Half-yearly Report

SMALL COMPANIES DIVIDEND TRUST PLC Half-yearly Report for the six months ended 31 October 2013 The Half-yearly Report and Accounts can be accessed via the Investment Manager's website at www.chelvertonam.com or by contacting the Company Secretary on telephone 01392 412122. Investment objective and policy The investment objective of Small Companies Dividend Trust PLC (the "Company") is to provide Ordinary shareholders with a high income and opportunity for capital growth, having provided a capital return sufficient to repay the capital entitlement of the Zero Dividend Preference shares issued by the subsidiary company, Small Companies ZDP PLC ("SCZ"). The Group's funds are invested principally in smaller capitalised UK companies. The portfolio comprises companies listed on the Official List and companies admitted to trading on AIM. The Group does not invest in other investment trusts or in unquoted companies. No investment is made in preference shares,loan stock or notes, convertible securities or fixed interest securities. Financial highlights 31 October 30 April 2013 2013 % change Capital Total net assets (£'000) 29,788 22,579 31.93 Net asset value per Ordinary share 183.31p 138.95p 31.93 Mid-market price per Ordinary share 162.75p 128.50p 26.65 Discount 11.22% 7.52% Net asset value per Zero Dividend Preference share 107.10p 104.00p 2.98 Mid-market price per Zero Dividend Preference share 115.00p 112.75p 2.00 Premium 7.38% 8.41% Six months to Six months to 31 October 2013 31 October 2012 % change Revenue Return per Ordinary share 4.75p 3.68p 29.08 Dividend per Ordinary share* 2.95p 2.80p 5.36 Six months to Six months to 31 October 2013 31 October 2012 Total return Total return on Group's net assets** 34.72% 13.60% * Dividend per Ordinary share includes the first interim paid and second interim declared for the period to 31 October 2013 and 2012 and will differ from the amounts disclosed within the statement of changes in net equity. ** Adding back dividends distributed in the period. Interim management report Results This half-yearly report covers the six months to 31 October 2013. The net asset value per Ordinary share at 31 October 2013 was 183.31p, an increase of 31.93% in the past six months compared to an increase of 15.67% in the MSCI Small Cap Index. Since the beginning of the Company's financial year, the Ordinary share price has increased from 128.50p to 162.75p at 31 October 2013, a rise of 26.65% whilst the discount has increased from 7.52% to 11.22% over the same period. Since then the share price has increased to 172.25p as at 13 December 2013, whilst the discount to NAV has narrowed to 5.36%. Dividend A first interim dividend of 1.475p (2012: 1.40p) per Ordinary share was paid on 4 October 2013. The Board has declared a second interim dividend of 1.475p per Ordinary share (2012: 1.40p) payable on 10 January 2014 to shareholders on the register on 27 December 2013, making a total for the half year of 2.95p per Ordinary share (2012: 2.80p). At present it is anticipated that the Company will maintain this level of dividend for the third quarter. Portfolio In the last six months we have increased our investment in six of our existing holdings including Alumasc and KCOM and we have added five new names to the portfolio. ACM Shipping is a shipbroker specialising in the tanker market, Town Centre Securities is a property investment and development company and Bloomsbury is a publishing business. We bought two well known names after earnings disappointments, Ladbrokes where the contribution from the digital division was downgraded and Greggs where the hot summer weather was partially to blame for downgrades. On 1 November 2013, we added a further new name to the portfolio - GLI Finance which provides finance to SMEs. Funds were raised from the sale of our holdings in Victoria, Close Brothers and Arbuthnot and by reducing some of our larger weightings which are now on lower yields, including Sanderson, St Ives and Jarvis Securities. Outlook Despite the new found optimism amongst equity investors the reality of the past couple of months is that the rate of earnings upgrades has begun to slow. Whilst we are not overly concerned by this, as it is more a reflection of analyst's expectations being too high rather than deterioration in corporate earnings, it does highlight the need for a period of sustained earnings upgrades to move the market from its current trading range. In this respect the busy March reporting season will be crucial in setting the tone for the remainder of the year as a wide range of companies update us on their prospects. Whilst short term valuations will continue to be driven by changes in earnings expectations our focus remains firmly on the longer term prospects for dividend growth and the underlying yield of our investment universe. The discipline of only buying new stocks on prospective yields of above four percent and selling holdings as yields fall below two percent gives us a tangible basis forvaluation. It is often the case that the short term 'noise' created by a disappointing few months for earnings can create a sound medium term investment opportunity for us as income investors. The performance of the domestic equity market over the last six months has been driven by a renewed confidence amongst investors and is a reflection of the improvement in the underlying economy. As GDP growth has continued to accelerate the debate amongst commentators has shifted from whether or not the economy is improving to a discussion about the strength of the recovery. This is positive for our portfolio as the small companies that we invest in tend to be relatively highly exposed to the fortunes of the domestic economy. Despite the strong rise in share prices, as interest rates are forecast to remain low for the foreseeable future, the dividend yield on the stocks that we invest in and ultimately on the fund itself will help to underpin valuations. Chelverton Asset Management Limited 17 December 2013 Principal risks The principal risks facing the Group are substantially unchanged since the date of the annual report for the year ended 30 April 2013 and continue to be as set out in that report. Risks faced by the Group include, but are not limited to, market risk, discount volatility, regulatory risk, financial risk, risks associated with banking counterparties and the risk of non-compliance with Section 1158 of the Corporation Tax Act 2010. Responsibility statement of the Directors in respect of the half-yearly report We confirm that to the best of our knowledge: • the condensed set of financial statements has been prepared in compliance with IAS 34 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities and financial position of the Group; and • the interim management report and notes to the half-yearly report include a fair view of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of the important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements;and a description of the principal risks and uncertainties for the remaining six months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Group during that period; and any changes in the related party transactions described in the last annual report that could do so. This half-yearly report was approved by the Board of Directors on 17 December 2013 and the above responsibility statement was signed on its behalf by Lord Lamont, Chairman. Condensed consolidated statement of comprehensive income (unaudited) for the six months ended 31 October 2013 Six months to 31 October 2013 Year to 30 April 2013 Six months to 31 October 2012 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (audited) Gains on investments - 7,478 7,478 - 6,094 6,094 - 2,155 2,155 Investment income 922 - 922 1,420 - 1,420 739 - 739 Expenses (see note 2) (150) (148) (298) (265) (226) (491) (126) (99) (225) Net return before finance costs and taxation 722 7,330 8,102 1,155 5,868 7,023 613 2,056 2,669 Finance costs Bank interest payable on overdraft and loan - - - (18) (54) (72) (18) (54) (72) Movement in fair value of ineffective element of interest rate swap - - - 3 10 13 3 10 13 Appropriations in respect of Zero Dividend Preference shares - (263) (263) - (340) (340) - (88) (88) - (263) (263) (15) (384) (399) (15) (132) (147) Net return before taxation 772 7,067 7,839 1,140 5,484 6,624 598 1,924 2,522 Taxation (see note 3) - - - - - - - - - Net return after taxation 772 7,067 7,839 1,140 5,484 6,624 598 1,924 2,522 Other comprehensive income Movement in fair value of cash flow hedge - 52 52 Total comprehensive income for the period 7,839 6,676 2,574 Revenue Capital Total Revenue Capital Total Revenue Capital Total pence pence pence pence pence pence pence pence pence Return per Ordinary share (see note 4) 4.75 43.49 48.24 7.02 33.75 40.77 3.68 11.84 15.52 Zero Dividend Preference share (see note 4) - 3.10 3.10 - 4.00 4.00 - 1.04 1.04 The total column of this statement is the statement of comprehensive income of the Group prepared in accordance with IFRS as adopted by the EU. All revenue and capital items in the above statement derive from continuing operations. All of the net return for the period and the total comprehensive income for the period is attributed to the Shareholders of the Group. The supplementary revenue and capital return columns are presented for information purposes as recommended by the Statement of Recommended Practice issued by the Association of Investment Companies ("AIC") Condensed consolidated statement of changes in net equity (unaudited) for the six months ended 31 October 2013 Share Share premium Capital Hedge Revenue capital account reserve reserve reserve Total £'000 £'000 £'000 £'000 £'000 £'000 Six months ended 31 October 2013 30 April 2013 4,063 11,917 5,273 - 1,326 22,579 Total comprehensive return for the period - - 7,067 - 772 7,839 Dividends paid (see note 5) - - - - (630) (630) 31 October 2013 4,063 11,917 12,340 - 1,468 29,788 Year ended 30 April 2013 (audited) 30 April 2013 4,063 11,917 2 (52) 1,250 17,180 Total comprehensive return for the year - - 5,484 52 1,140 6,676 Expenses of Zero Dividend Preference share issue - - (213) - - (213) Dividends paid - - - - (1,064) (1,064) 30 April 2013 4,063 11,917 5,273 - 1,326 22,579 Six months ended 31 October 2012 30 April 2012 4,063 11,917 2 (52) 1,250 17,180 Total comprehensive return for the period - - 1,924 52 598 2,574 Expenses of Zero Dividend Preference share issue - - (237) - - (237) Dividends paid - - - - (610) (610) 31 October 2012 4,063 11,917 1,689 - 1,238 18,907 Condensed consolidated balance sheet (unaudited) as at 31 October 2013 31 October 30 April 31 October 2013 2013 2012 £'000 £'000 £'000 (audited) Non-current assets Investments at fair value through profit or loss 38,384 31,318 27,103 Current assets Trade and other receivables 619 194 215 Cash and cash equivalents 30 39 287 649 233 502 Total assets 39,033 31,551 27,605 Current liabilities Trade and other payables (142) (132) (110) (142) (132) (110) Total assets less current liabilities 38,891 31,419 27,495 Non-current liabilities Zero Dividend Preference shares (9,103) (8,840) (8,588) (9,103) (8,840) (8,588) Total liabilities (9,245) (8,972) (8,698) Net assets 29,788 22,579 18,907 Represented by: Share capital 4,063 4,063 4,063 Share premium account 11,917 11,917 11,917 Capital reserve 12,340 5,273 1,689 Revenue reserve 1,468 1,326 1,238 Equity shareholders' funds 29,788 22,579 18,907 Net asset value per: (see note 6) pence pence pence Ordinary share 183.31 138.95 116.35 Zero Dividend Preference share 107.10 104.00 101.04 Condensed consolidated statement of cash flows (unaudited) for the six months ended 31 October 2013 Six months to Year to Six months to 31 October 30 April 31 October 2013 2013 2012 £'000 £'000 £'000 (audited) Operating activities Investment income received 945 1,432 767 Investment management fee paid (165) (254) (180) Administration and secretarial fees paid (31) (60) (30) Other cash payments (102) (146) (86) Cash generated from operations 647 972 471 Loan interest paid - (101) (101) Net cash inflow from operating activities (see note 7) 647 871 370 Investing activities Purchases of investments (3,774) (7,643) (4,073) Sales of investments 3,748 4,538 1,293 Net cash outflow from investing activities (26) (3,105) (2,780) Financing activities Issue of Zero Dividend Preference shares - 8,500 8,500 Expenses of Zero Dividend Preference share issue - (213) (243) Repayment of bank loan - (4,000) (4,000) Dividends paid (630) (1,064) (610) Net cash outflow/(inflow) from financing activities (630) 3,233 3,647 (Decrease)/increase in cash and cash equivalents for period (9) 989 1,237 Cash and cash equivalents at start of period 39 (950) (950) Cash and cash equivalents at end of period 30 39 287 Notes to the condensed half-yearly report for the six months ended 31 October 2013 1. General information The financial information contained in this half-yearly report does not constitute statutory financial statements as defined in Section 434 of the Companies Act 2006. The statutory financial statements for the year ended 30 April 2013, which contained an unqualified auditors' report, have been lodged with the Registrar of Companies and did not contain a statement required under the Companies Act 2006. These statutory financial statements were prepared under International Financial Reporting Standards ('IFRS') and in accordance with the Statement of Recommended Practice: Financial Statements of Investment Trust Companies, and Venture Capital Trusts issued by the AIC in January 2009, except to any extent where it conflicts with IFRS. The Group has considerable financial resources and therefore the Directors believe that the Group is well placed to manage its business risks and also believe that the Group will have sufficient resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing this half-yearly report. This half-yearly report has not been reviewed by the Group's Auditors. This half-yearly report has been prepared using accounting policies adopted in the audited financial statements for the year ended 30 April 2013. This report has also been prepared in compliance with IAS 34 'Interim Financial Reporting'. 2. Expenses 31 October 30 April 31 October 2013 2013 2012 £'000 £'000 £'000 Investment management fee 184 277 124 Subsidiary operating costs 10 18 6 Other expenses 104 196 95 298 491 225 Transfer to capital* (148) (226) (99) 150 265 126 * 75% of the investment management fees and 100% of the subsidiary operating costs are taken to capital. 3. Taxation The Company has an effective tax rate of 0%. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an Investment Trust and there is expected to be an excess of management expenses over taxable income and thus there is no charge for corporation tax. 4. Return per share Ordinary shares Revenue return per Ordinary share is based on revenue on ordinary activities after taxation of £772,000 (30 April 2013: £1,140,000, 31 October 2012: £598,000) and on 16,250,000 (30 April 2013: 16,250,000, 31 October 2012:16,250,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period. Capital return per Ordinary share is based on the capital profit of £7,067,000(30 April 2013: £5,484,000, 31 October 2012: £1,924,000) and on 16,250,000(30 April 2013: 16,250,000, 31 October 2012: 16,250,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the period. Zero Dividend Preference shares Capital return per Zero Dividend Preference share is based on allocations from the Company of £263,000 (30 April 2013: £340,000, 31 October 2012: £88,000) and on 8,500,000 (30 April 2013: 8,500,000, 31 October 2012: £8,500,000) Zero Dividend Preference shares being the weighted average number of Zero Dividend Preference shares in issue during the period. 5. Dividends During the period, a fourth interim dividend of 2.40p per Ordinary share for the year ended 30 April 2013, together with a first interim dividend of 1.475p per Ordinary share for the year ending 30 April 2014, have been paid to shareholders. In addition the Board has declared a second interim dividend of 1.475p per Ordinary share payable on 10 January 2014 to shareholders on the register at 27 December 2013. 6. Net asset values Ordinary shares The net asset value per Ordinary share is based on assets attributable of £29,788,000 (30 April 2013: £22,579,000, 31 October 2012: £18,907,000) and on 16,250,000 (30 April 2013: 16,250,000, 31 October 2012: 16,250,000) Ordinary shares being the number of shares in issue at the period end. Zero Dividend Preference shares The net asset value per Zero Dividend Preference share is based on assets attributable of £9,103,000 (30 April 2013: £8,840,000, 31 October 2012: £8,588,000) and on 8,500,000 (30 April 2013: 8,500,000, 31 October 2012: 8,500,000) Zero Dividend Preference shares being the number of shares in issue at the period end. 7. Reconciliation of net return before and after taxation to net cash inflow from operating activities 31 October 30 April 31 October 2013 2013 2012 £'000 £'000 £'000 Net return before and after taxation 7,839 6,624 2,522 Net capital return (7,067) (5,484) (1,924) Movement in fair value of ineffective element of interest rate swap - (13) (13) Decrease in receivables 13 11 21 Increase/(decrease) in payables 10 3 (93) Interest and expenses charged to the capital reserve (148) (270) (143) Net cash inflow from operating activities 647 871 370 8. Related party transactions The Group's investments are managed by Chelverton Asset Management Limited, a company in which Mr van Heesewijk, a Director of the Company, has an interest. The amounts paid to the Investment Manager in the period to 31 October 2013 were £184,000 (year ended 30 April 2013: £277,000, period to 31 October 2012: £124,000). At 31 October 2013 there were amounts outstanding to be paid to the Investment Manager of £98,000 (year ended 30 April 2013: £79,000, period to 31 October 2012: £nil). During the year ended 30 April 2013 Chelverton Asset Management Limited contributed £100,000 towards the issue costs relating to the Zero Dividend Preference share issue. Principal portfolio investments as at 31 October 2013 Top 20 holdings Market value % of Industrial classification £'000 portfolio Avesco Group Media 1,015 2.6 Photo-Me International Leisure Goods 998 2.6 Jarvis Securities Financial Services 960 2.5 Randall & Quilter Non Life Insurance 921 2.4 St Ives Support Services 905 2.3 Braemar Shipping Services Industrial Transportation 886 2.3 Chesnara Life Insurance 876 2.3 Marshalls Construction & Materials 870 2.3 Wilmington Group Media 865 2.2 Smiths News Support Services 840 2.2 Alumasc Group Construction & Materials 819 2.1 Clarke (T) Construction & Materials 804 2.1 ISG Support Services 795 2.1 Morgan Sindall Group Construction & Materials 792 2.1 Macfarlane Group General Industrials 770 2.0 Hansard Global Life Insurance 756 2.0 Cineworld Group Travel & Leisure 742 1.9 Personal Group Holdings Non Life Insurance 726 1.9 Dairy Crest Group Food Producers 725 1.9 Kier Group Construction & Materials 724 1.9 Top 20 companies 16,789 43.7 Balance held in 53 companies 21,595 56.3 Total portfolio 38,384 100.0 Breakdown of portfolio by industry Portfolio by industry % of portfolio (per table above) Support Services 16.9 Financial Services 13.4 Construction & Materials 10.8 Non Life Insurance 8.8 Travel & Leisure 8.3 Media 8.2 Life Insurance 4.3 Industrial Transportation 3.6 Leisure Goods 3.6 Industrial Engineering 3.5 Software & Computer Services 2.9 Food Producers 2.7 General Industrials 2.7 Household Goods 2.6 Fixed Line Telecommunications 1.8 Electronic & Electric Equipment 1.6 Food and Drug Retailers 1.2 General Retailers 1.1 Real Estate Investment Trusts 1.1 Gas, Water & Multi Utilities 1.0 Shareholder information Financial calendar Group's year end 30 April Interim dividends paid April, July, October and January Annual results announced July Annual General Meeting September Group half-year 31 October Half-year results announced December Share prices and performance information The Company's Ordinary and Zero Dividend Preference shares issued through SCZ are listed on the London Stock Exchange. The net asset values are announced weekly to the London Stock Exchange and published monthly via the AIC. Information about the Group can be obtained on the Chelverton internet site at www.chelvertonam.com. Any enquiries can also be e-mailed to cam@chelvertonam.com. Share register enquiries The registers for the Ordinary and Zero Dividend Preference shares are maintained by Share Registrars Limited. In the event of queries regarding your holding, please contact the Registrar on 01252 821390. Changes of name and/or address must be notified in writing to the Registrar. Interim management statements Under the EU Disclosure and Transparency Rules DTR 4.3.2R the Company is required to publish interim management statements. These statements are released to the London Stock Exchange and are also available on the Investment Manager's website www.chelvertonam.com Capital structure Small Companies Dividend Trust PLC (the 'Company') The Company has in issue one class of Ordinary share. In addition, it has a wholly owned subsidiary SCZ, through which Zero Dividend Preference shares have been issued. Ordinary shares of 25p each ('Ordinary shares')- 16,250,000 in issue Dividends Holders of Ordinary shares are entitled to dividends. Capital On a winding-up of the Company, Ordinary shareholders will be entitled to all surplus assets of the Company available after payment of the Company's liabilities including the capital entitlement of the Zero Dividend Preference shares. Voting Each holder, on a show of hands, will have one vote and on a poll will have one vote for each Ordinary share held. Small Companies ZDP PLC ('SCZ') )'the Company') Ordinary shares of 100p each ('ordinary shares') - 50,000 in issue (partly paid up as to 25p each) The ordinary shares are wholly owned by the Company. References to Ordinary shares within this half-yearly report are to the Ordinary shares of Small Companies Dividend Trust PLC. Capital Following payment of any liabilities and the capital entitlement to the Zero Dividend Preference shareholders, ordinary shareholders are entitled to any surplus assets of SCZ. Voting Each holder, on a show of hands, will have one vote and on a poll will have one vote for each ordinary share held. Zero Dividend Preference shares of 100p each - 8,500,000 in issue Dividends Holders of Zero Dividend Preference shares are not entitled to dividends. Capital On a winding up of SCZ, after the satisfaction of prior ranking creditors and subject to sufficient assets being available, Zero Dividend Preference shareholders are entitled to an amount equal to 100p per share increased daily from 28 August 2012 at such compound rate as will give an entitlement to 136.7 pence per share at 8 January 2018. Voting Each holder of Zero Dividend Preference shares, on a show of hands, will have one vote at meetings where Zero Dividend Preference shareholders are entitled to vote and on a poll will have one vote for every Zero Dividend Preference share held. Holders of Zero Dividend Preference shares are not entitled to attend, speak or vote at general meetings unless the business of the meeting includes a resolution to vary, modify or abrogate the rights attached to the Zero Dividend Preference shares. Directors and Advisers Directors Lord Lamont of Lerwick (Chairman) David Harris William van Heesewijk Howard Myles Investment Manager Chelverton Asset Management Limited 12b George Street Bath BA1 2EH Tel: 01225 483030 Secretary and Registered Office Capita Sinclair Henderson Limited Beaufort House 51 New North Road Exeter EX4 4EP Tel: 01392 412122 Registrar and Transfer Office Share Registrars Limited Suite E, First Floor 9 Lion and Lamb Yard Farnham Surrey GU9 7LL Tel: 01252 821390 www.shareregistrars.uk.com Auditors Hazlewoods LLP Windsor House Bayshill Road Cheltenham GL50 3AT Custodian Jarvis Investment Management Limited 78 Mount Ephraim Tunbridge Wells Kent TN4 8BS Registered in England No. 3749536 National Storage Mechanism A copy of the Half-yearly Report will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.morningstar.co.uk/uk/nsm ssible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

Companies

Chelverton UK Dividend Trust (SDV)
UK 100
FTSE quotes by TradingView

Latest directors dealings

All directors dealings today