REG - Dunedin Enterprise - Half-year Report
15/09/2023 07:00
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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)
· £203.5m returned to shareholders since 2012
Comparative Total Return Performance (%)
Periods to 30 June 2023 Net asset value (per share) Share price FTSE
Small Cap
(ex Inv Cos)
Index
1.0 14.9 2.0
Six months
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 £3.2m were offset by value decreases
of £3.3m. The valuation uplift was primarily generated from Premier (£1.4m),
Hawksford (£0.8m) and EV (£0.7m). The principal valuation reductions were at
Weldex (£1.9m) and FRA (£1.2m).
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
£11.6m out of total net assets of £33.5m. At that date there were
outstanding commitments to limited partnership funds of £9.0m, consisting of
£8.3m to Dunedin-managed funds and £0.7m 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 £1.4m.
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:-
£'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:-
£'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
at 31-12-22 in half year in half year movement movement at 30-6-23
£'m £'m £'m £'m £'m £'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 £4.6m. 75% of the proceeds were
received in July 2023 with the balance due in October 2023.
Investment activity
A further £0.2m 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 £3.2m. There were
valuation uplifts at Premier (£1.4m), Hawksford (£0.8m) and EV (£0.7m).
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 £3.3m. There
were valuation decreases at Weldex (£1.9m) and FRA (£1.2m).
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 % £'000 £'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
Cost of Gross Directors Total
realised
investment to date* valuation return
Company name £'000 £'000 £'000 £'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 £9.5m
Directors' valuation £4.7m
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 £10.1m
Directors' valuation £4.3m
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 £1.4m
Directors' valuation £2.8m
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 £5.5m.
Realza
Percentage of equity held 8.9%
Cost of Investment £3.7m
Directors' valuation £2.7m
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 €20m to €100m. The fund's typical equity
investment ranges from €10m to €25m.
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 £8.3m
Directors' valuation £2.6m
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 £-m
Directors' valuation £0.8m
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 £2.0m
Directors' valuation £-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 2023 Six months ended 30 June 2022 Year ended 31 December 2022
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
Note £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'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 earnings Total
capital reserve realised unrealised Reserve account £'000 equity
£'000 £'000 £'000 £'000 £'000 £'000 £'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 earnings Total
capital reserve realised unrealised Reserve account £'000 equity
£'000 £'000 £'000 £'000 £'000 £'000 £'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 earnings Total
capital reserve realised unrealised Reserve account £'000 equity
£'000 £'000 £'000 £'000 £'000 £'000 £'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)
£'000 £'000 £'000
Non-current assets
Investments held at fair value 18,194 57,993 28,487
Current assets
Other receivables 5,205 1,650 5,375
Cash and cash equivalents 10,152 14,936 778
15,357 16,586 6,153
Total assets 33,551 74,579 34,640
Current liabilities
Other liabilities (21) (28) (122)
Net assets 33,530 74,551 34,518
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)
£'000 £'000 £'000
Operating activities
Profit before tax 389 3,043 8,932
Adjustments for:
(Gains) on investments (430) (2,551) (4,514)
(Increase)/decrease in debtors 804 (1,352) (1,058)
(Decrease)/increase in creditors (102) (60) 34
Net cash from operating activities 661 (920) 3,394
Cash flows from investing activities
Purchase of investments (177) (231) (430)
Drawn from subsidiary (24) (53) (75)
Purchase of 'AAA' rated money market funds (123) (12,327) (28,422)
Sale of investments 113 8,641 30,007
Distribution from subsidiary - - 2,900
Sale of 'AAA' rated money market funds 10,300 9,115 28,615
Net cash used in investing activities 10,089 5,145 32,595
Cash flows from financing activities
Tender offer - - (41,456)
Dividends paid (1,376) (1,905) (6,371)
Net cash used in financing activities (1,376) (1,905) (47,827)
Net increase in cash and cash equivalents 9,374 2,320 (11,838)
Cash and cash equivalents at the start of the period 778 12,616 12,616
Cash and cash equivalents at the end of the period 10,152 14,936 778
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 to Six months to Year to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'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 to Six months to Year to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'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
£'000 £'000 £'000
Level 1 1,442 15,024 11,619
'AAA' rated money market funds OEICs
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
£'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
£'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
£'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 to Six months to Year to
30 June 30 June 31 December
2023 2022 2022
£'000 £'000 £'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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