Interim Results
Graphite Enterprise Trust PLC
19 September 2002
GRAPHITE ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE HALF YEAR
TO 30 JUNE 2002
SUMMARY
30 Jun 31 Dec % change to
2002 2001 30 Jun 2002
Shareholders' Funds £253.5m £262.3m -2.1%*
Net assets per share 274.7p 280.5p -2.1%
Share Price 216.0p 228.5p -5.5%
FTSE All-Share Index 2,523.9 2,263.1 -10.3%
* Adjusted for share buy-backs
KEY POINTS
• Net assets per share fell by 2.1% compared with a fall in the FTSE
All-Share Index of 10.3%.
• Realisations from the investment portfolio totalled £27.1 million of
which £21.3 million was from quoted disposals.
• Additions to the unquoted portfolio totalled £13.1 million.
• At 30 June 2002 66.8% of net assets were invested in or committed to
unquoted investments. Quoted investments represented 10.1% of net
assets.
Commenting on the results, John Sclater, Chairman, said:
'Overall Performance
In the six months to 30 June 2002 the net assets of Graphite Enterprise Trust
PLC (the 'Enterprise Trust' or the 'Company') fell by 2.1% to 274.7p per share
(£253.5 million). The share price fell by 5.5% to 216.0p. These movements
compare with falls in the FTSE All-Share Index and in the FTSE SmallCap Index of
10.3% and 10.4% respectively. The discount of the share price to the underlying
net asset value widened from 18.5% to 21.4% in the period.
Investment Activity
The main focus of the Enterprise Trust's activity in the first half of the year
was on the disposal of quoted holdings. Overall £27.1 million was realised from
the investment portfolio of which £21.3 million was from quoted disposals. In
particular the holdings in Computacenter and in Intermediate Capital Group were
reduced, realising a total of £16.5 million. A total of 2.8 million
Computacenter shares were sold at an average price of 350p, generating £9.8
million. In the case of Intermediate Capital Group 0.8 million shares were sold
at an average price of 824p, generating £6.7 million. There were no substantial
disposals from the unquoted portfolio.
The Enterprise Trust made no investments in the quoted portfolio, but added a
total of £13.1 million to the unquoted portfolio, mostly in scheduled draw downs
from investments in funds.
Performance of the Investment Portfolio
The investment portfolio fell in value by £6.4 million or 3.4% in the period.
Overall the quoted portfolio fell in value by £4.2 million or 8.2%, although the
substantial quoted disposals generated a small surplus over their opening
values.
There were a number of valuation movements in the unquoted portfolio, both
positive and negative, although none of them was substantial. The overall
movement was a fall of £2.1 million or 1.5% in the period.
Balance Sheet and Liquidity
In the six months to 30 June the redeployment of the Enterprise Trust's assets
of the last three years continued. At the end of the period the quoted
portfolio accounted for 10.1% of net assets, its lowest level for a number of
years. By contrast, the unquoted portfolio rose once again to 49.5% of net
assets, with investment commitments representing a further 17.3%. The balance
of 40.4% was held in liquid assets. These are available both to meet the
outstanding investment commitments and to make new investments. At 30 June,
with the exception of short-term debtors and creditors, they were held entirely
in cash or cash funds.
Share Buy Backs
In the uncertain markets of the last year the discount of the Enterprise Trust's
share price to its underlying net asset value has fluctuated considerably.
Towards the end of 2001 we took advantage of the combination of a high discount
and surplus liquidity to begin to buy back shares. In the first half of 2002 we
bought back a further 1.2 million shares. We shall consider further buy backs
if they will enhance the net asset value for the remaining shareholders without
threatening the Company's long term liquidity requirements.
Outlook
In a difficult environment both in the stock market and in some sectors of the
economy we have been pleased with the resilience of the investment portfolio.
While there have inevitably been some underperforming investments, overall
performance has been relatively robust and this has continued in the period
since 30 June.
Levels of activity in the private equity market have been unusually low, with a
notable shortage of high quality investment opportunities. Whenever they are
able to do so, vendors appear to be deferring disposals until market conditions
become more stable and positive.
Since 30 June the Enterprise Trust has made two new unquoted investments to
which it has committed a total of £9.3 million and it has committed a further
£10.8 million to the purchase of the unquoted portfolio of Graphite Private
Equity Trust. There have been no significant disposals and no valuation
movements in the unquoted portfolio. At 31 August 2002 net assets were 268.8p
per share (£248.1 million). This represents a fall of 4.2% in the first eight
months of the year compared with a fall of 18.9% in the FTSE All-Share Index.
We expect the level of disposals to remain subdued until there is some recovery
in the volume of stock market flotations and in corporate finance activity
generally. In the meantime the Enterprise Trust remains well placed to take
advantage of any increase in the flow of new investment opportunities.
For further information, please contact:
Rod Richards / William Eccles Tel: 020 7825 5300
Graphite Capital Management Limited
GRAPHITE ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE HALF YEAR TO 30 JUNE
Consolidated Assets 30 Jun 31 Dec
2002 2001 2001
£'000s £'000s £'000s
Listed investments 26,059 69,504 50,042
Unlisted investments at directors' valuation 127,327 146,648 123,699
Portfolio investments 153,386 216,152 173,741
FTSE 350 Index fund - 44,212 -
Total investments 153,386 260,364 173,741
Net current assets 103,948 15,187 91,773
Total assets less current liabilities 257,334 275,551 265,514
Minority interest (3,797) (4,221) (3,247)
Net assets attributable to ordinary shareholders 253,537 271,330 262,267
Net asset value per share 274.7p 288.5p 280.5p
Geographical distribution of portfolio investments Continental North
at 30 June 2002 UK Europe America Total
% % % %
Listed 17 - - 17
Unlisted 63 18 2 83
80 18 2 100
Consolidated Statement of Total Return 30 Jun 31 Dec
2002 2001 2001
(incorporating the Revenue Account) £'000s £'000s £'000s
Revenue Return
Income 3,321 2,829 6,571
Investment management fee (564) (615) (1,182)
Other expenses (324) (408) (812)
Net return before finance costs and taxation 2,433 1,806 4,577
Interest payable and similar charges (6) (5) (5)
Return on ordinary activities before tax 2,427 1,801 4,572
Tax on ordinary activities (585) - (456)
Return attributable to equity shareholders 1,842 1,801 4,116
Dividends in respect of ordinary shares (equity) - - (4,021)
Transfer to reserves 1,842 1,801 95
Capital Return
(Losses)/gains on investments (6,355) (37,891) (40,624)
Investment management fee (1,691) (1,846) (3,546)
Other expenses 558 (127) (276)
Tax on ordinary activities 507 - 456
(6,981) (39,864) (43,990)
Minority interests (936) (572) (2,553)
Net capital return (7,917) (40,436) (46,543)
Total Return (6,075) (38,635) (46,448)
Revenue return per ordinary share 1.97p 1.92p 4.38p
Capital return per ordinary share (8.47p) (43.00p) (49.50p)
Total return per ordinary share (6.50p) (41.08p) (45.12p)
Consolidated Cash Flow Statement 30 Jun 31 Dec
2002 2001 2001
£'000s £'000s £'000s
Net cash flow from operating activities 72 (121) 545
Returns on investments and servicing of finance (6) (5) (5)
Taxation - - -
Acquisitions and disposals 9,912 10,042 105,892
Equity dividends paid (4,021) (4,044) (4,044)
Management of liquid resources (15,379) - (45,227)
Net cash (outflow)/inflow before financing (9,422) 5,872 57,161
Financing (4,194) (223) (3,398)
(Decrease)/increase in cash (13,616) 5,649 53,763
Reconciliation of net cash flow to movement in net debt
(Decrease)/increase in cash (13,616) 5,649 53,763
Cash inflow from change in liquid resources 15,379 - 45,227
Change in net liquid funds resulting from cash flows 1,763 5,649 98,990
Exchange difference 558 (127) (276)
Movement of net liquid funds 2,231 5,522 98,714
Net liquid funds at 1 January 100,874 2,160 2,160
Net liquid funds 30 June/31 December 103,195 7,682 100,874
Reconciliation of operating profit to net cash flow from
operating activities
Net revenue on ordinary activities before taxation 2,427 1,801 4,572
Add back interest payable 6 5 5
Income before interest payable and taxation 2,433 1,806 4,577
Decrease in debtors
273 820 1,011
Increase/(decrease) in creditors (249) 218 232
Income capitalised - (744) (1,142)
Tax on investment income within income (694) (375) (587)
Management fee charged to capital (1,691) (1,846) (3,546)
Net cash inflow from operating activities 72 (121) 545
The abridged financial statements at 31 December 2001 have been compiled from
the latest published accounts. Those accounts have been delivered to the
Registrar of Companies: the report of the auditors thereon was unqualified.
Copies of the Interim Report will be posted to all shareholders on or around 30
September 2002 and copies may be obtained during normal business hours from the
Company's registered office, Berkeley Square House, Berkeley Square, London W1J
6BQ thereafter.
By order of the Board Registered Office
Graphite Capital Management Limited Berkeley Square House
Secretary Berkeley Square
London W1J 6BQ
Tel: 020 7825 5300
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