Abby Glennie

This outperforms the Numis Smaller Companies (ex- Investment Trusts) return of 21.9% over the reporting period.

The company’s share price performance was also ahead of the benchmark, with a total return (including dividends reinvested) of +22.9% over the year.

Three and five year NAV performance against the benchmark was strong, with returns of +68.2% and +91.0% respectively, versus composite benchmark returns of +37.3% and +36.8%.

The company’s board has announced a dividend of 8.85p per share for the year, signalling the highest level in ten years, offering a yield of 24%, higher than its benchmark which yielded 2.1%.

Earnings per ordinary share for the year ended 31 December 2021 was 9.69p (2020: 5.60p).

Over three and five years, the dividend has increased by 20.4% and 29.2% respectively, compared to rises in Consumer Prices Index (CPI) of 7.5% and 13.0%.

Robert Lister, chairman, abrdn Smaller Companies Income Trust plc, said: “In another year in which the Covid-19 pandemic has dominated the headlines, abrdn Smaller Companies Income Trust plc has delivered strong absolute and relative performance, with a net asset value total return of +30.4% compared to the benchmark, the Numis Smaller Companies (ex Investment Trusts) Index, which returned +21.9%. Share price performance was also ahead of the benchmark, with a total return (including dividends reinvested) of +22.9% over the period.

“The Manager’s investment process has delivered good results and it is pleasing to see the return of a more positive outlook for markets and to see dividend payments resume.”

Abby Glennie, co-manager, abrdn Smaller Companies Income Trust, added: “We are positive about the outlook and the long-term discipline that the investment process provides. While there will have been lasting impacts associated with the UK pandemic, particularly around supply chain and inflation issues, the Quality Growth Momentum (QGM) process the Company adheres to will continue to identify businesses that can drive up earnings in difficult macro environments.

“Concerns around supply chain issues remain a key concern for some sectors, and inflation overall, and how transitory that is, remains a question. There have been pleasing messages to customers across the portfolio on the ability to pass through inflation and protect margins. Also, much of the portfolio has limited exposure to logistics and supply chain concerns, which insulates those names from some market headwinds.

“The dividend outlook looks encouraging, with the market broadly and the company’s portfolio back to strong dividend payments. Dividend growth could be expected to grow roughly in line with earnings growth, and with supportive balance sheet strength.”

She continued: “It has been encouraging to see that the number of new issues coming to the market continues to grow, bringing further diversity and investment opportunities to the small and mid capital company arena. The start of the year can traditionally see some reversal in market trends, so it might be expected to see different aspects dominate markets and the first quarter reporting season will be key, with earnings results coming through, which is where the companies in the portfolio are expected to prove themselves.”

Ms Glennie concluded: “2021 was characterised by a more stable environment post-Pandemic, driven by the reopening of the global economy. However, the Pandemic created a unique period for markets and has driven various headwinds and volatility in the global environment, namely the supply chain challenges and inflationary pressures.

“This, combined with the conflict with Russia and Ukraine creates market uncertainty for the year ahead, however, we will continue to look to identify companies in line with our bottom-up QGM process.”