TIDMCGW
RNS Number : 9632B
Chelverton Growth Trust PLC
07 April 2017
Chelverton Growth Trust PLC
Half Yearly Report
For the six months ended 28 February 2017
The Directors announce the unaudited Half Yearly Report for the
period 1 September 2016 to 28 February 2017.
Investment objective and policy
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 GBP50 million,
which the Manager believes to be at a "point of change". The
Company will 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 the net asset value per share at a higher rate than
other quoted smaller company trusts and the MCSI Small Cap UK
Index.
It is the Company's policy not to invest in any listed
investment companies (including listed investment trusts).
Investment strategy
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 focusing 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.
Chairman's Report
Your Company has made good progress in the first six months of
the current year with the Net Asset Value per share rising from
62.53p to 74.89p, an increase of 19.8%, outperforming the benchmark
indices.
Over the same period, the AIM All-share index rose by 14.6%
whilst the Company's comparative index, the MSCI Small Cap UK index
rose by 6.1%. The share price decreased from 82p to 75p in line
with its historic relationship to Net Asset Value.
The half-year results were achieved against a background of
economic and political uncertainty. The biggest issue in the world
of politicians and commentators is the imminent negotiation of the
United Kingdom's exit from the European Union on the best mutual
terms for the United Kingdom and our fellow Europeans. The
companies in which we are invested sell approximately 85% of their
goods and services within the UK, with only 5% going to the
European Union. Apart from the fluctuations in currency rates, they
do not consider the eventual leaving of the EU a material day to
day business concern.
In the past six months, in line with our new direction, we have
liquidated holdings in Alliance Pharma, LPA Group and Northbridge
Industrial Services in their entirety. The holding in Petards was
reduced following a sharp increase in its share price resulting
from a good stream of contract wins. Petards, is a UK manufacturer
supplying the rail industry, and has strong potential going
forward. The portfolio is thus becoming concentrated in a smaller
number of holdings. The investment in Anaxsys was reduced to nil as
it has restructured its business and now licences the intellectual
property it has created and owns. Until it receives a royalty
payment it is considered prudent to reduce the value to nil. On the
positive side, other unquoted holdings made good progress leading
to increased valuations for Transflex Vehicle Rental and Chelverton
Asset Management, the investment managers of this fund.
Your fund held a shareholding in Parmenion which was sold last
year to Aberdeen Asset Management plc. An initial payment was
received at completion, in addition we could be entitled to a
further sum, subject to the performance of the business. The
maximum amount of this further payment is capped at GBP673,652.
Based upon its current expectation, the Board has put a value in
these accounts of GBP350,000 additional consideration.
The fund took up its rights in a placing made by CEPS plc, an
AIM trading holding company for a number of specialist niche
businesses. The fund now owns 21.2% of this company.
Whilst Shareholders are aware that it is the Board's ongoing
intention to return funds to Shareholders by way of annual tenders
these can only be carried out in a meaningful and cost effective
manner when the fund has significant cash resources. At the moment
the Company is largely fully invested and so the eighth tender
offer will be delayed until significant sums have been realised
from one or more investments.
Looking through to the second half of the year, and onwards, the
economic and political agenda is going to be dominated by the daily
reporting of the negotiations to leave the European Union. For
investors in this fund, the state of the UK economy is far more
relevant. The sentiment of the so called "experts" is that the UK
economy will continue to grow steadily into the future and, as the
European Union itself starts to exhibit signs of increasing growth
this will only serve to help. The Board therefore feels that the
portfolio will continue to make good progress.
Kevin Allen
Chairman
7 April 2017
Interim management report
The important events that have occurred during the period under
review and the key factors influencing the financial statements are
set out in the Chairman's Report. The Board considers that the
principal risks and uncertainties facing the Company remain the
same as those disclosed in the Annual Report for the year ended 31
August 2016 on pages 11 and 12 and pages 48 to 50. These risks
include, but are not limited to, market risk, discount volatility
risk, regulatory risk, financial risk and liquidity risk.
Responsibility statement
The Directors are responsible for preparing the unaudited Half
Yearly Report in accordance with applicable law and regulations.
The Directors confirm that to the best of their knowledge:
The condensed set of financial statements for the six months to
28 February 2017, has been prepared in accordance with FRS 104
"Interim Financial Reporting", gives a fair view of the assets,
liabilities, financial position and profit of the Company; and
this Half Yearly Report includes a fair review of the
information required by;
rule 4.2.7R of the Disclosure and Transparency Rules being an
indication of important events that have occurred during the first
six months of the financial year and their impact on the condensed
set of financial statements; and a description of the principal
risks and uncertainties for the remaining six months of the year;
and
rule 4.2.8R of the Disclosure and Transparency Rules, being
related party transactions that have taken place in the first six
months of the current financial year and that have materially
affected the financial position or performance of the Company
during that period; and any changes in the related party
transactions described in the last Annual Report that could do
so.
This Half Yearly Report was approved by the Board of Directors
on 7 April 2017 and the above responsibility statement was signed
on its behalf by Kevin Allen, Chairman.
Portfolio review
as at 28 February 2017
The Company's portfolio is set out below.
Investment Sector Valuation % of
GBP'000 total
portfolio
AIM traded
CEPS Support Services 981 21.3
Trading holding company
for a number of companies
supplying services and products
Lombard Risk Computer &
Management Software Services 234 5.1
Lombard Risk is one of the
world's leading providers
of collateral management,
liquidity analysis and regulatory
compliance software to financial
organisations
Technology
MTI Wireless Hardware &
Edge Equipment 152 3.3
Developer and manufacturer
of sophisticated antennas
and antenna systems
Petards Group Support Services 405 8.8
Development, provision and
maintenance of advance security
systems and related services
Flexible Energy
Plutus Powergen Supply 767 16.7
Providers of management
infrastructure and expertise
to operate power plants
and provide flexible electricity
generation
Technology
Hardware &
Touchstar* Equipment 563 12.2
Software systems for warehousing
and distribution
Universe Group Support Services 53 1.2
Provision of credit fraud
prevention, loyalty and
retail systems
*Formerly Belgravium
Technologies
Nasdaq Traded
One Horizon
Group Support Services 40 0.9
Provider of mobile satellite
communications equipment
and airtime
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 159 3.5
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 Support Services
Ordinary B
Shares 138 3.0
Loan Stock - -
Operator of dental surgeries
Pedaling Forth General Retailers 150 3.3
Internet retailer of cycling
clothing for women
Security Research
Group Support Services 52 1.1
Leading provider of Local
Authority residential property
searches; provision of packaging
solutions
Transflex Vehicle
Rental Support Services 902 19.6
Light commercial vehicle
rental
Portfolio valuation 4,596 100.0
---------- ----------
Portfolio holdings
28 February 31 August
2017 2016
Valuation % of Valuation % of
total total
Investment GBP'000 portfolio GBP'000 portfolio
CEPS 981 21.3 614 15.6
Transflex Vehicle
Rental 902 19.6 902 23.0
Plutus Powergen 767 16.7 400 10.2
Touchstar* 563 12.2 406 10.4
Petards Group 405 8.8 335 8.5
Lombard Risk Management 234 5.1 201 5.1
Chelverton Asset
Management Holdings 159 3.5 141 3.6
MTI Wireless Edge 152 3.3 165 4.2
Pedalling Forth 150 3.3 150 3.8
Main Dental 138 3.0 175 4.5
Universe Group 53 1.2 73 1.9
Security Research
Group 52 1.1 52 1.3
One Horizon Group 40 0.9 84 2.1
Alliance Pharma
** - - 49 1.3
LPA Group ** - - 123 3.1
Northbridge Industrial
Services ** - - 32 0.8
Anaxsys Technology - - 23 0.6
Airways Engineering - - - -
La Salle Education - - - -
Total 4,596 100.0 3,925 100.0
---------- ---------- ---------- ----------
* Formerly Belgravium
Technologies
** Sold during the period
Portfolio breakdown by sector and by index
% of
Sector distribution total
Support Services 59.4
Flexible Energy Supply 16.7
Technology Hardware &
Equipment 15.5
Software & Computer Services 5.1
General Retailers 3.3
% of
Index distribution total
AIM 68.6
Unquoted 30.5
Nasdaq 0.9
Income statement (unaudited) for the six months to 28 February
2017
Six months Year to Six months
to to
28 February 31 August 2016 29 February
2017 2016
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Gains on
investments
at fair
value (note
4) - 630 630 - 565 565 - 292 292
Income
(note 2) 1 250 251 27 100 127 18 - 18
Investment
management
fee (6) (18) (24) (12) (35) (47) (7) (19) (26)
Other expenses (64) (4) (68) (155) (7) (162) (67) (6) (73)
--------- -------- -------- --------- -------- -------- --------- -------- --------
Net return
on ordinary
activities
before
taxation (69) 858 789 (140) 623 483 (56) 267 211
Taxation
on ordinary
activities - - - - - - - - -
--------- -------- -------- --------- -------- -------- --------- -------- --------
Net return
on ordinary
activities
after taxation (69) 858 789 (140) 623 483 (56) 267 211
--------- -------- -------- --------- -------- -------- --------- -------- --------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence pence pence pence
Return
per Ordinary
share* (1.08) 13.45 12.37 (1.86) 8.26 6.40 (0.65) 3.14 2.49
The total column of this statement is the profit and loss
account of the Company prepared in accordance with Financial
Reporting Standards ("FRS"). The supplementary revenue return and
capital return columns are prepared in accordance with the
Statement of Recommended Practice issued in November 2014 by the
Association of Investment Companies ("AIC SORP").
All revenue and capital items in the above statement derive from
continuing operations.
A separate Statement of Other Comprehensive Income has not been
prepared as all such gains and losses are included in the Income
Statement.
The revenue column of the Income Statement includes all income
and expenses. The capital column accounts for the realised and
unrealised profit or loss on investments and 75% of the management
fee and finance costs charged to capital.
* The return per Ordinary share is based on 6,377,088 (31 August
2016: 7,538,051; 29 February 2016: 8,501,650) shares, being the
weighted average number of shares in issue during the period.
Statement of changes in equity (unaudited)
for the six months to 28 February 2017
Called
up Share Capital
share premium Special Capital redemption Revenue
capital account reserve* reserve reserve reserve Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 28 February 2017
1 September 2016 64 - 1,506 1,536 125 756 3,987
Net return after
taxation for
the period - - - 858 - (69) 789
--------- ---------- ----------- ---------- ------------ ---------- ----------
28 February 2017 64 - 1,506 2,394 125 687 4,776
--------- ---------- ----------- ---------- ------------ ---------- ----------
Year to 31 August
2016
1 September 2015 86 2,674 - 913 103 896 4,672
Costs 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
--------- ---------- ----------- ---------- ------------ ---------- ----------
Six months to
29 February 2016
1 September 2015 86 2,674 - 913 103 896 4,672
Cancellation
of share premium
account - (2,674) 2,674 - - - -
Costs of cancelling
share premium
account - - (19) - - - (19)
Net return after
taxation for
the period - - - 267 - (56) 211
--------- ---------- ----------- ---------- ------------ ---------- ----------
29 February 2016 86 - 2,655 1,180 103 840 4,864
--------- ---------- ----------- ---------- ------------ ---------- ----------
*The special reserve was created by the cancellation
of the share premium account by order of the High
Court on 20 January 2016. The special reserve can
be used for the purchase of the Company's Ordinary
shares.
Statement of financial position (unaudited)
as at 28 February 2017
As at 28 As at 31 As at 29
February August February
2017 2016 2016
GBP'000 GBP'000 GBP'000
Fixed assets
Investments at fair
value (note 4) 4,596 3,925 3,546
Current assets
Debtors 353 6 13
Cash at bank 103 261 1,328
-------------------------- ------------------------- --------------------------
456 267 1,341
-------------------------- ------------------------- --------------------------
Creditors - amounts falling due within one year
Creditors (26) (55) (23)
Short-term loans (note
5) (250) (250) -
-------------------------- ------------------------- --------------------------
(276) (305) (23)
-------------------------- ------------------------- --------------------------
Net current
assets/(liabilities) 180 (38) 1,318
-------------------------- ------------------------- --------------------------
Debtors - amounts
falling
due after one year - 100 -
-------------------------- ------------------------- --------------------------
Net assets 4,776 3,987 4,864
-------------------------- ------------------------- --------------------------
Share capital and reserves
Called up share capital 64 64 86
Special reserve 1,506 1.506 2,655
Capital reserve 2,394 1,536 1,180
Capital redemption
reserve 125 125 103
Revenue reserve 687 756 840
-------------------------- ------------------------- --------------------------
Equity shareholders'
funds 4,776 3,987 4,864
-------------------------- ------------------------- --------------------------
Net asset value per
Ordinary share (note
6) 74.89p 62.53p 57.21p
-------------------------- ------------------------- --------------------------
Statement of cash flows (unaudited)
for the six months to 28 February 2017
Six months Six months
to 28 Year to to 29
February 31 August February
2017 2016 2016
GBP'000 GBP'000 GBP'000
Cash flows from operating activities
Net return on ordinary
activities 789 483 211
Adjustment for:
Net capital return (858) (623) (267)
Income credited to
capital 250 100 -
Expenses charged to
capital (22) (42) (25)
Interest paid 5 11 9
(Decrease)/increase
in creditors (29) 27 (5)
Increase in debtors (247) (97) (4)
Cash used in operations (112) (141) (81)
------------- ---------------- -------------
Cash flows from investing activities
Purchase of investments (444) (420) (50)
Sales of investments 403 2,082 1,818
------------- ---------------- -------------
Net cash (used in)/from
investing activities (41) 1,662 1,768
------------- ---------------- -------------
Cash flows from financing activities
Cost of shares purchased
for cancellation under - (1,149) -
tender offer
Costs of cancelling
share premium account - (19) (19)
New loans advanced - 300 50
Capital repayment
of loans - (450) (450)
Interest paid (5) (11) (9)
------------- ---------------- -------------
Net cash used in financing
activities (5) (1,329) (428)
------------- ---------------- -------------
Net (decrease)/increase
in cash (158) 192 1,259
------------- ---------------- -------------
Cash at the beginning
of the period 261 69 69
------------- ---------------- -------------
Cash at the end of
the period 103 261 1,328
------------- ---------------- -------------
1. ACCOUNTING POLICIES
Statement of compliance
The Company's Financial Statements for the period ended 28
February 2017 have been prepared under UK Generally Accepted
Accounting Practice (UK GAAP) and the 2014 Statement of Recommended
Practice, 'Financial Statements of Investment Trust Companies and
Venture Capital Trusts' ('the SORP') issued by the Association of
Investment Trust Companies.
The financial statements have been prepared in accordance with
the accounting policies set out in the statutory accounts for the
year ended 31 August 2016.
Financial information
The financial information contained in this report does not
constitute statutory accounts as defined in Section 434 of the
Companies Act 2006. The financial information for the period ended
28 February 2017 and 29 February 2016 have not been audited or
reviewed by the Company's Auditor pursuant to the Auditing
Practices Board guidance on such reviews. The information for the
year to 31 August 2016 has been extracted from the latest published
Annual Report and Financial Statements, which have been lodged with
the Registrar of Companies, contained an unqualified auditors'
report and did not contain a statement required under Section 498
(2) or (3) of the Companies Act 2006.
Going concern
The Company's assets consist mainly of equity shares in
companies which, in most circumstances are realisable within a
short timescale. The Directors believe 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.
2 Income
Six months Year Six months
to to to
28 February 31 August 29 February
2017 2016 2016
GBP'000 GBP'000 GBP'000
Income from investments
Income from LLP
investments 250 115 15
UK net dividend
income 1 12 3
Total income 251 127 18
------------ --------------- -----------------
3 Taxation
The tax charge for the six months to 28 February 2017 is nil
(year to 31 August 2016: nil;six months to 29 February 2016:
nil).
The Company has an effective tax rate of 0% for the year ending
31 August 2017. The estimated effective tax rate is 0% as
investment gains are exempt from tax owing to the Company's status
as an Investment Trust and there is expected to be an excess of
management expenses over taxable income.
4 Investments
28 31 August 29 February
February
2017 2016 2016
AIM Unquoted NASDAQ Total Total Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Opening
book cost 3,155 1,612 166 4,933 4,695 4,695
Opening
investment
holding
(losses)/gains (757) (169) (82) (1,008) 327 327
----------- -------------- ------------ ---------------- --------------- -----------------
2,398 1,443 84 3,925 5,022 5,022
Movements
in the
period:
Purchases
at cost 444 - - 444 420 50
Sales proceeds (403) - - (403) (2,082) (129)
Gains on
sales 213 - - 213 1,900 1,689
Movement
in investment
holding
gains/(losses) 503 (42) (44) 417 (1,335) (3,086)
Closing
valuation 3,155 1,401 40 4,596 3,925 3,546
----------- -------------- ------------ ---------------- --------------- -----------------
Closing
book cost 3,409 1,612 166 5,187 4,933 4,616
Closing
investment
holding
(losses)/gains (254) (211) (126) (591) (1,008) (1,070)
Closing
valuation 3,155 1,401 40 4,596 3,925 3,546
Analysis of
capital gains
and losses
Realised
gains on
sales 213 - - 213 1,900 1,689
Movement
in fair
value of
investments 503 (42) (44) 417 (1,335) (1,397)
----------- -------------- ------------ ---------------- --------------- -----------------
716 (42) (44) 630 565 292
----------- -------------- ------------ ---------------- --------------- -----------------
Fair value hierarchy
In accordance with FRS 102 and FRS 104 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.
Classification B - The price of a recent transaction for an
identical asset, where quoted prices are unavailable.
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.
Details of the Company's financial instruments are shown in the
Portfolio Review including financial instruments which fall into
level C shown under the section heading "Unquoted". A summary
reconciliation of the fair value movements of level C investments
is shown in the table above.
Financial assets at fair value through profit or loss;
Classification Classification Classification Total
A B C
GBP'000 GBP'000 GBP'000 GBP'000
At 28 February
2017
Equity investments 3,195 - 1,401 4,596
Total 3,195 - 1,401 4,596
--------------- --------------- --------------- --------
At 31 August
2016
Equity investments 2,482 - 1,443 3,925
Total 2,482 - 1,443 3,925
--------------- --------------- --------------- --------
At 29 February
2016
Equity investments 2,541 - 1,005 3,546
Total 2,541 - 1,005 3,546
--------------- --------------- --------------- --------
5 Short term loans
On 17 June 2016 the Company entered in to a GBP250,000 loan
agreement with Jarvis Investment Management Limited. Interest is
payable monthly in arrears at the rate of 4.5% above the Bank of
England base rate.
At the period end GBP250,000 is outstanding of which GBP125,000
was drawn down on 17 June 2016 and GBP125,000 on 8 August 2016. The
loan is secured on the assets of the Company and is repayable on
demand.
6 Net asset value
The basic net asset value per Ordinary share is based on net
assets of GBP4,776,000 (31 August 2016: GBP3,987,000; 29 February
2016: GBP4,864,000) and on 6,377,088 Ordinary shares (31 August
2016: 6,377,088; 29 February 2016: 8,501,650) being the number of
Ordinary shares in issue at the period end. No shares are held in
Treasury.
7 Related party transactions
Under the terms of the agreement dated 28 June 2001, the Company
has appointed Chelverton Asset Management Limited to be the
Investment Manager. 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 holds an investment as set out
above. Mr Martin is the Chairman of Touchstar plc in which the
Company holds an investment as set out above.
At 28 February 2017 there was GBP4,200 (31 August 2016:
GBP3,500; 29 February 2016: GBP4,000) payable to the Investment
Manager.
The three Directors also have individual holdings in Chelverton
Asset Management Holdings, a company which has Mr Horner as a
director and which the Company also has a direct holding. The
Directors' holdings are detailed below.
Percentage Percentage
Loan stock of Ordinary of ordinary
held loan stock shares held shares held
held
GBP'000 % GBP'000 %
K J Allen - - 1 1
D A Horner 615 96 56 56
I P Martin - - 2 2
The Company holds 2,000 shares in Chelverton Asset Management
Limited representing 2% of the voting rights.
Directors and Advisers
Directors Registrars and
Transfer Office
Kevin Allen (Chairman) Share Registrars
Limited
David Horner The Courtyard
Ian Martin 17 West Street
Farnham
Surrey GU9 7DR
Tel: 01252 821
390
www.shareregistrars.uk.com
Investment Manager Auditors
Chelverton Asset Management Hazlewoods LLP
Limited
111 Laura Place Windsor House
Bath BA2 4BL Bayshill Road
Tel: 01225 483 030 Cheltenham GL50
3AT
Secretary and Registered Custodian and
Office Banker
ISCA Administration Limited Jarvis Investment
Management Limited
Suite 8, Bridge House 78 Mount Ephraim
Courtenay Street Royal Tunbridge
Wells TN4 8BS
Newton Abbot Tel: 01892 510
515
Devon TQ12 2QS
Tel: 01392 487 056
Email: cgw@iscaadmin.co.uk
Information about the Company can be obtained at the Investment
Manager's website at www.chelvertonam.com. Neither the contents of
the manager's website nor the contents of any website accessible
from hyperlinks on this announcement (or any other website
incorporated into, or forms part of this announcement.
An investment company as defined under Section 833 of the
Companies Act 2006.
REGISTERED IN ENGLAND No 2989519
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BDGDSSUGBGRR
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