REG-BlackRock Smaller Companies Trust Plc: Portfolio Update

Blackrock Smaller Companies TrustAnnouncement

12/08/2025 16:30

The information contained in this release was correct as at 31 July 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 31 July 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  1.0        8.5           -9.2        -2.0         27.3         
 Share price      0.6        8.8           -14.2       0.5          24.5         
 Benchmark*       0.7        11.6          2.5         10.7         39.9         

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):      1,429.38p   
 Net asset value Capital only (debt at fair value):     1,493.49p   
 Net asset value incl. Income (debt at par value)(1):   1,452.13p   
 Net asset value incl. Income (debt at fair value)(1):  1,516.24p   
 Share price:                                           1,328.00p   
 Discount to Cum Income NAV (debt at par value):        8.6%        
 Discount to Cum Income NAV (debt at fair value):       12.4%       
 Net yield(2):                                          3.3%        
 Gross assets(3):                                       £682.1m     
 Gearing range as a % of net assets:                    0-15%       
 Net gearing including income (debt at par):            6.4%        
 Ongoing charges ratio (actual)(4):                     0.8%        
 Ordinary shares in issue(5):                           42,182,792  
                                                                    
1. Includes net revenue of 22.75p
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 7,810,731 ordinary shares held in treasury.
                         
 Sector Weightings       % of portfolio  
 Industrials             29.5            
 Financials              27.9            
 Consumer Discretionary  10.8            
 Consumer Staples        8.8             
 Basic Materials         7.3             
 Real Estate             6.5             
 Health Care             4.0             
 Technology              2.4             
 Energy                  1.7             
 Utilities               1.1             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                         
 Country Weightings      % of portfolio  
 United Kingdom          97.0            
 United States           3.0             
                         -----           
 Total                   100.0           
                         =====           
                                         
                                           

 Ten Largest Equity Investments  % of portfolio  
 			Company                                      
 Boku                            3.0             
 XPS Pensions                    2.8             
 Great Portland Estates          2.7             
 Tatton Asset Management         2.6             
 IntegraFin                      2.6             
 Morgan Sindall                  2.4             
 Greencore Group Plc             2.4             
 Chemring Group                  2.2             
 Rosebank                        2.0             
 Serco Group                     2.0             
                                                 

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

During July the Company’s NAV per share rose 1.0% to 1,516.24p on a total
return basis, while our benchmark index, the Deutsche Numis Smaller Companies
plus AIM (excluding Investment Companies) Index, returned 0.7%.(1)

Politics remained front and centre in the UK during July. Tensions over
welfare reforms triggered a government U-turn, raising concerns about fiscal
headroom. The Office for Budget Responsibility flagged growth risks ahead of
the autumn budget, and the Chancellor signalled potential tax hikes to address
the widening fiscal gap. Weak retail sales and a second consecutive GDP (Gross
Domestic Product) contraction in May heightened expectations for a Bank of
England rate cut in August, as the Monetary Policy Committee advocated for
faster easing. UK equities benefited from global rotation out of U.S. assets
through the month amid tariff tensions and policy risks. The FTSE 100 Index
rose +4.3%, outperforming the small and mid-cap market which suffered from
ongoing domestic woes.

Oxford Biomedica was the top contributor to performance during the month after
also reporting strong H1 25 results and reiterating full-year guidance. The
company secured £149 million in new orders in the period, more than doubling
last year’s figures. The second largest contributor was Boku, a specialist
in localised payment solutions, which raised its full-year guidance following
a continued shift away from traditional card-based transactions toward Local
Payment Methods (LPMs). This structural change in consumer behaviour has
propelled Boku’s total payment volume beyond US$7 billion, underscoring its
growing relevance in the digital payments ecosystem. The portfolio also
benefited from M&A (mergers and acquisitions) activity, notably through our
holding in Alpha Group International, a specialist in FX risk management and
alternative banking solutions. Alpha received a recommended all-cash takeover
offer from Corpay Inc., a US-listed digital payments firm, valuing the company
at £1.8 billion, a 55% premium. The deal highlights the portfolio’s
exposure to high-quality, scalable financial technology businesses that are
increasingly attractive to global acquirers.

While Alpha was beneficial to relative performance, the extent of M&A in the
market more broadly continues to create challenges. This month it was
financial services business, Just Group, which received an offer from
Brookfield Wealth Solutions for a massive 75% premium. We did not own the
shares, which therefore hurt relative performance. Frustratingly Just Group
has subsequently issued a weak trading statement that highlights exactly why
we had exited our position. The second largest detractor was another share
that we do not own, Oxford Nanopore Technologies, which saw its share price
jump in response to a solid trading update with revenue growth ahead of
expectations. Finally, and in a direct contrast from last month where it was
the top contributor on the back of strong results, Paypoint gave back some of
its recent share price gains on no specific news.

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 more recent developments 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 30 bids in the first half
of the year, highlighting the valuation anomaly that sits within the UK. This
is the deepest and longest period of underperformance of UK SMID versus large
cap 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.

(     1)Source: BlackRock as at 31 July 2025

12 August 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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