Preliminary Results
Dunedin Enterprise Inv Trust PLC
14 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 trust
which specialises in investing in mid-market buyouts announces its preliminary
results 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 79.4
Share price 3.8 7.5 66.6 115.1 79.7
FTSE Small Cap Index -9.7 2.2 39.1 103.1 55.5
FTSE All Share Index 2.9 9.8 49.6 77.0 49.5
For further information please contact:
Ross Marshall Jane Kirby / Corinna Vere Nicoll
Chief Executive Officer Director
Dunedin Capital Partners Limited Equity Dynamics
0131 225 6699
07768 794 180 07825 326 441/0
ross.marshall@dunedin.com jane@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 - £50 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 primary 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 40 00 or visit the website at
www.dunedinenterprisetrust.co.uk.
Manager's Review
Overview
In the six months to 31 October 2007, Dunedin Enterprise invested £28.4 million
in two new investments and four follow-on investments. Two portfolio companies
were sold in the half year which, together with a number of other loan stock
redemptions and distributions from limited partnership funds, generated proceeds
totalling £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 per
share of 2.6%, from 541.9p to 555.9p. This compares to a decrease of 9.7% in
the FTSE Small Cap Index over the same period. During the six months the share
price 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 on
the register at close of business on 28 December 2007. The ex-dividend date is
24 December 2007. The accounting year end of the Company is being changed from
30 April to 31 December and the financial statements to 31 December 2007 will
cover an eight month period. The interim dividend has therefore been pro-rated
and 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 million
management buyout of Fernau Avionics Limited. Fernau is a world-leading
designer and manufacturer of Navigational Aids to the civil and military
aviation markets in the UK, Europe, North America and the Far East.
Navigational Aids are primarily fixed, ground-based installations which transmit
a series of radio signals allowing pilots to navigate safely and efficiently.
The strategy of investing in quoted European private equity companies continued
in the six months to 31 October 2007. An investment of £5 million was made in
Dinamia Capital Privado SA. Dinamia was the first Spanish private equity
company quoted on the Madrid Stock Exchange. It invests in management buyouts,
buyins and development capital opportunities in the Iberian peninsula. Since 30
April 2007, a further £10.5 million has been invested in CapMan Plc, Deutsche
Beteiligungs AG and GIMV. A total of £19.8 million has now been invested in
these four quoted European Private Equity companies.
As reported in the year end accounts, Practice Plan undertook a £26 million
recapitalisation in May 2007. Dunedin Enterprise realised £6.6 million on the
recapitalisation and took the opportunity to re-invest £9.3 million in the
company in the form of loan stock which produces a yield in excess of cash
deposits. Follow-on investments and further drawdowns by limited partnership
funds amounted to £1.0 million.
Following the half year end Dunedin Enterprise invested £3.3 million in the £18
million management buyout of Gissings Advisory Services Limited. Gissings
provides consultancy advice on flexible benefits, private medical insurance,
life assurance, permanent health insurance, occupational health and employee
wellness to a number of FTSE 100 and FTSE 250 businesses.
Realisations
During the half year two direct investments were fully realised; Zenith, the
provider 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; and
Central Scotland Finance, an investment held since 1982, was realised in
September 2007 generating proceeds of £1.4 million.
A number of successful disposals have been achieved from within the LGV Private
Equity 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 163.7
Unrealised valuation increases 11.2
Unrealised valuation decreases (7.2)
Realised profit over opening valuation 1.8
Other capital movements (1.6)
Net asset value at 31 October 2007 167.9
The valuation of the portfolio is in accordance with the International Private
Equity and Venture Capital Valuation Guidelines and revised UK GAAP
requirements.
The unrealised valuation increase of £11.2 million has been generated by a
number of portfolio companies. Improved trading at both OSS Environmental, the
oil recycling company, and Gardner Group, the aerospace services company, has
generated valuation uplifts of £4.8 million and £2.4 million respectively.
Capula, the provider of real time IT solutions, has enjoyed a period of strong
trading since the secondary buyout in August 2006 enabling it to be valued on an
earnings basis for the first time and generating an uplift of £1.2 million. The
portfolio companies held within LGV Private Equity Funds have added a further
uplift of £1.6 million.
Recently introduced European glass certification rules have adversely affected
trading at CGI leading to a valuation reduction of £2.0 million. Challenging
market conditions and a reduction in local and national government spending have
continued to adversely affect trading at New Horizons and RSL Steeper. This has
led to a further £1.3 million valuation decrease at New Horizons and a £1.0
million 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 from
payment of VAT on management fees. In November 2007, HMRC made an announcement
acknowledging that fund management services supplied to investment trusts are
exempt from VAT and confirming that claims for repayment of VAT overpaid in the
past will be processed in due course, although it is not yet clear for what
period or periods repayment will be made. Your Manager has confirmed that the
appropriate 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 VAT
recovery. On the basis of the information presently available the eventual
benefit to Dunedin Enterprise is not likely to exceed 1.5% of the present net
asset value. Future management fees payable to your Manager will be exempt from
VAT.
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 Interim
Management Statement in the quarters falling between the half year and full year
announcement of results. The Interim Management Statement is a vehicle to keep
shareholders updated on significant events within the business. Dunedin
Enterprise published its first Interim Management Statement in September 2007.
This statement and all future statements will be published via the Stock
Exchange and on the website www.dunedin.com.
Outlook
The downturn in the market highlighted in the Chairman's Statement in July 2007
has been focused on the banking sector to date. This has not led to a reduction
in the availability of bank debt to Dunedin to fund actual or potential
acquisitions. Dunedin has always been cautious of the level of debt taken on in
acquiring businesses and in many cases the funds invested by Dunedin exceed the
amount of external bank funding.
If the cycle has turned, Dunedin Enterprise is well placed. Over the past two
years it has made disposals exceeding £100 million and currently has cash and
near cash of £60 million, as well as substantial borrowing facilities. This
should enable it to take advantage of more realistically priced opportunities.
Dunedin Capital Partners Limited
13 December 2007
Overview of Portfolio
Analysed by category of investment
31 October 2007 30 April 2007
% %
A Direct 29 31
B Via Dunedin managed funds 10 9
C Via third party managed funds 25 17
D Cash 36 43
Analysed by valuation method
31 October 2007 30 April 2007
% %
A Cost 28 34
B Earnings multiple 39 32
C Sales price 1 13
D Quoted bid price 32 21
Analysed by geographic location
31 October 2007 30 April 2007
% %
A UK 78 87
B Rest of Europe 16 8
C USA 5 4
D Rest of World 1 1
Analysed by sector
31 October 2007 30 April 2007
% %
A Construction and building materials 12 15
B Consumer products & services 3 2
C Financial services 1 2
D Healthcare 5 8
E Leisure and hotels 9 8
F Industrials 19 12
G Pharma, medical, biotech 3 3
H Real Estate 1 -
J Support services 39 42
K Technology 8 8
Analysed by deal type
31 October 2007 30 April 2007
% %
A Management buyouts/buyins 88 89
B Technology* 8 8
C Life Science* 3 3
D Real Estate* 1 -
* - via third party funds
Analysed by age of investment
31 October 2007 30 April 2007
% %
A <1 year 12 21
B 1-3 years 39 40
C 3-5 years 18 11
D >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 9.3
Practice Plan Group (Holdings) Limited 26.2 9,514 15,234 9.1
CGI Group Limited 37.9 5,941 11,750 7.0
Capula Group Limited 35.5 8,289 9,501 5.7
WFEL Holdings Limited 24.2 6,410 6,410 3.8
CapMan plc 2.5 4,852 4,886 2.9
OSS Environmental Holdings Limited 49.0 6,184 4,774 2.8
GIMV 0.6 4,971 4,679 2.8
Deutsche Beteiligungs AG 1.8 4,999 4,620 2.8
ABI (UK) Group Limited 21.1 211 4,259 2.5
66,396 81,860 48.7
Income Statement
for 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 12,337
Income 3,044 - 3,044 2,901 - 2,901 6,036 - 6,036
Investment 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 16,113
costs and tax
Interest 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 15,895
activities before tax
Tax 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 16,583
equity shareholders
Basic return per ordinary 22.5p 17.3p 54.8p
share
The total column of this statement represents the profit and loss account of the
Company.
All items in the above statement derive from continuing operations.
Reconciliation of movements in shareholders' funds
for 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) 6,434 163,717
Net return on ordinary - - - 7,739 (2,675) 1,746 6,810
activities
Dividends 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 6,202 151,304
Net return on ordinary - - - 1,811 1,720 1,717 5,248
activities
Dividends 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 6,202 151,304
Net return on ordinary - - - 16,971 (4,115) 3,727 16,583
activities
Dividends 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 Sheet
as 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 assets
Debtors 346 86 772
Cash at bank 30,735 31,073 34,282
31,081 31,159 35,054
Current liabilities
Creditors: amounts falling due within one year (50) (152) (4,559)
Net assets 167,929 153,222 163,717
Capital and reserves
Called up share capital 7,552 7,565 7,552
Share premium 47,600 47,600 47,600
Capital redemption reserve 374 361 374
Capital reserve - realised 112,013 89,318 104,274
Capital 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 Statement
for 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 Investment
Purchase of investments (32,705) (15,501) (39,057)
Purchase of 'AAA' rated money market (65,694) (8,907) (25,252)
funds
Sale of investments 21,391 10,406 27,625
Sale of 'AAA' rated money market funds 74,652 40,341 64,928
Net cash inflow / (outflow) from (2,356) 26,339 28,244
financial investment
Equity dividends paid (2,598) (2,859) (3,495)
Net cash inflow / (outflow) before (3,442) 25,281 28,804
financing
Financing
Interest paid (105) (108) (218)
Purchase of ordinary shares - (471) (675)
Increase / (decrease) in cash for the (3,547) 24,702 27,911
period
Reconciliation of net cash flow to
movements in net funds
Increase / (decrease) in cash as above (3,547) 24,702 27,911
Cash at bank and in hand at beginning of 34,282 6,371 6,371
period
Cash at bank and in hand at end of period 30,735 31,073 34,282
Reconciliation of revenue return 2,520 2,336 5,039
before tax to net cash flow from
operating activities
(Increase)/decrease in debtors (90) 108 111
Increase/(decrease) in creditors (229) 42 168
Management fees charged to capital (689) (805) (1,383)
Arrangement fees - 120 120
Net cash inflow from operating 1,512 1,801 4,055
activities
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 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 Board
Dunedin Capital Partners Limited
Secretary
13 December 2007
Notes to the Accounts
1. Unaudited Interim Report
The financial information contained in this report does not constitute statutory
accounts as defined in Section 240 of the Companies Act 1985. The financial
information for the six months ended 31 October 2007 and 31 October 2006 has not
been audited.
The information for the year ended 30 April 2007 has been extracted from the
latest published audited financial statements. The audited financial statements
for the year ended 30 April 2007 have been filed with the Registrar of
Companies. The report of the auditors on those accounts contained no
qualification or statement under Section 237(2) or (3) of the Companies Act
1985.
2. Basis of Preparation
The financial information for the six months ended 31 October 2007 has been
prepared in accordance with the Listing Rules of the Financial Services
Authority and in accordance with the accounting policies that are expected to be
adopted for the period ending 31 December 2007, which are consistent with the
accounting 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 12.3
share (p)
Capital return per ordinary 16.7 11.6 42.5
share (p)
Earnings per ordinary share (p) 22.5 17.3 54.8
Weighted average number of 30,208,943 30,290,313 30,266,370
shares
The earnings per share figures are based on the weighted average numbers of
shares 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 - 111,000 161,000
Average price per share - 421.6p 419.4p
Total cost including expenses - 471,217 675,270
Number of shares in issue at the end of 30,208,943 30,258,943 30,208,943
the 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 financial
statements in the half-yearly financial report for the six months ended 31
October 2007 which comprises the Income Statement, Reconciliation of Movements
in Shareholder Funds, Balance Sheet, Cash Flow Statement and the related
explanatory notes. We have read the other information contained in the
half-yearly financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in the condensed
set of financial statements.
This report is made solely to the Company in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the Disclosure
and 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 the
Company those matters we are required to state to it in this report and for no
other purpose. To the fullest extent permitted by law, we do not accept or
assume responsibility to anyone other than the Company for our review work, for
this report, or for the conclusions we have reached.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved
by, the Directors. The Directors are responsible for preparing the half-yearly
financial report in accordance with the DTR of the UK FSA.
As disclosed in note 2, the annual financial statements of the Company are
prepared in accordance with UK Accounting Standards and applicable law (UK
Generally Accepted Accounting Practice). The condensed set of financial
statements included in this half-yearly financial report has been prepared in
accordance with the Statement Half-Yearly Financial Reports as issued by the UK
Accounting Standards Board.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed
set of financial statements in the half-yearly financial report based on our
review.
Scope of review
We conducted our review in accordance with International Standard on Review
Engagements (UK and Ireland) 2410 Review of Interim Financial Information
Performed by the Independent Auditor of the Entity issued by the Auditing
Practices Board for use in the UK. A review of interim financial information
consists of making enquiries, primarily of persons responsible for financial and
accounting matters, and applying analytical and other review procedures. A
review is substantially less in scope than an audit conducted in accordance with
International Standards on Auditing (UK and Ireland) and consequently does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an
audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe
that the condensed set of financial statements in the half-yearly financial
report for the six months ended 31 October 2007 is not prepared, in all material
respects, in accordance with the Statement Half-Yearly Financial Reports as
issued by the UK Accounting Standards Board and the DTR of the UK FSA.
KPMG Audit Plc
Chartered Accountants
Edinburgh
13 December 2007
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