The
information contained in this release was correct as at
31 May
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
31 May 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
|
7.8
|
13.4
|
16.5
|
-12.2
|
24.0
|
Share
price
|
8.2
|
15.0
|
18.4
|
-17.2
|
20.3
|
Benchmark*
|
6.4
|
11.8
|
12.5
|
-11.7
|
20.8
|
Sources:
BlackRock and
Deutsche Numis
*With
effect from 15 January 2024 the Numis
Smaller Companies plus AIM (excluding Investment Companies) Index
changed to the Deutsche Numis Smaller Companies plus AIM (excluding
Investment Companies).
At month
end
Net
asset value Capital only (debt at par value):
|
1,605.59p
|
Net
asset value Capital only (debt at fair value):
|
1,659.57p
|
Net
asset value incl. Income (debt at par value)1:
|
1,622.55p
|
Net
asset value incl. Income (debt at fair value)1:
|
1,676.53p
|
Share
price:
|
1,498.00p
|
Discount to Cum
Income NAV (debt at par value):
|
7.7%
|
Discount to Cum
Income NAV (debt at fair value):
|
10.6%
|
Net
yield2:
|
2.8%
|
Gross
assets3:
|
£833.7m
|
Gearing range as
a % of net assets:
|
0-15%
|
Net
gearing including income (debt at par):
|
10.5%
|
Ongoing charges
ratio (actual)4:
|
0.7%
|
Ordinary shares
in issue5:
|
47,099,792
|
|
|
-
Includes
net revenue of 16.96p
-
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 15.00 pence per
share (announced on 26 October 2023,
ex-date on 02 November 2023, and paid
04 December 2023) and the final
dividend of 27.00 pence per share
(announced on 14 May 2024, ex-date on
23 May 2024, and payment date
27 June 2024).
-
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
2,893,731 ordinary shares held in treasury.
Sector Weightings
|
% of portfolio
|
Industrials
|
31.2
|
Financials
|
18.4
|
Consumer
Discretionary
|
17.8
|
Basic
Materials
|
11.5
|
Technology
|
6.2
|
Consumer
Staples
|
3.2
|
Health
Care
|
3.0
|
Telecommunications
|
2.6
|
Real
Estate
|
2.4
|
Energy
|
1.9
|
Communication
Services
|
1.8
|
|
-----
|
Total
|
100.0
|
|
=====
|
|
|
|
Country Weightings
|
% of portfolio
|
United
Kingdom
|
98.1
|
United
States
|
1.5
|
Ireland
|
0.4
|
|
-----
|
Total
|
100.0
|
|
=====
|
|
|
|
|
|
Ten Largest Equity Investments
Company
|
% of portfolio
|
Gamma
Communications
|
2.6
|
Hill
& Smith
|
2.5
|
IntegraFin
|
2.4
|
4imprint
Group
|
2.3
|
Breedon
|
2.3
|
Chemring
Group
|
2.1
|
Bloomsbury
Publishing
|
2.1
|
Workspace
Group
|
2.1
|
Baltic
Classifieds Group
|
1.9
|
Tatton Asset
Management
|
1.7
|
|
|
|
|
|
Commenting
on the markets, Roland Arnold,
representing the Investment Manager noted:
During May the
Company’s NAV per share retuned 7.8% to 1,676.53p on a total return
basis, outperforming our benchmark index which returned 6.4%. For
comparison the large cap FTSE 100 index underperformed small &
mid-caps, returning 2.1%.1
UK
equities made a positive return during May, with small and mid-caps
outpacing large caps, driven by takeover activity, a brighter
macroeconomic outlook, and expectations of more buybacks and IPOs.
UK inflation dropped to 2.3% year-on-year, hitting its lowest level
since summer 2021. Additionally, the surprise announcement of a UK
general election in July could finally lift the political cloud
that has been hanging over the UK market for a number of
years.
The
largest positive contributor was textile service provider Johnson
Service Group. The company reported 8.9% revenue growth in the
first quarter, with its hotel, restaurant, and catering division
(HORECA) having a positive impact. Meanwhile, the general downward
trend in energy costs since the end of 2023 has been beneficial and
the business’s strategy of locking in forward energy prices leaves
the business well set to improve operating margins further from
here. Future PLC was another positive contributor as markets
reacted to 2024 interim results that suggested some form of
stability had returned to their end markets. UK revenue grew by 3%,
driven by a 30% increase in its insurance comparison subsidiary,
Go.Compare and solid performance from Future’s B2B offering.
IntegraFin, the operator of the Transact investment platform,
reported a 13% year on year increase in funds under direction,
which rose to £61bn as at the end of March
2024. Net inflows onto the platform rose by 4% during the
year, with advisers using the platform also growing at the same
rate to 7,900.
The
largest detractor to performance during May came from not owning
Keywords Studios, the video games service provider, as the company
agreed to accept a £2bn buyout offer from the Swedish private
equity investor, EQT Group. Macfarlane Group was another detractor.
The company reported a ‘challenging start to 2024’ with first
quarter sales and profits below the same period in 2023 amidst
continued weak consumer demand and price deflation. TT Electronics
fell after reporting ongoing destocking, notably in its
shorter-cycle components products in North America. However, considering a
book-to-bill ratio still greater than 1x and having just navigated
their toughest year on year comparable period with comps easing
from here we feel somewhat reassured, and then of course there is
the valuation which stands at 7.5x p/e for 2024 and 6.8x for
2025.
In
summary, and as we have highlighted for a long period of time now,
the current valuation of the UK market, and in particular UK small
and mid-cap, is about as attractive as we have ever seen.
Meanwhile, the economic backdrop is certainly improving.
Unemployment remains low, balance sheets remain strong, inflation
is falling, consumer confidence and PMIs are improving. This
backdrop gives confidence that the earnings outlook for our
businesses is broadly supportive for an earnings recovery. At the
same time, the announcement of the UK General Election in July
could be just what our market needs to finally end this persistent
investor aversion from the UK and stem the outflows from UK small
& mid-caps, which saw their first month of inflows in April in
almost three years. In this scenario, we could see an environment
where small & mid-caps, and in particular the holdings in this
trust, could move a long way on limited liquidity.
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.
21 June 2024
1Source: BlackRock
as at 31 May 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.