Communication with shareholders is given a high priority by both the Board and the Investment Manager and all Directors are available to enter into dialogue with shareholders at any time. Major shareholders of the Group have the opportunity to meet with the independent non-executive Directors of the Board in order to ensure that their views are understood. All shareholders are encouraged to attend the AGM when Government guidelines permit, during which the Board and the Investment Manager are available to discuss issues affecting the Group and shareholders have the opportunity to address questions to the Investment Manager, the Board and the Chairmen of the Board's standing committees.

There are no signi?cant issues raised by major shareholders to bring to all shareholders' attention, topics of interest are covered in the Strategic Report on pages pages 1 to 17.

Any shareholder who would like to lodge questions in advance of the AGM is invited to do so either on the reverse of the Proxy Form or in writing to the Company Secretary at the address given on page 76. The Company always responds to letters from individual shareholders.

The Annual and Half Yearly Reports of the Group are prepared by the Board and its advisers to present a full and readily understandable review of the Group's performance. Copies are available for downloading from the Investment Manager's website, www.chelvertonam.com, and on request from the Company Secretary on 01245 398950. Copies of the Annual Report are circulated to shareholders. Audit Committee Report Role of the Audit Committee

The Audit Committee ('the Committee') provides a forum through which the Group's Auditor reports to the Board. The Committee is responsible for monitoring the process of production and ensuring the integrity of the Group's ?nancial statements. The other primary responsibilities of the Committee are: ? to monitor adherence to best practice in corporate governance; ? to review the effectiveness of the internal control and risk management environment of the Group; ? to receive compliance reports from the Investment Manager; ? to consider the accounting policies of the Group; ? to make recommendations to the Board in relation to the re-appointment of the Auditor; ? to make recommendations to the Board in relation to the Auditors' remuneration and terms of engagement; and ? to review and monitor the Auditor's independence and objectivity and the effectiveness of the audit process.

The Committee's terms of reference were reviewed and updated in March 2021 to re?ect current recommended best practice. Matters considered in the year

The Committee met twice during the ?nancial year to consider the ?nancial statements and to review the internal control systems. The principal matters considered by the Committee were the valuation of the Group's assets, proof of ownership of its investments and cash, and the maintenance of its approval as an investment trust. The Audit Committee also ensured that the Board considered the Group's income forecasts with more regularity and in more detail than usual years, to closely monitor the impact of the Covid-19 pandemic on investee companies.

The Manager and Administrator have reported to the Committee to con?rm continuing compliance with their individual regulatory requirements and for maintaining the Company's investment trust status. These were also reviewed by the Auditor as part of the audit process.

The Committee liaised with the appointed Investment Manager, Chelverton Investment Management Limited, throughout the year, and received reports on their legal compliance. A Risk Assessment and Review of Internal Controls document maintained by the Board was considered in detail and amended as necessary. This document is reviewed by the Committee at each meeting. Internal audit

The Group does not have an internal audit function, as most of its day-to-day operations are delegated to third parties, all of whom have their own internal control procedures. The Committee discussed whether it would be appropriate to establish an internal audit function, and agreed that the existing system of monitoring and reporting by third parties remains appropriate and suf?cient. The need for an internal audit function is reviewed annually. External audit

The Audit Committee monitors and reviews the effectiveness of the external third-party service providers, audit process for the publication of the Annual Report and makes recommendations to the Board on the re-appointment, remuneration and terms of engagement of the Auditors.

Prior to each Annual Report being published, the Committee considers the appropriateness of the scope of the audit plan, the terms under which the audit is to be conducted, as well as the matter of remuneration, with a view to ensuring the best interests of the Group are promoted.

Audit fees are computed on the basis of the time spent on Group affairs by the Audit Senior Statutory Auditor and staff and on the levels of skill and responsibility of those involved.

Hazlewoods LLP was ?rst appointed as Auditor to the Group on 2 May 2007. As part of its review of the continuing appointment of the Auditor, the Committee considers the length of tenure of the audit ?rm, its fees and independence, along with any matters raised during each audit. The Committee has discussed with Hazlewoods LLP its objectivity, independence and experience in the investment trust sector.

The Committee has recommended the re-appointment of Hazlewoods LLP on each occasion since their initial appointment. The audit was put out to tender in 2017, and, as a result of that process, the Committee recommended to the Board, and the Board approved, the re-appointment of Hazlewoods LLP. The Senior Statutory Auditor for the Group has been rotated three times since the initial appointment, most recently in respect of the ?nancial year ended 30 April 2018.

Hazlewoods LLP has indicated its willingness to continue in of?ce as Auditor of the Group. Following its review, the Committee considers that, individually and collectively, the Auditor is appropriately experienced to ful?l the role required, and have recommended its re-appointment to the Board. A resolution for its re- appointment will be proposed at the forthcoming Annual General Meeting.

The Committee has considered the independence and objectivity of the Auditor and it is satis?ed in these respects that Hazlewoods LLP has ful?lled its obligations to the Group and its shareholders. In a change from previous years, Hazlewoods did not provide tax compliance services to the Group in the year ended 30 April 2021, which were outsourced to an alternative independent provider this year, and no other non- audit services were provided in the year. The Committee has advised that, based on its assessment of their performance and independence, Hazlewoods LLP has ful?lled its obligations to the Group and its shareholders. Howard Myles

Audit Committee Chairman

24 June 2021 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) (Amendment) Regulations 2013. The law requires the Group's Auditor, Hazlewoods LLP, to audit certain disclosures provided. Where disclosures have been audited, they are indicated as such. The Auditor's opinion is included in their report on pages 39 to 45.

Last year, shareholders were asked to approve the Directors' Remuneration Report at the Annual General Meeting ('AGM') through an advisory vote, as has been the case in previous years, and this will again be the case at this year's AGM. Similarly, shareholders were also asked to give a binding vote on the Directors' Remuneration Policy at last year's AGM. The Remuneration Policy must be the subject of a binding vote at least every three years and will not therefore be proposed at this year's AGM.

The Board considers and approves Directors' remuneration. No major decisions on or changes to Directors' remuneration have been made during the year ended 30 April 2021. During the year ended 30 April 2021, the fees were continued at a rate of GBP20,000 for the Chairman and GBP17,500 for other Directors, with an additional payment of GBP2,500 to the Chairman of the Audit Committee. The Company's performance

The graph on page 34 of the Annual Report compares the total return (assuming all dividends are reinvested) to Ordinary shareholders, compared to the total shareholder return of the MSCI UK Small Cap Index. Although the Company has no formal benchmark, the MSCI UK Small Cap Index has been selected as it is considered to represent a broad equity market index against which the performance of the Company's assets may be adequately assessed. Directors' service contracts

None of the Directors has a contract of service with the 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 ?rst Annual General Meeting after their appointment, and at least every three years after that. Directors who have served on the Board for more than nine years must offer themselves for re-election on an annual basis. Directors' entitlements

Directors are only entitled to fees in accordance with the Directors' Remuneration Policy as approved by shareholders. None of the Directors has any entitlement to pensions or pension-related bene?ts, medical or life insurance, share options, long-term incentive plans, or any form of performance-related pay. Also, no Director has any right to any payment by way of monetary equivalent, or any assets of the Company

except in their capacity as shareholders. There is no notice period and no provision for compensation upon loss of of?ce. The Directors' emoluments table below therefore does not include columns for any of these items or their monetary equivalents. Directors' emoluments for the year ended 30 April 2021 (audited)

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