Dunedin Ent.it. Regulatory News (DNE)

14 Dec 2007 07:01

Dunedin Enterprise Inv Trust PLC14 December 2007 EMBARGOED - 7AM FRIDAY 14 DECEMBER For release 07.00am 14 December 2007 Dunedin Enterprise Investment Trust PLC Preliminary Results for the half year ended 31 October 2007 Dunedin Enterprise Investment Trust PLC, the private equity investment trustwhich specialises in investing in mid-market buyouts announces its preliminaryresults for the half year ended 31 October 2007. Financial Highlights: • Net asset value per share increased by 2.6% to 555.9p per share • Total net assets now £167.9 million • Interim dividend of 1.5p • Realisations totaling £21.4 million • Investment of £28.4 million • Total return per ordinary share 22.5p Comparative Performance Periods to 31 October 2007 Six months 1 Year 3 Year 5 Year 10 Year % % % % %Net asset value per ordinary share 2.6 9.8 47.1 95.0 79.4Share price 3.8 7.5 66.6 115.1 79.7FTSE Small Cap Index -9.7 2.2 39.1 103.1 55.5FTSE All Share Index 2.9 9.8 49.6 77.0 49.5 For further information please contact: Ross Marshall Jane Kirby / Corinna Vere NicollChief Executive Officer DirectorDunedin Capital Partners Limited Equity Dynamics0131 225 669907768 794 180 07825 326 441/0ross.marshall@dunedin.com jane@equitydynamics.co.uk 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 - £50 million. It operates throughout the United Kingdom from itsoffices in Edinburgh and London. Dunedin Capital Partners is itself the resultof a management buyout which took place 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 2007, Dunedin Enterprise invested £28.4 millionin two new investments and four follow-on investments. Two portfolio companieswere sold in the half year which, together with a number of other loan stockredemptions and distributions from limited partnership funds, generated proceedstotalling £21.4 million. The unaudited net asset value rose from £163.7 million at 30 April 2007 to£167.9 million at 31 October 2007 reflecting an increase in net asset value pershare of 2.6%, from 541.9p to 555.9p. This compares to a decrease of 9.7% inthe FTSE Small Cap Index over the same period. During the six months the shareprice of Dunedin Enterprise rose from 462.0p to 479.75p, an increase of 3.8%. An interim dividend of 1.5p is to be paid on 31 January 2008 to shareholders onthe register at close of business on 28 December 2007. The ex-dividend date is24 December 2007. The accounting year end of the Company is being changed from30 April to 31 December and the financial statements to 31 December 2007 willcover an eight month period. The interim dividend has therefore been pro-ratedand represents a 7% increase on last year's interim dividend of 2.1p. Investments In June 2007, Dunedin Enterprise invested £2.6 million in the £16 millionmanagement buyout of Fernau Avionics Limited. Fernau is a world-leadingdesigner and manufacturer of Navigational Aids to the civil and militaryaviation markets in the UK, Europe, North America and the Far East.Navigational Aids are primarily fixed, ground-based installations which transmita series of radio signals allowing pilots to navigate safely and efficiently. The strategy of investing in quoted European private equity companies continuedin the six months to 31 October 2007. An investment of £5 million was made inDinamia Capital Privado SA. Dinamia was the first Spanish private equitycompany quoted on the Madrid Stock Exchange. It invests in management buyouts,buyins and development capital opportunities in the Iberian peninsula. Since 30April 2007, a further £10.5 million has been invested in CapMan Plc, DeutscheBeteiligungs AG and GIMV. A total of £19.8 million has now been invested inthese four quoted European Private Equity companies. As reported in the year end accounts, Practice Plan undertook a £26 millionrecapitalisation in May 2007. Dunedin Enterprise realised £6.6 million on therecapitalisation and took the opportunity to re-invest £9.3 million in thecompany in the form of loan stock which produces a yield in excess of cashdeposits. Follow-on investments and further drawdowns by limited partnershipfunds amounted to £1.0 million. Following the half year end Dunedin Enterprise invested £3.3 million in the £18million management buyout of Gissings Advisory Services Limited. Gissingsprovides consultancy advice on flexible benefits, private medical insurance,life assurance, permanent health insurance, occupational health and employeewellness to a number of FTSE 100 and FTSE 250 businesses. Realisations During the half year two direct investments were fully realised; Zenith, theprovider of car fleet management services, was sold to a secondary buyout,generating proceeds of £11.0 million and an IRR of 33% over two years; andCentral Scotland Finance, an investment held since 1982, was realised inSeptember 2007 generating proceeds of £1.4 million. A number of successful disposals have been achieved from within the LGV PrivateEquity limited partnership funds generating proceeds of £2.2 million. Results for the six months to 31 October 2007 The movement in net asset value is summarised in the table below: £'m Net asset value at 30 April 2007 163.7Unrealised valuation increases 11.2Unrealised valuation decreases (7.2)Realised profit over opening valuation 1.8Other capital movements (1.6) Net asset value at 31 October 2007 167.9 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 £11.2 million has been generated by anumber of portfolio companies. Improved trading at both OSS Environmental, theoil recycling company, and Gardner Group, the aerospace services company, hasgenerated valuation uplifts of £4.8 million and £2.4 million respectively.Capula, the provider of real time IT solutions, has enjoyed a period of strongtrading since the secondary buyout in August 2006 enabling it to be valued on anearnings basis for the first time and generating an uplift of £1.2 million. Theportfolio companies held within LGV Private Equity Funds have added a furtheruplift of £1.6 million. Recently introduced European glass certification rules have adversely affectedtrading at CGI leading to a valuation reduction of £2.0 million. Challengingmarket conditions and a reduction in local and national government spending havecontinued to adversely affect trading at New Horizons and RSL Steeper. This hasled to a further £1.3 million valuation decrease at New Horizons and a £1.0million reduction at RSL Steeper. European Court of Justice judgement in the JP Morgan Claverhouse case In June 2007, the European Court of Justice ruled against HM Revenue & Customs(HMRC) in the test case concerning the exemption of investment trusts frompayment of VAT on management fees. In November 2007, HMRC made an announcementacknowledging that fund management services supplied to investment trusts areexempt from VAT and confirming that claims for repayment of VAT overpaid in thepast will be processed in due course, although it is not yet clear for whatperiod or periods repayment will be made. Your Manager has confirmed that theappropriate protective claims have been made with HMRC. Pending clarification of the basis and timing of dealing with repayment claims,no provision has been made in these half-yearly accounts for any potential VATrecovery. On the basis of the information presently available the eventualbenefit to Dunedin Enterprise is not likely to exceed 1.5% of the present netasset value. Future management fees payable to your Manager will be exempt fromVAT. Interim Management Statement Under the new UK Listing Authority's Disclosure and Transparency Rules,companies with a full listing in the UK are required to publish an InterimManagement Statement in the quarters falling between the half year and full yearannouncement of results. The Interim Management Statement is a vehicle to keepshareholders updated on significant events within the business. DunedinEnterprise published its first Interim Management Statement in September 2007.This statement and all future statements will be published via the StockExchange and on the website www.dunedin.com. Outlook The downturn in the market highlighted in the Chairman's Statement in July 2007has been focused on the banking sector to date. This has not led to a reductionin the availability of bank debt to Dunedin to fund actual or potentialacquisitions. Dunedin has always been cautious of the level of debt taken on inacquiring businesses and in many cases the funds invested by Dunedin exceed theamount of external bank funding. If the cycle has turned, Dunedin Enterprise is well placed. Over the past twoyears it has made disposals exceeding £100 million and currently has cash andnear cash of £60 million, as well as substantial borrowing facilities. Thisshould enable it to take advantage of more realistically priced opportunities. Dunedin Capital Partners Limited13 December 2007 Overview of Portfolio Analysed by category of investment 31 October 2007 30 April 2007 % % A Direct 29 31B Via Dunedin managed funds 10 9C Via third party managed funds 25 17D Cash 36 43 Analysed by valuation method 31 October 2007 30 April 2007 % % A Cost 28 34B Earnings multiple 39 32C Sales price 1 13D Quoted bid price 32 21 Analysed by geographic location 31 October 2007 30 April 2007 % % A UK 78 87B Rest of Europe 16 8C USA 5 4D Rest of World 1 1 Analysed by sector 31 October 2007 30 April 2007 % % A Construction and building materials 12 15B Consumer products & services 3 2C Financial services 1 2D Healthcare 5 8E Leisure and hotels 9 8F Industrials 19 12G Pharma, medical, biotech 3 3H Real Estate 1 -J Support services 39 42K Technology 8 8 Analysed by deal type 31 October 2007 30 April 2007 % % A Management buyouts/buyins 88 89B Technology* 8 8C Life Science* 3 3D Real Estate* 1 - * - via third party funds Analysed by age of investment 31 October 2007 30 April 2007 % % A 5 years 31 28 Ten Largest Investments(both held directly and via Dunedin managed funds)by value at 31 October 2007 Company name Percentage Percentage Cost of Directors' of net of equity investment valuation assets % £'000 £'000 % SWIP Private Equity Fund of Fund II PLC 5.9 15,025 15,747 9.3Practice Plan Group (Holdings) Limited 26.2 9,514 15,234 9.1CGI Group Limited 37.9 5,941 11,750 7.0Capula Group Limited 35.5 8,289 9,501 5.7WFEL Holdings Limited 24.2 6,410 6,410 3.8CapMan plc 2.5 4,852 4,886 2.9OSS Environmental Holdings Limited 49.0 6,184 4,774 2.8GIMV 0.6 4,971 4,679 2.8Deutsche Beteiligungs AG 1.8 4,999 4,620 2.8ABI (UK) Group Limited 21.1 211 4,259 2.5 66,396 81,860 48.7 Income Statementfor the six months ended 31 October 2007 Unaudited Unaudited Audited Six months ended 31 October Six months ended 31 October Year ended 30 April 2007 2007 2006 Revenue Capital Total Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains on investments - 5,601 5,601 - 3,706 3,706 - 12,337 12,337Income 3,044 - 3,044 2,901 - 2,901 6,036 - 6,036Investment management fee (230) (689) (919) (268) (686) (954) (461) (1,263) (1,724)Other expenses (294) - (294) (297) - (297) (536) - (536) Net return before finance 2,520 4,912 7,432 2,336 3,020 5,356 5,039 11,074 16,113costs and taxInterest payable and similar (26) (78) (104) (27) (81) (108) (54) (164) (218)charges Return on ordinary 2,494 4,834 7,328 2,309 2,939 5,248 4,985 10,910 15,895activities before taxTax on ordinary activities (748) 230 (518) (592) 592 - (1,258) 1,946 688 Return attributable to 1,746 5,064 6,810 1,717 3,531 5,248 3,727 12,856 16,583equity shareholders Basic return per ordinary 22.5p 17.3p 54.8pshare 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 shareholders' fundsfor the six months ended 31 October 2007 Unaudited six months ended 31 October 2007 Share Capital Capital Capital Revenue Total Share premium redemption reserve reserve account equity capital account reserve -realised -unrealised £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30 April 2007 7,552 47,600 374 104,274 (2,517) 6,434 163,717Net return on ordinary - - - 7,739 (2,675) 1,746 6,810activitiesDividends paid - - - - - (2,598) (2,598) At 31 October 2007 7,552 47,600 374 112,013 (5,192) 5,582 167,929 Unaudited six months ended 31 October 2006 Share Capital Capital Capital Revenue Total Share premium redemption reserve reserve account equity capital account reserve -realised -unrealised £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 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 Audited year ended 30 April 2007 Share Capital Capital Capital Share premium redemption reserve reserve - Revenue Total capital account reserve -realised unrealised account equity £'000 £'000 £'000 £'000 £'000 £'000 £'000 At 30 April 2006 7,592 47,600 334 87,978 1,598 6,202 151,304Net return on ordinary - - - 16,971 (4,115) 3,727 16,583activitiesDividends paid - - - - - (3,495) (3,495)Purchase of own shares (40) - 40 (675) - - (675) At 30 April 2007 7,552 47,600 374 104,274 (2,517) 6,434 163,717 Balance Sheetas at 31 October 2007 Unaudited Unaudited Audited 31 October 31 October 30 April 2007 2006 2007 £'000 £'000 £'000 Investments held at fair value through profit or loss 136,898 122,215 133,222 Current assetsDebtors 346 86 772Cash at bank 30,735 31,073 34,282 31,081 31,159 35,054Current liabilitiesCreditors: amounts falling due within one year (50) (152) (4,559) Net assets 167,929 153,222 163,717 Capital and reservesCalled up share capital 7,552 7,565 7,552Share premium 47,600 47,600 47,600Capital redemption reserve 374 361 374Capital reserve - realised 112,013 89,318 104,274Capital reserve - unrealised (5,192) 3,318 (2,517)Revenue reserve 5,582 5,060 6,434 Total equity shareholders' funds 167,929 153,222 163,717 Net asset value per share 555.9p 506.4p 541.9p Cash Flow Statementfor the six months ended 31 October 2007 Unaudited Unaudited Audited Six months ended Six months ended Year ended 31 October 2007 31 October 2006 30 April 2007 £'000 £'000 £'000 £'000 £'000 £'000 Net cash inflow from operating activities 1,512 1,801 4,055 Financial InvestmentPurchase of investments (32,705) (15,501) (39,057)Purchase of 'AAA' rated money market (65,694) (8,907) (25,252)fundsSale of investments 21,391 10,406 27,625Sale of 'AAA' rated money market funds 74,652 40,341 64,928Net cash inflow / (outflow) from (2,356) 26,339 28,244financial investment Equity dividends paid (2,598) (2,859) (3,495) Net cash inflow / (outflow) before (3,442) 25,281 28,804financing FinancingInterest paid (105) (108) (218)Purchase of ordinary shares - (471) (675) Increase / (decrease) in cash for the (3,547) 24,702 27,911period Reconciliation of net cash flow tomovements in net fundsIncrease / (decrease) in cash as above (3,547) 24,702 27,911Cash at bank and in hand at beginning of 34,282 6,371 6,371periodCash at bank and in hand at end of period 30,735 31,073 34,282 Reconciliation of revenue return 2,520 2,336 5,039before tax to net cash flow fromoperating activities(Increase)/decrease in debtors (90) 108 111Increase/(decrease) in creditors (229) 42 168Management fees charged to capital (689) (805) (1,383)Arrangement fees - 120 120Net cash inflow from operating 1,512 1,801 4,055activities Responsibility statement of the Directors in respect of the half-yearlyfinancial report We confirm that to the best of our knowledge: • the condensed set of financial statements has been prepared in accordance with the Statement Half-yearly financial reports issued by the UK Accounting Standards Board; • 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 two months of the period; 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 period 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 BoardDunedin Capital Partners LimitedSecretary13 December 2007 Notes to the Accounts 1. Unaudited Interim Report 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 2007 and 31 October 2006 has notbeen audited. The information for the year ended 30 April 2007 has been extracted from thelatest published audited financial statements. The audited financial statementsfor the year ended 30 April 2007 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 2007 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 period ending 31 December 2007, which are consistent with theaccounting policies set out in the 2007 financial statements. 3. Dividends Six months to Six months to Year to 31 October 2007 31 October 2006 30 April 2007 £'000 £'000 £'000 Dividends paid in the period 2,598 2,859 3,495 4. Earnings per share Six months to Six months to Year to 31 October 2007 31 October 2006 30 April 2007 Revenue return per ordinary 5.8 5.7 12.3share (p)Capital return per ordinary 16.7 11.6 42.5share (p)Earnings per ordinary share (p) 22.5 17.3 54.8 Weighted average number of 30,208,943 30,290,313 30,266,370shares The earnings per share figures are based on the weighted average numbers ofshares set out above. 5. Share Buy Backs Six months to Six months to Year to 31 October 2007 31 October 2006 30 April 2007 Number of shares bought back - 111,000 161,000Average price per share - 421.6p 419.4pTotal cost including expenses - 471,217 675,270Number of shares in issue at the end of 30,208,943 30,258,943 30,208,943the period All shares bought back were subsequently cancelled. Independent Review Report to Dunedin Enterprise Investment Trust PLC Introduction We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report for the six months ended 31October 2007 which comprises the Income Statement, Reconciliation of Movementsin Shareholder Funds, Balance Sheet, Cash Flow Statement and the relatedexplanatory notes. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements. This report is made solely to the Company in accordance with the terms of ourengagement to assist the Company in meeting the requirements of the Disclosureand Transparency Rules ("the DTR") of the UK's Financial Services Authority ("the UK FSA"). Our review has been undertaken so that we might state to theCompany those matters we are required to state to it in this report and for noother purpose. To the fullest extent permitted by law, we do not accept orassume responsibility to anyone other than the Company for our review work, forthis report, or for the conclusions we have reached. Directors' responsibilities The half-yearly financial report is the responsibility of, and has been approvedby, the Directors. The Directors are responsible for preparing the half-yearlyfinancial report in accordance with the DTR of the UK FSA. As disclosed in note 2, the annual financial statements of the Company areprepared in accordance with UK Accounting Standards and applicable law (UKGenerally Accepted Accounting Practice). The condensed set of financialstatements included in this half-yearly financial report has been prepared inaccordance with the Statement Half-Yearly Financial Reports as issued by the UKAccounting Standards Board. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity issued by the AuditingPractices Board for use in the UK. A review of interim financial informationconsists of making enquiries, primarily of persons responsible for financial andaccounting matters, and applying analytical and other review procedures. Areview is substantially less in scope than an audit conducted in accordance withInternational Standards on Auditing (UK and Ireland) and consequently does notenable us to obtain assurance that we would become aware of all significantmatters that might be identified in an audit. Accordingly, we do not express anaudit opinion. Conclusion Based on our review, nothing has come to our attention that causes us to believethat the condensed set of financial statements in the half-yearly financialreport for the six months ended 31 October 2007 is not prepared, in all materialrespects, in accordance with the Statement Half-Yearly Financial Reports asissued by the UK Accounting Standards Board and the DTR of the UK FSA. KPMG Audit PlcChartered AccountantsEdinburgh 13 December 2007 This information is provided by RNS The company news service from the London Stock Exchange