BlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
LONDON, United Kingdom, January 29
The information contained in this release was correct as at 31 December 2024. 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 2024 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 | Three | Five |
Net asset value | -2.3 | -3.9 | 2.9 | -23.7 | 2.0 |
Share price | 0.3 | -5.2 | 2.2 | -29.4 | -8.9 |
Benchmark* | -0.1 | -1.6 | 5.0 | -15.4 | 6.6 |
Sources: BlackRock and Deutsche Numis
*With effect from 15 January 2024 the Numis Smaller Companies plus AIM (excluding Investment Companies) Index to Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies).
At month end
Net asset value Capital only (debt at par value): | 1,462.39p |
Net asset value Capital only (debt at fair value): | 1,519.93p |
Net asset value incl. Income (debt at par value)1: | 1,484.71p |
Net asset value incl. Income (debt at fair value)1: | 1,542.26p |
Share price: | 1,372.00p |
Discount to Cum Income NAV (debt at par value): | 7.6% |
Discount to Cum Income NAV (debt at fair value): | 11.0% |
Net yield2: | 3.1% |
Gross assets3: | £761.6m |
Gearing range as a % of net assets: | 0-15% |
Net gearing including income (debt at par): | 12.8% |
Ongoing charges ratio (actual)4: | 0.7% |
Ordinary shares in issue5: | 46,609,792 |
- Includes net revenue of 22.32p
- Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement and comprise the final dividend of 27.00 pence per share (announced on 14 May 2024, ex-date on 23 May 2024, and paid 24 June 2024) and Interim dividend of 15.50 pence per share (announced on 25 October 2024, ex-date on 31 October 2024, and paid on 04 December 2024)
- Includes current year revenue.
- The Company's ongoing charges are calculated as a percentage of average daily net assets and using the management fee and all other operating expenses excluding finance costs, direct transaction costs, custody transaction charges, VAT recovered, taxation and certain non-recurring items for year ended 29 February 2024.
- Excludes 3,383,731 ordinary shares held in treasury.
|
| ||||||||||||||||||||||||||||||||||||||||||||||||||
Ten Largest Equity Investments | % of portfolio |
Breedon | 2.7 |
IntegraFin | 2.5 |
Hill & Smith | 2.5 |
Gamma Communications | 2.3 |
XPS Pensions | 2.3 |
Bloomsbury Publishing | 2.2 |
Chemring Group | 2.1 |
Tatton Asset Management | 2.0 |
Boku | 2.0 |
Workspace Group | 2.0 |
|
|
| |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:
During December the Company's NAV per share returned -2.3% to 1,542.26p on a total return basis, while our benchmark index,
Deutsche Numis Smaller Companies plus AIM (excluding Investment Companies) Index returned -0.1%. For comparison the large cap FTSE 100 Index fell by -0.1%.1
Equity markets struggled in December as global market selloffs and unwinds hit every part of the equity market. Inflation remained persistent in the UK as the Bank of England announced that they were holding rates at 4.75%. This had been largely expected by the market as CPI inflation had ticked up from 2.3% in October to 2.6% in November, and wage growth had accelerated. Meanwhile, across the pond in the US, the Federal Reserve cut rates by 25bps but indicated fewer rate cuts in 2025 as inflation continues to hold steadily above target. As a result of the repricing of interest rate expectations and deteriorating economic outlook, UK domestics and rate sensitive areas remained under pressure, notably housebuilders and real estate companies.
Detractors to performance during the month were mixed across names that we do not own or are underweight that performed well (e.g. Dar Global), rate sensitive domestics due to the dynamics discussed above and a stock specific fall in Investment platform IntegraFin. In the case of IntegraFin, the company released solid full year results and reiterated guidance for FY25, however the shares fell which we believe was somewhat related to the timing of the statement (late December) in a market with limited liquidity. This remains a top 10 holding within the portfolio as we believe the platform is a market share winner that continues to see positive flows despite the challenging backdrop. It is worth noting the shares have partially recovered in January 2025 on the back of positive asset flow onto the platform. Workspace, Victorian Plumbing and Youngs, while all operating in very different industries, were victims of the rotation away from UK domestics during the month and therefore detracted despite no negative stock specific newsflow.
The largest positive contributor was ingredients manufacturer Treatt, which reported strong full year results, delivering profit growth ahead of expectations while strengthening its balance sheet with a significant reduction in net debt. The results showed an acceleration in the second half of the year as customer destocking appears to be normalising, and higher commodity prices fed through to stronger pricing most notably in its citrus division. Raspberry Pi was the second largest contributor to performance after the shares rose 70% in the month. In mid-November the company announced a strategic partnership with the Italian firm SECO to develop a human-machine interface solution targeting industrial and Internet of Things (IoT) applications, potentially increasing Raspberry Pi's addressable market for is compute modules. Shares in Porvair, a specialist in filtration and environmental technologies, rose after the company released a trading update for the year ending 30 Nov 2024, stating that revenue and profit growth will be ahead of market expectations.
As previously discussed, the budget was not the clearing event that we as a team had hoped for. However, while the impact on growth, debt, inflation and interest rates is incrementally more negative in the near term, some of the potential benefits from investments could come through further out. Importantly, we do still believe that the Budget was an important milestone to get past in order for the UK SMID (small and mid-cap) market to make any progress. Certain announcements, notably national insurance, will put pressure on profit margins of many domestic businesses into next year and companies will have to adjust to the new cost base, hiring intentions may change and companies without pricing power are going to feel the squeeze.
We also continue to keep a close eye on inflation and UK unemployment, which as of now this remains low. Finally, and importantly, the valuation of UK SMID companies is attractive on a historic basis. As we move through this near-term noise, the opportunity presented by the UK Small and Mid-cap will present itself, and maybe we will finally see investors looking to allocate back to what has historically been an profitable asset class.
We thank shareholders for your ongoing support.
1Source: BlackRock as at 31 December 2024
29 January 2025
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.
