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Chelverton Growth Trust PLC

Half Yearly Report

for the six months ended 29 February 2016

The Directors announce the unaudited Half Yearly Report for the period from 1 September 2015 to 29 February 2016.

Investment objective and policy

The Company's objective is to provide capital growth through investment in companies listed on the Official List and traded on the Alternative Investment Market ("AIM") with a market capitalisation at the time of investment of up to £50 million, which the Manager believes to be at a "point of change". The Company will invest in unquoted investments where it is believed that there is a likelihood of the shares becoming listed or traded on AIM or the investee company being sold. Its objective is to increase the net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap Index.

It is the Company's policy not to invest in any listed investment companies or listed investment trusts.

Investment strategy

Investments are selected for the portfolio only after extensive research which the Investment Manager believes to be key. The whole process through which equity must pass in order to be included in the portfolio is very rigorous. Only a security where the Investment Manager believes that the price will be significantly higher in the future will pass the selection process. The Investment Manager believes the key to successful stock selection is to identify the long-term value of a company's shares and to have the patience to hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a company's earnings prospects over a five year time horizon.

The Company's Investment Manager is Chelverton Asset Management Limited, a specialist investment manager focusing exclusively on achieving returns for investors based on UK investment analysis of the highest quality. The founder and employee owners of Chelverton include experienced investment professionals with strong investment performance records who believe rigorous fundamental research allied to patience is the basis of long-term investment success.

Chairman's Report

Your Company has continued to make good progress in the first six months of the current year with the Net Asset Value ("NAV") per share rising by 4.1% from 54.95p to 57.21p. This compares favourably to our benchmark indices, the AIM All-share index and the MSCI Small Cap UK, which declined by 5.1% and 2.7% respectively. It is also pleasing to report that the share price increased by over 16% during the period from 42.5p to 49.5p.

Since the period end we have been able to increase the value of two of our unquoted investments, Transflex Vehicle Rental and Anaxsys Technology, rise 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.

Although there is, as ever, political and economic uncertainty around the world, we remain in a low growth, low interest rate and low inflation environment. Corporate balance sheets and cash flows appear strong but real growth is increasingly difficult to achieve and maintain.

In the UK, the referendum on membership of the European Union will lead to increased uncertainty and consequent inaction by companies as they "sit on their hands" and await the outcome which is too close to call. If the electorate chooses to leave Europe it will potentially result in considerable short-term upheaval. However, in the main, the Board feels that the companies in which the Company is invested should produce improved trading performances in the short to medium term.

As stated previously, the Company 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, we have faith in the businesses in which we 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. Valid applications were received from eligible Shareholders in respect of a total of 3,173,391 ordinary shares (representing approximately 37.33% of the Company's issued ordinary share capital at the record date). It successfully completed in March 2016 with the purchase by the Company of 24.99% of the issued share capital being 2,124,562 shares at 52.92p each. The tender price was calculated as being equal to 92.5% of the NAV per share on 29 February 2016.

These shares have subsequently been cancelled leaving a reduced share capital of 6,377,088 shares in issue. 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. It is interesting to note that 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.

Looking forward to the remainder of the financial year, the economic environment is going to be dominated by the EU Referendum in Britain. However, notwithstanding the uncertainty this will cause, the Board believes that the investment portfolio will continue to make good progress.

Kevin Allen

Chairman

27 April 2016

Interim management report

The important events that have occurred during the period under review and the key factors influencing the financial statements are set out in the Chairman's Report. The Board considers that the principal risks and uncertainties facing the Company remain the same as those disclosed in the Annual Report for the year ended 31 August 2015 on pages 12 and 13 and pages 49 to 51. These risks include, but are not limited to, market risk, discount volatility risk, regulatory risk, financial risk and liquidity risk.

Responsibility statement

The Directors are responsible for preparing the unaudited Half Yearly Report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

The condensed set of financial statements for the six months to 29 February 2016, has been prepared in accordance with FRS 104 "Interim Financial Reporting", gives a fair view of the assets, liabilities, financial position and profit of the Company; and

This Half Yearly Report include a fair review of the information required by;

a) rule 4.2.7R of the Disclosure and Transparency Rules being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) rule 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could do so.

This Half Yearly Report was approved by the Board of Directors on 27 April 2016 and the above responsibility statement was signed on its behalf by Kevin Allen, Chairman.

Portfolio review

as at 29 February 2016

The Company's portfolio is set out below.

Portfolio holdings

Portfolio breakdown by sector and by index

Sector distribution

Index distribution

Income statement (unaudited) for the six months to 29 February 2016

All items in the above statement derive from continuing operations.

The revenue column of the Income Statement includes all income and expenses. The capital column accounts for the realised and unrealised profit or loss on investments and 75% of the management fee and finance costs charged to capital.

The total column of this statement is the Statement of Total Comprehensive Income of the Company prepared in accordance with Financial Reporting Standards ("FRS"). The supplementary revenue return and capital return columns are prepared in accordance with the Statement of Recommended Practice issued in November 2014 by the Association of Investment Companies ("AIC SORP").

\* The return per Ordinary share is based on 8,501,650 (31 August 2015: 9,019,251; 28 February 2015: 9,446,274) shares, being the weighted average number of shares in issue during the period.

Statement of changes in equity (unaudited) for the six months to 29 February 2016

Statement of financial position (unaudited) as at 29 February 2016

Statement of cash flows (unaudited)

for the six months to 29 February 2016

Notes to the financial statements

1 Accounting policies

a) Statement of compliance

The Company's Financial Statements for the period ended 29 February 2016 have been prepared under UK Generally Accepted Accounting Practice (UK GAAP) and the 2014 Statement of Recommended Practice, 'Financial Statements of Investment Trust Companies and Venture Capital Trusts' ('the SORP') issued by the Association of Investment Trust Companies.

The Company has also adopted FRS 104, which applies to interim periods commencing on or after 1 January 2015. The transition to FRS 104 has had no impact on the previous reported financial position and financial performance. With the exception of this, the financial statements have been prepared in accordance with the accounting policies set out in the statutory accounts for the year ended 31 August 2015.

b) Financial information

The financial information contained in this report does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006. The financial information for the period ended 29 February 2016 and 28 February 2015 have not been audited or reviewed by the Company's Auditor pursuant to the Auditing Practices Board guidance on such reviews. The information for the year to 31 August 2015 has been extracted from the latest published Annual Report and Financial Statements, which have been lodged with the Registrar of Companies, contained an unqualified auditors' report and did not contain a statement required under Section 498 (2) or (3) of the Companies Act 2006.

c) Going concern

The Company's assets consist mainly of equity shares in companies which, in most circumstances are realisable within a short timescale. The Directors believe that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the accounts.

2 Income

3 Taxation

The tax charge for the six months to 29 February 2016 is nil (year to 31 August 2015: nil; six months to 28 February 2015: nil).

The Company has an effective tax rate of 0% for the year ending 31 August 2016. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company's status as an Investment Trust and there is expected to be an excess of management expenses over taxable income.

4 Investments

Fair value hierarchy

In accordance with FRS 102 and FRS 104 the Company must disclose the fair value hierarchy of financial instruments.

The fair value hierarchy consists of the following three classifications:

Classification A - Quoted prices in active markets for identical assets or liabilities.

Classification B - The price of a recent transaction for an identical asset, where quoted prices are unavailable.

Classification C Inputs for the asset or liability that are based on observable market data and unobservable market data, to estimate what the transaction price would have been on the measurement data in an arm's length exchange motivated by normal business considerations.

Details of the Company's financial instruments are shown in the Portfolio Review including financial instruments which fall into level C shown under the section heading "Unquoted". A summary reconciliation of the fair value movements of level C investments is shown in the table above. The realised gains on sales of £1,667,000 relates to the sale of Parmenion Capital Partners LLP on 12 January 2016.

Financial assets at fair value through profit or loss;

5 Short term loans

In November 2015 the Company borrowed £50,000 from Chelverton Asset Management Limited. The loans of £400,000 from Jarvis Investment Management Limited and £50,000 from Chelverton Asset Management Limited were repaid in full in January 2016.

6 Net asset value

The basic net asset value per Ordinary share is based on net assets of £4,864,000 (31 August 2015: £4,672,000; 28 February 2015: £4,820,000) and on 8,501,650 Ordinary shares (31 August 2015: 8,501,650; 28 February 2015: 9,446,274) being the number of Ordinary shares in issue at the period end.

7 Post balance sheet events

On 18 March 2016, pursuant to the Tender Offer, 2,124,562 Ordinary shares were repurchased for cancellation resulting in there being 6,377,088 Ordinary shares of 1p in issue.

8 Related party transactions

Under the terms of the agreement dated 28 June 2001, the Company has appointed Chelverton Asset Management Limited to be the Investment Manager. Mr Horner, a Director of the Company, is also a director of Chelverton Asset Management Limited and CEPS PLC, in which the Company holds an investment as set out above.

At 29 February 2016 there was £4,000 (31 August 2015: £4,000; 28 February 2015: £4,200) payable to the Investment Manager.

Mr Martin was appointed is the Chairman of Belgravium Technologies plc in which the Company holds an investment as set out above.

The three Directors also have individual holdings in Chelverton Asset Management Holdings, a company which has Mr Horner as a director and which the Company also has a direct holding. The Directors' holdings are detailed below.

The Company holds 2,000 shares in Chelverton Asset Management Limited representing 2% of the voting rights.

Directors and advisers

Information about the Company can be obtained at the Investment Manager's website at www.chelvertonam.com.

Neither the contents of the Manager's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of this announcement

An investment company as defined under Section 833 of the Companies Act 2006.

REGISTERED IN ENGLAND No. 298951