Chelverton UK commits to at least maintain its dividend – Chelverton UK Dividend Trust has published its annual report for the year to 31 April 2020. The gearing provided by its zero dividend preference shares has amplified the COVID-19 related fall in its NAV. The NAV total return on the ordinary shares was -36.1%. Shareholders saw a 26.5% drop in the share price from 173.5p to 127.5p but that was somewhat offset by the dividend, which totalled 9.6p for the year (up from 8.97p). The dividend was almost covered by earnings of 9.45p per share.
The shares moved from trading at a discount of 19.0% to a modest premium of 2.1%. The board says it will only issue new ordinary shares when the premium is high enough to offset the associated costs. It says that it is also wary of diluting the revenue reserve. The company has revenue reserves which after payment of the fourth interim dividend represent some 172% of the current annual dividend or some 16.50p per ordinary share. The board has decided that the four interim dividends paid in respect of the financial year ending 30 April 2021 will not be less than that paid in respect of the financial year ended 30 April 2020. It will dip into the reserves if necessary.
Extract from the manager’s report
“In the last year we have had seven takeovers: KCom Group, Mucklow (A&J) Group, Sanderson Group, Statpro, BCA Marketplace, Murgitroyd Group and Low & Bonar (2019: 2), and post the year end the offer for Moss Bros Group was confirmed. Including the above takeovers, two other holdings from the portfolio were sold in their entirety (2019: 4), Anglo African Oil and Gas and De La Rue.
Shareholdings were reduced in 11 companies, including Belvoir Lettings, Bloomsbury Publishing, Castings, Clarke (T.), DFS Furniture, Jarvis Securities, Kin and Carta, Moss Bros Group, Strix Group, UP Global Sourcing Holdings and XP Power, all after strong share price performances.
Eight new shareholdings were added to the Company’s portfolio in the year, including: Close Brothers Group – Merchant Banking Group, Elementis – Speciality chemicals and personal care products, MTI Wireless Edge – Antennas and antenna systems, Portmeirion Group – Ceramic tablewear, giftware, glassware and home fragrance products, TheWorks.co.uk – Retailer of gifts, arts and crafts, stationary, toys and books, Tyman – Supplier of engineered fenestration components and access solutions, Vertu Motors – Car dealership group, XPS Pensions – Pensions consultancy.
The shareholdings were increased in 19 companies which were in the portfolio at the beginning of the financial year. As ever, this represents a significant part of the portfolio and again includes 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 at lower prices.”
SDV : Chelverton UK commits to at least maintain its dividend