Dunedin Ent.it. Regulatory News (DNE)

16 Jun 2005 07:00

Dunedin Enterprise Inv Trust PLC16 June 2005 For release 07.00am 16 June 2005 Dunedin Enterprise Investment Trust PLC Preliminary Results for the year ended 30 April 2005 Dunedin Enterprise Investment Trust PLC, the private equity investment trustwhich specialises in investing in management buyouts, management buyins andgrowing businesses throughout the UK, announces its preliminary results for theyear ended 30 April 2005. Financial Highlights: * Share price total return 38.1% including dividends paid in year * Net asset value per share increased by 18.8% to 408.5p per share * Total net assets now £124.1 million * Total return per ordinary share increased to 72.9p (2004: 42.8p) * Final dividend of 7.1p; a full year dividend of 9.0p, an increase of 5% * Realisations totalling £36.5 million, generating a profit of £8.9 million over valuation at the start of the year, an uplift of 44% * Investments during the year of £22.1 million, including: + £5.9 million investment in management buyout of New Horizons + £3.5 million investment in management buyout of Total Fitness Comparative Performance Periods to 30 April 2005 1 Year 3 Year 5 Year 10 Year % % % %Net asset value per ordinary share 18.8 25.1 -1.4 96.9Share price 34.1 39.8 8.0 91.2FTSE Small Cap Index 5.7 9.0 -10.9 59.9FTSE All Share Index 7.1 -4.7 -20.0 52.2 Edward Dawnay, Chairman of Dunedin Enterprise Investment Trust PLC, commented: "This time last year I felt the outlook for Dunedin Enterprise to be positive. Iam glad that this optimism was justified and I can announce another increase innet asset value of 18.8% for the year. This compares favourably to the FTSESmall Cap Index which rose by 5.7% over the same period. The private equity market has become increasingly attractive to retail investorsand this has been evidenced both by a change in the shareholder register ofDunedin Enterprise and by the consequential tightening of the discount on theshare price to net asset value. The performance of the portfolio overall continues to be strong andprofitability in the underlying investments continues to grow. Economicconditions in the UK are favourable for the time being and I believe the outlook for Dunedin Enterprise remains positive." For further information please contact Ross Marshall Jacqui GravesManaging Director Binns & Co PR LimitedDunedin Capital Partners Limited 0131 225 6699 0207 153 148607768 794 180ross.marshall@dunedin.com Notes to Editors Dunedin Enterprise Investment Trust PLC is managed by Dunedin Capital PartnersLimited. Dunedin Capital Partners Limited is an independent private equitycompany owned by its directors. The company specialises in providing equityfinance for management buyouts, management buyins and growing businesses with atransaction size of £10 million - £50 million. It operates throughout the UnitedKingdom from its offices in Edinburgh and London. Dunedin Capital Partners is itself the result of a management buyout which tookplace in 1996. Dunedin Enterprise's primary objective is to achieve substantial long termgrowth in its assets through capital gains from its investments. For more information on Dunedin Enterprise, its portfolio and investmentapproach, please visit the website www.dunedin.com. Investors can buy shares in the company through regular savings, PEP/ISA andpension plans. For further information, call the Edinburgh Fund Managershelpline on 0800 028 6789 or visit the website atwww.dunedinenterprisetrust.co.uk. Chairman's Statement Overview When I wrote to shareholders last year, I felt the outlook for DunedinEnterprise to be positive. I am glad that this optimism was justified and I canreport another increase in net asset value, of some 18.8%, for the year. Thiscompares favourably to the FTSE Small Cap Index which rose by 5.7% over the sameperiod. The private equity market has become increasingly attractive to retail investorsand this has been evidenced both by a change in the shareholder register ofDunedin Enterprise and by the consequential tightening of the discount on theshare price to net asset value. The interest in the sector has also contributed to the competition for deals.The valuation placed upon MBO transactions was historically high, particularlyin the larger MBO market but marginally less so in the mid market in whichDunedin Enterprise invests. Conversely, your Company was the beneficiary of thismarket when it came to disposals. This was assisted by a strong flow of newissues, by the availability of bank finance and by interested trade buyers. Portfolio Activity The Company invested £22.1 million during the year. A total of £9.4 million wasinvested in two new investments, New Horizons and Total Fitness, and a further£12.7 million was invested in limited partnership funds and existing portfoliocompanies. Total realisation proceeds from the portfolio in the year were £36.5million, which generated a profit of £8.9 million over valuation at 30 April2004. The realised gain was generated principally through the flotations ofGoals Soccer Centres and Jessops and the recapitalisations of ABI and CGIInternational. There was an uplift of £11.5 million from unrealised movements inthe valuation of portfolio companies. The Manager's Review gives details of portfolio movements, including significantacquisitions, disposals and valuation changes. At the year end your Company had investments in unquoted companies totalling£88.9 million. Cash and near cash balances amounted to £36.4 million and undrawncommitments to limited partnership funds amounted to £13.2 million. Assets invested in or committed to unquoted investments amounted to £102.1million, representing 82.3% of net assets at the year end. Board of Directors I am delighted at the appointment in January 2005 of Liz Airey and WillieHaughey as non executive directors to the Board. Each brings a wealth ofknowledge to the Board; Liz Airey from over twenty years experience in corporateadvisory work and as a finance director and Willie Haughey from operating one ofthe UK's largest specialist refrigeration and facilities management companies.They will both stand for election at the Annual General Meeting. Outlook for the current year Dunedin Enterprise's primary objective is to achieve substantial long termgrowth in its assets through capital gains from its investments. At 30 April2005 it had outperformed both the FTSE Small Cap and FTSE All Share indices overone, three, five and ten years. It is the Board's and the Manager's intention to continue to grow the business.Private equity is a long term investment and inevitably there will be cycleswhich affect performance, both positively and adversely. The Board hopes thatover the duration Dunedin Enterprise will be able to demonstrate superiorreturns. The market continues in the same vein as last year. The performance of theportfolio overall continues to be strong and profitability in the underlyinginvestments continues to grow. Economic conditions in the UK are favourable forthe time being and I believe the outlook for Dunedin Enterprise remainspositive. Dividends The Board is recommending a final dividend of 7.1p making a total dividend forthe year of 9.0p, a 5% increase on last year. The final dividend is to be paidon 9 September 2005 to shareholders on the register on 5 August 2005. Annual General Meeting The Annual General Meeting will be held at the Merchant's Hall, Hanover Street,Edinburgh on Wednesday 7 September at 12 noon. It will be followed by apresentation by the Managers. The ownership of Dunedin Enterprise lies in the hands of both institutional andprivate client shareholders. The AGM gives directors and shareholders theopportunity to meet, and I do hope you can attend. Edward Dawnay, Chairman15 June 2005 Manager's Review Overview The year ended 30 April 2005 has continued the good progress of last year. Netasset value per share increased by 18.8% in the year from 344.0p to 408.5p(2004: 11.2%). The net asset value total return per share over the year was21.7% (2004: 15.5%). Your Company's share price rose by 34.1% over the year from 258p to 346p. Thetotal return to shareholders, comprising the rise in the share price anddividends paid, was 38.1%. The strong share price performance resulted in areduction of the discount of the share price to net asset value from 25.0% at 30April 2004 to 15.3% at 30 April 2005. The growth in net asset value has been driven by a combination of strong tradingperformance and reduced gearing at a number of portfolio companies, togetherwith a number of successful realisations. The total movements in net assets canbe summarised as follows: £'mNet assets at 30 April 2004 105.7Unrealised value increases 21.6Unrealised value decreases (10.1)Realised profit over opening valuation 8.9Share buy back (1.2)Profit attributable to shareholders less expenses charged to capital 1.9Dividends paid to shareholders (2.7) --------Net assets at 30 April 2005 124.1 -------- Dunedin Enterprise received a total of £36.5 million from a number ofsignificant realisations in the year. This was principally from the flotation ofGoals Soccer Centres and Jessops, the sale of Earls Court & Olympia and therecapitalisation of CGI International and ABI. Investment activity in the year totalled £22.1 million. An investment of £5.9million was made in New Horizons, an operator of childrens care homes and £3.5million in Total Fitness, a fitness club operator. Both of these new investmentswere management buyouts. A total of £3.3 million was invested for the first timein LGV3 and LGV4 Private Equity Funds. A further £9.4 million was invested inten existing portfolio companies. Realisations Your Company received £36.5 million during the year from the sale of twelveportfolio companies and the redemption of loan stock by portfolio companies.This generated a profit of £8.9 million over the valuation of these investmentsat the start of the year, an uplift of 44%. Earls Court & Olympia is the owner of one of London's premier exhibition venuesand provides related services including event organisation. Earls Court was soldin May 2004 to Nomura. Your Company's shares were sold for £2.3 million. Thisinvestment was acquired as part of the Group Trust portfolio in 2001. DunedinEnterprise has received capital and income of £2.6 million from Earls Court inreturn for £1.0 million invested. This represents a multiple of 2.6 times moneyinvested and an annual return of 38% over three years. In July 2004, CGI International completed a £25 million recapitalisation.Dunedin Enterprise realised £11.3 million as a result of the recapitalisationand subsequently re-invested £5.9 million in the newly recapitalised entity, CGIGroup. CGI manufactures and distributes fire resistant glass for use in a widerange of commercial properties. Some 70% of the company's products are exportedto markets in Europe, the Far East and the USA. CGI has received the Queen'sAward for Enterprise in recognition of its export achievements. Your Company hasreceived capital and income of £10.8 million, net of re-investment, from CGIInternational in return for £4.4 million invested. This represents a multiple of2.5 times money invested and an annual return of 31% over six years. The recapitalisation of portfolio companies is a common approach used by privateequity companies to release value from successful cash generative businesses.This has enabled Dunedin Enterprise to realise risk capital whilst continuing tobenefit from the future growth of the new entity with a proven management team. In February 2004, an investment of £3.2 million was made in ABI, one of the UK'sleading manufacturers of leisure homes. During the year to 30 April 2005, ABItraded strongly, permitting the company to repay in August 2004 all £3.0 millionloan stock invested by Dunedin Enterprise and to then undertake arecapitalisation of the company, whereby a further £2.0 million was returned toDunedin Enterprise in March 2005. To date your Company has received capital andincome proceeds of £5.3 million in return for £3.3 million invested. Thisrepresents a multiple of 1.6 times money invested and a return of 107% over oneyear. In addition to this, Dunedin Enterprise retains an investment in ABIvalued at £3.3 million at 30 April 2005. Jessops, the specialist photographic retailer, floated on the London StockExchange in October 2004. Dunedin Enterprise achieved a partial exit from thisinvestment on float and achieved a complete exit in May 2005. The totalconsideration received from this investment following the final disposal in May2005 was £4.7 million, a gain of £1.5 million over the valuation at 30 April2004. Your Company has received £5.3 million in capital proceeds and income fromthis investment, a money multiple of 1.7 times original investment and a returnof 38% over two years. In December 2004, Goals Soccer Centres floated on the Alternative InvestmentMarket. Goals is a leading operator of "next generation" 5-a-side soccer centresacross the UK. Dunedin Enterprise fully exited from the investment on float. Thetotal consideration received on float was £9.3 million, a gain of £4.7 millionover the valuation at 30 April 2004. Your Company has received £10.5 million incapital proceeds and income from this investment, a money multiple of 2.2 timesoriginal investment and a return of 22% over four years. A further £4.8 million was received from the other portfolio companies,principally loan stock redemptions. Cost Valuation at 30 April 2004 Proceeds received Uplift over value Profit/(loss) over cost £'m £'m £'m £'m £'m At a profit 9.2 20.3 29.2 8.9 20.0over cost At a loss 8.3 0.1 0.1 - (8.2)over cost ------ --------- -------- -------- --------- 17.5 20.4 29.3 8.9 11.8 Loan stock 7.2 7.2 7.2 - -redemptions ------ --------- -------- -------- --------- 24.7 27.6 36.5 8.9 11.8 ------ --------- -------- -------- --------- New investments In the year to 30 April 2005, your Company invested £22.1 million (2004: £14.9million) in two new portfolio companies, two new limited partnership funds andten existing portfolio companies. In August 2004, Dunedin Enterprise invested in the management buyout of TotalFitness, a management buyout led by Legal & General Ventures. Dunedin Enterpriseinvested £3.5 million in this company for a 6% equity stake. Total Fitness is anoperator of 23 health and fitness centres located mainly in the North West ofEngland with in excess of 159,000 members. The company offers a wide range ofservices to its members through large purpose built centres, which typicallyincorporate a large gymnasium, exercise studios, a range of four swimming poolsand spa facilities. In addition, several centres include 200 metre four laneindoor running tracks. It services the consumer market as well as providing muchneeded resources for clinical purposes. Total Fitness aims to continue itsnational rollout of large scale fitness centres. In December 2004, Dunedin Enterprise supported the management buyout of NewHorizons. Dunedin Enterprise invested £5.9 million in this company in return fora 28% equity stake. The Dunedin Buyout Fund, in which your Company is aninvestor, has a matching stake. New Horizons is one of the UK's premierproviders of residential childcare services for emotionally and behaviourallydisturbed children. The company offers a range of therapeutic residentialservices to children and young people whose behaviour is the result of traumaticexperiences. Its primary aim is to stabilse the emotional and physical behaviourof children and then work with them on determining the optimal route to furtherrecovery and integration back into family surroundings or independent living.New Horizons operates 10 homes with living accommodation for 30 children. Itaims to grow through a rollout program of new home openings across the UK andthrough acquisition. Following the recapitalisation of CGI International, as detailed above, £5.9million was re-invested in the newly recapitalised company, CGI Group, in July2004. There was further investment of £0.7 million in a number of portfoliocompanies. Dunedin Enterprise made a commitment of £5.0 million to the LGV4 Private EquityFund and £3.0 million to the LGV3 Private Equity Fund. These funds aim to investin UK mid-market management buyouts with an enterprise value of between £60million and £300 million. This broadens Dunedin Enterprise's exposure to thelarge buyout market. Buyout and technology fund drawdowns in the year totalled£6.1 million. Unrealised value movements The table below summarises the main component of unrealised valuation movementsin the year to 30 April 2005. Four portfolio companies, Letts Filofax, Davenham, ABI and Caledonian, havecontributed a total of £14.6 million to unrealised valuation increases. Theincreased valuation of these companies has been generated from a combination ofstrong trading performance and debt reduction. The imminent sale of TridentComponents, the automotive component manufacturer, contributed a further £2.5million unrealised valuation increase. Fourteen other portfolio companiescontributed to the remaining £4.5 million unrealised valuation increase. Poor trading at three portfolio companies accounts for £8.8 million of the £10.1million unrealised valuation decreases. Two of these portfolio companies are nowfully provided against and one, C6 Solutions, a chemical manufacturing company,was placed into receivership in April 2006, after the loss of a number ofcontracts from its largest customer. At the other two companies, your Manager isactively working with management to return value to these investments. A furthersix investments contributed to the remaining £1.3 million unrealised valuationdecrease principally due to provisions made against technology funds. £'m £'mValue increases * Imminent realisations 3.8 * Trading performance 12.8 * Debt reduction 4.0 * Price earnings movements (1.0) * Other 2.0 ------- 21.6Value decreases * Trading performance (7.4) * Price earnings movements (1.8) * Other (0.9) ------- (10.1) -------Net Unrealised Value Movements 11.5 ------- Valuation basis Your Company's portfolio was valued on the following basis: At 30 April 2005 2004 £'m % £'m % Cost 18.3 21 27.9 33Earnings multiple 64.9 72 35.2 42Imminent sale 3.8 4 12.7 15Net asset value 2.7 3 7.9 10 --------- --------- -------- -------- 89.7 100 83.7 100 --------- --------- -------- -------- The weighted average price earnings multiple used to value your Company'sportfolio at 30 April 2005 was 7.7, a discount of 49% to the FTSE All Shareprice earnings multiple of 15.0 on that date (2004: 8.4; 53% discount to FTSEAll Share multiple of 17.9). Portfolio analysis Work has continued to be undertaken in reducing the number of investments heldwithin the portfolio. Four new companies were added to the portfolio and twelvecompanies were sold during the year. The quoted holding, in Jessops, wasrealised shortly after the year end. At 30 April 2005 2004 No. £'m No. £'m Unquoted companies 28 74.5 39 75.1Quoted companies 1 0.8 - -Buyout Fund 9 11.4 7 6.0Technology funds 4 3.0 4 2.6 --------- --------- -------- -------- 42 89.7 50 83.7 --------- --------- -------- -------- Following the year end an agreement has been signed to sell a further fiveportfolio companies. Completion of the sale is subject to regulatory clearancebeing received. Investment category The table below demonstrates your Company has invested 81% of its portfoliodirectly in management buyouts and buyins. A further 13% is invested inmanagement buyouts via limited partnership funds. Thus a total of 94% of theportfolio is invested either directly or indirectly in management buyouts orbuyins. At 30 April 2005 2004 £'m % £'m %Management buyouts/buyins 72.4 81 71.9 86Buyout funds 11.4 13 6.0 7Technology funds 3.0 3 2.6 3Other 2.9 3 3.2 4 --------- -------- -------- -------- 89.7 100 83.7 100 --------- -------- -------- -------- Portfolio analysed by industry sector The table below demonstrates that your Manager is committed to ensuring that adiversified portfolio of unquoted investments is held by your Company. 2005 2004 % %Construction and building materials 19 18Consumer products and services 21 21Financial services 18 17Healthcare 8 -Leisure and hotels 11 12Specialist manufacturing 8 11Support services 15 21 ----------- ---------- 100 100 ----------- ---------- Portfolio analysed by age 2005 2004 % %Less than 1 year 14 141-3 years 19 173-5 years 44 48More than 5 years 23 21 ----------- ---------- 100 100 ----------- ---------- Further Analysis Investors are able to review further information and data relating to DunedinEnterprise at our website www.dunedin.com. Dunedin Capital Partners Limited 15 June 2005 DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 Ten Largest Investments The ten largest investments account for 55.5% of the net assets of DunedinEnterprise as listed below: Company Cost of Directors' Percentage of investment valuation net assets % £'m £'m % Letts Filofax Group Limited 41.1 0.3 15.4 12.4 Davenham Group Holdings 34.4 5.0 12.6 10.2Limited Caledonian Building Systems 32.4 3.8 9.5 7.7LimitedCGI Group Limited 37.9 5.9 6.5 5.2New Horizons (Childcare) 27.8 5.9 5.9 4.8Holdings Limited Dunedin Buyout Fund LP 13.0 2.1 4.4 3.5 Portman Holdings Limited 16.8 2.3 4.1 3.3 Gardner Group Limited 15.0 3.6 3.6 2.9Total Fitness Group Limited 6.2 3.5 3.5 2.8 ABI (UK) Holdings Limited 18.5 0.2 3.3 2.7 ___ ____ ___ 32.6 68.8 55.5 ------ ------ ------ 'Fully diluted equity percentage' relates to the ordinary share capital of therelevant company and assumes full exercise of outstanding options, warrants andconversion rights. DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 GROUP BALANCE SHEET At 30 April 2005 2004 £'000 £'000 £'000 £'000 Fixed asset investments 121,108 103,733 Current assetsDebtors 179 429Cash at bank 5,025 5,050 ------- ------- 5,204 5,479 Current liabilitiesCreditors: amounts falling due within (2,254) (2,144)one year ------- -------Net current assets 2,950 3,335 -------- -------Total assets less current liabilities 124,058 107,068 Creditors: amounts falling due after - (1,381)more than one year -------- ------- 124,058 105,687 -------- ------- Capital and reservesCalled up share capital 7,592 7,680Share premium account 47,600 47,600Capital reserves:Capital redemption reserve 334 246Capital reserve - realised 51,709 42,123Capital reserve - unrealised 14,370 5,772Revenue reserve 2,453 2,266 -------- -------Total equity shareholders' funds 124,058 105,687 -------- ------- Net asset value per share 408.5p 344.0p DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 CONSOLIDATED STATEMENT OF TOTAL RETURN For the yearended 30 April 2005 2004 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 20,371 20,371 - 13,191 13,191investmentsIncome 5,224 - 5,224 4,624 - 4,624Investment (636) (1,909) (2,545) (671) (2,014) (2,685)management feeOther expenses (498) - (498) (459) - (459) ------- ------- ------- ------- ------- ------- Net return 4,090 18,462 22,552 3,494 11,177 14,671before financecosts and taxInterest payable (62) (185) (247) (251) (1,201) (1,452)and similar ------- ------- ------- ------- ------- -------charges Return on 4,028 18,277 22,305 3,243 9,976 13,219ordinaryactivitiesbefore taxTax on ordinary (1,117) 1,117 - (397) 397 -activities ------- ------- ------- ------- ------- ------- Return 2,911 19,394 22,305 2,846 10,373 13,219attributable toequityshareholdersDividends in (2,724) - (2,724) (2,645) - (2,645)respect of ------- ------- ------- ------- ------- -------equity shares Transfer to 187 19,394 19,581 201 10,373 10,574reserves ------- ------- ------- ------- ------- ------- Basic return per 9.5p 63.4p 72.9p 9.2p 33.6p 42.8pordinary share DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 GROUP CASH FLOW STATEMENT For the year ended 30 April 2005 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating 2,443 1,590activities Servicing of financeInterest paid (246) (1,003) Financial InvestmentPurchase of investments (22,126) (14,869)Purchase of 'AAA' rated money market (17,327) (22,888)fundsSale of investments 36,499 27,746Sale of 'AAA' rated money market 6,000 31,750funds ------- -------Net cash inflow from financial 3,046 21,739investment Equity dividends paid (2,626) (3,674) ------- -------Net cash inflow before financing 2,617 18,652 FinancingPurchase of ordinary shares (1,210) (379)Currency loan reduction (1,432) (3,810)Term Loan reduction - (15,000) ------- ------- (2,642) (19,189) ------- ------- Decrease in cash for the period (25) (537) ------- ------- Reconciliation of net cash flow tomovement in net fundsDecrease in cash as above (25) (537)Cash at bank and in hand at 1 May 5,050 5,587 ------- -------Cash at bank and in hand at 30 April 5,025 5,050 ------- ------- Notes 1. The directors recommend a final dividend of 7.1p per sharefor the year to 30 April 2005. If approved, the dividend will be paid on 9September 2005 to shareholders on the register at close of business on 5 August2005. The ex-dividend date is 3 August 2005. An interim dividend of 1.9p pershare was paid on 28 January 2005. 2. The financial information for the year ended 30 April 2004has been extracted from the annual report and accounts of the company which hasbeen filed with the Registrar of Companies and on which the auditors' report wasunqualified. The accounts have been prepared under the same accounting policiesused for the year to 30 April 2004. 3. The statutory accounts for 2005 contain an unqualified auditreport and will be delivered to the Registrar of Companies following thecompany's Annual General Meeting which will take place at 12 noon on Wednesday 7September 2005 at The Merchants' Hall, 22 Hanover Street, Edinburgh EH2 2EP. 4. The statement of total return (incorporating the revenueaccount) and balance sheet set out above do not represent full accounts inaccordance with Section 240 of the Companies Act 1985. The accounts have beenprepared in accordance with the Statement of Recommended Practice 'FinancialStatements of Investment Trust Companies'. 5. The annual report will be posted to shareholders in July2005 and copies will be available to members of the public at the Company'sRegistered Office, 10 George Street, Edinburgh, EH2 2DW. This information is provided by RNS The company news service from the London Stock Exchange