Chelverton Small ZDP Half-year Report

 
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: [phone]                         Essex CM2 5PW 
 
                                          Tel: [phone] 
 
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: [phone] 
 
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 
[e-mail] 
 
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 
 
 
 
END 
 

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November 16, 2017 02:01 ET (07:01 GMT)