Half-yearly Report
SMALL COMPANIES DIVIDEND TRUST PLC
Half-yearly Report
for the six months ended 31 October 2014
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
2014 2014 % change
Capital
Total net assets (£'000) 29,847 31,706 (5.86)
Net asset value per Ordinary share 180.34p 191.58p (5.87)
Mid-market price per Ordinary share 168.50p 188.00p (10.37)
Discount 6.56% 1.87%
Net asset value per Zero Dividend Preference share 113.52p 110.24p 2.98
Mid-market price per Zero Dividend Preference Share 121.25p 117.00p 3.63
Premium 6.81% 6.13%
Six months to Six months to
31 October 31 October
2014 2013 % change
Revenue
Return per Ordinary share 5.00p 4.75p 5.26
Dividend per Ordinary share* 3.15p 2.95p 6.78
Six months to Six months to
31 October 31 October
2014 2013
Total return
Total return on Group's net assets** (2.35)% 34.72%
* Dividend per Ordinary share includes the first interim paid and second
interim declared for the period to 31 October 2014 and 2013 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 2014. The net asset
value per Ordinary share as at 31 October 2014 was 180.34p, a decrease of 5.87%
in the past six months compared to an decrease of 3.10% in the MSCI Small Cap
Index. Since the beginning of the Company's financial year, the Ordinary share
price has decreased from 188.00p to 168.50p at 31 October 2014, a fall of
10.37% whilst the discount has increased from 1.87% to 6.56% over the same
period. Since then the share price has decreased to 163.00p as at 5 December
2014, whilst the discount to NAV has increased to 10.87%.
Dividend
A first interim dividend of 1.575p (2013: 1.475p) per Ordinary share was paid
on 18 September 2014 in respect of the year 1 May 2014 to 30 April 2015.
The Board has declared a second interim dividend of 1.575p per Ordinary share
(2013: 1.475p) payable on 9 January 2015 to shareholders on the register on 12
December 2014, making a total for the half year of 3.15p per Ordinary share
(2013: 2.95p). At present it is anticipated that the Company will maintain
this level of dividend for the third quarter.
It is the Board's intention, over time, to move the dividend profile gradually
to a position where the four interim dividends paid are equal. This will be
achieved by maintaining the fourth interim dividend at the same level and
increasing the first, second and third dividends in future years to reflect
earnings.
Portfolio
Within the fund we continue to favour a relatively balanced portfolio as the UK
equity market shows no sign of sustained sector or style leadership. In the
last period we started to build a holding in DX Group, a mail, parcels and
logistics business that IPOd earlier this year. We added two IPOs; Epwin
Group, a specialist provider of low maintenance building products, to the
portfolio on an annualised yield of over 6% and Shoe Zone a discount shoe
retailer on an annualised yield of over 5.5%.
During the period, we added a new holding in Belvoir Lettings, a residential
lettings agency and Majestic, the wine retailer. We reduced our holding in
Braemar Shipping Services after the takeover of ACM and sold some of our
holding in Stadium Group as we continued our policy of reducing our exposure to
relatively large illiquid weightings. These funds were used to top up our
positions in Avesco Group, Clarke (T) and Alumasc Group.
We sold our entire holding in RPC Group after a period of strong performance
and added another new investment in Bioventix, a business engaged in the
creation and engineering of antibodies on a 4% prospective yield.
We took up our rights in Acal, topped up our position in Mucklow (A&J) Group
and raised funds from the sale of our holding in Office2Office after an agreed
bid and from reducing Stadium Group, Portmeirion Group and Marshalls after
strong share price moves.
Outlook
The lack of investor appetite for small and mid caps that became apparent ahead
of the Scottish referendum in September 2014 has continued to provide a
headwind to performance. The problem is that the momentum in domestic corporate
earnings is not yet strong enough to compensate for a slowing Eurozone macro
outlook and investor nervousness can been seen in the magnitude of short term
share price falls in stocks that disappoint.
We believe that UK and small cap performance will steadily improve as our
portfolio is relatively highly geared to a strong domestic economy. Dividend
growth in the companies in which we invest continues to be ahead of market
expectations.
Chelverton Asset Management Limited
12 December 2014
Principal risks
The principal risks facing the Group are substantially unchanged since the date
of the annual report for the year ended 30 April 2014 and continue to be as set
out in that report on pages 9 to 10. Risks faced by the Group include, but are
not limited to, market risk, discount volatility, regulatory risk, financial
risk and risks associated with banking counterparties.
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 the 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 theDisclosure 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 12 December
2014 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 2014
Six months to 31 October Six months to 31 October
2014 Year to 30 April 2014 2013
Revenue Capital Total Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
(audited)
(Losses)/gains on
investments at
fair value through
profit or loss - (1,135) (1,135) - 8,649 8,649 - 7,478 7,478
Investment income 978 - 978 2,179 - 2,179 922 - 922
Investment management fee (50) (149) (199) (97) (292) (389) (46) (138) (184)
Other expenses (100) (11) (111) (203) (21) (229) (104) (10) (114)
Net
return/(deficit)
before finance
costs and taxation 828 (1,295) (467) 1,874 8,336 10,210 722 7,330 8,102
Finance Costs
Appropriations in
respect of Zero
Dividend
Preference
shares - (279) (279) - (530) (530) - (263) (263)
Net
return/(deficit)
before taxation 828 (1,574) (746) 1,874 7,806 9,680 772 7,067 7,839
Taxation
(see note 2) - - - - - - - - -
Net return/(deficit)
after taxation 828 (1,574) (746) 1,874 7,806 9,680 772 7,067 7,839
Revenue Capital Total Revenue Capital Total Revenue Capital Total
pence pence pence pence pence Pence pence pence Pence
Return per Ordinary share (see note 3) 500 (9.51) (4.51) 11.47 47.79 59.26 4.75 43.49 48.24
Zero Dividend Preference share (see note 3) - 3.28 3.28 - 6.24 6.24 - 3.10 3.10
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 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 2014
Share
Share premium Capital Revenue
capital account reserve reserve Total
£'000 £'000 £'000 £'000 £'000
Six months ended
31 October 2014
30 April 2014 4,138 12,403 13,079 2,086 31,706
Total comprehensive return for the period - - (1,574) 828 (746)
Dividends paid (see note 4) - - - (1,113) (1,113)
31 October 2014 4,138 12,403 11,505 1,801 29,847
Year ended 30 April 2014 (audited)
30 April 2013 4,063 11,917 5,273 1,326 22,579
Total comprehensive return for the year - - 7,806 1,874 9,680
Ordinary shares issued 75 493 - - 568
Expenses of ordinary share issue - (7) - - (7)
Dividends paid - - - (1114) (1114)
30 April 2014 4,138 12,403 13,079 2,086 31,706
Six months ended
31 October 2013
30 April 2013 4,063 11,917 5,273 1,326 22,579
Total comprehensive income for the period - - 7,067 772 7,839
Dividends paid - - - (630) (630)
31 October 2013 4,063 11,917 12,340 1,468 29,788
Condensed consolidated balance sheet (unaudited)
as at 31 October 2014
31 October 30 April 31 October
2014 2014 2013
£'000 £'000 £'000
(audited)
Non-current assets
Investments at fair value through
profit or loss 39,371 40,820 38,384
Current assets
Trade and other receivables 240 291 619
Cash and cash equivalents 51 136 30
291 427 649
Total assets 39,662 41,247 39,033
Current liabilities
Trade and other payables (166) (171) (142)
Total assets less current
liabilities 39,496 41,076 38,891
Non-current liabilities
Zero Dividend Preference shares (9,649) (9,370) (9,103)
(9,649) (9,370) (9,103)
Total liabilities (9,815) (9,541) (9,245)
Net assets 29,847 31,706 29,788
Represented by:
Share capital 4,138 4,138 4,063
Share premium account 12,403 12,403 11,917
Capital reserve 11,505 13,079 12,340
Revenue reserve 1,801 2,086 1,468
Equity shareholders' funds 29,847 31,706 29,788
Net asset value per: (see note 5) pence pence pence
Ordinary share 180.34 191.58 183.31
Zero Dividend Preference share 113.52 110.24 107.10
Condensed consolidated statement of cash flows (unaudited)
for the six months ended 31 October 2014
Six months to Year to Six months to
31 October 30 April 31 October
2014 2014 2013
£'000 £'000 £'000
(audited)
Operating activities
Investment income received 1,034 2,081 945
Investment management fee paid (203) (365) (165)
Administration and secretarial fees paid (31) (57) (31)
Other cash payments (86) (156) (102)
Net cash inflow from operating
activities (see note 7) 714 1,503 647
Investing activities
Purchases of investments (3,844) (8,807) (3,774)
Sales of investments 4,158 7,954 3,748
Net cash inflow/(outflow) from
investing activities 314 (853) (26)
Financing activities
Issue of Ordinary shares - 568 -
Expenses of Ordinary share issue - (7) -
Dividends paid (1,113) ( 1,114) (630)
Net cash outflow from financing
activities (1,113) (553) (630)
(Decrease)/increase in cash and
cash equivalents for period (85) 97 (9)
Cash and cash equivalents at
start of period 136 39 39
Cash and cash equivalents at end of period 51 136 30
Notes to the condensed half-yearly report
for the six months ended 31 October 2014
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 2014, 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 2014. This report
has also been prepared in compliance with IAS 34 'Interim Financial Reporting'.
2. 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.
3. Return per share
Ordinary shares
Revenue return per Ordinary share is based on revenue on ordinary activities
after taxation of £828,000 (30 April 2014: £ 1,874,000, 31 October 2013:
£772,000) and on 16,550,000 (30 April 2014: £16,335,000, 31 October 2013:
£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 loss of £1,574,000
(30 April 2014: capital profit of £7,806,000, 31 October 2013: capital profit
of £7,067,000) and on 16,550,000 (30 April 2014: 16,335,000, 31 October 2013:
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 £279,000 (30 April 2014: £530,000, 31 October 2013: £263,000)
and on 8,500,000 (30 April 2014: 8,500,000, 31 October 2013: 8,500,000) Zero
Dividend Preference shares being the weighted average number of Zero Dividend
Preference shares in issue during the period.
4 Dividends
During the period, a fourth interim dividend of 2.40p per Ordinary share and a
special dividend of 2.75p per Ordinary share for the year ended 30 April 2014,
together with a first interim dividend of 1.575p per Ordinary share for the
year ending 30 April 2015, have been paid to shareholders.
In addition the Board has declared a second interim dividend of 1.575p per
Ordinary share payable on 9 January 2015 to shareholders on the register at 12
December 2014.
5 Net asset values
Ordinary shares
The net asset value per Ordinary share is based on assets attributable of
£29,847,000 (30 April 2014: £31,706,000, 31 October 2013: £29,788,000) and on
16,550,000 (30 April 2014: 16,550,000, 31 October 2013: 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 shares is based on assets
attributable of £9,649,000 (30 April 2014: £9,370,000, 31 October 2013:
£9,103,000) and on 8,500,000 (30 April 2014: 8,500,000, 31 October 2013:
8,500,000) Zero Dividend Preference shares being the number of shares in issue
at the period end.
6 Fair Value Hierarchy
Financial assets and financial liabilities of the Company are carried in the
condensed Consolidated Balance Sheet at their fair value. The fair value is the
amount at which the asset could be sold or the liability transferred in a
current transaction between market participants, other than a forced or
liquidation sale. For investments actively traded in organised financial
markets, fair value is generally determined by reference to Stock Exchange
quoted market bid prices and Stock Exchange Electronic Trading Services
("SETS") at last trade price at the Balance Sheet date, without adjustment for
transaction costs necessary to realise the asset.
The Company measures fair values using the following hierarchy that reflects
the significance of the inputs used in making the measurements. Categorisation
within the hierarchy has been determined on the basis of the lowest level input
that is significant to the fair value measurement of the relevant assets as
follows:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
Level 2 - Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly (that is, as prices)
or indirectly (that is, derived from prices).
Level 3 - Inputs for the asset of liability that are not based on observable
market data (unobservable inputs).
As at 31 October 2014, 30 April 2014 and 31 October 2013 all of the Company's
investments are classified as Level 1.
7 Reconciliation of net (deficit)/return before and after taxation to net
cash inflow from operating activities
31 October 30 April 31 October
2014 2014 2013
£'000 £'000 £'000
Net (deficit)/return before and after taxation (746) 9,680 7,839
Net capital loss/(return) 1,574 (7806) (7,067)
Decrease/(increase) in receivables 51 (97) 13
(Decrease)/increase in payables (5) 39 10
Interest and expenses charged to the capital reserve (160) (313) (148)
Net cash inflow from operating activities 714 1,503 647
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 and the
subsidiary, has an interest. The amounts paid to the Investment Manager in the
period to 31 October 2014 were £199,000 (year ended 30 April 2014: £389,000,
six months to 31 October 2013: £184,000).
At 31 October 2014 there were amounts outstanding to be paid to the Investment
Manager of £99,000 (year ended 30 April 2014: £103,000, six months to 31 October 2013
: £98,000).
Principal portfolio investments
as at 31 October 2014
Top 20 holdings
Market value % of
Industrial classification £'000 portfolio
GVC Holdings Travel & Leisure 960 2.4
KCOM Group Fixed Line Telecommunication 930 2.4
Connect Group Support Services 928 2.4
Stadium Group Electronic & Electrical Equipment 917 2.3
Marshalls Construction & Materials 896 2.3
Alumasc Group Construction & Materials 851 2.2
Acal Support Services 841 2.1
Marston's Travel & Leisure 829 2.1
Braemar Shipping Services Industrial Transportation 819 2.1
Jarvis Securities Financial Services 805 2.0
Shoe Zone General Retailers 802 2.0
Town Centre Securities Real Estate 785 2.0
St Ives Support Services 772 2.0
Wilmington Group Media 764 1.9
Tritax Big Box Real Estate 763 1.9
Go-Ahead Group Travel & Lesiure 738 1.9
Avesco Group Media 700 1.8
Sanderson Group Software & Computer Services 700 1.8
Chesnara Life Insurance 689 1.8
Randall & Quilter Non Life Insurance 675 1.7
Top 20 companies 16,164 41.1
Balance held in 57 companies 23,207 58.9
Total portfolio 39,371 100.0
Breakdown of portfolio by industry
Portfolio by industry % of portfolio (per table above)
Support Services 14.0%
Financial Services 11.8%
Construction & Materials 9.6%
Non Life Insurance 7.3%
Travel & Leisure 10.3%
Technology Hardware & Equipment 1.1%
Media 6.2%
Life Insurance 3.3%
Industrial Transportation 2.2%
Leisure Goods 3.1%
Industrial Engineering 3.3%
Software & Computer Services 2.7%
Food Producers 2.3%
General Industrials 2.4%
Household Goods & Home Construction 1.4%
Fixed Line Telecommunications 2.4%
Electronic & Electric Equipment 2.3%
Food and Drug Retailers 1.2%
General Retailers 4.6%
Real Estate 5.3%
Pharmaceuticals & Biotechnology 1.1%
Gas, Water & Multi Utilities 1.0%
Equity Investment Instruments 1.1%
Shareholder information
Financial calendar
Group's year end 30 April
Interim dividends paid April, July, October and January
Special dividend paid July
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
The Financial Conduct Authority has removed the requirement for Companies to
prepare Interim Management Statements with effect from 7 November 2014.
Therefore the Board has decided not to prepare and release Interim Management
Statements in the future.
Capital structure
Small Companies Dividend Trust PLC
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') - 16,550,000 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 (' SCZ ordinary shares') - 50,000in issue (partly
paid up as to 25p each)
The SCZ 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 - 8,500,000in 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
Holders of Zero Dividend Preference shares are not entitled to attend, speak or
vote at a general meeting of the Company (including the Company's Annual
General Meeting) unless the business of the meeting includes a resolution to
vary, modify or abrogate the rights attached to the Zero Dividend Preference
shares.
In the event that ZDP shareholders are entitled to attend a General Meeting
each holder of Zero Dividend Preference shares, on a show of hands, will have
one vote for every Zero Dividend Preference share held.
Directors and Advisers
Directors The Rt Hon 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
END
Neither the contents of the Company's website nor the contents of any website
accessible from hyperlinks on this announcement (or any other website) is
incorporated into, or forms part of, this announcement.
D
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