Dunedin Ent.it. Regulatory News (DNE)

Dunedin Enterprise Investment Trust PLC (Company No SC52844)

Quarterly Update at 30 September 2017

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 Trust in a similar format to that previously provided by the IMS on a quarterly basis.

1. Unaudited net asset value per share

The unaudited net asset value per share at 30 September 2017 was 569.6p, representing an increase of 10.6% from the level at 30 June 2017. Following the Return of Capital and the Dividend referred to in paragraphs 5 and 6 below, the unaudited net asset value per share of the Company will reduce to 456.1p.

2. Share price

The share price increased by 13% from 350.5p to 396p over the quarter to 30 September 2017. This compares to an increase in the FTSE Small Cap Index of 2.8% over the same period. The discount to net asset value at 30 September 2017 was 30.5%. The share price at 16 November 2017 was 465p, representing a discount of 18.4% to the net asset value at 30 September 2017. 

3. Realisations

In August Blackrock PM was realised generating proceeds of £12.8m, consisting of capital of £12.7m and income of £0.1m. The original cost of the investment made in March 2015 was £4.9m and, over the life of the investment, a total of £13.9m has been received by Dunedin Enterprise representing a 2.8 times return and an IRR of 60%.

Following the quarter end two further realisations were achieved.

· Alpha FMC successfully listed on the AIM market and our entire investment was realised. Total proceeds from the listing amounted to £16.7m (an uplift of £7.7m), consisting of capital of £15.6m and income of £1.1m. The original cost of the investment in February 2016 was £8.1m and, over its life, a total of £16.7m has been received by Dunedin Enterprise, representing a 2.1 times return and an IRR of 55%.

· Kee Safety was realised via a secondary buyout with proceeds from the sale amounting to £15.8m (an uplift of £4.2m) consisting of capital of £15.1m and income of £0.7m. The original cost of the investment made in November 2013 was £6.3m and, over its life, a total of £18.8m has been received by Dunedin Enterprise, representing a 3.0 times return and an IRR of 35%.

4. Cash and Commitments

Dunedin Enterprise had cash and near cash balances of £16.4m at 30 September 2017. Following the realisations of Alpha and Kee Safety the cash balance held by the Company was £47.2m as at 16 November 2017. Additionally, Dunedin Enterprise has a revolving credit facility of £20m available until 31 May 2018.

Dunedin Enterprise has outstanding capital commitments to limited partnership funds of £43.5m following the recent realisations from Dunedin Buyout Fund III LP. It is expected that £27m of the total outstanding commitments will ultimately be drawn over the remaining life of the funds.

5. Return of Capital

Following the portfolio realisations noted above the Board has decided to return £20.6m to shareholders via an issue of B Shares as set out in the Circular sent to shareholders on 3 April 2017 and as approved by shareholders on 11 May 2017. B Shares of 50p each will be paid up from capital and issued to all shareholders by way of a bonus issue pro-rata to their holding of Ordinary Shares on the basis of two B Shares for every one Ordinary Share held at the record date of 6.00pm on 1 December 2017. The B Shares will be issued on 4 December 2017 and immediately redeemed at 50p per B Share. The proceeds from the redemption of the B Shares, which is equivalent to £1 per ordinary share, will be sent to shareholders on 15 December 2017, either through CREST to uncertificated shareholders or via cheque to certificated shareholders. The capital being returned represents 17.6% of the Company's net asset value at 30 September 2017.

A copy of the Circular sent to Shareholders is available on the Company's website (www.dunedinenterprise.com). Also available on the website is a Guide to the B Share Scheme which includes an illustration for the computation of the chargeable gain on the B Shares for tax purposes.

6. Dividend

An interim dividend of 13.5p per share is payable to shareholders on 15 December 2017 with an ex-dividend date of 30 November 2017 and a record date of 1 December 2017. This represents the majority of the income received by the Company to date.

7. Net asset value movements

The portfolio of investments has been re-valued at 30 September 2017 to reflect the recent realisations. The increase in net asset value in the quarter can be attributed to:-

· Within the Dunedin managed portfolio there were valuation increases at Alpha (£7.7m), Kee Safety (£4.2m), Pyroguard (£1.6m) and FRA (£1.3m). The valuations of both Alpha and Kee Safety reflect the realised proceeds received following the quarter end. Each of Pyroguard and FRA have benefited from an increase in maintainable earnings.

· These valuation increases have been offset by a carried interest provision of £3.3m being established in relation to Dunedin Buyout Fund III LP ("DBFIII"). DBFIII has a performance hurdle of 8% which has been achieved following the valuation uplifts achieved on the realisations of Blackrock PM, Alpha FMC and Kee Safety.

8. Balance Sheet

The unaudited balance sheet as at 30 September 2017 is noted below: -

*1- the cash balance held by the Company at 16 November 2017 was £47.2m following the realisations noted above. Conversely, the value of Dunedin managed funds has reduced to £50.9m.

9. Outlook

The Board remains committed to the aim of maximising shareholder value through the orderly wind-down process. In addition to the Manager realising individual assets within the Dunedin managed funds, the Board will also consider the timely and judicious sale of the Company's fund interests. This will be achieved either by a sale of fund interests on the secondary market or by continuing to hold these interests if this is likely to provide a better return to shareholders. Despite the ongoing political uncertainty, the pricing for realisations of quality businesses remains buoyant.

For further information on Dunedin Enterprise please go to www.dunedinenterprise.com