Chelverton UK Dividend Trust PLC
Half-Yearly Financial Report
For the Six Months ended 31 October 2025
Investment Objective and Policy
The Company’s investment policy is that:
• the Company will invest in equities in order to achieve its investment objectives, which are to provide both income and capital growth, predominantly through investment in mid and smaller capitalised UK companies admitted to the Official List of the UK Listing Authority and traded on the London Stock Exchange Main Market, on AIM or AQSE or traded on other qualifying UK marketplaces.
• the Company will not invest in preference shares, loan stock or notes, convertible securities or fixed interest securities or any similar securities convertible into shares; nor will it invest in the securities of other investment trusts or in unquoted companies. The Company may retain investments in companies which cease to be listed after the initial investment was made, so long as the total is non-material in the context of the overall portfolio; however, the Company may not increase its exposure to such investments.
Financial Highlights
| 31 October | 30 April | |||
| Capital | 2025 | 2025 | % change | |
| Total gross assets (£’000) | 32,718 | 30,328 | 7.88 | |
| Total net assets (£’000) | 32,568 | 29,867 | 9.04 | |
| Net asset value per Ordinary share | 145.07p | 133.04p | 9.04 | |
| Mid-market price per Ordinary share | 131.00p6.54% | 128.50p | 1.95 | |
| Discount | (9.70%) | (3.41%) | ||
| Six months to | Six months to | |||
| 31 October | 31 October | |||
| Revenue | 2025 | 2024 | % change | |
| Return per Ordinary share | 3.57p | 6.41p | (44.31) | |
| Dividends declared per Ordinary share* | 5.00p | 6.50p | (23.08) | |
| Total return | ||||
| Total return on Group net assets**1 | 13.32% | (23.82%) | ||
* Dividend per Ordinary share includes the first interim paid and second interim declared for each of the periods to 31 October 2025 and 2024 and will differ from the amounts disclosed within the statement of changes in net equity.
** Adding back dividends distributed in the period.
1 These are alternative performance measures (‘APM’) (see APM glossary for further information).
Interim Management Report
This half-yearly report covers the six months to 31 October 2025. The net asset value per Ordinary share as of 31 October 2025 was 145.07 up from 133.04p as of 30 April 2025, an increase of 9.0% during the period. As at the 28 November 2025 the NAV per share has decreased to 143.69p.
Since the beginning of the Company’s financial year, the Ordinary share price has increased from 128.5p to 134.0p as of 31 October 2025, an increase of 4.3%. Since the period end the shares have slightly decreased in price to 133.0p and as at 28 November 2025 the shares traded on a discount of 7.4%.
Dividend
As previously indicated, the Board has resolved to use revenue reserves to supplement the income from the underlying portfolio in order to pay a dividend of 10.0p per share for the next three years, subject to market conditions at the time but assuming no increase in underlying portfolio income. In line with this intention, the first interim dividend for the current year of 2.50p per Ordinary share was paid on 10th October 2025. The Board has declared a second interim dividend of 2.50p per Ordinary share payable on 8 January 2026 to shareholders on the register on 12 December 2025, making a total for the half year of 5.0p per Ordinary share.
It is anticipated that the Company will maintain the level of dividend for the third and fourth quarter at
2.5p making a total core dividend declared of 10.00p for the year.
Portfolio
In the last 6 months we have repositioned our portfolio following the ZDP redemption at the end of April 2025. We increased investment in ten of our existing holdings (2024:16), B&M Europe, Chesnara, Conduit Re, Foresight Group Holdings, Gateley Plc, ITV, Polar Capital, Serica Energy, Vesuvius and Zigup.
During the period we also added nine new names to the portfolio (2024: 9). These were British Land Co – real estate investment and development; Bytes Technology Group – IT solutions and services; Hilton Food Group – meat and fish packaging; Hollywood Bowl – leisure; Man Group – investment manager; Next 15 Group – consultancy; Primary Health Properties – healthcare REIT; Taylor Wimpey – housebuilder; and Tristel – hospital disinfection products.
Funds were raised from the outright sale of two of our holdings Bakkavor Group and Epwin Group, both of which were the subject of takeovers.
The following holdings were reduced on yield grounds: Arbuthnot Banking Group, Coral Products, DSW Capital, Kier Group, LendInvest, M.P. Evans Group, One Health Group, Orchard Funding Group, Palace Capital, Personal Group, Ramsdens Holdings, Sancus Lending Group, Smiths News and Stelrad Group.
From a performance perspective there was no real theme to the biggest movers in the period, with our top contributors and detractors largely reflecting individual company circumstances. On the downside Hilton Foods suffered due to an operational issue at its Greek smoked salmon facility, which impacted exports into the US. STV Group suffered from a slowdown in demand for its Studios business and B&M Europe shares fell reflecting a weak trading update, followed by a second update highlighting increased freight costs. On the positive side Serica Energy shares rose over 70% in the period, reflecting accretive M&A activity alongside expectations of a more hospitable regulatory environment for UK North Sea assets. Johnson Matthey reacted well to the disposal of its Catalyst Technologies business at an attractive price, Polar Capital benefitted from strong asset performance leading to increased AuM and Chesnara shares re-rated along with the wider Life Insurance sector as interest rates fell.
Outlook
The past six months have been a volatile period as markets tried to absorb the combined impacts of US trade tariffs, differing trajectories of interest rate cuts across western economies and the ever-evolving effect of the adoption of new technologies. From a UK perspective, a level of political uncertainty rarely seen under a government with such a large majority is adding to the general sense of unease, not helped by the long wait for this year’s “Autumn” Budget. The result of this has been a collapse in both corporate and consumer confidence, delays in business investment and a historically high household savings ratio.
There has undoubtedly been a sense of pessimism amongst investors around UK domestic equities, and UK small and midcap stocks in particular, however it’s not all doom and gloom. The most significant hurdles for the UK economy over the past couple of years have been the intertwined issues of high interest rates and high inflation, both of which we believe are now set to start moving in the right direction.
The Budget has been calmly received, as much of it had already been leaked, and the bond markets have been reassured by the level of headroom created. Unfortunately, there were no initiatives for advancing development and growth which of course would help GDP growth, higher government revenue and a consequent reduction of deficit financing. Our companies will have to manage another significant rise in the minimum wage of 4.1% and even higher increases for younger people.
Inflation is set to fall over the next year as several one-off factors in 2025 fall out of the calculation (national living wage and national insurance increase, energy price rises etc), which should allow the Bank of England to continue its current path of interest rate cuts into next year. We have already seen mortgage rates fall significantly from their peak and banks remain incredibly well capitalised.
As we have commented before, the strength of UK corporate balance sheets is neatly evidence by the scale of buy-back activity currently being undertaken, while consumer balance sheets have been bolstered by wage increases and increased savings. This means the raw material for growth is readily available, what is lacking is the confidence to deploy it.
As we look past the recent budget, a more stable economic environment combined with reducing interest rates and strong corporate balance sheets has the potential to be a powerful combination both for the UK economy at large and UK small and midcap equities.
In the meantime, we continue to be impressed by the resilience of cash flows within our underlying portfolio and the adaptability of our investee companies to the difficult macro environment. Dividend payments remain strong and we are confident that our management teams are positioning businesses to benefit from an uptick in demand when it happens.
Chelverton Asset Management Limited
4 December 2025
The SNOWBALL has avoided owning SDV as there ZDP’s had first call on any cash in a market crash. Having redeemed the ZDP’s they fill several requirements to be included in the SNOWBALL.
Bull Case
A yield of 7.5%, fcast dividend for the next couple of years, investing in Smaller Companies, where research shows they outperform as Elephants can’t run. Diversification away from Renewables whilst maintaining a higher dividend yield.
Bear Case
Trades at a small discount to NAV
From the commentary inflation is not going to fall but rise
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