CHELVERTON GROWTH TRUST CHELVERTON GROWTH TRUST PLC
Annual Report
for the year ended 31 August 2022
Contents
Investment Objective | 1 |
Company Summary | 2 |
Performance Statistics | 2 |
Strategic Report including: | |
- Chairman's Statement | 3 |
- Investment Manager's Overview | 5 |
- Portfolio Review | 7 |
- Portfolio Holdings | 8 |
- Portfolio breakdown by sector and by index | 9 |
- Section 172(1) Statement | 10 |
- Other statutory information | 13 |
Directors | 17 |
Investment Manager, Secretary and Advisers | 18 |
Corporate Governance Statement | 19 |
Report of the Directors | 27 |
Directors' Remuneration Report | 31 |
Statement of Directors' Responsibilities in respect of the Financial Statements | 34 |
Independent Auditors' Report | 35 |
Income Statement | 42 |
Statement of Changes in Equity | 43 |
Statement of Financial Position | 44 |
Statement of Cash Flows | 45 |
Notes to the Financial Statements | 46 |
Shareholder Information | 60 |
Notice of Annual General Meeting | 61 |
Form of Proxy | 64 |
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.
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Company summary
Benchmark | MSCI Small Cap UK Index |
Investment Manager | Chelverton Asset Management Limited |
See page 18 for further details | |
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 |
An investment company as defined under Section 833 of the Companies Act 2006.
REGISTERED IN ENGLAND No. 02989519
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Strategic Report
The Strategic Report section of this 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.
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Disclaimer
Chelverton Growth Trust plc published this content on 08 November 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 19 November 2022 02:18:06 UTC.