Annual Financial Report

RNS Number : 3389S

Chelverton Growth Trust PLC

06 November 2013

 



CHELVERTON GROWTH TRUST PLC

FINAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2013

The full Annual Report and Accounts can be accessed via the Company's website

at www.chelvertonam.com or by contacting the Company Secretary on telephone

01326 378288

Investment objective

The Company's objectiveis to provide capital growth through investment in companies listed on the Official List and tradedon the Alternative Investment Marketwith a market capitalisation at the time of investment of up to £50 million, which are believed to be at a "point of change". The Company will also invest in unquoted investments where it is believed that there is a likelihoodof the shares becoming listed or traded on the Alternative Investment Market or the investeecompany being sold.Its investment objective is to increase net asset valueper share at a higherrate than otherquoted smaller company trusts and the MSCI Small Cap UK Index.

It is the Company's policy not to invest in any listed investment companies(including listed investment trusts).

Company summary

Benchmark                MSCI Small Cap UK Index

Investment Manager       Chelverton Asset Management Limited

                          See page 10 for further details

Total net assets         £4,709,000   as at 31 August 2013

Market capitalization    £3,516,000   as at 31 August 2013

Capital structure        10,495,860 Ordinary 1p shares carrying one vote each. 

Performance statistics

	31 August 2013	31 August 2012	% Change
Net assets	£4,709,000	£4,212,000	11.8
Net asset value per share (NAV)	44.87p	35.74p	25.5
MSCI Small Cap UK Index	296.516	230.262	28.7
Share price	33.50p	27.00p	24.1
Discount to net asset value	25.34%	24.45%
Revenue loss after taxation	£(90,000)	£(21,000)
Revenue loss per share	(0.87)p	(0.17)p
Capital gain per share	9.87p	4.97p

 

Chairman's statement

I am delighted to announce another year of good progress in which the fund's net asset value per share ('NAV') has increased from 35.74p to 44.87p - an increase of 25.5%.

In the same period the Company's benchmark index, the MSCI Small Cap UK Index rose by 28.7%.  Since the year end the NAV has marginally increased to 46.47p, a further small rise of 3.6%. 

The early part of the Company's year, the latter part of 2012, was again dominated by talk of recession or even "double-dip" recession, where a 0.1%, upwards or downwards movement in UK GDP was either Armageddon or the dawn of a New Age of prosperity.  It now appears that the underlying economy did not go into a "double dip" recession in early 2012, and that for much of last year the UK Economy simply marked time.  This year the economy is starting to grow: falling inflation and a rise in individuals' real incomes may then follow, which in turn will have a consequent positive effect on GDP growth and ultimately employment.  All of this should mean, in time, a major boost to our essentially UK focused companies.

As is evident from the growth in net asset value per share, the companies in the portfolio have generally made further progress over the past year and as discussed above further progress may be expected in the current year.   

On a personal note, I shall not offer myself for re-election at the forthcoming AGM. My seven years as Chairman have coincided with one of the most difficult investment climates, certainly of my lifetime, and possibly for over a century. It is therefore gratifying to note that the NAV is higher today than it was in December 2006. The credit for this belongs rightly to the Manager for the rigour of its investment processes, but I believe that the Board has also played its part by keeping the Company's portfolio under constant review. We have not been afraid to cut our losses when necessary, and to seek more positive opportunities for the funds released. Today the share price stands at 38.25p and shareholders will be happy that values have been maintained, and indeed enhanced, during the Recession.

As your Company is restricted in its ability to pay dividends, the Board has resolved once again to proceed with a Tender offer this year - the 5^th such during my tenure. Thus shareholders have an opportunity - if they wish it - to realise an "income" from their holdings, often with advantageous taxation consequences. It therefore remains our intention to repeat this process each year so long as circumstances warrant it.

George Stevens

Chairman     

4 November 2013

Investment Manager's overview

In the past year the UK economy has finally shown that the fabled "green shoots" really were there and were not just part of our wishful thinking.  As unemployment, and the corollary, employment have fallen and risen respectively, already with anecdotal evidence of some skill shortages starting to emerge, we felt it was just a matter of time before the "statistics" would catch up with what we seemed to be hearing from our investee companies in this fund and in other investments. 

As the UK re-establishes itself as a place to do business the types of companies in which the Fund is invested will prosper particularly as businesses in the UK have the confidence to start investing in equipment and people.  The operational gearing effect of this will prove to be very rewarding whilst most costs are being held at current levels. 

The European zone appears, for the moment, to have stabilised itself, and for the time being has managed to re-build confidence in the currency and the system.  The UK's position is now clear and there is no pressure for the UK to engage further with Europe, with all the potential instability that might bring.

It is a relief that the Coalition are still talking about deficit, and subsequently debt reduction.  It is imperative that the wealth creators - businesses,  be given more room by the Public Sector to grow steadily and sensibly so as to generate the funds which alone  can finance the appropriate level of Public Services in the UK. 

In time it is to be hoped that bank lending to smaller companies does increase and that companies will want to borrow from banks rather than the alternative models for obtaining finance that have appeared to fill the vacuum left by the conventional sources of funding.  However, as this fund is an equity provider, this shortage of finance is helpful as it ultimately provides us with attractive investment opportunities.           

Portfolio review

This year we have continued the process of reducing the shareholding in IDOX with a near 60% reduction in the shareholding at an average price of 52.2p and a high of 59p against a current somewhat depressed price of 38p.  

New investments were made in: A B Dynamics - a specialist engineer providing test equipment to the global automotive market; Main Dental Partners - a company established to buy dental practices; and a small investment in Airways Engineering Limited, a broker of aircraft maintenance, repair and overhaul services. 

Additional investments were made in Transflex Vehicle Hire Limited - the company actually had two issues for additional equity capital to finance its strong growth.  The second share issue was priced at a premium of 25% and all shareholders took up their rights.  Further shares were acquired in Lombard Risk Management during a period of price weakness, which has since been corrected.  Additional small investment has been made in Anaxsys.

In the unquoted investments we have increased a number of the valuations as significant progress was made during the year.  One Horizon, previously traded on AIM before delisting, reversed into a Nasdaq OTC shell company with the intention, we understand, of obtaining a full Nasdaq listing as soon as possible.  A change of year-end and a consolidation of the share capital might be indicators of this happening in 2014.  Parmenion has continued its excellent progress of building up funds, making healthy profits and generating cash. The holding value has been increased to reflect this.

Closed Loop has also made very good progress and we expect, over the next few months, to see some tangible evidence of the hard work and progress of the past two years.

Outlook

With the sales from the IDOX shareholding, and the subsequent decline in its share price, the portfolio now has a more balanced look.  With some other holdings having recovered strongly over the past year from the depths of a few years ago we have more scope for gradually selling down some shareholdings for further reinvestment.

I believe we can expect to see another year of progress in 2013 - 2014.

David Horner

Chelverton Asset Management Limited

4 November 2013

Portfolio review

as at 31 August 2013

Investment	Sector			Valuation £'000	% of total
AIM traded
A B Dynamics	Industrial Engineering			241	5.1
Design and manufacture of advanced testing and measurement products to the automotive industry
Alliance Pharma	Pharmaceuticals & Biotechnology			297	6.3
Acquisition of the manufacturing, sales and distribution rights to pharmaceutical products
Belgravium Technologies	Technology Hardware & Equipment			175	3.7
Software systems for warehousing and distribution
CEPS	Support Services			280	6.0
Production and supply of components for the footwear industry; personal protection equipment; production of printed lycra fabric; and services to the direct mail industry
IDOX	Software & Computer Services			384	8.2
Software company specializing in the development of products for document and information management
Lombard Risk Management	Software & Computer Services			230	4.9
Lombard Risk is one of the world's leading providers of collateral management, liquidity analysis and regulatory compliance software to financial organisations
LPA Group	Electronic & Electrical Equipment			168	3.6
Design, manufacture and marketing of industrial electrical accessories
MTI Wireless Edge	Technology Hardware & Equipment			47	1.0
Developer and manufacturer of sophisticated antennas and antenna systems
Metalrax Group	Industrial Engineering			-	-
Specialist engineered products and consumer durables
Northbridge Industrial Services	Industrial Engineering			164	3.5
Consolidation vehicle for specialist industrial hire services
Petards Group	Support Services			50	1.0
Development, provision and maintenance of advance security systems and related services
Richoux Group	Travel & Leisure			145	3.0
Owner and operator of Richoux Restaurants
Sanderson Group	Software & Computer Services			168	3.6
Provides software and IT Services
Security Research Group	Support Services			67	1.4
Leading provider of Local Authority residential property searches; provision of packaging solutions and technical surveillance countermeasure components

Tristel	Healthcare Equipment & Services		112	2.4
Healthcare business specializing in infection control in hospitals
Universe Group	Support Services		31	0.7
Provision of credit fraud prevention system, loyalty systems and retail systems
Delisted
One Horizon Group	Support Services		639	13.6
Provider of mobile satellite communications equipment and airtime
Unquoted
Airways Engineering	Support Services
Ordinary B Shares			5	0.1
Loan stock			45	0.9
Commercial aviation maintenance
Closed Loop Recycling	Support Services
Ordinary B Shares			-	-
Loan Stock			84	1.8
Operation of a plastic (PET and HDPE) recycling plant
Parmenion Capital Partners	Support Services		774	16.4
Provides fund-based discretionary fund management services to independent Financial Advisors
Main Dental Partners	Support Services
Ordinary Shares			175	3.7
Loan stock			75	1.6
Operator of dental surgeries
Anaxsys Technology	Healthcare Equipment & Services		52	1.1
A medical device company for patient monitoring and screening
Transflex Vehicle Rental	Support Services		300	6.4
Light commercial vehicle rental
Portfolio Valuation			4,708	100.0

Portfolio holdings

	31 August	2013	31 August	2012
	Valuation	% of total	Valuation	% of total
Investment	£'000		£'000
Parmenion Capital Partners LLP	774	16.4	398	10.3
One Horizon Group	639	13.6	59	1.5
IDOX	384	8.2	1,057	27.3
Transflex Vehicle Rental	300	6.4	100	2.6
Alliance Pharma	297	6.3	223	5.7
CEPS	280	6.0	227	5.8
AB Dynamics	241	5.1	-	-
Lombard Risk Management	230	4.9	116	3.0
Belgravium Technologies	175	3.7	350	9.0
Main Dental	175	3.7	-	-
Sanderson Group	168	3.6	105	2.7
LPA Group	168	3.6	214	5.5
Northbridge Industrial Services	164	3.5	131	3.4
Richoux Group	145	3.0	47	1.2
Tristel	112	2.4	124	3.2
Closed Loop Recycling Limited (Loan stock)	84	1.8	-	-
Main Dental (Loan stock)	75	1.6	-	-
Security Research Group	67	1.4	149	3.8
Anaxsys Technology	52	1.1	200	5.2
Petards Group	50	1.0	14	0.4
MTI Wireless Edge	47	1.0	37	1.0
Airways Engineering (Loan stock)	45	0.9	-	-
Universe Group	31	0.7	14	0.4
Airways Engineering	5	0.1	-	-
Total	4,708	100	3,565	92

Percentage of portfolio by sector

Travel and leisure                              3%

Technology, hardware & equipment distribution   5%

Pharmaceuticals & Biotechnology                 6%

Mobile telecommunications                       14%

Healthcare & equipment                          3%

Industrial engineering                          9%

Electronic & electrical equipment               3%

Software & computer services                    17%

Support services                                40%

Percentage of portfolio by sector

Unquoted                                        32%

Delisted                                        14%

AIM                                             54%

Directors (all non-executive)

George Stevens (Chairman)*

Kevin Allen *

David Horner 

* independent

Extracts from the Report of the Directors

Status, objective and review

The principal activity of the Company is to carry on business as an investment trust. The Company has been granted approval from HM Revenue & Customs ('HMRC') as an authorised investment trust under Section 1158 of the Corporation Tax Act 2010 for the year ended 31 August 2012. The Directorsare of the opinion that the Company has conducted its affairs for the year ended 31 August 2013 so as to be able to continue to obtain approval as an authorised investment trust under Section 1158 of theCorporation Tax Act 2010. TheCompany is aninvestment company asdefined in Section833 of the Companies Act 2006.

New regulations for obtaining and retaining investment trust status have been published by HMRC and came into force on 1 January 2012. An application for approval as an investment trust must be made within 90 days after the end of the first accounting period of the Company following implementation of the new regime. The first accounting period affected by the new regulations is the year ending 31 August 2013 and therefore application must be made by 29 November 2013. If the application is accepted, the Company will be treatedas an investment trust companyfor that periodand for each subsequent accounting period, subject to there being no subsequent serious breaches of the regulations.

Investment objective

The Company's objectiveis to provide capital growth through investmentin companies listed on the Official List and tradedon the Alternative Investment Marketwith a market capitalisation at the time of investment of up to £50 million, which are believed to be at a "point of change".The Company will also invest in unquotedinvestments where it is believed that there is a likelihood of the shares becoming listed or traded on the Alternative Investment Market or the investee company being sold. Its investment objective is also to increasenet asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK Index.

Investment policy

The Companyinvests principally in securities of publicly quoted UK companies, though it may invest in unquoted securities. The concentrated UK portfoliocomprises between 20 to 35 securities. The performance of the Company's investments is compared to the MSCI Small Cap UK Index.

The Company will also invest in unquoted investments where it is believed that there is a likelihoodof the shares becoming listed or traded on the Alternative Investment Market or the investee company being sold.

It is the Company's policy not to invest in any listed investment companiesor listed investmenttrusts.

To comply with ListingRules the Company's investment policy is detailedabove and should be read in conjunction with the subsequent sections entitled investmentstrategy and the performance analysis.

It is intended from time to time, when deemed appropriate, that the Companywill borrow for investment purposes. The Company, however, does not currentlyhave any borrowing facilities.

The investment objective and policy stated are intended to distinguish the Company from other investment vehicles which have relatively narrow investment objectives and which are constrained in their decisionmaking and asset allocation. The investment objective and policyallow the Companyto be constrained in its investment selectiononly by valuation and to be pragmaticin portfolio construction by only investingin securities which the InvestmentManager considers to be undervalued on an absolute basis. Portfoliorisk is managed by investingin a diversified spread of investments.

Investment strategy

Investments are selected for the portfolioonly after extensiveresearch which the Investment Manager believes to be key.The whole processthrough which equity must pass in order to be included in the portfoliois very rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the selection process. The Investment Manager believes the key to successful stock selection is to identifythe long-term value of a company's shares and to have the patienceto hold the shares until that value is appreciated by other investors. Identifying long-termvalue involves detailed analysis of a company's earning prospects over a five year time horizon.

The Company's InvestmentManager is Chelverton Asset Management Limited, an independent investment manager focusing exclusively on achieving returns for investors based on UK investment analysis of the highest quality. The founders and employee owners of Chelverton include experienced investment professionals with strong investment performance records who believerigorous fundamental research allied to patience is the basis of long-term investment success.

The Chairman's statement and the Investment Manager's overview give details of the Company's activities during the year under review.

Performanceanalysis using key performance indicators

At each Board meeting, the Directors consider a number of performance measures to assess the Company's success in achieving its objectives, for example:the NAV, the movement in the Companyshare price, the discount of the share price in relation to the NAV and the on going charges.

The Company's income statement is set out below.

The movementof the NAV is compared to the MSCI Small Cap UK Index, the Company's benchmark. The  NAV per Ordinary share at 31 August 2013 was 44.87p (2012: 35.74p).

The Company's share price at the year end was 33.50p (2012: 27.00p).

Principal risks

The Board considers the following to be the principal risks facing the Company. Mitigation of these risks is sought and achieved in a number of ways:

Market risk

The Company is exposed to market risk due to fluctuations in the market prices of its investments.

The Investment Manager actively monitorseconomic and companyperformance and reportsregularly to the Board on a formal and informal basis.The Board formallymeets with the Investment Managerquarterly when portfolio transactions and performance are reviewed. The Management Engagement Committee meets as required to review the performance of the Investment Manager. Furtherdetails regarding the Company's various Committees and their duties are given on pages 19 and 20 of the statement on corporate governance.

The Companyis substantially dependent on the servicesof the Investment Manager's investment team for the implementation of its investmentpolicy.

The Company may hold a proportion of the portfolio in cash or cash equivalent investments from time to time. Whilst during positive stock market movementsthe portfolio may forego notionalgains, during negativemarket movements this may provide protection.

Discount volatility

As with many investmenttrust companies, discountscan significantly fluctuate.

The Boardrecognises that it is in the longterminterests of shareholders to reduce discountvolatility and believes that theprime driver of discounts over the longerterm is performance. The Board does not intendto adopt a precise discount target at which shares will be bought back. HoweverOrdinary shares will not be bought back for cancellation or into Treasuryat a discount to NAV of less than 7.5%.

Regulatory risks

Relevant legislation and regulations which apply to the Companyinclude the CompaniesAct 2006, the Corporation TaxAct 2010 ("CTA") and the ListingRules of the Financial ConductAuthority ("FCA"). The Company has noted the recommendations of the UK Corporate Governance Code and its statement of compliance appearson page 18. A breach of the CTA couldresult in the Company losing its status as an investment company and becoming subject to capitalgains tax, whilst a breach of the Listing Rules might result in censureby the FCA. At each Board meetingthe status of the Company is considered and discussed, so as to ensure that all regulations are being adhered to by the Company and its service providers.

The Board is not aware of any breachesof laws or regulations during the period under review and up to the date of this report.

Financial risk

The financialsituation of the Company is reviewed in detail at each Board meeting. The content of the Company's annual report and financial statementsis monitored and approved both by the Board and the Audit Committee.

Inappropriate accounting policies or failureto comply with current or new accounting standards may lead to a breach of regulations.

Liquidity risk

The Board monitors the liquidity of the portfolioat each Board meeting and regularly reviewsthe investments with theInvestment Manager.

A more detailed explanation of the investment management risks facingthe Company is given in note 18 to the accounts on pages 42 to 48.

Financial instruments

As part of its normal operations, the Company holds financial assets and financialliabilities. Full detailsof the role of financial instruments in the Company's operationsare set out in note 18 to the accounts.

Current and future developments

A review of the main featuresof the year is containedin the Chairman's statementand the Investment Manager's overview on pages 2 and 3.

The marketingand promotion of the Companywill continue to involve the Board, led by the Investment Manager, with a proactive communications programme either directlyor through its website, with existing and potential new shareholders and other external parties.

The Directors are seeking to renew the appropriate powersat the next Annual GeneralMeeting to enablethe issue and purchase of the company's own shares, when it is in the interests of shareholders as a whole.

Social, environmentaland employee issues

The Companydoes not have any employeesand the Board consists entirelyof non-executive directors. As the Company is an investmenttrust, which invests in other companies, it has no direct impact on the community or the environment, and as such has no policies in this area.

Results and dividend

The results for the year and the proposed transfer from revenue reserves are set out in the income statement. The Directors do not recommendthe payment of a dividend for the year.

Share Capital

On 18 December 2012 the Company announced the result of the tender offer and buyback offer issued to shareholders on6 November 2012. Underthe tender offer, 1,188,423 Ordinaryshares were repurchased for cancellation on 28 February 2013. On the same date, under the buybackoffer, 100,000 Ordinaryshares held in Treasury were cancelled. On 26 February 2013 the Company purchased100,000 Ordinary shares at 31p from the director Mr. D A Horner, the shares were cancelled on 27 February 2013.

At the year end and as at the date of this report there were 10,495,860 Ordinary 1p shares in issue each carryingone vote in the event of a poll.

Management and administration agreements

The Company's investments are managed by Chelverton Asset Management Limited ("CAM") under an agreement dated 28 June 2001. As previouslystated above, Mr. Horner is a director of CAM.

The Companypays CAM, in respect of its servicesas Investment Manager, a monthly fee (exclusive of VAT) payable in arrears as follows:

for the first£15 million of funds undermanagement at the rate of 1/12% per month of the grossvalue of   funds under management ("the Value");

for the next £15 million of funds under management, at the rate of 1/16% per month of the amount by which the Value exceeds £15 million; and

for funds under management above £30 million, at the rate of 1/24% per month.

The appointment of CAM as Investment Managermay be terminated by either party giving to the other not less than twelve months' notice of such termination. There are no specific provisionscontained within the Investment Management Agreement relatingto the compensation payable in the event of termination of the agreementother than entitlement to fees, which would be payable within any notice period.

Under an agreement dated 26 June 2001, company secretarial services and the general administration of the Company were undertaken by CapitaSinclair Henderson Limited("CSH") for anannual fee in 2012 of£49,565. Notice was served on CSH and John Girdlestone was appointed with effect from 1 January 2013 for an annual fee of £30,000 plus VAT at the prevailing rate.

Appointment of Chelverton Asset Management("CAM") as the Investment Manager

The Board, excluding Mr. Horner, continually reviews the performance of the InvestmentManager. In the opinion of the independent Directorsthe continuing appointment of CAM, as Investment Manager, on the terms outlined in the Investment Management Agreement dated 28 June 2001 and amended on 1 December2006, is in the best interests of theshareholders as a whole. Further, the Board is satisfied that CAM has the required skill and expertise to continue to manage the Company's portfolio and charges fees that are reasonable when compared with those of similar investment trusts.

On behalf of the Board

George Stevens

Chairman

4 November 2013

Statement of Directors'responsibilities in respect of the financial statements

The Directors are responsible for preparing the Annual Reportand the financial statements and have elected to prepare them in accordance with applicable United Kingdom law and United Kingdom Accounting Standards (United Kingdom Generally AcceptedAccounting Practice). Under company law the Directorsmust not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of its profit or loss for that period.

In preparingthe financial statements, the Directors are required to:

select suitable accounting policies and then apply them consistently;

make judgementsand estimates that are reasonableand prudent;

present information, including accounting policies,in a manner that providesrelevant, reliable,  comparable and understandable information;

state whetherapplicable UK Accounting Standards have been followed, subjectto any material departures disclosed and explained in the financial statements; and

prepare the financial statements on the goingconcern basis unlessit is inappropriate to presumethat the Company will continue in business.

The Directorsare responsible for keeping adequateaccounting records that are sufficient to show and explain the Company's transactions and disclose with reasonable accuracy, at any time,the financial positionof the Company and to enablethem to ensurethat the financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

Under applicable law and regulations, the Directors are also responsible for preparing a Report of Directors, Directors remuneration report and statement on corporate governance.

The Directors,to the best of their knowledge, state that:

the financialstatements, prepared in accordance with UK GenerallyAccepted Accounting Practice,give a true and fair view of the assets, liabilities, financial position and net return of the Company; and

the Chairman's statement,Investment Manager's overview and Report of the Directors include a fair review of the development and performance of the businessand the position of the Company togetherwith a description of the principalrisks and uncertainties that it faces.

The Directorsare responsible for the maintenance and integrity of the corporateand financial information related to the Company including on the website of the Investment Manager www.chelvertonam.com.

Legislation in the United Kingdom governingthe preparation and dissemination of financial statementsmay differ from legislation in other jurisdictions.

On behalf of the Board

George Stevens

Chairman

4 November 2013

NON-STATUTORY ACCOUNTS

The financial information set out below does not constitute the Company's

statutory accounts for the years ended 31 August 2012 and 2011 but is derived from those accounts. Statutory accounts for 2011 have been delivered to the registrar of companies, and those for 2012 will be delivered in due course. The auditors have reported on those accounts; their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying their report and (ii) did not contain a statement under Section 498 (2) or (3) of the Companies Act 2006. The text of the Auditor's report can be found in the Company's full Annual Report and Accounts on the Investment Manager's website: www.chelvertonam.com.

Income statement

for the year ended 31 August 2013

			2013				2012
	Note	Revenue	Capital	Total		Revenue	Capital	Total
		£'000	£'000	£'000		£'000	£'000	£'000
Gains on investments at fair value	7	-	1,123	1,123		-	647	647
Income	2	46	-	46		77	-	77
Investment management fee	3	(11)	(32)	(43)		(10)	(31)	(41)
Refund of VAT on administration and secretarial fees	4	-	-	-		40	-	40
Other expenses	4	(125)	-	(125)		(128)	-	(128)
Net return on ordinary activities before taxation		(90)	1,091	1,001		(21)	616	595
Taxation on ordinary activities	5	-	-	-		-	-	-
Net return on ordinary activities after taxation		(90)	1,091	1,001		(21)	616	595
		Revenue	Capital	Total		Revenue	Capital	Total
		pence	pence	pence		pence	pence	pence
Return per Ordinary share	6	(0.87)	9.87	9.00		(0.17)	4.97	4.80

All revenue and capital items in the above statement derive from continuingoperations.

No operationswere acquired or discontinued during the year.

A separatestatement of totalrecognised gains and losses has not been prepared as all such gains and losses are included in the income statement.

The notes below form part of these accounts.

Reconciliation of movementsin shareholders' funds

for the year ended 31 August 2013

	Called up	Share		Capital
	Share	Premium	Capital	Redemption	Revenue
	Capital	Account	Reserve	Reserve	Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Year ended 31 August 2013
1 September 2012	119	2,674	(1,241)	70	2,590	4,212
Cost of shares purchased for cancellation under tender offer	(13)	-	-	13	(473)	(473)
Cost of shares purchased for Treasury	-	-	-	-	(31)	(31)
Net return after taxation for the year	-	-	1,091	-	(90)	1,001
31 August 2013	106	2,674	(150)	83	1,996	4,709
Year ended 31 August 2012
1 September 2011	132	2,674	(1,857)	57	3,043	4,049
Cost of shares purchased for cancellation under tender offer and buyback offer	(13)	-	-	13	(406)	(406)
Cost of shares purchase for Treasury	-	-	-	-	(26)	(26)
Net return after taxation for the year	-	-	616	-	(21)	595
31 August 2012	119	2,674	(1,241)	70	2,590	4,212

The notes below form part of these accounts.

Balance sheet

as at 31 August 2013

			2013		2012
	Notes		£'000		£'000
Fixed assets
Investments at fair value	7		4,708		3,877
Current assets
Debtors	9		8		9
Cash at bank			17		364
			25		373
Creditors - amounts falling due within one year	10		(24)		(38)
Net current assets			1		335
Net assets			4,709		4,212
Share capital and reserves
Called up share capital	11		106		119
Share premium account	12		2,674		2,674
Capital reserve	12		(150)		(1,241)
Capital redemption reserve	12		83		70
Revenue reserve	12		1,996		2,590
Equity shareholders' funds			4,709		4,212
Net asset value per Ordinary share	16		44.87p		35.74p

The notes below form part of these accounts.

These accounts were approved by the Board of Directors of Chelverton Growth Trust PLC and authorised for issue on 4November 2013. They were signed on its behalf by

George Stevens

Chairman

Statement of cash flows

for the year ended 31 August 2013

		2013		2012
	Note	£'000		£'000
Operating activities
Investment income received		46		71
Interest income received		-		6
Investment management fees paid		(43)		(41)
Administration and secretarial fees paid		(41)		(49)
Refund of VAT paid on administration and secretarial fees		-		40
Other cash payments		(97)		(86)
Net cash outflow from operating activities	13	(135)		(59)
Investing activities
Purchase of investments		(850)		(714)
Sales of investments		1,142		1,539
Net cash inflow from investing activities		292		825
Financing
Cost of shares purchased for Treasury		-		(26)
Cost of shares purchased for cancellation under tender offer		(504)		(406)
Net cash outflow from financing activities		(504)		(432)
(Decrease)/Increase in cash	15	(347)		334

1    ACCOUNTINGPOLICIES

Accounting convention

The accounts are prepared in accordancewith UK Generally Accepted AccountingPractice ("UK GAAP") and with the AIC Statement of Recommended Practice("SORP") issued in January 2009,regarding the Financial Statements of InvestmentTrust Companiesand Venture Capital Trusts. All the Company's activitiesare continuing.

Income recognition

Dividends receivable on quoted equity shares are included as revenue when the investments concerned are quoted 'ex-dividend'. UK dividends are disclosed excluding the associated tax credit. Dividends receivable on equity and non-equity shares where no ex-dividend date is quoted are broughtinto account when the Company's right to receive payment is established. All other income is included on an accruals basis.

Expenses

All expensesare accounted for on an accruals basis and charged throughthe revenue accountin the income statement except as follows:

expenses which are incidental to the acquisition or disposal of an investment are treated as capital and separately identified and disclosed (see note 7):

management fees and bank interest have been allocated 75% to capital reserve and 25% to revenue reserve in the income statement, being in line with the Board's expected long-term split of returns, in the form of capital gains and income respectively, from the investment portfolio of the Company.

Investments

All investments held by the Company are classified as 'fair value through profit or loss'. Investments are initially recognised at cost, being the fair valueof the consideration given. After initial recognition investments are measured at fair value, with changes in the fair value of investments and impairment of investments recognised in the income statementand allocated to capital. Realisedgains and losses on investments sold are calculated as the difference between sales proceeds and cost.

Investments are recognised and derecognised on the trade date where a purchaseor sale is under a contractwhose terms require delivery within the timeframeestablished by the market concerned, and are initially measured at fair value.

For investments actively traded in organisedfinancial markets, fair value is generally determined by reference to StockExchange quoted market bid prices at the close of business on the balance sheet date, without adjustment for transaction costs necessaryto realise the asset. For investments traded on other financial markets such as the OTCQB, fair value is generally determined by reference to the share price at close of business on the balance sheet date, discounted to reflect the best estimate of the discount that may need to be applied for the shares to be sold as a single investment.

For investments that are not actively tradedin organised financial markets,the investments are valued at the Directors' estimate of its net realisable value being their estimate of fair value. Generally, fair value will be at cost or, where applicable, at the most recent transaction price. In the case of direct investments in unquoted companies the following valuation techniqueis applied. Initialvaluation is based on the transaction price. Where better indications of fair value become available, such as through subsequent issues of capital or dealings between third parties, the valuation is adjusted to reflect the new evidence.This represents the Directors' view of the amount for whichan asset could be exchangedbetween knowledgeable willing parties in an arm's length transaction.

Capital reserve

The followingare accounted for in this reserve:

gains and losses on the realisation of investments;

net movement arising from changes in the fair value of investments that can be readily converted to cash without accepting adverse terms;

realised exchange differences of a capital nature;

expenses, together with related taxation effect, charged to this account in accordance with the above policies; and

net movement arising from the changes in the fair value of investments that cannot be readily converted to cash without accepting adverse terms, held at the year end.

Taxation

The charge for taxation, where relevant, is based on the revenuebefore taxation for the year. Tax deferred or accelerated can arisedue to timing differencesbetween the treatment of certain itemsfor accounting and taxation purposes.

Full provisionis made for deferred taxationunder the liabilitymethod, on all timing differences not reversed by the balance sheet date, in accordance with FRS 19: Deferred tax.

The tax effect of different itemsof income/gain and expenditure/loss is allocated betweencapital and revenue on the same basis as the particular item to which it relates,using the Company's effective rate of tax for the accounting period.

2	INCOME	2013 £'000		2012 £'000
	Income from investments Income from LLP investments	11		10
	UK net dividend income	35		61
		46		71
	Other income Interest on VAT refund (see note 4)	-		6
	Total income	46		77
	Total income comprises: Other income	11		10
	Dividends	35		61
	Interest	-		6
		46		77

3	INVESTMENT MANAGEMENT FEE		2013				2012
		Revenue	Capital	Total		Revenue	Capital	Total
		£'000	£'000	£'000		£'000	£'000	£'000
	Investment management fee	11	32	43		10	31	41
		11	32	43		10	31	41

The investmentmanagement fee is calculated at the rate of 1/12% per month of the gross value of funds under management and is payable monthly in arrears. At 31 August 2013 there was £3,600 outstanding (2012: £3,000).

4	OTHER EXPENSES	2013		2012
		Revenue		Revenue
		£'000		£'000
	Administrative and secretarial services	41		49
	Directors' remuneration	34		34
	Audit fee	14		13
	Other expenses	36		32
	Refund of VAT on secretarial fees	-		(40)
		125		88

J.P. Morgan Claverhouse ('Claverhouse') brought a case againstHMRC to challenge the VAT charged on fund management services paid by investment companies.

In June 2007, the case was upheld by the EuropeanCourt of Justiceconcluding that fund management services paid by investment companiesbe exempt from VAT.

In 2010, protective claims were submittedto HMRC by the Company to request a repaymentof VAT charged to investment companies on administration and secretarial servicesand as a result, in March 2012,the Company received a repayment of VAT totalling £40,000 together with subsequent interestof £6,000 whichhave been included within the revenuecolumn of the income statementand within 'Interest' in note 2 and 'Other expenses' within note 4.

5	TAXATION		2013				2012
		Revenue	Capital	Total		Revenue	Capital	Total
	Analysis of charge in period	£'000	£'000	£'000		£'000	£'000	£'000
	Current tax	-	-	-		-	-	-

Factors affecting current tax charge for the period

The tax assessed for the period is lower than the standard rate of corporation tax in the UK of 26% to 31 March 2012 and 24% from 1 April 2012. The differences are explained below:

			2013				2012
	Revenue		Capital	Total		Revenue	Capital	Total
	£'000		£'000	£'000		£'000	£'000	£'000
Theoretical tax at UK corporation tax rate of 23.58% (2012: 25.17%)
Corporation tax	(21)	257		236		(5)	155	150
UK Dividend income not taxable	(11)	-		(11)		(14)	-	(14)
Non-taxable investment gains	-	(265)		(265)		-	(163)	(163)
Excess expenses for the period	32	8		40		19	8	27
Current tax charge for the period	-	-		-		-	-	-

At 31 August 2013 the Companyhad surplus management expenses of £3,532,000 (2012: £3,419,000) which have not been recognised as a deferredtax asset. This is becausethe Company is not expectedto generate taxable income in a future period in excess of the deductibleexpenses of that future period and, accordingly, it is unlikely that the Company will be able to reduce future tax liabilities through the use of existing surplus expenses.Due to the Company's statusas an investment trust and the intention to continue meetingthe conditions requiredto obtain approval as an investment trust in the foreseeable future,the Company has not providedfor deferred tax on any gainsand losses arising on the revaluation or disposal of investments.

6	RETURN PER ORDINARY SHARE		2013				2012
		Revenue	Capital	Total		Revenue	Capital	Total
		pence	pence	pence		pence	pence	pence
	Basic	(0.87)	9.87	9.00		(0.17)	4.97	4.80

Revenue return per Ordinaryshare is based on the net revenueloss on ordinary activities after taxation attributable of £90,000 (2012: £21,000) and on 11,062,872(2012: 12,389,652) Ordinary shares, being the weighted average number of Ordinary shares in issue less treasury shares during the year.

Capital returnper Ordinary shareis based on the net capital gain of £1,091,000 (2012: £616,000) and on 11,062,872 (2012: 12,389,652) Ordinaryshares, being the weighted averagenumber of Ordinaryshares in issue less treasury shares during the year.

Total return per Ordinaryshare is based on the total gain of £1,001,000 (2012: £595,000)and on 11,062,872 (2012: 12,389,652) Ordinary shares, being the weighted average number of Ordinary shares in issue less treasury shares during the year.

7	INVESTMENTS	2013		2012
		£'000		£'000
	Delisted	639		59
	AIM	2,560		3,120
	Unquoted	1,509		698
		4,708		3,877

		AIM	Delisted	Unquoted*	Total
		£'000	£'000	£'000	£'000
	Opening book cost	3,516	166	751	4,433
	Opening investment holding losses	(396)	(107)	(53)	(556)
		3,120	59	698	3,877
	Movements in the year:
	Purchases at cost	368	-	482	850
	Sales	(1,142)	-	-	(1,142)
	Gains/(losses) on sales	593	-	-	593
	Movement in investment holding losses	(380)	580	330	530
	Closing valuation	2,559	639	1,510	4,708
	Closing book cost	3,335	166	1,233	4,734
	Closing investment holding (losses)/gains	(776)	473	277	(26)
	Closing valuation	2,559	639	1,510	4,708

		2013		2012
		£'000		£'000
	Realised gains/(losses) on sales	593		188
	Movement in fair value of investments	530		459
	Net gains on investments	1,123		647
	All quoted investments are made up of equity shares.

* Unquoted investments are valued at the Directors' estimate of their net realisable value, being their estimate of fair value.

Analysis of movements in unquoted investments

	Cost at	Valuation at	Realised	Movement	Cost at	Valuation at
	31 August	31 August	in	in	31 August	31 August
	2013	2013	Year	Year	2012	2012
Investment	£'000	£'000	£'000	£'000	£'000	£'000
Anaxsys Technology	232	52	-	-	200	200
Airways Engineering
Loan stock	45	45	-	-	-	-
Ordinary B shares	5	5	-	-	-	-
Closed Loop Recycling
Loan stock	252	84	-	84	252	-
Ordinary B shares	84	-	-	-	84	-
Main Dental
Loan stock	75	75	-	-	-	-
Ordinary B shares	175	175	-	-	-	-
Parmenion Capital Partners LLP	115	774	-	376	115	398
Transflex Vehicle Rental	250	300	-	200	100	100
	1,233	1,510	-	660	751	698

Transaction costs

During the year, the Companyincurred transaction costs of £59 (2012: £2,034) and £4,635 (2012: £4,187)on purchases and salesof investments, respectively. These amountsare included in 'Gains on investments at fair value' as disclosed in the income statement.

  Details of material holdings in unquoted investments

		Valuation			Valuation			Last
	Cost at	at	Cost at		at	accounts						Pre tax
	31 August	31 August	31 August		31 August		period			Net	Turnover	(loss)/
	2013	2013	2012		2012	end			assets			profit
Investment	£'000	£'000	£'000		£'000	£'000			£'000		£'000	£'000
Anaxsys Technology	232	52	200		200	31/1/13			76		5	(930)
Airways   Engineering
Loan stock	45	45	-		-
Ordinary B shares	5	5	-		-
Closed Loop Recycling						30/6/12			(20,375)		14,874	(5,084)
Loan stock	252	84	252		-
Ordinary B shares	84	-	84		-
Main Dental
Loan stock	75	75	-		-
Ordinary B shares	175	175	-		-
Parmenion Capital Partners LLP	115	774	115		398	31/3/13			1,237		3,353	569
Transflex Vehicle Rental	250	300	100		100	31/12/12				3,444	825	(13)

A full listing of portfolio holdings is included in the portfolio review on pages 5 to 8.

8   SIGNIFICANT INTERESTS

At 31 August 2013 the Company had a holding of 3% or more of the issued class of share that is material in the context of the accounts in the following investments:

Security	Number of shares held	Percentage of issued share capital	Issued share capital
Main Dental	23,000	23.00	100,000
CEPS, Ord 5p	875,000	16.18	5,407,155
Anaxsys Technology	13,000	11.67	111,376
Airways Engineering	50,000	14.29	350,000
Transflex Vehicle Rental	240,000	10.00	2,400,000
Belgravium Technologies, Ord 5p	5,000,000	4.95	100,936,547

In addition to the above, the Company has a 5.526% interest in the capital and profits of Parmenion Capital Partners LLP.

9	DEBTORS - amounts falling due within one year	2013		2012
		£'000		£'000
	Prepayments and other debtors	8		9
		8		9
10	CREDITORS - amounts falling due within one year	2013		2012
		£'000		£'000
	Accruals and other creditors	24		38
		24		38
11	CALLED UP SHARE CAPITAL	2013		2012
		£'000		£'000
	Allotted, called up and fully paid:	106		119
	10,495,860 (2012: 11,884,283) Ordinary shares of 1p each

Pursuant to the Tender Offer, 1,188,428 ordinary shares being 10 per cent of the issued ordinary shares were  repurchased and cancelled with settlement on 14 January 2013.  On the same date the Company canceled 100,000 ordinary shares held in treasury. As a result, there will be 10,595,860 ordinary shares of 1p each in issue and circulation.

Duration of Company

At the annual general meeting of the Company falling in the calendar year 2014 and, if the Company has not then beenliquidated, unitised or reconstructed, at each fifth annual generalmeeting of the Company convenedby the Board thereafter, the Boardshall propose an ordinary resolution that the Companyshould continue as an investment trust for a further five year period.

If any such ordinaryresolution is not passed, the Board shall draw up proposals for the voluntary liquidation, unitisation or other reorganisation of the Company for submissionto the Members of the Company at a general meeting to be convened by the Board for a date not more than three months after the date of the meeting at which such ordinary resolution was not passed.

The Board shall ensure that such proposals for the liquidation, unitisation or reconstruction of the Company as are approvedby special resolutionare implemented as soon  as  is  reasonably  practicable  after  the  passing  of such resolution.

12	RESERVES			Capital
		Share premium	Capitalreserve	redemption reserve	Revenue reserve
	Year ended 31 August 2013	£'000	£'000	£'000	£'000
	At 1 September 2012	2,674	(1,241)	70	2,590
	Net gains on realisation of investments	-	593	-	-
	Movement in fair value of investments	-	530	-	-
	Cost of shares purchased for cancellation under tender offer	-	-	12	(504)
	Shares cancelled	-	-	1	-
	Costs charged to capital	-	(32)	-	-
	Retained net loss for the year	-	-	-	(90)
	At 31 August 2013	2,674	(150)	83	1,996

				Capital
		Share premium	Capitalreserve	redemption reserve	Revenue reserve
	Year ended 31 August 2012	£'000	£'000	£'000	£'000
	At 1 September 2011	2,674	(1,857)	57	3,043
	Net gains on realisation of investments	-	188	-	-
	Movement in fair value of investments	-	459	-	-
	Cost of shares purchased for cancellation under tender offer and buyback offer	-	-	-	(406)
	Shares cancelled	-	-	13	-
	Cost of shares purchased for Treasury	-	-	-	(26)
	Costs charged to capital	-	(31)	-	-
	Retained net loss for the year	-	-	-	(21)
	At 31 August 2012	2,674	(1,241)	70	2,590

13	RECONCILIATION OF NET RETURN BEFORE FINANCE                  COSTS AND TAXATION TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES	2013		2012
		£'000		£'000
	Net return before finance costs and taxation	1,001		595
	Net capital return before finance costs	(1,091)		(616)
	Expenses charged to capital	(32)		(31)
	Decrease in creditors and accruals	(14)		(7)
	Decrease in prepayments and accrued income	1		-
		(135)		(59)

14	RECONCILIATION OF NET CASH FLOW TO NET CASH	2013		2012
		£'000		£'000
	Net cash at 1 September	364		30
	Net cash (outflow)/inflow	(347)		334
	Net cash at 31 August	17		364

15	ANALYSIS OF CHANGES IN NET CASH	At		At
		31 August	Cash	31 August
		2012	flows	2013
		£'000	£'000	£'000
	Cash at bank	364	(347)	17
		364	(347)	17

16     NET ASSET VALUE PER ORDINARY SHARE

The basic net asset value per Ordinary share is based on net assets of £4,709,000 (2012: £4,212,000) and on 10,495,860 (2012: 11,784,283) Ordinary shares, being the number of shares in issue at the year end, less Treasury shares.

17     CAPITAL COMMITMENTS AND CONTINGENT LIABILITIES

At 31 August 2013 there were no capital commitments or contingent liabilities (2012: £nil).

18     ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES

The Company's financialinstruments comprise securities and other investments, cash balances and debtors and creditors that arise from its operations, for example, in respect of sales and purchases awaitingsettlement and debtors for accrued income.

The Company primarily invests in companies traded on AIM with a market capitalisation at the time of investment of up to £50 million. The Company finances its operations through its issued capital and existing reserves.

In followingits investment objective,the Company is exposed to a variety of risks that could result in a reduction in the Company's net assets.These risks are market risk (comprising exchangerate risk, interestrate risk and other price risk), credit risk and liquidity risk. The Board reviews and agrees policies for managing each of these risks andthey are summarised below:

(i)    Market risk - market price risk

Market price risk arises mainly from uncertainty about future prices of financialinvestments used in the Company's business. It represents the potentialloss the Company might suffer through holding market positions by way of price movements other than movementsin exchange rates and interest rates.

The Company's investment portfolio is exposedto market pricefluctuations which are monitored by the Investment Manager who gives timelyreports of relevantinformation to the Directors. Investment performance is also reviewed at each Board meeting.

The Directors are conscious of the fact that the nature of AIM investments is such that prices can be volatile. Investors should be aware that the Company is exposed to a higher rate of risk than exists within a fund which holds traditional blue chip securities.

Adherence to the investment objectives and the internal controllimits on investments set by the Company mitigates the risk of excessiveexposure to any one particulartype of security or issuer.

The Company's exposure to other changes in market prices at 31 August on its investments is as follows:

	2013		2012
Fair value through profit or loss investments	£'000 4,708		£'000               3,877

A 20% decrease in the market value of investments at 31 August 2013 would have decreasednet assets attributable to shareholders by 8.9 pence per share (2012: 6.6 pence per share). An increase of the same percentage would have an equal but opposite effect on net assets available to shareholders.

(ii)   Market risk - exchange rate risk

All of the Company's assets are in sterling and accordingly the only currencyexposure the Companyhas is through the trading activitiesof its investee companies.

(iii)  Market risk - interest rate risk

Changes in interest rates may cause fluctuations in the income and expenses of the Company.

The majorityof the Company's financial assets are non-interest bearing. As a result, the Company's financial assets are not subject to significant amounts of risk due to fluctuations in the prevailinglevels of market interest rates.

The possible effects on fair value and cash flows that could arise as a result of changes in interest rates are taken into account when making investmentdecisions.

The exposure at 31 August of financial assets and financialliabilities to interest rate risk is as follows:

	2013		2012
	£'000		£'000
Cash at bank	17		364
	17		364

The effect of an interest rate increase of 1% would increase net revenue before taxation on an annualised basis by £170 (2012: £3,640).If there was a decreasein interest rates of 0.5% net revenue before taxation would decrease by £85 (2012: £1,820).These calculations are based on balances as at 31 August 2013 and may not be representative of the year as a whole.

 (iv)     Credit Risk

Credit risk is the risk of financial loss to the Company if the contractual party to a financial    instrument fails to meet itscontractual obligations.

The carryingamounts of financial assets best represent the maximum creditrisk exposure at the balancesheet date. Bankruptcy or insolvency of the custodianmay cause the Company's rights with respect to securities held with the custodian to be delayed.

(v)       Liquidity risk

The majority of the Company's assets are AIM quoted securities, which under normal conditions can be sold to meet funding commitments if necessary. These may howeverbe difficult to realisein adverse market conditions. The Company's unquoted investments, representing 18.1% of the portfolio, could be more difficult to realiseas they are not tradable instruments.

(vi)      Maturity Analysis of Financial Liabilities

The Company's financial liabilities comprise of creditors as disclosed in note 10. All items are due within one year.

(vii)     Managing Capital

The Company's capital management objectivesare to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK Index.

Primarily the Company finances its operationsthrough its issued capital and existing reserves.At 31 August 2013 the Company had no borrowings.

(viii)     Fair values of financial assets and financial liabilities

All of the financialassets and liabilities of the Company are held at fair value.

(ix)     Financial instruments by category

The financialinstruments of the Company fall into the following categories

31 August 2013	At		Assets at fair
	amortised	Loans and	value through
	cost	receivables	profit or loss	Total
	£'000	£'000	£'000	£'000
Assets as per the Balance Sheet
Investments	-	-	4,708	4,708
Debtors	-	8	-	8
Total	-	8	4,708	4,716

Liabilities as per the Balance Sheet
Creditors	24	-	-	24
Total	24	-	-	24

31 August 2012	At		Assets at fair
	amortised	Loans and	value through
	cost	receivables	profit or loss	Total
	£'000	£'000	£'000	£'000
Assets as per the Balance Sheet
Investments	-	-	3,877	3,877
Debtors	-	9	-	9
Total	-	9	3,877	3,886

Liabilities as per the Balance Sheet
Creditors	38	-	-	38
Total	38	-	-	38

    Fair value hierarchy

In accordancewith Financial ReportingStandard No.29: 'FinancialInstruments: Disclosures', the Company   must disclose the fair value hierarchy of financial instruments.

The fair value hierarchyconsists of the following three levels:

Level 1 - Quoted prices (unadjusted) in active markets for identicalassets or liabilities (level 1).

An active market is a market in which transactions for the asset or liabilityoccur with sufficient frequencyand volume on an on going basis such that quotedprices reflect pricesat which an orderly transaction would take place between market participants at the measurement date. Quoted pricesprovided by externalpricing services, brokers and vendors are included in level 1, if they reflect actual and regularly occurringmarket 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 identicalor similar assets or liabilities in markets that are not active.     Characteristics of an inactive market include a significant declinein the volume and level of tradingactivity, the available prices vary significantly over time or among market participants or the prices are not current.

inputs other than quoted prices that are observablefor the asset (for example, interest rates and yield curves observable at commonly quoted intervals).

inputs that are derivedprincipally 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 levelin the fair value hierarchy within which the fair valuemeasurement is categorised in its entiretyis determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that requiresignificant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessingthe significance of a particular input to the fair value measurement in its entirety requires judgement,considering factors specific to the asset or liability.

The determination of what constitutes 'observable' requires significant judgement by the Company. The Company considers observable data to be investments actively traded in organisedfinancial markets, fair value is generally determined by reference to Stock Exchange quoted market bid prices or last traded in respectof SETS at the close ofbusiness on the balance sheet date, without adjustment for transaction costs necessary to realise the asset.

Investments, whosevalues are basedon quoted marketprices in activemarkets, and therefore classified within level 1,include active listed equities. The Company does not adjust the quoted price for these instruments.

Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputsare classified within level 2.

Investments classified within level 3 have significant unobservable inputs. Level 3 instruments include unquoted holdings. As observable prices are not availablefor these securities, the Company has used valuationtechniques to derive the fair value.The Company has no level2 investments, and level 3 investments consistonly of delisted/ unquoted holdings.

Financial assets at fair value through profit  or loss At  31 August 2013
	Level 1	Level 2	Level 3			Total
	£'000	£'000	£'000			£'000
Equity investments	2,559	-	2,149			4,708
Total	2,559	-	2,149			4,708

At 31 August 2012
	Level 1	Level 2	Level 3	Total
	£'000	£'000	£'000	£'000
Equity investments	3,120	-	757	3,877
Total	3,120	-	757	3,877

  The following table presents the movement in the level 3 investments for the period ended 31 August 2013:

	Equity Investments
	£'000
Opening balance	757
Purchases	482
Sales at cost	-
Total gains on investments in the income statement	910
Closing balance	2,149

19    RELATED PARTY TRANSACTIONS

Under the terms of the agreement dated 28 June 2001, the Company has appointed Chelverton Asset Management Limited to be the Investment Manager. The fee arrangements for these services and fees payable are set out in the Reportof the Directors on page 14 and in note 3 to the accounts.Mr. Horner, a Directorof the Company, is also a director of Chelverton Asset Management Limitedand CEPS PLC, in whichthe Company has an investment.

ANNUAL REPORT AND AGM

The foregoing represents extracts from the full text of the Annual Report and

Accounts for the year ended 31 August 2013. The full Report will shortly be

available for download from the following website:

www.chelvertonam.com

Copies will be posted to shareholders shortly.

The AGM will be held on 19 December 2013 at 11.00am at the offices of

Speechly Bircham LLP, 6 New Street Square, London, EC4A 3LX

NATIONAL STORAGE MECHANISM

A copy of the Annual Report and Financial Statements will be submitted shortly to the National Storage Mechanism ("NSM") and will be available for inspection at the NSM, which is situated at: www.hemscott.com/nsm.do.

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