RNS Number:4918E
Equity Pre-IPO Investments Ltd
26 September 2007
26 September 2007
EQUITY PRE-IPO INVESTMENTS LIMITED
("Pre IPO" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Equity Pre-IPO Investments Limited, (AIM :EIL), the pre-IPO investment company,
is pleased to announce its unaudited results for the six months ended 30 June
2007. Some additional information is also provided for the period up to 14
September 2007.
Period end highlights:
* NAV of 54.32 pence at 30 June 2007
* Flotations of two investee companies in second half of year progressed:
financial advisors appointed and timetables set
Post period highlights:
* Successful exit from one unquoted investment since 30 June 2007 for a profit
of 34% on the amount invested
* Five investments held as at 14 September 2007, all of which are unquoted
* Net asset value per share of 55.27 pence as at 14 September 2007 Martin
Shires, Director of Pre IPO, commented:
"As a result of the progress that has been made with our investment portfolio
since the beginning of the year we are very excited about the next twelve
months, in particular the prospect of further material uplifts in investee
company valuations and the flotation and realisation of a number of existing
investments. We believe that Pre IPO's business model is now a proven one and we
look forward to the next phase in the Company's growth with confidence."
For a complete set of Interim Statements, or for further information on the
Company please go to www.equitypreipo.com
For further information:
Martin Shires, +44 (0)1481 751 000
Director, Equity Pre-IPO Investments Limited
Paul Schreibke +44 (0)1481 751 000
Director, Equity Pre-IPO Investments Limited
John Riddell +44 (0)20 7763 2200
Noble & Company Limited
GTH Communications +44 (0)20 7153 8035
Toby Hall/Jade Mamabachi
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2007
Directors Review
We are delighted to present our interim results to shareholders, showing the
financial performance of the Company from 1 January 2007 to 30 June 2007. In
addition we have included some further information for the period up to 14
September 2007.
Net Asset Value
The Company's Net Asset Value ("NAV") per share as at 14 September 2007 stood at
55.27 pence. This compares with an NAV as at 31 December 2006 of 55.37 pence
per share. Whilst there has been little change in the NAV so far this year we
are working with our portfolio of investee companies very closely in order to
ensure that there is either an exit from our investment in the near term or else
a strategic plan that will ultimately generate an exit for us. The investment
strategy of Pre IPO is such that the NAV will often experience periods of
minimal movement followed by one off events that trigger material changes.
Investments
We stated in our annual report for the year to 31 December 2006 that our focus
for 2007 is the partial or complete exit from companies within our portfolio.
We set ourselves a target of the flotation of at least two companies from the
portfolio during 2007 and to increase the portfolio of investee companies to
ten.
We are delighted to be able to report that since the period end we have
completed the trade sale of Combimeer NV for a profit which equates to a return
of 34% on the amount invested. We are also working closely with two other
investee companies regarding their flotation - one on to AIM and one on to the
Plus Market. Both these companies have appointed their financial advisors and
have a timetable for completion of their respective flotations before the end of
2007. These flotations are, of course, subject to a number of matters and their
success may be impacted by the uncertainties being experienced in the markets at
the moment. We continue to work closely with our three other existing
investments with a view to securing a planned exit route for our investments.
In addition, since the period end, we participated in a fund raising for one new
investment. We have invested a total of Euro600,000 into Fashion Brands
Collections B.V. Fashion Brands is a Dutch based private company which holds
the exclusive rights to operate ELLE branded stores throughout Europe and the
Middle East selling ELLE's day wear collection, "pret-a-porter". Fashion Brands
was granted the rights from Hachette Filipacchi Presse SA ("HFP"), the Paris
based ultimate owner of ELLE magazine worldwide. ELLE is amongst the world's
largest fashion magazines, with 39 editions printed globally of which 24 are
printed in Europe and the Middle East. HFP has been extremely successful in
leveraging the strength of the ELLE brand in related markets having granted
approximately 150 licences and generating some $1.0 billion consumer annual
turnover.
Fashion Brands began operations last year and is forecast to have more than 15
stores open and operational across Europe before the end of 2007 Fashion Brands
designs the bi-annual collections in-house with its team of talented and up and
coming designers and outsources its manufacturing to high quality third parties.
ELLE branded stores are operated by sub-licencees of Fashion Brands and are
obliged to only sell clothing designed by Fashion Brands. We have been working
with the management of Fashion since March 2007 and are delighted to have made
this investment.
Therefore as of 14 September 2007 we held investments in a total of 6 unquoted
companies.
Funding
We are increasingly concerned that our inability to raise additional funds for
the Company will have a detrimental effect on the continued progress and
development of the Company. We have discussed and explored a number of ways to
increase the amount of capital available but to date have not succeeded in this
regard. We are continuing to explore a number of avenues which include raising
further equity capital and combining with other complementary organisations. We
believe that we will need to reach a resolution on this issue during 2007 and
will keep shareholders informed of any progress.
Outlook
As a result of the progress that has been made with our investment portfolio
since the beginning of the year we are very excited about the next twelve
months, in particular the prospect of further material uplifts in investee
company valuations and the flotation and realisation of a number of existing
investments. We believe that Pre IPO's business model is now a proven one and we
look forward to the next phase in the Company's growth with confidence.
Martin Shires
Paul Schreibke
EQUITY PRE-IPO INVESTMENTS LIMITED
STATEMENT OF TOTAL RETURN
FOR THE SIX MONTHS ENDED 30 JUNE 2007
For the six month For the six month For the year ended
period period
ended 30 June 2007 ended 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
Note Revenue Capital Total Revenue Capital Total Revenue Capital Total
# # # # # # # # #
GAINS ON INVESTMENTS
Net realised gains - 11,254 11,254 - 535,241 535,241 - 115,845 115,845
Net (decrease)/increase in
reserve for - 2,766 2,766 - (524,863) (524,863) - 1,759,775 1,759,775
unrealised gains
- 14,020 14,020 - 10,378 10,378 - 1,875,620 1,875,620
INCOME 2
Investment income - - - - - - - - -
commission received 1,200 - 1,200 - - - - - -
Loan interest
received - - - - - - 432 - 432
Bank interest 1,724 - 1,724 781 - 781 1,477 - 1,477
2,924 - 2,924 781 - 781 1,909 - 1,909
EXPENDITURE 2
Directors' fees 10,000 - 10,000 10,000 - 10,000 20,000 - 20,000
Administration fees 28,016 - 28,016 30,707 - 30,707 49,498 - 49,498
Professional fees - 65,848 65,848 - 37,645 37,645 42,862 14,609 57,471
AIM admission expenses - - - - - - - - -
Consultancy fees - 34,532 34,532 - 94,672 94,672 - 171,961 171,961
Share based payments - 4,811 4,811 - - - - - -
Audit fee 6,555 - 6,555 5,650 - 5,650 9,300 - 9,300
Bank charges and interest 800 - 800 3,273 - 3,273 2,074 - 2,074
Interest - other - - - - - - 2,124 - 2,124
Commission paid - - - 3,288 - 3,288 3,288 - 3,288
Sundry expenses - - - 3,100 - 3,100 - - -
Regulatory and
registration fees 3,110 - 3,110 12,705 - 12,705 18,046 - 18,046
Unrealised loss on foreign
exchange 7,594 - 7,594 - - - - - -
56,075 105,191 161,266 68,723 132,317 201,040 147,192 186,570 333,762
NET RETURN ON ORDINARY
ACTIVITIES FOR THE FINANCIAL
PERIOD/YEAR (53,151) (91,171) (144,322) (67,942) (121,939) (189,881) (145,253) 1,689,050 1,543,797
Return per share
- basic and diluted
(pence per share) (0.40) (0.69) (1.09) (0.51) (0.92) (1.43) (1.10) 12.76 11.66
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
A reconciliation of movements in shareholders' funds is set out in note 13 to the financial statements.
EQUITY PRE-IPO INVESTMENTS LIMITED
BALANCE SHEET
30 JUNE 2007
Note 30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
FIXED ASSETS
Quoted investments 4 - 1,102,261 918,000
Unquoted investments 5 7,077,739 4,559,876 6,352,739
7,077,739 5,662,137 7,270,739
CURRENT ASSETS
Loans receivable 80,000 - -
Cash at bank and broker 85,130 2,319 77,504
165,130 2,319 77,504
CREDITORS - AMOUNTS FALLING
DUE WITHIN ONE YEAR
Sundry creditors 8 (52,794) (68,548) (18,657)
NET CURRENT ASSETS 112,336 (66,229) 58,847
TOTAL ASSETS LESS CURRENT LIABILITES # 7,190,075 # 5,595,908 # 7,329,586
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 10 132,372 132,372 132,372
SHARE PREMIUM ACCOUNT 4,254,872 4,254,872 4,254,872
CAPITAL RESERVE
REALISED 11 452,906 533,637 546,843
UNREALISED 11 2,853,967 1,053,418 2,851,201
SHARE OPTION RESERVE 4,811 - -
REVENUE RESERVE 11 (508,853) (378,391) (455,702)
SHAREHOLDERS' FUNDS 12 # 7,190,075 # 5,595,908 # 7,329,586
Net asset value per share
(pence per share) 7 & 15 54.32 42.27 55.37
APPROVED BY THE BOARD OF DIRECTORS
P Schreibke M Shires
Director Director
25 September 2007
EQUITY PRE-IPO INVESTMENTS LIMITED
CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30
JUNE 2007
Six month Six month Year ended
period ended period ended 31 December
30 June 2007 30 June 2006 2006
(unaudited) (unaudited) (audited)
Notes
Net cash outflow from operating activities 9 (199,394) (159,889) (341,344)
Investing activities:
Purchase of quoted investments - - -
Purchase of unquoted investments (731,910) (837,825) (1,833,741)
Proceeds from disposals of quoted
investments 938,930 898,365 2,150,921
Net cash inflow/(outflow) from financial
investment 207,020 60,540 317,180
(Decrease)/increase in cash resources for the
period/year # 7,626 # (99,349) # (24,164)
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS
(Decrease)/increase in cash resources for the
period/year 7,626 (99,349) (24,164)
Opening net funds 77,504 101,668 101,668
Closing net funds # 85,130 # 2,319 # 77,504
NOTES TO THE FINANCIAL STATEMENTS
30 JUNE 2007
1. ACCOUNTING POLICIES
(a) CONVENTION
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments and in accordance
with applicable accounting standards and with the Statement of Recommended
Practice "Financial Statements of Investment Trust Companies" issued by The
Association of Investment Trust Companies in December 2005. The principal
accounting policies which the directors have adopted within that convention are
set out below.
(b) INCOME
Dividends receivable from quoted equity investments are recognised on the
ex-dividend date. Dividends receivable from equity investments where no
ex-dividend date is quoted are recognised when the Company's right to receive
payment is established. Interest receivable on cash deposits is accounted for
on an accruals basis.
(c) FOREIGN CURRENCY TRANSLATION
Assets and liabilities denominated in foreign currencies other than sterling
have been translated into sterling at the rates of exchange ruling at the
balance sheet date. Transactions during the period have been translated at the
rates of exchange ruling at the date of the transaction.
(d) VALUATION OF INVESTMENTS
Quoted investments are valued at bid price.
Unquoted investments are valued by the Board according to the valuation
principles of the European Private Equity and Venture Capital Association as
set out in the International Private Equity and Venture Capital Valuation
Guidelines (Published June 2005, amended October 2006) and accordingly are
stated at the value of their latest third party funding. Where no third party
funding has taken place, they are valued at cost, less a provision for
impairment when necessary.
Realised gains or losses on the disposal of investments are taken to the capital
reserve - realised. Unrealised gains or losses on revaluation of investments
are taken to the capital reserve - unrealised.
(e) EXPENDITURE
All expenses are accounted for on an accruals basis. Expenses are charged
through the Statement of Total Return except where the expense is incidental to
the acquisition or disposal of an investment in which case the expense is added
to the cost of the investment or deducted from the sale proceeds.
Expenses that are directly attributable to the management of investments are
allocated directly to capital in the Statement of Total Return. With the
Directors' long term target for returns on investments being entirely capital
gain there is no requirement to apportion these expenses between revenue and
capital.
2. TAXATION
The company has been granted exempt status under the Income Tax (Exempt Bodies)
(Guernsey) Ordinance 1989, and is therefore subject to the payment of an annual
fee which is currently #600.
3. QUOTED INVESTMENTS 30 June 2007 30 June 2006 31 December 2006
(unaudited) (unaudited) (audited)
At cost # - # 1,140,270 # 920,246
At market value # - # 1,102,261 # 918,800
4. UNQUOTED INVESTMENTS
At cost # 4,223,773 # 3,648,449 # 3,499,293
At Directors' valuation # 7,077,739 # 4,559,876 # 6,352,739
5. EARNINGS PER SHARE
The calculation of basic earnings per share is based on the net return on
ordinary activities after tax for the year and on 13,237,235 (six month period
ended 30 June 2006: 13,237,265, year ended 31 December 2006: 13,237,235) shares
being the weighted average number of shares in issue during the year.
The calculation of diluted earnings per share is based on the net return on
ordinary activities after tax for the year and on 13,237,235 (six month period
ended 30 June 2006: 13,237,235, year ended 31 December 2006: 13,237,235) shares
being the weighted average number of shares in issue during the year adjusted
for any dilutive effect of the share options.
6. NET ASSET VALUE
The calculation of net asset value is based on the net assets of #7,190,075 (30
June 2006: #5,596,908, 31 December 2006: #7,329,586) and on the ordinary shares
in issue of 13,237,235 (30 June 2006:13,237,235, 31 December 2006: 13,237,235)
at the balance sheet date.
7. SUNDRY CREDITORS 30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
Audit fees 3,625 1,000 4,650
Consultancy / directors 11,524 45,546 -
fees
Professional fees 3,122 12,945 7,500
Administration fees 34,523 9,057 6,507
# 52,794 # 68,548 # 18,657
8. RECONCILIATION OF REVENUE RETURN TO OPERATING CASH FLOW
30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
Net return on ordinary activities for
the
financial period before (53,151) (67,942) (145,253)
taxation
Expenses charged to capital (105,191) (132,317) (186,570)
(Increase) in debtors (80,000) - -
Increase in creditors 34,137 40,370 (9,521)
Share based payments 4,811 - -
Net cash outflow from operating # (199,394) # (159,889) # (341,344)
activities
9. CALLED UP SHARE CAPITAL 30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
Authorised
50,000,000 ordinary shares of #0.01 each # 500,000 # 500,000 # 500,000
Allotted and fully paid
13,237,235 ordinary shares of #0.01 each # 132,372 # 97,833 # 132,372
10. SHARE PREMIUM ACCOUNT
As at 1 January 2007 and at 30 June 2007 # 4,254,872
11. RESERVES Capital Capital Share Revenue
Reserve Reserve Option Reserve Total
- Realised - Reserve
Unrealised
Balance at 1 January 2007 546,843 2,851,201 - (455,702) 2,942,342
Net Return for the financial period (105,191) - - (53,151) (158,342)
Net realised gains/ 11,254 - - - 11,254
(losses)
Net unrealised gains/ - 2,766 - - 2,766
(losses)
Share based payments - - 4,811 - 4,811
Balance at 30 June 2007 452,906 2,853,967 4,811 (508,853) 2,802,831
12. RECONCILIATION OF MOVEMENTS IN
SHAREHOLDERS' FUNDS 30 June 2007 30 June 2006 31 December
2006
(unaudited) (unaudited) (audited)
Net return for the financial period/year (144,322) (253,750) 1,479,928
Dividends paid (net) - - -
(144,322) (253,750) 1,479,928
Net proceeds of new share capital
subscriptions - - -
-
Net (reduction in)/addition to shareholders'
funds - - -
Opening shareholders' funds 7,329,586 5,849,658 5,849,658
Closing shareholders' funds # 7,185,264 # 5,595,908 # 7,329,586
13. RELATED PARTY TRANSACTIONS
On 9 February 2005 and as disclosed in the AIM Admission Document dated 18
February 2005, Combined Management Services Limited ("CMS") entered into a
services agreement with the Company under the terms of which CMS agreed to
provide research, consultancy, office management and administration services to
the Investment Advisory Panel.
A total of #22,502 has been paid to CMS for the period to 30 June 2007 (#101,601
for the year to 31 December 2006). Jonathan Freeman owns 50% of CMS.
14. SHARE OPTIONS
At 30 June 2007 the number of ordinary shares of 1 pence each subject to options
granted under the Company's Share Option Plan were:
Exercise Exercise At January 2006 Grants Options At 30
Period Price per during exercised June
Share No. year No. No. 2007 No.
30 November 2007 - 26.0 pence Nil 50,000 Nil 50,000
30 May 2017
1 December 2007 - 26.0 pence Nil 750,000 Nil 750,000
1 June 2017
The Binomial formula is the option pricing model applied to the grant of all
options in respect of calculating the fair value of the options.
There were no market conditions within the terms of the grant of the options.
The main vesting condition for all the options awarded was that the consultant
remained employed within the Company at the date of exercise.
For the granting of options during the six month period ended 30 June 2007, the
following inputs have been used:
Six month period ended
30 June 2007
Number of shares under options 800,000
Share price at grant 22.1 pence
Option exercise price 26.0 pence
Expected life of options 3.5 years
Expected volatility 23.70%
Risk free rate 5.66% p.a.
Grant date 50,000 on 30 May 2007
750,000 on 1 June 2007
Fair value per share under option 4.21 pence
Total expected charge over the vesting period 33,680.00
The share-based remuneration charge comprises:
Period ended Year ended
30 June 2007 31 December 2007
Share-based payments #4,811 #Nil
15. FINANCIAL INSTRUMENTS
(i) Management of risk
The Company's financial instruments comprise:
- Equity shares that are held in accordance with the Company's investment
objective as set out in the Director's Statement - Cash and short term
debtors and creditors that arise directly from the Company's operations.
The main risks arising from the Company's financial instruments are due to
fluctuations in market prices, foreign exchange rates and
interest rates. The Board regularly reviews and agrees policies for managing
each of these risks and they are summarised below. These policies have remained
constant throughout the period under review.
Market price risk
Market price risk arises mainly from uncertainty about the future prices of
financial instruments used in the Company's operations. It represents the
potential loss the Company might suffer through holding market positions in the
face of price movements and movements in exchange rates. The Company's assets
comprise mainly investments in smaller, unquoted businesses which, by their
nature, tend to be
more fragile than larger, longer established businesses. In addition these
investments may include fast-growing companies undergoing significant change
which are, therefore, usually exposed to greater risks than lower growth
businesses. The Company's unquoted investments may therefore change in nature
quickly with such changes not being reflected in the Company's valuation of
investment.
It is the Board's policy to hold an appropriate spread of investments in the
portfolio in order to reduce risk arising from factors specific to a particular
country or sector. The allocation of assets to international markets and stock
selection are other factors which act to reduce market price risk. The
Investment Advisory Panel monitor market prices throughout the year and report
to the Board, which meets regularly to consider investment strategy.
Foreign currency risk
The Company's total return and net assets can be significantly affected by
fluctuations in foreign currency exchange rates because a portion of the
Company's assets and revenue are denominated in currencies other than sterling.
The Board carefully monitors the Company's exposure to exchange risk and if it
feels it necessary will utilise appropriate hedging strategies.
Liquidity risk
Liquidity risk is the risk that the Company will encounter in realising assets
or otherwise raising funds to meet its financial commitments. The Company's
assets comprise mainly investments in smaller, unquoted businesses which, by
their nature are difficult to realise. There is therefore a risk that the
Company may not be able to exit from an investment to meet a financial liability
or to fund further investment, when such an opportunity arises. Accordingly the
Company is generally able to use its non-cash assets to fund the Company's
on-going activities until an exit can be achieved. The Diretors carefully
monitor the ongoing working capital requirements of the Company and seek to
ensure that there is sufficient cash resources to meet the liabilities of the
Company as they arise.
The Company places funds with authorised deposit takers from time to time and is
therefore potentially at risk from the failure of any such institution of which
it is a creditor. The company expects to place any deposits on a short term
basis and where possible with more than one institution to reduce its credit
risk.
(ii) Interest rate risk of financial assets
The majority of the Company's financial assets are equity shares and other
investments which neither pay interest nor have a stated maturity date.
(iii) Currency exposure
A portion of the financial assets of the of the company are denominated in
currencies other than sterling with the effect that the net assets and total
return can be significantly affected by currency movements.
30 June 2007 Currency Investments Cash at bank Total
Euro # 269,040 # - # 269,040
US Dollar # - # 212 # 212
31 December 2006 Currency Investments Cash at bank Total
Euro # 276,470 # - # 276,470
US Dollar # - # 371 # 371
(iv) Fair values of financial assets
All of the financial assets of the Company are held at fair value, as shown in
notes 3 and 4.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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