Last checked at 
11 May 2016 10:33
Dunedin Enterprise Investment Trust PLC (Company No SC52844) - Quarterly Update
Whilst there is no longer a requirement to publish an Interim Management Statement ("IMS") the Board of Dunedin Enterprise Investment Trust PLC ("Dunedin Enterprise") has decided to continue to provide an update on the net asset value of the Trust in a similar format as previously provided in the IMS on a quarterly basis. This net asset value update is as at 31 March 2016.
1. Unaudited net asset value per share
The unaudited net asset value per share at 31 March 2016 was 499.6p. This represents a decrease of 1.2% from the level at 31 December 2015.
2. Share price
The share price has decreased by 0.5% from 321.5p to 320p in the quarter to 31 March 2016. This compares to a decrease in the FTSE Small Cap Index of 1.0% over the same period. The discount to net asset value at 31 March 2016 was 35.9%.
3. Balance Sheet
The unaudited balance sheet as at 31 March 2016 is noted below:-
£'m | |
Investments:- | |
Dunedin managed | 78.1 |
Third party managed | 19.5 |
97.6 | |
Cash and near cash | 4.8 |
Other assets and liabilities | 0.7 |
Total net assets | 103.1 |
| |
Net asset value per share (p) *1 | 499.6p |
*1 - before dividend of 16p per share to be paid on 18 May 2016
4. Net asset value movements
The portfolio of investments has been re-valued at 31 March 2016. The movement in net asset value in the quarter can be attributed to:-
· Within the Dunedin managed portfolio there were valuation increases at Kee Safety (£1.1m), Blackrock (£0.4m), UPOL (£0.4m) and CitySprint (£0.4m). Maintainable earnings at Kee Safety continue to grow both organically and by acquisition. The multiple applied to the valuation has been increased from 9.0x to 10.0x to reflect the increasing scale of the business. Each of Blackrock, U-POL and CitySprint have benefited from an increase in maintainable earnings.
· These valuation increases have been offset by decreases in valuation at EV (£1.6m), RED (£1.2m), Pyroguard (£1.0m), Formaplex (£0.7m) and Premier (£0.6). Both EV and Premier Hytemp continue to be impacted by the lower oil price. Significant cost reduction programmes have been undertaken at each company in order to account for the prevailing market conditions. The maintainable earnings at RED have been impacted by the continued underperformance of the Permanent division. The earnings at Pyroguard have been impacted by increased competition. Delays to import tooling contracts have impacted the maintainable earnings at Formaplex.
· The European funds contributed an uplift of £2.2m. Realza contributed £1.7m to this uplift due to strong trading at GTT, the provider of outsourced tax services (£1.2m) and Dolz, the automotive pumps manufacturer (£0.5m)
· Management fees accounted for the majority of the other movements.
5. New investment and realisations
New investments in the quarter totalled £9.3m. An investment of £7.0m was made into Alpha Financial Markets through Dunedin Buyout Fund III LP. Alpha is a leading global asset and wealth management consulting firm. It is a market leader in providing specialist consultancy services to blue chip asset and wealth managers and their third party administrators.
A further £1.7m was drawn down by Innova/5 to invest in Trimo, a Slovenian provider of fireproof facades and roofs, glass curtain wall systems and metal modular facades for non-residential buildings.
A net total of £20.2m was realised in the quarter. In February 2016 CitySprint was partially realised generating proceeds of £26.1m of which £22.8m is capital and £3.3m is loan interest. A total of £7.3m was rolled over into a CitySprint Newco alongside LDC, resulting in net cash proceeds of £18.8m received by Dunedin Enterprise. Dunedin Enterprise retains a 5% interest in the newco. The overall return to Dunedin Enterprise was 2.75 times the original investment of £9.8m over five years.
Within the Innova portfolio, Provus, the Romanian credit card processing and financial services company, was realised generating proceeds of £0.9m and an overall multiple of 2.2 times the original investment.
6. Cash and Commitments
The Company had cash and near cash balances of £4.8m at 31 March 2016. In addition the Company has a revolving credit facility of £20m available until 31 May 2018.
As at 31 March 2016 the Company has outstanding capital commitments to limited partnership funds of £40.1m of which it is forecast that up to £21m will be drawn over the next three years.
The Board and Manager remain satisfied with the balance between available credit facilities and outstanding commitments given the expected rate of new investment and potential realisations of existing investments.
7. Managed Wind-down
At a General Meeting on 11 May 2016 shareholders will vote on a proposal for a managed wind-down of the Company.
8. Outlook
The UK economy and M&A market have been affected this year by economic uncertainty, the oil price weakness and the uncertainty over the EU referendum. Trading in the portfolio companies continues to be mixed.
For further information on Dunedin Enterprise please go to www.dunedinenterprise.com