Last checked at 22 Oct 2021 17:35
BlackRock Smaller Companies Trust Plc - Portfolio UpdateBlackRock Smaller Companies Trust Plc - Portfolio Update
PR Newswire
London, October 21
The information contained in this release was correct as at 30 September 2021. 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 September 2021 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* | -4.5 | 4.1 | 54.9 | 37.0 | 96.8 |
| Share price* | -4.2 | 5.5 | 68.9 | 43.6 | 120.8 |
| Numis ex Inv Companies + AIM Index | -2.6 | 2.3 | 43.2 | 23.1 | 46.0 |
*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): | 2,157.32p |
| Net asset value Capital only (debt at fair value): | 2,151.15p |
| Net asset value incl. Income (debt at par value)1: | 2,182.63p |
| Net asset value incl. Income (debt at fair value)1: | 2,176.47p |
| Share price: | 2,060.00p |
| Discount to Cum Income NAV (debt at par value): | 5.6% |
| Discount to Cum Income NAV (debt at fair value): | 5.4% |
| Net yield2: | 1.6% |
| Gross assets3: | £1,175.2m |
| Gearing range as a % of net assets: | 0-15% |
| Net gearing including income (debt at par): | 7.9% |
| Ongoing charges ratio (actual)4: | 0.8% |
| Ordinary shares in issue5: | 48,829,792 |
Includes net revenue of 25.31p
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 12.8 pence per share (announced on 5 November 2020, ex-dividend on 12 November 2020, paid on 26 November 2020) and the second interim dividend of 20.5 pence per share (announced on 7 May 2021, ex-dividend on 20 May 2021, paid on 18 June 2021).
Includes current year revenue.
As reported in the Annual Financial Report for the year ended 28 February 2021 the Ongoing Charges Ratio (OCR) was 0.8%. 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.
| |||||||||||||||||||||||||||||||||||||||||||||||||||||
| Ten Largest Equity Investments Company | % of portfolio |
| Watches of Switzerland | 2.4 |
| Impax Asset Management | 2.3 |
| Treatt | 2.0 |
| CVS Group | 1.9 |
| Auction Technology | 1.8 |
| 4imprint Group | 1.7 |
| Oxford Instruments | 1.7 |
| Stock Spirits Group | 1.7 |
| IntegraFin | 1.7 |
| Breedon | 1.7 |
Commenting on the markets, Roland Arnold, representing the Investment Manager noted:During September the Company’s NAV per share fell by -4.5%1 to 2,157.32p, underperforming our benchmark index, Numis ex Inv Companies + AIM Index, which returned -2.6%1; for comparison the FTSE 100 Index fell by -0.5%1 (all figures are on a capital only basis).
The UK market sold off sharply in September. Hawkish signals from both the Federal Reserve and the Bank of England, acknowledging ongoing inflationary pressures, prompted a jump in bond yields and pulled forward the market-implied timing of rate hikes. What particularly characterised the nature of the stock market fall was the extremely strong rotation of market leadership at the end of the month from growth to value. As a result, many of the strongest performing areas of the market in recent months, such as technology, underperformed, while sectors such as travel & leisure benefitted. Britain plunged into uncertainty as issues over gasoline, electricity and food prompted warnings of “a really difficult winter” for the country as a significant lack of truck drivers has meant deliveries of fuel and goods have fallen short. Brent oil prices touched U.S.$80/barrel for the first time since late 2018, while European natural gas prices posted all-time highs after rising 11% late in the month, unsurprisingly leading to a rally in oil and gas stocks.
The notable driver of underperformance during the month was the market rotation which saw the growth factor underperform and the perceived inflation beneficiaries grind higher. As a result, some of the largest detractors to performance in September were simply companies that have been strong performers in prior months, for example Auction Technology Group and Gamma Communications which both fell despite no stock specific newsflow. Wiring and LED producer, Luceco, fell in response to warning that rising cost pressures would result in temporary gross margin compression. Supply chain disruption has been driving significant cost inflation for the business, which has seen the cost of copper and plastic increase by 37% and 71% respectively in 2021, while the cost of a sea container has increased almost five-fold. Strong demand and pricing power has enabled the group to pass these increases on to its customers, albeit with a slight lag, while operational efficiencies and strong operational gearing has enabled the group to protect operating margins. Luceco will not be the last to warn on such issues, but those without pricing power will see a much greater impact on earnings.
The spike in the oil price drove our holdings in the sector, Gulf Keystone Petroleum, Serica Energy and Jadestone Energy higher. Shares in digital ticketing specialist Accesso rallied in response to the company raising its 2021 revenue guidance, confirming that the business has seen a full recovery to 2019 trading levels. Furthermore, the company confirmed that investments in product development would drive new customer demand in future years.
September was clearly a challenging month for our strategy, but it is only one month. These short, sharp style rotations are not uncommon, and we have seen these many times in the past. Ultimately during these periods what is most important is for us to ascertain whether anything fundamental has changed that impacts the investment opportunity for our holdings. We continue to believe the outlook for our holdings remains strong. Yes, the current environment remains challenging, but we believe that many dynamic smaller companies will turn these challenges into opportunities.
We continue to believe that the ever-changing environment plays into the hands of dynamic smaller companies, those able to rapidly shift their business models to capitalise on new structural trends quickly as they emerge. We thank shareholders for their continued support.
1Source: BlackRock as at 30 September 2021
22 October 2021
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.