Dunedin Ent.it. Regulatory News (DNE)

15 Dec 2006 07:58

Dunedin Enterprise Inv Trust PLC15 December 2006 For release 07.00am 15 December 2006 Dunedin Enterprise Investment Trust PLC Preliminary Results for the half year ended 31 October 2006 Dunedin Enterprise Investment Trust PLC, the private equity investment trustwhich focuses on UK mid-market buyouts announces its preliminary results forthe half year ended 31 October 2006. Financial Highlights: • Investments during the half year of £15.5 million • Commitment of £75 million to Dunedin Buyout Fund II • Realisations totalling £10.4 million • Net asset value per share increased by 1.6% to 506.4p per share • Total net assets now £153.2 million • Total return per ordinary share increased to 17.3p • Interim dividend of 2.1p; an increase of 5% • Investments post half year end of £6.4 million Comparative Performance Periods to 31 October 2006 6 months 1 Year 3 Year 5 Year 10 Year % % % % % Net asset value per ordinary share 1.6 12.2 60.9 55.7 84.7Share price -2.5 8.6 77.5 57.2 103.9FTSE Small Cap Index 1.2 19.1 41.7 53.8 62.8FTSE All Share Index 2.2 17.8 47.4 29.6 60.1 Edward Dawnay, Chairman of Dunedin Enterprise Investment Trust PLC, commented: "The past six months have seen interest rates rise with a slowdown in consumerspending offset in other sectors driven by corporate and government spending.Against this backdrop Dunedin Enterprise has had a steady six months. I can report another increase in net asset value of some 1.6% for the six monthsto 31 October 2006. This compares favourably to the FT Small Cap Index whichrose by 1.2% over the same period. The performance of the portfolio overall continues to be strong andprofitability in the underlying investments continues to grow. I believe theoutlook for Dunedin Enterprise remains positive." For further information please contact: Ross Marshall Claire McCorquodaleChief Executive Marketing ManagerDunedin Capital Partners Limited Dunedin Capital Partners Limited0131 225 6699 0131 718 231307768 794 180 07740 912 043ross.marshall@dunedin.com claire.mccorquodale@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 and management buyins with a transaction size of£10 million - £75 million. It operates throughout the United Kingdom from itsoffices 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 Aberdeen Asset Managershelpline on 0500 00 40 00 or visit the website atwww.dunedinenterprisetrust.co.uk. Manager's Review Overview In the six months to 31 October 2006, Dunedin Enterprise invested £15.5 millionin two new investments and ten follow-on investments. A commitment of £75million was made to the Dunedin Buyout Fund II LP which held a final close inSeptember 2006 with total commitments of £252.5 million. Three portfoliocompanies were realised in the half year and there were a number of other loanstock redemptions and distributions from limited partnership funds totaling£10.4 million. The unaudited net asset value rose from £151.3 million at 30 April 2006 to£153.2 million at 31 October 2006. Net asset value per share increased by 1.6%in the six months to 31 October 2006 from 498.2p to 506.4p. This increasecompares to an increase of 1.2% in the FTSE Small Cap Index over the sameperiod. During the six months the share price of Dunedin Enterprise fell from457.75p to 446.5p, a decrease of 2.5%. The interim dividend has been increased by 5% to 2.1p per ordinary share. Thiswill be paid on 31 January 2007 to shareholders on the register at close ofbusiness on 29 December 2006. The ex-dividend date is 27 December 2006. Investments In June 2006, Dunedin Enterprise invested £3.2 million in the management buyoutof etc.venues Group Limited. etc.venues is one of London's leading independentproviders of meeting, training and event space. The company has six trainingand conference venues in operation across London. All venues are purposedesigned and renowned for their well resourced facilities. The company hasplans to rollout these facilities to regions throughout the UK. In August 2006, Dunedin Enterprise invested £8.3 million in the managementbuyout of Capula Group Limited. Capula provides real time automation systems tothe nuclear, power generation and utilities markets. This is a specialisedbusiness which involves complex software programming and systems engineering.Capula has a strong market position in its core markets, providing IT systemswhich control much of the electricity distributed across the UK and IT servicesto the majority of plants at the Sellafield nuclear site. Follow-on investments and further drawdowns by limited partnership fundsamounted to £4.0 million. Realisations During the half year three direct investments were realised. AIM Group was soldto a listed company, Computer Software Group, generating proceeds of £1.7million. AIM was recapitalised in July 2001, producing a 19% IRR and a moneymultiple of 1.8 times. Travel & General and Blaze Signs were realised for £2.6million and £1 million respectively. A number of successful disposals have been achieved from within the LGV PrivateEquity limited partnership funds generating proceeds of £3.9 million. Following the half year end approximately half of the remaining shareholding inDavenham Group was realised at 303p per share. This generated proceeds of £3.5million. Results for the six months to 31 October 2006 The movement in net asset value is summarised in the table below: £'m Net asset value at 30 April 2006 151.3Unrealised valuation increases 6.1Unrealised valuation decreases (4.1)Realised profit over opening valuation 1.7Other capital movements (1.8) Net asset value at 31 October 2006 153.2 The valuation of the portfolio is in accordance with the International PrivateEquity and Venture Capital Valuation Guidelines and revised UK GAAPrequirements. The unrealised valuation increase of £6.1 million has been generated by a numberof portfolio companies. Practice Plan and Zenith are investments which weremade in September 2005 and June 2005 respectively. Each have since achieved aperiod of strong trading and it has been possible to value them on an earningsbasis for the first time generating uplifts of £2.6 million and £0.9 millionrespectively. A mixture of strong trading performance and debt reduction at ABIand CGI has resulted in valuation uplifts of £1.1 million and £0.6 millionrespectively. The portfolio companies held within LGV 4 Private Equity Fundhave added a further £0.5 million of uplifts. Unrealised valuation decreases totalled £4.1 million in the half year. Thevaluation of the investment in New Horizons has been reduced by £0.9 million inthe period as the company's growth is behind plan. The share price of Davenhamfell from 335.25p at 30 April 2006 to 313p at 31 October 2006. This hasresulted in a valuation decrease of £0.6 million. Portfolio companies heldwithin LGV Private Equity Funds have contributed a further £1.2 million of theunrealised valuation decreases. The weighted average price earnings multiple used to value the portfolio at 31October 2006 was 10.7 (30 April 2006: 9.8), a discount of 22% to the FTSE AllShare price earnings multiple of 13.8 on that date (30 April 2006: 32% discountto the FTSE All Share multiple of 14.5). The discount has reduced as a resultof a difference in portfolio sector weightings between Dunedin Enterprise andthe FTSE All Share. At 31 October 2006, the discount to directly comparableFTSE All Share sector price earnings multiples was 47% (30 April 2006: 50%). Share Buyback During the half year 111,000 shares were repurchased and cancelled by DunedinEnterprise. These shares were purchased at a price of 421.6p per share. Itcontinues to be the Board's intention to utilise the power to buyback shareswhen a repurchase would be in the best interest of shareholders. Financial Services Authority ("FSA") review of the Private Equity industry In early 2006, the FSA decided to undertake a review of the private equityindustry. This review was initiated by the significant growth in the level offunds flowing into the private equity sector, the expanding reach of privateequity transactions and the increasing levels of leveraged finance beingprovided to private equity transactions. In November 2006, the FSA published adiscussion paper setting out the results of this investigation. The FSA hashighlighted a number of risks attaching to private equity which require to bemanaged. However, they believe that private equity can significantly enhancecapital market efficiency by widening the availability of capital, increasingthe effectiveness of company valuations, identifying companies with growthpotential and facilitating their transformation. It is encouraging to note thatthe FSA is making efforts to understand and engage with the private equityindustry. Outlook Dunedin Enterprise continues to focus on investing in UK lower mid marketmanagement buyouts. A significant commitment by Dunedin Enterprise to theDunedin Buyout Fund II LP ensures continued access to this market. The Managercontinues to generate a strong pipeline of UK lower mid market investmentopportunities. In the £10 million to £75 million deal size range there havebeen 86 deals completed in the first nine months of 2006 with a total value of£2,583 million. On 12 December 2006, Dunedin Enterprise invested £6.4 million in WFEL Limited,the UK's leading manufacturer of mobile bridging systems. This is the firstinvestment made by the Dunedin Buyout Fund II LP. It is the intention of the company to change its accounting year end from 30April to 31 December. This will align the company with the majority of theprivate equity industry and make performance comparison an easier task. Thechange in accounting date will take effect from 31 December 2007. Dunedin Capital Partners Limited 14 December 2006 DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR HALF YEAR ENDED 31 OCTOBER 2006 Ten Largest Investments (both held directly and via Dunedin managed funds) The ten largest investments account for 42% of the net assets of DunedinEnterprise as listed below: Company Fully diluted Cost of Directors' Percentage of equity investment valuation net assets percentage % £'m £'m % CGI Group Limited 37.9 5.9 11.9 7.7Capula Group Limited 35.7 8.3 8.3 5.4Davenham Group plc 10.1 0.2 8.1 5.3ZVC Group Limited 20.8 7.1 8.0 5.2Practice Plan Group (Holdings) Limited 26.2 4.3 6.9 4.5Portman Holdings Limited 16.8 2.0 5.7 3.8New Horizons (Child Care) Holdings Limited 31.6 6.4 4.3 2.8RSL Steeper Holdings Limited 28.9 4.0 4.0 2.6LGV 4 Private Equity Fund 2.7 2.4 3.4 2.2etc.venues Group Limited 28.0 3.2 3.2 2.1 ___ ____ ___ 43.8 63.8 41.6 Overview of Portfolio Analysed by valuation basis 31 October 30 April 2006 2006 % %A Price of recent investment 39 45B Earnings multiple 61 48C Imminent sale price - 4D Net assets - 3 Analysed by industry sector 31 October 30 April 2006 2006 % %A Construction and building materials 16 17B Consumer products and services - -C Financial services 12 17D Healthcare 15 19E Leisure and hotels 6 7F Specialist manufacturing 2 2G Support services 49 38 Analysed by deal type 31 October 30 April 2006 2006 % %A Management buyouts/buyins 86 79B Buyout funds 9 12C Technology funds 4 5D Other 1 4 Analysed by age of investment 31 October 30 April 2006 2006 % %A Less than 1 year 22 25B 1-3 years 36 20C 3-5 years 2 5D More than 5 years 40 50 Income Statement for the six months ended 31 October 2006 Unaudited Unaudited Audited Six months ended 31 October 2006 Six months ended 31 October 2005 Year ended 30 April 2006 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000Gains on investments - 3,706 3,706 - 11,597 11,597 - 24,982 24,982Income 2,901 - 2,901 2,827 - 2,827 6,200 - 6,200Investment management fee (268) (686) (954) (361) (917) (1,278) (743) (2,022) (2,765)Other expenses (297) - (297) (242) - (242) (558) - (558)Net return before finance 2,336 3,020 5,356 2,224 10,680 12,904 4,899 22,960 27,859costs and taxation Interest payable and similar (27) (81) (108) (27) (81) (108) (54) (161) (215)chargesReturn on ordinary activities 2,309 2,939 5,248 2,197 10,599 12,796 4,845 22,799 27,644before taxationTax on ordinary activities (592) 592 - (296) 296 - (609) 609 -Return attributable to equity 1,717 3,531 5,248 1,901 10,895 12,796 4,236 23,408 27,644shareholders Earnings per ordinary shareBasic and diluted 17.3p 42.1p 91.0p The total column of this statement represents the profit and loss account of theCompany. All items in the above statement derive from continuing operations. Reconciliation of movements in shareholder funds for the six months ended 31 October 2006 Unaudited six months ended 31 October 2006 Share Capital Capital Capital premium redemption reserve - reserve - account reserve realised unrealised Revenue account Share £'000 £'000 £'000 £'000 Total capital £'000 equity £'000 £'000At 30 April 2006 7,592 47,600 334 87,978 1,598 6,202 151,304Net return on ordinary - - - 1,811 1,720 1,717 5,248activitiesDividends paid - - - - - (2,859) (2,859)Purchase of own shares (27) - 27 (471) - - (471)At 31 October 2006 7,565 47,600 361 89,318 3,318 5,060 153,222 Unaudited six months ended 31 October 2005 Share Capital Capital Capital premium redemption reserve - reserve - account reserve realised unrealised Revenue account Share £'000 £'000 £'000 £'000 Total capital £'000 equity £'000 £'000At 30 April 2005 7,592 47,600 334 51,709 14,459 4,729 126,423Net return on ordinary - - - (5,544) 16,439 1,901 12,796activitiesDividends paid - - - - - (2,156) (2,156)At 31 October 2005 7,592 47,600 334 46,165 30,898 4,474 137,063 Audited year ended 30 April 2006 Share Capital Capital Capital premium redemption reserve - reserve - account reserve realised unrealised Revenue account Share £'000 £'000 £'000 £'000 Total capital £'000 equity £'000 £'000At 30 April 2005 7,592 47,600 334 51,709 14,459 4,729 126,423Net return on ordinary - - - 36,269 (12,861) 4,236 27,644activitiesDividends paid - - - - - (2,763) (2,763)At 30 April 2006 7,592 47,600 334 87,978 1,598 6,202 151,304 Balance Sheet as at 31 October 2006 Unaudited Unaudited Audited 31 October 31 October 30 April 2006 2005 2006 £'000 £'000 £'000 Investments held at fair value through profit or 122,215 131,858 144,847loss Current assetsDebtors 86 274 196Cash at bank 31,073 4,976 6,371 31,159 5,250 6,567Current liabilitiesCreditors: amounts falling due within one year (152) (45) (110) Net assets 153,222 137,063 151,304 Capital and reservesCalled up share capital 7,565 7,592 7,592Share premium 47,600 47,600 47,600Capital redemption reserve 361 334 334Capital reserve - realised 89,318 46,165 87,978Capital reserve - unrealised 3,318 30,898 1,598Revenue reserve 5,060 4,474 6,202 Total equity shareholders' funds 153,222 137,063 151,304 Net asset value per share 506.4p 451.3p 498.2p Cash Flow Statement for the six months ended 31 October 2006 Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 October 2006 31 October 2005 30 April 2006 £'000 £'000 £'000 £'000 £'000 £'000Net cash inflow from operating 1,801 1,263 3,824activities FinancingPurchase of investments (15,501) (13,994) (21,645)Purchase of 'AAA' rated money market (8,907) (5,655) (57,518)fundsSale of investments 10,406 10,003 70,015Sale of 'AAA' rated money market funds 40,341 10,600 10,600Net cash inflow from financial 26,339 954 1,452investment Equity dividends paid (2,859) (2,156) (2,763) Net cash inflow 25,281 61 2,513 FinancingInterest paid (108) (108) (215) Purchase of ordinary shares (471) - - Cash assumed on liquidation of - - 2,926subsidiary Increase/(decrease) in cash at bank 24,702 (47) 5,224 Notes 1. Financial Information The financial information contained in this report does not constitute statutoryaccounts as defined in Section 240 of the Companies Act 1985. The financialinformation for the six months ended 31 October 2006 and 31 October 2005 has notbeen audited. The information for the year ended 30 April 2006 has been extracted from thelatest published audited financial statements. The audited financial statementsfor the year ended 30 April 2006 have been filed with the Registrar ofCompanies. The report of the auditors on those accounts contained noqualification or statement under Section 237(2) or (3) of the Companies Act1985. 2. Basis of Preparation The financial information for the six months ended 31 October 2006 has beenprepared in accordance with the Listing Rules of the Financial ServicesAuthority and in accordance with the accounting policies that are expected to beadopted for the year ending 30 April 2007, which are consistent with theaccounting policies which are set out in the 2006 financial statements. 3. Dividends Six months to 31 Six months to 31 October 2006 October 2005 Year to 30 April 2006 £'000 £'000 £'000 Dividends paid in the period 2,859 2,156 2,763 The Directors recommend an interim dividend of 2.1p per share for the half yearto 31 October 2006. The interim dividend will be paid on 31 January 2007 toshareholders on the register at close of business on 29 December 2006. Theex-dividend date is 27 December 2006. 4. Earnings per share Six months to 31 Six months to 31 October 2006 October 2005 Year to 30 April 2006Revenue return per ordinary share 5.7 6.2 13.9Capital return per ordinary share 11.6 35.9 77.1Earnings per ordinary share (basis and diluted) 17.3 42.1 91.0Weighted average number of shares 30,290,313 30,369,943 30,369,943 The earnings per share figures are based on the weighted average numbers ofshares set out above. 5. Share Buy Backs Six months to 31 Six months to 31 October 2006 October 2005 Year to 30 April 2006Number of shares bought back 111,000 - -Average price per share 421.6p - -Total cost including expenses 471,217 - -Number of shares in issue at the end of the period 30,258,943 30,369,943 30,369,943 All shares bought back were subsequently cancelled. 6. Investments Investments held in the Dunedin Buyout Fund I and Equity Harvest Fund are shownon a look through basis. This information is provided by RNS The company news service from the London Stock Exchange