Half Yearly Report

RNS Number : 7973M

F&C Private Equity Trust PLC

30 August 2013

 



To: Stock Exchange	For immediate release:
	30 August 2013

F&C Private Equity Trust plc

Unaudited results for the half year to 30 June 2013

 

·      Share price total return for the six months of 12.0 per cent for the Ordinary Shares.

·      NAV total return for the six months of 5.0 per cent for the Ordinary Shares.

·      Semi-annual dividend of 5.22p per Ordinary Share.

·      Annualised dividend yield of 5.1 per cent at the period.

·      Cancellation of Restricted Voting Shares.

Chairman's Statement

As at 30 June 2013 the Company's net asset value ('NAV') was £192.1 million giving a fully diluted NAV per share of 262.12p. Taking into account the dividend of 5.07p per share paid on 31 May 2013 the NAV total return for the first half was 5.0 per cent. At the end of the period the Company had net cash of £9.5 million. Together with the accrued liability for the Zero Dividend Preference Shares of £39.9 million the Company's total debt was £30.4 million, equivalent to a gearing level of 13.7 per cent. The total outstanding undrawn commitments at 30 June 2013 were £71.6 million and, of this, approximately £20 million is to funds where the investment period has expired.

The Company's dividend policy, where it aims to pay semi-annual dividends with an annual yield equivalent to not less than 4 per cent of the average of the published NAVs per share as at the end of each of its last four financial quarters prior to the announcement of the relevant semi-annual dividend (or, if higher, equal to the highest semi-annual dividend previously paid) has now been in place for over a year. During the last twelve months the share price discount to the NAV has approximately halved and the share price has increased by more than 30 per cent. The Board's intention has been to provide shareholders with a significant, reliable, and growing yield in addition to capital gains through the appreciation of the share price. Our assessment has been that this is an objective shared by a wide range of shareholders, including those who are approaching retirement, and we are encouraged by the universally positive reception to this measure.

Based on the average of the last four quarters' NAV and in accordance with the above dividend policy the Board declares an interim dividend of 5.22p per share, payable on 1 November 2013 to shareholders on the register on 4 October 2013. For illustrative purposes only this dividend represents an annualised yield of 5.1 per cent based on the share price as at 30 June 2013.

I would like to draw shareholders' attention to our dividend reinvestment plan which will allow you, if you so wish, to use your dividend payments to purchase as many additional shares as possible with each dividend payment made whilst you participate in the plan. Participation in such a plan can be a convenient and easy way to build up an existing shareholding.

The first six months of this year have seen further steady progress in the portfolio. The economic background continues to improve but there have also been acute episodes of concern in the Eurozone, notably shown by the travails of Cyprus in the Spring. Levels of overall private equity activity in Europe are at broadly similar levels to the same period last year with the value of deals up but the number slightly down. Fundraising in the mid market remains challenging but there is a discernible trend where capital is moving towards those with clear track records of achieving good returns and good realisations in their previous funds. Those with a less clear record are struggling to raise significant fresh capital on target and on time. For your managers this can prove beneficial as they can access emerging management groups on competitive terms. Specifically, the number of teams offering co-investments and deal by deal 'pledge' funds or similar is increasing. In all cases the economics are more favourable than investing through a conventional fund structure. Fortunately, most of the managers whose funds form the core of the portfolio are doing well and we will continue to back those whose success justifies it.

The Company has approximately 12 per cent of its portfolio invested in co-investments at present. This is at the lower end of the historic range, principally as a result of strong realisations over the last few years, and the Managers intend to increase the exposure steadily and carefully taking advantage of the good dealflow being appraised. In addition, where funds can be sourced in the secondary market which are compatible with the Company's mid-market focus and where the price paid meets the return requirements, these will be added to the portfolio. The underlying health of the portfolio is good and, as the Manager's Review shows, it is continually being refreshed by an impressively diverse range of new investments.

Mark Tennant

Chairman

Manager's Review

Introduction

The environment for making fresh private equity investments is good. Pricing is generally attractive in the European mid-market, although it can take a long time for deals to be completed. There are distinct differences across the Continent with a fair generalisation being that the Northern half is more amenable than the South. That said, our investment partners continue to find some good growth companies in every quarter. We have had no large 'pop' exits in the first half but there has been encouraging progress over a broad base.

New Investments

The Company made four new fund commitments during the first six months of the year. Three of these were to funds managed by emerging managers and one was to a longstanding core relationship. We have also gained concentrated exposure to some new markets in Europe. We committed €3 million to the Finland-focused buy-out fund Vaaka Partners Buyout II. The management team initially came together at Pohjola Bank, from where they became independent in 2010. Finland has a well developed private equity market which is fairly difficult to access for outsiders. We also committed €3 million to the Polish mid-market buy-out fund Avallon MBO II. The Polish private equity market has developed considerably in recent years and the supportive background of a healthy banking sector, a large population, competitive labour costs, proximity to Western markets and a robust economy are considerable attractions. We committed £3.5 million to the European mid-market focused fund GCP Capital Partners Europe II, through a secondary transaction where we were able to acquire the invested element of the fund at a discount of 10 per cent to NAV. The key attractions here were gaining exposure to a portfolio of six principal investments with a promising management team in place. Lastly, we once again backed August Equity through their fund III with a £3 million commitment. We have backed this successful UK-focused mid-market management group in two previous funds and in one co-investment.

Two new co-investments were made during the first half and two immediately afterwards. We invested £2 million alongside Fleming Family and Partners Private Equity for a 15 per cent stake in David Phillips Holdings Limited, the UK's largest specialist supplier of furniture and other accessories to the residential property market, providing a B2B furniture service to landlords, agents, developers and local authorities. Early signs are that the company is making good progress. The second co-investment was £1.7 million invested alongside buy-out firm, Zurmont Madison, in Swiss based chemical company Schaetti. The investment provided a 12.5 per cent stake in the company whose principal business is the manufacture of customised thermoplastic and thermo-fusible powders used in a range of industries including apparel, footwear and automotive.

Since the end of the period, we have invested £2.2 million for a 7.2 per cent stake in Recover Nordic, a Norway based but pan-Nordic provider of damage control services. Its customer base is mainly insurance companies who retain Recover Nordic to provide immediate support to households and businesses where there has been an incident such as a burst pipe, flood or collapsed roof, often as a result of adverse weather events. This investment is led by Agilitas, an emerging manager whose principals are well known to us. Lastly, also in Norway, we have invested £1.3 million for just under 20 per cent of Safran, a Stavanger based software company. We are investing with Progressus, a Norwegian private equity boutique, Safran's main product is project management software for the offshore oil and gas industry. It also has applications in the aerospace and defence industries. The economic and industrial conditions in the Nordic region are attractive at present and we have appraised a number of investment opportunities there recently.

As noted in the Chairman's Statement it is our plan to build up the portfolio of co-investments from the current level of around 12 per cent of the portfolio to approximately double this level over the next two years or so, subject, of course, to finding sufficient good opportunities.

The total of drawdowns and co-investments in the first half of the year was £16.3 million.

Realisations

There have been several good realisations from the portfolio so far this year. In the UK,  Primary Capital III sold Napier Turbochargers to Wabtec Corporation returning £2.5 million with an investment multiple of 5.5x and an IRR of 44 per cent. August Equity Partners II exited 4Projects, its SaaS company servicing the construction and engineering industries, through its sale to the US corporation Coaxis Inc. This yielded £1.0 million, corresponding to 1.7x cost and an IRR of 10 per cent. Also in the UK, Primary Capital II sold specialist rail travel business Amber to private equity group ECI, returning £1.2 million, 3.2x cost and an IRR of 17 per cent.

There have been a number of good exits in other European markets. Norwegian fund Herkules Private Equity III sold debt collection agency Gothia to Arvator Infoscore Gmbh of Germany. The Company's return was £1.6 million, representing 2.0x cost and a 20 per cent IRR. In Poland, Accession Mezzanine II exited medical clinic chain Lux Med through its sale to BUPA which returned £1.5 million, 2.0x cost and a 16 per cent IRR. Lastly, one of the Company's very few venture fund holdings, Life Science Partners III, had an excellent period with the sale of its Swiss-based investment Okairos to GlaxoSmithKline. Okairos has a platform technology based on T cell vaccines with applications in the prophylaxis and treatment of infections. LSP III returned £1.5 million, several times the investment, with scope for more as escrows are released.

Total receipts from realisations and associated income in the first half of the year was £19.0 million.

Valuation Changes

The largest uplift in the first half of the year was Life Science Partners III which was up by £2.5 million, reflecting not only the sale of Okairos noted above, but the listing of another portfolio company Prosensa on NASDAQ. Prosensa is an RNA-based therapeutics company focusing on genetic disorders. Its lead product, which is in Phase III, is aimed at the previously untreatable condition Duchennes Muscular Dystrophy. Stirling Square Capital II was up by £1.2 million as a result of uplifts for SAR, the Norwegian waste services business focused on the oil and gas industry and for helicopter operator Omni, which also has an important oil and gas related aspect. Other funds with positive portfolio development included August Equity Partners II (+£0.6 million), RJD Partners II (+£0.5 million), GCP Capital Partners Europe II (+£0.4 million) and Herkules Private Equity III (+£0.4 million).

In other areas of the portfolio there were some downgrades. The holding in Italian security company Axitea has been reduced by £1.8 million as a consequence of the weak Italian economy's impact on investment in security systems and on customers' propensity to pay on time. Argan Capital was reduced by £1.0 million, the net result of several valuation changes in the portfolio. £0.9 million was deducted from the value of co-investment Whittan. This company, which makes pallet racking systems, mainly for the retail sheds sector, has suffered slightly from Amazon curtailing capital expenditure this year.

Financing

During the period a dividend of 5.07p per share was paid at a cost of £3.7 million. The net cash position of the Company at 30 June 2013 was £9.5 million. Together with availability of the full £50 million revolving credit facility, the Company is well financed. Outstanding undrawn commitments were up marginally to £71.6 million which is in line with expectations. In the short term, the cash position of the Company will depend on the balance between realisations and new investments. We have good visibility on both of these categories and expect that the former will continue to exceed the latter. As noted above, we intend to use some of the capital to increase the Company's co-investment component. Our expectation is that the Company's resources will be more than adequate to maintain and grow the dividend and maintain the rate of investment whilst providing enough to redeem the Zero Dividend Preference Shares towards the end of next year.

Outlook

The Company's progress in the first half of the year has been broadly based with many individual investments contributing in a small way to the growth in the portfolio. As noted above, the investment environment is attractive in most, if not all, European markets, and the sheer breadth of the mid-market means that our investment partners will always find attractive companies in which to invest. The opportunity to co-invest with a number of these managers is good and, as we have done before, we will take these selectively.  Further afield, there are also value accretive investments to be appraised and executed again in a highly selective manner. With the main commentators having adopted a more positive narrative concerning economic recovery this can only be beneficial to the Company's long term prospects.

Hamish Mair

Investment Manager

F&C Investment Business Limited

F&C Private Equity Trust plc

Consolidated Statement of Comprehensive Income for the

half year ended 30 June 2013

	Unaudited
	Revenue £'000	Capital £'000	Total £'000
Income
Gains on investments held at fair value	-	12,063	12,063
Exchange losses	-	(27)	(27)
Investment income	1,078	-	1,078
Other income	17	-	17
Total income	1,095	12,036	13,131
Expenditure
Investment management fee	(254)	(763)	(1,017)
Other expenses	(380)	-	(380)
Total expenditure	(634)	(763)	(1,397)
Profit before finance costs and taxation	461	11,273	11,734
Finance costs	(136)	(2,183)	(2,319)
Profit before taxation	325	9,090	9,415
Taxation	(77)	77	-
Profit for period/total comprehensive income	248	9,167	9,415
Return per Ordinary Share - Basic	0.35p	12.68p	13.03p
Return per Ordinary Share - Fully diluted	0.34p	12.34p	12.68p
Return per Restricted Voting Share - Basic	(0.01)p	0.01p	-p

F&C Private Equity Trust plc

Consolidated Statement of Comprehensive Income for the

half year ended 30 June 2012

	Unaudited
	Revenue £'000	Capital £'000	Total £'000
Income
Gains on investments held at fair value	-	11,189	11,189
Exchange losses	-	121	121
Investment income	1,173	-	1,173
Other income	8	-	8
Total income	1,181	11,310	12,491
Expenditure
Investment management fee	(242)	(1,388)	(1,630)
Other expenses	(452)	-	(452)
Total expenditure	(694)	(1,388)	(2,082)
Profit before finance costs and taxation	487	9,922	10,409
Finance costs	(148)	(2,072)	(2,220)
Profit before taxation	339	7,850	8,189
Taxation	(104)	89	(15)
Profit for period/total comprehensive income	235	7,939	8,174
Return per Ordinary Share - Basic	0.33p	10.97p	11.30p
Return per Ordinary Share - Fully diluted	0.32p	10.68p	11.00p
Return per Restricted Voting Share - Basic	(0.01)p	0.01p	-p

F&C Private Equity Trust plc

Consolidated Statement of Comprehensive Income for the

year ended 31 December 2012

	Audited
	Revenue £'000	Capital £'000	Total £'000
Income
Gains on investments held at fair value	-	15,178	15,178
Exchange gains	-	176	176
Investment income	4,044	-	4,044
Other income	25	-	25
Total income	4,069	15,354	19,423
Expenditure
Investment management fee	(487)	(1,462)	(1,949)
Other expenses	(866)	-	(866)
Total expenditure	(1,353)	(1,462)	(2,815)
Profit before finance costs and taxation	2,716	13,892	16,608
Finance costs	(283)	(4,198)	(4,481)
Profit before taxation	2,433	9,694	12,127
Taxation	(615)	622	7
Profit for year/total comprehensive income	1,818	10,316	12,134
Return per Ordinary Share - Basic	1.81p	15.08p	16.89p
Return per Ordinary Share - Fully diluted	1.76p	14.68p	16.44p
Return per Restricted Voting Share - Basic	0.76p	(0.87)p	(0.11)p

F&C Private Equity Trust plc

Amounts Recognised as Dividends

	Six months to 30 June 2013 (unaudited) £'000	Six months to 30 June 2012 (unaudited) £'000	Year to 31 December 2012 (audited) £'000
Final Ordinary Share dividend of 0.80p per share for the year ended 31 December 2011	-	578	578
Interim Ordinary Share dividend of 4.96p per share for the year ended 31 December 2012	-	-	3,585
Final Ordinary Share dividend of 5.07p per share for the year ended 31 December 2012	3,665	-	-
	3,665	578	4,163

On 27 January 2012 a special dividend of 1.60p per Restricted Voting Share was paid. The total amount paid was £1,073,000.

On 28 September 2012 a special dividend of 3.30p per Restricted Voting Share was paid. The total amount paid was £2,214,000.

On 14 February 2013 a final Restricted Voting Shares dividend of 1.675p per Restricted Voting Share was paid. The total amount paid was £1,124,000.

F&C Private Equity Trust plc

Consolidated Balance Sheet

	As at 30 June 2013 (unaudited)	As at 30 June 2012 (unaudited)	As at 31 December 2012 (audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	223,488	220,931	213,662
			213,662
Current assets
Other receivables	399	473	464
Cash and short-term deposits	9,527	6,387	12,931
	9,926	6,860	13,395
Current liabilities
Other payables	(1,410)	(2,071)	(1,453)
Net current assets	8,516	4,789	11,942
Total assets less current liabilities	232,004	225,720	225,604
Non-current liabilities
Zero dividend preference shares	(39,947)	(36,450)	(38,173)
Net assets	192,057	189,270	187,431
Equity
Called-up ordinary share capital	723	1,394	1,394
Special distributable capital reserve	15,679	15,679	15,679
Special distributable revenue reserve	31,403	34,741	32,527
Capital redemption reserve	1,335	664	664
Capital reserve	140,703	136,409	135,201
Revenue reserve	2,214	383	1,966
Shareholders' funds	192,057	189,270	187,431
Net asset value per Ordinary Share - Basic	265.70p	257.13p	257.75p
Net asset value per Ordinary Share - Fully diluted	262.12p	253.77p	254.38p
Net asset value per Restricted Voting Share - Basic	n/a	5.08p	1.67p

F&C Private Equity Trust plc

Consolidated Statement of Changes in Equity

	Share Capital	Special Distributable Capital Reserve	Special Distributable Revenue Reserve	Capital Redemption Reserve	Capital Reserve	Revenue Reserve	Total
	£'000	£'000	£'000	£'000	£'000	£'000	£'000

For the six months ended 30 June 2013 (unaudited)
Net assets at 1 January 2013		1,394	15,679	32,527		664		135,201		1,966	187,431
Cancellation of Restricted Voting Shares		(671)	-	-		671		-		-	-
Profit for the period/total comprehensive income		-	-	-		-		9,167		248	9,415
Dividends paid		-	-	(1,124)		-		(3,665)		-	(4,789)
Net assets at 30 June 2013		723	15,679	31,403		1,335		140,703		2,214	192,057
For the six months ended 30 June 2012 (unaudited)
Net assets at 1 January 2012		1,394	15,679	35,814		664		128,470		726	182,747
Profit for the period/total comprehensive income		-	-	-		-		7,939		235	8,174
Dividends paid		-	-	(1,073)		-		-		(578)	(1,651)
Net assets at 30 June 2012		1,394	15,679	34,741		664		136,409		383	189,270
For the year ended 31 December 2012 (audited)
Net assets at 1 January 2012	1,394		15,679		35,814		664		128,470	726	182,747
Profit for the year/total comprehensive income	-		-		-		-		10,316	1,818	12,134
Dividends paid	-		-		(3,287)		-		(3,585)	(578)	(7,450)
Net assets at 31 December 2012	1,394		15,679		32,527		664		135,201	1,966	187,431

F&C Private Equity Trust plc

Consolidated Cash Flow Statement

	Six months ended 30 June 2013 (unaudited)	Six months ended 30 June 2012 (unaudited)	Year ended 31 December 2012 (audited)
	£000	£000	£000
Operating activities
Profit before taxation	9,415	8,189	12,127
Gains on disposals of investments	(3,933)	(10,819)	(15,165)
Increase in holding gains	(8,130)	(370)	(13)
Exchange differences	27	(121)	(176)
Finance costs	2,319	2,220	4,481
Corporation tax received/(paid)	15	(15)	(15)
Decrease/(increase) in other receivables	50	(450)	(426)
(Decrease)/increase in other payables	(40)	1,187	625
Net cash (outflow)/inflow from operating activities	(277)	(179)	1,438
Investing activities
Purchases of investments	(16,264)	(13,157)	(31,653)
Sales of investments	18,501	26,802	56,557
Net cash inflow from investing activities	2,237	13,645	24,904
Financing activities
Repayment of bank loans	-	(13,019)	(13,019)
Draw down of bank loans	-	4,021	4,021
Interest paid	(548)	(407)	(993)
Equity dividends paid	(4,789)	(1,651)	(7,450)
Net cash outflow from financing activities	(5,337)	(11,056)	(17,441)
Net (decrease)/increase in cash and cash equivalents	(3,377)	2,410	8,901
Currency losses	(27)	(67)	(14)
Net (decrease)/increase in cash and cash equivalents	(3,404)	2,343	8,887
Opening cash and cash equivalents	12,931	4,044	4,044
Closing cash and cash equivalents	9,527	6,387	12,931

Statement of Principal Risks and Uncertainties

The Directors believe that the principal risks and uncertainties faced by the Company include investment and strategic, external, regulatory, operational, financial and funding risks.  These risks, and the way in which they are managed, are described in more detail under the heading Principal Risks and Uncertainties and Risk Management within the Business Review in the Company's Annual Report for the year ended 31 December 2012.  The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remaining six months of the Company's financial year.

Statement of Directors' Responsibilities in Respect of the Half Year Report

We confirm that to the best of our knowledge:

·      the condensed set of financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and give a true and fair view of the assets, liabilities, financial position and profit of the Company;

·      the Chairman's Statement and Manager's Review (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;

·      the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R; and

·      the condensed set of financial statements includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Mark Tennant

Chairman

Notes (unaudited)

1.   The condensed consolidated financial statements have been prepared in accordance with International Financial Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting' and, except as described below, the accounting policies set out in the statutory accounts of the Group for the year ended 31 December 2012. The condensed consolidated financial statements do not include all of the information required for a complete set of IFRS financial statements and should be read in conjunction with the consolidated financial statements of the Group for the year ended 31 December 2012, which were prepared under full IFRS requirements.

The Group has adopted the following new standards and amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2013. The following changes in accounting standards are also expected to be reflected in the Group's consolidated financial statements as at and for the year ending 31 December 2013.

·      Presentation of Items of Other Comprehensive Income (Amendments to IAS 1 'Presentation of Financial Statements'). The amendments to IAS 1 change the grouping of items presented in Other Comprehensive Income in its condensed consolidated statement of comprehensive income. Items that could be reclassified to profit or loss at a future point in time are now required to be presented separately from items that will never be reclassified. The amendment has no impact on the recognised assets, liabilities and comprehensive income of the Group.

·      IFRS 13 'Fair Value Measurement' (2011). IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements. IFRS 13 does not change when an entity is required to use fair value, but rather provides guidance on how to measure fair value under IFRS when fair value is required or permitted. In particular, it unifies the definition of fair value as the price at which an ordinary transaction to sell an asset or to transfer a liability would take place between investor participants at the measurement date. It also replaces and expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS 7 'Financial Instruments: Disclosures'. Some of these disclosures are specifically required in interim financial statements for financial instruments; accordingly, the Group has included additional disclosures in this regard (see note 8). The change has no significant impact on the measurement of the Group's assets and liabilities.

2.   Earnings for the six months to 30 June 2013 should not be taken as a guide to the results for the year to 31 December 2013.

3.   Investment management fee:

	Six months to 30 June 2013			Six months to 30 June 2012			Year ended 31 December 2012
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Investment management fee	254	763	1,017	242	728	970	487	1,462	1,949
Performance fee	-	-	-	-	660	660	-	-	-
	254	763	1,017	242	1,388	1,630	487	1,462	1,949

4.   Finance costs:

	Six months to 30 June 2013			Six months to 30 June 2012			Year ended 31 December 2012
	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000	Revenue £'000	Capital £'000	Total £'000
Interest payable on bank loans and overdrafts	136	409	545	148	444	592	283	847	1,130
Finance costs attributable to ZDP Shares	-	1,774	1,774	-	1,628	1,628	-	3,351	3,351
	136	2,183	2,319	148	2,072	2,220	283	4,198	4,481

5.   The basic return per Ordinary Share is based on a net return on ordinary activities after taxation of £9,415,000 (30 June 2012 - £8,172,000; 31 December 2012 - £12,207,000) and on 72,282,273 (30 June 2012 - 72,282,273; 31 December 2012 - 72,282,273) shares, being the weighted average number of Ordinary Shares in issue during the period.

The fully diluted return per Ordinary Share is based on a net return on ordinary activities after taxation of £9,145,000 (30 June 2012 - £8,172,000; 31 December 2012 - £12,207,000) and on 74,241,429 (30 June 2012 - 74,241,429; 31 December 2012 - 74,241,429) shares, being the weighted average number of Ordinary Shares in issue during the period after conversion of the Ordinary Share warrants.

The basic return per Restricted Voting Share is based on a net return on ordinary activities after taxation of £nil (30 June 2012 - £2,000; 31 December 2012- loss £73,000) and on 67,084,807 (30 June 2012 - 67,084,807; 31 December 2012 - 67,084,807) shares, being the weighted average number of Restricted Voting Shares in issue during the period.

6.  Zero Dividend Preference Shares

The Zero Dividend Preference Shares ('ZDP Shares') of F&C Private Equity Zeros plc were issued on 14 December 2009 at 100 pence per share and redeem on 15 December 2014 at 152.14 pence per share, an effective rate of 8.75 per cent per annum.

The fair value of the ZDP Shares at 30 June 2013 was £43,200,000 based on the quoted offer price of 144.00p per ZDP Share.

	Number of ZDP Shares	Amount due to ZDP shareholders £'000
As at 31 December 2012	30,000,000	38,173
ZDP Shares finance costs	-	1,774
As at 30 June 2013	30,000,000	39,947

7. The basic net asset value per Ordinary Share is based on net assets at the period end of £192,057,000 (30 June 2012 - £185,859,000; 31 December 2012 - £186,308,000) and on 72,282,273 (30 June 2012 - 72,282,273; 31 December 2012 - 72,282,273) shares, being the number of Ordinary Shares in issue at the period end.

The fully diluted net asset value per Ordinary Share is based on net assets at the period end of £194,603,000 (30 June 2012 - £188,405,000; 31 December 2012 - £188,854,000) and on 74,241,429 (30 June 2012 - 74,241,429; 31 December 2012 - 74,241,429) shares, being the number of Ordinary Shares in issue at the period end after conversion of the Ordinary Share warrants.

8.   Qulisted fixed asset investments held are valued at bid prices which equate to their fair values.  Unlisted investments are valued by the Directors on the basis of all the information available to them at the time of valuation.  The fair value of the ZDP Shares is shown in note 6.  The fair values of all of the Group's other financial assets and liabilities are not materially different from their carrying value in the balance sheet.  The fair value of the intercompany loan from F&C Private Equity Zeros plc to the Company was 39,087,000 as at 30 June 2013 compared to its value as stated on the balance sheet of £39,947,000.

	Level 1	Level 2	Level 3	2013
				Total
	£'000	£'000	£'000	£'000
Investments	1,130	-	222,358	223,488

      The above table provides an analysis based on the fair value hierarchy described below and which reflects the reliability and significance of the information used to measure their fair value.  The levels are determined by the lowest (that is the least reliable or least independently observable) level of impact that is significant to the fair value measurement for the individual investment in its entirety as follows:

Level 1 reflects financial instruments quoted in an active market.

Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.

Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.

There were no transfers of investments between levels in the period ended 30 June 2013.

The following table summarises the Group's Level 1 and 3 investments that were accounted for at fair value in the period to 30 June 2013.

	Level 1	Level 2	Level 3	30 June 2013
				Total
	£'000	£'000	£'000	£'000
Balance at beginning of year	938	-	212,724	213,662
Purchases	-	-	16,264	16,264
Sales	(605)	-	(17,896)	(18,501)
Gains on disposal	52	-	3,881	3,933
In specie distribution	694	-	(694)	-
Increase in holding gains	51	-	8,079	8,130
Balance at end of period	1,130	-	222,358	223,488

Other aspects of the Group's financial risk management objectives and policies are consistent with those disclosed in the consolidated financial statements as at and for the year ended 31 December 2012.

The Company's unlisted investments are all classified as Level 3 investments. They are fair valued by the Directors and determined in accordance with the International Private Equity and Venture Capital Valuation guidelines. The fair values of the unlisted investments have been determined principally by reference to earnings multiples, with adjustments made as appropriate to reflect matters such as the sizes of the holdings and liquidity. The weighted average earnings multiple for the portfolio as at 30 June 2013 was within the range of 6 - 7 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation).

The fair value of the Company's unlisted investments are sensitive to changes in the assumed earnings multiples. An increase in the earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the earnings multiple would lead to a decrease in the fair value.

9.   Following the payment of the final Restricted Voting Shares dividend of 1.675p per share on 14 February 2013, the Restricted Voting Pool has no assets or liabilities. The Restricted Voting Shares were converted and redesignated as Deferred Shares on 14 February 2013 and the Deferred Shares were bought back by the Company and cancelled on that date.  On 15 February 2013 the admission of the Restricted Voting Shares to the Official List of the UKLA and trading on the London Stock Exchange's Main Market were cancelled.  The Company therefore no longer has any Restricted Voting Shares in issue.

10.  These are not statutory accounts in terms of Section 434 of the Companies Act 2006 and have not been audited or reviewed by the Company's auditors. The information for the year ended 31 December 2012 has been extracted from the latest published financial statements which received an unqualified audit report and have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 31 December 2012 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Half-Year Report is available at the Company's website address, www.fcpet.co.uk.

For more information, please contact:

Hamish Mair (Fund Manager)	0131 718 1184 [e-mail]
Gordon Hay Smith (Company Secretary)	0131 718 1018 [e-mail]

|

 

END

 

 

IR PGUPCRUPWGAB