BLACKROCK SMALLER COMPANIES TRUST PLC (LEI: 549300MS535KC2WH4082)
All information is at 31 October 2018 and unaudited.
Performance at month end is calculated on a capital only basis
One month |
Three months |
One year |
Three years |
Five years |
|
Net asset value* | -11.8 | -14.9 | -6.0 | 34.7 | 61.1 |
Share price* | -8.7 | -13.5 | 1.9 | 41.4 | 60.5 |
Numis ex Inv Companies + AIM Index | -8.4 | -10.1 | -10.5 | 14.5 | 16.3 |
*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): | 1,388.91p |
Net asset value Capital only(debt at fair value): | 1,382.04p |
Net asset value incl. Income(debt at par value)1: | 1,414.81p |
Net asset value incl. Income(debt at fair value)1: | 1,407.94p |
Share price | 1,310.00p |
Discount to Cum Income NAV (debt at par value): | 7.4% |
Discount to Cum Income NAV (debt at fair value): | 7.0% |
Net yield4: | 2.1% |
Gross assets2: | £742.1m |
Gearing range as a % of net assets: | 0-15% |
Net gearing including income (debt at par): | 6.1% |
2018 Ongoing charges ratio (actual)3 | 0.7% |
2018 Ongoing charges ratio (restated)3 | 0.8% |
2018 Ongoing charges ratio (including performance fees)3: | 1.0% |
Ordinary shares in issue5: | 47,879,792 |
includes net revenue of 25.9p
includes current year revenue
As reported in the Annual Financial Report for the year ended 28 February 2018, the ongoing charges ratio is calculated as a percentage of net assets and using operating expenses, excluding performance fees, finance costs and taxation. As announced on 17 April 2018, with effect from 1 March 2018 the Company’s management fee arrangements have changed. Under the new fee basis BlackRock receives an annual fee which is calculated based on 0.60% in respect of the first GBP 750 million of the Company's total assets less current liabilities, reducing to 0.50% thereafter. The performance fee has been removed. This will impact the Ongoing Charges ratio for the Company. The restated Ongoing Charges Ratio for the year to 28 February 2018 had the new fee arrangements been in place for the full year is estimated to have been 0.77% on this basis.
Yield calculations are based on dividends announced in the last 12 months as at the date of release of this announcement, and comprise of the final dividend of 16.00 pence per share, (announced on 27 April 2018, ex-dividend on 17 May 2018) and the interim dividend of 12.00 pence per share (announced on 29 October 2018 and gone ex-dividend on 8 November 2018).
excludes 2,113,731 shares held in treasury.
Sector Weightings | % of portfolio |
Industrials | 31.6 |
Financials | 21.7 |
Consumer Services | 12.4 |
Consumer Goods | 7.7 |
Health Care | 7.2 |
Technology | 6.5 |
Basic Materials | 6.3 |
Oil & Gas | 6.1 |
Utilities | 0.5 |
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Total | 100.0 |
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Ten Largest Equity Investments | |
Company | % of portfolio |
Robert Walters | 1.9 |
4imprint Group | 1.9 |
Big Yellow | 1.8 |
YouGov | 1.7 |
Central Asia Metals | 1.6 |
IntegraFin | 1.5 |
Premier Asset Management Group | 1.5 |
Bodycote | 1.5 |
Liontrust Asset Management | 1.5 |
Advanced Medical Solutions | 1.5 |
Commenting on the markets, Mike Prentis and Roland Arnold, representing the Investment Manager noted:
During October the Company’s NAV per share fell by 11.8% to 1388.91p on a capital only basis, underperforming the benchmark index which fell by 8.4%; the FTSE 100 Index fell by 5.1% on a capital only basis.
October proved to be an extremely challenging market environment for the Company to navigate. Equity markets globally experienced a sharp sell-off during month, with the UK market recording its worst monthly return in over three years. There were many factors at play which could have arguably triggered the correction. These included rising bond yields with the US 10-year hitting 3.25%, concerns around the pace of US interest rate rises, ongoing trade conflict between the US and China, worries over the outlook for global growth and of course ongoing Brexit related concerns. Within the UK market, the falls were most severe at the lower end of the market cap spectrum, with small and mid-caps underperforming larger companies. There was also a notable rotation away from highly rated shares and higher momentum shares (those that have performed well), resulting in growth shares underperforming value.
As a result, we experienced a large sell-off in some of our highly rated holdings within the portfolio, most notably Integrafin, Fever-Tree and Learning Technologies. In all cases performance of the underlying businesses remains strong and the share price falls were not linked to any negative stock specific newsflow. We remain confident that our view on each of these remains intact.
Colour cosmetics company Warpaint was the largest stock specific detractor. The company is latest victim of the challenging environment currently facing businesses exposed to UK consumer spending. The shares fell after the company warned strong growth in the US was not enough to offset weakness in its core UK markets, where retailers are reducing orders leading into Christmas period.
Despite the indiscriminate sell-off across markets, we have continued to see positive stock specific newsflows from a number of our holdings. Gear4music, the online musical instruments retailer, reported strong first half revenue growth and gave a strong outlook. Dechra Pharmaceuticals pulled back some of September’s share price fall which followed a small earnings downgrade.
We remain of the view that the sell-off during the month was more of a correction rather than the start of a bear market. However, as stated in previous announcements, the short-term underperformance of growth and momentum stocks has not suited our portfolio. We hold our companies because of their long-term growth attractions and the strength of their management teams; these are undiminished. Our positioning therefore remains unchanged. At the margin and where market liquidity permits, we have been adding to good companies that in our view have been oversold.
22 November 2018
ENDS
Latest information is available by typing www.blackrock.co.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.