Dunedin Ent.it. Regulatory News (DNE)

28 Feb 2008 07:01

Dunedin Enterprise Inv Trust PLC28 February 2008 For release 07.00am 28 February 2008 Dunedin Enterprise Investment Trust PLC Preliminary Results for the period ended 31 December 2007 Dunedin Enterprise Investment Trust PLC ("the Company"), the private equityinvestment trust which specialises in investing in mid-market buyouts announcesits preliminary results for the period ended 31 December 2007. Financial Highlights: • Net asset value per share decreased by 2.3% to 529.5p per share • Total net assets now £159.9m • Final dividend of 6.0p, making a total dividend for the period of 7.5p • Realisations totaling £22.7m • Investment of £35.6m Comparative Performance Apr 2007 to Apr 2005 to Apr 2003 to Apr 1998 Dec 2007 Dec 2007 Dec 2007 to Dec 2007 % % % %Net asset value per ordinary share -2.3 27.2 71.2 58.7Share price -10.0 20.2 90.3 50.6FTSE Small Cap Index -23.1 10.0 67.6 16.3FTSE All Share Index -2.1 36.6 72.7 17.0Index For further information please contact: Ross Marshall Jane Kirby Chief Executive Officer Director Director Dunedin Capital Partners Limited Equity Dynamics0131 225 6699 07825 326 441/007768 794 180 - ross.marshall@dunedin.com jane@equitydynamics.co.uk Notes to Editors Dunedin Enterprise Investment Trust PLC is managed by Dunedin Capital PartnersLimited ("Dunedin"). Dunedin is an independent private equity company owned byits directors. The company specialises in providing equity finance formanagement buyouts and management buyins with a transaction size of £10m - £75m.It operates throughout the United Kingdom from its offices in Edinburgh andLondon. Dunedin is itself the result of a management buyout which took place in1996. 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. Chairman's Statement The change in the year end of the Company to 31 December has resulted in thegeneration of rather more information than shareholders might normallyanticipate. You will have recently received the half year report for the sixmonths to 31 October 2007 and this report covers that period plus the additionaltwo months to 31 December 2007. During the eight month period to 31 December 2007, net assets decreased by 2.3%from £163.7m to £159.9m. Inclusive of dividends paid during the year, DunedinEnterprise achieved a total return of -0.7%. Over the same period, the benchmarkindex, the FTSE Small Cap, fell by 23.1%. The share price of the Company hasdecreased from 462p to 415.75p over the same period, a fall of 10.0%, and as atthe date of this statement was 436p. The discount of the share price to netasset value has increased over the period from 14.7% to 21.5%. The Board is recommending a final dividend of 6.0p per share making a totaldividend of 7.5p per share for the eight month period. This equates to anannualised dividend of 11.25p (10.7p for the year to 30 April 2007). Portfolio The portfolio at 31 December 2007 consisted of investments made by Dunedin,directly or through its managed funds (38%), third party managed funds (27%) andcash or near cash (35%). At the year end, Dunedin Enterprise had outstandingcommitments of £68.2m to limited partnership funds, and cash or near cashresources of £55.4m. In addition the Company had undrawn banking facilities of£39.0m. During the eight months under review a total of £35.6m was invested; £19.6m wasinvested by Dunedin or in Dunedin managed funds and £16.0m was invested in thirdparty managed funds, principally European quoted private equity funds. Disposalsamounted to £22.7m in aggregate. A detailed account is contained in the Manager's Review. Dividends In the past I have warned shareholders not to assume that dividends would risewithout interruption and indeed the dividend was cut in 2004. The way in whichprivate equity transactions are now more commonly structured often means thatyield is rolled up and paid when investment in the underlying company isultimately sold. The level of dividend in future will therefore become moreunpredictable. VAT exemption on management fees There is little to add to what shareholders were told at the time of the halfyear report in December 2007. As stated then, and on the basis of theinformation currently available, the eventual benefit to Dunedin Enterprise isnot likely to exceed 1.5% of the present net asset value. Management fees arenow exempt from VAT. Board composition Willie Haughey has indicated to the Board that he will step down at the AGM inMay 2008 due to onerous business commitments. The Board wishes to express theirgratitude for his contribution over the past four years. Outlook The economic outlook for 2008 is an uncertain one. The sub-prime lending crisisin the US has radically altered economic sentiment worldwide and the commercialoutlook for many businesses. Private equity thrives on change and times ofeconomic disruption or transformation. The mid-market is continuing to prove amore resilient source of new deals and exits than the larger buyout market. Therelationship with lenders in this sector of the market, and the debt multiplesoffered, are currently satisfactory. Dunedin continues to source investmentopportunities and the Company has significant funds to take advantage ofattractively priced opportunities. Edward Dawnay,Chairman27 February 2008 Manager's Review Shareholders will be aware that the Company has changed its year end from 30April to 31 December. The eight month period to 31 December 2007 represents thetransitional period in adopting the new financial year end. The Company's netasset value decreased from £163.7m to £159.9m during the eight months to 31December 2007. This decrease in net assets is explained by:- £'mNet asset value at 1 May 2007 163.7Unrealised value increases 13.4Unrealised value decreases (18.8)Realised profit over opening valuation 2.5Other revenue and capital movements 1.7Dividends paid to shareholders (2.6)Net asset value at 31 December 2007 159.9 Portfolio Composition Dunedin Enterprise makes investments in unquoted companies: • directly and through funds managed by Dunedin, and • through funds managed by other private equity managers. The investment portfolio can be analysed as follows:- Valuation at Additions Disposals in Realised Unrealised Valuation 1 May 2007 in period period Movement Movement 31 December 2007 £'m £'m £'m £'m £'m £'mDirectly and funds managed by Dunedin 66.2 19.6 (19.0) 1.7 (6.4) 62.1Third party managed 28.4 16.0 (3.7) 0.8 1.0 42.5 94.6 35.6 (22.7) 2.5 (5.4) 104.6 New Investment Activity A total of £35.6 million was invested in the eight months to 31 December 2007. New investments made directly or through Dunedin managed funds totalled £19.6m.As discussed in the Interim Report, £9.3m was invested in Practice Plan, theindependent dental plans business. This followed the recapitalisation ofPractice Plan in May 2007 and enabled the Company to re-invest in the businessin the form of high yielding loan stock. In June 2007, £2.6m was invested inFernau Avionics, a world-leading designer and manufacturer of navigational aidsto the civil and military aviation markets. A total of £3.3m was invested in Gissings Advisory Services ("GAS") in November2007. GAS provides consultancy advice on flexible benefits, private medicalinsurance, life assurance, permanent health insurance, occupational health andemployee wellness. In December 2007, £3.1m was invested in Formaplex whichprovides a rapid turnaround service to engineering and product developmentcustomers servicing the automotive (including UK based Formula 1 teams), whitegoods, marine, telecoms and medical sectors. Investment in European listed private equity companies continued with a total of£15.6m invested in three existing portfolio companies, GIMV, CapMan and DeutscheBeteiligungs ("DBAG") and one new company, Dinamia Capital Privado. A further£0.4m was drawn down by third party managed limited partnership funds. Investment disposals A total of £22.7m was received from investments disposed of during the eightmonth period. As previously discussed in the Interim Report, Zenith and CentralScotland Finance were disposed of generating £11.0m and £1.4m respectively. Therecapitalisation of Practice Plan generated proceeds of £6.6m. Realisations fromthird party managed funds generated a total of £3.7m. These proceeds weregenerated principally by the LGV4 and LGV5 Private Equity Funds. Within thesefunds there were full exits from Kingfield Heath and South Lakeland Caravans anda partial exit from Verna Group. Unrealised movements in valuation Strong trading performances at OSS Environmental and Gardner Aerospace have ledto valuation uplifts of £4.8m and £2.4m respectively. Both companies encountereddifficult trading conditions in recent years but have returned to profitability,resulting in a write back in value. An investment was made in Capula in 2006 and this is the first year that thecompany has been valued on an earnings basis, leading to a valuation uplift of£1.2m. Adverse trading conditions have affected New Horizons and RSL Steeper.This has resulted in reductions in value of £1.3m and £3.4m respectively overthe eight month period. The valuations of CGI and Practice Plan have also beenadversely affected by lower price earnings multiples at the period end. As aresult the valuations of CGI and Practice Plan have been reduced by £5.1m and£3.5m respectively. Within third party managed funds there has been a 5% increase in the valuationof the investments held by SWIP Private Equity Fund of Funds. This hascontributed to a valuation increase of £2.0m. The share price of both DBAG andDinamia has been adversely affected by the general stock market downturncontributing to valuation decreases of £0.7m and £1.1m respectively. Overall thevaluation of Euro denominated investments have increased by £2.9m from currencymovements in the period. There has been a further £2.4m uplift in the valuation of other limitedpartnership funds driven by potential exits at a number of the underlyingportfolio companies. The managers of these funds anticipate that these exitswill be achieved in the first half of 2008. Euro denominated investments The total exposure of the Company to Euro denominated investments is €51.1m.This currency position was hedged in October 2007. In the period to 31 December2007 a charge of £1.8m has been made to the capital account following a fall inthe value of Sterling against the Euro. The value of the hedge position iscompensated for by an equal and opposite currency valuation movement in the Eurodenominated investments over the same period (included in the £2.9m above). Geographic distribution At 31 December 2007, 79% of the investment portfolio of £104.6m was based in theUK, with 15% in Continental Europe and 6% elsewhere. The increasing exposure toEurope follows the investment in European quoted private equity funds. 31 December 2007 30 April 2007 % %UK 79 87Europe 15 8USA 5 4Rest of World 1 1 Sector Analysis The investment portfolio of the Company is broadly diversified. At 31 December2007 the largest exposure of 37% was to the Support Services sector, a diversesector in itself. 31 December 2007 30 April 2007 % %Construction & building materials 9 15Consumer goods & services 3 2Financial services 5 2Healthcare 6 8Leisure & hotels 7 8Industrials 21 12Real estate 1 -Support services 37 42Technology 8 8Pharmaceutical, medical, biotech 3 3 Deal type The portfolio of investments continues to be predominantly weighted towards MBO/MBI's. 31 December 2007 30 April 2007 % %MBO/MBI 88 89Technology 8 8Life Sciences 3 3Real estate 1 - Valuation method The movement in valuation methodology applied to the portfolio reflects therealisation of Zenith during the period and the increased investment in quotedstocks. 31 December 2007 30 April 2007 % %Cost/written down 34 34Earnings 31 32Sales price 3 13Bid price 32 21 Year of investment In the vintage year chart below, value is allocated to the year in which eitherDunedin Enterprise or the third party manager first invested in each portfoliocompany. 31 December 2007 30 April 2007 % %Less than one year 13 21One to three years 40 40Three to five years 19 11Greater than five years 28 28 Dunedin Capital Partners Limited 27 February 2008 Ten Largest Investments(both held directly and via Dunedin managed funds)by value at 31 December 2007 --------------------------------------------------------------------------------Company name Percentage Percentage Cost of Directors' of net of equity investment valuation assets % £'000 £'000 %--------------------------------------------------------------------------------SWIP Private Equity Fund of FundII PLC 4.3 15,025 17,058 10.7Practice Plan Group (Holdings)Limited 26.2 9,514 11,727 7.3Capula Group Limited 35.5 8,289 9,509 5.9CGI Group Limited 37.9 5,941 8,645 5.4WFEL Holdings Limited 24.2 6,400 6,400 4.0GIMV 0.6 4,971 4,839 3.0CapMan plc 2.5 4,852 4,795 3.0OSS Environmental Holdings Limited 49.0 6,184 4,774 3.0Deutsche Beteiligungs AG 1.9 4,999 4,362 2.7Gardner Group Limited 23.7 5,644 3,977 2.5-------------------------------------------------------------------------------- 71,819 76,086 47.5-------------------------------------------------------------------------------- Dunedin Enterprise Investment Trust PLCPreliminary Results for the period ended 31 December 2007 Income Statementfor the period ended 31 December 2007 -------------------------------------------------------------------------------- Audited Audited Period ended 31 Year ended 30 December 2007 April 2007 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Gains/(losses) oninvestments - (2,834) (2,834) - 12,337 12,337Income 4,325 - 4,325 6,036 - 6,036Investmentmanagement fee (297) (890) (1,187) (461) (1,263) (1,724)Other expenses (400) - (400) (536) - (536)--------------------------------------------------------------------------------Net return beforefinance costs and tax 3,628 (3,724) (96) 5,039 11,074 16,113Interest payableand similar charges (33) (100) (133) (54) (164) (218)--------------------------------------------------------------------------------Return on ordinaryactivities before tax 3,595 (3,824) (229) 4,985 10,910 15,895Tax on ordinaryactivities (1,079) 154 (925) (1,258) 1,946 688--------------------------------------------------------------------------------Return attributableto equity shareholders 2,516 (3,670) (1,154) 3,727 12,856 16,583--------------------------------------------------------------------------------Basic return perordinary share (3.8p) 54.8p-------------------------------------------------------------------------------- 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 period ended 31 December 2007 Audited period ended 31 December 2007 Share Capital Share premium redemption Capital Revenue Total capital account reserve reserves Account equity £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------At 30 April 2007 7,552 47,600 374 101,757 6,434 163,717Net return onordinaryactivities - - - (3,670) 2,516 (1,154)Dividends paid - - - - (2,598) (2,598)Purchase ancancellationof shares 1) - 1 (18) - (18)--------------------------------------------------------------------------------At 31 December2007 7,551 47,600 375 98,069 6,352 159,947-------------------------------------------------------------------------------- Audited year ended 30 April 2007 -------------------------------------------------------------------------------- Share Capital Share premium redemption Capital Revenue Total capital account reserve reserves Account equity £'000 £'000 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------At 30 April2006 7,592 47,600 334 89,576 6,202 151,304Net return onordinaryactivities - - - 12,856 3,727 16,583Dividends paid - - - - (3,495) (3,495)Purchase ofown shares (40) - 40 (675) - (675)--------------------------------------------------------------------------------At 30 April 2007 7,552 47,600 374 101,757 6,434 163,717-------------------------------------------------------------------------------- Balance Sheet as at 31 December 2007 -------------------------------------------------------------------------------- Audited Audited 31 December 30 April 2007 2007 £'000 £'000--------------------------------------------------------------------------------Investments held at fair value through profit or loss 129,049 133,222Current assetsDebtors 249 772Cash at bank 31,047 34,282-------------------------------------------------------------------------------- 31,296 35,054Current liabilitiesCreditors: amounts falling due within one year (398) (4,559)--------------------------------------------------------------------------------Net assets 159,947 163,717--------------------------------------------------------------------------------Capital and reservesCalled up share capital 7,551 7,552Share premium 47,600 47,600Capital redemption reserve 375 374Capital reserve - realised 112,586 104,274Capital reserve - unrealised (14,517) (2,517)Revenue reserve 6,352 6,434--------------------------------------------------------------------------------Total equity shareholders' funds 159,947 163,717-------------------------------------------------------------------------------- Net asset value per share 529.5p 541.9p Cash Flow Statement for the period ended 31 December 2007 -------------------------------------------------------------------------------- Audited Audited Period ended Year ended 31 December 30 April 2007 2007 £'000 £'000 £'000 £'000--------------------------------------------------------------------------------Net cash inflow from operating 2,457 4,055activitiesFinancial InvestmentPurchase of investments (39,845) (39,057)Purchase of 'AAA' rated money market (65,950) (25,252)fundsSale of investments 22,700 27,625Sale of 'AAA' rated money market funds 80,152 64,928--------------------------------------------------------------------------------Net cash inflow / (outflow) fromfinancial (2,943) 28,244investmentEquity dividends paid (2,598) (3,495)--------------------------------------------------------------------------------Net cash inflow / (outflow) beforefinancing (3,084) 28,804FinancingInterest paid (133) (218)Purchase of ordinary shares (18) (675)--------------------------------------------------------------------------------Increase / (decrease) in cash for theperiod (3,235) 27,911-------------------------------------------------------------------------------- Reconciliation of net cash flow tomovements in net fundsIncrease / (decrease) in cash as above (3,235) 27,911Cash at bank and in hand at beginningof period 34,282 6,371--------------------------------------------------------------------------------Cash at bank and in hand at end of period 31,047 34,282-------------------------------------------------------------------------------- Reconciliation of revenue return before tax to net cash flow 3,628 5,039from operating activities(Increase)/decrease in debtors (164) 111Increase/(decrease) in creditors (117) 168Management fees charged to capital (890) (1,383)Arrangement fees - 120--------------------------------------------------------------------------------Net cash inflow from operating activities 2,457 4,055-------------------------------------------------------------------------------- Notes 1.The financial statements for the period ended 31 December 2007 have beenprepared on the basis of the accounting policies which are consistent with thoseset out in the Company's Annual Financial Statements at 30 April 2007. 2. Dividends-------------------------------------------------------------------------------- Period to Year to 31 December 30 April 2007 2007 £'000 £'000--------------------------------------------------------------------------------Dividends paid in the period 2,598 3,495-------------------------------------------------------------------------------- A final dividend of 6.0p, which together with the interim of 1.5p already paid,makes a total of 7.5p for the eight month period compared to 10.7p for thepervious year. If approved, the recommended final dividend will be paid on 16May 2008 to shareholders on the register at close of business on 18 April 2008.The ex-dividend date is 16 April 2008. 3. Earnings per share -------------------------------------------------------------------------------- Period to Year to 31 December 30 April 2007 2007--------------------------------------------------------------------------------Revenue return per ordinary share (p) 8.3 12.3Capital return per ordinary share (p) (12.1) 42.5--------------------------------------------------------------------------------Earnings per ordinary share (p) (3.8) 54.8--------------------------------------------------------------------------------Weighted average number of shares 30,208,874 30,266,370-------------------------------------------------------------------------------- The earnings per share figures are based on the weighted average numbers ofshares set out above. 4. Share Buy Backs -------------------------------------------------------------------------------- Period to Year to 31 December 30 April 2007 2007-------------------------------------------------------------------------------- Number of shares bought back 4,228 161,000--------------------------------------------------------------------------------Average price per share 411.9p 419.4p--------------------------------------------------------------------------------Total cost including expenses 17,503 675,270--------------------------------------------------------------------------------Number of shares in issue at the end of theperiod 30,204,715 30,208,943-------------------------------------------------------------------------------- All shares bought back were subsequently cancelled. 5. Financial Information The financial information set out above does not constitute the Company'sstatutory accounts for the period ended 31 December 2007. The financialinformation for the year ended 30 April 2007 is derived from the statutoryaccounts for the year ended 30 April 2007 which have been delivered to theRegistrar of Companies. The Auditors have reported on the accounts for the yearended 30 April 2007, their report was unqualified and did not contain astatement under section 237 (2) or (3) of the Companies Act 1985. The statutoryaccounts for the period ended 31 December 2007 will be finalised on the basis ofthe financial information presented in this preliminary announcement and will bedelivered to the Registrar of Companies following the Company's Annual GeneralMeeting. 6. None of the views expressed in this document should be construed as advice tobuy or sell a particular investment. This information is provided by RNS The company news service from the London Stock Exchange