
abrdn UK Smaller Companies Growth Trust plc 29
Strategic Report Governance Overview General Portfolio Corporate Information Financial Statements
Other new additions included;
Avon Technologies is a defence business, with a focus on
respirators and helmets. Whilst end market demand is
improving with countries across Europe committing to
higher defence budgets, Avon also has the drivers of
operational improvement under a new and impressive
management team.
Bloomsbury Publishing is a leading independent publishing
house of a wide range of book types as well as academic
publishing. It has a strong track record of identifying and
supporting new and leading authors, as well as benefitting
from continued sales of back catalogue. Some of its best-
known titles include the Harry Potter series and Sarah J.
Mass. ME Group is an operator of vending services, with a
focus on photo machines and communal laundry facilities.
Its key regions of operation are France and the UK, but it is
also present in other European countries. The photo
booths business is high return and generates strong cash
flows which fund the rollout of capacity in the newer
growth area of laundry.
Savills is a leading global real estate business, with
residential and commercial exposure, whilst Rotork is a
global leader in mission critical intelligent flow controls,
including actuators. Rotork sells into various end markets
including oil and gas, water and power. On the Beach is a
UK-based online travel agency, with a focus on outbound
package holidays, offering consumers a broad range of
packages across destinations and airlines. New areas of
growth are expected to come from city breaks and
outbound Irish business following the company’s
partnership with Ryanair.
Breedon is a vertically-integrated construction materials
business, operating in the UK, Ireland and the US. It has
grown through organic and acquisitive activities, and the
US is its newest geographic exposure. Galliford Try is a one
of the UK’s leading construction groups, operating across
a number of sectors such as education, defence, health,
custodial and infrastructure. Wickes is a UK home
improvement retailer, serving both trade and DIY
audiences, as well as operating a strong kitchen and
bathrooms sales division. Bellway is a UK housebuilder,
where we expect to see end markets improving over the
coming years as mortgage affordability and availability
improve, and volumes and transactions increase.
Trustpilot is a review business, creating an ecosystem for
consumers and companies to benefit from open market
reviews, as well as for companies to have insightful data
and analysis on their customers’ experiences. The UK is a
large market for the company with its market presence
helping create a flywheel effect, with the US its target
growth area. Alfa is a global leading software provider to
the asset finance industry, including auto, equipment and
wholesale finance businesses.
We exited the following holdings across the portfolio;
4imprint is a US promotion products business, where
challenges around tariffs, GDP risks, and lack of new
customer growth all caused concerns. Clarkson, the global
ship broker, was also exited on similar concerns about
indirect tariff risks, risks of weaker shipping rates, and
possible delays in big decision-making capital expenditure
by customers. Liontrust Asset Management is a UK asset
manager, where outflows have continued to be
challenging. YouGov, the international market research
business, has suffered from reduced discretionary spend
by enterprise clients, increasing competition from peers,
and poor execution from both past and current
management teams. Robert Walters, the recruitment
company, has continued to suffer from tough recruitment
markets, with companies far from being on hiring sprees,
and employees more reluctant to move jobs given
uncertain environments and smaller wage increase
potential compared to recent years. Treatt has continued
to suffer from slower demand and de-stocking, and we
are cautious of the level of management turnover.
Midwich and Ricardo also experienced slower growth.
Marlowe was impacted by a reduction in discretionary
spending, uncomfortable for what was tabled as a
resilient, recurring, demand business. Big Technologies
went through a series of disappointing outcomes on
competitive tenders, as well as suffering an ongoing (and
since exit, increasingly complicated) legal case. Alpha
Financial Markets, the consultant to asset management
and insurance industries, was acquired by Bridgepoint,
and hence we exited that holding.
Notable additions to positions this year included Hunting
(where international growth opportunities have emerged
strongly), Telecom Plus, Premier Foods and Johnson Service
(all of which have notable defensive revenue streams);
whilst notable reductions included Diploma and Games
Workshop (where both companies are now constituents
of the FTSE 100 Index given their strong performance and
therefore no longer part of the smaller company
universe), discoverIE (where de-stocking cycles and
lower demand have been elongated), Hill & Smith,
and
Hilton Food.