The
information contained in this release was correct as at
29 February
2024.
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
29 February
2024 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
year
%
|
Three
years
%
|
Five
years
%
|
Net
asset value
|
-2.2
|
5.9
|
-3.6
|
-9.6
|
19.8
|
Share
price
|
-0.7
|
1.4
|
-0.8
|
-15.8
|
12.5
|
Benchmark*
|
-2.2
|
4.5
|
-5.8
|
-11.6
|
11.9
|
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):
|
1,423.83p
|
Net
asset value Capital only (debt at fair value):
|
1,475.94p
|
Net
asset value incl. Income (debt at par value)1:
|
1,450.13p
|
Net
asset value incl. Income (debt at fair value)1:
|
1,502.24p
|
Share
price:
|
1,326.00p
|
Discount to Cum
Income NAV (debt at par value):
|
8.6%
|
Discount to Cum
Income NAV (debt at fair value):
|
11.7%
|
Net
yield2:
|
3.1%
|
Gross
assets3:
|
£755.7m
|
Gearing range as
a % of net assets:
|
0-15%
|
Net
gearing including income (debt at par):
|
11.5%
|
Ongoing charges
ratio (actual)4:
|
0.7%
|
Ordinary shares
in issue5:
|
47,319,792
|
|
|
-
Includes net revenue of
26.30p
-
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
15.00 pence per share (announced on
26 October 2023, ex-dividend on
2 November 2023, and paid on
4 December 2023) and the final
dividend of 25.50 pence per share
(announced on 05 May 2023, ex-date on
18 May 2023, and paid 27 June 2023).
-
Includes current year
revenue.
-
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
2023.
-
Excludes 2,673,731 ordinary shares
held in treasury.
Sector Weightings
|
% of portfolio
|
Industrials
|
33.7
|
Consumer
Discretionary
|
18.9
|
Financials
|
16.8
|
Basic
Materials
|
8.9
|
Technology
|
6.7
|
Consumer
Staples
|
3.5
|
Health
Care
|
2.8
|
Telecommunications
|
2.7
|
Energy
|
2.2
|
Real
Estate
|
2.1
|
Communication
Services
|
1.7
|
|
-----
|
Total
|
100.0
|
|
=====
|
|
|
|
Country Weightings
|
% of portfolio
|
United
Kingdom
|
98.1
|
United
States
|
1.4
|
Ireland
|
0.5
|
|
-----
|
Total
|
100.0
|
|
=====
|
|
|
|
Ten Largest Equity Investments
Company
|
% of portfolio
|
Gamma
Communications
|
2.7
|
4imprint
Group
|
2.5
|
Bloomsbury
Publishing
|
2.2
|
Hill
& Smith
|
2.2
|
Chemring
Group
|
2.1
|
Workspace
Group
|
2.1
|
Breedon
|
2.0
|
YouGov
|
1.9
|
Tatton Asset
Management
|
1.8
|
CVS
Group
|
1.8
|
|
|
|
Commenting
on the markets, Roland Arnold,
representing the Investment Manager noted:
During February
the Company’s NAV per share retuned -2.2% to 1,502.24p on a total
return basis, while our benchmark index also returned -2.2%. For
comparison the large cap FTSE 100 Index outperformed small and
mid-caps, returning 0.5%.1
The
UK market was mixed during February, with the large-cap FTSE 100
making a modest gain while small and mid-caps ended the month
lower. In the UK, data revealed that the country fell into
technical recession last year and Consumer Price Index (CPI) data
showed that inflation was still well above the Bank of England’s
(BOE) 2% target. The United Kingdom Manufacturing Purchasing
Managers' Index (PMI) increased to 47.5 in the month of February,
marking a 10-month high. Input costs and selling prices grew
modestly, with the latter reaching a five-month high, tempering
rate cut expectations from investors.
February was
another month that saw small and mid-caps in the UK remain under
pressure, however, despite the broad underperformance of the
market, a number of our holdings continued to demonstrate their
resilience and delivered positive updates to buck the downward
trend of the wider market. The largest positive contributor was
Bloomsbury Publishing, which soared after the company reported that
full-year revenue and profit would be significantly ahead of
recently upgraded market consensus. The business has benefited from
strength across its consumer division, helped by its recently
released, number one Sarah J. Maas
novel, which has spurred a surge in demand for the authors previous
15 titles, which Bloomsbury also published worldwide. The second
largest contributor was housebuilder MJ Gleeson. Having recently
warned the market of the difficult trading conditions during the
first half, investors were clearly encouraged by the “in-line”
interim results. Furthermore, the company highlighted signs of a
recovery in demand against the backdrop of improving mortgage
rates, which they expect to continue in the coming months. The
third largest contributor was Tatton Asset Management, which rose
despite no stock specific newsflow.
The
largest detractor during the month was operator of vet practices
CVS Group. The shares drifted lower during February, with the
overhang of the ongoing CMA (Competition and Markets Authority)
review (launched in September last year), weighing on the shares.
Post month end, the shares were hit by the announcement that the
CMA will launch a market investigation into veterinary services in
the UK. We have remained in discussion with the company on the
matter and will continue to monitor the situation closely. Serica
Energy fell after reporting 2023 annual production at the low end
of its guidance range. Additionally, the company announced that CEO
Mitch Flegg will be stepping down
after the release of its 2023 final results. Shares in XP Power
fell after the company issued a profit warning, highlighting demand
weakness as a result of ongoing de-stocking in the Healthcare and
Industrial Technology sectors. While disappointing in the near
term, we continue to believe in the longer-term investment thesis
or the business, however the recovery is taking longer to come
through than we anticipated.
Since
the end of 2021 rising interest rates have been weighing on the
valuations of long-duration, higher growth shares in the stock
market. As a result, UK small and mid-caps have continued to
underperform large caps and we are now in the deepest and longest
cycle of underperformance in recent history; worse than the Global
Financial Crisis, COVID, Brexit, Tech sell-off or Black Monday. The
fourth quarter of 2023 saw markets reflect the expectation of rate
cuts in 2024 in response to easing inflation data. However, as we
have entered 2024, the backup in bond yields has led to a volatile
start to the year in equity markets.
Against this
backdrop, the question remains, what is the catalysts for this
trend to change? Unfortunately, there is no simple answer. While
there are many headwinds to the UK SMID market; economic
uncertainty, political uncertainty, the structural flow issues in
the UK market, the risk of more pervasive inflation, to name a few,
we remind ourselves and take comfort in the fact that many of our
holdings continue to deliver against their objectives. Furthermore,
inflation and mortgage rates falling, business confidence is
improving, and consumers are experiencing real wage growth for the
first time in years. At some point, we are confident that investors
will decide the balance of probabilities is in favour of the
opportunities, that the risks are more than adequately priced in,
and that an increased allocation to UK small and mid-caps is
warranted.
As
ever, we remain focused on the micro, industry level change and
stock specific analysis and the opportunities we are seeing today
in our universe are as exciting as ever. Historically, periods of
heightened volatility have been followed by strong returns for the
strategy and presented excellent investment
opportunities.
We
thank shareholders for your ongoing support.
1Source: BlackRock
as at 29 February 2024
27 March 2024
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.