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SMALL COMPANIES DIVIDEND TRUST PLC - Annual Financial Report

Date : 07/08/2013 @ 1:07PM
Source : PR Newswire (US)
Stock : Sml Co. Div (SDV)
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SMALL COMPANIES DIVIDEND TRUST PLC - Annual Financial Report

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1 Year : From Apr 2013 to Apr 2014

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SMALL COMPANIES DIVIDEND TRUST PLC

ANNUAL FINANCIAL REPORT FOR THE YEAR ENDED 30 APRIL 2013

The full Annual 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.

The full details of the investment policy can be found in the Business Review
below.

FINANCIAL HIGHLIGHTS

                                             30 April    30 April

                                                 2013        2012     % change

Capital

Total net assets (£'000)                        22,579     17,180        31.43

Net asset value per Ordinary share              138.95p    105.72p       31.43

Mid-market price per Ordinary share             128.50p     98.00p       31.12

Discount                                          7.52%      7.30%

Net asset value per Zero Dividend               104.00p        -
Preference share

Mid-market price per Zero Dividend              112.75p        -
Preference share

Premium                                           8.41%        -

                                            Year ended  Year ended

                                              30 April    30 April

                                                  2013        2012   % change

Revenue

Return per Ordinary share                        7.02p       5.53p       26.94

Dividends declared per Ordinary share            6.60p       6.40p

Total Return

Total assets less current liabilities           46.35%       1.97%
(excluding bank borrowings) total return
on Group's net assets*

Total return on Group's net assets*             37.10%       0.02%

Ongoing charges**                                2.38%       2.36%

* Adding back dividends paid in the year and excluding derivative financial
instruments shown as a current liability on the Balance sheet in order that the
figure is comparable with 30 April 2012.

** Calculated in accordance with the new Association of Investment Companies
("AIC") guidelines. Based on total expenses, excluding finance costs for the
year and average net asset value. Previously this figure had been calculated
based on total expenses and average total asset value.

CHAIRMAN'S REPORT

Results

The Company's net asset value per Ordinary share at 30 April 2013 was 138.95p
(2012: 105.72p), an increase over the year of 31.43%. Dividends totalling 6.60p
per share were declared for the year. During the same period the MSCI Index
increased by 16.58% and the MSCI SmallCap Index increased by 25.48%.

Since the Company was launched, on 12 May 1999, the net asset value per
Ordinary share has risen by 44.74% and a total of 129.75p has been paid in
dividends. Since the year end, the net asset value per Ordinary share has risen
to 142.40p as at 30 June 2013 after payment of the fourth interim dividend of
2.40p.

The Company is invested in 71 companies across 19 sectors. This spread creates
a well diversified portfolio which we expect will lead to steady revenue growth
and, in time, capital growth.

Dividend growth has again been strong in the past year and despite paying
increased dividends of 6.60p the Company has been able to add to revenue
reserves. The impact of the introduction of Zero Dividend Preference shares was
not fully felt in the year and we expect in the year to April 2014 that
earnings will exceed dividends again and a further surplus will be used to
replenish revenue reserves.

The Company has enjoyed strong performance with share prices generally
increasing and with the Company's portfolio outperforming the market. However,
since January the focus of investors' attention has been more on larger
companies and this has been reflected in the rise in the FTSE 100 Index in the
first few months of the year.

Zero Dividend Preference Shares

Shareholders approved the issue of 8,500,000 Zero Dividend Preference shares in
SCZ at an EGM on 24 August 2012. The Zero Dividend Preference shares have a
redemption date of 8 January 2018 and an annual gross coupon of 6%.

Bank Facility

The Company started the year with borrowing facilities of a £4 million fixed
loan with Lloyds TSB Bank plc and a £2 million overdraft facility with HSBC
Bank plc. During the year part of the proceeds of the issue of 8,500,000 Zero
Dividend Preference shares in SCZ was used to repay all outstanding bank debt.

Dividend

The Board has declared a fourth interim dividend of 2.40p per Ordinary share
(2012: 2.35p) which when added to the three quarterly interim dividends of
1.40p (2012: 1.35p), equates to a total dividend for the year of 6.60p per
Ordinary share (2012: 6.40p), an increase of 3.13% over the previous year.

The Company has revenue reserves, which after payment of the fourth dividend,
represent 87% of the current annual dividend or 5.76p per Ordinary share

Outlook

Once again the vast majority of the companies we are invested in have reported
improved results in the period under review. The analysts are generally
forecasting steady improvement in the current year and it is in "UK centric"
businesses which are the focus of our investment policy that the impact of the
drive to reduce the fiscal deficit will be felt.

The UK seems to have avoided the triple dip recession but the fiscal reduction
programme has slowed. This process will take time and only when confidence has
returned can we expect to see capital spending from our investee companies.

Despite the persistently above target level of inflation and the unresolved
problems in the Eurozone position, the UK economy appears to be slowly
improving and we hope for a return to a modest level of growth in the UK
economy.

Lord Lamont of Lerwick

Chairman

8 July 2013

INVESTMENT MANAGER'S REPORT

The year to 30 April 2013 has seen strong growth in the Company's asset value
and with the new issue of the Zero Dividend Preference shares the appropriate
capital structure is now in place until January 2018.

In this fiscal year investors returned to the market by buying the very largest
of UK quoted companies and as a result pushed the FTSE 100 Index close to its
all-time high achieved in 1999. In addition, the smaller, but nonetheless world
leading companies that are in the FTSE 250 have been bought to heroic ratings.
Whilst the Small and Mid-Cap companies that this trust invests in have gone up
in value, they still remain on reasonable price earnings multiples and of
course, of great importance to this Group, good dividend yields.

In the past year we have seen some strong dividend growth as companies have
effectively completed the debt repayment phase, which was started in 2008, and
in the absence of mergers and acquisitions, and lacking the confidence to
commit to large investment projects, their cash reserves have increased. This
is part of the explanation for the increase in companies paying special
dividends as they recognise that shareholders are seeking income but they
themselves do not want to commit to a higher threshold for normal dividends
which they will have to support in the future.

Business confidence needs to improve before companies start to increase their
investment in their capital stock and their people. This will come and it is of
course essential to ensure that these companies are producing the earnings in
the future to pay the increased dividends that your Company needs.

Portfolio review

During the year we had, like last year, four takeovers, Omega Insurance, Psion,
Timeweave and Titan Europe. Unfortunately none of these were particularly
satisfactory for the Company as they were not completed at large premia and
were generally companies that had underperformed in the recent past. However,
we also recognise that in the period between 2003 and 2007 when a large number
of companies we were invested in were taken over at large premiums, we were
also unhappy because these were high quality companies which were hard to
replace!

Five stocks were sold in their entirety, with only Greene King and Greencore
being memorable as strong contributors to the Company's performance. ATH
Resources and Metalrax were sold at very significant losses.

Holdings were reduced in S & U, Arbuthnot Banking, Smith News, St Ives,
Wilmington Group, Beazley and Brown (N) Group after strong share price
performance.

As part of our investment process we like to have investments in 60-80
companies, and the net proceeds of the Zero Dividend Preference share issue
after repaying all of the bank debt, and the cash from the realisations above,
were utilised in increasing the number of holdings and adding to smaller
existing holdings.

Thirteen new shareholdings were added to the Company's investments. Stocks
acquired include Acal - an electrical component distributor which the Company
has previously owned; Kier Group - a contractor; National Express Group - an
operator of bus and rail services; Numis - a middle market stockbroker; and NWF
Group - a manufacturer and supplier of animal feeds, distributor of ambient
grocery and domestic oil. Again NWF Group is a company that we have owned and
achieved excellent profits in the past. Other smaller purchases include
Abermarle & Bond - a pawnbroker; Centaur Media - marketing services and Games
Workshop Group - a supplier of games figures.

Outlook

Finally, at least in respect of the UK, we are beginning to see the first signs
of positive trends in terms of employment, inflation and even GDP growth. It is
certainly nothing to compare yet with the United States, but it is beginning to
look rather more positive when compared with the members of the Eurozone.

We believe that on the basis of profit forecasts and medium term cash flow
prospects, current valuations of our universe remain attractive and we continue
to focus on the ability of our portfolio to deliver income as a key component
of total return.

As we have said before, the Company performs very well in periods of
acquisition and consolidation and as corporate confidence improves we would
expect to see more corporate activity. With the capital structure in place
until January 2018, the Group is in a good position to take advantage of buying
opportunities as they become available when short sharp corrections take place.

Breakdown of Portfolio by Industry

at 30 April 2013

Industry                                     %

Support Services                          16.6

Financial Services                        15.2

Non Life Insurance                         9.7

Construction & Materials                   9.2

Media                                      7.8

Travel & Leisure                           7.3

Life Insurance                             3.9

Household Goods & Home                     3.8
Construction

General Industrials                        3.8

Industrial Engineering                     3.7

Software & Computer Services               3.5

Food Producers                             3.1

Leisure Goods                              2.5

Industrial Transportation                  2.4

General Retailers                          2.0

Electronic & Electrical                    1.6
Equipment

Chemicals                                  1.4

Fixed Line Telecommunications              1.4

Gas, Water & Multi-Utilities               1.1

                                         100.0

Source: Capita Sinclair Henderson Limited

Twenty Largest Holdings

at 30 April 2013

                                                                    % of
                                                               portfolio

Macfarlane Group        Packaging distribution                       3.2

Avesco Group            Providers of specialist services to          3.0
                        the corporate presentation,
                        entertainment and broadcast markets

GVC Holdings            Provides B2B and B2C services to the         2.7
                        online gaming and sports betting
                        markets

Randall & Quilter       Specialist non-life insurance                2.5
                        investor, service provider and
                        underwriting manager

St Ives                 Printing and market solutions                2.5

Marshalls Group         Supplies the domestic, public sector         2.4
                        and commercial markets with ranges
                        of hard landscaping products

Intermediate Capital    Specialist investment firm and asset         2.4
Group                   manager

Smiths News             The UK leading wholesaler of                 2.3
                        newspapers and magazines and a
                        leading UK book wholesaler

Chesnara                Life assurance                               2.3

Sanderson Group         UK provider of software solutions            2.3
                        and IT services

Portmeirion Group       Markets and manufactures an                  2.2
                        extensive range of high quality
                        tableware, cookware and giftware

Dairy Crest Group       Producer of dairy products                   2.2

Braemer Shipping        Provides broking and consulting              2.1
Services                services to the global shipping
                        industry across four business
                        segments: shipbroking, logistics,
                        technical services and environmental
                        services

Jarvis Securities       Operates a number of retail                  2.1
                        stockbroking brands that provide
                        nominee, certificated, SIPP and ISA
                        accounts to individuals and
                        organisations. It also provides
                        outsourced financial administration
                        services to investment firms

Personal Group Holdings A group of companies providing               2.1
                        accident & health insurance,
                        employee benefits, financial advice,
                        and personal insurance and
                        reinsurance broking services

Abbey Protection        A specialist insurance intermediary          2.1
                        focused on the underwriting and sale
                        of legal and professional fees
                        insurance to businesses

Morgan Sindall Group    UK construction and urban                    2.0
                        regeneration group

Brown (N) Group         Leading internet and catalogue home          2.0
                        shopping

Photo-Me International  Provides consumers with a convenient         2.0
                        & cost-effective means of obtaining
                        ID photos which are compliant with
                        UK passport & driving licence
                        standards

Wilmington Group        Provides information and training to         1.9
                        selected professional business
                        markets

Top twenty companies                                                46.3
total

Balance held in 51                                                  53.7
holdings

Total portfolio                                                    100.0


Breakdown of Portfolio by Market Capitalisation

at 30 April 2013

Number of Companies

Over £500m              13

£250 - 500m             11

£100 - 250m             16

£75 - 100m               4

£50 - 75m                8

£25 - 50m                9

£0 - 25m                10

Total                   71

% of Portfolio

                         %

Over £500m            15.6

£250 - 500m           18.0

£100 - 250m           25.3

£75 - 100m             7.3

£50 - 75m             10.7

£25 - 50m             14.3

£0 - 25m               8.8

Total                100.0

Source: Capita Sinclair Henderson Limited

David Horner and David Taylor

Chelverton Asset Management Limited

8 July 2013

DIRECTORS

Lord Lamont of Lerwick* (Chairman)

David Harris*

William van Heesewijk

Howard Myles*

* Independent of the Investment Manager

BUSINESS REVIEW

The Business review has been prepared in accordance with the Companies Act 2006
and should be read in conjuction with the Chairman's report and Investment
Manager's report.

Company status, objective and review

The Company was incorporated on 6 April 1999 and commenced trading on 12 May
1999. Its capital structure consists of Ordinary shares of 25p each of which
16,250,000 are in issue. There were no changes to the share capital during the
year.

The Company owns 100% of the shares of Small Companies ZDP plc ("SCZ") which
was incorporated on 13 July 2012. SCZ issued 8,500,000 Zero Dividend Preference
shares on 28 August 2012, which have been admitted to the Official lLst of the
UK Listing Authority and to trading on the London Stock Exchange. Further
details of the Zero Dividend Preference shares and the loan and contribution
agreements entered into by the Company and SCZ can be found in notes 17 and 18
to the financial statements below.

The principal activity of the Company is to carry on business as an investment
trust. New regulations for obtaining and retaining investment trust status has
been published by HM Revenue & Customs ("HMRC") and came into force on 1
January 2012. The Company has applied for, and been granted, approval from HMRC
as an investment trust under sections 1158/1159 of the Corporation Tax Act 2010
("1158/1159") for the year ended 30 April 2013. The Company will be treated as
an investment trust company for each subsequent accounting period, subject to
there being no subsequent serious breaches of the conditions for approval. The
Company is also an investment company as defined in section 833 of the
Companies Act 2006.

The new rules removed the maximum holding in any one investment of 15% and
replaced this with a risk diversification approach. The Board has considered
this and agreed that the Company's investment policy offers suitable risk
diversification. One of the criteria for continued compliance is that the
Company distributes a minimum of 85% of all its income as dividend payments.
The Company could lose its investment trust company status if it became a close
company at any time during the accounting period. Failure by the Company to
satisfy the new requirements could result in it being subject to capital gains
tax arising on the sale of investments. Further details on the operation of
investment trusts can be obtained from the AIC on their website at
www.theaic.co.uk.

The investment objective of 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 SCZ.

Investment policies and restrictions

The Company's investment policy, as approved by shareholders, is that:

● 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 of other
investment trusts or in unquoted companies.

● There is no set limit on the Company's gearing.

The Chairman's report and Investment Manager's report give details of the
Company's activities during the financial year under review.

Performance analysis using key performance indicators

At each quarterly Board meeting the Directors consider a number of key
performance indicators ("KPIs") to assess the Group's success in achieving its
objectives, including the net asset value ("NAV"), the dividend per share and
the total ongoing charges.

● The Group's Consolidated statement of comprehensive income is set out below.

● A total dividend for the year to 30 April 2013 of 6.60p (2012: 6.40p) per
Ordinary share has been declared to shareholders by way of three payments of
1.40p per Ordinary share and a fourth interim payment of 2.40p per Ordinary
share.

● The NAV per Ordinary share at 30 April 2013 was 138.95p (2012: 105.72p).

● The ongoing charges (including investment management fees and other expenses
but excluding performance fees and exceptional items) for the year ended 30
April 2013 were 2.38% (2012: 2.36%).

Principal risks

The Board considers the following as the principal risks facing the Company.
Mitigation of these risks is sought and achieved in a number of ways as set out
below:

Market risk

The Company is exposed to UK market risk due to fluctuations in the market
prices of its investments.

The Investment Manager actively monitors economic performance of investee
companies and reports regularly to the Board on a formal and informal basis.
The Board formally meets with the Investment Manager on a quarterly basis when
the portfolio transactions and performance are discussed and reviewed.

The Company is substantially dependent on the services of the Investment
Manager's investment team for the implementation of its investment policy.

The Company may hold a proportion of the portfolio in cash or cash equivalent
investments from time to time. Whilst during positive stock market movements
the portfolio may forego notional gains, during negative market movements this
may provide protection.

Discount volatility

As with many investment trust companies, discounts can fluctuate significantly.

The Board recognises that, as a closed ended company, it is in the long-term
interests of shareholders to reduce discount volatility and believes that the
prime driver of discounts over the longer term is performance. The Board, with
its advisers, monitors the Company's discount levels and shares may be bought
back should it be thought appropriate to do so by the Board.

Regulatory risks

A breach of Companies Act regulations and FCA rules may result in the Group's
companies being liable to fines or the suspension of either of the group
companies from listing and from trading on the London Stock Exchange. The
Board, with its advisers, monitors the Company's and SCZ's regulatory
obligations both on an ongoing basis and at quarterly Board meetings.

Financial risk

The financial situation of the Group is reviewed in detail at each Board
meeting and monitored by the Audit Committee.

New developments in accounting standards and industry related issues are
actively reported to and monitored by the Board and its advisers, ensuring that
appropriate accounting policies are adhered to.

A more detailed explanation of the financial risks facing the Group is given in
note 26 to the financial statements.

Social, environmental and employee issues

The Group does not have any employees and the boards of both companies consist
entirely of non-executive Directors. As the business of the Group is to invest
in other companies, it has no direct impact on the community or the
environment, and as such has no policies in this area.

Current and future developments

A review of the main features of the year is contained in the Chairman's report
and the Investment Manager's report.

The marketing and promotion of the Group will continue to involve the Board,
led by the Investment Manager, with a proactive communications programme either
directly or through its website, with existing and potential new shareholders
and other external parties.

The Directors are seeking to renew the appropriate powers at the next Annual
General Meeting ("AGM") to enable the issue and purchase of its own shares,
when it is in shareholders' interests as a whole.

Dividends paid

                                                30 April 2013   30 April 2012

                                   Payment date         pence           pence

First interim                 28 September 2012          1.40            1.35

Second interim                   7 January 2013          1.40            1.35

Third interim                     15 April 2013          1.40            1.35

Fourth interim                     10 July 2013          2.40            2.35

                                                         6.60            6.40

The Directors have not recommended a final dividend in respect of the year
ended 30 April 2013.

Going concern

The Group's business activities, together with the factors likely to affect its
future development, performance and position, are described in the Chairman's
report and in the Investment Manager's report. The financial position of the
Group, its cash flows, liquidity position and borrowing facilities are
described in the financial statements. In addition, note 26 to the financial
statements sets out the Group's objectives, policies and processes for managing
its capital; its financial risk management objectives; details of its financial
instruments; and its exposure to credit risk and liquidity risk. The Group has
adequate financial resources and as a consequence, the Directors believe that
the Group is well placed to manage its business risks successfully despite the
economic outlook, and continue to adopt the going concern basis

The full Annual Report contains the following statements regarding
responsibility for the financial statements and management report/ business
review included therein.

STATEMENT OF DIRECTORS' RESPONSIBILITIES

in respect of the Annual Report and the financial statements

The Directors are responsible for preparing the Annual Report and the financial
statements. The Directors have elected to prepare financial statements in
accordance with International Financial Reporting Standards ("IFRSs") as
adopted by the EU. Company law requires the Directors to prepare such financial
statements in accordance with IFRSs and the Companies Act 2006.

Under company law the Directors must not approve the financial statements
unless they are satisfied that they present fairly the financial position,
financial performance and cash flows of the Group and the Company for that
period.

In preparing each of the Group and the Company's financial statements, the
Directors are required to:

  * select suitable accounting policies in accordance with IAS 8: `Accounting
    Policies, Changes in Accounting Estimates and Errors' and then apply them
    consistently;

  * present information, including accounting policies, in a manner that
    provides relevant, reliable, comparable and understandable information;

  * provide additional disclosures when compliance with specific requirements
    in IFRSs is insufficient to enable users to understand the impact of
    particular transactions, other events and conditions on the Group and the
    Company's financial position and financial performance;

  * state that the Group and the Company have complied with IFRSs, as adopted
    by the EU subject to any material departures disclosed and explained in the
    financial statements; and

  * make judgements and estimates that are reasonable and prudent.

The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group's financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group and hence for taking reasonable steps for
the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for
preparing a Report of the Directors (including Business review), Directors'
remuneration report and Statement on corporate governance that comply with that
law and those regulations, and for ensuring that the Annual Report includes
information required by the Listing Rules of the Financial Conduct Authority.

The Directors are responsible for the integrity of the information relating to
the Company on the Investment Manager's website. Legislation in the United
Kingdom governing the preparation and dissemination of financial statements
differs from legislation in other jurisdictions.

The Directors confirm that, to the best of their knowledge and belief:

  * the financial statements, prepared in accordance with IFRSs as adopted by
    the EU give a true and fair view of the assets, liabilities, financial
    position and profit of the Group; and

  * the Annual Report includes a fair review of the development and performance
    of the Group, together with a description of the principal risks and
    uncertainties faced.

On behalf of the Board of Directors

Lord Lamont of Lerwick

Chairman

8 July 2013

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Group's
statutory accounts for the years ended 30 April 2013 and 2012 but is derived
from those accounts. Statutory accounts for 2012 have been delivered to the
Registrar of Companies, and those for 2013 will be delivered in due course. The
Auditor has reported on those accounts; its report was (i) unqualified, (ii)
did not include a reference to any matters to which the Auditors drew attention
by way of emphasis without qualifying its report and (ii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006. The text of
the Auditor's report can be found in the Company's full Annual Report and
Accounts on the Investment Manager's website www.chelvertonam.com.

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

for the year ended 30 April 2013

                                      2013                      2012

                            Revenue  Capital   Total  Revenue  Capital   Total

                     Note     £'000    £'000   £'000    £'000    £'000   £'000

Gains/(losses) on     10          -    6,094   6,094        -     (699)   (699)
investments at fair
value through
profit or loss

Investment income     2       1,420        -   1,420    1,167        -   1,167

Investment            3         (69)    (208)   (277)     (55)    (166)   (221)
management fee

Recovery of VAT on    4           -        -       -       45        -      45
administration and
secretarial fees

Other expenses        4        (196)     (18)   (214)    (180)       -    (180)

Net return before             1,155    5,868   7,023      977     (865)    112
finance costs and
taxation

Finance costs         6         (15)    (384)   (399)     (78)    (235)   (313)

Net return before             1,140    5,484   6,624      899   (1,100)   (201)
taxation

Taxation              7           -        -       -        -        -      -

Net return after              1,140    5,484   6,624      899   (1,100)   (201)
taxation

Other comprehensive
income

Movement in fair                                  52                       205
value of cash flow
hedge

Total comprehensive                             6,676                        4
income for the year

                             Revenue  Capital   Total  Revenue   Capital  Total
                               pence    pence   pence    pence     pence  pence

Net return per:

Ordinary share        8        7.02    33.75   40.77     5.53     (6.77) (1.24)

Zero Dividend         8           -     4.00    4.00        -         -      -
Preference share


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. No
operations were acquired of discontinued during the year. All of the net return
for the period and the total comprehensive income for the period is
attributable to the shareholders of the Group. The supplementary revenue and
capital return columns are presented for information purposes as recommended by
the Statement of Recommended Practice issued by the AIC.

The notes form part of these financial statements.

CONSOLIDATED AND PARENT COMPANY STATEMENT OF CHANGES IN NET EQUITY

for the year ended 30 April 2013

                           Share  Share p  Capital   Hedge  Revenue    Total
                         capital   remium  reserve reserve  reserve
                                  account

                    Note  £'000    £'000    £'000    £'000   £'000    £'000

Year ended 30
April 2013

30 April 2012             4,063   11,917        2     (52)   1,250   17,180

Total                         -        -    5,484      52    1,140    6,676
comprehensive
return for the
year

Expenses of Zero              -        -     (213)      -        -     (213)
Dividend
Preference share
issue

Transactions with
owners:

Dividends paid       9        -        -        -       -   (1,064)  (1,064)

30 April 2013             4,063   11,917    5,273       -    1,326   22,579

Year ended 30
April 2012

30 April 2011             4,063   11,917    1,102    (257)   1,383   18,208

Total                         -        -   (1,100)    205      899        4
comprehensive
return for the
year

Transactions with
owners:

Dividends paid       9        -        -        -       -   (1,032)  (1,032)

30 April 2012             4,063   11,917        2     (52)   1,250   17,180

The notes form part of these financial statements.

CONSOLIDATED AND PARENT COMPANY BALANCE SHEETS

as at 30 April 2013

                                         Group*      Company          Company

                                           2013         2013             2012

                             Note         £'000        £'000           £'000

Non-current assets

Investments at fair value    10          31,318       31,318          22,120
through profit or loss

Investments in subsidiary    12               -           13               -

                                         31,318       31,331          22,120

Current assets

Trade and other              13             194          194             205
receivables

Cash and cash equivalents                    39           39               -

                                            233          233             205

Total assets                             31,551       31,564          22,325

Current liabilities

Bank overdraft                                -            -            (950)

Trade and other payables     14            (132)        (145)           (130)

Derivative financial         16               -            -             (65)
instruments

                                           (132)        (145)         (1,145)

Total assets less current                31,419       31,419          21,180
liabilities

Non-current liabilities

Bank loan                    15               -            -          (4,000)

Zero Dividend Preference     17          (8,840)           -               -
shares

Loan from subsidiary                     (8,840)      (8,840)              -

                                         (8,840)      (8,840)         (4,000)

Total liabilities                        (8,972)      (8,985)         (5,145)

Net assets                               22,579       22,579          17,180

Represented by:

Share capital                19           4,063        4,063           4,063

Share premium account        20          11,917       11,917          11,917

Capital reserve              20           5,273        5,273               2

Hedge reserve                20               -            -             (52)

Revenue reserve              20           1,326        1,326           1,250

Equity shareholders'                     22,579       22,579          17,180
funds


The notes form part of these financial statements.

* The subsidiary was incorporated on 13 July 2012 and therefore no comparatives
for the Group are shown for the year ended 30 April 2012.

These financial statements were approved by the Board of Small Companies
Dividend Trust plc and authorised for issue on 8 July 2013.

Lord Lamont of Lerwick

Chairman

8 July 2013

CONSOLIDATED AND PARENT COMPANY STATEMENT OF CASH FLOWS

for the year ended 30 April 2013

                                                     2013              2012

                                   Note             £'000             £'000

Operating activities

Investment income received                          1,432             1,162

Interest income received                               -                  6

Investment management fee paid                       (254)             (222)

Administration and secretarial                        (60)              (58)
fees paid

Refund of VAT paid on                                   -                 45
administration and secretarial
fees

Other cash payments                                  (146)              (119)

Cash generated from operations                        972                814

Loan interest paid                                   (101)              (352)

Net cash inflow from operating     22                 871                462
activities

Investing activities

Purchases of investments                           (7,643)            (5,703)

Sales of investments                                4,538              5,570

Net cash outflow from investing                    (3,105)              (133)
activities

Financing activities

Issue of Zero Dividend Preference                   8,500                  -
shares

Expenses of Zero Dividend                            (213)                 -
Preference share issue

Repayment of bank loan                             (4,000)                 -

Dividends paid                                     (1,064)            (1,032)

Net cash inflow/(outflow) from                      3,223             (1,032)
financing activities

Increase/(decrease) in cash and    23                 989               (703)
cash equivalents for year

Cash and cash equivalents at       24                (950)              (247)
start of year

Cash and cash equivalents at end   24                  39               (950)
of year

Cash and cash equivalents at 30
April comprise:

Cash at bank                                           39                 -

Bank overdraft                                         -                (950)

                                                       39               (950)

The notes form part of these financial statements.

NOTES TO THE FINANCIAL STATEMENTS

as at 30 April 2013

1 ACCOUNTING POLICIES

Small Companies Dividend Trust PLC is a company domiciled in the UK. The
consolidated financial statements for the Group for the year ended 30 April
2013 comprise the Company and its subsidiary, SCZ (together referred to as the
"Group")

Basis of preparation

The consolidated financial statements of the Group and the financial statements
of the Company have been prepared in conformity with International Financial
Reporting Standards ("IFRSs") issued by the International Accounting Standards
Board (as adopted by the EU) and Interpretations issued by the International
Financial Reporting Interpretations Committee, and applicable requirements of
United Kingdom company law, and reflect the following policies which have been
adopted and applied consistently.

As this is the first reporting period since the incorporation of SCZ on 13 July
2012, no comparative figures for the Group have been shown.

The accounting policies adopted are consistent with those of the previous
financial year and with the new accounting policies detailed below with regards
to the new subsidiary and the Zero Dividend Preference share issue.

At the date of authorisation of the financial statements, the following
Standards which have not been applied in these financial statements were in
issue but were not yet effective:

  * IAS 1 Presentation of Financial Statements - Amendments to revise the way
    other comprehensive income is presented (effective 1 July 2012)

  * IAS 32 Financial Instruments: Presentation - Amendments to application
    guidance on the offsetting of financial assets and financial liabilities
    (effective 1 January 2014)

  * IFRS 7 Financial Instruments: Disclosures - Amendments enhancing
    disclosures about offsetting of financial assets and financial liabilities
    (effective 1 January 2013).

  * IFRS 7 Financial Instruments: Disclosures - Amendments requiring
    disclosures about the initial application of IFRS 9 (effective 1 January
    2015 or otherwise when IFRS 9 is first applied)

  * IFRS 9 Financial Instruments - Classification and measurement of financial
    assets (effective 1 January 2015)

  * IFRS 9 Financial Instruments - Accounting for financial liabilities and
    de-recognition (effective 1 January 2015)

  * IFRS 12 Disclosure of Interests in Other Entities - Disclosure of
    information to evaluate the nature of, and risks assiociated with,
    interests in other entities and the effects of those interests on its
    financial position, financial performance and cash flows (effective 1
    January 2013)

  * IFRS 13 Fair Value Measurement - Replaces the guidance on fair value
    measurement in existing IFRS accounting literature with a single standard
    (effective 1 January 2013)

The Directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Group in future
periods.

Basis of consolidation

The Group financial statements consolidate the financial statements of the
Company and its wholly owned subsidiary undertaking, SCZ, drawn up to the same
accounting date.

The subsidiary is consolidated from the date of its incorporation, being the
date on which the Company obtained control, and will continue to be
consolidated until the date that such control ceases. Control comprises the
power to govern the financial and operating policies of the investee so as to
obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights. The financial statements of the subsidiary are
prepared for the same reporting year as the Company, using consistent
accounting policies. All inter-company balances and transactions, including
unrealised profits arising from them, are eliminated.

As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own Statement of comprehensive income. The amount of the
Company's return for the financial period dealt with in the financial
statements of the Group is a profit of £6,676,000.

Convention

The financial statements are presented in Sterling rounded to the nearest
thousand. The financial statements have been prepared on a going concern basis
under the historical cost convention, except for the measurement at fair value
of investments classified as fair value through profit or loss and interest
rate swaps taken out as cash flow hedges. Where presentational guidance set out
in the Statement of Recommended Practice regarding the Financial Statements of
Investment Trust Companies and Venture Capital Trusts ("SORP"), issued by the
Association of Investment Companies in January 2009, is consistent with the
requirements of IFRS, the Directors have sought to prepare the financial
statements on a consistent basis compliant with the recommendations of the
SORP.

Segmental reporting

The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group only invests in companies
listed in the UK.

Investments

All investments held by the Group are recorded at 'fair value through profit or
loss'. Investments are initially recognised at cost, being the fair value of
the consideration given.

After initial recognition, investments are measured at fair value, with
unrealised gains and losses on investments and impairment of investments
recognised in the Consolidated statement of comprehensive income and allocated
to capital. Realised gains and losses on investments sold are calculated as the
difference between sales proceeds and cost.

For investments actively traded in organised financial markets, fair value is
generally determined by reference to Stock Exchange quoted market bid prices
and SETS at last trade price at the close of business on the Balance sheet
date, without adjustment for transaction costs necessary to realise the asset.

Derivative financial instruments and hedge accounting

It is the Company's policy not to trade in derivative financial instruments.
However, the Company utilised interest rate swaps as cash flow hedges to
mitigate its exposure to interest rate changes on its bank loan which was
subject to a variable rate of interest. As at 30 April 2013 the Company had
repaid its loan and had no interest rate swap in place.

All derivatives are recognised at their fair value. The method of recognising
movements in the fair value of derivatives depends on whether they are
designated as hedging instruments and, if so, the nature of the item being
hedged. Derivatives are only designated as hedges provided certain strict
criteria are met. At the inception of a hedge its terms must be clearly
documented and there must be an expectation that the derivative will be highly
effective in offsetting changes in the cash flow of the hedged risk. The
effectiveness of the hedging relationship is tested throughout its life and if
at any point it is concluded that it is no longer highly effective the hedge
relationship is terminated.

The effective portion of changes in the fair value of derivatives that are
designated as cash flow hedges (being the interest rate swaps) is recognised in
equity. The gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.

Trade date accounting

All 'regular way' purchases and sales of financial assets are recognised on the
'trade date' i.e., the day that the Group commits to purchase or sell the
asset. Regular way purchases, or sales, are purchases or sales of financial
assets that require delivery of the asset within a time frame generally
established by regulation or convention in the market place.

Income

Dividends receivable on quoted equity shares are taken into account on the
ex-dividend date. Where no ex-dividend date is quoted, they are brought into
account when the Group's right to receive payment is established. Other
investment income and interest receivable are included in the financial
statements on an accruals basis. Dividends received from UK registered
companies are accounted for net of imputed tax credits.

Expenses

All expenses are accounted for on an accruals basis. All expenses are charged
through the revenue account in the Consolidated statement of comprehensive
income except as follows:

● expenses which are incidental to the acquisition of an investment are
included within the costs of the investment;

● expenses which are incidental to the disposal of an investment are deducted
from the disposal proceeds of the investment; and

● expenses are charged to capital reserve where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated.

The investment management fees, bank interest and all other expenses are
allocated to revenue with the exception of 75% (2012: 75%) of the Investment
Manager's fee, 75% (2012: 75%) of bank and loan interest and 100% of the
provision for the Investment Manager's performance fee, all of which are
allocated to capital. In respect of the investment management fee, bank and
loan interest allocation to revenue and capital, this is in line with the
Board's expected long-term split of returns from the investment portfolio, in
the form of income and capital gains respectively.

The operating expenses of the subsidiary are borne by the Company and taken
100% to capital.

Cash and cash equivalents

Cash in hand and in banks and short-term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as cash in hand,
demand deposits and short-term, highly liquid investments readily convertible
to known amounts of cash and subject to insignificant risk of changes in value.

Bank loans and borrowings

All bank loans and borrowings are initially recognised at cost, being the fair
value of the consideration received, less issue costs, where applicable. After
initial recognition, all interest-bearing loans and borrowings are subsequently
measured at amortised cost. Any difference between cost and redemption value is
recognised in the Consolidated statement of comprehensive income over the
period of the borrowings on an effective interest basis.

Zero Dividend Preference shares

Shares issued by the subsidiary are treated as a liability of the Group, and
are shown in the Balance sheet at their redemption value at the Balance sheet
date. The appropriations in respect of the Zero Dividend Preference shares
necessary to increase the subsidiary's liabilities to the redemption values are
allocated to capital in the Consolidated statement of comprehensive income.
This treatment reflects the Board's long-term expectations that the
entitlements of the Zero Dividend Preference shareholders will be satisfied out
of gains arising on investments held primarily for capital growth.

Share issue costs

Costs incurred directly in relation to the issue of shares in the subsidiary
were borne by the Company and taken 100% to capital.

Taxation

There is no charge to UK income tax as the Group's allowable expenses exceed
its taxable income. Deferred tax assets in respect of unrelieved excess
expenses are not recognised as it is unlikely that the Group will generate
sufficient taxable income in the future to utilise these expenses. Deferred tax
is not provided on capital gains and losses because the Company meets the
conditions for approval as an investment trust company.

Dividends payable to shareholders

Dividends to shareholders are recognised as a liability in the period in which
they are paid or approved in general meetings and are taken to the Statement of
changes in net equity. Dividends declared and approved by the Group after the
Balance sheet date have not been recognised as a liability of the Group at the
Balance sheet date.

2 Income

                                                         2013            2012

                                                        £'000           £'000

Income from listed investments

UK net dividend income                                  1,200           1,045

Unfranked foreign dividend income                         220             116

                                                        1,420           1,161

Other income

Interest on VAT refund                                     -                6

Total income                                            1,420           1,167

Total income comprises:

Dividends                                               1,420           1,161

Interest                                                    -               6

                                                        1,420           1,167

3 Investment management fee


                                 2013                          2012

                      Revenue   Capital    Total   Revenue   Capital    Total

                        £'000     £'000    £'000     £'000     £'000    £'000

Investment
management fee             69       208     277         55       166      221


At 30 April 2013 there were amounts outstanding of £79,000 (2012: £56,000).

4 Other expenses

                                                         2013            2012

                                                        £'000           £'000

Administration and secretarial fees                        60              58

Directors' remuneration (note 5)                           58              58

Auditor's remuneration:

audit services*                                            20              16

Insurance                                                   6               6

Other expenses*                                            70              42

Recovery of VAT on administration and                       -             (45)
secretarial fees

                                                          214             135

Subsidiary operating costs taken 100% to                  (18)              -
capital

                                                          196             135

* The above amounts include irrecoverable VAT where applicable.

5 Directors' Remuneration

                                               2013           2012

                                                  £              £

Total fees                                   57,500         57,500

Remuneration to Directors

Lord Lamont (Chairman)                       20,000         20,000

D Harris                                     20,000         20,000

H Myles                                      17,500         17,500

W van Heesewijk*                                  -              -

* Mr van Heesewijk has waived his entitlement to fees.

6 Finance costs

                                  2013                       2012

                       Revenue  Capital    Total    Revenue  Capital    Total
                         £'000    £'000    £'000      £'000    £'000    £'000

Interest payable on         18       54       72        91      273      364
bank overdraft and
bank loan

Movement in fair value      (3)     (10)     (13)      (13)     (38)     (51)
of ineffective element
of interest rate swap

Appropriations in            -       340     340         -        -        -
respect of
Zero Dividend
Preference shares

                            15       384     399        78      235      313


7 Taxation
                                                         2013            2012
                                                        £'000           £'000

Based on the revenue return for the year

Current tax - withholding tax on foreign                    -               -
dividend income


The current tax charge for the year is lower than the standard rate of
corporation tax in the UK of 24% to 31 March 2013 and 23% from 1 April 2013.
The differences are explained below:

                                   2013                        2012

                      Revenue  Capital     Total   Revenue  Capital     Total
                        £'000    £'000     £'000     £'000    £'000     £'000

Return on ordinary      1,140    5,484     6,624      899   (1,100)     (201)
activities before
taxation

Theoretical               273    1,312     1,585      232     (284)      (52)
corporation tax at
23.92% (2012: 25.83%)

Effects of:

Capital items not           -   (1,376)   (1,376)       -      181       181
taxable

UK and foreign           (340)       -      (340)    (300)       -      (300)
dividends which are
not taxable in the UK

Excess expenses in         67       64       131       68      103       171
the year

Actual current tax         -         -        -         -        -         -
charged to the
revenue account

The Group has unrelieved excess expenses of £17,902,000 (2012: £17,353,000). It
is unlikely that the Group will generate sufficient taxable profits in the
future to utilise these expenses and therefore no deferred tax asset has been
recognised.

8 Return per share

Ordinary shares

Revenue return per Ordinary share is based on revenue on ordinary activities
after taxation of £1,140,000 (2012: £899,000) and on 16,250,000 (2012:
16,250,000) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.

Capital return per Ordinary share is based on the capital profit of £5,484,000
(2012: capital loss of £1,100,000) and on 16,250,000 (2012: 16,250,000)
Ordinary shares, being the weighted average number of Ordinary shares in issue
during the year.

Zero Dividend Preference shares

Capital return per Zero Dividend Preference share is based on allocations from
the Company of £340,000 and on 8,500,000 Zero Dividend Preference shares, being
the weighted average number of Zero Dividend Preference shares in issue during
the year.

9 Dividends

                                                         2013            2012
                                                        £'000           £'000

Declared and paid per Ordinary share

Fourth interim dividend for the year ended                382             374
30 April 2012 of 2.35p (2011: 2.30p)

First interim dividend of 1.40p (2012:                    227             219
1.35p)

Second interim dividend of 1.40p (2012:                   227             219
1.35p)

Third interim dividend of 1.40p (2012:                    228             220
1.35p)

                                                        1,064           1,032

Declared and paid per Ordinary share*

Fourth interim dividend for the year ended                390             382
30 April 2013 of 2.40p (2012: 2.35p)


* Dividend paid subsequent to the year end.

10 Investments - Group and Company

                                                               2013

                                       Listed       AIM      Total
                                        £'000     £'000      £'000

Year ended 30 April 2013

Opening book cost                     15,873      9,909     25,782

Opening investment holding losses     (2,010)    (1,652)    (3,662)

Opening valuation                     13,863      8,257     22,120

Movements in the year:

Purchases at cost                      5,264      2,378      7,642

Disposals:

Proceeds                              (3,481)    (1,057)    (4,538)

Net realised gains/(losses) on           816     (1,658)      (842)
disposals

Transfers from AIM to Listed             232       (232)         -

Movement in investment holding         3,405      3,531      6,936
losses

Closing valuation                     20,099     11,219     31,318

Closing book cost                     18,704      9,340     28,044

Closing investment holding gains       1,395      1,879      3,274

                                      20,099     11,219     31,318

Realised gains/(losses) on               816     (1,658)      (842)
disposals

Movement in investment holding         3,405      3,531      6,936
losses

Gains on investments                    4,221      1,873     6,094


                                                              2012

                                      Listed        AIM      Total
                                       £'000      £'000      £'000

Year ended 30 April 2012

Opening book cost                     15,829      9,504     25,333

Opening investment holding losses       (719)    (1,925)    (2,644)

Opening valuation                     15,110      7,579     22,689

Movements in the year:

Purchases at cost                      4,300      1,335      5,635

Disposals:

Proceeds                              (4,154)    (1,351)    (5,505)

Net realised (losses)/ gains on         (102)       421        319
disposals

Movement in investment holding        (1,291)       273     (1,018)
losses

Closing valuation                     13,863      8,257     22,120

Closing book cost                     15,873      9,909     25,782

Closing investment holding losses     (2,010)    (1,652)    (3,662)

                                      13,863      8,257     22,120

Realised (losses)/gains on              (102)       421        319
disposals

Movement in investment holding        (1,291)       273     (1,018)
losses

(Losses)/gains on investments         (1,393)       694       (699)

Transaction costs

During the year the Group incurred transaction costs of £70,000 (2012: £53,000)
and £15,000 (2012: £20,000) on purchases and sales of investments respectively.
These amounts are included in losses on investments, as disclosed in the
Consolidated statement of comprehensive income.

11 Significant Interests

The Company has a holding of 3% or more in the following investments:

Name of undertaking                                             30 April 2013
                                              Class of share           % held

Stadium Group                                       Ordinary             4.06

RTC Group                                           Ordinary             3.48

Sanderson Group                                     Ordinary             3.47

Chamberlin                                          Ordinary             3.33

Macfarlane Group                                    Ordinary             3.04


12 Investment in subsidiary

The Company owns the whole of the issued ordinary share capital of SCZ,
especially formed for the issuing of Zero Dividend Preference shares, which is
incorporated and registered in England and Wales, under company number:
8142169.


13 Trade and other receivables

                                          Group         Company       Company

                                           2013            2013          2012
                                                          £'000         £'000
                                          £'000

Dividends receivable                        189             189           201

Prepayments and accrued income                5               5             4

                                            194             194           205

14 Trade and other payables

                                         Group         Company        Company

                                          2013            2013           2012

                                         £'000           £'000          £'000

Purchases of investments for                -               -               1
future settlement

Trade and other payables                   132             132            129

Loan from subsidiary                        -               13              -
undertaking

                                           132             145            130

15 Bank loan

                                        Group         Company        Company

                                         2013            2013           2012

                                        £'000           £'000          £'000

Bank loan                                   -               -          4,000


The loan was repaid in full on 31 August 2012.


16 DERIVATIVE FINANCIAL INSTRUMENTS

An interest rate swap is an agreement between two parties to exchange fixed and
floating interest payments based upon interest rates defined in the contract
without the exchange of the underlying principal amounts. The Company entered
into an interest rate swap agreement (£5 million fixed at 6.2475%) that expired
on 10 July 2012. Prior to this date the Company had reduced the loan drawn to
£4 million and there was a mismatch with the two swap transactions. The £4
million loan represented 80% of the £5 million swap. Therefore 20% of the cost
of the swap is charged to income with the remaining 80% to equity. At 30 April
2012 the fair value of the interest rate swap designated as a cash flow hedge
was £65,000.


17 ZERO DIVIDEND PREFERENCE SHARES

On 28 August 2012, SCZ issued 8,500,000 Zero Dividend Preference shares at 100p
per share and with net proceeds of £8.3 million. The expenses of the placing
were borne by the Company. The Zero Dividend Preference shares each have an
initial capital entitlement of 100p per share, growing by an annual rate of 6%
compounded daily to 136.70p on 8 January 2018, a total of £11,620,000. The
accrued entitlement as per the Articles of Association of SCZ at 30 April 2013
was 104.00p per share, being £8,840,000 in total, and the total amount accrued
for the year of £340,000 has been charged to capital.


18 SECURED LOAN

Pursuant to a loan agreement between SCZ and the Company, SCZ has lent the
gross proceeds of £8,500,000, raised from the placing on 28 August 2012 of
8,500,000 Zero Dividend Preference shares at 100p, to the Company. The loan is
non-interest bearing and is repayable three business days before the Zero
Dividend Preference share redemption date of 8 January 2018 or, if required by
SCZ, at any time prior to that date in order to repay the Zero Dividend
preference share entitlement. The funds are to be managed in accordance with
the investment policy of the Company.

The loan is secured by way of a floating charge on the Company's assets under a
debenture entered into between the Company and SCZ. dated 1 August 2012.

A contribution agreement between the Company and SCZ has also been made whereby
the Company 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 Zero Dividend Preference shares. The loan is secured
by way of a floating charge on the Company's assets under a debenture entered
into between the Company and SCZ. dated 1 August 2012. At 30 April 2013 the
contribution due from the Company to cover the accrued entitlement was
£340,000.

                                                      Company         Company

                                                         2013            2012
                                                        £'000
                                                                        £'000

Value at 1 May                                              -               -

Loan issued in year                                     8,500               -

Contribution to accrued capital entitlement               340               -
of

Zero Dividend Preference shares

Value at 30 April                                       8,840               -

19 Share capital

                                                         2013            2012
                                                        £'000           £'000

Issued, allotted and fully paid

16,250,000 (2012: 16,250,000) Ordinary shares           4,063           4,063
of 25p each


For details regarding the issue of Zero Dividend Preference shares by SCZ
please see note 17.

The rights attaching to the Ordinary shares are:

As to dividends each year

Ordinary shares are entitled to all the revenue profits of the Company
available for distribution, including all undistributed income.

As to capital on winding-up

On a winding-up, the holders of Zero Dividend Preference shares issued by SCZ
are entitled to a payment of an amount equal to 100p per share, increased daily
from 28 August 2012 at such a compound rate as will give an entitlement to
136.70p for each Zero Dividend Preference share at 8 January 2018, £11,620,000
in total.

The holders Ordinary shares will receive all the assets available for
distribution to shareholders after payment of all debts and satisfaction of all
liabilities of the Company rateably according to the amounts paid or credited
as paid up on the Ordinary shares held by them respectively.

Voting

Each holder of Ordinary shares on a show of hands will have one vote and on a
poll will have one vote for each Ordinary share held. Each holder of Zero
Dividend Preference shares on a show of hands will have one vote at meetings
where Zero Dividend Preference shareholders are entitled to vote and on a poll
will have one vote for every Zero Dividend Preference share held.

Duration

Under the Company's Articles of Association, the Directors are required to
convene a general meeting of the Company to be held in October 2017 or a date
which is either four months before or four months after this date so as to
align the vote with any timetable for a further issue of zero dividend
preference shares or to save costs by proposing the Continuation Resolution (as
defined below) at the annual general meeting or some other general meeting of
the Company ("the First GM"), at which an ordinary resolution will be proposed
to the effect that the Company continues in existence ("the Continuation
Resolution"). In the event that such resolution is not passed the Directors
shall, subject to the Statutes, put forward further proposals to shareholders
regarding the future of the Company (which may include voluntary liquidation,
unitisation or other reorganisation of the Company) ("the Restructuring
Resolution") at a general meeting of the Company to be convened not more than
four months after the date of the First GM (or such adjournment).

The Restructuring Resolution shall be proposed as a special resolution. If the
Restructuring Resolution is either not proposed or not passed then the
Directors shall convene a general meeting not more than four months after the
date of the First GM (or such adjournment). If the Restructuring Resolution is
not proposed or four months after the date the Restructuring Resolution is not
passed an ordinary resolution pursuant to section 84 of the Insolvency Act 1986
to voluntarily wind-up the Company shall be put to shareholders and the votes
taken on such resolution shall be on a poll.

20 Reserves - Group and Company

                                            Share   Capital    Hedge    Revenue
                                          premium   reserve  reserve    reserve
                                          account    £'000    £'000      £'000
                                           £'000

At 1 May 2012                             11,917         2      (52)     1,250

Net return on realisation of                   -      (842)       -          -
investments

Movement in investment holding losses          -     6,936        -          -

Costs charged to capital                       -      (270)       -          -

Expenses of Zero Dividend Preference           -      (213)       -          -
share issue

Appropriations in respect of Zero              -      (340)       -          -
Dividend Preference shares

Net return after dividends for the             -         -        -         76
year retained

Movement in fair value of cash flow            -         -       52          -
hedge

At 30 April 2013                          11,917     5,273        -      1,326

At 1 May 2011                             11,917     1,102     (257)     1,383

Net return on realisation of                   -       319        -          -
investments

Movement in investment holding losses          -    (1,018)       -          -

Costs charged to capital                       -      (401)       -          -

Net return after dividends for the             -        -         -       (133)
year retained

Movement in fair value of cash flow            -        -        205         -
hedge

As 30 April 2012                            11,917      2       (52)     1,250


21 Net asset value per share

The net asset value per share and the net assets attributable to the Ordinary
shareholders and Zero Dividend Preference shareholders are as follows:

                                Net asset   Net assets Net asset   Net assets
                                value per attributable value per attributable
                                    share           to     share           to
                                     2013 shareholders      2012 shareholders
                                    pence         2013     pence         2012
                                                 £'000                  £'000

Ordinary shares                    138.95       22,579    105.72       17,180

Zero Dividend Preference           104.00        8,840         -            -
shares

The net asset value per Ordinary share is calculated on 16,250,000 (2012:
16,250,000) Ordinary shares, being the number of Ordinary shares in issue at
the year end.

The net asset value per Zero Dividend Preference share is calculated on
8,500,000 Zero Dividend Preference shares, being the number of Zero Dividend
Preference shares in issue at the year end.

22 Reconciliation of net return before and after taxation to net cash flow

from operating activities - Group and Company

                                                            2013        2012
                                                           £'000       £'000

Net return before taxation                                 6,624        (201)

Taxation                                                       -           -

Net return after taxation                                  6,624        (201)

Net capital return                                        (5,484)      1,100

Movement in fair value of ineffective element of             (13)        (51)
interest rate swap

Decrease in receivables                                       11           5

Increase in payables                                           3          10

Interest and expenses charged to the capital reserve        (270)       (401)

Net cash inflow from operating activities                    871         462


23 Reconciliation of net cash flow to movement

in net cash/(debt) - Group and Company

                                                            2013        2012
                                                           £'000       £'000

Increase/(decrease) in cash in year                          989        (703)

Repayment of bank loan                                     4,000           -

Change in net cashflow                                     4,989        (703)

Net debt at 1 May                                         (4,950)     (4,247)

Net cash/(debt) at 30 April                                   39      (4,950)

24 Analysis of changes in net (debt)/cash - Group and Company

                                       At 1 May      Cash flows    At 30 April
                                                          £'000
                                           2012                           2013
                                          £'000                          £'000

Cash at bank                                  -              39             39

Bank overdraft                             (950)            950              -

                                           (950)            989             39

Debt due after more than one year        (4,000)          4,000              -

                                         (4,950)          4,989             39

25 Related party transactions

Under the terms of an agreement dated 30 April 2006 (effective from 1 December
2005), the Company appointed Chelverton to be Investment Manager. The fee
arrangements for these services and fees payable are set out in the Report of
the Directors in the full Annual Report and in note 3 to the financial
statements.

Chelverton contributed £100,000 towards the issue costs relating to the Zero
Dividend Preference share issue.

26 Analysis of financial assets and liabilities

Objectives, policies and strategies

The Group primarily invests in companies with a market capitalisation of up to
£500 million. All of the Group's investments comprise ordinary shares in
companies listed on the Official List and companies admitted to AIM.

The Group finances its operations through Zero Dividend Preference shares
issued by SCZ and equity.

Cash, liquid resources and short-term debtors and creditors arise from the
Group's day-to-day operations.

It is, and has been throughout the year under review, the Group's policy that
no trading in financial instruments shall be undertaken.

In pursuing its investment objective, the Group is exposed to a variety of
risks that could result in either a reduction in the Group's net assets or a
reduction of the profits available for distribution. These risks are market
risk (comprising currency risk, interest rate risk, and other price risk),
credit risk and liquidity risk. The Board reviews and agrees policies for
managing each of these risks and they are summarised below.

As required by IFRS 7: Financial Instruments: Disclosures, an analysis of
financial assets and liabilities, which identifies the risk to the Group of
holding such items, is given below.

Market risk

Market risk arises mainly from uncertainty about future prices of financial
instruments used in the Group's business. It represents the potential loss the
Group might suffer through holding market positions by way of price movements
and movements in exchange rates and interest rates. The Investment Manager
assesses the exposure to market risk when making each investment decision and
these risks are monitored by the Investment Manager on a regular basis and the
Board at quarterly meetings with the Investment Manager.

Market price risk

Market price risks (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.

The Board manages the risks inherent in the investment portfolios by ensuring
full and timely reporting of relevant information from the Investment Manager.
Investment performance is reviewed at each Board meeting.

The Group's exposure to changes in market prices at 30 April on its investments
is as follows:

                                                       2013              2012
                                                      £'000             £'000

Fair value through profit or loss                    31,318            22,120
investments


Sensitivity analysis

A 10% increase in the market value of investments at 30 April 2013 would have
increased net assets by £3,132,000 (2012: £2,212,000). An equal change in the
opposite direction would have decreased the net assets available to
shareholders by an equal but opposite amount.

Foreign currency risk

All the Group's assets are denominated in Sterling and accordingly the only
currency exposure the Group has is through the trading activities of its
investee companies.

Interest rate risk

Interest rate movements may affect the level of income receivable on cash
deposits.

The majority of the Group's financial assets are non-interest bearing. As a
result the Group's financial assets are not subject to significant amounts of
risk due to fluctuations in the prevailing levels of market interest rates.

The possible effects on fair value and cash flows that could arise as a result
of changes in interest rates are taken into account when making investment
decisions.

The exposure at 30 April of financial assets and financial liabilities to
interest rate risk is as follows:

                               Within one year   More than one        Total
                                                          year

                                        £'000           £'000         £'000

30 April 2013

Cash and cash equivalents                  39              -             39

Total exposure to interest                 39              -             39
rates

30 April 2012

Cash and cash equivalents and            (950)             -            (950)
bank overdraft

Bank loan                                   -          (4,000)        (4,000)

Total exposure to interest               (950)         (4,000)        (4,950)
rates


The loan facility of £4 million was repaid on 31 August 2012, therefore the
Group no longer has any interest rate risk associated to variable bank
borrowings.

Credit risk

Credit risk is the risk of financial loss to the Group if the contractual party
to a financial instrument fails to meet its contractual obligations.

The carrying amounts of financial assets best represent the maximum credit risk
exposure at the Balance sheet date.

Listed investments are held by Jarvis Investment Management Limited acting as
the Company's custodian. Bankruptcy or insolvency of the custodian may cause
the Company's rights with respect to securities held by the custodian to be
delayed. The Board monitors the Group's risk by reviewing the custodian's
internal controls reports.

Investment transactions are carried out with a number of brokers whose
creditworthiness is reviewed by the Investment Manager. Transactions are
ordinary undertaken on a delivery versus payment basis whereby the Company's
custodian bank ensures that the counterparty to any transaction entered into by
the Group has delivered in its obligations before any transfer of cash or
securities away from the Group is completed.

Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality.

The maximum exposure to credit risk as at 30 April 2013 was £31,551,000 (2012:
£22,325,000). The calculation is based on the Group's credit risk exposure as
at 30 April 2013 and this may not be representative of the year as a whole.

None of the Group's assets are past due or impaired.

Liquidity risk

The majority of the Group's assets are listed securities in small companies,
which can under normal conditions be sold to meet funding commitments if
necessary. They may however be difficult to realise in adverse market
conditions.

Financial instruments by category

The financial instruments of the Group fall into the following categories

30 April 2013                                At   Loans and   Assets at    Total
                                           cost receivables  fair value    £'000
                                          £'000       £'000     through
                                                              profit or
                                                                   loss
                                                                  £'000

Assets as per Balance
sheet

Investments                                   -           -      31,318   31,318

Trade and other                               -         194           -      194
receivables

Cash and cash equivalents                    39           -           -       39

Total                                        39         194      31,318   31,551

Liabilities as per
Balance sheet

Trade and other payables                    132           -           -      132

Total                                       132           -           -      132

30 April 2012

                                                  Assets at
                                                 fair value
                                                    through Derivatives
                                 At   Loans and   profit or    used for    Total
                               cost receivables        loss     hedging    £'000
                              £'000       £'000       £'000       £'000

Assets as per Balance
sheet

Investments                       -           -      22,120           -   22,120

Trade and other                   -         205           -           -      205
receivables

Total                             -         205      22,120           -   22,325

Liabilities as per
Balance sheet

Trade and other payables        130           -           -           -      130

Bank loan                     4,000           -           -           -    4,000

Bank overdraft                  950           -           -           -      950

Derivative financial              -           -           -          65       65
instruments

Total                         5,080           -           -          65    5,145


IFRS 7 hierarchy

The Company has adopted the amendment to IFRS 7, effective 1 January 2009. This
requires the Company 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 consists of the following three levels:

Level 1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities (Level 1).

An active market is a market in which transactions for the asset or liability
occur with sufficient frequency and volume on an ongoing basis such that quoted
prices reflect prices at which an orderly transaction would take place between
market participants at the measurement date. Quoted prices provided by external
pricing services, brokers and vendors are included in Level 1, if they reflect
actual and regularly occurring market transactions on an arms length basis.

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 2 inputs include the following:

• quoted prices for similar (i.e. not identical) assets in active markets.

• quoted prices for identical or similar assets or liabilities in markets that
are not active. Characteristics of an inactive market include a significant
decline in the volume and level of trading activity, the available prices vary
significantly over time or among market participants or the prices are not
current.

• inputs other than quoted prices that are observable for the asset (for
example, interest rates and yield curves observable at commonly quoted
intervals).

• inputs that are derived principally from, or corroborated by, observable
market data by correlation or other means (market-corroborated inputs).

Level 3 - Inputs for the asset or liability that are not based on observable
market data (unobservable inputs).

The level in the fair value hierarchy within which the fair value measurement
is categorised in its entirety is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. If a
fair value measurement uses observable inputs that require significant
adjustment based on unobservable inputs, that measurement is a Level 3
measurement. Assessing the significance of a particular input to the fair value
measurement in its entirety requires judgement, considering factors specific to
the asset or liability.

The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to investments
actively traded in organised financial markets. Fair value is generally
determined by reference to Stock Exchange quoted market bid prices (or last
traded in respect of SETS) at the close of business on the Balance sheet date,
without adjustment for transaction costs necessary to realise the asset.

Investments whose values are based on quoted market prices in active markets,
and therefore classified within Level 1, include active listed equities. The
Company does not adjust the quoted price for these investments.

Financial instruments that trade in markets that are not considered to be
active but are valued based on quoted market prices, dealer quotations or
alternative pricing sources supported by observable inputs are classified
within Level 2.

Investments classified within Level 3 have significant unobservable inputs.
Level 3 instruments include private equity and corporate debt securities. As
observable prices are not available for these securities, the Company has used
valuation techniques to derive the fair value. The Company has no Level 2 or
Level 3 investments, however the interest rate swap derivative was designated
Level 3. This was due to the fair value obtained being reliant upon inputs
obtained from brokers that are indicative and could not easily be corroborated
with observable market data.

The following table presents the movement in the Level 3 instrument for the
year ended 30 April 2013:

                                     Ineffective      Effective        Total
                                   element (20%)  element (80%)        £'000
                                       to income      to equity
                                           £'000          (hedge
                                                       reserve)
                                                          £'000

30 April 2012                                 13             52           65

Movement in year                             (13)           (52)         (65)

30 April 2013                                 -              -             -

COMPANY SUMMARY

History

The Company was launched on 12 May 1999, raising £21.38 million before
expenses, by a placing of 15,000,000 Ordinary shares and, through its former
subsidiary company, Small Companies PLC, 6,250,000 Zero Dividend Preference
shares and 31,260 Preference shares. A further 750,000 Ordinary shares were
issued as a result of a placing for cash on 3 March 2000 and on 26 October 2005
a further 500,000 shares were issued. The subsidiary, Small Companies PLC, was
placed into members' voluntary liquidation on 30 April 2007, following which
the capital entitlements of the Zero Dividend Preference and Preference shares
were repaid.

Group structure

The Company has in issue one class of Ordinary share. In addition, it has a new
wholly owned subsidiary, SCZ, through which Zero Dividend Preference shares
have been issued. The new subsidiary was incorporated on 13 July 2012 and has a
capital structure comprising unlisted ordinary shares and Zero Dividend
Preference shares listed on the Official List and traded on the London Stock
Exchange. SCZ was incorporated specifically for the issue of Zero Dividend
Preference shares. On 28 August 2012, SCZ issued 8,500,000 Zero Dividend
Preference shares at 100p per share and with net proceeds of £8.3 million. The
expenses of the placing were borne by the Company. Pursuant to a loan agreement
between SCZ and the Company, SCZ has lent the proceeds of the placing to the
Company. The loan is non-interest bearing and is repayable three business days
before the Zero Dividend Preference share redemption date of 8 January 2018 or,
if required by SCZ, at any time prior to that date in order to repay the Zero
Dividend Preference share entitlement. The funds are to be managed in
accordance with the investment policy of the Company.

A contribution agreement between the Company and SCZ has also been made whereby
the Company will undertake to contribute such funds as will ensure that SCZ
will have in aggregate sufficient assets on 8 January 2018 to satisfy the final
capital entitlement of the Zero Dividend Preference shares.

Total net assets and market capitalisation at year end

As at 30 April 2013, the Company had a market capitalisation of £20,881,000
(2012: £15,925,000) and total net assets amounted to £22,579,000 (2012:
£17,180,000).

Management fee

The fee payable to the Investment Manager is 1% of the gross assets of the
Group.

Capital structure

Details of share structure and entitlements and voting rights of each class can
be found below.

ISA status

The Company's Ordinary shares are qualifying investments for Individual Savings
Accounts ("ISAs") as are the ZDP shares of SCZ.

CAPITAL STRUCTURE

Small Companies Dividend Trust PLC (the "Company")

The Company has in issue one class of Ordinary share. In addition, it has a
wholly owned subsidiary, Small Companies ZDP PLC, through which Zero Dividend
Preference shares have been issued.

Ordinary shares of 25p each ("Ordinary shares") - 16,250,000 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")

Ordinary shares of 100p each ("ordinary shares") - 50,000 in issue (partly paid
up as to 25p each)

The ordinary shares are owned by the Company. References to Ordinary shares
within this Annual Report are to the Ordinary shares of Small Companies
Dividend Trust PLC.

Capital

Following the 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 - 8,500,000 in 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 136.7p
per share at 8 January 2018.

Voting

Each holder of Zero Dividend Preference shares on a show of hands will have one
vote at meetings where Zero Dividend Preference shareholders are entitled to
vote and on a poll will have one vote for every Zero Dividend Preference share
held.

Holders of Zero Dividend Preference shares are not entitled to attend, speak or
vote at general meetings unless the business of the meeting includes a
resolution to vary, modify or abrogate the rights attached to the Zero Dividend
Preference shares.

ANNUAL REPORT AND ANNUAL GENERAL MEETING

The foregoing represents extracts from the full text of the Annual Report and
Accounts for the year ended 30 April 2013. The full Report will shortly be
available for download from the following website:

www.chelvertonam.com

Copies will be posted to shareholders shortly.

The Annual General Meeting will be held on Wednesday 18 September 2013 at
11.00am at the offices of the Association of Investment Companies, 9th Floor,
24 Chiswell Street, London EC1Y 4YY.

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Accounts 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

8 July 2013

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.

Copyright ly 8 PR Newswire



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