Chelverton Small ZDP Half-year Report
16 November 2017 - 8:01AM
UK Regulatory
TIDMSDVZ
CHELVERTON SMALL COMPANIES ZDP PLC
Registered Number: 08142169
Half-Yearly Report
for the six months ended 31 October 2017
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 Chelverton Small Companies Dividend Trust PLC ('SCDT').
COMPANY SUMMARY
Company Activities, Strategy & Business Model
Chelverton 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 GBP8,500,000 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.
On the 24 March 2017 GBP1,146,150 was raised before expenses by placing an
additional 849,000 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 GBP8.3 million. The
expenses of the placing were borne by SCDT. On 24 March 2017, SCZ placed an
additional 849,000 ZDP shares at 135p per share and this raised a net total of
GBP1.1 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 GBP12,780,083 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 2017 they would have
to fall at a rate of 26.7% 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):
* 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 mid and
smaller capitalised UK companies admitted to the Official List of the UK
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: 08142169
INTERIM MANAGEMENT REPORT
For details of the Group's activities, development and performance during the
six months ended 31 October 2017 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
15 November 2017
PRINCIPAL RISKS
The principal risks facing the Company are substantially unchanged since the
date of the Annual Report for the year ended 30 April 2017 and continue to be
as set out on page 10 and 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 2017 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 15 November
2017 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 2017
Six months ended 31 October Year to 30 April 2017
2017 (audited)
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Income - - - - - -
- 341 341 - 633 633
Provision for contribution
from SCDT regarding the
capital entitlement of the
ZDP shares
Return before finance costs - 341 341 - 633 633
and taxation
Appropriations in respect - (341) (341) - (633) (633)
of ZDP shares
Net return after finance - - - -
costs and before taxation - -
Taxation - - - - - -
Net return after taxation - - - - - -
Return per ZDP share (see - 3.65p 3.65p - 7.37p
note 3) 7.37p
Six months ended 31 October 2016
Revenue Capital Total
GBP'000 GBP'000 GBP'000
- - - Income
- 313 313 Provision for contribution from SCDT
regarding the capital entitlement of
the ZDP shares
- 313 313 Return before finance costs and
taxation
- (313) (313) Appropriations in respect of ZDP
shares
- - Net return after finance costs and
- before taxation
- - - Taxation
- - - Net return after taxation
- 3.68p 3.68p Return per ZDP share (see note 3)
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 2017
31 October 30 April 31 October
2017 2017 2016
GBP'000 GBP'000 GBP'000
(audited)
Non-current assets
Loans and receivables 12,649 12,308 10,842
Current assets
Trade and other receivables 13 13 13
Total assets 12,662 12,321 10,855
Non-current liabilities
ZDP shares (12,649) (12,308) (10,842)
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 135.30p 131.65p 127.56p
note 4)
NOTES TO THE HALF-YEARLY REPORT
For the six months ended 31 October 2017
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 2017, 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
('SORP) issued by the AIC in November 2014, except to any extent where it
conflicts with IFRS.
The financial information of the Company for the period ended 31 October 2017
has also been consolidated into the results of SCDT for the six months ended 31
October 2017.
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 2017.
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 GBP341,000 (30 April 2017: GBP633,000; 31 October 2016: GBP
313,000) and on 9,349,000 (30 April 2017: 8,586,063; 31 October 2016:
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 GBP
12,649,000 (30 April 2017: GBP12,308,000; 31 October 2016: GBP10,842,000) and on
9,349,000 (30 April 2017: 9,349,000; 31 October 2016: 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 Maitland Administration Services
Limited
11 Lara Place Springfield Lodge
Bath BA2 4BL Colchester Road, Chelmsford
Tel: 01225 483030 Essex CM2 5PW
Tel: 01245 398950
Registrar and Transfer Office for the ZDP Auditor
shares
Share Registrars Limited Hazlewoods LLP
The Courtyard Windsor House
17 West Street Bayshill Road
Farnham Cheltenham GL50 3AT
Surrey GU9 7DR
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.
END
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