Final Results
CHELVERTON GROWTH TRUST PLC
PRELIMINARY ANNOUNCEMENT OF RESULTS
The Directors announce the unaudited statement of results for the year ended 31
August 2007 as follows:-
INCOME STATEMENT
For the year ended 31 August 2007
2007 2006
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains/(losses) on - 2,718 2,718 - (11) (11)
investments at fair
value
Income 106 - 106 66 - 66
Investment management (27) (79) (106) (49) (146) (195)
fee
Other expenses (166) - (166) (209) - (209)
Net return before
finance
costs and taxation (87) 2,639 2,552 (192) (157) (349)
Interest payable (15) (45) (60) (14) (41) (55)
Net return on ordinary
activities
before taxation (102) 2,594 2,492 (206) (198) (404)
Taxation on ordinary - - - - - -
activities
Net return on ordinary
activities
after taxation (102) 2,594 2,492 (206) (198) (404)
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Return per Ordinary (0.58) 14.65 14.07 (1.14) (1.09) (2.23)
share*
The total column of this statement is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the year.
A separate statement of total recognised gains and losses has not been prepared
as all such gains and losses are included in the income statement.
* The return per Ordinary share is based on 17,709,375 (2006:18,141,939)
Ordinary shares, being the weighted average number of shares in issue during
the year.
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
For the year ended 31 August 2007
Called up Share Capital Capital Revenue Total
premium reserve redemption reserve
share account reserve
capital
£'000 £'000 £'000 £'000 £'000 £'000
Year ended 31 August
2007
1 September 2006 182 2,674 (99) 7 3,805 6,569
Cost of shares (7) - (210) 7 - (210)
cancelled
Net return after - - 2,594 - (102) 2,492
taxation for the year
31 August 2007 175 2,674 2,285 14 3,703 8,851
Year ended 31 August
2006
1 September 2005 (as 182 2,674 400 7 4,011 7,274
originally stated)
Restatements - - (301) - - (301)
1 September 2005 182 2,674 99 7 4,011 6,973
(restated)
Net return after - - (198) - (206) (404)
taxation for the year
31 August 2006 182 2,674 (99) 7 3,805 6,569
BALANCE SHEET
As at 31 August 2007
2007 2006
£'000 £'000
Fixed assets
Investments at fair value 8,542 7,946
Current assets
Debtors 18 13
Cash at bank 382 24
400 37
Creditors - amounts falling due
within one year
Creditors 91 1,414
Net current assets / (liabilities) 309 (1,377)
Net assets 8,851 6,569
Share capital and reserves
Called up share capital 175 182
Share premium account 2,674 2,674
Capital reserve
- realised 3,058 1,989
- unrealised (773) (2,088)
- capital redemption reserve 14 7
Revenue reserve 3,703 3,805
Equity shareholders' funds 8,851 6,569
pence pence
Net asset value per Ordinary share 50.58 36.21
Ordinary shares in issue 17,500,000 18,141,939
STATEMENT OF CASH FLOWS
For the year ended 31 August 2007
2007 2006
£'000 £'000
Operating activities
Investment income received 98 67
Deposit interest received 3 1
Investment management fees paid (114) (194)
Secretarial fees paid (45) (44)
Other cash payments (113) (165)
Net cash outflow from operating activities (171) (335)
Returns on investments and servicing of
finance
Interest paid (68) (38)
Investing activities
Purchases of investments (2,070) (2,167)
Sales of investments 4,220 1,415
Net cash inflow / (outflow) from investing 2,150 (752)
activities
Financing
Share repurchase (210) -
Increase / (decrease) in cash 1,701 (1,125)
NOTES
The above financial information does not constitute statutory accounts as
defined in Section 240 of the Companies Act 1985. This financial information
has been prepared on the basis of the accounting policies stated in the
statutory accounts for the year ended 31 August 2006. The auditors have
reported on those accounts; their report was unqualified and did not contain a
statement under Section 237 (2) or (3) of the Companies Act 1985. The accounts
for the year ended 31 August 2006 have been delivered to the Registrar of
Companies. Statutory accounts for the year ended 31 August 2007 have not yet
been approved audited or filed and will be delivered to the Registrar of
Companies following the Annual General Meeting.
CHAIRMAN'S STATEMENT
Following a very successful year, it is predictable that the events of recent
months have had a negative impact on the asset value of our shares. As ever in
times of uncertainty and economic turmoil we see a "flight to size" rather than
a "flight to quality or value". It is interesting to note that much of this
uncertainty was caused by the decline of Northern Rock - itself a FTSE 100
company.
Chelverton's net asset value per share has increased this year from 36.21p to
50.58p - an increase of 39.7%. In the same period the Company's benchmark
index, the FTSE All-Share rose by 8.41%; the FTSE 100, which makes up over 90%
of the All-Share Index rose 6.73%; and the AIM Index increased by 5.93%.
However, since the year end the net asset value per share has declined to
48.96p, a drop of 3.2%.
Since the merger in August 2001 the net asset value per share has increased by
47.0% compared to a rise of 25.9% in the FTSE All-Share Index and 6.5% in the
AIM Index.
This is obviously a pleasing result and confirms the value that the Manager
believes to be latent within the portfolio and which is further evidenced by a
growth in the number of portfolio companies paying dividends. The portfolio has
contracted to 39 holdings and will be reduced further by number as funds are
recycled to acquire additional shares in existing, perceived to be undervalued
investments.
Shareholders will note the significant reduction in operating expenses which
have been achieved by a major reduction in Directors' fees, a halving of the
investment management fee and a number of other cost savings.
During the year, in an attempt to reduce the widening discount as the net asset
value per share rose, the Company bought back a total of 607,770 shares for
treasury at an average price of 32.1p per share, and those shares were duly
cancelled on 31 August 2007. The Company also purchased 34,169 shares for
cancellation at an average price of 42.4p per share.
In the light of the significant cash realisation from the takeover of Oasis
Healthcare plc and the substantial uplift in the asset value of the shares, the
Board and the Investment Manager now feel that the Company can take steps to
further narrow the discount and provide liquidity in the Company's shares. A
separate circular setting out the full details of the tender offer will
accompany the Annual Report.
In the documents accompanying the Report shareholders will find details of a
"Package of Proposals" to shareholders which includes an extension of the
duration of the Company, an annual tender offer and details of the Company's
discount management policy.
Tender Offer
The Board wishes to exercise its discretion to implement an annual tender
offer, for up to 15 per cent. of the Company's issued share capital, and
thereafter intends to implement further annual tender offers (at around the
time of the Company's annual general meetings in subsequent years) of up to 10
per cent. of the then issued share capital of the Company.
The current tender offer will be structured by way of an on market offer by
Ellis Stockbrokers Limited to acquire up the 15 per cent of the Company's
issued shares at a price per share equal to 92.5 per cent. of the net asset
value of the Company on the relevant calculation date divided by the number of
ordinary shares of £0.01 in issue as at such date, with such shares
subsequently being bought back by the Company (pursuant to a repurchase
agreement) from Ellis Stockbrokers Limited at the same price and cancelled.
Extension of Duration
The existing Articles of Association of the Company provide that the Directors
shall convene an extraordinary general meeting of the Company on 30 November
2009, at which proposals for the voluntary liquidation of the Company shall be
put to the members ("Winding-up Resolution") unless the Directors shall have
been previously released from their obligation to do so by a special resolution
of the Company duly passed at the annual general meeting of the Company to be
held in 2008 resolving to continue to operate as an investment trust company.
If the Directors are released from their obligation, they shall be obliged to
convene an extraordinary general meeting to be held on 30 November 2014 and
every fifth year thereafter (unless the Directors shall have been released from
their obligation to do so by a special resolution of the Company duly passed at
any annual general meeting of the Company held in the year preceding any such
dates), proposing a similar Winding-up Resolution.
In recognition of the fact that certain of the investments held by the Company
are illiquid and may, in the Manager's and Board's view, take longer than the
period remaining until 30 November 2009 to fulfil their inherent value, the
Directors propose to amend the Articles of Association (by way of a special
resolution to be proposed at this year's annual general meeting) so that, in
substitution of the procedure set out in the above paragraph, a special
resolution will be put to Shareholders at the annual general meeting of the
Company in 2011 in respect of the extension of the duration of the Company (``a
Continuance Resolution'') for a three year period. In the event that a
Continuance Resolution is passed, a further Continuance Resolution shall be put
to Shareholders in general meeting by no later than the third anniversary of
the previous Continuance Resolution. In the event that any Continuance
Resolution is not passed at any general meeting at which it is proposed, the
Directors shall then conduct the Company's affairs so as to effect an orderly
wind-up of the Company, and shall present a Winding-up Resolution at a general
meeting to be held not later than the third anniversary of the date on which
the previous Continuance Resolution failed to pass.
It is with sadness that I report to shareholders the death of Pratt Thompson,
the former Chairman of the Company. Pratt was involved in the Company from its
inception and was an enthusiastic and committed member of the Board.
George Stevens
Chairman
23 November 2007
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