |
| Grafton Group | 1.9 |
| Stock Spirits Group | 1.8 |
| Impax Asset Management | 1.8 |
| IntegraFin | 1.8 |
| IG Design Group | 1.8 |
| Calisen Plc | 1.7 |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:
During November the Company's NAV per share rose by 10.6%1 to 1,734.27p, outperforming our benchmark index which returned 8.3%1; for comparison the FTSE 100 Index rose by 3.1%1 (all calculations are on a capital only basis).
Equity markets rose in December as COVID-19 vaccine deployment began globally. Despite positive news around vaccine programmes, virus cases continued to rise and renewed restrictions on activity in Europe (Germany, UK and Netherlands) and the US (California) to slow the spread were implemented. Further travel restrictions in Europe arose on the discovery of a new, more contagious mutation of the virus.
Small & mid-cap stocks outperformed during the month as December finally delivered positive progress on Brexit, with an agreement on trade terms for goods. The marked increase in takeover activity, notably from private equity and overseas bidders continued with a number of smaller companies receiving bids, indicating a willingness of strategic buyers to look through the period of current uncertainty and focus on what we see as the undervaluation of UK equities versus their global peers.
The two largest contributors to performance in the month were IMIMobile and Calisen, both of which were recipients of the previously mentioned mergers and acquisitions trend. While beneficial to performance when our holdings are bid for, our preference would always be to own these companies for the strong long-term prospects which have attracted us to the holdings in the first place, something that has clearly attracted the interest of strategic buyers in recent weeks. Shares in IMIMobile, the cloud communications software specialist soared after the company agreed to a takeover approach from US listed IT giant Cisco Systems. Shares in smart meter installation and asset owner, Calisen, rallied after the business agreed to a bid from a consortium of private equity funds. Learning technologies announced the acquisition of privately-owned eThink Education. The earnings enhancing deal follows the recent acquisition of eCreators and shows the speed with which the company is utilising the proceeds of their recent fund raise.
Shares in Avon Rubber fell on the disappointing news that one of their products needs to be re-certified, resulting in a delay to some revenues. While the delay is disappointing, we continue believe in the long-term attractions of the business and recent steps taken to increase its focus on the protection markets. Many of the other detractors to performance during the month were simply companies that we do not own which benefited from the value rally which continued during the month.
Despite further mandated restrictions in many countries across Europe (including the UK) and the US, stock markets are now focused on how quickly the world can return to something approximating to normality. Whilst this is clearly positive news for markets and global economies, we remain mindful that any programme of mass vaccination will take many months to implement, and therefore we may see further volatility from new waves and variants of the virus and further lockdowns.
Meanwhile the trade deal agreed between the UK and the EU finally provides the UK market with some long-awaited clarity and removes the risk premium associated with a no-deal Brexit for UK assets. We therefore believe that resolution and clarification over Brexit will now have potential to drive flows into UK equities as global asset allocators reassess their underweight positions. Whilst there will undoubtedly be some teething problems as companies and industries adjust to new ways of working in a post Brexit world, and this will certainly not be the last we hear of Brexit, we continue to believe that smaller companies in particular will be best placed to react and adapt fastest to the future rules of engagement.
The Company's investment strategy is focussed on quality growth investments in smaller companies, a style that has demonstrably worked for the long-term, and historically periods of heightened volatility, such as this, have proven to be excellent investment opportunities. We therefore remain optimistic about the opportunity ahead for this Company.
1Source: BlackRock as at 31 December 2020
28 January 2021
ENDS
