Interim Management Statement

RNS Number : 0957S

Standard Life UK Small.Co's Tst PLC

12 May 2009

 



Standard Life UK Smaller Companies Trust plc

Interim Management Statement

Three months ended 31 March 2009

To the members of Standard Life UK Smaller Companies Trust plc ('the Company')

This Interim Management Statement ('IMS') has been produced solely to provide additional information to shareholders as a body to meet the relevant requirements of the UK Listing Authority's Disclosure and Transparency Rules. It should not be relied upon by any other party or for any other purpose.

This IMS relates to the period from 1 January 2009 to 31 March 2009 and contains information that covers this period, and up to the date of publication of this IMS, unless otherwise specified.

Investment objective

The objective of Standard Life UK Smaller Companies Trust plc ('the Company') is to achieve long term capital growth by investment in UK quoted smaller companies.

Investment policy

The Company's investment objective is to achieve long-term capital growth by investment in UK quoted smaller companies.

The Company intends to achieve its investment objective by investing in a diversified portfolio consisting mainly of UK quoted smaller companies. The portfolio will normally comprise around 50 individual holdings representing the Investment Manager's highest conviction investment ideas. In order to reduce risk in the Company without compromising flexibility, no holding within the portfolio should exceed 5 per cent. of total assets at the time of acquisition.

The Directors expect that, in normal market conditions, gearing will not exceed 20 per cent. of net assets. The Directors have delegated responsibility to the Investment Manager for the operation of the gearing level within the above parameters. 

The Investment Manager's investment process combines asset allocation, stock selection, portfolio construction, risk management and dealing. The investment process is research-intensive and is driven by the Investment Manager's distinctive 'focus on change' which recognises that different factors drive individual stocks and markets at different times in the cycle. This flexible, but disciplined, process ensures that the Investment Manager has the opportunity to perform in different market conditions. The investment strategy in respect of the Continuation Fund (see 'Issue of Continuation Shares', below) will be to realign the assets comprised in the Continuation Fund in accordance with the investment policy of the Company in an orderly manner over a period of up to 12 months.

Benchmark

Extended Hoare Govett Smaller Companies Index (excluding Investment Companies).

Material events

Dividend

An interim dividend of 0.50 pence per ordinary share was declared payable on 23 January 2009 to shareholders on the register on 16 January 2009. The ex-dividend date was 14 January 2009.

Issue of Continuation Shares

The Company announced on 26 January 2009 that further to the prospectus (the 'Prospectus') and the circular (the 'Circular') published by the Company on 23 December 2008 in connection with the scheme (the 'Scheme') of reconstruction and winding up of Gartmore Smaller Companies Trust P.L.C. ('Gartmore Smaller') and the rollover of assets of Gartmore Smaller into the Company, a special resolution proposed at the general meeting of the Company on 25 January 2009 was passed by shareholders. The resolution approved the Company's participation as the rollover vehicle in the scheme of reconstruction of Gartmore Smaller Companies Trust P.L.C. (the 'Scheme'), increased the authorised share capital of the Company by the creation of 100 million new Continuation Shares, authorised the directors to allot such shares in connection with the Scheme and adopted new articles of association setting out the rights attaching to the new Continuation Shares. Proxy votes received on the resolution totalled 16,957,111 of which 99.8 per cent. were in favour of the resolution (or at the Chairman's discretion) and 0.2 per cent. against.

On 3 February 2009, following Gartmore Smaller shareholders voting in favour of the resolutions proposed at the general meeting of Gartmore Smaller earlier on 3 February 2009, the Scheme became unconditional. Shareholders holding approximately 68 per cent. of the shares in Gartmore Smaller elected to roll over their investments into new Continuation Shares in the Company. The Board was pleased to announce that, pursuant to the Scheme, 31,189,825 new Continuation Shares were issued to those shareholders of Gartmore Smaller who were rolling over their investments into the Company.  For the purposes of the Scheme, the value of such investments was to be calculated as at close of business on 27 January 2009.  All elections for Continuation Shares were satisfied in full. As set out in the Prospectus and the Circular, the new Continuation Shares were issued at an issue price of 100p each which was satisfied by the transfer to the Company of assets of Gartmore Smaller valued at £31.2 million in accordance with the Scheme.

The new Continuation Shares were admitted to listing on the Official List of the UK Listing Authority and to trading on the main market of the London Stock Exchange at 8.00 am on 4 February 2009.

Following the issue of the new Continuation Shares, the Company has 33,202,130 Ordinary Shares of 25p each in issue and 31,189,825 Continuation Shares of 75p each in issue, each carrying one voting right per share which in aggregate totals 64,391,955 voting rights.

Directorate Change

The Directors announced the appointment of Carol Ferguson and Lynn Ruddick as non-executive Directors of the Company, and the retirement of Neil Dunn as a non-executive Director of the Company, with effect from 4 February 2009.

On 3 March 2009, the Directors announced, with great regret, the sudden death on 28 February 2009 of Mr Mickey Ingall. Mr Ingall had served as a non-executive Director of the Company since its formation in 1993 during which time the other Directors and the Company benefited from his industry experience and sound advice.  

First conversion of C Shares

On 3 April 2009, the Company announced that, in accordance with the prospectus and the circular published by the Company in December 2008, the Company would make its first conversion of Continuation Shares into new Ordinary Shares at 8.00 am on 14 April 2009. For the purposes of the conversion, the record date and time were 6.00 pm on 9 April 2009 and the newly converted Ordinary Shares would be credited to the accounts and registered in the names of those Continuation Share shareholders on the register of members at 8.00 am on 14 April 2009.

No transfer of certificated Continuation Shares dated on or prior to 9 April 2009 would be registered after 6.00 pm on 9 April 2009. CREST transfers of Continuation Shares instructed prior to 6.00 pm on 9 April 2009 but settling after 9 April 2009 would be registered but the transferee would receive newly converted Ordinary Shares and the balance of Continuation Shares (and in the event that a shareholder transferred part only of its holding of Continuation Shares through CREST settling after 9 April 2009, the recipient would receive a pro rata number of newly converted Ordinary Shares and Continuation Shares).  

On 9 April 2009, the Company announced that Standard Life Investments Limited ('SLI'), the Manager of the Company, had realigned close to 90 per cent. of the Continuation Fund (representing the interests of those shareholders in Gartmore Smaller Companies Trust P.L.C. ('Gartmore Smaller') who chose to rollover their investments into Continuation Shares in the Company earlier this year). The Company was in a position to convert approximately 88.3 per cent of the Continuation Shares into new Ordinary Shares of the Company. The completion of the reorganisation and realisation process in the Continuation Fund was scheduled to take up to 12 months following the rollover from Gartmore Smaller becoming effective in February 2009 and the Board of the Company was pleased that such significant progress had been made in the first two months of the exercise.

Based on the respective unaudited net asset values of 99.0791p per Ordinary Share and 94.5027p per Continuation Share as at 31 March 2009, a conversion ratio of 1 Continuation Share to 0.953810 Ordinary Shares was established which would result in 27,545,948 Continuation Shares converting into 26,273,612 new Ordinary Shares in the Company with 3,643,877 Continuation Shares remaining. For illustration (and dependent on rounding) a shareholder holding 1,000 Continuation Shares would have received 842 new Ordinary Shares from the conversion of 883 Continuation Shares and would retain 117 Continuation Shares to be converted at a later date. The new Ordinary Shares would rank pari passu with existing Ordinary Shares in the Company in all respects, including for future dividends paid by the Company.

As part of its discount control measures, the Company would introduce discretionary periodic tender offers from June 2010 as described in more detail in the circular published by the Company on 23 December 2008. In the meantime, the Company intends to use its annual share buyback authority to seek to maintain a discount level of less than 10 per cent. on the enlarged Company's Ordinary Shares under normal market conditions and subject to the best interests of shareholders as a whole.

It was expected that, conditional on admission of the new Ordinary Shares to listing on the Official List of the UKLA and to trading on the main market of the London Stock Exchange, the conversion of Continuation Shares into new Ordinary Shares would take place at 8.00 am on 14 April 2009, with dealings in new Ordinary Shares expected to commence at 8.00 am on 14 April 2009. Application had been made for admission of the new Ordinary Shares to listing on the Official List of the UKLA and to trading on the main market of the London Stock Exchange accordingly. To facilitate the conversion, at the time the conversion became effective, the remaining Continuation Shares were assigned the new ISIN number of GB00B3QMX901.

It was expected that the new Ordinary Shares would be credited to CREST accounts at 8.00 a.m. on 14 April 2009. It was expected that (i) documents of title in respect of certificated holdings and (ii) a confirmation note in respect of all holdings specifying the conversion ratio, number of Continuation Shares converted, new Ordinary Shares issued and balance of Continuation Shares retained by each holder of Continuation Shares, would, in both cases be dispatched to Continuation Shareholders on 14 April 2009.

The Company was also informed by the joint liquidators appointed in respect of the winding-up of Gartmore Smaller (the 'Liquidators') that the Realisation Fund (for the benefit of those shareholders in Gartmore Smaller who elected to receive cash in the reconstruction and winding up of Gartmore Smaller) was now approximately 90.3 per cent. realised, following the ongoing liquidation of its investments. The Liquidators had made an initial liquidation distribution of £2.81 per share to Gartmore Smaller shareholders who elected to receive cash and had mailed cheques to certificated holders and credited CREST accounts of uncertificated holders. The Liquidators have confirmed that, as at 27 March 2009, the unaudited net asset value of a Realisation Share was £3.11 (prior to the liquidation distribution of £2.81). Any questions in relation to this distribution should be directed to the Liquidators (c/o Mark McCartney, Ernst & Young LLP, tel. [phone]).

For comparative purposes only, in the scheme of reconstruction of Gartmore Smaller, ordinary shareholders of Gartmore Smaller who elected to receive cash received one Realisation Share in Gartmore Smaller and those ordinary shareholders who elected to rollover their investment into The Company received approximately 3.30 new Continuation Shares for each Gartmore Smaller share rolling over. The aggregate unaudited net asset value of 3.30 Continuation Shares as at 31 March 2009 was £3.11 i.e. the same as the unaudited net asset value of a Realisation Share at 27 March 2009, as described above.

Ten largest equity holdings*as at 31 March 2009: -

Ranking as at 31 March 2009	Investment	Market Value at 31 March 2009 £'000	%
1	ASOS	1,809,088	4.4
2	Abcam	1,551,336	3.8
3	Telecom Plus	1,499,850	3.6
4	Domino's Pizza	1,303,060	3.2
5	Chemring Group	1,114,867	2.7
6	Connaught	1,096,324	2.7
7	Playtech Ltd	1,077,000	2.6
8	Chloride Group	1,001,066	2.4
9	Craneware	924,185	2.3
10	Dechra Pharmaceuticals	910,695	2.2
	Assets in ten largest holdings		29.9

Total assets * breakdown as at: -

	31 March 2009	31 December 2008
	%	%
Industrials	23.7	27.2
Consumer Services	20.8	20.1
Technology	17.8	15.5
Healthcare	11.7	13.1
Consumer Goods	7.6	6.2
Oil & Gas	4.9	5.5
Telecoms	4.6	4.9
Financials	4.4	4.4
Basic Materials	2.6	3.1
Utilities	1.3	-
Others	0.6	-
Total	100.0	100.0

* Based on the equity holdings and total assets within the Ordinary share pool, excluding the Conversion pool of assets.

General description of Company's financial position and performance as at 31 March 2008

Gross Assets	£62m
Discount	9.7%
Current net cash /(equity gearing)	2.0%

Source: Standard Life Investments and Fundamental Data

Cumulative performance (%)*

	As at  31 March 2009	3 months	1 year	3 years	5 years
Share price	87.25p	7.4	-21.6	-12.5	57.2
Net asset value	96.6p	2.5	-25.5	-20.7	33.7
Benchmark index#		2.7	-37.2	-40.5	-11.9

*Total Return; Net Income Reinvested, GBP
# Extended Hoare Govett Smaller Companies Index (excluding Investment Companies)
Source: Standard Life Investments, Bloomberg and Thomson Datastream

The Board is not aware of any significant events or transactions which have occurred between 31 March 2009 and the date of publication of this IMS, other than those referred to above, which would have a material impact on the financial position of the Company.

For the Manager's current Investment Review & Outlook, please refer to the latest Quarterly Update which is available from the investment trust section of the Manager's website which may be accessed at www.standardlifeinvestments.com/its

Please note that past performance is not necessarily a guide to the future and that the value of investments and the income from them may fall as well as rise. Investors may not get back the amount they originally invested.

For Standard Life UK Smaller Companies Trust plc

Aberdeen Asset Management PLC, Secretary

12 May 2009

 

END

 

 

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