Downing Strategic Micro-Cap makes solid progress on managed wind down

Downing Strategic Micro-Cap Investment Trust (DSM) announced its annual results for the year ended 29 February 2024. In November 2023 the board and manager announced the managed winddown of the company and the intention to return at least 20% of NAV to shareholders in early 2024. Since then, authority to change the mandate of the company and proceed with winddown has been approved by shareholders, and the payment of a 30p dividend (42% of the NAV as at the time of the November announcement of intention to return capital), has been repaid to shareholders by way of special dividend. The remaining portfolio is valued at a NAV of 40.02p per share (as at 31 May 24). In the period, there were realisations of £11.6m across the portfolio realising net gains on cost of £2.0m. Write downs of unlisted assets resulted in a realised loss of £3.8m.

Outlook and Post Balance Sheet events

As at 31 May 2024, the net assets were £18.3m or 40.02p per share post the payment of the special interim dividend of 30p per share on 30 April 2024. The remaining portfolio amounts to £12.7m, and cash was £5.6m.

Since the year end, as at 31 May 2024, FireAngel (12.8% of NAV) is now under a mandatory offer subject to shareholder support, which should it be approved, alongside other realisations would return a minimum of 8p per share to shareholders in DSM later in the summer of 2024.

The remaining portfolio is held in companies that are profitable, cash generative, and reporting positive operational trading momentum. The company believes these sit at a material discount to intrinsic value with clear catalysts in place.