25 September 2008
EQUITY PRE IPO INVESTMENTS LIMITED
("Pre IPO" or "the Company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2008
Equity Pre Ipo Investments Limited (AIM: EIL), the strategic
Pre-IPO investment company, today announces its unaudited results for the six
months ended 30 June 2008.
DIRECTORS' REVIEW
We are pleased to present the Company's interim results for the six
months to 30 June 2008 to shareholders.
Background
In the annual report and accounts issued earlier this year, we
stated that the environment for smaller companies has been unfavourable for
many months. As has been well documented elsewhere, the environment for
floating smaller companies has worsened further as evidenced by the lowest
number of new companies being admitted to AIM in the first half of 2008 for
almost 10 years. In the first eight months of 2008, only 85 companies joined
AIM, compared to 284 during 2007, 462 in 2008 and 519 in 2005. In addition the
current economic environment has meant that it is proving very difficult for
smaller companies to raise new funds. Banks are generally unwilling to provide
debt finance and there are few investors interested in providing equity
finance.
We took the prudent view to write down a significant proportion of
the carrying value of our portfolio at the end of 2007 (�4.1 million). Our
portfolio companies have continued to operate successfully and, therefore,
whilst we have struggled to achieve realisations from our investments we have
taken the view that there should be no material changes to the valuations at
30 June 2008 (�4.0 million).
Financial review and net asset value
The Company's unaudited net asset value per share ("NAV") as at 30
June 2008 stood at 27.18 pence, down marginally from 28.56 pence at 31
December 2007. The fall is primarily due to exchange rate differences on
conversions of euro investments and the ongoing running costs incurred in the
first half year of �0.19 million.
Despite the lack of exit opportunities currently available due to
the current difficulties in the financial markets, we remain confident of the
current carrying value of the investment portfolio as each of the businesses
continue to trade in line with their management's expectations.
Loss for the period was �0.18 million (2007: �0.15 million),
resulting in a loss per share of 1.38 pence (2007: 1.09 pence). We managed
only a small partial exit from one investment during the period and, as a
consequence, the Company's ongoing overheads have been primarily paid through
an increase in the value of loans payable at the year end to �0.54 million
(2007: �0.50 million). One of our goals for the second half of the year is to
reduce the value of the Company's borrowings through further partial
realisations or loan conversions.
Investee Companies
The Company continues to hold investments in six companies (31
December 2007: six), although shortly after the period end, one of the
companies, Pinnacle Plus Limited, was sold to an AIM listed company, Creon
Corporation plc ("Creon") in an all paper deal. Accordingly, we today have
five unquoted investments and one quoted investment in the portfolio. In
addition we continue to have a loan outstanding with Pinnacle Plus Limited and
are in conversations with Creon and Pinnacle about the most appropriate way to
achieve its repayment.
Lorega Limited, a provider of loss recovery insurance products
continues to trade well with record profits recorded in the period to March
2008. Altair Financial Services Plc, the prepaid card processer, remains on
course to deliver significant uplifts in revenues during 2009 as a number of
key international contracts begin to be rolled out.
Of the remaining three investments, we are currently in
negotiations to dispose of one, which could realise a potential return of more
than 50% on the original amount invested of �185,000. (It should be noted,
however, that Pre-IPO made its first investment in this company in early
2005.) We continue to hold our positions in Radioscape plc and Fashion Brands
Collections B.V.
Outlook
We anticipate that stock market conditions will remain very
difficult for smaller companies in the foreseeable future. We will however
continue to work closely with our investee companies with the aim of
extracting value over the coming months from our investments. Since the period
end, we have continued negotiations to dispose of parts of the portfolio and,
as a result, we remain confident that we will be able to reduce our loan
balances by the year end.
UNAUDITED STATEMENT OF TOTAL RETURN
FOR THE SIX MONTHS ENDED 30 JUNE 2008
For the six month period For the six month period For the year ended
ended 30 June 2008 ended 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
� � � � � � � � �
GAINS ON INVESTMENTS
Net (losses)/gains on
investments
at fair value through
profit or loss - (10,252) (10,252) - 11,254 11,254 - (3,279,261) (3,279,261)
Unrealised gain on foreign
exchange - - - - - - 14,163 - 14,163
- (10,252) (10,252) - 11,254 11,254 14,163 (3,279,261) (3,265,098)
INCOME
Commission received - - - 1,200 - 1,200 1,200 - 1,200
Interest income 20,858 - 20,858 1,724 - 1,724 22,219 - 22,219
20,858 - 20,858 2,924 - 2,924 23,419 - 23,419
EXPENDITURE
Directors' fees 10,000 - 10,000 10,000 - 10,000 20,000 - 20,000
Administration fees 32,189 - 32,189 28,016 - 28,016 43,530 - 43,530
Professional fees - 14,040 14,040 - 65,848 65,848 26,738 10,667 37,405
Consultancy fees - 75,011 75,011 - 39,343 39,343 - 183,768 183,768
Audit fee 1,500 - 1,500 6,555 - 6,555 12,930 - 12,930
Bank charges and
interest 202 - 202 800 - 800 - - -
Interest charged 16,892 - 16,892 - - - 20,418 - 20,418
Commission paid - - - - - - 3,256 - 3,256
Regulatory and
registration fees 11,238 - 11,238 3,110 - 3,110 19,097 - 19,097
Loss on exchange 32,807 - 32,807 7,594 - 7,594 - - -
104,828 89,051 193,879 56,075 105,191 161,266 145,969 194,435 340,404
NET LOSS ON ORDINARY
ACTIVITIES FOR THE
FINANCIAL
PERIOD/YEAR (83,970) (99,303) (183,273) (53,151) (93,937) (147,088) (108,387) (3,473,696) (3,582,083)
Basic earnings per share
(pence per share) (0.63) (0.75) (1.38) (0.40) (0.69) (1.09) (0.82) (26.24) (27.06)
All revenue and capital items in the above statement derive from continuing
operations.
No operations were acquired or discontinued during the period.
UNAUDITED BALANCE SHEET
30 JUNE 2008
30 June 2008 30 June 2007 31 December 2007
(unaudited) (unaudited) (audited)
FIXED ASSETS
Investments at fair value through
profit or loss 4,037,543 7,077,739 4,093,423
CURRENT ASSETS
Loans receivable 230,000 80,000 230,000
Other debtors and prepayments 39,970 - 21,202
Cash equivalents 1,664 85,130 6,651
271,634 165,130 257,853
CREDITORS - AMOUNTS FALLING
DUE WITHIN ONE YEAR
Loans payable (541,257) - (496,269)
Other creditors and accruals (170,010) (52,794) (73,824)
(711,267) (52,794) (570,093)
NET CURRENT ASSETS (439,633) 112,336 (312,240)
TOTAL ASSETS LESS CURRENT
LIABILITIES � 3,597,910 � 7,190,075 � 3,781,183
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 132,372 132,372 132,372
SHARE PREMIUM ACCOUNT 4,254,872 4,254,872 4,254,872
CAPITAL RESERVE
REALISED 527,566 452,906 520,093
UNREALISED (613,470) 2,853,967 (595,745)
SHARE OPTION RESERVE 33,680 4,811 33,680
REVENUE RESERVE (737,110) (508,853) (564,089)
SHAREHOLDERS' FUNDS � 3,597,910 � 7,190,075 � 3,781,183
Net asset value per share
(pence per share) 27.18 54.32 28.56
APPROVED BY THE BOARD OF DIRECTORS
P M Schreibke M Shires
Director Director
Date: 25 September 2008
UNAUDITED CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2008
Six month Six month Year ended
period ended period ended 31 December
30 June 2008 30 June 2007 2007
(unaudited) (unaudited) (audited)
Net cash outflow from operating
activities (95,603) (199,394) (235,176)
Investing activities:
Purchase of quoted investments - - -
Purchase of unquoted investments - (731,910) (1,466,394)
Proceeds from disposals of quoted investments - 938,930 985,498
Proceeds from disposals of unquoted investments 45,628 - 378,950
Loans receivable advanced - - (230,000)
Net cash inflow/(outflow) from financial investment 45,628 207,020 (331,946)
Financing:
Loans payable received 44,988 - 496,269
Net cash inflow from financing 44,988 - 496,269
(Decrease)/increase in cash for the period/year � (4,987) � 7,626 � (70,853)
RECONCILIATION OF NET CASHFLOW
TO MOVEMENT IN CASH
AND CASH EQUIVALENTS
(Decrease)/increase in cash resources for the year (4,987) 7,626 (70,853)
Cash inflow from increase in debt finance (44,988) - (496,269)
Change in net debt resulting from cash flows (49,975) 7,626 (567,122)
Opening funds brought forward (489,618) 77,504 77,504
Closing net (debt)/funds carried forward � (539,593) � 85,130 � (489,618)
NOTES TO THE UNAUDITED FINANCIAL STATEMENTS
30 JUNE 2008
1. ACCOUNTING POLICIES
(a) CONVENTION
These unaudited interim financial statements have been prepared
using the same accounting policies, presentation and
methods of computation adopted in the last audited financial
statements, which were prepared in accordance with applicable
United Kingdom Accounting Standards.
2. 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 shares
being the weighted average number of shares in issue during the period/year.
FRS 22: "Earnings Per Share" defines dilution as a reduction in
earnings per share or as an increase in loss per share. When
calculating the dilutive earnings per share for the year the loss
per share decreased. Accordingly the diluted loss per share is not
disclosed as per FRS 22. The company has 800,000 share options in
issue which could potentially dilute basic earnings per share
in the future.
3. NET ASSET VALUE PER SHARE
The calculation of net asset value per share is based on the net
assets of �3,597,910 and on the ordinary shares in issue of
13,237,235 at the balance sheet date.
The report is available to view and download from the Company's website at
www.equitypreipo.com
For further information please contact:
Equity Pre-IPO Investments Limited
Paul Schreibke +44 (0)1481 751 000
Jonathan Freeman +44 (0) 20 752 0215
Daniel Stewart & Company Plc
Oliver Rigby +44 (0)207 776 6550
GTH Communications
Toby Hall +44 (0)20 7153 8039
Christian Pickel +44 (0)20 7153 8036
END
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