Dunedin Enterprise has announces its annual results for the year ended 31 December 2015. During the year the companies NAV total return was flat whilst it share price fell 7.5%; both underperforming the FTSE Small Cap Ex-Investment Trusts Index, which returned 13.0%. At the end of February, the trust announced that, following consultation with the company’s largest shareholders and advisers, proposals are to be put to shareholders for a managed wind down of the company. The company says that a separate circular will be posted to shareholders with the Annual Report containing further information on these proposals, on which shareholders will be asked to vote. There were no significant realisations during the year to 31 December 201h and so the company’s income fell as a result. As such, the board are not proposing a final dividend for the year. However, following the CitySprint realisations, post year end, the company is proposing to pay an interim dividend of 16p per share for the year ended 31 December 2016.
In terms of portfolio activity, there were £3.3m of portfolio realisations during the year as well as £14.5m of new investment, whilst post-year end, there has been a partial realisation of CitySprint (at 2.75 times cost) as well a new investment in Alpha Financial Markets for £7.0m. In terms of specific names, a new investment of £4.9m was made in Blackrock Programme Management, which provides independent expert witness and construction consulting services for large, international projects. Follow-on investments were also made into RED, Premier Hytemp and Steeper.
In terms of trading performance, the company says that this has again been mixed.they say that valuation uplifts were achieved by CitySprint, Hawksford, the fiduciary services business, and Kee Safety, the provider of safety equipment. The managers comment that each of these businesses is trading well as a result of growth, achieved both organically and by acquisition.They also say that, as EV and Premier Hytemp supply services to the oil industry, trading at both has been significantly impacted by the reduction in the price of oil. However, they also say that both are actively reducing their cost base to align this more closely to market conditions. In addition they comment that Pyroguard has been impacted by production difficulties during the year at its French site but that these have now been resolved.
In terms of outlook, the company says that the June vote on the UK’s membership of the EU is likely to lead to a period of uncertainty. However, the environment continues to be favourable for realising good private equity assets and particularly those which offer the potential for strong profit growth. They also comment that the investment portfolio is relatively mature and a number of their investee companies offer interesting prospects for realisation.
As at 31 December 2015 the Company had cash and near cash balances of £0.6m all of which are denominated in Sterling. The Company also has a revolving credit facility with Lloyds of £20m of which £4.7m was drawn at the year end. The net cash position of the Company, at the year end, was therefore overdrawn by £4.1m but, during the year, the availability of the £20m facility from Lloyds was extended to 31 May 2018. Following the sale of CitySprint and after taking account of the investment in Alpha, other follow-on investments and operating expenses, the Company has net cash of £4.6m. At 31 December 2015 the Company had undrawn commitments totalling £50.2m however, following investment activity so far during 2016, the company says that it now has undrawn commitments to Dunedin managed funds of £35.7m and a further €6.0m (£4.4m) of undrawn commitments to the two remaining European funds. The company says that it is expected that £21m of the total outstanding commitments will ultimately be drawn over the remaining life of the funds.
Dunedin to pay 16p interim dividend following CitySprint realisation : DNE