Aberforth Smaller Companies Trust PLC · LSE:ASL
Aberforth Smaller Companies Trust — Shareholder Meeting (March 2022)
21 slides from Aberforth Smaller Companies Trust's shareholder meeting presentation, March 2022
Slide 1: AGM Investor Presentation
Aberforth Partners LLP Aberforth Smaller Companies Trust plc (“ASCoT”) AGM Investor Presentation March 2022 14 Melville Street ‐ Edinburgh EH3 7NS Tel 0131 220 0733 ‐ Fax 0131 220 0735 enquiries@aberforth.co.uk ‐ www.aberforth.co.uk Aberforth Partners LLP is authorised and regulated by the Financial
Slide 2: 2021 Financial Highlights
2021 Financial Highlights Net Asset Value Total Return +32.5% NSCI (XIC) Total Return +21.9% Ordinary Share Price Total Return +20.3% ─ Discount to NAV increased to 12.6% from 3.4% a year ago Clients Total dividends of 35.2p (+5.7% year‐on‐year) Tactical gearing remains in place ─ £86.5m d
Slide 3: 2021 Context
2021 Context Economies mounted a recovery from the pandemic Growth momentum slowed in the second half ─ Supply chain disruptions, high inflation and fears of a new variant The rhetoric of central banks is beginning to shift in response to inflation Investor re‐engagement with the UK and Valu
Slide 4: The UK discount
The UK discount Meaningful capital outflows from UK equities since Brexit ─ £21.7bn of net retail outflows from the asset class since 2016 ─ The figure compares with £237.6bn of retail capital invested in UK Equity funds as of December 2021 (Source: Investment Association) Result: valuation disc
Slide 5: A demonstrable value premium in small UK quoted companies
A demonstrable value premium in small UK quoted companies The Value Premium: NSCI (XIC) value component vs NSCI (XIC) * Index 19% 870 – since Index inception +3.1% p.a. – since **ASCOT’s inception +1.5% p.a. 17% 15% 670 13% Value component of NSCI (XIC) vs NSCI (XIC) 11% 9% 470 7% 5% 3% 270 1% ‐1% 7
Slide 6: ASCOT valuations remain attractive
ASCOT valuations remain attractive EV/EBITA is Aberforth’s preferred valuation metric ─ It helps comparison by adjusting for companies’ differing capital structures Number EV/EBITA of stocks 2020 2021 2022 2023 ASCOT 77 12.4x 9.4x 8.1x 7.2x Tracked Universe 245 15.0x 12.9x 10.9x 9.2x Pre pandemi
Slide 7: UK valuations are inviting corporate interest
UK valuations are inviting corporate interest M&A activity in the NSCI (XIC) 30 25 27 1 6 20 19 18 18 15 17 14 10 12 12 12 5 5 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 Deals completed Offers made 31 Dec 21 Approaches etc. 31 Dec 21 Holdings in the year affected by M&A ─ U and I, Vectura
Slide 8: Resilient dividends
Resilient dividends Portfolio categorised by holding's most recent dividend action 30 25 Number of companies 20 15 27 24 10 16 5 5 5 0 cutters nil payers no changers increasers returners Smaller companies’ dividends are recovering more quickly than we had expected a year ago ─ Some companies are s
Slide 9: ASCoT is differentiated by its value style
ASCoT is differentiated by its value style *Aberforth Investment Size Trusts Mid Cap ITs Unit Trusts * ASCoT Style Aberforth Partners LLP *Aberforth “Standard Value” portfolio. Source: Aberforth Partners LLP; Morningstar. Data available as at 10 January 2022. 8
Slide 10: Outlook
Outlook The demand recovery continues, though is complicated by supply chain volatility and higher energy prices Inflation would challenge the status quo in markets Ukraine ─ Limited direct exposure to Ukraine or Russia ─ Main impact is likely to be higher energy costs ─ Another opportunity fo
Slide 11: Appendix
Appendix Aberforth Partners LLP 10
Slide 12: Top holdings
Top 20 holdings Total Rank Company Activity portfolio (%) 1 Reach UK newspaper publisher 3.4 2 Redde Northgate Van rental 3.0 3 Provident Financial Personal credit provider 2.8 4 FirstGroup Bus & rail operator 2.8 5 Morgan Advanced Materials Manufacture of carbon & ceramic materials 2.7 6 Robert Wal
Slide 13: Aberforth Partners update
Aberforth Partners update 1. Over 30 years of small cap value investing 2. Self‐imposed ceiling on the business to prioritise existing investors ─ AUM capped at c.1.5% of the NSCI (XIC)’s market cap 3. Consistency: ownership structure, collegiate process, investment focus ─ Rob Scott‐Moncrieff joine
Slide 14: ESG considerations
ESG considerations Aberforth will not launch ESG products We believe ESG factors have an effect on corporate earnings and valuations UK smaller companies are at different stages of their ESG journey but there is a broad recognition of the importance of climate issues Key findings of our 2021
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 Redemption Yield (Ordinary Share) is the annualised rate at which projected future income and capital cash flows (based on assumed future capital/dividend growth rates) is discounted to produce an amount equal to the share price at the date of calculation. Redemption Y
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 Numis Smaller Companies Index (Excluding Investment Companies) which are referred to as “NSCI (XIC)”; LARGE COMPANIES mean constituents of the FTSE All‐Share Index which are referred to as “F
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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