CHELVERTON GROWTH TRUST PLC
FINAL RESULTS FOR THE YEAR ENDED 31
AUGUST 2012
The full Annual Report and Accounts can be accessed via the
Company's website at www.chelvertonam.com or by contacting the
Company Secretary on telephone 01392 412122.
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 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 the Alternative Investment
Market 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).
Company summary
Benchmark MSCI Small Cap UK Index
Investment Manager Chelverton Asset Management Limited
Total net assets £4,212,000 as at 31 August 2012
Market capitalisation £3,209,000 as at 31 August 2012
Capital structure 11,784,283 Ordinary 1p shares carrying one
vote each. In addition there are 100,000
Ordinary 1p shares held in Treasury.
Performance statistics
Year ended Year ended
31 August 31 August
2012 2011 % change
Net assets £4,212,000 £4,049,000 4.03
Net asset value per share 35.74p 30.60p 16.80
("NAV")
MSCI Small Cap UK Index 230.262 201.584 14.23
Share price 27.00p 22.00p 22.73
Discount to net asset 24.45% 28.10%
value
Revenue loss after £(21,000) £(69,000)
taxation
Revenue loss per share (0.17)p (0.50)p
Capital gain per share 4.97p 6.42p
Chairman's statement
I am pleased to announce another year of good progress in which
Chelverton's net asset value per share has increased from 30.60p to
35.74p - an increase of 16.80%. The Board has recently switched to
a new benchmark index, the MSCI Small Cap UK Index, and in the same
period the MSCI Small Cap UK index rose by 14.23%.
Since the year end the net asset value per share has marginally
declined from 35.74p to 34.94p, a reduction of 2.24%.
The year has been dominated by reports and newspaper reports on
the state of the UK Economy. The phrase "doubledip" has moved
firmly into mainstream language alongside "quantitative easing" and
every minor change in employment levels and Gross Domestic Product
("GDP") is analysed and commented on with exaggerated fervour. When
the impact of the Diamond Jubilee national holiday, by itself, was
sufficient to determine whether the second quarter of 2012 was in
recession or not, we may conclude that the economy is stable,
neither growing nor declining by much.
However, analysts believe that the economy will show growth in
the second half of the year and given the portfolio is almost
totally based on UK focussed businesses this should be helpful to
the underlying performances of our companies.
As inflation falls, and remains subdued, then individuals' real
incomes will finally start to rise providing a welcome boost to the
beleaguered High Street and a consequent positive effect on
employment and GDP. In addition once the gradual cutting in
government spending appears and some limited growth is finally
evidenced then there may be scope for specific direct investment
with the focus being on infrastructure development.
Within our investment portfolio the companies have generally
made further progress over the past year either by growing profits,
or continuing to reduce debt or by putting in place trading
arrangements that will produce benefit in the future.
Given the continued increase in the net asset value and with no
bank debt the Board again feels that it is in the best interest of
all shareholders to proceed with a tender offer again this year. It
remains our intention to repeat this process each year so long as
circumstances warrant it.
George Stevens
Chairman
6 November 2012
Investment Manager's overview
As time passes, the "tin can" that is the Euro and the Euro
sovereign debt crisis gets kicked further down the road. Whilst
none of the fundamentals have changed significantly from last year
people have learnt to live with the status quo. There is, we
believe, a tacit acceptance that Greece will have to default at some point in
the future and the European banking system continues to deleverage
and to make provision against sovereign debt. The situation, whilst
not getting better, is very gradually becoming more manageable.
It is to be hoped that the extensive rhetoric from this
government about being "enterprise friendly" will actually manifest
itself in actions to support and help UK companies. Whether by
removing red-tape, cutting taxes on employment or ensuring that any
one of the numerous government backed and led initiatives finally
delivers its objectives. It is essential that confidence for UK
companies, and small companies in particular, starts to increase
such that they feel able to start investing.
For much of this year, we have been puzzled by the reports from
almost all of the companies we are invested in, and the numerous
companies that we meet incidental to this, that trading is gently
improving as compared to the official statistics which seem to
indicate that UK PLC is going backwards. This dichotomy, compounded
by the steadily reducing level of unemployment, seems to indicate
that the "green shoots" of economic growth whilst maybe not
currently evident are about to appear.
To this end we have been investing in the portfolio and have
introduced four new companies in the past six months and are
looking at a number of other opportunities.
Portfolio review
The year has essentially been one of reducing our shareholding
in the largest investment, IDOX, in order to make four new
investments, and to fund the tender offer approved by shareholders
in 2011.
The new investments made were: Transflex Vehicle Rental - a
start-up van leasing business which was profitable as planned after
four months of operation; Metalrax Group - an undervalued recovery
story in specialist engineering; Lombard Risk Management - a
company involved in industry-leading global risk management and
regulatory compliance solutions; and finally Anaxsys Technology - a
medical device company that develops and markets innovative
respiratory devices that meet clinical needs. In addition, a
further investment was made in CEPS to support the purchase of a
profitable, cash generative business operating in a niche
market.
Currently Titan Europe has "succumbed" to an all share offer
from Titan Inc, its largest shareholder, at a price which we find
very disappointing. In addition, in a similar style Petards Group
is in discussions with Water Hall plc a 29.9% shareholder as to
whether they will make a bid for the balance that they do not
own.
Security Research Group (previously called PSG Solutions)
announced another small tender offer at 225p, against a current
share price of 112p. This company has some very interesting
products which it is now looking to market beyond the UK.
We have maintained the valuations of our unquoted investments at
the same level as last year but feel that there may be scope to
revalue these in the near future as all of them are working hard to
create bigger, stronger, more valuable businesses.
Outlook
As further value is created in IDOX we would expect to continue
to trim the holding to a more balanced level and reinvest the
proceeds in undervalued companies in the portfolio and new
opportunities.
As ever we will continue to look to realise funds from holdings
when their valuations are more reflective of medium term prospects
and to reinvest into other stocks that remain substantially
undervalued.
David Horner
Chelverton Asset Management Limited
6 November 2012
Portfolio review
as at 31 August 2012
Investment Sector Valuation % of
£'000 total
AIM traded
Alliance Pharma Pharmaceuticals & 223 5.7
Biotechnology
Acquisition of the manufacturing, sales and distribution rights to
pharmaceutical products
Belgravium Technologies Technology Hardware & 350 9.0
Equipment
Software systems for warehousing and distribution
CEPS Support Services 227 5.8
Production and supply of components for the footwear industry; personal
protection equipment; production of printed lycra fabric; and services to the
direct mail industry
Datong Electronics Electronic & Electrical 64 1.6
Equipment
Develops, manages and supplies covert tracking and surveillance
systems
IDOX Software & Computer 1,057 27.3
Services
Software company specialising in the development of products for document and
information management
Lombard Risk Management Software & Computer 116 3.0
Services
Lombard Risk is one of the world's leading providers of
collateral management, liquidity analysis & regulatory
compliance software to financial organisations
LPA Group Electronic & Electrical 214 5.5
Equipment
Design, manufacture and marketing of industrial electrical
accessories
Metalrax Group Industrial Engineering 130 3.4
Specialist engineered products and consumer durables
MTI Wireless Edge Technology Hardware & 37 1.0
Equipment
Developer and manufacturer of sophisticated antennas and antenna
systems
Northbridge Industrial Industrial Engineering 131 3.4
Services
Consolidation vehicle for specialist industrial services
Petards Group Support Services 14 0.4
Development, provision and maintenance of advanced security
systems and related services
Richoux Group Travel & Leisure 47 1.2
Owner and operator of Richoux Restaurants
Sanderson Group Software & Computer 105 2.7
Services
Provides software and IT services
Security Research Group Support Services 149 3.8
Leading provider of Local Authority residential property
searches; provision of packaging solutions and technical
surveillance countermeasures components
Titan Europe Industrial Engineering 118 3.0
Manufacture of big wheels for construction, mining and
agricultural vehicles
Tristel Health Care Equipment & 124 3.2
Services
Healthcare business specialising in infection control in hospitals
Universe Group Support Services 14 0.4
Provision of credit card fraud prevention system, loyalty systems and retail
systems
Delisted
One Horizon Group Mobile Telecommunications 59 1.5
Provider of mobile satellite communications equipment and airtime
Unquoted
Closed Loop Recycling Support Services
Loanstock 0 0.0
Ordinary B shares 0 0.0
Operation of a plastic recycling plant
Parmenion Capital Partners Support Services 398 10.3
LLP
Provides fund-based discretionary fund management services to Independent
Financial Advisors
Anaxsys Technology Health Care Equipment & 200 5.2
Services
A medical device company for patient monitoring and screening
Transflex Vehicle Rental Support Services 100 2.6
Light commercial vehicle rental business
Portfolio valuation 3,877 100.0
Portfolio holdings
31 August 2012 31 August 2011
Investment Valuation % of Valuation % of
£'000 total £'000 total
IDOX 1,057 27.3 1,153 28.4
Parmenion Capital Partners LLP 398 10.3 436 10.8
Belgravium Technologies 350 9.0 312 7.7
CEPS 227 5.8 260 6.4
Alliance Pharma 223 5.7 264 6.5
LPA Group 214 5.5 78 1.9
Anaxsys Technology 200 5.2 0 0.0
Security Research Group 149 3.8 114 2.8
Northbridge Industrial Services 131 3.4 132 3.3
Metalrax Group 130 3.4 0 0.0
Tristel 124 3.2 160 3.9
Titan Europe 118 3.0 124 3.1
Lombard Risk Management 116 3.0 0 0.0
Sanderson Group 105 2.7 99 2.4
Transflex Vehicle Rental 100 2.6 0 0.0
Datong Electronics 64 1.6 62 1.5
One Horizon Group 59 1.5 32 0.8
Richoux Group 47 1.2 49 1.2
MTI Wireless Edge 37 1.0 60 1.5
Petards Group 14 0.4 11 0.3
Universe Group 14 0.4 10 0.2
Total 3,877 100 3,356 82.7
Portfolio breakdown by sector and by index
Portfolio by Sector Percentage
Software and Computer Services 33.0%
Support Services 23.3%
Technology Hardware & 10.0%
Equipment
Industrial Engineering 9.8%
Health Care Equipment & 8.4%
Services
Electronic & Electrical 7.1%
Equipment
Pharmaceutical & Biotechnology 5.7%
Mobile Telecommunications 1.5%
Travel & Leisure 1.2%
Portfolio by Index Percentage
AIM 80.4%
Unquoted 18.1%
Delisted 1.5%
Directors (all non-executive)
George Stevens (Chairman)*
Kevin Allen*
David Horner
* independent
Extracts 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 for the year
ended 31 August 2011. The Directors
are of the opinion that the Company has conducted its affairs for
the year ended 31 August 2012 so as
to be able to continue to obtain approval as an authorised
investment trust under Section 1158 of the Corporation Tax Act
2010. The Company is an investment company as defined in Section
833 of the Companies Act 2006.
New regulations for obtaining and retaining investment trust
status have been published by HMRC and came into force on
1 January 2012. An application for
approval as an investment trust must be made within 90 days after
the end of the first accounting period of the Company following
implementation of the new regime. The first accounting period
affected by the new regulations is the year ending 31 August 2013 and therefore application must be
made by 29 November 2013. If the
application is accepted, the Company will be treated as an
investment trust company for that period and for each subsequent
accounting period, subject to there being no subsequent serious
breaches of the regulations.
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 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 the Alternative Investment
Market or the investee company being sold. Its investment objective
is also 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
concentrated UK portfolio comprises between 20 to 35 securities.
The performance of the Company's investments is compared to the
MSCI Small Cap UK Index.
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 the Alternative Investment Market or the investee
company being sold.
It is the Company's policy not to invest in any listed
investment companies or listed investment trusts.
To comply with Listing Rules the Company's investment policy is
detailed above and should be read in conjunction with the
subsequent sections entitled investment strategy and the
performance analysis.
It is intended from time to time, when deemed appropriate, that
the Company will borrow for investment purposes. The Company,
however, does not currently have any borrowing facilities.
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.
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 earning 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 founders and employee owners of Chelverton
include experienced investment professionals with strong investment
performance records who believe rigorous fundamental research
allied to patience is the basis of long term investment
success.
The Chairman's statement and the Investment Manager's overview
give details of the Company's activities during the year under
review.
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
share price, the discount of the share price in relation to the NAV
and the ongoing charges.
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 2012 was 35.74p (2011:
30.60p).
The Company's share price at the year end was 27.00p (2011:
22.00p).
Principal risks
The Board considers the following to be the principal risks
facing the Company. Mitigation of these risks is sought and
achieved in a number of ways:
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 Management Engagement Committee meets as required to
review the performance of the Investment Manager. Further details
regarding the Company's various Committees and their duties are
given in the statement on corporate governance.
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
significantly fluctuate.
The Board recognises that it is in the long-term interests of
shareholders to reduce discount volatility and believes that the
prime driver of discounts over the longer term is performance. The
Board does not intend to adopt a precise discount target at which
shares will be bought back. However Ordinary shares will not be
bought back for cancellation or into Treasury at a discount to NAV
of less than 7.5%.
Regulatory risks
Relevant legislation and regulations which apply to the Company
include the Companies Act 2006, the Corporation Tax Act 2010
("CTA") and the Listing Rules of the Financial Services Authority
("FSA"). The Company has noted the recommendations of the UK
Corporate Governance Code and its statement of compliance appears
on page 17 of the 2012 Annual Report and Accounts. 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 FSA. 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
accounts 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 are given in note 18 to the accounts.
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 18 to the accounts.
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
above.
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 issue and purchase of its
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.
Results and dividend
The results for the year and the proposed transfer from revenue
reserves are set out in the income statement.
The Directors do not recommend the payment of a dividend for the
year.
Share Capital
On 28 December 2011 the Company
announced the result of the tender offer and buyback offer issued
to shareholders on 28 November 2011.
Under the tender offer, 1,323,334 Ordinary shares were repurchased
for cancellation on 23 January 2012.
On the same date, under the buyback offer, 25,727 Ordinary shares
were purchased for cancellation. On 31 May
2012 the Company purchased 100,000 Ordinary shares,
representing 0.84% of the shares in issue at 26p each for placing
in Treasury.
At the year end and as at the date of this report there were
11,784,283 Ordinary 1p shares in issue each carrying one vote in
the event of a poll and 100,000 Ordinary 1p shares in Treasury
representing 0.84% of the shares in issue.
Management and administration agreements
The Company's investments are managed by Chelverton Asset
Management Limited ("CAM") under an agreement dated 28 June 2001. As previously stated above, Mr
Horner is a director of CAM.
The Company pays CAM, in respect of its services as Investment
Manager, a monthly fee (exclusive of VAT) payable in arrears as
follows:
(i) for the first £15 million of funds under management at the
rate of 1/12 % per month of the gross value of funds under
management ("the Value");
(ii) for the next £15 million of funds under management, at the
rate of 1/16 % per month of the amount by which the Value exceeds
£15 million; and
(iii) for funds under management above £30 million, at the rate
of 1/24 % per month.
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 26 June
2001, company secretarial services and the general
administration of the Company are undertaken by Capita Sinclair
Henderson Limited ("CSH") for an annual fee in 2012 of £49,565.
Notice has been served on CSH and John
Girdlestone is to be appointed with effect from 1 January 2013.
Appointment of Chelverton Asset Management ("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. The reason for this view is that the investment performance
of the Company is satisfactory having regard to the exceptional
circumstances of the past couple of years. Further, the Board is
satisfied that CAM has the required skill and expertise to continue
to manage the Company's portfolio and charges fees that are
reasonable when compared with those of similar investment
trusts.
On behalf of the Board
George Stevens
Chairman
6 November 2012
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; and
● state whether applicable UK Accounting Standards have been
followed, subject to any material departures disclosed and
explained in the financial statements.
● 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 Directors, Directors'
remuneration report and statement on corporate governance.
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 net return of
the Company; and
• the Chairman's statement, Investment Manager's overview and
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
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
George Stevens
Chairman
6 November 2012
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 31 August 2012 and 2011 but is derived from those
accounts. Statutory accounts for 2011 have been delivered to the
registrar of companies, and those for 2012 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 (ii) did not contain a
statement under Section 498 (2) or (3) of the Companies Act 2006.
The text of the Auditor's report can be found in the Company's full
Annual Report and Accounts on the Investment Manager's website:
www.chelvertonam.com.
Income statement
for the year ended 31 August
2012
2012 2011
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments 7 - 647 647 - 913 913
at fair value
Income 2 77 - 77 77 - 77
Investment management 3 (10) (31) (41) (10) (31) (41)
fee
Refund of VAT on 4 40 - 40 - - -
administration and
secretarial fees
Other expenses 4 (128) - (128) (136) - (136)
Net return on (21) 616 595 (69) 882 813
ordinary activities
before taxation
Taxation on ordinary 5 - - - - - -
activities
Net return on (21) 616 595 (69) 882 813
ordinary activities
after taxation
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Return per Ordinary 6 (0.17) 4.97 4.80 (0.50) 6.42 5.92
share
The total column of this statement is the profit and loss
account of the Company.
All revenue and capital items in the above statement derive from
continuing operations.
No operations were acquired or discontinued during the year.
A separate statement of total recognised gains and losses has
not been prepared as all such gains and losses are included in the
income statement.
The notes below form part of these accounts.
Reconciliation of movements in shareholders' funds
for the year ended 31 August
2012
Called Share Capital Revenue
up share premium Capital redemption Revenue
capital account reserve reserve reserve Total
£'000 £'000 £'000 £'000 £'000 £'000
Year ended 31 August 2012
1 September 2011 132 2,674 (1,857) 57 3,043 4,049
Cost of shares purchased (13) - - 13 (406) (406) for
cancellation under
tender offer and buyback
offer
Cost of shares purchased - - - - (26) (26) for Treasury
Net return after taxation - - 616 - (21) 595
for the year
31 August 2012 119 2,674 (1,241) 70 2,590 4,212
Year ended 31 August 2011
1 September 2010 149 2,674 (2,739) 40 3,506 3,630
Cost of shares purchased (15) - - 15 (394) (394)
for cancellation under
tender offer
Shares cancelled from (2) - - 2 - -
Treasury
Net return after taxation - - 882 - (69) 813 for the year
31 August 2011 132 2,674 (1,857) 57 3,043 4,049
The notes below form part of these accounts.
Balance sheet
as at 31 August 2012
Note 2012 2011
£'000 £'000
Fixed assets
Investments at fair value 7 3,877 4,055
Current assets
Debtors 9 9 9
Cash at bank 364 30
373 39
Creditors - amounts falling due 10 (38) (45) within one year
Net current assets/(liabilities) 335 (6)
Net assets 4,212 4,049
Share capital and reserves
Called up share capital 11 119 132
Share premium account 12 2,674 2,674
Capital reserve 12 (1,241) (1,857)
Capital redemption reserve 12 70 57
Revenue reserve 12 2,590 3,043
Equity shareholders' funds 4,212 4,049
Net asset value per Ordinary share 16 35.74p 30.60p
The notes below form part of these accounts.
These accounts were approved by the Board of Directors of
Chelverton Growth Trust PLC and authorised for issue on
6 November 2012. They were signed on
its behalf by
George Stevens
Chairman
Statement of cash flows
for the year ended 31 August
2012
Note 2012 2011
£'000 £'000
Operating activities
Investment income received 71 76
Interest income received 6 -
Investment management fees paid (41) (41)
Administration and secretarial fees paid (49) (46)
Refund of VAT paid on administration and 40 -
secretarial fees
Other cash payments (86) (92)
Net cash outflow from operating 13 (59) (103)
activities
Investing activities
Purchases of investments (714) (156)
Sales of investments 1,539 597
Net cash inflow from investing 825 441
activities
Financing
Cost of shares purchased for Treasury (26) -
Cost of shares purchased for (406) (394)
cancellation under tender offer and
buyback offer
Net cash outflow from financing (432) (394)
activities
Increase/(decrease) in cash 15 334 (56)
The notes below form part of these accounts.
Notes to the accounts
as at 31 August 2012
1 ACCOUNTING POLICIES
Accounting convention
The accounts are prepared in accordance with UK Generally
Accepted Accounting Practice ("UK GAAP") and with the AIC Statement
of Recommended Practice ("SORP") issued in January 2009, regarding the Financial Statements
of Investment Trust Companies and Venture Capital Trusts. 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'. UK
dividends are disclosed excluding the associated tax credit.
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);
● management fees and bank 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 timeframe established by the market concerned,
and are initially measured at fair value.
For investments actively traded in organised financial markets,
fair value is generally determined by reference to Stock Exchange
quoted market bid prices at the close of business on the balance
sheet date, without adjustment for transaction costs necessary to
realise the asset.
For investments that are not actively traded in organised
financial markets, the investments are valued at the Directors'
estimate of its net realisable value being their estimate of fair
value. Generally, fair value will be at cost or, where applicable,
at the most recent transaction price. In the case of direct
investments in unquoted companies the following valuation technique
is applied. Initial valuation is based on the transaction price.
Where better indications of fair value become available, such as
through subsequent issues of capital or dealings between third
parties, the valuation is adjusted to reflect the new evidence.
This represents the Directors' view of the amount for which an
asset could be exchanged between knowledgeable willing parties in
an arm's length transaction.
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.
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 19: Deferred tax.
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.
2 INCOME
2012 2011
£'000 £'000
Income from investments
Income from LLP investments 10 -
UK net dividend income 61 77
71 77
Other income
Interest on VAT refund (see note 4) 6 -
Total income 77 77
Total income comprises:
Other income 10 -
Dividends 61 77
Interest 6 -
77 77
3 INVESTMENT MANAGEMENT FEE
2012 2011
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Investment management 10 31 41 10 31 41
fee
10 31 41 10 31 41
The investment management fee is calculated at the rate of 1/12%
per month of the gross value of funds under management and is
payable monthly in arrears. At 31 August
2012 there was £3,000 outstanding (2011: £3,000).
4 OTHER EXPENSES
2012 2011
Revenue Revenue
£'000 £'000
Administrative and secretarial 49 47
services
Directors' remuneration 34 38
Auditors' remuneration:
audit services 13 13
Other expenses 32 38
Refund of VAT on secretarial fees (40) -
88 136
J.P. Morgan Claverhouse ('Claverhouse') brought a case against
HMRC to challenge the VAT charged on fund management services paid
by investment companies.
In June 2007, the case was upheld
but the European Court of Justice concluding that fund management
services paid by investment companies be exempt from VAT.
In 2010, protective claims were submitted to HMRC by the Company
to request a repayment of VAT charged to investment companies on
administration and secretarial services and as a result, in
March 2012, the Company received a
repayment of VAT totalling £40,000 together with subsequent
interest of £6,000 which have been included within the revenue
column of the income statement and within 'Interest' in note 2 and
`Other expenses' within note 4.
5 TAXATION
2012 2012
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Analysis of charge
in period
Current tax - - - - - -
Factors affecting current tax charge for the period
The tax assessed for the period is lower than the standard rate
of corporation tax in the UK of 26% to 31
March 2012 and 24% from 1 April
2012. The differences are explained below:
2012 2011
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Loss)/profit on (21) 616 595 (69) 882 813
ordinary activities
before taxation
Theoretical tax at (5) 155 150 (19) 240 221
UK corporation tax
rate of 25.17%
(2011: 27.17%)
UK dividend income (14) - (14) (21) - (21)
not taxable
Non-taxable - (163) (163) - (248) (248)
investment gains
Excess expenses for 19 8 27 40 8 48
the period
Current tax charge - - - - - -
for the period
At 31 August 2012 the Company had
surplus management expenses of £3,419,000 (2011: £3,312,000) 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
2012 2011
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Basic (0.17) 4.97 4.80 (0.50) 6.42 5.92
Revenue return per Ordinary share is based on the net revenue
loss on ordinary activities after taxation attributable of £21,000
(2011: £69,000) and on 12,389,652 (2010: 13,742,414) Ordinary
shares, being the weighted average number of Ordinary shares in
issue less treasury shares during the year.
Capital return per Ordinary share is based on the net capital
gain of £616,000 (2011: £882,000) and on 12,389,652 (2011:
13,742,414) Ordinary shares, being the weighted average number of
Ordinary shares in issue less treasury shares during the year.
Total return per Ordinary share is based on the total gain of £595,000
(2011: £813,000) and on 12,389,652 (2011: 13,742,414) Ordinary shares, being the
weighted average number of Ordinary shares in issue less treasury shares during
the year.
7 INVESTMENTS
2012 2011
£'000 £'000
Delisted 59 43
AIM 3,120 3,576
Unquoted 698 436
3,877 4,055
AIM Delisted Unquoted* Total
£'000 £'000 £'000 £'000
Opening book cost 4,063 556 451 5,070
Opening investment (487) (513) (15) (1,015)
holding losses
3,576 43 436 4,055
Movements in the year:
Purchases at cost 414 - 300 714
Sales:
Proceeds (1,525) (14) - (1,539)
Gains/(losses) on sales 564 (376) - 188
Movement in investment 91 406 (38) 459
holding losses
Closing valuation 3,120 59 698 3,877
Closing book cost 3,516 166 751 4,433
Closing investment (396) (107) (53) (556)
holding losses
Closing valuation 3,120 59 698 3,877
2012 2011
£'000 £'000
Realised gains/(losses) on 188 (1,740)
sales
Movement in fair value of 459 2,653
investments
Net gains on investments 647 913
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.
Analysis of movements in unquoted investments
Valuation Valuation
Cost at at Cost at at
31 31 Movement 31 31
August August Realised in fair August August
2012 2012 in year value 2011 2011
Investment £'000 £'000 £'000 £'000 £'000 £'000
Anaxsys Technology 200 200 - - - -
Closed Loop
Recycling
Loan Stock 252 - - - 252 -
Ordinary B shares 84 - - - 84 -
Parmenion Capital 115 398 - (38) 115 436
Partners LLP
Transflex Vehicle 100 100 - - - -
Rental
751 698 - (38) 451 436
Transaction costs
During the year, the Company incurred transaction costs of
£2,034 (2011: £1,534) and £4,187 (2011: £301) on purchases and
sales of investments, respectively. These amounts are included in
`Gains on investments at fair value' as disclosed in the income
statement.
Details of material holdings in unquoted investments
Cost Valuation Cost Valuation
at at at at Last
31 31 31 31 accounts Pre tax
August August August August period Net (loss)/
2012 2012 2011 2011 end assets Turnover profit
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Investment
Anaxsys 200 200 - - 31/01/2012 9 8 (1,362)
Technology
Parmenion 115 398 115 436 31/03/2012 777 2,249 251
Capital
Partners
LLP **
Transflex 100 100 - - * - - -
Vehicle
Rental
* Transflex Vehicle Rental is a new start up so no historical
accounts exist. Its first year end will be 31 December 2012.
A full listing of portfolio holdings is included in the
portfolio review above.
8 SIGNIFICANT INTERESTS
At 31 August 2012 the Company had a holding of 3% or more of the issued class
of share that is material in the context of the accounts in the following
investments:
Number of Percentage of
shares issued share Issued share
Security held capital capital
CEPS, Ord 5p 1,750,000 16.182 10,814,310
Anaxsys Technology 5,000 9.371 53,358
Transflex Vehicle 100,000 8.000 1,250,000
Rental
Belgravium 5,000,000 4.954 100,936,547
Technologies, Ord 5p
In addition to the above, the Company has a 5.526% interest in
the capital and profits of Parmenion Capital Partners LLP.
9 DEBTORS - amounts falling due within one year
2012 2011
£'000 £'000
Prepayments and other 9 9
debtors
9 9
10 CREDITORS - amounts falling due within one year
2012 2011
£'000 £'000
Accruals and other 38 45
creditors
38 45
11 CALLED UP SHARE CAPITAL
2012 2011
£'000 £'000
Allotted, called up and fully paid:
11,884,283 (2011: 13,233,344) Ordinary shares 119 132 of 1p
each
There were 100,000 (2011: nil) shares held in Treasury at the
date of this report. The shares were purchased on 31 May 2012 at a cost of £26,000 and that amount
has been deducted from distributable reserves.
A tender offer to purchase up to 10 per cent of the Company's
issued share capital and a subsequent invitation to certain
minority shareholder to offer their shares for buyback to the
Company was announced on 28 November
2011. Pursuant to the tender offer and buyback offer
1,323,334 and 25,727 Ordinary shares were repurchased for
cancellation on 23 January 2012.
Duration of Company
At the annual general meeting of the Company falling in the
calendar year 2014 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.
If any such ordinary resolution is not passed, the Board shall
draw up proposals for the voluntary liquidation, unitisation or
other reorganisation of the Company for submission to the Members
of the Company at a general meeting to be convened by the Board for
a date not more than three months after the date of the meeting at
which such ordinary resolution was not passed.
The Board shall ensure that such proposals for the liquidation, unitisation or
reconstruction of the Company as are approved by special resolution are
implemented as soon as is reasonably practicable after the passing of such
resolution.
12 RESERVES
Capital
Share Capital redemption Revenue
premium reserve reserve reserve
Year ended 31 August 2012 £'000 £'000 £'000 £'000
At 1 September 2011 2,674 (1,857) 57 3,043
Net gains on realisation of - 188 - -
investments
Movement in fair value of - 459 - -
investments
Cost of shares purchased for - - - (406)
cancellation under tender
offer and buyback offer
Shares cancelled - - 13 -
Cost of shares purchased for - - - (26)
Treasury
Costs charged to capital - (31) - -
Retained net loss for the - - - (21)
year
At 31 August 2012 2,674 (1,241) 70 2,590
Capital
Share Capital redemption Revenue
premium reserve reserve reserve
Year ended 31 August 2011 £'000 £'000 £'000 £'000
At 1 September 2010 2,674 (2,739) 40 3,506
Net losses on realisation of - (1,740) - -
investments
Movement in fair value of - -
investments
Cost of share purchased for - - - (394)
cancellation under tender
offer
Shares cancelled - - 17 -
Costs charged to capital - (31) - -
Retained net loss for the - - - (69)
year
At 31 August 2011 2,674 (1,857) 57 3,043
13 RECONCILIATION OF NET return BEFORE FINANCECOSTS AND TAXATION
TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES
2012 2011
£'000 £'000
Net return before finance costs and 595 813
taxation
Net capital return before finance costs (616) (882)
Expenses charged to capital (31) (31)
Decrease in creditors and accruals (7) -
Increase in prepayments and accrued income - (3)
(59) (103)
14 RECONCILIATION OF NET CASH FLOW TO NET CASH
2012 2011
£'000 £'000
Net cash at 1 September 30 86
Net cash inflow/(outflow) 334 (56)
Net cash at 31 August 364 30
15 ANALYSIS OF CHANGES IN NET CASH
At At
31 August Cash 31 August
2011 flows 2012
£'000 £'000 £'000
Cash at bank 30 334 364
30 334 364
16 NET ASSET VALUE PER ORDINARY SHARE
The basic net asset value per Ordinary share is based on net
assets of £4,212,000 (2011: £4,049,000 and on 11,784,283 (2011:
13,233,344) Ordinary shares, being the number of shares in issue at
the year end, less Treasury shares.
17 CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES
At 31 August 2012 there were no
capital commitments or contingent liabilities (2011: £nil).
18 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 and existing reserves.
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 fund which holds traditional blue chip
securities.
Adherence to the investment objectives and the internal control
limits on investments set by the Company mitigates the risk of
excessive exposure to any one particular type of security or
issuer.
The Company's exposure to other changes in market prices at 31 August on its
investments is as follows:
2012 2011
£'000 £'000
Fair value through profit or 3,877 4,055
loss investments
A 20% decrease in the market value of investments at
31 August 2012 would have decreased
net assets attributable to shareholders by £775,000 (2011:
£811,000). 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:
2012 2011
£'000 £'000
Cash at bank 364 30
364 30
The effect of an interest rate increase of 1% would increase net
revenue before taxation on an annualised basis by £3,640 (2011:
£300). If there was a decrease in interest rates of 0.5% net
revenue before taxation would decrease by £1,820 (2011: £150).
These calculations are based on balances as at 31 August 2012 and may not be representative of
the year as a whole.
(iv) Credit risk
Credit risk is the risk of financial loss to the Company if the
contractual party to a financial instrument fails to meet its
contractual obligations.
The carrying amounts of financial assets best represent the
maximum credit risk exposure at the balance sheet date. Bankruptcy
or insolvency of the custodian may cause the Company's rights with
respect to securities held with the custodian to be delayed.
(v) Liquidity risk
The majority of the Company's assets are 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 18.1% of the portfolio, could be more difficult to
realise as they are not a tradable instruments.
(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 rather 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. At 31 August
2012 the Company had no borrowings.
(viii) Fair values of financial assets and financial
liabilities
All of the financial assets and liabilities of the Company are
held at fair value.
(ix) Financial instruments by category
The financial instruments of the Company fall into the following
categories.
31 August 2012
Assets
at fair
value
At through
amortised Loans and profit
cost receivables or loss Total
£'000 £'000 £'000 £'000
Assets as per the Balance sheet
Investments - - 3,877 3,877
Debtors - 9 - 9
Total - 9 3,877 3,886
Liabilities as per the Balance
sheet
Creditors 38 - - 38
38 - - 38
31 August 2011 Assets
at fair
value
At through
amortised Loans and profit
cost receivables or loss Total
£'000 £'000 £'000 £'000
Assets as per the Balance sheet
Investments - - 4,055 4,055
Debtors - 9 - 9
Total - 9 4,055 4,064
Liabilities as per the Balance
sheet
Creditors 45 - - 45
45 - - 45
Fair value hierarchy
In accordance with Financial Reporting Standard No.29:
'Financial Instruments: Disclosures', the Company must disclose the
fair value hierarchy of financial instruments.
The fair value hierarchy consists of the following three
levels:
Level 1 - Quoted prices (unadjusted) in active markets for
identical assets or liabilities (level 1).
An active market is a market in which transactions for the asset
or liability occur with sufficient frequency and volume on an
ongoing basis such that quoted prices reflect prices at which an
orderly transaction would take place between market participants at
the measurement date. Quoted prices provided by external pricing
services, brokers and vendors are included in level 1, if they
reflect actual and regularly occurring market transactions on an
arms length basis.
Level 2 - Inputs other than quoted prices included within level
1 that are observable for the asset or liability, either directly
(that is, as prices) or indirectly (that is, derived from
prices).
Level 2 inputs include the following:
• quoted prices for similar (i.e. not identical) assets in
active markets.
• quoted prices for identical or similar assets or liabilities
in markets that are not active. Characteristics of an inactive
market include a significant decline in the volume and level of
trading activity, the available prices vary significantly over time
or among market participants or the prices are not current.
• inputs other than quoted prices that are observable for the
asset (for example, interest rates and yield curves observable at
commonly quoted intervals).
• inputs that are derived principally from, or corroborated by,
observable market data by correlation or other means
(market-corroborated inputs).
Level 3 - Inputs for the asset or liability that are not based
on observable market data (unobservable inputs)
The level in the fair value hierarchy within which the fair
value measurement is categorised in its entirety is determined on
the basis of the lowest level input that is significant to the fair
value measurement in its entirety. 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 within 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 delisted/unquoted holdings.
Financial assets at fair value through profit or loss
At 31 August 2012
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 3,120 - 757 3,877
Total 3,120 - 757 3,877
At 31 August 2011
Level 1 Level 2 Level 3 Total
£'000 £'000 £'000 £'000
Equity investments 3,576 - 479 4,055
Total 3,576 - 479 4,055
The following table presents the movement in the level 3
investment for the period ended 31 August
2012:
Equity
investments
£'000
Opening balance 479
Purchases 300
Sales proceeds: (14)
Total losses included in gains on investments in the (8)
income statement
Closing balance 757
19 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 and in note 3 to the accounts. Mr Horner, a
Director of the Company, is also a director of Chelverton Asset
Management Limited and CEPS PLC, in which the Company has an
investment. During the year ended 31 August
2012 the Company added to its investment in CEPS PLC,
acquiring a further 750,000 shares at a cost of £150,000.
ANNUAL REPORT AND AGM
The foregoing represents extracts from the full text of the
Annual Report and Accounts for the year ended 31 August 2012. 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 on 13 December
2012 at 11.00am at the offices
of Speechly Bircham LLP, 6 New Street Square, London, EC4A 3LX
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at:
www.hemscott.com/nsm.do.
END
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on this announcement (or
any other website) is incorporated into, or forms part of, this
announcement.