Rockwood Strategic Reports Strong Interim Performance with 12.5% NAV Return

Rockwood Strategic’s interim NAV return: 12.5% and NAV per share at 279.91p

Rockwood Strategic’s trading update for the six months to 30 September 2025 shows a solid period. Net asset value (NAV) total return was 12.5%, taking NAV per share to 279.91p. That beats the FTSE Small Cap (ex-ITs) at 12.1%, though it trails the FTSE AIM All-Share’s punchy 14.8%.

Total shareholder return (TSR) – the share price move plus any dividends – was 11.5% for the half. For context, NAV total return includes the underlying portfolio performance and income, net of costs; TSR is what lands in your brokerage account via the share price.

Three-year performance: 93.9% NAV total return and 99.7% TSR

The medium-term scorecard is the headline act. Over three years to 30 September 2025, Rockwood has delivered a 93.9% NAV total return. TSR over the same stretch is 99.7%. That comfortably tops the FTSE Small Cap (ex-ITs) at 31.2% and leaves the FTSE AIM All-Share’s -2.9% in the rear-view mirror.

The Company says NAV has grown 267% over the last three years, which has built scale and widened its investable universe. Scale matters for idea selection and liquidity – especially in UK small caps where depth can be thin.

Premium to NAV, fresh issuance and cash: scaling to £134.8 million

Investor demand was strong. Rockwood issued 9,343,667 new shares during the period, increasing the share count by 24%. The shares traded at an average 1.6% premium to NAV and finished the half at a 0.8% premium. A premium means the market price sits above the per-share NAV – a signal that buyers are willing to pay up for access to the strategy.

Thanks to performance and issuance, total NAV grew to £134.8 million at period end. Net cash stood at approximately £9.8 million, equivalent to 7.3% of NAV. That cash buffer gives optionality to deploy into new opportunities or support existing holdings.

Portfolio construction: 24 holdings, with conviction in the top ten

Rockwood held 24 positions at period end. The top ten accounted for 59.3% of NAV, which is reasonably concentrated. Concentration can be a double-edged sword: it amplifies winners when stock selection is strong, but it also raises single-name risk. The three-year record suggests it has worked in shareholders’ favour so far.

Active moves: new investments, a lucrative exit, and notable updates

New buys: Treatt and Tribal Group

Two new positions were initiated. Treatt Plc has since received a takeover approach that the manager calls “derisory”. No price or terms were disclosed, but the language signals the manager believes intrinsic value sits materially higher. Tribal Group Plc has moved fast in the right direction, up 53% since Rockwood first bought.

Realisation: Galliford Try delivers a 48.2% IRR

Rockwood exited Galliford Try Plc, banking a 48.2% internal rate of return (IRR) and a 2.4x money multiple (that’s 2.4 times invested capital). The thesis, initiated in Q2 2022, played out via a valuation re-rating and an operating turnaround. It’s a neat example of the “self-help” style the manager references – backing businesses with controllable catalysts rather than waiting on macro tailwinds.

Standouts: Vanquis, Filtronic and Centaur

• Vanquis Banking Group Plc – a top five holding – has more than doubled as financial progress continues and clarity emerged around motor finance liabilities.
• Filtronic Plc won its largest ever contract from SpaceX. Big customer validation like this can be transformational for smaller companies.
• Centaur Media Plc sold MiniMBA, The Lawyer and Marketing Week for cash. Combined with existing cash, that amount exceeded Centaur’s market capitalisation at period end. Rockwood highlights this as a live example of pricing inefficiency in UK small caps and the latent value in its portfolio.

Manager’s take: catalysts over macro, but watch policy risks

Richard Staveley strikes an optimistic tone despite a “soggy” economic backdrop. He points to potential tax changes, inflation, and disruptive US trade policy as factors damping “animal spirits” – simply, corporate risk appetite. The strategy leans on “self-help” and strategic catalysts: things like cost actions, asset sales, management change, or product wins that can move the dial regardless of the wider economy.

Crucially, he says the portfolio is at a deep discount to intrinsic value. If that’s right, and if catalysts keep landing, the valuation gap can close over time. He also suggests tax clarity, lower inflation and more stable trade policy might emerge in the near future. None of that is guaranteed, but the cash balance and ongoing deal flow give room to manoeuvre.

Why this trading update matters for RKW shareholders

• Performance held up in a risk-on small-cap rally, with NAV total return of 12.5% and TSR of 11.5%.
• The three-year compounding is the standout – 93.9% NAV total return and 99.7% TSR versus far lower benchmarks.
• Scaling continues: £134.8 million NAV, issuance at a premium, and 7.3% of NAV held in cash for deployment.
• Portfolio activity is delivering: a 48.2% IRR exit, a 53% gain in Tribal since purchase, and positive company-specific news at Vanquis, Filtronic and Centaur.
• Valuation discipline remains the pitch, with the manager calling out deep discounts and mispricings in the UK small-cap space.

On the flip side, it’s worth noting that the period’s 12.5% NAV return lagged the FTSE AIM All-Share’s 14.8%. And while a premium rating is healthy, it can compress if sentiment reverses. Execution on catalysts – not just macro hopes – will remain the key driver.

Key definitions, briefly

• NAV total return: Growth in NAV including income, after costs.
• Total shareholder return (TSR): Share price change plus dividends.
• Premium/discount to NAV: The share price relative to NAV per share; a premium means the shares trade above NAV.
• IRR and money multiple: IRR is the annualised return on an investment; money multiple is total value divided by cost.

Key numbers at a glance

Period covered	Six months to 30 September 2025
NAV per share	279.91p
NAV total return (period)	12.5%
Total shareholder return (period)	11.5%
Benchmark moves (period)	FTSE Small Cap (ex-ITs) 12.1%; FTSE AIM All-Share 14.8%
Three-year NAV total return	93.9%
Three-year TSR	99.7%
Three-year benchmark comparison	FTSE Small Cap (ex-ITs) 31.2%; FTSE AIM All-Share -2.9%
Average premium to NAV (period)	1.6%
Premium at period end	0.8%
New shares issued	9,343,667 (share count up 24%)
Total NAV	£134.8 million
Net cash	c.£9.8 million (7.3% of NAV)
Holdings	24 (top ten = 59.3% of NAV)
Notable outcomes	Galliford Try exit 48.2% IRR and 2.4x; Tribal +53% since purchase; Vanquis +100%+; Filtronic SpaceX contract; Centaur disposals exceed its period-end market cap with existing cash

My take: momentum with a margin of safety

Rockwood is doing what it says on the tin: backing underappreciated UK smaller companies with specific catalysts and harvesting the re-rates. The period shows steady progress, but the three-year record is where the strategy shines. With a cash buffer, a growing asset base and a pipeline of corporate change stories, the set-up remains attractive.

The risk remains what it always is in small caps: liquidity, execution, and the mood music of markets. But if the manager is right about discounts to intrinsic value – and recent portfolio outcomes support that case – there is more to go at. For existing holders, this is a reassuring check-in. For would-be investors, the premium and the need for continued catalyst delivery are the watch items.