Final Results

Dunedin Enterprise Inv Trust PLC 16 June 2005 For release 07.00am 16 June 2005 Dunedin Enterprise Investment Trust PLC Preliminary Results for the year ended 30 April 2005 Dunedin Enterprise Investment Trust PLC, the private equity investment trust which specialises in investing in management buyouts, management buyins and growing businesses throughout the UK, announces its preliminary results for the year ended 30 April 2005. Financial Highlights: * Share price total return 38.1% including dividends paid in year * Net asset value per share increased by 18.8% to 408.5p per share * Total net assets now £124.1 million * Total return per ordinary share increased to 72.9p (2004: 42.8p) * Final dividend of 7.1p; a full year dividend of 9.0p, an increase of 5% * Realisations totalling £36.5 million, generating a profit of £8.9 million over valuation at the start of the year, an uplift of 44% * Investments during the year of £22.1 million, including: + £5.9 million investment in management buyout of New Horizons + £3.5 million investment in management buyout of Total Fitness Comparative Performance Periods to 30 April 2005 1 Year 3 Year 5 Year 10 Year % % % % Net asset value per ordinary share 18.8 25.1 -1.4 96.9 Share price 34.1 39.8 8.0 91.2 FTSE Small Cap Index 5.7 9.0 -10.9 59.9 FTSE All Share Index 7.1 -4.7 -20.0 52.2 Edward Dawnay, Chairman of Dunedin Enterprise Investment Trust PLC, commented: 'This time last year I felt the outlook for Dunedin Enterprise to be positive. I am glad that this optimism was justified and I can announce another increase in net asset value of 18.8% for the year. This compares favourably to the FTSE Small Cap Index which rose by 5.7% over the same period. The private equity market has become increasingly attractive to retail investors and this has been evidenced both by a change in the shareholder register of Dunedin Enterprise and by the consequential tightening of the discount on the share price to net asset value. The performance of the portfolio overall continues to be strong and profitability in the underlying investments continues to grow. Economic conditions in the UK are favourable for the time being and I believe the outlook for Dunedin Enterprise remains positive.' For further information please contact Ross Marshall Jacqui Graves Managing Director Binns & Co PR Limited Dunedin Capital Partners Limited 0131 225 6699 0207 153 1486 07768 794 180 ross.marshall@dunedin.com 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, management buyins and growing businesses 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 Edinburgh Fund Managers helpline on 0800 028 6789 or visit the website at www.dunedinenterprisetrust.co.uk. Chairman's Statement Overview When I wrote to shareholders last year, I felt the outlook for Dunedin Enterprise to be positive. I am glad that this optimism was justified and I can report another increase in net asset value, of some 18.8%, for the year. This compares favourably to the FTSE Small Cap Index which rose by 5.7% over the same period. The private equity market has become increasingly attractive to retail investors and this has been evidenced both by a change in the shareholder register of Dunedin Enterprise and by the consequential tightening of the discount on the share price to net asset value. The interest in the sector has also contributed to the competition for deals. The valuation placed upon MBO transactions was historically high, particularly in the larger MBO market but marginally less so in the mid market in which Dunedin Enterprise invests. Conversely, your Company was the beneficiary of this market when it came to disposals. This was assisted by a strong flow of new issues, by the availability of bank finance and by interested trade buyers. Portfolio Activity The Company invested £22.1 million during the year. A total of £9.4 million was invested in two new investments, New Horizons and Total Fitness, and a further £12.7 million was invested in limited partnership funds and existing portfolio companies. Total realisation proceeds from the portfolio in the year were £36.5 million, which generated a profit of £8.9 million over valuation at 30 April 2004. The realised gain was generated principally through the flotations of Goals Soccer Centres and Jessops and the recapitalisations of ABI and CGI International. There was an uplift of £11.5 million from unrealised movements in the valuation of portfolio companies. The Manager's Review gives details of portfolio movements, including significant acquisitions, disposals and valuation changes. At the year end your Company had investments in unquoted companies totalling £88.9 million. Cash and near cash balances amounted to £36.4 million and undrawn commitments to limited partnership funds amounted to £13.2 million. Assets invested in or committed to unquoted investments amounted to £102.1 million, representing 82.3% of net assets at the year end. Board of Directors I am delighted at the appointment in January 2005 of Liz Airey and Willie Haughey as non executive directors to the Board. Each brings a wealth of knowledge to the Board; Liz Airey from over twenty years experience in corporate advisory work and as a finance director and Willie Haughey from operating one of the UK's largest specialist refrigeration and facilities management companies. They will both stand for election at the Annual General Meeting. Outlook for the current year Dunedin Enterprise's primary objective is to achieve substantial long term growth in its assets through capital gains from its investments. At 30 April 2005 it had outperformed both the FTSE Small Cap and FTSE All Share indices over one, three, five and ten years. It is the Board's and the Manager's intention to continue to grow the business. Private equity is a long term investment and inevitably there will be cycles which affect performance, both positively and adversely. The Board hopes that over the duration Dunedin Enterprise will be able to demonstrate superior returns. The market continues in the same vein as last year. The performance of the portfolio overall continues to be strong and profitability in the underlying investments continues to grow. Economic conditions in the UK are favourable for the time being and I believe the outlook for Dunedin Enterprise remains positive. Dividends The Board is recommending a final dividend of 7.1p making a total dividend for the year of 9.0p, a 5% increase on last year. The final dividend is to be paid on 9 September 2005 to shareholders on the register on 5 August 2005. Annual General Meeting The Annual General Meeting will be held at the Merchant's Hall, Hanover Street, Edinburgh on Wednesday 7 September at 12 noon. It will be followed by a presentation by the Managers. The ownership of Dunedin Enterprise lies in the hands of both institutional and private client shareholders. The AGM gives directors and shareholders the opportunity to meet, and I do hope you can attend. Edward Dawnay, Chairman 15 June 2005 Manager's Review Overview The year ended 30 April 2005 has continued the good progress of last year. Net asset value per share increased by 18.8% in the year from 344.0p to 408.5p (2004: 11.2%). The net asset value total return per share over the year was 21.7% (2004: 15.5%). Your Company's share price rose by 34.1% over the year from 258p to 346p. The total return to shareholders, comprising the rise in the share price and dividends paid, was 38.1%. The strong share price performance resulted in a reduction of the discount of the share price to net asset value from 25.0% at 30 April 2004 to 15.3% at 30 April 2005. The growth in net asset value has been driven by a combination of strong trading performance and reduced gearing at a number of portfolio companies, together with a number of successful realisations. The total movements in net assets can be summarised as follows: £'m Net assets at 30 April 2004 105.7 Unrealised value increases 21.6 Unrealised value decreases (10.1) Realised profit over opening valuation 8.9 Share buy back (1.2) Profit attributable to shareholders less expenses charged to capital 1.9 Dividends paid to shareholders (2.7) -------- Net assets at 30 April 2005 124.1 -------- Dunedin Enterprise received a total of £36.5 million from a number of significant realisations in the year. This was principally from the flotation of Goals Soccer Centres and Jessops, the sale of Earls Court & Olympia and the recapitalisation of CGI International and ABI. Investment activity in the year totalled £22.1 million. An investment of £5.9 million was made in New Horizons, an operator of childrens care homes and £3.5 million in Total Fitness, a fitness club operator. Both of these new investments were management buyouts. A total of £3.3 million was invested for the first time in LGV3 and LGV4 Private Equity Funds. A further £9.4 million was invested in ten existing portfolio companies. Realisations Your Company received £36.5 million during the year from the sale of twelve portfolio companies and the redemption of loan stock by portfolio companies. This generated a profit of £8.9 million over the valuation of these investments at the start of the year, an uplift of 44%. Earls Court & Olympia is the owner of one of London's premier exhibition venues and provides related services including event organisation. Earls Court was sold in May 2004 to Nomura. Your Company's shares were sold for £2.3 million. This investment was acquired as part of the Group Trust portfolio in 2001. Dunedin Enterprise has received capital and income of £2.6 million from Earls Court in return for £1.0 million invested. This represents a multiple of 2.6 times money invested and an annual return of 38% over three years. In July 2004, CGI International completed a £25 million recapitalisation. Dunedin Enterprise realised £11.3 million as a result of the recapitalisation and subsequently re-invested £5.9 million in the newly recapitalised entity, CGI Group. CGI manufactures and distributes fire resistant glass for use in a wide range of commercial properties. Some 70% of the company's products are exported to markets in Europe, the Far East and the USA. CGI has received the Queen's Award for Enterprise in recognition of its export achievements. Your Company has received capital and income of £10.8 million, net of re-investment, from CGI International in return for £4.4 million invested. This represents a multiple of 2.5 times money invested and an annual return of 31% over six years. The recapitalisation of portfolio companies is a common approach used by private equity companies to release value from successful cash generative businesses. This has enabled Dunedin Enterprise to realise risk capital whilst continuing to benefit from the future growth of the new entity with a proven management team. In February 2004, an investment of £3.2 million was made in ABI, one of the UK's leading manufacturers of leisure homes. During the year to 30 April 2005, ABI traded strongly, permitting the company to repay in August 2004 all £3.0 million loan stock invested by Dunedin Enterprise and to then undertake a recapitalisation of the company, whereby a further £2.0 million was returned to Dunedin Enterprise in March 2005. To date your Company has received capital and income proceeds of £5.3 million in return for £3.3 million invested. This represents a multiple of 1.6 times money invested and a return of 107% over one year. In addition to this, Dunedin Enterprise retains an investment in ABI valued at £3.3 million at 30 April 2005. Jessops, the specialist photographic retailer, floated on the London Stock Exchange in October 2004. Dunedin Enterprise achieved a partial exit from this investment on float and achieved a complete exit in May 2005. The total consideration received from this investment following the final disposal in May 2005 was £4.7 million, a gain of £1.5 million over the valuation at 30 April 2004. Your Company has received £5.3 million in capital proceeds and income from this investment, a money multiple of 1.7 times original investment and a return of 38% over two years. In December 2004, Goals Soccer Centres floated on the Alternative Investment Market. Goals is a leading operator of 'next generation' 5-a-side soccer centres across the UK. Dunedin Enterprise fully exited from the investment on float. The total consideration received on float was £9.3 million, a gain of £4.7 million over the valuation at 30 April 2004. Your Company has received £10.5 million in capital proceeds and income from this investment, a money multiple of 2.2 times original investment and a return of 22% over four years. A further £4.8 million was received from the other portfolio companies, principally loan stock redemptions. Cost Valuation at 30 April 2004 Proceeds received Uplift over value Profit/(loss) over cost £'m £'m £'m £'m £'m At a profit 9.2 20.3 29.2 8.9 20.0 over cost At a loss 8.3 0.1 0.1 - (8.2) over cost ------ --------- -------- -------- --------- 17.5 20.4 29.3 8.9 11.8 Loan stock 7.2 7.2 7.2 - - redemptions ------ --------- -------- -------- --------- 24.7 27.6 36.5 8.9 11.8 ------ --------- -------- -------- --------- New investments In the year to 30 April 2005, your Company invested £22.1 million (2004: £14.9 million) in two new portfolio companies, two new limited partnership funds and ten existing portfolio companies. In August 2004, Dunedin Enterprise invested in the management buyout of Total Fitness, a management buyout led by Legal & General Ventures. Dunedin Enterprise invested £3.5 million in this company for a 6% equity stake. Total Fitness is an operator of 23 health and fitness centres located mainly in the North West of England with in excess of 159,000 members. The company offers a wide range of services to its members through large purpose built centres, which typically incorporate a large gymnasium, exercise studios, a range of four swimming pools and spa facilities. In addition, several centres include 200 metre four lane indoor running tracks. It services the consumer market as well as providing much needed resources for clinical purposes. Total Fitness aims to continue its national rollout of large scale fitness centres. In December 2004, Dunedin Enterprise supported the management buyout of New Horizons. Dunedin Enterprise invested £5.9 million in this company in return for a 28% equity stake. The Dunedin Buyout Fund, in which your Company is an investor, has a matching stake. New Horizons is one of the UK's premier providers of residential childcare services for emotionally and behaviourally disturbed children. The company offers a range of therapeutic residential services to children and young people whose behaviour is the result of traumatic experiences. Its primary aim is to stabilse the emotional and physical behaviour of children and then work with them on determining the optimal route to further recovery and integration back into family surroundings or independent living. New Horizons operates 10 homes with living accommodation for 30 children. It aims to grow through a rollout program of new home openings across the UK and through acquisition. Following the recapitalisation of CGI International, as detailed above, £5.9 million was re-invested in the newly recapitalised company, CGI Group, in July 2004. There was further investment of £0.7 million in a number of portfolio companies. Dunedin Enterprise made a commitment of £5.0 million to the LGV4 Private Equity Fund and £3.0 million to the LGV3 Private Equity Fund. These funds aim to invest in UK mid-market management buyouts with an enterprise value of between £60 million and £300 million. This broadens Dunedin Enterprise's exposure to the large buyout market. Buyout and technology fund drawdowns in the year totalled £6.1 million. Unrealised value movements The table below summarises the main component of unrealised valuation movements in the year to 30 April 2005. Four portfolio companies, Letts Filofax, Davenham, ABI and Caledonian, have contributed a total of £14.6 million to unrealised valuation increases. The increased valuation of these companies has been generated from a combination of strong trading performance and debt reduction. The imminent sale of Trident Components, the automotive component manufacturer, contributed a further £2.5 million unrealised valuation increase. Fourteen other portfolio companies contributed to the remaining £4.5 million unrealised valuation increase. Poor trading at three portfolio companies accounts for £8.8 million of the £10.1 million unrealised valuation decreases. Two of these portfolio companies are now fully provided against and one, C6 Solutions, a chemical manufacturing company, was placed into receivership in April 2006, after the loss of a number of contracts from its largest customer. At the other two companies, your Manager is actively working with management to return value to these investments. A further six investments contributed to the remaining £1.3 million unrealised valuation decrease principally due to provisions made against technology funds. £'m £'m Value increases * Imminent realisations 3.8 * Trading performance 12.8 * Debt reduction 4.0 * Price earnings movements (1.0) * Other 2.0 ------- 21.6 Value decreases * Trading performance (7.4) * Price earnings movements (1.8) * Other (0.9) ------- (10.1) ------- Net Unrealised Value Movements 11.5 ------- Valuation basis Your Company's portfolio was valued on the following basis: At 30 April 2005 2004 £'m % £'m % Cost 18.3 21 27.9 33 Earnings multiple 64.9 72 35.2 42 Imminent sale 3.8 4 12.7 15 Net asset value 2.7 3 7.9 10 --------- --------- -------- -------- 89.7 100 83.7 100 --------- --------- -------- -------- The weighted average price earnings multiple used to value your Company's portfolio at 30 April 2005 was 7.7, a discount of 49% to the FTSE All Share price earnings multiple of 15.0 on that date (2004: 8.4; 53% discount to FTSE All Share multiple of 17.9). Portfolio analysis Work has continued to be undertaken in reducing the number of investments held within the portfolio. Four new companies were added to the portfolio and twelve companies were sold during the year. The quoted holding, in Jessops, was realised shortly after the year end. At 30 April 2005 2004 No. £'m No. £'m Unquoted companies 28 74.5 39 75.1 Quoted companies 1 0.8 - - Buyout Fund 9 11.4 7 6.0 Technology funds 4 3.0 4 2.6 --------- --------- -------- -------- 42 89.7 50 83.7 --------- --------- -------- -------- Following the year end an agreement has been signed to sell a further five portfolio companies. Completion of the sale is subject to regulatory clearance being received. Investment category The table below demonstrates your Company has invested 81% of its portfolio directly in management buyouts and buyins. A further 13% is invested in management buyouts via limited partnership funds. Thus a total of 94% of the portfolio is invested either directly or indirectly in management buyouts or buyins. At 30 April 2005 2004 £'m % £'m % Management buyouts/buyins 72.4 81 71.9 86 Buyout funds 11.4 13 6.0 7 Technology funds 3.0 3 2.6 3 Other 2.9 3 3.2 4 --------- -------- -------- -------- 89.7 100 83.7 100 --------- -------- -------- -------- Portfolio analysed by industry sector The table below demonstrates that your Manager is committed to ensuring that a diversified portfolio of unquoted investments is held by your Company. 2005 2004 % % Construction and building materials 19 18 Consumer products and services 21 21 Financial services 18 17 Healthcare 8 - Leisure and hotels 11 12 Specialist manufacturing 8 11 Support services 15 21 ----------- ---------- 100 100 ----------- ---------- Portfolio analysed by age 2005 2004 % % Less than 1 year 14 14 1-3 years 19 17 3-5 years 44 48 More than 5 years 23 21 ----------- ---------- 100 100 ----------- ---------- Further Analysis Investors are able to review further information and data relating to Dunedin Enterprise at our website www.dunedin.com. Dunedin Capital Partners Limited 15 June 2005 DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 Ten Largest Investments The ten largest investments account for 55.5% of the net assets of Dunedin Enterprise as listed below: Company Cost of Directors' Percentage of investment valuation net assets % £'m £'m % Letts Filofax Group Limited 41.1 0.3 15.4 12.4 Davenham Group Holdings 34.4 5.0 12.6 10.2 Limited Caledonian Building Systems 32.4 3.8 9.5 7.7 Limited CGI Group Limited 37.9 5.9 6.5 5.2 New Horizons (Childcare) 27.8 5.9 5.9 4.8 Holdings Limited Dunedin Buyout Fund LP 13.0 2.1 4.4 3.5 Portman Holdings Limited 16.8 2.3 4.1 3.3 Gardner Group Limited 15.0 3.6 3.6 2.9 Total Fitness Group Limited 6.2 3.5 3.5 2.8 ABI (UK) Holdings Limited 18.5 0.2 3.3 2.7 ___ ____ ___ 32.6 68.8 55.5 ------ ------ ------ 'Fully diluted equity percentage' relates to the ordinary share capital of the relevant company and assumes full exercise of outstanding options, warrants and conversion rights. DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 GROUP BALANCE SHEET At 30 April 2005 2004 £'000 £'000 £'000 £'000 Fixed asset investments 121,108 103,733 Current assets Debtors 179 429 Cash at bank 5,025 5,050 ------- ------- 5,204 5,479 Current liabilities Creditors: amounts falling due within (2,254) (2,144) one year ------- ------- Net current assets 2,950 3,335 -------- ------- Total assets less current liabilities 124,058 107,068 Creditors: amounts falling due after - (1,381) more than one year -------- ------- 124,058 105,687 -------- ------- Capital and reserves Called up share capital 7,592 7,680 Share premium account 47,600 47,600 Capital reserves: Capital redemption reserve 334 246 Capital reserve - realised 51,709 42,123 Capital reserve - unrealised 14,370 5,772 Revenue reserve 2,453 2,266 -------- ------- Total equity shareholders' funds 124,058 105,687 -------- ------- Net asset value per share 408.5p 344.0p DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 CONSOLIDATED STATEMENT OF TOTAL RETURN For the year ended 30 April 2005 2004 Revenue Capital Total Revenue Capital Total £'000 £'000 £'000 £'000 £'000 £'000 Gains on - 20,371 20,371 - 13,191 13,191 investments Income 5,224 - 5,224 4,624 - 4,624 Investment (636) (1,909) (2,545) (671) (2,014) (2,685) management fee Other expenses (498) - (498) (459) - (459) ------- ------- ------- ------- ------- ------- Net return 4,090 18,462 22,552 3,494 11,177 14,671 before finance costs and tax Interest payable (62) (185) (247) (251) (1,201) (1,452) and similar ------- ------- ------- ------- ------- ------- charges Return on 4,028 18,277 22,305 3,243 9,976 13,219 ordinary activities before tax Tax on ordinary (1,117) 1,117 - (397) 397 - activities ------- ------- ------- ------- ------- ------- Return 2,911 19,394 22,305 2,846 10,373 13,219 attributable to equity shareholders Dividends in (2,724) - (2,724) (2,645) - (2,645) respect of ------- ------- ------- ------- ------- ------- equity shares Transfer to 187 19,394 19,581 201 10,373 10,574 reserves ------- ------- ------- ------- ------- ------- Basic return per 9.5p 63.4p 72.9p 9.2p 33.6p 42.8p ordinary share DUNEDIN ENTERPRISE INVESTMENT TRUST PLC PRELIMINARY RESULTS FOR YEAR ENDED 30 APRIL 2005 GROUP CASH FLOW STATEMENT For the year ended 30 April 2005 2004 £'000 £'000 £'000 £'000 Net cash inflow from operating 2,443 1,590 activities Servicing of finance Interest paid (246) (1,003) Financial Investment Purchase of investments (22,126) (14,869) Purchase of 'AAA' rated money market (17,327) (22,888) funds Sale of investments 36,499 27,746 Sale of 'AAA' rated money market 6,000 31,750 funds ------- ------- Net cash inflow from financial 3,046 21,739 investment Equity dividends paid (2,626) (3,674) ------- ------- Net cash inflow before financing 2,617 18,652 Financing Purchase of ordinary shares (1,210) (379) Currency loan reduction (1,432) (3,810) Term Loan reduction - (15,000) ------- ------- (2,642) (19,189) ------- ------- Decrease in cash for the period (25) (537) ------- ------- Reconciliation of net cash flow to movement in net funds Decrease in cash as above (25) (537) Cash at bank and in hand at 1 May 5,050 5,587 ------- ------- Cash at bank and in hand at 30 April 5,025 5,050 ------- ------- Notes 1. The directors recommend a final dividend of 7.1p per share for the year to 30 April 2005. If approved, the dividend will be paid on 9 September 2005 to shareholders on the register at close of business on 5 August 2005. The ex-dividend date is 3 August 2005. An interim dividend of 1.9p per share was paid on 28 January 2005. 2. The financial information for the year ended 30 April 2004 has been extracted from the annual report and accounts of the company which has been filed with the Registrar of Companies and on which the auditors' report was unqualified. The accounts have been prepared under the same accounting policies used for the year to 30 April 2004. 3. The statutory accounts for 2005 contain an unqualified audit report and will be delivered to the Registrar of Companies following the company's Annual General Meeting which will take place at 12 noon on Wednesday 7 September 2005 at The Merchants' Hall, 22 Hanover Street, Edinburgh EH2 2EP. 4. The statement of total return (incorporating the revenue account) and balance sheet set out above do not represent full accounts in accordance with Section 240 of the Companies Act 1985. The accounts have been prepared in accordance with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies'. 5. The annual report will be posted to shareholders in July 2005 and copies will be available to members of the public at the Company's Registered Office, 10 George Street, Edinburgh, EH2 2DW. This information is provided by RNS The company news service from the London Stock Exchange

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