We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Chelverton Uk Dividend Trust Plc | LSE:SDV | London | Ordinary Share | GB0006615826 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.50 | 3.26% | 142.50 | 140.00 | 145.00 | 142.50 | 138.00 | 138.00 | 63,083 | 13:36:15 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Mgmt Invt Offices, Open-end | -2.34M | -3.93M | -0.1886 | -7.56 | 29.71M |
Hot Features
Premium
TIDMSDV TIDMSDVZ
CHELVERTON SMALL COMPANIES DIVID TRUST PLC
Annual Report for the full year to 30 April 2017
A copy of the Company's Annual Report for the year ended 30 April 2017 will
shortly be available to view and download from the dedicated page on Chelverton
Asset Management's website http://chelvertonam.com. Neither the contents of
this website nor the contents of any website accessible from hyperlinks on this
website (or any other website) is incorporated into or forms part of this
announcement.
Printed copies of the Annual Report will be sent to shareholders shortly.
Additional copies may be obtained from the Corporate Secretary - Maitland
Administration services Limited, Springfield Lodge, Colchester Road,
Chelmsford, Essex CM2 5PW.
The Annual General Meeting of the Company will be held on Thursday 7 September
2017 at 11.00am.
The following text is copied from the Annual Report & Accounts.
Strategic Report
The Strategic Report comprising pages 1 to 13 has been prepared in accordance
with Section 414A of the Companies Act 2006 ('the Act'). Its purpose is to
inform shareholders and help them understand how the Directors have performed
their duty under Section 172 of the Act to promote the success of the Company.
Chelverton Small Companies Dividend Trust PLC ('the Company') and its
subsidiary Chelverton Small Companies ZDP PLC ('SCZ') together form the Group.
The Group's funds are invested principally in smaller capitalised UK companies.
The portfolio comprises companies listed on the Official List and companies
admitted to trading on AIM. The Group does not invest in other investment
trusts or in unquoted companies. No investment is made in preference shares,
loan stock or notes, convertible securities or fixed interest securities.
Financial Highlights
Capital 30 April 30 April % change
2017 2016
Total net assets (GBP'000) 41,724 35,077 18.96
Net asset value per Ordinary share 248.35p 211.95p 17.18
Mid-market price per Ordinary share 230.00p 190.50p 20.73
Discount 7.39% 10.12%
Net asset value per Zero Dividend Preference 131.65p 123.87p 6.28
share
Mid-market price per Zero Dividend 136.00p 127.50p 6.67
Preference share
Premium 3.30% 2.93%
Year Year
ended ended
30 April 30 April
Revenue 2017 2016 % change
Return per Ordinary share 12.17p 11.23p 8.37
Dividends declared per Ordinary share 7.95p 7.50p 6.00
Special Dividends declared per Ordinary 1.86p 1.60p 16.25
share
Total Return
Total return on Group's net assets* (prior 21.95% 10.92%
to deduction for provision of Zero Dividend
Preference share entitlement)
Total return on Group's net assets* 23.46% 12.42%
Ongoing charges** 1.93% 1.88%
* Adding back dividends paid in the year.
** Calculated in accordance with the Association of Investment Companies
('AIC') guidelines. Based on total expenses, excluding finance costs, for the
year and average net asset value.
Chairman's Statement
Results
The Company's consolidated net asset value per Ordinary share as at 30 April
2017 was 248.35p (2016: 211.95p), an increase over the year of 17.2%, and the
ordinary share price on that date was 230.00p per share (2016: 190.50p). In the
year total dividends of 9.81p per Ordinary share were paid and proposed,
including a special dividend of 1.86p. During the same period the MSCI Index
increased by 20.2% and the MSCI Small Cap Index increased by 20.2%. Total
assets less current liabilities at the year end, excluding Zero Dividend
Preference shares but including revenue reserves, were GBP54.0m (2016: GBP45.6) and
the total net assets were GBP41.7m (2016: GBP35.1m).
The Company was launched on 12 May 1999, and the net asset value per Ordinary
share has risen by 148.35% and a total of 165.66p has been paid in dividends.
Since the year end, the net asset value per Ordinary share has fallen to
241.67p as at 30 June 2017; the premium to market NAV is currently some 1.79%.
The increased share price and its move to a premium relative to the net asset
value per share enabled the Board to issue 250,000 ordinary shares on 24 March
at 232.56p per share. Following the year end, a further 550,000 ordinary shares
were issued, taking the total share capital to 17,350,000.
The Company has had another good year, with shares prices rising across the
course of the year, a full recovery from the severe reduction in share prices
following the result of the Referendum a year ago.
The current underlying portfolio dividend growth has again been positive in the
past year with a portfolio yield today of 4.47%. As a result of the underlying
dividend growth and a number of special dividends paid by portfolio companies
in the year, it has been possible to increase the dividend paid to
shareholders, including a special dividend, and also to retain the maximum
revenue allowable to add to the revenue reserves.
The Company's portfolio is currently invested in 71 companies spread across 26
sectors. This spread creates a well-diversified portfolio, which should lead to
steady revenue growth and, in time, capital growth.
Zero Dividend Preference shares ('ZDP')
The ZDP shares are held in a wholly owned subsidiary, Chelverton Small
Companies ZDP PLC. The net asset value per ZDP share at 30 April 2017 was
131.65p per share (2016: 123.87p) with a share price of 136.00p per share
(2016: 127.50p), an increase over the year of 6.3% and 6.7% respectively.
The ZDP shares have traded throughout the year at a premium and as at 30 June
2017 trade at a 2.56% premium. As at the company year end the ZDP shares
provided capital gearing of 22.8% and are 4.2 times covered to final redemption
value of 136.70p on 8 January 2018 with an annual gross coupon of 6%. A further
849,000 ZDP were issued on 24 March at 135.00p.
The Board have publicly stated that it is their intention to renew and increase
the number of ZDP shares in issue in January 2018 whilst at the same looking to
increase further the number of Ordinary shares in issue.
Dividend
The Board has declared a fourth interim dividend of 2.40p per Ordinary share
(2016: 2.40p) which when added to the three quarterly interim dividends of
1.85p per Ordinary share (2016: 1.70p) brings the total to 7.95p (2016: 7.5p)
in respect of the year ended 30 April 2017, an increase of 6.0% over the
previous year. In addition the Board has declared a special dividend of 1.86p
per Ordinary share to be paid with the fourth interim dividend. Shareholders
will effectively receive a fourth dividend of 4.26p per Ordinary share. This
equates to a total dividend for the year of 9.81p per Ordinary share.
As has been said before, it remains the Board's intention, over time, to move
the dividend profile gradually to a position where the four interim dividends
paid are equal. This will be achieved by maintaining the fourth interim
dividend at the same level and increasing the first, second and third dividends
in future years to reflect earnings.
The Company has revenue reserves which after payment of the fourth interim
dividend and special dividend represent some 135% of the current annual
dividend or 13.30p per Ordinary share.
Outlook
The last year has been a turbulent one politically with the EU Referendum,
terrorist incidents and the Election. The indecisive outcome of the General
Election resulting in a minority government has contributed to increased
uncertainty.
However, even in these uncertain times, it is important to emphasise that the
companies that have been selected for inclusion in the Company's portfolio are
profitable, generate significant cash flows, have low gearing, or indeed in a
number of cases have no gearing, and at the point of purchase are well priced.
The precise outcome of the negotiations with the EU will not be known for at
least two years which again will inevitably cause some uncertainty. Given the
UK focus of the portfolio the impact on the economy will be critical. This
underlines the importance of selecting strong companies with good fundamentals.
Lord Lamont of Lerwick
Chairman
14 July 2017
Investment Manager's Report
The year to 30 April 2017 saw a steady growth in the Company's net asset value
per share, with a solid increase in the dividend of 6%, which was in line with
the targeted increase. In addition, the Company has announced a special
dividend of 1.86p, which has been aggregated with the fourth interim dividend.
As we said last year, more companies are choosing to return excess cash to
shareholders by paying special dividends and therefore, in turn, these
unexpected receipts will be passed on as special dividends to the Company's
shareholders.
It is pleasing to be able to report that the share price has moved during the
year so that it is more closely tracking the reported net asset value per
share. In the last few months the shares have periodically traded at a premium
to the net asset value and consequently the Board have been able to issue
blocks of shares to meet investor demand.
Given the solid dividend growth and at the same time the maximum allocation of
surplus revenue to revenue reserves, it would be reasonable to expect continued
dividend growth over the next few years. It is our objective to continue paying
a steadily increasing dividend and to then pay 'excess revenue' by way of a
Special Dividend. The fourth interim dividend of 2.40p was aggregated with the
Special Dividend of 1.86p to make a total payment of 4.26p.
Portfolio Review
In the last year we have had four takeovers (2016: 2): Premier Farnell,
Charlemagne Capital, Avesco Group and Dee Valley Group. Whilst the takeover of
Premier Farnell and Charlemagne Capital did not make a material difference to
the net asset value, the sale of Dee Valley Group was positive and the takeover
of Avesco Group was very positive and beyond all expectations. These proceeds
were quickly recycled into new higher yielding holdings.
Including the four takeovers above, thirteen holdings from the portfolio were
sold in their entirety (2015: 12): Ashmore Group, Avesco Group, Charlemagne
Capital, Dee Valley Group, Electrocomponents, Fenner, Grafenia, National
Express Group, Novae Group, NWF Group, Premier Farnell, RWS Holdings and Watkin
Jones Group.
Shareholdings were reduced in fifteen companies after strong share price
performances: Amino Technologies, Bioventix, Chesnara, Dairy Crest Group,
Galliford Try, Games Workshop Group, Go-Ahead Group, GVC Holdings, Intermediate
Capital Group, KCOM Group, Morgan Sindall Group, Personal Group Holdings, Polar
Capital Holdings, Sanderson Group and StatPro Group.
Ten new shareholdings were added to the Company's portfolio in the year: Anglo
African Oil and Gas - an AIM traded oil and gas producer in the Republic of the
Congo; Conviviality - independent drinks distributor; DFS Furniture -
upholstery retailer; Diversified Gas and Oil - US based producer of gas and
oil; Gattaca - provider of specialist recruitment services; Murgitroyd Group -
international intellectual property attorneys; Produce Investments - a leading
operator in the fresh potato and daffodil sectors; Ramsdens Holdings - a
diversified financial services provider and retailer; UP Global Sourcing
Holdings - branding, sourcing and distribution of consumer products; and
Victrex - a producer of high performance polymer solutions.
The shareholdings were increased in thirty one companies which were in the
portfolio at the beginning of the year, being almost half the portfolio.
Outlook
There has already been a lot of coverage of matters political and pertaining to
Brexit over the past fifteen months. As we have met our investee companies over
the past year we have of course asked them about the implications of 'Brexit'
and generally their mood is one of 'cautious neutrality'. Those that trade
rather more with countries in the EU generally already have fully functioning
operational subsidiaries in various countries across Europe and therefore there
would appear to be no need to change the status quo, whatever the outcome of
negotiations.
As an exercise to try and scope the scale of the 'Brexit' problem, we
aggregated all of the sales destinations of all of our portfolio companies and
the results were that 73% of sales were made in the UK, 13% into Europe, 9%
into North America and 5% to the Rest of the World. The portfolio has ten
companies who have more than 30% of their sales to Europe and they represent
the bulk of the portfolio's European sales. This exercise merely confirmed what
we have been saying since the fund was launched 18 years ago: that it is very
'UK-centric' and that the health and growth of the UK economy is the biggest
determinant of the success and prosperity of the bulk of the companies.
In all of the discussions and newspaper column inches, the tone seems to be
that EU countries are doing the UK a favour by buying goods and services from
British companies. However, in the real world we know, for example, that French
companies would prefer to buy from French suppliers and German companies from
German suppliers, and will only look elsewhere in the event that the service or
product cannot be supplied by French or German suppliers. In reality, UK
companies have to compete not only with all other potential suppliers from the
EU but also suppliers from around the world and they only win business on the
basis of providing the right product, at the right quality, on time at a
comparable or cheaper price. Clearly if the UK were to leave the EU with no
deal then UK companies would have to manage the tariff barriers imposed by the
EU; however, the 'Brexit' decline in sterling has already gone a long way to
equalising this.
The portfolio performance over the past month, since the election, has been
poor and reflects the market uncertainty created by the election result.
Looking at the portfolio and the strength and trading of the individual
companies, we feel that this has been an overreaction, albeit understandable in
the circumstances. We feel that the valuation of the portfolio is not stretched
and would expect to see further progress in the current year.
David Horner
Chelverton Asset Management Limited
14 July 2017
Breakdown of Portfolio by Industry
at 30 April 2017 Market value % of
Market sector portfolio
Financial Services 7,785 14.4
Construction & Materials 5,484 10.2
Support Services 4,705 8.7
General Retailers 3,401 6.4
Media 2,538 4.7
Real Estate Investment Trusts 2,366 4.4
Travel & Leisure 2,269 4.3
Software & Computer Services 2,144 4.0
Food & Drug Retailers 2,140 4.0
Leisure Goods 2,085 3.9
Food Producers 1,994 3.7
Real Estate Investment & Services 1,893 3.5
Industrial Engineering 1,829 3.4
Oil & Gas Producers 1,685 3.1
Nonlife Insurance 1,615 3.0
General Industrials 1,530 2.8
Industrial Transportation 1,389 2.6
Life Insurance 1,359 2.5
Technology Hardware & Equipment 1,251 2.3
Household Goods & Home Construction 1,214 2.3
Equity Investment Instruments 760 1.4
Oil Equipment, Services & Distribution 722 1.3
Electronic & Electrical Equipment 529 1.0
Fixed Line Telecommunications 528 1.0
Pharmaceuticals & Biotechnology 373 0.7
Chemicals 239 0.4
53,827 100.0
Breakdown of Portfolio by Market Capitalisation
at 30 April 2017
Click here for graph.
Portfolio Statement
at 30 April 2017 Market % of
value
Security Sector GBP'000 portfolio
StatPro Group Software & Computer Services 1,304 2.4
Amino Technologies Technology Hardware & 1,251 2.3
Equipment
McColl's Retail Group Food & Drug Retailers 1,230 2.3
Games Workshop Group Leisure Goods 1,219 2.3
Belvoir Lettings Real Estate Investment & 1,176 2.2
Services
Acal Support Services 1,128 2.1
Alumasc Group Construction & Materials 1,122 2.1
Curtis Banks Group Financial Services 1,112 2.1
Braemar Shipping Industrial Transportation 1,104 2.1
Services
Galliford Try Household Goods & Home 1,077 2.0
Construction
Connect Group Support Services 1,071 2.0
Gattaca Support Services 1,027 1.9
Jarvis Securities Financial Services 1,013 1.9
Moss Bros Group General Retailers 1,000 1.9
Marston's Travel & Leisure 998 1.9
Numis Corporation Financial Services 973 1.8
Diversified Gas & Oil Oil & Gas Producers 960 1.8
Mucklow (A&J) Group Real Estate Investment Trusts 960 1.8
Brown (N) Group General Retailers 953 1.8
Polar Capital Holdings Financial Services 939 1.7
Kier Group Construction & Materials 935 1.7
Personal Group Holdings Nonlife Insurance 930 1.7
Conviviality Food & Drug Retailers 910 1.7
Shoe Zone General Retailers 900 1.7
Coral Products General Industrials 885 1.6
Park Group Financial Services 880 1.6
Low & Bonar Construction & Materials 873 1.6
Photo-Me International Leisure Goods 866 1.6
Dairy Crest Group Food Producers 860 1.6
Sanderson Group Software & Computer Services 840 1.6
Brewin Dolphin Holdings Financial Services 817 1.5
Chesnara Life Insurance 764 1.4
GLI Finance Equity Investment Instruments 760 1.4
Clarke (T) Construction & Materials 750 1.4
Chamberlin Industrial Engineering 750 1.4
GVC Holdings Travel & Leisure 746 1.4
Epwin Group Construction & Materials 743 1.4
Anglo African Oil & Gas Oil & Gas Producers 725 1.3
Cape Oil Equipment, Services & 722 1.3
Distribution
Foxtons Group Real Estate Investment & 717 1.3
Services
Ramsdens Holdings Financial Services 712 1.3
Town Centre Securities Real Estate Investment Trusts 712 1.3
Regional REIT Real Estate Investment Trusts 694 1.3
Bloomsbury Publishing Media 685 1.3
Randall & Quilter Nonlife Insurance 685 1.3
Investment
Centaur Media Media 667 1.2
Market % of
value
Security Sector GBP'000 portfolio
Orchard Funding Group Financial Services 656 1.2
Macfarlane Group General Industrials 645 1.2
Morgan Sindall Group Construction & Materials 636 1.2
Severfield Industrial Engineering 609 1.1
Hansard Global Life Insurance 595 1.1
Wilmington Group Media 595 1.1
Huntsworth Media 591 1.1
Produce Investments Food Producers 570 1.1
Hilton Food Group Food Producers 564 1.0
DFS Furniture General Retailers 548 1.0
Intermediate Capital Financial Services 546 1.0
Group
XP Power Electronic & Electrical 529 1.0
Equipment
KCOM Group Fixed Line Telecommunications 528 1.0
Go-Ahead Group Travel & Leisure 525 1.0
RPS Group Support Services 507 0.9
Castings Industrial Engineering 470 0.9
Titon Holdings Construction & Materials 425 0.8
St. Ives Support Services 396 0.7
RTC Group Support Services 378 0.7
Bioventix Pharmaceuticals & 373 0.7
Biotechnology
DX Group Industrial Transportation 285 0.5
Victrex Chemicals 239 0.4
Murgitroyd Group Support Services 198 0.4
Fairpoint Group Financial Services 137 0.3
UP Global Sourcing Household Goods & Home 137 0.3
Holdings Construction
Total Portfolio 53,827 100.0
Investment Objective and Policy
The investment objective of the Company is to provide Ordinary shareholders
with a high income and opportunity for capital growth, having provided a
capital return sufficient to repay the full final capital entitlement of the
Zero Dividend Preference shares issued by the wholly owned subsidiary company
SCZ.
The Company's investment policy is that:
· The Company will invest in equities in order to achieve its investment
objectives, which are to provide both income and capital growth, predominantly
through investment in mid and smaller capitalised UK companies admitted to the
Official List of the UK Listing Authority and traded on the London Stock
Exchange Main Market or traded on AIM.
· The Company will not invest in preference shares, loan stock or notes,
convertible securities or fixed interest securities or any similar securities
convertible into shares; nor will it invest in the securities of other
investment trusts or in unquoted companies.
· There is no set limit on the Company's gearing.
Performance Analysis using Key Performance Indicators
At each quarterly Board meeting, the Directors consider a number of key
performance indicators ('KPIs') to assess the Group's success in achieving its
objectives, including the net asset value ('NAV'), the dividend per share and
the total ongoing charges.
· The Group's Consolidated Statement of Comprehensive Income is set out on
page 42.
· A total dividend for the year to 30 April 2017 of 9.81p (2016: 9.10p) per
Ordinary share has been declared to shareholders by way of three payments of
1.85p per Ordinary share and a fourth interim dividend payment of 2.40p per
Ordinary share and a special dividend of 1.86p per Ordinary share.
· The NAV per Ordinary share at 30 April 2017 was 248.35p (2016: 211.95p).
· The ongoing charges (including investment management fees and other
expenses but excluding exceptional items) for the year ended 30 April 2017 were
1.93% (2016: 1.88%).
Principal Risks
The Directors confirm that they have carried out a robust assessment of the
principal risks facing the Company, including those that would threaten its
objective, business model, future performance, solvency or liquidity. The Board
regularly considers the principal risks facing the Company. Mitigation of these
risks is sought and achieved in a number of ways as set out below:
Market risk
The Company is exposed to UK market risk due to fluctuations in the market
prices of its investments.
The Investment Manager actively monitors economic performance of investee
companies and reports regularly to the Board on a formal and informal basis.
The Board formally meets with the Investment Manager on a quarterly basis when
the portfolio transactions and performance are discussed and reviewed.
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
The Board recognises that, as a closed ended company, 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, with
its advisers, monitors the Company's discount levels and shares may be bought
back should it be thought appropriate to do so by the Board.
Regulatory risks
A breach of Companies Act provisions and Financial Conduct Authority ('FCA')
rules may result in the Group's companies being liable to fines or the
suspension of either of the Group companies from listing and from trading on
the London Stock Exchange. The Board, with its advisers, monitors the Company's
and SCZ's regulatory obligations both on an ongoing basis and at quarterly
Board meetings.
Financial risk
The financial position of the Group is reviewed in detail at each Board meeting
and monitored by the Audit Committee.
New developments in accounting standards and industry-related issues are
actively reported to and monitored by the Board and its advisers, ensuring that
appropriate accounting policies are adhered to.
A more detailed explanation of the financial risks facing the Group is given in
note 24 to the financial statements on pages 60 to 65.
Gearing
The Company's shares are geared by the Zero Dividend Preference shares and
should be regarded as carrying above average risk since a positive NAV for the
Company's shareholders will be dependent upon the Company's assets being
sufficient to meet those prior entitlements of the holders of Zero Dividend
Preference shares. As a consequence of the gearing, a decline in the value of
the Company's investment portfolio will result in a greater percentage decline
in the NAV of the Ordinary Shares.
Refinancing Bank
SCZ might issue Zero Dividend Preference shares but due to adverse market
conditions the demand might be limited. This would restrict the growth capacity
of the Company and potentially cause shrinkage of the portfolio. The Investment
Manager monitors market conditions, receives regular updates from the Company's
Brokers and meets potential investors in person in an effort to the extent of
investor demand.
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
three years is the most appropriate time horizon to consider the Company's
viability, and after careful analysis, the Directors believe that the Company
is viable over a three-year period. The following facts support the Directors'
view:
· The Company has a liquid investment portfolio invested predominantly in
readily realisable smaller capitalised UK-listed and AIM traded securities and
has some short-term cash on deposit.
· Revenue expenses of the Company are covered multiple times by investment
income.
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 expection that the Company
will be able to continue in operation and meet its liabilities as they fall due
over the period of the assessment.
Other Statutory Information
Company status and business model
The Company was incorporated on 6 April 1999 and commenced trading on 12 May
1999. The Company is a closed-ended investment trust with registered number
03749536. Its capital structure consists of Ordinary shares of 25p each, which
are listed and traded on the main market of the London Stock Exchange.
The principal activity of the Company is to carry on business as an investment
trust. The Company has been granted approval from HMRC as an investment trust
under Sections 1158/1159 of the Corporation Tax Act 2010 ('1158/1159') on an
ongoing basis. The Company will be treated as an investment trust company
subject to there being no serious breaches of the conditions for approval. The
Company is also an investment company as defined in Section 833 of the
Companies Act 2006. The current portfolio of the Company is such that its
shares are eligible for inclusion in ISAs up to the maximum annual subscription
limit and the Directors expect this eligibility to be maintained.
On 1 August 2016, the Company changed its name from Small Companies Dividend
Trust plc.
The Group financial statements consolidate the audited annual report and
financial statements of the Company and SCZ, its subsidiary undertaking, for
the year ended 30 April 2017. The Company owns 100% of the issued ordinary
share capital of SCZ, which was incorporated on 13 July 2012.
Further information on the capital structure of the Company and SCZ can be
found on pages 68 and 69.
AIFM
The Board has registered itself as a Small Registered Alternative Investment
Fund Manager ('AIFM') with the FCA and all required returns have been completed
and filed.
Employees, environmental, human rights and community issues
The Board recognises the requirement under Section 414C of the Companies Act to
detail information about employees, human rights and community issues,
including information about any policies it has in relation to these matters
and the effectiveness of these policies. These requirements and the
requirements of the Modern Slavery Act 2015 do not apply to the Company as it
has no employees and no physical assets, all the Directors are non-executive
and it has outsourced all its management and administrative functions to
third-party service providers. The Company has therefore not reported further
in respect of these provisions. However, in carrying out its activities and in
relationships with suppliers, the Company aims to conduct itself responsibly,
ethically and fairly.
Current and future developments
A review of the main features of the year and the outlook for the Company are
contained in the Chairman's Statement on pages 2 and 3 and the Investment
Manager's Report on pages 4 to 9.
Dividends declared/paid
Payment date 30 April 2017 30 April
pence 2016
pence
First interim 5 October 2016 1.85 1.70
Second interim 5 January 2017 1.85 1.70
Third interim 31 March 2017 1.85 1.70
Fourth interim 3 July 2017 2.40 2.40
7.95 7.50
Special dividend 3 July 2017 1.86 1.60
9.81 9.10
The Directors have not recommended a final dividend in respect of the year
ended 30 April 2017.
Diversity
The Board of Directors of the Company comprised four male Directors in the year
to 30 April 2017. The Board recognises the benefits of diversity in future
appointments to the Board; however, the key criteria for the appointment of new
directors will be the appropriate skills and experience in the interests of
shareholder value. The Directors are satisfied that the Board currently
contains members with an appropriate breadth of skills and experience. No new
appointments to the Board have been made or are contemplated at present.
The Strategic Report is signed on behalf of the Board by
Lord Lamont of Lerwick
Chairman
14 July 2017
Directors
The Directors are:
The Rt Hon. Lord Lamont of Lerwick*+ (Chairman) was Chancellor of the Exchequer
between 1990 and 1993. Prior to his appointment, Lord Lamont was Chief
Secretary to the Treasury between 1989 and 1990. Following his retirement as a
Member of Parliament in 1997, he has held numerous positions as a director of
various organisations and funds, including NM Rothschild and Sons Limited. He
is an adviser to BC Partners and Stanhope Capital.
Lord Lamont was appointed to the Board on 27 February 2006.
David Harris*+ is chief executive of InvaTrust Consultancy Limited. The company
specialises in marketing issues relating to the investment and financial
services industry. He writes regular articles for the national and trade press
on investment matters. From 1995 to 1999 he was a director of the AIC with
specific responsibility for training and education of independent financial
advisers. He is a non-executive director of the Character Group PLC, Aseana
Properties Limited, F&C Managed Portfolio Trust PLC and Manchester and London
Investment Trust PLC.
Mr Harris was appointed to the Board on 30 May 2000 and served as Audit
Committee Chairman until 15 June 2016.
William van Heesewijk began his career with Lloyds Bank International in 1981,
working for both the merchant banking and investment management arms. He has
been involved in the investment trust industry since 1987 in various
capacities. During his tenure with Fidelity Investments International, Gartmore
Investment Management PLC and BFS Investments PLC he managed several launches
of onshore and offshore investment funds, including a number of roll-overs and
reconstructions involving complex capital structures and across several
geographic regions. His roles involved business development, project
management, sales and marketing. He is the Business Development Director of
Chelverton Asset Management Limited. He is a member of the Association of
Investment Companies Managers forum.
Mr van Heesewijk was appointed to the Board on 1 December 2005.
Howard Myles*+ was a partner in Ernst & Young from 2001 to 2007 and was
responsible for the Investment Funds Corporate Advisory Team. He was previously
with UBS Warburg from 1987 to 2001. Mr Myles began his career in stockbroking
in 1971 as an equity salesman and in 1975 joined Touche Ross & Co, where he
qualified as a chartered accountant. In 1978 he joined W Greenwell & Co in the
corporate broking team and in 1987 moved to SG Warburg Securities, where he was
involved in a wide range of commercial and industrial transactions in addition
to leading Warburg's corporate finance function for investment funds. He is now
a non-executive director of Lazard World Trust Fund SICAF S.A., Aberdeen
Private Equity Fund Limited, Baker Steel Resources Trust Limited, JPMorgan
Brazil Investment Trust plc, The Forest Company Limited and BBGI SICAV S.A.
Mr Myles was appointed to the Board on 15 March 2011. He became Chairman of the
Audit Committee on 15 June 2016.
* Independent
+ Audit Committee member
Investment Manager, Secretary and Registrar
Investment Manager: Chelverton Asset Management Limited ('Chelverton')
Chelverton was formed in 1998 by David Horner, who has considerable experience
of analysing investments and working with smaller companies. Chelverton is
largely owned by its employees.
Chelverton is a specialist fund manager focused on UK mid and small companies
and has a successful track record. At 31 May 2017, Chelverton had total funds
under management of approximately GBP650 million including two investment trust
companies and two OEICs. The fund management team comprises David Horner, David
Taylor and James Baker.
Chelverton is authorised and regulated by the FCA.
Administrator and Corporate Secretary: Maitland Administration Services Limited
Maitland Administration Services Limited provides company secretarial and
administrative services for the Group. The Maitland group provides
administration and regulatory oversight solutions for a wide range of
investment companies.
Registrar: Share Registrars Limited
Share Registrars Limited is a CREST registrar established in 2004 and provides
share registration services to over 220 client companies.
Directors' Report
The Directors present their Annual Report and financial statements for the
Group and the Company for the year ended 30 April 2017.
Directors
The Directors who served during the year ended 30 April 2017 are listed on page
15. None of the Directors nor any persons connected with them had a material
interest in any of the Company's transactions, arrangements or agreements
during the year, except Mr van Heesewijk, who by virtue of his employment with
Chelverton is interested in the Investment Management Agreement. None of the
Directors has or has had any interest in any transaction which is or was
unusual in its nature or conditions or significant to the business of the
Company, and which was effected by the Company during the current financial
year. There have been no loans or guarantees from the Company or its subsidiary
undertakings, to any Director at any time during the year or thereafter.
Corporate Governance
A formal statement on Corporate Governance and the Company compliance with the
UK Corporate Governance Code and the AIC on Corporate Governance can be found
on pages 22 to 28.
Management agreements
The Company's investments are managed by Chelverton Asset Management Limited
under an agreement ('the Investment Management Agreement') dated 30 April 2006
(effective from 1 December 2005). A periodic fee is payable quarterly in
arrears at an annual rate of 1% of the value of the gross assets under
management of the Company.
The Investment Management Agreement may be terminated by 12 months' written
notice. There are no additional arrangements in place for compensation beyond
the notice period.
Under another agreement ('the Administration Agreement') dated 1 January 2016,
company secretarial services and the general administration of the Group are
undertaken by Maitland Administration Services Limited ('Maitland'). Their fee
is subject to review at intervals of not less than three years. The
Administration Agreement may be terminated by six months' written notice.
It is the Directors' opinion that the continuing appointment of the Investment
Manager and the Administrator/Secretary on the terms agreed is in the best
interests of the Group and its shareholders. The Directors are satisfied that
Chelverton has the required skill and expertise to continue successfully to
manage the Group's assets, and is satisfied with the services provided by
Maitland.
Dividends
Details of the dividends declared and paid by the Board are set out in the
Strategic Report on page 13.
Substantial shareholdings
The Directors have been informed of the following notifiable interests in the
voting shares of the Company at 30 April 2017:
Number of % of
Ordinary shares shares voting rights
Hargreaves Lansdown Asset Management 3,018,024 17.96%
Alliance Trust Savings 1,400,603 8.34%
Barclays Wealth Management (UK) 850,997 5.07%
TD Direct Investing 771,895 4.59%
Halifax Share Dealing 735,220 4.38%
Integrated Financial 694,915 4.14%
AJ Bell Securities 692,805 4.12%
Interactive Investor Sharedealing 679,637 4.05%
Charles Stanley & Co 672,444 4.00%
Jarvis Investment Management 661,441 3.94%
Equinti 620,693 3.70%
Consistent Unit Trust Management 600,000 3.57%
Jupiter Asset Management 600,000 3.57%
Philip J Milton & Company 622,275 3.76%
The Company has not been notified of any changes to the above holdings between
30 April 2017 and the date of this report.
Special business at the Annual General Meeting
The Company's AGM will be held at 11.00 am on Thursday 7 September 2017. The
Notice of Meeting is set out on pages 72 to 76.
In addition to the ordinary business of the meeting, there are a number of
items of special business, as follows:
Remuneration Policy
An Ordinary Resolution was passed at the AGM held in 2014 approving the
Remuneration Policy. This Policy must be approved at least every three years,
therefore it will be submitted at this year's AGM as Resolution 8. The proposed
Policy is set out on page 33 of the Directors' Remuneration Report, which if
approved, shall take effect immediately after the end of the Annual General
Meeting. There are no substantive changes to the Policy that is already in
place.
Authority to issue shares and disapply pre-emption rights
An Ordinary Resolution was passed at the last AGM held on 8 September 2016
giving Directors authority, pursuant to Section 551 of the Companies Act 2006,
to allot Ordinary shares up to an aggregate nominal value equal to GBP1,379,167
(which figure represented one-third of the issued share capital of the
Company). This authority expires at the conclusion of the next AGM. The
Directors are seeking renewal, pursuant to Section 551 of the Companies Act
2006, to allot up to an aggregate nominal value equal to GBP1,445,833, being
one-third of the Ordinary shares in issue at the date of this report, as set
out in Resolution 9 in the Notice of Meeting. This authority will expire at the
AGM to be held in 2018 or 15 months from the passing of the Resolution,
whichever is earlier.
A Special Resolution was also passed on 8 September 2016 giving the Directors
power to issue Ordinary shares for cash notwithstanding the pre-emption
provisions of the Companies Act 2006 and permitting the Directors to issue
shares without being required to offer them to existing shareholders in
proportion to their current holdings. This power expires at the conclusion of
the next AGM and the Directors are seeking its renewal, pursuant to Sections
570 and 573 of the Companies Act 2006, to enable the Directors to issue up to
10% of the issued Ordinary share capital, representing 1,735,000 Ordinary
shares at the date of this report, as set out in the Notice of Meeting as
Resolution 10.
This authority will also cover the sale of shares held in Treasury, and will
expire at the AGM to be held in 2018 or 15 months from the passing of the
Resolution, whichever is earlier. The authorities to issue shares will only be
used when it would be in the interests of shareholders as a whole. The
Directors do not currently intend to issue or sell shares from Treasury other
than above the prevailing NAV.
Purchase of own shares
At the AGM held on 8 September 2016 the Directors were granted the authority to
buy back in the market up to 14.99% of the Company's Ordinary shares in
circulation at that date for cancellation or placing into Treasury. No shares
have been purchased under this authority which remains in force. Resolution 12
as set out in the Notice of Meeting will renew this authority for up to 14.99%
of the current issued Ordinary share capital in circulation, which represents
2,600,765 Ordinary shares at the date of this report. The Directors do not
intend to use the authority to purchase the Company's shares unless to do so
would result in an increase in the net asset value per share for the remaining
shareholders and would generally be in the interests of all shareholders. The
authority, if given, will lapse at the AGM to be held in 2018 or 15 months from
the passing of this Resolution, whichever is earlier.
Purchases will be made on the open market. The price paid for Ordinary shares
will not be less than 25p and not more than the higher of (i) 5% above the
average of the middle market quotations (as derived from the Daily Official
List of the London Stock Exchange) of the Ordinary shares for the five business
days immediately preceding the date on which the Ordinary share is purchased,
and (ii) the higher of the price of the last independent trade and the current
highest independent bid on the London Stock Exchange. Shares may be cancelled
or placed in Treasury.
Pursuant to the loan agreement between the Company and SCZ, the Company will
not purchase any of its Ordinary shares out of capital reserves unless the
cover for the final redemption value of the Zero Dividend Preference shares is
at least 1.9 times after the purchase.
Notice period for general meetings
Resolution 12 is a Special Resolution that will give the Directors the ability
to convene general meetings, other than Annual General Meetings, on a minimum
of 14 clear days' notice. The minimum notice period for annual general meetings
will remain at 21 clear days. The approval will be effective until the
Company's Annual General Meeting to be held in 2018, at which it is intended
that renewal will be sought. The Company will have to offer facilities for all
shareholders to vote by electronic means for any general meeting convened on 14
days' notice. The Directors will only call a general meeting on 14 days' notice
where they consider it to be in the interests of shareholders to do so and the
relevant matter is required to be dealt with expediently.
Recommendation
The Board considers that the Resolutions to be proposed at the AGM are in the
best interests of shareholders as a whole and the Company and, accordingly,
recommends that shareholders vote in favour of each Resolution, as the
Directors intend to do in respect of their own beneficial shareholdings
representing c.1% of the issued share capital.
Company information
The following information is disclosed in accordance with the Companies Act
2006:
· The Group's capital structure and voting rights are summarised on pages 68
to 69.
· Details of the substantial shareholders in the Company are listed on page
18.
· The rules concerning the appointment and replacement of Directors are
contained in the Company's Articles of Association.
· The Articles of Association can be amended by the passing of a Special
Resolution of the members in a General Meeting.
· Amendment of the Articles of Association and the giving of powers to issue
or buy back the Company's shares require the relevant Resolution to be passed
by shareholders. The Board's current powers to issue or buy back shares and
proposals for their renewal are detailed on pages 18 and 19.
· There are no restrictions concerning the transfer of securities in the
Company; no restrictions on voting rights; no special rights with regard to
control attached to securities; no agreements between holders of securities
regarding their transfer known to the Company; and no agreements which the
Company is party to that might affect its control following a successful
takeover bid.
· Consideration of likely future developments is detailed in the Strategic
Report on pages 1 to 13.
Special business at the SCZ Annual General Meeting
The SCZ's AGM will be held on Thursday 7 September 2017 following the Company's
AGM. The Notice of Meeting is set out in the SCZ Annual Report.
In addition to the ordinary business of the meeting, there are a number of
items of special business, as follows:
Authority to issue shares
An Ordinary Resolution was passed at the last AGM held on 8 September 2016
giving Directors authority, pursuant to Section 551 of the Companies Act 2006,
to allot shares up to an aggregate nominal value equal to GBP2,833,333 (which
figure represented one-third of the issued share capital of the SCZ). This
authority expires at the conclusion of the next AGM. The Directors are seeking
renewal, pursuant to Section 551 of the Companies Act 2006, to allot up to an
aggregate nominal value equal to GBP3,166,333, being one-third of the Zero
Dividend Preference shares in issue at the date of this report, as set out in
Resolution 6 in the SCZ Notice of Meeting. This authority will expire at the
AGM to be held in 2018 or 15 months from the passing of the Resolution,
whichever is earlier.
Going concern
The Group's business activities, together with the factors likely to affect its
future development, performance and position, are described in the Chairman's
Report on pages 2 and 3 and in the Investment Manager's Report on pages 4 to 9.
The financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described in the financial statements. In addition,
note 24 on pages 60 to 65 to the financial statements sets out the Group's
objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments; and its exposure
to credit risk and liquidity risk. The Group has adequate financial resources
and, as a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully and it is appropriate to adopt the going
concern basis.
Global greenhouse gas emissions
The Company has no greenhouse gas emissions to report from its operations, nor
does it have responsibility for any other emission-producing sources under the
Companies Act 2006 (Strategic Report and Directors' Report) Regulations 2013.
Auditor
The Auditor, Hazlewoods LLP, has indicated its willingness to continue in
office until such time as the audit tender process for the 2018 audit is
completed, and Resolution 7 proposing its re-appointment and authorising the
Directors to determine its remuneration for the ensuing year will be submitted
at the AGM.
The Directors who were in office on the date of approval of these financial
statements have confirmed, as far as they are each aware, that there is no
relevant audit information of which the Auditor is unaware. Each of the
Directors have confirmed that they have taken all the steps that they ought to
have taken as Directors in order to make themselves aware of any relevant audit
information and to establish that it has been communicated to the Auditor.
On behalf of the Board
Lord Lamont of Lerwick
Chairman
14 July 2017
Statement on Corporate Governance
The Company is committed to maintaining high standards of corporate governance
and the Directors are accountable to shareholders for the governance of the
Group's affairs.
Statement of compliance with the UK Corporate Governance Code ('the Governance
Code')
The Directors have reviewed the detailed principles outlined in the Governance
Code and confirm that, to the extent that they are relevant to the Company's
business, they have complied with the provisions of the Governance Code
throughout the year ended 30 April 2017 except as explained in this section as
being non-compliant and that the Company's current practice is in all material
respects consistent with the principles of the Governance Code.
The Board also confirms that, to the best of its knowledge and understanding,
procedures were in place to meet the requirements of the Governance Code
relating to internal controls throughout the year under review. This statement
describes how the principles of the Governance Code have been applied in the
affairs of the Company.
As an investment trust, the Company has also taken into account the Code of
Corporate Governance produced by the Association of Investment Companies ('the
AIC Code'), which is intended as a framework of best practice specifically for
AIC member companies.
The AIC Code, as explained by the AIC Corporate Governance Guide ('the AIC
Guide'), addresses all the principles set out in the Governance Code, and there
are some areas where the AIC Code is more flexible than the Governance Code for
investment companies. The Board has taken steps to adhere to its principles and
follow the recommendations in the AIC Code where it believes they are
appropriate.
A copy of the AIC Code and the AIC Guide can be obtained via the AIC website,
www.theaic.co.uk, and a copy of the Governance Code can be obtained at
www.frc.org.uk.
The Company has not complied with the following provisions of the Governance
Code:
· owing to the size of the Board, it is felt inappropriate to appoint a
senior independent non-executive Director.
· as the Group has no staff, other than Directors, there are no procedures in
place in relation to whistle-blowing. The Board has satisfied itself there are
appropriate whistle-blowing procedures in place at its service providers.
Board responsibilities and relationship with Investment Manager
The Board is responsible for the investment policy and strategic and
operational decisions of the Group and for ensuring that the Group is run in
accordance with all regulatory and statutory requirements. These procedures
have been formalised in a schedule of matters reserved for decision by the
Board. These matters include:
· the maintenance of clear investment objectives and risk management
policies, changes to which require Board approval;
· the monitoring of the business activities of the Group, including
investment performance and annual budgeting; and
· review of matters delegated to the Investment Manager, Administrator or
Secretary.
The Group's day-to-day functions have been delegated to a number of service
providers, each engaged under separate legal agreements. At each Board meeting
the Directors follow a formal agenda prepared and circulated in advance of the
meeting by the Company Secretary to review the Group's investments and all
other important issues, such as asset allocation, gearing policy, corporate
strategic issues, cash management, peer group performance, marketing and
shareholder relations, investment outlook and revenue forecasts, to ensure that
control is maintained over the Group's affairs. The Board regularly considers
its overall strategy.
The management of the Group's assets is delegated to Chelverton. At each Board
meeting, representatives of Chelverton are in attendance to present verbal and
written reports covering its activity, portfolio composition and investment
performance over the preceding period. Ongoing communication with the Board is
maintained between formal meetings. The Investment Manager ensures that
Directors have timely access to all relevant management and financial
information to enable informed decisions to be made and contacts the Board as
required for specific guidance. The Company Secretary and Investment Manager
prepare briefing notes for Board consideration on matters of relevance, for
example changes to the Group's economic and financial environment, statutory
and regulatory changes and corporate governance best practice.
The Company has arranged a Directors' and Officers' Liability insurance policy
which includes cover for legal expenses.
The Articles of Association of both the Company and SCZ provide the Directors,
subject to the provisions of UK legislation, with an indemnity in respect of
liabilities which they may sustain or incur in connection with their
appointment. Save for this, there are no qualifying third-party indemnity
provisions in force.
Board membership
At the year end the Board consisted of four Directors, all of whom are
non-executive. The Group has no employees. The Board seeks to ensure that it
has the appropriate balance of skills, experience and length of service amongst
its members. The Board's policy on tenure is that Directors can stand for more
than nine years. The Board considers that length of service does not
necessarily compromise the independence or contribution of directors of
investment trust companies where experience and continuity can be a significant
strength. The Directors possess a wide range of business and financial
expertise relevant to the direction of the Group and Company and consider that
they commit sufficient time to the Group and Company's affairs. On appointment
to the Board, Directors are fully briefed as to their responsibilities by the
Chairman and the Investment Manager. Brief biographical details of the
Directors can be found on page 15.
The Directors meet at regular Board meetings, held at least four times a year,
and additional meetings and telephone meetings are arranged as necessary.
During the year to 30 April 2017 the Board met four times and all Directors
were present at all Board meetings.
Board effectiveness
The Board conducts an annual review of the performance of the Board, its
Committees and the Directors. The Board is satisfied from the results of its
last evaluation that the Board, its Committees and Directors function
effectively, collectively and individually and that the Board contains an
appropriate balance of skills and experience to effectively manage the Company.
Chairman
The Chairman, Lord Lamont, is independent. He has shown himself to have
sufficient time to commit to the Group's affairs. The Company does not have a
chief executive officer, as it has no executive directors. The Chairman has no relationships that may create a conflict of interest between the Chairman's interest and those of the shareholders. The Chairman does not sit on the Board of any other investment company managed by Chelverton. Directors' independence In accordance with the Listing Rules for investment entities, the Board has reviewed the status of its individual Directors and the Board as a whole. The Governance Code requires that this report should identify each non-executive Director the Board considers to be independent in character and judgement and whether there are relationships or circumstances which are likely to affect, or could appear to affect, the Director's judgement, stating its reasons if it determines that a Director is independent notwithstanding the existence of relationships or circumstances which may appear relevant to its determination. Mr Myles is deemed to be independent of the Investment Manager. Despite being on the Board for over nine years, the Board believes Lord Lamont and Mr Harris are also independent. They all continue to perform their roles effectively. Mr van Heesewijk is not deemed independent by virtue of his employment by Chelverton. In accordance with the requirements of the Listing Rules, Mr van Heesewijk is subject to annual re-election due to this connection. The majority of the Board, being three of the four Directors, is therefore independent. Under the Articles of Association, one-third of Directors will retire by rotation at each AGM and no Director shall serve a term of more than three years before re-election, in accordance with corporate governance principles. The Board has reviewed the appointment of those Directors retiring at the forthcoming AGM. In accordance with the Governance and AIC Codes, Lord Lamont and Mr Harris will offer themselves for re-election (and do so on an annual basis), having served on the Board for over nine years. Mr van Heesewijk as a non-independent Director will also stand for re-election. Mr Myles will also stand for re-election as he was last re-elected in 2014. The Board recommends that shareholders vote for the re-election of Lord Lamont, Mr Harris, Mr Myles and Mr van Heesewijk as it believes their contributions to the Board to be effective, that they demonstrate commitment to their roles as non-executive Directors of the Company and have actively contributed throughout the year. Senior Independent Director No separate Senior Independent Director has been appointed to the Board as, in the view of the Directors, it is inappropriate to do so given the size and composition of the Board. All the Directors make themselves available to shareholders at general meetings of the Company. The Directors can be contacted at other times via the Company Secretary. Audit Committee The Audit Committee comprises the independent Directors. The Committee met twice during the year ended 30 April 2017, with Mr Myles as Chairman. All members of the Committee were present at both meetings. The Audit Committee has direct access to the Group's Auditor, Hazlewoods LLP, and representatives of Hazlewoods LLP attend the year end Audit Committee meeting. The primary responsibilities of the Audit Committee are: to review the effectiveness of the internal control environment of the Group and monitor adherence to best practice in corporate governance; to make recommendations to the Board in relation to the re-appointment of the Auditor and to approve their remuneration and terms of engagement; to review and monitor the Auditor's independence and objectivity and the scope and effectiveness of the audit process and to provide a forum through which the Group's Auditor reports to the Board. The Audit Committee also has responsibility for monitoring the integrity of the financial statements and accounting policies of the Group and for reviewing the Group's financial reporting and internal control policies and procedures. Committee members consider that individually and collectively they are appropriately experienced in accounting and audit processes to fulfil the role required. Management Engagement Committee The functions performed by this type of Committee are carried out by the Board of the Company. The Board reviewed the performance of the Investment Manager's obligations under the Investment Management Agreement. Based on this performance, the Board decided that the Investment Manager's appointment continues. It also reviewed the performance of the Company Secretary, the Custodian and the Registrar and matters concerning their respective agreements with the Company. Nominations Committee The functions performed by this type of Committee are carried out by the Board of the Company. The Board evaluated the performance of Directors and the Chairman for the year ended 30 April 2017. As a result of the evaluation, the Board considers that all Directors contribute effectively and have the skills and experience relevant to the leadership and direction of the Company. The Board also recommended the reappointment of those Directors standing for re-election at the Annual General Meeting. Remuneration Committee The functions performed by this type of Committee are carried out by the Board of the Company. The Board assessed the Directors' fees, following proper consideration of the role that individual Directors fulfil in respect of Board and Committee responsibilities, the time committed to the Group's affairs and remuneration levels generally within the investment trust sector. Under the Listing Rules, the Governance Code principles relating to directors' remuneration do not apply to an investment trust company other than to the extent that they relate specifically to non-executive directors. Detailed information on the remuneration arrangements can be found in the Directors' Remuneration Report on pages 31 to 34 and in note 5 to the financial statements. Independent professional advice The Board has formalised arrangements under which the Directors, in the furtherance of their duties, may take independent professional advice at the Company's expense. Institutional investors - use of voting rights The Investment Manager, in the absence of explicit instruction from the Board, is empowered to exercise discretion in the use of the Company's voting rights. Conflicts of interest It is the responsibility of each individual Director to avoid an unauthorised conflict arising. He must notify and request authorisation from the Board as soon as he becomes aware of the possibility of a conflict arising. The Board is responsible for considering Directors' requests for authorisation of conflicts and for deciding whether or not the conflict should be authorised. The factors to be considered will include whether the conflict could prevent the Director from properly performing his duties, whether it has, or could have, any impact on the Group and whether it could be regarded as likely to affect the judgement and/or actions of the Director in question. When the Board is deciding whether to authorise a conflict or potential conflict, only Directors who have no interest in the matter being considered are able to take the relevant decision, and in taking the decision the Directors must act in a way they consider, in good faith, will be most likely to promote the Group's success. The Directors are able to impose limits or conditions when giving authorisation if they think this is appropriate in the circumstances. A register of conflicts is maintained by the Company Secretary and is reviewed at Board meetings, to ensure that any authorised conflicts remain appropriate. Directors are required to confirm at these meetings whether there has been any change to their position. Internal control review The Board is responsible for establishing and maintaining the Group's systems of internal control and for reviewing their effectiveness. An ongoing process, in accordance with the guidance supplied by the Financial Reporting Council, 'Guidance on Risk Management, Internal Control and Related Financial and Business Reporting', is in place for identifying, evaluating and managing risks faced by the Company and the Group. The Company's risks are documented and evaluated using a risk register. This register is reviewed regularly by Directors to ensure appropriate risk mitigation actions are in place. This process helps to ensure that the Board maintains a sound system of internal control to safeguard shareholders' investments and the Group's assets. This process also involves a review by Directors of reports on the internal control systems of the service providers who perform all the Company's administrative and managerial functions. As described below, this process, together with key procedures established with a view to providing effective financial control, have been in place for the full financial year and up to the date the financial statements were approved. The risk management process and systems of internal control are designed to manage rather than eliminate the risk of failure to achieve the Company's objectives. It should be recognised that such systems can only provide reasonable, rather than absolute, assurance against material misstatement or loss. No significant failings or weaknesses have been identified. Internal control assessment process Risk assessment and the review of internal controls is undertaken by the Board in the context of the Group's overall investment objective. The review covers the key business, operational, compliance and financial risks facing the Company. In arriving at its judgement of what risks the Company faces, the Board has considered the Company's operations in the light of the following factors: · the threat of such risks becoming a reality; · the Company's ability to reduce the incidence and impact of risk on its performance;
· the cost to the Company and benefits related to the review of risk and
associated controls of the Group; and
· the extent to which third parties operate the relevant controls.
Against this background the Board has split the review into four sections
reflecting the nature of the risks being addressed. The sections are as
follows:
· corporate strategy;
· published information and compliance with laws and regulations;
· relationship with service providers; and
· investment and business activities.
Given the nature of the Company's activities and the fact that most functions
are subcontracted, the Group does not have an internal audit function. The
Directors have obtained information from key third-party suppliers regarding
the controls operated by them. To enable the Board to make an appropriate risk
and control assessment, the information and assurances sought from third
parties include the following:
· details of the control environment;
· identification and evaluation of risks and control objectives;
· assessment of the communication procedures; and
· assessment of the control procedures.
The key procedures which have been established to provide effective internal
financial controls are as follows:
· investment management is provided by Chelverton. The Board is responsible
for the implementation of the overall investment policy and monitors the
actions of the Investment Manager at regular Board meetings;
· the provision of administration, accounting and company secretarial duties
is the responsibility of Maitland Administration Services Limited;
· custody of assets is undertaken by Jarvis Investment Management Limited;
· the duties of investment management, accounting and custody of assets are
segregated. The procedures of the individual parties are designed to complement
one another;
· the non-executive Directors of the Group clearly define the duties and
responsibilities of their agents and advisers in the terms of their contracts.
The appointment of agents and advisers is conducted by the Board after
consideration of the quality of the parties involved; the Board via the
Management Engagement Committee monitors their ongoing performance and
contractual arrangements;
· mandates for authorisation of investment transactions and expense payments
are set by the Board; and
· the Board reviews detailed financial information provided by the
Administrator on a regular basis.
Company Secretary
The Board has direct access to the advice and services of the Company
Secretary, Maitland Administration Service Limited, which is responsible for
ensuring that Board and Committee procedures are followed and that applicable
regulations are complied with. The Secretary is also responsible to the Board
for ensuring timely delivery of information and reports and that the statutory
obligations of the Group are met.
Dialogue with shareholders
Communication with shareholders is given a high priority by both the Board and
the Investment Manager and all Directors are available to enter into dialogue
with shareholders at any time. Major shareholders of the Group have the
opportunity to meet with the independent non-executive Directors of the Board
in order to ensure that their views are understood. All shareholders are
encouraged to attend the AGM, during which the Board and the Investment Manager
are available to discuss issues affecting the Group and shareholders have the
opportunity to address questions to the Investment Manager, the Board and the
Chairmen of the Board's standing committees.
There are no significant issues raised by major shareholders to bring to all
shareholders' attention, topics of interest are covered in the Strategic Report
on pages 1 to 13.
Any shareholder who would like to lodge questions in advance of the AGM is
invited to do so either on the reverse of the Proxy Form or in writing to the
Company Secretary at the address given on page 71. The Company always responds
to letters from individual shareholders.
The Annual and Half Yearly Reports of the Group are prepared by the Board and
its advisers to present a full and readily understandable review of the Group's
performance. Copies are available for downloading from the Investment Manager's
website www.chelvertonam.com and on request from the Company Secretary on 01245
398950. Copies of the Annual Report are mailed to shareholders.
Audit Committee Report
Role of the Committee
The Audit Committee ('the Committee') provides a forum through which the
Group's Auditor reports to the Board. The Committee is responsible for
monitoring the process of production and ensuring the integrity of the Group's
financial statements. The other primary responsibilities of the Committee are:
· to monitor adherence to best practice in corporate governance;
· to review the effectiveness of the internal control and risk management
environment of the Group;
· to receive compliance reports from the Investment Manager;
· to consider the accounting policies of the Group;
· to make recommendations to the Board in relation to the re-appointment of
the Auditor;
· to make recommendations to the Board in relation to the Auditors'
remuneration and terms of engagement; and
· to review and monitor the Auditor's independence and objectivity and the
effectiveness of the audit process.
Matters considered in the year
The Committee met twice during the financial year to consider the financial
statements and to review the internal control systems. The principal matters
considered by the Committee were the valuation of the Group's assets, proof of
ownership of its investments and cash, and the maintenance of its approval as
an investment trust.
The Manager and Administrator have reported to the Committee to confirm
continuing compliance with their individual regulatory requirements and for
maintaining the Company's investment trust status. These were also reviewed by
the Auditor as part of the audit process.
The Committee liaised with the appointed Investment Manager, Chelverton
Investment Management Limited, throughout the year, and received reports on
their legal compliance at each meeting. A Risk Assessment and Review of
Internal Controls document maintained by the Board was considered in detail and
amended as necessary. This document is reviewed by the Committee at each
meeting.
Internal Audit
The Group does not have an internal audit function as most of its day-to-day
operations are delegated to third parties, all of whom have their own internal
control procedures. The Committee discussed whether it would be appropriate to
establish an internal audit function, and agreed that the existing system of
monitoring and reporting by third parties remains appropriate and sufficient.
The need for an internal audit function is reviewed annually.
External Audit
The Audit Committee monitors and reviews the effectiveness of the external
third-party service providers, audit process for the publication of the Annual
Report and makes recommendations to the Board on the re-appointment,
remuneration and terms of engagement of the Auditors.
Prior to each Annual Report being published, the Committee considers the
appropriateness of the scope of the audit plan, the terms under which the audit
is to be conducted, as well as the matter of remuneration, with a view to
ensuring the best interests of the Group are promoted.
Audit fees are computed on the basis of the time spent on Group affairs by the
Audit partners and staff and on the levels of skill and responsibility of those
involved.
Hazlewoods LLP was first appointed as Auditor to the Group on 2 May 2007. As
part of its review of the continuing appointment of the Auditor, the Committee
considers the length of tenure of the audit firm, its fees and independence,
along with any matters raised during each audit. The Committee has discussed
with Hazlewoods LLP its objectivity, independence and experience in the
investment trust sector.
The Committee has recommended the re-appointment of Hazlewoods LLP on each
occasion since their initial appointment, and no tender has been undertaken for
the audit of the Group. The Audit Partner for the Group has been rotated once
since their initial appointment, most recently in respect of the financial year
ended 30 April 2012. In accordance with Auditing Practice Board Ethical
Standard 3 (Revised) the audit will be put to tender in 2017 for the 2018
audit.
Hazlewoods LLP has indicated its willingness to continue in office as Auditor
of the Group until such time as the audit tender process for the 2018 audit is
completed. Following its review, the Committee considers that, individually and
collectively, the Auditor is appropriately experienced to fulfil the role
required, and have recommended its re-appointment to the Board. A resolution
for its re-appointment will be proposed at the forthcoming Annual General
Meeting.
The Committee has considered the independence and objectivity of the Auditor
and it is satisfied in these respects that Hazlewoods LLP has fulfilled its
obligations to the Group and its shareholders. During the year, Hazlewoods
provided tax compliance services to the Group. These were not provided by the
audit team and the fee is not significant. No other non-audit services were
provided in the year. The Committee has advised that, based on its assessment
of their performance and independence, Hazlewoods LLP has fulfilled its
obligations to the Group and its shareholders.
I intend to be present at the Annual General Meeting to address any questions
from shareholders relating to the financial statements.
Howard Myles
Audit Committee Chairman
14 July 2017
Directors' Remuneration Report
The Board has prepared this Report in accordance with the requirements of
Schedule 8 to the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013. The law requires the Group's Auditor,
Hazlewoods LLP, to audit certain disclosures provided. Where disclosures have
been audited, they are indicated as such. The Auditor's opinion is included in
their report on pages 37 to 40.
Last year, shareholders were asked to approve the Directors' Remuneration
Report at the Annual General Meeting ('AGM') through an advisory vote, as has
been the case in previous years, and this will again be the case at the next
AGM. At the AGM held in 2014 shareholders were also asked to give a binding
vote on the Directors' Remuneration Policy. The Remuneration Policy must be
approved at least every three years; therefore, it will be submitted at this
year's AGM.
An Ordinary Resolution to approve to receive and approve the Remuneration
Report will be put to shareholders at the forthcoming AGM on 7 September 2017.
The Board considers and approves Directors' remuneration. No major decisions on
or changes to Directors' remuneration have been made during the year ended 30
April 2017. During the year ended 30 April 2017, the fees were continued at a
rate of GBP20,000 for the Chairman and GBP17,500 for other Directors, with an
additional payment of GBP2,500 to the Chairman of the Audit Committee.
The Company's performance
The graph below compares the total return (assuming all dividends are
reinvested) to Ordinary shareholders, compared to the total shareholder return
of the MSCI UK Small Cap Index. Although the Company has no formal benchmark,
the MSCI UK Small Cap Index has been selected as it is considered to represent
a broad equity market index against which the performance of the Company's
assets may be adequately assessed.
Click here for graph.
Directors' service contracts
None of the Directors has a contract of service with the Company, nor has there
been any contract or arrangement between the Company and any Director at any
time during the year. The terms of their appointment provide that a Director
shall retire and be subject to re-election at the first Annual General Meeting
after their appointment, and at least every three years after that. Directors
who have served on the Board for more than nine years must offer themselves for
re-election on an annual basis.
Directors' entitlements
Directors are only entitled to fees in accordance with the Directors'
Remuneration Policy as approved by shareholders. None of the Directors has any
entitlement to pensions or pension-related benefits, medical or life insurance,
share options, long-term incentive plans, or any form of performance-related
pay. Also, no Director has any right to any payment by way of monetary
equivalent, or any assets of the Company except in their capacity as
shareholders. There is no notice period and no provision for compensation upon
loss of office. The Directors' emoluments table below therefore does not
include columns for any of these items or their monetary equivalents.
Directors' emoluments for the year ended 30 April 2017 (audited)
The Directors who served in the year received the following emoluments wholly
in the form of fees:
Fees/Total
Year to Year to
30 April 2017 30 April
2016
Lord Lamont (Chairman) 20,000 20,000
D Harris 17,813 20,000
H Myles 19,687 17,500
W van Heesewijk* - -
57,500 57,500
* William van Heesewijk has waived his entitlement to fees.
During the year no Directors received taxable benefits (2016: same).
Directors' interests (audited)
The interests of the Directors and any connected persons in the Ordinary shares
and Zero Dividend Preference ('ZDP') shares of the subsidiary Company are set
out below:
Number of Number of Number of Number of
Ordinary shares ZDP shares Ordinary ZDP shares
held at held at shares held at
held at
Director 30 April 2017 30 April 30 April 2016 30 April
2017 2016
Lord Lamont (Chairman) 69,588 10,000 69,048 10,000
*
D Harris 5,802 Nil 5,802 Nil
W van Heesewijk 90,000 Nil 90,000 Nil
H Myles Nil Nil Nil Nil
* Lord Lamont purchased 216 Ordinary Shares on 7 July 2017 under a dividend
reinvestment plan.
Significance of spend on pay
Change
2017 2016 %
Dividends paid to Ordinary shareholders 1,585,000 1,291,000 22.78
in the year
Total remuneration paid to Directors 57,500 57,500 -
None of the Directors nor any persons connected with them had a material
interest in the Company's transactions, arrangements or agreements during the
year.
The Directors' Remuneration Report for the year ended 30 April 2016 (Resolution
2) was approved by shareholders at the Annual General Meeting held on 8
September 2016. The votes cast by proxy were as follows:
Number of votes % of votes
cast
For 1,125,488 100.00
Against 0 0.00
At Chairman's discretion 0 0.00
Total votes cast 1,125,488
Number of votes abstained 0
Remuneration Policy
The Board's policy is that the remuneration of non-executive Directors should
be sufficient to attract and retain directors with suitable skills and
experience, and is determined in such a way as to reflect the experience of the
Board as a whole, in order to be comparable with other organisations and
appointments.
The fees of the non-executive Directors are determined within the limits of GBP
112,500, as set out in the Company's Articles of Association. The approval of
shareholders would be required to increase the limits set out in the Articles
of Association. Directors are not eligible for bonuses, pension benefits, share
options, long-term incentive schemes or other benefits, as the Board does not
consider such arrangements or benefits necessary or appropriate. Fees for any
new Director appointed will be made on the same basis.
The Directors' Remuneration Policy (Resolution 3) was approved by shareholders
at the Annual General Meeting held on 17 September 2014. The votes cast by
proxy were as follows:
Number of votes % of votes
cast
For 2,034,679 99.65
Against 7,070 0.35
At Chairman's discretion 0 0.00
Total votes cast 2,041,749
Number of votes abstained 1,200
Expected Fees for Fees for
Year to Year to
30 April 2018 30 April
2017
Chairman basic fee 20,000 20,000
Non-Executive Director basic fee 17,500 17,500
Audit Committee Chairman additional fee 2,500 2,500
The Company intends to continue with the Directors' Remuneration Policy over
the next financial year on the above basis. Fees payable in respect of
subsequent periods will be determined following an annual review. Any views
expressed by shareholders on remuneration being paid to Directors would be
taken into consideration by the Board. In accordance with the regulations, an
Ordinary Resolution to approve the Directors' Remuneration Policy will be put
to shareholders at least once every three years.
Approval
The Directors' Remuneration Report on pages 31 to 34 was approved by the Board
on 14 July 2017.
On behalf of the Board
Lord Lamont of Lerwick
Chairman
14 July 2017
Statement of Directors' Responsibilities
in respect of the Annual Report and the financial statements
The Directors are responsible for preparing the Annual Report and the financial
statements. The Directors have elected to prepare financial statements in
accordance with International Financial Reporting Standards ('IFRSs') as
adopted by the EU. Company law requires the Directors to prepare such financial
statements in accordance with IFRSs and the Companies Act 2006.
Under company law the Directors must not approve the financial statements
unless they are satisfied that they present fairly the financial position,
financial performance and cash flows of the Group and the Company for that
period.
In preparing each of the Group and the Company's financial statements, the
Directors are required to:
· select suitable accounting policies in accordance with International
Accounting Standard ('IAS') 8: 'Accounting Policies, Changes in Accounting
Estimates and Errors' and then apply them consistently;
· present information, including accounting policies, in a manner that
provides relevant, reliable, comparable and understandable information;
· provide additional disclosures when compliance with specific requirements
in IFRSs is insufficient to enable users to understand the impact of particular
transactions, other events and conditions on the Group and the Company's
financial position and financial performance;
· state that the Group and the Company have complied with IFRSs, as adopted
by the EU subject to any material departures disclosed and explained in the
financial statements; and
· make judgements and estimates that are reasonable and prudent.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Group's transactions and disclose with
reasonable accuracy at any time the financial position of the Group and enable
them to ensure that the Group's financial statements comply with the Companies
Act 2006 and Article 4 of the IAS Regulation. They are also responsible for
safeguarding the assets of the Group 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 Strategic Report, a Directors' Report, Directors' Remuneration
Report and Statement on Corporate Governance that comply with that law and
those regulations, and for ensuring that the Annual Report includes information
required by the Listing Rules of the FCA.
The Directors are responsible for the integrity of the information relating tothe Company on the Investment Manager's website. Legislation in the UK
governing the preparation and dissemination of financial statements differs
from legislation in other jurisdictions.
The Directors confirm that, to the best of their knowledge and belief:
· the financial statements, prepared in accordance with IFRSs as adopted by
the EU, give a true and fair view of the assets, liabilities, financial
position and profit of the Group;
· the Annual Report includes a fair review of the development and performance
of the Group, together with a description of the principal risks and
uncertainties faced;
· the Annual Report is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company's performance,
business model and strategy; and
· * the Investment Managers' Report includes a fair review of the development
and performance of the business and the Company and its undertakings included
in the consolidation taken as a whole and adequately describes the principal
risks and uncertainties they face.
On behalf of the Board of Directors
Lord Lamont of Lerwick
Chairman
14 July 2017
Auditor's Report
to the members of Chelverton Small Companies Dividend Trust PLC
We have audited the Group financial statements of Chelverton Small Companies
Dividend Trust PLC for the year ended 30 April 2017 which comprise the
Consolidated Statement of Comprehensive Income, the Consolidated and Parent
Company Statement of Changes in Net Equity, the Consolidated and Parent Company
Balance Sheets, the Consolidated and Parent Company Statement of Cash Flows and
the related notes. The financial reporting framework that has been applied in
their preparation is applicable law and IFRSs as adopted by the EU.
This report is made solely to the Group's members, as a body, in accordance
with Chapter 3 of Part 16 of the Companies Act 2006. Our audit work has been
undertaken so that we might state to the Group's members those matters we are
required to state to them in an audit report and for no other purpose. To the
fullest extent permitted by law, we do not accept or assume responsibility to
anyone other than the Group and the Group's members as a body, for our audit
work, for this report or for the opinions we have formed.
Respective responsibilities of Directors and Auditor
As explained more fully in the Statement of Directors' Responsibilities set out
on pages 35 and 36, the Directors are responsible for the preparation of the
Group financial statements and for being satisfied that they give a true and
fair view. Our responsibility is to audit and express an opinion on the Group
financial statements in accordance with applicable law and International
Standards on Auditing (UK and Ireland). Those standards required us to comply
with the Auditing Practices Board's ('APB's') Ethical Standards for Auditors.
Scope of the audit of the financial statements
An audit involves obtaining evidence about the amounts and disclosures in the
financial statements sufficient to give reasonable assurance that the financial
statements are free from material misstatement, whether caused by fraud or
error. This includes an assessment of: whether the accounting policies are
appropriate to the Group's circumstances and have been consistently applied and
adequately disclosed; the reasonableness of significant accounting estimates
made by the Directors; and the overall presentation of the financial
statements. In addition, we read all the financial and non-financial
information in the Strategic Report and Directors' Report to identify material
inconsistencies with the audited financial statements and to identify any
information that is apparently materially incorrect based on, or materially
inconsistent with the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements or
inconsistencies, we consider the implications for our report.
Opinion on financial statements
In our opinion the Group financial statements:
· give a true and fair view of the state of the Group's and of the Company's
affairs as at 30 April 2017 and of its net return and comprehensive income for
the year then ended;
· have been properly prepared in accordance with IFRSs as adopted by the EU;
and
· have been prepared in accordance with the requirements of the Companies Act
2006 and Article 4 of the IAS Regulations.
Our assessment of risks of material misstatement
Without modifying our opinion, we highlight the following matters that are, in
our judgement, likely to be most important to users' understanding of our
audit. Our audit procedures relating to these matters were designed in the
context of our audit of the financial statements as a whole, and not to express
an opinion on individual transactions, balances or disclosures.
Allocation of costs between capital and revenue
The Group is required to apportion its expenses between revenue and capital.
This allocation is important as the company can only pay dividends out of
revenue. The split has to be performed on the basis of the Board's expected
long-term capital and revenue returns. Our audit work included, but was not
restricted to, a detailed review of the actual dividend and capital income
received in the past 11 years compared to the Board's expected long-term
capital and revenue returns. The Group's accounting policy on this allocation
is included in note 1.
Revenue recognition
Investment income is the Group's main source of revenue and is recognised when
the Group's right to the return is established in accordance with the Statement
of Recommended Practice. Our audit work included, but was not restricted to, a
detailed review of those sources of income recorded in the financial statements
and further consideration of other potential sources of income. The Group's
accounting policy on income is included in note 1 and its disclosures about
income are included in note 2.
Management override of financial controls
The Group operates a system of financial controls to mitigate its vulnerability
to fraud and its financial statements to material error and is reliant upon the
efficacy of these controls to ensure that its financial statements present a
true and fair view. The financial statements contain a number of significant
accounting estimates that require an element of judgement on behalf of
management and that are, therefore, potentially open to manipulation. Our audit
work included, but was not restricted to, a review of all significant
management estimates and detailed consideration of all material judgements
applied during the completion of the financial statements. We also reviewed
material journal entries processed by management during the period. The Group's
principal accounting policies are included in note 1.
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in
evaluating the effect of any identified misstatements and in forming our
opinion. For the purpose of determining whether the financial statements are
free from material misstatement, we define materiality as the magnitude of a
misstatement or an omission from the financial statements or related
disclosures that would make it probable that the judgement of a reasonable
person relying on the information would have been changed or influenced by the
misstatement or omission. We also determine a level of performance materiality
which we use to determine the extent of testing needed to reduce to an
appropriately low level the probability that the aggregate of uncorrected and
undetected misstatements exceeds materiality for the financial statements as a
whole.
We established materiality for the financial statements as a whole to be GBP
457,000, which is 1% of the value of the Group's total assets. For income and
expenditure items we determined that misstatements of lesser amounts than
materiality for the financial statements as a whole would make it probable that
the judgement of a reasonable person, relying on the information, would have
been changed or influenced by the misstatement or omission. Accordingly, we
established materiality for revenue items within the income statement to be GBP
108,000.
An overview of the scope of our audit
Our audit approach was based on a thorough understanding of the Group's
business and is risk-based. The day-to-day management of the Group's investment
portfolio, the custody of its investments and the maintenance of the Group's
accounting records is outsourced to third-party service providers. Accordingly,
our audit work is focused on obtaining an understanding of, and evaluating,
internal controls at the Group and the third-party service providers, and
inspecting records and documents held by the third-party service providers. We
undertook substantive testing on significant transactions, balances and
disclosures, the extent of which was based on various factors such as our
overall assessment of the control environment, the effectiveness of controls
over individual systems and the management of specific risks.
Opinion on other matters prescribed by the Companies Act 2006
In our opinion based on the work undertaken in the course of the audit:
· the part of the Directors' Remuneration Report to be audited has been
properly prepared in accordance with the Companies Act 2006;
· the information given in the Strategic Report and Directors' Report for the
financial year for which the financial statements are prepared is consistent
with the financial statements; and
· the Strategic Report and Directors' Report have been prepared in accordance
with applicable legal requirements.
In the light of our knowledge and understanding of the Group and its
environment obtained in the course of the audit, we have not identified
material misstatements in the Strategic Report and the Directors' Report.
Matters on which we are required to report by exception
We have nothing to report in respect of the following:
Under the ISAs (UK and Ireland), we are required to report to the Board if, in
our opinion, information in the Strategic Report and the Directors' Report is:
· materially inconsistent with the information in the audited financial
statements; or
· apparently materially incorrect based on, or materially inconsistent with,
our knowledge of the Group acquired in the course of performing our audit; or
· is otherwise misleading.
In particular, we are required to consider whether we have identified any
inconsistencies between our knowledge acquired during the audit and the
Directors' statement that they consider the Annual Report is fair, balanced and
understandable and whether the Annual Report appropriately discloses those
matters that we communicated to the Audit Committee which we consider should
have been disclosed.
Under the Companies Act 2006 we are required to report to you if, in our
opinion:
· adequate accounting records have not been kept, or returns adequate for our
audit have not been received from branches not visited by us; or
· the financial statements and the part of the Directors' Remuneration Report
to be audited are not in agreement with the accounting records and returns; or
· certain disclosures of directors' remuneration specified by law are not
made; or
· we have not received all the information and explanations we require for
our audit.
· the Directors' statement, set out on page 20, in relation to going concern;
and
· the part of the Statement on Corporate Governance relating to the Group's
compliance with the nine provisions of the UK Corporate Governance Code
specified for our review.
Scott Lawrence (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor
Cheltenham
14 July 2017
Consolidated Statement of Comprehensive Income
for the year ended 30 April 2017
Note Revenue 2017 Total Revenue 2016 Total
GBP'000 Capital GBP'000 GBP'000 Capital GBP'000
GBP'000 GBP'000
Gains on investments at fair 10 - 6,642 6,642 - 3,104 3,104
value through profit or loss
Investment income 2 2,361 - 2,361 2,180 - 2,180
Investment management fee 3 (119) (357) (476) (115) (345) (460)
Other expenses 4 (224) (12) (236) (206) (2) (208)
Net return before finance 2,018 6,273 8,291 1,859 2,757 4,616
costs and taxation
Finance costs 6 - (633) (633) - (597) (597)
Net return before taxation 2,018 5,640 7,658 1,859 2,160 4,019
Taxation 7 - - - - - -
Total comprehensive income 2,018 5,640 7,658 1,859 2,160 4,019
for the year
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Net return per:
Ordinary share 8 12.17 34.03 46.20 11.23 13.05 24.28
Zero Dividend Preference 8 - 7.37 7.37 - 7.02 7.02
share
The total column of this statement is the Statement of Comprehensive Income of
the Group prepared in accordance with IFRS as adopted by the EU. All revenue
and capital items in the above statement derive from continuing operations. No
operations were acquired or discontinued during the year. All of the net return
for the period and the total comprehensive income for the period is
attributable to the shareholders of the Group. The supplementary revenue and
capital return columns are presented for information purposes as recommended by
the Statement of Recommended Practice issued by the AIC.
The notes on pages 46 to 65 form part of these financial statements.
Consolidated and Parent Company Statement of Changes in Net Equity
for the year ended 30 April 2017
Share Share Capital Revenue Total
capital premium reserve reserve
account
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year ended 30 April 2017
30 April 2016 4,138 12,403 15,992 2,544 35,077
Total comprehensive income - - 5,640 2,018 7,658
for the year
Ordinary shares issued 62 519 - - 581
Expenses of ordinary share - (7) - - (7)
issue
Dividends paid 9 - - - (1,585) (1,585)
30 April 2017 4,200 12,915 21,632 2,977 41,724
Year ended 30 April 2016
30 April 2015 4,138 12,403 13,832 1,976 32,349
Total comprehensive income - - 2,160 1,859 4,019
for the year
Dividends paid 9 - - - (1,291) (1,291)
30 April 2016 4,138 12,403 15,992 2,544 35,077
The notes on pages 46 to 65 form part of these financial statements.
Consolidated and Parent Company Balance Sheets
as at 30 April 2017
Note Group Group Company Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Non-current assets
Investments at fair value through 10 53,827 45,376 53,827 45,376
profit or loss
Investments in subsidiary 12 - - 13 13
53,827 45,376 53,840 45,389
Current assets
Trade and other receivables 13 262 333 262 333
Cash and cash equivalents 89 29 89 29
351 362 351 362
Total assets 54,178 45,738 54,191 45,751
Current liabilities
Trade and other payables 14 (146) (132) (159) (145)
Zero Dividend Preference shares 15 (12,308) - - -
Loan from subsidiary 16 - - ( -
12,308)
(12,454) (132) (12,467) (145)
Total assets less current 41,724 45,606 41,724 45,606
liabilities
Non-current liabilities
Zero Dividend Preference shares 15 - (10,529) - -
Loan from subsidiary 16 - - - (10,529)
- (10,529) - (10,529)
Total liabilities (12,454) (10,661) (12,467) (10,674)
Net assets 41,724 35,077 41,724 35,077
Represented by:
Share capital 17 4,200 4,138 4,200 4,138
Share premium account 18 12,915 12,403 12,915 12,403
Capital reserve 18 21,632 15,992 21,632 15,992
Revenue reserve 18 2,977 2,544 2,977 2,544
Equity shareholders' funds 41,724 35,077 41,724 35,077
The notes on pages 46 to 65 form part of these financial statements.
These financial statements were approved by the Board of Chelverton Small
Companies Dividend Trust PLC and authorised for issue on 14 July 2017.
Lord Lamont of Lerwick
Chairman
Company Registered Number: 03749536
Consolidated and Parent Company Statement of Cash Flows
for the year ended 30 April 2017
Note 2017 2016
GBP'000 GBP'000
Operating activities
Investment income received 2,419 2,158
Refund of loan interest - 2
Investment management fee paid (457) (510)
Administration and secretarial fees (64) (59)
paid
Other cash payments (185) (133)
Net cash inflow from operating 20 1,713 1,458
activities
Investing activities
Purchases of investments (13,776) (14,714)
Sales of investments 11,988 14,087
Net cash (outflow)/inflow from (75) 831
investing activities
Financing activities
Issue of Zero Dividend Preference 1,146 -
shares
Issue of ordinary shares 581 -
Expenses of ordinary share issue (7) -
Dividends paid 9 (1,585) (1,291)
Net cash inflow/(outflow) from 135 (1,291)
financing activities
Change in cash and cash equivalents 21 60 (460)
for year
Cash and cash equivalents at start 21 & 22 29 489
of year
Cash and cash equivalents at end of 21 & 22 89 29
year
Comprises of:
Cash and cash equivalents 22 89 29
The notes on pages 46 to 65 form part of these financial statements.
Notes to the Financial Statements
as at 30 April 2017
1 ACCOUNTING POLICIES
Chelverton Small Companies Dividend Trust PLC is a company domiciled in the UK.
The consolidated financial statements for the year ended 30 April 2017 comprise
the financial statements of the Company and its subsidiary, SCZ (together
referred to as the 'Group').
Basis of preparation
The consolidated financial statements of the Group and the financial statements
of the Company have been prepared in conformity with IFRSs issued by the
International Accounting Standards Board (as adopted by the EU) and
Interpretations issued by the International Financial Reporting Interpretations
Committee ('IFRIC'), and applicable requirements of UK company law, and reflect
the following policies which have been adopted and applied consistently.
New standards, interpretations and amendments adopted by the Group
The accounting policies adopted in the preparation of the consolidated
financial statements are consistent with those of the previous financial year.
There were no IFRS standards or IFRIC interpretations adopted for the first
time in these financial statements that had a material impact on the Group's
financial statement.
At the date of authorisation of the financial statements, the following
Standards which have not been applied in these financial statements were in
issue but were not yet effective:
· IFRS 7 Financial Instruments: Disclosures - Amendments requiring disclosures
about the initial application of IFRS 9 (effective 1 January 2016 or otherwise
when IFRS 9 is first applied)
· IFRS 9 Financial Instruments - Classification and measurement of financial
assets (effective 1 January 2018)
· IFRS 9 Financial Instruments - Classification and measurement of financial
liabilities and de-recognition requirements from IAS 39 Financial Instruments
Recognition and Measurement (effective 1 January 2018)
The Directors do not expect that the adoption of the Standards listed above
will have a material impact on the financial statements of the Group in future
periods.
Critical accounting judgements and uses of estimation
The preparation of financial statements in conformity with IFRS requires
management to make judgements, estimates and assumptions that affect the
application of policies and the amounts reported in the Balance Sheet, the
Statement of Comprehensive Income. The estimates and associated assumptions are
based on historical experience and various other factors that are believed to
be reasonable under the circumstances, the results of which form the basis of
making judgements about carrying values of assets and liabilities that are not
readily apparent from other sources. Actual results may differ from these
estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Revisions to accounting estimates are recognised in the period in which the
estimate is revised if the revision affects only that period, or in the period
of the revision and future period if the revision affects both current and
future periods. There were no significant accounting estimates or significant
judgements in the current period.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its wholly-owned subsidiary undertaking, SCZ, drawn up to the same
accounting date.
The subsidiary is consolidated from the date of its incorporation, being the
date on which the Company obtained control, and will continue to be
consolidated until the date that such control ceases. Control comprises the
power to govern the financial and operating policies of the investee so as to
obtain benefit from its activities and is achieved through direct or indirect
ownership of voting rights. The financial statements of the subsidiary are
prepared for the same reporting year as the Company, using consistent
accounting policies. All inter-company balances and transactions, including
unrealised profits arising from them, are eliminated.
As permitted by Section 408 of the Companies Act 2006, the Company has not
presented its own Statement of Comprehensive Income. The amount of the
Company's return for the financial period dealt with in the financial
statements of the Group is a profit of GBP7,658,000 (2016: GBP4,019,000).
Convention
The financial statements are presented in Sterling rounded to the nearest
thousand. The financial statements have been prepared on a going concern basis
under the historical cost convention, except for the measurement at fair value
of investments classified as fair value through profit or loss. Where
presentational guidance set out in the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture Capital Trusts'
('SORP'), issued by the Association of Investment Companies (dated January
2017) is consistent with the requirements of IFRS, the Directors have sought to
prepare the financial statements on a consistent basis compliant with the
recommendations of the SORP.
Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment
of business, being investment business. The Group only invests in companies
listed in the UK.
Investments
All investments held by the Group are recorded at '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
unrealised gains and losses on investments and impairment of investments
recognised in the Consolidated Statement of Comprehensive Income and allocated
to capital. Realised gains and losses on investments sold are calculated as the
difference between sales proceeds and cost.
For investments actively traded in organised financial markets, fair value is
generally determined by reference to quoted market bid prices at the close of
business on the Balance Sheet date, without adjustment for transaction costs
necessary to realise the asset.
Trade date accounting
All 'regular way' purchases and sales of financial assets are recognised on the
'trade date', i.e. the day that the Group commits to purchase or sell the
asset. Regular way purchases, or sales, are purchases or sales of financial
assets that require delivery of the asset within a time frame generally
established by regulation or convention in the market place.
Income
Dividends receivable on quoted equity shares are taken into account on the
ex-dividend date. Where no ex-dividend date is quoted, they are brought into
account when the Group's right to receive payment is established. Other
investment income and interest receivable are included in the financial
statements on an accruals basis.
Expenses
All expenses are accounted for on an accruals basis. All expenses are charged
through the revenue account in the Consolidated Statement of Comprehensive
Income except as follows:
· expenses which are incidental to the acquisition of an investment are
included within the costs of the investment;
· expenses which are incidental to the disposal of an investment are deducted
from the disposal proceeds of the investment;
· expenses are charged to capital reserve where a connection with the
maintenance or enhancement of the value of the investments can be demonstrated;
and
· operating expenses of the subsidiary are borne by the Company and taken 100%
to capital.
All other expenses are allocated to revenue with the exception of 75% (2016:
75%) of the Investment Manager's fee which is allocated to capital. This is in
line with the Board's expected long-term split of returns from the investment
portfolio, in the form of income and capital gains respectively.
Cash and cash equivalents
Cash in hand and in banks and short-term deposits which are held to maturity
are carried at cost. Cash and cash equivalents are defined as cash in hand,
demand deposits and short-term, highly liquid investments readily convertible
to known amounts of cash and subject to insignificant risk of changes in value.
Loans and borrowings
All loans and borrowings are initially recognised at cost, being the fair value
of the consideration received, less issue costs, where applicable. After
initial recognition, all interest-bearing loans and borrowings are subsequently
measured at amortised cost. Any difference between cost and redemption value is
recognised in the Consolidated Statement of Comprehensive Income over the
period of the borrowings on an effective interest basis.
Zero Dividend Preference shares
Shares issued by the subsidiary are treated as a liability of the Group, and
are shown in the Balance Sheet at their redemption value at the Balance Sheet
date. The appropriations in respect of the Zero Dividend Preference shares
necessary to increase the subsidiary's liabilities to the redemption values are
allocated to capital in the Consolidated Statement of Comprehensive Income.
This treatment reflects the Board's long-term expectations that the
entitlements of the Zero Dividend Preference shareholders will be satisfied out
of gains arising on investments held primarily for capital growth.
Share issue costs
Costs incurred directly in relation to the issue of shares in the subsidiary
are borne by the Company and taken 100% to capital. Share issue costs relating
to Ordinary share issues by the Company are taken 100% to the share premium
account.
Capital Reserve
Capital reserve (other) includes:
· gains and losses on the disposal of investments;
· exchange difference of a capital nature; and
· expenses, together with the related taxation effect, allocated to this
reserve in accordance with the above policies.
Capital reserve (investment holding gains) includes increase and decrease in
the valuation of investments held at the year end.
Revenue Reserve
This reserve includes net revenue recognised in the revenue column of the
Statement of Comprehensive Income.
Taxation
There is no charge to UK income tax as the Group's allowable expenses exceed
its taxable income. Deferred tax assets in respect of unrelieved excess
expenses are not recognised as it is unlikely that the Group will generate
sufficient taxable income in the future to utilise these expenses. Deferred tax
is not provided on capital gains and losses because the Company meets the
conditions for approval as an investment trust company.
Dividends payable to shareholders
Dividends to shareholders are recognised as a liability in the period in which
they are paid or approved in general meetings and are taken to the Statement of
Changes in Net Equity. Dividends declared and approved by the Group after the
Balance Sheet date have not been recognised as a liability of the Group at the
Balance Sheet date.
2 INCOME
2017 2016
GBP'000 GBP'000
Income from listed investments
UK dividend income 2,009 1,962
Overseas dividend income 255 177
Property income distibution 97 39
Other income
Refund of loan interest - 2
Total income 2,361 2,180
Total income comprises:
Dividends 2,361 2,178
Interest - 2
2,361 2,180
3 INVESTMENT MANAGEMENT FEE
2017 2016
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management 119 357 476 115 345 460
fee
At 30 April 2017 there were amounts outstanding of GBP72,000 (2016: GBP
53,000).
4 OTHER EXPENSES
2017 2016
GBP'000 GBP'000
Administration and secretarial fees 64 64
Directors' remuneration (note 5) 58 58
Auditor's remuneration:
audit services* 21 20
non-audit services* 3 3
Insurance 4 4
Other expenses* 86 59
236 208
Subsidiary operating costs (12) (2)
224 206
* The above amounts include irrecoverable VAT where applicable.
5 DIRECTORS' REMUNERATION
2017 2016
GBP GBP
Total fees 57,500 57,500
Remuneration to Directors
Lord Lamont (Chairman) 20,000 20,000
D 17,813 20,000
Harris
H 19,687 17,500
Myles
W van Heesewijk* - -
* Mr van Heesewijk has waived his entitlement to fees.
6 FINANCE COSTS
2017 2016
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Appropriations in respect of
Zero Dividend Preference shares - 633 - 597 597 -
7 TAXATION
2017 2016
GBP'000 GBP'000
Based on the revenue return for the year
Current tax - -
The current tax charge for the year is lower than the standard rate of
corporation tax in the UK of 20% to 30 April 2017 and 30 April 2016. The
differences are explained below:
2017 Total Revenue 2016 Total
Revenue Capital Capital
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Return on ordinary activities 2,018 5,640 7,691 1,859 2,160 4,019
before taxation
Theoretical corporation tax at 404 1,128 1,538 372 432 804
20%
Effects of:
Capital items not taxable - (1,202) (1,208) - (501) (501)
UK and overseas dividends which (453) - (453) (428) - (428)
are
not liable to corporation tax
Excess expenses in the year 49 74 123 56 69 125
Actual current tax charged to
the
revenue account - - - - - -
The Group has unrelieved excess expenses of GBP20,299,712 (2016: GBP19,678,000). It
is unlikely that the Group will generate sufficient taxable profits in the
future to utilise these expenses and therefore no deferred tax asset has been
recognised.
8 RETURN PER SHARE
Ordinary shares
Revenue return per Ordinary share is based on revenue on ordinary activities
after taxation of GBP2,018,000 (2016: GBP1,859,000) and on 16,575,343 (2016:
16,550,000) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.
Capital return per Ordinary share is based on the capital profit of GBP5,640,000
(2016: GBP2,160,000) and on 16,575,343 (2016: 16,550,000) Ordinary shares, being
the weighted average number of Ordinary shares in issue during the year.
Zero Dividend Preference shares
Capital return per Zero Dividend Preference share is based on allocations from
the Company of GBP633,000 (2016: GBP597,000) and on 8,586,063 (2016: 8,500,000)
Zero Dividend Preference shares, being the weighted average number of Zero
Dividend Preference shares in issue during the year.
9 DIVIDS
2017 2016
GBP'000 GBP'000
Declared and paid per Ordinary share
Fourth interim dividend for the year 397 397
ended 30 April 2016 of 2.40p (2015:
2.40p)
Special dividend for the year ended 30 265 50
April 2016 of 1.60p (2015: 0.30p)
First interim dividend of 1.85p (2016: 306 281
1.70p)
Second interim dividend of 1.85p (2016: 306 281
1.70p)
Third interim dividend of 1.85p (2016: 311 282
1.70p)
1,585 1,291
Declared per Ordinary share*
Fourth interim dividend for the year 413 397
ended 30 April 2017 of 2.40p (2016:
2.40p)
Special dividend for the year ended 30 320 265
April 2017 of 1.86p (2016: 1.60p)
733 662
* Dividend paid subsequent to the year
end.
10 INVESTMENTS - Group and Company
Listed AIM 2017
GBP'000 GBP'000 Total
GBP'000
Year ended 30 April 2017
Opening book cost 23,700 15,084 38,784
Opening investment holding gains 3,982 2,610 6,592
Opening valuation 27,682 17,694 45,376
Transfer of GVC Holdings from AIM to 524 (524) -
listed
Movements in the year:
Purchases at cost 5,632 8,144 13,776
Disposals:
Proceeds (5,826) (6,141) (11,967)
Net realised gains on disposals 1,881 3,632 5,513
Movement in investment holding gains 1,864 (735) 1,129
Closing valuation 31,757 22,070 53,827
Closing book cost 25,911 20,195 46,106
Closing investment holding gains 5,846 1,875 7,721
31,757 22,070 53,827
Realised gains on disposals 1,881 3,632 5,513
Movement in investment holding gains 1,864 (735) 1,129
Gains on investments 3,745 2,897 6,642
Listed AIM 2016
GBP'000 GBP'000 Total
GBP'000
Year ended 30 April 2016
Opening book cost 22,561 11,815 34,376
Opening investment holding gains 4,247 3,058 7,305
Opening valuation 26,808 14,873 41,681
Movements in the year:
Purchases at cost 7,969 6,745 14,714
Disposals:
Proceeds (8,846) (5,277) (14,123)
Net realised gains on disposals 2,016 1,801 3,817
Movement in investment holding gains (265) (448) (713)
Closing valuation 27,682 17,694 45,376
Closing book cost 23,700 15,084 38,784
Closing investment holding gains 3,982 2,610 6,592
27,682 17,694 45,376
Realised gains on disposals 2,016 1,801 3,817
Movement in investment holding gains (265) (448) (713)
Gains on investments 1,751 1,353 3,104
Transaction costs
During the year the Group incurred transaction costs of GBP52,000 (2016: GBP64,000)
and GBP29,000 (2016: GBP35,000) on purchases and sales of investments respectively.
These amounts are included in gains on investments, as disclosed in the
Consolidated Statement of Comprehensive Income.
11 SIGNIFICANT INTERESTS
The Company has provided notifications of holdings of 3% or more in relevant
issuers. The following issuer notifications remain effective as at 30 April
2017:
30 April 2017
Name of issuer Class of share % held
Coral Products Plc Ordinary 7.6
RTC Group Plc Ordinary 6.9
Chamberlin Plc Ordinary 6.3
Anglo African Oil & Gas Ordinary 4.7
Plc
Orchard Funding Group Ordinary 3.3
Plc
Belvoir Lettings Plc Ordinary 3.1
12 INVESTMENT IN SUBSIDIARY
The Company owns the whole of the issued ordinary share capital of SCZ,
especially formed for the issuing of Zero Dividend Preference shares, which is
incorporated and registered in England and Wales, under company number:
08142169.
13 TRADE AND OTHER RECEIVABLES
Group Group Company Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Amounts due from Brokers 15 36 15 36
Dividends receivable 235 295 235 295
Prepayments and accrued income 12 2 12 2
262 333 262 333
14 TRADE AND OTHER PAYABLES
Group Group Company Company
2017 2016 2017 2016
GBP'000 GBP'000 GBP'000 GBP'000
Trade and other payables 146 132 146 132
Loan from subsidiary undertaking - - 13 13
146 132 159 145
15 ZERO DIVID PREFERENCE SHARES
On 28 August 2012, SCZ issued 8,500,000 Zero Dividend Preference shares at 100p
per share and with net proceeds of GBP8.3 million. The expenses of the placing
were borne by the Company and the Investment Manager. On 24 March 2017, SCZ
issued a further 849,000 Zero Dividend Preference shares at a premium of 135p
per share and with net proceeds of GBP1,146,000. The Zero Dividend Preference
shares each have an initial capital entitlement of 100p per share, growing by
an annual rate of 6% compounded daily to 136.70p on 8 January 2018, a total of
GBP12,780,000. The accrued entitlement as per the Articles of Association of SCZ
at 30 April 2017 was 131.65p (2016: 123.87p) per share, being GBP12,308,000
(2016: GBP10,529,000) in total, and the total amount accrued for the year of GBP
633,000 (2016: GBP597,000) has been charged to capital.
16 SECURED LOAN
Pursuant to a loan agreement between SCZ and the Company, SCZ has lent the
gross proceeds of GBP8,500,000, raised from the placing on 28 August 2012 of
8,500,000 Zero Dividend Preference shares at 100p, to the Company. SCZ has lent
the gross proceeds of GBP1,146,000 raised from the additional placing on 24 March
2017 of 849,000 Zero Dividend Preference shares at a premium of 135p per share
to the Company. The loan is non-interest bearing and is repayable three
business days before the Zero Dividend Preference share redemption date of 8
January 2018 or, if required by SCZ, at any time prior to that date in order to
repay the Zero Dividend preference share entitlement. The funds are to be
managed in accordance with the investment policy of the Company.
The loan is secured by way of a floating charge on the Company's assets under a
debenture entered into between the Company and SCZ dated 1 August 2012.
A contribution agreement between the Company and SCZ has also been made whereby
the Company will undertake to contribute such funds as would ensure that SCZ
will have in aggregate sufficient assets on 8 January 2018 to satisfy the final
capital entitlement of the Zero Dividend Preference shares. At 30 April 2017
the contribution due from the Company to cover the accrued entitlement was GBP
633,000 (2016: GBP597,000).
Company Company
2017 2016
GBP'000 GBP'000
Value at 1 May 10,529 9,932
Loan issued during year 1,146 -
Contribution to accrued capital 633 597
entitlement of Zero Dividend Preference
shares
Value at 30 April 12,308 10,529
17 SHARE CAPITAL
2017 2016
Number GBP'000 Number GBP'000
Issued, allotted and fully paid:
Opening balance 16,550,000 4,138 16,550,000 4,138
Issue of Ordinary shares 250,000 62 - -
16,800,000 4,200 16,550,000 4,138
On 24 March 2017, the Company announced the issue of 250,000 Ordinary shares of
25p each at an issue price of 232.56p per Ordinary share.
The rights attaching to the Ordinary shares are:
As to dividends each year
Ordinary shares are entitled to all the revenue profits of the Company
available for distribution, including all undistributed income.
As to capital on winding up
On a winding up, holders of Zero Dividend Preference shares issued by SCZ are
entitled to a payment of an amount equal to 100p per share, increased daily
from 28 August 2012 at such a compound rate as will give a final entitlement to
136.70p for each Zero Dividend Preference share at 8 January 2018, GBP12,780,000
in total.
The holders of Ordinary shares will receive all the remaining Group assets
available for distribution to shareholders after payment of all debts and
satisfaction of all liabilities of the Company rateably according to the
amounts paid or credited as paid up on the Ordinary shares held by them
respectively.
Voting
Each holder of Ordinary shares on a show of hands will have one vote and on a
poll will have one vote for each Ordinary share held. Each holder of Zero
Dividend Preference shares on a show of hands will have one vote at meetings
where Zero Dividend Preference shareholders are entitled to vote and on a poll
will have one vote for every Zero Dividend Preference share held.
Duration
Under the Parent Company's Articles of Association, the Directors are required
to convene a General Meeting of the Company to be held in October 2017 or on a
date which is either four months before or four months after this date so as to
align the vote with any timetable for a further issue of Zero Dividend
Preference shares or to save costs by proposing the Continuation Resolution (as
defined below) at the Annual General Meeting or some other General Meeting of
the Company ('the First GM'), at which an Ordinary Resolution will be proposed
to the effect that the Company continues in existence ('the Continuation
Resolution'). In the event that such Resolution is not passed the Directors
shall, subject to the Statutes, put forward further proposals to shareholders
regarding the future of the Company (which may include voluntary liquidation,
unitisation or other reorganisation of the Company) ('the Restructuring
Resolution') at a General Meeting of the Company to be convened not more than
four months after the date of the First GM (or such adjournment).
The Restructuring Resolution shall be proposed as a Special Resolution. If the
Restructuring Resolution is either not proposed or not passed then the
Directors shall convene a General Meeting not more than four months after the
date of the First GM (or such adjournment). If the Restructuring Resolution is
not proposed or four months after the date the Restructuring Resolution is not
passed, an Ordinary Resolution pursuant to Section 84 of the Insolvency Act
1986 to voluntarily wind up the Company shall be put to shareholders and the
votes taken on such Resolution shall be on a poll.
18 RESERVES - Group and Company
Share Capital Revenue
premium reserve reserve
account GBP GBP'000 GBP'000
'000
At 1 May 2016 12,403 15,992 2,544
Net return on realisation of investments - 5,513 -
Movement in investment holding gains - 1,129 -
Costs charged to capital - (369) -
Issue of ordinary shares 519 - -
Expenses of ordinary share issue (7) - -
Appropriations in respect of Zero Dividend - (633) -
Preference shares
Net return after dividends for the year - - 433
retained
At 30 April 2017 12,915 21,632 2,977
At 1 May 2015 12,403 13,832 1,976
Net return on realisation of investments - 3,817 -
Movement in investment holding gains - (713) -
Costs charged to capital - (347) -
Appropriations in respect of Zero Dividend - (597) -
Preference shares
Net return after dividends for the year - - 568
retained
At 30 April 2016 12,403 15,992 2,544
19 NET ASSET VALUE PER SHARE
The net asset value per share and the net assets attributable to the Ordinary
shareholders and Zero Dividend Preference shareholders are as follows:
Net asset Net assets Net Net assets
value per attributable asset attributable
share to value to
shareholders per shareholders
share
2017 2017 2016 2016
pence GBP'000 pence GBP'000
Ordinary shares 248.36 41,724 211.95 15,077
Zero Dividend Preference shares 131.65 12,308 123.87 10,529
The net asset value per Ordinary share is calculated on 16,800,000 (2016:
16,550,000) Ordinary shares, being the number of Ordinary shares in issue at
the year end.
The net asset value per Zero Dividend Preference share is calculated on
9,349,000 (2016: 8,500,000) Zero Dividend Preference shares, being the number
of Zero Dividend Preference shares in issue at the year end.
20 RECONCILIATION OF NET RETURN BEFORE AND AFTER TAXATION
TO NET CASH FLOW FROM OPERATING ACTIVITIES - Group and Company
2017 2016
GBP'000 GBP'000
Net return before taxation 7,658 4,019
Taxation - -
Net return after taxation 7,658 4,019
Net capital return (5,640) (2,160)
Decrease/(increase) in receivables 50 (19)
Increase/(decrease) in payables 14 (35)
Interest and expenses charged to the capital (369) (347)
reserve
Net cash inflow from operating activities 1,713 1,458
21 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH - Group and Company
2017 2016
GBP'000 GBP'000
Increase/(decrease) in cash in year 60 (460)
Net cash at 1 May 29 489
Net cash at 30 April 89 29
22 ANALYSIS OF CHANGES IN NET CASH - Group and Company
At 1 May At 30
April
2016 Cash 2017
flows
GBP'000 GBP'000 GBP'000
Cash at bank 29 60 89
23 RELATED PARTY TRANSACTIONS
Under the terms of an agreement dated 30 April 2006 (effective from 1 December
2005), the Company appointed Chelverton to be Investment Manager. The fee
arrangements for these services and fees payable are set out in the Directors'
Report on page 17 and in note 3 to the financial statements.
24 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
Objectives, policies and strategies
The Group primarily invests in companies with a market capitalisation of up to
GBP500 million. All of the Group's investments comprise ordinary shares in
companies listed on the Official List and companies admitted to AIM.
The Group finances its operations through Zero Dividend Preference shares
issued by SCZ and equity. Cash, liquid resources and short-term debtors and
creditors arise from the Group's day-to-day operations.
It is, and has been throughout the year under review, the Group's policy that
no trading in financial instruments shall be undertaken.
Objectives, policies and strategies
In pursuing its investment objective, the Group is exposed to a variety of
risks that could result in either a reduction in the Group's net assets or a
reduction of the profits available for distribution. These risks are market
risk (comprising currency 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.
As required by IFRS 7: Financial Instruments: Disclosures, an analysis of
financial assets and liabilities, which identifies the risk to the Group of
holding such items, is given below.
Market risk
Market risk arises mainly from uncertainty about future prices of financial
instruments used in the Group's business. It represents the potential loss the
Group might suffer through holding market positions by way of price movements
and movements in exchange rates and interest rates. The Investment Manager
assesses the exposure to market risk when making each investment decision and
these risks are monitored by the Investment Manager on a regular basis and the
Board at quarterly meetings with the Investment Manager.
Market price risk
Market price risks (i.e. changes in market prices other than those arising from
currency risk or interest rate risk) may affect the value of investments.
The Board manages the risks inherent in the investment portfolios by ensuring
full and timely reporting of relevant information from the Investment Manager.
Investment performance is reviewed at each Board meeting.
The Group's exposure to changes in market prices at 30 April on its investments
is as follows:
2017 2016
GBP'000 GBP'000
Fair value through profit or loss investments 53,827 45,376
Sensitivity analysis
A 10% increase in the market value of investments at 30 April 2017 would have
increased net assets by GBP5,383,000 (2016: GBP4,538,000). An equal change in the
opposite direction would have decreased the net assets available to
shareholders by an equal but opposite amount.
Foreign currency risk
All the Group's assets are denominated in Sterling and accordingly the only
currency exposure the Group has is through the trading activities of its
investee companies.
Interest rate risk
Interest rate movements may affect the level of income receivable on cash
deposits. The Group does not currently receive interest on its cash deposits.
The majority of the Group's financial assets are non-interest bearing. As a
result the Group's financial assets are not subject to significant amounts of
risk due to fluctuations in the prevailing levels of market interest rates.
24 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
Interest rate risk
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 30 April 2017 of financial assets and financial liabilities to
interest rate risk is limited to cash and cash equivalents of GBP89,000 (2016: GBP
29,000). Cash and cash equivalents are all due within one year.
Credit risk
Credit risk is the risk of financial loss to the Group 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.
Listed investments are held by Jarvis Investment Management Limited acting as
the Company's custodian. Bankruptcy or insolvency of the custodian may cause
the Company's rights with respect to securities held by the custodian to be
delayed. The Board monitors the Group's risk by reviewing the custodian's
internal controls reports.
Investment transactions are carried out with a number of brokers whose
creditworthiness is reviewed by the Investment Manager. Transactions are
ordinarily undertaken on a delivery versus payment basis whereby the Company's
custodian bank ensures that the counterparty to any transaction entered into by
the Group has delivered in its obligations before any transfer of cash or
securities away from the Group is completed.
Cash is only held at banks that have been identified by the Board as reputable
and of high credit quality. The maximum exposure to credit risk as at 30 April
2017 was GBP54,178,000 (2016: GBP45,738,000). The calculation is based on the
Group's credit risk exposure as at 30 April 2017 and this may not be
representative of the year as a whole.
None of the Group's assets are past due or impaired.
Liquidity risk
The majority of the Group's assets are listed securities in small companies,
which can under normal conditions be sold to meet funding commitments if
necessary. They may however be difficult to realise in adverse market
conditions.
All other payables are due in less than one year.
Financial instruments by category
The financial instruments of the Group fall into the following categories:
30 April 2017
Assets at
At cost Loans and fair value
receivables through
profit
cost or loss Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets as per Balance Sheet
Investments - - 53,827 53,827
Trade and other receivables - 262 - 262
Cash and cash equivalents 89 - - 89
Total 89 262 53,827 54,178
Liabilities as per Balance
Sheet
Trade and other payables 146 - - 146
Zero Dividend Preference - 12,308 - 12,308
shares
Total 146 12,308 - 12,454
30 April 2016 At Loans and Assets at
cost receivables fair value
through
profit
or loss Total
GBP'000 GBP'000 GBP'000 GBP'000
Assets as per Balance Sheet
Investments - - 45,376 45,376
Trade and other receivables - 333 - 333
Cash and cash equivalents 29 - - 29
Total 29 333 45,376 45,738
Liabilities as per Balance
Sheet
Trade and other payables 132 - - 132
Zero Dividend Preference - 10,529 - 10,529
shares
Total 132 10,529 - 10,661
As required by IFRS 7 the Company is required to classify fair value
measurements using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy consists of
the following three levels:
Level 1 - Quoted prices (unadjusted) in active markets for identical assets or
liabilities.
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 arm's 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); and
· 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. 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 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 investments.
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 private equity and corporate debt securities. 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 or Level 3 investments (2016: same).
25 CAPITAL MANAGEMENT POLICIES AND PROCEDURES
The Group's capital management objectives are:
· to ensure the Group's ability to continue as a going concern;
· to provide an adequate return to shareholders;
· to support the Group's stability and growth;
· to provide capital for the purpose of further investments.
The Group actively and regularly reviews and manages its capital structure to
ensure an optimal capital structure and to maximise equity holder returns,
taking into consideration the future capital requirements of the Group and
capital efficiency, prevailing and projected profitability, projected operating
cash flows and projected strategic investment opportunities. The management
regards capital as total equity and reserves, for capital management purposes.
26 POST BALANCE SHEET EVENTS
Between the year end and the 14 July 2017, the latest practicable date before
the publication of these financial statements, the Company has issued 550,000
ordinary shares for a consideration of GBP1,581,000.
Shareholder Information
Financial calendar
Group's year end 30 April
Quarterly interim dividends paid July, October, January and April
Special dividend paid July
Annual results announced June
Annual General Meeting September
Group's half year 31 October
Half year results December
announced
Share prices and performance information
The Company's Ordinary shares and the Zero Dividend Preference shares issued
through SCZ are listed on the London Stock Exchange Main Market.
The net asset values are announced weekly to the London Stock Exchange and
published monthly via the AIC.
Information about the Group can be obtained on the Chelverton website at
www.chelvertonam.com. Any enquiries can also be e-mailed to
cam@chelvertonam.com.
Share register enquiries
The register for the Ordinary shares and the Zero Dividend Preference shares
are maintained by Share Registrars Limited. In the event of queries regarding
your holding, please contact the Registrar on 01252 821390. Changes of name and
/or address must be notified in writing to the Registrar.
Company Summary
History
The Company was launched on 12 May 1999, raising GBP21.38 million before
expenses, by a placing of 15,000,000 Ordinary shares and, through its former
subsidiary company, Small Companies PLC, 6,250,000 Zero Dividend Preference
shares and 31,260 Preference shares. A further 750,000 Ordinary shares were
issued as a result of a placing for cash on 3 March 2000 and on 26 October 2005
a further 500,000 shares were issued. The subsidiary, Small Companies PLC, was
placed into members' voluntary liquidation on 30 April 2007, following which
the capital entitlements of the Zero Dividend Preference and Preference shares
were repaid.
Group structure
The Company has in issue one class of Ordinary share. In addition, it has a
wholly owned subsidiary, SCZ, through which Zero Dividend Preference shares
have been issued. The new subsidiary was incorporated on 13 July 2012 and has a
capital structure comprising unlisted Ordinary shares and Zero Dividend
Preference shares listed on the Official List and traded on the London Stock
Exchange. SCZ was incorporated specifically for the issue of Zero Dividend
Preference shares. On 28 August 2012, SCZ issued 8,500,000 Zero Dividend
Preference shares at 100p per share and with net proceeds of GBP8.3 million. The
expenses of the placing were borne by the Company. On 24 March 2017, SCZ issued
a further 849,000 Zero Dividend Preference shares at a premium of 135p per
share and with net proceeds of GBP1,146,000. Pursuant to a loan agreement between
SCZ and the Company, SCZ has lent the proceeds of the placing to the Company.
The loan is non-interest bearing and is repayable three business days before
the Zero Dividend Preference share redemption date of 8 January 2018 or, if
required by SCZ, at any time prior to that date in order to repay the Zero
Dividend Preference share entitlement. The funds are to be managed in
accordance with the investment policy of the Company.
A contribution agreement between the Company and SCZ has also been made whereby
the Company will undertake to contribute such funds as will ensure that SCZ
will have in aggregate sufficient assets on 8 January 2018 to satisfy the final
capital entitlement of the Zero Dividend Preference shares.
Total net assets and market capitalisation at year end
As at 30 April 2017, the Company had a market capitalisation of GBP38,640,000
(2016: GBP31,528,000) and total net assets amounted to GBP41,724,000 (2016: GBP
35,077,000).
Management fee
The fee payable to the Investment Manager is 1% of the combined gross assets of
the Group.
Capital structure
Details of share structure and entitlements and voting rights of each class can
be found on page 68.
ISA status
The Company's Ordinary shares are qualifying investments for Individual Savings
Accounts ('ISAs'), as are the Zero Dividend Preference shares of SCZ.
Registered in England
No. 03749536
A member of the Association of Investment Companies
Capital Structure
Chelverton Small Companies Dividend Trust PLC ('the Company')
Chelverton Small Companies Dividend Trust PLC was registered on 3 September
2003 with number 03749536. The Company has in issue one class of Ordinary
share. In addition, it has a wholly owned subsidiary, Chelverton Small
Companies ZDP PLC, which was registered on 13 July 2012 with number 08142169,
through which Zero Dividend Preference shares have been issued.
Ordinary shares of 25p each ('Ordinary shares') - 16,800,000 in issue as at 30
April 2017
Share Capital Events
On 24 March 2017, the Company announced the issue of 250,000 Ordinary shares at
a price of 232.56p each, which were to rank pari passu in all respects with the
Ordinary shares in issue. The shares were issued for cash in order to meet
investor demand. Following this admission there were 16,800,000 Ordinary shares
in issue. The Company has only one class of share and this figure represents
100% of the Company's share capital and voting rights.
Since 30 April 2017 and 14 July 2017, the latest practicable date before the
publication of these financial statements, a further 550,000 ordinary shares
have been issued for a total consideration of GBP1,581,000. The number of shares
in issue at the date of this report is 17,350,000.
Dividends
Holders of Ordinary shares are entitled to dividends.
Capital
On a winding up of the Company, Ordinary shareholders will be entitled to all
surplus assets of the Company available after payment of the Company's
liabilities, including the full and final capital entitlement of the Zero
Dividend Preference shares.
Voting
Each holder on a show of hands will have one vote and on a poll will have one
vote for each Ordinary share held.
Chelverton Small Companies ZDP PLC ('SCZ')
Ordinary shares of 100p each ('ordinary shares') - 50,000 in issue (partly paid
up as to 25p each)
The ordinary shares are owned by the Company. References to Ordinary shares
within this Annual Report are to the Ordinary shares of Chelverton Small
Companies Dividend Trust PLC.
Capital
Following payment of any liabilities and the capital entitlement to the Zero
Dividend Preference shareholders, ordinary shareholders are entitled to any
surplus assets of SCZ.
Voting
Each holder on a show of hands will have one vote and on a poll will have one
vote for each ordinary share held.
Zero Dividend Preference shares of 100p each - 9,349,000 in issue as at 30
April 2017
Share Capital Events
On 24 March 2017, the Company announced the issue of 849,000 Zero Dividend
Preference shares at a price of 135p each. Following this admission there were
9,349,000 Zero Dividend Preference shares in issue.
Dividends
Holders of Zero Dividend Preference shares are not entitled to dividends.
Capital
On a winding up of SCZ, after the satisfaction of prior ranking creditors and
subject to sufficient assets being available, Zero Dividend Preference
shareholders are entitled to an amount equal to 100p share increased daily from
28 August 2012 at such compound rate as will give an entitlement to 136.7p per
share at 8 January 2018.
Voting
Each holder of Zero Dividend Preference shares on a show of hands will have one
vote at meetings where Zero Dividend Preference shareholders are entitled to
vote and on a poll will have one vote for every Zero Dividend Preference share
held.
Holders of Zero Dividend Preference shares are not entitled to attend, speak or
vote at General Meetings unless the business of the meeting includes a
resolution to vary, modify or abrogate the rights attached to the Zero Dividend
Preference shares.
Glossary of Terms
Net asset value ('NAV')
The NAV is shareholders' funds expressed as an amount per individual share.
Shareholders' funds are the total value of all the Company's assets, at current
market value, having deducted all prior charges at their par value (or at their
asset value).
Discount
If the share price of an investment trust is lower than the NAV per share, the
shares are said to be trading at a discount. The size of the discount is
calculated by subtracting the share price from the NAV per share and is usually
expressed as a percentage of the NAV per share. If the share price is higher
than the NAV per share, the shares are said to be trading at a premium.
Gearing
Gearing is the process whereby changes in the total assets of a company have an
exaggerated effect on the net assets of that company's ordinary shares due to
the presence of borrowing or share classes with a prior ranking entitlement to
capital.
Ongoing charges
The total expenses incurred by a company, including those charged to capital
(excluding performance fee and finance costs and exceptional costs) as a
percentage of average quarterly net assets.
Total return
The combined effect of any dividends paid, together with the rise or fall in
the share price or NAV. Total return statistics enable the investor to make
performance comparisons between trusts with different dividend policies. Any
dividends (after tax) received by a shareholder are assumed to have been
reinvested in either additional shares of the trust at the time the shares go
ex-dividend (the share price total return) or in the assets of the trust at its
NAV per share (the NAV total return).
Directors and Advisers
Directors Lord Lamont of Lerwick (Chairman)
David Harris
William van Heesewijk
Howard Myles
Investment Manager Chelverton Asset Management Limited
11 Laura Place
Bath BA2 4BL
Tel: 01225 483030
Secretary and Maitland Administration Services
Limited
Registered Office Springfield Lodge
Colchester Road, Chelmsford Essex CM2
5PW Tel: 01245 398950
Registrar and Share Registrars Limited
Transfer Office Suite E
First Floor
9 Lion and Lamb Yard
Farnham
Surrey GU9 7LL
Tel: 01252 821390
www.shareregistrars.uk.com
Auditors Hazlewoods LLP
Windsor House
Bayshill Road
Cheltenham GL50 3AT
Custodian Jarvis Investment Management Limited
78 Mount Ephraim Tunbridge Wells
Kent TN4 8BS
Notice of Annual General Meeting
This document is important and requires your immediate attention. If you are in
any doubt as to what action you should take, you are recommended to seek your
own financial advice from your stockbroker or other independent adviser
authorised under the Financial Services and Markets Act 2000 immediately.
If you have sold or otherwise transferred all of your shares in Chelverton
Small Companies Dividend Trust PLC, please forward this document as soon as
possible to the purchaser or transferee or to the stockbroker, bank or other
agent through whom the sale or transfer was effected for transmission to the
purchaser or transferee.
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of the Company will be
held at 11.00 am on Thursday 7 September 2017 at the offices of Chelverton
Asset Management, 3rd Floor, 20 Ironmonger Lane, London EC2V 8EP for the
following purposes:
Ordinary Business - Resolutions 1 to 7 will be proposed as Ordinary Resolutions
1 To receive the Strategic Report, Directors' Report and the audited financial
statements for the year ended 30 April 2017.
2 To receive and approve the Directors' Remuneration Report for the year ended
30 April 2017.
3 To re-elect Lord Lamont as a Director.
4 To re-elect Mr Harris as a Director.
5 To re-elect Mr van Heesewijk as a Director.
6 To re-elect Mr Myles as a Director.
7 To appoint Hazlewoods as Auditor and to authorise the Directors to determine
their remuneration.
Special Business
To consider and, if thought fit, to pass the following Resolutions of which
Resolutions 8 and 9 will be proposed as an Ordinary Resolution and Resolutions
10 to 12 will be proposed as Special Resolutions.
8 To approve the Directors' Remuneration Policy, as set out on page 33 of the
Directors' Remuneration Report, which takes effect immediately after the Annual
General meeting.
9 THAT the Directors be and are hereby generally and unconditionally authorised
pursuant to Section 551 of the Companies Act 2006 ('the Act') (in substitution
for any existing allotment authorities, provided that such substitution shall
not have retrospective effect) to exercise all the powers of the Company to
allot shares and to grant rights to subscribe for, or to convert any security
into, shares in the Company ('the Rights') up to an aggregate nominal value
equal to GBP1,445,833, being one-third of the issued Ordinary share capital as
at 14 July 2017, during the period commencing on the date of the passing of
this Resolution and expiring (unless previously renewed, varied or revoked by
the Company in general meeting) at the conclusion of the Annual General Meeting
of the Company to be held in 2018, or 15 months from the passing of this
Resolution, whichever is earlier (the 'Period of Authority'), but so that the
Directors may, at any time prior to the expiry of the Period of Authority, make
offers or agreements which would or might require shares to be allotted and/or
Rights to be granted after the expiry of the Period of Authority and the
Directors may allot shares or grant Rights in pursuance of such offers or
agreements as if the authority had not expired.
10 THAT, subject to the passing of Resolution 9 above, the Directors of the
Company be and they are hereby empowered pursuant to Section 570 and Section
573 of the Act to allot equity securities (within the meaning of Section 560 of
the Act) or sell shares held in Treasury (within the meaning of Section
560(3) of the Act) for cash pursuant to the authority conferred by Resolution 9
above as if Section 561(1) of the Act did not apply to any such allotment,
provided that this power shall be limited to:
a) the allotment of equity securities in connection with a rights issue, open
offer or any other offer in favour of Ordinary shareholders where the equity
securities respectively attributable to the interests of all Ordinary
shareholders are proportionate (as nearly as may be) to the respective number
of Ordinary shares held by them subject to such exclusions or other
arrangements as the Directors may deem fit to deal with fractional
entitlements, record dates, legal, regulatory or practical problems arising
under the laws of any overseas territory or the requirements of any regulatory
authority or any stock exchange; and
b) to the allotment (otherwise than pursuant to paragraph (a) above) of
equity securities up to 10% of the issued Ordinary share capital, representing
1,735,000 Ordinary shares at 14 July 2017.
and shall expire at the conclusion of the Annual General Meeting of the Company
to be held in 2017, or 15 months from the passing of this Resolution, whichever
is earlier, save that the Company may before such expiry make offers,
agreements or arrangements which would or might require equity securities to be
allotted after such expiry and so that the Directors of the Company may allot
equity securities in pursuance of such offers, agreements or arrangements as if
the power conferred hereby had not expired.
11 THAT the Company is hereby generally and unconditionally authorised in
accordance with Section 701 of the Act to make market purchases (within the
meaning of Section 693(4) of the Act) of Ordinary shares of 25p each in the
capital of the Company ('Ordinary shares') for cancellation or for placing into
Treasury provided that:
a) the maximum aggregate number of Ordinary shares authorised to be acquired
is 2,600,765, or if less, 14.99% of the Ordinary shares in issue and in
circulation immediately following the passing of this Resolution;
b) the minimum price which may be paid for each Ordinary share is 25p
(exclusive of expenses);
c) the maximum price which may be paid for each Ordinary share is, in respect
of a share contracted to be purchased on any day, an amount which shall not be
more than the higher of (i) 5% above the average of the middle market
quotations (as derived from the Daily Official List of the London Stock
Exchange) of the Ordinary shares for the five business days immediately
preceding the date on which the Ordinary share is purchased, and (ii) the
higher of the price of the last independent trade and the highest current
independent bid on the London Stock Exchange;
d) this authority will (unless renewed) expire at the conclusion of the next
Annual General Meeting of the Company or, if earlier, 15 months from the date
on which this Resolution is passed; and
e) any Ordinary shares bought back under the authority hereby granted may, at
the discretion of the Directors, be cancelled or held in treasury and if held
in treasury may be cancelled at the discretion of the Directors.
12 THAT a general meeting other than an annual general meeting may be called on
not less than 14 clear days' notice.
By order of the Board Registered office:
Maitland Administration Services Limited Springfield Lodge
Secretary Colchester Road
14 July 2017 Chelmsford CM2 5PW
Explanatory notes to the notice of meeting
Ordinary shareholders have the right to attend, speak and vote at the
forthcoming Annual General Meeting or at any adjournment(s) thereof. In order
to exercise all or any of these rights you should read the following
explanatory notes to the business of the Annual General Meeting.
Notes
1. A member entitled to attend, vote and speak at this meeting may appoint
one or more persons as his/her proxy to attend, speak and vote on his/her
behalf at the meeting. A proxy need not be a member of the Company. If multiple
proxies are appointed they must not be appointed in respect of the same shares.
To be effective, the enclosed form of proxy, together with any power of
attorney or other authority under which it is signed or a certified copy
thereof, should be lodged at the office of the Company's Registrar, Share
Registrars Limited, Suite E, First Floor, 9 Lion and Lamb Yard, Farnham, Surrey
GU9 7LL not later than 48 hours before the time of the meeting. The appointment
of a proxy will not prevent a member from attending the meeting and voting and
speaking in person if he/she so wishes. A member present in person or by proxy
shall have one vote on a show of hands and on a poll shall have one vote for
every Ordinary share of which he/she is the holder.
In the case of joint holders of a share, the vote of the senior who tenders a
vote, whether in person or by proxy, shall be accepted to the exclusion of the
vote or votes of the other joint holder or holders, and seniority shall be
determined by the order in which the names of the holders stand in the
register.
Any question relevant to the business of the Annual General Meeting may be
asked at the meeting by anyone permitted to speak at the meeting. You may
alternatively submit your question in advance by letter addressed to the
Company Secretary at the registered office.
2. A person to whom this notice is sent who is a person nominated under
Section 146 of the Companies Act 2006 to enjoy information rights (a 'Nominated
Person') may, under an agreement between him/her and the shareholder by whom he
/she was nominated, have a right to be appointed (or to have someone else
appointed) as a proxy for the Annual General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights. 3. The statements of the rights of members in relation to the appointment of proxies in Note 1 above do not apply to a Nominated Person. The rights described in that Note can only be exercised by registered members of the Company. 4. As at 14 July 2017 (being the last business day prior to the publication of this notice) the Company's issued share capital amounted to 17,350,000 Ordinary shares carrying one vote each. 5. The Company specifies that only those Ordinary shareholders registered on the Register of Members of the Company as at 11.00 am on 7 September 2017 (or in the event that the meeting is adjourned, only those Ordinary shareholders registered on the Register of Members of the Company as at 11.00 am on the day which is 48 hours prior to the adjourned meeting) shall be entitled to attend in person or by proxy and vote at the Annual General Meeting in respect of the number of Ordinary shares registered in their name at that time. Changes to entries on the Register of Members after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting. 6. In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to the business being dealt with at the meeting put by a member attending the meeting to be answered. No such answer need be given if: a) to do so would: i) interfere unduly with the preparation for the meeting, or ii) involve the disclosure of confidential information; b) the answer has already been given on a website in the form of an answer to a question; or c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered 7. A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the corporation could exercise if it were an individual member of the Company (provided, in the case of multiple corporate representatives of the same corporate shareholder, they are appointed in respect of different shares owned by the corporate shareholder or, if they are appointed in respect of those same shares, they vote those shares in the same way). To be able to attend and vote at the meeting, corporate representatives will be required to produce prior to their entry to the meeting evidence satisfactory to the Company of their appointment. Corporate shareholders can also appoint one or more proxies in accordance with Note 1. On a vote on a Resolution on a show of hands, each authorised person has the same voting rights to which the corporation would be entitled. On a vote on a Resolution on a poll, if more than one authorised person purports to exercise a power in respect of the same shares: a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way; b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised. 8. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service may do so for this meeting by following the procedures described in the CREST Manual. CREST personal members or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s), should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on their behalf. In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message (a 'CREST Proxy Instruction') must be properly authenticated in accordance with Euroclear's specifications and must contain the information required for such instructions, as described in the CREST Manual. The message, in order to be valid, must be transmitted so as to be received by the Company's agent (ID 7RA36) by the latest time for receipt of proxy appointments specified in Note 1 above. For this purpose, the time of receipt will be taken to be the time (as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company's agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any change of instructions to proxies appointed through CREST should be communicated to the appointee through other means. CREST members and, where applicable, their CREST sponsors or voting service providers, should note that Euroclear does not make available special procedures in CREST for any particular messages. Normal system timings and limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s)) such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the CREST system and timings. The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of the Uncertificated Securities Regulations 2001. 9. Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under Section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting out any matter relating to: (i) the audit of the Company's accounts (including the auditor's report and the conduct of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in accordance with Section 437 of the Companies Act 2006. The Company may not require the shareholders requesting any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006. Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006, it must forward the statement to the Company's auditor not later than the time when it makes the statement available on the website. The business which may be dealt with at the Annual General Meeting includes any statement that the Company has been required under Section 527 of the Companies Act 2006 to publish on a website. 10. Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company to give, to members of the Company entitled to receive notice of the Annual General Meeting, notice of a Resolution which those members intend to move (and which may properly be moved) at the Annual General Meeting. A Resolution may properly be moved at the Annual General Meeting unless (i) it would, if passed, be ineffective (whether by reason of any inconsistency with any enactment or the Company's constitution or otherwise); (ii) it is defamatory of any person; or (iii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify the Resolution of which notice is to be given, must be authenticated by the person(s) making it and must be received by the Company not later than six weeks before the date of the Annual General Meeting. 11. Members satisfying the thresholds in Section 338A of the Companies Act 2006 may request the Company to include in the business to be dealt with at the Annual General Meeting any matter (other than a proposed Resolution) which may properly be included in the business at the Annual General Meeting. A matter may properly be included in the business at the Annual General Meeting unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must identify grounds for the request, must be authenticated by the person(s) making it and must be received by the Company not later than six weeks before the date of the Annual General Meeting. 12. The Annual Report incorporating this notice of Annual General Meeting and, if applicable, any members' statements, members' Resolutions or members' matters of business received by the Company after the date of this notice will be available on the Company's website www.chelvertonam.com . 13. None of the Directors has a contract of service with the Company. END END
(END) Dow Jones Newswires
July 14, 2017 10:02 ET (14:02 GMT)
1 Year Chelverton Uk Dividend Chart |
1 Month Chelverton Uk Dividend Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
