During the year to 29 February 2016, BlackRock Smaller Companies’ net asset value increased by 4.0% to 992.18p per share, compared with its benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which fell by 4.4%. The company’s share price increased by 6.3% to 863.00p per share.
Small capitalisation stocks outperformed mid and large capitalisation stocks; the FTSE AIM All Share Index fell by 3.0% compared with the FTSE 250 Index which fell by 3.5% and the FTSE 100 Index which fell by 12.2%.
In October 2015 the Board declared an interim dividend of 7.00p per share (2015: 5.50p per share). The Directors are pleased to recommend the payment of a final dividend of 10.50p per share (2015: 9.00p per share), making a total for the year of 17.50p, an increase of 20.7% over the total dividend of 14.50p paid in the previous year. The compound annual increase in dividends paid over the past five years has been 20% per annum. This increase in total dividends this year means that the company has now increased its dividends every year for each of the last thirteen years.
The significant outperformance of the Company’s NAV over the year was largely attributable to good stock selection, with the best individual stock performance coming from more defensive health care stocks and companies with exposure to leisure and UK consumer discretionary spending. Sector allocation also generated outperformance, with the portfolio’s overweight position in housebuilders and health care companies and its underweight position in the oil and gas sector being the most significant contributors. The largest detractor from performance came from exposure to the oil and power sectors.
The best individual stock performers were holdings in CVS Group, Betfair Group, Fevertree Drinks, Hutchison China Meditech and 4imprint Group. The share prices in Betfair Group and Fevertree Drinks appreciated by 158% and 166% respectively during the year. CVS Group has expanded its veterinary surgery business by acquisition whilst significantly improving the performance of its existing surgeries. It now has 333 surgeries and 6 pet crematoria in the UK making it, they believe, the largest independent operator. Betfair Group has continued to grow strongly, has merged with Paddy Power and has joined the FTSE100. They say, sadly, in line with their usual practice, they have now sold the Betfair shares. Fevertree Drinks has continued to grow strongly both in the UK and internationally. For the year to 31 December 2015 sales grew 71% compared to 2014; all of the growth was organic. Hutchison China Meditech continues to develop its oncology portfolio with Tier 1 pharma partners. The company has recently raised money on the NASDAQ. 4imprint Group has continued to grow its US-based promotional products business strongly, and all organically.
The holding in Northbridge Industrial Services detracted most from relative performance. The company is a supplier to the oil and power sectors.
BRSC : A good year for BlackRock Smaller Companies