AN unusual feature of the #71m Murray Ventures' performance over the
past year has been its success in unlisted disposals, which are
traditionally hard to move in a recession. Yesterday's results showed
that sales totalled #15.7m for a #7.5m net gain.
It is a measure of Murray Johnstone's management success that out of a
portfolio of 61 young companies there was only one receivership, though
clearly substantial provisions have been required to reflect difficult
trading conditions.
Five investments made substantial capital gains and three more fair
market values. Successes included Burn Stewart Distillers' listing, the
sale of Clairmont's core business, also Tallent Holdings, and Alexander
Drew. All were above valuation with a 25% uplift overall.
Lack of business confidence has restricted the flow of new proposals,
however, with #8.8m invested in the year against #13.7m previously. But
there is a strong flow of medium-sized regional management buy-outs,
with some at attractive prices.
The trust's net asset value of 286.2p was 6% lower on the year to
end-July, though it had been around 297p earlier this month ahead of the
recent rally. Earnings moved from 12.04p to 12.20p a share.
The final dividend is maintained at 6.90p and covered. But the board
warns that any advance in the current year is likely to be modest, with
the ability of unlisted investments to produce income restricted and a
cautious approach on dividend payments necessary.
That point made, the record is a good one, with 72% dividend growth
over the last five years, which is well above the yield on the All-Share
index. That the going is tough for these smaller companies is well
known, but trust managers highlight overdue customer payments, bad
debts, and the illiquidity of traditional providers of financial
facilities, as among problems affecting recovery strategies. Their own
after-care team has been fully committed with portfolio companies, which
has obviously helped these results.
The listed content has increased from 41% to 47% of assets over the
year. Traditionally holding half in UK smaller and medium companies,
this was cut to just 20% in 1990 anticipating they would be severely
hit. Now that valuations have fallen steadily the trust has restored its
listed exposure to 50%, with the balance in blue chips as a solid anchor
and source of liquidity to fund unlisted deals.
''This has been a record year for profitable disposals of unlisted
investments, despite the dismal economic conditions,'' commented fund
manager Geoff Burns. ''The recession will lead to lower prices of MBOs
and an increased equity demand, and the trust is well placed to benefit
from the recovery.''
Among the 20 largest investments are Crockfords, Stage-Coach, ScotCare
Group, and Burn Stewart Distillers.
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