Interim Results

Bear Stearns Private Equity Limited 31 March 2006 BEAR STEARNS PRIVATE EQUITY LIMITED UNAUDITED INTERIM REPORT PERIOD FROM 28 APRIL 2005 (DATE OF INCORPORATION) TO 31 DECEMBER 2005 Page General Information 3 Investment review 4 Balance Sheet 6 Income Statement 7 Statement of Changes in Equity 8 Statement of Cash Flows 9 Notes to the Financial Statements 10 DIRECTORS: Trevor Charles Ash (Chairman) John Loudon Paul Adam Sanabria Christopher Paul Spencer MANAGER (as to the Private Equity BEAR STEARNS ASSET MANAGEMENT INC. Portfolio and as to the Enhanced Cash 383 Madison Avenue Management Strategy) New York New York 10179 United States of America MANAGER (as to the Private Equity BEAR STEARNS ASSET MANAGEMENT LIMITED Portfolio): 45 Old Bond Street London W1S 4QT United Kingdom ADMINISTRATOR AND HSBC MANAGEMENT (GUERNSEY) LIMITED COMPANY SECRETARY: HSBC Private Bank Building Rue du Pre St Peter Port Guernsey GY1 1LU AUDITORS: KPMG Channel Islands Limited 2 Grange Place The Grange St Peter Port Guernsey GY1 4LD SOLICITORS TO THE COMPANY HERBERT SMITH LLP (as to English and US law): Exchange House Primrose Street London EC2A 2HS United Kingdom LEGAL ADVISERS TO THE COMPANY CAREY OLSEN (as to Guernsey Law): 7 New Street St Peter Port Guernsey GY1 4BZ REGISTRAR: CAPITA IRG (CI) LIMITED 2nd Floor 1 Le Truchot St Peter Port Guernsey GY1 4AE Publication Date: 31 March 2006 Bear Stearns Private Equity Limited Chairman's Statement Announcement of Results for Period Ending 31 December 2005 I am pleased to report strong performance by Bear Stearns Private Equity Limited ('BSPEL' or 'Company') during its initial half-year ending 31 December 2005. Our net asset value per ordinary share increased 5.8% (11.7% on an annualized basis) to $1.08, while our ordinary share price did even better, increasing by 11.7% (23.5% on an annualized basis) to $1.14. The zero dividend preference shares increased 3.44% (approximately 7.0% on an annualized basis). INVESTMENT ACTIVITY The Company concluded its initial offering on 30 June 2005 and during the following six months invested or committed virtually all of its initial capital in private equity. As of 31 December 2005, the Company's private equity portfolio was principally invested in US and European fund managers and diversified by vintage year, investment style, sector, and geography. It included exposure to buyout, venture capital and real estate strategies TRANSFER PORTFOLIO At the conclusion of the initial offering period on 30 June 2005, the Company agreed to purchase a secondary portfolio of 20 private equity fund interests (the 'Transfer Portfolio'), which was independently valued by a third-party, representing $73.6 million in original commitments from The Bear Stearns Companies Inc. The Company worked with the General Partners of each of the 20 funds to transfer these interests to BSPEL. As of the publication date, all 20 funds in the Transfer Portfolio have been transferred directly or via an economic transfer agreement entered into between BSPEL and The Bear Stearns Companies Inc., the effect of which mirrors the economic position the Company would have had if the ownership interests had been transferred to BSPEL outright. ADDITIONAL SECONDARY PURCHASE BSPEL completed an additional secondary acquisition during the half-year, investing $3 million in the Trumpet Feeder Fund Ltd ('Trumpet'). Trumpet is a lower middle market buyout fund located in New York focused on companies in neglected industries and/or with undervalued assets. The Trumpet allocation supports the Company's investment strategy to invest in seasoned assets at attractive valuations. PRIMARY COMMITMENT In the beginning of October, the Company agreed to commit €4 million to the Candover 2005 Fund, a €3.5 billion fund representing the first primary commitment made by the Company. Candover was established in 1980, and specializes in arranging and leading large buyouts and buy-ins across Europe via their offices in London, Paris and Dusseldorf. The Candover 2005 Fund allocation supports the Company's investment strategy to further diversify the Portfolio's geographic investment focus, particularly in Europe. CORPORATE ACTIONS PLACING OF NEW EQUITY AND ZDP SHARES On 24 October 2005, the Board of Directors determined it was in the best interests of the Company to raise new investment capital through a secondary placing and authorized its advisors and agents to take all necessary actions to effect the placing. Thereafter, the Company worked to prepare an additional offering, culminating in the Company's Board of Directors announcing on 7 February 2006 that 63,747,901 New Equity Shares and 26,326,569 New ZDP Shares were allotted pursuant to the secondary placing. In US dollar terms, this resulted in approximately $91.6 million in new capital raised (before expenses). Following the issue of the new shares, the number of Equity Shares and ZDP Shares in issue is 96,817,361 and 59,475,034, respectively. EXTRAORDINARY GENERAL MEETING On 3 January 2006, the holders of the Company's Equity Shares and ZDP Shares voted by proxy or in person at an Extraordinary General Meeting to approve two proposals. The first proposal amended the Company's investment objective and investment policy to allow the Company to invest directly in portfolio companies sponsored by private equity investors with whom the Managers have relationships. Direct investment opportunities enable the Company to access the sourcing networks of well-established private equity sponsors without having to pay the management and performance fees typically associated with investing through their funds. The second proposal permitted the Company to enter into the aforementioned economic transfer agreements with two of the funds in the Transfer Portfolio. OUTLOOK The portfolio of private equity funds is well diversified, by vintage year, industry and geography. The follow-on share offering affords the Company greater flexibility to implement its mandate to, among other things, (i) further diversify the portfolio geographically and by vintage year, (ii) execute secondary transactions, and (iii) grow the size and diversity of the shareholder base. The Company has already identified a number of investment opportunities and we remain confident that our portfolio and future investments will continue to deliver positive asset growth in the future. Trevor Ash Chairman Description of Bear Stearns Private Equity Limited Bear Stearns Private Equity Limited ('BSPEL' or the 'Company') is a London-quoted, Guernsey-registered, closed-end investment company which primarily uses a fund-of-funds approach to gain exposure to the private equity asset class. The Company invests in private equity funds by acquiring limited partnership interests in the secondary market and making commitments to newly formed private equity funds. In addition, BSPEL makes direct investments in individual companies by co-investing with individual private equity sponsors. The Company diversifies its investments by manager, industry, geography, asset class, stage and vintage year. The Company employs an enhanced cash management strategy for capital awaiting investment in private equity assets, which may include investments in fixed income instruments, money market accounts, bank deposits, bank loans, hedge fund-of-funds and other instruments. The Company's capital structure consists of two classes of shares: Ordinary Shares and Zero Dividend Preference Shares ('ZDP Shares'). The Company aims to provide Equity shareholders with geared exposure to a private equity fund portfolio and to provide ZDP shareholders with a predetermined final capital entitlement (although not guaranteed). Balance Sheet at 31 December 2005 31/12/2005 £'000 Non-current assets Investments 21,885 Current assets Receivables 1,411 Cash and cash equivalents 11,823 13,234 Current liabilities Payables and accruals (105) Net current assets 13,129 Non-current liabilities Zero dividend preference shares (14,257) 20,757 Represented by: Share Capital 3 Reserves 20,754 20,757 NAV per Equity share £0.63 Income Statement for the period from 28 April 2005 to 31 December 2005 28/04/2005 to 31/12/2005 £'000 £'000 Expenses Investment management fee (166) Valuers' fees (74) Administrative fee (35) Audit fee (6) Directors' fees (25) Other expenses (86) Total Expenses (392) Net Operating loss before net finance costs (392) Interest receivable 455 Interest payable (488) Net finance costs (33) Gains from investments Unrealised gains on revaluation of investments 1,557 Profit for the period 1,132 Basic earnings per share 3.42p Statement of Changes in Equity for the period ended 31 December 2005 Share Share Profit Currency Special Total Capital Premium & loss translation Reserve reserve £'000 £'000 £'000 £'000 £'000 £'000 At 28 April 2005 - - - - - - (Date of Incorporation) Issue of ordinary 3 19,028 - - - 19,031 shares Issue costs (447) - - - (447) Transfer of share (18,581) - - 18,581 - premium to special reserve Effect of - - - 1,041 - 1,041 translation to presentation currency Profit for the - - 1,132 - - 1,132 period At 31 December 3 - 1,132 1,041 18,581 20,757 2005 Statement of Cash Flows for the period ended 31 December 2005 28/04/2005 to 31/12/2005 £'000 Operating activities Profit for the period 1,132 Adjustments for: Net financing cost 33 Gains from investments (1,557) Operating loss before changes in working capital (392) provisions Increase in receivables (83) Increase in payables 105 Cash flows from operations (370) Interest received 455 Cash flows from operating activities 85 Investing activities Purchase of non-current financial assets (23,566) Net proceeds from the sale of non-current financial assets 1,911 Cash flows from investing activities (21,655) Financing Activities Proceeds on issue of shares 19,031 Issue costs (447) Proceeds from issue of zero dividend preference shares 13,757 Cash flows from financing activities 32,341 Effects of exchange difference arising from cash and cash 1,052 equivalents Net increase in cash and cash equivalents 11,823 1 SIGNIFICANT ACCOUNTING POLICIES Bear Stearns Private Equity Limited is a closed-ended investment company incorporated in Guernsey. The Company's objective is to invest into private equity funds. Statement of compliance The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') issued by, or adopted by, the International Accounting Standards Board (the 'IASB'), interpretations issued by the International Financial Reporting Standards committee, applicable legal and regulatory requirements of Guernsey Law and the Listing Rules of the UK Listing Authority. 2 Basis of Preparation The financial statements are presented in sterling, rounded to the nearest thousand. The accounting policies have been consistently applied to the results, assets, liabilities and cash flows of the company. The preparation of financial statements in conformity with IFRS, requires management to make judgement, estimates and assumptions that affect the application of policies and the reported amounts of assets and liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making judgements about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. Non-current asset investments All of the Company's non-current asset investments are valued at fair value, which is based on the Managers' estimate following the recommendations of the British Venture Capital Association. For unquoted fund investments, the value will be the most recent valuation placed on a fund by the respective private equity sponsor, adjusted as necessary by the Managers for changes in the value of publicly traded portfolio companies comprised in the Company Portfolio and for cash flows between the Company and the fund concerned which occur between the private equity sponsor's valuation date and the Company's balance sheet date. The valuation policies used by many of the private equity sponsors in undertaking such valuations will generally be in line with the recommendations of either the British Venture Capital Association or standard industry practice. Cash and cash equivalents Cash comprises deposits with banks. Cash equivalents are short-term highly liquid investments that are readily convertible to known amounts of cash, are subject to an insignificant risk of changes in value and are held for the purpose of meeting short term cash commitments rather than for investment or other purposes. Costs incurred for the issuance of ordinary shares Incremental external costs directly attributable to the equity transaction and costs associated with the establishment of the Company that would otherwise have been avoided are written off against share premium account. Interest Interest income and expense is recognised in the income statement as it accrues using the original effective interest rate of the instrument calculated at the acquisition or origination date. Expenses Expenses are included on an accruals basis, in the income statement. Foreign Exchange Foreign currency transactions Transactions in foreign currencies are translated at foreign exchange rates ruling at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the balance sheet date are translated into US dollars at foreign exchange rate ruling at that date. Foreign exchange differences arising from translation are recognised in the profit and loss account. Non-monetary assets and liabilities measured at cost in a foreign currency are translated using exchange rates at the date of the transaction. Non-monetary assets and liabilities measured at fair value in foreign currencies are translated to US dollars at foreign exchange rates ruling at the dates the fair value was determined. Presentation currency The financial statements of the Company are presented in Sterling as the shareholders are residing mainly in the UK. Assets and liabilities are translated from the functional currency US dollars to Sterling at rates of exchange ruling at the balance sheet date. Income and expense items are translated at the average exchange rate for the year. All equity items other than the result for the current year are translated at historical rates. Resultant exchange differences are recognised directly in the Currency Translation Reserve. Taxation The Company has obtained exempt company status in Guernsey under the terms of the Income Tax (Exempt Bodies) Ordinance 1989 so that it is exempt from Guernsey taxation on income arising outside Guernsey and on bank interest receivable in Guernsey. The Company is therefore only liable to a fixed fee of £600 per annum. This information is provided by RNS The company news service from the London Stock Exchange

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