SMALL COMPANIES ZDP PLC
Half-Yearly Report
for the six months ended 31 October
2015
The Half-Yearly Report can be accessed via the Investment
Manager’s website at www.chelvertonam.com or by contacting the
Company Secretary on 01245 398950.
This interim report should be read in conjunction with the
Half-Yearly report of Small Companies Dividend Trust PLC
(‘SCDT’).
COMPANY SUMMARY
Company Activities, Strategy &
Business Model
Small Companies ZDP PLC (‘SCZ’ or the ‘Company’) was
incorporated on 13 July 2012 as a
wholly owned subsidiary of SCDT, together referred to as the
‘Group’. SCZ was formed especially for the issuing of Zero Dividend
Preference (‘ZDP’) shares. It raised £8,500,000 before expenses on
28 August 2012 by a placing of
8,500,000 ZDP shares, which are listed on the UK Official List and
admitted to trading on the London Stock Exchange.
Pursuant to a loan agreement between SCZ and SCDT, SCZ has lent
the proceeds of the placing to SCDT. The loan is non-interest
bearing and is repayable three business days before the ZDP share
redemption date of 8 January 2018 or,
if required by SCZ, at any time prior to that date in order to
repay the ZDP share entitlement. The funds are to be managed in
accordance with the investment policy of SCDT.
SCZ investment objective &
policy
The objective of SCZ is to provide the final capital entitlement
of the ZDP shares to the holders of the ZDP shares at the
redemption date of 8 January 2018.
The proceeds of the placing of the ZDP shares have been lent to
SCDT under a loan agreement and the funds are managed in accordance
with the investment policy of SCDT.
SCZ has a capital structure comprising unlisted Ordinary shares
and ZDP shares listed on the Official List and traded on the London
Stock Exchange by way of a standard listing. SCZ is a wholly owned
subsidiary of SCDT which is a closed-ended investment company. On
28 August 2012, SCZ placed 8,500,000
ZDP shares at 100p per share and this raised a net total of £8.3
million. The expenses of the placing were borne by SCDT.
A contribution agreement between SCDT and SCZ has also been made
whereby SCDT will undertake to contribute such funds as would
ensure that SCZ will have in aggregate sufficient assets on
8 January 2018 to satisfy the final
capital entitlement of the ZDP shares of 136.70p per share, being
£11,620,000 in total. This assumes that the parent company and the
Company have sufficient assets as at 8
January 2018 to repay the ZDP shares. To this extent the
Company is reliant upon the investment performance of the parent
company and subject to the principal risks as set out in the Annual
Report of SCDT.
To protect the interests of ZDP shareholders, the loan agreement
contains a restriction on the Group incurring any other borrowings
(other than short-term indebtedness in the normal course of
business, such as when settling share transactions) except where
such borrowings are for the purpose of paying the final capital
entitlement due to holders of ZDP shares.
Based on the value of the Group’s assets as at 31 October 2015 they would have to fall at a rate
of 28% per annum for the Company to be unable to meet the full
capital repayment entitlements of the ZDP shares on the scheduled
repayment date of 8 January 2018.
The proceeds of the ZDP issue are being invested by SCDT in
accordance with the investment objective and policy of SCDT, which
is as follows (as extracted from the Annual Report of SCDT for
the
financial year ended 30 April
2015). The investment objective and policy of SCDT has not
changed during the period:
• The
Company’s assets comprise investments in equities in order to
achieve its investment objectives. It is the aim of the Company to
provide both income and capital growth predominantly through
investment in smaller capitalised United
Kingdom companies admitted to the Official List of the
United Kingdom Listing Authority and traded on the London Stock
Exchange Main Market or traded on AIM.
• The
Company will not invest in preference shares, loan stock or notes,
convertible securities or fixed interest securities or any similar
securities convertible into shares; nor will it invest in the
securities or other investment trusts or in unquoted companies.
•
There is no set limit on the Company’s gearing.
.
Registered in England No: 8142169
INTERIM MANAGEMENT REPORT
For details of the Group’s activities, development and
performance during the six months ended 31
October 2015 shareholders should refer to the Half-Yearly
Report of SCDT, which can be found on the Investment Manager’s
website. www.chelvertonam.com or is available for inspection at the
NSM, which is situated at www.morningstar.co.uk/uk/nsm
David Horner
Chelverton Asset Management Limited
2 December 2015
PRINCIPAL RISKS
The principal risks facing the Company are substantially
unchanged since the date of the Annual Report for the year ended
30 April 2015 and continue to be as
set out in note 11 of that report.
In addition, and due to the Company’s dependence on SCDT to
repay the loan and provide a contribution to meet the capital
entitlement of the ZDP shareholders, the other risks faced by the
Company are considered to be the same as for SCDT. These are
defined in note 24 of SCDT’s Annual Report for the year ended
30 April 2015 and include the
following; market risk, market price risk, foreign currency risk,
interest rate risk, credit risk and liquidity risk.
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 IAS34 ‘Interim Financial Reporting’ and gives a
true and fair view of the assets, liabilities and financial
position of the Company; 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 Company
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 2 December 2015 and the above
responsibility statement was signed on its behalf by Lord Lamont,
Chairman.
STATEMENT OF COMPREHENSIVE INCOME (unaudited)
for the six months ended 31 October
2015
|
Six months ended
31 October 2015 |
|
Year to
30 April 2015 (audited) |
|
Six months ended
31 October 2014 |
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
Revenue |
Capital |
Total |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Income |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
Provision for
contribution from SCDT regarding the capital entitlement of the ZDP
shares |
-
|
296 |
296 |
|
- |
562 |
562 |
|
- |
279 |
279 |
Return before
finance costs and taxation |
- |
296 |
296 |
|
- |
562 |
562 |
|
- |
279 |
279 |
|
|
|
|
|
|
|
|
|
|
|
|
Appropriations in
respect of ZDP shares |
- |
(296) |
(296) |
|
- |
(562) |
(562) |
|
- |
(279) |
(279) |
Net return after
finance costs and before taxation |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Taxation on
ordinary activities |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
Net return after
taxation |
- |
- |
- |
|
- |
- |
- |
|
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Return per ZDP
share (see note 3) |
- |
3.48p |
3.48p |
|
- |
6.61p |
6.61p |
|
- |
3.28p |
3.28p |
The total column of this statement is the Statement of
Comprehensive Income of the Company, prepared in accordance with
International Financial Reporting Standards (‘IFRS’), as adopted by
the EU. 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’).
All items in the above statement derive from continuing
operations.
BALANCE SHEET (unaudited)
as at 31 October 2015
|
31
October
2015 |
|
30
April
2015 |
|
31
October
2014 |
|
£'000 |
|
£'000 |
|
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
Non-current
assets |
|
|
|
|
|
Loans and
receivables |
10,228 |
|
9,932 |
|
9,649 |
|
|
|
|
|
|
Current
assets |
|
|
|
|
|
Trade and other
receivables |
13 |
|
13 |
|
13 |
|
|
|
|
|
|
Total
assets |
10,241 |
|
9,945 |
|
9,662 |
|
|
|
|
|
|
Non-current
liabilities |
|
|
|
|
|
ZDP shares |
(10,228) |
|
(9,932) |
|
(9,649) |
|
|
|
|
|
|
Net assets |
13 |
|
13 |
|
13 |
|
|
|
|
|
|
Represented
by: |
|
|
|
|
|
Share capital |
13 |
|
13 |
|
13 |
|
|
|
|
|
|
Equity
shareholders’ funds |
13 |
|
13 |
|
13 |
|
|
|
|
|
|
Net asset value per
ZDP share (see note 4) |
120.33p |
|
116.85p |
|
113.52p |
|
|
|
|
|
|
NOTES TO THE HALF-YEARLY REPORT
For the six months ended 31 October
2015
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
2015, 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 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 financial information of the Company for the period ended
31 October 2015 has also been
consolidated into the results of SCDT for the six months ended
31 October 2015.
This Half-Yearly Report has not been reviewed by the Company’s
Auditors.
This Half-Yearly Report has been prepared using accounting
policies set out in note 2 of the Company’s audited financial
statements for the year ended 30 April
2015.
2. Taxation
There is no charge to United
Kingdom income taxation as the Company does not have any
income. There are no deferred tax assets in respect of unrelieved
excess expenses as all expenses are borne by SCDT.
3. Return per ZDP share
The capital return per ZDP share is based on appropriations,
(the accrued entitlement to date) of £296,000 (30 April 2015: £562,000; 31 October 2014: £279,000) and on 8,500,000
(30 April 2015: 8,500,000;
31 October 2014: 8,500,000) being the
weighted average number of ZDP shares in issue during the
period.
4. Net asset value per ZDP share
The net asset value per ZDP share is based on the net assets
attributable of £10,228,000 (30 April
2015: £9,932,000; 31 October
2014: £9,649,000) and on 8,500,000 (30 April 2014: 8,500,000) being the number of ZDP
shares in issue during the period.
5. Going concern
The Company will fulfil its investment objective through the
contribution agreement it has with SCDT. The contribution from SCDT
will provide the capital entitlement of the ZDP shareholders. The
principal risk the Company faces, is therefore, that SCDT would not
have sufficient assets to repay the loan and to make a contribution
to fulfil the amount of the capital entitlement due to the ZDP
shareholders. Covenants are in place between SCDT and the Company
that ensure that SCDT will not undertake certain actions in
relation to both itself and the Company.
Due to the Company’s dependence on SCDT to repay the loan and
provide a contribution to meet the capital entitlement of the ZDP
shareholders, other risks faced by the Company are considered to be
the same as for SCDT and these are defined in note 24 of SCDT’s
Annual Report.
SCDT has considerable financial resources and therefore the
Directors believe that the Company is well placed to manage its
business risks and also believe that SCDT will have sufficient
resources to continue in operational existence for the foreseeable
future. Accordingly, they have prepared this Half-Yearly Report on
the going concern basis.
6. Related party transactions
The funds lent to SCDT are managed by Chelverton Asset
Management Limited, a company in which Mr van Heesewijk, a Director of the Company, has an
interest. The Investment Manager is remunerated by SCDT and the
amounts in respect of its services as Investment Manager of the
Company are not separately identifiable.
DIRECTORS AND ADVISERS
Directors
Lord Lamont of Lerwick
(Chairman) |
|
David Harris |
|
William van
Heesewijk |
|
Howard Myles |
|
|
|
Principal Group Advisers
Investment
Manager |
Secretary and
Registered Office |
Chelverton Asset
Management Limited |
Phoenix Administration
Services Limited |
12b George Street |
Springfield Lodge |
Bath BA1 2EH |
Colchester Road,
Chelmsford |
Tel: 01225 483030 |
Essex CM2 5PW |
|
Tel: 01245 398950 |
|
|
Registrar and
Transfer Office for the ZDP shares |
Auditor |
Share Registrars
Limited |
Hazlewoods LLP |
Suite E, First
Floor |
Windsor House |
9 Lion and Lamb
Yard |
Bayshill Road |
Farnham |
Cheltenham GL50
3AT |
Surrey GU9 7LL |
|
Tel: 01252 821390 |
|
www.shareregistrars.uk.com |
|
|
|
SHAREHOLDER INFORMATION
Financial calendar
Company year end – April
Annual results announced – June
Annual General Meeting – September
Half-year results announced - December
Sources of further information
The Company’s ZDP shares are listed on the London Stock
Exchange.
The Company’s ZDP NAV is released to the London Stock Exchange
on a weekly basis and published monthly via the AIC.
Information about the Company and SCDT can be obtained on the
Manager’s website: www.chelvertonam.com. Any enquiries can also be
emailed to cam@chelvertonam.com
Share registrar enquiries
The register for the ZDP shares is 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.
Neither the contents of the Company’s
website nor the contents of any website accessible from hyperlinks
on this announcement (or any website) is incorporated into, or
forms part of, this announcement.