Interim Results
PANTHEON INTERNATIONAL PARTICIPATIONS PLC (`PIP')
CHAIRMAN'S STATEMENT
The global private equity industry continued to be strong in the first half of
our financial year with a high level of realisations producing good returns for
investors in many private equity funds. PIP, with its portfolio of investments
in a wide range of high quality funds, has benefited from this market
environment and has seen its Net Asset Value per share increase in the six
months to 31 December by 16.9% to 768.9p. This performance was due primarily to
an increase in the value of PIP's private equity investments, driven
principally by good realisations, and, to a lesser extent, to the beneficial
effect on the portfolio of the 4.2% appreciation of the US dollar, which
affected approximately 60.8% of the private equity assets.
In the first half our ordinary share price moved in line with Net Asset Value
increasing by 16.3% to 756.5p at 31 December 2005. Our total assets rose in the
period by £53.6 million to £435 million.
Investment Activity
The six months to end December 2005 was an outstanding period for realising
value from the private equity market. The total amount of cash distributed to
PIP as a result of investment realisations during the period was £79.3 million.
This is a record level of distributions for PIP in any six month period since
inception and follows on from the £90.1 million received in the twelve months
to 30 June 2005. These high levels of distributions reflect the maturity of
PIP's underlying portfolio.
PIP has also been investing actively in the six months to end December 2005.
The total amount of cash PIP invested in private equity assets during the
period was £59.8 million, of which £26.8 million was paid to meet investment
calls within PIP's primary portfolio with the balance applied to the secondary
portfolio.
Secondary Commitments
During the six months to end December 2005 PIP committed £39.2 million to
acquiring secondary interests in private equity funds. The majority of these
funds were mature US venture funds. PIP's manager, Pantheon, believes that some
portfolios of venture funds represent attractive investments at this stage of
the investment cycle. The ability to purchase secondaries allows PIP to invest
in more mature assets.
Primary Commitments
Gaining access to the best private equity funds continues to be a major issue
for many private equity investors. Pantheon's global expertise and longstanding
relationships have enabled PIP to gain access to many of the invitation-only
private equity funds that have been fundraising in 2005.
The amount of capital committed to primary funds during the six months to end
December 2005 was £71.8 million. PIP continues to diversify across leading
private equity managers and over the period made commitments to six US buyout
funds, two US venture capital funds, two US special situations fund, three
European buyout funds and one European special situations fund. In order to
continue to be able to reinvest the growing level of distributions received
from PIP's private equity portfolio, the Board has increased the rate that PIP
will commit to primary funds from £300 million to £450 million over a
three-year period.
Market Review & Prospects
The global private equity market has continued to grow over the six months to
end December 2005. Buyout managers have been active in making new investments,
fund-raising has continued to rise and exits have been strong, aided by the
favourable debt markets and strong global stock markets. Venture markets are
showing signs of renewed life, evidenced by a number of prominent trade sales
and successful IPOs. PIP's exposure to venture capital funds should prove
beneficial if this early promise continues.
The outlook for 2006 is positive, with private equity funds expected to carry
on returning money to their investors as a result of sales, recapitalisations
and IPOs thereby making good returns for their investors. Low interest rates
and supportive debt markets continue to stimulate the buyout and M&A markets.
Fundraising is expected to continue at a high level in 2006.
Whilst the current environment of rising company valuations is beneficial for
adding value at the point of an exit, it also leads to an increase in the
average price paid for new investments. It is therefore important to select
fund managers that are able to maximise the value received at exit whilst
maintaining the necessary discipline when making new investments.
PIP's manager continues to see a wide range of portfolios through the secondary
market and, although prices being paid have firmed over recent months, has been
able to identify value in a number of select portfolios that PIP has been able
to purchase.
Capital Structure
Due to better than expected distributions received from PIP's portfolio, the
Board decided to release some of its surplus cash by redeeming £10m of
redeemable shares in November 2005. The ability to deploy cash through
investment or redemptions is advantageous in ensuring that PIP does not suffer
from performance drag created by holding excessive amounts of cash.
Tom H. Bartlam
15 March 2006
STATEMENT OF TOTAL RETURN OF THE COMPANY (unaudited)
(incorporating the revenue account*)
for the six months to 31 December
2005 Restated
2004
Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
Gains on investments ** - 63,428 63,428 - 5,210 5,210
Currency timing - 352 352 - 421 421
differences
Income
Income 3,541 - 3,541 864 - 864
Investment management (2,367) - (2,367) (1,829) - (1,829)
fee
Other expenses (547) (56) (603) (503) - (503)
Return on ordinary 627 63,724 64,351 (1,468) 5,631 4,163
activities before
financing costs and tax
Interest payable and (431) - (431) (560) - (560)
similar charges
Return on ordinary 196 63,724 63,920 (2,028) 5,631 3,603
activities before tax
Tax on ordinary - (247) (247) (2) (44) (46)
activities
Return on ordinary 196 63,477 63,673 (2,030) 5,587 3,557
activities after tax
Earnings per ordinary 110.43p 5.15p
and redeemable share -
basic
Earnings per PLN N/A 8.49p
All revenue and capital items in the above statement relate to continuing
operations.
* The total column of this statement represents the Company's profit and loss
statement prepared in accordance with UK Accounting Standards. The
supplementary revenue return and capital columns are both prepared under
guidance published by the Association of Investment Trust Companies.
** Includes currency movements on investments.
SUMMARISED BALANCE SHEET OF THE COMPANY (unaudited)
As at 31 As at 30 As at 31
Dec 2005 June 2005 Dec 2004
£'000 £'000 £'000
Investments at fair value * 422,143 371,950 279,571
Investment in subsidiary undertaking - 1 1
Net current assets/(liabilities) 12,991 9,537 (31,642)
TOTAL ASSETS LESS CURRENT LIABILITIES 435,134 381,488 247,930
CAPITAL AND RESERVES 435,134 381,488 247,930
Total net assets for the purpose of
calculating
the net asset value per share 435,134 381,488 247,930
Net asset value per share - basic 768.9p 657.9p 579.0p
Number of ordinary shares in issue 26,471,013 26,471,013 26,471,013
Number of redeemable shares in issue 30,117,964 31,513,199 16,353,199
* Includes fixed interest investments held for cash management purposes.
SUMMARISED STATEMENT OF CASHFLOWS (unaudited)
For the six For the six
months to months to
31 December 2005 31 December 2004
£'000 £'000
Net cash inflow/(outflow) from operating 231 (791)
activities
Servicing of finance
Interest paid (6) (50)
Loan commitment and arrangement fees (132) (177)
paid
Redeemable shares commitment fees paid (252) -
PLN commitment fees paid - (500)
Net cash outflow from servicing of (390) (727)
finance
Taxation
Withholding tax suffered on limited (247) (2)
partnership distributions
Net cash outflow from taxation (247) (2)
Capital expenditure and financial
investment
Purchases of investments (63,012) (77,549)
Purchases of government securities (140,327) -
Disposals of investments 77,572 36,799
Disposals of government securities 136,645 -
Realised currency gains/(losses) 73 (26)
Net cash inflow/(outflow) from capital 10,951 (40,776)
expenditure and financial investment
Financing
Cost of issue of ordinary and redeemable - (500)
shares
Payments to buy back redeemable shares (10,000) -
Drawdown of bank credit facility - 35,488
Net cash (outflow)/ inflow from (10,000) 34,988
financing
Increase/(decrease) in cash 545 (7,308)
These accounts have been prepared using accounting standards and policies
adopted at the year-end except as explained below.
This interim report has been prepared using new accounting standards, which
have been issued to begin the process of converging UK standards with
International Financial Reporting Standards ('IFRS'). The applicable standards
that have been adopted by the Company with effect from 1 July 2005 are FRS 21
Events after the Balance Sheet Date; FRS 22 Earnings per share, FRS 23 The
Effects of Changes in Foreign Exchange Rates, FRS 25 Financial Instruments:
Disclosure and Presentation, FRS 26 Financial instruments: Measurement and FRS
28 Corresponding Amounts.
All investments held by the Company are classified as 'fair value through
profit or loss'. For investments actively traded in organised financial
markets, fair value is generally determined by reference to Stock Exchange
quoted market bid prices at the close of business on the balance sheet date.
For investments that are not actively traded on organised financial markets,
fair value is determined using reliable valuation techniques as described in
detail in the Company's last Annual Report. There is no material effect on the
portfolio as a result of this change.
Under FRS 25, Participating Loan Notes (PLNs) have been classified as equity.
The revaluation of PLNs in the period to 31 December 2004, is now treated as an
allocation of profits. This has no effect on the return to ordinary and
redeemable shareholders. As the PLNs were converted to ordinary and redeemable
shares on 20 September 2004, there is no restatement effect to the Balance
Sheet at 31 December 2005, 30 June 2005 or 31 December 2004.
This interim statement is not the Company's statutory accounts. The statutory
accounts for the year ended 30 June 2005 have been delivered to the Registrar
of Companies and received an audit report which was unqualified, did not
include a reference to any matters to which the auditors drew attention by way
of emphasis without qualifying the report, and did not contain statements under
section 237(2) and (3) of the Companies Act 1985.
The results for the six months to 31 December 2005 have been reviewed by the
Company's auditors and their report is attached.
Signed on behalf of the Board
Tom H. Bartlam
Chairman
INDEPENDENT REVIEW REPORT TO PANTHEON INTERNATIONAL PARTICIPATIONS PLC
Introduction
We have been instructed by the Company to review the financial information,
which comprises the statement of total return, the balance sheet, the cash flow
statement and the related notes that have been reviewed for the six months to
31 December 2005. We have read the other information contained in the interim
report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information. This report is made
solely to the company having regard to guidance contained in Bulletin 1999/4
'Review of interim financial information' issued by the Auditing Practices
Board. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company, for our work, for this report,
or for the conclusions we have formed.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by, the directors. The directors
are responsible for preparing the interim report in accordance with the Listing
Rules of the Financial Services Authority. The directors are also responsible
for ensuring that the accounting policies and presentation applied to the
interim figures are consistent with those applied in preparing the preceding
annual accounts except where any changes, and the reasons for them, are
disclosed.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/
4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of management and applying
analytical procedures to the financial information and underlying financial
data and, based thereon, assessing whether the disclosed accounting policies
have been consistently applied, unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
and therefore provides a lower level of assurance. Accordingly we do not
express an audit opinion on the financial information.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31 December 2005.
RSM Robson Rhodes LLP
Chartered Accountants
London, England
15 March 2006
Latest directors dealings
- 2 hours ago Urban Logistics Reit
- 2 hours ago Ocado Group
- 2 hours ago AJ Bell
- 2 hours ago Foresight Enterprise VCT
- 2 hours ago Mitie Group