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Chelverton UK Dividend’s new chairman has already been on the board since 2011

Chelverton UK Dividend Trust has published results covering the 12 month ended 30 April 2022. The underlying portfolio fell by 8.1%, beating the MSCI Small Cap Index, which fell by 15.2%. However, the fall is amplified by the gearing provided by the trust’s zero dividend preference shares. The net asset value per ordinary share fell to 198.5p from 227.1p, a decrease over the year of 12.60%. The ordinary share price fell to 192.5p per share from 220.0p.

The dividend was increased by 7.1% to 11p, but this was not covered by earnings – revenue per share was 10.0p. After payment of the fourth interim dividend, revenue reserves represent some 81.7% of the current annual dividend or about 9.0p per ordinary share.

Many investors like to see board tenures capped at 10 years. William van Heesewijk has retired from the board after 17 years. Howard Myles will replace Lord Lamont as chairman despite having been a member of the board since 2011.

Extract from the manager’s report

The general de-rating of UK equities has resulted in a pickup in corporate activity across the market. Within our portfolio, Brewin Dolphin received a recommended bid from RBC at an attractive premium and we took the opportunity to exit our position at close to the offer price so we could reinvest the cash. Randall & Quilter also received an opportunistic approach from its largest shareholder, although this has since been rejected by the wider shareholder base. Just after the period end we also saw a recommended bid by KKR for ContourGlobal. While the offer price represents a reasonable premium over the previous market price, we will be sorry to lose a solid cash generator which paid a very attractive dividend. In addition to the takeovers, we have sold six positions in their entirety (2021: 8): Babcock, DX, Flowtech, Go Ahead, ShoeZone and Strix Group. We have however started a new position in Strix Group more recently as the shares had de-rated significantly and offered an attractive yield again.

Shareholdings were reduced in those companies that outperformed during the period including: Bloomsbury Publishing, Braemar Shipping Services, Epwin Group, Jarvis Securities, Redde Northgate, Clarke (T.), TheWorks.co.uk, Tyman and Vertu Motors, all after strong share price performance.

Eight new shareholdings were added to the Company’s portfolio in the year (2021: 8), including: DSW Capital – a challenger mid-market professional services business; Kitwave Group – an independent impulse product wholesaler; Spectra Systems – an IP led business focussing on secure transaction technology; Springfield Properties – a Scottish housebuilder; and speciality chemicals business, Synthomer. Shareholdings were also increased in 20 companies (2021: 33) which were in the portfolio at the start of the year, including Bakkavor, ContourGlobal, Duke Royalty, Hargreaves Services, iEnergizer, MP Evans and Palace Capital.

SDV : Chelverton UK Dividend’s new chairman has already been on the board since 2011

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