RNS Number:6646R
Equity Special Situations Limited
23 September 2005
For release 23 September 2005
EQUITY SPECIAL SITUATIONS LIMITED
UNAUDITED INTERIM RESULTS
FOR THE 6 MONTHS TO 30 JUNE 2005
Equity Special Situations Limited ("ESS"), the AIM-quoted strategic investment
company, is pleased to announce its unaudited results for the six month period
from 1 January 2005 to 30 June 2005. Additional information is also provided
for the period up to the 23 September 2005.
Highlights
* Significant rise in NAV to 250 pence per share as at 23 September 2005
* Successful spin off of Syndicate Asset Management plc into an independent
company quoted on AIM
* #680,000 raised from the issue of new shares
* Investments currently held in seven companies
* A healthy pipeline of new investment proposals is in place
Peter Griffin, a Director of ESS, commented:
"Our overall aim with ESS is to identify and invest in exciting investment
opportunities. Most investments are actively managed in their early stages with
the intention that they will become independent and self supporting over time.
This investment strategy is now beginning to create value for ESS which is
reflected in the increase in our NAV. We are very excited both by the
investments now held by ESS and by a number of potential investment
opportunities that we are currently working on. I look forward to giving further
updates on our progress with these opportunities in due course."
-ends-
For further information:
Peter Griffin, +44 (0) 1481 751000
Director, Equity Special Situations Limited
Justin Griffiths +44 (0) 20 7638 9571
Citigate Dewe Rogerson
Alasdair Robinson +44 (0) 131 225 9677
Noble & Company
EQUITY SPECIAL SITUATIONS LIMITED
UNAUDITED INTERIM RESULTS
FOR THE PERIOD FROM 1 JANUARY 2005
TO 30 JUNE 2005
Directors Review
We are delighted to present this interim report to shareholders. The following
pages show the financial performance of the Company for the period 1 January
2005 to 30 June 2005. In addition we have included information for the period
up to the 23 September 2005.
During the course of this year we have devoted considerable time to the creation
of a new company called Syndicate Asset Management plc ("SAM"). An outline of
the strategy to be pursued by SAM was provided in an RNS announcement on 10th
June 2005 and an update on progress made by SAM was provided on 9th September
2005. We are now delighted to be able to report that SAM's ordinary shares were
today admitted to trading on AIM, with the opening share price for SAM being
113.5 pence per share. We now regard SAM as an independently managed company in
which ESS is a passive shareholder and owns 20 million shares.
On 1 January 2005 our Net Asset Value ("NAV") per share was 17.49 pence. We
have now begun to profit from investments made with the result that, as of 30
June 2005, the NAV was 22.05 pence per share and as of 31 August 2005 it had
risen to 81.53 pence per share. Due to the fact that ESS owns 20 million shares
in SAM the NAV as of 23 September 2005 is 250 pence per share. This increase in
the NAV represents a rise of approximately 1329% over the nearly nine month
period from 1 January 2005.
Funding
We have raised 3 tranches of equity finance during the first six months of this
year totalling approximately #680,000. In addition we have, when necessary,
used short term debt finance facilities. We have tended to operate with a low
cash balance in order that our funds are concentrated on investments. This
does, however, mean that there are often potential investments that we would
like to make but which we decline because of a lack of uncommitted cash
resources. The Directors continue to monitor the funding of ESS and intend to
seek to provide access to a larger pool of funding in the future.
Investments
Our investment strategy is to seek out ideas and companies which will provide a
material uplift in valuation to an investment made by ESS. We often combine an
investment into a company with management and infrastructure assistance,
particularly when we are helping in the creation of a start up. A good example
of this strategy, and the rewards that can be generated from it, is Syndicate
Asset Management plc. This was originally an idea that was developed and
supported by ESS. That idea turned into a business plan and was then formalised
by the creation of a wholly owned subsidiary company in March 2005. ESS
provided the initial funding for SAM and continued to provide its directors and
consultants to SAM in order to generate the necessary momentum for the project.
SAM has now raised its own finance (#33 million) from third party investors,
appointed its own board of directors and has successfully floated on to AIM,
having made a recommended cash offer for Ashcourt Holdings plc. We believe
that the work carried out by ESS in relation to the creation of SAM is now
complete and ESS will therefore be a passive shareholder of SAM going forward.
This effort by ESS is being repeated for a number of other projects, some of
which have included the purchase of shares and others which are, at this stage,
the provision of consultants paid for by ESS.
As at 23rd September 2005 ESS held investments in seven companies. The best
performing investment is SAM with the unrealised return being considerable. Of
the remaining six investments 2 are privately held companies and four are quoted
on AIM. We are very pleased with the commercial progress of all these companies
but have not re-valued the privately held companies as no third party investment
into these companies has occurred since ESS invested. All our investments have
achieved considerable commercial progress over the last few months and we are
expecting their valuations to rise further and so provide ESS with further
returns on investment.
We continue to receive a variety of high quality potential investments that meet
with ESS's investment criteria and to work hard on a number of projects. We are
therefore very excited about the future for ESS for both our existing
investments and our future potential investments.
Peter Griffin
Michael Cahill
23 September 2005
EQUITY SPECIAL SITUATIONS LIMITED
UNAUDITED STATEMENT OF TOTAL RETURN
FOR THE PERIOD 1 JANUARY 2005 TO 30 JUNE 2005
For the period 16 July 2004
to 31 December 2004
Note Revenue Capital Total Revenue Capital Total
# # # # # #
GAINS ON INVESTMENTS
Net realised gains/(losses) - 10,067 10,067 - (68,624) (68,624)
Net unrealised gains - 118,912 118,912 - 43,567 43,567
128,979 128,979 (25,057) (25,057)
INCOME
Investment income - - - - - -
Bank interest 1,534 - 1,534 841 - 841
1,534 - 1,534 841 - 841
EXPENDITURE 1
Directors' fees 2,000 - 2,000 1,667 - 1,667
Administration fees - 28,567 28,567 - 28,398 28,398
Professional fees 33,879 - 33,879 29,033 114,437 143,470
AIM admission expenses - - - 213,857 - 213,857
Consultancy fees - 39,683 39,683 - 8,500 8,500
Audit fee 2,500 - 2,500 5,000 - 5,000
Bank charges and interest 994 - 994 15,361 - 15,361
Loan interest payable 4,525 - 4,525 5,973 - 5,973
Loss/(profit) on exchange 534 - 534 (712) - (712)
44,432 68,250 112,682 270,179 151,335 421,514
NET RETURN ON ORDINARY (42,898) 60,729 17,831 (269,338) (176,392) (445,730)
ACTIVITIES FOR THE
FINANCIAL PERIOD
Return per share - basic 4 (0.48)p 0.68p 0.20p (3.6p) (2.3p) (5.9p)
and diluted
EQUITY SPECIAL SITUATIONS LIMITED
UNAUDITED BALANCE SHEET
30 JUNE 2005
Note 31 December 2004
FIXED ASSETS
Quoted investments 3 1,714,737 1,217,862
Unquoted investments 147,500 -
1,862,237 1,217,862
CURRENT ASSETS
Cash at bank and broker 339,004 49,465
Sundry debtors 6 - 426,358
339,004 475,823
CREDITORS - AMOUNTS FALLING
DUE WITHIN ONE YEAR
Sundry creditors 22,000 14,747
Loan payable 7 - 174,668
22,000 189,415
NET CURRENT ASSETS 317,004 286,408
TOTAL ASSETS LESS CURRENT LIABILITES # 2,179,241 # 1,504,270
CAPITAL AND RESERVES
CALLED UP SHARE CAPITAL 9 98,839 86,000
SHARE PREMIUM ACCOUNT 10 2,508,301 1,864,000
CAPITAL RESERVE
REALISED 11 (278,142) (219,959)
UNREALISED 11 162,479 43,567
REVENUE RESERVE 11 (312,236) (269,338)
SHAREHOLDERS' FUNDS 12 # 2,179,241 # 1,504,270
Net asset value per share 5 22.05p 17.49p
EQUITY SPECIAL SITUATIONS LIMITED
UNAUDITED CASH FLOW STATEMENT
FOR THE PERIOD 1 JANUARY 2005 TO 30 JUNE 2005
16 July 2004 to
Notes 31 December 2004
Net cash outflow from operating 8 (23,005) (486,816)
activites
Investing activities:
Purchase of listed securities 8 (99,141) (1,280,060)
Purchase of unlisted securities (202,575) -
Proceeds from disposals of listed 87,208 1,323,311
securities
Proceeds from disposals of unlisted 62,000 -
securities
Net cash flow from financial investment (175,513) (443,565)
Financing:
Loan received/(repaid) (174,668) 174,668
Issue of own shares 8 658,387 318,362
Forestdale commission (18,667) -
# 289,539 # 49,465
Increase in cash resources # 289,539 # 49,465
EQUITY SPECIAL SITUATIONS LIMITED
NOTES TO THE UNAUDITED INTERIM FINANCIAL STATEMENTS
30 JUNE 2005
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 January 2003. 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 middle market prices. Unquoted investments are valued
by the Board according to the valuation principles of the British Venture Capital
Association. 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
revenue account 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 charged
directly to the capital account. With the Directors' long term target for returns on
investments being entirely capital gain there is no requirement to apportion these
expenses between the revenue and capital account.
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 31 December 2004
At cost # 1,552,258 # 1,174,295
At market value # 1,714,737 # 1,217,862
4. The calculation of basic earnings per share is based on the loss on ordinary activities after
tax for the period and on 8,915,180 shares being the weighted average number of shares in
issue during the period.
The calculation of diluted earnings per share is based on the loss on ordinary activities
after tax for the period and on 8,915,180 shares being the weighted average number of shares
in issue during the period adjusted for dilutive effect of the share options mentioned in note
8.
5. The calculation of net asset value is based on the net assets of #2,179,241 and on the
ordinary shares in issue of 9,883,888 at the balance sheet date.
6. SUNDRY DEBTORS 31 December
2004
Unpaid share subscriptions (690,936 shares at 50 - 345,468
pence)
Amount due from broker - 80,890
# - # 426,358
7. LOAN PAYABLE
Loan payable # - # 174,668
The loan payable is unsecured repayable on demand and bears interest at 3% above the base rate
of Barclays Bank plc.
The loan was repaid in full with accrued interest on 3 May 2005.
8. RECONCILIATION OF REVENUE RETURN ON ORDINARY ACTIVITIES BEFORE TAXATION TO NET
CASH FLOW FROM OPERATING ACTIVITIES
31 December
2004
Net return on ordinary (42,898) (269,338)
activities for the
financial period before taxation
Expenses charged to capital (68,250) (151,335)
(Increase)/decrease in debtors 80,890 (80,890)
Increase in creditors 7,253 14,747
Net cash outflow from operating # (23,005) # (486,816)
activities
(b) Significant non-cash transactions
During the period the company accepted equities in lieu of share subscriptions totalling
#362,888.
9. CALLED UP SHARE CAPITAL 31 December
2004
Authorised
50,000,000 ordinary shares of # 500,000 # 500,000
#0.01 each
Allotted and fully
paid
9,883,888 ordinary shares of #0.01 # 98,839 # 79,091
each
Allotted and unpaid
690,936 ordinary shares of #0.01 # # 6,909
each -
On 12 April 2005 46,921 ordinary shares of #0.01 each were issued at a premium of #0.54 each
ranking pari passu with the existing shares in issue.
On 6 May 2005 777,831 ordinary shares of #0.01 each were issued at a premium of #0.50425 each
ranking pari passu with the existing shares in issue.
On 7 June 2005 459,136 ordinary shares of #0.01 each were issued at a premium of #0.5345 each
ranking pari passu with the existing shares in issue.
10. SHARE PREMIUM ACCOUNT
Balance at 1 January 2005 1,864,000
Premium on new share issues 662,968
Commission on new issues (18,667)
# 2,508,301
11. RESERVES Capital Capital Revenue
Reserve Reserve Reserve Total
- Realised - Unrealised
Balance at 1 January 2005 (219,959) 43,567 (269,338) (445,730)
Net Return for the financial period (68,250) - (42,898) (111,148)
Net realised gains/(losses) 10,067 - - 10,067
Net unrealised gains - 118,912 - 118,912
Balance at 30 June 2005 # (278,142) 162,479 (312,236) (427,899)
12. RECONCILIATION OF MOVEMENTS IN
SHAREHOLDERS' FUNDS 31 December
2004
Net Return for the financial period 17,831 (445,730)
Dividends paid (net) - -
17,831 (445,730)
New share capital subscribed 675,807 1,950,000
Commission on new subscriptions (18,667) -
Net addition to shareholders' 674,971 1,504,270
funds
Opening shareholders' funds 1,504,270 -
Closing shareholders' funds # 2,179,241 # 1,504,270
This information is provided by RNS
The company news service from the London Stock Exchange
END
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