Dunedin Smaller Companies posts strong outperformance – Dunedin Smaller Companies says that, for the year ended 31 October 2017, its net asset value total return was 32.8%, a significant outperformance of the benchmark, the SmallCap Index (ex Investment Companies), which delivered a total return of 21.9%. The share price total return for the year was 28.8%. The discount at the year-end was 20.7%, which compared to 17.8% at the beginning of the year.
The chairman says positive performance was broadly spread across the portfolio. Areas deserving of special mention include the very strong performance from power converter business XP Power, and specialist electronic design and manufacturer Acal. The household goods sector was another area that delivered a material contribution to performance and it is pleasing to note that recent introductions, Cairn Homes and Victoria, both performed particularly strongly. Dechra Pharmaceuticals is a company that has been in the portfolio for 14 years. It has featured as a significant contributor to performance in previous periods and has done so again this year. Another more recent introduction to the portfolio is litigation finance company Burford Capital. It has had an exceptional year, combining a material acquisition with strong underlying performance and outstanding performance from one asset in particular.
Real Estate is an area of the market that has suffered in the post-Brexit environment. However, the portfolio’s exposure to this segment of the market is largely through companies that, whilst cyclical, are less exposed to office and retail markets which have been most severely affected. Consequently, the Company has benefited from being both underweight the sector relative to the benchmark and from its holdings performing more strongly than the benchmark.
Revenue earnings per share for the year were 5.42p, compared to 5.98p for the previous year. The primary reasons for this decline were dividend cuts announced by Interserve and Fenner, and the non-recurrence of the special dividend that was paid by Stock Spirits in the prior year. The total dividend for the year will amount to 6.39p (2016 – 6.15p), an increase of 3.9% for the year, in line with inflation.
DNDL : Dunedin Smaller Companies posts strong outperformance