Aberforth Smaller Companies Trust PLC · LSE:ASL
Aberforth Smaller Companies Trust — Shareholder Meeting (March 2024)
21 slides from Aberforth Smaller Companies Trust's shareholder meeting presentation, March 2024
Slide 1: Aberforth Smaller Companies Trust plc AGM Investor Presentation
Aberforth Partners LLP Aberforth Smaller Companies Trust plc (“ASCoT”) AGM Investor Presentation March 2024 14 Melville Street - Edinburgh EH3 7NS Tel 0131 220 0733 enquiries@aberforth.co.uk - www.aberforth.co.uk Aberforth Partners LLP is authorised and regulated by the Financial Conduct Authority
Slide 2: 2023 financial highlights
2023 financial highlights Net Asset Value Total Return 8.2% DNSCI (XIC) Total Return 10.1% Ordinary Share Price Total Return 8.0% Total dividends of 50.5p Clients ─ Ordinary dividend of 41.5p (+6.4% year-on-year) ─ Special dividend of 9.0p Aberforth Partners LLP For more details see www.aber
Slide 3: ASCoT's record of dividend growth
ASCoT’s record of dividend growth ASCoT dividend per share (p) ASCoT’s dividend per share record 60 - Inception to 2023 +7% p.a. 50 - Financial crisis to 2023 +5% p.a. 9.0 8.3 40 41.5 Dividend (p) 7.75 39.0 6.70 4.00 35.2 33.3 30 32.0 2.75 30.3 2.75 28.8 27.4 26.0 24.8 23.5 20 22.3 20.8 19.0 19.0 19
Slide 4: 2023 context
2023 context A year of recovery for global stockmarkets after a challenging 2022 ─ Weaker economic activity in most developed economies ─ As expected, profits are under cyclical pressure ─ UK economy in the middle of the pack, but sentiment remains weak ─ Latterly, markets enthused by lower inflat
Slide 5: Value was a relative tailwind in 2023
Value was a relative tailwind in 2023 Value component of DNSCI (XIC) against DNSCI (XIC) 19% 870 17% 770 15% Value component of DNSCI (XIC) vs NSCI (XIC) 13% 670 11% 570 9% 470 7% 370 5% 3% 270 1% 170 -1% 70 -3% -30 -5% -7% -130 Aug-60 Oct-64 Nov-66 Jan-71 Jun-81 Jul-83 Aug-85 Oct-89 Nov-91 Jan-96 J
Slide 6: Another busy year for M&A
Another busy year for M&A M&A activity in the DNSCI (XIC) 30 25 27 20 19 18 15 17 4 14 14 10 12 12 12 12 5 5 0 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Deals completed Offers 31 Dec 23 Acquirers have been tempted by low valuations, despite higher interest rates 5 of the portfolio’s
Slide 7: The opportunity – a quadruple discount
The opportunity – a quadruple discount Historical PEs Quadruple discount: 1. The UK vs. RoW World 15.9 33Y average 0.84 16.0 13.9 Today 0.68 13.4 UK 2. Small caps vs. UK 10.2 10.8 33Y average 1.02 Today 0.96 13.6 Small cap* 3. Value vs. Small caps 10.3 33Y average 0.88 8.2 Today 0.77 12.0 4. Trust d
Slide 8: Balance sheet and free cash flow resilience
Balance sheet and free cash flow resilience 50% Leverage profile of ASCoT and the Tracked Universe 45% Strong balance sheets among small companies 40% Higher leverage among pub companies, lenders 35% % by value of Tracked Universe & Portfolio 30% 25% and real estate 20% 15% 10% 5% 0% Net cash ba
Slide 9: Outlook
Outlook Portfolio – well positioned ─ Balance sheets are unusually strong and valuations are attractive ─ The stockmarket has begun to look through reports of weak trading ─ Plentiful opportunities for the value investor, particularly in the UK ASCoT – advantages of its closed end structure and
Slide 10: Top holdings
Top 20 holdings Total Rank Company Activity portfolio (%) 1 Wilmington Business publishing & training 2.8 2 Wincanton Logistics 2.7 3 Morgan Advanced Materials Manufacture of carbon & ceramic materials 2.6 4 FirstGroup Bus & rail operator 2.5 5 Vesuvius Metal flow engineering 2.5 6 Redde Northgate V
Slide 11: Appendix
Appendix Aberforth Partners LLP 10
Slide 12: Aberforth Partners
Aberforth Partners A consistent investment approach deployed by a well resourced team ─ Small UK quoted companies with a value investment philosophy ─ Fundamental analysis backed up by stewardship and engagement Prioritising our existing clients ─ Ceiling on the business: 1.5% of the DNSCI (XIC)
Slide 13: ASCoT is differentiated by its value style
ASCoT is differentiated by its value style The pricing basis of financial markets has changed as interest rates rise ─ But style positioning among peers has changed little ASCoT Investment Trusts Mid Cap ITs Unit Trusts Size ASCoT Style Aberforth Partners LLP Source: Aberforth Partners LLP; Mornin
Slide 14: Stewardship and ESG
Stewardship and ESG Integrated in the investment process, supported by a bespoke database module Our framework analyses company specific risks and opportunities against a sector determined risk score ─ Environmental: Climate change, pressure on natural resources, pollution and waste ─ Social: Em
Slide 15: Glossary – Aberforth Funds
Glossary – Aberforth Funds Aberforth’s investment philosophy and putting it into practice is explained further at www.aberforth.co.uk/about-Aberforth/ Aberforth Standard Value refers to The Aberforth Smaller Companies Trust plc, Aberforth’s longest standing client. Accumulation Units: units no
Slide 16: Glossary – Aberforth Funds
Glossary – Aberforth Funds NSCI (XIC): The Numis Smaller Companies Index (excluding Investment Companies). PE: The price-earnings ratio (P/E ratio). Redemption Yield (Ordinary Share) is the annualised rate at which projected future income and capital cash flows (based on assumed future capital
Slide 17: Important information
Important information Aberforth Partners LLP 16
Slide 18: Important information
Important information Throughout this presentation references to: SMALL COMPANIES mean constituents of the Deutsche Numis Smaller Companies Index (Excluding Investment Companies) which are referred to as “DNSCI (XIC)”; LARGE COMPANIES mean constituents of the FTSE All-Share Index which are referre
Slide 19: Important information
Important information The information contained in this presentation does not constitute an offer of, or an invitation to apply for, securities in any jurisdiction where such an offer or invitation is unlawful or in which the person making such offer is not qualified to do so or to whom it is unla
Slide 20: Risk warnings
Risk warnings Capital may be at risk as the value of investments may go down as well as up and is not guaranteed; therefore investors may not get back the amount originally invested. Past performance is not a guide to future performance, nor a reliable indicator of future results or performance.
Slide 21: Risk warnings
Risk warnings An investment trust may only pay dividends to the extent that it has distributable profits available for that purpose. A reduction in the income from an investment trust's portfolio could adversely affect the yield, if any, on its shares. Investment trusts may borrow money in order
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