Last checked at 
6 Aug 2009 07:00
EMBARGOED - 7AM THURSDAY 6 AUGUST
For release 07.00am 6 August 2009
Dunedin Enterprise Investment Trust PLC
Interim Results for the half year ended 30 June 2009
Dunedin Enterprise Investment Trust PLC, the private equity investment trust which specialises in investing in mid-market buyouts, announces its results for the half year ended 30 June 2009.
Financial Highlights:
Net asset value per share decreased by 5.8% to 408.3p per share
Interim dividend of 0.5p per share
New investment of £4.2 million in the half year
Realisations of £8.3 million in the half year
Comparative Performance
| Periods to 30 June 2009 | Net Asset value* | Share price | FTSE Small Cap (ex Inc Cos) Index | FTSE All Share (ex Inc Cos) Index |
| Six months | -5.8% | 34.1% | 24.1% | -2.0% |
| One year | -22.6% | -23.1% | -24.2% | -24.0% |
| Three years | -18.0% | -32.9% | -42.6% | -27.0% |
| Five years | 18.7% | 0.9% | -27.4% | -3.1% |
| Ten years | 8.5% | -9.0% | -27.8% | -26.9% |
* - taken to 30 April for three, five and ten years
For further information please contact:
| Brian Scouler Director Dunedin Capital Partners Limited 0131 225 6699 07811 262 796 brian.scouler@dunedin.com | Jane Kirby / Corinna Osborne Directors Equity Dynamics Limited 07825 326 441/ 440 jane@equitydynamics.co.uk / corinna@equitydynamics.co.uk |
Notes to Editors
Dunedin Enterprise Investment Trust PLC is managed by Dunedin Capital Partners Limited. Dunedin Capital Partners Limited is an independent private equity company owned by its directors. The company specialises in providing equity finance for management buyouts and management buyins with a transaction size of £10 million to £75 million. It operates throughout the United Kingdom from its offices in Edinburgh and London. Dunedin Capital Partners is itself the result of a management buyout which took place in 1996.
Dunedin Enterprise's investment objective is to achieve substantial long term growth in its assets through capital gains from its investments. For more information on Dunedin Enterprise, its portfolio and investment approach, please visit the website www.dunedin.com. Investors can buy shares in the company through regular savings, PEP/ISA and pension plans. For further information, call the Aberdeen Asset Managers helpline on 0500 00 00 40 or visit the website at www.dunedinenterprisetrust.co.uk.
Manager's Review
Overview
In the six months to 30 June 2009, Dunedin Enterprise's unaudited net asset value decreased from £130.8m at 31 December 2008 to £123.2m, a movement of -5.8%. During the period a final and special dividend totalling 23.45p per share and amounting to £7.1m was paid to shareholders following exceptional income receipts in 2008. After taking account of the dividend payment, other net asset value movements in the half year amounted to -£0.5m. The net asset value per share decreased from 433.4p to 408.3p.
During the six months to 30 June 2009 the share price of Dunedin Enterprise increased by 34.1% from 211p to 283p as discounts narrowed significantly across the listed private equity sector. This compares to an increase of 24.1% in the FTSE Small Cap over the same period.
In the six months to 30 June 2009, Dunedin Enterprise invested a total of £4.2m and realised £8.3m from investments. Realisations in the half year generated a profit of £3.5m over the opening valuation.
An interim dividend of 0.5p is to be paid on 31 August 2009 to shareholders on the register at close of business on 14 August 2009. The ex-dividend date is 12 August 2009. Last year an interim dividend of 2.4p was paid. The reduction in the interim dividend this year reflects a combination of more investments structured with a rolled up yield, a lower yield from cash balances, and difficult trading conditions being experienced by some portfolio companies.
With realisations being delayed by the current economic climate, the prospects for future dividends are difficult to predict. However, it is likely that the 2009 final dividend will be very much lower than for 2008.
In 2010 the Board intends to recommend the payment of only one dividend, at the final stage, which will be determined by the requirements of the UK tax authorities which oblige the Company to retain no more than 15% of income received during the year.
Net asset movements in the six months to 30 June 2009
The movement in net asset value is summarised in the table below:-
| £'m | |
| Net asset value at 31 December 2008 | 130.8 |
| Realised profit over opening valuation | 3.5 |
| Unrealised value increases | 5.9 |
| Unrealised value decreases | (14.8) |
| Dividend paid | (7.1) |
| Exchange hedge movement | 5.0 |
| Other movements | (0.1) |
| Net asset value at 30 June 2009 | 123.2 |
Portfolio movements
Dunedin Enterprise's investment portfolio comprises:-
• Dunedin managed funds (including direct investments),
• third party managed funds,
• listed private equity companies, and
• legacy technology funds.
| Valuation | Additions | Disposals | Realised | Unrealised | Valuation | |
| at 31-12-08 | in half year | in half year | movement | movement | at 30-6-09 | |
| £'m | £'m | £'m | £'m | £'m | £'m | |
| Dunedin managed | 39.3 | 0.9 | (8.0) | 3.5 | (3.9) | 31.8 |
| Third party managed - Europe | 2.9 | 3.2 | (0.2) | - | (0.6) | 5.3 |
| Third party managed - UK | 0.8 | - | - | - | - | 0.8 |
| Listed private equity | 27.2 | - | - | - | (3.7) | 23.5 |
| Legacy technology funds | 3.2 | 0.1 | (0.1) | - | (0.7) | 2.5 |
| 73.4 | 4.2 | (8.3) | 3.5 | (8.9) | 63.9 |
In the half year a total of £4.2m was invested by Dunedin Enterprise. The majority of new investment was made via the European Funds programme. A total of £3.2m was drawndown by the four funds to which commitments have already been made; FSN Capital III, Realza Capital Fondo FCR, Egeria Private Equity Fund III and Innova/5. Since 30 June 2009 a new commitment of €10m has been made to Capiton IV, a mid market buyout fund that focuses on Germany. The Capiton business is based in Berlin, has a team of 16 and is privately owned by the investment manager. The fund will invest in companies with an Enterprise Value of between €30m and €100m.
In the half year to 30 June 2009 a total of £8.3m was realised from investments. The most significant realisation was that of Fernau in a sale of the business to Moog Controls Limited, a subsidiary of Moog Inc. From an initial investment of £2.5m, Dunedin Enterprise realised income and capital totalling £7.7m, a return of over three times and an IRR of 92% within a period of less than two years.
Unrealised movements in valuation
Within Dunedin managed investments, growth in the values of WFEL, Formaplex, Practice Plan and etc.venues was driven by increases in comparable price earnings multiples. The total value increase attributable to these higher multiples was £5.7m.
Offsetting these increases, however, were falls in the values of OSS Environmental Holdings and CGI, both as a result of difficult trading conditions. OSS, which recycles waste oil into a fuel product, has suffered from a fall in oil prices since last year and the imposition of duty on the company's product. The delayed implementation of a new product standard has also contributed to a difficult market. CGI, which manufactures fire resistant glass, has suffered from the downturn in the building and construction markets. The valuation of these two companies has decreased by £6.7m and £2.0m respectively, with both now being fully provided against.
The five European listed private equity companies' share prices decreased in value by a total of £3.7m, of which £0.5m is a result of share price movements and £3.2m a result of currency movements. This has been offset by an increase in value of £5m from the Euro hedging arrangements as the Euro has weakened against Sterling in the first half of 2009.
The portfolio is valued in accordance with the International Private Equity and Venture Capital Valuation Guidelines.
The principal risks which the Company faces include continued weakness and volatility in the financial markets, currency movements and portfolio companies facing difficult trading conditions.
The Company has significant financial resources and continues to adopt a going concern basis in preparing the interim report and accounts.
European Commission
In April 2009 the European Commission published proposals for a Directive on Alternative Investment Fund Managers. The Board and Manager of the Company are participating in industry wide discussions regarding the appropriateness of these proposals to a listed private equity investment trust.
Outlook
Market conditions remain difficult and challenging, with most attention being given to protection of value in the existing portfolio. New investment opportunities in the UK market are not expected to pick up significantly this year and realisations will be delayed. Nevertheless, the Company remains prudently funded with significant cash resources to take advantage of any market upturn.
The European Funds programme has made an encouraging start, with good relationships being forged and a broader range of markets to consider. We expect more activity in this business in the short term, with both new commitments and investments.
Dunedin Capital Partners Limited
5 August 2009 Ten Largest Investments
(both held directly and via Dunedin managed funds) by value at 30 June 2009
| Approx. | Percentage | |||
| percentage | Cost of | Directors' | of net | |
| of equity | investment | valuation | assets | |
| Company name | % | £'000 | £'000 | % |
| SWIP Private Equity Fund of Funds II PLC | 4.3 | 15,025 | 12,380 | 10.0 |
| Practice Plan (Holdings) Limited | 26.1 | 10,262 | 10,560 | 8.6 |
| WFEL Holdings Limited | 23.2 | 6,399 | 6,116 | 5.0 |
| Capula Group Limited | 37.8 | 5,753 | 5,327 | 4.4 |
| GIMV | 0.6 | 4,971 | 4,232 | 3.4 |
| etc.venues Group Limited | 25.1 | 3,317 | 4,043 | 3.3 |
| Hawksford International Limited | 16.0 | 3,676 | 3,676 | 3.0 |
| FSN Capital III LP | 3.3 | 3,529 | 3,256 | 2.6 |
| Deutsche Beteiligungs AG | 1.9 | 5,000 | 2,850 | 2.3 |
| Dinamia Capital Privado SA | 2.1 | 5,017 | 2,360 | 1.9 |
| 62,949 | 54,800 | 44.5 |
Overview of Portfolio
Analysed by category of investment
| 30 June 2009 % | 31 December 2008 % | |
| Dunedin managed | 25 | 28 |
| Third party managed | 5 | 3 |
| Listed private equity | 19 | 19 |
| Legacy technology funds | 2 | 2 |
| Cash | 49 | 48 |
Analysed by valuation method
| 30 June 2009 % | 31 December 2008 % | |
| Cost/written down | 37 | 48 |
| Earnings | 26 | 15 |
| Bid price | 37 | 37 |
Analysed by geographic location
| 30 June 2009 % | 31 December 2008 % | |
| UK | 58 | 67 |
| Rest of Europe | 34 | 27 |
| USA | 7 | 5 |
| Rest of World | 1 | 1 |
Analysed by sector
| 30 June 2009 % | 31 December 2008 % | |
| Automobiles and parts | 3 | 2 |
| Construction and building materials | - | 3 |
| Consumer products & services | 7 | 6 |
| Financial services | 7 | 6 |
| Healthcare | 3 | 2 |
| Leisure and hotels | 1 | 1 |
| Industrials | 20 | 20 |
| Pharma, medical, biotech | 3 | 4 |
| Real Estate | 2 | 2 |
| Support services | 42 | 44 |
| Technology | 12 | 10 |
Analysed by deal type
| 30 June 2009 % | 31 December 2008 % | |
| Management buyouts/buyins | 83 | 84 |
| Technology | 12 | 10 |
| Life Sciences | 3 | 4 |
| Real Estate | 2 | 2 |
Analysed by age of investment
| 30 June 2009 % | 31 December 2008 % | |
|
| 21 | 17 |
| 1-3 years | 33 | 35 |
| 3-5 years | 33 | 24 |
| >5 years | 13 | 24 |
Consolidated Income Statement
for the six months ended 30 June 2009
| Unaudited | Unaudited | Audited | |||||||
| Six months ended 30 June 2009 | Six months ended 30 June 2008 | Year ended 31 December 2008 | |||||||
| Revenue | Capital | Total | Revenue | Capital | Total | Revenue | Capital | Total | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Investment income | 882 | - | 882 | 5,627 | - | 5,627 | 12,533 | - | 12,533 |
| Gains/(losses) on investments | - | (446) | (446) | - | (3,226) | (3,226) | - | (35,167) | (35,167) |
| Total Income | 882 | (446) | 436 | 5,627 | (3,226) | 2,401 | 12,533 | (35,167) | (22,634) |
| Expenses | |||||||||
| Investment management fees | (128) | (384) | (512) | (186) | (559) | (745) | (358) | (1,073) | (1,431) |
| VAT on investment management fees | - | - | - | 538 | 1,613 | 2,151 | 538 | 1,613 | 2,151 |
| Other expenses | (325) | - | (325) | (278) | - | (278) | (627) | - | (627) |
| Profit/(loss) before finance costs and tax | 429 | (830) | (401) | 5,701 | (2,172) | 3,529 | 12,086 | (34,627) | (22,541) |
| Finance costs | (27) | (80) | (107) | (27) | (82) | (109) | (54) | (162) | (216) |
| Profit/(loss) before tax | 402 | (910) | (508) | 5,674 | (2,254) | 3,420 | 12,032 | (34,789) | (22,757) |
| Taxation | (118) | 130 | 12 | (1,592) | (277) | (1,869) | (3,207) | (109) | (3,316) |
| Profit/(loss) for the period | 284 | (780) | (496) | 4,082 | (2,531) | 1,551 | 8,825 | (34,898) | (26,073) |
| Earnings per ordinary share (basic & diluted) | 0.9p | (2.6p) | (1.7p) | 13.5p | (8.4p) | 5.1p | 29.2p | (115.6p) | (86.4p) |
The total column of this statement represents the Income Statement of the Group, prepared in accordance with International Financial Reporting Standards as adopted by the EU. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies. All items in the above statement derive from continuing operations.
All income is attributable to the equity shareholders of Dunedin Enterprise Investment Trust PLC.
Consolidated Statement of Changes in Equity
for the six months ended 30 June 2009
Six months ended 30 June 2009 (unaudited)
| Share capital £'000 | Share premium £'000 | Capital redemption reserve £'000 | Capital Reserve realised £'000 | Capital reserve - unrealised £'000 | Revenue account £'000 | Total retained earnings £'000 | Total equity £'000 | |
| At 31 December 2008 | 7,544 | 47,600 | 382 | 108,451 | (45,387) | 12,187 | 75,251 | 130,777 |
| Profit/(loss) for the period | - | - | - | 3,801 | (4,581) | 284 | (496) | (496) |
| Repurchase of own shares | - | - | - | - | - | - | - | - |
| Dividends paid | - | - | - | - | - | (7,077) | (7,077) | (7,077) |
| At 30 June 2009 | 7,544 | 47,600 | 382 | 112,252 | (49,968) | 5,394 | 67,678 | 123,204 |
Six months ended 30 June 2008 (unaudited)
| Share capital £'000 | Share premium £'000 | Capital redemption reserve £'000 | Capital Reserve realised £'000 | Capital reserve - unrealised £'000 | Revenue account £'000 | Total retained earnings £'000 | Total equity £'000 | |
| At 31 December 2007 | 7,551 | 47,600 | 375 | 112,586 | (14,517) | 6,352 | 104,421 | 159,947 |
| Profit/(loss) for the period | - | - | - | 10,140 | (12,671) | 4,082 | 1,551 | 1,551 |
| Repurchase of own shares | (7) | - | 7 | (107) | - | - | (107) | (107) |
| Dividends paid | - | - | - | - | - | (2,265) | (2,265) | (2,265) |
| At 30 June 2008 | 7,544 | 47,600 | 382 | 122,619 | (27,188) | 8,169 | 103,600 | 159,126 |
Year ended 31 December 2008 (audited)
| Share capital £'000 | Share premium £'000 | Capital redemption reserve £'000 | Capital Reserve realised £'000 | Capital reserve - unrealised £'000 | Revenue account £'000 | Total retained earnings £'000 | Total equity £'000 | |
| At 31 December 2007 | 7,551 | 47,600 | 375 | 112,586 | (14,517) | 6,352 | 104,421 | 159,947 |
| Profit/(loss) for the year | - | - | - | (4,028) | (30,870) | 8,825 | (26,073) | (26,073) |
| Repurchase of own shares | (7) | - | 7 | (107) | - | - | (107) | (107) |
| Dividends paid | - | - | - | - | - | (2,990) | (2,990) | (2,990) |
| At 31 December 2008 | 7,544 | 47,600 | 382 | 108,451 | (45,387) | 12,187 | 75,251 | 130,777 |
Consolidated Balance Sheet
As at 30 June 2009
| Unaudited 30 June 2009 £'000 | Unaudited 30 June 2008 £'000 | Audited 31 December 2008 £'000 | |
| Non-current assets | |||
| Investments held at fair value | 125,914 | 145,438 | 140,919 |
| Current assets | |||
| Other receivables | 2,235 | 3,010 | 342 |
| Cash and cash equivalents | 398 | 17,376 | 665 |
| 2,633 | 20,386 | 1,007 | |
| Total assets | 128,547 | 165,824 | 141,926 |
| Current liabilities | |||
| Other liabilities | (199) | (79) | (123) |
| Current tax liabilities | (434) | (2,106) | (1,347) |
| Other financial liabilities | (4,710) | (4,513) | (9,679) |
| Net assets | 123,204 | 159,126 | 130,777 |
| Equity attributable to equity holders | |||
| Share capital | 7,544 | 7,544 | 7,544 |
| Share premium | 47,600 | 47,600 | 47,600 |
| Capital redemption reserve | 382 | 382 | 382 |
| Capital reserve - realised | 112,252 | 122,619 | 108,451 |
| Capital reserve - unrealised | (49,968) | (27,188) | (45,387) |
| Revenue reserve | 5,394 | 8,169 | 12,187 |
| Total equity | 123,204 | 159,126 | 130,777 |
| Net asset value per ordinary share (basic and diluted) | 408.3p | 527.3p | 433.4p |
Consolidated Cash Flow Statement
for the six months ended 30 June 2009
| Unaudited 30 June 2009 £'000 | Unaudited 30 June 2008 £'000 | Audited 31 December 2008 £'000 | |
| Operating activities | |||
| Profit/(loss) before tax | (508) | 3,420 | (22,757) |
| Losses on investments | 446 | 3,226 | 35,167 |
| Interest paid | 107 | 109 | 216 |
| (Increase)/decrease in debtors | (1,893) | (2,761) | (93) |
| Increase/(decrease) in creditors | 76 | (82) | (38) |
| Tax paid | (901) | - | (2,206) |
| Net cash inflow/(outflow) from operating activities | (2,673) | 3,912 | 10,289 |
| Servicing of finance | |||
| Interest paid | (107) | (109) | (216) |
| Investing activities | |||
| Purchase of investments | (4,219) | (11,183) | (19,291) |
| Purchase of 'AAA' rated money market funds | (30,460) | (28,473) | (100,441) |
| Maturity of exchange hedge | - | - | (2,680) |
| Sale of investments | 8,269 | 20,562 | 27,734 |
| Sale of 'AAA' rated money market funds | 36,000 | 4,000 | 57,320 |
| Net cash inflow/(outflow) from investing activities | 9,590 | (15,094) | (37,358) |
| Financing activities | |||
| Repurchase of own shares | - | (107) | (107) |
| Dividends paid | (7,077) | (2,265) | (2,990) |
| Net cash outflow from financing activities | (7,077) | (2,372) | (3,097) |
| Net decrease in cash and cash equivalents | (267) | (13,663) | (30,382) |
| Cash and cash equivalents at the start of period | 665 | 31,047 | 31,047 |
| Net decrease in cash and cash equivalents | (267) | (13,663) | (30,382) |
| Effect of foreign exchange rate changes | - | (8) | - |
| Cash and cash equivalents at the end of period | 398 | 17,376 | 665 |
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 as adopted by the EU;
- the interim management report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial period and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the entity during that period; and any changes in the related party transactions described in the last annual report that could do so.
By Order of the Board
Edward Dawnay
Chairman
5 August 2009
Notes to the Accounts
1. Unaudited Interim Report
The financial information contained in this report does not constitute statutory accounts as defined in Section 435 of the Companies Act 2006. The financial information for the six months ended 30 June 2009 and 30 June 2008 has not been audited. The information for the year ended 31 December 2008 has been extracted from the latest published audited financial statements. The audited financial statements for the year ended 31 December 2008 have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under the Companies Act 2006.
2. Accounting Policies
This interim financial information has been prepared in accordance with IFRSs for interim financial statements (IAS 34 Interim Financial Reporting). The condensed consolidated interim financial statements do not include all of the information required for full annual financial statements.
The same accounting policies, presentation and methods of computation are followed in these financial statements as are applied in the Group's latest annual audited financial statements. No material changes in accounting policies are anticipated in the forthcoming financial statements for the year ended 31 December 2009.
3. Dividends
| Six months to 30 June 2009 £'000 | Six months to 30 June 2008 £'000 | Year to 30 December 2008 £'000 | |
| Dividends paid in the period | 7,077 | 2,265 | 2,990 |
4. Earnings per share
| Six months to 30 June 2009 £'000 | Six months to 30 June 2008 £'000 | Year to 30 December 2008 £'000 | |
| Revenue return per ordinary share (p) | 0.9 | 13.5 | 29.2 |
| Capital return per ordinary share (p) | (2.6) | (8.4) | (115.6) |
| Earnings per ordinary share (p) | (1.7) | 5.1 | (86.4) |
| Weighted average number of shares | 30,177,380 | 30,197,189 | 30,187,231 |
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/(loss) in the period as shown in the consolidated income statement.
5. Share Buy Backs
| Six months to 30 June 2009 £'000 | Six months to 30 June 2008 £'000 | Year to 30 December 2008 £'000 | |
| Number of shares bought back | - | 27,335 | 27,355 |
| Average price per share | - | 391.6p | 391.6p |
| Total cost including expenses | - | 107,034 | 107,034 |
| Number of shares in issue at the end of the period | 30,177,380 | 30,177,380 | 30,177,380 |
All shares bought back were subsequently cancelled.
6. Contingent assets
In 2007 the European Court of Justice ruled that investment trust management firms should be exempt from VAT. Since then the HMRC has accepted the Manager's repayment claims for the periods from 2001 to 2008 and £2.2m of VAT together with £0.3m of interest in respect of these periods was repaid by the Manager to the Company in the year to 31 December 2008.
Discussions are ongoing regarding the recovery of VAT suffered prior to 2001 and payment of interest on a compound basis. The amount and timing of any recovery remains uncertain and accordingly no amount has been provided for in the financial statements.