We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register to chat with like-minded investors on our interactive forums.
| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Dunedin Enterprise Investment Trust Plc | LSE:DNE | London | Ordinary Share | GB0005776561 | ORD 25P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 480.00 | 464.00 | 496.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Finance Services | 1.52M | 1.25M | 0.0950 | 50.53 | 63.06M |
From Apr 2019 to Apr 2024
TIDMDNE
RNS Number : 4566H
Dunedin Enterprise Inv Trust PLC
25 March 2020
25 March 2020
Dunedin Enterprise Investment Trust PLC ("the Company")
Year ended 31 December 2019
Dunedin Enterprise Investment Trust PLC, the private equity investment trust, announces its results for the year ended 31 December 2019.
Financial Highlights :
-- Share price total return of 23.6% in the year to 31 December 2019 -- Net asset value total return of 14.4% in the year to 31 December 2019 -- Realisations of GBP8.9m in the year -- GBP5.2m returned via B shares in June 2019 -- Final dividend of 5.0 p per share proposed for the year ended 31 December 2019 -- Realisation of Kingsbridge post year end
Comparative Total Return Performance
Hot Features
Premium
FTSE
Small Cap
(ex Inv
Year to 31 December Net Asset Cos)
2019 value Share price Index
--------------------- ---------- ------------ -----------
One year 14.4% 23.6% 17.7%
Three years 50.8% 134.7% 17.3%
Five years 54.8% 117.1% 49.1%
Ten years 113.0% 227.2% 182.2%
For further information please contact:
Graeme Murray Corinna Osborne / Emily Weston Dunedin LLP Equity Dynamics 0131 225 6699 07825 326 440 / 07825326442 0131 718 2310 corinna@equitydynamics.co.uk 07813 138367 emily@equitydynamics.co.uk
Chairman's Statement
In the year to 31 December 2019 your Company's net asset value total return was 14.4%, generated principally from valuation uplifts.
The relative share price performance was pleasing with a total return to shareholders of 23.6%. This was boosted by a return of capital to shareholders of 25p per share in June and the payment of a 2.0p dividend.
The Company's net asset value per share increased from 412.9p to 444.4p during the year after taking account of the return of capital and dividends. Since 2012, following the change of investment policy, a total of GBP115m has been returned to shareholders.
The discount at which the shares trade was 15.4% at the end of the year, based on a net asset value per share of 444.4p and a share price of 376p.
The share price has suffered during the very severe dislocation in the stock market resulting from the coronavirus; the share price at the date of this statement was 255p.
Portfolio
No new investments were made during the year. There were follow-on investments made in GPS, CitySprint and EV. During the year a recapitalisation was undertaken at both FRA and Kingsbridge which resulted in proceeds being distributed to Dunedin Enterprise. There were two realisations from the Realza portfolio - Litalsa and Quimi Romar.
Overall the trading performance of our portfolio companies has been strong during the year. Unrealised valuation increases of GBP24.9m were partially offset by decreases of GBP12.8m. Valuation uplifts were achieved by FRA, RED, GPS, U-POL, Formaplex and EV, all of which are trading well as a result of strong organic growth. The most significant valuation reduction in the year to 31 December 2019 was the decline of GBP6.4m in the value of the holding in CitySprint.
Following the successful realisation of our investment in Kingsbridge (the provider of insurance services to contractors) in March this year, we have re-valued this investment as at 31 December 2019 at GBP10.4m being the expected proceeds from the sale. This represents an uplift of GBP5.7m during the year after also taking account of the return of GBP3.2m on a re-financing in February 2019. The investment was originally made in May 2016 at a cost of GBP4.2m. Although the transaction includes a two year earn-out which may generate further proceeds for the Company, no value has been placed on this. Completion of the transaction is subject to regulatory approval.
Commitments & Liquidity
At the year end the Company had outstanding commitments to limited partnership funds of GBP22.2m, which consisted of GBP21.5m to Dunedin managed funds and GBP0.7m to Realza, the one remaining European fund. Assuming these funds are held to maturity, it is estimated that only some GBP12.2m of this total outstanding commitment will be drawn over the remaining life of the funds.
The investment periods of all funds to which the Company has made a commitment have now ended. In future we are only required to meet drawdowns for follow-on investments, management fees and ongoing expenses during the remainder of the life of the funds.
At 31 December 2019 the Company held cash balances of GBP12.3m. In addition, we renewed our revolving credit facility at the lower level of GBP5m; this was undrawn at 31 December 2019 and is available until 31 May 2020. The Board and the Manager keep the cash and commitment position under regular review. It is the Board's intention to extend the revolving credit facility by a further year.
B Share Scheme
Shareholders received a return of capital via the B Share Scheme during the year, representing GBP5.2m or 25p per share following the re-financings at FRA and Kingsbridge, and the realisation of Litalsa.
This was achieved by way of the issue of 25 B Shares of 1p for every one ordinary share held. The B shares were immediately redeemed and proceeds of GBP5.2m were distributed to shareholders on 26 June 2019.
Dividends
It is proposed that a final dividend of 5.0p per share be paid on 15 May 2020. This will distribute to shareholders the net profit generated by the Company during 2019.
Board
In view of his other commitments, Michael Meyer Jensen has decided not to stand for re-election at the Annual General Meeting on 6 May 2020. We are grateful to him for his significant contribution and wish him well for the future.
Outlook
Although the uncertainty created by the spread of the coronavirus will continue to cause significant dislocation, the extent of this remains unpredictable. Our portfolio companies are making contingency plans wherever possible to address this threat.
Although the UK has formally left the EU there remains significant uncertainty regarding the ongoing relationship that the UK will have with the EU. While the Board does not expect there to be any significant impact from Brexit on the operations of the Company itself, each of our portfolio companies are preparing for the likely outcomes as Brexit negotiations continue.
More generally, the Board welcomes the continued strong trading performance of a number of portfolio companies during the year under review. We also welcome the returns which have been delivered for shareholders by the underlying investment performance of the portfolio and the return of capital. We will continue to return capital to shareholders whenever practicable following realisations of investments.
Duncan Budge
Chairman
25 March 2020
Manager's Review
The total net asset return to shareholders in the year to 31 December 2019 was 14.4%. This is stated after taking account of a final dividend for 2018 of 2p (paid in May 2019) and a B share redemption equivalent in total of 25p (paid in June 2019).
The net asset value per share in the year to 31 December 2019 increased from 412.9p to 444.4p.
The Company's net asset value increased from GBP85.2m to GBP91.7m over the year. As detailed below this movement is stated following a dividend payment of GBP0.4m and capital of GBP5.2m returned to shareholders via the issue and redemption of B shares in June 2019.
GBPm
-------------------------------------------------- ------
Net asset value at 1 January 2019 85.2
Unrealised value increases 24.9
Unrealised value decreases (12.8)
Realised gain over opening valuation (0.8)
Net income and capital movements 0.8
-------------------------------------------------- ------
Net asset value prior to shareholder distribution 97.3
Dividends paid to shareholders (0.4)
B share redemption (5.2)
Net asset value at 31 December 2019 91.7
-------------------------------------------------- ------
Portfolio Composition
The investment portfolio can be analysed as shown in the table below.
Valuation
at Valuation at
1 January Additions Disposals Realised Unrealised 31 December
2019 in year in year movement movement 2019
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
Dunedin managed 64.8 2.7 (3.4) (0.8) 12.6 75.9
Third party managed 10.5 0.1 (5.5) - (0.5) 4.6
--------------------- ---------- --------- --------- --------- ---------- ------------
Investment portfolio 75.3 2.8 (8.9) (0.8) 12.1 80.5
AAA rated money
market funds 2.1 12.9 (6.4) - - 8.6
--------------------- ---------- --------- --------- --------- ---------- ------------
77.4 15.7 (15.3) (0.8) 12.1 89.1
--------------------- ---------- --------- --------- --------- ---------- ------------
Investment Activity
In the year to 31 December 2019 a total of GBP2.8m was invested in portfolio companies. An investment of GBP1.0m was made in GPS, the market leader in payment processing technology, to facilitate further investment in GPS's payments processing platform. A further GBP0.7m was invested in CitySprint, the same day courier, to provide working capital support as the company faced increased competition in a low growth market. There was also a follow-on investment of GBP0.3m made in EV, the provider of high performance ruggedised video cameras for the oil and gas industry, to support the ongoing development of EV's camera fleet.
A further GBP0.8m was drawn down by Dunedin and third-party managed funds to meet management fees and ongoing expenses.
Realisations
In the year to 31 December 2019 a total of GBP8.9m was realised from the portfolio of investments.
In January 2019 Litalsa, an investment held within the Realza portfolio, was realised. Litalsa is a leading independent provider of printing and varnishing services for metal can and closure manufacturers in Spain. Total proceeds from the sale amounted to GBP3.9m (EUR4.5m). The original cost of the investment in Litalsa was GBP1.4m (EUR1.9m) and, over its life, a total of GBP3.9m (EUR4.5m) will have been received by Dunedin Enterprise representing a 2.9 times return.
In August 2019, there was a further realisation from the Realza portfolio, Quimi Romar, the manufacturer of household cleaning and personal care products. Proceeds of GBP1.5m (EUR1.6m) were received which represent a return of 1.2 times original cost.
During the year there were two re-financings undertaken at portfolio companies following a period of strong trading. In January 2019 a re-financing of FRA, the provider of forensic accounting, data analytics and e discovery expertise, was completed. A total of GBP1.8m was received by Dunedin Enterprise consisting of GBP1.1m capital and GBP0.7m income. In February 2019 a re-financing of Kingsbridge, the provider of insurance services to contractors, was completed. A total of GBP3.2m was received by Dunedin Enterprise consisting of GBP2.3m capital and GBP0.9m income.
After the year end in February 2020 a further re-financing of FRA was completed. A total of GBP4.0m was received by Dunedin Enterprise, consisting of GBP3.5m capital and GBP0.5m income.
Following a successful realisation of the investment in Kingsbridge (the provider of insurance services to contractors) in March this year, this investment has been re-valued as at 31 December 2019 at GBP10.4m being the expected proceeds from the sale. This represents an uplift of GBP5.7m during the year after also taking account of the return of GBP3.2m on a re-financing in February 2019. The investment was originally made in May 2016 at a cost of GBP4.2m. Although the transaction includes a two year earn-out which may generate further proceeds for the Company, no value has been placed on this. Completion of the transaction is subject to regulatory approval.
Unrealised valuation uplifts
In the year to 31 December 2019 there were valuation uplifts generated from the following investments: FRA (GBP6.7m), Kingsbridge (GBP5.7m), RED (GBP4.8m), GPS (GBP2.8m), U-POL (GBP2.3m), Formaplex (GBP1.9m) and EV (GBP1.2m).
FRA has achieved a 49% increase in maintainable EBITDA (maintainable EBITDA being EBITDA for the last twelve months adjusted for exceptional items) in the year. The company continues to experience a strong demand for its services with a robust pipeline of new projects. During 2019 FRA opened an office in Stockholm further expanding its global footprint.
Red, the supplier of SAP software experts on both a contract and permanent basis, has performed strongly in the year with a 59% increase in maintainable EBITDA. The contracting division continues to perform well in the UK, Germany and US markets. New business written in the current year is 18% up on the same period last year.
As noted above Kingsbridge was realised following the year end generating an uplift of GBP5.7m during the year.
During the year GPS showed significant growth in both revenue and maintainable EBITDA. Record levels of new business have been achieved and the global reach of the business has increased with expansion into both Singapore and Australia. The strong trading performance has allowed GPS to be valued on a revenue basis, whereas previously the investment was valued at cost.
U-Pol, the manufacturer of automotive refinish products including body fillers, coatings, aerosols, polishing compounds and components, has achieved an 18% increase in maintainable EBITDA during the year. Performance in the year has been boosted by a new UK sales team and sales to two significant US retailers.
Formaplex, the provider of tooling and lightweight components, has seen profits recover strongly in the year. This has been achieved by winning new contracts in the components division and improved cost control. The sales pipeline is strong with more than 90% of 2019/20 sales covered by confirmed orders. The improved maintainable EBTDA has allowed Formaplex to be valued on an earnings basis rather than a net assets basis.
Unrealised valuation reductions
The most significant valuation reduction in the year to 31 December 2019 was at CitySprint (GBP6.4m). There were also valuation reductions at Incremental (GBP1.5m) and Hawksford (GBP1.1m).
CitySprint, the same day courier, experienced difficult trading during 2019 due to increased competition in a low growth market and the loss of a significant customer. This has impacted maintainable EBITDA which reduced by 43% in the year. Both the company's new management team and the institutional investors are proactively taking steps to manage costs within the business and return CitySprint to historic levels of profitability.
Revenue at Incremental has shown an increase during the year. However, there has been accelerated investment in both billable and non-billable staff to support future growth in the business. A provision has been made against this investment reflecting the higher cost base in the business and fall in profitability. The pipeline of new business is strong and the focus in 2020 is to convert the order pipeline into billable work.
Hawksford continues to progress but has suffered from exceptional costs of change which has impacted valuation. These costs are not expected to continue.
Cash and commitments
The Company had outstanding commitments to limited partnership funds of GBP22.2m. The outstanding commitment position consisted of GBP21.5m to Dunedin managed funds and GBP0.7m to Realza, the one remaining European fund. Assuming these funds are held to maturity, it is estimated that only some GBP12.2m of this total outstanding commitment will be drawn over the remaining life of the funds.
The original investment periods of all funds to which the Company has made a commitment have now ended. In future the Company will only be required to meet drawdowns for follow-on investments, management fees and expenses during the remainder of the life of the funds.
The Company has a revolving credit facility with Lloyds Bank of GBP5m which was undrawn at 31 December 2019 and is available until 31 May 2020. The Board and the Manager keep the cash and commitment position under regular review. It is the Board's intention to extend the revolving credit facility by a further year.
Coronavirus
The coronavirus is creating significant disruption around the world which, to varying degrees, will have an impact on each of the portfolio companies. Your Manager has representation on the Board of each portfolio company. Regular contact is being maintained with the portfolio companies to understand the impact of the coronavirus on their trading and financial stability. Each portfolio company is developing a contingency plan to mitigate the impact of the coronavirus. These contingency plans will evolve as the impact of the coronavirus becomes clearer. It is not possible at the date of this Manager's Review to fully assess the impact of the coronavirus on the portfolio companies.
Brexit
Your Manager has a representative on the Board of each Dunedin managed portfolio company. The board of each portfolio company meets regularly and continues to assess the impact of Brexit on their business, developing contingency plans to mitigate a variety of Brexit scenarios. These plans are kept under constant review as the outcome of the Brexit negotiations evolve.
Valuations and Gearing
The average earnings multiple applied in the valuation of the Dunedin managed portfolio was 9.1x EBITDA (2018: 9.6x). These multiples continue to be applied to maintainable profits.
Within the Dunedin managed portfolio, the weighted average gearing of the companies was 2.8x EBITDA (2018: 2.7x).
Analysing the portfolio gearing in more detail, the percentage of investment value represented by different gearing levels was as follows:
Less than 1 x EBITDA 33% Between 1 and 2 x EBITDA -% Between 2 and 3 x EBITDA 18% More than 3 x EBITDA 49%
Of the total acquisition debt in the Dunedin managed portfolio companies the scheduled repayments are spread as follows:
Less than one year 15% Between one and two years 13% Between two and three years 3% More than three years 69%
Fund Analysis
The chart below analyses the investment portfolio by investment fund vehicle.
Dunedin Buyout Fund II 47% Dunedin Buyout Fund III 45% Equity Harvest Fund 3% Third Party managed 5%
Portfolio Analysis
Detailed below is an analysis of the investment portfolio by geographic location as at 31 December 2019.
UK 95% Rest of Europe 5%
Sector Analysis
The investment portfolio of the Company is broadly diversified. At 31 December 2019 the largest sector exposure of 44% remains to the diverse Support Services sector.
Automotive 3% Consumer products & services 2% Financial services 34% Industrials 17% Support services 44%
Valuation Method
Cost 17% Earnings - uplift 47% Revenue - uplift 11% Assets basis 13% Exit value 12%
Year of Investment
In the vintage year chart below, current value is allocated to the year in which either Dunedin Enterprise or the third-party manager first invested in each portfolio company.
<1 year -% 1-3 years 33% 3-5 years 14% >5 years 53%
Dunedin LLP
25 March 2020
Ten Largest Investments
(both held directly and via Dunedin managed funds) by value at 31 December 2019
Approx. Percentage
percentage Cost of Directors' of net
of equity investment valuation assets
Company name % GBP'000 GBP'000 %
-------------- ----------- ----------- ----------- -----------
FRA 5.4 4,894 18,398 20.1
Kingsbridge 12.4 1,852 10,373 11.3
GPS 8.5 7,338 10,148 11.1
Hawksford 17.8 6,746 10,067 11.0
Red 20.1 9,665 9,316 10.2
Weldex 15.1 9,505 9,198 10.0
U-POL 5.0 5,657 5,944 6.5
Realza 8.9 4,289 4,372 4.8
EV 10.6 8,321 3,643 4.0
Formaplex 19.4 3,235 3,607 3.9
61,502 85,066 92.9
-------------- ----------- ----------- ----------- -----------
Income Statement
2019 2018
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment income 1,390 - 1,390 778 - 778
Gains on investments - 11,293 11,293 - 6,269 6,269
---------------------------- --------- ------- -------- ----------- --------- ---------
Total income 1,390 11,293 12,683 778 6,269 7,047
Expenses
Investment management fee (15) (46) (61) (49) (148) (197)
Other expenses (390) (39) (429) (448) (113) (561)
---------------------------- --------- ------- -------- ----------- --------- ---------
Profit before finance costs
and tax 985 11,208 12,193 281 6,008 6,289
Finance costs (27) (80) (107) (66) (197) (263)
---------------------------- --------- ------- -------- ----------- --------- ---------
Profit before tax 958 11,128 12,086 215 5,811 6,026
Taxation (25) 25 - (38) 38 -
---------------------------- --------- ------- -------- ----------- --------- ---------
Profit for the year 933 11,153 12,086 177 5,849 6,026
---------------------------- --------- ------- -------- ----------- --------- ---------
Basic return per ordinary
share
(basic & diluted) 4.52p 54.02p 58.54p 0.86p 28.33p 29.19p
The total column of this statement represents the Income Statement of the Group, prepared in accordance with International Financial Reporting Standards as adopted by the EU. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
All income is attributable to the equity shareholders of Dunedin Enterprise Investment Trust PLC.
Statement of Changes in Equity
for the year ended 31 December 2019
Year ended 31 December 2019
Capital Capital Capital Special Total
Share redemption Reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 GBP'000 GBP'000 unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
At 31
December
2018 5,161 23,409 58,063 (13,030) 6,312 5,320 56,665 85,235
Profit for
the year - - 2,000 9,153 - 933 12,086 12,086
B shares
issued
during the
year 5,161 (5,161) - - - - - -
B shares
redeemed
during
the year (5,161) 5,161 - - (5,161) - (5,161) (5,161)
Dividends
paid - - - - - (413) (413) (413)
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
At 31
December
2019 5,161 23,409 60,063 (3,877) 1,151 5,840 63,177 91,747
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
Year ended 31 December 2018
Capital Capital Capital Special Total
Share redemption Reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 GBP'000 GBP'000 unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
At 31
December
2017 5,161 23,409 57,936 (18,752) 26,956 6,278 72,418 100,988
Profit for
the year - - 127 5,722 - 177 6,026 6,026
B shares
issued
during the
year 20,644 (20,644) - - - - - -
B shares
redeemed
during
the year (20,644) 20,644 - - (20,644) - (20,644) (20,644)
Dividends
paid - - - - - (1,135) (1,135) (1,135)
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
At 31
December
2018 5,161 23,409 58,063 (13,030) 6,312 5,320 56,665 85,235
-------------- ---------- ------------ ---------- ------------ -------------- ---------- ---------- ----------
Balance Sheet
As at 31 December 2019
31 December 31 December
2019 2018
GBP'000 GBP'000
------------------------------------------- ------------ ------------
Non-current assets
Investments held at fair value 89,105 77,431
Current assets
Other receivables 1,073 4,242
Cash and cash equivalents 3,735 3,645
------------------------------------------- ------------ ------------
4,808 7,887
Current liabilities
Other liabilities (2,166) (83)
Net assets 91,747 85,235
------------------------------------------- ------------ ------------
Capital and reserves
Share capital 5,161 5,161
Capital redemption reserve 23,409 23,409
Capital reserve - realised 60,063 58,063
Capital reserve - unrealised (3,877) (13,030)
Special distributable reserve 1,151 6,312
Revenue reserve 5,840 5,320
------------------------------------------- ------------ ------------
Total equity 91,747 85,235
------------------------------------------- ------------ ------------
Net asset value per ordinary share (basic
and diluted) 444.4p 412.9p
Cash Flow Statement
for the year ended 31 December 2019
31 December 31 December
2019 2018
GBP'000 GBP'000
-------------------------------------------- ------------ ------------
Cash flows from operating activities
Profit
Adjustments for: 12,086 6,026
Gains on investments (11,293) (6,269)
Interest paid 107 263
Decrease/(increase) in debtors 4,658 (4,699)
Increase in creditors 594 1,398
Net cash from operating activities 6,152 (3,281)
Cash flows from investing activities
Purchase of investments (2,696) (13,942)
Drawdown from subsidiary (112) (162)
Purchase of 'AAA' rated money market funds (12,862) (47)
Sale of investments 3,401 11,251
Distribution from subsidiary 5,480 1,014
Sale of 'AAA' rated money market funds 6,410 21,413
-------------------------------------------- ------------ ------------
Net cash used in investing activities (379) 19,527
Cash flows from financing activities
Redemption of B shares (5,161) (20,644)
Dividends paid (413) (1,135)
Interest paid (107) (263)
-------------------------------------------- ------------ ------------
(5,681) (22,042)
Net increase/(decrease) in cash and cash
equivalents 92 (5,796)
Cash and cash equivalents at 1 January 3,645 9,441
Effect of exchange rate fluctuations on (2) -
cash held
Cash and cash equivalents at 31 December 3,735 3,645
-------------------------------------------- ------------ ------------
Statement of Directors' Responsibilities in respect of the Annual Report and the Financial Statements
The Directors are responsible for preparing the Annual Report and the Group and Parent Company financial statements in accordance with applicable law and regulations.
Company law requires the Directors to prepare Group and Parent Company financial statements for each financial year. Under that law they have elected to prepare the financial statements in accordance with IFRSs as adopted by the EU and applicable law.
Under company law the Directors must not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of their profit or loss for that period. In preparing these financial statements, the Directors are required to:
- select suitable accounting policies and then apply them consistently;
- make judgments and estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with IFRSs as adopted by the EU;
- assess the Company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern; and
- use the going concern basis of accounting unless they either intend to liquidate the Company or to cease operations, or have no realistic alternative but to do so. As explained in note 3, the Directors do not believe that it is appropriate to prepare these financial statements on a going concern basis.
The Directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Parent Company's transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that its financial statements comply with the Companies Act 2006. They have general responsibility for taking such steps as are reasonably open to them to safeguard the assets of the Company and to prevent and detect fraud and other irregularities.
Under applicable law and regulations, the Directors are also responsible for preparing a Strategic Report, Directors' Report, Directors' Remuneration Report and Corporate Governance Statement that complies with that law and those regulations.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the UK governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Responsibility statement of the Directors in respect of the annual financial report
We confirm that to the best of our knowledge:
- the financial statements, prepared in accordance with the applicable set of accounting standards, give a true and fair view of the assets, liabilities, financial position and profit or loss of the company taken as a whole; and
- the Strategic Report and Directors' Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
We consider the annual report and accounts taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company's position and performance, business model and strategy.
Duncan Budge
Chairman
25 March 2020
Notes to the Accounts
1. Preliminary Results
The financial information contained in this report does not constitute the Company's statutory accounts for the years ended 31 December 2019 or 2018. The financial information for 2018 is derived from the statutory accounts for 2018 which have been delivered to the Registrar of Companies. The auditor has reported on those accounts. Their report was (i) unqualified, (ii) did not include a reference to any matters to which the auditor drew attention by way of emphasis without qualifying their report and (iii) did not contain a statement under section 498(2) or (3) of the Companies Act 2006. The audit of the statutory accounts for the year ended 31 December 2019 is not yet complete. These accounts will be finalised on the basis of the financial information presented by the Directors in this preliminary announcement and will be delivered to the Registrar of Companies following the Company's annual general meeting.
2. Going Concern
The financial information for 2018 and 2019 has not been prepared on a going concern basis, since the Company's current objective is to conduct an orderly realisation of the investment portfolio and return cash to shareholders. Following the Director's assessment, no adjustments were deemed necessary to the investment valuations or other assets and liabilities included in the financial information as a consequence of the change in the basis of preparation.
3. Dividends
Year to 31 Year to 31
December December
2019 2018
GBP'000 GBP'000
Dividends paid in the year 413 1,135
------------ ------------
A final dividend of 5.0p per share for the year ended 31 December 2019 is proposed and if approved, will be paid on 15 May 2020 to shareholders on the register at close of business on 24 April 2020. The ex-dividend date is 23 April 2020.
4. Earnings per share
Year to Year to
31 December 31 December
2019 2018
Revenue return per ordinary share
(p) 4.52 0.86
Capital return per ordinary share
(p) 54.02 28.33
Earnings per ordinary share (p) 58.54 29.19
Weighted average number of shares 20,644,062 20,644,062
The earnings per share figures are based on the weighted average numbers of shares set out above. Earnings per share is based on the revenue profit in the period as shown in the consolidated income statement.
References to page numbers and notes in the disclosures below are to page numbers and notes to the annual report and accounts of the Company for the year ended 31 December 2019.
5. Principal Risks and Uncertainties (Strategic Report page 25)
The principal risks and uncertainties identified by the Board which might affect the Company's business model and future performance, and the steps taken with a view to their mitigation, are as follows:
Coronavirus: the profitability of the Company's investments is adversely impacted due to an adverse economic impact on the UK and world economy from the Coronavirus. Mitigation: A representative of your Manager, Dunedin LLP, sits on the Board of each portfolio company. These companies hold regular board meetings at which the financial position of the company is monitored. Between board meetings there is an ongoing dialogue between the Manager and the senior management of the portfolio company. Each portfolio company monitors all risks pertinent to their businesses including the coronavirus, the potential impact these risks may have on their businesses, and develop contingency plans where appropriate. The Board and Manager keep under regular review the liquidity available to the Company, including bank facilities, required to meet the expected outstanding commitments that will be drawn and the ongoing expenses of the Company. The Board are satisfied that the liquidity position of the Company is sufficiently strong to
mitigate the threat.
Brexit: the profitability of the Company's investments is adversely impacted due to an adverse economic impact on the UK economy for a no-deal Brexit and restricted access to European markets. Mitigation: Brexit has been an ongoing board agenda item for all our portfolio companies. Each portfolio company has developed plans to cater for a variety of outcomes from the Brexit negotiations. These plans will be continually revisited as the course of the Brexit negotiations becomes clearer.
Investment and liquidity risk: the Company's investments are in small and medium-sized unquoted companies, which by their nature entail a higher level of risk and lower liquidity than investments in large quoted companies. Mitigation: the Manager aims to limit the risk attaching to the portfolio as a whole by closely monitoring individual holdings, including the appointment of investor directors to the board of portfolio companies. The Board reviews the portfolio, including the schedule of projected exits, with the Manager on a regular basis with a view to ensuring that the orderly realisation process is progressing.
Portfolio concentration risk: following the adoption of the Company's revised investment policy in May 2016 the portfolio will become more concentrated as investments are realised and cash is returned to shareholders. This will increase the proportionate impact of changes in the value of individual investments on the value of the Company as a whole. The Directors' valuation of the Company's investments represents their best assessment of the fair value of the investments as at the valuation date and the amounts eventually realised from such investments may be more or less than the Directors' valuation. Mitigation: the Directors and Manager keep the changing composition of the portfolio under review and focus closely on those holdings which represent the largest proportion of total value.
Financial risk: most of the Company's investments involve a medium to long term commitment and many are relatively illiquid. Mitigation: the Directors consider it appropriate to finance the Company's activities through borrowing on a short-term basis. Accordingly, the Board seeks to ensure that the availability of cash reserves and bank borrowings match the forecast cash flows of the Company both on a base and stress case basis given the level of undraw commitments to limited partnership funds.
Economic risk: events such as economic recession or general fluctuations in stock markets and interest rates may affect the valuation of portfolio companies and their ability to access adequate financial resources, as well as affecting the Company's own share price and discount to net asset value. Mitigation: the Company invests in a diversified portfolio of investments spanning various sectors and maintains access to sufficient cash reserves to be able to provide additional funding to portfolio companies should this become necessary.
Credit risk: the Company holds a number of financial instruments and cash deposits and is dependent on counterparties discharging their commitment. Mitigation: the Directors review the creditworthiness of the counterparties to these investments and cash deposits and seek to ensure there is no undue concentration of credit risk with any one party.
Currency risk: the Company is exposed to currency risk as a result of investing in companies and funds denominated in euros. The sterling value of these investments can be influenced by movements in foreign currency exchange rates. Mitigation: Currency risk is monitored by the Manager on an ongoing basis and on a quarterly basis by the Board.
Internal control risk: the Company's assets could be at risk in the absence of an appropriate internal control regime. Mitigation: the Board regularly reviews the system of internal controls, both financial and non-financial, operated by the Company and the Manager. These include controls designed to ensure that the Company's assets are safeguarded and that proper accounting records are maintained.
6. Related Party Transactions (Notes to the Accounts page 63, note 21)
The Company has investments in Dunedin Buyout Fund II LP, Dunedin Buyout Fund III LP, Dunedin Fund of Funds LP and Equity Harvest Fund LP. Each of these limited partnerships are managed by Dunedin. The Company has paid a management fee of GBP0.6m (2018: GBP0.7m) in respect of these limited partnerships. The total investment management fee payable by the Company to the Manager is therefore GBP0.7m (2018: GBP0.9m).
Since the Company began investing in Dunedin Buyout Funds ("the Funds") executives of the Manager have been entitled to participate in a carried interest scheme via the Funds. Performance conditions are applied whereby any gains achieved through the carried interest scheme associated with the Funds are conditional upon a certain minimum return having been generated for the limited partner investors. Additionally, within Dunedin Buyout Fund II LP and Dunedin Buyout Fund III LP the economic interest of the Manager is aligned with that of the limited partner investors by co-investing in this fund.
As at 31 December 2019 there is a provision made within Investments for carried interest of GBP8.0m (2018: GBP5.1m) relating to Dunedin Buyout Fund III LP and GBP1.4m (2018: GBP1.4m) relating to Equity Harvest Fund LP. Current executives of the Manager are entitled to 85% of the carried interest in Dunedin Buyout Fund III LP and 14% in Equity Harvest Fund LP.
ENDS
This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.
END
FR KKQBBOBKDBNB
(END) Dow Jones Newswires
March 25, 2020 03:00 ET (07:00 GMT)
1 Year Dunedin Enterprise Inves... Chart |
1 Month Dunedin Enterprise Inves... Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
