SDV 2025 ZDP plc

Annual Report and Accounts for the year ended 30 April 2022

This Report and Accounts should be read in conjunction with the Report and Accounts of Chelverton UK Dividend Trust PLC (“SDV”).

The financial information set out below does not constitute the Company's statutory accounts for the year ended 30 April 2022.  The financial information for 2022 is derived from the statutory accounts for that year.  The auditors, Hazlewoods LLP, have reported on the 2022 accounts. Their report was unqualified and did not include a reference to any matters to which the auditors draw attention by way of emphasis without qualifying their report.  The financial information for 2021 is derived from the statutory accounts for that year. The following text is copied from the Annual Report & Accounts.

Strategic Report

The Strategic Report has been prepared in accordance with Section 414A of the Companies Act 2006 (the “Act”). Its purpose is to inform members of the Company and help them understand how the Directors have performed their duties under Section 172 of the Act to promote the success of the Company.  The Directors are conscious of their duties to promote the success of the Company under 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 it operates. The Board recognises that its decisions are material to the Company and also to the Company’s key stakeholders. Further details of how the Directors have performed their duty under Section 172 is contained within the Annual Report of SDV.

Chairman’s Statement

The Chairman’s report on the Group’s activities for the year ended 30 April 2022 is contained within the Annual Report of SDV. A copy of the full SDV Annual Report can be found on the Investment Manager’s website, www.chelvertonam.com and is available for inspection at the National Storage Mechanism (“NSM”) which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

Howard Myles

Chairman

29 June 2022

Investment Manager’s Report

For details of the Group’s activities, development and performance during the year to 30 April 2022 shareholders should refer to the Annual Report of SDV, which can be found on the Investment Manager’s website, www.chelvertonam.com and is available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

David Horner

Chelverton Asset Management Limited

29 June 2022

Other Statutory Information

Company Activities, Strategy & Business Model

SDV 2025 ZDP plc (“SDVP” or the “Company”) was incorporated on 25 October 2017 as a wholly owned subsidiary of SDV, together referred to as the “Group”. SDVP was formed specifically for the issuing of Zero Dividend Preference (“ZDP”) shares. It raised £10,980,000 before expenses on 8 January 2018 by the conversion of ZDP’s from Chelverton Small Companies ZDP PLC (“SDVP”) of 10,977,747 ZDP shares and £1,802,000 before expenses on 8 January 2018 by a placing of 1,802,336 ZDP shares. The Company’s shares are listed on the UK Official List and admitted to trading on the London Stock Exchange. Between 11 April and 15 May 2018, the Company placed an additional 1,719,917 shares raising a further £1,775,500. Further detail is set out in the Capital Structure section below.

Pursuant to a contribution agreement between SDVP and SDV, SDVP has loaned the proceeds of the ZDP share placings to SDV. The loan is non-interest bearing and is repayable three business days before the ZDP share redemption date of 30 April 2025 or, if required by SDVP, at any time prior to that date in order to repay the ZDP share entitlement. The funds are to be managed in accordance with the investment policy of SDV.

SDVP investment objective & policy

The objective of SDVP is to provide the final capital entitlement of the ZDP shares to the holders of the ZDP shares at the redemption date of 30 April 2025. The proceeds of the placing of the ZDP shares have been loaned to SDV under a contribution agreement and the funds are managed in accordance with the investment policy of SDV, which is as follows (as extracted from the Annual Report of SDV):

• 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 or other investment trusts or in unquoted companies.

Capital Structure & Contribution Agreement

SDVP has a capital structure comprising unlisted Ordinary shares and ZDP shares listed on the Official List and admitted to trading on the London Stock Exchange by way of a standard listing. SDVP is a wholly owned subsidiary of SDV which is a closed-ended investment company. On 8 January 2018, 10,977,747 ZDP shares were converted from SDVP at 100p per share, and 1,802,336 ZDP shares were placed at 100p per share. This raised a net total of £12.4 million.

On 11 April 2018, SDVP placed an additional 1,419,917 ZDP shares at 103p per share and this raised a net total of £1.4 million. 

On 10 May 2018, SDVP placed an additional 100,000 ZDP shares at 104p per share and this raised a net total of £104,500. 

On 15 May 2018, SDVP placed an additional 200,000 ZDP shares at 105p per share and this raised a net total of £208,500. 

A contribution agreement between SDV and SDVP has also been made whereby SDV 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 ZDP shares of 133.18p per share, being £19,311,100 in total. This assumes that the parent company and the Company have sufficient assets  as at  30 April 2025 to repay the ZDP shares. To this extent the Company is reliant upon the investment performance of the parent company and subject to the principal risks as set out in the Annual Report of SDV.

To protect the interests of ZDP shareholders, the contribution agreement contains a restriction on the Group incurring any other borrowings (other than short-term indebtedness in the normal course of business, such as when settling share transactions) except where such borrowings are for the purpose of paying the final capital entitlement due to holders of ZDP shares.

The value of the Group’s net assets would have to fall by 67% (2021: 69.7%) for it to be unable to meet the full capital repayment entitlement of the ZDP shares on the scheduled repayment date of 30 April 2025.

Performance

The Board reviews performance by reference to a number of key performance indicators (“KPIs”) and considers that the most relevant KPI is that which communicates the financial performance and strength of the Company as a whole being:

• Total return per ZDP share

This is set out below:

Further KPIs for the parent company can be found in SDV’s Annual Report.

Principal Risks and Uncertainties Facing the Company

Due to the Company’s dependence on SDV to repay the loan and provide a contribution to meet the capital entitlement of the ZDP shareholders other risks faced by the Company are considered to be the same as for SDV and these are defined in note 21 of SDV’s Annual Report.

Employees, Environmental, Human Rights and Community Issues

The Board recognises the requirement under Section 414C of the Act to detail information about employees, environmental, human rights and community issues, including information about any policies it had in relation to these matters and the effectiveness of these policies. The Company has no employees and the Board is comprised entirely of non-executive Directors.  Day-to-day management of the Company and SDV is delegated to the Investment Manager (details of the respective management agreements are set out in the Director’s Report of SDV’s Annual Report). The Company itself has no environmental, human rights or community policies. However in carrying out its activities in relationships with suppliers, by way of SDV, the Company aims to conduct itself responsibly, ethically and fairly.

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 the final capital entitlement of the ZDP shares to the holders of the ZDP shares at the redemption date of 30 April 2025. 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.

Current and Future Developments

The current and future developments of the Company can be reviewed as part of the Group’s activities for the year ended 30 April 2022 by reference to the Annual Report and financial statements of SDV.

Dividends

The Directors do not recommend the payment of a final dividend in respect of the year ended 30 April 2022.

Diversity and succession planning

The Board of Directors of the Company comprised three male Directors during the year to 30 April 2022. Mr van Heesewijk resigned from the Board on 30 April 2022. On 1 May 2022 Ms Hadgill was appointed as a Director of the Company.

The Directors are satisfied that the Board currently contains members with an appropriate breadth of skills and experience and considers succession planning on at least an annual basis. The key criteria for the appointment of new Directors will be the skills and experience of candidates having regard also to the benefits of diversity in the interests of shareholder value.  In relation to any further future appointments the Board will seek to consider a wide range of candidates with due regard to diversity.

On behalf of the Board

Howard Myles

29 June 2022

Board of Directors

The Directors are:

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  and BBGI SICAV S.A. in April 2022.

Mr Myles was appointed to the Board of SDVP on 25 October 2017 and has been a director of the parent company, SDV since 2011. He chairs the Audit Committee of SDV.

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 and BMO UK High Income Trust plc.

Mr Watkins was appointed to the Board of SDVP on 6 September 2018 and has also been a director of the parent company, SDV from the same date.

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 of SDVP on 1 May 2022 and has also been a director of the parent company, SDV from the same date.

William van Heesewijk resigned from the Board on 30 April 2022.

All continuing Directors are independent of the Investment Manager.

Investment Manager, Secretary 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 largely owned by its employees.

Chelverton is a specialist fund manager focused on UK mid and small companies and has a successful track record. At 30 April 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.

Registrar: Share Registrars Limited

Share Registrars Limited is a CREST registrar established in 2004.  The Company provides registration services to over 200 client companies.

Directors’ Report

The Directors present their Report and the financial statements of the Company for the year ended 30 April 2022. The comparative period covers the year to 30 April 2021. The Company’s registered number is 11031268.

Directors

Directors who served during the year ended 30 April 2022, all of whom are non-executive were as follows:

H Myles

A Watkins

W van Heesewijk (Resigned on 30 April 2022)

D Hadgill was appointed as a non-executive Director on 1 May 2022.

Biographical details of the continuing Directors are given above.

Under the Company’s Articles of Association, Directors are required to retire at the first Annual General Meeting (“AGM”) following their appointment, and thereafter at three-yearly intervals.  At least one Director must retire at each annual general meeting.  The Directors to retire by rotation are first, a Director who wishes to retire and offer himself for reappointment and, second, those Directors who have been longest in office since their last appointment or reappointment. However, in accordance with the Articles of Association, and prevailing corporate governance best practice, Mr Myles and Mr Watkins will stand for re-election and Ms Hadgill will stand for election at the forthcoming AGM on 8 September 2022.

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 to any Director at any time during the year or thereafter.

The Company’s Articles of Association provide the Directors of the Company, subject to the provisions of UK legislation, with an indemnity in respect of liabilities which they may sustain or incur in connection with their appointment. Save for this, there are no qualifying third party indemnities in place.

Formal performance evaluation of the Directors and the Board has been carried out and the Board considers that all of the Directors contribute effectively and have the skills and experience relevant to the future leadership and direction of the Company.

The rules concerning the appointment and replacement of Directors are contained in the Company’s Articles of Association.

Corporate Governance

A formal statement on Corporate Governance is set out on below.

Share Capital

At the date of this report, the issued share capital of the Company comprised of 50,000 Ordinary shares and 14,500,000 ZDP shares.

50,000 Ordinary shares of £1, each partly paid as to 25p (and each of which have been issued to SDV), represent 0.35% of the total share capital.  Holders of Ordinary shares are entitled to receive notice of, attend and vote at General Meetings of the Company. The Ordinary shares at are not admitted to trading on a regulated market.

12,780,083 ZDP shares of £1 each were issued on 8 January 2018, pursuant to the placing ZDP shares represent 99.65% of the total share capital. 1,419,917 additional ZDP shares for a total consideration of £1.03 each were issued on 11 April 2018. 300,000 ZDP shares were issued in at a premium May 2018 for a total consideration of £1.045 each.

Holders of ZDP shares are entitled to receive notice of, attend and vote at those General Meetings where ZDP shareholders are entitled to vote. They are not entitled to attend or vote at any General Meeting of the Company unless the business includes any resolution to vary, modify or abrogate any of the special rights attached to the ZDP shares.

Shareholders’ funds and market capitalisation

At 30 April 2022 the Company had a market capitalisation of £17,183,000 and total net assets amounted to £13,000.

ISA status

The ZDP shares are eligible for inclusion in ISAs.

Management agreements

The Group’s assets are managed by Chelverton under an agreement (‘the Investment Management Agreement’) dated 30 April 2006 (effective from 1 December 2005) with the parent company. 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 Group.

These fees are met entirely by the parent company.

The Investment Management Agreement may be terminated by twelve 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 2015, company secretarial services and the general administration of the Group are undertaken by Maitland Administration Services Limited. 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.

Management fee

The management fee for the Group is charged to and paid in full by SDV.

Company Information

• The Company’s capital structure and voting rights are summarised above.
• SDVP is a wholly-owned subsidiary of SDV.
• The rules concerning the appointment and replacement of Directors are covered by Article 22 of the Company’s Articles of Association.
• There are no restrictions concerning the transfer of securities in the Company; 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.
• There are no agreements between the Company and its Directors that provide compensation for loss of office or as a result of a takeover.

Viability Statement

The Board reviews the performance and progress of the Company over various time periods and uses these assessments, regular updates from the Investment Manager and a continuing programme of risk monitoring, to assess the future viability of the Company. The Directors consider that a period until the maturity of the ZDPs on 30 April 2025 is the most appropriate time horizon to consider the Company’s viability and after careful analysis, the Directors believe that the Company is viable over this time period.

The Board has reviewed the viability statement of SDV and has assessed that SDV has the necessary financial strength to fulfil the obligations to SDVP under the contribution agreement. SDV has a liquid investment portfolio invested predominantly in readily realisable smaller and mid capitalised companies.

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.

Going concern

The Company has adopted the going concern basis in preparing the financial statements consistent with the parent company. The parent company has adequate financial resources to ensure SDVP will have in aggregate sufficient assets to satisfy the accrued capital entitlement and future capital entitlement of the ZDP shares.

Global Greenhouse Gas Emissions

The Company has no greenhouse gas emissions to report from its operations, nor does it have any responsibility for any other emission-producing sources under the Companies Act 2006 (Strategic Report and Directors’ Report) Regulations 2013.

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 Company’s affairs.

As set out in the Prospectus dated 24 November 2017,  SDVP, as a company with a standard listing, is not required to comply with the UK Corporate Governance Code and does not intend to do so. In the Directors’ opinion, the interests of SDVP and SDVP shareholders are adequately covered by the governance procedures applicable to SDV. For example SDV’s Audit Committee considers the financial reporting procedures and oversees the internal control and risk management systems for the Group as a whole and the Directors see no benefit in convening a separate Audit Committee for SDVP.

Auditor

The Auditor, Hazlewoods LLP, has indicated their willingness to continue in office and resolutions proposing their re-appointment and authorising the Directors to determine their remuneration for the ensuing year will be submitted at the forthcoming Annual General Meeting on 8 September 2022.

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 Auditors are 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.  The Directors consider that the accounts taken as a whole are fair, balanced and understandable.

Annual General Meeting

A formal Notice convening the Annual General Meeting to be held on 8 September 2022 can be found below.

On behalf of the Board

Howard Myles

Chairman

29 June 2022

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) (Amendments) Regulations 2013. Ordinary resolutions for the approval of this report and the Directors’ Remuneration Policy shall be put to shareholders at the forthcoming AGM.

The law requires the Group’s Auditor, Hazlewoods LLP, to audit certain disclosures provided within this report. Where disclosures have been audited, they are indicated as such. The Auditor’s opinion is included in their report below.

Report from the Company Chairman

As set out in the Directors’ Report, the Company has a standard listing and is not required to comply with the UK Corporate Governance Code and does not intend to do so as a matter of course. However the Board notes the expectations of the 2018 version of the code, to which the majority of the Board’s governance arrangements are aligned. The Board of SDV considers the Directors’ remuneration for the Group as a whole.

Directors’ Remuneration Policy

The Remuneration Policy for the Company is that no fees are payable to the Directors in connection with their duties to SDVP. It is intended that 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. Accordingly, a resolution to approve the Remuneration Policy will be considered at the AGM on 8 September 2022.

Directors are also 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.

The Directors do receive fees relating to their duties to the parent company, SDV.  This policy will continue for future years and is set out in full in the Directors’ Remuneration Report of SDV.

Directors’ service contracts

None of the Directors has a contract of service with the Company or the parent 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. A Director’s appointment can be terminated in accordance with the Articles and without compensation.

Directors’ emoluments for the year (audited)

No fees are payable to the Directors regarding their duties to SDVP.

Directors’ beneficial and family interests (audited)

The Directors’ interests in the shares of the parent company are shown in the Annual Report of SDV.

Your Company’s performance

The objective of SDVP is to provide the accrued capital entitlement to the ZDP shareholders. The Company has loaned all of its assets to SDV and therefore the performance of the Company is best reflected by looking at the performance of SDV. The Directors’ remuneration report within the Annual Report of SDV contains a graph comparing the total return (assuming all dividends are reinvested) to SDV Ordinary shareholders, compared to the total shareholder return of the MSCI UK Small Cap Index. A copy of SDV’s Annual Report can be found on the Investment Manager’s website www.chelvertonam.com or is available for inspection at the NSM, which is situated at https://data.fca.org.uk/#/nsm/nationalstoragemechanism.

There has been no demonstration of relative importance of spend on pay for the Company as no remuneration is payable to Directors.

Approval

The Directors’ Remuneration Report was approved by the Board on 29 June 2022.

On behalf of the Board of Directors

Howard Myles

Chairman

29 June 2022

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 Financial Reporting Standards (‘UK adopted IFRS’) 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 Company for that period.

In preparing the Company’s financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;
• make judgments and estimates that are reasonable and prudent;
• state that the Company has complied with IFRS, 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 IFRS is insufficient to enable users to understand the impact of particular transactions, other events and conditions on the Company’s financial position and financial performance; and
• make an assessment of the Company'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 Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the Company’s financial statements comply with the Companies Act 2006. They are also responsible for safeguarding the assets of the Company and hence for taking reasonable steps for the prevention and detection of fraud and other irregularities.

The Directors are responsible for ensuring that the Directors’ Report and other information included in the Annual Report is prepared in accordance with applicable company law. They are also responsible for ensuring that the Annual Report includes information required by the Listing Rules of the Financial Conduct Authority.

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 Company;
• the Annual Report includes a fair review of the development and performance of the Company, together with a description of the principal risks and uncertainties faced; and
• 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.

On behalf of the Board of Directors

Howard Myles

Chairman

29 June 2022

Statement of Comprehensive Income

for the year ended 30 April 2022

The total column of this statement is the Statement of Comprehensive Income of the Company, prepared in accordance with UK adopted IFRS’ and with the requirements of the Companies Act 2006. All revenue and capital return columns in the above statement derive from continuing operations.  No operations were acquired or discontinued during the year.  All of the net return for the year is attributable to the shareholders of the Company.  The supplementary revenue and capital columns are presented for information purposes as recommended by the Statement of Recommended Practice issued by the AIC.

The accompanying notes form part of these financial statements.

Statement of Changes in Net Equity

for the year ended 30 April 2022

The accompanying notes form part of these financial statements.

Balance Sheet

as at 30 April 2022

The accompanying notes form part of these financial statements.

These financial statements were approved by the Board of SDV 2025 ZDP PLC and authorised for issue on 29 June 2022 and were signed on behalf of the Company by:

Howard Myles,

Chairman

29 June 2022

Company Registered No: 11031268

Notes to the Financial Statements

as at 30 April 2022

1. General information

SDVP is a public company incorporated and registered in England and Wales on 25 October 2017 with limited liability under the Companies Act 2006. All of its Ordinary shares are held by SDV. It is not regulated by the Financial Conduct Authority or any commission.

The financial information of the Company for the year ended 30 April 2022 has also been consolidated into the results of SDV.

2. Accounting policies

Basis of preparation

The financial statements of the Company have been prepared in accordance with UK adopted International Financial Reporting Standards (‘UK adopted IFRS’), and Interpretations issued by the International Financial Reporting Interpretations Committee, and applicable requirements of UK company law, 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 judgments and uses of estimation

The preparation of financial statements in conformity with UK adopted IFRS requires management to make judgments, estimate 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 judgments 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 estimate 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 judgments in the current year.

Convention

The financial statements are presented in Sterling, rounded to the nearest £’000. The financial statements have been prepared on a going concern basis. Where presentational guidance set out in the Statement of Recommended Practice regarding the ‘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 Company does not engage in any business activities from which it can earn revenues and therefore segmental reporting does not apply.

Loans and receivables

The Company holds a non-interest bearing secured loan in SDV. Under IAS 39 ‘Financial Instruments: Recognition and Measurement’ the loan is carried at amortised cost using the effective interest method. Amortised cost represents the initial cost of the loan plus a proportion of the expected surplus on redemption. The expected surplus on redemption is allocated to capital at a constant rate over the life of the loan.

Expenses

All operating expenses (including the auditors remuneration) of the Company are borne by SDV.

ZDP shares

ZDP shares issued by the Company are treated as a liability under IAS 32 ‘Financial Instruments: Disclosure and Presentation’, and are shown in the Balance Sheet at their redemption value at the Balance Sheet date. The appropriations in respect of the ZDP shares necessary to increase the Company’s liabilities to the redemption values are allocated to capital in the Statement of Comprehensive Income. This treatment reflects the Board’s long-term expectations that the entitlements of the ZDP shareholders will be satisfied out of gains arising on SDV investments held primarily for capital growth.

Cash flow statement

The Company is a wholly-owned subsidiary of SDV and the cash flows of the Company are included in the consolidated cash flow statement of the parent undertaking. During the prior period the receipt of loan funding from the issue of ZDP shares was received directly by SDV.

There were no cash flows during the year ended 30 April 2022 therefore no cash flow statement is presented within the financial statements.

Taxation

There is no charge to UK income taxation as the Company does not have any income. There are no deferred tax assets in respect of unrelieved excess expenses as all expenses are borne by SDV.

3. Directors’ remuneration/Management fee

The Directors and Manager are remunerated by SDV and the amounts in respect of their services as Directors and Manager of SDVP are not separately identifiable.

4. Return per share

ZDP shares

The capital return per ZDP share is based on appropriations of £654,000 (2021: £630,000) and on 14,500,000 shares (2021: 14,500,000), being the weighted average number of ZDP shares in issue during the year.

5. Loans and receivables

The Company has entered into a contribution agreement with SDV whereby the Company loaned SDV the gross proceeds of £12,782,000 raised from the conversion of SVC ZDP shares of 10,977,747 and the placing on 8 January 2018 of 1,802,336 ZDP shares at 100p.

On 11 April 2018, the Company loaned SDV the gross proceeds of £1,462,514 raised from the additional placing of 1,419,917 ZDP shares at 103p each.

On 10 May 2018, the Company loaned SDV the gross proceeds of £104,500 raised from the additional placing of 100,000 ZDP shares at 104p each.

On 15 May 2018, the Company loaned SDV the gross proceeds of £208,500 raised from the additional placing of 200,000 ZDP shares at 105p each.

The loan is non-interest bearing and is secured on SDV’s total assets by a floating charge debenture entered into between the Company and SDV. The loan is repayable three business days prior to the ZDP share redemption date of 30 April 2025 or, if required by the Company at any time prior to that date in order to repay the ZDP share entitlement.

A contribution agreement between the Company and SDV has also been entered into whereby SDV will undertake to contribute such funds as would ensure that the Company will have in aggregate sufficient assets on 30 April 2025 to satisfy the final capital entitlement of the ZDP shares.

6. Trade and other receivables

7. Share capital

Allotted, issued:

The Company was incorporated on 25 October 2017 with 50,000 ordinary shares in issue partly paid as to 25p each. All of the ordinary shares are held by SDV.

On 8 January 2018, 12,780,083 ZDP shares were issued at 100p each. The share issue costs were borne by SDV.

On 11 April 2018, 1,149,917 additional ZDP shares were issued at 103p each.  The share costs were borne by SDV.

On 10 May 2018, 100,000 ZDP shares were issued at 104.5p each. The share issue costs were borne by SDV.

On 15 May 2018, 200,000 ZDP shares were issued at 104.25p each.  The share costs were borne by SDV.

As to dividends

Ordinary shares are entitled to any revenue profits which the Company may determine to distribute as dividends in respect of any financial period. It is not expected that any such dividends will be declared.

The holders of ZDP shares are not entitled to dividends or other distributions out of the revenue or any other profits of the Company.

As to capital on a winding up

On a winding up, and after payment of SDVP’s liabilities in full, holders of ZDP shares are entitled to a payment of an amount equal to 100p per share, increased daily from 8 January 2018 at such compound rate, equivalent to 4%, as will give an entitlement to 133.18p for each ZDP share at 30 April 2025, £19,311,100 in total. 

Following payment of the capital entitlement to the ZDP shareholders, Ordinary shareholders are entitled to any surplus assets of the Company.

As to voting

Holders of Ordinary shares are entitled to receive notice of, attend and vote at General Meetings of the Company.

Holders of ZDP shares are entitled to receive notice of, attend and vote at those general meetings where ZDP shareholders are entitled to vote. They are not entitled to attend or vote at any general meeting of the Company unless the business includes any resolution to vary, modify or abrogate any of the special rights attached to the ZDP shares.

Commitment to contribute to the capital entitlement of the ZDP shares

The Company has entered a contribution agreement with its parent company, SDV, pursuant to which SDV 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 ZDP shares or, if required by the Company, the accrued capital entitlement at any time prior to that date. This assumes that SDV has sufficient assets to repay the capital entitlement of the ZDP shares. As at 30 April 2022, the Group had total assets less current liabilities available for repayment of the ZDP shares of £58,568,000 (2021: £63,877,000). The value of the Group’s assets would have to fall at a rate of 67.0% (2021: 69.7%) for it to be unable to meet the full capital repayment entitlement of the ZDP shares on the scheduled repayment date of 30 April 2025.

Duration

The Articles of Association provide that the Directors shall convene a general meeting of the Company to be held on 30 April 2025 or, if that is not a business day, on the immediately following business day, at which a special resolution will be proposed requiring the Company to be wound up unless the Directors shall have previously been released from their obligations to do so by a special resolution of the Company (such special resolution having been sanctioned by any necessary class approval). If no variation of such date is approved and the Company is not wound up on such date, any holder of more than 1,000 ZDP shares shall have the right to requisition a general meeting of the Company to consider a resolution to wind it up.

At the general meeting, those shareholders present, in person or by proxy or by duly authorised representative who vote in favour of the resolution to wind up the Company will collectively have such total number of votes on a poll as is one more than the number of votes which are required to be cast for the resolution to be carried. The vote will be taken on a poll.

8. Net asset value per share

The net asset value per ZDP share and the net assets attributable to the ZDP shareholders are as follows:

9. Ultimate parent undertaking

The Company is a wholly owned subsidiary of SDV which is registered in England and Wales under company number 03749536.  The Annual Report of SDV is available from the website of the Manager at www.chelvertonam.com

10. Financial instruments

Investment objective and investment policy

The objective of SDVP is to provide the final capital entitlement of the ZDP shares to the holders of the ZDP shares at the redemption date of 30 April 2025.

The Company will fulfil its investment objective through the contribution agreement it has with SDV, as detailed in note 5 and 7. The contribution from SDV will provide the capital entitlement of the ZDP shareholders. The principal risk the Company faces is therefore, that SDV would not have sufficient assets to repay the loan and to make a contribution to fulfil the amount of the capital entitlement due to the ZDP shareholders. Covenants are in place between SDV and the Company that ensure that SDV will not undertake certain actions in relation to both itself and the Company.

Due to the Company’s dependence on SDV to repay the loan and provide a contribution to meet the capital entitlement of the ZDP shareholders other risks faced by the Company are considered to be the same as for SDV and these are defined in note 22 of SDV’s Annual Report.

SDV has considerable financial resources and therefore the Directors believe that the Company is well placed to manage its business risks and also believe that SDV will have sufficient resources to continue in operational existence for the foreseeable future.

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 requirement 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 does not currently have any loans and the Directors do not intend to have any loans or borrowings.

Directors and Advisers

Directors

Principal Group Advisers

Shareholder Information

Sources of further information

The Company’s ZDP shares are listed on the London Stock Exchange.

The Company’s ZDP NAV is released to the London Stock Exchange on a daily basis and published monthly via the AIC.

Information about the Company and SDV can be obtained on the Manager’s website: www.chelvertonam.com. Any enquiries can also be emailed to cam@chelvertonam.com.

Share registrar enquiries

The register for the ZDP shares is 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.

SDV 2025 ZDP PLC - Notice of Annual General Meeting

NOTICE IS HEREBY GIVEN that the ANNUAL GENERAL MEETING of the Company will take place at 11.30am (or as soon thereafter as the Annual General Meeting of the parent company, Chelverton UK Dividend Trust PLC has concluded) on 8 September 2022 at the offices of Chelverton Asset Management, Basildon House, 7 Moorgate, London, EC2R 6AF for the following purposes:

Ordinary Business: Ordinary Resolutions

1. To receive the Report of the Directors and the audited financial statements for the year ended 30 April 2022

2. To receive and approve the Directors’ Remuneration Policy, as set out in the Directors’ Remuneration Report

3. To receive and approve the Directors’ Remuneration Report for the year ended 30 April 2022

4. To re-elect Mr Myles as a Director

5. To re-elect Mr Watkins as a Director

6. To elect Ms Hadgill as a Director

7. To re-appoint Hazlewoods LLP as Auditor

8. To authorise the Directors to determine the remuneration of the Auditor

Special Business

To consider, and if thought fit to pass the following Resolutions which will be proposed as an Ordinary Resolution:

9. THAT the Directors be and are hereby generally and unconditionally authorised pursuant to Section 551 of the Companies Act 2006 (‘the Act’) 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 £4,833,333, being one-third of the issued ZDP 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 fifteen months from the passing of this resolution, whichever is earlier (the ‘Period of Authority’).

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.

Explanatory Notes to the Notice of Annual General Meeting

1. The holders of the Ordinary shares have the right to receive notice, attend, speak and vote at the Annual General Meeting. Holders of ZDP shares have the right to receive notice of general meetings of the Company but do not have any right to attend, speak and vote ate any general meeting of the Company unless the business of the meeting includes any resolution to vary, modify or abrogate any of the special rights attached to the ZDP shares.

2. A member entitled to attend, vote and speak at the 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 form of proxy, 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 Secretary, Maitland Administration Services Limited, Hamilton Centre, Rodney Way, Chelmsford, Essex, CM1 3BY 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.

3. 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. The statements of the rights of members in relation to the appointment of proxies in Note 2 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 voting share capital and total voting rights amounted to 50,000 Ordinary shares of 100p, partly paid as to 25p each, all of which are held by the parent company. In addition, there are 14,500,000 ZDP shares of 100p each in issue with no voting rights attached.

5. The Company specifies that only those Ordinary shareholders registered on the Register of Members of the Company as at 11.30am on 6 September 2022 (or in the event that the meeting is adjourned, only those shareholders registered on the Register of Member of the Company as at 11.30am 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 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. Any question relevant to the business of 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 questions in advance by letter addressed to the Company Secretary at the registered office or by email to: cosec@maitlandgroup.com.

7. 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:

1. to do so would:
   1. Interfere unduly with the preparation for the meeting, or
   2. involve the disclosure of confidential information;
2. the answer has already been given on a website in the form of an answer to a question; or
3. it is undesirable in the interests of the Company or the good order of the meeting that the question be answered.

8. Shareholders should note 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 circumstances 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. 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.

9. 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 evidence satisfactory to the Company of their appointment. Corporate shareholders can also appoint one or more proxies in accordance with Note 2. 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:

1. if they purport to exercise the power in the same was as each other, the power is treated as exercised in that way;

2. if they do not purport to exercise the power in the same way as each other, the power is treated as not exercised.

10. Members satisfying the thresholds in Section 338 or 338A 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.