Interim Results
December 22 2003 - 6:06AM
UK Regulatory
RNS Number:5449T
Inflexion PLC
22 December 2003
22 December 2003
INFLEXION PLC
INTERIM RESULTS
for the six months ended 30 September 2003
Inflexion is an AIM traded private equity investment company. Inflexion
primarily invests its funds in unquoted companies that offer the potential for
substantial capital gains. The particular emphasis of Inflexion is on buy-outs
of profitable businesses in the UK mid-market.
Business and financial highlights:
* First closing of Inflexion Private Equity Fund 2, a UK mid-market
buy-out fund, in June 2003 and acquisition of Guinness Flight VCT advisory
contract in July 2003 bring private equity funds under management to about
#60 million. Fees in respect of these funds will make a significant
contribution to costs;
* Completion of first transaction from Inflexion Private Equity Fund 2,
with the buy-out of the Ster Century chain of UK multiplex cinemas;
* Appointment of Andrew Shaw as non-executive Chairman, and Andrew Burns
as non-executive director;
* Operating loss for the period to 30 September reduced to #688,000,
compared with #1,036,000 in the first six months of last year;
* Net loss of #2.1 million after provisions of #1.5 million against
investments;
* Net assets of #13.4 million, including cash reserves of #9.5 million.
Inflexion Chairman, Andrew Shaw, commented:
"The Group completed two key initiatives in this period, namely the first
closing of Inflexion Private Equity Fund 2 and the acquisition of the Guinness
Flight VCT advisory contract; Fund 2 has already made its first investment.
Although the further write-down of investments is disappointing, the additional
funds under management will make a contribution to operating costs and should
strengthen the Company's position in the private equity investment market."
For further information, please contact:
Inflexion 020 7487 9888
Simon Turner/John Hartz
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby
Freida Moore
Investors may wish to visit Inflexion Private Equity's website,
www.inflexion.com
Joint CEOs' statement
The past six months has been an active period for the Group, as a number of
corporate and strategic initiatives have been brought to completion.
In June we achieved the successful first closing of #26 million for Inflexion
Private Equity Fund 2, an institutional fund which invests in buy-outs at the
smaller end of the UK mid-market. Inflexion made a commitment of #7.5 million
to the fund, alongside other leading European institutional investors. This
first closing was achieved despite difficult fund-raising conditions facing the
private equity market in general. We are hopeful of achieving a larger final
closing in due course.
Shortly after announcing the fund's closing, its first investment was completed,
the #22 million buy-out of the UK multiplex cinema operation, Ster Century (UK)
Limited. Ster owns and operates seven state-of-the-art multiplex cinemas
located in integrated retail and leisure centres at six sites in the UK and one
in Dublin. Ster currently owns 87 screens with its most recent cinema opening
in April 2003 in Cardiff's Millennium Plaza.
During the period we also established Inflexion Portfolio Advisers as a separate
division of Inflexion, run by Gordon Power, a highly experienced investor who
ran ProVen for 15 years. Portfolio Advisers provides management services to
existing private equity funds, where investors are seeking a change of approach
or the existing manager is unwilling or unable to continue. In July Portfolio
Advisers acquired the management company with the contract to advise the
Guinness Flight VCT plc, a #21 million investment trust invested in UK mid-size
unquoted companies.
Finally, in September of this year, we were pleased to welcome Andrew Shaw and
Andrew Burns to the board of Inflexion as non-executive Chairman, and
non-executive director respectively. Andrew Shaw was formerly a corporate
finance director at Schroders and then finance director of Arjo Wiggins
Appleton; he is currently a director of British Linen Advisers. Andrew Burns is
currently finance director of Luminar Leisure plc, having before that been with
Rank. Our thanks go to the outgoing non-executive directors, Michael Freeman
(the previous chairman) and Tim Hely Hutchinson, who have provided valuable
insight to the board in the period since the flotation in April 2000.
Investment review
As noted above, in July 2003 Fund 2 completed its first transaction acquiring
with co-investors a 75% interest in Ster Century. As an investor in this fund,
Inflexion has acquired an effective 12% interest in Ster Century at a cost of #1
million.
As previously reported, in 2002 Inflexion acquired a controlling interest in
Micronics Telesystems Limited (trading as Brainstorm), in order to effect a
change of strategy and to align overheads with projected revenues. Having
secured key contracts with both Vodafone and AOL in the period of our control,
we sought a strategic partner to acquire the business. In July 2003 the
business was merged with Opera Telecom, and the Company now has a minority stake
in Opera. Opera is a provider of SMS premium services and is profitable.
We have reviewed the holding cost of all of our investments in accordance with
the valuation guidelines published by the British Venture Capital Association in
July 2003. We have chosen not to increase the valuation of our interest in Ster
but have made provisions of #1.5 million against our other interests.
Financial summary
The management fees arising from the closing of Inflexion Private Equity Fund 2
and the acquisition of the Guinness Flight VCT advisory contract are shown as
turnover from June and July respectively, and we are pleased to record increased
operating income arising from directors and transaction fees. Administrative
costs were 13% lower than the previous period, and other income increased. As a
result we are pleased to show reducing operating losses.
Inflexion's net asset value at 30 September 2003 was #13.4 million after a loss
on ordinary activities of #2.1 million, inclusive of investment provisions of
#1.5 million.
Outlook
The business has taken significant steps in the last six months. We are now
actively seeking strong investment opportunities for the new fund.
Unaudited consolidated profit and loss account for the six month period from 1
April 2003 to 30 September 2003
Audited Unaudited Unaudited
31-Mar 30-Sep 30-Sep
2003 2003 2002
#'000 Note #'000 #'000
- Turnover 131 -
- Cost of sales - -
- Gross profit 131 -
(2,173) Administrative expenses (967) (1,111)
133 Other operating income 148 75
(2,040) Operating loss (688) (1,036)
463 Interest receivable and similar income 168 238
(2,796) Amounts written off investments (1,540) -
(1) Interest payable and similar charges (5) -
(4,374) Loss on ordinary activities before taxation (2,065) (798)
- Tax on loss on ordinary activities - -
(4,374) Loss for the financial period (2,065) (798)
- Dividends - -
(4,374) Retained loss for the financial period (2,065) (798)
Loss per ordinary share
(7.18)p - basic and fully diluted 3 (3.39)p (1.31)p
Unaudited consolidated balance sheet as at 30 September 2003 (unaudited)
Audited Unaudited Unaudited
31-Mar 30-Sep 30-Sep
2003 2003 2002
#'000 Note #'000 #'000
Fixed assets
155 Tangible assets 152 193
3 Investments - interests in own shares 3 3
3,910 Investments 3,841 6,203
- Goodwill 4 790 -
4,068 4,786 6,399
Current assets
258 Debtors 536 204
100 Investments - -
11,439 Cash at bank and in hand 9,450 12,741
11,797 9,986 12,945
(365) Creditors: amounts falling due within one year (662) (268)
11,432 Net current assets 9,324 12,677
15,500 Total assets less current liabilities 14,110 19,076
Creditors: amounts falling due after more than
- one year 4 (675) -
15,500 Net assets 13,435 19,076
Capital and reserves
654 Called up share capital 654 654
34,386 Share premium account 34,386 34,386
(19,540) Profit and loss account - deficit (21,605) (15,964)
15,500 Total equity shareholders' funds 13,435 19,076
Unaudited consolidated cash flow statement for the six month period from 1 April
2003 to 30 September 2003
31-Mar 30-Sep 30-Sep
2003 2003 2002
#'000 Note #'000 #'000
(1,908) Net cash flow from operating activities a (651) 985)
Returns on investment and servicing of finance
463 Interest received 168 238
(1) Interest paid (5) -
462 Net cash inflow from returns on investment and 163 238
servicing of finance
Capital expenditure and financial investment
(5) Purchase of tangible fixed assets (30) (5)
- Sale of tangible fixed assets 12 -
(910) Purchase of fixed asset investments (1,371) (307)
- Sale of fixed asset investments - -
(915) Net cash outflow for capital expenditure and (1,389) (312)
financial investment
Acquisitions
- Bank overdraft acquired with subsidiary (112) -
- Equity dividends paid - -
(2,361) Net cash flow before financing and management of (1,989) (1,059)
liquid resources
Management of liquid resources
20 Decrease in short term deposits with banks 100 -
(2,341) Decrease in net cash b (1,889) (1,059)
Notes to the unaudited consolidated cash flow statement for the six month period
from 1 April 2003 to 30 September 2003
a. Reconciliation of operating loss to net cash flow from operating activities
#'000 Continuing Operations #'000 #'000
(2,040) Operating loss (688) (1,036)
76 Depreciation 33 38
- Amortisation of goodwill 72 -
2 (Profit)/loss on sale of fixed assets (12) 2
(66) Increase in debtors (202) (12)
120 Increase in creditors 146 23
(1,908) Net cash outflow from continuing operations (651) (985)
b. Reconciliation of net cash flow to movement in net funds
#'000 #'000 #'000
13,800 Net funds brought forward 11,439 13,800
(2,341) Decrease in net cash (1,889) (1,059)
(20) Movement in deposits (100) -
11,439 Net funds carried forward 9,450 12,741
NOTES TO THE INTERIM REPORT
1. Basis of preparation
The interim financial information, which has been neither audited nor reviewed
by the Company's auditors, has been prepared on the basis of the accounting
policies set out in the Group's statutory accounts for the financial period
ending 31 March 2003 with the exception of the policy relating to goodwill, (see
note 4). The preceding unaudited financial information does not constitute
statutory accounts as defined in Section 240 of the United Kingdom Companies Act
1985. The comparative financial information for the financial period ending 31
March 2003 is based on the statutory accounts dated 22 August 2003. These
accounts, upon which the auditors have issued an unqualified opinion, have been
delivered to the Registrar of Companies.
The Group owns certain investments that the Companies Act 1985 requires to be
treated as associated undertakings and therefore accounted for using the equity
method of accounting. The directors believe that equity accounting for such
investments that fall within the definition of associated undertakings would not
give a true and fair view of the value generated from the investment activities
of the Company, since that is better measured by the inclusion of profits or
losses on disposal of such investments in the profit and loss account.
Accordingly all investments have been recorded at cost irrespective of whether
they fall within the definition of an associated undertaking. This treatment
which requires a true and fair override of the Companies Act 1985 is permitted
by paragraph 49 of FRS 9 - Associates and Joint Ventures.
2. Statement of total recognised gains and losses
A statement of total recognised gains and losses is not provided as there were
no gains and losses recognised in the period ended 30 September 2003 other than
the losses as set out above.
3. Loss per share
As is required by Financial Reporting Standard 14, the shares of the Employee
Benefit Trust are excluded from the calculation of basic and fully diluted loss
per share. The loss per share has been calculated on this basis, based upon the
loss after tax for the period of #2,065,000.
4. In July 2003, the Company acquired GP Private Equity Limited which has the
investment advisory contract for Guinness Flight VCT, a #21 million venture
capital trust. In consideration the Company issued long term loan notes
totalling #599,000 and assumed net liabilities of #263,000. As a result the
Company recognised goodwill of #862,000, which is being amortised over a three
year period.
5. The interim results were approved by the Board on 22 December 2003.
This information is provided by RNS
The company news service from the London Stock Exchange
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