Interim Results
SMALL COMPANIES DIVIDEND TRUST PLC
PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS
Chairman's statement
This preliminary announcement covers the six months to 31 October 2006.
The total return per Ordinary share in the period was 2.57% compared to 1.42%
in the FTSE SmallCap Index. The net asset value per Ordinary share at 31
October 2006 was 245.94p, an increase of 0.43% in the past six months compared
to rises of 2.15% in the FTSE All-Share Index, 0.27% in the FTSE SmallCap
Index, 0.89% in the FTSE Fledgling Index and a decline of 20.29% in the FTSE
AIM All-Share Index.
Since the beginning of the Company's financial year, the Ordinary share price
has declined from 222.25p to 220p at 31 October 2006, a fall of 1.01%. Since
then the share price rose to an all time high of 228.50p at 24 November 2006.
A first interim dividend of 3.00p (2005: 2.50p) per Ordinary share was paid in
September 2006 an increase of 20%. The Board has declared a second interim
dividend of 3.00p per Ordinary share (2005: 2.50p) payable on 29 December 2006
to shareholders on the register on 8 December 2006, making a total for the half
year of 6.00p per Ordinary share (2005: 5.00p). Shareholders should be aware
that it is the Board's intention, in the absence of unforeseen circumstances,
to make two further interim dividend payments of 3.00p and 4.00p respectively
to produce a total annual dividend of 13.00p, an increase of 15.56% on the
11.25p relating to the year ended April 2006.
The Company is invested in the ordinary shares of seventy four listed and
AIM-traded companies and one unquoted company, across 26 sectors. It does not
and never has invested in the shares of any investment trusts or collectives.
During this period the takeovers of Center Parcs, Bristol Water, Birse and
House of Fraser were completed. London Scottish has announced it is in talks
that may lead to an offer for the company.
New investments have been made in four companies: Acertec, supplying
reinforcing bar and mesh for the concrete construction industry and metal
pressings for the automotive industry; Macfarlane Group, which the fund has
owned in the past, a supplier of packaging through a national distribution
network; Victoria manufactures and sells carpets; and Stadium Group, a leader
in injection moulded plastics and contract assemblies for OEM's. Further
investments have also been made in over twenty of the existing portfolio
companies.
In order to make these investments, funds were raised from the sale of the
entire holdings of Telecom Plus and Autologic Holdings and two of the longer
term and very successful holdings, NWF Group and Savills. After excellent
increases partial disposals were made in Foseco, Clarkson, Dee Valley Group,
Hill & Smith Holdings, Fenner and latterly Flying Brands.
We are pleased to note the launch by the Investment Manager of the Chelverton
Savings Plan, being a cost efficient means for existing and new shareholders to
purchase shares on a monthly, lump sum or dividend reinvestment basis. As
investors become aware of this method of buying the shares regularly and more
accounts are opened, it is hoped that the discount will narrow further.
Basis of Cost Allocation
The Board has reviewed the allocation of costs under the Statement of
Recommended Practice and has concluded that a more appropriate allocation would
be to charge 25% of management fees and bank interest to revenue and 75% to
capital, rather than the previous basis of 40% and 60% respectively. These
accounts have therefore now been prepared on the 25:75 basis.
Outlook
With the domestic economy forecast to grow at around 2.5% the macroeconomic
environment remains supportive of continued progress for the portfolio
companies. Whilst energy costs and raw material prices remain an issue, at the
corporate level, balance sheets remain strong and the prospects for both
earnings and dividend growth remain robust.
The cash takeovers have provided a welcome opportunity to reinvest in other
attractive companies where the underlying cash flow characteristics are
undervalued by the market and where there are good prospects for dividend
growth to boost the earnings stream.
Lord Lamont, Chairman
8 December 2006
The Directors announce the unaudited results for the period 1 May 2006 to 31
October 2006 as follows:
Consolidated income statement (unaudited)
for the six months ended 31 October 2006
1 May 2006 to 31 October 2006 1 May 2005 to 31 October 2005
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investments
Gains on investments - 1,058 1,058 - 2,635 2,635
Investment income 1,430 - 1,430 1,320 - 1,320
Expenses
Investment management fee (87) (261) (348) (102) (153) (255)
Bank interest payable (67) (202) (269) (108) (163) (271)
Appropriations in respect of
Zero Dividend Preference
shares - (423) (423) - (391) (391)
Appropriations in respect of
Preference shares - (2) (2) - (2) (2)
Amortisation of Zero Dividend
Preference share issue costs - (16) (16) - (16) (16)
Other expenses (398) - (398) (110) - (110)
Total expenses (552) (904) (1,456) (320) (725) (1,045)
Net return before taxation 878 154 1,032 1,000 1,910 2,910
Taxation (7) - (7) - - -
Net return after taxation 871 154 1,025 1,000 1,910 2,910
Return per : (see note 3) pence pence pence pence pence pence
Ordinary share 5.36 0.95 6.31 6.34 12.10 18.44
Zero Dividend Preference share - 6.76 6.76 - 6.26 6.26
Preference share - 6.76 6.76 - 6.26 6.26
The total column of this statement is the income statement of the Group.
All items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the period.
These accounts are unaudited and are not the Group's statutory accounts.
Consolidated statement of changes in net equity (unaudited)
for the six months ended 31 October 2006
Share
Share premium Capital Revenue
capital account reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Six months ended 31 October 2006
30 April 2006 4,063 11,917 22,265 1,582 39,827
Net return after taxation for the period - - 154 871 1,025
Dividends paid - - - (1,097) (1,097)
31 October 2006 4,063 11,917 22,419 1,356 39,755
Year ended 30 April 2006
30 April 2005 3,938 11,126 11,172 1,429 27,665
Issue of shares 125 - - - 125
Premium on issue of shares - 795 - - 795
Cost of issue of shares - (4) - - (4)
Net return after taxation for the year - - 11,093 1,942 13,035
Dividends paid - - - (1,789) (1,789)
30 April 2006 4,063 11,917 22,265 1,582 39,827
Six months ended 31 October 2005
30 April 2005 3,938 11,126 11,172 1,429 27,665
Issue of shares 125 - - - 125
Premium on issue of shares - 795 - - 795
Net return after taxation for the period - - 1,910 1,000 2,910
Dividends paid - - - (977) (977)
31 October 2005 4,063 11,921 13,082 1,452 30,518
31 October 30 April 31 October
2006 2006 2005
£'000 £'000 £'000
Non-current assets
Fair value through profit or loss investments 60,491 59,739 49,902
Current assets
Fair value through profit or loss investments held by Subsidiary 26 27 -
Debtors 138 692 179
Cash and cash equivalents 111 261 172
275 980 351
Total assets 60,766 60,719 50,253
Current liabilities
Other creditors (4,863) (5,185) (4,446)
Bank loan (5,000) (5,000) -
Zero Dividend Preference shares (11,092) (10,653) -
Preference shares (56) (54) -
(21,011) (20,892) (4,446)
Total assets less current liabilities 39,755 39,827 45,807
Non-current liabilities
Bank loan - - (5,000)
Zero Dividend Preference shares - - (10,237)
Preference shares - - (52)
- - (15,289)
Total liabilities (21,011) (20,892) (19,735)
Net assets 39,755 39,827 30,518
Represented by:
Share capital 4,063 4,063 4,063
Share premium account 11,917 11,917 11,921
Capital reserve 22,419 22,265 13,082
Revenue reserve 1,356 1,582 1,452
Issued capital and reserves 39,755 39,827 30,518
Net asset value per: (see note 4) pence pence pence
Ordinary share 245.94 244.89 187.37
Zero Dividend Preference share 177.72 170.96 164.56
Preference share 177.72 170.96 164.56
Consolidated statement of cash flows (unaudited)
for the six months ended 31 October 2006
Six months Six months
ended ended
31 October 31 October
2006 2005
£'000 £'000
Operating activities
Investment income received 1,967 1,797
Bank deposit interest received 4 7
Investment management fee paid (348) (251)
Investment management performance fee paid (243) (1,698)
Administration and secretarial fees paid (26) (25)
Bank interest paid (270) (273)
Other cash payments (191) (87)
Net cash inflow/(outflow) from operating activities 893 (530)
Investing activities
Purchases of investments (9,107) (11,679)
Sales of investments 9,242 11,978
Net cash inflow from investing activities 135 299
Financing activities
Issue of shares - 920
Dividends paid (1,097) (977)
Net cash outflow from financing activities (1,097) (57)
Decrease in cash and cash equivalents for period (69) (288)
Cash and cash equivalents at start of period (4,160) (3,621)
Cash and cash equivalents at end of period (4,229) (3,909)
Notes
For the six months ended 31 October 2006
1 General information
The financial information contained in this interim report does not constitute
statutory financial statements as defined in Section 240 of the Companies Act
1985. The statutory financial statements for the year ended 30 April 2006,
which contained an unqualified auditors' report, have been lodged with the
Registrar of Companies and did not contain a statement required under Section
237(2) or (3) of the Companies act 1985. 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, revised December 2005. The financial statements
have been prepared using the accounting policies adopted in the audited
financial statements for the year ended 30 April 2006 (see note 2).
2 Change in allocation of expenses
With effect from 1 May 2006, the Board changed the Company's allocation of
investment management fees and bank interest between revenue and capital. These
expenses are allocated 25% to revenue and 75% to capital, previously they were
allocated 40% to revenue and 60% to capital. The investment management
performance fee remains 100% charged to capital. This change in allocation is
not considered to be a change in accounting policy and therefore no restatement
of prior period figures is required.
3 Return per share
The return per share is based on 16,250,000 (2005: 15,779,891) Ordinary shares,
6,250,000 (2005: 6,250,000) Zero Dividend Preference shares and 31,260 (2005:
31,260) Preference shares being the weighted average number of shares in issue
during the period.
4 Net asset values
Net asset values per share have been calculated in accordance with entitlements
as at the period end and in accordance with the Company's Articles of
Association and exclude current period revenue for the unaudited values at 31
October 2006 and 2005.
The net asset value per Ordinary share is based on assets attributable of £
39,965,000 (30 April 2006: £39,795,000, 31 October 2005: £30,447,000) and on
16,250,000 (30 April 2006: 16,250,000,
31 October 2005: 16,250,000) Ordinary shares, being the number of Ordinary
shares in issue at the period end.
The net asset value per Zero Dividend Preference share is based on assets
attributable of £11,108,000 (30 April 2006: £10,685,000, 31 October 2005: £
10,285,000) and on 6,250,000 (30 April 2006: 6,250,000, 31 October 2005:
6,250,000) Zero Dividend Preference shares, being the number of Zero Dividend
Preference shares in issue at the period end.
The net asset value per Preference share is based on assets attributable of £
56,000 (30 April 2006: £54,000, 31 October 2005: £52,000) and on 31,260 (30
April 2006: 31,260, 31 October 2005: 31,260) Preference shares, being the
number of Preference shares in issue at the period end.
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