Blackrock Smaller Companies Trust NAV per share rose by 1.5%, outperforming benchmark index


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

All information is at 31 May 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*1.515.550.429.496.9
Share price*2.615.753.033.2115.8
Numis ex Inv Companies + AIM Index1.111.353.219.252.1

*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):2,052.74p
Net asset value Capital only (debt at fair value):2,042.91p
Net asset value incl. Income (debt at par value)1:2,062.05p
Net asset value incl. Income (debt at fair value)1:2,052.22p
Share price:1,964.00p
Discount to Cum Income NAV (debt at par value):4.3%
Discount to Cum Income NAV (debt at fair value):4.8%
Net yield2:1.7%
Gross assets3:£1,101.5m
Gearing range as a % of net assets:0-15%
Net gearing including income (debt at par):9.7%
Ongoing charges ratio (actual)4:0.8%
Ordinary shares in issue5:48,829,792
  1. Includes net revenue of 9.31 p
  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 and pay date 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 Discretionary21.5
Consumer Staples11.5
Basic Materials5.4
Health Care3.7
Real Estate0.3
Country Weightings% of portfolio
United Kingdom98.4
United States1.2
Ten Largest Equity Investments
% of portfolio
Watches of Switzerland2.4
Impax Asset Management2.2
CVS Group1.9
Gamma Communications1.6
Stock Spirits Group1.6
Pets At Home1.6

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

During May the Company’s NAV per share rose by 1.5%1 to 2,052.74p, outperforming our benchmark index which returned 1.1%1; for comparison the FTSE 100 Index rose by 0.8%1 (all figures are on a capital only basis).

Equity markets delivered another positive month in May as vaccine deployment continued to make progress across many developed market countries. Following April’s resurgence of the growth factor being the primary driver of returns, market leadership in May switched firmly back to value outperforming growth following signs of rising inflation in both the UK and US. April CPI figures showed that UK inflation “more than doubled” to 1.5% year-on-year, however, the rise was in-line with consensus, with much of the increase coming from one-off factors and the lower base effect. Therefore, while the rise appears to be transitory the market was fast to react. UK lockdown easing continued with the reopening of indoor dining and hotels on the 17th May, however, the newly branded “delta” variant of the virus caused some concerns around the planned return to normality.

Outperformance during May was driven by another month of positive updates from many of our long-term core holdings. The largest positive contributor was marketer of promotional products, 4imprint, which provided a solid trading update. Since the full year results, which were reported in March, the business has continued to see order intake accelerate; it now stands at 85% of 2019 levels. The result is an encouraging sign for the US economy, given that 4imprint generates almost 100% of its revenue from the US and provides us with confidence that the company will return to its previous strategy of consolidating its fragmented end market. Auction Technology Group, which we purchased at IPO (Initial Public Offering) earlier in the year, reported interim results showing impressive revenue growth as the traditional auction house clients continue to see the benefits of moving online. Impax Asset Management was once again a top contributor during the month as the recent growth in AUM (Assets Under Management) shows no sign of slowing given the strength of its franchise, market leading investment performance and the structural growth/interest in sustainability which underpins the company’s investment philosophy.

Ergomed, the pharmaceutical services business, gave back some of its recent strong performance having been an outstanding performer over the last year. Other notable detractors included video game developer Team17 and digital payments provider Eckoh, both of which have been top performers during the COVID-19 pandemic. Importantly these are not businesses that we think were simply COVID-19 lockdown beneficiaries, and we believe that the structural changes that we are seeing in their markets will result in continued demand for their products leading long term growth in profits and cashflows.

In the UK the successful vaccine rollout continues, but the pace of reopening remains a key focus for investors. Like everyone we are monitoring the situation closely, and whilst there is always a risk a ‘variant of concern’ may cause the re-opening plan to falter (as we have just seen in the UK with the 4 week delay) at this time we still believe the vaccine will ultimately see us return to a more normal way of life. The strength of trading shown in the recent reporting season provides us with confidence in our current positioning and the outlook for many businesses across the portfolio continues to improve. We also continue to see evidence that those companies which went into the COVID-19 crisis in a strong position (both financially and operationally) are emerging even stronger. 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 focus on bottom-up company fundamentals, with a bias towards high quality market leading global businesses, which are operating in attractive end markets and run by strong management teams. The road ahead remains uncertain, and there is potential for sharp spikes in volatility. However, as always, we believe that focusing on the micro will triumph over the macro headwinds, and historically volatility has always created opportunity for this strategy. We thank shareholders for their continued support.

     1Source: BlackRock as at 31 May 2021

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