BlackRock Smaller Companies’ 15 years record of strong performance continues – in its final report to 28 February 2018, the NAV of BlackRock Smaller Companies (BRSC) increased by 20.8% to 1,506.78 pence per share, compared with its benchmark, the Numis Smaller Companies plus AIM (excluding Investment Companies) Index, which increased by 8.3%. During the financial year, the share price increased by 25%.
Performance
In his statement, the chairman, Nicholas Fry pointed out that for fifteen consecutive years it has outperformed its benchmark and increased its dividend.
The significant outperformance of the company’s NAV over the year was largely attributable to good stock selection and to the positive impact of gearing. The best individual stock performances came from companies with exposure to the pharmaceuticals and biotechnology sectors and from financial and support services stocks.
Detractors from relative performance came mainly from companies in the benchmark that were not in the portfolio and which performed strongly in the year. Companies with exposure to the retail sector struggled, with the largest single stock detractor during the period (UP Global Sourcing) seeing a sharp fall in its share price after a profit warning.
Gearing
At the year end, the Company’s gearing was 9.8% of net assets. Gearing will not exceed 15% of the net assets of the company. Under normal operating conditions gearing will be within a range of 0%-15% of NAV.
Discount
The discount to NAV of the company ended the year at 11.7%. During the year the share price traded at an average discount of 13.0%. In the report, the company confirms that the discount has narrowed to 9.4% as at 25 April 2018.
Dividends
The company’s revenue return per share for the year ended 28 February 2018 increased by 30.4%, to 29.30 pence per share compared with 22.47 pence per share for the previous year.
Regular dividends from portfolio companies also rose by 30.2%, while special dividends received were 24.2% higher than in the previous year.
The total dividend for the year will be 26.00p, an increase of 23.8% over the total dividend of 21.00p paid in the previous year. The compound annual increase in dividends paid over the past nine years has been 20% per annum.
BRSC : BlackRock Smaller Companies’ 15 years record of strong performance continues