Standard Life UK Smaller reports on difficult year – Standard Life UK Smaller Companies reports that, for the year ended 30 June 2021, it generated a return on NAV of 41.9% and a return to shareholders of 46.9%. However, both of these figures are below the return on the company’s benchmark – the Numis Smaller Companies plus AIM (excluding investment companies) Index – which returned 52.3%.
The chairman explains that the trust “typically underperforms in the early stages of a market recovery, as we saw in the immediate aftermath of the announcements of the Covid-19 vaccine approvals last November“.
The COVID period has also been marked by pressures on dividends and it is perhaps unsurprising that the trust’s revenue per share fell in comparison with the previous year – by 4.6% to 6.43p. The board has opted to use some of the company’s revenue reserves to maintain the dividend at 7.7p.
Name change
The board notes that the Standard Life brand is now owned by the Phoenix Group. It plans to change the name of the company to abrdn UK Smaller Companies Growth Trust. Shareholders get to vote on this at the AGM.
If approved, the change of the name will be effected as soon as possible after the AGM, its identifier will become AUSC and its website address will become: www.abrdnuksmallercompaniesgrowthtrust.co.uk.
Extract from the manager’s report
“Relative performance “pre-vaccine” was good and was driven by some really quite spectacular trading statements, from the likes of Kainos, Games Workshop, Ergomed, Impax Asset Management, Team17, Gear4Music and Focusrite. However, following the announcement of a Covid vaccine, the portfolio’s performance appears pedestrian when compared to the index. This impact was particularly fierce in the week after the announcement of the first vaccine. Share price returns since March 2021 seem to be more rational and tend to reflect underlying trading within individual company holdings.
The five leading performers during the year were as follows:-
Future (closing weight 4.8%) +2.4% completed the acquisition of GoCo plc, the price comparison website. It also turned in a couple of sets of stellar results.
Kainos (closing weight 4.0%) +1.1% announced that results would be materially ahead of expectations and reinstated the dividend. Government digitalisation of processes continues apace as does Workday installations.
Impax Asset Management (closing weight 2.9%) +0.9% continues to ride the ESG wave and take in assets at a prodigious rate as it invests in companies well positioned to benefit from the transition to a more sustainable global economy.
Next Fifteen Communications (closing weight 1.9%) +0.7% has gained momentum in the digital media space under the leadership of industry veteran founder Tim Dyson.
Alpha Financial Markets (closing weight 2.4%) +0.5% is a specialist in providing consultancy to the asset management industry which is currently facing significant change.
The five worst performers during the year were as follows:-
Hilton Food Group (closing weight 2.6%) -1.5%. Although this innovative international beef and fish packer has performed well, there is the feeling abroad that it will suffer post-Covid when restaurants are open again.
Trainline (position sold during the year) -1.2%. The on-line rail ticketing agent was hit hard by the announcement that the new rail authority GB Rail would establish its own competing on-line ticketing system.
RWS (closing weight 1.7%) -1.1% has weakened following the share acquisition of SDL. This language translation company was seen as low grade by investors.
AO World (closing weight 1.3%) -1.0% decided to go for growth rather than profitability as it expands aggressively in the German market with its “appliances on-line” model.
First Derivatives (position sold during the year) -0.9%. This software company has not recovered from the untimely death of founder and major shareholder Brian Conlan.“
SLS : Standard Life UK Smaller reports on difficult year