REG-BlackRock Smaller Companies Trust Plc: Portfolio Update

Blackrock Smaller Companies TrustAnnouncement

28/07/2025 17:30

tThe information contained in this release was correct as at 30 June 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 30 June 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  0.9         9.6            -4.0     6.4       26.1      
 Share price      1.9         10.0           -6.1     12.3      18.4      
 Benchmark*       3.2         13.6           7.8      15.2      42.1      

 

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):      1,419.84p   
 Net asset value Capital only (debt at fair value):     1,482.41p   
 Net asset value incl. Income (debt at par value) 1 :   1,438.74p   
 Net asset value incl. Income (debt at fair value) 1 :  1,501.30p   
 Share price:                                           1,320.00p   
 Discount to Cum Income NAV (debt at par value):        8.3%        
 Discount to Cum Income NAV (debt at fair value):       12.1%       
 Net yield 2 :                                          3.3%        
 Gross assets 3 :                                       £679.9m     
 Gearing range as a % of net assets:                    0-15%       
 Net gearing including income (debt at par):            8.3%        
 Ongoing charges ratio (actual) 4 :                     0.8%        
 Ordinary shares in issue 5 :                           42,422,792  
                                                                    

 
1. Includes net revenue of 18.90p
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 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) and final dividend of 28.50 pence
per share (announced on 07 May 2025, ex-date on 15 May 2025, and paid on 26
June 2025).
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 28 February 2025. 
5. Excludes 7,570,731 ordinary shares held in treasury.
 

                         
 Sector Weightings       % of portfolio  
 Industrials             29.2            
 Financials              26.0            
 Consumer Discretionary  12.7            
 Basic Materials         10.3            
 Consumer Staples        6.9             
 Real Estate             6.6             
 Health Care             3.6             
 Technology              3.1             
 Energy                  1.5             
 Telecommunications      0.1             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                         
 Country Weightings      % of portfolio  
 United Kingdom          97.3            
 United States           2.7             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                           

 

 Ten Largest Equity Investments  % of portfolio  
  Company                                        
 IntegraFin                      2.7             
 Boku                            2.7             
 XPS Pensions                    2.5             
 Tatton Asset Management         2.4             
 Great Portland Estates          2.4             
 Chemring Group                  2.1             
 Rosebank                        2.0             
 Morgan Sindall                  2.0             
 PayPoint                        1.9             
 Premier Foods                   1.9             
                                                 
                                                 

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

During May the Company’s NAV per share rose 0.9 to 1,501.30p on a total
return basis, while our benchmark index, Deutsche Numis Smaller Companies plus
AIM (excluding Investment Companies) Index, returned 3.2%.1

 

June began with renewed inflationary pressures and ongoing uncertainty in the
UK. Chancellor Rachel Reeves faced mounting economic headwinds ahead of the
June spending review, including a policy reversal on welfare spending and
concerns over a potential funding gap. Bank of England Governor, Andrew
Bailey, urged caution on further rate cuts, citing inflation volatility and
trade-related risks. The Bank ultimately held rates steady at 4.25% mid-month,
in-line with market expectations.

 

In Europe, the ECB (European Central Bank) implemented a widely anticipated
rate cut, reducing the deposit facility rate to 2.00% in an “almost
unanimous” decision. The move followed a drop in eurozone inflation to 1.9%
in May, marking the first sub-2% reading since September 2024. Across the
Atlantic, the Federal Reserve (Fed) maintained its policy stance, keeping
rates unchanged despite mounting political pressure from President Donald
Trump, although the Fed continues to project two rate cuts in 2025.

 

While the first half of June was relatively calm, geopolitical tensions
escalated later in the month. Israel launched a series of strikes on Iranian
nuclear facilities and senior military figures, prompting a sharp 13%
overnight spike in oil prices and a modest pullback in equities. However, the
well-telegraphed nature of the attack meant the market reaction remained
largely contained. Markets partially recovered following President Trump’s
announcement of a “substantial chance of negotiations” with Iran and a
decision on potential US military involvement. A ceasefire was later confirmed
by both Israeli Prime Minister Netanyahu and Iranian Foreign Minister
Araghchi. Markets also rallied later in the month on news that the US and
China had reached an agreement to de-escalate trade tensions, although exact
specifics are yet to be determined.

 

M&A (mergers and acquisitions) activity in the UK remained elevated, with
several high-profile takeover bids from foreign investors targeting British
firms. Notably, US-based institutions made offers for Alphawave and Spectris.
Year-to-date, there have been 30 bids for UK-listed companies with market
capitalisations over £100 million, totalling £25 billion in value.

 

The largest detractors to performance this month were notably UK domestic
shares Breedon, Ibstock and MJ Gleeson. Breedon shares struggled as poor
weather in the US alongside concerns that volume recovery has been pushed to
the right dampened investor sentiment. However, whilst temporary challenges
may weigh on the share price, the medium-term investment case has not been
derailed. Ibstock lowered guidance during the month, citing higher than
expected costs coupled with weaker prices, despite encouraging signs of a
recovery in the UK housing market. MJ Gleeson sold off as higher costs and
planning delays hit profits for the year. Despite reporting a solid first half
trading statement and encouraging signs of a recovery in demand, the group
reported significant headwinds through the year including increased build
costs, soft selling prices, and the continued use of bulk sale transactions.

 

The largest contributor was Paypoint, which released a resilient set of
results during the month, forecasting 5-8% of revenue growth for the next 3
years. The company also increased and extended its share buyback programme, as
well as increasing the dividend. Boku shares rose on no stock-specific news
but benefitted from increased liquidity as some selling pressure that had been
compressing the share price cleared towards the end of the month. Tatton Asset
Management reported record assets under management and net inflows in its
full-year results, with net inflows up 22% from the previous year. 

 

For the last few months we have been more constructive on the outlook for the
UK market. Rates have been falling, unemployment whilst rising is still at
historically low levels, real wage growth continues, and the government has
made inroads into reducing regulatory over burden which has the potential to
start to lift the country out of the productivity malaise of the last few
years. However, we have to acknowledge the last few weeks have not been
supportive of this stance, with Labour backtracking on a number of
initiatives, and the bond market’s reaction to Rachel Reeves’ emotional
appearance at Prime Minister’s Questions highlights the fragile nature of
government finances. Once again, the predictability of the government is being
called into question, once again this will lead to company management pausing
on decisions, and once again it will raise the spectre of tax increases at the
next budget.

 

All is not lost however, and whilst Trump’s tariffs will no doubt have
significant and far-reaching consequences, the recent signing of several trade
deals has settled both bond and equity markets. Once the rules of engagement
are known, companies can then begin to plan for the medium to long term. The
release of the fiscal break in Germany has the potential to reinvigorate
European investment, something that many UK companies will benefit from, and
perhaps reminds investors there are profitable opportunities outside of the US
equity market.

 

The pace of M&A shows little signs of slowing, with 15 deals in the first
quarter of the year, and this has accelerated since the start of Q2,
highlighting the valuation anomaly that sits within the UK. This is the
deepest and longest period of underperformance of UK SMID vs large we have
seen in over 40 years. Whilst the outlook may still be difficult for many
companies, we feel this is more than captured in valuations. With all the
uncertainty in the US equity market and investors looking for other places to
allocate money, a stabilising and cheap UK market could be a valid and
attractive alternative.

 

We thank shareholders for your ongoing support.

     1Source: BlackRock as at 30 June 2025

 

28 July 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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