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Better Capital’s 2009 Cell makes good progress but 2012 Cell disappoints

Better Capital PCC has announced its final results for both its 2009 cell and 2012 cell for the year ended 31 March 2016. The company says that the 2009 Cell made good progress during the year and that this was mainly driven by Gardner’s sustained solid performance. It also says that the disposal of Santia, delivering net proceeds at around the Interim Results NAV level, enabled the Company to make a third capital distribution to the 2009 Cell Shareholders. Overall the 2009 cell provided a 6.45% annualised NAV total return.

The company says that the 2009 Cell NAV, including accumulated distributions of £61.7m (29.4 per cent. of funds raised) rose by £14.3m, 5.0% in the year to £303.1m. This was after accounting for the net carry provision of £19.1m. The 2009 Cell NAV including accumulated distributions rose by £12.4m, 4.3% since the Interim Report. This was after accounting for a £12.0m movement to the net carry provision. The company says that Gardner continues to grow from strength to strength operationally and financially, and dominates the 2009 Cell NAV. The company says that lead advisers were appointed in Q1 2016 to manage its exit and the Board has been informed that exit preparations are well underway. It says that early indications are that the asset is generating strong global interest. The sale of Santia completed in December 2015 for an EV of £47.0m to Alcumus, a business backed by Inflexion Private Equity. The company say that this is Fund I’s first major profitable exit and that it achieved a money multiple of 2.8 times with an IRR of 25.8% on exit. Initial net proceeds of £38.7m were received, of which £35.3m was repaid to the 2009 Cell and £35.2m distributed to the 2009 Cell Shareholders in January 2016. In September 2015, Fund I disposed of its equity interest in Fairline to Wessex Bristol for a £2.0m secured deferred consideration. The company say that, following the new owner’s failure to adequately fund Fairline, the business entered into administration in December 2015. However, they say that Fund I, as secured creditor to the business, has to date received net proceeds of £3.5m with a further £0.2m recognised as a fund receivable. The company also say that there has been a high level of activity under the new management team in Omnico and that the closure of the loss-making Hardware division which completed in Q1 2016 has enabled Omnico to generate monthly profits and that this is expected to continue into the future.

The company say that it is disappointed that the 2012 Cell has a decline of £15.7 million or 5.8% to its NAV since the Interim Report.  In the year, the 2012 Cell NAV, including accumulated distributions of £6.1 million (1.7 per cent. of funds raised), declined by £92.3 million from £346.0 million to £253.7 million, principally due to write downs in Everest, SPOT, CAV Aerospace and Jaeger, offset by a write up in iNTERTAIN.  The 2012 Cell NAV summary is set out below.

The company says that, following a period of profitable growth, it is disappointed to observe a further mark down in Everest. It says that the weakness in trading in 2015 has had a significant bearing on the write-down in the business and continued to impact performance in early 2016. However, it says that a new senior team was installed in January 2016 and has already made good progress. In contrast SPOT, which was written down in the Interim Report, is performing broadly to expectations in the current year. The company says that, whilst sales growth continues to be a key focus, the business has made significant inroads to improve operationally and these projects have delivered substantial savings. iNTERTAIN, which operates predominantly the Walkabout late-night venues, has reportedly enjoyed a strong year under Fund II’s ownership. The company says that, unencumbered from certain loss-making venues following a Company Voluntary Arrangement (CVA) in February 2015, the business has been able to invest into the existing estate and acquire additional sites. These new investments have reportedly performed to expectation. The company says that the Board has been informed that CAV Aerospace has made good progress, both operationally and financially but from a very weak position. The business’s key customers have remained supportive; however, discussions around the legacy loss-making contracts are still being addressed.  Further funding in the near term is not anticipated.  A substantial warranty claim is underway.

Better Capital’s 2009 Cell makes good progress but 2012 Cell disappoints : BCAP, BC12

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