Final Results

Chelverton UK Dividend Trust PLC

30 August 2024

 

Chelverton UK Dividend Trust PLC

Legal Entity Identifier (LEI): 213800DAF47EJ2HT4P78

Annual Results for the year to 30 April 2024

Printed copies of the Annual Report will be sent to those shareholders who have opted in to receive communications from the Company shortly. Additional copies may be obtained from the Company Secretary: Apex Fund Administration Services (UK) Limited, Hamilton Centre, Rodney Way, Chelmsford, Essex CM1 3BY.

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 April 2024.  The financial information for 2024 is derived from the statutory accounts for that year.  The auditors, Johnston Carmichael LLP, have reported on the 2024 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.  The financial information for 2023 is derived from the statutory accounts for that year. The following text is copied from the Annual Report and Accounts.

Strategic Report

Financial Highlights

	30 April	30 April
Capital	2024	2023	% change
Total gross assets (£'000)	52,231	53,674	(2.69)
Total net assets (£'000)	33,521	35,563	(5.75)
Net asset value per Ordinary share	155.59p	168.15p	(7.47)
Mid-market price per Ordinary share	145.50p	174.50p	(16.62)
(Discount)/premium	(6.48%)	3.78%
Net asset value per Zero Dividend Preference share 2025	128.11p	123.21p	3.98
Mid-market price per Zero Dividend Preference share 2025	120.00p	117.50p	2.13
Discount	(6.33%)	(4.64%)
	Year ended	Year ended
	30 April	30 April
Revenue	2024	2023	% change
Return per Ordinary share	12.70p	12.94p	(1.85)
Dividends declared per Ordinary share	12.60p	11.77p	7.05
Total return
Total return on Group's gross assets	2.26%	(4.78%)
Total return on Group's net assets* (total return as proportion of net assets after the provision for the Zero Dividend Preference shares)	2.47%	(4.64%)
Total return on Group's net assets*1	1.72%	(8.21%)
Ongoing charges**1	2.73%	2.44%
Ongoing charges***1	1.72%	1.62%

*        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.

***    Based on gross assets.

1These are alternative performance measures ('APM') (see APM glossary for further information).

Chairman's Statement

I am delighted to present to shareholders of the Chelverton UK Dividend Trust plc the Annual Report for the financial year ended 30 April 2024.

The year we are reporting on has seen several momentous world events impacting on the UK economy. The war between Russia and Ukraine following Russia's invasion in February 2022 has now been going on for more than two years although the market economic repercussions of this, so strongly felt in 2022, have tended to diminish over the course of 2023 and 2024. The demise of the Silicon Valley Bank, which was the 16th largest bank in the USA and with representation in the UK, in March 2023 was initially a major concern but its problems were highly localised and did not, in the end, spread contagion into the wider banking system.

The attack on Israel by Hamas in October 2023 and the subsequent reactions of Israel and Iran has caused a heightening of tensions in an already tense part of the world. This uncertainty led to volatility in oil and gas prices and recently the Houthi pirates operating in Yemen have been attacking shipping in the Red Sea and off the coast of Yemen, leading to increased costs and delays for shipping.

However, the major factor in the financial year was the rapid rise in inflation which started in 2022 but continued in the UK in 2023 where the level remained stubbornly high as compared to the United States and other countries in Europe. It has now fallen such that it is 2% today and is therefore in line with the Bank of England's target. However, a majority on the Monetary Policy Committee is now concerned about persistent high wage rises and it is only in the last month that we have seen the commencement of an overdue reduction in the Bank of England's base rate.

Over the past two years we have faced multiple rises in interest rates, which rose 14 times from 0.1% in December 2021, to what we expect, and sincerely hope, to be a peak of 5.25%. This rate was reached in August 2023. Of greater importance to the underlying investee companies is the impact on consumer spending and the public's disposable income. Initially, with the very rapid rise in inflation real wages fell behind. However more recently, as wages have risen sharply and inflation has declined equally sharply, positive real wage growth has re-emerged.

Of equal importance to markets was the expectation of a dramatic rise in mortgage rates, which would severely reduce spending power as much higher rates would have replaced historically extraordinarily low rates. However, this impact has been far less than was feared as today some 80% of mortgages, as compared to almost none 30 years ago, are now on fixed terms so that there is a long lead in time for the impact of these increases to have any effect. Mortgage rates, anticipating a future steady reduction in Bank of England rates, have fallen to much more manageable and historic levels and consequently what was expected to be a massive problem is now much reduced.

Some eighteen months ago the Bank of England warned that the UK was going to move into its longest recession for 100 years and that unemployment would rise from 3.5% to 6.5%. This view was also endorsed by the International Monetary Fund. Thankfully, the outturn was significantly different with the UK moving into a technical, marginal and very short-term recession in January 2024 with a return to growth of 0.6% being registered in the following quarter, the fastest in the G7. Unemployment has risen to 4.4% in the past few months, still some way short of the long-term average.

Results

The Company's net asset value per ordinary share as of 30 April 2024 was 155.59p (2023: 168.15p), a decrease over the year of 7.5% with an ordinary share price of 145.50p per share (2023: 174.50p). Total assets, including audited revenue reserves, were £52.231m (2023: £53.674m), a decrease over the year of 2.7%, and the total net assets were £33.521m (2023: £35.563m).

The Company was launched on 12 May 1999, and over this time the net asset value per Ordinary share has risen by 62.1% while a total of 241.49p has been paid in dividends, including the fourth interim dividend announced in June.

In the year total dividends of 12.60p per Ordinary share (2023: 11.77p) were proposed and paid, representing an increase of 7.05% year on year.

The Company has now returned to a position where the dividend is being paid entirely from the current year revenue surplus after costs. The intention in the future is to increase dividends by a level in excess of prevailing inflation and to use any surplus to replenish the revenue reserves.

The Company has increased its dividend each year for the last 14 years. Because of the strength of the revenue reserves, and the intention to add to them where possible in the future, the Company is in a strong position and the Board is confident that it will be possible to further grow the annual dividend, assuming the current macro-economic conditions continue.

The Company is currently invested in 80 companies spread across 17 sectors. This spread creates a well-diversified portfolio which is designed to produce steady revenue growth with a strong return of dividend income and, over time, capital growth.

Capital Structure

During the year the Board approved the modest issuance of shares at a premium to the prevailing net asset value. The number of ordinary shares has increased by 395,000 to 21,545,000 shares.

In the past we have been regularly asked to issue new shares to meet market demand. However, the Board's policy is that it will only consider issuing new shares if it can do so at a premium to NAV which is sufficient not only to cover all the costs of issuance but also to recognise the value of the revenue reserves that have been built up over many years by retaining profits which would otherwise have been distributed to holders of the existing share capital.

Dividend

The Board has declared a fourth interim dividend of 3.15p per Ordinary share (2023: 2.9425p) which, when added to the three quarterly interim dividends of 3.15p per Ordinary share, brings the total paid and declared to 12.60p (2023: 11.77p) for the year ended 30 April 2024, an increase of 7.05% over the previous year. No special dividend was paid during the year. The Company has revenue reserves which, after payment of the fourth interim dividend, represent some 78.3% of the current annual dividend.

The Board is committed to progressively improving the Company's dividend for investors and expects that the four interim dividends paid in respect of the financial year ending 30 April 2025 will very likely exceed, but in any event will not be less than, those paid in respect of the financial year ended 30 April 2024.

Outlook

As mentioned above in the introduction, there are currently many uncertainties across Europe and in the UK, not least the recent change in the UK government following the general election held on 4 July 2024. Sadly, the war in Ukraine is still continuing and at this time there appears to be no end in sight. European countries have rebalanced their economies and have achieved major savings in energy which it is to be hoped will become embedded.

Going forward in 2024, we are very hopeful that the continued anticipated decline in inflation will lead to a steady, but regular, decline in interest rates in the second half of the calendar year. Historically, that sort of environment has been very positive for small company share prices.

As mentioned in my introduction, things are currently very uncertain across the UK and Europe. This year, 2024, is being labelled as the Year of Elections, as more than half the world's democracies will be voting in national elections. After all the instability over the past eight years, a period of political renewal and revitalisation is to be welcomed.

Whilst a reader and listener to the mainstream media might well believe that the UK economy is in a disastrous place the reality is that this is not correct. Certainly, things could be better, but when could they not! The UK has for far too long suffered with low growth and whilst UK GDP has grown modestly, GDP per capita has not.

The UK economy is expected to steadily improve in the balance of 2024, but to "bounce back" to near long-term trend growth in 2025. Inflation is expected to decline sharply over the next period, and it seems that interest rates have already peaked. As the countries of Europe and the World return to a more "normal" state there is likely to be steady growth in the UK economy.

Howard Myles

Chairman

29 August 2024

Investment Manager's Report

The year to 30 April 2024, as a whole, saw a continuation of the difficult environment for UK small & midcaps, which we have commented on at length in our recent reports. As we highlighted in our Interim Report in November however, there were reasons to be optimistic, with the macro-outlook improving and analyst attention shifting towards when we might expect interest rates to start coming down. These conditions played out within the NAV performance of the Company, with the second half of the year seeing something of a rebound, which has so far continued into the current year. Despite the performance in the second half of the year, overall there was a 7.5% decline in the Company's net asset value per share from 168.15p to 155.59p. At the same time the core dividend increased 7.05% to 12.60p. The Company has not paid a special dividend in respect of the 2023/2024 financial year.

Despite the combined headwinds of high inflation, volatile commodity prices, supply chain de-stocking and weak demand, it is pleasing to note that the vast majority of our companies continue to trade profitably, generate significant levels of cash and pay dividends. This has resulted in generally strong balance sheets across our portfolio which has, in turn, allowed companies to look at additional ways to return cash to shareholders. Across the UK small and midcap market, and in our portfolio, there is an extremely high level of equity retirement as a number of companies continue to buy back their own shares. This highlights a solid level of underlying cash generation and provides an insight into how company boards view the current valuation of their shares. We expect that as corporate confidence returns, the economy improves, and share prices rise, cash flow will be redirected from buybacks into capital investment, helping to sustain the upcycle.

The recent earnings season has been encouraging, reinforcing the view that we are currently "bumping along" the bottom of the cyclical lows and, as we move through into the second half of the calendar year, earnings forecasts should start to look through to a more accommodative economic environment in 2025. In addition, we have seen a notable increase in bid activity across the market. Six of our stocks were the subject of corporate activity in the year to April 2024: Belvoir (now Property Franchise), finnCap (now Cavendish Financial), Numis, Restaurant Group, TClarke and Tyman.

The more positive sentiment in the market has translated into a 20.3% rise in Company NAV in the second half of the year to 30 April 2024, with the NAV rising further to 169.79p as of 27 August 2024. We are pleased to have delivered revenue generation that has enabled an annual 7.05% rise in the dividend to 12.60p during this period.

Portfolio Review

As noted above, corporate activity has been high within the portfolio, however not all have been cash takeovers. Belvoir and finnCap were the subject of all share mergers, and we have retained our holdings in the new combined entities. TClarke and Tyman both received bids in April 2024 and, as such, are still held in the portfolio. We exited our positions in Numis and Restaurant Group. In addition to these two, we exited ten positions entirely in the year. Positions in Bellway, Bloomsbury Publishing, Crest Nicholson, Essentra, Saga, Synthomer, Vertu Motors, Vistry Group and Wilmington Group were all exited on yield grounds, and we accepted a tender offer for our entire position in Town Centre Securities. Shareholdings were reduced in sixteen companies including Alumasc Group, Castings, Fonix Mobile, Hilton Foods, Kitwave Group, ME Group, Smiths News and Ultimate Products.

Nine new holdings were added to the Company's portfolio in the year, including home furnishing retailer Dunelm, law firm Gateley, studios business and broadcaster ITV, property finance platform Lendinvest, price comparison business MoneySupermarket, radiator manufacturer and distributor Stelrad and specialist bank Vanquis Banking. In addition, we added to twenty-two positions, including Arbuthnot Banking, Bakkavor, DFS Furniture, Duke Capital, FDM Group, Hargreaves Services, Liontrust Asset Management, Marshalls, Paypoint, RTC Group, RWS, Sabre Insurance, Spectra Systems, STV Group and Wickes Group.

Outlook

There have been many column inches written over the past few years trying to identify the catalyst which will spark a re-rating of UK listed assets, and UK small and midcaps in particular. While most commentators agree that falling inflation and lower interest rates will feed through to improved business confidence and a rebound in consumer spending, pinpointing the exact timing of the market rebound is likely to be as imprecise this time as it has been in previous cycles.

In times like this we take confidence from the quality of our underlying holdings, and the way in which, in the main, their management teams have navigated what has undoubtedly been an extremely difficult trading environment. We must also hope that we do not lose too many of our holdings to takeovers at prices which do not reflect the full medium-term potential of the business. As long-term, fundamental investors, we would far rather continue to back the management teams of growing, cash generative businesses, than settle for a quick return based on current low levels of valuation.

Stock prices are forward-looking instruments and as we look into calendar year 2025, the macro picture appears to be more favourable than it has been for some time. There are also some tentative signs that asset allocators are starting to view our UK small and midcap universe more favourably. A reversal of the outflows which we have seen from our part of the market, combined with the scarcity of stock arising from the high levels of equity retirement currently being seen, has the potential to result in very favourable conditions for UK small and midcaps, as and when earnings start to recover.

David Horner

Chelverton Asset Management Limited

29 August 2024

Breakdown of Portfolio by Industry

at 30 April 2024	Market value Bid	% of
Market sector	£'000	portfolio
Banks	1,211	2.30
Basic Resources	514	1.00
Construction & Materials	8,364	16.10
Consumer Products and Services	4,349	8.50
Energy	788	1.50
Financial Services	7,274	14.30
Food, Beverage & Tobacco	3,222	6.30
Health Care	623	1.20
Industrial Goods & Services	10,510	20.40
Insurance	4,017	7.80
Media	1,651	3.20
Personal Care, Drugs & Grocery Stores	578	1.10
Real Estate	2,297	4.50
Retail	4,337	8.40
Technology	538	1.00
Telecommunications	903	1.80
Travel & Leisure	307	0.60
	51,483	100.0

Portfolio Statement

at 30 April 2024		Market value	% of
Security	Sector	£'000	portfolio
Ultimate Products	Consumer Products and Services	1,575	3.1
Alumasc Group	Construction & Materials	1,260	2.4
Hargreaves Services	Industrial Goods & Services	1,260	2.4
Smiths News	Industrial Goods & Services	1,238	2.4
Property Franchise	Real Estate	1,226	2.4
Bakkavor	Food, Beverage & Tobacco	1,186	2.3
RTC Group	Industrial Goods & Services	1,184	2.3
Chesnara	Insurance	1,132	2.2
Tyman	Construction & Materials	1,131	2.2
ME Group	Consumer Products and Services	1,039	2.0
M P Evans	Food, Beverage & Tobacco	1,038	2.0
Redde Northgate	Industrial Goods & Services	961	1.9
Duke Royalty	Financial Services	960	1.9
Somero	Industrial Goods & Services	960	1.9
STV	Media	948	1.8
Wickes	Retail	946	1.8
OSB Group	Financial Services	924	1.8
TClarke	Construction & Materials	923	1.8
Hilton Foods	Food, Beverage & Tobacco	916	1.8
Epwin Group	Construction & Materials	900	1.7
Stelrad	Construction & Materials	889	1.7
Conduit	Insurance	877	1.7
Genuit Group	Construction & Materials	873	1.7
Kier Group	Construction & Materials	872	1.7
Spectra Systems	Retail	864	1.7
MTI Wireless Edge	Telecommunications	861	1.7
Severfield	Construction & Materials	845	1.6
Castings	Industrial Goods & Services	823	1.6
Sabre Insurance	Insurance	802	1.6
Diversified Energy	Energy	788	1.5
Dunelm	Retail	761	1.5
Ramsdens Holdings	Financial Services	753	1.5
Palace Capital	Real Estate	735	1.4
TP ICAP	Financial Services	726	1.4
Fonix Mobile	Industrial Goods & Services	703	1.4
ITV	Media	703	1.4
DFS Furniture	Retail	696	1.4
Polar Capital Holdings	Financial Services	676	1.3
Marshalls	Construction & Materials	671	1.3
Coral Products	Industrial Goods & Services	665	1.3
Arbuthnot Banking	Banks	663	1.3
Hansard Global	Insurance	628	1.2
One Health Group	Health Care	623	1.2
Kitwave Group	Personal Care, Drugs & Grocery Stores	578	1.1
Personal Group Holdings	Insurance	560	1.1
Vector Capital	Financial Services	560	1.1
Springfield Properties	Consumer Products and Services	558	1.1
MoneySuperMarket	Technology	538	1.0
Paypoint	Industrial Goods & Services	526	1.0
Premier Miton Group	Financial Services	497	1.0
Gateley	Industrial Goods & Services	480	0.9
Portmeirion Group	Consumer Products and Services	446	0.9
Topps Tiles	Retail	432	0.8
FDM Group	Industrial Goods & Services	431	0.8
RWS	Industrial Goods & Services	431	0.8
TheWorks.co.uk	Retail	425	0.8
Ecora Resources	Basic Resources	410	0.8
Lendinvest	Financial Services	405	0.8
Liontrust Asset Management	Financial Services	405	0.8
Strix Group	Industrial Goods & Services	387	0.8
Watkin Jones	Consumer Products and Services	379	0.7
Orchard Funding Group	Financial Services	363	0.7
Gattaca	Industrial Goods & Services	356	0.7
Headlam Group	Consumer Products & Services	352	0.7
Cavendish Financial	Financial Services	341	0.7
Regional REIT	Real Estate	336	0.7
Bank of Cyprus	Banks	321	0.6
Jarvis Securities	Financial Services	300	0.6
Marston's	Travel & Leisure	279	0.5
Close Brothers Group	Banks	227	0.4
DSW Capital	Financial Services	225	0.4
Brown (N) Group	Retail	213	0.4
iEnergizer *	Industrial Goods & Services	105	0.2
Chamberlin	Basic Resources	104	0.2
Vanquis Banking	Financial Services	94	0.2
Wynnstay Group	Food, Beverage & Tobacco	82	0.2
Sancus Lending Group	Financial Services	45	0.1
Aferian	Telecommunications	42	0.1
Revolution Bars Group	Travel & Leisure	28	0.1
Randall & Quilter	Insurance	18	0.0
Total Portfolio		51,483	100.0

* iEnergizer delisted from AIM on 25 May 2023 and is held as a Level 3 investment as at 30 April 2024.

Investment Objective and Policy

The investment objective of the Company is to provide Ordinary shareholders with a high income and the 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, SDVP.

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, traded on AIM, or traded on other qualifying UK marketplaces.

·   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. The Company may retain investments in companies which cease to be listed after the initial investment was made, so long as the total is non-material in the context of the overall portfolio; however, the Company may not increase its exposure to such investments.

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 57 of the Annual Report.

·   A total dividend for the year to 30 April 2024 of 12.60p (2023: 11.77p) per Ordinary share has been declared to shareholders by way of three payments totalling 9.45p per Ordinary share plus a planned fourth interim dividend payment of 3.15p per Ordinary share.

·   The NAV per Ordinary share at 30 April 2024 was 155.59p (2023: 168.15p).

·   The ongoing charges (including investment management fees and other expenses but excluding exceptional items) for the year ended 30 April 2024 were 2.73% (2023: 2.44%). The increase in the annualised ongoing charges is primarily due to the decrease in net asset value during the year.

Principal Risks

The Directors confirm that they have carried out a robust annual assessment of the principal and emerging risks facing the Company, including those that would threaten its objectives, business model, future performance, solvency or liquidity. The Board regularly monitors the principal risks facing the Company, the likelihood of any risk crystallising, the potential implications for the Company and its performance, and any additional mitigation that might be introduced. The Board maintains and regularly reviews a matrix of risks faced by the Company and the associated controls in place to mitigate those risks. Emerging risks, such as the conflict in the Middle East, the ongoing conflict in Ukraine and the impact on supply chains from disruption to shipping through the Suez Canal are actively discussed to ensure that any such risks are adequately identified and are mitigated, as far as is reasonably practicable. Any emerging risks that are identified and which are considered to be of significance to the Company will be recorded within the risk matrix, together with any mitigants. The emerging risks referred to above are not deemed of sufficient significance to the Company to be added to the risk matrix; however, this is reviewed regularly. Mitigation of risks is primarily 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 meets formally with the Investment Manager on a quarterly basis when the portfolio transactions and performance are discussed and reviewed to ensure that the Investment Manager is managing the portfolio within the scope of the 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 potential gains as a result of maintaining such liquidity, during negative market movements this may provide downside 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 is pleased to report that discount volatility improved with the Company's stronger net asset value position and share price during the second half of the year. However, the Board, with its advisers, continues to monitor the Company's discount levels and shares may be bought back in future should it be considered appropriate to do so by the Board, taking into account the size of the Company and liquidity in the market in its shares.

Regulatory risk

A breach of Companies Act provisions or 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. Furthermore, the Company must comply with the requirements of section 1158 of the Corporation Tax Act 2010 to maintain its investment trust status. The Board, with its advisers, monitors the Group's regulatory obligations both on an ongoing basis and at quarterly Board meetings.

Financial risk

The financial position of the Group is reviewed via detailed management accounts at each Board meeting

and both financial position and controls are monitored by the Audit Committee.

A more detailed explanation of the financial risks facing the Group is given in note 21 to financial statements of the Annual Report.

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 final 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 and vice versa. The Investment Manager seeks to mitigate the gearing risk by maintaining a diverse portfolio of investments to reduce exposure to any single source of risk.

The Zero Dividend Preference shares issued by the Company's subsidiary are due to be redeemed on 30 April 2025. In the event that the Company is unable to replace the maturing Zero Dividend Preference shares with a further issue of Zero Dividend Preference shares via a new subsidiary then the Company's total assets would be materially reduced; however, it would still be of a viable size for an investment trust. The Board is considering the available options and an update will be provided in the Company's 2024 interim report.

Political risk

The Board recognises that changes in the political landscape may substantially affect the Company's prospects and the value of its portfolio companies. The Board and Investment Manager continue to monitor any developments in respect of the war in Gaza as well as the impact of sanctions imposed on Russia as a result of the war in Ukraine. The Company has no exposure to Israeli or Russian stocks within its investment portfolio, hence there was no requirement to amend the Company's investment policy. Potential future changes to the UK's policies and regulatory landscape in light of the UK's departure from the EU, as well as the change in government following the UK General Election on 4 July 2024, could impact the Company and its portfolio companies. Potential political consequences for the Company are regularly monitored and assessed by the Board.

Loss of key personnel

The Board recognises the crucial part the Investment Manager plays in the ongoing success of the Company's performance and that the Company is substantially dependent on the services of the Investment Manager's investment team for the implementation of its investment policy. The departure of the Investment Manager or a key individual at Chelverton Asset Management Limited ('Chelverton') may therefore affect the Company's performance.

As set out in the Investment Management Agreement, Chelverton is required to provide one or more dedicated fund managers to the Company, who provides the Board with regular updates on developments at Chelverton, such as succession planning and business continuity plans. Chelverton currently provides two fund managers to the Company, therefore lowering the impact of the potential loss of key personnel.

Operational risk

The Company relies on the performance of its third-party service providers. The preparation of the financial statements and administration and maintenance of its records are delegated to its Administrator and Company Secretary, Apex Fund Administrations Services (UK) Limited. The custody of its assets has been delegated to Northern Trust. The Board reviews the performance, risk control procedures and the terms on which these third-party service providers provide services to the Company on a regular basis.

Accounting policies

New developments in accounting standards and industry-related issues are actively reported to and monitored by the Audit Committee, the Board where applicable and the Company's advisers, ensuring that all appropriate accounting policies are adhered to.

Section 172 Statement

The Directors are mindful of their duties to promote the success of the Company in accordance with Section 172 of the Companies Act 2006, for the benefit of the shareholders, giving careful consideration to wider stakeholders' interests and the environment in which the Company operates. The Board recognises that its decisions are material, not only to the Company and its future performance, but also to the Company's key stakeholders, as identified below. In making decisions, the Board considered the outcome from its stakeholder engagement exercises as well as the need to act fairly as between the members of the Company.

Investors

The Company's shareholders have a significant role in monitoring and safeguarding the governance of the Company and can exercise their voting rights to do so at general meetings of the Company. Shareholders also benefit from improving performance and returns.

All shareholders have access to the Board via the Company Secretary and the Investment Manager at key company events, such as the Annual General Meeting, and throughout the year by contacting the Company Secretary or the Chairman. These regular communications help the Board make informed decisions when considering how to promote the success of the Company for the benefit of shareholders. Furthermore, the Investment Manager prepares and publishes a monthly factsheet on their website.

This year's Annual General Meeting is to be held on 11 October 2024 at the offices of Chelverton Asset Management, Basildon House, 7 Moorgate, London EC2R 6EA. Shareholders are strongly encouraged to vote by proxy and to appoint the Chairman as their proxy. Shareholders are also encouraged to put forward any questions to the Company Secretary in advance of the Annual General Meeting.

The Board received enhanced Investor Relations themed reporting from its broker, Shore Capital, during the year, including quarterly shareholder analyses, to ensure continuing awareness of key shareholder groups.

Investment Manager

The Board recognises the critical role of the Investment Manager in delivering the Company's future success. The Investment Manager attends Board and Audit Committee meetings, to participate in transparent discussions, where constructive challenge is encouraged. The Board and Investment Manager communicate regularly outside of these meetings with the aim of maintaining an open relationship and momentum in the Company's performance and prospects. The Investment Manager's performance is evaluated informally on a regular basis, with a formal review carried out on an annual basis by the Board when performing the functions of a management engagement committee. The Investment Management Agreement is reviewed as part of this process.

Key service providers

The Board relies on a number of advisors for support in the successful operation of the Company and in order to meet its obligations. The Board therefore considers the Investment Manager, Company Secretary/Administrator, Auditor, Broker, Registrar and Custodian to be stakeholders.

The Company employs a collaborative approach and looks to build long term partnerships with these key service providers. They are required to report to the Board on a regular basis and their performance and the terms on which they are engaged are evaluated and considered annually.

Portfolio companies

The Investment Manager regularly liaises with the management teams of companies within the Investment Portfolio and reports on findings and the performance of investee companies to the Board on at least a quarterly basis.

Regulators

The Board regularly reviews the regulatory landscape and ensures compliance with rules and regulations relevant to the Company via reporting at quarterly Board meetings from the Company Secretary. Compliance with relevant rules and regulations is regularly formally assessed.

Community and environment

The Board believes that consideration of environmental, social and governance ('ESG') factors as part of the investment process when pursuing the Company's objectives is key. The Board therefore discusses this with the Investment Manager on a regular basis.

 Principal Decisions

The Board defines principal decisions as those that are material to the Company as well as those that are significant to any of the Company's key stakeholders as identified above. In making the principal decisions set out below, the Board considered the outcome from its engagement with stakeholders as well as the need to maintain a reputation for high standards of business conduct and the need to act fairly as between the members of the Company.

Principal decision 1 - Audit Tender

The Company, led by the Audit Committee, conducted a comprehensive and competitive tender of its audit services during the year to 30 April 2024. As a result of the tender process the Board appointed Johnston Carmichael LLP as auditor with effect from 6 November 2023. The appointment of the auditor is subject to shareholder approval at the Annual General Meeting to be held on 11 October 2024. Resolutions concerning Johnston Carmichael LLP's appointment and remuneration will be submitted to that meeting.

Principal decision 2 - Change in investment policy

As a result of iEnergizer, one of the investments in the Company's portfolio, delisting in the current year, the Board decided to change the Company's investment policy to allow the Company to retain investments in companies which cease to be listed after the initial investment was made, so long as the total is non-material in the context of the overall portfolio; however, the Company may not increase its exposure to such investments. This investment was sold after the 30 April 2024 year end.

Principal decision 3 - Change in custodian

As Jarvis Investment Management Limited was no longer able to provide the services required by the Company, the Board decided to change the Company's custodian to Northern Trust with effect from 18 December 2023.

Principal decision 4 - Dividend policy

In accordance with the Company's dividend policy, for the year to 30 April 2024, the Board approved three interim dividends of 3.15p per Ordinary share (totalling 9.45p), with a fourth interim dividend of 3.15p per Ordinary share having been approved, bringing the total to 12.60p for the year.

In the previous financial year to 30 April 2023, the Company increased the quarterly dividend rate by 7% from that of 2022. For the current financial year, the Board has once again increased the quarterly dividend rate, by 7.05%.

Principal decision 5 - Mailings to shareholders

In response to letters received from a number of shareholders, the Board decided to send all shareholders an 'opt in' letter in December 2023. As a result, only those shareholders who have 'opted in' will continue to receive correspondence from the Company in hard copy; this includes the mailings of the Annual and Interim report and accounts.

Viability Statement

The Board and Investment Manager continuously consider the performance, progress and prospects of the Company over a variety of future timescales. These assessments, including regular investment performance updates from the Investment Manager, and a continuing programme of risk monitoring and analysis, form the foundations of the Board's assessment of the future viability of the Company. The Directors are mindful of the Company's commitments to shareholders of the Subsidiary in 2025 in forming their viability opinion for the Company each year.

With this in mind, the Directors currently believe that future demand from investors will enable the Group to launch a new subsidiary through which it can issue a further tranche of  zero dividend preference shares (ZDPs) upon the repayment of the existing ZDPs in April 2025. The Directors remain of the view, therefore, that three years is a wholly realistic and the most appropriate period over which to assess the viability of the Company. After careful analysis, taking into account the potential impact of the current risks and uncertainties to which the Company is exposed, the Directors confirm that in their opinion:

·   it is appropriate to adopt the going concern basis for this Annual Report and Accounts; and

·   the Company continues to be viable for a period of at least three years from the date of signing of this Annual Report and Accounts. Three years is considered by the Board to be the maximum period over which it is currently feasible to make a viability forecast based on known risks and macro--economic trends.

The following facts, which have not materially changed in the last financial year, 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 a small amount of short-term cash on deposit; and

·   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 assurances from its independent service providers, to whom all management and administrative functions are delegated, that their operations are well managed and they are taking appropriate action to monitor and mitigate risk. The Directors have a reasonable expectation 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 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 Individual Savings Accounts ('ISAs') up to the maximum annual subscription limit and the Directors expect this eligibility to be maintained.

The Group financial statements consolidate the audited annual report and financial statements of the Company and SDVP for the year ended 30 April 2024. The Company owns 100% of the issued ordinary share capital and voting rights of SDVP, which was incorporated on 25 October 2017.

Further information on the capital structure of the Company and SDVP can be found in the annual report.

Alternative Investment Fund Manager ('AIFM')

The Board is compliant with the directive and the Company is registered as a Small Registered 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, environmental, 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 directly 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 service providers, the Company aims to conduct itself responsibly, ethically and fairly at all times.

Environmental, Social, Governance ('ESG')

The Board and the Investment Manager are committed to delivering the long-term investment objectives of the Company. This long-term lens involves careful consideration of systemic issues that can present investing opportunities and challenges for investors, such as those relating to climate change and more sustainable business practice.

Responsible investing and active stewardship lie at the heart of the investing approach and the Investment Manager is signatory to the United Nations backed Principles of Responsible Investing ('PRI') and the revised UK Stewardship Code 2020.

As signatory to these best-practice principles the Investment Manager systematically incorporates relevant ESG issues within its investment analysis and decision making and adheres to policies and processes designed to ensure the responsible allocation, management, and oversight of capital with the aim of protecting and enhancing value for investors, leading to benefits for the economy, the environment and society.

The Responsible Investing policies, plans, and risk controls that guide the Investment Manager's investing activities are detailed in a Responsible Investing Policies Pack, available to view on the Chelverton website alongside an annual UK Stewardship Code Report and quarterly Engagement and Voting reports.

The Responsible Investing Policies Pack includes:

•     an ESG Integration Policy detailing how E, S, and G issues are incorporated within the investment process and how ESG risk is monitored and controlled.

•     a Shareholder Engagement and Voting Policy detailing the principles that guide the Investment Manager's engagement and voting behaviour.

•     an annual Engagement Plan, designed to ensure ESG issues are appropriately incorporated within company engagements and detailing how the Investment Manager engages to support improvements in company ESG management and reporting and the control of systemic risk.

The internal roles, governance structures, and resources that support the responsible investing and active stewardship activities of the Investment Manager include:

•     a Head of Responsible Investing who leads an ESG Team that work alongside the Investment Manager supporting E, S, and G analysis and engagement and voting activities.

•     a regular cycle of ESG meetings that input to Board oversight of ESG risk.

•     proprietary ESG data collection and third-party ESG data services.

ESG in a UK small and mid-cap context

Small and medium-sized companies are neither immune from the impact of systemic risk, nor without a significant role to play in the delivery of required change. However, small and mid-sized companies are typically poorly researched by external ESG ratings agencies and assessments show a recognised large-cap bias. Consequently, the Investment Manager does not rely on external ESG ratings, considering these for contextual purposes only. The Investment Manager prefers in-house analysis supported by proprietary ESG data collection, considering this more appropriate for the small and mid-cap universe.

Corporate governance issues within investee companies

The Board relies on the Investment Manager to factor in consideration of corporate governance matters when assessing existing and potential investments. The Investment Manager pays particular attention to corporate governance, believing purpose driven companies, demonstrating strong and effective governance and a healthy corporate culture, are best placed to succeed.

The Investment Manager has the support of the ESG Team in this assessment and access to information and analysis gathered from proprietary ESG questionnaires.

The assessment is sensitive to company size, level of maturity, and specific circumstances of each company.

The Investment Manager is supportive of the general principles expressed by the UK Corporate Governance Code and Quoted Companies Alliance (QCA) Code for small and medium sized companies and expects companies to adhere to these standards or explain why they have not done so.

The Investment Manager considers the following, engaging to understand individual circumstances and to influence change where this is deemed to be of value.

•     Board Size and Composition

The Investment Manager considers the boards of small and medium-sized companies should not become too large for cost and efficiency reasons and that the Board should be well-balanced in terms of executive and non-executive directors, with a majority of non-executive directors.

Non-executive directors are scrutinised for their independence and good historic behaviour.

The tenure of directors should ideally not exceed nine years. However, this is always considered within the company context.

The Investment Manager prefers non-executives to be on fewer rather than multiple boards whilst acknowledging good non-executives are in short supply.

The Investment Manager looks for an appropriate mixture of abilities and knowledge on the Board and considers the experience of an independent Chair to be particularly important.

Diversity and inclusion at board level is considered an indicator of an inclusive company culture and important in relation to the quality of decision-making. Whilst encouraging boards to ensure their composition is reflective of society, the Investment Manager accepts this can take time to achieve. However, the Investment Manager will engage to ensure board diversity is a consideration in the nomination process, where appropriate.

•     Remuneration

Executive remuneration proposals are reviewed annually using the company report and accounts and the Investment Manager will engage with the Chair or Chair of the Remuneration Committee where proposals do not meet the following broad criteria:

Remuneration should encourage long-term value creation and the alignment of management and shareholder interests, including claw back mechanisms in the event of misconduct.

Basic pay awards above inflation should be justified by performance. Performance thresholds should be challenging and linked to clear targets.

The Investment Manager favours the inclusion of material ESG management targets alongside financial targets and believes that awards should be sensitive to the constraints on awards to the wider workforce during periods of difficult trading.

Long term incentive schemes should be simple and share-based with minimum holding periods, and the Investment Manager favours the inclusion of total shareholder return metrics in long term incentive schemes.

Shareholder dilution resulting from the issuance of options or new shares in remuneration packages should not be excessive.

One-off recruitment awards to secure the right candidate should not become part of ongoing remuneration.

Executive pension contributions should progressively align with the pension contributions of the wider workforce.

Environmental issues

The Board expects the Investment Manager to consider each company's approach to the identification, management and reporting of material environmental issues. To this end, the Investment Manager makes targeted enquiries via ESG questionnaires and relies on the support of the ESG Team for additional insight where appropriate.

The Investment Manager also undertakes a review of company policies, standards, and commitments in relation to environmental responsibilities as appropriate.

In addition, the Investment Manager writes annually to committed holdings outlining expectations regarding issues considered so pervasive that they have become the responsibility of all system participants to manage regardless of materiality.

Climate

The Board accepts that limiting global warming to 1.5 degrees above pre-industrials, in line with the Paris Agreement and national commitments to Net Zero, is a central consideration for a responsible investor.

The Board encourages the Investment Manager to employ shareholder influence to ensure all investee companies are working towards the adoption of a net zero strategy.

Biodiversity

The Board is mindful of the depletion in the natural capital upon which we all depend and the urgency to reverse biodiversity loss and encourages the Investment Manager to engage with investee companies to ensure focus on natural resource efficiency, the control of negative impacts, and the adoption of policies and practices that can support nature restoration.

Social issues

As part of the investment process the Investment Manager considers each company's approach to the identification, management and reporting of material social issues, asking targeted questions via ESG questionnaires and relying on the support of the ESG Team for additional insight where appropriate.

A review of company policies, standards, and commitments in relation to social issues is undertaken as relevant.

Human rights

The Board relies on the Investment Manager to adopt procedures to understand each company's focus on the effective management of human rights issues, including within supply chains. Questions are asked via an ESG questionnaire and a review company policies, standards, and commitments in relation to human rights is undertaken with the support of the ESG Team where appropriate.

Human capital

Competition for talent across many sectors of the economy is fierce and the employment expectations and training and support needs of the workforce have rapidly evolved in recent years.  A company's focus on recruitment, employee satisfaction, and retention are viewed by both the Board and the Investment Manager to be central to ingredients of company success.

Questions are asked via an ESG questionnaire and a review of company policies, standards, and commitments in relation to human capital management is undertaken with the support of the ESG Team where appropriate.

In addition, the Board expects the Investment Manager to use its influence as a shareholder to ensure all investee companies are focused on improving diversity, equity and inclusion within leadership and the wider workforce.

Health and safety

As a part of understanding company culture and a company's focus on human capital, company policies are reviewed by the Investment Manager. This includes reviews of performance statistics where relevant, relating the occupational Health and Safety, in addition to making enquiries via an ESG questionnaire and reviewing the approach with the support of the ESG Team.

Engagement

Engagement lies at the heart of the Investment Manager's approach to managing ESG risk and significant time and resources are devoted to company engagement.

The Investment Manager fosters constructive relationships with the executive and non-executive management teams of investee companies, and increasingly with sustainability and other professionals such as investor relations, seeking purposeful dialogue on ESG issues.

Engagement activity is reported on an annual basis in the Investment Manager's UK Stewardship Code Report and is guided by the Chelverton Shareholder Engagement and Voting Policy.

The Board considers the Investment Manager's skill and expertise when engaging with companies to be value enhancing. The Investment Manager follows a structured approach, relying on the support of the ESG Team to ensure the appropriate inclusion of ESG issues and progress in relation to active engagement objectives.

The Investment Manager writes to all committed holdings on an annual basis outlining ESG management and reporting expectations and asking for focus on issues, such as climate change, diversity and inclusion, ESG targets within executive remuneration packages, and more recently natural resource usage and nature restoration.

Collaborative engagement aims to support the needs of small and mid-sized companies within the financial system and promote their participation in more sustainable business practice, and the Investment Manager targets collaborative engagements that address the market-wide and systemic risks identified through the investment process as important.

The desired outcome of active engagement is to reduce investment risk and enhance the prospects of investee companies through dialogue and support. However, the Investment Manager may look to sell holdings where the investment case is considered at risk for any reason, including due to inadequate management focus on material ESG risk.

Proxy voting

The Board and Investment Manager consider voting an important shareholder right. Consequently, the Investment Manager seeks to vote every eligible vote in line with the principles laid out in the Chelverton Asset Management Shareholder Engagement and Voting Policy and active engagement objectives laid out in the annual Engagement Plan. However, in principle, having satisfied itself regarding the integrity of the investment case, the Investment Manager is likely to be supportive of company management.

The Investment Manager does not rely on the services of a third-party proxy voting advisor, believing in-house governance analysis by the ESG Team's Corporate Governance Manager, considered alongside the contextual knowledge of the Investment Manager, is more pertinent for small and mid-sized companies.

Voting behaviour, including the rationale for any vote that is not supportive of a management resolution, is reported on a quarterly basis on the Chelverton website and summarised annually in the UK Stewardship Code Report.

Data science and third-party data resources

The Chelverton ESG Team has built a proprietary ESG database using company ESG questionnaire responses supplemented by desk-based research. The Investment Manager also maintains a shared Corporate Engagement Log recording relevant company engagements and progress in relation to engagement objectives.

The Investment Manager has access to several external ESG data services that provide contextual insight in relation to ESG risk factors, including Integrum, Bloomberg (which includes summary ESG ratings from Sustainalytics and ISS), signatory CDP data (Carbon Disclosure Project) relating to climate, water and deforestation, and ASR Macro ESG research.

Screening

The Investment Manager does not currently set limits or apply exclusion or inclusion criteria in relation to sustainability objectives, except where required by law or in relation to banned activities under international conventions.

However, the Investment Manager's investment focus on quality characteristics will tend to exclude companies assessed as managing ESG risks badly and/or without a credible strategy. For example, if a company operating in a high ESG risk sector is identified as managing ESG risk poorly, the company will tend to be excluded from consideration by the Investment Manager's selection criteria, as laid out in the Investment Manager's ESG Integration Policy.

Anti-greenwashing rule

The FCA's anti-greenwashing rule is designed to ensure sustainability-related claims are fair, clear and not misleading. The Investment Manager does not currently manage any funds pursuing sustainability objectives. However, as a responsible investor it follows a structured approach to ESG Integration and Stewardship to ensure relevant ESG issues are considered alongside financial factors with the aim of protecting and enhancing investment value for clients. The Investment Manager therefore welcomes the clarity the anti-greenwashing rule should bring alongside the new SDR labelling regime.

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.

Streamlined energy and carbon reporting

The Company is categorised as a lower energy user under the HMRC Environmental Reporting Guidelines March 2019 and is therefore not required to make the detailed disclosures of energy and carbon information set out within the guidelines. The Company has therefore not reported further in respect of these guidelines.

Culture and values

The Company's values are to act responsibly, ethically and fairly at all times. The Company's culture is driven by its values and is focused on providing Ordinary shareholders with a high income and opportunity for capital growth. As the Company has no employees, its culture is represented by the values, conduct and performance of the Board, the Investment Manager and its key service providers, all of whom work collaboratively to support delivery of the Company's strategy.

Current and future developments

A review of the main features of the year and the outlook for the Company is contained in the Chairman's

Statement and the Investment Manager's Report set out above.

Dividends declared/paid

	Payment date	30 April 2024 pence	30 April 2023 pence
First interim	13 October 2023	3.15	2.9425
Second interim	12 January 2024	3.15	2.9425
Third interim	19 April 2024	3.15	2.9425
Fourth interim	12 July 2024	3.15	2.9425
		12.60	11.77
The Directors do not declare a final dividend.

Ten year dividend history

	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
	pence	pence	pence	pence	pence	pence	pence	pence	pence	pence
1st Quarter	3.15	2.9425	2.75	2.50	2.40	2.19	2.02	1.85	1.70	1.575
2nd Quarter	3.15	2.9425	2.75	2.50	2.40	2.19	2.02	1.85	1.70	1.575
3rd Quarter	3.15	2.9425	2.75	2.50	2.40	2.19	2.02	1.85	1.70	1.575
	9.45	8.8275	8.25	7.50	7.20	6.57	6.06	5.55	5.10	4.725
4th Quarter	3.15	2.9425	2.75	2.50	2.40	2.40	2.40	2.40	2.40	2.40
	12.60	11.77	11.00	10.00	9.60	8.97	8.46	7.95	7.50	7.125
% increase of core dividend	7.05	7.00	10.00	4.17	7.02	6.03	6.47	6.00	5.26	4.40
Special dividend	-	-	-	0.272	-	2.50	0.66	1.86	1.60	0.30
Total dividend	12.60	11.77	11.00	10.272	9.60	11.47	9.12	9.81	9.10	7.425

The Strategic Report is signed on behalf of the Board by

Howard Myles

Chairman

29 August 2024

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. Company law requires the Directors to prepare financial statements for each financial year. Under that law the Directors have elected to prepare financial statements in accordance with UK adopted international accounting standards and with the requirements of the Companies Act 2006 as applicable to companies reporting under international accounting standards.

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 and then apply them consistently;

·   make judgements and estimates that are reasonable and prudent;

·   state that the Group and the Company have complied with UK adopted international accounting standards subject to any material departures disclosed and explained in the financial statements;

·   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 UK adopted international accounting standards 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; and

·   make an assessment of the Group's ability to continue as a going concern.

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. 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 maintenance and integrity of the corporate and financial information relating to the 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 the relevant financial framework, give a true and fair view of the assets, liabilities, financial position and profit or loss of the Group;

·   the Annual Report includes a fair review of the development and performance of the Group and the position 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 Group 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

Howard Myles

Chairman

29 August 2024

Consolidated Statement of Comprehensive Income

for the year ended 30 April 2024

	Note	Revenue £'000	2024 Capital £'000	Total £'000	Revenue £'000	2023 Capital £'000	Total £'000
Losses on investments at fair value through profit or loss	10	-	(1,627)	(1,627)	-	(5,543)	(5,543)
Investment income	2	3,260	-	3,260	3,202	-	3,202
Investment management fee	3	(125)	(375)	(500)	(133)	(400)	(533)
Other expenses	4	(357)	(13)	(370)	(333)	(14)	(347)
Net surplus/(deficit) before finance costs and taxation		2,778	(2,015)	763	2,736	(5,957)	(3,221)
Finance costs	6	-	(709)	(709)	-	(680)	(680)
Net surplus/(deficit) before taxation		2,778	(2,724)	54	2,736	(6,637)	(3,901)
Taxation	7	(58)	-	(58)	(32)	-	(32)
Total comprehensive expense for the year		2,720	(2,724)	(4)	2,704	(6,637)	(3,933)
		Revenue	Capital	Total	Revenue	Capital	Total
		pence	pence	pence	pence	pence	pence
Net return per:
Ordinary share	8	12.70	(12.72)	(0.02)	12.94	(31.77)	(18.83)
Zero Dividend Preference share 2025	8	-	4.89	4.89	-	4.69	4.69

The total column of this statement is the Statement of Comprehensive Income of the Group prepared in accordance with UK adopted International Accounting Standards and with the requirements of the Companies Act 2006. 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 accompanying notes form part of these financial statements.

Consolidated and Parent Company Statement of Changes in Net Equity

for the year ended 30 April 2024

		Share capital	Share premium account	Capital redemption reserve	Capital reserve	Revenue reserve	Total
Note		£'000	£'000	£'000	£'000	£'000	£'000
Year ended 30 April 2024
30 April 2023		5,288	17,980	5,004	4,564	2,727	35,563
Total comprehensive expense for the year		-	-	-	(2,724)	2,720	(4)
Ordinary shares issued		98	539	-	-	-	637
Expenses of Ordinary share issue		-	(22)	-	-	-	(22)
Dividends paid	9	-	-	-	-	(2,653)	(2,653)
30 April 2024		5,386	18,497	5,004	1,840	2,794	33,521

Year ended 30 April 2023
30 April 2022		5,213	17,517	5,004	11,201	2,447	41,382
Total comprehensive expense for the year		-	-	-	(6,637)	2,704	(3,933)
Ordinary shares issued		75	466	-	-	-	541
Expenses of Ordinary share issue		-	(3)	-	-	-	(3)
Dividends paid	9	-	-	-	-	(2,424)	(2,424)
30 April 2023		5,288	17,980	5,004	4,564	2,727	35,563

The accompanying notes form part of these financial statements.

Consolidated and Parent Company Balance Sheets

as at 30 April 2024

	Note	Group 2024 £'000	Group 2023 £'000	Company 2024 £'000	Company 2023 £'000
Non-current assets
Investments at fair value through profit or loss	10	51,483	52,825	51,483	52,825
Investments in Subsidiary	12	-	-	13	13
		51,483	52,825	51,496	52,838
Current assets
Trade and other receivables	13	661	469	661	469
Cash and cash equivalents		87	380	87	380
		748	849	748	849
Total assets		52,231	53,674	52,244	53,687
Current liabilities
Trade and other payables	14	(135)	(245)	(148)	(258)
Zero Dividend Preference shares	15	(18,575)	-	-	-
Loan from Subsidiary	16	-	-	(18,575)	-
		(18,710)	(245)	(18,723)	(258)
Total assets less current liabilities		33,521	53,429	33,521	53,429
Non-current liabilities
Zero Dividend Preference shares	15	-	(17,866)	-	-
Loan from Subsidiary	16	-	-	-	(17,866)
		-	(17,866)	-	(17,866)
Total liabilities		(18,710)	(18,111)	(18,723)	(18,124)
Net assets		33,521	35,563	33,521	35,563
Represented by:
Share capital	17	5,386	5,288	5,386	5,288
Share premium account		18,497	17,980	18,497	17,980
Capital redemption reserve		5,004	5,004	5,004	5,004
Capital reserve		1,840	4,564	1,840	4,564
Revenue reserve		2,794	2,727	2,794	2,727
Equity shareholders' funds		33,521	35,563	33,521	35,563

The accompanying notes form part of these financial statements.

These financial statements were approved by the Board of Chelverton UK Dividend Trust PLC and authorised for issue on 29 August 2024.

Howard Myles
Chairman

Company Registered Number: 03749536

Consolidated and Parent Company Statement of Cash Flows

for the year ended 30 April 2024

	Note	2024 £'000	2023 £'000
Operating activities
Investment income received		3,032	3,170
Investment management fee paid		(502)	(546)
Administration and secretarial fees paid		(64)	(64)
Refund of tax		1	-
Bank interest paid		5	-
Other cash payments		(322)	(273)
Cash generated from operations	19	2,150	2,287
Purchases of investments		(10,444)	(12,624)
Sales of investments		10,039	12,069
Net cash outflow from operating activities		(405)	(555)
Financing activities
Issue of Ordinary shares		637	541
Expenses of Ordinary share issue		(22)	(3)
Dividends paid	9	(2,653)	(2,424)
Net cash outflow from financing activities		(2,038)	(1,886)
Change in cash and cash equivalents	20	(293)	(154)
Cash and cash equivalents at start of year	20	380	534
Cash and cash equivalents at end of year	20	87	380

The accompanying notes form part of these financial statements.

Notes to the Financial Statements

as at 30 April 2024

1 ACCOUNTING POLICIES

Chelverton UK Dividend Trust PLC is a public company, limited by shares, domiciled and registered in the UK. The consolidated financial statements for the year ended 30 April 2024 comprise the financial statements of the Company and its subsidiary SDV 2025 ZDP PLC.

Basis of preparation

The consolidated financial statements of the Group and the financial statements of the Company have been prepared in accordance with UK-adopted International Accounting Standards and with the Companies Act 2006 as applicable to companies reporting under international accounting standards, and reflect the following policies which have been adopted and applied consistently.

New standards, interpretations and amendments adopted by the Group

There are no amendments to standards effective this year, being relevant and applicable to the Group.

Critical accounting judgements and uses of estimation

The preparation of financial statements in conformity with UK-adopted Accounting Standards requires management to make judgements, estimates and assumptions that affect the application of policies and the amounts reported in the Balance Sheet and 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 (under IFRS10), the financial statements of the Company and its wholly-owned subsidiary undertaking, SDVP, drawn up to the same accounting date. The disclosure basis of recognition is at cost.

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 loss of £4,000 (2023: loss of £3,933,000).

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 June 2022) is consistent with the requirements of UK-Adopted International Accounting Standards, 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.

Unquoted investments are valued at the balance sheet date using recognised valuation methodologies. In accordance with International Private Equity and Venture Capital ('IPEVC') valuation guidelines. This can include dealing prices, third party valuations where available and other information as appropriate.

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. Overseas dividends received from UK Companies are stated gross of any withholding tax.

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;

·   operating expenses of the Subsidiary are borne by the Company and taken 100% to capital; and

•   finance costs of the ZDP shares are charged 100% to capital.

All other expenses are allocated to revenue with the exception of 75% (2022: 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 capital and income gains respectively.

Cash and cash equivalents

Cash in hand and in banks including where held by custodians 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 in respect of premiums on issue of such shares. Where there is no premium on issue, costs are taken directly to equity against revenue reserves.

Capital reserve

Capital reserve (other) includes:

·   gains and losses on the disposal of investments;

·   exchange differences 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. This reserve is distributable to the extent that gains have been realised.

Revenue reserve

This reserve includes net revenue recognised in the revenue column of the Statement of Comprehensive

Income. This reserve is distributable.

Capital redemption reserve

This reserve represents the cancellation of the C shares when they were converted into Ordinary shares

and deferred shares. This reserve is not distributable.

Share premium reserve

This reserve can be used to finance the redemption and/or purchase of shares in issue. It has been built up due to historic share issuances. This reserve is not distributable.

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

	2024	2023
	£'000	£'000
Income from listed investments	2,179
UK dividend income	2,618	2,651
Overseas dividend income	519	437
Property income distributions	118	114
	3,255	3,202
Other income
Bank interest	5	-
Total income	3,260	3,202

3 INVESTMENT MANAGEMENT FEE

		2024			2023
	Revenue	Capital	Total	Revenue	Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Investment management fee	125	375	500	133	400	533

At 30 April 2024 there were amounts outstanding of £58,000 (2023: £61,000).

4	OTHER EXPENSES
				2024				2023
				£'000				£'000
	Administration and secretarial fees			64				64
	Directors' remuneration (note 5)			77				89
	Auditor's remuneration: **
	audit services*			46				25
	Insurance			3				4
	Other expenses*			180				165
				370				347
	Subsidiary operating costs			(13)				(14)
				357				333
	* The above amounts include irrecoverable VAT where applicable.  **The fee for the Company audit is £38,500 excluding VAT. The fee for the SDV 2025 ZDP PLC audit is £4,500 excluding VAT.
5	DIRECTORS' REMUNERATION
				2024				2023
				£				£
	Directors' fees			77,000				84,942
	Social security costs			-				4,213
				77,000				89,156
	Remuneration to Directors
	Lord Lamont*			-				10,692
	H Myles			30,000				28,276
	A Watkins			25,000				23,974
	D Hadgill			22,000				22,000
				77,000				84,942
	* Retired 8 September 2022.
6	FINANCE COSTS
		2024 Revenue Capital			Total	Revenue	2023 Capital		Total
		£'000	£'000		£'000	£'000	£'000		£'000
Appropriations in respect of Zero Dividend Preference shares		-	709		709	-	680		680
		-	709		709	-	680		680
7 TAXATION
				2024				2023
				£'000				£'000
Based on the revenue return for the year
Overseas tax				58				32
				58				32

The current tax charge for the year is lower than the standard rate of corporation tax in the UK of 25% to 30 April 2024 and 19.5% to 30 April 2023. The differences are explained below:

	Revenue	2024 Capital	Total	Revenue	2023 Capital	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Return on ordinary activities before taxation	2,778	(2,724)	54	2,736	(6,637)	(3,901)
Theoretical corporation tax at 25% (2023: 19.5%)	694	(681)	13	534	(1,294)	(760)
Effects of:
Capital items not taxable	-	584	584	-	1,213	1,213
UK and overseas dividends which are not liable to UK corporation tax	(784)	-	(784)	(602)	-	(602)
Excess expenses in the year	90	97	187	68	81	149
Overseas tax	58	-	58	32	-	32
Total tax charged to the revenue account	58	-	58	32	-	32

The Group has unrelieved excess expenses of £25,619,855 (2023: £24,871,884). 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 £2,720,000 (2023: £2,704,000) and on 21,413,334 (2023: 20,889,726) 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 loss of £2,724,000 (2023: loss of £6,637,000) and on 21,413,334 (2023: 20,889,726) 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 2025 is based on allocations from the Company of £709,000 (2023: £680,000) and on 14,500,000 (2023: 14,500,000) Zero Dividend Preference shares 2025, being the weighted average number of Zero Dividend Preference shares in issue during the year.

9 DIVIDENDS

	2024	2023
	£'000	£'000
Declared and paid per Ordinary share Fourth interim dividend for the year ended 30 April 2023 of 2.9425p (2022: 2.75p)	629	574
First interim dividend of 3.15p (2023: 2.9425p)	673	614
Second interim dividend of 3.15p (2023: 2.9425p)	673	614
Third interim dividend of 3.15p (2023: 2.9425p)	678	622
	2,653	2,424
Declared per Ordinary share* Fourth interim dividend for the year ended   30 April 2024 of 3.15p (2023: 2.9425p)	678	623
All dividends are paid from Revenue Reserve. * Dividend paid subsequent to the year end.

10 INVESTMENTS - Group and Company

	All other listed*	AIM traded**	Delisted***	Total
Year ended 30 April 2024	£'000	£'000	£'000	£'000
Opening book cost	35,566	30,269	-	65,835
Opening investment holding losses	(7,406)	(5,604)	-	(13,010)
Opening valuation	28,160	24,665	-	52,825
Transfer of AIM stocks to listed	461	(461)	-	-
Transfer of delisted stocks	-	(242)	242	-
Movements in the year: Purchases at cost	8,237	2,087	-	10,324
Disposals: Proceeds	(6,268)	(3,771)	-	(10,039)
Net realised (losses)/gains on disposals	(3,494)	2,005	-	(1,489)
Decrease/(increase) in investment holding losses	4,138	(4,139)	(137)	(138)
Closing valuation	31,234	20,144	105	51,483
Closing book cost	34,502	29,195	934	64,631
Closing investment holding losses	(3,268)	(9,051)	(829)	(13,148)
	31,234	20,144	105	51,483
Realised (losses)/gains on disposals	(3,494)	2,005	-	(1,489)
Movement in investment holding losses	4,138	(4,139)	(137)	(138)
Gains/(losses) on investments	644	(2,134)	(137)	(1,627)

*This includes all Level 1 and Level 2 investments listed on the London Stock Exchange.

**This includes all level 1 and 2 investments listed on AIM.

***This includes all delisted stocks which are level 3. The only delisted stock held by the Company is iEnergiser.

		All other listed*			AIM traded**	Delisted***	Total
	Year ended 30 April 2023	£'000		£'000		£'000	£'000
Opening book cost			35,194		27,518	-	62,712
Opening investment holding (losses)/gains			(5,359)		398	-	(4,961)
Opening valuation			29,835		27,916	-	57,751
Movements in the year: Purchases at cost			6,562		6,078	-	12,640
Disposals: Proceeds			(7,633)		(4,390)	-	(12,023)
Net realised gains on disposals			1,443		1,063	-	2,506
Increase in investment holding losses			(2,047)		(6,002)	-	(8,049)
Closing valuation			28,160		24,665	-	52,825
Closing book cost			35,566		30,269	-	65,835
Closing investment holding losses			(7,406)		(5,604)	-	(13,010)
			28,160		24,665	-	52,825
Realised gains on disposals			1,443		1,063	-	2,506
Movement in investment holding losses			(2,047)		(6,002)	-	(8,049)
Losses on investments			(604)		(4,939)	-	(5,543)

*This includes all Level 1 and Level 2 investments listed on the London Stock Exchange.

**This includes all level 1 and 2 investments listed on AIM.

***This includes all delisted stocks which are level 3. The company did not hold any delisted stocks during the year ended 30 April 2023.

Transaction costs

During the year the Group incurred transaction costs of £55,000 (2023: £33,000) and £13,000 (2023: £11,000) 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 2024:

Name of issuer                                                                             Class of share                                            % held

RTC Group plc                                                                                       Ordinary                                               10.14

Coral Products plc                                                                                 Ordinary                                                 7.85

Orchard Funding Group plc                                                                Ordinary                                                 5.85

Chamberlin plc                                                                                       Ordinary                                                 5.02

Vector Capital plc                                                                                  Ordinary                                                 3.87

One Health Group plc                                                                           Ordinary                                                 3.48

12 INVESTMENT IN SUBSIDIARY

	Company 2024 £'000	Company 2023 £'000
Cost as at 1 May and 30 April	13	13

The Company owns the whole of the issued ordinary share capital of SDVP, especially formed for the issuing of Zero Dividend Preference shares, which is incorporated and registered in England and Wales, under company number: 11031268.

13 TRADE AND OTHER RECEIVABLES

	Group	Group	Company	Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Dividends receivable	625	464	625	464
Prepayments and accrued income	36	5	36	5
	661	469	661	469

14 TRADE AND OTHER PAYABLES

	Group	Group	Company	Company
	2024	2023	2024	2023
	£'000	£'000	£'000	£'000
Amounts due to brokers	-	120	-	120
Trade and other payables	135	125	135	125
Loan from subsidiary undertaking	-	-	13	13
	135	245	148	258

15 ZERO DIVIDEND PREFERENCE SHARES

On 8 January 2018, SDVP issued 10,977,747 Zero Dividend Preference shares at 100p per share from the conversion of Zero Dividend Preference shares of SCZ, the 2018 ZDP subsidiary. On 8 January 2018, 1,802,336 Zero Dividend Preference shares were also issued at 100p per share by a placing with net proceeds of £1.8 million. The expenses of the placing were borne by the Company and the Investment Manager.

On 11 April 2018, SDVP issued a further 1,419,917 Zero Dividend Preference shares at 103p per share (a premium of 3p per share), and net proceeds of £1.5 million.

On 10 May 2018, SDVP issued a further 100,000 Zero Dividend Preference shares at 104.50p per share (a premium of 4.50p per share) and net proceeds of £104,500.

On 15 May 2018, SDVP issued a further 200,000 Zero Dividend Preference shares at 104.25p per share (a premium of 4.25p per share) and net proceeds of £208,500.

The Zero Dividend Preference shares each have an initial capital entitlement of 100p per share, growing by an annual rate of 4% compounded daily to 133.18p on 30 April 2025, being the final redemption date where the ZDPs will redeem in full giving a final redemption of £19,311,000. The accrued entitlement as per the Articles of Association of SDVP at 30 April 2024 was 128.11p (2023: 123.21p) per share, being £18,575,000 in total, and the total amount accrued for the year of £709,000 (2023: £680,000) has been charged as a finance cost to capital.

The Zero Dividend Preference shares are redeemable in full on 30 April 2025.

16 UNSECURED LOAN

Pursuant to a loan agreement between SDVP and the Company, SDVP has lent the gross proceeds of the following Zero Dividend Preference transactions to the Company:

· Gross proceeds of £10,978,000 raised from the conversion of 10,977,747 Zero Dividend Preference shares at 100p on 8 January 2018

· Gross proceeds of £1,802,000 raised from the placing of 1,802,336 Zero Dividend Preference share at 100p on 8 January 2018

· Gross proceeds of £1,463,000 raised from the placing of 1,419,917 Zero Dividend Preference shares at a premium of 103p on 11 April 2018

· Gross proceeds of £313,000 raised from the placings of 300,000 Zero Dividend Preference shares at a premium of 104p on 10 and 15 May 2018

The loan is non-interest bearing and is repayable three business days before the Zero Dividend Preference share redemption date of 30 April 2025 or, if required by SDVP, 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 loan agreement entered into between the Company and SDVP dated 27 November 2017.

A contribution agreement between the Company and SDVP has also been made whereby the Company will undertake to contribute such funds as would ensure that SDVP will have in aggregate sufficient assets on 30 April 2025 to satisfy the final capital entitlement of the Zero Dividend Preference shares. The contribution accrued by the Company to cover the entitlement for the year was £709,000 (2023: £680,000).

		2024 £'000		2023 £'000
Value at 1 May		17,866		17,186
Contribution to accrued capital entitlement of Zero Dividend Preference shares 2025		709		680
		18,575		17,866
17 SHARE CAPITAL
	2024		2023
	Number	£'000	Number	£'000
Issued, allotted and fully paid:
Ordinary shares of 25p each
Opening balance	21,150,000	5,288	20,850,000	5,213
Issue of Ordinary shares	395,000	98	300,000	75
	21,545,000	5,386	21,150,000	5,288

During the year, the Company announced the following issuances of new Ordinary Shares of 25p each:

			Nominal Value
Date	Shares	Price	£'000
03/05/2023	50,000	1.70	13
04/05/2023	100,000	1.69	25
09/05/2023	60,000	1.69	15
09/01/2024	75,000	1.53	18
10/01/2024	110,000	1.52	27
	395.000		98

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 SDVP are entitled to a payment of an amount equal to 100p per share, increased daily from 8 January 2018 at such a compound rate, equivalent to 4%, as will give a final entitlement to 133.18p for each Zero Dividend Preference share at 30 April 2025, £19,311,000 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.

18 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 value per share	Net assets attributable to shareholders	Net asset value per share	Net assets attributable to shareholders
	2024	2024	2023	2023
	pence	£'000	pence	£'000
Ordinary shares	155.59	33,521	168.15	35,563
Zero Dividend Preference shares	128.11	18,575	123.21	17,866

The net asset value per Ordinary share is calculated on 21,545,000 (2023: 21,150,000) 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 14,500,000 (2023: 14,500,000) Zero Dividend Preference shares, being the number of Zero Dividend Preference shares in issue at the year end.

19 RECONCILIATION OF NET RETURN BEFORE AND AFTER TAXATION TO CASH GENERATED
FROM OPERATIONS - Group and Company

	2024 £'000	2023 £'000
Net surplus/(deficit) before taxation	54	(3,901)
Taxation	(58)	(32)
Net deficit after taxation	(4)	(3,933)
Net capital deficit	2,724	6,637
(Increase)/decrease in receivables	(192)	5
Increase/(decrease) in payables	10	(8)
Interest and expenses charged to the capital reserve	(388)	(414)
Net cash inflow from operating activities	2,150	2,287
20 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET CASH - Group and Company
	2024	2023
	£'000	£'000
Decrease in cash in year	(293)	(154)
Net cash at 1 May	380	534
Net cash at 30 April	87	380

21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES

Objectives, policies and strategies

The Group primarily invests in mid and smaller capitalised UK companies. All of the Group's investments comprise ordinary shares in companies listed on the Official List of the UK Listing Authority and traded on the London Stock Exchange Main Market, traded on AIM or traded on other qualifying UK marketplaces.

The Group may retain investments in companies which cease to be listed after the initial investment was made, so long as the total is non-material in the context of the overall portfolio. The Company has one investment held at 30 April which was delisted during the year (2023: none)

The Group finances its operations through Zero Dividend Preference shares issued by SDVP and equity. The Zero Dividend Preference shares have a redemption date of 30 April 2025 and will be repaid in full. The Directors currently believe that future demand from investors will enable the Group to launch a new subsidiary through which it can issue a further tranche of zero dividend preference shares ('ZDPs') upon the repayment of these existing ZDPs in April 2025. 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.

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:

	2024 £'000	2023 £'000
Fair value through profit or loss investments	51,483	52,825

Sensitivity analysis

A 10% increase in the market value of investments at 30 April 2024 would have increased net assets by £5,148,000 (2023: £5,283,000). 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.

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 2024 of financial assets and financial liabilities to interest rate risk is limited to cash and cash equivalents of £87,000 (2023: £380,000). 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 Northern Trust 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 2024 was £52,231,000 (2023: £53,764,000). The calculation is based on the Group's credit risk exposure as at 30 April 2024 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.

Please see notes 15 and 16 for details of the ZDP liability that is due within one year. All other payables are due in less than one year.

Financial instruments by class and category
	2024 £'000	2023 £'000
Assets measured at amortised cost*
Trade and other receivables	661	469
Cash and cash equivalents	87	380
	748	849
Assets measured at fair value
Investments at fair value	51,483	52,825
Total financial assets	52,231	53,674
Liabilities measured at amortised cost*
Trade and other payables	135	245
Zero dividend preference shares	18,575	17,866
Total financial liabilities	18,710	18,111

*It is the Directors' view that the fair values of the assets and liabilities measured at amortised cost are not materially different from the carrying values presented above.

IFRS 7 hierarchy

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).

·  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 table below sets out fair value measurements of financial instruments at the year end, by the level in the fair value hierarchy into which the fair value measurement is categorised.

Financial Assets at fair value through profit or loss at 30 April 2024

Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
50,755	623	105	51,483

Financial Assets at fair value through profit or loss at 30 April 2023

Level 1 £'000	Level 2 £'000	Level 3 £'000	Total £'000
52,825	-	-	52,825

The Company's policy is to recognise transfers into and out of the different fair value hierarchy levels as at the date of the event or change in circumstances that caused the transfer to occur.

A reconciilation of fair value measurement in Level 3 is set out in the following table.

Level 3 Financial Assets at fair value through profit or loss at 30 April

	2024	2023
	£'000	£'000
Opening fair value	-	-
Transfer from Level 1	200	-
Purchases	-	-
Sales Total gains /(losses) included in losses on investments in the Consolidated Statement of Comprehensive Income: - on sold assets	- -	- -
- on assets held at the year end	(95)	-
Closing fair value	105	-

As at 30 April, the investment in iEnergizer has been classified as Level 3. This stock was delisted from AIM on the 25 May 2023 and has been valued at 50% of the closing value. On 22 May 2024 this stock was sold in full.

22 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. The Group currently does not have any loans and the Directors do not intend to have any loans or borrowings.

23 POST BALANCE SHEET EVENTS

There were no post balance sheet events for the year ended 30 April 2024.

A copy of the Company's Annual Report for the year ended 30 April 2024 will shortly be available to view and download from the Company's website www.chelvertonukdividendtrustplc.com.

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