7th Sep 2006 07:00
For release at 0700, Thursday 7th September, 2006 CANDOVER INVESTMENTS PLC Interim results for the half year ended 30th June, 2006 FINANCIAL HIGHLIGHTS: ‚£100.0 million of cash returned to shareholders in May (457p per ordinaryshare).Net assets per share increased by 5.5% over the six months to 30th June 2006,after adding back the return of cash to shareholders. FTSE All-Share Indexincreased 4.2% over the same period.Net assets per share were 1372p (unadjusted; adjusted to add back the return ofcash: 1834p) compared to 1740p at 31st December, 2005.Net assets per share increased 10.8% on the prior year (30th June, 2005: 1656pper share). Total net assets of ‚£299.8 million (unadjusted; adjusted ‚£401.1 million)compared to ‚£380.3 million at 31st December, 2005.Profits before tax of ‚£10.1 million (2005: ‚£9.4 million).Interim dividend increased 9.1% to 18.0p (2005: 16.5p).Ten year compound growth in net assets per share of 13.8% per annum. FTSEAll-Share growth over the same period of 4.8%. OPERATING HIGHLIGHTS: Two new investments made during the period, the EUR 445.0 million buyout of UPCNorway and the EUR 463.5 buyout of EurotaxGlass's.Since the period end, the acquisition and merger of the UK mail servicescompanies DX Services plc and Secure Mail Services Limited has completed.Refinancings of Bureau van Dijk and Springer. This was the third refinancingfor Springer which has now returned 1.6x cost.Five new continental European executives recruited.Gerry Grimstone, Chairman of Candover Investments plc, commented: "Candover continues to make solid progress with good net asset growth. TheEuropean buyout market has reached new heights and market conditions remainfavourable. Expanding our pan-European presence has been an important priorityfor us during the period, and I am confident that the growth of our footprintwill enable us to remain at the forefront of the industry." Ends *References in this announcement to 'Candover' mean Candover Investments plcand/or, where appropriate, one or more of its subsidiaries. For further information, please contact: Gerry Grimstone, Candover +44 (0)20 7489 9848 Colin Buffin, Candover +44 (0)20 7489 9848 Julie Foster, Tulchan Communications +44 (0)20 7353 4200 CHAIRMAN'S STATEMENT For the half year to 30th June, 2006 INTRODUCTION This is my first statement as Chairman of Candover and I am pleased to reportthat your Company continues to make solid progress. Net assets per shareincreased by 5.5% over the six months to 30th June, 2006, after adding back thereturn of cash to shareholders which took place in May 2006. This uplift wasprincipally due to revaluations of investee companies and gains from companieswhich have either been realised or partially exited. At 30th June, 2006, the unaudited net assets attributable to the ordinaryshares were ‚£299.8 million (unadjusted; adjusted to add back the return ofcash: ‚£401.1 million) compared to ‚£380.3 million at 31st December, 2005. Netassets per share were 1372p (unadjusted; adjusted 1834p) compared to 1740p at31st December, 2005, and 1656p at 30th June, 2005. This represents adjustedincreases of 5.5% and 10.8% respectively. The 5.5% increase in net assets per share over the six months to 30th June,2006 compares with an increase of 4.2% in the FTSE All-Share Index over thesame period.RETURN OF CASH Successful past realisations had led to a build-up of our cash reserves andyour board considered that shareholder value would be enhanced by a return ofcash. On 8th May, 2006 shareholders voted to return ‚£100.0 million, and anissue of B and C preference shares took place on 9th May, 2006. The subsequentredemption or repurchase of these shares resulted in the return of 457p perordinary share to shareholders. As a result of the return of cash, Candover'snet asset value and share price were reduced proportionally. We intend, going forward, to make more active use of Candover's balance sheet,so that return of cash at this point in our funding cycle should not beinterpreted as meaning that we will not be increasing our exposure to futureinvestments made by our funds, which have generated excellent returns to ourshareholders. INVESTMENTS In total, Candover invested ‚£35.3 million during the six months to 30th June,2006 in two new investments and four follow-on financings. As reported at the year end, in January, Candover and the 2005 Fund completedthe buyout of UPC Norway, a Norwegian cable company, for a total considerationof EUR445.0 million. Candover invested ‚£16.0 million and the 2005 Fund invested‚£96.6 million in the transaction. In June, Candover and the 2005 Fund completed the buyout of EurotaxGlass's, aprovider of automotive data and intelligence, for an enterprise value ofEUR480.0 million. Candover invested ‚£17.4 million and the 2005 Fund invested ‚£105.6 million. Since the period end, Candover has completed the acquisition and merger of theUK mail services companies, DX Services plc (DX) and Secure Mail ServicesLimited (SMS). DX is a leading provider of B2B mail services in the UK, and SMSis the largest private sector player in the UK secure mail market (primarilyB2C). The combined business will be the largest independent end-to-end playerin the UK mail market, delivering approximately 290 million letters and parcelseach year. Candover invested ‚£29.5 million and the 2005 Fund invested ‚£182.9million. REALISATIONS As reported at the year end, Candover successfully exited Kabel Deutschland(KDG) which resulted in further gains of ‚£3.7 million for Candover and ‚£29.1million for the 2001 Fund. Including proceeds received from earlierrefinancings, KDG has generated an investment multiple of 3.3 times theoriginal investment. In May, Acertec listed on the Alternative Investment Market at 148p per share.At the listing, Acertec repaid the loan stock representing a significantproportion of the cost of the original investment and this resulted in ‚£55.8million being realised in cash, ‚£6.6 million for Candover and ‚£49.2 million forthe 1997 Fund. Candover's residual holding of 1.2 million shares is valued at‚£1.6 million and the 1997 Fund's holding is valued at ‚£11.6 million. Refinancings of Bureau van Dijk (BvD) and Springer took place in May and Junerespectively, with BvD returning approximately a third of the originalinvestment. Springer was successfully refinanced for a third time, generatinggains over cost of ‚£7.5 million for Candover and ‚£63.5 million for the 2001Fund. In total, Springer has now returned 1.6 times the original cost of theinvestment. RESULTS FOR THE SIX MONTHS TO 30th JUNE, 2006 The increase in net assets of ‚£20.8 million since 31st December, 2005, afteradding back the return of cash, was mainly due to a net increase in valuationsof portfolio companies. The value ascribed to Candover's share of the carriedinterest in the 1997 Fund was increased by ‚£2.9 million (13p per share) to ‚£6.2million. Profits before tax for the six months under review were ‚£10.1 million, comparedto ‚£9.4 million for the first half of 2005. This growth has come from increasedinvestment and other income combined with increased management fees from theCandover 2005 Fund, offset partly by the higher staff costs required to manageour expansion in funds under management. The valuation of financial investments at 30th June, 2006 was ‚£220.9 million,compared to ‚£187.9 million at 31st December, 2005. This valuation of ‚£220.9million was calculated having taken into account new investments, net ofrealisations, of ‚£17.2 million, and a net increase of ‚£15.8 million in thevaluation of investments. Valuation adjustments include ‚£17.8 million of upwardadjustments and downward adjustments of ‚£2.0 million. Following the return of cash, cash and liquid assets totalled ‚£79.9 millioncompared with ‚£189.4 million at 31st December, 2005. DIVIDENDS The board has decided to increase the interim dividend by 9.1% to 18.0p perordinary share compared to 16.5p per ordinary share last year. The dividendwill be paid on 17th October, 2006 to shareholders on the register at 22ndSeptember, 2006. The number of ordinary shares in issue was not reduced as aresult of the return of cash earlier this year and our progressive dividendpolicy has been maintained despite our lower capital base. Candover hasincreased its dividends every year since its listing in 1984. BOARD AND STAFF At the AGM in May, Stephen Curran stepped down as executive Chairman, althoughhe remains a non-executive director. In addition, Doug Fairservice retired as adirector of the Company. Stephen and Doug have contributed immeasurably toCandover's success over the last 25 and 22 years respectively, and I would liketo thank both of them for all that they have helped achieve for the Company. Expanding our pan-European presence has been an important priority for us, andwe have been joined by five new executives, all of whom are non-UK nationals.Bertrand Finet and Javier Abad joined as directors, Simon Marc and LauraMarangione joined as investment managers and Raphaƒ«l Candelier joined as anassociate. Bertrand joined us from CVC Capital Partners in Paris where he was amanaging director and Javier from Apax Partners in Madrid where he was adirector. Simon also joins us from Apax Partners, Laura from BNP Paribas andRaphaƒ«l from Goldman Sachs. PROSPECTS The first half of 2006 has once again seen the value of European buyouts reachrecord levels. Candover remains confident that it is well placed to takeadvantage of the presently favourable market conditions, and that its Europeanfootprint and experienced team will enable it to remain at the forefront of theindustry. Our overall portfolio is in good shape and we continue to work withour investee companies to deliver good returns for our shareholders and fundinvestors. As one of the leading quoted private equity companies with all thatimplies in terms of reputation, profile and access to capital, we are wellplaced to take advantage of the growing investor interest in private equity asan asset class. G E Grimstone, Chairman, 7th September, 2006 INVESTMENTS - ANALYSIS BY VALUE Investments by valuation method1 Multiple of earnings 75%2 Cost 21%3 Stock market price 4% Investments by region1 United Kingdom 48%2 Scandinavia 15%3 Americas 9%4 Germany 9%5 Switzerland 8%6 Benelux 6%7 France 3%8 Spain 2% Investments by sector1 Support services 28%2 Media 22%3 Industrials 18%4 Leisure 16%5 Financials 7%6 External funds 7%7 Health 2% Investments by age1 5 years 10% REVIEW OF 15 LARGEST INVESTMENTS GALA CORAL (UK, leisure)Date of investment: March 2003/October 2005Gala Coral was formed in November 2005 when Gala Group Ltd, an existingportfolio company, acquired Coral Eurobet plc. The combined entity is the UK'slargest bingo operator, and its third largest bookmaker and casino operator. Inaddition Gala Coral has a sizeable online gambling business, which includesbingo, sports betting and casino product offerings.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment ‚£24,772,000 ‚£24,772,000 Directors' valuation ‚£32,348,000 ‚£32,348,000 Effective equity interest (fully 2.0% 2.0%diluted) % of Candover's net assets 10.8% 8.5% Basis of valuation Multiple of Multiple of earnings earnings SPRINGER SCIENCE + BUSINESS MEDIA (Germany, media)Date of investment: January/September 2003Springer is the world's second largest academic publisher. During the period,the company was refinanced for a third time, realising capital proceeds of ‚£7.6million for Candover.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR943,000 EUR1,050,000 (‚£638,000) (‚£710,000) Directors' valuation EUR26,188,000 EUR27,832,000 (‚£18,104,000) (‚£19,123,000) Effective equity interest (fully 4.0% 4.0%diluted) % of Candover's net assets 6.0% 5.0% Basis of valuation Multiple of Multiple of earnings earnings EUROTAXGLASS'S (Switzerland, support services)Date of investment: June 2006EurotaxGlass's is the leading provider of pan-European decision-criticalautomotive intelligence and solutions. The company provides dealers, workshops,manufacturers, fleet and finance operators, insurers and consumers withsolutions providing vehicle specification data, current and future residualvalues, servicing and maintenance information as well as repair costestimation.Candover's investment as at 30th June, 2006 Cost of investment EUR25,316,000 (‚£17,415,000) Directors' valuation EUR25,316,000 (‚£17,501,000) Effective equity interest (fully diluted) 9.0% % of Candover's net assets 5.8% Basis of valuation Cost UPC NORWAY (Norway, media)Date of investment: January 2006UPC Norway operates cable networks in Oslo and the major cities of SouthernNorway. Within its franchise area it is the only cable operator and offersanalogue and digital television, broadband internet and analogue and digitaltelephony services to the residential market.Candover's investment as at 30th June, 2006 Cost of investment EUR23,251,000 (‚£15,997,000) Directors' valuation EUR23,251,000 (‚£16,074,000) Effective equity interest (fully diluted) 9.4% % of Candover's net assets 5.4% Basis of valuation Cost THULE (Sweden, industrials)Date of investment: December 2004Thule is a consumer goods company with a strong brand which supplies productsto the outdoor leisure markets. It is the global number one in its coreactivity of car racks and rooftop boxes and also holds either global orEuropean market leading positions in all its other product areas.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment* EUR22,584,000 EUR22,635,000 (‚£15,579,000) (‚£15,579,000) Directors' valuation EUR22,323,000 EUR22,169,000 (‚£15,432,000) (‚£15,232,000) Effective equity interest (fully 6.7% 6.7%diluted) % of Candover's net assets 5.2% 4.0% Basis of valuation Multiple of Multiple of earnings earnings \* This investment was made in SEK and Euros. ALCONTROL GROUP (UK, support services)Date of investment: December 2004ALcontrol is a laboratory-based testing business which supplies services to thefood and environmental markets. It ranks as number one in the UK, Benelux andSweden, making it a leading player in Western Europe. The group comprises 26laboratories and operates in ten countries. In the period there was anadditional investment of ‚£58,000.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR18,669,000 EUR18,585,000 (‚£12,902,000) (‚£12,844,000) Directors' valuation EUR18,669,000 EUR18,585,000 (‚£12,906,000) (‚£12,769,000) Effective equity interest (fully 6.8% 6.8%diluted) % of Candover's net assets 4.3% 3.4% Basis of valuation Multiple of Multiple of earnings earnings VETCO INTERNATIONAL (UK, support services)Date of investment: July 2004Vetco International is a major global participant in the oilfield servicessector and supplies a portfolioof high technology proprietary upstream products and services. It routinelyserves the major national and international oil companies as well asindependent producers throughout the world.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment US$113,000 US$113,000 (‚£61,000) (‚£61,000) Directors' valuation US$22,333,000 US$17,391,000 (‚£12,074,000) (‚£10,130,000) Effective equity interest (fully 2.5% 2.5%diluted) % of Candover's net assets 4.0% 2.7% Basis of valuation Multiple of Multiple of earnings earnings DAKOTA, MINNESOTA & EASTERN RAILROAD CORPORATION (US, support services)Date of investment: September 1986Dakota, Minnesota & Eastern Railroad Corporation (DM&E) is a regional railroadoperating company on 1,103 miles of track. DM&E also owns Iowa, Chicago &Eastern Railroad Corporation, a contiguous railroad.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment US$1,478,000 US$1,478,000 (‚£888,000) (‚£888,000) Directors' valuation US$19,695,000 US$16,672,000 (‚£10,648,000) (‚£9,711,000) Effective equity interest (fully 8.5% 8.5%diluted) % of Candover's net assets 3.6% 2.6% Basis of valuation Multiple of Multiple of earnings earnings INNOVIA FILMS (UK, industrials)Date of investment: September 2004Innovia Films is a manufacturer of specialist bi-orientated polypropylene andcellulose coated and uncoated films. The business enjoys strong positions inniche markets and focuses on higher value-added applications.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR14,448,000 EUR14,448,000 (‚£9,913,000) (‚£9,913,000) Directors' valuation EUR14,799,000 EUR14,448,000 (‚£10,300,000) (‚£9,927,000) Effective equity interest (fully 8.0% 8.0%diluted) % of Candover's net assets 3.4% 2.6% Basis of valuation Multiple of Multiple of earnings earnings BUREAU VAN DIJK ELECTRONIC PUBLISHING (Netherlands, media)Date of investment: November 2004Bureau van Dijk is a global publisher of specialised financial and companyinformation products via the internet and on CD/DVDs on nearly twenty millioncompanies worldwide, with a strong emphasis on private companies. Its maindatabases are market leaders in the niches they target. The company wasrefinanced in the period, returning approximately a third of Candover'soriginal investment.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR11,104,000 EUR14,586,000 (‚£7,788,000) (‚£10,231,000) Directors' valuation EUR13,122,000 EUR14,586,000 (‚£9,072,000) (‚£10,022,000) Effective equity interest (fully 6.3% 6.3%diluted) % of Candover's net assets 3.0% 2.6% Basis of valuation Multiple of Multiple of earnings earnings ASPEN INSURANCE (US, financials)Date of investment: June 2002Aspen Insurance, one of the largest independent reinsurance vehicles in the UKmarket, listed on the New York Stock Exchange in December 2003.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment ‚£6,814,000 ‚£6,814,000 Directors' valuation US$15,870,000 US$16,129,000 (‚£8,580,000) (‚£10,089,000) Effective equity interest (fully diluted) 0.9% 0.9% % of Candover's net assets 2.9% 2.5% Basis of valuation Market price Market price QIOPTIQ (UK, industrials)Date of investment: December 2005Qioptiq is a world leader in the design and manufacture of high precisionoptical components and modules for military and civil applications.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR,10,680,000 EUR,10,680,000 (‚£7,274,000) (‚£7,274,000) Directors' valuation EUR,10,680,000 EUR,10,680,000 (‚£7,383,000) (‚£7,338,000) Effective equity interest (fully diluted) 9.6% 9.6% % of Candover's net assets 2.5% 1.9% Basis of valuation Cost Cost EQUITY TRUST (UK, financials)Date of investment: May 2003Equity Trust's principal business is the formation and administration ofoffshore trusts and companies. In the period a follow-on investment of ‚£37,000was made.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR9,268,000 EUR9,231,000 (‚£6,500,000) (‚£6,475,000) Directors' valuation EUR9,268,000 EUR9,231,000 (‚£6,407,000) (‚£6,343,000) Effective equity interest (fully 5.3% 5.3%diluted) % of Candover's net assets 2.1% 1.7% Basis of valuation Multiple of Multiple of earnings earnings WOOD MACKENZIE (UK, support services)Date of investment: July 2005Wood Mackenzie provides research and consulting services covering the upstreamoil and gas, oil refining and downstream gas and power generation sectors in 93countries.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment ‚£4,376,000 ‚£4,376,000 Directors' valuation ‚£6,248,000 ‚£4,376,000 Effective equity interest (fully 4.1% 4.1%diluted) % of Candover's net assets 2.1% 1.2% Basis of valuation Multiple of Cost earnings CICLAD 3 (France, external funds)Date of investment: April 2000Ciclad is an investment company specialising in French buyouts. The fund is nowfully invested and is in the process of realising its portfolio.Candover's investment as at 30th June, 2006 31st December, 2005 Cost of investment EUR75,000 EUR2,998,000 (‚£45,000) (‚£1,619,000) Directors' valuation EUR7,800,000 EUR11,603,000 (‚£5,392,000) (‚£7,973,000) Effective equity interest (fully n/a n/adiluted) % of Candover's net assets 1.8% 2.1% Basis of valuation Multiple of Multiple of earnings earnings INDEPENDENT REVIEW REPORT TO THE MEMBERS OF CANDOVER INVESTMENTS PLC INTRODUCTION We have been instructed by the Company to review the financial information forthe six months ended 30th June, 2006 which comprises the Group incomestatement, Statement of recognised income and expenses, Group balance sheet,Group cash flow statement and the related notes. We have read the otherinformation contained in the interim report which comprises only the Chairman'sstatement, Investments - analysis by value and Review of the 15 largestinvestments and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Our responsibilitiesdo not extend to any other information. This report is made solely to the Company in accordance with guidance containedin Auditing Practices Board (APB) Bulletin 1999/4 'Review of Interim FinancialInformation'. Our review work has been undertaken so that we might state tothe Company those matters we are required to state to them in a review reportand for no other purpose. To the fullest extent permitted by law, we do notaccept or assume responsibility to anyone other than the Company for our reviewwork, for this report, or for the conclusion we have formed. DIRECTORS' RESPONSIBILITIES The interim report including the financial information contained therein is theresponsibility of, and has been approved by, the directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes,and the reasons for them, are disclosed. This interim report has been prepared in accordance with InternationalAccounting Standard 34 'Interim Financial Reporting'. REVIEW WORK PERFORMED We conducted our review in accordance with guidance contained in Bulletin 1999/4 'Review of Interim Financial Information' issued by the Auditing PracticesBoard for use in the United Kingdom. A review consists principally of makingenquiries of management and applying analytical procedures to the financialinformation and underlying financial data and, based thereon, assessing whetherthe accounting policies and presentation have been consistently applied unlessotherwise disclosed. A review excludes audit procedures such as tests ofcontrols and verification of assets, liabilities and transactions. It issubstantially less in scope than an audit performed in accordance withInternational Standards in Auditing (UK and Ireland) and therefore provides alower level of assurance than an audit. Accordingly, we do not express anaudit opinion on the financial information. REVIEW CONCLUSION On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30th June, 2006. Grant Thornton UKLLP, Chartered Accountants, London, 7th September, 2006 NOTE 1: The maintenance and integrity of the Company's website is theresponsibility of the directors: the interim review does not involveconsideration of these matters and, accordingly, the Company's reportingaccountants accept no responsibility for any changes that may have occurred tothe interim report since it was initially presented on the website. NOTE 2: Legislation in the United Kingdom governing the preparation anddissemination of the interim report may differ from legislation in otherjurisdictions. GROUP INCOME STATEMENT for the period ended 30th June, 2006 Unaudited Six months to 30th June, Six months to 30th June, Year to 31st December, 2006 2005 2005 Revenue Capital Total* Revenue Capital Total* Revenue Capital Total* ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Gains on financial investments and cash equivalents at fair value through profit and loss Realised - 7,587 7,587 - 757 757 - 15,220 15,220and losses Unrealised - 16,047 16,047 - 42,528 42,528 - 47,810 47,810gains and losses - 23,634 23,634 - 43,285 43,285 - 63,030 63,030 REVENUE Management fees from: Managed funds 19,547 - 19,547 12,265 - 12,265 29,964 - 29,964 Investment and 10,121 - 10,121 7,645 - 7,645 14,700 - 14,700other income Total Revenue 29,668 - 29,668 19,910 - 19,910 44,664 - 44,664 Administrative (19,533) (4,157) (23,690) (10,507) (3,381) (13,888) (28,029) (7,681) (35,710)expenses Profit before 10,135 19,477 29,612 9,403 39,904 49,307 16,635 55,349 71,984finance costs and taxation Interest (14) - (14) (8) - (8) (161) - (161)payable and similar charges Profit before 10,121 19,477 29,598 9,395 39,904 49,299 16,474 55,349 71,823taxation Taxation (2,952) 1,247 (1,705) (2,912) 1,014 (1,898) (4,841) 2,304 (2,537) Profit attributable to Equity 7,169 20,724 27,893 6,483 40,918 47,401 11,633 57,653 69,286shareholders Earnings per ordinary share Basic and 32.8p 94.8p 127.6p 29.7p 187.2p 216.9p 53.2p 263.8p 317.0pdiluted Dividends paid 7,002 - 7,002 6,338 - 6,338 9,945 - 9,945(‚£000) An interim dividend in respect of 2006 of 18p per ordinary share, amounting toa total dividend of ‚£3,934,000, is proposed. This dividend is not reflected inthe interim financial statement. The total column represents the Income Statement under IFRS. STATEMENT OF RECOGNISED INCOME AND EXPENSES for the period ended 30th June, 2006 Unaudited Six months to Six months to Year to 31st 30th June 2006 30th June 2005 December, 2005 ‚£000 ‚£000 ‚£000 Profit attributable to equity 27,893 47,401 69,286shareholders Exchange differences on (6) - (8)translation of foreign operations Total recognised income and 27,887 47,401 69,278expenses GROUP BALANCE SHEET at 30th June, 2006 Unaudited 30th June, 2006 30th June, 2005 31st December, 2005 Notes ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Non-current assets Property, plant and 915 950 934equipment Financial investments designated at fair value through profit and loss 3 Investee companies 213,879 191,486 184,048 Other financial 7,005 42,321 3,827 investments 220,884 233,807 187,875 Trade and other 4,460 925 4,820receivables Deferred tax asset 3,026 - 2,289 229,285 235,682 195,918 Current assets Trade and other 15,628 20,178 20,545 receivables Cash and cash 79,935 123,031 189,392 equivalents 95,563 143,209 209,937 Current liabilities Trade and other (22,917) (8,954) (19,971) payables Current tax (2,098) (2,887) (5,623) liabilities (25,015) (11,841) (25,594) Net current assets 70,548 131,368 184,343 Non-current liabilities Deferred tax - (5,059) -liabilities Net assets 299,833 361,991 380,261 Equity attributable to equity holders Called up share 5,464 5,464 5,464capital Share premium 1,232 1,451 1,451account Translation reserve (14) - (8) Capital redemption 499 290 290reserve Capital reserve - 222,672 257,525 313,214realised Capital reserve - 35,133 64,124 25,170unrealised Revenue reserve 34,847 33,137 34,680 Total equity 4 299,833 361,991 380,261 Net asset value per 1372p 1656p 1740pshare Net asset value per 5 1834p 1656p 1740pshare (adjusted for return of cash) GROUP CASH FLOW STATEMENT for the period ended 30th June, 2006 Unaudited Six months to 30th Six months to 30th Year to 31st June, 2006 June, 2005 December, 2005 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 ‚£000 Cash flow from operating activities Cash flow from 9,278 (1,595) 8,165 operations Interest paid (14) (8) (47) Tax paid (5,967) (3,717) (8,968) Net cash from 3,297 (5,320) (850)operating activities Cash flows from investing activities Purchase of (188) (65) (253) property, plant and equipment Purchase of (35,298) (3,503) (41,727) financial investments Sale of property, 29 - 9 plant and equipment Sale of financial 26,698 14,431 116,309 investments Net cash from (8,759) 10,863 74,338investing activities Cash flows from financing activities Equity dividends (7,002) (6,338) (9,945)paid Return of cash (96,234) - - Increase/ (108,698) (795) 63,543(decrease) in cash and cash equivalents Opening cash and 189,392 124,807 124,807cash equivalents Effect of exchange rates and revaluation on cash and cash (759) (981) 1,042equivalents Closing cash and 79,935 123,031 189,392cash equivalents NOTES TO THE FINANCIAL STATEMENTS NOTE 1 - GENERAL INFORMATION The information for the year ended 31st December, 2005 does not constitutestatutory accounts as defined in Section 240 of the United Kingdom CompaniesAct 1985. Comparative figures for 31st December, 2005 are taken from the fullaccounts, which have been delivered to the Registrar of Companies and containan unqualified audit report. NOTE 2 - BASIS OF ACCOUNTING This statement has been prepared using accounting policies and presentationconsistent with those applied in the preparation of the accounts for theCompany for the year ended 31st December, 2005 and in accordance withInternational Accounting Standard 34 'Interim Financial Reporting'. NOTE 3 - FINANCIAL INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH PROFIT AND LOSS Six months to 30th Six months to Year to 31st June, 2006 30th June,2005 December,2005 ‚£000 ‚£000 ‚£000 Opening 187,875 200,468 200,468valuation Additions at 35,298 3,503 41,727cost Disposals (18,077) (13,741) (100,277) Appreciation 15,788 43,577 45,957 Closing 220,884 233,807 187,875valuation 'Other financial investments' comprise the Company's valuation of itsinvestment as a Special Limited Partner in managed funds. NOTE 4 - RECONCILIATION OF MOVEMENTS IN EQUITY Six months to Six months to Year to 31st 30th June, 2006 30th June 2005 December 2005 ‚£000 ‚£000 ‚£000 Opening total 380,261 320,928 320,928equity Total recognised 27,887 47,401 69,278income and expenses Return of cash (101,313) - - Dividends (7,002) (6,338) (9,945) Closing total 299,833 361,991 380,261equity NOTE 5 - RETURN OF CASH During the period, the Company undertook a return of cash of ‚£100 million,equivalent to 457p per ordinary share whereby existing shareholders wereentitled to receive one B share or one C share for each ordinary share held bythem on 5th May, 2006. The B shares were redeemed one day after their issueand B shareholders received a redemption payment of 457p plus an amount inrespect of accrued dividend for each B share. A purchase offer was made forthe C Shares on 10th May, 2006 by JPMorgan Cazenove for 457p plus an amount inrespect of accrued dividend for each C share. C shareholders could choose notto accept the purchase offer in respect of some or all of the C shares whichthey had received. The number of B shares created and redeemed was 10,491,231. The number of Cshares created and purchased for cancellation was 10,271,924, with a further1,093,460 of C shares created and still outstanding. The total costs,inclusive of advisors' fees, were ‚£101.3 million. No share consolidation wasundertaken and as a result the number of ordinary shares in issue wasunchanged. ENDCANDOVER INVESTMENTS PLCRelated Shares:
CDI.L