Annual Report • Aug 31, 2017
Annual Report
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Annual Report for the year ended 31 August 2017
The Company's objective is to provide capital growth through investment in companies listed on the Official List and traded on the Alternative Investment Market ("AIM") with a market capitalisation at the time of investment of up to £50 million, which are believed to be at a "point of change". The Company will also invest in unquoted investments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold. Its investment objective is to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK Index.
It is the Company's policy not to invest in any listed investment companies (including listed investment trusts).
| Investment Objective | inside front cover |
|---|---|
| Company summary | 1 |
| Performance statistics | 1 |
| Strategic Report including: | |
| – Chairman's statement | 2 |
| – Investment Manager's overview | 4 |
| – Portfolio review | 6 |
| – Portfolio holdings | 8 |
| – Portfolio breakdown by sector and by index | 9 |
| – Other statutory information | 10 |
| Directors | 14 |
| Investment Manager, Secretary and Advisers | 15 |
| Corporate Governance Statement | 16 |
| Report of the Directors | 23 |
| Directors' Remuneration Report | 27 |
| Statement of Directors' responsibilities in respect of the financial statements | 30 |
| Independent Auditors' report | 31 |
| Income statement | 36 |
| Statement of changes in equity | 37 |
| Statement of financial position | 38 |
| Statement of cash flows | 39 |
| Notes to the financial statements | 40 |
| Shareholder information | 55 |
| Notice of Annual General Meeting | 56 |
| Form of Proxy | 60 |
| Benchmark | MSCI Small Cap UK Index |
|---|---|
| Investment Manager | Chelverton Asset Management Limited See page 15 for further details |
| Total net assets | £5,460,000 as at 31 August 2017 |
| Market capitalisation | £4,018,000 as at 31 August 2017 |
| Capital structure | 6,377,088 Ordinary 1p shares carrying one vote each. |
| Year ended | Year ended | ||
|---|---|---|---|
| 31 August 2017 | 31 August 2016 | % Change | |
| Net assets | £5,460,000 | £3,987,000 | 36.94 |
| Net asset value per share (NAV) | 85.63p | 62.53p | 36.94 |
| MSCI Small Cap UK Index | 412.80 | 363.11 | 13.68 |
| Share price | 63.00p | 82.00p | (23.17) |
| (Discount)/premium to net asset value | (26.43)% | 31.14% | |
| Revenue loss after taxation | £(136,000) | £(140,000) | |
| Revenue loss per share | (2.13)p | (1.86)p | |
| Capital gain per share | 25.23p | 8.26p |
An investment company as defined under Section 833 of the Companies Act 2006.
The Strategic Report has been prepared in accordance with section 414A of the Companies Act 2006 (the"Act"). Its purpose is to inform the Members of the Company and help them understand how the Directors have performed their duty under section 172 of the Act to promote the success of the Company.
I am pleased to report an excellent year of progress in which the Company's net asset value per share increased by 36.9% to 85.63p. This represents a significant outperformance over the Company's benchmark index, the MSCI Small Cap UK Index which rose by 13.7%.
The last 12 months has seen politics dominating the agenda serving to create an environment of considerable uncertainty. In March 2017, the Conservative Government exercised Article 50 to trigger Britain's exit from the European Union after 44 years of membership. In an opportunistic attempt to strengthen her hand ahead of the Brexit negotiation, Prime Minister Theresa May called an unexpected General Election in June 2017. Instead of achieving an enhanced position, the Conservative Government lost its overall majority in Parliament, thus weakening the Prime Minister's position, adding to the uncertainty around what the future relationship between the United Kingdom and Europe will look like.
Corporate Britain is maintaining what appears to be a "business as usual" position, but uncertainty is not a positive to running a business and is not conducive to investment decisions. Until there is more clarity this will be an undoubted headwind.
The companies held in the portfolio are highly UK-centric in their business dealings and therefore the prosperity and growth of the domestic economy is the biggest single driver of their future success. It is probable that the UK economy will continue to see steady but slow economic growth, together with modest inflationary pressures. The Bank of England has started to raise interest rates to check the rising level of consumer debt. This can be construed as a sign that the UK is in reasonable shape and reinforces the likelihood of future economic growth. The Government will probably add some fiscal stimuli to counter any negative effects of monetary tightening. Overall, the Board expects to see a benign but supportive backdrop for financial markets and the companies in which we are invested.
In September 2017, the Board announced a tender offer to acquire up to 15% of the outstanding shares at a price of 76.73p, a discount of 7.5% against the net asset value per share of 82.95p at 18 September 2017. In total, 956,563 shares were available to be tendered. However, in the event the total number of shares tendered was only 749,765 or 11.76% of the shares in issue.
This is the Company's first tender offer which has not been over-subscribed. In this context, it is worth noting that the effect of the multiple tender offers and the occasional buy-back of shares over the last 11 years has reduced the Company's share capital by almost 70%, from 18.1 million to the current 5.6 million shares. The Board remains committed to the annual tender process as a means of offering Shareholders the ability to realise some of their shareholding at a modest discount to the net asset value.
It remains the Board's intention to carry out another tender of up to 15% of the outstanding shares in 2018.
As the number of shares in issue continues to decline, (as a direct result of the multiple tender offers) and, at the same time, the number of investment holdings reduces, the ongoing viability of Chelverton Growth Trust must logically be in question. Over the period of the tender offers, the fund has grown by a larger percentage than the percentage reduction in the share capital. Indeed, it is worth pointing out that five years ago the net assets were some £4.2 million against the current value of £5.5 million and over the same period, the share capital has been reduced by more than 50% by the acquisition of 6.2 million shares.
The Board is mindful of the ongoing cost of running a Company in which only the investment management fee is designed to flex with the size of the Company. The Board continues to review options for the future which maximise Shareholder value, whilst the Investment Manager continues to effectively manage the reducing portfolio.
The companies in the portfolio have generally made steady progress over the past year. We anticipate that the investment and development that has taken place in the past few years will continue to bear fruit in the future period.
Kevin Allen Chairman 8 November 2017
In the past year the UK economy has again grown steadily, albeit at a somewhat slower rate than in previous years. "On the ground" when meeting and visiting with current or potential investee companies there seems to be very little sense of the doom and gloom that one reads about every day in the papers or is broadcast on television. There will be no certainty on the UK's position with the European Community for some time and this same uncertainty will, for a few years, become the "new normal". Companies and investors are already "getting on with getting on" and will in turn position themselves to changing circumstances.
We have said before that as the portfolio is invested in small AIM traded or smaller unquoted UK companies, the health and growth of the UK economy is by far and away the most important determinant of our underlying companies' success. Indeed, a review of the sales of all our portfolio companies shows that 83% of sales are made in the UK and only 5% are made to countries in the EU. For information and completeness 3% are made to North America and 9% to the Rest of the World.
Without wishing to appear complacent, in the longer-term we believe that the changes that the UK will go through over the next five years will leave the country in a better position politically and economically. We are also relaxed about the impact of leaving the European Union in respect of the portfolio as there are of course no investments in Pharmaceutical, Aerospace, Automotive and complex Financial Services companies, the sectors that we consider could possibly be most impacted by leaving the European Union.
The biggest change in the year to the portfolio was the sale of Transflex Vehicle Rental Limited ("Transflex") for 335p per share producing cash proceeds of £929,625. The Company backed Transflex from start-up in January 2012 with a modest investment of £100,000 and then added a further £225,000 over the next two years to fund the rapid growth of the business. The sales price represented a cash return of 2.86 times, and whilst being very satisfactory, was probably a bit less than the management had been hoping for.
A further investment was made as part of a placing by CEPS plc, and this investment coupled with the disposal of Transflex has meant that CEPS has become the largest holding in the Company. CEPS has multiple subsidiary trading companies and has just announced its interim results for the six months ended 30 June 2017 which were very positive and their view is that there will be further progress in the second half of 2017 and on into 2018.
The Board has chosen to recognise in these accounts the full amount of the Company's share of the earn-out of £673,652 in respect of the sale of Parmenion Capital Partners two years ago to Aberdeen Asset Management plc. The relevant date for the earn-out calculation was 29 September 2017. These proceeds were received on 23 October 2017 and £250,000 was used to repay the loan from Jarvis Investment Management Limited, the Company's custodian.
This year we have sold the balance of the shareholdings in LPA Group plc, Alliance Pharma plc and Northbridge Industrial Services plc at what now appear to be advantageous prices. The holding in Petards plc was reduced as the share price moved up very sharply and then towards the end of the year the holding was modestly added to at much lower prices despite very positive interim results. Petards plc supplies sophisticated products to the rail industry and is building a very large order book to be delivered over the next two to three years.
Plutus Powergen plc has continued its rapid development of the past few years and is broadening its business to help mitigate the impact of political risk on energy policy.
The holding in Chelverton Asset Management Holdings Limited, the company used to finance the MBO of Chelverton Asset Management, the Investment Manager of this Company, was again revalued upwards reflecting the continued success of their funds which has led to a growth in their funds under management.
Security Research plc announced that it was self-liquidating and will be returning funds to shareholders over the next period.
The holding in Anaxsys Technology was written down to nil to reflect the disappointing take up in their product by the market place. The product rights have been sold to a third party from whom royalty payments will become due in the event of future sales.
The ongoing growth of CEPS plc, the largest holding in the Company, is expected to continue with the share price beginning to recognise the profits, cash generation and value created in the subsidiaries. Expected further recovery and growth in the share prices of a number of the AIM holdings will also contribute to the future increase in the asset value.
We expect to see further share price growth across the portfolio over the next twelve months and we believe we can expect to see another year of good progress in 2017 – 2018.
Chelverton Asset Management Limited 8 November 2017
| Investment | Sector | Valuation £'000 |
% of total portfolio |
|---|---|---|---|
| AIM Traded | |||
| CEPS | Support Services | 1,292 | 30.7 |
| Trading holding company for a number of companies supplying services and products | |||
| Lombard Risk Management | Software & Computer Services | 323 | 7.7 |
| analysis and regulatory compliance software to financial organisations | Lombard Risk is one of the world's leading providers of collateral management, liquidity | ||
| MTI Wireless Edge | Technology Hardware & Equipment | 210 | 5.0 |
| Developer and manufacturer of sophisticated antennas and antenna systems | |||
| Petards Group | Support Services | 434 | 10.3 |
| Development, provision and maintenance of advance security systems and related services | |||
| Plutus Powergen | Flexible Energy Supply | 700 | 16.6 |
| flexible electricity generation | Providers of management infrastructure and expertise to operate power plants and provide | ||
| Touchstar | Technology Hardware & Equipment | 621 | 14.7 |
| Software systems for warehousing and distribution | |||
| Universe Group | Support Services | 61 | 1.4 |
| Provision of credit fraud prevention, loyalty and retail systems | |||
| Nasdaq Traded | |||
| One Horizon Group | Support Services | 22 | 0.5 |
| Provider of mobile satellite communications equipment and airtime | |||
| 3,663 | 86.9 |
| Investment | Sector | Valuation £'000 |
% of total portfolio |
|---|---|---|---|
| Unquoted | |||
| Airways Engineering | Support Services | ||
| Ordinary B Shares | – | – | |
| Loan Stock | – | – | |
| Commercial aviation maintenance | |||
| Anaxsys Technology | Healthcare Equipment & Services | – | – |
| A medical device company for patient monitoring and screening | |||
| Chelverton Asset Management Holdings | Support Services | 200 | 4.7 |
| Investment management, including providing services to Chelverton Growth Trust Plc | |||
| La Salle Education | Support Services | – | – |
| A UK based company dedicated to improving mathematics education | |||
| Main Dental Partners | Support Services | ||
| Ordinary B Shares | 138 | 3.3 | |
| Loan Stock | – | – | |
| Operator of dental surgeries | |||
| Pedalling Forth | General Retailers | 150 | 3.6 |
| Internet retailer of cycling clothing for women | |||
| Security Research Group | Support Services | 62 | 1.5 |
| Leading provider of Local Authority residential property searches; provision of packaging solutions |
|||
| Portfolio Valuation | 4,213 | 100.0 |
| 31 August 2017 | 31 August 2016 | ||||
|---|---|---|---|---|---|
| Investment | Valuation £'000 |
% of total portfolio |
Valuation £'000 |
% of total portfolio |
|
| CEPS | 1,292 | 30.7 | 614 | 15.6 | |
| Plutus Powergen | 700 | 16.6 | 400 | 10.2 | |
| Touchstar | 621 | 14.7 | 406 | 10.4 | |
| Petards Group | 434 | 10.3 | 335 | 8.5 | |
| Lombard Risk Management | 323 | 7.7 | 201 | 5.1 | |
| MTI Wireless Edge | 210 | 5.0 | 165 | 4.2 | |
| Chelverton Asset Management Holdings | 200 | 4.7 | 141 | 3.6 | |
| Pedalling Forth | 150 | 3.6 | 150 | 3.8 | |
| Main Dental Partners | 138 | 3.3 | 175 | 4.5 | |
| Security Research Group | 62 | 1.5 | 52 | 1.3 | |
| Universe Group | 61 | 1.4 | 73 | 1.9 | |
| One Horizon Group | 22 | 0.5 | 84 | 2.1 | |
| Anaxsys Technology | – | – | 23 | 0.6 | |
| La Salle Education | – | – | – | – | |
| Airways Engineering | – | – | – | – | |
| Transflex Vehicle Rental* | – | – | 902 | 23.0 | |
| LPA Group* | – | – | 123 | 3.1 | |
| Alliance Pharma* | – | – | 49 | 1.3 | |
| Northbridge Industrial Services* | – | – | 32 | 0.8 | |
| Total | 4,213 | 100.0 | 3,925 | 100.0 |
*Sold during the year
As explained within the Report of the Directors on page 23, the Company carries on business as an investment trust. Investment trusts are collective closed-ended public limited companies.
Chelverton Growth Trust plc is a public limited company incorporated in England and Wales (registration number 2989519) with its registered office being Suite 8, Bridge House, Courtenay Street, Newton Abbot TQ12 2QS.
The Company is an investment company under section 833 of the Companies Act.
The Company's shares are listed on the London Stock Exchange main market under the code CGW (sedol 0262134) and L.E.I. 213800I86P8BAE6UVI83.
The Board of Directors is responsible for the overall stewardship of the Company, including investment and dividend policies, corporate and gearing strategy, corporate governance procedures and risk management. Biographical details of the three Directors, can be found on page 14.
The Company's objective is to provide capital growth through investment in companies listed on the Official List and traded on the Alternative Investment Market ("AIM") with a market capitalisation at the time of investment of up to £50 million, which are believed to be at a "point of change". The Company will also invest in unquoted investments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold. Its investment objective is to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK Index.
The Company invests principally in securities of publicly quoted UK companies, though it may invest in unquoted securities. The performance of the Company's investments is compared to the MSCI Small Cap UK Index.
The Company may also invest in unquoted investments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold.
It is the Company's policy not to invest in any listed investment companies or listed investment trusts.
To comply with Listing Rules the Company's investment policy is detailed above and should be read in conjunction with the subsequent sections entitled investment strategy and the performance analysis.
It is intended from time to time, when deemed appropriate, that the Company will borrow for investment purposes.
The Investment Objective and Policy stated are intended to distinguish the Company from other investment vehicles which have relatively narrow investment objectives and which are constrained in their decision making and asset allocation. The Investment Objective and Policy allow the Company to be constrained in its investment selection only by valuation and to be pragmatic in portfolio construction by only investing in securities which the Investment Manager considers to be undervalued on an absolute basis. Portfolio risk is managed by investing in a diversified spread of investments.
Investments are selected for the portfolio only after extensive research which the Investment Manager believes to be key. The whole process through which equity must pass in order to be included in the portfolio is very rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the
selection process. The Investment Manager believes the key to successful stock selection is to identify the long-term value of a company's shares and to have the patience to hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a company's earnings prospects over a five year time horizon.
The Company's Investment Manager is Chelverton Asset Management Limited, an independent investment manager focussing exclusively on achieving returns for investors based on UK investment analysis of the highest quality. The founder and employee owners of Chelverton include experienced investment professionals with strong investment performance records who believe rigorous fundamental research allied to patience is the basis of long-term investment success.
The Chairman's statement on pages 2 and 3 and the Investment Manager's overview on pages 4 and 5 give details of the Company's activities during the year under review.
At each Board meeting, the Board considers compliance with the Company's investment policy and other investment restrictions during the reporting period. An analysis of the portfolio on 31 August 2017 can be found on pages 6 to 9 of the report.
All of the Company's activities are outsourced to third parties. As such it does not have any physical assets, property, or operations of its own and does not generate any greenhouse gas or other emissions.
Reviews of the Company's returns during the financial year, the position of the Company at the year end, and the outlook for the coming year are contained in the Chairman's Statement on pages 2 and 3 and the Investment Manager's overview on pages 4 and 5.
As stated within the Corporate Governance Statement on pages 16 to 22, the Board applies the principles detailed in the internal control guidance issued by the Financial Reporting Council, and has established a continuing process designed to meet the particular needs of the Company in managing the risks and uncertainties to which it is exposed.
The principal risks and uncertainties faced by the Company are described below and in note 15 which provides detailed explanations of the risks associated with the Company's financial instruments.
The Company is exposed to market risk due to fluctuations in the market prices of its investments.
The Investment Manager actively monitors economic and company performance and reports regularly to the Board on a formal and informal basis. The Board formally meets with the Investment Manager quarterly when portfolio transactions and performance are reviewed. The Board acting as the Management Engagement Committee meets as required to review the performance of the Investment Manager. Further details regarding the Company's Committees and their duties are given on pages 18 to 20 of the Corporate Governance Statement.
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.
As with many investment trust companies, premiums/discounts can significantly fluctuate.
The Board recognises that 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 does not intend to adopt a precise discount target at which shares will be bought back. However, Ordinary shares will not be bought back for cancellation or into Treasury at a discount to NAV of less than 7.5%.
Relevant legislation and regulations which apply to the Company include the Companies Act 2006, the Corporation Tax Act 2010 ("CTA"), the Alternative Investment Fund Managers Directive ("AIFMD") and the Listing Rules of the Financial Conduct Authority ("FCA"). The Company has noted the recommendations of the UK Corporate Governance Code and its statement of compliance appears on pages 16 to 22. A breach of the CTA could result in the Company losing its status as an investment company and becoming subject to capital gains tax, whilst a breach of the Listing Rules might result in censure by the FCA. At each Board meeting the status of the Company is considered and discussed, so as to ensure that all regulations are being adhered to by the Company and its service providers.
The Board is not aware of any breaches of laws or regulations during the period under review and up to the date of this report.
The financial situation of the Company is reviewed in detail at each Board meeting. The content of the Company's Annual Report and financial statements is monitored and approved both by the Board and the Audit Committee.
Inappropriate accounting policies or failure to comply with current or new accounting standards may lead to a breach of regulations.
The Board monitors the liquidity of the portfolio at each Board meeting and regularly reviews the investments with the Investment Manager.
A more detailed explanation of the investment management risks facing the Company is given in note 15 to the financial statements.
As part of its normal operations, the Company holds financial assets and financial liabilities. Full details of the role of financial instruments in the Company's operations are set out in note 15 to the financial statements.
The Board seeks to mitigate and manage these risks through continual review, policy setting and enforcement of contractual obligations. It also regularly monitors the investment environment and the management of the Company's investment portfolio. Investment risk is spread through holding a wide range of securities in different industrial sectors.
Following a detailed review of the Annual Report and Accounts by the Audit Committee, the Directors consider that taken as a whole it is fair, balanced and understandable and provides the information necessary for Shareholders to assess the Company's performance, business model and strategy.
At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives, for example: the NAV, the movement in the Company's share price and the premium/discount of the share price in relation to the NAV.
The Company's Income statement is set out on page 36.
The movement of the NAV is compared to the MSCI Small Cap UK Index, the Company's benchmark. The NAV per Ordinary share at 31 August 2017 was 85.63p (2016: 62.53p), an increase of 36.94%. By comparison the benchmark rose 13.68%.
The Company's share price at the year end was 63.00p (2016: 82.00p).
The Board reviews the performance and progress of the Company over various time periods and uses these assessments, regular investment performance updates from the Investment Manager and a continuing programme of monitoring risk, to assess the future viability of the Company. The Directors consider that a period of three years is the most appropriate time horizon to consider the Company's viability and after careful analysis, the Directors believe that the Company is viable over a three-year period. The Directors are of the opinion that the Company has sufficient liquidity in the portfolio in readily realisable smaller capitalised AIM traded securities.
In order to maintain viability, the Company has a robust risk control framework for the identification and mitigation of risk which is reviewed regularly by the Board. The Directors also seek reassurance from suppliers that their operations are well managed and they are taking appropriate action to monitor and mitigate risk. The Directors have a reasonable expectation that the Company will be able to continue in operation and meet its liabilities as they fall due over the period of assessment.
A review of the main features of the year is contained in the Chairman's statement and the Investment Manager's overview on pages 2 to 5.
The marketing and promotion of the Company 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.
On 4 September 2017, the Company announced details of a Tender Offer to purchase up to 15% of the Company's share capital. On 21 September 2017, the Company announced the results of the Tender Offer. A total of 749,765 shares (representing 11.76% of the Company's issued share capital at that date) were purchased at a price of 76.73p per Ordinary share. These shares have now been cancelled.
The Directors are seeking to renew the appropriate powers at the next Annual General Meeting to enable the purchase of the Company's own shares, when it is in the interests of Shareholders as a whole.
The Company does not have any employees and the Board consists entirely of non-executive directors. As the Company is an investment trust, which invests in other companies, it has no direct impact on the community or the environment, and as such has no policies in this area.
The Board has registered itself as the AIFM with the FCA under the Directive and confirm that all required returns have been completed and filed.
By Order of the Board
Kevin Allen Chairman 8 November 2017
The Directors are:
Kevin Allen (Chairman) is a chartered accountant. After qualifying with Coopers & Lybrand, he joined Overseas Containers (part of P&O Group) where he spent five years, latterly as chief accountant. In 1986 he joined Volvo Car UK as financial controller before joining Kellock Limited, the factoring and invoice discounting arm of Bank of Scotland Group, as finance and operations director. He became finance director of Brockbank Group plc in 1993, serving on the boards of Brockbank Syndicate Management, Admiral Insurance Services and Brockbank Insurance Services Inc.
David Horner is managing director of Chelverton Asset Management Limited and the chairman of CEPS plc. He qualified as a chartered accountant and has considerable experience of analysing and working with smaller companies. In 2013 he resigned his membership of The Institute of Chartered Accountants in England and Wales, as his career is now fully involved in fund management.
Ian Martin has successfully headed both quoted and unquoted companies in both the insurance and media industry. From 2002 to 2012, he oversaw the growth of Avesco, the AIM quoted provider to the broadcast industry, including delivering Olympic ceremonies in London and Beijing. Prior to that he held senior board positions at Ascot Underwriting, Admiral Insurance and the Brockbank Group plc. Ian is currently chairman of the Internet Safe Search company Hypersonica plc, Touchstar plc, managing director of Neon Underwriting, a Lloyds Managing Agency and a non-executive director of JJ Location one of the most respected photographic studios in London.
Chelverton Asset Management Limited 11 Laura Place Bath BA2 4BL Tel: 01225 483 030
Chelverton Asset Management Limited was formed in 1998. The investment team consists of David Horner, David Taylor and James Baker who have considerable experience of companies in the smaller quoted market sector.
The Company website is maintained by the Investment Manager and can be found at www.chelvertonam.com.
ISCA Administration Services Limited Suite 8, Bridge House Courtenay Street Newton Abbot TQ12 2QS Tel: 01392 487056 Email: [email protected]
Share Registrars Limited The Courtyard 17 West Street Farnham Surrey GU9 7DR Tel: 01252 821390 www.shareregistrars.uk.com
HSBC 46 Market Street Falmouth Cornwall TR11 3AA
Hazlewoods LLP Windsor House Bayshill Road Cheltenham GL50 3AT
Jarvis Investment Management Limited 78 Mount Ephraim Royal Tunbridge Wells Kent TN4 8BS Tel: 01892 510515
Shareholders hold the Directors of a Company responsible for the stewardship of that Company's affairs. Corporate governance is the process by which a board of directors discharges this responsibility. The Company's arrangements in respect of corporate governance are explained in this report.
The Company is required to comply with, or to explain its non-compliance with, the relevant provisions of the UK Corporate Governance Code 2016 issued by the Financial Reporting Council (the 'FRC') which can be found at www.frc.org.uk.
The Board recognises the importance of a strong corporate governance culture and has established a framework for corporate governance which it considers appropriate to the business of the Company as an investment trust.
The Company has not complied with the provisions of the Corporate Governance Code in respect of the following:
At the end of the year the Board consisted of two independent directors and Mr Horner, who is not considered independent. The biographies of all the Directors are contained on page 14.
The Board believes that the two independent Directors are independent in character and that there are no relationships or circumstances which are likely to affect their judgement. All Directors receive relevant training, collectively or individually, as necessary. The Directors believe that the Board has the balance of skills, experience, ages and length of service to enable it to provide effective leadership and proper governance of the Company. The Directors possess a range of business and financial expertise relevant to the direction of the Company and consider that they commit sufficient time to the Company's affairs.
The Directors of the Company meet at regular Board Meetings. During the year to 31 August 2017, the Directors' attendance at meetings has been recorded as follows:
| Board Meetings |
Audit Committee |
|
|---|---|---|
| K J Allen | 4 of 4 | 2 of 2 |
| D A Horner | 4 of 4 | n/a |
| I P Martin | 4 of 4 | 2 of 2 |
The Board subscribes to the view that long-serving Directors should not be prevented from forming part of an independent majority. It does not consider that the length of a Director's tenure reduces his ability to act independently. The Board's policy on tenure is that continuity and experience are considered to add significantly to the strength of the Board and, as such, no limit on the overall length of services of any of the Company's Directors, including the Chairman, has been imposed, although the Board believes in the merits of periodic and progressive refreshment of its composition.
The basis on which the Company aims to generate value over the longer term is set out in the Strategic Report on pages 2 to 13. All matters, including corporate and gearing strategy, investment and dividend policies, corporate governance procedures and risk management are reserved for the approval of the Board of Directors. The Board receives full information on the Company's investment performance, assets, liabilities and other relevant information in advance of Board meetings.
In accordance with the Listing Rules for investment entities, the Board has reviewed the status of its individual Directors and the Board as a whole. The non-executive Directors are considered by the Board to be independent and free of any business or other relationship which could interfere with the exercise of their independent judgement.
The three Directors were appointed at the 2016 Annual General Meeting for a term to expire at the next Annual General Meeting. All three non-executive Directors will offer themselves for re-election at the forthcoming Annual General Meeting.
Mr Allen and Mr Martin are deemed by the Board to be independent of the Investment Manager. The continuing independence of Mr Allen has been fully considered in light of his having served for more than nine years on the Board since his first election. Mr Allen and Mr Martin were the founding Board members. Mr Martin, having previously resigned from the Board, was re-appointed on 19 December 2013. Their knowledge of the Company and experience is considered extremely valuable by the other Director. Mr Horner, as managing director of Chelverton Asset Management Limited the Investment Manager, is not independent. Given the size and nature of the Board, it is not considered appropriate to appoint a Senior Independent Director. This is a breach of code provision A.3.3. The Company does not have a chief executive officer, but by appointing a management company the roles of chairman and chief executive officer are effectively separated. Brief biographical details of the Directors can be found on page 14.
The Board is responsible for the Investment Policy and strategic and operational decisions of the Company and for ensuring that the Company is run in accordance with all regulatory and statutory requirements. These matters include:
The Investment Manager ensures that Directors have timely access to all relevant management and financial information to enable informed decisions to be made and contacts the Board as required for specific guidance. The Company Secretary and Investment Manager prepare monthly reports for Board consideration on matters of relevance, for example current valuation and portfolio changes, cash availability and requirements and a breakdown of shareholdings by listing and sector. The Board takes account of Corporate Governance best practice.
The Directors review at each Board meeting the Company's investments and all other important issues to ensure that control is maintained over the Company's affairs. The Board is responsible for the Investment Policy and strategic and operational decisions of the Company. A formal schedule of matters specifically reserved for the Board's approval has been adopted. The management of the Company's assets is delegated to Chelverton Asset Management Limited, which has discretion to manage the assets of the Company in accordance with the Company's investment objectives and policies subject to the following:
• Opportunistic top-up investments of up to £50,000 are permitted in any company on the basis that the Board is informed.
The Board is aware of its duty to act in the interests of the Company. The Board acknowledges that there are risks associated with investment in companies which fail to conduct business in a socially responsible manner. The Investment Manager considers social environmental and ethical factors which may affect the performance or value of the Company's investments. The Directors, through the Manager, encourage companies in which investments are held to adhere to best practice in the area of Corporate Governance. They believe that this can best be achieved by entering into a dialogue with company management to encourage them, where necessary, to improve their policies in this area. The Company's ultimate objective is to deliver superior long term returns for Shareholders which the Board believe will be produced on a sustainable basis by investing in companies which adhere to best practice in the area of Corporate Governance. Accordingly the Fund Manager will seek to favour companies which pursue best practice in this area.
The Chairman, Mr Allen, is independent. He considers himself to have sufficient time to commit to the Company's affairs. Given the size and nature of the Board it is not considered appropriate to appoint a Senior Independent Director.
The Company also uses an Audit Committee to control and monitor its operations and provide a forum through which the Company's external Auditors report to the Board of Directors. The Committee meets at least twice a year and is chaired by Mr Martin. Mr Horner is not a member by virtue of his association with the Investment Manager. The Audit Committee's delegated responsibilities are clearly defined in written terms of reference, copies of which are available from the Company's Secretary.
The Audit Committee provides a forum through which the Company's external Auditors report to the Board of Directors. The Committee meets at least twice a year and is chaired by Mr Martin.
The primary responsibilities of the Audit Committee are: to review the effectiveness of the internal control environment of the Company and monitor adherence to best practice in corporate governance; to make recommendations to the Board in relation to the re-appointment of the Auditors and to approve their remuneration and terms of engagement; to review and monitor the Auditors' independence and objectivity and the effectiveness of the audit process and provide a forum through which the Company's Auditors report to the Board. The Audit Committee also has responsibility for monitoring the integrity of the financial statements, finanical reporting process and accounting policies of the Company and for reviewing the Company's financial reporting and internal control policies and procedures. Committee members consider that individually and collectively they are appropriately experienced to fulfil the role required.
The Audit Committee has direct access to the Company's Auditors, Hazlewoods LLP, whose representatives attend the year end Audit Committee meeting. On the basis of these meetings the Audit Committee has been able to assess the effectiveness of the external audit. A formal statement of independence is received from the external Auditors each year. The Committee has advised the Board that based on its assessment of their performance and independence Hazlewood's LLP has fulfilled its obligations to the Company and Shareholders.
The Company does not have an internal audit function. All of the Company's management functions are delegated to independent third parties and, as a result, this function is not felt to be appropriate. However the need for one is reviewed annually.
| Significant Issues Considered by the Audit Committee in Relation to the Financial Statements | |||||
|---|---|---|---|---|---|
| -- | -- | -- | -- | -- | ---------------------------------------------------------------------------------------------- |
| Matter | Action |
|---|---|
| Investment Portfolio Valuation | |
| The Company's portfolio is invested predominantly in | The Listed portfolio is valued at bid price at the end of |
| Listed and Unquoted securities. Eighty seven percent of the | each month by the Company Secretary. The Unquoted |
| portfolio is highly liquid and listed on recognised stock | Securities are reviewed on a quarterly basis by the |
| exchanges. Errors in the portfolio valuation could have a | Investment Manager and at the year end with the |
| material impact on the Company's NAV per share. | Auditors. |
| Misappropriation of Assets | |
| Misappropriation of the Company's investments or cash | The Listed portfolio is valued at bid price at the end of |
| balances could have a material impact on its NAV per | each month by the Company Secretary. The portfolio is |
| share. | agreed on a monthly basis by the Company Secretary |
| and the Investment Manager during the completion of | |
| the monthly accounts. The Company Secretary | |
| reconciles cash balances on a monthly basis. | |
| Income Recognition | |
| Incomplete or inaccurate income recognition could have | The level of income received for the year is agreed on a |
| an adverse effect on the Company's NAV and earnings | monthly basis with the Investment Manager and the |
| per share and its level of dividend cover. | Company Secretary. |
The Audit Committee reviews the scope and results of the audit and, during the year, considered and approved Hazlewoods plan for the audit of the financial statements for the year ended 31 August 2017. At the conclusion of the audit Hazlewoods did not highlight any issues to the Audit Committee which would cause it to qualify its audit report nor did it highlight any fundamental internal control weaknesses. Hazlewoods issued an unqualified audit report which is included on pages 31 to 35.
Hazlewoods LLP was first appointed as Auditor to the Company on 27 February 2007. As part of its review of the continuing appointment of the Auditor, the Committee considers the length of tenure of the audit firm, its fees and independence, along with any matters raised during each audit. The Committee has discussed with Hazlewoods LLP its objectivity, independence and experience in the investment trust sector.
The Committee had previously recommended the re-appointment of Hazlewoods LLP on each occasion since their initial appointment, and no tender had been undertaken for the audit of the Company. The Audit Partner for the Company has been rotated once since their initial appointment, most recently in respect of the financial year ended 31 August 2012. The audit for 2017 was Hazlewoods LLP's tenth year as Auditor and in accordance with Auditing Practice Board Ethical Standard 3 (Revised) the audit was put out to tender in respect of the 2018 year end. The Committee invited tenders from three audit firms and the tender documents were discussed in detail. Based on a number of criteria the Committee agreed to recommend to the Board the reappointment of Hazlewoods LLP as Auditors to the Company.
Hazlewoods LLP has indicated their willingness to continue in office as Auditor of the Company. Following its review, the Committee considers that individually and collectively Hazlewoods LLP are appropriately experienced to fulfil the role required.
The Committee has considered the independence and objectivity of the Auditor and it is satisfied in these respects that Hazlewoods LLP has fulfilled its obligations to the Company and its Shareholders. During the year Hazlewoods provided tax compliance services to the Company. These were not provided by the audit team and the fee is not significant at £2,000 plus VAT. No other non-audit services were provided in the year. The Committee has advised that based on its assessment of their performance and independence, Hazlewoods LLP has fulfilled its obligations to the Company and its Shareholders and on this basis recommends their reappointment as Auditor.
The Board acting as a Nomination Committee considers the appointment and re-appointment of Directors and meets as and when required, and is chaired by Mr Allen. The Board meets for the purpose of considering appointments to, and removals from, the Board and determining the appointment process when required.
The Board, excluding Mr Horner, reviews the performance of the Investment Manager under the Investment Management Agreement. Based on this review it has concluded that the Investment Manager's appointment continues. The Board also reviewed the performance of the Company Secretary, the Custodian and the Registrar and matters concerning their respective agreements with the Company.
The Board of Directors of the Company comprised three male Directors in the year to 31 August 2017. While the Board recognises the benefits of diversity in future appointments to the Board, the key criteria for the appointment of new directors will be the appropriate skills and experience in the interest of Shareholder value. The Directors are satisfied that the Board currently contains members with an appropriate breadth of skills and experience.
The Board as a whole fulfils the function of a Remuneration Committee. Remuneration details are given in the Directors' remuneration report on pages 27 to 29. At 31 August 2017 there were no Directors' service agreements and no Director had been granted any options to acquire shares in the Company.
On 21 December 2015, ISCA Administration Services Limited was appointed as Company Secretary and Administrator to the Company and is responsible for ensuring that Board and Committee procedures are followed and that applicable regulations are complied with. The Company Secretary also ensures timely delivery of information and reports and that the statutory obligations of the Company are met. All the Directors have direct access to the advice and services of the Company Secretary.
There is an agreed procedure for Directors to seek independent professional advice if necessary at the Company's expense on any matter that concerns them in the furtherance of their duties. The Chairman liaises on a regular basis with the other Directors and the Company Secretary to ensure that they are maintaining adequate training and continuing professional development.
In accordance with corporate governance best practice, formal performance evaluation of the Board, Audit Committee and individual Directors was undertaken following the year end by verbal consultation. It was concluded that the Board represented an effective combination of skill and expertise and continued to operate successfully as a small, proficient unit. The performance of each Director continues to be effective and demonstrates commitment to the role.
The following information is disclosed in accordance with The Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2008 and DTR 7.2.6.
• There are no agreements between the Company and its Directors concerning compensation for loss of office.
Communication with Shareholders is addressed by both the Board and the Investment Manager and the Directors are available to enter into dialogue with Shareholders. Shareholders of the Company are encouraged to take the opportunity to meet with the Directors of the Board at the Annual General Meeting and ensure that their views are understood. All Shareholders are encouraged to attend and vote at the Annual General Meeting, during which the Board and the Investment Manager are available to discuss issues affecting the Company and Shareholders have the opportunity to address questions to the Investment Manager, the Board and the Chairman of the Audit Committee.
Any Shareholder who would like to lodge questions in advance of the Annual General Meeting is invited to do so either on the reverse of the proxy card or in writing to the Company Secretary at the address given on page 15. The Company always responds to letters from individual Shareholders.
The Annual and Half Yearly Reports of the Company are prepared by the Board and its advisers to present a full and readily understandable review of the Company's performance. Copies of the Annual Report are dispatched to Shareholders by mail. The Annual and Half Yearly Reports are also available for downloading from the Company's website maintained by the Investment Manager at www.chelvertonam.com.
The Board is responsible for the Company's system of internal control and for reviewing its effectiveness. It has established an ongoing process designed to meet the particular needs of the Company in managing the risks to which it is exposed, consistent with the internal control guidance issued by the FRC.
Adequate internal controls are in place for identifying, evaluating and managing risks faced by the Company. This process, together with key procedures established with a view to providing effective financial control, has been in place for the full financial year and up to the date the financial statements were approved and is consistent with the internal control guidance issued by the FRC.
The Board has reviewed the need for an internal audit function. It has decided that the systems and procedures employed by the Directors, provide sufficient assurance that a sound system of internal control, which safeguards the assets, is maintained. An internal audit function specific to the Company is therefore considered unnecessary.
Risk assessment and the review of internal controls are undertaken by the Board in the context of the Company's overall investment objective. The review covers the key business, operational, compliance and financial risks facing the Company. In arriving at its judgement of what risks the Company faces, the Board has considered the Company's operations in the light of the following factors:
Against this background, the Board has split the review of risk and associated controls into four sections reflecting the nature of the risks being addressed. These sections are as follows:
• Corporate strategy;
The key procedures which have been established to provide internal controls are as follows:
In accordance with guidance issued to directors of listed companies, the Directors have carried out a review of the effectiveness of the system of internal control as it has operated over the year.
On behalf of the Board
Kevin Allen Chairman 8 November 2017
The Directors present their report and audited financial statements of the Company for the year ended 31 August 2017. This report also contains certain information required in accordance with s992 of the Companies Act 2006.
The registered company number for Chelverton Growth Trust PLC is 2989519.
The principal activity of the Company is to carry on business as an investment trust. The Company has been granted approval from HM Revenue & Customs ('HMRC') as an authorised investment trust under Section 1158 of the Corporation Tax Act 2010. The Company will be treated as an investment trust company for each subsequent accounting period, subject to there being no serious breaches of the conditions. The Directors are of the opinion that the Company has conducted its affairs for the year ended 31 August 2017 so as to be able to continue to qualify as an authorised investment trust. The Company is an investment company as defined in Section 833 of the Companies Act 2006.
The results for the year and the proposed transfer from revenue reserves are set out in the Income statement on page 36. The Directors do not recommend the payment of a dividend for the year (2016: nil).
The Directors in office during the year and at the date of this report, all of whom are non-executive, are shown below:
| Date of appointment | |
|---|---|
| K J Allen | 8 November 1994 |
| D A Horner | 1 May 2006 |
| I P Martin | 19 December 2013 |
In accordance with the UK Corporate Governance Code, that non-executive directors who have served on a board for more than nine years should be subject to annual re-election. All Directors have agreed to retire at the Annual General Meeting and, being eligible, will offer themselves for re-election.
The Board as a whole believes that Messrs Allen, Horner and Martin, collectively and individually, make active and effective contributions in their roles as Directors of the Company and that Shareholders should vote in favour of their re-election, respectively, for the following reasons:
Mr Horner is managing director of Chelverton Asset Management Limited, the Company's Investment Manager. He has considerable experience of analysing and working with smaller companies.
Mr Allen is a founding Director of the Company. He is a chartered accountant and has held a number of financial management positions within varied sectors where he has gained a thorough knowledge of smaller companies' managerial issues. His financial experience enables him to contribute significantly on accounting and reporting matters. Mr Allen is deemed wholly independent by the other Board members notwithstanding his length of service.
Mr Martin is also a founding Director of the Company although he was only re-elected to the Board in 2013. He has also held a number of management positions within varied sectors where he gained a thorough knowledge of smaller companies' managerial issues. His financial experience enables him to contribute significantly on accounting and reporting matters. Mr Martin is deemed wholly independent by the other Board members.
None of the Directors has a contract of service with the Company nor, save as disclosed below, has there been any other contract or arrangement between the Company and any Director at any time during the year. None of the Directors nor any persons connected with them had a material interest in any of the Company's transactions, arrangements or agreements during the year. Mr Horner is the managing director of Chelverton Asset Management Limited, the Company's Investment Manager and is also the chairman of CEPS PLC in which the Company has an investment. The three Directors also have personal holdings in Chelverton Asset Management Holdings in which Mr Horner is a director and in which the Company has an investment. Mr Martin is the chairman of Touchstar plc in which the Company has an investment.
The Directors had been notified of the following notifiable interests in the voting shares of the Company at 31 August 2017.
| Number of shares |
% of total voting rights |
|
|---|---|---|
| IONIC Investments SA | 968,539 | 15.19 |
| Miton Global Opportunities PLC | 600,000 | 9.41 |
| Mr D A Horner | 557,197 | 8.74 |
| Charles Stanley Group PLC | 335,736 | 5.26 |
| Mr K Allen | 221,762 | 3.48 |
At the date of this report and following the tender offer and buy back on 4 October 2017 and 26 October 2017, the Company has been advised of the following interests in shares and voting rights:
| Number of shares |
% of total voting rights |
|
|---|---|---|
| IONIC Investments SA | 968,539 | 17.44 |
| Miton Global Opportunities PLC | 600,000 | 10.80 |
| Mr D A Horner | 557,197 | 10.03 |
| Charles Stanley Group PLC | 310,000 | 5.58 |
| Mr K Allen | 221,762 | 3.99 |
At the year end and there were 6,377,088 Ordinary 1p shares in issue each carrying one vote in the event of a poll. No shares are held in Treasury.
On 24 September 2017 the Company announced the result of the tender offer and buyback offer issued to Shareholders on 4 September 2017. Under the tender offer, 749,765 Ordinary shares, representing 11.76% of the issued share capital with a nominal value of £7,498, were repurchased for cancellation on 4 October 2017, at a price of 76.73p per share for a total consideration of £605,000 including the tender offer costs. Following this buyback there were 5,627,323 Ordinary 1p shares in issue, each carrying one vote in the event of a poll. No shares are held in Treasury.
On 26 October 2017, the Company bought back 73,969 shares at a price of 73.5 pence per share, representing 1.31% of the issued share capital for a total cost of £54,600. At the date of this report there are now 5,553,354 shares in issue.
The Company's investments are managed by Chelverton Asset Management Limited ("CAM") under an agreement dated 28 June 2001. As previously stated above, Mr Horner is a director of CAM.
The Company pays CAM, in respect of its services as Investment Manager, an annual fee of 1% payable monthly in arrears.
The amount payable to CAM for the year ending 31 August 2017 was £50,000. At the year-end £4,800 was outstanding to CAM.
The appointment of CAM as Investment Manager may be terminated by either party giving to the other not less than twelve months' notice of such termination. There are no specific provisions contained within the Investment Management Agreement relating to the compensation payable in the event of termination of the agreement other than entitlement to fees, which would be payable within any notice period.
Under an agreement dated 21 December 2015, company secretarial services and the general administration of the Company are undertaken by ISCA Administration Services Limited for an annual fee of £40,000.
The Board, excluding Mr Horner, continually reviews the performance of the Investment Manager. In the opinion of the independent Directors the continuing appointment of CAM, as Investment Manager, on the terms outlined in the Investment Management Agreement dated 28 June 2001 and amended on 1 December 2006, is in the best interests of the Shareholders as a whole. Further, the Board is satisfied that CAM has the required skill and expertise to continue to manage the Company's portfolio and charges fees that are reasonable when compared with those of similar investment trusts.
The Company does not follow any code or standard on payment practice. However it is the Company's payment policy to obtain the best possible terms for all business and, therefore, there is no consistent policy as to the terms used. The Company agrees with its suppliers the terms on which business will be transacted, and it is the Company's policy to abide by those terms. At 31 August 2017 all suppliers' invoices received had been settled.
In assessing the going concern basis of accounting, the Directors have had regard to the guidance issued by the Financial Reporting Council. They have considered the current cash position of the Company, and forecast revenues for the current financial year. The Directors have also taken into account the Company's Investment Policy, which is described on page 10 and which is subject to regular Board monitoring processes, and is designed to ensure the Company holds sufficient liquid securities to meet possible cash flow needs.
The Company retains title to all assets held by its custodian. Note 15 to the financial statements sets out the financial risk profile of the Company and indicates the effect on its assets and liabilities of falls and rises in the value of securities, market rates of interest and changes in exchange rates.
The Directors believe, in the light of the controls and review processes noted above and bearing in mind the nature of the Company's business and assets, that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the accounts.
The Company's financial instruments comprise its investment portfolio, cash balances and debtors and creditors that arise directly from its operations such as sales and purchases awaiting settlement and accrued income. The financial risk management objectives and policies arising from its financial instruments and the exposure of the Company to risk are disclosed in note 15 to the financial statements.
The Notice of Annual General Meeting is set out on pages 56 to 59.
It is also proposed in Resolutions 7 and 8 that at the Annual General Meeting the Company be given renewed authority to buy back its own shares in the market and through a Tender Offer, which may either be cancelled or held in Treasury. Any decision regarding placing into Treasury, or issuing shares from Treasury will only be taken if, in the opinion of the Directors, the decision would be in the interest of Shareholders as a whole and at prices below NAV. Of the authority granted at the 2016 Annual General Meeting to repurchase shares other than under a tender offer, authority to repurchase 881,956 shares remained outstanding.
As at 7 November 2017, being the latest practicable date before the publication of this Annual Report, there are no outstanding warrants or options to subscribe for any Ordinary shares of the Company.
The Directors who held office at the date of approval of the Report of the Directors' confirm that so far as they are aware:
Following the Audit Tender Process undertaken, the Board agreed that the reappointment of Hazlewoods LLP as Auditors to the Company shall be recommended. Therefore a resolution will be put to the Shareholders at the Annual General Meeting proposing the re-appointment of Hazlewoods LLP as Auditors to the Company. Hazlewoods LLP have indicated their willingness to continue in office.
On behalf of the Board
Chairman 8 November 2017
The Board has prepared this report, in accordance with Schedule 8 to The Large and Medium-Sized Companies and Groups (Accounts and Reports) Regulations 2013. An ordinary resolution will be put to the members to approve the report at the forthcoming Annual General Meeting.
The law requires your Company's Auditors to audit certain disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditors' opinion is included in their report on pages 31 to 35.
The Company has three non-executive directors. The Board as a whole fulfils the function of a Remuneration Committee which considers and approves Directors' remuneration.
The Board is mindful of its obligation to set remuneration levels which will attract and maintain an appropriate calibre of individuals whilst simultaneously protecting the interests of Shareholders. The Company's Articles cap Directors' fees to £100,000 per annum. During the year to 31 August 2017, the Board reviewed the exisiting remuneration levels and recommended they remain unchanged from those to 31 August 2016.
It is the Board's policy that none of the Directors has a service contract. The terms of their appointment provide that a Director may be removed without notice and that compensation will not be due on leaving office.
The graph below shows the percentage growth over the past six years in the Company's NAV and share price compared to the growth in the MSCI Small Cap UK Index.
The Directors who served during the year received the following emoluments in the form of fees:
| 2017 £ |
2016 £ |
|
|---|---|---|
| K J Allen | 18,750 | 18,750 |
| I P Martin | 15,000 | 15,000 |
| D A Horner* | – | – |
| 33,750 | 33,750 |
*Mr Horner has waived his fees.
The interests of the Directors and their families in the Ordinary shares of the Company are set out below:
| At 31 August 2017 |
At 31 August 2016 |
|
|---|---|---|
| K J Allen | 221,762 | 221,762 |
| D A Horner | 557,197 | 557,197 |
| I P Martin | 1,200 | 1,200 |
There have been no changes to any of the above holdings between 31 August 2017 and the date of this report. None of the Directors has any non-beneficial interests to disclose.
| 2017 | 2016 | % Change | |
|---|---|---|---|
| Cost of shares purchased for cancellation under tender offer | – | 1,124,318 | n/a |
| Total remuneration paid to Directors | 33,750 | 33,750 | 0.00 |
As discussed on page 24, a Tender Offer of up to 15% of the Company's issued shares was offered to Shareholders post year end.
None of the Directors nor any persons connected with them had a material interest in the Company's transactions, arrangements or agreements during the year.
The Directors' Remuneration Report for the year ended 31 August 2016 was approved by Shareholders at the Annual General Meeting held on 15 December 2016. The votes cast by proxy were as follows:
| Number of votes | % of votes cast | |
|---|---|---|
| For | 332,182 | 96.22 |
| Against | 13,055 | 3.78 |
| Total votes cast | 345,237 | 100.00 |
| Number of votes withheld | 1,015 |
The Board's policy is that the remuneration of non-executive Directors should be sufficient to attract and retain directors with suitable skills and experience, and is determined in such a way as to reflect the experience of the Board as a whole, in order to be comparable with other organisations and appointments. It is intended that this policy will continue for the year ending 31 August 2018 and thereafter.
The fees for non-executive Directors are determined within the limits set out in the Company's Articles of Association. The approval of Shareholders would be required to increase the limits set out in the Articles of Association. Directors are not eligible for bonuses, pension benefits, share options, long-term incentive schemes or other benefits, as the Board does not consider such arrangements or benefits necessary or appropriate. Fees for any new Director appointed will be made on the same basis.
The policy was approved by Shareholders at the Annual General Meeting on 15 December 2015.
| Expected Fees for Year to 31 August 2018 |
Fees for Year to 31 August 2017 |
|
|---|---|---|
| Chairman's fee | 18,750 | 18,750 |
| Non-Executive Director fee | 15,000 | 15,000 |
This Directors' remuneration report was approved by the Board of Directors on 8 November 2017.
On behalf of the Board
Chairman
The Directors are responsible for preparing the Annual Report and the financial statements and have elected to prepare them in accordance with applicable United Kingdom law and United Kingdom Accounting Standards (United Kingdom Generally Accepted Accounting Practice). Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period.
In preparing the financial statements, the Directors are required to:
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy, at any time, the financial position of the Company and to enable them to ensure that the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company 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, Directors Remuneration Report and Corporate Governance Statement.
The Directors, to the best of their knowledge, state that:
The Directors are responsible for the maintenance and integrity of the corporate and financial information related to the Company including on the website of the Investment Manager www.chelvertonam.com.
Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
On behalf of the Board
Chairman 8 November 2017
To the members of Chelverton Growth Trust PLC
We have audited the financial statements of Chelverton Growth Trust PLC (the Company), which comprise the statement of financial position as at 31 August 2017 and the income statement, statement of changes in equity and statement of cash flows for the year then ended, and notes to the financial statements, including a summary of significant accounting policies. The financial reporting framework that has been applied in their preparation is applicable law and United Kingdom Accounting Standards, including Financial Reporting Standard 102 The Financial Reporting Standard applicable in the UK and Republic of Ireland (United Kingdom Generally Accepted Accounting Practice).
This report is made solely to the Company's members, as a body, in accordance with chapter 3 of part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company's members those matters we are required to state to them in an auditors' report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company and the Company's members as a body, for our audit work, for this report, or for the opinions we have formed.
In our opinion the financial statements:
We conducted our audit in accordance with International Standards on Auditing (UK) ((ISAs UK)) and applicable law. Our responsibilities under those standards are further described in the Auditor's Responsibilities for the audit of the financial statements section of our report. We are independent of the Company in accordance with the ethical requirements that are relevant to our audit of the financial statements in the UK, including the FRC's Ethical Standard, and we have fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the financial statements of the current period. These matters were addressed in the context of our audit of the financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Investment income is the Company's main source of revenue and is recognised when the Company's right to the return is established in accordance with the Statement of Recommended Practice. Our audit work included, but was not restricted to a detailed review of those sources of income recorded in the financial statements and further consideration of other potential sources of income. The Company's accounting policy on income is included in note 1 and its disclosures about income are included in note 2.
The Company operates a system of financial controls to mitigate its vulnerability to fraud and its financial statements to material error and is reliant upon the efficacy of these controls to ensure that its financial statements present a true and fair view. The financial statements contain a number of significant accounting estimates that require an element of judgement on behalf of management and that are, therefore, potentially open to manipulation. Our audit work included, but was not restricted to, a review of all significant management estimates and detailed consideration of all material judgements applied during the completion of the financial statements. We also reviewed material journal entries processed by management during the period. The Company's principal accounting policies are included in note 1.
The Company owns a number of unquoted fixed asset investments. The valuation of unquoted investments is subjective and requires an element of judgement on behalf of management and are, therefore, potentially open to manipulation. Our audit work included, but was not restricted to, a review of all significant management estimates and detailed consideration of all material judgements applied during the valuation of the unquoted investments at the balance sheet date.
The Company owns a number of quoted fixed asset investments. Whilst the valuation of quoted investments is not subjective, the investment portfolio is a significant and material balance in the financial statements. Our audit work included but was not restricted to understanding management's process to recognise and measure quoted investments, assessing the Company's policy for valuing these investments, comparing quoted investment valuations to an independent source of market prices, testing additions and disposals to transaction notes and bank statements, and confirming holdings to third party confirmations or share certificates.
We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any identified misstatements and in forming our opinion. For the purpose of determining whether the financial statements are free from material misstatement, we define materiality as the magnitude of a misstatement or an omission from the financial statements or related disclosures that would make it probable that the judgement of a reasonable person, relying on the information would have been changed or influenced by the misstatement or omission. We also determine a level of performance materiality, which we use to determine the extent of testing needed, to reduce to an appropriately low level the probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the financial statements as a whole.
We established materiality for the financial statements as a whole to be £109,000, which is 2.0% of the value of the Company's net assets. For income and expenditure items we determined that misstatements of lesser amounts than materiality for the financial statements as a whole would make it probable that the judgement of a reasonable person, relying on the information would have been changed or influenced by the misstatement or omission. Accordingly, we established materiality for revenue items within the income statement to be £34,000, which is 25% of the Company's net return on ordinary activities before taxation, excluding gains on investments at fair value.
Our audit approach was based on a thorough understanding of the Company's business and is risk-based. The day-today management of the Company's investment portfolio, the custody of its investments and the maintenance of the Company's accounting records is outsourced to third-party service providers. Accordingly, our audit work is focused on obtaining an understanding of, and evaluating, internal controls at the Company and the third-party service providers and inspecting records and documents held by the third-party service providers. We undertook substantive testing on significant transactions, balances and disclosures, the extent of which was based on various factors such as our overall assessment of the control environment, the effectiveness of controls over individual systems and the management of specific risks.
We have nothing to report in respect of the following matters in relation to which the ISAs (UK) require us to report to you where:
The Directors are responsible for the other information. The other information comprises the information included in the annual report, other than the financial statements and our auditor's report thereon. Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If we identify such material inconsistencies or apparent material misstatements, we are required to determine whether there is a material misstatement in the financial statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
In our opinion, based on the work undertaken in the course of the audit:
Under the Companies Act 2006 we are required to report to you if, in our opinion:
Under the Listing Rules we are required to review:
As explained more fully in the Statement of Directors' responsibilities (set out on page 30), the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view, and for such internal control as the Directors determine is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Directors either intend to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with ISAs (UK), we exercise professional judgement and maintain professional skepticism throughout the audit. We also:
• Conclude on the appropriateness of the Directors' use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
For and on behalf of Hazlewoods LLP, Statutory Auditor, Cheltenham 8 November 2017
for the year ended 31 August 2017
| 2017 | 2016 | ||||||
|---|---|---|---|---|---|---|---|
| Note | Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Gains on investments at fair value | 7 | – | 1,086 | 1,086 | – | 565 | 565 |
| Income | 2/9 | 5 | 574 | 579 | 27 | 100 | 127 |
| Investment management fee | 3 | (12) | (38) | (50) | (12) | (35) | (47) |
| Other expenses | 4 | (129) | (13) | (142) | (155) | (7) | (162) |
| Net return on ordinary activities before taxation |
(136) | 1,609 | 1,473 | (140) | 623 | 483 | |
| Taxation on ordinary activities | 5 | – | – | – | – | – | – |
| Net return on ordinary activities after taxation |
(136) | 1,609 | 1,473 | (140) | 623 | 483 | |
| Revenue | Capital | Total | Revenue | Capital | Total | ||
| Return per Ordinary share | 6 | (2.13)p | 25.23p | 23.10p | (1.86)p | 8.26p | 6.40p |
The total column of this statement is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
No operations were acquired or discontinued during the year.
A separate Statement of Other Comprehensive Income has not been prepared as all such gains and losses are included in the Income statement.
The notes on pages 40 to 54 form part of these accounts.
for the year ended 31 August 2017
| Called up Share Capital £'000 |
Share Premium Account £'000 |
Special Reserve £'000 |
Capital Reserve £'000 |
Capital Redemption Reserve £'000 |
Revenue Reserve £'000 |
Total £'000 |
|
|---|---|---|---|---|---|---|---|
| Year ended 31 August 2017 | |||||||
| 1 September 2016 | 64 | – | 1,506 | 1,536 | 125 | 756 | 3,987 |
| Net return after taxation for the year |
– | – | – | 1,609 | – | (136) | 1,473 |
| 31 August 2017 | 64 | – | 1,506 | 3,145 | 125 | 620 | 5,460 |
| Year ended 31 August 2016 | |||||||
| 1 September 2015 | 86 | 2,674 | – | 913 | 103 | 896 | 4,672 |
| Cost of shares purchased for cancellation under tender offer |
(22) | – | (1,149) | – | 22 | – | (1,149) |
| Cancellation of share premium account |
– | (2,674) | 2,674 | – | – | – | – |
| Costs of cancelling share premium account |
– | – | (19) | – | – | – | (19) |
| Net return after taxation for the year |
– | – | – | 623 | – | (140) | 483 |
| 31 August 2016 | 64 | – | 1,506 | 1,536 | 125 | 756 | 3,987 |
The notes on pages 40 to 54 form part of these accounts.
as at 31 August 2017
| 2017 | 2016 | ||
|---|---|---|---|
| Note | £'000 | £'000 | |
| Fixed assets | |||
| Investments at fair value | 7 | 4,213 | 3,925 |
| Current assets | |||
| Debtors | 9 | 683 | 6 |
| Cash at bank | 847 | 261 | |
| 1,530 | 267 | ||
| Creditors – amounts falling due within one year | 10 | (283) | (305) |
| Net current assets/(liabilities) | 1,247 | (38) | |
| Debtors – amounts falling due after one year | 9 | – | 100 |
| Net assets | 5,460 | 3,987 | |
| Share capital and reserves | |||
| Called up share capital | 11 | 64 | 64 |
| Special reserve | 12 | 1,506 | 1,506 |
| Capital reserve | 12 | 3,145 | 1,536 |
| Capital redemption reserve | 12 | 125 | 125 |
| Revenue reserve | 12 | 620 | 756 |
| Equity shareholders' funds | 5,460 | 3,987 | |
| Net asset value per Ordinary share | 13 | 85.63p | 62.53p |
The notes on pages 40 to 54 form part of these accounts.
These accounts were approved by the Board of Directors of Chelverton Growth Trust PLC and authorised for issue on 8 November 2017. They were signed on its behalf by
Kevin Allen
Chairman
for the year ended 31 August 2017
| 2017 | 2016 | |
|---|---|---|
| £'000 | £'000 | |
| Cash flows from operating activities | ||
| Net return on ordinary activities | 1,473 | 483 |
| Adjustment for: | ||
| Net capital return | (1,609) | (623) |
| Income credited to capital | 574 | 100 |
| Expenses charged to capital | (51) | (42) |
| Interest paid | 11 | 11 |
| (Decrease)/increase in creditors | (22) | 27 |
| Increase in debtors | (577) | (97) |
| Cash used in operations | (201) | (141) |
| Cash flows from investing activities | ||
| Purchase of investments | (535) | (420) |
| Proceeds from sales of investments | 1,333 | 2,082 |
| Net cash from investing activities | 798 | 1,662 |
| Cash flows used in financing activities | ||
| Cost of shares purchased for cancellation under tender offer | – | (1,149) |
| Cost of cancelling share premium account | – | (19) |
| New loan advanced | – | 300 |
| Capital repayment of loan | – | (450) |
| Interest paid | (11) | (11) |
| Net cash used in financing activities | (11) | (1,329) |
| Net increase in cash | 586 | 192 |
| Cash at the beginning of the year | 261 | 69 |
| Cash at the end of the year | 847 | 261 |
The notes on pages 40 to 54 form part of these accounts.
for the year ended 31 August 2017
The financial statements are prepared in accordance with applicable United Kingdom accounting standards, including Financial Reporting Standard 102 ("FRS 102"), the Companies Act 2006 and with the AIC Statement of Recommended Practice ("SORP") issued in November 2014, regarding the Financial Statements of Investment Trust Companies and Venture Capital Trusts. All the Company's activities are continuing.
Dividends receivable on quoted equity shares are included as revenue when the investments concerned are quoted 'ex-dividend'. Dividends receivable on equity and non-equity shares where no ex-dividend date is quoted are brought into account when the Company's right to receive payment is established. All other income is included on an accruals basis.
All expenses are accounted for on an accruals basis and charged through the revenue account in the Income statement except as follows:
All investments held by the Company are classified as '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 changes in the fair value of investments and impairment of investments recognised in the Income statement and allocated to capital. Realised gains and losses on investments sold are calculated as the difference between sales proceeds and cost.
Investments are recognised and derecognised on the trade date where a purchase or sale is under a contract whose terms require delivery within the timeframe established by the market concerned, and are initially measured at fair value.
For investments actively traded in organised financial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices at the close of business on the balance sheet date, without adjustment for transaction costs necessary to realise the asset. For investments traded on other financial markets such as the OTCQB, fair value is generally determined by reference to the share price at close of business on the balance sheet date, discounted to reflect the best estimate of the discount that may need to be applied for the shares to be sold as a single investment.
For investments that are not actively traded in organised financial markets, fair value is determined as set out below under the heading 'significant judgements and estimation uncertainty'.
for the year ended 31 August 2017
Preparation of the financial statements requires the Investment Manager to make significant judgements. The items in the financial statements where these judgements have been made are:
Investments that are not actively traded in organised financial markets, are valued at the Directors' estimate of the investment's net realisable value being their estimate of fair value. Generally, fair value will be at cost or, where applicable, at the most recent transaction price. In the case of direct investments in unquoted companies the following valuation technique is applied. Initial valuation is based on the transaction price. Where better indications of fair value become available, such as through subsequent issues of capital or dealings between third parties, the valuation is adjusted to reflect the new evidence. This represents the Directors' view of the amount for which an asset could be exchanged between knowledgeable willing parties in an arm's length transaction.
The following are accounted for in this reserve:
The Special reserve was created by the cancellation of the Share Premium account by order of the High Court on 13 January 2016. It can be used for the repurchase of the Company's own shares.
The charge for taxation, where relevant, is based on the revenue before taxation for the year. Tax deferred or accelerated can arise due to timing differences between the treatment of certain items for accounting and taxation purposes.
Full provision is made for deferred taxation under the liability method, on all timing differences not reversed by the balance sheet date, in accordance with FRS 102.
The tax effect of different items of income/gain and expenditure/loss is allocated between capital and revenue on the same basis as the particular item to which it relates, using the Company's effective rate of tax for the accounting period.
for the year ended 31 August 2017
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Income from investments | ||||||
| Income from LLP investments | – | 574 | 574 | 15 | 100 | 115 |
| UK net dividend income | 5 | – | 5 | 12 | – | 12 |
| Total income | 5 | 574 | 579 | 27 | 100 | 127 |
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Investment management fee | 12 | 38 | 50 | 12 | 35 | 47 |
The investment management fee is calculated at the rate of 0.0833% per month, equating to 1% per annum, of the gross value of funds under management and is payable monthly in arrears. At 31 August 2017 there was £4,800 outstanding (2016: £3,500).
| 2017 | 2016 | |
|---|---|---|
| £'000 | £'000 | |
| Administrative and secretarial services | 40 | 59 |
| Directors' remuneration | 34 | 34 |
| Audit fee | 17 | 19 |
| Other expenses | 51 | 50 |
| 142 | 162 |
| 2017 | ||||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Analysis of charge in period | ||||||
| Current Tax | – | – | – | – | – | – |
for the year ended 31 August 2017
The tax assessed for the period is lower than the standard rate of corporation tax in the UK of 19.58%. The differences are explained below:
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| Revenue £'000 |
Capital £'000 |
Total £'000 |
Revenue £'000 |
Capital £'000 |
Total £'000 |
|
| Theoretical tax at UK corporation tax rate of 19.58% (2016: 20.00%) |
||||||
| Corporation tax | (27) | 315 | 288 | (28) | 125 | 97 |
| Investment income not taxable | (1) | (112) | (113) | (5) | (20) | (25) |
| Non-taxable investment gains | – | (213) | (213) | – | (113) | (113) |
| Excess expenses for the period | 28 | 10 | 38 | 33 | 8 | 41 |
| Current tax charge for the period |
– | – | – | – | – | – |
At 31 August 2017 the Company had surplus management expenses of £4,117,000 (2016: £3,925,000) which have not been recognised as a deferred tax asset. This is because the Company is not expected to generate taxable income in a future period in excess of the deductible expenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses. Due to the Company's status as an investment trust and the intention to continue meeting the conditions required to obtain approval as an investment trust in the foreseeable future, the Company has not provided for deferred tax on any gains and losses arising on the revaluation or disposal of investments.
| 2017 | 2016 | |||||
|---|---|---|---|---|---|---|
| Revenue | Capital | Total | Revenue | Capital | Total | |
| pence | pence | pence | pence | pence | pence | |
| Basic | (2.13)p | 25.23p | 23.10p | (1.86)p | 8.26p | 6.40p |
Revenue return per Ordinary share is based on the net revenue loss on ordinary activities after taxation attributable of £136,000 (2016: £140,000) and on 6,377,088 (2016: 7,538,051) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
Capital return per Ordinary share is based on the net capital gain of £1,609,000 (2016: £623,000) and on 6,377,088 (2016: 7,538,051) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
Total return per Ordinary share is based on the total gain of £1,473,000 (2016: £483,000) and on 6,377,088 (2016: 7,538,051) Ordinary shares, being the weighted average number of Ordinary shares in issue during the year.
for the year ended 31 August 2017
| 2017 | 2016 | |||
|---|---|---|---|---|
| £'000 | £'000 | |||
| AIM | 3,641 | 2,398 | ||
| Unquoted | 550 | 1,443 | ||
| NASDAQ | 22 | 84 | ||
| 4,213 | 3,925 | |||
| AIM £'000 |
Unquoted* £'000 |
NASDAQ £'000 |
Total £'000 |
|
| Opening book cost | 3,155 | 1,612 | 166 | 4,933 |
| Opening investment holding losses | (757) | (169) | (82) | (1,008) |
| 2,398 | 1,443 | 84 | 3,925 | |
| Movements in the year: | ||||
| Purchases in the year | 535 | – | – | 535 |
| Sales – proceeds | (403) | (930) | – | (1,333) |
| – gains on sales | 213 | 605 | – | 818 |
| Movement in investment holding gains/(losses) | 898 | (568) | (62) | 268 |
| Closing valuation | 3,641 | 550 | 22 | 4,213 |
| Closing book cost | 3,500 | 1,287 | 166 | 4,953 |
| Closing investment holding gains/(losses) | 141 | (737) | (144) | (740) |
| Closing valuation | 3,641 | 550 | 22 | 4,213 |
| 2017 £'000 |
2016 £'000 |
|||
| Realised gains on sales | 818 | 1,900 | ||
| Movement in fair value of investments | 268 | (1,335) | ||
| Net gains on investments | 1,086 | 565 |
All quoted investments are made up of equity shares.
* Unquoted investments are valued at the Directors' estimate of their net realisable value, being their estimate of fair value.
for the year ended 31 August 2017
| Cost | Cost | Valuation | Valuation | |||||
|---|---|---|---|---|---|---|---|---|
| at 31 | at 31 | Unrealised | at 31 | at 31 | ||||
| August | August | Realised | gain/ | August | August | |||
| 2016 | Additions | Disposals | 2017 | gain | (loss) | 2017 | 2016 | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investment | ||||||||
| Anaxys Technology | 292 | – | – | 292 | – | (23) | – | 23 |
| Airways Engineering | ||||||||
| Loan stock | 45 | – | – | 45 | – | – | – | – |
| Ordinary B shares | 30 | – | – | 30 | – | – | – | – |
| Chelverton Asset Management |
||||||||
| Holdings | 2 | – | – | 2 | – | 59 | 200 | 141 |
| Closed Loop Recycling* | ||||||||
| Loan stock | 252 | – | – | 252 | – | – | – | – |
| Ordinary B shares | 84 | – | – | 84 | – | – | – | – |
| La Salle Education | 130 | – | – | 130 | – | – | – | – |
| Main Dental | ||||||||
| Loan stock | 75 | – | – | 75 | – | – | – | – |
| Ordinary B shares | 175 | – | – | 175 | – | (37) | 138 | 175 |
| Pedalling Forth | 150 | – | – | 150 | – | – | 150 | 150 |
| Security Research | ||||||||
| Group | 52 | – | – | 52 | – | 10 | 62 | 52 |
| Transflex Vehicle Rental |
325 | – | (325) | – | 605 | (577) | – | 902 |
| 1,612 | – | (325) | 1,287 | 605 | (568) | 550 | 1,443 |
During the year, the Company incurred transaction costs of £nil (2016: £nil) and £1,079 (2016: £667) on purchases and sales of investments, respectively. These amounts are included in 'Gains on investments at fair value' as disclosed in the Income statement.
for the year ended 31 August 2017
| Valuation | Valuation | |||||||
|---|---|---|---|---|---|---|---|---|
| Cost at | at | Cost at | at | Last | Net | Pre tax | ||
| 31 August | 31 August | 31 August | 31 August | Accounts | Assets/ | (loss)/ | ||
| 2017 | 2017 | 2016 | 2016 | Period End | Liabilities | Turnover | profit | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investment | ||||||||
| Anaxys Technology | 292 | – | 292 | 23 | 31 Jan '16 | 59 | – | – |
| Airways Engineering | 31 Oct '16 | (65) | – | – | ||||
| Loan stock | 45 | – | 45 | – | ||||
| Ordinary B shares | 30 | – | 30 | – | ||||
| Chelverton Asset Management Holdings* |
2 | 200 | 2 | 141 | 31 Mar '17 | 2,509 | 4,203 | 1,116 |
| Closed Loop Recycling** | 30 Jun '13 | (10,534) | 15,424 | (5,666) | ||||
| Loan stock | 252 | – | 252 | – | ||||
| Ordinary B shares | 84 | – | 84 | – | ||||
| La Salle Education | 130 | – | 130 | – | 31 Dec '16 | 580 | – | – |
| Main Dental | 31 Mar '16 | 806 | – | – | ||||
| Loan stock | 75 | – | 75 | – | ||||
| Ordinary B shares | 175 | 138 | 175 | 175 | ||||
| Pedalling Forth | 150 | 150 | 150 | 150 | 31 Dec '15 | (210) | – | – |
| Security Research Group |
52 | 62 | 52 | 52 31 Mar '17 | 10,964 | 6,793 | 575 |
* Consolidated figures
** In administration
A full listing of portfolio holdings is included in the portfolio review on pages 6 and 7.
for the year ended 31 August 2017
At 31 August 2017, the Company had a holding of 3% or more of the issued class of share that is material in the context of the accounts in the following investments:
| Number | issued | Issued share | |
|---|---|---|---|
| of shares | share capital | capital | |
| Security | |||
| Main Dental | 23,000 | 24.08 | 95,500 |
| CEPS | 2,871,250 | 21.75 | 13,199,940 |
| Pedalling Forth | 18,000 | 12.00 | 150,000 |
| Touchstar | 640,000 | 10.14 | 6,308,750 |
| La Salle Education | 160,000 | 5.07 | 3,158,179 |
| Plutus Powergen | 33,333,334 | 4.69 | 711,428,935 |
| Petards | 1,550,000 | 4.24 | 36,570,762 |
| Anaxsys Technology | 39,525 | 3.95 | 1,000,000 |
| 9. DEBTORS |
|||
| 2017 | 2016 | ||
| £'000 | £'000 | ||
| Amounts falling due within one year | |||
| Prepayments and other debtors | 683 | 6 | |
| Amounts falling due after one year Other debtors* |
– | 100 |
* The other debtor, in the previous year, related to capital income due from Parmenion Capital Partners LLP. This debtor, as detailed in the Investment Manager's overview on page 4, has increased to £674,000 and is now included in amounts falling due within one year. The proceeds were received on 23 October 2017.
| 2017 £'000 |
2016 £'000 |
|
|---|---|---|
| Accruals and other creditors | 33 | 55 |
| Short term loan | 250 | 250 |
| 283 | 305 |
On 17 June 2016, the Company entered in to a £250,000 loan agreement with Jarvis Investment Management Limited. Interest was payable monthly in arrears at the rate of 4.5% plus the Bank of England base rate.
At 31 August 2017, £250,000 was outstanding of which £125,000 was drawn down on 17 June 2016 and £125,000 on 8 August 2016. The loan was secured on the assets of the Company and was repayable on demand.
The loan was repaid in full on 25 October 2017.
for the year ended 31 August 2017
| 2017 £'000 |
2016 £'000 |
|
|---|---|---|
| Allotted, called up and fully paid: 6,377,088 (2016: 6,377,088) Ordinary shares of 1p each |
64 | 64 |
Details of the Tender Offer and share buy back post year end are given in note 18 on page 54.
At the Annual General Meeting of the Company falling in the calendar year 2020 and, if the Company has not then been liquidated, unitised or reconstructed, at each fifth annual general meeting of the Company convened by the Board thereafter, the Board shall propose an ordinary resolution that the Company should continue as an investment trust for a further five year period.
| Capital | |||||
|---|---|---|---|---|---|
| Special | Capital | redemption | Revenue | ||
| reserve* | reserve | reserve | reserve* | ||
| £'000 | £'000 | £'000 | £'000 | ||
| Year ended 31 August 2017 | |||||
| At 1 September 2016 | 1,506 | 1,536 | 125 | 756 | |
| Net gains on realisation of investments | – | 818 | – | – | |
| Movement in fair value of investments | – | 268 | – | – | |
| Income of a capital nature | – | 574 | – | – | |
| Costs charged to capital | – | (51) | – | – | |
| Retained net loss for the year | – | – | – | (136) | |
| At 31 August 2017 | 1,506 | 3,145 | 125 | 620 |
| Capital | ||||||
|---|---|---|---|---|---|---|
| Share premium |
Special reserve* |
Capital reserve |
redemption reserve |
Revenue reserve* |
||
| £'000 | £'000 | £'000 | £'000 | £'000 | ||
| Year ended 31 August 2016 | ||||||
| At 1 September 2015 | 2,674 | – | 913 | 103 | 896 | |
| Net gains on realisation of investments | – | – | 1,900 | – | – | |
| Movement in fair value of investments | – | – | (1,335) | – | – | |
| Cost of shares purchased for cancellation under tender offer |
– | (1,149) | – | 22 | – | |
| Cancellation of share premium account | (2,674) | 2,674 | – | – | – | |
| Costs of cancelling share premium account | – | (19) | – | – | – | |
| Income of a capital nature | – | – | 100 | – | – | |
| Costs charged to capital | – | – | (42) | – | – | |
| Retained net loss for the year | – | – | – | – | (140) | |
| At 31 August 2016 | – | 1,506 | 1,536 | 125 | 756 |
*Distributable reserves. The Special reserve and Revenue reserve may be used for the repurchase of the Company's own shares.
for the year ended 31 August 2017
The basic net asset value per Ordinary share is based on net assets of £5,460,000 (2016: £3,987,000) and on 6,377,088 (2016: 6,377,088) Ordinary shares, being the number of shares in issue at the year end.
The basic net asset value per Ordinary share has increased from that announced on 14 September 2017 as a result of an increase in the expected earn-out from Parmenion Capital Partners LLP.
The expected earn-out has risen from £600,000 to £674,000 resulting in an increase in the NAV of 1.16p from 84.47p to 85.63p.
At 31 August 2017 there were no capital commitments or contingent liabilities (2016: £nil).
The Company's financial instruments comprise securities and other investments, cash balances and debtors and creditors that arise from its operations, for example, in respect of sales and purchases awaiting settlement and debtors for accrued income.
The Company primarily invests in companies traded on AIM with a market capitalisation at the time of investment of up to £50 million. The Company finances its operations through its issued capital, existing reserves and the loan from the Custodian as detailed in note 10.
In following its investment objective, the Company is exposed to a variety of risks that could result in a reduction in the Company's net assets. These risks are market risk (comprising exchange rate 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:
Market price risk arises mainly from uncertainty about future prices of financial investments used in the Company's business. It represents the potential loss the Company might suffer through holding market positions by way of price movements other than movements in exchange rates and interest rates.
The Company's investment portfolio is exposed to market price fluctuations which are monitored by the Investment Manager who gives timely reports of relevant information to the Directors. Investment performance is also reviewed at each Board meeting.
The Directors are conscious of the fact that the nature of AIM investments is such that prices can be volatile. Investors should be aware that the Company is exposed to a higher rate of risk than exists within a fund which holds traditional blue chip securities.
Adherence to the investment objectives and the internal control limits on investments set by the Company mitigates the risk of excessive exposure to any one particular type of security or issuer.
for the year ended 31 August 2017
The Company's exposure to other changes in market prices at 31 August on its investments is as follows:
A 20% decrease in the market value of investments at 31 August 2017 would have decreased net assets attributable to Shareholders by 13 pence per share (2016: 12 pence per share). An increase of the same percentage would have an equal but opposite effect on net assets available to Shareholders.
| 2017 | 2016 | |
|---|---|---|
| £'000 | £'000 | |
| Fair value through profit or loss investments | 4,213 | 3,925 |
All of the Company's assets are in sterling and accordingly the only currency exposure the Company has is through the trading activities of its investee companies.
Changes in interest rates may cause fluctuations in the income and expenses of the Company.
The majority of the Company's financial assets are non-interest bearing. As a result, the Company'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 31 August of financial assets and financial liabilities to interest rate risk is as follows:
| 2017 £'000 |
2016 £'000 |
|
|---|---|---|
| Cash at bank | 847 | 261 |
| Loan from Custodian | 250 | 250 |
As the Company receives no interest on its bank balances and pays interest on its loan then the effect of an interest rate increase of 1% would decrease net revenue before taxation on an annualised basis by £2,500 (2016: £2,500). If there was a decrease in interest rates of 0.5% net revenue before taxation would increase by £1,250 (2016: £1,250). These calculations are based on balances as at 31 August 2017 and may not be representative of the year as a whole.
The loan was repaid on 25 October 2017.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the balance sheet date. Bankruptcy or insolvency of the custodian may cause the Company's rights with respect to securities held with the custodian to be delayed.
Over eighty six percent of the Company's portfolio are AIM quoted securities and a half of one percent NASDAQ quoted securities, which under normal conditions can be sold to meet funding commitments if necessary. These may however be difficult to realise in adverse market conditions. The Company's unquoted investments, representing the remaining thirteen percent of the portfolio, could be more difficult to realise as they are not tradable instruments.
for the year ended 31 August 2017
The Company's financial liabilities comprise of creditors as disclosed in note 10. All items are due within one year.
The Company's capital management objectives are to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK Index.
Primarily the Company finances its operations through its issued capital and existing reserves. However to help fund further investment the Company borrowed on a short term loan £250,000 from its Custodians, Jarvis Investment Management. At the year end an amount of £250,000 was outstanding. Further details are given in note 10.
All of the financial assets and liabilities of the Company are held at fair value.
The financial instruments of the Company fall into the following categories:
| 31 August 2017 | At amortised cost £'000 |
Loans and receivables £'000 |
Assets at fair value through profit and loss £'000 |
Total £'000 |
|---|---|---|---|---|
| Assets as per the Statement of Financial Position | ||||
| Investments | – | – | 4,213 | 4,213 |
| Debtors | – | 683 | – | 683 |
| Cash at bank | 847 | – | – | 847 |
| Total | 847 | 683 | 4,213 | 5,743 |
| Liabilities as per the Statement of Financial Position | ||||
| Creditors | 33 | 250 | – | 283 |
| Total | 33 | 250 | – | 283 |
| 31 August 2016 | At amortised cost £'000 |
Loans and receivables £'000 |
Assets at fair value through profit and loss £'000 |
Total £'000 |
| Assets as per the Statement of Financial Position | ||||
| Investments | – | – | 3,925 | 3,925 |
| Debtors | – | 106 | – | 106 |
| Cash at bank | 261 | – | – | 261 |
| Total | 261 | 106 | 3,925 | 4,292 |
| Liabilities as per the Statement of Financial Position | ||||
| Creditors | 55 | 250 | – | 305 |
| Total | 55 | 250 | – | 305 |
for the year ended 31 August 2017
In accordance with FRS 102, the Company must disclose the fair value hierarchy of financial instruments.
The fair value hierarchy consists of the following three classifications:
Classification A – Quoted prices in active markets for identical assets or liabilities.
Quoted in an active market in this context means quoted prices are readily and regularly available and those prices represent actual and regularly occurring market transactions on an arm's length basis.
Classification B – The price of a recent transaction for an identical asset, where quoted prices are unavailable.
The price of a recent transaction for an identical asset provides evidence of fair value as long as there has not been a significant change in economic circumstances or a significant lapse of time since the transaction took place. If it can be demonstrated that the last transaction price is not a good estimate of fair value (e.g. because it reflects the amount that an entity would receive or pay in a forced transaction, involuntary liquidation or distress sale), that price is adjusted.
Classification C – Inputs for the asset or liability that are based on observable market data and unobservable market data, to estimate what the transaction price would have been on the measurement data in an arm's length exchange motivated by normal business considerations.
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. For this purpose, the significance of an input is assessed against 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 classification C 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 be 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 classification A, include active listed equities. The Company does not adjust the quoted price for these instruments.
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 as B.
Investments classified within classification C have significant unobservable inputs. Classification C instruments include unquoted holdings. As observable prices are not available for these securities, the Company has used valuation techniques to derive the fair value. The Company has no classification B investments, and classification C investments consist only of unquoted holdings.
for the year ended 31 August 2017
| Classification A £'000 |
Classification B £'000 |
Classification C £'000 |
Total £'000 |
|
|---|---|---|---|---|
| At 31 August 2017 | ||||
| Equity investments | 3,663 | – | 550 | 4,213 |
| Total | 3,663 | – | 550 | 4,213 |
| Classification A £'000 |
Classification B £'000 |
Classification C £'000 |
Total £'000 |
|
| At 31 August 2016 | ||||
| Equity investments | 2,482 | – | 1,443 | 3,925 |
| Total | 2,482 | – | 1,443 | 3,925 |
The following table presents the movement in the classification C investments for the period ended 31 August 2017:
| Equity Investments £'000 |
|
|---|---|
| Opening balance | 1,443 |
| Purchases | – |
| Sales at cost | (325) |
| Total losses on investments in the Income Statement | (568) |
| Closing balance | 550 |
Under the terms of the agreement dated 28 June 2001, the Company has appointed Chelverton Asset Management Limited to be the Investment Manager. The fee arrangements for these services and fees payable are set out in the Report of the Directors on page 25 and in note 3 to the accounts. Mr Horner, a Director of the Company, is also a director of Chelverton Asset Management Limited and chairman of CEPS PLC, in which the Company has an investment. Mr Martin is the chairman of Touchstar plc, in which the Company holds an investment as set out on pages 6 and 7.
The three Directors also have individual holdings in Chelverton Asset Management Holdings, a company which has Mr Horner as a director and in which the Company also has a direct holding. The Directors' holdings are detailed below:
| Percentage of holding in shares % |
Ordinary shares held £'000 |
Percentage of Loan stock holding % |
Loan stock held £'000 |
|
|---|---|---|---|---|
| K J Allen | 1 | 1 | – | – |
| D A Horner | 56 | 56 | 93 | 1,000 |
| I P Martin | 2 | 2 | – | – |
for the year ended 31 August 2017
The Company's capital management objectives are:
The Company actively and regularly reviews and manages its capital structure to ensure an optimal capital structure, taking into consideration the future capital requirements of the Company and capital efficiency, projected operating cash flows and projected strategic investments opportunities. The management regards capital as total equity and reserves, for capital management purposes.
On 21 September 2017, the Company announced the result of the tender offer and buyback offer issued to Shareholders on 4 September 2017. Under the tender offer, 749,765 Ordinary shares, representing 11.76% of the issued share capital with a nominal value of £7,498, were repurchased for cancellation on 4 October 2017, at a price of 76.73p per share for a total consideration of £605,000 including the tender offer costs. Following this buyback there were 5,627,323 Ordinary 1p shares in issue.
On 23 October 2017, the Company received the proceeds of £674,000 from Parmenion Capital Partners shown as a debtor in note 9.
On 25 October 2017, the Company repaid the loan of £250,000 to Jarvis Investment Management as detailed in note 10.
On 26 October 2017, the Company bought back 73,969 shares at a price of 73.5 pence per share, representing 1.31% of the issued share capital for a total cost of £54,600. At the date of this report there are now 5,553,354 shares in issue.
Shareholders wishing to communicate directly with the Board should contact the Company Secretary who will pass on Shareholder details to the relevant Board member.
| Contact details | ||
|---|---|---|
| Company Secretary: | ISCA Administration Services Limited | Tel: 01392 487 056 Fax: 01392 891 155 [email protected] |
| Registrar: | Share Registrars Limited | Tel: 01252 821 390 www.shareregistrars.uk.com |
| Investment Manager: | Chelverton Asset Management Limited | Tel: 0207 222 8989 |
| Website: | www.chelvertonam.com | |
| Postal address details are shown on page 15. | ||
| Key dates | ||
| August | Company year end | |
| November | Annual results | |
| December | AGM |
April Half-year results
The Company's net asset value is released to the Stock Exchange monthly and is posted on the Investment Manager's website: www.chelvertonam.com.
This document is important and requires your immediate attention. If you are in any doubt as to what action you should take, you are recommended to seek your own financial advice from your stockbroker or other independent adviser authorised under the Financial Services and Markets Act 2000 immediately.
If you have sold or otherwise transferred all of your shares in Chelverton Growth Trust PLC, please forward this document as soon as possible to the purchaser or transferee or to the stockbroker, bank or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
Notice is hereby given that the Annual General Meeting of Chelverton Growth Trust PLC will be held at the offices of Chelverton Asset Management Limited, 11 Laura Place, Bath BA2 4BL at 12:00pm on Thursday, 14 December 2017, for the following purposes:
To consider and if thought fit to pass the following resolutions as ordinary resolutions:
The following resolutions will be proposed as special resolutions.
Save as expressly provided in this resolution, Terms and Conditions shall bear the same meanings in this resolution.
Registered Office By order of the Board Suite 8, Bridge House ISCA Administration Services Limited Courtenay Street Secretary Newton Abbot TQ12 2QS 8 November 2017
1. Pursuant to Regulation 41 of The Uncertificated Securities Regulations 2001 and paragraph 18(c) of The Companies Act 2006 (Consequential Amendments) (Uncertificated Securities) Order 2009, the Company specifies that only those members registered on the Company's register of members 48 hours before the time of the Meeting shall be entitled to attend and vote at the Meeting. In calculating the period of 48 hours mentioned above no account shall be taken of any part of a day that is not a working day.
6. The notes to the proxy form explain how to direct your proxy how to vote on each resolution or withhold their vote.
To appoint a proxy using the proxy form, the form must be:
In the case of a member which is a company, the proxy form must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company.
Any power of attorney or any other authority under which the proxy form is signed (or a duly certified copy of such power or authority) must be included with the proxy form.
7. CREST members who wish to appoint a proxy or proxies through the CREST electronic proxy appointment service may do so for the Annual General Meeting and any adjournment(s) thereof by using the procedures described in the CREST Manual.
CREST Personal Members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s) should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf.
In order for a proxy appointment or instruction made using the CREST service to be valid, the appropriate CREST message (a "CREST Proxy Instruction") must be properly authenticated in accordance with CRESTCO Limited's specifications and must contain the information required for such instructions, as described in the CREST Manual.
The message, regardless of whether it relates to the appointment of a proxy or to an amendment to the instruction given to a previously appointed proxy must, in order to be valid, be transmitted so as to be received by the issuer's agent 7RA36 by the latest time(s) for receipt of proxy appointments specified above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the issuer's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means.
CREST members and, where applicable, their CREST sponsors or voting service providers should note that CRESTCO Limited does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his or her CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of CREST by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001.
8. In the case of joint holders, where more than one of the joint holders purports to appoint a proxy, only the appointment submitted by the most senior holder will be accepted. Seniority is determined by the order in which the names of the joint holders appear in the Company's register of members in respect of the joint holding (the first-named being the most senior).
9. To change your proxy instructions simply submit a new proxy appointment using the methods set out above. Note that the cut-off time for receipt of proxy appointments (see above) also apply in relation to amended instructions; any amended proxy appointment received after the relevant cut-off time will be disregarded.
Where you have appointed a proxy using the hard-copy proxy form and would like to change the instructions using another hard-copy proxy form, please contact Share Registrars Limited on 01252 821 390.
If you submit more than one valid proxy appointment, the appointment received last before the latest time for the receipt of proxies will take precedence.
10. In order to revoke a proxy instruction you will need to inform the Company using one of the following methods:
By sending a signed hard copy notice clearly stating your intention to revoke your proxy appointment to Share Registrars Limited at The Courtyard, 17 West Street, Farnham, Surrey GU9 7DR or by facsimile transmission to 01252 719 232. In the case of a member which is a company, the revocation notice must be executed under its common seal or signed on its behalf by an officer of the company or an attorney for the company. Any power of attorney or any other authority under which the revocation notice is signed (or a duly certified copy of such power or authority) must be included with the revocation notice.
In either case, the revocation notice must be received by Share Registrars Limited no later than 48 hours (excluding non-business days) prior to the Meeting.
If you attempt to revoke your proxy appointment but the revocation is received after the time specified then, subject to the paragraph directly below, your proxy appointment will remain valid.
Appointment of a proxy does not preclude you from attending the Meeting and voting in person. If you have appointed a proxy and attend the Meeting in person, your proxy appointment will automatically be terminated.
11. As at 7 November 2017, the Company's issued share capital comprised 5,553,354 ordinary shares of 1p each. No ordinary shares are held in treasury. Each ordinary share carries the right to one vote at an Annual General Meeting of the Company and, therefore, the total number of voting rights in the Company as at 7 November 2017 is 5,553,354.
12. Except as provided above, members who have general queries about the Meeting should telephone the Company Secretary on 01392 487 056 (no other methods of communication will be accepted). You may not use any electronic address provided either in this notice of general meeting; or any related documents (including the chairman's letter and proxy form), to communicate with the Company for any purposes other than those expressly stated.
13. This notice, together with information about the total number of shares in the Company in respect of which members are entitled to exercise voting rights at the meeting at 7 November 2017 (the business day prior to the approval of this Notice) and, if applicable, any members' statements, members' resolutions or members' matter of business received by the Company after the date of this Notice, will be available on the Company's website: www.chelvertonam.com.
For use at the Annual General Meeting of Chelverton Growth Trust PLC
| I/We (Block Capitals please). | |
|---|---|
| . a member/members of Chelverton Growth Trust PLC ("the Company"), |
NUMBER OF SHARES HELD |
| hereby appoint the Chairman of the Meeting/ | |
| . | |
| as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be held at the offices of Chelverton Asset Management Limited, 11 Laura Place, Bath BA2 4BL at 12:00pm on Thursday, 14 December 2017, and at any adjournment thereof. |
Signature . .
Date . 2017
Please mark this box to indicate that this proxy appointment is one of multiple appointments being made (see note 7). Please indicate with an X in the spaces below how you wish your votes to be cast.
| ORDINARY RESOLUTIONS | FOR | AGAINST WITHHELD | ||
|---|---|---|---|---|
| RESOLUTION 1 | To adopt the financial statements for the year ended 31 August 2017, together with the Reports of the Directors and Independent Auditors thereon. |
|||
| RESOLUTION 2 | To receive and accept the Directors' remuneration report. | |||
| RESOLUTION 3 | To re-elect Mr K Allen as a Director of the Company. | |||
| RESOLUTION 4 | To re-elect Mr D Horner as a Director of the Company. | |||
| RESOLUTION 5 | To re-elect Mr I Martin as a Director of the Company. | |||
| RESOLUTION 6 | To re-appoint Hazlewoods LLP as Auditors to the Company and to authorise the Directors to determine their remuneration. |
|||
| SPECIAL RESOLUTIONS | ||||
| RESOLUTION 7 | To authorise the Company to renew its authority to make market purchases of its Ordinary shares. |
|||
RESOLUTION 8 To authorise the Company to purchase Ordinary shares under a Tender Offer.
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