BlackRock Smll Cos Portfolio Update

 
TIDMBRSC 
 
The information contained in this release was correct as at 30 September 2020. 
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 30 September 2020 and unaudited. 
Performance at month end is calculated on a capital only basis 
 
 
                                            One     Three     One    Three      Five 
                                          month    months    year    years     years 
                                              %         %       %        %         % 
 
Net asset value*                           -2.7       2.2    -5.4     -2.2      37.7 
 
Share price*                               -0.8      -4.4   -11.6     -1.9      38.8 
 
Numis ex Inv Companies + AIM Index         -1.2       7.1    -4.6    -13.7       9.0 
 
*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):                             1,392.76p 
 
Net asset value Capital only (debt at fair value):                            1,373.83p 
 
Net asset value incl. Income (debt at par value)1:                            1,397.58p 
 
Net asset value incl. Income (debt at fair value)1:                           1,378.64p 
 
Share price:                                                                  1,220.00p 
 
Discount to Cum Income NAV (debt at par value):                                   12.7% 
 
Discount to Cum Income NAV (debt at fair value):                                  11.5% 
 
Net yield4:                                                                        2.7% 
 
Gross assets2:                                                                  GBP752.0m 
 
Gearing range as a % of net assets:                                               0-15% 
 
Net gearing including income (debt at par):                                        5.4% 
 
Ongoing charges ratio (actual)3:                                                   0.7% 
 
Ordinary shares in issue5:                                                   48,829,792 
 
 1. Includes net revenue of 4.82p 
 
 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 2019, 
    ex-dividend on 14 November 2019) and the second interim dividend of 19.7 
    pence per share (announced on 3 June 2020, ex-dividend on 11 June 2020). 
 
 3. Includes current year revenue. 
 
 4. As reported in the Annual Financial Report for the year ended 28 February 
    2019 the Ongoing Charges Ratio (OCR) was 0.7%. 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 
 
Industrials                                                                   27.2 
 
Financials                                                                    20.3 
 
Consumer Services                                                             15.7 
 
Consumer Goods                                                                11.4 
 
Technology                                                                    10.3 
 
Health Care                                                                    6.1 
 
Basic Materials                                                                5.0 
 
Oil & Gas                                                                      1.6 
 
Telecommunications                                                             1.3 
 
Materials                                                                      1.1 
 
                                                                             ----- 
 
Total                                                                        100.0 
 
                                                                             ===== 
 
Country Weightings                                                  % of portfolio 
 
United Kingdom                                                                98.0 
 
United States                                                                  1.0 
 
Singapore                                                                      0.6 
 
France                                                                         0.4 
 
                                                                             ----- 
 
Total                                                                        100.0 
 
                                                                             ===== 
 
 
 
Ten Largest Equity Investments 
 
Company                                                             % of portfolio 
 
YouGov                                                                         2.5 
 
Pets at Home                                                                   2.1 
 
Avon Rubber                                                                    2.0 
 
Watches of Switzerland                                                         2.0 
 
Games Workshop                                                                 1.9 
 
IntegraFin                                                                     1.9 
 
Impax Asset Management                                                         1.9 
 
Ergomed                                                                        1.8 
 
Breedon                                                                        1.8 
 
Treatt                                                                         1.7 
 
Commenting on the markets, Roland Arnold, representing the Investment Manager 
noted: 
 
During September the Company's NAV per share fell by -2.7%1 to 1,392.76p, 
underperforming our benchmark index which fell -1.2%1; for comparison the FTSE 
100 Index fell by -1.6%1 (all calculations are without income reinvested). 
 
Equity markets fell in September on the back of rising geopolitical risks and 
concerns over a second wave of COVID-19, with infections in several countries 
(most notably in Europe) rising during the month. As seen in many other 
countries, tighter restrictions were once again imposed in the UK to curb the 
spread of the virus.  These included the 'rule of six' and reduced operating 
hours for the already fragile hospitality sector. Brexit made headlines with 
the Government's controversial Internal Markets Bill which provoked an intense 
row with the EU. As a result, concerns of a "no-deal Brexit" once again came to 
the fore and this coupled with softer domestic data led to sterling weakness. 
 
During the month the portfolio benefited from a number of positive updates from 
key holdings; however, weakness in some of our more domestically focussed 
holdings detracted from performance.  In addition, a number of recent strong 
performers gave back some of their recent gains; a combination of these factors 
resulted in the Company's NAV per share underperforming the benchmark. Relative 
performance was also impacted by not owning William Hill, the largest position 
in our benchmark, which received a bid from the US company Caesar's 
Entertainment.  This impacted relative performance by -47 basis points (and 
represented the single largest detractor in the month). Having performed well 
since providing a positive trading update in July, shares in YouGov gave back 
some of this recent strong performance despite there being no change to the 
outlook for the business. Shares in The Pebble Group fell in response to mixed 
results which highlighted the strength in the promotional services Facilisgroup 
business, while Brand Addition remained challenged during the first half of the 
year. Elsewhere our pub stocks, JD Wetherspoons and Youngs, were impacted by 
the increased restrictions imposed by the Government. 
 
The largest positive contributor was Pets at Home, which performed well after 
issuing a positive trading update which highlighted strong sales momentum ahead 
of expectations, as customer shopping habits saw a return to normal in addition 
to the reinstatement of services and procedures within the veterinary and 
retail operations. The company said it had delivered double-digit like-for-like 
sales growth in the second quarter and now expect full year profits to be ahead 
of market expectations. Shares in Ergomed rose in response to strong interim 
results which showed continued revenue growth of 14.8%, with the order book up 
22% since the beginning of the year, providing high visibility into the second 
half and beyond. Shares in Games Workshop once again contributed positively to 
performance. The tabletop game manufacturer reported trading which continues to 
be ahead of expectations, driven by growth in its online channel, with retail 
stores also recovering since reopening. Whilst the long-term and ongoing impact 
of the pandemic remains unclear, the board declared its dividend payment, in 
line with the company's policy to distribute surplus cash. 
 
The current environment continues to present a number of challenges as the 
outlook remains highly uncertain and investors are inconsistent on how they are 
pricing coronavirus risks. The smaller end of the market remains very narrow 
and, in our opinion, continues to inconsistently value risk. This can be seen 
in valuations of the winners which have continued to stretch, while the losers 
compress. This has also been evident in a number of cases where share prices 
have become completely detached from fundamentals, and we can point to a number 
of examples where investment cases are playing out, but the share price is 

telling a different story; and this disconnect certainly cannot last forever. 
We must all remind ourselves that in the short-term share prices are driven by 
supply and demand (investor sentiment), however, in the long-term it is company 
earnings that will drive share prices. 
 
We therefore remain confident in our strategy on a medium-term view. Market 
volatility presents us with a fantastic investment opportunity. The Company's 
investment strategy is focussed on quality growth investments in smaller 
companies, a style that has demonstrably worked for the long-term, and 
historically periods of sudden underperformance, such as this, have proven to 
be excellent investment opportunities. 
 
1Source: BlackRock as at 30 September 2020 
 
19 October 2020 
 
 
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. 
 
 
 
END 
 

(END) Dow Jones Newswires

October 19, 2020 12:55 ET (16:55 GMT)