For release                                                                                                            15 September 2023

Dunedin Enterprise Investment Trust PLC

Half year ended 30 June 2023

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 2023.

Financial Highlights:

·    Net asset value total return: 1.0%

·    Net asset value per share at 30 June 2023: 609.2p, after 25p dividend (627.1p at 31/12/22)

·    Share price total return: 14.9%

·    Share price at 30 June 2023: 560p (509p at 31/12/22)

·    £203.5m returned to shareholders since 2012

Comparative Total Return Performance (%)

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Chairman's Statement

The total return in the half year to 30 June 2023 was 1.0% in terms of net asset value per share which decreased from 627.1p to 609.2p in the half year. This is stated after allowing for a final dividend of 25.0p (paid in May 2023), relating to the year ended 31 December 2022.

The share price total return was 14.9% during the period under review. The price of 560p at 30 June 2023 represented a discount of 8.1% to the net asset value of 609.2p per share.

Portfolio

Unrealised valuation increases totalling £3.2m were offset by value decreases of £3.3m. The valuation uplift was primarily generated from Premier (£1.4m), Hawksford (£0.8m) and EV (£0.7m). The principal valuation reductions were at Weldex (£1.9m) and FRA (£1.2m).

Further details are provided in the Manager's Review.

Cash, Commitments & Liquidity

At 30 June 2023 the Company held cash and near cash equivalents totalling £11.6m out of total net assets of £33.5m. At that date there were outstanding commitments to limited partnership funds of £9.0m, consisting of £8.3m to Dunedin-managed funds and £0.7m to Realza.

Dividends

A final dividend of 25.0p per share relating to the year ended 31 December 2022 was paid to shareholders in May 2023, amounting to £1.4m.

Future Tender Offers

The Board is committed to returning proceeds of asset sales to shareholders and doing so efficiently. While the portfolio realisation process continues, the Board will look at opportunities to combine the proceeds of more than one sale before conducting a further tender in order to achieve economies in the process.

Outlook

Following discussions with the Manager and the Company's advisers, the Board does not currently anticipate putting formal proposals to Shareholders for a members' voluntary liquidation of the Company in the short to medium term while the orderly realisation continues. As the wind-down progresses, the Board will continue to assess whether the Company's current arrangements remain in the interests of Shareholders as a whole and will, of course, continue to keep Shareholders informed as to the future of the Company.

Furthermore, the Board considers maintaining the Company's listed status to be important during this stage of the orderly wind-down, as it is aware that many Shareholders would be unable to hold the Shares, or greatly inconvenienced by holding them, if they were not listed on the London Stock Exchange.

Duncan Budge

15 September 2023

Manager's Review

Results for the six months to 30 June 2023

In the six months to 30 June 2023, the net asset value per share total return was 1.0%, after taking account of dividends paid for 2022 of 25.0p per share (paid in May 2023). This compares with an increase in the FTSE Small Cap Index (ex Inv. Cos) over the same period of 2.0%.

Net asset and cash movements in the half year to 30 June 2023

The movement in net asset value is summarised in the table below:-

Cash movements in the half year to 30 June 2023 can be summarised as follows:-

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:-

Realisations

In the half year the earn-out relating to RED, the provider of SAP contract and permanent staff, has increased to £4.6m.  75% of the proceeds were received in July 2023 with the balance due in October 2023.

Investment activity

A further £0.2m 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 £3.2m. There were valuation uplifts at Premier (£1.4m), Hawksford (£0.8m) and EV (£0.7m).

Premier Hytemp, the provider of highly engineered components to the oil and gas industry, has experienced a continued recovery in profitability. As the market outlook improves the company is tendering for some significant contracts.

Hawksford, the provider of corporate, private client and fund services, has continued with its buy and build strategy. In addition, strong trading has resulted in maintainable EBITDA increasing by 40% in the half year.

EV, the provider of high performance, video cameras and other visualisation technology used in the oil and gas industry, has experienced strong trading following the recovery in the price of oil.  Maintainable EBITDA has increased by 20% in the half year.

Unrealised valuation decreases in the half year amounted to £3.3m.  There were valuation decreases at  Weldex (£1.9m) and FRA (£1.2m).

Weldex is valued in line with expected proceeds from a refinancing exercise.

Trading at FRA has not progressed as quickly as expected with maintainable EBITDA reducing by 18% in the half year.  Recent trading and the outlook for the remainder of the year are positive.

The portfolio continues to be valued in accordance with the International Private Equity Venture Capital valuation guidelines (www.privateequityvaluation.com).

Dunedin LLP

15 September 2023

Current Investments

by value at 30 June 2023

Total return of current investments

at 30 June 2023

*   - dividends and capital.

Top investments

Weldex

Percentage of equity held              15.1%

Cost of Investment                         £9.5m

Directors' valuation                        £4.7m

Percentage of net assets                 14.0%

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. Recent projects include the HS2 railway, the Thames Tideway Tunnel in London, and the Peterborough Railway Tunnel where a curved concrete box weighing more than the Eiffel Tower will be pushed underground to form a new railway tunnel.

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.

Premier Hytemp

Percentage of equity held              23.0%

Cost of Investment                       £10.1m

Directors' valuation                        £4.3m

Percentage of net assets                 12.8%

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.

FRA

Percentage of equity held                5.2%

Cost of Investment                         £1.4m

Directors' valuation                        £2.8m

Percentage of net assets                   8.5%

FRA is an international consultancy that provides forensic accounting, data analytics and e-discovery expertise, helping businesses respond to 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, Philadelphia, Paris, Helsinki and Stockholm. It also runs data centres near each office location as well as in Montreal and Zurich.

Two re-financings of the business have been undertaken with Dunedin Enterprise receiving proceeds of £5.5m.

Realza

Percentage of equity held                8.9%

Cost of Investment                         £3.7m

Directors' valuation                        £2.7m

Percentage of net assets                   7.9%

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 €20m to €100m. The fund's typical equity investment ranges from €10m to €25m.

Realza has two investments remaining: -

•           a producer of premium tomatoes; and

•           a producer of cannabis for medicinal and pharmaceutical use.

EV

Percentage of equity held              10.6%

Cost of Investment                         £8.3m

Directors' valuation                        £2.6m

Percentage of net assets                   7.7%

EV is a UK headquartered, global market leader in the provision of high performance, harsh environment, video cameras and quantitative visual analytics to the global energy industry.

It offers a highly specialist service, providing skilled engineers to operate its market leading 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, quantify and solve problems rapidly. EV is based in Dubai, Perth, Kuala Lumpur, Calgary, Aberdeen, Houston and Norwich. It has a further presence in seventeen worldwide locations across Europe, Canada, USA, South America, West Africa, the Middle East, Asia and Australasia. The business employs more than 100 staff.

EV's high value Visual Analytics services and products hold a significant technological competitive advantage operating in a growing marketplace as global leader in this field of optical data analytics. The business has a key technological competitive advantage delivering full 360 degree top to toe wellbore images in HD colour employing the EV proprietary Optis Infinity Multi-Side-View-Camera technology. EV are focussed on increasing customer well performance and providing detailed well integrity information helping customers extend well life and thereby decrease the global carbon footprint.

Hawksford

Percentage of equity held        3.7%

Cost of Investment                    £-m

Directors' valuation                £0.8m

Percentage of net assets           2.4%

Hawksford is a leading international provider of corporate, private client and funds services. The business offers a comprehensive range of services to, and solutions for, trusts, companies, foundations, partnerships, family offices and investment funds.

During 2018 Hawksford completed the acquisitions of P&P, a Hong Kong based trust business; and the corporate services division of audit and accountancy practice SH Landes. The P&P acquisition increased Hawksford's Asian presence, giving the company new representation in China and Japan, building on its existing presence in Singapore and Hong Kong. Hawksford's international clients will now have access to a greater depth of services across Asia, while P&P clients will be able to utilise Hawksford's wider services in other locations. As a result of the SH Landes acquisition, Hawksford is able to provide specialist corporate services from its central London offices.

To date Hawksford has completed seven major acquisitions in Jersey, the UK, the Middle East and the Far East. These acquisitions have further enhanced Hawksford's position through additional high-quality people and clients. The focus of the business remains on providing excellent service and increasing client choice by growing the international footprint.

In February 2021 Hawksford completed a refinancing where proceeds of 1.0x cost were received.  Dunedin Enterprise retains a 3.7% interest in Hawksford.

Thredd (previously GPS)

Percentage of equity held                1.5%

Cost of Investment                         £2.0m

Directors' valuation                           £-m

Percentage of net assets                      -%

Thredd 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 100 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.

Thredd 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 Thredd 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 Thredd 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).

Thredd has an increasingly international target market, with recent client wins in Europe and Australia. GPS has 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 Thredd was selected by the Department for International Trade (DIT) to become a London Export Champion.

In December 2021 a refinancing of Thredd was completed with new investors providing additional capital to finance future growth.  Gross proceeds from the refinancing of 2.2x original cost were received by Dunedin Enterprise, which retains a 1.5% interest in Thredd Newco.