TIDMDNDL
RNS Number : 3206S
Dunedin Smaller Cos Inv Tst PLC
25 June 2018
DUNEDIN SMALLER COMPANIES INVESTMENT TRUST PLC
Legal Entity Identifier (LEI): 213800CI43OQT8KBKE03
HALF YEARLY REPORT FOR THE SIX MONTHSED 30 APRIL 2018
The objective of Dunedin Smaller Companies Investment Trust PLC
is to achieve long-term growth from a portfolio of smaller
companies in the United Kingdom.
Financial Highlights 30 April 2018 31 October % change
2017
Total assets(A) (GBP'000) 162,869 157,630 +3.3
Equity shareholders' funds (GBP'000) 156,874 152,630 +2.8
Net asset value per share(B) 327.80p 318.93p +2.8
Share price per share (mid-market) 276.50p 253.00p +9.3
Interim dividend per share 2.15p 2.15p(C) -
Discount to net asset value 15.6% 20.7%
Ongoing charges ratio(D) - excluding
performance fee 0.73% 0.77%
Ongoing charges ratio(D) - including
performance fee 1.05% 1.36%
(A) Represents total assets less current liabilities excluding
bank loans.
(B) Including undistributed revenue for the period.
(C) For six months ended 30 April 2017.
(D) Considered to be an Alternative Performance Measure. Ongoing
charges ratio calculated in accordance with guidance issued by
the AIC as the total of the investment management fee and administrative
expenses (annualised) divided by the average cum income net asset
value throughout the year. The ratio for 30 April 2018 is based
on forecast ongoing charges for the year ending 31 October 2018.
Performance (total return)(A)
Six months ended Year ended
30 April 2018 31 October
2017
Net asset value per share +4.1% +32.8%
Share price +11.0% +28.8%
FTSE SmallCap Index (ex Investment Companies) +1.0% +21.9%
(A) The total return for share price and net asset value is calculated
on the basis of reinvesting dividends to shareholders on the ex-dividend
date and is considered to be an Alternative Performance Measure.
Source: Aberdeen Fund Managers Limited, Morningstar & Factset.
For further information, please contact:
Maria Allen
Aberdeen Fund Managers Limited 020 7463 6000
INTERIM BOARD REPORT - CHAIRMAN'S STATEMENT
This is my first Statement since I took over as Chairman from
Norman Yarrow following the Company's Annual General Meeting on 8
February 2018. I would like to reiterate the Board's thanks to
Norman for his service to the Company since his appointment as a
Director in 1998 and as Chairman in 2015.
Future of the Company
On 21 June 2018, following a strategic review by your Board and
the consideration of a number of options, your Board announced
proposals for the merger of the Company with Standard Life UK
Smaller Companies Trust plc, an investment trust with a similar
mandate managed by the Company's Manager. We believe there are a
number of benefits of the merger, and that it will result in a
significant increase in the valuation of the Company's
shareholders' investment. Further details are provided below under
'Merger Proposal'.
Performance
I am pleased to report that the Company's net asset value
("NAV") total return for the six months ended 30 April 2018 was
4.1%, which compares favourably to a total return of 1.0% from the
benchmark index, the FTSE SmallCap Index (excluding investment
companies). The share price total return was 11.0%, reflecting a
narrowing of the discount at which the shares trade to the NAV per
share, from 20.7% to 15.6% at the end of the period.
While the UK equity market has so far seen relatively limited
disjoint from Brexit, there has been an increase in volatility at
the start of 2018. Economic data has been mixed in recent months,
with quarterly GDP growth slowing in the first quarter and
dampening expectations of an imminent rate-raise in May. Sterling
weakness buoyed firms with overseas earnings as a result, while
share prices in the energy sector have recently received a boost
from the firmer oil price, with the price of crude oil exceeding
its highest level in over four years since the end of the reporting
period. In addition, merger and acquisition activity has remained
notably elevated.
The Company benefited from the strong performance of a number of
holdings in the portfolio. Dechra Pharmaceuticals, which is the
largest position in the portfolio, traded strongly following the
acquisition of two Dutch businesses in January and impressive
interim results in February. Exemplifying the rise in bid activity,
conveyor-belt maker Fenner received a takeover offer from French
tyre manufacturer Michelin at an attractive 24% premium to the
previous closing share price. In the software sector, AVEVA
performed strongly as it enacted the reverse takeover of French
engineering firm Schneider Electric's software assets.
The largest detractor to performance during the period was
funeral and crematoria services company Dignity, which was impacted
by significant new price competition within the sector. The
Investment Manager became concerned about the company's prospects
and the holding was disposed of prior to the end of the period.
Earnings and Dividends
The Company's revenue earnings per share for the period were
3.22p, compared to 2.38p in the equivalent period last year. The
main reason for the increase in earnings was the receipt of special
dividends from Victrex and also AVEVA, following the deal with
Schneider referred to above.
Your Board has declared an unchanged interim dividend of 2.15p
per share which will be paid on 27 July 2018 to shareholders on the
register on 6 July 2018.
Discount
As stated above, the discount at the end of the period was
15.6%. The Directors monitor the Company's discount on an ongoing
basis relative to its peer group and the wider investment trust
sector and, subject to market conditions, may use the Company's
share buyback authority if considered appropriate.
Merger Proposal
Notwithstanding the Company's recent favourable performance on
an NAV total return basis, your Board is aware that the Company's
size and the secondary market liquidity in its shares make it
challenging to attract new investors in the Company. Your Board
also believes that these factors have contributed to the discount
at which the Company's shares trade. In addition, the recent merger
of the Company's Manager Aberdeen Asset Management PLC with
Standard Life plc has resulted in the Company being managed
alongside a company with a very similar UK smaller companies
mandate. As a consequence of these factors, your Board decided to
undertake a strategic review of the Company and its position in the
UK smaller companies sector.
Having considered a number of options and following consultation
with the Company's largest shareholders, your Board believes that
shareholders, as a whole, still wish to retain exposure to UK
smaller companies via an investment trust with a similar mandate
managed by the Company's Manager, Aberdeen Standard Investments(1)
. Consequently, the Company has agreed, in principle, the terms of
a merger with Standard Life UK Smaller Companies Trust plc
("SLS").
Your Board believes that the merger of the Company and SLS would
provide the Company's shareholders with an investment in a
significantly larger investment trust, with a strong investment
track record, a stronger rating, a robust discount control
mechanism and substantially greater secondary market liquidity, all
of which should appeal to a broader range of investors. In
particular, your Board believes that a merger would result in a
significant increase in the valuation of the Company's
shareholders' investment (over the 12 months ended 19 June 2018,
the shares of the Company and of SLS traded at average discounts of
17.4% and 3.8% respectively(2) ).
The merger would be effected by way of a scheme of
reconstruction of the Company under section 110 of the Insolvency
Act 1986 resulting in the voluntary liquidation of the Company and
shareholders rolling over their investment in the Company into SLS
on the basis of an all-share, nil premium (to NAV) merger, save
that the aggregate costs of the Company and SLS would be borne by
the Company's shareholders. The transaction would be subject to,
inter alia, approval by the shareholders of each of the Company and
SLS.
The Directors expect to declare, pre-merger, a final interim
dividend. Although the merger of the Company and SLS is expected to
result in a reduction in the aggregate annual dividends received by
the Company's shareholders, the final interim dividend is expected
to be at least equivalent to that reduction during the 12 months
following the merger(3) .
A circular convening a general meeting to approve the
transaction is expected to be sent to shareholders in due course.
Shareholders will also receive a prospectus issued by SLS
containing details of the SLS shares that you will receive in
exchange for your Ordinary shares in the Company under the merger
proposals.
Note: (1) Aberdeen Standard Investments is a brand of the
investment businesses of Aberdeen Asset Management and Standard
Life Investments.(2) Discounts are based on the respective net
asset values (cum-income, with debt at fair value) and share prices
of the Company and SLS over the 12 months ended 19 June 2018. (3)
Based on the dividends declared by the Company and SLS respectively
during the 12 months prior to and ending on 19 June 2018.
Gearing
As reported in the recent Annual Report, the Company's loan
facilities matured on 24 November 2017 and the Company replaced
them with new facility agreements entered into with Scotiabank
Europe PLC (the "New Facilities"). The New Facilities were for a
five year period to 24 November 2022 and, as with the previous
facilities, comprised a GBP5 million fixed rate term loan and a
GBP5 million revolving credit facility. At the period-end, the GBP5
million term loan had been fully drawn down at an all-in interest
rate of 2.78% per annum and GBP1 million was drawn down under the
revolving credit facility. Total borrowings (net of cash) amounted
to GBP1.9 million at the period end, representing a modestly geared
position of 1.2% of shareholders' funds.
However, in light of the Company's plans regarding its future,
your Board believes it is prudent to repay both facilities in full
as soon as practicable. Accordingly, both loans have been repaid
since the end of the period. There was no break cost in relation to
the early repayment of the fixed term facility.
Board Composition
In light of the announcement regarding the Company's future,
your Board does not intend to make any changes to its
composition.
Manager
Pending the results of the proposal to merge the Company with
SLS, your Company will continue to be managed in accordance with
the terms of its current mandate by the Aberdeen Standard
Investments UK Smaller Companies Team, but the portfolio is likely
to be increasingly aligned with that of SLS. The realignment
process has already begun and includes disposing of existing
holdings and the acquisition of new holdings, but a significant
proportion of the portfolio is also likely to be retained, given
the similarities that exist between the two portfolios.
Your Board would also like to take the opportunity to thank Ed
Beal for his hard work in managing the Company's portfolio over the
past 14 years.
Outlook
Despite recent stock market volatility, prospects for the global
economy are still generally supportive, with a combination of
improving growth, subdued inflation, and gradual central bank
tightening continuing to support equity markets. The unsettling
impact of a number of geo-political uncertainties remain to the
fore, however, and are likely to continue to exercise the minds of
investors.
Even with a market that has become increasingly focused on short
term news flow, the companies in the portfolio have had a broadly
positive reporting season, although the impact of weaker consumer
confidence has been evident with more UK companies in the wider
market warning of tougher times ahead. The existing portfolio
remains underweight in its exposure to the more cyclical
domestic-focused businesses. Going forward, the Manager remains
vigilant for opportunities that may be presented by such a market
backdrop, both in implementing the realignment process referred to
above, but also in general for investing in their preferred
companies at attractive valuations.
James Barnes
Chairman
22 June 2018
INTERIM BOARD REPORT - OTHER MATTERS
Directors' Responsibilities Statement
The Directors are responsible for preparing the Half-Yearly
Financial Report in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
-- the condensed set of financial statements within the
Half-Yearly Financial Report has been prepared in accordance with
Financial Reporting Standard 104 'Interim Financial Reporting';
-- the Interim Board Report (constituting the interim management
report) includes a fair review of the information required by rule
4.2.7R of the Disclosure Guidance and Transparency Rules (being an
indication of 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
financial year) and 4.2.8R (being related party transactions that
have taken place during the first six months of the financial year
and that have materially affected the financial position of the
Company during that period; and any changes in the related party
transactions described in the last Annual Report that could so
do).
Principal Risks and Uncertainties
The Board regularly reviews the principal risks and
uncertainties which it has identified, together with the mitigation
actions it has established to manage the risks. These are set out
within the Strategic Report contained within the Annual Report for
the year ended 31 October 2017. The Board has identified the
principal risks and uncertainties facing that Company which can be
summarised under the following headings:
-- Investment strategy and objectives
-- Investment management
-- Income/dividends
-- Financial obligations
-- Gearing
-- Regulatory
-- Operational
The Company's principal risks and uncertainties have not changed
materially since the date of the Annual Report and are not expected
to change materially for the remaining six months of the Company's
financial year.
Going Concern
The Company's assets consist substantially of equity shares in
companies traded on the London Stock Exchange which are, in most
circumstances, realisable within a short timescale. The Board has
set limits for borrowing and regularly reviews actual exposures,
cash flow projections and compliance with banking covenants. As
such, the Directors believe that the Company has adequate financial
resources to continue in operational existence for the foreseeable
future and at least 12 months from the date of this Report.
As explained in the Chairman's Statement, the Board has
announced proposals for the merger of the Company with Standard
Life UK Smaller Companies Trust plc ("SLS"), an investment trust
with a similar mandate managed by the Company's Manager. As stated
in the Chairman's Statement, the Board believes there are a number
of benefits of the merger. The merger would be effected by way of a
scheme of reconstruction of the Company under section 110 of the
Insolvency Act 1986 resulting in the voluntary liquidation of the
Company and a roll-over of shares in the Company into SLS.
The Directors are aware that should this transaction proceed to
completion, the Company will no longer exist as a corporate entity.
In accordance with accounting standards, this obviously constitutes
a material uncertainty that may cast significant doubt upon the
Company's ability to continue as a going concern. The Directors
clearly still consider that in the event that the merger doesn't
proceed, the Company would continue as a going concern.
Performance to 30 April 2018
1 year return 3 year return 5 year return
Total return* % % %
------------------------------- -------------- -------------- --------------
Share price 27.5 52.9 66.8
Net asset value per share 19.1 46.4 90.9
FTSE SmallCap Index (ex IC's) 6.1 34.7 84.3
------------------------------- -------------- -------------- --------------
* The total return for share price and net asset value is
calculated on the basis of reinvesting dividends to shareholders on
the ex-dividend date.
Source: Aberdeen Fund Managers Limited, Morningstar &
Factset
On behalf of the Board
James Barnes
Chairman
22 June 2018
INDEPENT REVIEW REPORT TO DUNEDIN SMALLER COMPANIES INVESTMENT
TRUST PLC
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the Half-Yearly Financial Report for the
six months ended 30 April 2018 which comprises the Condensed
Statement of Comprehensive Income, Condensed Statement of Financial
Position, Condensed Statement of Changes in Equity and Condensed
Statement of Cash Flows and the related explanatory notes.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the Half-Yearly Financial Report for the six months ended 30
April 2018 is not prepared, in all material respects, in accordance
with FRS 104 'Interim Financial Reporting' and the Disclosure
Guidance and Transparency Rules (the "DTR") of the UK's Financial
Conduct Authority (the "UK FCA").
Material Uncertainty Related to Going Concern
We draw attention to note 1(b) of the financial statements which
indicates that the Board has announced proposals for the merger of
the Company with Standard Life UK Smaller Companies Trust plc
("SLS"). The merger would result in the voluntary liquidation of
the Company and a roll-over of shares in the Company into SLS. The
proposed transaction gives rise to a material uncertainty that may
cast significant doubt upon the ability of the Company to continue
as a going concern. Our conclusion is not modified in respect of
this matter.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the UK. A review of interim financial information consists of
making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. We read the other information contained in the
Half-Yearly Financial Report and consider whether it contains any
apparent misstatements or material inconsistencies with the
information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and
consequently does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
Directors' Responsibilities
The Half-Yearly Financial Report is the responsibility of, and
has been approved by, the Directors. The Directors are responsible
for preparing the Half-Yearly Financial Report in accordance with
the DTR of the UK FCA.
The annual financial statements of the Company are prepared in
accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice), including FRS 102 'The
Financial Reporting Standard applicable in the UK and Republic of
Ireland'. The Directors are responsible for preparing the condensed
set of financial statements included in the Half-Yearly Financial
Report in accordance with FRS 104 'Interim Financial
Reporting'.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the Half-Yearly
Financial Report based on our review.
The Purpose of Our Review Work and to Whom We Owe Our
Responsibilities
This report is made solely to the Company in accordance with the
terms of our engagement to assist the Company in meeting the
requirements of the DTR of the UK FCA. Our review has been
undertaken so that we might state to the Company those matters we
are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept
or assume responsibility to anyone other than the Company for our
review work, for this report, or for the conclusions we have
reached.
John Waterson
For and on behalf of KPMG LLP
Chartered Accountants
Saltire Court
20 Castle Terrace
Edinburgh EH1 2EG
22 June 2018
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
Six months ended
30 April 2018
Revenue Capital Total
Note GBP'000 GBP'000 GBP'000
Gains on investments - 5,519 5,519
Income 2 1,912 - 1,912
Investment management and
performance fee (80) (724) (804)
Administrative expenses (270) - (270)
__________ __________ __________
Net return before finance
costs and taxation 1,562 4,795 6,357
Finance costs (21) (63) (84)
__________ __________ __________
Net return before taxation 1,541 4,732 6,273
Taxation - - -
__________ __________ __________
Net return attributable to
equity shareholders 1,541 4,732 6,273
__________ __________ __________
Return per Ordinary share
(pence) 4 3.22 9.89 13.11
__________ __________ __________
The total column of this statement represents the profit and
loss account of the Company.
All revenue and capital items in the above statement derive from
continuing operations.
The accompanying notes are an integral part of this condensed
set of interim financial statements.
CONDENSED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)
(Cont'd)
Six months ended
30 April 2017
Revenue Capital Total
Note GBP'000 GBP'000 GBP'000
Gains on investments - 17,814 17,814
Income 2 1,455 - 1,455
Investment management and
performance fee (66) (199) (265)
Administrative expenses (233) - (233)
__________ __________ __________
Net return before finance
costs and taxation 1,156 17,615 18,771
Finance costs (15) (46) (61)
__________ __________ __________
Net return before taxation 1,141 17,569 18,710
Taxation - - -
__________ __________ __________
Net return attributable to
equity shareholders 1,141 17,569 18,710
__________ __________ __________
Return per Ordinary share
(pence) 4 2.38 36.71 39.09
__________ __________ __________
The accompanying notes are an integral part of this condensed
set of interim financial statements.
CONDENSED STATEMENT OF FINANCIAL POSITION (UNAUDITED)
As at As at
30 April 31 October
2018 2017
Note GBP'000 GBP'000
Non-current assets
Investments at fair value through
profit or loss 158,595 154,803
__________ __________
Current assets
Debtors and prepayments 988 339
Cash and short term deposits 4,098 3,747
__________ __________
5,086 4,086
__________ __________
Creditors: amounts falling due
within one year
Bank loan 5 (1,000) (5,000)
Other creditors (812) (1,259)
__________ __________
(1,812) (6,259)
__________ __________
Net current assets/(liabilities) 3,274 (2,173)
__________ __________
Total assets less current liabilities 161,869 152,630
__________ __________
Creditors: amounts falling due
after more than one year
Bank loan 5 (4,995) -
__________ __________
Net assets 156,874 152,630
__________ __________
Capital and reserves
Called-up share capital 7 2,393 2,393
Share premium account 30 30
Capital redemption reserve 2,233 2,233
Capital reserve 8 148,233 143,501
Revenue reserve 3,985 4,473
__________ __________
Equity shareholders' funds 156,874 152,630
__________ __________
Net asset value per Ordinary share
(pence) 9 327.80 318.93
__________ __________
The accompanying notes are an integral part of this condensed
set of interim financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)
Six months ended 30
April 2018
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 October
2017 2,393 30 2,233 143,501 4,473 152,630
Net return attributable
to equity shareholders - - - 4,732 1,541 6,273
Dividends paid 3 - - - - (2,029) (2,029)
_____ ______ _______ ______ ______ ______
Balance at 30 April
2018 2,393 30 2,233 148,233 3,985 156,874
_____ ______ _______ ______ ______ ______
Six months ended 30
April 2017
Share Capital
Share premium redemption Capital Revenue
capital account reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 31 October
2016 2,393 30 2,233 108,139 4,823 117,618
Net return attributable
to equity shareholders - - - 17,569 1,141 18,710
Dividends paid 3 - - - - (1,914) (1,914)
_____ ______ _______ ______ ______ ______
Balance at 30 April
2017 2,393 30 2,233 125,708 4,050 134,414
_____ ______ _______ ______ ______ ______
The accompanying notes are an integral part of this condensed set
of interim financial statements.
CONDENSED STATEMENT OF CASH FLOWS (UNAUDITED)
Six months Six months
ended ended
30 April 30 April
2018 2017
GBP'000 GBP'000
Operating activities
Net return before finance costs and taxation 6,357 18,771
Adjustment for:
Gains on investments (5,519) (17,814)
Scrip dividends included in investment income (42) -
Increase in accrued dividend income (455) (551)
(Increase)/decrease in other debtors (1) 11
Decrease in creditors (249) (13)
__________ __________
Net cash flow from operating activities 91 404
Investing activities
Purchases of investments (12,486) (8,367)
Sales of investments 13,857 7,683
__________ __________
Net cash inflow/(outflow) from investing
activities 1,371 (684)
Financing activities
Interest paid (82) (62)
Equity dividends paid (2,029) (1,914)
Bank loan drawn down 1,000 -
__________ __________
Net cash flow used in financing activities (1,111) (1,976)
__________ __________
Increase/(decrease) in cash and cash equivalents 351 (2,256)
__________ __________
Analysis of changes in cash and cash equivalents
during the period
Opening balance 3,747 8,122
Increase/(decrease) in cash above 351 (2,256)
__________ __________
Closing balance 4,098 5,866
__________ __________
The accompanying notes are an integral part of this condensed
set of interim financial statements.
Notes to the Financial Statements
1. Accounting policies
(a) Basis of preparation
The condensed financial statements have been prepared in
accordance with Financial Reporting Standard 104 (Interim
Financial Reporting) and the principles of the Statement
of Recommended Practice for 'Financial Statements of Investment
Trust Companies and Venture Capital Trusts' issued in November
2014 and updated in February 2018 with consequential updates
(applicable for accounting periods beginning on or after
1 January 2019 but adopted early).
The interim financial statements have been prepared using
the same accounting policies as the preceding annual financial
statements.
(b) Going concern
As explained in the Chairman's Statement, the Board has
announced proposals for the merger of the Company with Standard
Life UK Smaller Companies Trust plc ("SLS"). The Directors
are aware that should this transaction proceed to completion,
the Company will no longer exist as a corporate entity.
In accordance with accounting standards, this obviously
constitutes a material uncertainty that may cast significant
doubt upon the Company's ability to continue as a going
concern. The Directors clearly still consider that in the
event that the merger doesn't proceed, the Company would
continue as a going concern.
Six months Six months
ended ended
30 April 2018 30 April
2017
2. Income GBP'000 GBP'000
Income from investments
UK dividend income 1,714 1,277
Overseas dividend income 96 104
Property income distributions 55 63
UK scrip dividend income 42 -
__________ __________
1,907 1,444
__________ __________
Other income
Deposit interest 5 1
Underwriting commission - 10
__________ __________
5 11
__________ __________
Total income 1,912 1,455
__________ __________
Six months Six months
ended ended
30 April 2018 30 April
2017
3. Ordinary dividends on equity shares GBP'000 GBP'000
Final dividend for 2017 - 4.24p
(2016 - 4.00p) 2,029 1,914
__________ __________
An interim dividend of 2.15p per share for the year to 31
October 2018 will be paid on 27 July 2018 to shareholders
on the register on 6 July 2018. The ex-dividend date is
5 July 2018.
Six months Six months
ended ended
30 April 2018 30 April
2017
4. Return per Ordinary share p p
Revenue return 3.22 2.38
Capital return 9.89 36.71
__________ __________
Total return 13.11 39.09
__________ __________
The figures above are based on the
following:
Six months Six months
ended ended
30 April 2018 30 April
2017
GBP'000 GBP'000
Revenue return 1,541 1,141
Capital return 4,732 17,569
__________ __________
Total return 6,273 18,710
__________ __________
Weighted average number of Ordinary
shares in issue 47,857,317 47,857,317
__________ __________
5. Bank loan
On 24 November 2017, the Company renewed its GBP5 million
revolving facility agreement as well as agreeing a new five
year term loan facility of GBP5 million with Scotiabank
Europe. GBP5 million was currently drawn down at the period
end at a fixed interest rate of 2.78% until 24 November
2022. The loan was repaid in full on 22 June 2018. GBP1
million was drawn down from the revolving facility at an
interest rate of 2.20325% per annum at the period end and
was repaid in full on 18 June 2018. The terms of the loan
facility covenants specify that the minimum net assets of
the Company should not be less than GBP70 million and the
percentage of borrowings against net assets should not be
more than 25%.
6. Transaction costs
During the period, expenses were incurred in acquiring or
disposing of investments classified as fair value through
profit or loss. These have been expensed through capital
and are included within gains on investments in the Condensed
Statement of Comprehensive Income. The total costs were
as follows:
Six months Six months
ended ended
30 April 2018 30 April
2017
GBP'000 GBP'000
Purchases 49 28
Sales 8 4
__________ __________
57 32
__________ __________
7. Called-up share capital
As at 30 April 2018 there were 47,857,317 (31 October 2017
- 47,857,317) Ordinary shares of 5p each in issue.
8. Capital reserves
The capital reserve reflected in the Condensed Statement
of Financial Position at 30 April 2018 includes gains of
GBP68,544,000 (31 October 2017 - gains of GBP62,807,000)
which relate to the revaluation of investments held at the
reporting date.
As at As at
9. Net asset value per share 30 April 31 October
2018 2017
Equity shareholders' funds GBP156,874,000 GBP152,630,000
Number of Ordinary shares in issue
at period end 47,857,317 47,857,317
Equity shareholders' funds per share 327.80p 318.93p
10. Fair value hierarchy
FRS 102 requires an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance
of the inputs used in making the measurements. The fair
value hierarchy has the following classifications:
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 assets or
liabilities, either directly (i.e., as prices)
or indirectly (i.e., derived from prices); and
Level 3: inputs for the assets or liabilities that are
not based on observable market data (unobservable
inputs).
All of the Company's investments are in quoted equities
(31 October 2017 - same) actively traded on recognised
stock exchanges, with their fair value being determined
by reference to their quoted bid prices at the reporting
date. The total value of the investments as at 30 April
2018 of GBP158,595,000 (31 October 2017 - GBP154,803,000)
have therefore been deemed as Level 1.
The fair value of the term loan facility is determined
by aggregating the expected future cash flows for the loan
discounted at a rate comprising the borrower's margin plus
one year LIBOR.
The financial liability in the form of the short-term revolving
facility is held at amortised cost.
The fair value of borrowings as at 30 April 2018 has been
estimated at GBP6,060,000 (31 October 2017 - GBP5,000,000).
Under the fair value hierarchy, these borrowings are classified
as Level 2.
There were no transfers of assets or liabilities between
levels of the fair value hierarchy during the six months
ended 30 April 2018 (year ended 31 October 2017 - same).
11. Related party transactions and transactions with the Manager
The Company has agreements with Aberdeen Fund Managers
Limited ("AFML" or the "Manager") for the provision of
investment management, secretarial, accounting and administration
and promotional services.
The management fee is calculated at 0.4% per annum of the
gross assets of the Company after deducting current liabilities
and excluding commonly managed funds ('adjusted gross assets').
The management fee is chargeable 25% to revenue and 75%
to capital. During the period GBP318,000 (30 April 2017
- GBP265,000) of investment management fees were earned
by the Manager, with a balance of GBP161,000 (30 April
2017 - GBP138,000) being payable to AFML at the period
end. There were no commonly managed funds held in the portfolio
during the six months to 30 April 2018 (2017 - none).
In addition, the Manager is entitled to an annual performance-related
fee calculated at a rate of 0.1% per annum (up to a maximum
of 0.5% per annum) of the adjusted gross assets, as at
31 October each year, for every 1% by which the Company's
net asset value performance outperforms the capital performance
of the FTSE SmallCap Index (ex Investment Companies) over
the previous twelve month period.
At the period end GBP485,000 (30 April 2017 - GBPnil) was
accrued for a twelve months' fee based on the performance
of the Company over the six month period and is included
within other creditors.
The management agreement may be terminated by either party
on the expiry of three months' written notice. In the event
of termination by the Company on less than the agreed notice
period, compensation is payable to the Manager in lieu
of the unexpired notice period.
The fee for promotional activities is based on a current
annual amount of GBP66,000 inclusive of VAT, payable quarterly
in arrears. During the period GBP34,000 (30 April 2017
- GBP24,000) of fees were earned, with a balance of GBP5,000
(30 April 2017 - GBP16,000) being payable to AFML at the
period end.
The fee for secretarial services is based on a current
annual amount of GBP107,000 inclusive of VAT, payable quarterly
in arrears. During the period GBP54,000 (30 April 2017
- GBP52,000) of fees were earned, with a balance of GBP54,000
(30 April 2017 - GBP26,000) being payable to AFML at the
period end.
12. Segmental information
The Company is engaged in a single segment of business,
which is to invest in equity securities. All of the Company's
activities are interrelated, and each activity is dependent
on the others. Accordingly, all significant operating decisions
are based on the Company as one segment.
13. Subsequent events
Subsequent to the period, on 21 June 2018, the Company
announced proposals for the merger of the Company with
Standard Life UK Smaller Companies Trust plc, following
a strategic review and the consideration of a number of
options. Further details are provided within the 'Merger
Proposal' section of the Chairman's Statement.
14. The financial information contained in this Half-Yearly
Financial Report does not constitute statutory accounts
as defined in Sections 434 - 436 of the Companies Act 2006.
The financial information for the six months ended 30 April
2018 and 30 April 2017 has not been audited.
The information for the year ended 31 October 2017 has
been extracted from the latest published audited financial
statements which have been filed with the Registrar of
Companies. The report of the auditor on those accounts
contained no qualification or statement under Section 498
of the Companies Act 2006.
The auditor has reviewed the financial information for
the six months ended 30 April 2018 pursuant to the Auditing
Practices Board guidance on Review of Interim Financial
Information. The report of the auditor is included above.
15. This Half-Yearly Financial Report was approved by the Board
on 22 June 2018.
By order of the Board
Aberdeen Asset Management PLC
Company Secretary
22 June 2018
Please note that past performance is not necessarily a guide to
the future and the value of investments and the income from them
may fall as well as rise. Investors may not get back the amount
they originally invested.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BIGDLIDDBGIS
(END) Dow Jones Newswires
June 25, 2018 02:00 ET (06:00 GMT)
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