TIDMDNE
RNS Number : 9186L
Dunedin Enterprise Inv Trust PLC
16 September 2021
For release
16 September 2021
Dunedin Enterprise Investment Trust PLC
Half year ended 30 June 2021
Dunedin Enterprise Investment Trust PLC, the private equity
investment trust which specialises in investing in UK mid-market
buyouts, announces its results for the half year ended 30 June
2021.
Financial Highlights :
-- Net asset value total return: 20.5% reflecting the
realisation of U-POL after the half year end
-- Net asset value per share at 30 June 2021: 496.5p (413.9p at 31/12/20), after 2.0p dividend
-- Share price at 30 June 2021: 344.0p (336p at 31/12/20) and 416p at 15 September 2021
-- Realisations: GBP6.8m in the half year
-- GBP126m returned to shareholders since 2012
Comparative Total Return Performance (%)
FTSE
Small Cap
Net asset (ex Inv
Periods to 30 June value (per Cos)
2021 share) Share price Index
-------------------- ------------ ------------ -----------
Six months 20.5 3.0 28.5
One year 31.3 31.6 65.2
Three years 34.6 8.7 32.4
Five years 81.5 120.2 80.8
Ten years 85.6 119.3 206.9
For further information please contact:
Graeme Murray
Dunedin LLP
07813 138367
Chairman's Statement
The total return in the half year to 30 June 2021 was 20.5% in
terms of net asset value per share. This is stated after allowing
for a final dividend for 2020 of 2.0p paid in May 2021. The net
asset value per share increased from 413.9p to 496.5p in the half
year reflecting the U-POL realisation announced in July.
The share price total return of 3.0% during the period under
review does not reflect the impact of the U-POL realisation which
was announced after the half year end.
The share price of 344p at 30 June 2021 represented a discount
of 30.7% to the net asset value of 496.5p per share. The share
price currently stands at 416p, representing a discount of
16.2%.
Portfolio
The refinancing at Hawksford, a leading provider of corporate,
private client and fund services, was completed in February 2021
generating proceeds of GBP6.9m. The investment was valued at
GBP6.9m at 31 December 2020.
Following the half year end a legally binding agreement was
entered into for the realisation of U-POL, the manufacturer of
automotive refinish products. The transaction was subject to
regulatory approval and completed on 15 September 2021. Proceeds
from the sale, including GBP0.4m repaid by the company during the
half year, amounted to GBP22.0m, representing an uplift of GBP13.0m
on the valuation at 31 December 2020 and a return of 4.4 times
cost.
An agreement was also entered into following the half year for
the realisation of CitySprint, the same day courier. This
transaction is subject to regulatory approval and is expected to
complete in the second half of 2021. The investment in CitySprint
has been valued at the expected proceeds of GBP1.5m. The investment
in CitySprint has generated a return of 2.1 times cost.
Overall, the trading performance of the portfolio has largely
recovered from the impact of the coronavirus. Unrealised valuation
increases totalling GBP22.6m were offset by value decreases of
GBP6.6m. The valuation uplift was primarily generated from the
realisation of U-POL. There were also valuation uplifts at RED and
GPS, offset by reductions in the valuations of FRA, Weldex and
Premier Hytemp. Further details are provided in the Manager's
Review.
During the half year there was one follow-on investment of
GBP0.9m in Incremental, a provider of IT services.
Cash, Commitments & Liquidity
At 30 June 2021 the Company held cash and near cash equivalents
totalling GBP19.1m. There are outstanding commitments to limited
partnership funds of GBP11.9m at 30 June 2021, consisting of
GBP11.1m to Dunedin managed funds and GBP0.8m to Realza.
In view of the cash balances held by the Company, the Board
decided not to renew the GBP5m bank facility at 31 May 2021.
Tender Offer
The Company will hold cash balances of cGBP40m on completion of
the U-POL and CitySprint realisations. There remain outstanding
commitments to limited partnership funds of GBP11.9m. The Board has
decided to retain sufficient cash reserves to meet outstanding
commitments in full. Following receipt of proceeds from the U-POL
realisation it is the Board's intention to undertake a Tender
Offer. Further details of the Tender Offer will be issued in due
course.
Dividends
A final dividend of 2.0p per share relating to the year ended 31
December 2020 was paid to shareholders in May 2021, amounting to
GBP0.4m.
Outlook
While the disruption created by the pandemic has continued to be
a focus for our portfolio companies during the period under review,
their generally strong financial position has provided some
protection. The Board welcomes the realisations achieved in the
year to date and looks forward to being in a position to return
cash to shareholders in the second half of 2021, building on the
GBP126m which has already been returned to shareholders since
2012.
Duncan Budge
16 September 2021
Manager's Review
Results for the six months to 30 June 2021
In the six months to 30 June 2021, the net asset value per share
total return was 20.5%, after taking account a dividend paid for
2020 of 2.0p per share (paid in May 2021). This compares with an
increase in the FTSE Small Cap Index (ex Inv. Cos) over the same
period of 28.5%.
In the six months to 30 June 2021 the Company invested a total
of GBP1.4m and realised GBP6.8m from investments.
Net asset and cash movements in the half year to 30 June
2021
The movement in net asset value is summarised in the table
below:-
GBP'm
------------------------------------- -----
Net asset value at 31 December 2020 74.9
Unrealised value increases 22.6
Unrealised value decreases (6.6)
Realised loss over opening valuation (0.9)
Dividends paid to shareholders (0.3)
Other movements 0.2
------------------------------------- -----
Net asset value at 30 June 2021 89.9
------------------------------------- -----
Cash movements in the half year to 30 June 2021 can be
summarised as follows:-
GBP'm
------------------------------------------ -----
Cash & near cash balances at
31 December 2020 13.8
Investments made (1.4)
Investments realised 6.8
Dividends paid to shareholders (0.3)
Operating activities 0.2
------------------------------------------ -----
Cash & near cash balances at 30 June 2021 19.1
------------------------------------------ -----
Portfolio composition and movements
Dunedin Enterprise holds investments in unquoted companies
through:-
-- Dunedin managed funds, and
-- Third party managed funds.
The portfolio movements can be analysed as shown in the table
below:-
Additions Disposals
Valuation in half in half Realised Unrealised Valuation
at 31-12-20 year year movement movement at 30-6-21
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
--------------------- ------------ --------- --------- --------- ---------- -----------
Dunedin managed 57.8 1.4 (6.8) (0.9) 15.4 66.9
Third party managed 4.5 - - - 0.5 5.0
--------------------- ------------ --------- --------- --------- ---------- -----------
Investment portfolio 62.3 1.4 (6.8) (0.9) 15.9 71.9
AAA rated money
market funds
(excluding cash
on deposit) 13.7 6.2 (1.0) - - 18.9
--------------------- ------------ --------- --------- --------- ---------- -----------
Total 76.0 7.6 (7.8) (0.9) 15.9 90.8
--------------------- ------------ --------- --------- --------- ---------- -----------
Realisations
In the half year a total of GBP6.8m was realised from the
portfolio of investments.
In February 2021 Hawksford, a leading provider of corporate,
private client and fund services, completed its refinancing.
Completion of the transaction had been subject to regulatory
approval. Proceeds from the refinancing amounted to GBP6.9m,
consisting of capital of GBP6.3m and income of GBP0.6m. The
investment in Hawksford was valued at GBP6.9m at 31 December 2020.
Dunedin Enterprise retains a 5% interest in Hawksford. No value has
been attributed to this at 30 June 2021.
Following the half year end in July 2021 a legally binding
agreement was entered into to realise U-POL, the manufacturer of
automotive refinish products, including body fillers, coatings,
aerosols, polishing compounds and consumables. The transaction was
subject to regulatory approval and completed on 15 September 2021.
The investment in U-POL was valued at GBP9.0m at 31 December 2020.
Proceeds from the sale, including redemptions of loan stock since
31 December 2020, amounted to GBP22.0m, consisting of capital of
GBP19.7m and income of GBP2.3m. A total of GBP24.6m has been
generated from the investment compared to an original cost of
GBP5.7m, a return of 4.4 times cost.
An agreement was entered into in August 2021 to realise the
remaining investment in CitySprint, the same day courier. The
transaction is subject to regulatory approval and is expected to
complete in the second half of 2021. The investment in CitySprint
has been valued at the expected proceeds from the transaction of
GBP1.5m. A total of GBP21.3m has been generated from the investment
compared to an original cost of GBP10.5m, a return of 2.1 times
cost.
Investment activity
During the six months to 30 June 2020 a follow-on investment of
GBP0.9m was made in Incremental, the market leading IT services
provider which designs, implements and supports clients with
ERP/CRM systems and cloud infrastructure. Further funding was
provided to enable Incremental to follow its buy-and-build strategy
with the acquisition of RedSpire. The RedSpire acquisition
increases Incremental's market position in the financial services
sector and makes it one of the largest Microsoft Dynamics partners
in the UK.
A further GBP0.3m was drawn down by Dunedin and third-party
managed funds to meet management fees and ongoing expenses.
Unrealised movements in valuations
Unrealised valuation increases in the half year amounted to
GBP22.6m. There were valuation uplifts at U-POL (GBP13.0m), RED
(GBP4.8m) and GPS (GBP2.0m).
As noted above, a legally binding contract was entered into to
realise U-POL, the manufacturer of automotive refinish products,
which completed on 15 September 2021. The realisation was achieved
on the back of a 44% increase in maintainable EBITDA in the half
year. Proceeds from the sale amounted to GBP22.0m compared to a
valuation of GBP9.0m at 31 December 2020.
RED, the provider of SAP contract and permanent staff, has
experienced an 47% increase in maintainable EBITDA during the half
year. Both the contract and permanent sides of the business are
performing strongly. The company has come through the coronavirus
pandemic extremely well with management prioritising cost control
and cash collection and focusing on sales to well-capitalised
customers globally.
GPS, a market leader in payment processing technology, has shown
revenue growth of 16% in the half year to 30 June 2021. Transaction
levels have started to increase following the ending/relaxation of
European lockdowns. The restrictions currently being placed on
travel will continue to impact the growth of the company. In spite
of the restrictions imposed as a result of coronavirus GPS achieved
revenue growth of 28% in 2020.
The principal valuation reductions were at FRA (GBP3.6m), Weldex
(GBP1.7m) and Premier Hytemp (GBP1.1m).
FRA, the forensic accounting, data analytics and e-discovery
business, continues to experience a slowdown in new business wins
following the coronavirus outbreak. A new CEO joined the company in
June 2021. Management's medium-term view remains positive as they
anticipate a wave of new regulatory investigations to commence in
the coming months. The business has retained core talent, beyond
that required for current utilisation levels, in anticipation of
significant project wins in the medium term.
Weldex, the market leading crawler crane hire business, has
experienced delays in cranes going out for large construction
projects and pricing pressure on rates. The investment continues to
be valued on a net assets basis.
Premier Hytemp, the provider of highly engineered components to
the oil and gas industry, has suffered from a weak market over the
past eighteen months. The business expects that there will be a
market upturn in Q4 of 2021. The investment continues to be valued
on a net assets basis.
The average earnings multiple applied to the valuation of the
Dunedin managed portfolio was 9.5x EBITDA (31 December 2020: 9.2x).
These multiples are applied to the maintainable earnings of
portfolio companies. Within the Dunedin managed portfolio, the
weighted average gearing of the companies was 3.2x EBITDA (31
December 2020: 2.4x).
The portfolio continues to be valued in accordance with the
International Private Equity Venture Capital valuation guidelines
(www.privateequityvaluation.com).
Dunedin LLP
16 September 2021
Ten Largest Investments
by value at 30 June 2021
Approx. Percentage
percentage Cost of Directors of net
of equity investment valuation assets
Company name % GBP'000 GBP'000 %
--------------- ----------- ----------- ---------- ----------
U-POL 5.0 5,253 21,597 24.0
--------------- ----------- ----------- ---------- ----------
GPS 8.5 8,220 16,106 17.9
--------------- ----------- ----------- ---------- ----------
RED 20.1 9,665 13,738 15.3
--------------- ----------- ----------- ---------- ----------
Weldex 15.1 9,505 6,547 7.3
--------------- ----------- ----------- ---------- ----------
FRA 5.2 1,413 5,836 6.5
--------------- ----------- ----------- ---------- ----------
Realza 8.9 4,223 4,824 5.4
--------------- ----------- ----------- ---------- ----------
Incremental 8.2 3,875 4,701 5.2
--------------- ----------- ----------- ---------- ----------
Premier Hytemp 23.0 10,136 2,190 2.4
--------------- ----------- ----------- ---------- ----------
EV 10.6 8,321 1,912 2.1
--------------- ----------- ----------- ---------- ----------
CitySprint 0.6 7,978* 1,541 1.7
--------------- ----------- ----------- ---------- ----------
68,589 78,992 87.8
--------------- ----------- ----------- ---------- ----------
* - accounting book cost. Original investment in 2010 of
GBP9.8m. Total proceeds of GBP26.1m were received from a secondary
buyout in 2016. Cash proceeds of GBP18.8m were received and the
balance of GBP7.3m was rolled into a CitySprint newco. A further
GBP0.7m was invested in 2019.
Total return of ten largest investments
at 30 June 2021
Original
cost of Realised Directors Total
investment to date* valuation return
Company name GBP'000 GBP'000 GBP'000 GBP'000
--------------- ----------- --------- ---------- --------
U-POL 5,657 2,993 21,597 24,590
--------------- ----------- --------- ---------- --------
GPS 7,739 - 16,106 16,106
--------------- ----------- --------- ---------- --------
RED 10,844 1,432 13,738 15,170
--------------- ----------- --------- ---------- --------
Weldex 9,505 119 6,547 6,666
--------------- ----------- --------- ---------- --------
FRA 6,035 5,504 5,836 11,340
--------------- ----------- --------- ---------- --------
Realza 11,580 11,651 4,824 16,475
--------------- ----------- --------- ---------- --------
Incremental 3,924 - 4,701 4,701
--------------- ----------- --------- ---------- --------
Premier Hytemp 10,136 178 2,190 2,368
--------------- ----------- --------- ---------- --------
EV 8,321 - 1,912 1,912
--------------- ----------- --------- ---------- --------
CitySprint 10,507 19,763 1,541 21,304
--------------- ----------- --------- ---------- --------
84,248 41,640 78,992 120,632
--------------- ----------- --------- ---------- --------
* - dividends and capital.
Top ten investments (held via funds and direct investments)
U-POL
Percentage of equity held 5.0%
Cost of Investment GBP5.3m
Directors' valuation GBP21.6m
Percentage of net assets 24.0%
U-POL is a leading independent manufacturer of automotive
refinish products including body fillers, coatings, aerosols,
polishing compounds and consumables. Included in the product range
is RAPTOR(TM), a tough protective coating product which can be used
over a multitude of surfaces. Sales of RAPTOR(TM) continue to grow
steadily and the business is exploring opportunities to sell this
product into adjacent sectors.
From its UK manufacturing base in Wellingborough, U-POL exports
a range of products to 120 countries worldwide. The company has a
strong market position in the UK and a growing position in other
large markets such as the USA, the Far East, the Middle East,
Africa and Russia.
In August 2016 a re-financing of the business was undertaken
with Dunedin Enterprise receiving proceeds of GBP2.6m.
In July 2021 a legally binding agreement was entered to realise
the investment in U-POL. The transaction was subject to regulatory
approval and completed on 15 September 2021.
GPS
Percentage of equity held 8.5%
Cost of Investment GBP8.2m
Directors' valuation GBP16.1m
Percentage of net assets 17.9%
Global Processing Services ("GPS") is a UK headquartered
payments processing business providing customers with leading edge
payment processing and ancillary services. Customers include new
emerging fintech or challenger banks, offering a significantly
differentiated proposition for their clients; as well as specialist
payment firms serving the travel, insurance and foreign exchange
markets. It offers a best in class, scalable payment processing
platform with flexibility, innovative features and an accelerated
speed to market for new market entrants. It has over 200 clients,
including many UK fintech and challenger banks, and is seeing
significant growth opportunities from emerging overseas challenger
banks as they seek to disrupt their own domestic banking
markets.
GPS has a large and growing addressable market. Challenger banks
and fintech companies needing leading edge payment processing
services are being created in all major geographical markets. Many
are seeking help from GPS as they start to disrupt their own
domestic markets. As the winners emerge, the volume of payments
that they generate also increases, thereby adding further volume of
processing to the GPS platform. In general, the payments market is
growing globally through a reduction in the use of cash and an
increase in the use of mobile methods of payment (e.g. phones and
'tap to pay' debit cards).
GPS has an increasingly international target market, with recent
client wins in Europe, Hong Kong and Australia. It has recently
signed a strategic Partnership with Visa to provide fintech clients
with payments technology in the Asia Pacific region. It has also
been selected by Mastercard as its chosen processing partner in its
Fintech Express Programme. In 2020 GPS was selected by the
Department for International Trade (DIT) to become a London Export
Champion.
RED
Percentage of equity held 20.1%
Cost of Investment GBP9.7m
Directors' valuation GBP13.7m
Percentage of net assets 15.3%
RED is a global supplier of SAP contract and permanent staff to
international corporations and consultancies. SAP is the market
leader in ERP software (Enterprise Resource Planning), which
enables companies of all sizes and industries to operate more
efficiently, including many of the world's largest organisations.
The SAP after sales service market is estimated to be $20bn per
annum.
RED, which was founded in 2000, now has a global footprint with
access to over 200,000 candidates in 80 countries, and has offices
in the UK, Germany, Switzerland and the USA.
RED has a highly scalable business model. Growth is expected to
come from deeper penetration of the existing client base,
development of new clients, continued focus on service
differentiation and increasing market share in existing
geographical markets. Additional growth opportunities include
expansion to support high growth technologies complementary to
SAP.
Weldex
Percentage of equity held 15.1%
Cost of Investment GBP9.5m
Directors' valuation GBP6.5m
Percentage of net assets 7.3%
Weldex is a market-leading crawler crane hire business in the
UK, with the tenth largest lifting capacity globally. It serves the
offshore wind, oil & gas, commercial construction and
infrastructure markets. Its cranes, including some of the largest
in the UK, have been used in a number of significant construction
projects including Heathrow Terminal 5, the iconic arch at the
Wembley Stadium, the 2012 Olympic site and Crossrail. A recent
project was the Viinamaki Wind Farm in Finland where cranes were
supplied for the installation of the highest all steel wind
turbines to date.
Weldex was established in 1979 and has grown into the UK's
largest crawler crane hire company. The company employs over 100
staff and operates nationwide and overseas from its headquarters in
Inverness and its depot at Alfreton. The company provides its
customers with an established team of fully accredited operators,
site managers and service engineers and also supplies associated
lifting equipment including wheeled cranes, forklifts, lorry
loaders and trailers.
FRA
Percentage of equity held 5.2%
Cost of Investment GBP1.4m
Directors' valuation GBP5.8m
Percentage of net assets 6.5%
FRA is an international consultancy business that provides
forensic accounting, data analytics and e-discovery expertise,
helping businesses respond to major regulatory investigations in an
increasingly regulated global environment.
FRA works on some of the largest and most complex regulatory
investigations globally. Its clients are typically blue-chip
multinational corporates seeking advice to help navigate regulatory
scrutiny, effect compliant cross border data transfer, and manage
risk. The company has offices in London, Dallas, New York,
Washington DC, Paris and Zurich. It also runs data centres near
each office location as well as in Montreal. The strategy is to
develop FRA's international reach by recruiting talent into
existing offices whilst opening new offices to access further
talent pools or expand client relationships.
Two refinancings of the business have been undertaken with
Dunedin Enterprise receiving proceeds of GBP5.5m
Realza Capital
Percentage of equity held 8.9%
Cost of Investment GBP4.2m
Directors' valuation GBP4.8m
Percentage of net assets 5.4%
Realza Capital FCR is a Spanish private equity fund making
investments in Spain and Portugal. The fund is limited to investing
15% of commitments in Portugal. Dunedin Enterprise's investment is
held via Dunedin Fund of Funds LP.
The fund invests in companies with leading market positions and
attractive growth prospects either through organic growth or
through merger & acquisition activity. Realza seeks to invest
in companies with an enterprise value normally ranging from EUR20m
to EUR100m. The fund's typical equity investment ranges from EUR10m
to EUR25m.
Realza has two investments remaining: -
-- a manufacturer of water pumps for the automotive industry; and
-- a producer of premium tomatoes.
Incremental
Percentage of equity held 8.2%
Cost of Investment GBP3.9m
Directors' valuation GBP4.7m
Percentage of net assets 5.2%
Incremental is a digital technology services company which helps
public sector, not for profit and commercial organisations
transform their ERP and CRM systems with Microsoft technologies. It
is a Microsoft Inner Circle Partner, putting it in the top 1% of
partners worldwide, and also provides Microsoft Power Platform,
Modern Workplace, Azure and data services. Its customer base
includes Admiral, Virgin Money and the NHS. With a growing customer
base in the public sector, not for profit, manufacturing and
professional services, Incremental is also increasingly seeing
success in the financial services market.
Incremental has three main delivery sites in Glasgow, Inverurie
and Manchester. The business has a headcount of 135.
Incremental has a large addressable market which is growing
strongly, particularly in the ERP and CRM space. The transition
from on-site servers to the Cloud is driving businesses to
transform their IT systems and strategies.
Premier Hytemp
Percentage of equity held 23.0%
Cost of Investment GBP10.1m
Directors' valuation GBP2.2m
Percentage of net assets 2.4%
Premier Hytemp is a global market leader in the manufacture and
supply of engineered metal solutions. It is a specialist in the
provision of low alloy and nickel alloy steel components for the
upstream oil and gas industry. Its components are used in complex
engineered assemblies required to extract and control the flow of
oil and gas from new reserves, often sub-sea.
Premier Hytemp is headquartered in Edinburgh with manufacturing
facilities in Singapore and Malaysia and specialist metal
procurement and metallurgy services in Edinburgh.
EV
Percentage of equity held 10.6%
Cost of Investment GBP8.3m
Directors' valuation GBP1.9m
Percentage of net assets 2.1%
EV is a UK headquartered, global market leader in the provision
of high performance, video cameras and other visualisation
technology used to analyse problems in oil and gas wells.
It offers a highly specialist service, providing skilled
engineers to operate its cameras in the most difficult down-hole
conditions. The high-resolution video images produced by EV's
cameras allow oil and gas well operators to identify and solve
problems rapidly. EV is based in Aberdeen, Houston and Norwich. It
has a further presence in seventeen worldwide locations across
Northern Europe, Canada, USA, West Africa, the Middle East, Asia
and Australasia. The business employs more than 100 staff.
EV has a significant technological competitive edge operating in
a predominantly untapped global market and is a global leader in
this field. The business has technological competitive advantage
around imaging (it has the only camera that can provide a 360
degree, top-to-toe perspective of well performance and integrity in
HD colour) and around operating conditions (the cameras can operate
under extremes of heat, pressure and visibility). EV has a strong,
committed management team and a good reputation with its
customers.
CitySprint
Percentage of equity held 0.6%
Cost of Investment GBP8.0m
Directors' valuation GBP1.5m
Percentage of net assets 1.7%
CitySprint is the UK's largest national time-critical and same
day distribution network. It benefits from an asset-light business
model with over 3,000 self-employed couriers, making the business
both highly flexible and scalable. It operates from 40 service
centres in the UK and handles over ten million critical same day
deliveries a year.
CitySprint offers a range of services including SameDay Courier,
UK Overnight and International courier services, as well as more
complex logistics services. It services a number of different
sectors, including healthcare, online retail fulfilment and parts
fulfilment such as outsourced supply chain services for engineering
and servicing companies. During the period of Dunedin's investment,
CitySprint has completed 29 acquisitions. CitySprint now has the
UK's largest same day healthcare courier network.
In February 2016 the investment in CitySprint was partially
realised in a sale to LDC. On completion Dunedin Enterprise
received proceeds totalling GBP26.1m of which GBP22.8m was capital
and GBP3.3m was loan interest. A total of GBP7.3m has been rolled
into a CitySprint Newco alongside LDC, resulting in net cash
proceeds received of GBP18.8m by Dunedin Enterprise. Dunedin
Enterprise retains a 0.8% interest in the Newco.
In August 2021 an agreement was entered to realise the remaining
investment in CitySprint. The transaction is subject to regulatory
approval and is expected to complete in the second half of
2021.
Overview of Portfolio
Fund Analysis
Dunedin Buyout Fund II 63%
Dunedin Buyout Fund III 30%
Realza 7%
Geographic Location
UK 94%
Rest of Europe 6%
Valuation Method
Earnings - provision 3%
Earnings - uplift 37%
Revenue - uplift 20%
Assets basis 11%
Exit value 29%
Sector Analysis
Automotive 3%
Consumer products & services 3%
Financial services 21%
Industrials 33%
Support services 40%
Year of Investment
1-3 years 6%
3-5 years 28%
>5 years 66%
Statement of Comprehensive Income
for the six months ended 30 June 2021
Six months ended 30 June Six months ended 30 June Year ended 31 December 2020
2021 2020
(unaudited) (unaudited) (audited)
------------------- ---- ---------------------------- ---------------------------- -------------------------------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Investment income 3 590 - 590 709 - 709 764 - 764
Gain/(loss) on
investments - 15,003 15,003 - (12,783) (12,783) - (5,993) (5,993)
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Total Income 590 15,003 15,593 709 (12,783) (12,074) 764 (5,993) (5,229)
Expenses
Investment
management
fees (10) (31) (41) (8) (23) (31) (23) (69) (92)
Other expenses (193) (2) (195) (166) (3) (169) (372) (30) (402)
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Profit/(loss)
before
finance costs and
tax 387 14,970 15,357 535 (12,809) (12,274) 369 (6,092) (5,723)
Finance costs (12) (37) (49) (10) (31) (41) (24) (71) (95)
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Profit/(loss)
before
tax 375 14,933 15,308 525 (12,840) (12,315) 345 (6,163) (5,818)
Taxation - - - - - - - - -
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Profit/(loss) for
the
period 375 14,933 15,308 525 (12,840) (12,315) 345 (6,163) (5,818)
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
Earnings per
ordinary
share (basic &
diluted) 6 2.07p 82.50p 84.57p 2.54p (62.19)p (59.65)p 1.70p (30.37)p (28.67)p
------------------- ---- -------- -------- -------- -------- -------- -------- --------- --------- ---------
The Total column of this statement represents the Statement of
Comprehensive Income of the Company, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The supplementary revenue
and capital columns are both prepared under guidance published by
the Association of Investment Companies.
All income is attributable to the equity shareholders of Dunedin
Enterprise Investment Trust PLC.
Statement of Changes in Equity
for the six months ended 30 June 2021
Six months ended 30 June 2021 (unaudited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 (restated) (restated) unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 31 December
2020 4,525 49,850 30,600 (16,357) 1,151 5,153 20,547 74,922
Profit/(loss)
for the half
year - - (4,163) 19,096 - 375 15,308 15,308
Dividends paid - - - - - (362) (362) (362)
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 30 June
2021 4,525 49,850 26,437 2,739 1,151 5,166 35,493 89,868
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
Six months ended 30 June 2020 (unaudited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 (restated) (restated) unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 31 December
2019 5,161 49,214 34,258 (3,877) 1,151 5,840 37,372 91,747
Profit/(loss)
for the half
year - - 6,822 (19,662) - 525 (12,315) (12,315)
Dividends paid - - - - - (1,032) (1,032) (1,032)
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 30 June
2020 5,161 49,214 41,080 (23,539) 1,151 5,333 24,025 78,400
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
Year ended 31 December 2020 (audited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 (restated) (restated) unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000 GBP'000 GBP'000
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 31 December
2019 5,161 49,214 34,258 (3,877) 1,151 5,840 37,372 91,747
Profit/(loss)
for the year - - 6,317 (12,480) - 345 (5,818) (5,818)
Purchase and
cancellation
of shares (636) 636 (9,975) - - (9,975) (9,975)
Dividends paid - - - - - (1,032) (1,032) (1,032)
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
At 31 December
2020 4,525 49,850 30,600 (16,357) 1,151 5,153 20,547 74,922
--------------- ---------- ----------- ----------- ----------- -------------- ---------- ---------- ----------
Balance Sheet
As at 30 June 2021
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ -------------- -------------- -------------
Non-current assets
Investments held at fair value 9 0,821 7 6,551 7 5,985
Current assets
Other receivables 4 01 1 ,054 1 ,057
Cash and cash equivalents 1 71 3 ,725 1 51
------------------------------------ -------------- -------------- -------------
5 72 4 ,779 1 ,208
Total assets 9 1,393 8 1,330 7 7,193
Current liabilities
(1 ,525 (2 ,930 (2 ,271
Other liabilities ) ) )
Net assets 8 9,868 78,400 7 4,922
------------------------------------ -------------- -------------- -------------
Capital and reserves
Share capital 4 ,525 5,161 4 ,525
Capital redemption reserve 49,8 50 49,214 49,8 50
Capital reserve - realised 2 6,437 41,080 3 0,600
Capital reserve - unrealised 2 ,739 (23,539) (16,357)
Special distributable reserve 1 ,151 1 ,151 1,151
Revenue reserve 5 ,166 5,333 5,153
------------------------------------ -------------- -------------- -------------
Total equity 8 9,868 78,400 74,922
------------------------------------ -------------- -------------- -------------
Net asset value per ordinary share
(basic and diluted) 496.5p 379.8p 413.9p
Cash Flow Statement
for the six months ended 30 June 2021
30 June 30 June 31 December
2021 2020 2020
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------- ------------- ------------
Operating activities
Profit / (loss) before tax 15,308 (12,315) (5,818)
Adjustments for:
(Gains) / loss on investments (15,003) 12,783 5,993
Interest paid 49 41 95
Decrease in debtors 656 19 16
(Decrease) / increase in creditors (746) 764 105
Net cash from operating activities 264 1,292 391
Cash flows from investing activities
Purchase of investments (1 ,342 ) (1 ,369 ) (2,242)
Drawn from subsidiary (35) (46) (86)
Purchase of 'AAA' rated money market
funds (6,208) (12,675) (12,683)
Sale of investments 6,753 13,771 14,414
Distribution from subsidiary - 90 187
Sale of 'AAA' rated money market funds 1,000 - 7,537
---------------------------------------- ------------- ------------- ------------
Net cash used in investing activities 168 (229) 7,127
Cash flows from financing activities
T ender offer (1) - (9,975)
Dividends paid (3 62 ) (1 ,032 ) (1,032)
Interest paid (4 9 ) (4 1 ) (95)
Net cash used in financing activities (412) (1,073) (11,102)
Net i ncrease / (d ecrease) in cash
and cash equivalents 20 (10) (3,584)
Cash and cash equivalents at the start
of the period 151 3,735 3,735
Cash and cash equivalents at the end
of the period 171 3,725 151
---------------------------------------- ------------- ------------- ------------
Statement of Principal Risks and Uncertainties
The Directors have an ongoing process for identifying,
evaluating and managing principal risks, emerging risks and
uncertainties of the Company. The principal risks faced by the
Company related to the Company's investment activities and these
are set out below: -
-- Coronavirus
-- Brexit
-- investment and liquidity risk
-- portfolio concentration risk
-- financial risk
-- economic risk
-- credit risk
-- currency risk
-- internal control risk
Information on each of these risks, and an explanation of how
they are managed, is on page 23 of the Company's Annual Report for
the year ended 31 December 2020.
The Company's principal risks, emerging risks and uncertainties
have not changed materially since the date of the Annual Report and
are not expected to change materially for the remaining six months
of the Company's financial year.
Responsibility statement of the Directors
in respect of the half-yearly financial report
We confirm that to the best of our knowledge:
- the condensed set of financial statements has been prepared in
accordance with IAS 34 'Interim Financial Reporting' and give a
true and fair view of the assets, liabilities, financial position
and profit of the Company;
- the Chairman's Statement and Manger's Review (together
constituting the Interim Management Report) include a fair review
of the information required by the Disclosure and Transparency
Rules ('DTR') 4.2.7R, being an indication of the important events
that have occurred during the first six months of the financial
year and their impact on the financial statements;
- the Statement of Principal Risks and Uncertainties shown above
is a fair review of the information required by DTR 4.2.7R; and
- the condensed set of financial statements include a fair
review of the information required by DTR 4.2.8R, being related
party transactions that have taken place in the first six months of
the financial year and that have materially affected the financial
position or performance of the Company during the period, and any
changes in the related party transactions described in the last
Annual Report that could do so.
On behalf of the Board,
Duncan Budge
Chairman
16 September 2021
Notes to the Accounts
1. Unaudited Interim Report
The comparative financial information contained in this report
for the year ended 31 December 2020 does not constitute the
Company's statutory accounts but is derived from those accounts.
Statutory accounts for the year ended 31 December 2020 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 financial statements for the six months ended 30 June 2020
and 30 June 2021 have not been audited.
2. Basis of Preparation
These condensed set of financial statements for the six months
ended 30 June 2021 have been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority (FCA) and IAS 34 'Interim Financial Reporting'. They do
not include all the information required by International Financial
Reporting Standards (IFRS) in full annual financial statements and
should be read in conjunction with the Annual Report and Accounts
for the year ended 31 December 2020.
In May 2016 shareholders approved a change in the investment
policy of the Company. The Company's new investment objective is to
conduct an orderly realisation of its relatively illiquid assets,
to be effected in a manner that seeks to achieve a balance between
maximising the value of its assets and progressively returning cash
to shareholders. As it is likely this process, which is expected to
have a duration of several years, will ultimately lead to the
liquidation of the Company, these financial statements have not
been prepared on a going concern basis. No adjustments were
necessary to the investment valuations or other assets and
liabilities included in the financial statement as a consequence of
the change in the basis of preparation.
.
3. Income
Six months Six months
to to Year to
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Limited partnership income - UK 582 671 714
AAA rated money market funds 1 24 33
Deposit interest 7 14 15
Other income - - 2
---------- ---------- ------------
590 709 764
========== ========== ============
4. Dividends
Six months Six months
to to Year to
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Dividends paid in the period 362 1,032 1,032
========== ========== ============
5. Investments
All investments are designated fair value through profit or loss
at initial recognition, therefore all gains and losses that arise
on investments are designated at fair value through profit or loss.
Given the nature of the Company's investments the fair value gains
recognised in these financial statements are not considered to be
readily convertible to cash in full at the balance sheet date and
therefore the movement in these fair values are treated as
unrealised.
Fair value hierarchy
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based
on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect
differences between the instruments.
The table below analyses financial instruments, measured at fair
value at the end of the reporting period, by the level in the fair
value hierarchy into which the fair value measurement is
categorised:
At At At
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Level 1
'AAA' rated money market funds OEICs 18,907 21,228 13,699
Level 2 - - -
Level 3
Unlisted investments 71,914 55,323 62,286
-------- -------- ------------
90,821 76,551 75,985
======== ======== ============
The Company recognises transfers between the levels of the fair
value hierarchy as of the end of the reporting period during which
the transfer occurred. There were no transfers between Level 1 and
Level 2 of the fair value hierarchy during the six months ended 30
June 2021.
Level 3 fair values
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the six months
ended 30 June 2021 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2020 78,643
Unrealised depreciation (16,357)
------------------------------------ --------
Valuation at 31 December 2020 62,286
Purchases at cost 1,377
Sales - proceeds (6,753)
Sales - realised gain on sales (4,092)
Increase in unrealised appreciation 19,096
------------------------------------ --------
Valuation at 30 June 2021 71,914
------------------------------------ --------
Book cost at 30 June 2021 69,175
Closing unrealised appreciation 2,739
------------------------------------ --------
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the six months
ended 30 June 2020 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2019 84,429
Unrealised depreciation (3,877)
------------------------------------ --------
Valuation at 31 December 2019 80,552
Purchases at cost 1,415
Sales - proceeds (13,861)
Sales - realised gain on sales 6,879
Decrease in unrealised appreciation (19,662)
------------------------------------ --------
Valuation at 30 June 2020 55,323
------------------------------------ --------
Book cost at 30 June 2020 78,862
Closing unrealised depreciation (23,539)
------------------------------------ --------
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the year ended 31
December 2020 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2019 84,429
Unrealised depreciation (3,877)
------------------------------------ --------
Valuation at 31 December 2019 80,552
Purchases at cost 2,328
Sales - proceeds (14,601)
Sales - realised gain on sales 6,487
Decrease in unrealised appreciation (12,480)
------------------------------------ --------
Valuation at 31 December 2020 62,286
------------------------------------ --------
Book cost at 31 December 2020 78,643
Closing unrealised depreciation (16,357)
------------------------------------ --------
Valuation of investments
Unquoted investments are fair valued by the Directors in
accordance with the following rules, which are consistent with the
International Private Equity and Venture Capital Valuation
Guidelines:
-- Investments are only valued at cost for a limited period
after the date of acquisition, otherwise investments are valued on
one of the other basis detailed below. Generally the earnings
multiple basis of valuation will be used.
-- When valuing on an earnings basis, the maintainable earnings
of a company are multiplied by an appropriate multiple.
-- When valuing on a revenue basis, the maintainable revenue of
a company is multiplied by an appropriate multiple.
-- An investment may be valued by reference to the value of its
net assets. This is appropriate for businesses whose value derives
mainly from the underlying value of its assets rather than its
earnings.
-- When investments have obtained an exit (either by listing or
trade sale) after the valuation date but before finalisation of the
relevant accounts (interim or final), the valuation is based on the
exit valuation.
-- Accrued interest on loans to portfolio companies is included
in valuations where there is an expectation that the interest will
be received.
IFRS 13 requires disclosure, by class of financial instrument,
if the effect of changing one or more inputs to reasonably possible
alternative assumptions would result in a significant change to the
fair value measurement. The information used in determination of
the fair value of Level 3 investments is chosen with reference to
the specific underlying circumstances and position of the investee
company. On that basis the Board believe that the impact of
changing one or more of the inputs to reasonably possible
alternative assumptions would not change the fair value
significantly.
The Directors consider the carrying value of financial
instruments in the financial statements to represent their fair
value.
6. Earnings per share
Six months Six months
to to Year to
30 June 30 June 31 December
2021 2020 2020
GBP'000 GBP'000 GBP'000
Revenue return per ordinary share (p) 2.07 2.54 1.70
Capital return per ordinary share (p) 82.50 (62,19) (30.37)
Earnings per ordinary share (p) 84.57 (59.65) (28.67)
Weighted average number of shares 18,100,180 20,644,062 20,289,587
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.
7. Related party transactions
There have been no material changes to the related party
transactions described in the last annual report.
ENDS
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