Blackrock Smaller Companies Trust July NAV rose by 3.2%, outperforming its benchmark index


Blackrock Smaller Companies Trust plc (LON:BRSC) has provided the following portfolio update.

All information is at 31 July 2021 and unaudited.

To learn more about the BlackRock Smaller Companies Trust plc please follow this link:

Performance at month end is calculated on a capital only basis

One month
Three months
Net asset value*3.25.857.331.1111.1
Share price*3.55.565.633.3139.2
Numis ex Inv Companies + AIM Index0.80.647.919.151.9

*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):2,139.39p
Net asset value Capital only (debt at fair value):2,125.69p
Net asset value incl. Income (debt at par value)1:2,158.28p
Net asset value incl. Income (debt at fair value)1:2,144.59p
Share price:2,020.00p
Discount to Cum Income NAV (debt at par value):6.4%
Discount to Cum Income NAV (debt at fair value):5.8%
Net yield2:1.6%
Gross assets3:£1,053.9m
Gearing range as a % of net assets:0-15%
Net gearing including income (debt at par):7.3%
Ongoing charges ratio (actual)4:0.8%
Ordinary shares in issue5:48,829,792
  1. Includes net revenue of 18.89p
  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 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).
  3. Includes current year revenue.
  4. 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.
  5. Excludes 1,163,731 ordinary shares held in treasury.
Sector Weightings% of portfolio
Consumer Discretionary20.7
Consumer Staples11.1
Basic Materials4.7
Health Care3.7
Real Estate0.4
Country Weightings% of portfolio
United Kingdom98.4
United States1.3
Ten Largest Equity Investments
% of portfolio
Watches of Switzerland2.7
Impax Asset Management2.3
CVS Group2.0
Oxford Instruments1.7
Gamma Communications1.7
Auction Technology1.6

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

During July the Company’s NAV per share rose by 3.2%1 to 2,139.39p, outperforming our benchmark index, Numis ex Inv Companies + AIM Index, which returned 0.8%1; for comparison the FTSE 100 Index fell by -0.1%1 (all figures are on a capital only basis).

Equity markets rose for the sixth straight month in July. Volatility was high, however, positive and strengthening bottom-up earnings results more than outweighed the negatives from the spread of the Delta variant. July also saw a continuation of the recent rotation towards growth, with many of the winners of 2020 continuing to deliver positive results and showing that they are more than just ‘Covid-beneficiaries’, most notably within Technology, Industrials and Healthcare.

The Company continued to benefit from stock specifics during the month, with positive contributions from a number of shares across a broad range of industries. Watches of Switzerland rose in response to positive full year result which showed strong growth despite stores in the UK being closed for almost half of the year. The company reiterated plans to further expand in the US market which we believe offers significant future growth potential. Shares in Big Technologies rallied following its successful IPO (Initial Public Offering) in July. The company designs tracking devices predominantly used within the criminal justice system and is a great example of an innovative UK company that is leveraging technology and its software as a service model to enter new markets where there is a large opportunity to drive future growth. M&A (Merger & Acquisition) activity for UK listed companies continued during the month with our holding in video game developer, Sumo Group, receiving an offer from Chinese gaming giant Tencent.

Detractors during the month were limited and as always it was pleasing to see no major stock specific disappointments. The largest detractor was Moonpig which reported good full year results that were ahead of consensus with upgrades to forecasts. However, the shares fell in responses to a slightly softer outlook as some customers acquired during the pandemic have begun to revert to pre-pandemic habits. We believe that guidance seems too conservative and that the opportunity for Moonpig remains as attractive as ever. Other detractors included Treatt and XP Power which gave back some recent strong performance.

We think the outlook for the portfolio remains strong. The global economy continues to recover from the economic shocks of the COVID-19 crisis. The pandemic is by no means over, as recent developments with the Delta variant demonstrate. The vaccine deployment continues to make progress globally and evidence from the UK demonstrates that the vaccines work and dramatically cut the harm done by the virus. This should support a gradual return to normality, though the speed of that return will be bumpy and unevenly spread across sectors and companies.

The strength of trading that we have seen from many of our holdings reaffirms our confidence in current positioning and the outlook for many businesses across the portfolio. We also continue to see evidence of those companies that went into the COVID-19 crisis in a strong position, both financially and operationally, are emerging in even stronger positions. The ability of well financed, market leading businesses to improve their relative positions in times of stress has always been one of our core beliefs, and this crisis has only reinforced that belief.

We continue to believe 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 31 July 2021

    25 August 2021

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