UK - Rutland Trust reports 2005 results

The majority of the Trust’s investments comprise the unlisted investments made through the Rutland Fund, which at 31 December 2005 comprised Wolstenholme Group, The Music Group, Carron Energy, Harvey & Thompson and Advantage Healthcare Group. The Trust’s directly held investments include its minority interest in Lindsey Morden Group Inc., a Canadian listed company, and the investment property of Rutland House.

In March 2005 Wolstenholme Group disposed of its Metasheen business for £22m. The net proceeds from the sale were used to repay third-party bank debt and make a distribution to the Fund’s investors. The Trust’s share of the distribution was £3.5m comprising a capital repayment of £1.6m and loan stock interest of £1.9m. Following the sale of Metasheen Rutland has been working with Wolstenholme’s management to restructure the business.

In June 2005 The Music Group (“TMG”) disposed of its Buffet Crampon business for EUR 37m. The proceeds were used to repay the remainder of its external group debt and make a distribution of £8m, of which the Trust’s share was a capital repayment of £3.8m. The remainder of the proceeds was retained by TMG to help finance and restructure Schreiber, its principal remaining business. Rutland continues to work with TMG’s management to build and ultimately release value from this business.

In August 2005 Rutland agreed the sale of Interfloor Group for £84.1m in a secondary buyout to European Acquisition Capital. Rutland formed Interfloor in May 2002 following the simultaneous acquisitions of Duralay from Cinven and Gates Consumer and Industrial from Tomkins Plc. The original acquisition was funded by an investment from the Fund of £21.2m, the Trust’s share of which was £9.6m (net of transaction costs). After repayment of outstanding bank debt, pension contributions and transaction-related costs, the proceeds distributed to Fund investors were £50m, the Trust’s net share of which was £22.5m.

In March 2005 the Fund completed the acquisition from BUPA of a group of temporary staffing businesses for the healthcare industry. The Fund invested through Advantage Healthcare Holdings Ltd, a new company managed by an experienced team from the healthcare-staffing industry. The total initial investment by the Fund was £5.5m of which the Trust’s share was £2.3m (net of transaction costs).

It was announced in October that Carron Energy had completed the introduction of £35m of new independent bank lending facilities, providing funds for capital expenditure, the build-up of working capital going into the winter period and collateral for sales contracts. In relation to the new bank facilities, Carron contracted for the forward-sale of approximately one third of its generating capacity for the next three years along with the fuel requirements for that generation. In addition, the forward-sale of a further one third was contracted for the first quarter of 2006. In light of this new financing and the forward-sales contracts, the Trust’s investment in Carron had been written up by £11.1m from £10.6m to £21.7m. Subsequently, the final turbine unit was returned to service in November, effectively completing the re-commissioning of the station. As a result of these developments, the Trust’s share of the investment in Carron has been written up at 31 December 2005 by a further £7.7m to £29.4m, making a total increase in valuation during the year of £18.8m. Following completion of the re-commissioning and interest received from several potential acquirers, the opportunity for an early realisation of this investment is currently being assessed.

In view of improved trading and a strong business performance resulting from the actions implemented over the last year, the Trust’s share of the investment in the pawnbroking group H&T Group has been written up by £6.6m from £8.3m to £14.9m.

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