REG-BlackRock Smaller Companies Trust Plc: Portfolio Update

Blackrock Smaller Companies TrustAnnouncement

27/03/2025 19:00

The information contained in this release was correct as at 28 February
2025.  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 28 February 2025 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      
                   %           %              year     years     years    
                                              %        %         %        
 Net asset value  -4.6        -7.3           0.0      -16.2     5.5       
 Share price      -6.9        -7.2           -1.4     -17.7     -2.7      
 Benchmark*       -3.6        -2.8           6.2      -7.5      17.2      

 

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):      1,374.66p   
 Net asset value Capital only (debt at fair value):     1,434.65p   
 Net asset value incl. Income (debt at par value) 1 :   1,403.44p   
 Net asset value incl. Income (debt at fair value) 1 :  1,463.43p   
 Share price:                                           1,270.00p   
 Discount to Cum Income NAV (debt at par value):        9.5%        
 Discount to Cum Income NAV (debt at fair value):       13.2%       
 Net yield 2 :                                          3.3%        
 Gross assets 3 :                                       £684.3m     
 Gearing range as a % of net assets:                    0-15%       
 Net gearing including income (debt at par):            13.3%       
 Ongoing charges ratio (actual) 4 :                     0.7%        
 Ordinary shares in issue 5 :                           43,804,792  

 

 
1. Includes net revenue of 28.78p
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 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)
3. Includes current year revenue.
4. 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. 
5. Excludes 6,188,731 ordinary shares held in treasury.
  

                         
 Sector Weightings       % of portfolio  
 Industrials             26.6            
 Financials              23.6            
 Basic Materials         14.0            
 Consumer Discretionary  13.3            
 Consumer Staples        5.0             
 Real Estate             4.8             
 Technology              4.4             
 Health Care             3.5             
 Telecommunications      2.1             
 Energy                  1.6             
 Communication Services  1.1             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                         
 Country Weightings      % of portfolio  
 United Kingdom          98.1            
 United States           1.9             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                           

 

 Ten Largest Equity Investments  % of portfolio  
  Company                                        
 Breedon                         2.6             
 IntegraFin                      2.6             
 XPS Pensions                    2.6             
 Hill & Smith                    2.6             
 Alpha Group International Plc   2.2             
 Bloomsbury Publishing           2.2             
 Tatton Asset Management         2.2             
 Gamma Communications            2.1             
 Boku                            1.9             
 Workspace Group                 1.8             
                                                 

 

Commenting on the markets, Roland Arnold, representing the Investment Manager
noted:

During February the Company’s NAV per share returned -4.6% to 1,463.43p on a
total return basis, while our benchmark index, the Deutsche Numis Smaller
Companies plus AIM (excluding Investment Companies) Index, returned -3.6%. For
comparison the large cap FTSE 100 Index rose by 2.0%.1

 

Tariffs dominated the headlines during February and caused a broad-based move
lower in risk assets across markets, with areas such as technology and
consumer discretionary being the hardest hit. In the UK, large-caps benefited
from being relatively shielded from tariff discussions and the market's
low-technology exposure. The Bank of England struck a dovish tone with a 25bps
rate cut halfway through February, as the Governor, Andrew Bailey, pointed to
the UK economy's stagnation, despite a slightly stronger fourth quarter of
2024 for GDP. The move was highly anticipated by markets, but the 7-2 vote
split did provide a mild surprise, with two members voting for a larger 50bps
cut. Inflation data surprised to the upside for January, rising 3% against
expectations of 2.8% year-on-year, its highest in 10 months. The increase was
driven largely by a smaller-than-usual drop in air fares in December, and the
implementation of VAT on private school fees. The economy also grew in Q4
2024, up 0.1%, defying expectations of a contraction.

 

Shares in IntegraFin weakened during the month, giving back some of their
outperformance after the positive trading update in January. Oxford Biomedica
released a trading update reporting a slightly higher than expected EBITDA
(earnings before interest, taxes, depreciation, and amortisation) loss as a
result of the integration of recently acquired OXB France and investments made
in technical and operational hires. In our view demand and revenue growth have
been strong and therefore the additional costs are understandable from a
business that is fundamentally repositioning itself. Shares in Boku fell on no
news flow. Numbers in January were positive and therefore we see the fall as
not being related to fundamentals, but more a result of selling pressure in
the market, particularly for AIM listed shares.

 

Chemring was the largest positive contributor during the month, experiencing a
rise after Bain Capital, a US Private Equity firm, reportedly offered £1
billion for the UK-based defence business. Analysts believe this offer
significantly undervalues the company. At the end of the month, Chemring
issued a robust trading update, announcing a £40 million share buyback and
expressing a positive outlook for future growth. Shares in XPS Pensions also
increased after the company upgraded its full-year revenue guidance. This
growth was driven by strong demand for its services, which was influenced by
regulatory changes, new client acquisitions, and the inflation-linked nature
of its contracts. Alfa Financial Software saw continued growth following
strong full-year results at the end of January, which revealed operating
profits that exceeded market expectations by 5%. The company has successfully
shifted its business model towards software as a service (SaaS) licenses to
meet customer demand and has a strong pipeline to support future growth.

 

The economic backdrop remains fluid, with lots of moving pieces. We continue
to keep a close eye on inflation and UK unemployment, both of which remain at
acceptable levels, but are likely to move as companies respond to National
Insurance increases. 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 outperforming asset class.   

 

We thank shareholders for your ongoing support.

 

     1Source: BlackRock as at 28 February 2025

27 March 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.



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