St Helens Private Equity Plc

November 28, 2008 06:08 ET

Final Results for the year ended 30 September 2008

                                                                                  28 November 2008

                                   ST HELEN'S PRIVATE EQUITY PLC
                                     ("SHPE" or "the Company")
                                        (PLUS SYMBOL: SHPE)

                        FINAL RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2008

St Helen's Private Equity Plc the Pre-IPO, Special Situations and 'Small cap' investment company
announces audited annual accounts for the year ended 30 September 2008.


Turnover:                                     GBP7,217 (2007: GBP54,668)
Total recognised loss for the year:           GBP737,749 (2007:gain GBP306,315)
Shareholder Funds:                            GBP808,313 (2007: GBP1,297,564)
Recognised loss per share:                    36.99p (2007: 14.64p gain)
Net Asset Value per share:                    48p (2007: 93p)
Number of investments:                        35 (2007: 35)


I am sorry to report the disappointing results for the year ended 30 September 2008, the Company's
third full year of operation.

The Company has made a post tax loss of GBP625,100 (2007: GBP204,760 profit)  for the full year
and net assets per share have decreased by 45p to 48p per share, which is a decrease of 48.39% for
the twelve months.

Shareholders funds have decreased by 37.71% during the period to GBP808,313.

Market Review

The 15 month period since the FTSE 100 index reached its recent peak of 6,700 in June 2007 has
been an extremely difficult one for the global financial markets. The period began with growing
concerns over the sub-prime mortgage market in the US, which led to a freezing up of the wholesale
money markets and the need for the nationalisation of Northern Rock. In more recent months the
situation has deteriorated into a dramatic loss of investor confidence, when some of the biggest
falls in a generation were recorded in stock markets around the world.

As a result of the turmoil in the global financial markets, there were substantial falls in the
indices we track the performance of our Net Asset Value against during the year. The performance
of these tracker indices were as follows:

FTSE 100 index           - 24.19%
AIM UK 50 Index          - 45.17%
AIM All-share Index      - 44.30%

Small companies are generally regarded as more vulnerable during recessionary times and as a
consequence their share prices often suffer more than those of larger more established
enterprises. This is one of the reasons for the much higher falls in the AIM indices.

Apart from the dramatic impact on valuations the change in market sentiment has had two other
major impacts on the market. Firstly, fundraising has become much more difficult with the result
that the number of Pre-IPO and other investment opportunities has decreased. Secondly IPO and
Trade sales have become much more difficult which has meant that the main exit routes for
investments are almost non-existent at present. In addition the weakening economy is creating a
more difficult trading environment for companies.

In summary the financial market background to the period was one of the most difficult since the
early 1970's and characterized by dramatic falls in valuations, reduced investment opportunities,
and reduced exit opportunities. At the same time the environment for young and early stage
businesses has become much more difficult as their access to equity and debt finance is reduced
and the challenges for winning customers and growing revenues increased.

Investment Performance Review

During the period the Net Asset Value of the Company decreased from 93p per share to 48p per

Where an underlying investment has a quoted share price this is used for valuation purposes. In
the week following our year end the market-makers marked down substantially the share prices on a
high number of PLUS-quoted companies and this has also been reflected in the valuation. Unquoted
investments are generally valued using their cost price, unless there has been a significant event
that justifies revaluation. The valuations of all our unquoted holdings were reviewed at 30
September 2008. A number of them were written down where it was felt a valuation at cost no longer
reflects the value of the investment on account of: fundraisings subsequent to SHPE's investment
at a lower valuation; the earnings forecast; the trading outlook; or the cash position of the

Although the underlying performance of the individual investments was mixed, the portfolio's
performance as a whole was similar to our AIM benchmark indices. Overall we suffered a decrease of

The Company suffered recognised loss relating to the year of GBP737,749. The Directors do not
recommend paying a dividend.

Investment Activity Review

At the start of the year the Company held thirty-five investments, eight of which traded on AIM,
eleven traded on PLUS, and the balancing sixteen were unlisted.

SHPE's strategy is to invest relatively short term, at the point in a business's development where
there is the greatest possible opportunity for value uplift; this is usually before or around the
time that the business undertakes an IPO. The Company then looks to exit investments subsequent to
this and recycle cash into new investments. In the second half of the year we were expecting two
major exits which would show good profits. One was the expected sale of our holding in a newly
listed oil company and the other was the proposed trade sale of an unquoted software company. In
the end neither exit materialised principally due to the dramatic fall in stock market prices and
trade sale valuations which meant that neither investment could be exited at a value which in our
view fairly reflected the true value of the underlying businesses.

The Company uses a number of strategies to manage the high risk nature of private equity and
'small cap' companies and reduce the impact of choosing companies that do not succeed, or indeed
fail completely. Firstly to diversify risk, we are seeking to increase the number of investments
in the portfolio to over forty holdings. Secondly we are targeting investments which have the
potential to show returns in excess of 30% per annum. With these strategies the Company aims to
maximise its exposure to high performing investments whose performance will substantially outweigh
the losses incurred on those investments which do not succeed.

Seven new investments and one follow-on investment were made during the year, and a total of three
investments were either partly or wholly divested. For the first time since inception we lost
three investments on account of companies going into administration.

During the year only one of the Pre-IPO investments, Cadogan Petroleum, was listed on the main

In terms of performance two of the three investments which were partly or wholly divested during
the period, outperformed expectations and realised both actual and annualized returns in excess of

During the period the Company raised GBP248,498 of new funds through the issue of 291,000 new
ordinary shares at 86p per share.

At the end of the year the Company held thirty five investments, one of which traded on the Main
market, six of which traded on AIM, nine traded on PLUS, and the balancing nineteen were unlisted.


There were no Board changes during the year.


In summary although the Company has had a difficult year its investment performance has been in
line with its benchmark indices.

The individual and overall performance of the exited investments during the period indicate that
the Company's investment strategies are capable of delivering above average returns.

The reduced availability of equity and debt finance coupled with a weak economy provides a
challenging trading outlook for small companies. Our business model assumes that a number of
investment will fail and the greater part of our performance is dependent on a small number of
investments being very successful and delivering exceptional returns. We believe that we have a
number of investments in the portfolio that are capable of delivering these exceptional returns.
The critical success factor for our future performance is that we do not lose too many of these
potential stars during the downturn.

It is anticipated that generating cash from exits may be difficult during the next 12 months. The
Company's cash holding of GBP117,000 at the Year End  represented approximately 14% of NAV and
provides us with some limited opportunity for additional investment. The Board would like to have
more funds available for investing in attractive propositions during the downturn, and accordingly
is considering raising additional investment capital. Further details will be announced on this in
the future.

The Directors continue to actively seek good investment proposals and believe that the current
market volatility and weakening economy should present an increasing number of good value
investment opportunities for the Company.

Jon Pither


The following details are extracted from St Helen's Private Equity Plc Report and Accounts for the
year ended 30 September 2008. The Auditors, H W Fisher & Company has audited these annual results.


                                                                                      YEAR              YEAR
                                                                                     ENDED             ENDED
                                                                                30-SEPT-08        30-SEPT-07
                                                                                       GBP               GBP
Turnover                                                                             7,217            54,668
Administrative expenses                                                           (84,546)         (147,926)
Operating Loss                                                                    (77,329)          (93,258)
Other income                                                                        39,466           489,925
Amounts written off investments                                                  (587,237)          (43,633)
Interest payable and similar charges                                                   -                 (6)
(Loss)/profit on ordinary activities before                                      (625,100)           353,028
Taxation                                                                               -           (148,268)
(Loss)/profit on ordinary activities after taxation                              (625,100)           204,760
Retained profit brought forward                                                    440,211            10,897
Prior year adjustment                                                            (165,755)         (122,686)
As restated                                                                        274,456         (111,789)
(Net deficit)/retained profit for the year                                       (625,100)           204,760
Transfers from revaluation reserve                                                   7,156           181,485
Retained (loss)/profit carried forward                                           (343,488)           274,456
(Loss)/earnings per share (pence)                                                 (36.99)p            14.64p

                                                                                     AS AT             AS AT
                                                                                30-SEPT-08        30-SEPT-07
                                                                                       GBP               GBP
FIXED ASSETS                                                                                                
Investments                                                                        711,514         1,303,035
CURRENT ASSETS                                                                                              
Debtors                                                                              7,117           124,578
Cash at bank and in hand                                                           116,962            65,403
CREDITORS: AMOUNTS FALLING DUE WITHIN ONE YEAR                                    (27,280)         (195,452)
NET CURRENT ASSETS/(LIABILITIES)                                                    96,799           (5,471)
TOTAL ASSETS LESS CURRENT LIABILITIES                                              808,313         1,297,564
CAPITAL AND RESERVES                                                                                        
Called up share capital                                                            101,378            83,918
Share Premium Account                                                            1,032,923           801,885
Revaluation Reserve                                                                 17,500           137,305
Profit & Loss Account                                                            (343,488)           274,456
SHAREHOLDERS' FUNDS                                                                808,313         1,297,564



ST HELEN'S PRIVATE EQUITY PLC          TEL: 020 7628 5582
Hamish Williams

FISHER CORPORATE PLC                   TEL: 020 7388 7000
Gary Miller

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  • St Helens Private Equity Plc