XLON:SDV ESEF Annual Report
CHELVERTON UK DIVIDEND TRUST PLC (XLON:SDV)
ESEF Annual Report
2022-08-17
For: 2022-04-30
View Original
Added on
September 22, 2026
Annual Report
for the year ended 30 April 2022
ASSET MANAGEMENT
CHELVERTON
C
Contents
Section 1
Strategic Report including:
– Financial Highlights 1
– Chairman’s Statement 2
– Investment Manager’s Report 5
– Investment Objective and Policy 11
– Other Statutory Information 15
Section 2
Directors 19
Investment Manager, Secretary, Custodian and Registrar 20
Directors’ Report 21
Statement on Corporate Governance 25
Audit Committee Report 32
Directors’ Remuneration Report 34
Statement of Directors’ Responsibilities 38
Independent Auditor’s Report 40
Section 3
Financial Statements including:
– Consolidated Statement of Comprehensive Income 49
– Consolidated and Parent Company Statement of Changes in Net Equity 50
– Consolidated and Parent Company Balance Sheets 51
– Consolidated and Parent Company Statement of Cash Flows 52
– Notes to the Financial Statements 53
Shareholder Information 72
Company Summary 73
Capital Structure 74
Glossary of Terms 76
Directors and Advisers 77
Notice of Annual General Meeting 78
Proxy Form 83
SECTION 1
1
Strategic Report
The Strategic Report comprising pages 1 to 17 has been prepared in accordance with Section 414A of the
Companies Act 2006 (‘the Act’). Its purpose is to inform shareholders and help them understand how the
Directors have performed their duties under Section 172 of the Act to promote the success of the Company.
Chelverton UK Dividend Trust PLC (‘the Company’) and its subsidiary SDV 2025 ZDP PLC (‘SDVP’) (‘the
subsidiary’) together form the Group. The Group’s funds are invested principally in mid and smaller
capitalised UK companies. The portfolio comprises companies listed on the Official List and companies
admitted to trading on AIM. The Group does not invest in other investment trusts or in unquoted
companies. No investment is made in preference shares, loan stock or notes, convertible securities or fixed
interest securities.
Financial Highlights
30 April 30 April
Capital 2022 2021 % change
Total gross assets (£’000) 58,805 64,013 (8.14)
Total net assets (£’000) 41,382 47,345 (12.60)
Net asset value per Ordinary share 198.47p 227.07p (12.60)
Mid-market price per Ordinary share 192.50p 220.00p (12.50)
Discount (3.01%) (3.11%)
Net asset value per Zero Dividend Preference share 2025 118.52p 114.01p 3.96
Mid-market price per Zero Dividend Preference share 2025 118.50p 116.00p 2.16
(Discount)/premium (0.02%) 1.75%
Year ended Year ended
30 April 30 April
Revenue 2022 2021 % change
Return per Ordinary share 10.00p 6.12p 63.40
Dividends declared per Ordinary share 11.00p 10.00p 10.00
Special dividends declared per Ordinary share – 0.272p (100.00)
Total return
Total return on Group’s gross assets (4.92%) 57.18%
Total return on Group’s net assets* (total return as proportion of net
assets after the provision for the Zero Dividend Preference shares) (4.71%) 57.24%
Total return on Group’s net assets* (7.74%) 89.79%
Ongoing charges** 2.03% 2.33%
Ongoing charges*** 1.48% 1.56%
* 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.
2
Strategic Report (continued)
Chairman’s Statement
It gives me great pleasure to introduce this Annual Report, my final one, for the financial year to 30 April
2022 to shareholders.
The last 12 months have been extremely challenging. Although it seems a very long time ago, the first few
months of the Company’s year were still subject to lockdown regulations. An easing commenced from July
2021; however, the sudden emergence of the Omicron Covid variant towards the end of the calendar year
recreated the problems arising from the global Covid-19 pandemic and caused considerable economic
uncertainty for an important period. Nevertheless, your Company continued to recover, benefitting from a
strong recovery in the performance of its investee companies and, at that time, an improving business and
economic outlook in the UK.
However, the invasion of Ukraine by Russia on the 24 February has exacerbated all of the uncertainty in the
global economy and has led to a sharp downward movement in the shares held by your company.
With a highly UK centric portfolio, only invested in smaller UK AIM traded and Listed companies, in a “risk-
off” environment the shares tend to fall rather more than constituents of the FTSE 100, notwithstanding
the fact that the underlying trading performance of the companies is very satisfactory. However, history,
and indeed empirical studies, have shown a recovery will take place, in time, leading to longer term
outperformance
Results
The Company’s net asset value per ordinary share as of 30 April 2022 was 198.47p (2021: 227.07p), a
decrease over the year of 12.60% with an ordinary share price of 192.50p per share (2021: 220.00p). Total
assets, including audited revenue reserves, were £58.805m (2021: £64.013m), a decrease over the year of
8.14%, and the total net assets were £41.382m (2021: £47.345m). During the same period the MSCI Small
Cap Index decreased by 15.22%.
The Company was launched on 12 May 1999, and over this time the net asset value per Ordinary share has
risen by 106.7% and in addition a total of 217.12p has been paid in this period in dividends, including the
fourth interim dividend announced with this report.
In the year total dividends of 11.00p per Ordinary share were paid and proposed, including the fourth
interim dividend of 2.75p. The total dividend in 2022 represents an increase of 7.1% year on year (2021:
10.272p). The Company has partially used its revenue reserves, built over many years, to declare the core
dividend.
The underlying portfolio yield has increased this year as our investee companies have continued to grow
their dividends. As a result of the policy over the past twelve years of growing the annual dividend and
retaining to revenue reserves the maximum permitted under the legislation, the Company is in a strong
position and can continue to pay its dividend for some time from accumulated reserves should it be
required. The Board is confident that the Company is well positioned to grow further the annual dividend,
assuming more favourable macro-economic conditions over the medium term.
The Company’s portfolio is currently invested in 74 companies spread across 17 sectors. This spread creates
a well-diversified portfolio which should, in the future, lead to a strong return of dividend income and,
subsequently, steady revenue growth and, in time, capital growth.
3
Capital structure
There was no change to the number of shares in issue during the year. 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. Provided these
criteria are met, the issue of new shares will enhance net asset value per share, and the increase in the size
of the Company should improve liquidity in the market for its shares while making it more attractive to
potential new investors.
If the issue of new shares is considered in the future, the Board will consider the two factors discussed
above, and the potential to improve the underlying performance and returns of the company for the benefit
of all shareholders.
Dividend
As briefly discussed in the Results section, the Board has declared a fourth interim dividend of 2.75p per
Ordinary share (2021: 2.50p) which, when added to the three quarterly interim dividends of 2.75p per
Ordinary share, brings the total paid and declared to 11.0p (2021: 10.0p) for the year ended 30 April 2022,
an increase of 10.0% over the previous year.
Under the dividend distribution policy, the Board has not declared a special dividend (2021: 0.272p) to be
paid with the fourth interim dividend. The Company has revenue reserves which after payment of the fourth
interim dividend represent some 81.7% of the current annual dividend or some 9.0p per Ordinary share.
The Board is committed to progressively improving the Company’s dividend for investors and as such has
decided that the four interim dividends paid in respect of the financial year ending 30 April 2023 will very
likely exceed, but in any event will not be less than, that paid in respect of the financial year ended
30 April 2022.
Board Changes
I would like to thank William van Heesewijk who retired from the Board after 17 years of long and valued
service. In his place we welcome Denise Hadgill who has extensive experience of investment management
and will be a strong addition to the Board. I also welcome Howard Myles as my successor as Chairman.
Howard has been a member of the Board since 2011 and became Chairman of the Audit Committee in 2016.
Outlook
There is ongoing uncertainty in the world’s economies and in their recovery across all sectors, from the
recent impact of the Covid-19 instigated lockdowns and the more recent impact of the war in Ukraine. The
well documented increase in the price of energy, raw materials and foodstuffs is also a great concern.
Chelverton, the investment managers of the Company, meet and discuss these issues with all the companies
in the portfolio, and they tell us that, generally, the investee companies are managing the current tricky
situation. The companies’ management teams are redoubling their efforts to improve efficiencies and to
reduce the labour required in their businesses. This will be very important, with a reported 500,000 people
having taken themselves out of employment, compounded by up to a further one million European workers
who have chosen not to return, yet, to the UK.
4
Strategic Report (continued)
Inflation, about which people have been too complacent, will in all probability continue to rise this year
but will moderate somewhat next year as the rises in the first half of this year fall out of the annual
calculation. Future inflation will depend on the Bank of England and whether inflation becomes embedded.
I have very much enjoyed being Chairman of your Company over the past tumultuous period, seeing the
companies and the portfolio recovering from one upset and then another. The managers of the companies
are always striving to improve their businesses and to make them more resilient. I am sure the evidence of
these efforts will be seen in the future.
Lord Lamont of Lerwick
Chairman
29 June 2022
Investment Manager’s Report
In the year to 30 April 2022 there was a 12.60% decline in the Company’s net asset value per share from
227.07p to 198.47p. During the same period the MSCI Small Cap Index decreased by 15.22%. At the same
time the core dividend increased 10% to 11.0p, in line with the intentions outlined in September 2021. The
Company has not paid a special dividend in respect of the 2021/2022 financial year, in line with the dividend
policy announced in March 2019.
It should be noted that prior to the Covid-19 pandemic it had been the Manager’s intention to deliver a
7% increase in the core dividend for the year to April 2021. However, given the unprecedented reduction
in dividends and uncertainty across the market at the time of the first interim dividend decision, we
prudently took a more conservative approach to dividend growth, delivering a 4.2% increase in the core
dividend in the year. By the time of the full year results in June 2021 we had the confidence to boost the
core dividend to the level originally planned via a special dividend of 0.272p. The 11.0p dividend for the
year to April 2022 represents a 7.1% increase on the total dividends paid in the year to April 2021.
The year to April 2022 has been a challenging one. After a strong recovery from the depths of the pandemic,
companies have had to deal with new strains of the virus and associated restrictions, supply chain
challenges, rising inflation, a shortage of skilled workers and now the impact of the appalling war in Ukraine.
The stock market tends to react poorly to uncertainty so, in the face of continuing shocks to the system, it
is not surprising that share prices have suffered. Our investee companies have, on the whole, navigated
these challenges well. The recent reporting season saw the majority of companies report an in-line set of
results which, in many cases, could have been even better were it not for supply chain challenges
constraining revenues. Despite the solid underlying trading performance, the market has been de-rated,
resulting in the 12.6% decline in Company NAV, almost all of which came in the second half of the year.
While this is slightly better than the fall in the MSCI Small Cap Index, it is nevertheless disappointing to see
a reduction in NAV, particularly when we believe the improvements made during the pandemic mean that
our companies are in better shape now than they were in 2019.
On a more positive note, the underlying performance of our companies was reflected in good cash
generation and dividends which were generally in-line or ahead of expectations. This has allowed us to
continue rebuilding the income account after the pandemic shock, while also building positions in
companies which we believe will deliver strong capital growth in the coming years. Dividend income grew
51% in the year to £2.58m (2021: £1.71m), reflecting the strong recovery in dividend payments. We
continued to utilise the revenue reserves built up prior to the pandemic in the year in order to maintain our
desired dividend trajectory for the Company, however the rebound in dividend payments saw our reliance
on revenue reserves reduce. We expect this trend to continue into the current year.
It is our fundamental belief that strong operational management, good cash generation and growing
dividends result in rising share prices over the medium term. Now that the majority of companies have
returned to paying dividends, we expect an element of yield support to protect ratings during turbulent
times. Many of the positives we have previously talked about coming out of the pandemic have yet to be
appreciated given the uncertain macro environment. This gives us confidence that our portfolio of
companies is well placed to deliver over the coming years.
5
Strategic Report (continued)
Portfolio review
The general de-rating of UK equities has resulted in a pickup in corporate activity across the market. Within
our portfolio, Brewin Dolphin received a recommended bid from RBC at an attractive premium and we
took the opportunity to exit our position at close to the offer price so we could reinvest the cash. Randall
& Quilter also received an opportunistic approach from its largest shareholder, although this has since been
rejected by the wider shareholder base. Just after the period end we also saw a recommended bid by KKR
for ContourGlobal. While the offer price represents a reasonable premium over the previous market price,
we will be sorry to lose a solid cash generator which paid a very attractive dividend. In addition to the
takeovers, we have sold six positions in their entirety (2021: 8): Babcock, DX, Flowtech, Go Ahead,
ShoeZone and Strix Group. We have however started a new position in Strix Group more recently as the
shares had de-rated significantly and offered an attractive yield again.
Shareholdings were reduced in those companies that outperformed during the period including:
Bloomsbury Publishing, Braemar Shipping Services, Epwin Group, Jarvis Securities, Redde Northgate,
Clarke (T.), TheWorks.co.uk, Tyman and Vertu Motors, all after strong share price performance.
Eight new shareholdings were added to the Company’s portfolio in the year (2021: 8), including: DSW
Capital – a challenger mid-market professional services business; Kitwave Group – an independent impulse
product wholesaler; Spectra Systems – an IP led business focussing on secure transaction technology;
Springfield Properties – a Scottish housebuilder; and speciality chemicals business, Synthomer.
Shareholdings were also increased in 20 companies (2021: 33) which were in the portfolio at the start of
the year, including Bakkavor, ContourGlobal, Duke Royalty, Hargreaves Services, iEnergizer, MP Evans and
Palace Capital.
Outlook
The market is currently coming to terms with a phenomenon which it has not experienced for quite some
time, namely inflation. In times of uncertainty there is usually a “flight to liquidity”, and we have seen this
occur this time around, to the detriment of the small and mid-cap stocks in which we invest. As noted above
however, the solid underlying performance and low valuations in our part of the market have sparked an
increase in corporate activity, a sure sign that there is value in the market.
We have also seen a marked increase in the number of companies undertaking share buy-backs, another
consequence of current valuations combined with good cash generation and strong balance sheets. As long
as buy-backs are instigated alongside an appropriate dividend policy, and the shares are subsequently
cancelled, buy-backs are a positive for our stocks, as they should ultimately result in faster dividend growth
in future years.
Supply chain challenges are likely to remain in the short to medium term, however good management teams
are finding ways to adapt to the current climate. One consequence of this is higher levels of inventory
throughout the system, something we will need to keep an eye on as this should unwind to some degree as
and when supply chains become more predictable. We are unlikely to see a return to the positive earnings
forecast momentum seen at the beginning of last year until management teams feel they are able to predict
macro conditions more accurately; however, we take comfort from the fact that our companies have kept
forecasts on the conservative side coming out of the pandemic. This, combined with the operational
improvements made over the last few years at our investee companies and the attractive dividend yields
currently available, gives us a significant degree of confidence looking into the medium term.
David Horner
Chelverton Asset Management Limited
29 June 2022
6
Breakdown of Portfolio by Industry
at 30 April 2022
Market
value
Bid % of
Market sector £’000 portfolio
Banks 555 1.0
Basic Resources 1,326 2.3
Chemicals 610 1.0
Construction & Materials 5,014 8.8
Consumer Products and Services 4,242 7.4
Energy 1,694 2.9
Financial Services 10,466 17.9
Food, Beverage & Tobacco 2,824 4.9
Industrial Goods & Services 9,464 16.5
Insurance 4,144 7.2
Media 4,148 7.2
Personal Care, Drugs & Grocery Stores 975 1.7
Real Estate 4,678 8.1
Retail 3,459 6.0
Telecommunications 1,622 2.8
Travel & Leisure 1,862 3.2
Utilities 668 1.1
57,751 100.0
7
Strategic Report (continued)
Breakdown of Portfolio by Market Capitalisation
at 30 April 2022
Number of Companies
% of Portfolio
Source: Maitland Administration Services Limited
8
£50–75m
7
£25–50m
5
<£25m
7
£75–100m
7
£100–250m
17
£250–500m
16
> £500m
15
£50–75m
9%
£25–50m
7%
<£25m
9%
£75–100m
9%
£100–250m
23%
£250–500m
22%
> £500m
21%
Portfolio Statement
at 30 April 2022
Market
value % of
Security Sector £’000 portfolio
Belvoir Lettings Real Estate 2,400 4.2
Diversified Energy Energy 1,694 2.9
iEnergizer Industrial Goods & Services 1,445 2.5
Alumasc Group Construction & Materials 1,440 2.5
UP Global Sourcing Holdings Consumer Products and Services 1,283 2.2
MP Evans Food, Beverage & Tobacco 1,175 2.0
STV Media 1,142 2.0
Jarvis Securities Financial Services 1,067 1.8
MTI Wireless Edge Telecommunications 1,062 1.8
Coral Products Industrial Goods & Services 1,050 1.8
Devro Food, Beverage & Tobacco 1,038 1.8
Hargreaves Services Industrial Goods & Services 1,022 1.8
Chesnara Insurance 1,003 1.7
Redde Northgate Industrial Goods & Services 991 1.7
Kitwave Group Personal Care, Drugs & Grocery Stores 975 1.7
Ramsdens Holdings Financial Services 975 1.7
Vector Capital Financial Services 951 1.6
Personal Group Holdings Insurance 915 1.6
Anglo Pacific Basic Resources 903 1.6
Randall & Quilter Insurance 901 1.6
Clarke (T.) Construction & Materials 891 1.5
Curtis Banks Group Financial Services 875 1.5
Regional REIT Real Estate 847 1.5
Severfield Construction & Materials 845 1.5
Premier Miton Group Financial Services 840 1.4
DFS Furniture Retail 839 1.4
Smiths News Industrial Goods & Services 837 1.4
Vistry Group Media 836 1.4
Palace Capital Real Estate 831 1.4
Duke Royalty Financial Services 820 1.4
Finncap Group Financial Services 813 1.4
Wilmington Group Media 813 1.4
Bloomsbury Publishing Media 794 1.4
TP ICAP Financial Services 791 1.4
Castings Industrial Goods & Services 790 1.4
Essentra Industrial Goods & Services 786 1.4
Braemar Shipping Services Industrial Goods & Services 780 1.4
Vertu Motors Retail 777 1.3
Appreciate Group Financial Services 753 1.3
Marston's Travel & Leisure 750 1.3
Sabre Insurance Insurance 735 1.3
Epwin Group Construction & Materials 731 1.3
Photo-me International Consumer Products and Services 708 1.2
Polar Capital Holdings Financial Services 695 1.2
ContourGlobal Utilities 668 1.1
Headlam Group Consumer Products and Services 635 1.1
Strix Group Industrial Goods & Services 633 1.1
9
Strategic Report (continued)
Portfolio Statement
at 30 April 2022 (continued)
Market
value % of
Security Sector £’000 portfolio
TheWorks.co.uk Retail 630 1.1
Numis Corporation Financial Services 626 1.1
Orchard Funding Group Financial Services 625 1.1
Bakkavor Food, Beverage & Tobacco 611 1.1
Synthomer Chemicals 610 1.0
Town Centre Securities Real Estate 600 1.0
Hansard Global Insurance 590 1.0
Centaur Media Media 563 1.0
Aferian Telecommunications 560 1.0
Springfield Properties Consumer Products and Services 560 1.0
Close Brothers Group Banks 555 1.0
Kier Group Construction & Materials 555 1.0
Tyman Construction & Materials 552 1.0
Portmeirion Group Consumer Products and Services 550 1.0
Topps Tiles Retail 550 1.0
RPS Group Industrial Goods & Services 517 0.9
Crest Nicholson Consumer Products and Services 506 0.9
DSW Capital Financial Services 500 0.8
Brown (N) Group Retail 438 0.8
Chamberlin Basic Resources 423 0.7
Saga Travel & Leisure 394 0.7
Restaurant Group Travel & Leisure 373 0.6
Revolution Bars Group Travel & Leisure 345 0.6
RTC Group Industrial Goods & Services 337 0.6
Gattaca Industrial Goods & Services 276 0.5
Spectra Systems Retail 225 0.4
Sancus Lending Group Financial Services 135 0.2
Total Portfolio 57,751 100.0
10
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, or traded on AIM.
• The Company will not invest in preference shares, loan stock or notes, convertible securities or fixed
interest securities or any similar securities convertible into shares; nor will it invest in the securities of
other investment trusts or in unquoted companies.
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 49.
• A total dividend for the year to 30 April 2022 of 11.00p (2021: 10.272p) per Ordinary share has been
declared to shareholders by way of three payments totalling 8.25p per Ordinary share plus a planned
fourth interim dividend payment of 2.75p per Ordinary share.
• The NAV per Ordinary share at 30 April 2022 was 198.47p (2021: 227.07p).
• The ongoing charges (including investment management fees and other expenses but excluding
exceptional items) for the year ended 30 April 2022 were 2.03% (2021: 2.33%). The decrease in the
annualised ongoing charges during the year is primarily due to the increase in net asset value during
the first half of the year.
Principal Risks
The Directors confirm that they have carried out a robust annual assessment of the principal 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. Mitigation of these risks is primarily sought and achieved in a number
of ways as set out below:
11
Strategic Report (continued)
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.
The Company is substantially dependent on the services of the Investment Manager’s investment team for
the implementation of its investment policy.
The Company may hold a proportion of the portfolio in cash or cash equivalent investments from time to
time. Whilst during positive stock market movements the portfolio may forego 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 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.
Regulatory risks
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. The Board, with its advisers, monitors the Group and SDVP’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.
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. Potential future changes to the UK’s policies and
regulatory landscape in light of the UK’s departure from the EU could impact the Company and its portfolio
companies. Potential consequences for the Company are regularly monitored and assessed by the Board.
Climate change risk
The Board and Investment Manager consider and discuss how climate change could affect the Company’s
portfolio companies and shareholder returns. Environmental, social and governance factors increasingly
form a part of the dialogue between the Investment Manager and the management teams of portfolio
companies and also contribute to portfolio investment decisions.
12
The coronavirus pandemic
The intensive vaccine rollouts, combined with the arrival of less potent strains of the virus, have resulted in
a return to more normalised social, travel and work patterns, albeit with hybrid working arrangements
remaining in place for a large number of organisations. The fiscal stimulus provided by governments around
the world served to limit the impact on many economies. The Board and Investment Manager continue to
monitor the effects of the social and economic changes arising from the pandemic, together with their impact
on the market, the Company’s key service providers and the future prospects of the portfolio companies.
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.
A more detailed explanation of the financial risks facing the Group is given in note 21 to the financial
statements on pages 66 to 71.
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.
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.
Key stakeholders
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 if appropriate. These regular
communications help the Board make informed decisions when considering how to promote the success of
the Company for the benefit of shareholders. This year’s Annual General Meeting is to be held on 8
September 2022 and will be held at the new offices of the Investment Manager, Basildon House, 7 Moorgate,
London EC2. 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 to ensure continuing awareness of key shareholder concerns.
13
Strategic Report (continued)
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 and collegiate 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 as further discussed on page 21.
Key service providers – The Company employs a collaborative approach and looks to build long term
partnerships with its key service providers. These 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, as
detailed on pages 29 and 30.
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 meeting from the Company Secretary.
Compliance with relevant rules and regulations is formally assessed on at least an annual basis.
Viability Statement
The Board and Investment Manager continuously consider the performance, progress and future 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 SDVP in 2025 in
forming their viability opinion for the Company each year.
The Directors consider that a period of three years is currently the most appropriate time horizon to consider
the Company’s future viability. 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 & 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 some short-term cash on deposit; and
• revenue expenses of the Company are covered multiple times by investment income, even in the event
that lower income levels as a result of the Covid-19 pandemic continue for some considerable time.
14
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 Group financial statements consolidate the audited annual report and financial statements of the
Company and SDVP, its subsidiary undertaking, for the year ended 30 April 2022. 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 on pages 74 to 75.
AIFM
The Board is compliant with the directive and the Company is registered as a Small Registered Alternative
Investment Fund Manager (‘AIFM’) with the FCA and all required returns have been completed and filed.
Employees, environmental, human rights and community issues
The Board recognises the requirement under Section 414C of the Companies Act to detail information
about employees, 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’)
ESG matters continue to have an increasing prominence in financial and regulatory reporting. In company
meetings, the Investment Manager routinely questions the corporate management on a variety of topics,
such as safety records, environmental footprint and the key areas of focus of their board papers, to ensure
that portfolio companies and prospective investments are adhering to best practice and emerging market
trends at all times.
15
Strategic Report (continued)
The way companies respond to ESG issues can affect their business performance, both directly and
indirectly. ESG factors are considered by Chelverton Asset Management (‘Chelverton’) investment teams
and increasingly contribute to investment decision making; however investment decisions also continue to
balance ESG performance in the context of overall investment potential.
The Investment Manager is successfully integrating responsible investing considerations more closely into
investment processes for the Company and the other investment vehicles it operates on behalf of investors,
a process that began in 2018. The appointment and integration in 2018 of a Corporate Governance
Manager within the investment team at Chelverton has been supported by the appointment of an
experienced ESG professional to the position of Responsible Investing Manager in October 2020. This
renewed commitment is strengthening the Chelverton team’s focus on ESG priorities within all Chelverton’s
investment processes. Misjudgements on ESG matters can increasingly incur major additional costs to
portfolio holdings, as well as undermining their equity returns through reputational damage.
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 set out on page 11. 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 on pages 2 to 4 and the Investment Manager’s Report on pages 5 and 6.
Dividends declared/paid
30 April 2022 30 April 2021
Payment date p p
First interim 1 October 2021 2.75 2.50
Second interim 4 January 2022 2.75 2.50
Third interim 19 April 2022 2.75 2.50
Fourth interim 15 July 2022 2.75 2.50
11.00 10.00
Special dividend – 0.272
11.00 10.272
The Directors do not declare a final dividend.
16
Ten year dividend history
2022 2021 2020 2019 2018 2017 2016 2015 2014 2013
p p p p p p p p p p
1st Quarter 2.75 2.50 2.40 2.19 2.02 1.85 1.70 1.575 1.475 1.40
2nd Quarter 2.75 2.50 2.40 2.19 2.02 1.85 1.70 1.575 1.475 1.40
3rd Quarter 2.75 2.50 2.40 2.19 2.02 1.85 1.70 1.575 1.475 1.40
8.25 7.50 7.20 6.57 6.06 5.55 5.10 4.725 4.425 4.20
4th Quarter 2.75 2.50 2.40 2.40 2.40 2.40 2.40 2.40 2.40 2.40
11.00 10.00 9.60 8.97 8.46 7.95 7.50 7.125 6.825 6.60
% increase of core
dividend 10.00 4.17 7.02 6.03 6.47 6.00 5.26 4.40 3.41 3.12
Special dividend – 0.272 – 2.50 0.66 1.86 1.60 0.30 2.75 –
Total dividend 11.00 10.272 9.60 11.47 9.12 9.81 9.10 7.425 9.575 6.60
Diversity and succession planning
Throughout the year to 30 April 2022 the Board comprised four male Directors. On 30 April 2022, Mr van
Heesewijk retired as a Director. In order to draw upon as diverse a pool of candidates as possible, the
Board engaged the services of a third-party recruitment consultant in its search for an additional director.
On 1 May 2022, Ms Hadgill was appointed to the Board. The Board recognises the need to consider the
benefits of diversity when considering new appointments to the Board. All appointments are made on the
basis of merit against objective criteria; however, the Board seeks to consider a wide range of candidates
with due regard to diversity, spanning gender, ethnicity, background and experience. As all appointments
are based on merit, and in view of the small size of the Board, the Board does not consider it appropriate
to set diversity targets. The Board will continue to consider succession planning on an annual basis.
The Strategic Report is signed on behalf of the Board by
Lord Lamont of Lerwick
Chairman
29 June 2022
17
18
SECTION 2
Directors
The Rt Hon. Lord Lamont of Lerwick*
+
(Chairman) was Chancellor of the Exchequer between 1990 and
1993. Prior to that appointment, Lord Lamont was Chief Secretary to the Treasury between 1989 and 1990.
Following his retirement as a Member of Parliament in 1997, he has held numerous positions as a director
of various organisations and funds, including NM Rothschild and Sons Limited. He is a director of European
Opportunities Trust plc, Stanhope Gate Architecture Limited and OMFIF Foundation Limited. He was
formerly a director of The British-Iranian Chamber of Commerce.
Lord Lamont was appointed to the Board on 27 February 2006 and will retire following the conclusion of
the AGM on 8 September 2022.
William van Heesewijk began his career with Lloyds Bank International in 1981, working for both the
merchant banking and investment management arms. He has been involved in the investment trust industry
since 1987 in various capacities. During his tenure with Fidelity Investments International, Gartmore
Investment Management PLC, BFS Investments PLC and Chelverton Asset Management Limited, he
managed several launches of onshore and offshore investment funds, including a number of roll-overs and
reconstructions involving complex capital structures and across several geographic regions. His roles
involved business development, project management, sales compliance and marketing. He was a member
of the Association of Investment Companies Managers forum.
Mr van Heesewijk was appointed to the Board on 1 December 2005 and retired on 30 April 2022.
Howard Myles*
+
was a partner in Ernst & Young from 2001 to 2007 and was responsible for the Investment
Funds Corporate Advisory Team. He was previously with UBS Warburg from 1987 to 2001. Mr Myles began
his career in stockbroking in 1971 as an equity salesman and in 1975 joined Touche Ross & Co, where he
qualified as a chartered accountant. In 1978 he joined W Greenwell & Co in the corporate broking team
and in 1987 moved to SG Warburg Securities, where he was involved in a wide range of commercial and
industrial transactions in addition to leading Warburg’s corporate finance function for investment funds.
He is now a non-executive director of Baker Steel Resources Trust Limited and abrdn Latin American Income
Fund Limited, having stepped down from the Board of BBGI SICAV S.A. in April 2022.
Mr Myles was appointed to the Board on 15 March 2011 and he became Chairman of the Audit Committee
on 15 June 2016. Upon the retirement of the Chairman, Lord Lamont, on 8 September 2022, Mr Myles will
be appointed Chairman of the Board. In accordance with corporate governance best practice, upon this
appointment, he will step down as Chairman of the Audit Committee but will remain a member thereof.
Andrew Watkins*
+
has a wealth of experience in the financial services industry working in senior positions
at Kleinwort Benson, Flemings, Jupiter and most recently as Head of Client Relations, Sales & Marketing for
Investment Trusts at Invesco Perpetual, retiring in 2017. He is currently a non-executive director and chairman
of Ashoka India Equity Investment Trust plc and a non-executive director of Baillie Gifford European Growth
Trust plc, BMO UK High Income Trust plc and Consistent Unit Trust Management Ltd.
Mr Watkins was appointed to the Board on 6 September 2018. He will replace Mr Myles as Chairman of
the Audit Committee on 8 September 2022.
Denise Hadgill*
+
has spent 35 years in the investment industry, first in the Eurobond market at SGST and
then in the equity oil sector at Smith New Court. She moved into fund management at Schroders where she
was a UK Equity Fund Manager and Director responsible for the firm’s relationship with UK pension funds
and charity clients with multi asset portfolios. Denise went on to be a Managing Director and Head of the
UK Product Strategy group at BlackRock where she was responsible for delivering the firm’s investment
message and economic outlook to an extensive range of UK clients. Denise is a Non-Executive Director of
Henderson Diversified Income Trust Plc and Smithson Investment Trust plc as well as the mutual society,
Pharmaceutical and General Provident Society Limited.
Ms Hadgill was appointed to the Board on 1 May 2022.
* Independent
+
Audit Committee member
19
Investment Manager, Secretary, Custodian and
Registrar
Investment Manager: Chelverton Asset Management Limited (‘Chelverton’)
Chelverton was formed in 1998 by David Horner, who has considerable experience of analysing investments
and working with smaller companies. Chelverton is predominantly owned by its employees.
Chelverton is a specialist fund manager focused on UK mid and small companies and has a successful track
record. At 31 March 2022, Chelverton had total funds under management of approximately £2.178 billion,
including two investment companies and three OEICs. The Income Fund Management Team comprises
David Horner, Oliver Knott and David Taylor.
Chelverton is authorised and regulated by the FCA.
Administrator and Corporate Secretary: Maitland Administration Services Limited
Maitland Administration Services Limited provides company secretarial and administrative services for the
Group. The Maitland group provides administration and regulatory oversight solutions for a wide range of
investment companies.
Custodian: Jarvis Investment Management Limited
Established for over 30 years, Jarvis Investment Management Limited offers a wide range of administration
services and solutions, including custody services.
Registrar: Share Registrars Limited
Share Registrars Limited is a CREST registrar established in 2004 and provides share registration services
to over 200 client companies.
20
Directors’ Report
The Directors present their Annual Report and financial statements for the Group and the Company for
the year ended 30 April 2022.
Directors
The Directors who served during the year ended 30 April 2022 are listed on page 19. None of the Directors
nor any persons connected with them had a material interest in any of the Company’s transactions,
arrangements or agreements during the year. None of the Directors has or has had any interest in any
transaction which is or was unusual in its nature or conditions or significant to the business of the Company,
and which was effected by the Company during the current financial year. There have been no loans or
guarantees from the Company or its subsidiary undertakings, to any Director at any time during the year
or thereafter.
Corporate governance
A formal statement on corporate governance and the Company’s compliance with the UK Corporate
Governance Code and the AIC Code of Corporate Governance can be found on pages 25 to 31.
Management agreements
The Company’s investments are managed by Chelverton under an agreement (‘the Investment Management
Agreement’) dated 30 April 2006 (effective from 1 December 2005). A periodic fee is payable quarterly in
arrears at an annual rate of 1% of the value of the gross assets under management of the Company. Fees
payable under the Investment Management Agreement increased during the year, reflecting the Company’s
improving underlying asset value over the financial year.
The Investment Management Agreement may be terminated by 12 months’ written notice. There are no
additional arrangements in place for compensation beyond the notice period.
Under another agreement (‘the Administration Agreement’) dated 1 January 2016, company secretarial
services and the general administration of the Group are undertaken by Maitland Administration Services
Limited (‘Maitland’). Their fee is subject to review at intervals of not less than three years. The Administration
Agreement may be terminated by six months’ written notice.
It is the Directors’ opinion that the continuing appointment of the Investment Manager and the
Administrator/Secretary on the terms agreed is in the best interests of the Group and its shareholders. The
Directors are confident that Chelverton has the required skill and expertise to continue to successfully
manage the Group’s assets, and continues to be satisfied with the services provided by Maitland.
Dividends
Details of the dividends declared and paid by the Board are set out in the Strategic Report on page 1.
Directors’ indemnification and insurance
The Company’s Articles of Association provide that, insofar as permitted by law, every Director shall be
indemnified by the Company against all costs, charges, expenses, losses or liabilities incurred in the
execution and discharge of the Directors’ duties, powers or office. The Company has arranged appropriate
insurance cover in respect of legal action against its Directors. This cover was in place during the year,
having been reviewed and renewed, and also to the date of signing this report.
21
Directors’ Report (continued)
Substantial shareholdings
The Directors have been informed of the following notifiable interests in the voting shares of the Company
at 30 April 2022:
Number of % of
Ordinary shares shares voting rights
IntegraFin Holdings plc 1,460,756 7.01%
Philip J Milton & Company Plc 1,051,833 5.04%
Integrated Financial Arrangements Limited 801,748 4.05%
The Company has not been notified of any changes to the above holdings between 30 April 2022 and the
date of this report.
Special business at the Annual General Meeting
The Company’s AGM will be held at 11.00 am on Thursday 8 September 2022. The Notice of Meeting is
set out on pages 78 to 82.
In addition to the ordinary business of the meeting, there are items of special business, as follows:
Authority to issue shares and disapply pre-emption rights
A Special Resolution was passed at the last AGM held on 9 September 2021 giving the Directors authority,
pursuant to Section 551 of the Companies Act 2006, to allot Ordinary shares up to an aggregate nominal
value equal to £781,875 (which figure represented 15% of the issued share capital of the Company). This
authority expires at the conclusion of the next AGM. The Directors are accordingly seeking authorisation,
pursuant to Section 551 of the Companies Act 2006, to allot up to an aggregate nominal value equal to
£781,875, being 15% of the Ordinary shares in issue at the date of this report, as set out in Resolution 8 in
the Notice of Meeting. This authority will expire at the AGM to be held in 2022 or 15 months from the
passing of the Resolution, whichever is earlier.
A Special Resolution was also passed on 9 September 2021 giving the Directors power to issue Ordinary
shares for cash notwithstanding the pre-emption provisions of the Companies Act 2006 and permitting the
Directors to issue shares without being required to offer them to existing shareholders in proportion to
their current holdings. This power expires at the conclusion of the next AGM and the Directors are
accordingly seeking its renewal, pursuant to Sections 570 and 573 of the Companies Act 2006, to enable
the Directors to issue up to 10% of the issued Ordinary share capital, representing 2,085,000 Ordinary
shares at the date of this report, as set out in the Notice of Meeting as Resolution 9.
This authority will also cover the sale of shares held in Treasury, and will expire at the AGM to be held in
2023 or 15 months from the passing of the Resolution, whichever is earlier. The authority to issue shares
will only be used when it would be in the interests of shareholders as a whole. The Directors do not currently
intend to issue or sell shares from Treasury other than above the prevailing NAV.
Purchase of own shares
At the AGM held on 9 September 2021 the Directors were granted the authority to buy back in the market
up to 14.99% of the Company’s Ordinary shares in circulation at that date for cancellation or placing into
Treasury. No shares have been purchased under this authority, which remains in force. Resolution 10 as set
out in the Notice of Meeting will renew this authority for up to 14.99% of the current issued Ordinary share
capital in circulation, which represents 3,125,415 Ordinary shares at the date of this report. The Directors
do not intend to use the authority to purchase the Company’s shares unless to do so would result in an
increase in the net asset value per share for the remaining shareholders and would generally be in the
interests of all shareholders. The authority, if given, will lapse at the AGM to be held in 2023 or 15 months
from the passing of this Resolution, whichever is earlier.
22
Purchases will be made on the open market. The price paid for Ordinary shares will not be less than 25p
and not more than the higher of (i) 5% above the average of the middle market quotations (as derived from
the Daily Official List of the London Stock Exchange) of the Ordinary shares for the five business days
immediately preceding the date on which the Ordinary share is purchased, and (ii) the higher of the price
of the last independent trade and the current highest independent bid on the London Stock Exchange.
Shares may be cancelled or placed in Treasury.
Pursuant to the loan agreement between the Company and SDVP, the Company will not purchase any of
its Ordinary shares out of capital reserves unless the cover for the final redemption value of the Zero
Dividend Preference shares is at least 1.9 times after the purchase.
Notice period for general meetings
Resolution 11 is a Special Resolution that will give the Directors the ability to convene general meetings,
other than Annual General Meetings, on a minimum of 14 clear days’ notice. The minimum notice period
for annual general meetings will remain at 21 clear days. The approval will be effective until the Company’s
Annual General Meeting to be held in 2023, at which it is intended that renewal will be sought. The
Company will have to offer facilities for all shareholders to vote by electronic means for any general meeting
convened on 14 days’ notice. The Directors will only call a general meeting on 14 days’ notice where they
consider it to be in the interests of shareholders to do so and the relevant matter is required to be dealt
with expediently.
Recommendation
The Board considers that the Resolutions to be proposed at the AGM are in the best interests of
shareholders as a whole and the Company and, accordingly, recommends that shareholders vote in favour
of each Resolution, as the Directors intend to do in respect of their own beneficial shareholdings
representing approximately 0.5% of the issued share capital.
Company information
The following information is disclosed in accordance with the Companies Act 2006:
• The Group’s capital structure and voting rights are summarised on pages 74 and 75.
• Details of the substantial shareholders in the Company are listed on page 22.
• The Articles of Association can be amended by the passing of a Special Resolution of the members
in a General Meeting.
• Amendment of the Articles of Association and the granting of powers to issue or buy back the
Company’s shares require the relevant Resolutions to be passed by shareholders. The Board’s current
powers to issue or buy back shares and proposals for their renewal are detailed on pages 22 and 23.
• There are no restrictions concerning the transfer of securities in the Company; no restrictions on voting
rights; no special rights with regard to control attached to securities; no agreements between holders
of securities regarding their transfer known to the Company; and no agreements which the Company
is party to that might affect its control following a successful takeover bid.
• Consideration of potential future developments is detailed in the Strategic Report on page 16.
23
Directors’ Report (continued)
SDVP Annual General Meeting
SDVP’s AGM will be held on Thursday 8 September 2022 following the Company’s AGM. The Notice of
Meeting is set out in the SDVP Annual Report.
Going concern
The Group’s business activities, together with the factors likely to affect its future development, performance
and position, are described in the Chairman’s Statement on pages 2 to 4 and in the Investment Manager’s
Report on pages 5 and 6. The financial position of the Group, its cash flows, liquidity position and borrowing
facilities are described in the financial statements. In addition, note 21 on pages 66 to 71 to the financial
statements sets out the Group’s objectives, policies and processes for managing its capital; its financial risk
management objectives; details of its financial instruments; and its exposure to credit risk and liquidity risk.
The Audit Committee has conducted stress testing of the balance sheet and future dividend streams in
different scenarios to support the opinion regarding financial position and outlook.
Notwithstanding the Company’s stable performance and financial position during the financial year, the
Directors have determined that there is continuing uncertainty as to the prospects for and timing of a full
recovery from the economic effects of the Covid-19 pandemic. It is likely that different sectors of the
domestic economy, and countries globally, will recover at different speeds and trajectories. The Group
continues to benefit from adequate financial resources however and, as a consequence, having assessed
the principal risks facing the Company and the other matters set out in the Viability Statement, the Directors
believe that the Group is well placed to manage its business risks successfully and it is appropriate to adopt
the going concern basis.
Climate Disclosures
Statements regarding the Company’s climate related activities and Board policies where applicable can be
found in the Strategic Report on pages 15 and 16.
Auditor
The Auditor, Hazlewoods LLP, has indicated its willingness to continue in office and Resolutions 6 and 7
proposing its re-appointment and authorising the Directors to determine its remuneration for the ensuing
year will be submitted for approval at the AGM.
The Directors who were in office on the date of approval of these financial statements have confirmed, as
far as they are each aware, that there is no relevant audit information of which the Auditor is unaware. Each
of the Directors has confirmed that they have taken all the steps that they ought to have taken as Directors
in order to make themselves aware of any relevant audit information and to establish that it has been
communicated to the Auditor.
On behalf of the Board
Lord Lamont of Lerwick
Chairman
29 June 2022
24
Statement on Corporate Governance
The Company is committed to maintaining high standards of corporate governance and the Directors are
accountable to shareholders for the governance of the Group’s affairs.
Statement of compliance with the UK Corporate Governance Code 2018 (‘the Governance Code’)
The Directors have reviewed the detailed principles outlined in the Governance Code and confirm that, to
the extent that they are relevant to the Company’s business, they have complied with the provisions of the
Governance Code throughout the year ended 30 April 2022 except as explained in this section as being
non-compliant and that the Company’s current practice is, in all material respects, consistent with the
principles of the Governance Code.
The Board also confirms that, to the best of its knowledge and understanding, procedures were in place to
meet the requirements of the Governance Code relating to internal controls throughout the year under
review. This statement describes how the principles of the Governance Code have been applied in the
affairs of the Company.
As an investment trust, the Company has also taken into account the Code of Corporate Governance 2019
produced by the Association of Investment Companies (‘the AIC Code’), which is intended as a framework
of best practice specifically for AIC member companies.
The AIC Code addresses all the principles set out in the Governance Code, and there are some areas where
the AIC Code is more flexible than the Governance Code. The Board has taken steps to adhere to its
principles for investment companies and follow the recommendations in the AIC Code where it believes
they are appropriate.
A copy of the AIC Code and the AIC Guide can be obtained via the AIC website, www.theaic.co.uk, and a
copy of the Governance Code can be obtained at www.frc.org.uk.
The Company has complied with the recommendations of the AIC Code and the relevant provisions of the
Governance Code except as set out below:
• owing to the size of the Board, it is felt inappropriate to appoint a senior independent non-executive
Director as further detailed on page 27.
• as the Group has no staff, other than Directors, there are no procedures in place in relation to raising
concerns anonymously and in confidence. The Board has satisfied itself there are appropriate
procedures in place for the workforce to raise concerns at its service providers.
• the Board has not established a remuneration committee or nomination committee as the functions
of these are performed by the Board.
Board responsibilities and relationship with Investment Manager
The Board is responsible for the investment policy and strategic and operational decisions of the Group and
for ensuring that the Group is run in accordance with all regulatory and statutory requirements. These procedures
have been formalised in a schedule of matters reserved for decision by the Board. These matters include:
• the maintenance of clear investment objectives and risk management policies, changes to which
require Board approval;
• the monitoring of the business activities of the Group, including investment performance and annual
budgeting; and
• review of matters delegated to the Investment Manager, Administrator, Custodian or Secretary.
25
Statement on Corporate Governance (continued)
The Group’s day-to-day functions have been delegated to a number of service providers, each engaged
under separate legal agreements. At each Board meeting the Directors follow a formal agenda prepared
and circulated in advance of the meeting by the Company Secretary to review the Group’s investments
and all other important issues, such as asset allocation, gearing policy, corporate strategic issues, cash
management, peer group performance, marketing and shareholder relations, investment outlook and
revenue forecasts, to ensure that control is maintained over the Group’s affairs. The Board regularly
considers its overall strategy and also conducts one-off and more focused reviews of all matters within its
remit, and the focus during the financial year was on monitoring the continued effective working of the
Investment Manager and third party advisers together with modelling changes to the Company’s dividend
income streams as discussed throughout this Strategic Report.
The management of the Group’s assets is delegated to Chelverton. At each Board meeting, one or more
representatives of Chelverton are in attendance to present verbal and written reports covering its activity,
portfolio composition and investment performance over the preceding period. Ongoing communication
with the Board is maintained between formal meetings. The Investment Manager ensures that Directors
have timely access to all relevant management and financial information to enable informed decisions to
be made and contacts the Board as required for specific guidance. The Company Secretary and Investment
Manager prepare briefing notes for Board consideration on matters of relevance, for example changes to
the Group’s economic and financial environment, statutory and regulatory changes and corporate
governance best practice.
Board membership
At the year end the Board consisted of four Directors, all of whom are non-executive. The Group has no
employees. The Board seeks to ensure that it has the appropriate balance of skills, experience and length
of service amongst its members. The Board’s policy on tenure is that Directors can stand for more than
nine years. The Board considers that length of service does not necessarily compromise the independence
or contribution of directors of investment trust companies where experience and continuity can be a
significant strength. The Directors possess a wide range of business and financial expertise relevant to the
direction of the Group and Company and consider that they commit sufficient time to the Group and
Company’s affairs. On appointment to the Board, Directors are fully briefed as to their responsibilities by
the Chairman, the Investment Manager and the Company Secretary. Brief biographical details of the
Directors, along with recent and planned changes to the Board, are set out on page 19.
The Directors meet at regular Board meetings, held at least four times a year, and additional meetings and
telephone meetings are arranged as necessary. During the year to 30 April 2022 the Board and its
Committees met four times and all Directors were present at all formal Board meetings, and those specific
purpose Committee meetings they were asked to attend.
Board effectiveness
The Board, acting as the Nomination Committee, conducts a formal annual review of the size, composition
and balance of the Board and the performance of the Board, its Committees and the Directors facilitated
by feedback provided by each Director. The Chairman provides a summary of the findings which are
discussed at the meeting and an action plan is agreed if required. During the year, no issues were identified
requiring an action plan. The performance of the Chairman of the Board is evaluated by the other Directors.
The Board is satisfied from the results of the evaluation completed this year that the Board, its Committees
and Directors function effectively, collectively and individually, and that the Board contains an appropriate
balance of skills and experience to manage the Company.
26
Chairman
The Chairman, Lord Lamont, is independent. He has shown himself to have sufficient time to commit to
the Group’s affairs. The Company does not have a chief executive officer, as it has no executive directors.
The Chairman has no relationships that may create a conflict of interest between the Chairman’s interest
and those of the shareholders. The Chairman does not sit on the Board of any other investment company
managed by Chelverton. Upon Lord Lamont’s retirement on 8 September 2022, Mr Myles will become
Chairman of the Board.
Directors’ independence
In accordance with the Listing Rules for investment entities, the Board has reviewed the status of its
individual Directors and the Board as a whole.
The Governance Code requires that this report should identify each non-executive Director the Board
considers to be independent in character and judgement and whether there are relationships or
circumstances which are likely to affect, or could appear to affect, the Director’s judgement, stating its
reasons if it determines that a Director is independent notwithstanding the existence of relationships or
circumstances which may appear relevant to its determination.
Mr Watkins is deemed to be independent of the Investment Manager. Despite being on the Board for over
nine years, the Board believes Lord Lamont and Mr Myles are also independent. They all continue to
perform their roles effectively. Mr van Heesewijk was not deemed independent by virtue of his role as a
consultant to Chelverton. Mr van Heesewijk retired on 30 April 2022 as detailed on page 19.
Under the Articles of Association, one-third of the Directors are required to retire by rotation at each AGM
and no Director shall serve a term of more than three years before re-election. However, in line with
prevailing corporate governance best practice, all Directors will retire and offer themselves for annual re-
election at this year’s annual general meeting. The Board has therefore reviewed the appointment of all
Directors and recommends that shareholders vote for the re-election of Mr Myles and Mr Watkins. The
Board also recommends that shareholders vote for the election of Ms Hadgill.
The Board believes that although certain Board members have served for more than the recommended
nine years, the Board continues to benefit from Directors’ individual and collective expertise, their individual
contributions to the Board remain effective, that they demonstrate commitment to their roles as non-
executive Directors of the Company, and each has actively contributed throughout the year.
Senior Independent Director
No separate Senior Independent Director has been appointed to the Board as, in the view of the Directors,
it is inappropriate to do so given the size and composition of the Board. The Chairman’s performance is
evaluated annually by the Board when carrying out the functions performed by a nomination committee as
detailed on page 28. All the Directors make themselves available to shareholders at general meetings of
the Company. The Directors can be contacted at other times via the Company Secretary.
Audit Committee
The Audit Committee comprises the Directors of the Board. The Committee met twice during the year
ended 30 April 2022, with Mr Myles as Chairman. Mr Watkins will become Chairman of the Audit Committee
with effect from 8 September 2022, as detailed on page 19. All members of the Committee were present
at both meetings. The Audit Committee has direct access to the Group’s Auditor, Hazlewoods LLP, and
representatives of Hazlewoods LLP attend the year end Audit Committee meeting.
27
Statement on Corporate Governance (continued)
The primary responsibilities of the Audit Committee are: to review the effectiveness of the internal control
environment of the Group and monitor adherence to best practice in corporate governance; to make
recommendations to the Board in relation to the re-appointment of the Auditor and to approve their
remuneration and terms of engagement; to review and monitor the Auditor’s independence and objectivity
and the scope and effectiveness of the audit process and to provide a forum through which the Group’s
Auditor reports to the Board. The Audit Committee also has responsibility for monitoring the integrity of
the financial statements and accounting policies of the Group and for reviewing the Group’s financial
reporting and internal control policies and procedures. Committee members consider that, individually and
collectively, they are appropriately experienced in accounting and audit processes to fulfil the role required.
Management Engagement Committee
The functions performed by this type of Committee are carried out by the Board of the Company.
The Board reviewed the performance of the Investment Manager’s obligations under the Investment
Management Agreement and considered whether the terms and conditions of the Investment Management
Agreement remain appropriate. Based on continuing performance, the Board concluded that the Investment
Manager’s appointment should continue. It also reviewed the performance of the Company Secretary, the
Custodian and the Registrar and matters concerning their respective agreements with the Company.
Nominations Committee
The functions performed by this type of Committee are carried out by the Board of the Company. The rules
concerning the appointment and replacement of Directors are contained in the Company's Articles of
Association.
The Board, acting as the Nomination Committee, evaluated the performance of Directors and the Chairman
for the year ended 30 April 2022. No third party was engaged to carry out an external evaluation of the
Board. As a result of the evaluation, the Board remains of the opinion that all Directors contribute effectively
and have the skills and experience relevant to the leadership and direction of the Company as detailed on
page 27. The Board assessed the time commitment for each Board post and agreed that sufficient time
was being spent by each Director to fulfil their duties. The Board also recommended the re-appointment
of Mr Myles and Mr Watkins standing for re-election at the AGM.
As noted on page 17, during the year the Board engaged the services of a third-party recruitment consultant
to assist in the search for an additional Director. The search was conducted against objective criteria
designed to ensure that the Board continues to have the appropriate skills and experience to manage the
Company effectively and to face future opportunities and challenges. As a result of the recruitment process
Ms Hadgill was appointed as a Director with effect from 1 May 2022. In relation to future appointments,
the Board will seek to draw upon as diverse a pool of candidates as possible.
Remuneration Committee
The functions performed by this type of Committee are carried out by the Board of the Company.
The Board assessed the Directors’ fees, following proper consideration of the role that individual Directors
fulfil in respect of Board and Committee responsibilities, the time committed to the Group’s affairs and
remuneration levels generally within the investment trust sector. As a result of this review, the fees were
increased as noted in the Directors’ Remuneration Report.
28
Under the Listing Rules, the Governance Code principles relating to directors’ remuneration do not apply
to an investment trust company other than to the extent that they relate specifically to non-executive
directors. Detailed information on the remuneration arrangements can be found in the Directors’
Remuneration Report on pages 34 to 37 and in note 5 to the financial statements.
Independent professional advice
The Board has formalised arrangements under which the Directors, in the furtherance of their duties, may
take independent professional advice at the Company’s expense.
Institutional investors – use of voting rights
The Investment Manager, in the absence of explicit instruction from the Board, is empowered to exercise
discretion in the use of the Company’s voting rights in investee companies.
Conflicts of interest
It is the responsibility of each individual Director to avoid an unauthorised conflict arising. Each Director
must notify and request authorisation from the Board as soon as they become aware of the possibility of a
conflict arising.
The Board is responsible for considering Directors’ requests for authorisation of conflicts and for deciding
whether or not the conflict should be authorised. The factors to be considered will include whether the
conflict could prevent the Director from properly performing their duties, whether it has, or could have,
any impact on the Group and whether it could be regarded as likely to affect the judgement and/or actions
of the Director in question. When the Board is deciding whether to authorise a conflict or potential conflict,
only Directors who have no interest in the matter being considered are able to take the relevant decision,
and in taking the decision the Directors must act in a way they consider, in good faith, will be most likely
to promote the Group’s success. The Directors are able to impose limits or conditions when giving
authorisation if they think this is appropriate in the circumstances.
A register of conflicts is maintained by the Company Secretary and is reviewed at Board meetings, to ensure
that any authorised conflicts remain appropriate. Directors are required to confirm at these meetings
whether there has been any change to their position.
Internal control review
The Board is responsible for establishing and maintaining the Group’s systems of internal control and for
reviewing their effectiveness.
An ongoing process, in accordance with the guidance supplied by the Financial Reporting Council,
‘Guidance on Risk Management, Internal Control and Related Financial and Business Reporting’, is in place
for identifying, evaluating and managing risks faced by the Company and the Group. The Company’s risks
are documented and evaluated using a risk register. This register is reviewed regularly by Directors to ensure
appropriate risk mitigation actions are in place. This process helps to ensure that the Board maintains a
sound system of internal control to safeguard shareholders’ investments and the Group’s assets. This
process also involves a review by Directors of reports on the internal control systems of the service providers
who perform all the Company’s administrative and managerial functions. As described below, this process,
together with key procedures established with a view to providing effective financial control, have been in
place for the full financial year and up to the date the financial statements were approved.
29
Statement on Corporate Governance (continued)
The risk management process and systems of internal control are designed to manage rather than eliminate
the risk of failure to achieve the Company’s objectives. It should be recognised that such systems can only
provide reasonable, rather than absolute, assurance against material misstatement or loss. No significant
failings or weaknesses have been identified.
Reflecting recent macro-economic and political uncertainty, the Board, on the recommendation of the Audit
Committee, completed additional reviews of the Company’s internal control environment during the year,
with updates at each quarterly meeting.
Internal control assessment process
Risk assessment and the review of internal controls is undertaken by the Board in the context of the Group’s
overall investment objective. The review covers the key business, operational, compliance and financial
risks facing the Company. In arriving at its judgement of what risks the Company faces, the Board has
considered the Company’s operations in the light of the following factors:
• the threat of such risks becoming a reality;
• the Company’s ability to reduce the incidence and impact of risk on its performance;
• the cost to the Company and benefits related to the review of risk and associated controls of the
Group; and
• the extent to which third parties operate the relevant controls.
Against this background the Board has split the review into four sections reflecting the nature of the risks
being addressed. The sections are as follows:
• corporate strategy and performance;
• published information and compliance with laws and regulations;
• relationship with service providers; and
• investment and business activities.
Given the nature of the Company’s activities and the fact that most functions are subcontracted, the Group
does not have an internal audit function. The Directors have obtained information from key third-party
suppliers regarding the controls operated by them and have also sought reassurance from each as to their
continuing performance across the financial year. To enable the Board to make an appropriate risk and
control assessment, the information and assurances sought from third parties include the following:
• details of the control environment;
• identification and evaluation of risks and control objectives;
• assessment of the communication procedures; and
• assessment of the control procedures.
The key procedures which have been established to provide effective internal financial controls are as
follows:
30
• Investment management is provided by Chelverton. The Board is responsible for the implementation
of the overall investment policy and monitors the actions of the Investment Manager at regular Board
meetings.
• The provision of administration, accounting and company secretarial duties is the responsibility of
Maitland Administration Services Limited.
• Custody of assets is undertaken by Jarvis Investment Management Limited.
• The duties of investment management, accounting and custody of assets are segregated. The
procedures of the individual parties are designed to complement one another.
• The non-executive Directors of the Group clearly define the duties and responsibilities of their agents
and advisers in the terms of their contracts. The appointment of agents and advisers is conducted by
the Board after consideration of the quality of the parties involved; the Board, acting as the
Management Engagement Committee, monitors their ongoing performance and contractual
arrangements.
• Mandates for authorisation of investment transactions and expense payments are set by the Board.
• The Board reviews detailed financial information provided by the Administrator on a regular basis.
Company Secretary
The Board has direct access to the advice and services of the Company Secretary, who is responsible for
ensuring that Board and Committee procedures are followed and that applicable regulations are complied
with. The Secretary is also responsible to the Board for ensuring timely delivery of information and reports
and that the statutory obligations of the Group are met.
Dialogue with shareholders
Communication with shareholders is given a high priority by both the Board and the Investment Manager
and all Directors are available to enter into dialogue with shareholders at any time. Major shareholders of
the Group have the opportunity to meet with the Directors of the Board in order to communicate their
views. All shareholders are encouraged to attend the AGM, during which the Board and the Investment
Manager are available to discuss issues affecting the Group and shareholders have the opportunity to
address questions to the Investment Manager, the Board and the Chair of the Audit Committee.
There are no significant issues raised by major shareholders to bring to all shareholders’ attention, topics
of interest are covered in the Strategic Report on pages 1 to 17.
Any shareholder who would like to lodge questions in advance of the AGM is invited to do so either on the
reverse of the Proxy Form or in writing to the Company Secretary at the address given on page 77. The
Company always responds to letters from individual shareholders.
The Annual and Half Yearly Reports of the Group are prepared by the Board and its advisers to present a
full and readily understandable review of the Group’s performance. Copies are available for downloading
from the Investment Manager’s website, www.chelvertonam.com, and on request from the Company
Secretary on 01245 398950. Copies of the Annual Report are circulated to shareholders.
31
Audit Committee Report
Role of the Audit Committee
The Audit Committee (‘the Committee’) provides a forum through which the Group’s Auditor reports to
the Board. The Committee is responsible for monitoring the process of production and ensuring the
integrity of the Group’s financial statements. The other primary responsibilities of the Committee are:
• to monitor adherence to best practice in corporate governance;
• to review the effectiveness of the internal control and risk management environment of the Group;
• to receive compliance reports from the Investment Manager;
• to consider the accounting policies of the Group;
• to make recommendations to the Board in relation to the re-appointment of the Auditor;
• to make recommendations to the Board in relation to the Auditors’ remuneration and terms of
engagement; and
• to review and monitor the Auditor’s independence and objectivity and the effectiveness of the audit
process.
The Committee’s terms of reference were reviewed and updated in June 2021 to reflect current
recommended best practice.
Matters considered in the year
The Committee met twice during the financial year to consider the financial statements and to review the
internal control systems. The principal matters considered by the Committee were the valuation of the
Group’s assets, proof of ownership of its investments and cash, and the maintenance of its approval as an
investment trust. The Audit Committee ensured that the Board continued to consider the Group’s income
forecasts on a regular basis to monitor the ongoing impact of the Covid-19 pandemic on investee
companies.
The Manager and Administrator have reported to the Committee to confirm continuing compliance with
their individual regulatory requirements and for maintaining the Company’s investment trust status. These
were also reviewed by the Auditor as part of the audit process.
The Committee liaised with the appointed Investment Manager, Chelverton, throughout the year, and
received reports on their legal compliance. A Risk Assessment and Review of Internal Controls document
maintained by the Board was considered in detail and amended as necessary. This document is reviewed
by the Committee at each meeting.
Internal audit
The Group does not have an internal audit function, as most of its day-to-day operations are delegated to
third parties, all of whom have their own internal control procedures. The Committee discussed whether it
would be appropriate to establish an internal audit function, and agreed that the existing system of
monitoring and reporting by third parties remains appropriate and sufficient. The need for an internal audit
function is reviewed annually.
32
External audit
The Audit Committee monitors and reviews the effectiveness of the third-party service providers, the audit
process for the publication of the Annual Report and makes recommendations to the Board on the re-
appointment, remuneration and terms of engagement of the Auditors.
Prior to each Annual Report being published, the Committee considers the appropriateness of the scope
of the audit plan, the terms under which the audit is to be conducted, as well as the matter of remuneration,
with a view to ensuring the best interests of the Group are promoted.
Audit fees are computed on the basis of the time spent on Group affairs by the Audit Senior Statutory
Auditor and staff and on the levels of skill and responsibility of those involved.
Hazlewoods LLP was first appointed as Auditor to the Group on 2 May 2007. As part of its review of the
continuing appointment of the Auditor, the Committee considers the length of tenure of the audit firm, its
fees and independence, along with any matters raised during each audit. The Committee has discussed
with Hazlewoods LLP its objectivity, independence and experience in the investment trust sector.
The Committee has recommended the re-appointment of Hazlewoods LLP on each occasion since their
initial appointment. The audit was put out to tender in 2017, and, as a result of that process, the Committee
recommended to the Board, and the Board approved, the re-appointment of Hazlewoods LLP. The Senior
Statutory Auditor for the Group has been rotated twice since the initial appointment, most recently in
respect of the financial year ended 30 April 2018. The Senior Statutory Auditor will rotate for the 2023
audit.
Hazlewoods LLP has indicated its willingness to continue in office as Auditor of the Group. Following its
review, the Committee considers that, individually and collectively, the Auditor is appropriately experienced
to fulfil the role required, and has recommended its re-appointment to the Board. A resolution for its re-
appointment will be proposed at the forthcoming AGM.
The Committee has considered the independence and objectivity of the Auditor and has assessed its
performance. The Committee is satisfied in these respects that Hazlewoods LLP has fulfilled its obligations
to the Group and its shareholders.
Howard Myles
Audit Committee Chairman
29 June 2022
33
Directors’ Remuneration Report
The Board has prepared this Report in accordance with the requirements of Schedule 8 to the Large and
Medium-sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013. The law
requires the Group’s Auditor, Hazlewoods LLP, to audit certain disclosures provided. Where disclosures have
been audited, they are indicated as such. The Auditor’s opinion is included in their report on pages 40 to 47.
Last year, shareholders were asked to approve the Directors’ Remuneration Report at the AGM through an
advisory vote, as has been the case in previous years, and this will again be the case at this year’s AGM.
Similarly, shareholders were also asked to give a binding vote on the Directors’ Remuneration Policy at the
2020 AGM. The Remuneration Policy must be the subject of a binding vote at least every three years and
will not therefore be proposed at this year’s AGM.
The Board considers Directors’ remuneration annually. The level of remuneration is designed to attract and
retain individuals with the appropriate skills and experience necessary for the effective stewarding of the
Company. The annual review includes an assessment of the time commitment to the Group’s affairs, as well
as a comparison with the remuneration paid to directors of similar investment trusts. In connection with
the recruitment of a new director, after careful consideration, the Board approved an increase in the level
of Directors’ fees for the coming financial year, the fees having not been increased since before 2005. With
effect from 1 May 2022 the fees will be paid at a rate of £30,000 for the Chairman and £22,000 for the
other Directors, with an additional payment of £3,000 to the Chairman of the Audit Committee in
recognition of the greater workload and responsibilities required in that role. During the year ended 30
April 2022, the fees were unchanged at a rate of £20,000 for the Chairman and £17,500 for other Directors,
with an additional payment of £2,500 to the Chairman of the Audit Committee.
The Company’s performance
The graph below compares the total return (assuming all dividends are reinvested) to Ordinary shareholders,
compared to the total shareholder return of the MSCI UK Small Cap Index. Although the Company has no
formal benchmark, the MSCI UK Small Cap Index has been selected as it is considered to represent a broad
equity market index against which the performance of the Company’s assets may be adequately assessed.
Directors’ service contracts
None of the Directors has a contract of service with the Company, nor has there been any contract or
arrangement between the Company and any Director at any time during the year. The terms of their
appointment provide that a Director shall retire and be subject to re-election at the first
AGM
after their
appointment, and at least every three years after that. Directors who have served on the Board for more
than nine years must offer themselves for re-election on an annual basis.
34
Chelverton UK Dividend Trust plc NAV rebased to 100
MSCI UK Small Cap (Total Return) rebased to 100
2020 202220212012 2013 2014 2015 2016 2018 2019
2017
350
400
200
250
300
50
0
100
150
Directors’ entitlements
Directors are only entitled to fees in accordance with the Directors’ Remuneration Policy as approved by
shareholders. None of the Directors has any entitlement to pensions or pension-related benefits, medical
or life insurance, share options, long-term incentive plans, or any form of performance-related pay. Also,
no Director has any right to any payment by way of monetary equivalent, or any assets of the Company
except in their capacity as shareholders. There is no notice period and no provision for compensation upon
loss of office. The Directors’ emoluments table below therefore does not include columns for any of these
items or their monetary equivalents.
Directors’ emoluments for the year ended 30 April 2022 (audited)
The Directors who served in the year received the following emoluments wholly in the form of fees:
Fees/Total
Year to Year to
30 April 2022 30 April 2021
£ £
Lord Lamont (Chairman) 20,000 20,000
H Myles 20,000 20,000
W van Heesewijk* – –
A Watkins 17,500 17,500
57,500 57,500
* Mr van Heesewijk has waived his entitlement to fees.
During the year no Directors received taxable benefits (2021: same).
Directors’ interests (audited)
The interests of the Directors and any connected persons in the Ordinary shares and Zero Dividend
Preference (‘ZDP’) shares of the subsidiary Company are set out below:
Number of Number of Number of Number of
Ordinary shares ZDP shares Ordinary shares ZDP shares
held at held at held at held at
Director 30 April 2022 30 April 2022 30 April 2021 30 April 2021
Lord Lamont (Chairman) 84,201 10,000 84,201 10,000
W van Heesewijk 110,000 Nil 110,000 Nil
H Myles Nil Nil Nil Nil
A Watkins 13,100 Nil 13,100 Nil
In August 2021 the Board, acting its capacity as the Remuneration Committee, approved a revised and
updated Share Dealing Policy for Directors.
Significance of spend on pay
Change
2022 2021 %
£ £
Dividends paid to Ordinary shareholders in the year 2,298,000 2,064,000 11.34
Total remuneration paid to Directors 57,500 57,500 –
35
Directors’ Remuneration Report (continued)
None of the Directors nor any persons connected with them had a material interest in the Company’s
transactions, arrangements or agreements during the year.
The Directors’ Remuneration Report for the year ended 30 April 2021 (Resolution 2) was approved by
shareholders at the AGM held on 9 September 2021. The votes cast by proxy were as follows:
Number of votes % of votes cast
For 732,504 93.4
Against 51,500 6.6
At Chairman’s discretion 0 0.0
Total votes cast 784,004
Number of votes abstained 25,220
Remuneration policy
The Board’s policy is that the remuneration of non-executive Directors should be sufficient to attract and
retain directors with suitable skills and experience, and is determined in such a way as to reflect the experience
of the Board as a whole, in order to be comparable with other similar organisations and appointments.
The fees of the non-executive Directors are determined within the limits of £250,000, as set out in the
Company’s Articles of Association. The approval of shareholders would be required to increase the limits
set out in the Articles of Association. Directors are not eligible for bonuses, pension benefits, share options,
long-term incentive schemes or other benefits, as the Board does not consider such arrangements or
benefits necessary or appropriate. Fees for any new Director appointed will be made on the same basis.
The Directors’ Remuneration Policy (Resolution 7) was approved by shareholders at the Annual General
Meeting held on 9 September 2020. The votes cast by proxy were as follows:
Number of votes % of votes cast
For 991,995 91.9
Against 87,732 8.1
Total votes cast 1,079,727
Number of votes abstained 16,282
As noted on page 34, from 1 May 2022 the fees will increase as shown below:
Expected Fees for Year to Fees for Year to
30 April 2023 30 April 2022
Chairman 30,000 20,000
Non-Executive Director 22,000 17,500
Audit Committee Chairman additional fee 3,000 2,500
The Company intends to continue with the Directors’ Remuneration Policy approved by shareholders in
2020 over the next financial year. Fees payable in respect of subsequent periods will be determined
following an annual review. Any views expressed by shareholders on remuneration being paid to Directors
would be taken into consideration by the Board. In accordance with the regulations, an Ordinary Resolution
to approve the Directors’ Remuneration Policy will be put to shareholders at least once every three years.
36
Approval
The Directors’ Remuneration Report on pages 34 to 37 was approved by the Board on 29 June 2022.
On behalf of the Board
Lord Lamont of Lerwick
Chairman
29 June 2022
37
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 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;
38
• 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
Lord Lamont of Lerwick
Chairman
29 June 2022
39
Independent Auditor’s Report
to the members of Chelverton UK Dividend Trust PLC
Opinion
We have audited the financial statements of Chelverton UK Dividend Trust plc (the ‘Parent Company’) and
its subsidiaries (the ‘Group’) for the year ended 30 April 2022, which comprise the Consolidated Statement
of Comprehensive Income, the Consolidated and Parent Company Statement of Changes in Net Equity,
the Consolidated and Parent Company Balance Sheets, the Consolidated and Parent Company Statement
of Cash Flows and the related notes, including a description of significant accounting policies.
The financial reporting framework that has been applied in their preparation is applicable law and UK
adopted International Accounting Standards.
In our opinion, the financial statements:
• give a true and fair view of the state of the Group’s and Parent Company’s affairs as at 30 April 2022
and of the Group’s and the Parent Company’s profit for the year then ended;
• have been properly prepared in accordance with UK adopted International Accounting Standards; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
Separate opinion in relation to IFRSs as issued by the IASB
As explained in note 1 to the Group Financial Statements, the Group in addition to complying with its legal
obligation to apply UK adopted International Accounting Standards, has also applied International Financial
Reporting Standards (“IFRSs”) as issued by the International Accounting Standards Board (“IASB”). In our
opinion the Group Financial Statements give a true and fair view of the consolidated financial position of
the group as at 30 April 2022 and of its consolidated financial performance and its consolidated cash flows
for the year then ended in accordance with IFRSs as issued by the IASB.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (‘ISAs (UK)’) and
applicable law. Our responsibilities under those standards are further described in the Auditor’s
responsibilities for the audit of the financial statements section of our report. We are independent of the
Group in accordance with the ethical requirements that are relevant to our audit of the financial statements
in the UK, including the FRC’s Ethical Standard as applied to listed public interest entities, and we have
fulfilled our other ethical responsibilities in accordance with these requirements. We believe that the audit
evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Our approach to the audit
Our audit approach is based on a thorough understanding of the Group’s business and is risk-based. The
day-to-day management of the Group’s investment portfolio, the maintenance of the Group’s accounting
records and the custody of its investments is outsourced to third-party service providers. Accordingly, our
audit work is focused on obtaining an understanding of, and evaluating, internal controls by the Group and
inspecting records and documents held by the third-party service providers. We undertook substantive
testing on significant transactions, balances and disclosures, the extent of which was based on various
factors such as our overall assessment of the control environment, the effectiveness of controls over
individual systems and the management of specific risks.
Our approach to the audit is also based on the key audit matters identified. Key audit matters are those
matters that, in our professional judgement, were of most significance in our audit of the financial
statements of the current period and include the most significant assessed risks of material misstatement
40
(whether or not due to fraud) we identified, including those which had the greatest effect on: the overall
audit strategy; the allocation of resources in the audit; and directing the efforts of the engagement team.
These matters were addressed in the context of our audit of the financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters.
The key audit matters identified and described further below were the valuation, ownership and existence of
investments and the allocation of capital and revenue items. Revenue recognition and management override
of controls are always deemed risks in any audit. This is not a complete list of all risks identified by our audit.
Key Audit Matter How our scope addressed this matter
41
Valuation, ownership and existence of
investments
The Group’s business is to invest predominantly in
small capitalised UK companies, listed on the
Official List and admitted to trading on AIM, to
achieve a high income and opportunity for capital
growth. Accordingly, the investment portfolio is a
significant, material balance in the Financial
Statements. We therefore identified the valuation,
ownership and existence of the investment portfolio
as a risk that requires particular audit attention.
Allocation of capital and revenue items
The Group has elected to determine capital profits
reflecting indirect and direct costs incurred in
generating capital gains. The Group is therefore
required to apportion its expenses between
revenue and capital. This allocation is important as
the Parent Company can only pay dividends out of
revenue reserves.
The split has to be performed on the basis of ‘the
Board’s expected long-term split of returns.
Our audit work included, but was not restricted to:
• understanding management’s process to
recognise and measure quoted investments;
• assessing whether the Group’s accounting
policy for valuation of quoted investments is in
accordance with IFRS 9;
• comparing a sample of quoted investment
valuations to an independent source of market
prices;
• testing a sample of investment additions and
disposals to contracts and bank statements; and
• confirming investment holdings to third party
confirmations.
The Group’s accounting policy on valuation of
investments is shown in note 1 to the financial
statements and related disclosures are included in
note 10. The Audit Committee identified the
valuation and ownership of investments as a
significant issue in its report on page 32, where the
Committee also described the action that it has
taken to address this risk.
Our audit work included, but was not restricted to,
examining the historical and forecast trends of
revenue and capital gains of the Parent Company
and assessing whether the allocation of expenses
between revenue and capital is fair and reasonable.
Independent Auditor’s Report (continued)
Key Audit Matter How our scope addressed this matter
Our application of materiality
We apply the concept of materiality in planning and performing our audit, in evaluating the effect of any
identified misstatements and in forming our opinion. For the purpose of determining whether the financial
statements are free from material misstatement, we define materiality as the magnitude of an omission or
misstatement that, individually or in the aggregate, could reasonably be expected to influence the economic
decisions of the users of the financial statements. We also determine a level of performance materiality,
which we use to determine the extent of testing needed, to reduce to an appropriately low level the
probability that the aggregate of uncorrected and undetected misstatements exceeds materiality for the
financial statements as a whole.
42
Management override of controls
ISA 240 – The Auditor’s Responsibilities Relating
to Fraud in an Audit of Financial Statements (“ISA
240”) states that the risk of management override
of controls is present in all entities.
Revenue recognition
ISA 240 notes that there is a rebuttable assumption
that there is a risk of fraud as a result of revenue
being misstated due to the improper recognition.
In particular, we identified completeness and
occurrence of investment income as a risk that
requires particular audit attention.
To address this risk our audit work included, but
was not restricted to:
• reviewing material estimates, judgements and
decisions made by management; and
• testing all material manual journal entries.
The Group’s accounting policies in respect of
material estimates and judgements are set out in
note 1.
Our audit work included, but was not restricted to:
• assessing whether the Group’s accounting
policy for revenue recognition is in accordance
with IAS 18 ‘Revenue’;
• obtaining an understanding of management’s
process to recognise revenue in accordance
with the stated accounting policy;
• testing income transactions by comparing
dividends during the year obtained from an
independent source with those recognised by
the group;
• testing gains and losses on investments to third
party contracts;
• performing cut-off testing of dividend income
around the year end; and
• checking the classification of special dividends
as either revenue or capital receipts.
The accounting policy on income, including its
recognition, in shown in note 1 to the financial
statements and the components of that income are
included in note 2.
We established materiality for the financial statements as a whole to be £588,000, which is 1% of the value
of the Group’s total assets. Performance materiality was set at £470,000, being 80% of the financial
statement materiality. For income and expenditure items we determined that misstatements of lesser
amounts than materiality for the financial statements as a whole would make it probable that the economic
decisions of the users of the financial statements could be changed or influenced by the misstatement or
omission. Accordingly, we established materiality for revenue items within the income statement to be
£147,000, which is 25% of the financial statement materiality, . We agreed with the Audit Committee that
we would report all differences that we identified in excess of 5% of financial statement materiality as well
as differences below that threshold that, in our view, warranted reporting on qualitative grounds. We also
report to the Audit Committee on disclosure matters that we identified during the course of assessing the
overall presentation of the financial statements.
Conclusions relating to going concern
In auditing the financial statements, we have concluded that the directors’ use of the going concern basis
of accounting in the preparation of the financial statements is appropriate. Our audit procedures to evaluate
the directors' assessment of the Group and the Parent Company's ability to continue to adopt the going
concern basis of accounting included but were not limited to:
• undertaking an initial assessment at the planning stage of the audit to identify events or conditions
that may cast significant doubt on the Group’s and the Parent Company’s ability to continue as a
going concern;
• evaluating the directors’ method to assess the Group’s and the Parent Company’s ability to continue
as a going concern;
• a review of the available cash and highly liquid assets;
• assessing the Group's and the Parent Company’s ability to convert other less liquid assets into cash;
• comparing those resources against ongoing expenditure and charges; and
• reviewing the appropriateness of the directors' disclosures in the financial statements.
Based on the work we have performed, we have not identified any material uncertainties relating to events
or conditions that, individually or collectively, may cast significant doubt on the Group's and the Parent
Company's ability to continue as a going concern for a period of at least twelve months from when the
financial statements are authorised for issue.
In relation to the Group’s reporting on how it has applied the UK Corporate Governance Code, we have
nothing material to add or draw attention to in relation to the directors’ statement in the Financial
Statements about whether the directors considered it appropriate to adopt the going concern basis of
accounting.
Our responsibilities and the responsibilities of the directors with respect to going concern are described in
the relevant sections of this report.
Other information
The other information comprises the information included in the Annual Report, other than the Financial
Statements and our Auditor’s Report thereon. The Directors are responsible for the other information. Our
opinion on the Financial Statements does not cover the other information and, except to the extent
otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.
43
Independent Auditor’s Report (continued)
Our responsibility is to read the other information and, in doing so, consider whether the other information
is materially inconsistent with the Financial Statements or our knowledge obtained in the course of the
audit, or otherwise appears to be materially misstated. If we identify such material inconsistencies or
apparent material misstatements, we are required to determine whether this gives rise to a material
misstatement in the Financial Statements themselves. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report that
fact. We have nothing to report in this regard.
Opinions on other matters prescribed by the Companies Act 2006
In our opinion, the part of the Directors’ remuneration report to be audited has been properly prepared in
accordance with the Companies Act 2006.
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Directors’ Report for the financial year for which
the financial statements are prepared is consistent with the financial statements and those reports
have been prepared in accordance with applicable legal requirements;
• the information about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 in the
Disclosure Rules and Transparency Rules sourcebook made by the Financial Conduct Authority (‘the
FCA Rules’), is consistent with the financial statements and has been prepared in accordance with
applicable legal requirements; and
• information about the Group’s corporate governance code and practices and about its administrative,
management and supervisory bodies and their committees complies with rules 7.2.2, 7.2.3 and 7.2.7
of the FCA Rules.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Group and the Parent Company and their
environment obtained in the course of the audit, we have not identified material misstatements in:
• the Strategic Report or the Directors’ Report; or
• the information about internal control and risk management systems in relation to financial reporting
processes and about share capital structures, given in compliance with rules 7.2.5 and 7.2.6 of the
FCA Rules.
We have nothing to report in respect of the following matters in relation to which the Companies Act 2006
requires us to report to you if, in our opinion:
• adequate accounting records have not been kept by the Parent Company, or returns adequate for
our audit have not been received from branches not visited by us; or
• the Parent Company financial statements and the part of the Directors’ Remuneration Report to be
audited are not in agreement with the accounting records and returns; or
• certain disclosures of Directors’ remuneration specified by law are not made; or
• we have not received all the information and explanations we require for our audit; or
• a corporate governance statement has not been prepared by the Parent Company.
44
Corporate governance statement
We have reviewed the directors' statement in relation to going concern, longer-term viability and that part
of the Corporate Governance Statement relating to the Group's compliance with the provisions of the UK
Corporate Governance Statement specified for our review by the Listing Rules.
Based on the work undertaken as part of our audit, we have concluded that each of the following elements
of the Corporate Governance Statement is materially consistent with the financial statements and our
knowledge obtained during the audit:
• Directors' statement with regards the appropriateness of adopting the going concern basis of
accounting and any material uncertainties identified set out on page 24;
• Directors’ explanation as to their assessment of the Group’s prospects, the period this assessment
covers and why that period is appropriate set out on page 14;
• Directors’ statement on whether it has a reasonable expectation that the Group will be able to continue
in operation and meet its liabilities set out on page 15;
• Directors' statement on fair, balanced and understandable set out on pages 38 and 39;
• Board’s confirmation that it has carried out a robust assessment of the emerging and principal risks
set out on pages 11 to 13;
• Section of the Annual Report that describes the review of effectiveness of risk management and internal
control systems set out on pages 29 to 31; and
• Section describing the work of the audit committee set out on pages 27 and 28.
Responsibilities of Directors
As explained more fully in the Directors’ Responsibilities Statement, set out on pages 38 and 39, the Directors
are responsible for the preparation of the financial statements and for being satisfied that they give a true
and fair view, and for such internal control as the Directors determine is necessary to enable the preparation
of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Parent
Company’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless the Directors either intend to liquidate the Group
or the Parent Company or to cease operations, or have no realistic alternative but to do so.
Auditor’s responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are
free from material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes
our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit
conducted in accordance with ISAs (UK) will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate,
they could reasonably be expected to influence the economic decisions of users taken on the basis of these
financial statements.
Irregularities, including fraud, are instances of non-compliance with laws and regulations. We design
procedures in line with our responsibilities, outlined above, to detect material misstatements in respect of
irregularities, including fraud.
45
Independent Auditor’s Report (continued)
Based on our understanding of the Group and the Parent Company and its activities, we identified that the
principal risks of non-compliance with laws and regulations related to UK tax legislation, money laundering,
and the Listing Rules, and we considered the extent to which non-compliance might have a material effect
on Financial Statements. We also considered those laws and regulations that have a direct impact on the
preparation of the Financial Statements such as the Companies Act 2006.
We evaluated the directors’ and management’s incentives and opportunities for fraudulent manipulation
of the Financial Statements (including the risk of override of controls) and determined that the principal
risks were related to posting manual journal entries to manipulate financial performance, management bias
through judgements and assumptions and significant one-off or unusual transactions.
Our audit procedures were designed to respond to those identified risks, including non-compliance with
laws and regulations (irregularities) and fraud that are material to the financial statements. Our audit
procedures included but were not limited to:
• Discussing with the directors and management their policies and procedures regarding compliance
with laws and regulations;
• Communicating identified laws and regulations throughout our engagement team and remaining alert
to any indications of non-compliance throughout our audit;
• Considering the risk of acts by the Group and the Parent Company which were contrary to the
applicable laws and regulations, including fraud.
Our audit procedures in relation to fraud included but were not limited to:
• Making enquiries of the directors and management on whether they had knowledge of any actual,
suspected or alleged fraud;
• Gaining an understanding of the internal controls established to mitigate risks related to fraud;
• Discussing amongst the engagement team the risks of fraud; and
• Addressing the risks of fraud through management override of controls by performing journal entry
testing.
We consider that our procedures are sufficient to detect irregularities, including fraud, although they are
not designed specifically for the detection of irregularities. The primary responsibility for the prevention
and detection of irregularities including fraud rests with both those charged with governance and
management. As with any audit, there remains a risk of non-detection of irregularities, as these may involve
collusion, forgery, intentional omissions, misrepresentations or the override of internal controls. The risks
of material misstatement that had the greatest effect on our audit, including fraud, are discussed under
“Audit Approach” within this report.
A further description of our responsibilities is available on the Financial Reporting Council’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our Auditor’s Report.
Other matters which we are required to address
Following the recommendation of the Audit Committee, we were appointed by the Board on 13 October
2017 to audit the financial statements for the year ending 30 April 2018 and subsequent financial periods.
The period of total uninterrupted engagement including previous renewals and reappointments of the firm
is 16 years, covering the years ending 2007 to 2022.
46
The non-audit services prohibited by the FRC’s Ethical Standard were not provided to the Group or the
Parent Company and we remain independent of the Group and Parent Company in conducting our audit.
Our audit opinion is consistent with the additional report to the audit committee.
Use of this report
This report is made solely to the Company's members, as a body, in accordance with Chapter 3 of Part 16
of the Companies Act 2006. Our audit work has been undertaken so that we might state to the Company’s
members those matters we are required to state to them in an auditors’ report and for no other purpose.
To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the
Company and the Company’s members as a body, for our audit work, for this report, or for the opinions
we have formed.
Ryan Hancock (Senior Statutory Auditor)
For and on behalf of Hazlewoods LLP, Statutory Auditor
Cheltenham
29 June 2022
47
48
SECTION 3
Consolidated Statement of Comprehensive Income
for the year ended 30 April 2022
2022 2021
Revenue Capital Total Revenue Capital Total
Note £’000 £’000 £’000 £’000 £’000 £’000
(Losses)/gains on investments at fair
value through profit or loss 10 – (4,610 ) (4,610 ) – 23,110 23,110
Investment income 2 2,576 – 2,576 1,708 – 1,708
Investment management fee 3 (158 ) (473 ) (631 ) (124 ) (372 ) (496 )
Other expenses 4 (302 ) (12 ) (314 ) (280 ) (10 ) (290 )
Net (deficit)/surplus before finance
costs and taxation 2,116 (5,095 ) (2,979 ) 1,304 22,728 24,032
Finance costs 6 – (654 ) (654 ) – (630 ) (630 )
Net (deficit)/surplus before taxation 2,116 (5,749 ) (3,633 ) 1,304 22,098 23,402
Taxation 7 (32 ) – (32 ) (27 ) – (27 )
Total comprehensive (expense)/
income for the year 2,084 (5,749 ) (3,665 ) 1,277 22,098 23,375
Revenue Capital Total Revenue Capital Total
pence pence pence pence pence pence
Net return per:
Ordinary share 8 10.00 (27.57 ) (17.57 ) 6.12 105.99 112.11
Zero Dividend Preference share 2025 8 – 4.51 4.51 – 4.34 4.34
The total column of this statement is the Statement of Comprehensive Income of the Group prepared in
accordance with UK adopted IFRS 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 notes on pages 53 to 71 form part of these financial statements.
49
Consolidated and Parent Company Statement of
Changes in Net Equity
for the year ended 30 April 2022
Share Capital
Share premium
redemption
Capital Revenue
capital account reserve reserve reserve Total
Note £’000 £’000 £’000 £’000 £’000 £’000
Year ended 30 April 2022
30 April 2021 5,213 17,517 5,004 16,950 2,661 47,345
Total comprehensive (expense)/
income for the year – – – (5,749 ) 2,084 (3,665 )
Dividends paid 9 – – – – (2,298 ) (2,298 )
30 April 2022 5,213 17,517 5,004 11,201 2,447 41,382
Year ended 30 April 2021
30 April 2020 5,213 17,517 5,004 (5,148 ) 3,448 26,034
Total comprehensive income
for the year – – – 22,098 1,277 23,375
Dividends paid 9 – – – – (2,064 ) (2,064 )
30 April 2021 5,213 17,517 5,004 16,950 2,661 47,345
The notes on pages 53 to 71 form part of these financial statements.
50
Consolidated and Parent Company Balance Sheets
as at 30 April 2022
Group Group Company Company
2022 2021 2022 2021
Note £’000 £’000 £’000 £’000
Non-current assets
Investments at fair value through profit or loss 10 57,751 62,768 57,751 62,768
Investments in subsidiary 12 – – 13 13
Current assets
Trade and other receivables 13 520 757 520 757
Cash and cash equivalents 534 488 534 488
Total assets 58,805 64,013 58,818 64,026
Current liabilities
Trade and other payables 14 (237 ) (136 ) (250) (149)
(237 ) (136 ) (250) (149)
Total assets less current liabilities 58,568 63,877 58,568 63,877
Non-current liabilities
Zero Dividend Preference shares 15 (17,186 ) (16,532 ) – –
Loan from subsidiary 16 – – (17,186) (16,532)
(17,186 ) (16,532 ) (17,186) (16,532)
Total liabilities (17,423 ) (16,668 ) (17,436) (16,681)
Net assets 41,382 47,345 41,382 47,345
Represented by:
Share capital 17 5,213 5,213 5,213 5,213
Share premium account 18 17,517 17,517 17,517 17,517
Capital redemption reserve 18 5,004 5,004 5,004 5,004
Capital reserve 18 11,201 16,950 11,201 16,950
Revenue reserve 2,447 2,661 2,447 2,661
Equity shareholders’ funds 41,382 47,345 41,382 47,345
The notes on pages 53 to 71 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 June 2022.
Lord Lamont of Lerwick
Chairman
Company Registered Number: 03749536
51
52
Consolidated and Parent Company Statement of
Cash Flows
for the year ended 30 April 2022
2022 2021
Note £’000 £’000
Operating activities
Investment income received 2,370 1,447
Investment management fee paid (643 ) (469 )
Administration and secretarial fees paid (67 ) (64 )
Other cash payments (236 ) (210 )
Cash generated from operations 19 1,424 704
Purchases of investments (8,795 ) (9,266 )
Sales of investments 9,715 9,848
Net cash inflow from operating activities 2,344 1,286
Financing activities
Dividends paid 9 (2,298 ) (2,064 )
Net cash outflow from financing activities (2,298 ) (2,064 )
Change in cash and cash equivalents 20 46 (778 )
Cash and cash equivalents at start of year 20 488 1,266
Cash and cash equivalents at end of year 20 534 488
The notes on pages 53 to 71 form part of these financial statements.
Notes to the Financial Statements
as at 30 April 2022
1 ACCOUNTING POLICIES
Chelverton UK Dividend Trust PLC is a public company , limited by shares, domiciled and registered in
the UK
statements of the Company and its subsidiary SDV 2025 ZDP plc (SDVP) (together referred to as the
‘Group’).
Basis of preparation
The consolidated financial statements of the Group and the financial statements of the Company have
been prepared in accordance with UK adopted International Financial Reporting Standards (‘UK adopted
IFRS’) 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 IFRS 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 £3,665,000 (2021: profit of £23,375,000).
53
Notes to the Financial Statements (continued)
as at 30 April 2022
1 ACCOUNTING POLICIES (continued)
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 April 2021) is consistent with the requirements of UK adopted IFRS, the
Directors have sought to prepare the financial statements on a consistent basis compliant with the
recommendations of the SORP.
Segmental reporting
The Directors are of the opinion that the Group is engaged in a single segment of business, being
investment business. The Group only invests in companies listed in the UK.
Investments
All investments held by the Group are recorded at ‘fair value through profit or loss’. Investments are
initially recognised at cost, being the fair value of the consideration given.
After initial recognition, investments are measured at fair value, with unrealised gains and losses on
investments and impairment of investments recognised in the Consolidated Statement of
Comprehensive Income and allocated to capital. Realised gains and losses on investments sold are
calculated as the difference between sales proceeds and cost.
For investments actively traded in organised financial markets, fair value is generally determined by
reference to quoted market bid prices at the close of business on the Balance Sheet date, without
adjustment for transaction costs necessary to realise the asset.
Trade date accounting
All ‘regular way’ purchases and sales of financial assets are recognised on the ‘trade date’, i.e. the day
that the Group commits to purchase or sell the asset. Regular way purchases, or sales, are purchases or
sales of financial assets that require delivery of the asset within a time frame generally established by
regulation or convention in the market place.
Income
Dividends receivable on quoted equity shares are taken into account on the ex-dividend date. Where
no ex-dividend date is quoted, they are brought into account when the Group’s right to receive payment
is established. Other investment income and interest receivable are included in the financial statements
on an accruals basis. 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;
54
1 ACCOUNTING POLICIES (continued)
• expenses are charged to capital reserve where a connection with the maintenance or enhancement
of the value of the investments can be demonstrated; and
• operating expenses of the subsidiary are borne by the Company and taken 100% to capital.
All other expenses are allocated to revenue with the exception of 75% (2021: 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.
55
Notes to the Financial Statements (continued)
as at 30 April 2022
1 ACCOUNTING POLICIES (continued)
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.
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
2022 2021
£’000 £’000
Income from listed investments
UK dividend income 2,179 1,381
Overseas dividend income 290 233
Property income distributions 107 94
Total income 2,576 1,708
Total income is comprised entirely of dividends.
3 INVESTMENT MANAGEMENT FEE
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Investment management fee 158 473 631 124 372 496
At 30 April 2022 there were amounts outstanding of £73,000 (2021: £86,000).
56
4 OTHER EXPENSES
2022 2021
£’000 £’000
Administration and secretarial fees 66 64
Directors’ remuneration (note 5) 58 58
Auditor’s remuneration:
audit services* 23 22
Insurance 3 3
Other expenses* 164 143
314 290
Subsidiary operating costs (12) (10)
302 280
* The above amounts include irrecoverable VAT where applicable.
5 DIRECTORS’ REMUNERATION
2022 2021
£ £
Directors’ fees 57,500 57,500
Social security costs 275 297
57,775 57,797
Remuneration to Directors
Lord Lamont (Chairman) 20,000 20,000
H Myles 20,000 20,000
W van Heesewijk* – –
A Watkins 17,500 17,500
57,500 57,500
* Mr van Heesewijk has waived his entitlement to fees.
6 FINANCE COSTS
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Appropriations in respect of
Zero Dividend Preference shares – 654 654 – 630 630
– 654 654 – 630 630
57
Notes to the Financial Statements (continued)
as at 30 April 2022
7 TAXATION
2022 2021
£’000 £’000
Based on the revenue return for the year
Overseas tax 32 27
32 27
The current tax charge for the year is lower than the standard rate of corporation tax in the UK of 19%
to 30 April 2022 and 30 April 2021. The differences are explained below:
2022 2021
Revenue Capital Total Revenue Capital Total
£’000 £’000 £’000 £’000 £’000 £’000
Return on ordinary activities before
taxation 2,116 (5,749) (3,633) 1,304 22,098 23,402
Theoretical corporation tax at 19% (2021: 19%)
402 (1,092) (690) 248 4,198 4,446
Effects of:
Capital items not taxable – 1,000 1,000 – (4,271) (4,271)
UK and overseas dividends which are
not liable to UK corporation tax (469) – (469) (307) – (307)
Excess expenses in the year 67 92 159 59 73 132
Overseas tax 32 – 32 27 – 27
Actual current tax charged to the
revenue account 32 – 32 27 – 27
The Group has unrelieved excess expenses of £24,105,279 (2021: £23,268,343). 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.
58
8 RETURN PER SHARE
Ordinary shares
Revenue return per Ordinary share is based on revenue on ordinary activities after taxation of £2,084,000
(2021: £1,277,000) and on 20,850,000 (2021: 20,850,000) Ordinary shares, being the weighted average
number of Ordinary shares in issue during the year.
Capital return per Ordinary share is based on the capital loss of £5,749,000 (2021: profit of £22,098,000)
and on 20,850,000 (2021: 20,850,000) Ordinary shares, being the weighted average number of Ordinary
shares in issue during the year.
Zero Dividend Preference shares
Capital return per Zero Dividend Preference share 2025 is based on allocations from the Company of
£654,000 (2021: £630,000) and on 14,500,000 (2021: 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
2022 2021
£’000 £’000
Declared and paid per Ordinary share
Fourth interim dividend for the year ended
30 April 2021 of 2.50p (2020: 2.40p) 521 500
Special dividend for the year ended
30 April 2021 of 0.272p (2020: nil) 57 –
First interim dividend of 2.75p (2021: 2.50p) 573 521
Second interim dividend of 2.75p (2021: 2.50p) 573 521
Third interim dividend of 2.75p (2021: 2.50p) 574 522
2,298 2,064
Declared per Ordinary share*
Fourth interim dividend for the year ended
30 April 2022 of 2.75p (2021: 2.50p) 574 521
Special Dividend for the year ended
30 April 2022 of nil (2021: 0.272p) – 57
574 578
All dividends are paid from Revenue Reserve.
* Dividend paid subsequent to the year end.
59
Notes to the Financial Statements (continued)
as at 30 April 2022
10 INVESTMENTS – Group and Company
2022
Listed AIM Total
£’000 £’000 £’000
Year ended 30 April 2022
Opening book cost 37,344 27,884 65,228
Opening investment holding (losses)/gains (3,571) 1,111 (2,460)
Opening valuation 33,773 28,995 62,768
Movements in the year:
Purchases at cost 3,975 4,924 8,899
Disposals:
Proceeds (5,285) (4,021) (9,306)
Net realised losses on disposals (840) (1,269) (2,109)
Increase in investment holding losses (1,788) (713) (2,501)
Closing valuation 29,835 27,916 57,751
Closing book cost 35,194 27,518 62,712
Closing investment holding (losses)/gains (5,359) 398 (4,961)
29,835 27,916 57,751
Realised losses on disposals (840) (1,269) (2,109)
Increase in investment holding losses (1,788) (713) (2,501)
Losses on investments (2,628) (1,982) (4,610)
60
10 INVESTMENTS – Group and Company (continued)
2021
Listed AIM Total
£’000 £’000 £’000
Year ended 30 April 2021
Opening book cost 42,746 22,319 65,065
Opening investment holding losses (18,359) (6,118) (24,477)
24,387 16,201 40,588
Investments transferred between Listed and AIM
during the year (2,418) 2,418 –
Movements in the year:
Purchases at cost 3,534 5,732 9,266
Disposals:
Proceeds (6,977) (3,219) (10,196)
Net realised gains on disposals 459 633 1,092
Decrease in investment holding losses 14,788 7,230 22,018
Closing valuation 33,773 28,995 62,768
Closing book cost 37,344 27,884 65,228
Closing investment holding (losses)/gains (3,571) 1,111 (2,460)
33,773 28,995 62,768
Realised gains on disposals 459 633 1,092
Decrease in investment holding losses 14,788 7,230 22,018
Gains on investments 15,247 7,863 23,110
Transaction costs
During the year the Group incurred transaction costs of £20,000 (2021: £24,000) and £12,000 (2021:
£14,000) 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 2022:
Name of issuer Class of share % held
RTC Group plc Ordinary 10.00
Coral Products plc Ordinary 8.90
Chamberlin plc Ordinary 8.52
Orchard Funding Group plc Ordinary 5.85
Vector Capital Group plc Ordinary 3.34
61
Notes to the Financial Statements (continued)
as at 30 April 2022
12 INVESTMENT IN SUBSIDIARY
Company Company
2022 2021
£’000 £’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
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Amounts due from brokers 46 455 46 455
Dividends receivable 464 290 464 290
Prepayments and accrued income 10 12 10 12
520 757 520 757
14 TRADE AND OTHER PAYABLES
Group Group Company Company
2022 2021 2022 2021
£’000 £’000 £’000 £’000
Amounts due to brokers 104 – 104 –
Trade and other payables 133 136 133 136
Loan from subsidiary undertaking – – 13 13
237 136 250 149
62
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 the 10 May 2018 and 15
May 2018, SDVP issued a further 100,000 and 200,000 Zero Dividend Preference shares at 104p per
share (a premium of 4p per share), and net proceeds of £313,000. 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, a total of £19,311,000. The accrued entitlement as per the Articles
of Association of SDVP at 30 April 2022 was 118.52p (2021: 114.01p) per share, being £17,186,000 in
total, and the total amount accrued for the year of £654,000 (2021: £630,000) has been charged as a
finance cost to capital.
16 SECURED 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 £10,978,000 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 the 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 £654,000 (2021: £630,000).
63
Notes to the Financial Statements (continued)
as at 30 April 2022
16 SECURED LOAN (continued)
2022 2021
£’000 £’000
Value at 1 May 16,532 15,902
Contribution to accrued capital entitlement of Zero
Dividend Preference shares 2025 654 630
17,186 16,532
17 SHARE CAPITAL
2022 2021
Number £’000 Number £’000
Issued, allotted and fully paid:
Ordinary shares of 25p each
Opening balance 20,850,000 5,213 20,850,000 5,213
20,850,000 5,213 20,850,000 5,213
No Ordinary shares were issued in the year.
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.
Voting
Each holder of Ordinary shares on a show of hands will have one vote and, on a poll, will have one vote
for each Ordinary share held. Each holder of Zero Dividend Preference shares on a show of hands will
have one vote at meetings where Zero Dividend Preference shareholders are entitled to vote and, on
a poll, will have one vote for every Zero Dividend Preference share held.
64
17 SHARE CAPITAL (continued)
Duration
Under the Parent Company’s Articles of Association, the Directors are required to convene a General
Meeting of the Company to be held in April 2025 so as to align the vote with any timetable for a further
issue of Zero Dividend Preference shares or to save costs by proposing the Continuation Resolution (as
defined below) at the Annual General Meeting or some other General Meeting of the Company (‘the
First GM’), at which an Ordinary Resolution will be proposed to the effect that the Company continues
in existence (‘the Continuation Resolution’). In the event that such Resolution is not passed, the Directors
shall, subject to the Statutes, put forward further proposals to shareholders regarding the future of the
Company (which may include voluntary liquidation, unitisation or other reorganisation of the Company)
(‘the Restructuring Resolution’) at a General Meeting of the Company to be convened not more than
four months after the date of the First GM (or such adjournment).
The Restructuring Resolution shall be proposed as a Special Resolution. If the Restructuring Resolution
is either not proposed or not passed then the Directors shall convene a General Meeting not more than
four months after the date of the First GM (or such adjournment). If the Restructuring Resolution is not
proposed or four months after the date the Restructuring Resolution is not passed, an Ordinary
Resolution pursuant to Section 84 of the Insolvency Act 1986 to voluntarily wind up the Company shall
be put to shareholders and the votes taken on such Resolution shall be on a poll.
18 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 assets Net assets
Net asset attributable to Net asset attributable to
value per share shareholders value per share shareholders
2022 2022 2021 2021
pence £’000 pence £’000
Ordinary shares 198.47 41,382 227.07 47,345
Zero Dividend Preference shares 118.52 17,186 114.01 16,532
The net asset value per Ordinary share is calculated on 20,850,000 (2021: 20,850,000) 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 (2021: 14,500,000)
Zero Dividend Preference shares, being the number of Zero Dividend Preference shares in issue at the
year end.
65
Notes to the Financial Statements (continued)
as at 30 April 2022
19 RECONCILIATION OF NET RETURN BEFORE AND AFTER TAXATION
TO CASH GENERATED FROM OPERATIONS – Group and Company
2022 2021
£’000 £’000
Net (deficit)/surplus before taxation (3,633) 23,402
Taxation (32) (27)
Net (deficit)/surplus after taxation (3,665) 23,375
Net capital return 5,749 (22,098)
Increase in receivables (172) (223)
(Decrease)/increase in payables (3) 32
Interest and expenses charged to the capital reserve (485) (382)
Net cash inflow from operating activities 1,424 704
20 RECONCILIATION OF NET CASH FLOW TO MOVEMENT
IN NET CASH – Group and Company
2022 2021
£’000 £’000
Increase in cash in year 46 (778)
Net cash at bank
(including those held by custodians) at 1 May 488 1,266
Net cash at bank
(including those held by custodians) at 30 April 534 488
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES
Objectives, policies and strategies
The Group primarily invests in mid and small capitalised companies. All of the Group’s investments
comprise ordinary shares in companies listed on the Official List and companies admitted to AIM.
The Group finances its operations through Zero Dividend Preference shares issued by SDVP and equity.
Cash, liquid resources and short-term debtors and creditors arise from the Group’s day-to-day
operations.
It is, and has been throughout the year under review, the Group’s policy that no trading in financial
instruments shall be undertaken.
66
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES (continued)
Objectives, policies and strategies (continued)
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:
2022 2021
£’000 £’000
Fair value through profit or loss investments 57,751 62,768
Sensitivity analysis
A 10% increase in the market value of investments at 30 April 2022 would have increased net assets by
£5,775,000 (2021: £6,277,000). 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.
67
Notes to the Financial Statements (continued)
as at 30 April 2022
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES (continued)
Interest rate risk (continued)
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 2022 of financial assets and financial liabilities to interest rate risk is limited to
cash and cash equivalents of £534,000 (2021: £488,000). Cash and cash equivalents are all due within
one year.
Credit risk
Credit risk is the risk of financial loss to the Group if the contractual party to a financial instrument fails
to meet its contractual obligations.
The carrying amounts of financial assets best represent the maximum credit risk exposure at the Balance
Sheet date.
Listed investments are held by Jarvis Investment Management Limited acting as the Company’s
custodian. Bankruptcy or insolvency of the custodian may cause the Company’s rights with respect to
securities held by the custodian to be delayed. The Board monitors the Group’s risk by reviewing the
custodian’s internal controls reports.
Investment transactions are carried out with a number of brokers whose creditworthiness is reviewed
by the Investment Manager. Transactions are ordinarily undertaken on a delivery versus payment basis
whereby the Company’s custodian bank ensures that the counterparty to any transaction entered into
by the Group has delivered in its obligations before any transfer of cash or securities away from the
Group is completed.
Cash is only held at banks that have been identified by the Board as reputable and of high credit quality.
The maximum exposure to credit risk as at 30 April 2022 was £58,805,000 (2021: £64,013,000). The
calculation is based on the Group’s credit risk exposure as at 30 April 2022 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 liabilities that fall due for payment in more than one year. All
other payables are due in less than one year.
68
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES (continued)
Financial instruments by category
The financial instruments of the Group fall into the following categories:
30 April 2022 Assets at
fair value
through
At Loans and profit
cost receivables or loss Total
£’000 £’000 £’000 £’000
Assets as per Balance Sheet
Investments – – 57,751 57,751
Trade and other receivables – 520 – 520
Cash and cash equivalents 534 – – 534
Total 534 520 57,751 58,805
Liabilities as per Balance Sheet
Trade and other payables 237 – – 237
Zero Dividend Preference shares – 17,186 – 17,186
Total 237 17,186 – 17,423
30 April 2021 Assets at
fair value
through
At Loans and profit
cost receivables or loss Total
£’000 £’000 £’000 £’000
Assets as per Balance Sheet
Investments – – 62,768 62,768
Trade and other receivables – 757 – 757
Cash and cash equivalents 488 – – 488
Total 488 757 62,768 64,013
Liabilities as per Balance Sheet
Trade and other payables 136 – – 136
Zero Dividend Preference shares – 16,532 – 16,532
Total 136 16,532 – 16,668
69
Notes to the Financial Statements (continued)
as at 30 April 2022
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES (continued)
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.
70
21 ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES (continued)
IFRS 7 hierarchy (continued)
Investments whose values are based on quoted market prices in active markets, and therefore classified
within Level 1, include active listed equities. The Company does not adjust the quoted price for these
investments.
Financial instruments that trade in markets that are not considered to be active but are valued based
on quoted market prices, dealer quotations or alternative pricing sources supported by observable
inputs are classified within Level 2.
Investments classified within Level 3 have significant unobservable inputs. Level 3 instruments include
private equity and corporate debt securities. As observable prices are not available for these securities,
the Company has used valuation techniques to derive the fair value.
The Company has no Level 2 or Level 3 investments (2021: same).
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 do not have any
loans and the Directors do not intend to have any loans or borrowings.
23 POST BALANCE SHEET EVENTS
There are no post balance sheet events.
71
Shareholder Information
Financial calendar
Group’s year end 30 April
Quarterly interim dividends usually paid July, October, January and April
Annual results announced June
Annual General Meeting September
Group’s half year 31 October
Half year results announced December
Share prices and performance information
The Company’s Ordinary shares and the Zero Dividend Preference shares issued through SDVP are listed
on the London Stock Exchange Main Market.
The net asset values are announced daily to the London Stock Exchange and published monthly via the
AIC.
Information about the Group can be obtained on the Chelverton website at www.chelvertonam.com. Any
enquiries can also be e-mailed to [email protected].
C Share Conversion Ratio
On 26 January 2018 the Company converted its entire issued C share capital (5,500,000 C Shares) into new
Ordinary shares. The conversion ratio was 0.36051421 Ordinary shares in respect of each C share, with
entitlements rounded down to the nearest whole number.
Share register enquiries
The register for the Ordinary shares and the Zero Dividend Preference shares are maintained by Share
Registrars Limited. In the event of queries regarding your holding, please contact the Registrar on 01252
821390. Changes of name and/or address must be notified in writing to the Registrar.
72
Company Summary
History
The Company was launched on 12 May 1999, raising £21.38 million before expenses, by a placing of
15,000,000 Ordinary shares and, through its former subsidiary company, Small Companies PLC, 6,250,000 Zero
Dividend Preference shares and 31,260 Preference shares. A further 750,000 Ordinary shares were issued as a
result of a placing for cash on 3 March 2000 and on 26 October 2005 a further 500,000 shares were issued.
The subsidiary, Small Companies PLC, was placed into members’ voluntary liquidation on 30 April 2007,
following which the capital entitlements of the Zero Dividend Preference and Preference shares were repaid
to those investors.
A further subsidiary, Chelverton Small Companies ZDP PLC, was incorporated on 13 July 2012, to issue
Zero Dividend Preference shares. A total of 8,500,000 Zero Dividend Preference shares were issued on 24
August 2012, and a further 849,000 on 24 March 2017. This subsidiary was placed into members’ voluntary
liquidation on 5 January 2018, following which the capital entitlements of the Zero Dividend Preference
shares were repaid.
Group structure
The Company has in issue one class of Ordinary share. In addition, it has a wholly owned subsidiary, SDVP,
through which Zero Dividend Preference shares have been issued. SDVP was incorporated on 25 October
2017 and has a capital structure comprising unlisted Ordinary shares and Zero Dividend Preference shares
listed on the Official List and traded on the London Stock Exchange. SDVP was incorporated specifically
for the issue of Zero Dividend Preference shares.
On 8 March 2018, SDVP issued 12,780,083 Zero Dividend Preference shares at 100p per share. The
expenses of the placing were borne by the Company. 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
£1,500,000. On 10 and 15 May 2018, SDVP issued a further 100,000 and 200,000 Zero Dividend Preference
shares at 104p per share (a premium of 4p per share), and net proceeds of £313,000. Pursuant to a loan
agreement between SDVP and the Company, SDVP has lent the proceeds of the placing to the Company.
The loan is non-interest bearing and is repayable three business days before the Zero Dividend Preference
share redemption date of 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.
A contribution agreement between the Company and SDVP has also been made whereby the Company
will undertake to contribute such funds as will 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.
Total net assets and market capitalisation at year end
As at 30 April 2022, the Company had a market capitalisation of £40,136,000 (2021: £45,870,000) and total
net assets amounted to £41,382,000 (2021: £47,345,000).
Management fee
The fee payable to the Investment Manager is 1% of the combined gross assets of the Group.
Capital structure
Details of share structure and entitlements and voting rights of each class can be found on pages 74 and 75.
ISA status
The Company’s Ordinary shares are qualifying investments for Individual Savings Accounts (‘ISAs’), as are
the Zero Dividend Preference shares of SDVP.
Registered in England
No. 03749536
A member of the Association of Investment Companies
73
Capital Structure
Chelverton UK Dividend Trust PLC (‘the Company’)
Chelverton UK Dividend Trust PLC was registered on 3 September 2003 with company number 03749536.
The Company has in issue one class of Ordinary share. In addition, it has a wholly owned subsidiary, SDV
2025 ZDP PLC, which was registered on 25 October 2017 with company number 11031268, through which
Zero Dividend Preference shares have been issued.
Ordinary shares of 25p each (‘Ordinary shares’) – 20,850,000 in issue as at 30 April 2022
Share Capital Events
No Ordinary shares were issued during the year. The Company has only one class of share and this figure
represents 100% of the Company’s share capital and voting rights.
Dividends
Holders of Ordinary shares are entitled to dividends.
Capital
On a winding up of the Company, Ordinary shareholders will be entitled to all surplus assets of the Company
available after payment of the Company’s liabilities, including the full and final capital entitlement of the
Zero Dividend Preference shares.
Voting
Each holder on a show of hands will have one vote and on a poll will have one vote for each Ordinary
share held.
SDV 2025 ZDP PLC (‘SDVP’)
Ordinary shares of 100p each (‘ordinary shares’) – 50,000 in issue (partly paid up as to 25p each)
The ordinary shares in the subsidiary are owned by the Company. References to Ordinary shares within this
Annual Report are to the Ordinary shares of Chelverton UK Dividend Trust PLC.
Capital
Following payment of any liabilities and the capital entitlement to the Zero Dividend Preference
shareholders, ordinary shareholders are entitled to any surplus assets of SDVP.
Voting
Each holder on a show of hands will have one vote and on a poll will have one vote for each ordinary
share held.
Zero Dividend Preference shares of 100p each – 14,500,000 in issue as at 30 April 2022
Share Capital Events
No Zero Dividend Preference shares were issued during the year.
Dividends
Holders of Zero Dividend Preference shares are not entitled to dividends.
74
Capital
On a winding up of SDVP, after the satisfaction of prior ranking creditors and subject to sufficient assets
being available, Zero Dividend Preference shareholders are entitled to an amount equal to 100p share
(increased daily from 8 January 2019 at such compound rate, equivalent to 4%, as will give an entitlement
to 133.18p per share at 30 April 2025).
Voting
Each holder of Zero Dividend Preference shares on a show of hands will have one vote at meetings where
Zero Dividend Preference shareholders are entitled to vote and on a poll will have one vote for every Zero
Dividend Preference share held.
Holders of Zero Dividend Preference shares are not entitled to attend, speak or vote at General Meetings
unless the business of the meeting includes a resolution to vary, modify or abrogate the rights attached to
the Zero Dividend Preference shares.
75
Glossary of Terms
Net asset value (‘NAV’)
The NAV is shareholders’ funds expressed as an amount per individual share. Shareholders’ funds are the
total value of all the Company’s assets, at current market value, having deducted all prior charges at their
par value (or at their asset value).
Discount/Premium
If the share price of an investment trust is lower than the NAV per share, the shares are said to be trading
at a discount. The size of the discount is calculated by subtracting the share price from the NAV per share
and is usually expressed as a percentage of the NAV per share. If the share price is higher than the NAV
per share, the shares are said to be trading at a premium.
Gearing
Gearing is the process whereby changes in the total assets of a company have an exaggerated effect on
the net assets of that company’s ordinary shares due to the presence of borrowing or share classes with a
prior ranking entitlement to capital.
Ongoing charges
The total expenses incurred by a company, including those charged to capital (excluding performance fee
and finance costs and exceptional costs) as a percentage of average quarterly net assets.
Total return
The combined effect of any dividends paid, together with the rise or fall in the share price or NAV. Total
return statistics enable the investor to make performance comparisons between trusts with different
dividend policies. Any dividends (after tax) received by a shareholder are assumed to have been reinvested
in either additional shares of the trust at the time the shares go ex-dividend (the share price total return)
or in the assets of the trust at its NAV per share (the NAV total return).
76
Directors and Advisers
Directors Lord Lamont of Lerwick (Chairman)
William van Heesewijk (Retired on 30 April 2022)
Howard Myles
Andrew Watkins
Denise Hadgill (Appointed on 1 May 2022)
Investment Manager Chelverton Asset Management Limited
11 Laura Place
Bath BA2 4BL
Tel: 01225 483030
Secretary and Maitland Administration Services Limited
Registered Office Hamilton Centre
Tel: 01245 398950
Registrar and Share Registrars Limited
Transfer Office 3 Millennium Centre
Crosby Way
Farnham
Surrey GU9 7XX
Tel: 01252 821390
www.shareregistrars.uk.com
Auditors Hazlewoods LLP
Staverton Court
Staverton
Cheltenham, GL51 0UX
Brokers Shore Capital
Cassini House
57 St James’s Street
London SW1A 1LD
Custodian Jarvis Investment Management Limited
78 Mount Ephraim
Tunbridge Wells
Kent TN4 8BS
77
Chelverton UK Dividend Trust PLC
Notice of Annual General Meeting
This document is important and requires your immediate attention. If you are in any doubt as to what
action you should take, you are recommended to seek your own financial advice from your stockbroker or
other independent adviser authorised under the Financial Services and Markets Act 2000 immediately.
If you have sold or otherwise transferred all of your shares in Chelverton UK Dividend Trust PLC, please
forward this document as soon as possible to the purchaser or transferee or to the stockbroker, bank or
other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.
NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of the Company will be held at
11.00 am on Thursday, 8 September 2022 at the offices of Chelverton Asset Management, Basildon House,
7 Moorgate, London EC2R 6AF for the following purposes:
Ordinary Business – Resolutions 1 to 7 will be proposed as Ordinary Resolutions
1 To receive the Strategic Report, Directors’ Report and the audited financial statements for the year
ended 30 April 2022.
2 To receive and approve the Directors’ Remuneration Report for the year ended 30 April 2022.
3 To re-elect Mr Myles as a Director.
4 To re-elect Mr Watkins as a Director.
5 To elect Ms Hadgill as a Director
6 To re-appoint Hazlewoods as the Company’s Auditor.
7 To authorise the Directors to determine the remuneration of the Company’s Auditor.
Special Business
To consider and, if thought fit, to pass the following Resolutions of which Resolution 8 will be proposed as
an Ordinary Resolution and Resolutions 9 to 11 will be proposed as Special Resolutions:
8 THAT the Directors be and are hereby generally and unconditionally authorised pursuant to Section
551 of the Companies Act 2006 (‘the Act’) (in substitution for any existing allotment authorities, provided
that such substitution shall not have retrospective effect) to exercise all the powers of the Company to
allot shares and to grant rights to subscribe for, or to convert any security into, shares in the Company
(‘the Rights’) up to an aggregate nominal value equal to £781,875, being 15% of the issued Ordinary
share capital as at 28 June 2022, during the period commencing on the date of the passing of this
Resolution and expiring (unless previously renewed, varied or revoked by the Company in general
meeting) at the conclusion of the Annual General Meeting of the Company to be held in 2023, or 15
months from the passing of this Resolution, whichever is earlier (the ‘Period of Authority’), but so that
the Directors may, at any time prior to the expiry of the Period of Authority, make offers or agreements
which would or might require shares to be allotted and/or Rights to be granted after the expiry of the
Period of Authority and the Directors may allot shares or grant Rights in pursuance of such offers or
agreements as if the authority had not expired.
9 THAT, subject to the passing of Resolution 8 above, the Directors of the Company be and they are
hereby empowered pursuant to Section 570 and Section 573 of the Act to allot equity securities (within
the meaning of Section 560 of the Act) or sell shares held in Treasury (within the meaning of Section
560(3) of the Act) for cash pursuant to the authority conferred by Resolution 8 above as if Section 561(1)
of the Act did not apply to any such allotment, provided that this power shall be limited to:
78
a) the allotment of equity securities in connection with a rights issue, open offer or any other offer in
favour of Ordinary shareholders where the equity securities respectively attributable to the interests
of all Ordinary shareholders are proportionate (as nearly as may be) to the respective number of
Ordinary shares held by them subject to such exclusions or other arrangements as the Directors may
deem fit to deal with fractional entitlements, record dates, legal, regulatory or practical problems
arising under the laws of any overseas territory or the requirements of any regulatory authority or
any stock exchange; and
b) to the allotment (otherwise than pursuant to paragraph (a) above) of equity securities up to 10% of
the issued Ordinary share capital, representing 2,085,000 Ordinary shares as at 28 June 2022.
and shall expire at the conclusion of the Annual General Meeting of the Company to be held in 2023,
or 15 months from the passing of this Resolution, whichever is earlier, save that the Company may before
such expiry make offers, agreements or arrangements which would or might require equity securities
to be allotted after such expiry and so that the Directors of the Company may allot equity securities in
pursuance of such offers, agreements or arrangements as if the power conferred hereby had not expired.
10 THAT the Company is hereby generally and unconditionally authorised in accordance with Section 701
of the Act to make market purchases (within the meaning of Section 693(4) of the Act) of Ordinary
shares of 25p each in the capital of the Company (‘Ordinary shares’) for cancellation or for placing into
Treasury provided that:
a) the maximum aggregate number of Ordinary shares authorised to be acquired is 3,125,415, or if
less, 14.99% of the Ordinary shares in issue and in circulation immediately following the passing of
this Resolution;
b) the minimum price which may be paid for each Ordinary share is 25p (exclusive of expenses);
c) the maximum price which may be paid for each Ordinary share is, in respect of a share contracted
to be purchased on any day, an amount which shall not be more than the higher of (i) 5% above the
average of the middle market quotations (as derived from the Daily Official List of the London Stock
Exchange) of the Ordinary shares for the five business days immediately preceding the date on which
the Ordinary share is purchased, and (ii) the higher of the price of the last independent trade and
the highest current independent bid on the London Stock Exchange;
d) this authority will (unless renewed) expire at the conclusion of the next Annual General Meeting of
the Company or, if earlier, 15 months from the date on which this Resolution is passed; and
e) any Ordinary shares bought back under the authority hereby granted may, at the discretion of the
Directors, be cancelled or held in treasury and, if held in treasury, may be cancelled at the discretion
of the Directors.
11 THAT a general meeting, other than an annual general meeting, may be called on not less than 14 clear
days’ notice.
By order of the Board Registered office:
Maitland Administration Services Limited Hamilton Centre
Secretary Rodney Way
29 June 2022 Chelmsford CM1 3BY
79
Notice of Annual General Meeting (continued)
Explanatory notes to the notice of meeting
Ordinary shareholders have the right to attend, speak and vote at the forthcoming Annual General
Meeting or at any adjournment(s) thereof. In order to exercise all or any of these rights you should read
the following explanatory notes to the business of the Annual General Meeting.
Notes
1. A member entitled to attend, vote and speak at this meeting may appoint one or more persons as his/her proxy to
attend, speak and vote on his/her behalf at the meeting. A proxy need not be a member of the Company. If multiple
proxies are appointed they must not be appointed in respect of the same shares. To be effective, the enclosed proxy
form, together with any power of attorney or other authority under which it is signed or a certified copy thereof,
should be lodged at the office of the Company’s Registrar, Share Registrars Limited, 3 The Millennium Centre, Crosby
Way, Farnham, Surrey GU9 7XX not later than 48 hours before the time of the meeting. The appointment of a proxy
will not prevent a member from attending the meeting and voting and speaking in person if he/she so wishes. A
member present in person or by proxy shall have one vote on a show of hands and on a poll shall have one vote for
every Ordinary share of which he/she is the holder.
In the case of joint holders of a share, the vote of the senior who tenders a vote, whether in person or by proxy, shall
be accepted to the exclusion of the vote or votes of the other joint holder or holders, and seniority shall be
determined by the order in which the names of the holders stand in the register.
Any question relevant to the business of the Annual General Meeting may be asked at the meeting by anyone
permitted to speak at the meeting. You may alternatively submit your question in advance by letter addressed to
the Company Secretary at the registered office.
2.
A person to whom this notice is sent who is a person nominated under Section 146 of the Companies Act 2006 to enjoy
information rights (a ‘Nominated Person’) may, under an agreement between him/her and the shareholder by whom
he/she was nominated, have a right to be appointed (or to have someone else appointed) as a proxy for the Annual
General Meeting. If a Nominated Person has no such proxy appointment right or does not wish to exercise it, he/she
may, under any such agreement, have a right to give instructions to the shareholder as to the exercise of voting rights.
3.
The statements of the rights of members in relation to the appointment of proxies in Note 1 above do not apply to
a Nominated Person. The rights described in that Note can only be exercised by registered members of the Company.
4. As at 28 June 2022 (being the last business day prior to the publication of this notice) the Company’s issued share
capital amounted to 20,850,000 Ordinary shares carrying one vote each.
5.
The Company specifies that only those Ordinary shareholders registered on the Register of Members of the Company
as at 11.00 am on 6 September 2022 (or in the event that the meeting is adjourned, only those Ordinary shareholders
registered on the Register of Members of the Company as at 11.00 am on the day which is 48 hours prior to the
adjourned meeting) shall be entitled to attend in person or by proxy and vote at the Annual General Meeting in
respect of the number of Ordinary shares registered in their name at that time. Changes to entries on the Register of
Members after that time shall be disregarded in determining the rights of any person to attend or vote at the meeting.
6. In accordance with Section 319A of the Companies Act 2006, the Company must cause any question relating to the
business being dealt with at the meeting put by a member attending the meeting to be answered. No such answer
need be given if:
a) to do so would:
i) interfere unduly with the preparation for the meeting; or
ii) involve the disclosure of confidential information;
b) the answer has already been given on a website in the form of an answer to a question; or
c) it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.
80
7. A person authorised by a corporation is entitled to exercise (on behalf of the corporation) the same powers as the
corporation could exercise if it were an individual member of the Company (provided, in the case of multiple
corporate representatives of the same corporate shareholder, they are appointed in respect of different shares owned
by the corporate shareholder or, if they are appointed in respect of those same shares, they vote those shares in the
same way). To be able to attend and vote at the meeting, corporate representatives will be required to produce,
prior to their entry to the meeting, evidence satisfactory to the Company of their appointment. Corporate
shareholders can also appoint one or more proxies in accordance with Note 1. On a vote on a Resolution on a show
of hands, each authorised person has the same voting rights to which the corporation would be entitled.
On a vote on a Resolution on a poll, if more than one authorised person purports to exercise a power in respect of
the same shares:
a) if they purport to exercise the power in the same way as each other, the power is treated as exercised in that way;
b) if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.
8. CREST members who wish to appoint a proxy or proxies by utilising the CREST electronic proxy appointment service
may do so for this meeting by following the procedures described in the CREST Manual. CREST personal members
or other CREST sponsored members, and those CREST members who have appointed a voting service provider(s),
should refer to their CREST sponsor or voting service provider(s), who will be able to take the appropriate action on
their behalf.
In order for a proxy appointment or instruction made by means of CREST to be valid, the appropriate CREST message
(a ‘CREST Proxy Instruction’) must be properly authenticated in accordance with Euroclear’s specifications and must
contain the information required for such instructions, as described in the CREST Manual. The message, in order to
be valid, must be transmitted so as to be received by the Company’s agent (ID 7RA36) by the latest time for receipt
of proxy appointments specified in Note 1 above. For this purpose, the time of receipt will be taken to be the time
(as determined by the timestamp applied to the message by the CREST Applications Host) from which the Company’s
agent is able to retrieve the message by enquiry to CREST in the manner prescribed by CREST. After this time, any
change of instructions to proxies appointed through CREST should be communicated to the appointee through
other means.
CREST members and, where applicable, their CREST sponsors or voting service providers, should note that Euroclear
does not make available special procedures in CREST for any particular messages. Normal system timings and
limitations will therefore apply in relation to the input of CREST Proxy Instructions. It is the responsibility of the
CREST member concerned to take (or, if the CREST member is a CREST personal member or sponsored member or
has appointed a voting service provider(s), to procure that his CREST sponsor or voting service provider(s) take(s))
such action as shall be necessary to ensure that a message is transmitted by means of the CREST system by any
particular time. In this connection, CREST members and, where applicable, their CREST sponsors or voting service
providers are referred, in particular, to those sections of the CREST Manual concerning practical limitations of the
CREST system and timings.
The Company may treat as invalid a CREST Proxy Instruction in the circumstances set out in Regulation 35(5)(a) of
the Uncertificated Securities Regulations 2001.
9. Shareholders should note that it is possible that, pursuant to requests made by shareholders of the Company under
Section 527 of the Companies Act 2006, the Company may be required to publish on a website a statement setting
out any matter relating to: (i) the audit of the Company’s accounts (including the Auditor’s Report and the conduct
of the audit) that are to be laid before the Annual General Meeting; or (ii) any circumstance connected with an auditor
of the Company ceasing to hold office since the previous meeting at which annual accounts and reports were laid in
accordance with Section 437 of the Companies Act 2006. The Company may not require the shareholders requesting
any such website publication to pay its expenses in complying with Sections 527 or 528 of the Companies Act 2006.
81
Notice of Annual General Meeting (continued)
Where the Company is required to place a statement on a website under Section 527 of the Companies Act 2006,
it must forward the statement to the Company’s auditor not later than the time when it makes the statement available
on the website. The business which may be dealt with at the Annual General Meeting includes any statement that
the Company has been required under Section 527 of the Companies Act 2006 to publish on a website.
10. Members satisfying the thresholds in Section 338 of the Companies Act 2006 may require the Company to give, to
members of the Company entitled to receive notice of the Annual General Meeting, notice of a Resolution which
those members intend to move (and which may properly be moved) at the Annual General Meeting. A Resolution
may properly be moved at the Annual General Meeting unless (i) it would, if passed, be ineffective (whether by reason
of any inconsistency with any enactment or the Company’s constitution or otherwise); (ii) it is defamatory of any person;
or (iii) it is frivolous or vexatious. A request made pursuant to this right may be in hard copy or electronic form, must
identify the Resolution of which notice is to be given, must be authenticated by the person(s) making it and must be
received by the Company not later than six weeks before the date of the Annual General Meeting.
11. Members satisfying the thresholds in Section 338A of the Companies Act 2006 may request the Company to include
in the business to be dealt with at the Annual General Meeting any matter (other than a proposed Resolution) which
may properly be included in the business at the Annual General Meeting. A matter may properly be included in the
business at the Annual General Meeting unless (i) it is defamatory of any person or (ii) it is frivolous or vexatious. A
request made pursuant to this right may be in hard copy or electronic form, must identify grounds for the request,
must be authenticated by the person(s) making it and must be received by the Company not later than six weeks
before the date of the Annual General Meeting.
12. The Annual Report incorporating this notice of Annual General Meeting and, if applicable, any members’ statements,
members’ Resolutions or members’ matters of business received by the Company after the date of this notice will
be available on the Company’s website www.chelvertonam.com.
13. None of the Directors has a contract of service with the Company.
82
83
Chelverton UK Dividend Trust PLC
Proxy Form
I/We (Block Capitals please) ............................................................................................................................
.........................................................................................................................................................................
being a member/members of the above-named Company, hereby appoint the Chairman of the Meeting
.........................................................................................................................................................................
as my/our proxy to vote for me/us on my/our behalf at the Annual General Meeting of the Company to be
held at 11.00 am at the offices of Chelverton Asset Management, Basildon House, 7 Moorgate, London
EC2R 6AF on Thursday, 8 September 2022 and at any adjournment thereof.
Signature .........................................................................................................................................................
Date ........................................................................................................................................................ 2022
Please indicate with an X in the spaces below how you wish your votes to be cast.
Please tick here to indicate that this proxy appointment is one of multiple appointments being made.
ORDINARY RESOLUTIONS
RESOLUTION 1 To receive the Strategic Report, Directors’ Report, Auditor’s
Report and the audited financial statements for the year ended
30 April 2022.
RESOLUTION 2 To receive and approve the Directors’ Remuneration Report,
for the year ended 30 April 2022.
RESOLUTION 3 To re-elect Mr Myles as a Director.
RESOLUTION 4 To re-elect Mr Watkins as a Director.
RESOLUTION 5 To elect Ms Hadgill as a Director.
RESOLUTION 6 To re-appoint Hazlewoods LLP as the Company’s Auditor.
RESOLUTION 7 To authorise the Directors to determine the remuneration of
the Company’s Auditor.
RESOLUTION 8 To authorise the allotment of shares.
SPECIAL RESOLUTIONS
RESOLUTION 9 To authorise the Directors to issue shares having disapplied
pre-emption rights.
RESOLUTION 10 Authority to buy back shares.
RESOLUTION 11 Authority to hold general meetings on 14 clear days’ notice.
continued over
FOR AGAINST
VOTE
WITHHELD
84
NOTES
1. All members are entitled to vote at the meeting by providing a form of proxy.
2. Members are strongly advised to appoint the Chairman of the meeting as their proxy. However, in accordance with the Companies
Act 2006 we are required to advise you that a member may appoint a proxy of his/her own choice. If such an appointment is made,
delete the words ‘the Chairman of the Meeting’ and insert the name of the person appointed proxy in the space provided.
3. If the appointor is a corporation, this form must be under its common seal or under the hand of some officer or attorney duly
authorised on behalf of that corporation.
4. In the case of joint holders, the signature of any one holder will be sufficient but the names of all the joint holders should be stated.
5. If this form is returned without any indication as to how the person appointed proxy shall vote, the proxy will exercise his/her
discretion as to how he/she votes or whether he/she abstains from voting.
6. To be valid, this form must be completed and deposited at the office of the Company’s Registrars not less than 48 hours before the
time fixed for holding the meeting or adjourned meeting. Only those Ordinary shareholders registered in the register of members
48 hours prior to the meeting shall be entitled to attend and vote at the meeting in respect of the number of Ordinary shares
registered in their name at that time. Changes to the register of members after that time shall be disregarded in determining the
rights of any person to attend and vote at the meeting.
7. A ‘vote withheld’ is not a vote in law and will not be counted in the calculation of the proportion of the votes for and against the
Resolution. The ‘vote withheld’ option is provided to enable you to instruct the registered holder to abstain from voting.
8. You are entitled to appoint more than one proxy provided that each proxy is appointed to exercise rights attached to a different
share or shares held by you. You may not appoint more than one proxy to exercise rights attached to any one share. To appoint
more than one proxy, (an) additional Proxy Form(s) may be obtained by contacting the Registrars’ helpline or you may photocopy
this form. Please indicate in the box next to the proxy holder’s name the number of shares in relation to which they are authorised
to act as your proxy. Please also indicate by ticking the box provided, if the proxy instruction is one of multiple instructions being
given. All forms must be signed and should be returned together in the same envelope.
9. The termination of the authority of a person to act as proxy must be notified to the Company’s Registrar in writing.
10. Please return this proxy form to Share Registrars Limited, 3 The Millennium Centre, Crosby Way, Farnham, Surrey GU9 7XX.
87
ASSET MANAGEMENT
CHELVERTON
C