Chelverton UK Dividend Trust (SDV) has released its annual results for the 12 month period ending 30 April 2023.
- SDV’s NAV per share fell by -15.3%, and its share price fell by -9.4%. Total assets, including its revenue reserve, fell by -8.7%. Over the same period the MSCI Small Cap Index fell by -5.2%.
- SDV paid four quarterly dividends of 2.9425p per share over the year, totalling 11.77p per share, a 7% increase on the prior year’s. The board expects the next financial year’s dividend will very likely exceed, or at the very least match, this year’s payment.
- The dividend was fully covered by the revenue return of the trust, which increased by 29.4 over the year to 12.94p per share. The prior year’s dividend was uncovered.
- SDV was able to trade at a 3.85 premium as of end April 2023, increasing from the 30% discount it traded on at the end of its prior financial year. SDV currently trades on a 7.4% premium.
- The board was able to issue a small number of shares over the year, issuing 0.5m shares, increasing the circulation to 21.4m.
SDV’s investment manager, David Horner, commented:
“The year to April 2023 has been another challenging one, with the global economy feeling the effects of the war in Ukraine, supply chain challenges, inflation, rising interest rates and a banking crisis. In the UK, these combined forces were exacerbated by political turmoil, culminating in multiple leadership changes and the mini-budget in September, which severely dented both corporate and consumer confidence. With this as the backdrop, it is not surprising that share prices have suffered, with the small and midcap companies in which we invest particularly affected. It should also be noted that the large open-ended funds which invest in small and midcap UK equities have seen significant redemptions over the past year, which has put further pressure on stock market valuations in our part of the market.
“It is encouraging that the underlying performance of the companies in the portfolio continues to be resilient with the majority of businesses reporting results in line with market expectations during the recent reporting season. The more efficient processes developed during the pandemic have helped our investee companies to navigate the difficult trading conditions over the past year and have left them well prepared to take advantage when the macro environment improves. Despite the resilient underlying trading, the small and midcap market has de-rated, resulting in the decline in the Company’s NAV.
“We continue to have confidence in our investee companies and believe we are yet to benefit from the positive steps taken to improve the underlying operating efficiency of the businesses through the pandemic. Having traded through the challenges of the last twelve months, our companies are generally entering the next phase of the cycle as more lean, nimble enterprises. It will take a positive shift in investor sentiment for our companies to receive the ratings they deserve, but we are confident that the small and midcap universe in which we invest will return to outperformance over the medium term.”