TIDMDNE
RNS Number : 4604M
Dunedin Enterprise Inv Trust PLC
15 September 2023
For release 15 September 2023
Dunedin Enterprise Investment Trust PLC
Half year ended 30 June 2023
Dunedin Enterprise Investment Trust PLC, the private equity
investment trust which specialises in investing in UK mid-market
buyouts, announces its results for the half year ended 30 June
2023.
Financial Highlights :
-- Net asset value total return: 1.0%
-- Net asset value per share at 30 June 2023: 609.2p, after 25p dividend (627.1p at 31/12/22)
-- Share price total return: 14.9%
-- Share price at 30 June 2023: 560p (509p at 31/12/22)
-- GBP203.5m returned to shareholders since 2012
Comparative Total Return Performance (%)
FTSE
Small Cap
Net asset (ex Inv
Periods to 30 June value (per Cos)
2023 share) Share price Index
-------------------- ------------ ------------ -----------
Six months 1.0 14.9 2.0
One year 18.2 24.5 -8.9
Three years 87.0 154.5 43.4
Five years 91.7 113.5 11.4
Ten years 146.7 247.7 96.9
For further information please contact:
Graeme Murray
Dunedin LLP
07813 138367
Chairman's Statement
The total return in the half year to 30 June 2023 was 1.0% in
terms of net asset value per share which decreased from 627.1p to
609.2p in the half year. This is stated after allowing for a final
dividend of 25.0p (paid in May 2023), relating to the year ended 31
December 2022.
The share price total return was 14.9% during the period under
review. The price of 560p at 30 June 2023 represented a discount of
8.1% to the net asset value of 609.2p per share.
Portfolio
Unrealised valuation increases totalling GBP3.2m were offset by
value decreases of GBP3.3m. The valuation uplift was primarily
generated from Premier (GBP1.4m), Hawksford (GBP0.8m) and EV
(GBP0.7m). The principal valuation reductions were at Weldex
(GBP1.9m) and FRA (GBP1.2m).
Further details are provided in the Manager's Review.
Cash, Commitments & Liquidity
At 30 June 2023 the Company held cash and near cash equivalents
totalling GBP11.6m out of total net assets of GBP33.5m. At that
date there were outstanding commitments to limited partnership
funds of GBP9.0m, consisting of GBP8.3m to Dunedin-managed funds
and GBP0.7m to Realza.
Dividends
A final dividend of 25.0p per share relating to the year ended
31 December 2022 was paid to shareholders in May 2023, amounting to
GBP1.4m.
Future Tender Offers
The Board is committed to returning proceeds of asset sales to
shareholders and doing so efficiently. While the portfolio
realisation process continues, the Board will look at opportunities
to combine the proceeds of more than one sale before conducting a
further tender in order to achieve economies in the process.
Outlook
Following discussions with the Manager and the Company's
advisers, the Board does not currently anticipate putting formal
proposals to Shareholders for a members' voluntary liquidation of
the Company in the short to medium term while the orderly
realisation continues. As the wind-down progresses, the Board will
continue to assess whether the Company's current arrangements
remain in the interests of Shareholders as a whole and will, of
course, continue to keep Shareholders informed as to the future of
the Company.
Furthermore, the Board considers maintaining the Company's
listed status to be important during this stage of the orderly
wind-down, as it is aware that many Shareholders would be unable to
hold the Shares, or greatly inconvenienced by holding them, if they
were not listed on the London Stock Exchange.
Duncan Budge
15 September 2023
Manager's Review
Results for the six months to 30 June 2023
In the six months to 30 June 2023, the net asset value per share
total return was 1.0%, after taking account of dividends paid for
2022 of 25.0p per share (paid in May 2023). This compares with an
increase in the FTSE Small Cap Index (ex Inv. Cos) over the same
period of 2.0%.
Net asset and cash movements in the half year to 30 June
2023
The movement in net asset value is summarised in the table
below:-
GBP'm
------------------------------------- -----
Net asset value at 31 December 2022 34.5
Unrealised value increases 3.2
Unrealised value decreases (3.3)
Realised gain over opening valuation 0.6
Dividends paid to shareholders (1.4)
Other movements (0.1)
------------------------------------- -----
Net asset value at 30 June 2023 33.5
------------------------------------- -----
Cash movements in the half year to 30 June 2023 can be
summarised as follows:-
GBP'm
---------------------------------------------- -----
Cash & near cash balances at 31 December 2022 12.4
Investments made (0.2)
Investments realised 0.1
Dividends paid to shareholders (1.4)
Operating activities 0.7
---------------------------------------------- -----
Cash & near cash balances at 30 June 2023 11.6
---------------------------------------------- -----
Portfolio composition and movements
Dunedin Enterprise holds investments in unquoted companies
through:-
-- Dunedin managed funds, and
-- Third party managed funds.
The portfolio movements can be analysed as shown in the table
below:-
Valuation Additions Disposals Realised Unrealised Valuation
in half in half
at 31-12-22 year year movement movement at 30-6-23
GBP'm GBP'm GBP'm GBP'm GBP'm GBP'm
-------------------------- ----------- --------- --------- -------- ---------- ----------
Dunedin managed 14.1 0.2 (0.1) (0.1) - 14.1
Third party managed 2.8 - - - (0.1) 2.7
-------------------------- ----------- --------- --------- -------- ---------- ----------
Investment portfolio 16.9 0.2 (0.1) (0.1) (0.1) 16.8
AAA rated money market
funds (excluding cash on
deposit) 11.6 0.1 (10.3) - - 1.4
-------------------------- ----------- --------- --------- -------- ---------- ----------
Total 28.5 0.3 (10.4) (0.1) (0.1) 18.2
-------------------------- ----------- --------- --------- -------- ---------- ----------
Realisations
In the half year the earn-out relating to RED, the provider of
SAP contract and permanent staff, has increased to GBP4.6m. 75% of
the proceeds were received in July 2023 with the balance due in
October 2023.
Investment activity
A further GBP0.2m was drawn down by Dunedin and third-party
managed funds to meet management fees and ongoing expenses.
Unrealised movements in valuations
Unrealised valuation increases in the half year amounted to
GBP3.2m. There were valuation uplifts at Premier (GBP1.4m),
Hawksford (GBP0.8m) and EV (GBP0.7m).
Premier Hytemp, the provider of highly engineered components to
the oil and gas industry, has experienced a continued recovery in
profitability. As the market outlook improves the company is
tendering for some significant contracts.
Hawksford, the provider of corporate, private client and fund
services, has continued with its buy and build strategy. In
addition, strong trading has resulted in maintainable EBITDA
increasing by 40% in the half year.
EV, the provider of high performance, video cameras and other
visualisation technology used in the oil and gas industry, has
experienced strong trading following the recovery in the price of
oil. Maintainable EBITDA has increased by 20% in the half year.
Unrealised valuation decreases in the half year amounted to
GBP3.3m. There were valuation decreases at Weldex (GBP1.9m) and FRA
(GBP1.2m).
Weldex is valued in line with expected proceeds from a
refinancing exercise.
Trading at FRA has not progressed as quickly as expected with
maintainable EBITDA reducing by 18% in the half year. Recent
trading and the outlook for the remainder of the year are
positive.
The portfolio continues to be valued in accordance with the
International Private Equity Venture Capital valuation guidelines
(www.privateequityvaluation.com).
Dunedin LLP
15 September 2023
Current Investments
by value at 30 June 2023
Approx. Percentage
percentage Cost of Directors of net
of equity investment valuation assets
Company name % GBP'000 GBP'000 %
--------------- ---------- ---------- --------- ----------
Weldex 15.1 9,505 4,681 14.0
--------------- ---------- ---------- --------- ----------
Premier Hytemp 23.0 10,136 4,307 12.8
--------------- ---------- ---------- --------- ----------
FRA 5.2 1,413 2,849 8.5
--------------- ---------- ---------- --------- ----------
Realza 8.9 3,742 2,656 7.9
--------------- ---------- ---------- --------- ----------
EV 10.6 8,321 2,585 7.7
--------------- ---------- ---------- --------- ----------
Hawksford 3.7 - 819 2.4
--------------- ---------- ---------- --------- ----------
Thredd 1.5 1,994 - -
--------------- ---------- ---------- --------- ----------
35,111 17,897 53.3
--------------- ---------- ---------- --------- ----------
Total return of current investments
at 30 June 2023
Gross
Cost of realised Directors Total
investment to date* valuation return
Company name GBP'000 GBP'000 GBP'000 GBP'000
--------------- ---------- --------- --------- -------
Weldex 9,505 119 4,681 4,800
--------------- ---------- --------- --------- -------
Premier Hytemp 10,136 178 4,307 4,485
--------------- ---------- --------- --------- -------
FRA 6,035 5,504 2,849 8,353
--------------- ---------- --------- --------- -------
Realza 11,545 14,551 2,656 17,207
--------------- ---------- --------- --------- -------
EV 8,321 - 2,585 2,585
--------------- ---------- --------- --------- -------
Hawksford 6,910 7,087 819 7,906
--------------- ---------- --------- --------- -------
Thredd 8,220 18,203 - 18,203
--------------- ---------- --------- --------- -------
60,672 45,642 17,897 63,539
--------------- ---------- --------- --------- -------
* - dividends and capital.
Top investments
Weldex
Percentage of equity held 15.1%
Cost of Investment GBP9.5m
Directors' valuation GBP4.7m
Percentage of net assets 14.0%
Weldex is a market-leading crawler crane hire business in the
UK, with the tenth largest lifting capacity globally. It serves the
offshore wind, oil & gas, commercial construction and
infrastructure markets. Its cranes, including some of the largest
in the UK, have been used in a number of significant construction
projects including Heathrow Terminal 5, the iconic arch at the
Wembley Stadium, the 2012 Olympic site and Crossrail. Recent
projects include the HS2 railway, the Thames Tideway Tunnel in
London, and the Peterborough Railway Tunnel where a curved concrete
box weighing more than the Eiffel Tower will be pushed underground
to form a new railway tunnel.
Weldex was established in 1979 and has grown into the UK's
largest crawler crane hire company. The company employs over 100
staff and operates nationwide and overseas from its headquarters in
Inverness and its depot at Alfreton. The company provides its
customers with an established team of fully accredited operators,
site managers and service engineers and also supplies associated
lifting equipment including wheeled cranes, forklifts, lorry
loaders and trailers.
Premier Hytemp
Percentage of equity held 23.0%
Cost of Investment GBP10.1m
Directors' valuation GBP4.3m
Percentage of net assets 12.8%
Premier Hytemp is a global market leader in the manufacture and
supply of engineered metal solutions. It is a specialist in the
provision of low alloy and nickel alloy steel components for the
upstream oil and gas industry. Its components are used in complex
engineered assemblies required to extract and control the flow of
oil and gas from new reserves, often sub-sea.
Premier Hytemp is headquartered in Edinburgh with manufacturing
facilities in Singapore and Malaysia.
FRA
Percentage of equity held 5.2%
Cost of Investment GBP1.4m
Directors' valuation GBP2.8m
Percentage of net assets 8.5%
FRA is an international consultancy that provides forensic
accounting, data analytics and e-discovery expertise, helping
businesses respond to regulatory investigations in an increasingly
regulated global environment.
FRA works on some of the largest and most complex regulatory
investigations globally. Its clients are typically blue-chip
multinational corporates seeking advice to help navigate regulatory
scrutiny, effect compliant cross-border data transfer, and manage
risk. The company has offices in London, Dallas, New York,
Washington DC, Philadelphia, Paris, Helsinki and Stockholm. It also
runs data centres near each office location as well as in Montreal
and Zurich.
Two re-financings of the business have been undertaken with
Dunedin Enterprise receiving proceeds of GBP5.5m.
Realza
Percentage of equity held 8.9%
Cost of Investment GBP3.7m
Directors' valuation GBP2.7m
Percentage of net assets 7.9%
Realza Capital FCR is a Spanish private equity fund making
investments in Spain and Portugal. The fund is limited to investing
15% of commitments in Portugal. Dunedin Enterprise's investment is
held via Dunedin Fund of Funds LP.
The fund invests in companies with leading market positions and
attractive growth prospects either through organic growth or
through merger & acquisition activity. Realza seeks to invest
in companies with an enterprise value normally ranging from EUR20m
to EUR100m. The fund's typical equity investment ranges from EUR10m
to EUR25m.
Realza has two investments remaining: -
-- a producer of premium tomatoes; and
-- a producer of cannabis for medicinal and pharmaceutical use.
EV
Percentage of equity held 10.6%
Cost of Investment GBP8.3m
Directors' valuation GBP2.6m
Percentage of net assets 7.7%
EV is a UK headquartered, global market leader in the provision
of high performance, harsh environment, video cameras and
quantitative visual analytics to the global energy industry.
It offers a highly specialist service, providing skilled
engineers to operate its market leading cameras in the most
difficult down-hole conditions. The high-resolution video images
produced by EV's cameras allow oil and gas well operators to
identify, quantify and solve problems rapidly. EV is based in
Dubai, Perth, Kuala Lumpur, Calgary, Aberdeen, Houston and Norwich.
It has a further presence in seventeen worldwide locations across
Europe, Canada, USA, South America, West Africa, the Middle East,
Asia and Australasia. The business employs more than 100 staff.
EV's high value Visual Analytics services and products hold a
significant technological competitive advantage operating in a
growing marketplace as global leader in this field of optical data
analytics. The business has a key technological competitive
advantage delivering full 360 degree top to toe wellbore images in
HD colour employing the EV proprietary Optis Infinity
Multi-Side-View-Camera technology. EV are focussed on increasing
customer well performance and providing detailed well integrity
information helping customers extend well life and thereby decrease
the global carbon footprint.
Hawksford
Percentage of equity held 3.7 %
Cost of Investment GBP - m
Directors' valuation GBP 0.8 m
Percentage of net assets 2.4 %
Hawksford is a leading international provider of corporate,
private client and funds services. The business offers a
comprehensive range of services to, and solutions for, trusts,
companies, foundations, partnerships, family offices and investment
funds.
During 2018 Hawksford completed the acquisitions of P&P, a
Hong Kong based trust business; and the corporate services division
of audit and accountancy practice SH Landes. The P&P
acquisition increased Hawksford's Asian presence, giving the
company new representation in China and Japan, building on its
existing presence in Singapore and Hong Kong. Hawksford's
international clients will now have access to a greater depth of
services across Asia, while P&P clients will be able to utilise
Hawksford's wider services in other locations. As a result of the
SH Landes acquisition, Hawksford is able to provide specialist
corporate services from its central London offices.
To date Hawksford has completed seven major acquisitions in
Jersey, the UK, the Middle East and the Far East. These
acquisitions have further enhanced Hawksford's position through
additional high-quality people and clients. The focus of the
business remains on providing excellent service and increasing
client choice by growing the international footprint.
In February 2021 Hawksford completed a refinancing where
proceeds of 1.0x cost were received. Dunedin Enterprise retains a
3.7% interest in Hawksford.
Thredd (previously GPS)
Percentage of equity held 1.5%
Cost of Investment GBP2.0m
Directors' valuation GBP-m
Percentage of net assets -%
Thredd is a UK headquartered payments processing business
providing customers with leading edge payment processing and
ancillary services. Customers include new emerging fintech or
challenger banks, offering a significantly differentiated
proposition for their clients; as well as specialist payment firms
serving the travel, insurance and foreign exchange markets. It
offers a best in class, scalable payment processing platform with
flexibility, innovative features and an accelerated speed to market
for new market entrants. It has over 100 clients, including many UK
fintech and challenger banks, and is seeing significant growth
opportunities from emerging overseas challenger banks as they seek
to disrupt their own domestic banking markets.
Thredd has a large and growing addressable market. Challenger
banks and fintech companies needing leading edge payment processing
services are being created in all major geographical markets. Many
are seeking help from Thredd as they start to disrupt their own
domestic markets. As the winners emerge, the volume of payments
that they generate also increases, thereby adding further volume of
processing to the Thredd platform. In general, the payments market
is growing globally through a reduction in the use of cash and an
increase in the use of mobile methods of payment (e.g. phones and
'tap to pay' debit cards).
Thredd has an increasingly international target market, with
recent client wins in Europe and Australia. GPS has signed a
strategic partnership with Visa to provide fintech clients with
payments technology in the Asia Pacific region. It has also been
selected by Mastercard as its chosen processing partner in its
Fintech Express Programme. In 2020 Thredd was selected by the
Department for International Trade (DIT) to become a London Export
Champion.
In December 2021 a refinancing of Thredd was completed with new
investors providing additional capital to finance future growth.
Gross proceeds from the refinancing of 2.2x original cost were
received by Dunedin Enterprise, which retains a 1.5% interest in
Thredd Newco.
Statement of Comprehensive Income
for the six months ended 30 June 2023
Six months ended 30 June Six months ended 30 June Year ended 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Investment income 3 171 - 171 791 - 791 4,951 - 4,951
Gain on investments - 430 430 - 2,551 2,551 - 4,514 4,514
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Total Income 171 430 601 791 2,551 3,342 4,951 4,514 9,465
Expenses
Investment management
fees (7) (22) (29) (17) (50) (67) (35) (105) (140)
Other expenses (172) (11) (183) (180) (52) (232) (380) (13) (393)
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Profit before finance
costs and tax (8) 397 389 594 2,449 3,043 4,536 4,396 8,932
Finance costs - - - - - - - - -
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Profit before tax (8) 397 389 594 2,499 3,043 4,536 4,396 8,932
Taxation - - - - - - (37) 37 -
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Profit for the period (8) 397 389 594 2,499 3,043 4,499 4,433 8,932
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
Earnings per ordinary
share (basic &
diluted) 6 (0.14)p 7.20p 7.06p 4.52p 19.04p 23.56p 36.46p 35.92p 72.38p
--------------------- ---- ------- ------- ----------- ------- ------- ----------- ------- ------- ---------
The Total column of this statement represents the Statement of
Comprehensive Income of the Company, prepared in accordance with
international accounting standards in conformity with the
requirements of the Companies Act 2006. The supplementary revenue
and capital columns are both prepared under guidance published by
the Association of Investment Companies.
All income is attributable to the equity shareholders of Dunedin
Enterprise Investment Trust PLC.
Statement of Changes in Equity
for the six months ended 30 June 2023
Six months ended 30 June 2023 (unaudited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 GBP'000 GBP'000 unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 31 December
2022 1,376 3,149 33,947 (18,220) 9,594 4,672 29,993 34,518
Profit/(loss)
for the
period - - 548 (141) (11) (8) 388 388
Dividends paid - - - - - (1,376) (1,376) (1,376)
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 30 June
2023 1,376 3,149 34,495 (18,361) 9,583 3,288 29,005 33,530
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
Six months ended 30 June 2022 (unaudited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 GBP'000 GBP'000 unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 31 December
2021 3,284 1,241 19,721 (8,378) 51,001 6,544 68,888 73,413
Profit/(loss)
for the
period - - (3,544) 5,993 - 594 3,043 3,043
Dividends paid - - - - - (1,905) (1,905) (1,905)
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 30 June
2022 3,284 1,241 16,177 (2,385) 51,001 5,233 70,026 74,551
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
Year ended 31 December 2022 (audited)
Capital Capital Capital Special Total
Share redemption reserve reserve Distributable Revenue retained Total
capital reserve realised - Reserve account earnings equity
GBP'000 GBP'000 GBP'000 unrealised GBP'000 GBP'000 GBP'000 GBP'000
GBP'000
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 31 December
2021 3,284 1,241 19,721 (8,378) 51,001 6,544 68,888 73,413
Profit/(loss)
for the year - - 14,276 (9,842) - 4,499 8,933 8,933
Purchase and
cancellation
of shares (1,908) 1,908 (50) - (41,407) - (41,457) (41,457)
Dividends paid - - - - - (6,371) (6,371) (6,371)
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
At 31 December
2022 1,376 3,149 33,947 (18,220) 9,594 4,672 29,993 34,518
--------------- ---------- ----------- ---------- ------------ -------------- ---------- ---------- ----------
Balance Sheet
As at 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ -------------- -------------- -------------
Non-current assets
Investments held at fair value 18,194 57,993 2 8,487
Current assets
Other receivables 5,205 1,650 5 ,375
Cash and cash equivalents 10,152 14,936 7 78
------------------------------------ -------------- -------------- -------------
15,357 16,586 6 ,153
Total assets 33,551 74,579 3 4,640
Current liabilities
Other liabilities (21) (28) (1 22 )
Net assets 33,530 74,551 3 4,518
------------------------------------ -------------- -------------- -------------
Capital and reserves
Share capital 1,376 3,284 1,376
Capital redemption reserve 3,149 1,241 3,149
Capital reserve - realised 34,495 16,177 33,947
Capital reserve - unrealised (18,361) (2,385) (18,220)
Special distributable reserve 9,583 51,001 9,594
Revenue reserve 3,288 5,233 4,672
------------------------------------ -------------- -------------- -------------
Total equity 33,530 74,551 34,518
------------------------------------ -------------- -------------- -------------
Net asset value per ordinary share
(basic and diluted) 609.2p 567.5p 627.1p
Cash Flow Statement
for the six months ended 30 June 2023
30 June 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
-------------------------------------------- ------------- ------------- ------------
Operating activities
Profit before tax 3 89 3,043 8 ,932
Adjustments for:
(Gains) on investments (4 30 ) (2,551) (4 ,514 )
(Increase)/decrease in debtors 80 4 (1,352) ( 1,058)
(Decrease)/increase in creditors (1 02 ) (60) 3 4
Net cash from operating activities 661 (920) 3 ,394
Cash flows from investing activities
Purchase of investments (177) (231) (4 30 )
Drawn from subsidiary (24) (53) (75)
Purchase of 'AAA' rated money market (2 8,422
funds (123) (12,327) )
Sale of investments 113 8,641 3 0,007
Distribution from subsidiary - - 2 ,900
Sale of 'AAA' rated money market funds 10,300 9,115 2 8,615
-------------------------------------------- ------------- ------------- ------------
Net cash used in investing activities 10,089 5,145 3 2,595
Cash flows from financing activities
Tender offer - - (41,456)
Dividends paid (1,3 76 ) (1,905) (6,371)
(4 7,827
Net cash used in financing activities (1,376) (1,905) )
Net i ncrease in cash and cash equivalents 9,374 2,320 ( 11,838)
Cash and cash equivalents at the start
of the period 778 12,616 1 2,616
Cash and cash equivalents at the end
of the period 10,152 14,936 7 78
-------------------------------------------- ------------- ------------- ------------
Statement of Principal Risks and Uncertainties
The Directors have an ongoing process for identifying,
evaluating and managing principal risks, emerging risks and
uncertainties of the Company. The principal risks faced by the
Company related to the Company's investment activities and these
are set out below: -
-- war in Ukraine
-- investment and liquidity risk
-- portfolio concentration risk
-- financial risk
-- economic risk
-- credit risk
-- currency risk
-- internal control risk
Information on each of these risks, and an explanation of how
they are managed, is on page 23 of the Company's Annual Report for
the year ended 31 December 2022.
The Company's principal risks, emerging risks and uncertainties
have not changed materially since the date of the Annual Report and
are not expected to change materially for the remaining six months
of the Company's financial year.
On behalf of the Board
Duncan Budge
Chairman
Statement of the Directors' Responsibilities in respect of the
half-yearly financial report
In accordance with Chapter 4 of the Disclosure Guidance and
Transparency Rules, the Directors confirm that to the best of their
knowledge:
-- the condensed set of financial statements has been prepared
in accordance with applicable International Financial Reporting
Standards, and gives a true and fair view of the assets,
liabilities, financial position and net return of the Company;
-- the half-yearly report includes a fair review of the
development and performance of the Company and important events
that have occurred during the first six months of the financial
year and their impact on the financial statements;
-- the Directors' Statement of Principal Risks and Uncertainties
shown on this page is a fair review of the principal risks and
uncertainties for the remainder of the financial year; and
-- the half-yearly report includes a fair review of the related
party transactions that have taken place in the first six months of
the financial year.
On behalf of the Board
Duncan Budge
Chairman
Notes to the Accounts
1. Unaudited Interim Report
The comparative financial information contained in this report
for the year ended 31 December 2022 does not constitute the
Company's statutory accounts but is derived from those accounts.
Statutory accounts for the year ended 31 December 2022 have been
delivered to the Registrar of Companies. The auditor has reported
on those accounts; their report was (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006.
The financial statements for the six months ended 30 June 2022
and 30 June 2023 have not been audited.
2. Basis of Preparation
These condensed set of financial statements for the six months
ended 30 June 2023 have been prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority (FCA) and IAS 34 'Interim Financial Reporting'. They do
not include all the information required by International Financial
Reporting Standards (IFRS) in full annual financial statements and
should be read in conjunction with the Annual Report and Accounts
for the year ended 31 December 2022.
In May 2016 shareholders approved a change in the investment
policy of the Company. The Company's new investment objective is to
conduct an orderly realisation of its relatively illiquid assets,
to be effected in a manner that seeks to achieve a balance between
maximising the value of its assets and progressively returning cash
to shareholders. As it is likely this processwill ultimately lead
to the liquidation of the Company, these financial statements have
not been prepared on a going concern basis. No adjustments were
necessary to the investment valuations or other assets and
liabilities included in the financial statement as a consequence of
the change in the basis of preparation.
.
3. Income
Six months Six months
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Limited partnership income - UK - 747 4,722
AAA rated money market funds 123 27 166
Deposit interest 48 17 63
171 791 4,951
========== ========== ============
4. Dividends
Six months Six months
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Dividends paid in the period 1,376 1,905 6,371
========== ========== ============
5. Investments
All investments are designated fair value through profit or loss
at initial recognition, therefore all gains and losses that arise
on investments are designated at fair value through profit or loss.
Given the nature of the Company's investments the fair value gains
recognised in these financial statements are not considered to be
readily convertible to cash in full at the balance sheet date and
therefore the movement in these fair values are treated as
unrealised.
Fair value hierarchy
The Company measures fair values using the following fair value
hierarchy that reflects the significance of the inputs used in
making the measurements:
-- Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
-- Level 2: Valuation techniques based on observable inputs,
either directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
-- Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable inputs have a significant effect on the instrument's
valuation. This category includes instruments that are valued based
on quoted prices for similar instruments where significant
unobservable adjustments or assumptions are required to reflect
differences between the instruments.
The table below analyses financial instruments, measured at fair
value at the end of the reporting period, by the level in the fair
value hierarchy into which the fair value measurement is
categorised:
At At At
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Level 1
'AAA' rated money market funds OEICs 1,442 15,024 11,619
Level 2 - - -
Level 3
Unlisted investments 16,752 42,969 16,868
-------- -------- ------------
18,194 57,993 28,487
======== ======== ============
The Company recognises transfers between the levels of the fair
value hierarchy as of the end of the reporting period during which
the transfer occurred. There were no transfers between Level 1 and
Level 2 of the fair value hierarchy during the six months ended 30
June 2023.
Level 3 fair values
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the six months
ended 30 June 2023 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2022 35,088
Unrealised depreciation (18,220)
------------------------------------ --------
Valuation at 31 December 2022 16,868
Purchases at cost 201
Sales - proceeds (113)
Sales - realised gain on sales (63)
Decrease in unrealised appreciation (141)
------------------------------------ --------
Valuation at 30 June 2023 16,752
------------------------------------ --------
Book cost at 30 June 2023 35,113
Closing unrealised appreciation (18,361)
------------------------------------ --------
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the six months
ended 30 June 2022 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2021 57,154
Unrealised depreciation (8,378)
------------------------------------ --------
Valuation at 31 December 2021 48,776
Purchases at cost 284
Sales - proceeds (8,641)
Sales - realised gain on sales (3,443)
Increase in unrealised appreciation 5,993
------------------------------------ --------
Valuation at 30 June 2022 42,969
------------------------------------ --------
Book cost at 30 June 2022 45,354
Closing unrealised appreciation (2,385)
------------------------------------ --------
Details of the determination of Level 3 fair value measurements
and the movements in Level 3 fair values during the year ended 31
December 2022 are set out below:-
Level 3
GBP'000
------------------------------------ --------
Book cost at 31 December 2021 57,154
Unrealised depreciation (8,378)
------------------------------------ --------
Valuation at 31 December 2021 48,776
Purchases at cost 505
Sales - proceeds (36,927)
Sales - realised gain on sales 14,356
Decrease in unrealised appreciation (9,842)
------------------------------------ --------
Valuation at 31 December 2022 16,868
------------------------------------ --------
Book cost at 31 December 2022 35,088
Closing unrealised depreciation (18,220)
------------------------------------ --------
Valuation of investments
Unquoted investments are fair valued by the Directors in
accordance with the following rules, which are consistent with the
International Private Equity and Venture Capital Valuation
Guidelines:
-- Investments are only valued at cost for a limited period
after the date of acquisition, otherwise investments are valued on
one of the other basis detailed below. Generally the earnings
multiple basis of valuation will be used.
-- When valuing on an earnings basis, the maintainable earnings
of a company are multiplied by an appropriate multiple.
-- When valuing on a revenue basis, the maintainable revenue of
a company is multiplied by an appropriate multiple.
-- An investment may be valued by reference to the value of its
net assets. This is appropriate for businesses whose value derives
mainly from the underlying value of its assets rather than its
earnings.
-- When investments have obtained an exit (either by listing or
trade sale) after the valuation date but before finalisation of the
relevant accounts (interim or final), the valuation is based on the
exit valuation.
-- Accrued interest on loans to portfolio companies is included
in valuations where there is an expectation that the interest will
be received.
IFRS 13 requires disclosure, by class of financial instrument,
if the effect of changing one or more inputs to reasonably possible
alternative assumptions would result in a significant change to the
fair value measurement. The information used in determination of
the fair value of Level 3 investments is chosen with reference to
the specific underlying circumstances and position of the investee
company. On that basis the Board believe that the impact of
changing one or more of the inputs to reasonably possible
alternative assumptions would not change the fair value
significantly.
The Directors consider the carrying value of financial
instruments in the financial statements to represent their fair
value.
6. Earnings per share
Six months Six months
to to Year to
30 June 30 June 31 December
2023 2022 2022
GBP'000 GBP'000 GBP'000
Revenue return per ordinary share (p) (0.14) 4.52 36.46
Capital return per ordinary share (p) 7.20 19.04 35.92
Earnings per ordinary share (p) 7.06 23.56 72.38
Weighted average number of shares 5,504,274 13,136,810 12,342,190
The earnings per share figures are based on the weighted average
numbers of shares set out above. Earnings per share is based on the
revenue profit in the period as shown in the consolidated income
statement.
7. Related party transactions
There have been no material changes to the related party
transactions described in the last annual report.
ENDS
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END
IR FIFLTAIISLIV
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September 15, 2023 02:00 ET (06:00 GMT)
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