Final Results

SMALL COMPANIES DIVIDEND TRUST PLC PRELIMINARY ANNOUNCEMENT OF UNAUDITED RESULTS The Directors announce the unaudited statement of consolidated results for the year 1 May 2004 to 30 April 2005 as follows: Highlights: • Net Asset Value (NAV) up 15.57% at 175.19p per Ordinary share (2004: 151.59p) • NAV increase more than double the rise in FTSE All-Share and FTSE Small Cap indices • Final dividend of 3.70p per Ordinary share (2004: 3.60p) making total for the year of 10.75p (2004: 10.35p) a 3.9% increase • Current NAV as at 16 June 2005 of 185.11p per Ordinary share up 9.92p since year-end CONSOLIDATED STATEMENT OF TOTAL RETURN (*incorporating the revenue account) 1 May 2004 to 1 May 2003 to 30 April 2005 30 April 2004 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 6,572 6,572 - 11,994 11,994 Dividends and interest 2,488 - 2,488 2,224 - 2,224 Other income 9 - 9 5 - 5 Investment management - (1,698) (1,698) - (1,064) (1,064) performance fee Investment management (186) (279) (465) (166) (248) (414) fee Other expenses (218) - (218) (209) (5) (214) Net return before finance costs and 2,093 4,595 6,688 1,854 10,677 12,531 taxation Interest payable and (217) (325) (542) (172) (258) (430) similar charges Appropriations in respect of: - Zero Dividend - (733) (733) - (680) (680) Preference shares - Preference shares - (4) (4) - (4) (4) Issue costs of Zero Dividend Preference - (31) (31) - (31) (31) shares Return on ordinary activities before and after 1,876 3,502 5,378 1,682 9,704 11,386 taxation First interim dividend (370) - (370) (354) - (354) paid of 2.35p (2004: 2.25p) Second interim (370) - (370) (354) - (354) dividend paid of 2.35p (2004: 2.25p) Third interim dividend (370) - (370) (355) - (355) paid of 2.35p (2004: 2.25p) Fourth interim (583) - (583) (567) - (567) dividend declared of 3.70p (2004: 3.60p) Transfer to reserves 183 3,502 3,685 52 9,704 9,756 Return per: pence pence pence pence pence pence Ordinary share 11.91 22.23 34.14 10.68 61.61 72.29 Zero Dividend - 11.72 11.72 - 10.88 10.88 Preference share Preference share - 11.72 11.72 - 10.88 10.88 * The revenue column of this statement is the revenue account of the Group. CONSOLIDATED BALANCE SHEET As at As at 30 April 30 April 2005 2004 £'000 £'000 Investments 46,957 44,265 Current assets Debtors 1,705 514 Cash at bank 232 25 1,937 539 Current liabilities Creditors 2,506 1,850 Bank overdraft 3,853 4,872 6,359 6,722 Net current liabilities (4,422) (6,183) Total assets less current liabilities 42,535 38,082 Creditors - amounts falling due after more than one year (14,880) (14,112) 27,655 23,970 Share capital and reserves Share capital 3,938 3,938 Share premium 11,126 11,126 Capital reserve 11,745 8,243 Revenue reserve 846 663 Shareholders funds 27,655 23,970 Net asset value per: Ordinary share 175.19p 151.59p Zero Dividend Preference share 158.30p 146.58p Preference share 158.30p 146.58p CONSOLIDATED STATEMENT OF CASHFLOWS 1 May 2004 to 1 May 2003 to 30 April 2005 30 April 2004 £'000 £'000 Net cash inflow from operating activities 550 1,662 Servicing of finance Interest paid (540) (422) Net cash outflow from servicing of (540) (422) finance Taxation recovered - - Capital expenditure and financial investment Purchase of investments (10,558) (11,966) Sale of investments 13,451 9,660 Net cash inflow/ (outflow) from capital expenditure and financial investment 2,893 (2,306) Equity dividends paid (1,677) (1,599) Financing Loan drawndown - 5,000 Net cash inflow 1,226 2,335 Increase in cash 1,226 2,335 NOTE 1. The above unaudited financial information for the year ended 30 April 2005 which does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985 has been prepared on the basis of the accounting policies set out in the statutory accounts of the Group for the year ended 30 April 2004. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under section 237 (2) or (3) of the Companies Act 1985. The April 2004 statutory accounts have been delivered to the Registrar of Companies. Statutory financial statements for the year ended 30 April 2005 will be delivered to the Registrar. 2. The Directors declared on 1 June 2005 a fourth dividend of 3.70p (2004: 3.60p) per Ordinary share, payable on 30 June 2005 to the holders of Ordinary shares on the Register at 10 June 2005. 3. The revenue return per Ordinary share is based on earnings of £1,876,000 (2004: £1,682,000) and on 15,750,000 (2004: 15,750,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. 4. The capital return per Ordinary share is based on net capital gains of £ 3,502,000 (2004: gains of £9,704,000) and on 15,750,000 (2004: 15,750,000) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year. 5. An amount of £2,302,000 (2004: £1,575,000) has been charged to capital in respect of management fees, investment management performance fees and interest in accordance with the Company's accounting policy. 6. The Company has conducted its affairs so that it satisfies the conditions for approval as an investment trust company set out in section 842 of the Income and Corporation Tax Act 1988. It is the intention of the Directors that the Company continues to meet these conditions. 7. There are 31,260 Preference and 6,250,000 Zero Dividend Preference shares in issue. They each have an initial capital entitlement of 100p per share, growing to 184.63p on 30 April 2007. The accrued entitlement as at 30 April 2005 calculated in accordance with the Company's Articles of Association, was 158.30p per Zero Dividend Preference share (2004: 146.58p) and 158.30p per Preference share (2004: 146.58p). A total amount of £737,000 (2004: £684,000) has been charged to capital during the year, in respect of their accrued entitlement. 8. The net assets attributable and the net asset value per share are calculated in accordance with the Company's Articles of Association. Shareholders funds shown in the balance sheet are in accordance with FRS4. 9. The Group's funds are invested principally in companies with a market capitalisation of less than £100 million. The Group's portfolio comprises companies listed on the official list and companies admitted to trading on AIM. The Group may also invest up to 5% of its portfolio in unquoted securities. Whilst the majority of the Group's funds are invested in ordinary shares of companies, up to 30% may be invested in convertible securities. The Group does not invest in other investment trusts. CHAIRMAN'S STATEMENT RESULTS This Report covers the twelve months ended 30 April 2005. The recovery from the lows of 2003 continued in the year under review, after the small reduction which occurred in the first quarter, the capital value of your shares has shown further good progress at the year-end. The Company's net asset value per Ordinary share at 30 April 2005 was 175.19p (2004: 151.59p), an increase over the year of 15.6%. During this period the FTSE All-Share Index increased by 7.1%, the FTSE Small-Cap Index increased by 6.8% and the FTSE Fledgling Index increased by 11.4%. Since Listing, on 12 May 1999, the FTSE All-Share has fallen by 18.7% and the net asset value per Ordinary share has risen by 82.5%. Since the year-end the net asset value per Ordinary share has risen to 185.11p as at 16 June 2005 (including the revenue reserve to 30 April 2005). The Board has declared a final dividend of 3.70p per Ordinary share (2004: 3.60p) which, when added to the three quarterly interim dividends of 2.35p, equates to a total dividend for the year of 10.75p per Ordinary Share (2004: 10.35p), an increase of 3.9% over the previous year. The Board is pleased to be able to increase the dividend by more than the rate of inflation, as it has been able to do for each year of the six-year life of the Company. BACKGROUND The past year has been a good one for your Company with increased earnings and dividend growth being reported by almost all of our investee companies. This positive background has also led to an increase in corporate activity and this has been reflected in the five takeovers within the portfolio during the year. Whilst there are always concerns about the level of interest rates it would appear with rates now at 4.75%, and held there for the past nine months, there is an expectation that we are now very close to the peak in this cycle. Inflation remains relatively subdued with the slow-down in consumer spending helping to restrain any price rises. Further concerns abound about the price of energy, steel and raw materials and the recent strength in the dollar will of course increase the sterling cost of these inputs to UK companies. Anecdotal evidence would indicate a general slow-down in activity across the whole economy. INVESTMENT MANAGER In the light of the fundamental uncertainty surrounding BFS Investments plc ('BFS'), the Investment Manager, the Board took the decision on 1 December 2004 to serve notice under the terms of the investment management agreement. The notice period of twelve months commenced from that date and is due to end on the 30 November 2005. Given the contractual and operational relationship between BFS and Chelverton Asset Management Limited ('Chelverton'), the Investment Adviser, the management of the assets of your Company has not changed in any way. Over the life of the Company the investment management of the Company's assets has in fact been carried out exclusively by Chelverton, as agreed between BFS and Chelverton. The Board are in discussions with Chelverton in respect of the continuing management of the Company's assets. As part of the resolution of the Split Capital sector's issues it was pleasing to see that the FSA was finally able to reach an agreement with eighteen of the twenty two companies by 24 December 2004. Unfortunately BFS Investments plc was not one of these parties and neither was it one of the two other parties who have reached an agreement with the FSA since that date. Reflecting the Board's and certain shareholders continued concerns, Mr Tony Reid, the managing director of BFS, resigned from the Board on 24 February 2005. SPLIT CAPITAL SECTOR With the settlement referred to above, the rise of the market over past two years and the liquidation of a number of troubled split capital trusts over the past eighteen months, the sector is in better health than it has been for some time. Whilst there is little prospect, at the moment, of a resurgence in this type of structure for providing gearing for collective investments it would appear that there is growing realisation that existing successful companies in this sector should be supported. As I have said before there is nothing fundamentally wrong with a split capital structure as it exists in your Company if the underlying investments are appropriate for the gearing. The Company itself does not invest in other investment trusts, split capital or otherwise. PROSPECTS The Company is invested in 65 companies across 22 sectors and this spread provides the strength and stability for the Company. After several years of low interest rates, growing profits and cash generation, company balance sheets have been strengthened with the level of Bank debt at low levels enabling dividends to be increased and for share buy-back programmes to be implemented. The Board is encouraged by the progress in the past year and believes that we should, given the forecast growth in revenue, be able to report an increased total dividend in respect of the Ordinary Shares for next year. Bryan Lenygon 21 June 2005

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