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Chelverton Small Companies Dividend Trust PLC (SDVP)
Half Yearly Results
10-Dec-2018 / 08:47 GMT/BST
Dissemination of a Regulatory Announcement that contains inside information according to
REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
CHEVERTON UK DIVIDEND TRUST PLC
Half-Yearly Financial Report
For the six months ended 31 October 2018
Investment Objective and Policy
The investment objective of Chelverton UK Dividend Trust PLC ('the Company') is to provide
Ordinary shareholders with a high income and opportunity for capital growth, having
provided a capital return sufficient to repay the full final capital entitlement of the
Zero Dividend Preference shares issued by the wholly owned subsidiary company, SDV 2025 ZDP
PLC ('SDVP').
Chelverton UK Dividend Trust PLC, and its subsidiary SDV 2025 ZDP PLC, together form the
Group ('the Group'). The Group's funds are invested principally in mid and smaller
capitalised UK companies. The portfolio comprises companies listed on the Official List and
companies admitted to trading on AIM. The Group does not invest in other investment trusts
or in unquoted companies. No investment is made in preference shares, loan stock or notes,
convertible securities or fixed interest securities.
Financial Highlights
Capital 31 October 30 April 2018 % change
2018
Total gross assets 59,531 66,386 -10.33
(GBP'000)
Total net assets (GBP'000) 44,403 51,794 -14.27
Net asset value per 212.96p 249.61p -14.68
Ordinary share
Mid-market price per 209.00p 251.00p -16.73
Ordinary share
(Discount)/premium (1.86)% 0.56%
Net asset value per Zero 103.47p 101.41p 2.03
Dividend Preference share
Mid-market price per Zero 108.00p 105.50p 2.37
Dividend Preference share
Premium 4.38% 4.02%
Revenue Six months to Six months to % change
31 October 31 October
2018 2017
Earnings per Ordinary 7.15p 6.37p 12.24
share
Dividends declared per 4.38p 4.04p 8.42
Ordinary share*
Special dividends 0.66p - -
declared per Ordinary
share*
Total Return
Total return on Group net 12.16% 16.27%
assets**
* Dividend per Ordinary share includes the first interim paid and second interim declared
for the period to 31 October 2018 and 2017 and will differ from the amounts disclosed
within the statement of changes in net equity, owing to the timings of payments.
** Adding back dividends distributed in the period.
Interim Management Report
Results
This Half-Yearly Report covers the six months to 31 October 2018. The net asset value per
Ordinary share at 31 October 2018 was 212.96p down from 249.61p at 30 April 2018, a
decrease of 14.68% in the past six months compared to a decrease of 6.92% in the MSCI Small
Cap Index.
Since the beginning of the Company's financial year, the Ordinary share price has decreased
from 251p to 209p at 31 October 2018, a decrease of 16.7%, the premium of 0.56% at the
year-end has now become a discount of 1.86% at the period end. Since then the share price
has decreased to 188.50p as at the close of business on 5 December 2018.
Dividend
Following 10 years of increase in real terms the total annual core dividend paid by the
Company, the first interim dividend for the current year of 2.19p (2017: 2.02p) per
Ordinary share was paid on 1 October 2018. The Board has declared a second interim dividend
of 2.19p per Ordinary share (2017: 2.02p) payable on 2 January 2019 to shareholders on the
register on 7 December 2018, making a total for the half year of 4.38p per Ordinary share
(2017: 4.04p) an increase of 8.4%. Iit is anticipated that the Company will maintain this
level of dividend for the third quarter and will likewise maintain the same level for the
fourth interim of 2.40p as was paid last year making a total core dividend of 8.97p for the
year (2017: 8.46p) an increase of 6.03%.
Portfolio
In the last six months we have increased our investment in eighteen of our existing
holdings (2017: 17), taking advantage of lower share prices and shares being available in
Alumasc Group, Anglo African Oil & Gas, Brewin Dolphin Holdings, Brown (N) Group, Castings,
Dairy Crest Group, Essentra, Flowtech Fluidpower, Headlam, Kier Group, Low & Bonar,
Marston's, McColls Retail Group, Mucklow (A & J) Group, Park Group, Photo-Me International,
Revolution Bars Group and UP Global Sourcing Holdings.
During the period we added three new names to the portfolio (2017: 8) - Bakkavor1, Crest
Nicholson2 and Sabre Insurance3. Funds were raised from the outright sale of four of our
holdings (2017: 19); Produce Investments was the only company taken over in the period
whilst the holdings in Huntsworth, Macfarlane and Hilton Foods were sold in their entirety.
The following holdings were reduced as they grew to become larger weightings on lower
yields: Amino Technologies, BCA Marketplace, Curtis Banks Group, GVC Holdings, Numis
Corporation, Ramsdens Holdings and Titon Holdings.
Outlook
Overall, the shares of the companies in which the fund is invested were generally steady in
the first part of the reporting period from May to July but since then have declined,
despite the fact that the underlying performance of most of the companies has generally
been positive with strong dividend growth. With the recent decline in the general market
the number of attractive opportunities available to invest in has increased significantly
and the portfolio has been increased to 73 holdings (2017: 72).
UK GDP growth has been subdued but steady for the last six months, although there are signs
that UK Growth will be maintained whilst the Eurozone, collectively, is starting to
experience some reductions in growth.
The whole Brexit position of course remains unresolved and at this point no one can say
what the position will be on the 1st April 2019. The whole issue has progressively absorbed
more and more time and attention and in the meantime our companies, for whom trading with
the EU is a very small part of their sales, have seen their share prices dragged down.
Reassuringly, the dividends of the underlying companies continue to be increased and we
believe that this will continue into 2019 with company balance sheets remaining in a strong
state.
Chelverton Asset Management
7 December 2018
1 Bakkavor - provider of fresh prepared food
2 Crest Nicholson - residential developer
3 Sabre Insurance - private motor insurance underwriter
Principal Risks
The principal risks facing the Group are substantially unchanged since the date of the
Annual Report for the year ended 30 April 2018 and continue to be as set out in that report
on pages 10 to 11. Risks faced by the Group include, but are not limited to, market risk,
discount volatility, regulatory risk, financial risk and risks associated with banking
counterparties.
Responsibility Statement of the Directors in respect of the Half-Yearly Report
We confirm that to the best of our knowledge:
? the condensed set of financial statements has been prepared in compliance with the IAS 34
'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities and
financial position of the Group; and
? the interim management report and notes to the Half-Yearly Report include a fair view of
the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of the
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) DTR 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 Group 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 7 December 2018 and the
above responsibility statement was signed on its behalf by Lord Lamont, Chairman.
Condensed Consolidated Statement of Comprehensive Income (unaudited)
for the six months ended 31 October 2018
Six months to Year to 30 April Six months to
2018
31 October 2018 31 October 2017
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(audited)
(Losses)/gains - (7,472) (7,472 - 999 999 -' 3,820 3,820
on investments )
at fair value
through profit
or loss
Investment 1,712 - 1,712 2,526 - 2,526 1,314 - 1,314
income
Investment (79) (236) (315) (156) (469) (625) (75) (223) (298)
management fee
Other expenses _(142) __(30) _(172) _(275) _(446) _(721) _(118) __(6) (124)
Net 1,491 (7,738) (6,247 2,095 84 2,179 1,121 3,591 4,712
(deficit)/retu )
rn before
finance costs
and taxation
Finance costs
Appropriations ___- (290) (290) ___- (630) (630) ___- (341) (341)
in respect of
Zero Dividend
Preference
shares
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