Tuesday, 11 March 2008

Chelford sold because of CGT changes?

Last week it was announced that AIM-listed Chelford had agreed to be acquired by Solarsoft for £16.1m cash/215p per share and a 25% premium to the previous day’s closing price.

Chelford, provides specialist solutions in the areas of supply chain management, ERP, manufacturing, warehousing and distribution, asset tracking and financials, using products based upon its own intellectual property, SAP, Microsoft and CODA software products. As at 30 June 2007, Chelford employed in excess of 150 people and generated revenues of approximately £9.3 million and operating profit (before amortisation of intangibles and share based payments) of some £0.6 million in the six month period ended 30 June 2007.

George O’Connor from Panmure Gordon thinks “that this could be the first illustration that CGT tax changes are changing the shape of the sector”.

As readers know, the rate of CGT payable on the sale of business assets (all AIM stocks are classed as business assets) will rise from 10% (assuming the shares have been held for 2 years or more) to 18% in the next Tax Year which starts on 6th Apr 08.

I’ve expressed my views on this crazy CGT change many, many times since Darling wrote it on the back-of-a-fag packet for the pre-Budget review last Oct. Unfortunately I now cannot see him either changing the proposed rules any further or postponing them in his Budget on Wednesday. He has made some concessions – you can still make a £1m gain and be taxed at just 10%. But this will not apply to most AIM shares and it certainly will not apply to most investments that ‘serial entrepreneurs’ (like me) might make. To be eligible you have to be a director of the company and own more than 5% of the voting equity.

In my lifetime, I’ve lived through a number of ‘bad Chancellors’ but Darling is doing everything necessary to get my vote of Worst ever. I just hope he might be one of the shortest stay Chancellors on record too.

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