16th Mar 2005 10:44
Graphite Enterprise Trust PLC16 March 2005 For immediate release 16 March 2005 GRAPHITE ENTERPRISE TRUST PLC UNAUDITED PRELIMINARY STATEMENT OF RESULTS FOR THE YEAR TO 31 DECEMBER 2004 SUMMARY • Net assets per share rose by 12.5% • Total return to shareholders was £38.2 million or 14.8% • The share price rose by 27.3% • Realisations from the investment portfolio totalled £109.3 million • Closing shareholders' funds were £287.6 million FINANCIAL RESULTS 2004 2003 Change Net assets per share 320.6p 284.9p +12.5%attributable to ordinaryshareholders Share price 283.0p 222.3p +27.3% FTSE All-Share Index 2,410.75 2,207.38 +9.2% Final dividend per share 4.3p 4.3p - Special dividend per share 2.8p - n/a John Sclater, Chairman, made the following statement on the results: Performance The net asset value per share of Graphite Enterprise increased by 12.5% in 2004,mainly as a result of a number of profitable disposals. The share priceperformed particularly strongly, rising by 27.3% in the year. These increasescompare with a rise of 9.2% in our benchmark, the FTSE All-Share Index. At theyear end shareholders' funds were £287.6 million. Reflecting the strong share price performance, the discount of the share priceto the underlying net asset value narrowed sharply in the year from 22.0% to11.7%. This was the lowest the discount had been since May 2001. The objective of Graphite Enterprise is to provide shareholders with long termcapital growth measured against our benchmark, the FTSE All-Share Index. Equitymarkets have been turbulent since the late 1990s, with most indices stillsignificantly below the peaks they reached in 1999 and 2000. In the five yearsto 31 December 2004, the FTSE All-Share Index fell by 25.6% while the net assetvalue per share of Graphite Enterprise rose by 0.8% and its share price fell by12.4%. The longer term performance of Graphite Enterprise has been strong, withincreases of 285.7% in the net asset value per share and 301.4% in the shareprice in the ten years to 31 December 2004. These movements compare with anincrease of 58.5% in the FTSE All-Share Index over the same period. Portfolio movements In last year's annual report we commented on rising confidence and prices in theprivate equity market and we anticipated that the rate of disposals from theGraphite Enterprise portfolio would be higher in 2004. In the event the marketremained strong and conditions for disposals were excellent. Total proceeds from the investment portfolio were £109.3 million, realising asurplus over opening valuations of £36.1 million or 49.4%. As we took the viewthat prices were unusually high, it was unsurprising that total new investmentsof £29.4 million were considerably less than the exceptionally high level ofdisposals. This resulted in an increase in the level of liquidity in the year.At the same time, as anticipated in last year's report, few new fund commitmentswere made in a market where, in our view, there were few high quality fundsavailable. Balance sheet At 31 December 2004 £234.8 million was invested in or committed to theinvestment portfolio, representing 80.3% of total net assets. Adjusting forfurther commitments of £35.9 million since the year end, this rises to 92.6%. Ayear earlier, the amount invested in or committed to the portfolio represented112.2% of total net assets. The change in 2004 was the result of the high levelof disposals. The investment portfolio was valued at £151.4 million at the end of the year,representing 51.8% of total net assets. Cash and near-cash were £140.8 million(48.2%) offset by £83.3 million of commitments (28.5%). Uncommitted cash andnear-cash was therefore £57.5 million, an amount which has fallen to £21.6million, or 7.4% of total net assets, following the commitments since the yearend. Given the nature of our commitments, uncommitted cash and near-cash is thebest measure of liquidity. The great majority of our commitments are to funds and are contractual, longterm and binding. It is therefore essential to have sufficient liquidityavailable to meet cash calls from funds, whether in cash or in borrowingfacilities. Although Graphite Enterprise is currently liquid following thesuccessful recent disposals, looking forward we expect commitments to exceedliquidity once again, and it is also possible that borrowing facilities will berequired. Share buy backs The discount of the share price to net asset value fluctuated widely during theyear, hitting a peak of 24.8% and narrowing in the last few months to end at11.7%. We have continued to follow the policy of enhancing shareholder returnsby buying back shares when they are available in reasonable volumes at a highdiscount, while maintaining sufficient liquidity for new investments. For alarge part of 2004, however, it was not possible, for regulatory reasons, to buyback shares when negotiations were under way to make disposals that would belikely to affect the share price if they completed. Following the announcementof these disposals, share buy-backs resumed. A total of 1.075 million shares was bought back during the year at a cost of£2.9 million. Prices paid varied between 262.0p and 270.0p, with an averageprice of 266.9p, and an average discount to net asset value of 15.0%. The buybacks enhanced net asset value per share by 0.6p. Statement of total return and dividend The total return for the year was £38.2 million, or 42.1p per share,representing 14.8% of opening shareholders' funds. The capital return was £30.4million or 33.6p per share, and the net revenue attributable to shareholders was£7.7 million or 8.5p per share. Net revenue increased by £3.3 million, principally as a result of higherdividend and interest income from portfolio investments. The income included anunusually large dividend of £2.1 million received from Maplin Electronics priorto its sale. The increase in net revenue was partly offset by a higher taxcharge and slightly higher expenses. The exceptional level of net revenue in 2004, and in particular the receipt ofthe dividend income from Maplin, allowed Graphite Enterprise to pay a specialdividend of 2.8p per share in December. The Board is recommending an unchangedfinal dividend of 4.3p per share. International financial reporting standards (IFRS) As a listed group which prepares consolidated accounts, Graphite Enterprise willapply IFRS from 1 January 2005, and the first published results under IFRS willbe those for the six months ending 30 June 2005 with restatement of prior yearcomparatives. While the precise application of IFRS to investment trusts is still underdebate, it seems unlikely at this stage that it will result in any major changeto the net asset value of Graphite Enterprise. Outlook The UK private equity market has been unusually strong for some time, withprivate company valuations at the end of 2004 higher than for many years. Thesupply of debt remains plentiful, and this encourages equity providers to offerhigh prices when bidding for companies. Conditions therefore remain good fordisposals, while it is often questionable whether the prices demanded for newinvestments represent good value. We believe that the UK private equity marketis at a cyclical peak from which it is likely to fall over the next 12 to 18months, especially if the economy slows or interest rates rise further.Conditions in continental European markets have generally been similar, if notso extreme as in the UK. Against this background, we shall remain enthusiastic sellers of maturecompanies and cautious buyers until conditions change. This may result in afurther short term increase in liquidity, leaving us well positioned to takeadvantage of any downturn in the market. In the meantime there has been asignificant change in the fund market where we expect the supply of high qualityfunds to increase in 2005. We have already made two commitments since the yearend and we are actively considering a number of others. The raising of thesefunds is well timed in relation to our view of the market, as they will beinvesting over the next three or four years when conditions for new investmentsare likely to be more attractive than they are at present. For further information, please contact: Rod Richards / William Eccles Tel: 020 7825 5300 Graphite Capital GRAPHITE ENTERPRISE TRUST PLC Preliminary Statement (unaudited) for the year ended 31 December 2004 SUMMARY OF CONSOLIDATED BALANCE SHEET At 31 December 2004 2003 £'000s £'000s Investments listed in Great Britain 17,231 24,446Investments listed outside Great Britain 210 168Unlisted investments at directors' valuation 133,998 168,467Net current assets 140,791 69,734Total assets less current liabilities 292,230 262,815Minority interests (4,609) (4,110)Net assets attributable to ordinary shareholders 287,621 258,705 CONSOLIDATED STATEMENT OF TOTAL RETURN (INCORPORATING THE REVENUE ACCOUNT) For the year ended 31 December 2004 2003 Revenue Capital Total Revenue Capital Total £'000s £'000s £'000s £'000s £'000s £'000s Gains and losses on investments - 38,256 38,256 - 26,319 26,319Income (see Note 1) 11,681 - 11,681 7,537 - 7,537Investment management charges (1,209) (3,626) (4,835) (1,076) (3,229) (4,305)Other expenses (874) 181 (693) (770) (152) (922)Net return before finance costs andtax 9,598 34,811 44,409 5,691 22,938 28,629Interest payable and similar (1) - (1) (15) - (15)chargesReturn on ordinary activities 5,676 22,938 28,614before tax 9,597 34,811 44,408Tax on ordinary activities (1,864) 1,864 - (1,242) 1,245 3Return on ordinary activities aftertax 7,733 36,675 44,408 4,434 24,183 28,617Minority interests - (6,232) (6,232) - (1,406) (1,406)Return attributable to equityshareholders 7,733 30,443 38,176 4,434 22,777 27,211Dividends in respect of ordinaryshares (equity)Proposed final dividend (3,858) - (3,858) (3,904) - (3,904)Special dividend (2,512) - (2,512) - - -Transfer to reserves 1,363 30,443 31,806 530 22,777 23,307Return per ordinary share 8.54p 33.61p 42.15p 4.88p 25.08p 29.96p SUMMARY OF CONSOLIDATED CASH FLOW STATEMENT For the year ended 31 December 2004 2003 £'000s £'000sNet cash inflow from operating activities 2,720 943Net cash outflow from servicing of finance (1) (15)Net cash inflow from tax - 544Net cash inflow/(outflow) from investing activities 79,890 (865)Equity dividends paid (6,417) (3,904)Net cash (outflow)/inflow from movement in liquid resources (52,792) 18,500Net cash outflow from financing (8,610) (1,321)Increase in cash 14,790 13,882 Reconciliation of net cash flow to movement in net liquid funds 2004 2003 £'000s £'000s £'000s £'000s Net liquid funds at 1 January 73,528 76,635Increase in cash as above 14,790 13,882 Purchase/(sale) of institutional sterling funds 52,792 (18,500)Change in net liquid funds resulting from cash flows 67,582 (4,618)Exchange difference 269 (39)Capitalised income 2,435 1,550Movement of net liquid funds 70,286 (3,107)Net liquid funds at 31 December 143,814 73,528 Note 1 Analysis of Income 2004 2003 £'000s £'000sDividends 3,556 1,682Interest from investments 3,852 3,152Income from current asset investments 2,435 1,550Other income 1,838 1,153 11,681 7,537 The Directors propose a final dividend of 4.3p (2003 - 4.3p) per share payableon 25 May 2005 to shareholders registered on 22 April 2005. The Annual General Meeting will be held at 11.30 a.m. on 18 May 2005 at TheRichmond Room, The Washington Mayfair Hotel, 5/7 Curzon Street, London W1. Theregistered office of the Company is 4th Floor, Berkeley Square House, BerkeleySquare, London W1J 6BQ. The above financial information comprises non-statutory accounts within themeaning of Section 240 of the Companies Act 1985. The financial information forthe year ended 31 December 2003 has been extracted from published accounts forthe year ended 31 December 2003 which have been delivered to the Registrar ofCompanies and on which the report of the auditors was unqualified. For the yearended 31 December 2004 copies of the audited Report and Accounts will be postedto shareholders on or about 15 April 2005 and copies may be obtained duringnormal business hours from the Company's registered office thereafter. By order of the Board Graphite Capital Management Limited Secretary 16 March 2005 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
ICG Enterprise Trust