CGW.L Regulatory News (CGW)

Investment objective

The Company's objective is to provide capital growth through investment in companies listed on the Official List and tradedon the Alternative Investment Market ("AIM") with a market capitalisation at the time of investmentof up to

£50 million, which are believed to be at a "point of change".The Company will also invest in unquotedinvestments 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 investmentobjective is to increase net asset value per share at a higher rate than other quoted smaller company trusts and the MSCI Small Cap UK index.

Investment policy

The Company investsprincipally in securities of publicly quoted UK companies, though it will invest in unquoted securities. The concentrated UK portfoliocomprises between 20 to 35 securities. The performance of the Company's investments is compared to the MSCI Small Cap UK index.

The Company will also invest in unquoted investments where it is believed that there is a likelihoodof the shares becoming listed or traded on AIM or the investee company being sold.

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

It is intendedfrom time to time, when deemed appropriate, that the Companywill borrow for investment purposes. The Company, currently has borrowing facilities in place with Jarvis Investment Management Limited.

Investments are selectedfor 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 Company's 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 patienceto hold the shares until that value is appreciated by other investors. Identifying long-term value involves detailed analysis of a company's earning prospects over a five year time horizon.

The Company's InvestmentManager is Chelverton Asset Management Limited, an independent investment manager focusing exclusively on achieving returns for investors based on UK investment analysis of the highest quality. The founders 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-terminvestment success.

Chairman's Report

I am delighted to be making my first statement to shareholders having replaced George Stevens in this position after the Annual General Meeting in December of last year. I would like to thank George for his considerable contribution to the development of the Company during a period of unprecedented economic turmoil.

I am also very pleased to welcome Ian Martin to the Board. There is a real symmetry to Ian's appointment as he and I were closely involved in the creation of Chelverton Growth Trust plc in 1998. Ian has a wealth of experience across several business sectors and recently stood down as CEO of Avesco Plc. I feel that we are fortunate that he has agreed to join the Board and look forward to his help and support in shaping the future of the Company.

The Company's net asset value per share has increased in the last six months from 44.87p to 49.98p, an increase of 11.4%. In the same period the Company's benchmark index, the MSCI Small Cap UK index increased by some 17.2%.

The underperformance was due to the volatility of our Nasdaq OTC holding One Horizon, which has had a disproportionate effect on the performance.

In the last few months there has been a stream of good news about the rate of growth of the UK economy and the forecasts for its continued growth over the next few years. This growth has been achieved against a background of inflation falling to 1.7%. Consequently, employment has continued to rise and now stands at an all time record. With a "Goldilocks scenario" emerging of inflation continuing to fall and growth continuing to rise, the UK economy is looking to be set fair for the next few years.

Gradually, we expect that the UK will begin to see real wages rise as inflation remains at or lower than the current levels and wages begin to rise, albeit modestly in historical terms, to more than 2%. Anecdotal evidence from a large number of the companies, both Public and Private, invested in by Chelverton Asset Management (our investment manager), would indicate that UK companies have started to reinvest in their capacity - new equipment, and their capability - recruiting more people.

On the macro economic/political scene there are major concerns over the posturing of Russia and Mr Putin. Whilst the Euro sovereign debt problems have been pushed from the newspapers, the issues still remain and the cutbacks in government spending in several European countries are beginning to lead to social and political instability. The European debt position is not resolved and only at some distant point in the future, when it is demonstrably cleared up, can we be confident about the European market.

The "rebalancing" of the British Economy continues with evidence that growth is beginning to be created across the UK in most sectors. The Banks appear to still be putting their houses in order at the expense of providing finance to the SME sector and we anticipate that this process will continue for several more years. The emergence of alternative lenders to this sector may well have the result that in a few years time, when the Banks are looking to increase their lending, they will discover that a number of entrenched new suppliers of capital have established strong market positions.

In the past six months the holdings in Sanderson, and Richoux were sold completely and reductions were made in the holdings of IDOX, Alliance Pharma, Northbridge and A B Dynamics. A B Dynamics is a company that floated on AIM in May 2013 at 86p and the partial disposal of half the holding was made at an average price of 171p. Additional shares were acquired in Belgravium after the announcement of their final results. These appear to indicate that the market and their business are in a recovery phase.

Good increases were seen in Tristel, LPA, MTI Wireless Edge, Belgravium and Sanderson and Richoux up to their disposal.

In the unquoted portfolio there were increases in the valuations of Parmenion Capital Partners (as it continued on its strong growth path), Transflex (which is performing well), and the loan stock of Closed Loop Recycling (written back to 100p following some important positive events).

Unfortunately we have made a provision against the investment in Airways Engineering, as the expected orders have not materialised. In addition have we reduced the holding price of Main Dental, as it has taken longer to acquire and integrate the dental practices than expected, although real progress is now being made. All the valuations in the unquoted portfolio were made by the Board prior to the tender offer.

A new investment was made in the MBO of Chelverton Asset Management, the investment managers of this fund and other successful funds investing in Small and Mid-Cap quoted shares and in Unquoted Companies.

The fifth tender offer was completed in early January with the purchase by the Company of 1,049,586 shares at 44.31p each. These shares were subsequently cancelled leaving a reduced share capital of 9,446,274, a short term loan of £400,000 was taken out to provide flexibility to fund the tender offer. In the absence of any unexpected events it is the Board's intention to repeat the process again this year.

Looking forward to the second half of the year, with the recovery in the UK beginning to get stronger and broader, we can expect further growth in the value of the portfolio.

Kevin Allen

Chairman

3 April 2014

Principal risks and uncertainties

The Board considers that the principal risks and uncertainties facing the Company for the remaining six months of the financial year remain the same as those disclosedin the interim management report on page 2 and also on pages 11 and 12 of the Report of the Directors in the Annual Report for the year ended 31 August 2013. These risks include market risk, discount volatility, regulatoryrisks, financial risk and liquidityrisks.

Responsibility statement

The Directors are responsible for preparing the unaudited half yearly financial report in accordance with applicable law and regulations. The Directors confirm that to the best of their knowledge:

• the condensedset of financial statements for the six months to 28 February2014, has been prepared in accordance with the Statement on Half Yearly Financial Reports issued by the UK Accounting Standards Board.

• the interim management report together with the notes to the Half Yearly Report include a fair review of the

information required by;

(a) rule 4.2.7Rof the Disclosure and Transparency Rules,being an indication of important eventsthat have occurred during the first six months of the financial year and their impact on the condensedset of financial statements; and a description of the principalrisks and uncertainties for the remainingsix months of the year; and

(b) rule 4.2.8R of the Disclosure and Transparency Rules, being relatedparty transactions that have taken place in thefirst six monthsof the current financial year and that have materially affected the financial positionor performance of the Company during that period;and any changes in the related party transactions describedin

the last Annual Report that could do so (see note 5).

Going concern

The Company's assets consist mainly of equity shares in companies listed on the London Stock Exchange and in most circumstances are realisable within a short timescale. The Directors believethat the Companyhas adequate resources to continue in operational existencefor the foreseeable future. Accordingly, they continue to adoptthe going concern basis in preparing the accounts.

This Half Yearly Financial Report was approved by the Board of Directorson 3 April 2014. 

Kevin Allen

Chairman

Portfolio review

as at 28 February2014

The Company's portfoliois set out below.

Portfolio of investments

Percentage of portfolio by sector

Percentage of portfolio by Index

Income statement (unaudited)

for the six months to 28 February 2014

*  75% of the managementfee and finance costs have been charged to capital reserve.

#  The returnper Ordinary shareis based on10,403,842 (31 August 2013: 11,062,872; 28 February2013: 10,570,998) shares, being the weighted average number of shares in issue during the period.

The total column of this statementis the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuingoperations.

A separate statement of total recognised gains and losseshas not been prepared as all such gains and losses are included in the income statement.

Reconciliation of movements in shareholders' funds (unaudited)

for the six months to 28 February 2014

Balance sheet (unaudited)

as at 28 February 2014

Statement of cash flows (unaudited)

for the six months to 28 February 2014

Notes to the half yearly report

The unaudited interim financial information does not constitutestatutory accounts as defined in Section 434 of the Companies Act 2006. The statutory accounts for the year to 31 August 2013, which contained an unqualified auditors' report, have been lodged with the Registrar of Companies and did not contain a statement required under Section 498

(2) or (3) of the Companies Act 2006. The financial information for the period ended 28 February 2014 and 28 February 2013 have not been audited or reviewed by the Company'sAuditor pursuant to the AuditingPractices Board guidance on such reviews.

This information has been preparedon the basis of accounting policies set out in the statutory accountsof the Company for the year to 31 August 2013.

The basic net asset value per Ordinary share is based on net assets of £4,720,000(31 August 2013 : £4,709,000; 28 February2013: £4,412,000) and on 9,446,274 Ordinary shares(31 August 2013:10,495,860; 28 February 2013: 10,495,860) being the number of Ordinary shares in issue at the period end.

The tax charge for the six months to 28 February2014 is nil (year to 31 August 2013: nil; six months to 28 February 2013: nil).

The Company has an effective tax rate of 0% for the year ending 31 August 2013. The estimated effective tax rate is 0% as investment gains are exempt from tax owing to the Company'sstatus as an Investment Trust and there is expected to be an excess of management expenses over taxable income.

4 Called up share capital

Pursuant to the Tender Offer, 1,049,586 Ordinary shares were repurchased for cancellation on 27 January 2014. Following the Tender Offer there are 9,446,274 Ordinary shares in issue (31 August 2013: 10,495,860: 

28 February 2013: 10,495,860).

Chelverton Asset Management Limited is the Investment Manager. Mr Horner, a Director of the Company, is alsoa Director of Chelverton AssetManagement Limited and Chelverton Asset Management Holdings Limited. He is also a director of CEPS PLC, in whichthe Company has an investment.

At 28 February 2014 there was £4,000 (31 August 2013: £4,000; 28 February2013:£3,000) payable to the Investment Manager.

The Company and its directors have the following commercial interest in the Investment Manager's holding company; Chelverton Asset Management Holdings Limited.

The total Ordinary share interest held by the Company and the Independent Directors represents five percent of the voting rights.

David Horner, including his family interest, is the majority share holder with 56.25 percent of the voting rights in Chelverton Asset Management Holdings Limited.

It is the intention of the Directors to conduct the affairs of the Company so that they satisfy the conditions for approval as aninvestment trust company as set out in Sections 1158/1159 of the Corporation Tax Act 2010.

Directors and advisers

George Stevens (resigned 19 December 2013)

Kevin Allen (Chairman) David Horner

Ian Martin (appointed 20 December 2013)

Chelverton Asset ManagementLimited 12b George Street

Bath BA1 2EH Tel: 01225 483 030

Secretary and Registered Office John Girdlestone

Chartered Accountant

Waterside Court

Falmouth Road

Penryn

Cornwall

TR10 8AW

Tel: 01326 378 288

john@girdlestone.org.uk

Share Registrars Limited Suite E

First Floor

9 Lion and Lamb Yard Farnham

Surrey GU9 7LL Tel: 01252 821 390

www.shareregistrars.uk.com

Auditors Hazlewoods LLP Windsor House Bayshill Road

Cheltenham GL50 3AT

Custodian and Banker Jarvis Investment Management Limited

78 Mount Ephraim

Royal Tunbridge Wells

TN4 8BS

Tel: 01892 510 515

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

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

REGISTERED IN ENGLAND No. 2989519