Over the year to 31 August 2016, Chelverton Growth Trust’s NAV increased from 54.95p to 62.53p – an increase of 13.79% a significant outperformance over the Company’s benchmark index, the MSCI Small Cap UK Index which rose by 3.78%.
On the share price, the chairman says “It would be my reasonable expectation that the share price would trade around the NAV of the Company as reflected in the report and accounts (currently 62.53p). Therefore, I see no fundamental reason for the current 108% premium to the NAV to be maintained.”
The most important change to the portfolio was the sale of Parmenion Capital Partners LLP to Aberdeen Asset Management plc at the beginning of the year for GBP1.78m with a possible further payment, dependent on Parmenion’s performance, up to a maximum of GBP674,000. Taking the progress of Parmenion since the sale and the many factors that could possibly de-rail any earn-out being achieved, it was decided at this stage to include GBP100,000 in these accounts in respect of this possible future sum. They will continue to closely monitor performance against the earn-out criteria and revalue the asset accordingly.
This year they have sold the balance of the shareholding in IDOX plc which has been a major contributor to the fund over many years. They have reduced the holding in LPA plc as its share price has finally recognised its value as a specialist supplier to the manufacturers of railway rolling stock.
Additional investments were made in Touchstar plc, the new name for Belgravium Technologies plc, which, following its interim results has begun to see some recognition in the share price of the operational progress that has been made. Further investments were made in Petards plc and Lombard Risk Management plc both of which we expect to make good contributions to the growth of the fund in the current year.
A new unquoted investment was made in Pedalling Forth Limited, trading as VeloVixen. This young business supplies by an internet “shop” cycling clothing for women. As most people are aware, cycling is enjoying a massive growth in participation and the percentage increase in women cyclists is probably greater than that of the overall market. This funding is to finance additional marketing of the business as it develops.
The holding in Chelverton Asset Management Holdings Limited the company used to finance the MBO of Chelverton Asset Management, the Investment Manager of this fund, was again revalued upwards reflecting the growth in funds under management. The investment in Transflex Vehicle Rental was also increased, recognising the significant progress made; this was highlighted with the company coming third in a league table of the fastest growing North East companies. The holding in La Salle Education was written off to reflect the disappointing take up in their product by the market place.
CGW : Chelverton Growth says no reason for the premium to be maintained