BlackRock Smll Cos Portfolio Update
June 22 2022 - 6:27AM
UK Regulatory
TIDMBRSC
The information contained in this release was correct as at 31May2022.
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 May 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 Three One Three Five
month months year years years
% % % % %
Net asset value -2.0 -6.4 -13.6 22.1 37.0
Share price -3.2 -10.8 -23.0 11.7 32.0
Numis ex Inv Companies + AIM Index -1.7 -2.6 -11.7 20.8 19.4
Sources: BlackRock and Datastream
At month end
Net asset value Capital only (debt at par value): 1,708.20p
Net asset value Capital only (debt at fair value): 1,726.74p
Net asset value incl. Income (debt at par value)1: 1,721.49p
Net asset value incl. Income (debt at fair value)1: 1,740.04p
Share price: 1,478.00p
Discount to Cum Income NAV (debt at par value): 14.1%
Discount to Cum Income NAV (debt at fair value): 15.1%
Net yield2: 2.4%
Gross assets3: £925.1
Gearing range as a % of net assets: 0-15%
Net gearing including income (debt at par): 1.9%
Ongoing charges ratio (actual)4: 0.7%
Ordinary shares in issue5: 48,829,792
1. Includes net revenue of 13.29p
2. 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).
3. Includes current year revenue.
4. 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.
5. Excludes 1,163,731 ordinary shares held in treasury.
Sector Weightings % of portfolio
Industrials 28.9
Consumer Discretionary 22.4
Financials 13.9
Technology 9.9
Consumer Staples 6.4
Energy 5.8
Basic Materials 5.1
Health Care 3.9
Telecommunications 2.4
Real Estate 1.3
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Total 100.0
=====
Country Weightings % of portfolio
United Kingdom 99.5
United States 0.5
-----
Total 100.0
=====
Ten Largest Equity Investments % of portfolio
Company
CVS Group 2.6
Gamma Communications 2.5
Treatt 2.3
Watches of Switzerland 2.3
YouGov 2.2
Next Fifteen Communications 2.2
Auction Technology 2.0
Workspace Group 1.9
Oxford Instruments 1.9
4imprint Group 1.9
Commenting on the markets, Roland Arnold, representing the Investment Manager
noted:
During May the Company's NAV per share fell by -2.0%1 to 1,740.04p on a total
return basis (with debt at fair value), while our benchmark index fell -1.7%1;
for comparison UK large caps continued to outperform during the month with the
FTSE 100 Index rising by 1.1%1 on a total return basis.
Volatility continued in equity markets during May, with the narrative remaining
unchanged and focused on concerns around inflation, monetary tightening,
geopolitical tensions and COVID-19. The Federal Reserve (Fed) delivered the
expected +50bps rate hike to a range of 0.75%-1%, its biggest interest rate
increase in more than two decades, and Fed Chairman, Jerome Powell, all but
promised the same again at the next two meetings. The Bank of England also
increased the Bank Rate by 0.25 percentage points to 1%, India's central bank
announced a surprise increase to its benchmark rate, and Australia's central
bank enacted its first interest rate hike in more than a decade. Reports of
some high-profile earnings downgrades from large U.S. retailers, Walmart and
Target, saw significant share price moves and raised fears that there could be
plenty more inflation or demand normalisation related warnings to come. Once
again, the large cap FTSE 100 Index outperformed given its heavy weighting of
defensive sectors and US Dollar earners. Meanwhile the UK small & mid-cap
indices lagged as a result of its UK domestic and consumer facing business
which struggled against the backdrop of the ongoing cost of living crisis.
Ingredients manufacturer, Treatt, was the largest detractor during the month.
Despite reporting growing sales during the six months to March, the shares were
weak as investors worried about the risk to second half profits. The company
remains confident that it will deliver its full-year targets, as sales momentum
has continued into the second half, with the order book up by more than 25%
compared to last year. Next Fifteen Communications was another top detractor
during the month. The shares were weak after the group announced the takeover
of M&C Saatchi. Shares in Robert Walters were also weak during the month as
concerns around the outlook for the global economy and therefore the job market
weighed on recruitment businesses.
The largest contributor to performance was Auction Technology Group, a company
which had been a detractor in recent months as investors worried about the
earnings, however, results were accompanied by an outlook statement that was
indeed better than expected. Shares in regulatory and compliance software
provider, Ideagen, soared following a flurry of takeover interest from private
equity buyers. The de-rating that we have seen across the UK small & mid-cap
market year-to-date coupled with weakness in Sterling, has resulted in a spike
in interest from corporate and overseas buyers in recent weeks. We believe this
is a positive sign of the value that our universe continues to offer and is a
trend that we do not see slowing in the coming months if the market continues
to price in overly bearish scenarios on all companies regardless of the outlook
for the underlying businesses. Other notable contributors included YouGov and
Baltic Classifieds which both rebounded following recent share price weakness.
The ongoing conflict between Russia and Ukraine has remained a source of
uncertainty just as the world appeared to be emerging from the challenges
caused by COVID-19 over the past 2 years. It goes without saying the situation
remains extremely fluid with little clarity on how things will play out, but it
is likely that market volatility will remain high as ultimately, the range of
outcomes has significantly widened. In the medium-term, the conflict adds
further inflationary pressures, and it brings with it questions over the path
for monetary policy. Despite the new challenges that have emerged we have not
significantly changed portfolio positioning. We feel that the best investments
in the current environment are similar to those held during the COVID-19
pandemic; high quality, nimble businesses, operated by entrepreneurial
management teams, with strong market positions and resilient cash-flows. Our
view on consumer spending has moderated in recent months given the increasing
inflationary pressures that are faced by households. As a result, we have been
reducing some holdings here at the margin, and we will use the proceeds to add
to some of our highest conviction holdings that we feel have been oversold in
the recent sell-off. Whilst the confusing and chaotic backdrop brings
challenges, we believe the businesses we invest in have the capability to rise
above the short-term noise. We thank shareholders for your 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 May 2022
22 June 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.
END
(END) Dow Jones Newswires
June 22, 2022 07:27 ET (11:27 GMT)
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