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LONDON (Alliance News) - Aberforth Smaller Cos Trust PLC on Friday reported a decrease in assets in 2018 as the trust performed in line with its benchmark.
Chair Paul Trickett also announced his intention not to stand for re-election at the trust's upcoming annual general meeting at the end of February.
Aberforth Smaller Cos also announced it has hired Richard Davidson as non-executive director, effective Saturday. He is currently chair of Miton Global Opportunities PLC. Davidson is expected to take over from Trickett at the end of the trust's AGM.
FTSE 250-listed Aberforth Smaller Cos net asset value per share at December 31 was 1,273.72 pence compared to 1,543.72p the year before, a 17% decrease.
The trust's net assets decreased 20% in the period to GBP1.15 billion from GBP1.44 billion the year before.
Aberforth Smaller Cos bought back 2.4 million shares, for GBP32.8 million, in March - which represented about 2.6% of the trust's issued share capital.
Aberforth Smaller Cos NAV total return for 2018 was negative 15.4% compared to its benchmark, the Numis Smaller Cos Index - excluding investment companies - Total Return, losing 15.3%.
The trust attributed its negative return on UK stock "struggling" in 2018, with small companies having a "weak" year.
Trickett said: "Around the world, 2018 proved to be a year of negative returns for the vast majority of stockmarket indices. As the year progressed, trade wars, politics and slowing economic activity all weighed heavily on markets. Perhaps unsurprisingly, with Brexit as its companion, small UK quoted companies did not escape."
Aberforth Smaller Cos noted a split in its portfolio's performance into firms that derive the majority of its revenue from the UK economy and those more dependent on overseas. The trust attributed this to the "overhang" of Brexit.
Aberforth Smaller Cos said those that generate revenue domestically underperformed their overseas earner peers by 24%, reflecting the influences of sterling weakness.
The trust said: "The overseas companies have seen their sterling profits rise as income streams earned in euros or dollars have been translated into pounds. In contrast, the domestics have had to deal with insipid consumer spending and a hit to gross margins as foreign currency input costs have risen in sterling terms."
Aberforth Smaller Cos' portfolio is weighted 62% towards domestic earners.
The trust declared a final dividend of 20.75p, giving a total dividend of 30.25p, a 5.0% increase on the 28.80p paid out the year before. The trust also declared a special dividend of 7.75p for 2018, 16% higher than the special dividend paid last year.
Tricket added: "Throughout my tenure as chair, politics has cast a somewhat dark shadow. Two referendums, two general elections and the rise of populism globally have contributed to a challenging investment environment. Brexit negotiations are currently centre stage. The difficulties in reconciling a narrow referendum outcome, which would seem to be at odds with the majority in the Houses of Parliament, should not be underestimated, although it is perhaps the transition from quantitative easing to quantitative tightening that will have more lasting impact on the investment world.
"The coming year will undoubtedly bring an array of surprises. However, after a tough 2018, the board looks forward with a degree of optimism, which is based upon the attractive valuations and the consistency of approach and professionalism of the managers."
Shares in Aberforth Smaller Cos were trading flat on Friday afternoon at 1,210.00 pence each.
