1st Quarter Results

RNS Number : 4160M

F&C Private Equity Trust PLC

24 May 2010

 



To: Stock Exchange	For immediate release:
	24 May 2010

F&C Private Equity Trust plc

Quarterly results for the three months to 31 March 2010

 

·      Ordinary share price total return of 27.6 per cent

·      Fourth consecutive quarterly increase in the ordinary share NAV, up 1.7 per cent

·      Realisation of Entec, returns £3.0m, at a 2.0x multiple and 30% IRR

·      Diverse new investments across Europe and US

·      Scope for new investments and commitments

Manager's Review

Introduction

The valuation of the ordinary share pool at 31 March 2010 was £152.1 million, giving a fully diluted NAV per share of 208.3p, an increase over the quarter of 1.7 per cent.  The net assets of the restricted voting shares were £5.4m giving an NAV per share of 8.0p, an increase over the quarter of 6.3 per cent. The ordinary share pool had net cash of £7.6m and outstanding undrawn commitments at the end of March of £111m. The Company's revolving credit facility of £40m was completely undrawn.

New Investments

No new commitments were made to private equity funds or to co-investments during the quarter. There was an increase in new investment activity by the funds in the portfolio and a limited number of refinancings of certain co-investments.  Over the quarter total drawdowns amounted to £9.4m.  This was nearly double the quarterly run rate during 2009.  There has been an observable improvement in confidence and this has resulted in a number of new deals being completed.  The new investments covered a typically wide range of mid market companies.  It is worth highlighting the more notable ones.  £1.1m was drawn by August Equity II for investment in Active Assistance, a company which provides a national live-in care service for adults and children with spinal cord injuries and neurological conditions; this builds on August Equity's substantial expertise in the homecare market. TDR Capital II called £0.6m for VPS, a provider of products and services to protect vacated properties in Europe.  Piper Private Equity IV called £0.5m for investment in Weird Fish, a leading UK wholesaler of outdoor clothing.  Primary Capital III invested £0.5m in AMTECH Group, a producer of software and data services for the mechanical and electrical building services industry.  Further afield, Accession Mezzanine II has invested £0.4m in Masterlease Polska, one of the largest Polish leasing companies.  In the US our investment partners have also been active, with Camden Strategic Partners IV calling £0.8m for two investments; Patient Safe Solutions, a San Diego based patient safety and clinical quality solutions company, and The Princeton Review, a higher education support service company.  Blue Point Capital Partners invested £0.4m in Atlas Railroad Construction Company, a Pennsylvania based railroad maintenance of way services company.

There were also several refinancings of existing investments.  The most significant of these was for our co-investment in 3si (anti-theft systems) where an additional £1.7m has been invested.  This investment has strengthened the company's position with its bank and gives us an excellent chance of making a strong return on this investment in due course.  We also invested £0.8m in another Stirling Square led investment, Whittan (metal lockers and pallet racking).  This was also used to reduce bank debt and give the company more room for manoeuvre.  There were also refinancings for Rollover, the hotdog vending company led by Piper (£0.3m) and for Delsey, the luggage company led by Argan (£0.1m).

Realisations

Total distributions in the quarter were £4.4m.  The major realisation in the portfolio was the sale of Entec (environmental consultancy) to Amec plc.  This was anticipated in last quarter's valuation and had minimal impact on this quarter's valuation.  F&C PET received £2.3m from the direct investment and £0.7m from the position held through the fund, making a total return of 2.0x and an IRR of 30 per cent.  There is also the potential for an additional earn-out component which could boost the return slightly.  This is an excellent result for the lead managers, Growth Capital Partners, who have a relatively unusual investment style involving the provision of debt as well as equity.  The other inflows during the quarter were minor with the exception of £0.7m received from Stirling Square Capital II as an equalisation amount following the admission of additional partners into their fund.

Valuation Changes

There were relatively few valuation changes during the quarter reflecting the comprehensive review that most funds conducted at 31 December 2009 and a general reluctance to write up investments too quickly whilst the economic conditions remain uncertain.  The largest individual uplift was of £0.9m for Nursing Agency ICS, which has continued to trade well and has been refinanced again, returning £0.5m of capital immediately after the quarter end. Inflexion have applied a small uplift in valuation multiple.  Other upgrades include an uplift of £0.3m from Candover Investments, £0.3m from Argan Capital and £0.2m from Alto Capital II. Downgrades include several within the venture capital sub sector and some within the global funds section of the portfolio.  The influence of foreign exchange movements was positive, mainly because of the strength of the dollar versus sterling; foreign exchange added £2.5m to the portfolio's value during the quarter.

Financing

There are no issues on financing at present with the Company continuing to achieve a flow of distributions which finances a large part of the commitments to the funds as they are drawn down.  The net outflow this quarter has been £5.0m, which is rather more than was usual during 2009.  This reflects some pick up in investment activity and also the refinancing of some of our co-investments.  The former should feed through to more realisations in due course and the latter are effectively 'one off' events. The Company retains very substantial capacity to meet existing commitments and to make selected new investments during the remainder of the year.

Outlook

The economic situation globally is clearly much improved from the worst points of last year, but it remains replete with potential problems, most notably the drag factor of very large fiscal deficits.  The current difficulties in the Euro zone have to date had little direct impact on our portfolio; but, if the problems of Greece, where we have no investments, spread to Spain, where we have approximately 5% exposure, there could be pressures, although many of the problem companies in our Spanish funds have already been written down.  Closer to home, the improved confidence levels of many UK based companies could be tested by the currently fragile economic recovery and the as yet unclear long term implications of the new coalition government.  The banking situation appears to have improved slightly, with those funds with good banking relationships and with modest appetites for debt, being able to implement small deals.  Our positioning in the mid-market has ensured that a reasonable level of portfolio activity has been maintained.  The current annual meeting season is indicating some improvement from the extremely quiet conditions of 2009, with a number of funds examining an improving pipeline of deals.  Once private equity funds consider that they are definitely investing on the upslope of recovery investment activity will improve.  The common refrain in 2009 was that vendors' price expectations were too high; there are some signs of more reasonable pricing returning.  In the meantime, our investment partners continue to labour with management teams to build value for the long term.

Hamish Mair

For more information, please contact:

Hamish Mair	0131 718 1184
Martin Cassels	0131 718 1095
[e-mail]  / [e-mail]

F&C PRIVATE EQUITY TRUST PLC

Consolidated Statement of Comprehensive Income for the

three months ended 31 March 2010

	Unaudited
	Revenue £'000	Capital £'000	Total £'000
Capital gains on investments
Gains on investments held at fair value	-	3,526	3,526
Currency gains	-	92	92
	-	3,618	3,618
Revenue
Investment income	518	-	518
Other income	20	-	20
Total income	538	3,618	4,156
Expenditure
Investment management fee	(105)	(315)	(420)
Other expenses	(118)	-	(118)
Total expenditure	(223)	(315)	(538)
Profit before finance costs and taxation	315	3,303	3,618
Finance costs	(10)	(672)	(682)
Profit before taxation	305	2,631	2,936
Taxation	(88)	88	-
Total comprehensive income	217	2,719	2,936
Return per ordinary share - Basic	0.30p	3.31p	3.61p
Return per ordinary share - Fully diluted	0.29p	3.22p	3.51p
Return per restricted voting share - Basic	0.00p	0.48p	0.48p

F&C PRIVATE EQUITY TRUST PLC

Consolidated Statement of Comprehensive Income for the

three months ended 31 March 2009

	Unaudited
	Revenue £'000	Capital £'000	Total £'000
Capital (losses)/gains on investments
Losses on investments held at fair value	-	(12,041)	(12,041)
Currency gains	-	1,635	1,635
	-	(10,406)	(10,406)
Revenue
Investment income	512	-	512
Other income	11	-	11
Total income	523	(10,406)	(9,883)
Expenditure
Investment management fee	(87)	(259)	(346)
Other expenses	(153)	-	(153)
Total expenditure	(240)	(259)	(499)
Profit/(loss) before finance costs and taxation	283	(10,665)	10,382
Finance costs	(76)	(229)	(305)
Profit/(loss) before taxation	207	(10,894)	(10,687)
Taxation	(60)	60	-
Total comprehensive income	147	(10,834)	(10,687)
Return/(loss) per ordinary share - Basic	0.20p	(15.19)p	(14.99)p
Return/(loss) per ordinary share - Fully diluted	0.20p	(14.79)p	(14.59)p
Return/(loss) per restricted voting share - Basic	0.00p	0.21p	0.21p

F&C PRIVATE EQUITY TRUST PLC

Consolidated Statement of Comprehensive Income for the

year ended 31 December 2009

	Audited
	Revenue £'000	Capital £'000	Total £'000
Capital (losses)/gains on investments
Losses on investments held at fair value	-	(12,896)	(12,896)
Currency gains	-	3,767	3,767
	-	(9,129)	(9,129)
Revenue
Investment income	1,813	-	1,813
Other income	42	-	42
Total income	1,855	(9,129)	(7,274)
Expenditure
Investment management fee	(356)	(1,067)	(1,423)
Other expenses	(720)	-	(720)
Total expenditure	(1,076)	(1,067)	(2,143)
Profit/(loss) before finance costs and taxation	779	(10,196)	(9,417)
Finance costs	(195)	(709)	(904)
Profit/(loss) before taxation	584	(10,905)	(10,321)
Taxation	(164)	164	-
Total comprehensive income	420	(10,741)	(10,321)
Return/(loss) per ordinary share - Basic	0.58p	(14.89)p	(14.31)p
Return/(loss) per ordinary share - Fully diluted	0.56p	(14.49)p	(13.93)p
Return/(loss) per restricted voting share - Basic	0.00p	0.03p	0.03p

F&C PRIVATE EQUITY TRUST PLC

Balance Sheets

	As at 31 March 2010	As at 31 March 2009	As at 31 December 2009
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	179,585	185,119	171,011
	179,585	185,119	171,011
Current assets
Other receivables	152	649	157
Cash and cash equivalents	8,454	3,061	13,509
	8,606	3,710	13,666
Current liabilities
Other payables	(1,021)	(33,945)	(1,106)
Net current assets/(liabilities)	7,585	(30,325)	12,560
Total assets less current liabilities	187,170	154,884	183,571
Non-current liabilities
Zero dividend preference shares	(29,655)	-	(28,992)
Net assets	157,515	154,884	154,579
Equity
Called-up ordinary share capital	1,394	1,394	1,394
Special distributable capital reserve	15,679	15,679	15,679
Special distributable revenue reserve	37,357	37,692	37,537
Capital redemption reserve	664	664	664
Capital reserve	101,533	98,721	98,814
Revenue reserve	888	734	671
Shareholders' funds	157,515	154,884	154,579
Net asset value per ordinary share - Basic	210.45p	206.17p	206.84p
Net asset value per ordinary share - Fully diluted	208.33p	204.15p	204.81p
Net asset value per restricted voting share - Basic	8.04p	8.74p	7.56p

F&C PRIVATE EQUITY TRUST PLC

Reconciliation of Movement in Shareholders' Funds

 

	Three months ended 31 March 2010	Three months ended 31 March 2009	Year ended 31 December 2009
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Opening shareholders' funds	154,579	165,571	165,571
Total comprehensive income	2,396	(10,687)	(10,321)
Dividends paid	-	-	(336)
Special dividends paid	-	-	(335)
Closing shareholders' funds	157,515	154,884	154,579

 

 

 

Notes (unaudited)

1.   The unaudited quarterly results have been prepared on the basis of the accounting policies set out in the statutory accounts of the Company for the year ended 31 December 2009. 

2.   These are not full statutory accounts in terms of Section 434 of the Companies Act 2006.  The full audited accounts for the year to 31 December 2009, which were unqualified, have been lodged with the Registrar of Companies.  The quarterly report will be available on the Company's website.

3.   Returns per Restricted Voting share are based on the average number of shares in issue during the period of 67,084,807.

Returns per Ordinary share are based on the following average number of shares in issue during the period:-

Basic                72,282,273

Fully diluted       74,241,429

Basic net asset value per Restricted Voting share is based on 67,084,807 shares in issue at the end of the period.

Basic net asset value per Ordinary share is based on 72,282,273 shares in issue at the end of the period.

Fully diluted net asset value per Ordinary share is based on 74,241,429 shares in issue at the end of the period.

 

END

 

 

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