REG - Chelverton Grwth Tst - Final Results
09/11/2022 07:01
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20221109:nRSI7451Fa&default-theme=true
RNS Number : 7451F Chelverton Growth Trust PLC 09 November 2022
CHELVERTON GROWTH TRUST PLC
LEI: 213800I86P8BAE6UVI83
FINAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2022
The full Annual Report and Accounts can be accessed via the Company's website
at www.chelvertonam.com (http://www.chelvertonam.com/) or by contacting the
Company Secretary on 01392 487056.
Investment objective
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).
At the Annual General Meeting held on 12 December 2019, Shareholders voted to
amend the Company's Investment Policy to state that the Company:
• may participate in a CEPS plc placing (if it were to
have one);
• will liquidate its various other investments when it
is felt appropriate to do so;
• will repay the outstanding Jarvis Loan; and
• will pay all outstanding liabilities.
Company summary
Benchmark MSCI Small Cap UK Index
Investment Manager Chelverton Asset Management Limited
Total net assets £2,961,000 as at 31 August 2022
Market capitalisation £1,693,000 as at 31 August 2022
Capital structure 5,460,301 Ordinary 1p shares carrying one vote each
Performance statistics
Year ended Year ended
31 August 2022 31 August 2021 % Change
Net assets £2,961,000 £3,146,000 (5.88)
Net asset value per share (NAV) 54.24p 57.62p (5.87)
MSCI Small Cap UK Index 370.37 502.41 (26.28)
Share price 31.00p 59.50p (47.90)
(Discount)/premium to net asset value (42.85)% 3.26%
Revenue loss after taxation £(111,000) £(107,000)
Revenue loss per share (2.04)p (1.95)p
Capital (loss)/gain per share (1.35)p 18.95p
Strategic Report
The Strategic Report section of the Annual Report has been prepared to help
Shareholders understand the operations of the Company and assess its
performance.
Chairman's Statement
I am not intending within this report to discuss in detail the litany of well
documented issues and problems currently facing the economies of the United
Kingdom and Europe. Through the almost daily turmoil seen in Government, our
politicians have managed to cause further angst and uncertainty. The world
looks a very different place today from that when I reported to you a year
ago, and certainly not for the better as had been hoped.
Notwithstanding this economic climate, I am pleased to report that the
Company's value has held up well on a relative value basis. Most of the
portfolio companies have made progress in the past year at an operating level.
However, in these febrile, risk averse times, the prices of the AIM traded
shares have not advanced to reflect these improvements.
As a result, the past year has been one of consolidation with a decrease in
the Company's net asset value per share from 57.62p to 54.24p - a reduction of
5.87%. In the same period the Company's benchmark index, the MSCI Small Cap UK
Index decreased by 26.28%.
The Manager's Report sets out in more detail the developments in the portfolio
over the past twelve months. I am pleased to say that there has been some
continued positive progress, and I wish to recognise the considerable efforts
by everyone working in our investee companies to achieve the best they can
within highly challenging conditions.
The Future
The Board is aware that the current structure of the Company is not
appropriate for enabling our objective of achieving the best long-term
outcomes for Shareholders.
To date the Company's strategy has been to return cash to Shareholders via
regular tender offers. Over a number of years £5.4 million has been returned
and 71% of the equity retired. This has been a successful strategy and has
been well received.
The Board feels that the reduced size of the Company and the small number of
investments, dictates that a further tender offer is inappropriate at this
stage. Consequently, we are now investigating other options to maximise the
return of funds to Shareholders. Nothing has been concluded at this time, but
as soon as this process is complete, the Board will formally report its
intended strategy to Shareholders. It is hoped that such a report will be
published within the next six months.
Recognising the need to minimise the ongoing cost base of the Company, Board
members have continued to provide their services at reduced salaries. In
addition, our Investment Manager, Chelverton Asset Management, has cut its
fees to zero.
The Board considers that there remains significant unrecognised value in the
portfolio and wishes to only sell investments once an appropriate value is
reflected.
To provide adequate liquidity for such a strategy to be pursued, we have put
in place a loan facility with David Horner who has provided a £215,000 loan
to the Company. The loan is interest free and unsecured and can be repaid by
the Company at any time or on 18 months notice from Mr Horner.
The Outlook
Despite the current market conditions in the UK, it is hoped that over the
next twelve months we will start to see a return to more stable conditions
which support a period of steady and sustainable growth. The market
dislocation caused by Covid-19 and associated lockdowns should begin to reduce
and the political and social fallout from the Ukrainian war will hopefully
abate.
If the matters referred to above are resolved, then the improved certainty and
clarity in the UK should encourage international investors back to invest in
UK companies.
The companies in the portfolio have shown great resilience over the past three
years, and it will be this strength that should enable them to prosper going
forward.
Kevin Allen
Chairman
8 November 2022
Investment Manager's Overview
Having emerged from the pandemic and associated lockdowns it had been hoped
that the UK economy would bounce back and recover to be ahead of its 2019
levels.
Unfortunately, the impact of the lockdowns and the furlough scheme have proved
to be far more disruptive than was ever considered likely. Supply chains have
not yet recovered to their pre-Covid levels of consistency or speed of
delivery. The increases in world demand, which have not been matched by
production and supply, have resulted in the high levels of price inflation
which we are now experiencing.
The portfolio is invested in small AIM traded or unquoted companies whose
business is largely conducted in the UK. Therefore, the strength and growth of
the UK economy is by far and away the most important determinant of our
underlying companies' success.
The UK economy is dynamic and will adapt to the challenges it faces. There
will always be opportunities for nimble businesses operating in niche markets
and the issues our companies are facing are evolving almost on a weekly basis.
The main problems currently faced are ones of supply of labour and input
materials. In addition, the price and perhaps availability of energy, both gas
and electricity, could be problematic over the winter period. However,
successful businesses will always find solutions; a longer-term answer to
these problems is to use less labour and energy by adopting new processes and
procedures, thereby becoming competitive within the changing environment.
Those of us of a certain age will recall previous periods, not unlike the one
we are now experiencing. We should take comfort that the UK economy came
through those times in a stronger and more efficient state. I do believe that
we will find a way through what now seems like an impenetrable fog of
uncertainty.
Portfolio review
I am pleased to say that the recovery that we talked about last year in CEPS
plc, the Company's largest holding (68.0% of the Company's portfolio), was
demonstrated in the CEPS results for the year ended 2021.This positive trend
continues with another solid performance reported in the latest interim
accounts for the six months ended June 2022. The full year accounts will enjoy
the benefits from a complete year's trading of several incremental
acquisitions made during the prior year by CEPS businesses. Thus, we remain
positive.
The Hickton Group, a subsidiary of CEPS plc, has deliberately increased its
cost base by putting in additional controls to manage its rapid growth over
the past two years and to provide the base to facilitate future growth.
The management team at Aford Awards acquired a large internet-based business
to expand the range of its offering. The integration of this business into the
Aford Awards operation near Maidstone is ongoing. It is hoped that further
acquisitions will be made in the next year.
Friedmans has seen a very welcome return to sales and profits growth. The
ongoing issues of the supply of lycra and currency volatility have however
been problematical. Milano International, Friedmans subsidiary, manufacturing
gymnastic sportswear, has struggled with a shortage of skilled labour.
However, the management team are working hard to improve efficiency and
therefore performance.
A cash offer was received for Universe at 12p per share which was a good price
and accelerated the returns from the new management team mentioned last year.
We stated at that time that we were expecting "to see significant progress in
the business and the share price".
Touchstar, as expected and heralded last year, has continued to improve its
performance. This was evidenced in its latest interim results with increases
in sales, gross margins, order book, profits, and consequently cash reserves.
It will be important for Touchstar to utilise its hard created balance sheet
strength to create value.
Petards has transformed its business to manage the reduction in sales in the
railway supply side. It has significantly increased gross margins which has
helped to manage the decline in its sales. Its objective two years ago was to
move to a higher value-added service with stronger recurring revenue. It is
well on the way to achieving this objective. As a measure of its undervalue,
some 50% of market capitalisation is represented by cash reserves.
La Salle Education continued to make progress and is developing its business
model on several fronts. We believe that the hard work of the past five years
will begin to be demonstrated in the next set of results.
SpaDental/Main Dental Partners (MDP) continues to be problematical. Having
lost an appeal to a negative judgement against it, MDP is waiting for the
legal process to conclude. I am reticent to put any timetable on when this
will be resolved and to the exact level of cash the Company could finally
receive.
Redecol had received an offer to invest significant sums into the company
however, the principal investor, tragically died in an accident and matters
are consequently now on hold.
Pedalling Forth (t/a Velovixen), like most internet retailers, struggled once
the lockdown environment ended. Sales were significantly lower and eventually
we decided to accept a modest cash offer for our shares, there being no better
alternative.
Outlook
The economic environment, at the time of writing, is looking very uncertain
and problematical. Things will improve, however, at this stage, it is
impossible to say when. The anticipated decline in inflation over the course
of 2023 should be a big help as will the normalisation of the energy supply
side. Gradually, the imbalance between demand and supply will disappear, not
least because the UK and Europe are forecast to enter a period of recession.
The resolution of these issues will happen slowly, and the financial
performance of our investee companies should begin to reflect the underlying
progress that they have made over the past three years. This progress will, in
the end, be evidenced by increases in their value.
David Horner
Chelverton Asset Management Limited
8 November 2022
Portfolio Review
as at 31 August 2022
Valuation % of
£'000 total portfolio
Investment Sector
AIM Traded
CEPS Support Services 2,075 68.0
Trading holding company for a number of companies supplying services and
products
Petards Group Support Services 180 5.9
Development, provision and maintenance of advanced security systems and
related services
Touchstar Technology Hardware and Equipment 595 19.5
Software systems for warehousing and distribution
Nasdaq Traded
Touchpoint Group Holdings Support Services - -
Provider of mobile satellite communications equipment and airtime
Unquoted
La Salle Education Support Services 182 5.9
A UK based company dedicated to providing on-line mathematics education
Redecol Healthcare, Equipment & Services 21 0.7
A medical device company focussed on the development of asthma monitoring
3,053 100.0
Portfolio Valuation
Portfolio Holdings
as at 31 August 2022
31 August 2022 31 August 2021
Valuation % of total Valuation % of total
Investment £'000 portfolio £'000 portfolio
CEPS 2,075 68.0 1,771 57.1
Touchstar 595 19.5 637 20.6
La Salle Education 182 5.9 182 5.9
Petards Group 180 5.9 190 6.1
Redecol 21 0.7 21 0.7
Touchpoint Group Holdings - - - -
Pedalling Forth * - - 240 7.7
Universe Group* - - 33 1.1
Zenith Energy * - - 24 0.8
Total 3,053 100.0 3,098 100.0
* Sold during the year.
Portfolio breakdown by sector and by index
Percentage of portfolio by sector
Support Services 79.8%
Technology Hardware & Equipment 19.5%
Healthcare, Equipment & Services 0.7%
Percentage of portfolio by index
AIM 93.4%
Unquoted 6.6%
All investments are in companies based in the United Kingdom.
Directors (all non-executive)
Kevin Allen (Chairman)⃰
David Horner
Ian Martin⃰
⃰Independent
Extracts from the Strategic Report
As explained within the Report of the Directors, 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 02989519) 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.
Board
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.
Investment Objective
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.
Investment Policy
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.
At the Annual General Meeting held on 12 December 2019, Shareholders voted to
amend the Investment Policy to state that the Company:
1. may participate in another CEPS plc placing (if it were to have one);
2. will liquidate its various other investments when it is felt
appropriate to do so;
3. will repay the outstanding Jarvis Loan; and
4. will pay all outstanding liabilities.
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, 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. Although the
Company's investment in CEPS represents 68.0% of the portfolio, it should be
noted that CEPS is diversified across a number of underlying businesses.
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
("CAM"), an investment manager focusing exclusively on achieving returns for
investors based on UK investment analysis of the highest quality. The founder
and employee owners of CAM 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.
Note 16 gives details of the Directors' interests in the Investment Manager.
The Chairman's Statement and the Investment Manager's Overview give details of
the Company's activities during the year under review.
Investment of Assets
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 at 31 August 2022 can be found above.
Environment Emissions
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.
Review of Performance and Outlook
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 and the Investment Manager's Overview.
Principal risks and uncertainties and risk management
As stated within the Corporate Governance Statement on pages 19 to 26 of the
Annual Report, 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.
Market risk
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 21 to 23 of the Corporate Governance Statement
in the Annual Report.
The Company is substantially dependent on the services of the Investment
Manager's investment team for the implementation of its Investment Policy.
The Company may hold a proportion of the portfolio in cash or cash equivalent
investments from time to time. Whilst during positive stock market movements
the portfolio may forego notional gains, during negative market movements this
may provide protection.
Discount volatility
As with many investment trust companies, discounts can fluctuate
significantly.
The Board recognises that 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%.
Regulatory risks
Relevant legislation and regulations which apply to the Company include the
Companies Act 2006, the Corporation Tax Act 2010 ("CTA"), the Alternative
Investment Fund Manager's 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 19 to 26 of the Annual Report. 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.
Financial risk
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.
Liquidity risk
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.
Financial instruments
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.
Statement regarding annual report and accounts
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.
Performance analysis using key performance indicators
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 below.
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 2022 was 54.24p
(2021: 57.62p), an increase of 5.87%. By comparison the benchmark fell by
26.28%.
The Company's share price at the year-end was 31.00p (2021: 59.50p).
Viability Statement
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 two years is the most appropriate time horizon to consider
the Company's viability and after careful analysis and consideration of the
future prospects as discussed in the Chairman's statement above, the Directors
believe that the Company is viable over a two-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.
Current and future developments
A review of the main features of the year is contained in the Chairman's
Statement and the Investment Manager's Overview.
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.
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.
Social, environmental and employee issues
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.
Alternative Investment Fund Manager's Directive ("AIFMD")
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 2022
Extract from the Report of the Directors
Status, objective and review
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 2022 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.
Management and administration agreements
The Company's investments are managed by Chelverton Asset Management Limited
("CAM") under an agreement dated 28 June 2001. Mr Horner is a director of CAM.
The Company previously paid CAM, in respect of its services as Investment
Manager, an annual fee of 0.5% of gross assets, payable monthly in arrears.
With effect from 1 September 2020, the Investment Manager has agreed to waive
its rights to receive an investment management fee. As a result, the amount
payable to CAM for the year ending 31 August 2022 was £nil (2021: £nil).
At the year-end £nil (2021: £nil) 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.
Appointment of CAM as the Investment Manager
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.
Going concern
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 subject to regular Board monitoring
processes, and is designed to ensure the Company holds sufficient liquid
securities to meet possible cash flow needs. The Board has also considered the
risk to the Company of the ongoing Covid-19 pandemic and the conflict in
Ukraine.
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.
On behalf of the Board
Kevin Allen
Chairman
8 November 2022
Statement of Directors' Responsibilities in respect of the Financial
Statements
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:
- select suitable accounting policies and then apply them consistently;
- make judgements and estimates that are reasonable and prudent;
- present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
- state whether applicable UK Accounting Standards have been followed, subject
to any material departures disclosed and explained in the financial
statements; and
- prepare the financial statements on the going concern basis unless it is
inappropriate to presume that the Company will continue in business.
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 financial statements, prepared in accordance with UK Generally
Accepted Accounting Practice, give a true and fair view of the assets,
liabilities, financial position and loss of the Company; and
· the Strategic Report incorporating the Chairman's Statement and
Investment Manager's Overview together with the Report of the Directors
include a fair review of the development and performance of the business and
the position of the Company together with a description of the principal risks
and uncertainties that it faces.
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 ww (http://www.chelvertonam.com/) w
(http://www.chelvertonam.com/) .chelvertonam.com.
(http://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
Kevin Allen
Chairman
8 November 2022
NON- STATUTORY ACCOUNTS
The financial information set out below does not constitute the Company's
statutory accounts for the years ended 31 August 2022 and 2021 but is derived
from those accounts. Statutory accounts for 2021 have been delivered to the
Registrar of Companies, and those for 2022 will be delivered in due course.
The Auditors have reported on those accounts; their report was (i)
unqualified, (ii) did not include a reference to any matters to which the
Auditors drew attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under Section 498 (2) or (3) of the
Companies Act 2006. The text of the Auditor's report can be found in the
Company's full Annual Report and Accounts on the Investment Manager's website:
www.chelvertonam.com.
Income Statement
for the year ended 31 August 2022
2022 2021
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments at fair value 7 - (72) (72) - 1,042 1,042
Income 2 9 - 9 10 - 10
Investment management fee 3 - - - - - -
Other expenses 4 (120) (2) (122) (117) (7) (124)
Net (loss)/gain on ordinary activities before taxation (111) (74) (185) (107) 1,035 928
Taxation on ordinary activities 5 - - - - - -
Net (loss)/gain on ordinary activities after taxation (111) (74) (185) (107) 1,035 928
Revenue Capital Total Revenue Capital Total
(Loss)/gain per Ordinary share 6 (2.04)p (1.35)p (3.39)p (1.95)p 18.95p 17.00p
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
The total column of this statement is the Statement of Total Comprehensive
Income of the Company prepared in accordance with applicable Financial
Reporting Standards ("FRS"). The supplementary revenue return and capital
return columns are prepared in accordance with the Statement of Recommended
Practice ("AIC SORP") issued in July 2022 by the Association of Investment
Companies.
The notes form part of these accounts.
Statement of Changes in Equity
for the year ended 31 August 2022
Called up Share Capital Capital Reserve** Capital Redemption Reserve Revenue Reserve* Total
Special Reserve*
£'000 £'000 £'000 £'000 £'000 £'000
Year ended 31 August 2022
1 September 2021 55 787 2,011 134 159 3,146
Net loss after taxation for the year - (74) - (111) (185)
-
31 August 2022 55 787 1,937 134 48 2,961
Year ended 31 August 2021
1 September 2020 55 787 976 134 266 2,218
Net gain/(loss) after taxation for the year - 1,035 - (107) 928
-
31 August 2021 55 787 2,011 134 159 3,146
* Distributable reserves. The Special Reserve and Revenue Reserve may be used
for the repurchase of the Company's own shares.
** The Capital Reserve has not been analysed between those amounts that are
distributable and those that are not distributable.
The notes form part of these accounts.
Statement of Financial Position
as at 31 August 2022
2022 2021
Notes £'000 £'000
Fixed assets
Investments at fair value 7 3,053 3,098
Current assets
Debtors 9 146 146
Cash and cash equivalents 10 34
156 180
Creditors - amounts falling due within one year 10 (248) (132)
Net current (liabilities)/assets (92) 48
Net assets 2,961 3,146
Share capital and reserves
Called up share capital 12 55 55
Special reserve 787 787
Capital reserve 1,937 2,011
Capital redemption reserve 134 134
Revenue reserve 48 159
Equity Shareholders' funds 2,961 3,146
Net asset value per Ordinary share 13 54.24p 57.62p
These financial statements were approved and authorised for issue by the Board
of Directors on 8 November 2022 and signed on their behalf by
Kevin Allen
Chairman
The notes form part of these accounts.
Statement of Cash Flows
For the year ended 31 August 2022
2022 2021
Note £'000 £'000
Cash flows used in operating activities
Net (loss)/gain on ordinary activities (185) 928
Adjustment for:
Net capital loss/(gain) 74 (1,035)
Expenses charged to capital (2) (7)
Interest paid 3 10
Change in creditors 1 (14)
Change in debtors - 4
Cash used in operations (109) (114)
Cash flows (used in)/from investing activities
Purchases of investments (160) -
Proceeds from sales of investments 133 339
Net cash (used in)/from investing activities (27) 339
Cash flows from/(used in) financing activities
Loan advanced 215 -
Capital repayment of loan (100) (220)
Interest paid (3) (10)
Net cash from/(used in) financing activities 112 (230)
Net decrease in cash (24) (5)
Cash at the beginning of the year 34 39
Cash at the end of the year 11 10 34
The notes form part of these accounts.
1 ACCOUNTING POLICIES
Accounting convention
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"), Financial Statements of Investment Trust Companies and
Venture Capital Trusts issued in July 2022. All the Company's activities are
continuing.
Income recognition
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.
Expenses
All expenses are accounted for on an accruals basis and charged through the
revenue account in the Income Statement except as follows:
- expenses which are incidental to the acquisition or disposal of an
investment are treated as capital and separately identified and disclosed (see
note 7); and
- management fees, bank interest and loan interest have been allocated 75% to
capital reserve and 25% to revenue reserve in the Income Statement, being in
line with the Board's expected long-term split of returns, in the form of
capital gains and income respectively, from the investment portfolio of the
Company.
Investments
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 time-frame
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 NASDAQ, 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'.
Cash and cash equivalents
Cash and cash equivalents includes funds held by the custodian on behalf of
the Company.
Current assets
All current assets, except for those held at fair value through profit or
loss, are subject to review for impairment at least at each reporting date.
• Current assets at amortised cost include debtors, prepayments and cash.
• Current assets held at fair value through profit or loss include the
deferred consideration from the SpaDental Share Purchase Agreement and loan
notes. Assets in this category are measured at fair value, with gains or
losses recognised in profit or loss.
Current liabilities
All current liabilities, except for those held at fair value through profit or
loss, are subject to review for impairment at least at each reporting date.
• Current liabilities at amortised cost include accruals and other
creditors.
• Current liabilities held at fair value through profit or loss include
short term loans. Liabilities in this category are measured at fair value,
being equivalent to par value.
Significant judgements and estimation uncertainty
Preparation of the financial statements requires the Directors 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 the most
recent transaction price. In the case of direct investments in unquoted
companies the 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, net asset value or funds
under management, 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 recoverability of the Spa Dental debtor as shown in note 9 and the
impairment of the interest has been considered by the Directors who believe
that the amounts are stated at fair value.
Capital reserve
The following are accounted for in this reserve:
· gains and losses on the realisation of investments;
· net movement arising from changes in the fair value of investments
that can be readily converted to cash without accepting adverse terms;
· realised exchange differences of a capital nature;
· expenses, together with related taxation effect, charged to this
account in accordance with the above policies; and
· net movement arising from the changes in the fair value of investments
that cannot be readily converted to cash without accepting adverse terms, held
at the year end.
Special 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.
Taxation
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.
Segmental reporting
The Directors are of the opinion that the Company is engaged in a single
segment of business, being investment business.
2 INCOME
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Income from investments
UK net dividend income - - - 14 - 14
Loan stock interest 9 - 9 (4) - (4)
Total income 9 - 9 10 - 10
3 INVESTMENT MANAGEMENT FEE
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management fee - - - - -
-
With effect from 1 September 2020, the Investment Manager has agreed to waive
the entitlement to a fee.
4 OTHER EXPENSES 2022 2021
£'000 £'000
Administrative and secretarial services 40 36
Directors' remuneration 20 20
Auditors' remuneration
- audit services 18 18
- non-audit services - -
Finance costs 3 10
Other expenses 41 40
122 124
5 TAXATION 2022 2021
Revenue Capital Total Revenue Capital Total
Analysis of charge in year £'000 £'000 £'000 £'000 £'000 £'000
Current tax - - - - - -
Factors affecting current tax charge for the year
The tax assessed for the year is lower than the standard rate of corporation
tax in the UK of 19%. The differences are explained below:
2022 2021
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Theoretical tax at UK corporation tax rate of 19% (2021: 19%)
Corporation tax (21) (14) (35) (20) 196 176
Investment income not taxable - - - (3) - (3)
Non-taxable investment losses/(gains) - 14 14 - (198) (198)
Excess expenses for the year 21 - 21 23 2 25
Current tax charge for the year - - - - - -
At 31 August 2022, the Company had surplus management expenses and losses of
£4,924,000 (2021: £4,813,000) 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.
6 RETURN PER ORDINARY SHARE
2022 2021
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Basic (2.04) (1.35) (3.39) (1.95) 18.95 17.00
Revenue return per Ordinary share is based on the net revenue loss on ordinary
activities after taxation attributable of £111,000 (2021: £107,000) and on
5,460,301 (2021: 5,460,301) 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 loss of £74,000
(2021: gain of £1,035,000) and on 5,460,301 (2021: 5,460,301) 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 loss of £185,000 (2021:
gain of £928,000) and on 5,460,301 (2021: 5,460,301) Ordinary shares, being
the weighted average number of Ordinary shares in issue during the year.
7 INVESTMENTS 2022 2021
£'000 £'000
Fully Listed - 24
Traded on AIM 2,850 2,631
Unquoted 203 443
NASDAQ - -
3,053 3,098
Fully Traded on
Listed AIM Unquoted* NASDAQ Total
£'000 £'000 £'000 £'000 £'000
Opening book cost 118 3,696 772 166 4,752
Opening investment holding losses (94) (1,065) (329) (166) (1,654)
24 2,631 443 - 3,098
Movements in the year:
Purchases - 160 - - 160
Sales - proceeds (24) (82) (27) - (133)
- losses on sales (94) (132) (273) - (499)
Movement in investment holding losses 94 273 60 - 427
Closing valuation - 2,850 203 - 3,053
Closing book cost - 3,642 472 166 4,280
Closing investment holding losses - (792) (269) (166) (1,227)
Closing valuation - 2,850 203 - 3,053
2022 2021
£'000 £'000
Realised (losses)/gains on sales (499) 338
Movement in fair value of investments 427 704
Net (losses)/gains on investments (72) 1,042
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.
Transaction costs
During the year, the Company incurred transaction costs of £nil (2021: £nil)
and nil (2021: £nil) on purchases and sales of investments, respectively.
Analysis of movements in unquoted investments
Cost at 31 August 2021 Additions Disposals Cost at 31 August 2022 Realised (loss)/gain Movement in unrealised losses Valuation at 31 August 2022 Valuation at 31 August 2021
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment
La Salle Education 180 - - 180 - - 182 182
Pedalling Forth 300 - (300) - (291) 60 - 240
Parmenion - - - - 18 - - -
Redecol 292 - - 292 - - 21 21
772 - (300) 472 (273) 60 203 443
Details of material holdings in unquoted investments
Cost at 31 August 2022 Valuation at 31 August 2022 Cost at 31 August 2021 Valuation at 31 August 2021 Equity Last accounts period end Net Turnover Pre-tax profit
Held assets * *
%
Investment £'000 £'000 £'000 £'000 £'000 £'000 £'000
La Salle Education 180 182 180 182 31/12/21 198 - -
5.2
Redecol 292 21 292 21 1.0 31/01/21 279 - -
* Where turnover and pre-tax profit are not disclosed the investee companies
are eligible to file filleted accounts at Companies House.
A full listing of portfolio holdings is included in the portfolio review
above.
8 SIGNIFICANT INTERESTS
At 31 August 2022, 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:
Security Number Issued
of shares Percentage of issued share capital
share capital
CEPS 5,460,301 26.00 21,000,000
Touchstar 850,000 10.03 8,475,077
La Salle Education 260,000 5.19 5,012,014
Petards 2,000,000 3.48 57,528,229
9 DEBTORS 2022 2021
£'000 £'000
Amounts falling due within one year
Prepayments and other debtors 8 8
Amounts due from investment proceeds * 138 138
146 146
* Represents the amount due from SpaDental in the form of deferred
consideration from a Share Purchase Agreement and an Assignment of Loan. From
the date of completion, interest accrues on the balance outstanding of the
purchase price at the rate of 3.5% above the base rate of Lloyds Bank, payable
six monthly in arrears. At 31 August 2022, interest is past due and impaired
and a total of £1,000 has been written off in the year under review.
10 CREDITORS - amounts falling due within one year
2022 2021
£'000 £'000
Accruals and other creditors 33 32
Short term loan 215 100
248 132
On 4 June 2018, the Company entered in to a £600,000 loan agreement with
Jarvis Securities plc. Interest was payable monthly in arrears at the rate of
4.5% plus the Bank of England base rate.
The loan was drawn down on 4 June 2018. Partial repayments were made of
£280,000 on 11 May 2020, £220,000 on 2 March 2021, £50,000 on 7 February
2022 and £50,000 on 31 May 2022. The loan has therefore been fully repaid.
On 16 September 2021, the Company entered into an interest free loan agreement
with Mr Horner. Drawdowns were made of £165,000 on 16 September 2021,
£25,000 on 30 May 2022 and £25,000 on 31 May 2022. At the year end,
£215,000 was outstanding. The loan is unsecured, interest free and can be
repaid by the Company at any time or on 18 months' notice from Mr Horner.
11 ANALYSIS OF CHANGES IN NET DEBT
At 1 September 2021 Cash At 31 August 2022
flows
£'000 £'000 £'000
Cash and cash equivalents
Cash 34 (24) 10
34 (24) 10
Borrowings
Debt due within one year (100) (115) (215)
Total (66) (139) (205)
12 CALLED UP SHARE CAPITAL 2022 2021
£'000 £'000
Allotted, called up and fully paid:
5,460,301 (2021: 5,460,301) Ordinary shares of 1p each 55 55
Duration of Company
At the Annual General Meeting of the Company on 10 December 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.
13 NET ASSET VALUE PER ORDINARY SHARE
The basic net asset value per Ordinary share of 54.24p (2021:57.62p) is based
on net assets of £2,961,000 (2021: £3,146,000) and on 5,460,301 (2021:
5,460,301) Ordinary shares, being the number of shares in issue at the year
end.
14 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
At 31 August 2022, there were no capital commitments outstanding (2021:
£160,132) and no contingent liabilities (2021: £nil).
15 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
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 David Horner 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:
i) Market risk - market price risk
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 company 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.
The Company's exposure to other changes in market prices at 31 August 2022 on
its investments is as follows:
2022 2021
£'000 £'000
Fair value through profit or loss investments 3,053 3,098
A 20% decrease in the market value of investments at 31 August 2022 would have
decreased net assets attributable to Shareholders by 11 pence per share (2021:
11 pence per share). An increase of the same percentage would have an equal
but opposite effect on net assets available to Shareholders.
(ii) Market risk - exchange rate risk
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.
(iii) Market risk - interest rate risk
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:
2022 2021
£'000 £'000
Amounts due from investment proceeds 138 138
Short term loan - (100)
The Company receives no interest on its bank balances currently receives no
interest from SpaDental Limited as stated in note 9 and pays no interest on
its loan so the effect of an interest rate increase of 1% would decrease net
revenue before taxation on an annualised basis by £nil (2021: £1,000). If
there was a decrease in interest rates of 0.1% (2021: 0.1%) net revenue before
taxation would increase by £nil (2021: £100). These calculations are based
on balances as at 31 August 2022 and may not be representative of the year as
a whole.
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.
(iv) Liquidity risk
Ninety three percent of the Company's portfolio is fully listed on the London
Stock Exchange or AIM 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 seven percent of the portfolio, could be more
difficult to realise as they are not tradable instruments.
v) Credit risk
The Company does not have any significant exposure to credit risk arising from
one individual party. Credit risk is spread across a number of counterparties,
each having an immaterial effect on the Company's cash flows should a default
happen. The Company assesses its debtors from time to time to ensure they are
neither past due or impaired. During the year under review, it has identified
the interest from SpaDental as being past due and impaired as detailed in note
9.
(vi) Maturity analysis of financial liabilities
The Company's financial liabilities comprise of creditors as disclosed in note
10. All items are due within one year.
(vii) Managing capital
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 £215,000 from Mr Horner. At the year-end an
amount of £215,000 remained outstanding. Further details are given in note
10.
(viii) Fair values of financial assets and financial liabilities
All financial assets and liabilities of the Company are held at fair value or
amortised cost which equates to fair value.
(ix) Financial instruments by category
The financial instruments of the Company fall into the following categories:
At amortised Loans and Assets at fair value
through
cost receivables profit or loss Total
31 August 2022 £'000 £'000 £'000 £'000
Assets as per the Statement of Financial Position
Investments - - 3,053 3,053
Debtors 8 138 - 146
Cash at bank and cash equivalents 10 - - 10
Total 18 138 3,053 3,209
Liabilities as per the Statement of Financial Position
Creditors 33 215 - 248
Total 33 215 - 248
Assets at fair value through
At
amortised Loans and
cost receivables profit or loss Total
31 August 2021 £'000 £'000 £'000 £'000
Assets as per the Statement of Financial Position
Investments - - 3,098 3,098
Debtors 8 138 - 146
Cash at bank and cash equivalents 34 - - 34
Total 42 138 3,098 3,278
Liabilities as per the Statement of Financial Position
Creditors 32 100 - 132
Total 32 100 - 132
Fair value hierarchy
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:
Level 1 - 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.
Level 2 - 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.
Level 3 - 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 Level 3 measurement. Assessing the significance of a
particular input to the fair value measurement in its entirety requires
judgement, considering factors specific to the asset or liability.
The determination of what constitutes 'observable' requires significant
judgement by the Company. The Company considers observable data to 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 Level 1, 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
Level 2.
Investments classified within Level 3 have significant unobservable inputs.
Level 3 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 Level 2 investments, and Level 3
investments consist only of unquoted holdings.
Financial assets at fair value through profit or loss
Level 1 Level 2 Level 3 Total
At 31 August 2022 £'000 £'000 £'000 £'000
Investments 2,850 - 203 3,053
Total 2,850 - 203 3,053
Level 1 Level 2 Level 3 Total
At 31 August 2021 £'000 £'000 £'000 £'000
Investments 2,655 - 443 3,098
Total 2,655 - 443 3,098
The following table presents the movement in the Level 3 investments for the
year ended 31 August 2022:
Investments
£'000
Opening balance 443
Sale proceeds (27)
Total losses on investments in the Income Statement (213)
Closing balance 203
16 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. The fee
arrangements for these services and fees payable are set out in the Report of
the Directors on page 28 of the Annual Report and in note 3 to the accounts.
Mr Horner, a Director of the Company, is also a director of Chelverton Asset
Management Limited a subsidiary of Chelverton Asset Management Holdings
Limited, and chairman of CEPS PLC in which the Company has a significant
investment.
Mr Martin is the chairman of Touchstar plc, in which the Company holds an
investment.
The three Directors also have individual holdings in Chelverton Asset
Management Holdings Limited, a company which has Mr Horner as a director and
in which the Company had a direct holding until sold on 26 February 2021. The
Directors' holdings are detailed below:
Percentage Ordinary shares
of holding held
in shares
% £'000
K J Allen 1 1
D A Horner* 55.25 55.25
I P Martin 2 2
* Directors and connected persons total holdings
As stated in note 10 the Company entered into a loan agreement with Mr Horner.
At the year end £215,000 remained outstanding.
17 CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Company's capital management objectives are:
· to ensure the Company's ability to continue as a going concern;
· to provide an adequate return to Shareholders;
· to support the Company's stability and growth;
· to provide capital for the purpose of further investments.
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.
ANNUAL REPORT AND AGM
The foregoing represents extracts from the full text of the Annual Report and
Accounts for the year ended 31 August 2022. The full Report will shortly be
available for download from the following website: www.chelvertonam.com
Copies will be posted to Shareholders shortly.
The AGM will be held at the offices of Chelverton Asset Management Limited,
Ground Floor Office, Basildon House, 7 Moorgate, London EC2R 6AF at 11.30 a.m.
on Thursday 15 December 2022. Shareholders should refer to page 29 of the
Annual Report regarding the arrangements for the Meeting.
NATIONAL STORAGE MECHANISM
A copy of the 2022 Annual Report will be submitted shortly to the National
Storage Mechanism ("NSM") and will be available for inspection at the NSM,
which is situated at:
https://data.fca.org.uk/#/nsm/nationalstoragemechanism
(https://data.fca.org.uk/#/nsm/nationalstoragemechanism)
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
or visit
www.rns.com (http://www.rns.com/)
.
RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
. END FR FSIFAAEESEFFRecent news on Chelverton Growth Trust
See all newsREG - Official List Chelverton Grwth Tst - Removal - Chelverton Growth Trust plc
AnnouncementREG - Stock Exch Notice Chelverton Grwth Tst - Cancellation - Chelverton Growth Trust PLC
AnnouncementREG - Chelverton Grwth Tst - Result of Meeting
AnnouncementREG - Official List Chelverton Grwth Tst - Suspension - Chelverton Growth Trust plc
AnnouncementREG - Chelverton Grwth Tst - Net Asset Value(s)
Announcement