Chelverton UK Dividend Trust plc (SDV) Chelverton UK Dividend Trust plc: Half-yearly Results 06-Dec-2019 / 12:43 GMT/BST Dissemination of a Regulatory Announcement, 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 2019 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 % 2019 2019 change Total gross assets 56,734 62,032 (8.54) (GBP'000) Total net assets 40,932 44,659 (8.35) (GBP'000) Net asset value per 196.32p 214.19p (8.34) Ordinary share Mid-market price per 182.50p 173.50p 5.19 Ordinary share Discount (7.04%) (19.00%) Net asset value per 107.57p 105.48p 1.98 Zero Dividend Preference share Mid-market price per 108.00p 110.00p (1.82) Zero Dividend Preference share Premium 0.40% 4.29% Revenue Six months to 31 Six months to % October 31 October change 2019 2018 Return per Ordinary 6.71p 7.15p (6.15) share Dividends declared per 4.80p 4.38p 9.59 Ordinary share* Special dividends 2.50p 0.66p 278.79 declared per Ordinary share Total Return Total return on Group (4.94%) 12.16% net assets** * Dividend per Ordinary share includes the first interim paid and second interim declared for the period to 31 October 2019 and 2018 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 2019. The net asset value per Ordinary share at 31 October 2019 was 196.3p down from 214.2p at 30 April 2019, a decrease of 8.3% during the period compared to an increase of 0.8% in the MSCI Small Cap Index, and NAV now stands at 202.5p. Since the beginning of the Company's financial year, the Ordinary share price has increased from 173.5p to 182.5p at 31 October 2019, an increase of 5.19%. Since the period end the shares have increased further to 191.0p, a percentage increase of 4.66% as at 2 December 2019 and the shares now trade on a reduced discount of 4.3%. Dividend Following 11 years of increase in the total annual core dividend paid by the Company, the first interim dividend for the current year of 2.40p (2018: 2.19p) per Ordinary share was paid on 1 October 2019. The Board has declared a second interim dividend of 2.40p per Ordinary share (2018: 2.19p) payable on 2 January 2020 to shareholders on the register on 13 December 2019, making a total for the half year of 4.80p per Ordinary share (2018: 4.38p) an increase of 9.6%. It 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 making a total core dividend of 9.60p for the year (2018: 8.97p) an increase of 7.0%. Portfolio In the last six months we have increased our investment in eighteen of our existing holdings (2018: 18), taking advantage of lower share prices and shares being available in Alumasc Group, Amino Technologies, Badcock International, Brewin Dolphin Holdings, Castings, Chesnara, Crest Nicholson, De La Rue, Devro, Essentra, GVC Holdings, McColls Retail Group, Northgate, Personal Group Holdings, Saga, Shoe Zone, STV and Town Centre Securities. During the period we added four new names to the portfolio (2018: 3) - Close Brothers Group1, Tyman2, Vertu Motors3 and XPS Pensions4. Funds were raised from the outright sale of four of our holdings (2018: 4); Kcom Group, Mucklow (A&J), Sanderson Group and StatPro were taken over in the period. The following holdings were reduced as they grew to become larger weightings on lower yields: Clarke (T.), Titon Holdings and UP Global Sourcing Holdings. Outlook The shares of the companies in which the fund is invested have experienced a tough 18 months as smaller companies that pay increasing dividends and are labelled "value shares" have fallen further out of favour. In the last few months there has been some improvement as it is hoped that the whole Brexit process will reach resolution. The underlying performance of most of the companies has generally been positive with associated 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 75 holdings (2018: 73). UK GDP growth has been very subdued for the past six months, although there are signs that UK Growth will be maintained and might, next year, start to gently accelerate. As we write this report today the whole Brexit position of course remains unresolved. We are close to the General Election on 12 December 2019 and a great deal depends on the result of that. At this point no one can say what the position will be on 1 January 2020 however it is to be hoped that the "Brexit issue", which has progressively absorbed more and more time and attention, will be resolved in some manner. In the meantime our companies, for whom trading across border with the EU is a very small part of their sales, have been dragged down by this generally negative sentiment. Reassuringly the dividends of the underlying companies continue to be increased and we believe that this will continue into 2020 with company balance sheets remaining in a strong state. Chelverton Asset Management 6 December 2019 1 Close Brothers Group - financial services provider 2 Tyman - building materials manufacturer 3 Vertu Motors - automotive retailer 4 XPS Pensions - pensions actuarial, consulting and administration services Principal Risks The principal risks facing the Group are substantially unchanged since the date of the Annual Report for the year ended 30 April 2019 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) (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 6 December 2019 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 2019 Six months to Year to Six months to 31 October 2018 30 April 2019 31 October 2018 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 on - (3,080) (3,08 - (7,083) (7,08 - (7,472) (7,47 investment 0) 3) 2) s at fair value through profit or loss Investment 1,604 - 1,604 3,221 - 3,221 1,712 - 1,712 income Investment (71) (214) (285) (153) (459) (612) (79) (236) (315) management fee Other (134) (8) (142) (274) (37) (311) (142) (30) (172) expenses Net 1,399 (3,302) (1,90 2,794 (7,579) (4,78 1,491 (7,738) (6,24
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