Flat year for Standard Life UK Smaller – that’s good
After a difficult start, when the NAV dropped by 19.5% in total return terms, Standard Life UK Smaller Companies came roaring back in the second half of its financial year to finish with an NAV total return of -1.1% and a share price return of -0.3%. These flat numbers for the year ended 30 June 2019 contrast with losses on its benchmark, the Numis Smaller Companies plus AIM (ex investment companies) Index, of 7.2%.
The dividend rises by 10% to 7.7p, despite the distorting effect of merging this trust with Dunedin Smaller Companies (adding £38m of assets) early on in the financial year. The increased size of the trust helped the ongoing charges ratio to fall to 0.90% from 1.04%.
Extract from the manager’s report
“Our five leading performers in the period have been as follows:-
Marshalls (3.5% ending weight), the block paving company has benefitted from their 20:20 self-improvement efficiency programme which is coming though strongly.
Gamma Communications (3.8%) has seen a significant acceleration in its SIP trunking, PBX, Ethernet and a host of other services to business in the UK in competition to BT.
Kainos Group (3.2%) is a data services company that provides solutions to Government agencies interacting with the public and business. They are also a major Workday HR software provider. Their business has gone from strength to strength. They are seen as one of the few actual beneficiaries of Brexit
RWS Group (3.8%) is an international language translation and intellectual property management business. Their recent Moravia acquisition has surpassed expectations.
4imprint Group (2.6%). Based in Oshkosh, Wisconsin, but UK listed, the promotional products company is having great success with its most recent marketing initiatives.
Other strong performers include JD Sports Fashion following the success of their Finish Line acquisition and Intermediate Capital Group (ICG), the high yield asset management specialist, Aveva Group, a leading industrial design software company performed well, and like ICG, was inherited from Dunedin Smaller Companies Investment Trust (“Dunedin”) following the merger in October 2018. Gratifyingly, new additions Future, GlobalData and Games Workshop performed well.
The poorest performer was Accesso Technology, the visitor attractions software company, which ran out of growth. The holding has been sold since the year end. XP Power (portfolio weight: 2.2%), the Far-East-based manufacturer of electronic components and sub- systems was at the wrong end of the semi-conductor cycle. Fevertree (2.5%) saw profit taking in the latter part of calendar 2019. CVS Group, which has been sold suffered through vet salary inflation. First Derivatives (3.2%) likewise traded down towards the tail-end of calendar 2018. Finally, Patisserie Holdings which was one of the nine new holdings acquired by the Company as part of the merger with Dunedin appear to have been the victim of fraudulent accounting practices. Almost as soon as the news broke, we elected to write the holding down and, as the position worsened, we wrote off the entire position. Prior to the revelations, the company represented 0.7% of the portfolio.”
SLS : Flat year for Standard Life UK Smaller – that’s good
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