Portfolio Update

The information contained in this release was correct as at 30 September2022.  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 2022 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	-9.8	-7.4	-33.6	1.5	8.9
Share price	-9.4	-5.6	-39.5	-5.8	8.9
Numis ex Inv Companies + AIM Index	-7.7	-7.1	-26.9	3.5	-1.2

Sources:  BlackRock and Datastream

At month end

Net asset value Capital only (debt at par value):	1,340.09p
Net asset value Capital only (debt at fair value):	1,388.75p
Net asset value incl. Income (debt at par value)1:	1,369.98p
Net asset value incl. Income (debt at fair value)1:	1,418.65p
Share price:	1,218.00p
Discount to Cum Income NAV (debt at par value):	11.1%
Discount to Cum Income NAV (debt at fair value):	14.1%
Net yield2:	2.9%
Gross assets3:	£738.5m
Gearing range as a % of net assets:	0-15%
Net gearing including income (debt at par):	2.8%
Ongoing charges ratio (actual)4:	0.7%
Ordinary shares in issue5:	48,829,792

1. Includes net revenue of 29.89p
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 13.0 pence per share (announced on 2 November 2021, ex-dividend on 11 November 2021, and pay date 2 December 2021), and the final ex-dividend of 22.00 pence per share (announced on 29 April 2022, ex-date on 12 May 2022, and pay date 17 June 2022).
3. Includes current year revenue.
4. 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 2022.
5. Excludes 1,163,731 ordinary shares held in treasury.

Sector Weightings % of portfolio Industrials 30.3 Consumer Discretionary 22.2 Financials 12.8 Technology 9.0 Energy 5.8 Consumer Staples 5.5 Basic Materials 5.3 Health Care 4.4 Telecommunications 2.9 Real Estate 1.1 Utilities 0.7 ----- Total 100.0 ===== Country Weightings % of portfolio United Kingdom 99.3 United States 0.7 ----- Total 100.0 =====

Ten Largest Equity Investments Company	% of portfolio
CVS Group	3.2
4imprint Group	3.1
Gamma Communications	2.9
Spirent Communications	2.3
Qinetiq Group	2.2
Ergomed	2.2
Watches of Switzerland	2.1
Bloomsbury Publishing	2.1
Oxford Instruments	1.9
Auction Technology	1.9

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

During September the Company’s NAV per share fell by -9.8% to 1,418.65p on a total return basis (with debt at fair value), while our benchmark index fell -7.7%.¹ For comparison the large cap FTSE 100 Index fell by -5.2%.¹

Equity markets fell further in September, after hawkish actions by central banks focused on pressure to quickly get core inflation to target. In the US, there was an upside surprise in the inflation data for August, which prompted the Federal Reserve (Fed) to hike interest rates by 75 bps for the third consecutive time. The Bank of England (BoE) raised interest rates by 50 bps, taking the base rate to 2.25%, with a bigger increase expected later this year. Liz Truss took office as the UK’s new prime minister and as her first order of business, announced a relief package to shield the country from soaring energy prices. The month ended tumultuously as lax fiscal policy clashed with the tightening objective of the BoE. A UK rates selloff was triggered by the new government’s mini-budget session, where policies including unfunded tax cuts were announced. The British Pound hit a 37-year low against the US Dollar as the 10-year benchmark yield saw its highest monthly increase since the 1970s. The BoE then had to intervene and buy long-term bonds in order to reverse this disorderly yield spike which led to the 30-year gilt yield posting its largest one-day drop on record. This political turbulence drove a high level of volatility in the UK equity market, with domestic facing sectors most negatively impacted.

Shares in Hilton Food Group fell significantly after the company issued a profit warning as volumes have been coming under pressure due to the ongoing cost of living crisis, with consumers becoming ever-more cost conscious. Shares in Alliance Pharma came under pressure after the CMA (Competitive Markets Authority) announced that it had issued proceedings in the High Court to disqualify directors at four pharmaceuticals companies, including the chief executive of Alliance Pharma. Elsewhere within the portfolio, domestic businesses such as Workspace Group were impacted from the sell-off in UK assets.

Having been weak in August after a profit warning, shares in Treatt rebounded in September, recouping some of the falls. We have reduced the position size following the warning recognising the risks associated with rising costs, currency and slowing demand, however we maintain a holding. Shares in Ergomed remained resilient during the month and Gamma Communications outperformed the falling market after reporting strong first half results with a positive outlook for the full year.

The coming months are likely to remain highly uncertain, with heightened volatility as investors continue to focus on the path for monetary policy, inflation data, the oil price and geopolitics. The political environment is likely to remain a key driver of short-term swings in the currency, which will have the potential to drive outsized sector level moves. While the macro environment is likely to present its fair share of challenges for lots of companies, it is important to remember that the effects of the challenging environment will not be felt evenly. We are therefore sticking to our core beliefs and focusing on bottom-up company specific analysis to identify high quality, nimble businesses, operated by entrepreneurial management teams, with strong market positions and resilient cash-flows. These are the types of businesses that we believe will be best placed to manage and thrive in the current environment. Historically these periods have been followed by strong returns for the strategy and presented excellent investment opportunities. We thank shareholders for your ongoing support and look forward to providing further confirmation of the investment cases that we are exposed to within the portfolio in the coming months.

  ¹Source: BlackRock as at 30 September 2022

24 October 2022

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.