Half-yearly Report

8 October 2009 BLACKROCK SMALLER COMPANIES TRUST plc Half yearly financial announcement of results in respect of the six months ended 31 August 2009 Financial Highlights Six months ended 31 August 2009 Performance Net asset value per share 335.68p Movement in net asset value per share +47.6% Movement in Hoare Govett Smaller Companies plus AIM (ex Investment Companies) Index +52.2% Share price per share 271.75p Movement in share price +53.5% Revenue Performance Return per share 4.00p Interim dividend per share 2.00p Chairman's Statement Overview The severe economic downturn in 2008 continued into 2009, with markets falling by early March, the start of the Company's financial year, to their lowest levels for over a decade. The UK Smaller Companies sector suffered significantly during this downward spiral but has rebounded since mid-March as cyclical stocks recovered and risk aversion declined. Volatility has remained high and setbacks, such as that seen in June, are inevitable. However, there have been clearer signs that a number of economic indicators are stabilising and even beginning to show some improvement. During the six months to 31 August 2009, the Company's net asset value ("NAV") per share grew by 47.6%, compared to a rise in the Company's benchmark of 52.2%. This reflects the Manager's continued focus on good quality growth stocks and an underweight exposure to the recently favoured recovery stocks. The Company's share price rose by 53.5%. Since the period end, the Company's net asset value has increased by a further 7.8% and the share price by 6.7%, compared with an increase in the benchmark of 6.0%. The last twelve months has been a roller coaster ride but it is encouraging to note that the fall in NAV suffered in the second half of the Company's last financial year has now been substantially recovered. Further information on the Company's performance is included in the Investment Manager's Report. Earnings and dividends At a time when dividends generally will be under pressure, the revenue return per share amounted to 4.00p for the period, a fall of 6.5% on the corresponding six months in the previous year. The Board has declared an interim dividend of 2.00p per share (2008: 1.95p per share), representing an increase of 2.6% over the previous interim dividend. The dividend will be paid on 2 November 2009 to shareholders on the Company's register on 16 October 2009. Gearing The Company has an overdraft facility and a Â£15 million debenture, which gives the Investment Manager the ability to gear tactically. In the six months to 31 August 2009, net gearing ranged from 10.2% to 13.8% and has been beneficial to performance. It currently stands at Â£17.8 million, 10.2% of shareholders' funds. Discount and share buy backs The Board will use its powers to buy back the Company's shares where it considers that there is likely to be a benefit to shareholders. In April, the Board took the opportunity to repurchase 300,000 shares at a price of 201.00p per share and a discount to net asset value of 17.1%, to assist in managing an imbalance between the supply and demand for the Company's shares. The discount stood at 19.0% as at 31 August 2009. VAT recovery As shareholders will be aware from my previous statements, VAT is no longer payable on management fees. I am pleased to report that HM Revenue & Customs ("HMRC") has now repaid all of the irrecoverable VAT on invoices raised by the current Investment Manager, BlackRock, since taking over the management of the Company in December 2004, amounting to Â£617,000. The VAT recovered has been allocated 20% to revenue and 80% to capital in accordance with the original allocation of the management fees. Outlook Markets have strengthened as recessionary pressures have eased and leading indicators point towards a brighter outlook. However, although we do not expect a further test of the March market lows, the environment is still clearly a challenging one fuelled by rising unemployment, faltering retail sales and huge budget deficits in Western economies. Given this ongoing uncertainty, we expect the recovery to be slow, with economic growth gradually returning to positive territory during 2010. Despite this, we believe that the market is currently providing good long term opportunities with significant value now available in a broad range of smaller company sectors. We will maintain our focus on quality businesses with strong balance sheets and exposure to overseas growth markets. Interim Management Report and Responsibility Statement The Chairman's Statement above and the Investment Manager's Report below give details of the important events which have occurred during the period and their impact on the financial statements. Principal risks and uncertainties The principal risks faced by the Company can be divided into various areas as follows: - Performance; - Income/dividend; - Regulatory; - Operational; and - Financial. The Board reported on the principal risks and uncertainties faced by the Company in the Annual Report and Accounts for the year ended 28 February 2009. A detailed explanation can be found on pages 15 and 16 of the Annual Report and Accounts which is available on the website maintained by the Investment Manager, BlackRock Investment Management (UK) Limited, at www.blackrock.co.uk/ its. In the view of the Board, there have not been any changes to the fundamental nature of these risks since the previous report and these principal risks and uncertainties are equally applicable to the remaining six months of the financial year as they were to the six months under review. Related party transactions The Investment Manager is regarded as a related party and details of the management fees payable are set out in note 3. Directors' responsibility statement The Disclosure and Transparency Rules ("DTR") of the UK Listing Authority require the Directors to confirm their responsibilities in relation to the preparation and publication of the Interim Management Report and Financial Statements. The Directors confirm to the best of their knowledge that: - the condensed set of financial statements contained within the half yearly financial report has been prepared in accordance with applicable UK Accounting Standards and the Accounting Standards Board's Statement `Half Yearly Financial Reports'; and - the interim management report, together with the Chairman's Statement and Investment Manager's Report, include a fair review of the information required by 4.2.7R and 4.2.8R of the FSA's Disclosure and Transparency Rules. The half yearly financial report was approved by the Board and the above responsibility statement was signed on its behalf by the Chairman. Investment Manager's Report Market review and overall investment performance Markets have rallied strongly since March as hopes have started to build that economies are stabilising and recovery is in prospect. This has enabled us to recover a significant part of the losses sustained in the latter part of 2008. During the first half of the Company's year, the NAV rose by 47.6% and the benchmark rose by 52.2%. Over this period larger companies lagged, with the FTSE100 Index rising by only 28.2%. Portfolio performance Our best performance came in the technology sectors. Software stocks were our largest overweight sector during the period and, on average, our holdings increased in value by 61%. The largest percentage increases came from our holdings in Alterian and Kewill Systems, both small companies but key global players in their respective markets, and our larger holdings in Aveva Group and Fidessa performed well too. Hardware stocks also did well with holdings in Pace, a leading global supplier of set top boxes, and BATM Advanced Communications, a supplier of leading edge communications technology, contributing significantly. Some of our emerging market and resources investments rebounded sharply, notably OPG Power Ventures, which generates power in India, and International FerroMetals, a supplier of ferrochrome based in South Africa. By contrast, a number of our core holdings lagged because the stockmarket chose to focus on recovery stocks. Poor performers included Mouchel Group, London Capital Group, Dechra Pharmaceuticals, Alternative Networks, Rathbone Brothers, Chemring, Consort Medical, Caretech and Ultra Electronics. We decided to sell our holdings in Mouchel and Chemring, the former because it is almost exclusively UK public sector focused and we expect its relatively high margin consultancy business to suffer around the time of a general election when a hiatus in public spending is a possibility. Chemring has been well managed in recent years, but we expect UK and US defence budgets, on which it depends, to be cut back over the next few years. London Capital, which provides spread betting products on financial markets, suffered in the Spring because markets had become less volatile and we have reduced our position. We retain all of the other holdings; they have not been immune from cyclical forces, but are all well managed, with excellent market positions generally based on proprietary technology or strong brands, and each is soundly financed. We expect these companies to perform well operationally over the next three years, although their share prices could continue to lag in a cyclical recovery. Our performance against our benchmark suffered as we did not own many of the best performing recovery stocks in the benchmark, which in general had fallen sharply in 2008 for good reason and only joined our benchmark on 1 January 2009. Often these businesses were not only of average quality, at best, but also overly indebted. Activity Our strategy, for about twelve months now, has been looking to increase exposure to early cyclical companies. We have generally bought companies with strong market positions, preferably serving international markets, and with proprietary technology or strong brands. Purchases during the period included Cookson, Charter, 3i Group, Greene King, Halfords and Persimmon. Cookson stands to benefit from a recovery in steel consumption in China; a significant part of its supplies are consumables. Charter is an engineering group which through its welding supplies division would, like Cookson, be a direct beneficiary from a recovery in steel consumption. 3i is a leading private equity group; its shares were sold down too aggressively on financing fears and we bought a holding when the share price was below 3i's share price on IPO in 1994. As fears subsided, and with the help of a rights issue, the shares have recovered sharply and we took the opportunity to sell out. Greene King, Halfords and Persimmon are all well run UK orientated consumer companies; the latter, a former FTSE100 constituent, in particular has been a strong performer. In addition to the sale of shares in 3i, we sold other early cyclicals in which we had achieved strong gains, for instance our holding in Burberry which had doubled in the six months we had owned it. With hindsight, we have sold some of these companies too soon, but they have returned to the FTSE100 and in such circumstances we tend to sell and look for other opportunities at the smaller end of the market. Gearing Gearing has generally been around 10% to 14% in recent months and was beneficial in the first half of the year. We aim to retain gearing at 10% or more over the coming months. Portfolio positioning We are focused mainly on good quality growth companies which meet our criteria for core holdings; these are the large positions in the portfolio. Looking at our current largest holdings, many have strong, leading technology, including holdings such as Fidessa, Aveva, Pace, Dechra Pharmaceuticals, Domino Printing Sciences, BATM Advanced Communications, Alterian, Kewill, Intec Telecom Systems and Spirent. Other portfolio holdings have well known brands, for instance Rathbone Brothers, Rensburg Sheppards, Brewin Dolphin and Abcam. Others give excellent exposure to emerging markets, many of which we expect to lead global GDP growth over the next five years, for instance City of London Investment Group, ITE Group, Rotork, Spirax-Sarco and Victrex. We have increased our exposure to real estate companies over the last six months. Our preference is very much the West End of London, represented by holdings in Derwent London, Shaftesbury and Great Portland Estates. We also like the developers which have excellent management and track records, notably St Modwen Estates, Development Securities and Helical Bar. Within the resources sectors our larger holdings are sensibly valued producers, for instance Premier Oil, Gulfsands Petroleum and Valiant Petroleum amongst oil producers, and Petropavlovsk (formerly Peter Hambro Mining), International FerroMetals and Eastern Platinum amongst the miners. We do have small investments in a number of exploration companies where success would be transformational; these include Falkland Oil & Gas and BPC, which has interesting licences between Cuba and the Bahamas which it is farming out to Statoil. Our other cyclical holdings include construction related companies such as Keller, again a leading global player in ground preparation, house builders Persimmon and Bellway, engineering consultancy WSP Group, and pub companies Enterprise Inns and Greene King. We are generally cautious on the outlook for the UK economy. It faces headwinds stronger than many developed economies, including high public sector debt, with the likelihood of large increases in both taxes, and reductions in public sector spending soon after the impending general election. We continue to hold shares in Connaught and Caretech which have very high levels of long term contracted revenues, strong management teams and scope to gain significant market share even if public spending is cut sharply. We maintain significant underweight positions in UK discretionary consumer related sectors, especially travel & leisure and general retailers. We have repeated a rough exercise to estimate the proportion of the portfolio's sales by destination. This indicates that about 45% of our portfolio sales are into the UK economy, down from just over 50% six months ago. The reduction in sales to the UK is counterbalanced by an increase in sales to Asia Pacific and other Emerging Markets, which now account for 20% of the portfolio's sales. The balance is split almost equally between Western Europe excluding the UK, and North America. A review of our portfolio's style relative to our benchmark shows unsurprising results. Our portfolio beta on an ungeared basis is 0.92, reflecting our preference for less volatile stocks. Our tracking error has edged down slightly over the last six months and the largest constituents of this are, from a style point of view, in order, below average market capitalisation of holdings compared to the benchmark, less volatile than average share prices of holdings, less exposure to value stocks, more exposure to less liquid stocks and more exposure to growth stocks. Outlook Developed economies are starting to recover from a painful recession. Recovery is expected to be slow, but we hope that we can look forward to a gradual recovery and a return to a period of sustainable growth. Cyclical recovery stocks have performed very strongly since March; many have already seen their share prices double from cyclical lows, although generally their share prices are still well below the levels seen in 2007. The quality growth companies which we know best, and which dominate our portfolio, have lagged over the last six months but should deliver good absolute performance in the long term. Investment exposure as at 31 August 2009 Number of % of Portfolio investments <Â£1m 89 26.3 Â£1m to Â£2m 53 42.4 Â£2m to Â£3m 18 24.7 Â£3m to Â£4m 2 4.1 >Â£4m 1 2.5 Market capitalisation as at 31 August 2009 % of Portfolio < Â£100m 18.8 Â£100m to Â£400m 43.9 Â£400m to Â£1bn 26.4 >Â£1bn 10.9 Twenty Largest Holdings (in alphabetical order) as at 31 August 2009 Company Business activity Abcam Production and distribution of research grade antibodies and associated products Alterian Development and marketing of customer relationship software Aveva Group Development and marketing of engineering computer software BATM Advanced Communications Development and production of advanced data and telecommunication products Brewin Dolphin Holdings Fund management and stockbroking City of London Investment Group Management of investment funds primarily invested in emerging markets Dechra Pharmaceuticals Development, manufacture and supply of veterinary products Domino Printing Sciences Manufacture of inkjet and laser commercial printers Fidessa Group Development and marketing of financial trading and connectivity software Hardy Underwriting Provision of specialist insurance ITE Group Organisation of exhibitions in emerging markets PACE Design and supply of set top boxes Premier Oil Exploration and production of oil and gas Rathbone Brothers Private client fund management Rensburg Sheppards Private client fund management Rotork Engineering, manufacturing and design and assembly of valve actuators Shaftesbury Ownership and management of retail, leisure and office property in London's West End Spirax-Sarco Engineering Design and manufacture of steam management systems Ultra Electronic Holdings Design and supply of electronic products to the aerospace and defence sector Victrex Manufacture and supply of PEEK thermoplastic products Distribution of investments as at 31 August 2009 Analysis of portfolio % Oil & Gas Producers 7.0 Oil Equipment, Services & Distribution 1.5 Chemicals 2.1 Industrial Metals 1.3 Mining 6.3 Construction & Materials 2.0 Aerospace & Defence 2.8 General Industrials 0.8 Electronic & Electrical Equipment 3.2 Industrial Engineering 5.4 Industrial Transportation 0.8 Support Services 7.9 Automobiles & Parts 0.4 Beverages 1.5 Household Goods 3.8 Health Care Equipment & Services 3.3 Pharmaceuticals & Biotechnology 2.5 Food & Drug Retailers 0.5 General Retailers 4.1 Media 2.9 Travel & Leisure 4.7 Fixed-Line Telecommunications 0.9 Electricity 0.9 Non-life Insurance 2.2 Real Estate 6.8 General Financial 9.5 Equity Investment Instruments 0.0 Software & Computer Services 10.3 Technology Hardware & Equipment 4.3 Other 0.1 Cash 0.2 INCOME STATEMENT for the six months ended 31 August 2009 Revenue Â£'000 Capital Â£'000 Total Â£'000 Six months Six months Year Six months Six months Year Six months Six months Year ended ended ended ended ended ended ended ended ended 31.08.09 31.08.08 28.02.09 31.08.09 31.08.08 28.02.09 31.08.09 31.08.08 28.02.09 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Gains/ (losses) on investments held at fair value through profit or loss - - - 52,809 (8,101) (89,186) 52,809 (8,101) (89,186) Income from investments held at fair value through profit or loss (note 2) 2,346 2,469 4,320 - - - 2,346 2,469 4,320 Other income (note 2) 20 6 20 - - - 20 6 20 Investment management and performance fees (note 3) (111) (146) (233) (333) (966) (1,125) (444) (1,112) (1,358) Write back of prior years' VAT (note 3) (12) - - - - - (12) - - Other operating expenses (145) (84) (273) - - - (145) (84) (273) ----- ----- ----- ------ ----- ------ ------ ----- ----- Net return before finance costs and taxation 2,098 2,245 3,834 52,476 (9,067) (90,311) 54,574 (6,822) (86,477) Finance costs (152) (165) (329) (454) (490) (940) (606) (655) (1,269) ----- ----- ----- ------ ----- ------ ------ ----- ----- Return on ordinary activities before taxation 1,946 2,080 3,505 52,022 (9,557) (91,251) 53,968 (7,477) (87,746) Taxation on ordinary activities (15) (4) (6) - - - (15) (4) (6) ----- ----- ----- ------ ----- ------ ------ ----- ----- Return on ordinary activities after taxation 1,931 2,076 3,499 52,022 (9,557) (91,251) 53,953 (7,481) (87,752) ===== ===== ===== ======= ====== ======= ======= ====== ======= Return per ordinary share (note 4) 4.00p 4.28p 7.21p 107.80p (19.70p) (188.12p) 111.80p (15.42p) (180.91p) ===== ===== ===== ======= ====== ======= ======= ====== ======= The total column of this statement represents the Income Statement of the Company. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. The Company has no recognised gains or losses other than those disclosed in the Income Statement and the Reconciliation of Movements in Shareholders' Funds. All items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period. RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the six months ended 31 August 2009 Share Capital Share premium redemption Capital Revenue capital account reserve reserves reserve Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 For the six months ended 31 August 2009 (unaudited) At 28 February 2009 12,498 38,952 1,982 50,566 6,267 110,265 Return for the period - - - 52,022 1,931 53,953 Shares purchased and held in treasury - - - (607) - (607) Dividends paid (a) - - - - (1,831) (1,831) ------ ------ ----- ------- ----- ------- At 31 August 2009 12,498 38,952 1,982 101,981 6,367 161,780 ------ ------ ----- ------- ----- ------- For the six months ended 31 August 2008 (unaudited) At 29 February 2008 12,498 38,952 1,982 141,840 5,780 201,052 Return for the period - - - (9,557) 2,076 (7,481) Dividends paid (b) - - - - (2,067) (2,067) ------ ------ ----- ------- ----- ------- At 31 August 2008 12,498 38,952 1,982 132,283 5,789 191,504 ------ ------ ----- ------- ----- ------- For the year ended 28 February 2009 (audited) At 29 February 2008 12,498 38,952 1,982 141,840 5,780 201,052 Return for the year - - - (91,251) 3,499 (87,752) Shares purchased and held in treasury - - - (23) - (23) Dividends paid (c) - - - - (3,012) (3,012) ------ ------ ----- ------ ----- ------- At 28 February 2009 12,498 38,952 1,982 50,566 6,267 110,265 ------ ------ ----- ------ ----- ------- (a) Final dividend of 3.10p and special dividend of 0.70p per share for the year ended 28 February 2009, declared on 22 April 2009 and paid on 24 June 2009. (b) Final dividend of 3.01p and special dividend of 1.25p per share for the year ended 29 February 2008, declared on 28 April 2008 and paid on 11 June 2008. (c) Final dividend of 3.01p and special dividend of 1.25p per share for the year ended 29 February 2008, declared on 28 April 2008 and paid on 11 June 2008 and interim dividend of 1.95p per share for the six months ended 31 August 2008, declared on 9 October 2008 and paid on 3 November 2008. BALANCE SHEET as at 31 August 2009 31 August 31 August 28 February 2009 2008 2009 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Fixed assets Investments held at fair value through profit or loss 177,108 207,616 124,429 ------- ------- ------- Current assets Debtors 3,657 900 1,202 Cash - 28 1,271 ------- ------- ------- 3,657 928 2,473 Creditors - amounts falling due within one year Bank overdrafts (1,695) (952) - Other creditors (2,478) (1,291) (1,831) ------- ------- ------- Net current (liabilities)/assets (516) (1,315) 642 ------- ------- ------- Total assets less current liabilities 176,592 206,301 125,071 Creditors - amounts falling due after more than one year (14,812) (14,797) (14,806) ------- ------- ------- Net assets 161,780 191,504 110,265 ====== ====== ====== Capital and reserves Share capital (note 5) 12,498 12,498 12,498 Share premium account 38,952 38,952 38,952 Capital redemption reserve 1,982 1,982 1,982 Capital reserves 101,981 132,283 50,566 Revenue reserve 6,367 5,789 6,267 ------- ------- ------- Total equity shareholders' funds 161,780 191,504 110,265 ======= ======= ======= Net asset value per ordinary share (note 4) 335.68p 394.78p 227.37p ======= ======= ======= CASH FLOW STATEMENT for the six months ended 31 August 2009 Six months Six months Year ended ended ended 31 August 31 August 28 February 2009 2008 2009 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Net cash inflow from operating activities 2,300 977 2,364 Losses on investments and servicing of finance (591) (647) (1,257) Capital expenditure and financial investment Purchases of investments (48,414) (49,286) (87,032) Proceeds from sales of investments 46,178 51,012 91,102 ------ ------ ------ Net cash (outflow)/inflow from capital expenditure and financial investment (2,236) 1,726 4,070 ------ ------ ------ Equity dividends paid (1,831) (2,067) (3,012) ------ ------ ------ Net cash (outflow)/inflow before financing (2,358) (11) 2,165 ------ ------ ------ Financing Purchase of ordinary shares (607) - (23) ------ ------ ------ Net cash outflow from financing (607) - (23) ------ ------ ------ (Decrease)/increase in cash in the period (note 6) (2,965) (11) 2,142 ===== ===== ====== RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION TO NET CASH FLOW FROM OPERATING ACTIVITIES Six months Six months Year ended ended ended 31 August 31 August 28 February 2009 2008 2009 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Net gain/(loss) before finance costs and taxation 54,574 (6,822) (86,477) (Gains)/losses on investments held at fair value through profit or loss (52,809) 8,101 89,186 (Increase)/decrease in accrued income (9) 108 102 Decrease/(increase) in debtors 629 (4) - Decrease in creditors (58) (406) (434) Income tax suffered (8) - (7) Overseas withholding tax suffered (19) - (6) ------ ------ ------- Net cash inflow from operating activities 2,300 977 2,364 ------ ------ ------- Notes to the Financial Statements 1. Principal activity and basis of preparation The Company conducts its business so as to qualify as an investment trust company within the meaning of section 842 of the Income and Corporation Taxes Act 1988. The half yearly financial statements have been prepared using the same accounting policies set out in the Company's financial statements for the year ended 28 February 2009. Under FRS 26 "Financial Instruments-Measurement" the Company has designated its assets and liabilities as being measured at "fair value through profit or loss". The fair value of fixed asset investments is deemed to be the bid market value at the close of business on the balance sheet date. The taxation charge has been calculated by applying an estimate of the annual effective tax rate to any profit for the period. The financial statements have been prepared in accordance with applicable Accounting Standards, pronouncements on half yearly reporting issued by the Accounting Standards Board and the Statement of Recommended Practice "Financial Statements of Investment Trust Companies" ("SORP") dated January 2003 and revised in December 2005 and January 2009. 2. Income Six months Six months Year ended ended ended 31 August 31 August 28 February 2009 2008 2009 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Investment income: UK listed dividends 2,086 2,306 3,815 Overseas listed dividends 260 163 505 ----- ----- ----- 2,346 2,469 4,320 ----- ----- ----- Other income: Deposit interest 1 1 16 Underwriting commission 19 5 4 ----- ----- ----- 20 6 20 ----- ----- ----- Total 2,366 2,475 4,340 ----- ----- ----- 3. Investment management and performance fees Six months ended Six months ended Year ended 31 August 2009 31 August 2008 28 February 2009 (unaudited) (unaudited) (audited) Revenue Capital Total Revenue Capital Total Revenue Capital Total Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Investment management fees 111 333 444 146 437 583 233 698 931 Performance fees - - - - 529 529 - 427 427 --- --- --- --- --- ----- --- ----- ----- 111 333 444 146 966 1,112 233 1,125 1,358 Write back of prior years' VAT 12 - 12 - - - - - - --- --- --- --- --- ----- --- ----- ----- 123 333 456 146 966 1,112 233 1,125 1,358 --- --- --- --- --- ----- --- ----- ----- The investment management fee is calculated based on 0.65% in respect of the first Â£50 million of the Company's total assets less current liabilities, reducing to 0.5% thereafter. A performance fee is payable at the rate of 10% of the annualised excess performance in the two previous financial years, applied to the average of the total assets less current liabilities of the Company. The fee is payable annually in April and is capped at 0.25% of the average of the total assets less current liabilities. Performance fees have been wholly allocated to capital reserves as the performance has been predominantly generated through capital returns of the investment portfolio. No performance fee was accrued for the six month period to 31 August 2009 (six months ended 31 August 2008: Â£529,000 and the year ended 28 February 2009: Â£427,000). In line with the AIC Statement of Recommended Practice, the performance fee accrual of Â£529,000 at 31 August 2008 was an estimate based on outperformance data and reasonable market assumptions at that date. Subsequent movements in performance between 31 August 2008 and 28 February 2009 resulted in a performance fee of Â£427,000 being crystallised and paid in respect of the full year. 4. Returns and net asset value per ordinary share Revenue and capital returns per share are shown below and have been calculated using the following: Six months Six months Year ended ended ended 31 August 31 August 28 February 2009 2008 2009 (unaudited) (unaudited) (audited) Revenue return (Â£'000) 1,931 2,076 3,499 Capital return (Â£'000) 52,022 (9,557) (91,251) ------- ------- ------- Total return (Â£'000) 53,953 (7,481) (87,752) ------- ------- ------- Equity shareholders' funds (Â£'000) 161,780 191,504 110,265 ------- ------- ------- The weighted average number of ordinary shares in issue on which the return per ordinary share was calculated, was: 48,258,379 48,509,708 48,506,488 The actual number of ordinary shares in issue at the end of each period, on which the net asset value per ordinary share was calculated, was: 48,194,792 48,509,708 48,494,792 Revenue return per ordinary share 4.00p 4.28p 7.21p Capital return per ordinary share 107.80p (19.70p) (188.12p) ------- ------ ------- Total return per ordinary share 111.80p (15.42p) (180.91p) ------- ------ ------- Net asset value per ordinary share (debt at par value) 335.68p 394.78p 227.37p ------- ------ ------- Net asset value per ordinary share (debt at fair value) 331.43p 390.33p 221.91p ------- ------ ------- 5. Share capital and shares held in treasury Number of Number of ordinary treasury Nominal shares in shares in Total value issue issue shares Â£'000 Authorised share capital: Ordinary shares of 25p each 80,000,000 - 80,000,000 20,000 ---------- --------- ---------- ------ At 28 February 2009 48,494,792 1,498,731 49,993,523 12,498 Shares transferred into treasury (300,000) 300,000 - - ---------- --------- ---------- ------ At 31 August 2009 48,194,792 1,798,731 49,993,523 12,498 ---------- --------- ---------- ------ 6. Movement in net debt Six months Six months Year ended ended ended 31 August 31 August 28 February 2009 2008 2009 Â£'000 Â£'000 Â£'000 (unaudited) (unaudited) (audited) Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (2,965) (11) 2,142 Foreign exchange movements (1) 3 45 Amortised debenture stock issue expenses (6) (6) (15) ------ ------ ------ Movement in net debt in the period (2,972) (14) 2,172 Opening net debt (13,535) (15,707) (15,707) ------ ------ ------ Closing net debt (16,507) (15,721) (13,535) ------ ------ ------ 7. Distributable status of capital reserves Under the terms of the Company's Articles of Association, sums standing to the credit of the capital reserves are distributable only by way of redemption or purchase of any of the Company's own shares, for so long as the Company carries on business as an investment company. Company law states that investment companies may only distribute accumulated "realised" profits. The Institute of Chartered Accountants in England and Wales in its technical guidance TECH 01/08, states that profits arising out of a change in fair value of assets, recognised in accordance with accounting standards, may be distributed, provided the change recognised can be readily converted into cash. Securities listed on a recognised stock exchange are generally regarded as being readily convertible into cash and hence unrealised profits in respect of such securities, currently included within capital reserves, may be regarded as distributable under company law. The technical interpretation of the meaning of distributable reserves would, as a consequence, give rise at 31 August 2009 to capital reserves available for distribution of approximately Â£101,981,000 after adjusting for unrealised capital gains of Â£8,686,000. 8. Publication of non statutory accounts The financial information contained in this half yearly financial report does not constitute statutory accounts as defined in the Companies Act 2006. The financial information for the six months ended 31 August 2009 and 31 August 2008 has not been audited. The information for the year ended 28 February 2009 has been extracted from the latest published audited financial statements which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under sections 237(2) or 237(3) of the Companies Act 1985. A copy of the half yearly financial report will be available on the BlackRock Investment Management (UK) Limited website at www.blackrock.com/its. Independent Review Report to BlackRock Smaller Companies Trust plc Introduction We have been engaged by the Company to review the condensed set of financial statements in the half yearly financial report for the six month period ended 31 August 2009 which comprises the Income Statement, Reconciliation of Movements in Shareholders' Funds, Balance Sheet, Cash Flow Statement, Reconciliation of Net Return before Finance Costs and Taxation to Net Cash Flow from Operating Activities, and the related notes. We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK and Ireland) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our work, for this report, or for the conclusions we have formed. Directors' responsibilities The half yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half yearly financial report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in note 1, the annual financial statements of the Company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half yearly financial report has been prepared in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports". Our responsibility Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half yearly financial report based on our review. Scope of review We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters and applying analytical and other review procedures. A review is substantially less in scope than an audit performed in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half yearly financial report does not give a true and fair view of the financial position of the Company as at 31 August 2009, and of its cash flows for the six month period then ended, in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority. Scott-Moncrieff Chartered Accountants Edinburgh For further information please contact: Jonathan Ruck Keene, Managing Director Investment Companies - 0207 743 2178 Mike Prentis, Fund Manager - 0207 743 2312 Emma Phillips, Media & Communications - 0207 743 2922 BlackRock Investment Management (UK) Limited or William Clutterbuck - 0207 379 5151 The Maitland Consultancy

Companies

BlackRock Smaller Companies Trust (BRSC)

Wednesday, 15th January 2025

COMPANIES COVERED:

GNS CURY BANK

Profitability upgrades buoy FTSE-250 listed Currys and Genus, whilst small cap FinTech Fiinu surges on promising news of first white label deal with UK banking counterparty.

Full Archive

UK 100

Latest directors dealings

11 hours ago Dr. Martens
12 hours ago Capita
12 hours ago Imperial Brands
12 hours ago Knights Group Holdings
13 hours ago Vanquis Banking Group 20

All directors dealings today