Chelverton Growth Trust’s half year results for the six months ended 29 February 2016 show its Net Asset Value per share rising by 4.1% from 54.95p to 57.21p. This compares favourably to its benchmark indices, the AIM All-share index and the MSCI Small Cap UK, which declined by 5.1% and 2.7% respectively. The share price increased by over 16% during the period from 42.5p to 49.5p. In addition, since the period end, they have increased the value of two of the fund’s unquoted investments, Transflex Vehicle Rental and Anaxsys Technology, substantially. Consequently, the NAV per share has increased further to 61.73p at the end of March 2016. In response, the share price has increased to 62p very close to the underlying NAV.
The Board say Chelverton Growth Trust is entering a phase of maturity and shareholders should expect to see it become increasingly concentrated on a smaller number of investments. It is the Board’s intention to continue with the annual tender offer and cancellation of shares, which may, in the short-term, result in a higher level of volatility in the NAV of the company. In the longer term, they have faith in the businesses in which they are invested and expect long-term performance to be solid.
In line with the above policy, during the past six months further reductions have been made in the holding of IDOX and after the period end this investment was sold in its entirety. LPA was also reduced after a very strong share price performance. The holdings in Belgravium Technologies and La Salle Education were both increased in the period.
Following further growth of funds under management at Chelverton Asset Management, the Investment Managers of this fund, the valuation of this shareholding was increased again to reflect the company’s underlying performance. Excellent progress at Transflex Vehicle Rental led to an increase in the valuation by 50% which is in line with the price placed on shares by the Board of the company.
A new investment of £150,000 was made in Pedalling Forth Limited, trading as VeloVixen. The investment was part of a £500,000 development fundraising by the company. VeloVixen is a three-year old business which supplies women’s cycling clothing and accessories via the internet. The funds will be used to raise the profile of the business and to provide working capital.
The proceeds received following the sale of the fund’s largest investment Parmenion enabled us to eliminate borrowings and apply the cash to an offer for 24.99% of the outstanding shares in Chelverton Growth Trust.
This was the seventh tender offer. In the absence of any unexpected events, it is the Board’s intention to repeat the process at the same time next year based on the net asset value per share calculated at 28 February 2017. Following the seventh tender offer the number of shares acquired and cancelled is now 12,505,957 being a 66.2% reduction in the company’s original share capital.
Shareholders voted at the Annual General Meeting in December 2015 to flex the Investment Approach and to permit a reduction in the number of holdings. This change in policy recognises that future tender offers will make it likely that each year the number of investments will gradually reduce until at some point the Board will need to consider how to effect a final transfer of value to shareholders.
CGW : Chelverton boosted by unquoted write up