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Chelverton UK Dividend shares dropped 31%

Chelverton UK Dividend shares dropped 31% – Over the year to the end of April 2019, Chelverton UK Dividend returned -9.9% in NAV terms as the company’s split capital structure magnified a -3.5% return on the portfolio. The share price divided from 251p to 173.5p – moving from a 0.6% premium to a 19% discount. The MSCI UK Small Cap Index fell by 3.1% over the period. Total dividends of 11.47p per ordinary share were paid and proposed including a special dividend of 2.50p. The core dividend rose by 6%.

[The collapse in the company’s rating may reflect investors’ nervousness around Brexit and the additional volatility that comes with the trust’s split capital structure. At the portfolio level, the manager didn’t do a bad job, but as the value of the ZDPs rises inexorably upwards towards their final capital entitlement, any fall in the NAV is magnified. This does work both ways, however.]

Extract from the manager’s statement

In the last year we have had two takeovers, Produce Investments and Dairy Crest (2018 – 1), and just post the year end we received offers for KCom, Mucklow (A & J) and BCA Marketplace. Including the takeovers of Produce Investments and Dairy Crest, seven holdings from the portfolio were sold in their entirety (2018 – 3), Curtis Banks, Discover IE, Macfarlane, Huntsworth and Hilton Foods.

Shareholdings were reduced in sixteen companies including Amino Technologies, BCA Marketplace, Bloomsbury Publishing, T. Clarke, Diversified Gas & Oil, Go-Ahead Group, GVC Holdings, Jarvis Securities, Kin and Carta, Numis Corporation, Polar Capital, Ramsdens, Randall and Quilter, Sanderson, Titon Holdings and UP Global Sourcing, all after strong share price
performances.

Seven new shareholdings were added to the Company’s portfolio in the year including, Babcock International – specialising in managing complex assets and infrastructure, Bakkavor – an international food manufacturing business specialising in fresh prepared foods, Crest Nicholson – a housebuilder, Devro – manufactures products derived from collagen, principally sausage casings, FinnCap – the largest adviser on the Alternative Investment Market (“AIM”) advising both public and private companies, Sabre Insurance Group – a specialist car insurer, STV Group – a Scottish media company.

The shareholdings were increased in twenty-five companies which were in the portfolio at the beginning of the financial year. Like last year this is a significant part of the portfolio and included a number of holdings that were “top sliced” in the early part of the year and then added to towards
the end of the year.

SDV : Chelverton UK Dividend shares dropped 31%

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