26 Nov 2010 07:00
ABERDEEN PRIVATE EQUITY FUND LIMITED
UNAUDITED HALF YEARLY REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2010
Chairman's Statement
I am pleased to present to shareholders the Half-Yearly Report and condensed financial statements of the Company for the six months ended 30 September 2010.
Performance
The Company's Total Assets (in US Dollar terms and adding back buybacks) fell by 0.6% in the six months to September 2010. As shareholders are aware, the period saw the simplification of the Company's share structure, with Sterling and US Dollar share classes merging on 2 July 2010. Accordingly, the only comparable Net Asset Value ("NAV") per share comparison for the period is the Sterling Share class. Because of the move in the exchange rate, this NAV actually declined by 3.5% over the half year from 89.6p to 86.5p. However, the improved sentiment towards the sector, and the Company's willingness to buy-back shares, saw the share price for the Sterling shares rise by 24.1% over the six months (from 54p to 67p), reducing the discount per share at the period end to 22.5% (31 March 2010 - 40.0%). This trend has continued since the period end, at the time of writing this discount now stands at just over 19%, versus a sector average of 32.8%.
Market Overview
As an asset class, Private Equity appears to be continuing a welcome process of rehabilitation in the eyes of fund allocators, and our Manager has noted that they are starting to see a pick up in interest in this asset class. Private Equity net asset values have started to rise in the year to date, being driven by both operational improvements and increasing deal multiples, with the latter being supported by money flows coming out of recently raised funds, particularly in the US mid market buyout segment.
Both call rates and distributions across the spectrum of Private Equity are increasing and if the macro environment is able to hold a steady recovery with potential double dips minimised, then conditions augur well for a more sustained recovery in the fortunes of the industry, which itself has to learn some important lessons from the recent past.
Share Buybacks
During the period under review the Company purchased in the market for cancellation 3.41 million Sterling shares, pursuant to the shareholder authority granted at the Annual General Meeting ("AGM") held on 27 August 2009 which was renewed at the AGM held on 13 September 2010. The shares were purchased at prices ranging from 51.5p to 65.5p representing an average discount to NAV of 37.4%, and a positive impact on NAV of 0.8p per share. Subsequent to the period end a further 1,059,000 Sterling shares have been purchased. The Company may continue to buy-back shares subject to demand and pricing and at the complete discretion of the Board.
Portfolio Commentary
The portfolio has bedded in well and it is encouraging to see distributions come through broadly in line with where the Manager had expected them to. The Company's holding in the distressed sector has worked well and, with a significant amount of debt refinancing still to come, this cycle may be set to continue for some time. The Company's exposure to Oaktree, in particular, has been a positive influence on performance. Your Board is pleased to note that the overall portfolio remains sensibly diversified.
Outlook
The Manager is increasingly focusing on new ideas for the portfolio and is in the process of adding a US operational turnaround fund, and is reviewing a number of other US and European mid-market buyout fund raisings, but also seeking opportunities in South East Asia (where the strong demographic arguments underpin the economic story). Commitment cover remains high and the Board and Manager will keep this under review when considering investments and buybacks.
I look forward to reporting to you again in June 2011 in respect of the year to 31 March 2011 and in the meantime shareholders will find regular monthly updates on the Company's portfolio on the Company's website, http://www.aberdeenprivateequity.co.uk/doc.nsf/Lit/FactsheetUKClosedAberdeenPrivateEquityFund.
Jonathan Carr
Chairman
25 November 2010
Interim Board Report
Principal Risk Factors
The Company's principal risks and uncertainties are as noted below. These risks and other risks faced by the Company, and the way in which they are managed, are described in more detail within note 18 to the financial statements in the Company's Annual Report for the year ended 31 March 2010. The Company's principal risks and uncertainties have not changed materially since the date of that Annual Report.
Sterling Shares
The market price and the realisable value of the Sterling shares, as well as being affected by their underlying net asset value, also take into account supply and demand for the Sterling shares, market conditions and general investor sentiment. As such, the market price and the realisable value of the Sterling shares may fluctuate and vary considerably from the net asset value of the Sterling shares and investors may not be able to realise the value of their original investment.
Borrowings
The Company may borrow up to 25% of the NAV of the Company. Whilst the use of borrowings should enhance the total return on the Sterling shares where the return on the Company's underlying assets is rising and exceeds the cost of borrowing, it will have the opposite effect where the underlying return is less than the cost of borrowing, further reducing the total return on the Sterling shares. At present the Company does not have any borrowings.
Market Risks
The fair value or future cash flows of a financial instrument held by the Company may fluctuate because of changes in market prices. Market risk comprises three elements; interest rate risk, currency risk and other price risk. Further details of these risks are disclosed in note 18 of the Annual Report and financial statements for the year ended 31 March 2010. Investment in private equity securities involves a greater degree of risk than that usually associated with investment in listed securities markets.
General
The Company does not have a fixed winding-up date and, therefore, unless shareholders vote to wind up the Company, shareholders will only be able to realise their investment through the market.
Taxation and Exchange Controls
Any change in the Company's tax status or in taxation legislation (including the tax treatment of dividends or other investment income received by the Company) could affect the value of the investments held by the Company, affect the Company's ability to provide returns to shareholders or alter the post-tax returns to shareholders.
Investment Strategy and Performance
Inappropriate long-term investment strategies in terms of, inter alia, asset allocation, level of gearing or manager selection may result in underperformance of the Company against the companies within the peer group. The Board regularly considers the Company's investment strategy and monitors performance at each Board meeting.
Portfolio Risks
Private equity investments are long-term in nature and it may take a considerable period to be realised. A substantial proportion of the Company's assets are invested in limited partnerships which invest in private companies. These unquoted investments are less readily realisable than quoted securities. Such investments may therefore carry a higher degree of risk than quoted securities. In valuing its investments in private equity funds or limited partnerships and in calculating its NAV, the Company relies to a significant extent on the accuracy of financial and other information provided by these funds to the Manager. Limited partnerships typically provide updated (unaudited) valuations on a quarterly or six-monthly basis.
Directors' Responsibility Statement
The Directors are responsible for preparing this Half-Yearly Report in accordance with applicable law and regulations.
The Directors confirm that this Half-Yearly Report and Condensed Half-Yearly Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and that the Chairman's Statement, Interim Board Report and Manager's Review (together constituting the Interim Management Report) includes a fair review of the information required by the Disclosure and Transparency Rules (DTR) 4.2.7R and 4.2.8R, namely:
- an indication of important events that have occurred during the first six months and their impact on the Condensed Half-Yearly Financial Statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
- material related party transactions in the first six months and any material changes in the related party transactions described in the last Annual Report.
The Directors of the Company are listed on page 20 of the Half-Yearly Report to be posted to shareholders shortly.
For and on behalf of the Board of Aberdeen Private Equity Fund Limited
Jonathan Carr
Chairman
25 November 2010
Manager's Review
Summary
At the end of the period, approximately 61.5% of the Company's NAV was invested in Private Equity, 'Private Equity like' & Specialty funds and 38.2% in cash. The Company's remaining Hedge fund investments accounted for 0.3% of NAV. The Company held nineteen funds in its portfolio at 30 September 2010 plus three fully written down holdings; one in Aarkad Plc and two in Madoff related vehicles. Of those nineteen funds, sixteen were Private Equity & 'Private Equity Like' funds, one was a Specialty fund and two were Hedge funds.
We set out here a summary of the monthly NAV and share price performance of the two share classes (USD share class to end June only).
Sterling Share Class (%)
Cumulative Performance | ||||||
As at 30/09/10 | 1 mth | 3 mths | 6 mths | 1 yr | 3 yrs | |
Share price | 67.0p | 6.8 | 30.7 | 24.1 | 25.2 | -32.3 |
NAV | 86.5p | -0.9 | -3.0 | -3.5 | 0.4 | -11.0 |
Discrete Performance | |||
30/09/10 | 30/09/09 | 30/09/08 | |
Share price | 25.2 | -32.7 | -19.7 |
NAV | 0.4 | -11.4 | 0.1 |
US Dollar Shares (%)*
Cumulative Performance | |||||
As at 30/06/10 | 1 mth | 3 mths | 6 mths | 1 yr | |
Share price | $0.5 | -4.0 | -4.0 | -9.4 | -20.0 |
NAV | $0.8 | -0.6 | -1.8 | 0.3 | 2.2 |
Discrete Performance | ||
As at 30/06/10 | 30/06/09 | |
Share price | -20.0 | -41.2 |
NAV | 2.2 | -24.2 |
* The entire issued share capital of US Dollar shares was converted into Sterling shares on 2 July 2010.
Source: Aberdeen Asset Managers Limited and Morningstar
During the first half of the Company's financial year the Sterling share class NAV fell by 3.5%. In USD terms this translated to a small increase of 0.3%. Given that 81.0% of the NAV is accounted for by both US Dollar denominated assets and cash, this translation provides a more accurate assessment of the performance of the underlying assets.
Private Equity, 'Private Equity Like' and Specialty Funds Review
It should be noted that the portfolio is still relatively immature, with only 62.0% of the total commitments having been drawn. Call rates by managers have started to increase this year and we have been encouraged to see a pick up in investment activity. The portfolio does not have a large exposure to buyout, particularly mega buyout and has therefore had very little exposure to a phenomena we have seen this year whereby Private Equity funds sell on their investments to other peers, also known as 'pass the parcel' trades. The accusation here is that Private Equity houses want to call commitments before the investment period closes, hence ensuring ongoing fees. We have looked closely at deals in the Company's funds which could arguably fall into this category and are satisfied that these investments have been made based on sound fundamentals.
Distributions from funds owned in the portfolio are still picking up, in line with the industry. On an aggregated basis, for those full exits that we have seen this year for underlying companies owned by funds within the portfolio, realisations have come at a considerable premium to the last recorded Fair Market Value (FMV). This is an encouraging indicator but Aberdeen is reluctant to extrapolate to a broader industry trend. Principally this is because there are still a lot of poor quality companies held by the industry at, in many cases, unachievable valuations. However, Aberdeen has reviewed the portfolio and does not believe this to be the case in the Company's portfolio.
Discounts (to last reported FMV) for primary funds sold in the secondary market are narrowing and for good quality recent vintage funds we are seeing bidding levels at around the 80-90% of FMV level. For most funds without significant quality issues, for the secondary market discount to close further to par, we are probably going to need to see an increase in NAV mark up momentum (the deployable dry powder contained in specialist secondary market funds is unlikely to be powerful enough in its own right to close that gap to par).
The Company has two investments in specialist funds of Secondary funds, Greenpark International Investors III and Coller International Partners V. These funds provide vintage diversification and both are now at or about breakeven on a gross multiple of invested capital ("GMOIC") basis (ie 1.0x). Respectively they are 81.5% and 63.0% drawn.
The Company's Venture funds, RhoVentures VI, DFJ Athena and Tenaya Capital V are likewise, at or about breakeven in respect of GMOIC and we are starting to see some good exits from those portfolios.
Within the Company's Distressed sector holdings Oaktree OCM Opportunities Fund VIIb, in particular has performed well. That holding's FMV is now greater than the original commitment amount and the fund has not yet fully drawn. The holding in MatlinPatterson Global Opportunities Partners III has performed less well due to the fall in share price of Flagstar Bancorp, the shares of which are still held within the MatlinPatterson fund.
We have seen a dichotomy of performance with the Company's Growth Capital funds Thoma Bravo Fund IX and PineBridge Latin America Partners II. The former is showing a GMOIC of around 1.5x and is still only 46.5% drawn. The latter has been troubled by senior management departures though the arrival of a new head of Latin American alternative investment should help stabilise relations with investee companies. That fund is at the breakeven level on a GMOIC basis.
The Company's Buyout exposure is taken through investments in Goldman Sachs Capital Partners VI, Silver Lake Partners III and Terra Firma Capital Partners III. Terra Firma, run by Guy Hands has been rarely out of the headlines as they have chosen a potentially fraught tack by taking Citigroup to court over claims that their purchase of EMI was engineered such that they overpaid for that acquisition. An opportunistic approach was made to acquire the Company's interest in Terra Firma. However, Aberdeen determined that the price was too distressed as Terra Firma is not just about EMI and its other investments proceed well. As with all of the Company's positions, if compelling offers to purchase its holdings are made, we will consider their merits on a case-by-case basis, whilst also looking at the wider implications for the Company.
SVG Strategic Recovery Fund IItakes minority stakes in publically listed small cap UK companies and works with management to effect change. The GMOIC on this fund is close to breakeven and in due course we expect a private equity like return from this position.
The Company's last remaining Specialty fund, Resonant Music, which acquires the rights to original scores for movies, and subsequently exploits those rights, achieved a notable success by securing the rights to the original score for The King's Speech, which has been tipped for award success. The fund should benefit from a strong theatrical release and subsequent DVD sales. The royalty stream from the fund's other investments is expected to continue to show healthy growth. We expect to see a number of copycat funds being launched in this area.
Remaining Hedge Fund Positions
There remain two small Hedge Fund positions within the portfolio, a legacy of the Company's former pan-Alternative investment mandate, under its previous manager. These are Deephaven Global Multi-Strategy Fund and King Street Capital Ltd Class S Series 9. The former is a multi-strategy relative value fund that was acquired by Stark Investments who initiated a liquidation process in May last year. The capital is being returned on a drip basis though at a slower pace than expected. The latter is ostensibly a US based distressed fund that has historically played credit markets via a combination of tactical and longer term strategies. The sidepocket actually relates to a relatively illiquid investment into German real estate, a strategy somewhat removed from the description 'on the tin' of the main fund.
The remaining legacy investment of note is Aarkad Plc. Following extensive evaluation work late last year the Aarkad position was written down by 75%. We expected some residual value but subsequent to the period end we have now been advised by the liquidator that investors are unlikely to recover any of their investment. Accordingly your Board has taken the prudent step of writing this holding down to nil as at 30 September 2010. The liquidator has advised that there may be some future realisations from proceedings brought by the liquidator against third parties, though as close followers of this investment we are not optimistic. The impact of the write-down to nil was a reduction in the Company's NAV of approximately 1%.
Hedging Activity
There were no USD currency hedges in place during the period. The assets of the Company are mostly priced in US Dollars, the cash is largely held in US Dollars and the Company's liabilities are predominantly in US Dollars, which means that the Company's assets have minimal transactional risk. Investors should note that Sterling share class holders are exposed to translational risk from USD assets. There is a partial physical hedge in place for the Company's uncalled Euro commitments with Euro cash being held, though we note that the FMV of the Euro assets are only 9.3% of NAV (in USD terms).
Portfolio Strategy and Outlook
The Company has a strong level of commitment cover of 86.2%, one of the highest in its peer group. There is no magic formula for determining what that level should be, and every quoted fund of Private Equity Fund's needs differ depending on quality of underlying investment, cash call rate, vintage exposure of underlying funds or, for example, as in the Company's recent case, share buybacks. Using conservative estimates for distributions and assuming that all of the Company's investments draw to the maximum, we believe we are able to estimate with some degree of confidence where we expect future 'trough level cash' to fall. Accordingly we are confident that continuing to deploy the Company's cash into 2010 and 2011 vintages is an appropriate strategy though we anticipate retaining a prudent and conservative level of cash for commitment cover.
We are making a commitment to Gores Capital Partners III LP, a US operational turnaround Private Equity fund, approval for which has already been given by the Company's Board subject to the operational and legal due diligence process which has now been completed with no material adverse findings. This will be a 2010 vintage commitment, though at the time of writing the first cash call has not yet been made.
The Buyout sector is likely to be successful for cash deployed this year and into next, however any excessive returns are likely to see a return to the spotlight for the Private Equity industry. The Aberdeen view is that returns to investors are likely to remain muted, but with the better teams being able to deliver around 2x net. We continue to favour the smaller General Partners, particularly where fees and alignments of interests with investors make us more comfortable.
We continue to remain less than enamoured with US Mega Buyout, and indeed most funds are going to struggle to deploy money into this area, with lenders still reticent for their low cost debt to be deployed into this area without compelling re-engineering or economic fundamentals, neither of which are present in abundance at this time. Mid Market Buyout is within our comfort zone, and we are now willing to look at those houses which are able to deploy away from defensive areas into potentially riskier areas, for example consumer or retail. From a geographic perspective we are also prepared to look away from the US into Europe, with a preference for a pan European fund, rather than country specific, principally for diversification purposes. Anecdotally it appears that financing for the large end of European Buyout is proving to be tougher to secure, most likely through a combination of the European recovery lagging that of the US and a more deep seated conservatism in European banks.
For the Venture element of the portfolio we already have good exposure through the US and we are minded at this stage to not increase that US VC exposure.
The Asia Pacific region, and in particular South East Asia, holds strong potential. Asia's role in the world economy is changing; whilst it will remain a manufacturer of cheap products for a western world encumbered by expensive and inflexible labour, it is becoming a consumer powerhouse in its own right with luxury goods, education and technology at the forefront of that demand. We are looking at funds that have broad exposure to South East Asia rather than those that are country specific.
Alexander Barr
Aberdeen Asset Managers Limited
25 November 2010
Condensed Statement of Comprehensive Income
Six months ended | Six months ended | Year ended | ||
30 September 2010 | 30 September 2009 | 31 March2010 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Gains on investments | 6 | 541 | 14,389 | 14,007 |
Income | 7 | 209 | 83 | 147 |
Currency gains/(losses) | 16 | (49) | (14) | |
Investment management fees | (1,366) | (1,355) | (2,740) | |
Other expenses | (483) | (1,332) | (2,272) | |
_______ | _________ | _________ | ||
(Loss)/profit and total comprehensive Income for the period | (1,083) | 11,736 | 9,128 | |
_______ | _________ | _________ | ||
Earnings per share | 9 | |||
Sterling shares | GBP (0.0061) | GBP 0.0568 | GBP 0.0442 | |
_______ | _________ | _________ | ||
US Dollar shares | n/a | US$ 0.0472 | US$ 0.0388 | |
_______ | _________ | _________ | ||
The Company does not have any income or expense that is not included in (loss)/profit for the period, and therefore the "(Loss)/profit for the period" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised). | ||||
The total columns of this statement represent the Statement of Comprehensive Income, prepared in accordance with IFRS. All items in the above statement derive from continuing operations. | ||||
All income is attributable to the equity holders of Aberdeen Private Equity Fund Limited. | ||||
Condensed Balance Sheet
As at | As at | As at | ||
30September 2010 | 30September 2009 | 31March2010 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Non-current assets | ||||
Financial assets held at fair value through profit or loss | 5 | 112,105 | 108,757 | 104,992 |
Current assets | ||||
Cash and cash equivalents | 69,487 | 79,410 | 80,561 | |
Trade and other receivables | 167 | 133 | 140 | |
_______ | _______ | _______ | ||
69,654 | 79,543 | 80,701 | ||
_______ | _______ | _______ | ||
Creditors: amounts falling due within one year | ||||
Trade and other payables | (552) | (458) | (459) | |
_______ | _______ | _______ | ||
Net current assets | 69,102 | 79,085 | 80,242 | |
_______ | _______ | _______ | ||
Net assets | 181,207 | 187,842 | 185,234 | |
_______ | _______ | _______ | ||
Capital and reserves | ||||
Share capital | 11 | - | - | - |
Share premium | 255,815 | 258,759 | 258,759 | |
Revenue reserves | 12 | (74,608) | (70,917) | (73,525) |
_______ | _______ | _______ | ||
Equity shareholders' funds | 181,207 | 187,842 | 185,234 | |
_______ | _______ | _______ | ||
Net asset value per share (pence): | 10 | |||
Sterling shares | GBP 0.8649 | GBP 0.8613 | GBP 0.8955 | |
__________ | __________ | __________ | ||
US Dollar shares | n/a | US$ 0.8003 | US$ 0.7892 | |
__________ | _________ | __________ |
Condensed Statement of Changes in Equity
Six months ended 30 September 2010 (unaudited) | |||
Share | Revenue | ||
premium | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2010 | 258,759 | (73,525) | 185,234 |
Repurchase of shares | (2,944) | - | (2,944) |
Loss from operations | - | (1,083) | (1,083) |
_______ | _______ | _______ | |
As at 30 September 2010 | 255,815 | (74,608) | 181,207 |
_______ | _______ | _______ | |
Six months ended 30 September 2009 (unaudited) | |||
Share | Revenue | ||
premium | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2009 | 258,759 | (82,653) | 176,106 |
Profit from operations | - | 11,736 | 11,736 |
_______ | _______ | _______ | |
As at 30 September 2009 | 258,759 | (70,917) | 187,842 |
_______ | _______ | _______ | |
Year ended 31 March 2010 (audited) | |||
Share | Revenue | ||
premium | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2009 | 258,759 | (82,653) | 176,106 |
Profit from operations | - | 9,128 | 9,128 |
_______ | _______ | _______ | |
As at 31 March 2010 | 258,759 | (73,525) | 185,234 |
_______ | _______ | _______ |
Condensed Statement of Cash Flows
Six months ended | Six months ended | Yearended | |
30 September 2010 | 30 September 2009 | 31 March2010 | |
(unaudited) | (unaudited) | (audited) | |
US$'000 | US$'000 | US$'000 | |
Cash flows from operating activities | |||
(Loss)/profit for the period | (1,083) | 11,736 | 9,128 |
Net interest income from cash and cash equivalents | (170) | - | (1) |
Unrealised losses/(gains) on investments | 128 | (13,480) | (12,771) |
Increase/(decrease) in trade and other payables | 93 | (52) | (51) |
(Increase)/decrease in trade and other receivables | (27) | 9,564{A} | (34) |
_________ | _________ | _________ | |
Net cash (outflow)/inflow from operating activities | (1,059) | 7,768 | (3,729) |
Cash flows from investing activities | |||
Net interest income from cash and cash equivalents | 170 | - | 1 |
Purchases of investments | (14,529) | (9,453) | (21,196) |
Sales of investments | 7,288 | 26,786 | 51,176 |
_________ | _________ | _________ | |
Net cash (outflow)/inflow from investing activities | (7,071) | 17,333 | 29,981 |
Cash flows from financing activities | |||
Repurchase of shares | (2,944) | - | - |
_________ | _________ | _________ | |
Net cash outflow from financing activities | (2,944) | - | - |
_________ | _________ | _________ | |
Net change in cash and cash equivalents for the period | (11,074) | 25,101 | 26,252 |
Cash and cash equivalents at beginning of the period | 80,561 | 54,309 | 54,309 |
_________ | _________ | _________ | |
Cash and cash equivalents at the end of the period | 69,487 | 79,410 | 80,561 |
_________ | _________ | _________ | |
{A} includes US$9,581,000 relating to amounts due from brokers |
Notes to the Accounts
1. | General information |
The Company is a limited liability company incorporated and domiciled in Guernsey. The address of the registered office is as included on page 20 of the Half Yearly Report to be posted to shareholders shortly. The Company is listed on the London Stock Exchange. This condensed interim financial information was approved for use on 25 November 2010. This condensed interim financial information does not comprise statutory accounts within the meaning of the Companies (Guernsey) Law, 2008. Statutory accounts for the year ended 31 March 2010 were approved by the Board of Directors on 23 July 2010. The report of the auditors on these accounts was unqualified and did not contain an emphasis of matter paragraph. This interim financial information for the half year period ended 30 September 2010 has been reviewed, not audited. |
2. | Basis of preparation |
This condensed interim financial information for the half year period ended 30 September 2010 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Services Authority in the UK and with IAS 34, "Interim Financial Reporting". The condensed interim financial information should be read in conjunction with the annual financial statements for the year ended 31 March 2010, which have been prepared in accordance with International Financial Reporting Standards. |
3. | Accounting policies |
The accounting policies are consistent with those of the annual financial statements for the year ended 31 March 2010. |
4. | Operating segments |
The Company is engaged in three segments of business: investment in the Private Equity, Specialty & Private Equity Like Funds portfolio, the Strategic Hedge Funds portfolio and the Transitional portfolio. A reconciliation of movements in value during the period can be found in notes 5 and 6. | |
All of the Company's income from investments is from underlying investments that are incorporated in countries other than Guernsey. | |
The Company has a diversified portfolio of investments and no single investment accounts for more than 20% of the Company's income. |
30 September 2010 | 30 September 2009 | 31 March2010 | ||||||
5. | Financial assets at fair value through profit or loss | US$'000 | US$'000 | US$'000 | ||||
Cost at beginning of period | 134,918 | 155,307 | 155,307 | |||||
Additions | 14,529 | 9,453 | 21,196 | |||||
Disposals | (8,574) | (28,115) | (44,333) | |||||
Realised gains on investments | 1,732 | 1,329 | 2,748 | |||||
_________ | _________ | _________ | ||||||
Cost at end of period | 142,605 | 137,974 | 134,918 | |||||
Unrealised losses on investments | (30,500) | (29,217) | (29,926) | |||||
_________ | _________ | _________ | ||||||
Fair value at end of period | 112,105 | 108,757 | 104,992 | |||||
_________ | _________ | _________ | ||||||
The operating segments of the financial assets at fair value through profit or loss are analysed as follows: | ||||||||
Private Equity | ||||||||
Specialty | Strategic | |||||||
& Private Equity Like | HedgeFunds | Transitional | ||||||
Funds portfolio | portfolio | portfolio | Total | |||||
30 September 2010 | US$'000 | US$'000 | US$'000 | US$'000 | ||||
Cost at beginning of period | 111,947 | 12,771 | 10,200 | 134,918 | ||||
Additions | 14,529 | - | - | 14,529 | ||||
Disposals | (2,662) | (5,912) | - | (8,574) | ||||
Realised (losses)/gains on investments | (711) | 2,443 | - | 1,732 | ||||
_________ | _________ | _________ | _________ | |||||
Cost at end of period | 123,103 | 9,302 | 10,200 | 142,605 | ||||
Unrealised losses on investments | (11,623) | (8,677) | (10,200) | (30,500) | ||||
_________ | _________ | _________ | _________ | |||||
Fair value at end of period | 111,480 | 625 | - | 112,105 | ||||
_________ | _________ | _________ | _________ | |||||
Private Equity | ||||||||
Specialty | Strategic | |||||||
& Private Equity Like | HedgeFunds | Transitional | ||||||
Funds portfolio | portfolio | portfolio | Total | |||||
30 September 2009 | US$'000 | US$'000 | US$'000 | US$'000 | ||||
Cost at beginning of period | 86,361 | 46,652 | 22,294 | 155,307 | ||||
Additions | 9,453 | - | - | 9,453 | ||||
Disposals | (138) | (22,782) | (5,195) | (28,115) | ||||
Realised (losses)/gains on investments | (212) | 1,341 | 200 | 1,329 | ||||
_________ | _________ | _________ | _________ | |||||
Cost at end of period | 95,464 | 25,211 | 17,299 | 137,974 | ||||
Unrealised losses on investments | (12,550) | (4,917) | (11,750) | (29,217) | ||||
_________ | _________ | _________ | _________ | |||||
Fair value at end of period | 82,914 | 20,294 | 5,549 | 108,757 | ||||
_________ | _________ | _________ | _________ | |||||
Private Equity | ||||||||
Specialty | Strategic | |||||||
& Private Equity Like | Hedge Funds | Transitional | ||||||
Funds portfolio | portfolio | portfolio | Total | |||||
31 March 2010 | US$'000 | US$'000 | US$'000 | US$'000 | ||||
Cost at beginning of period | 86,361 | 46,652 | 22,294 | 155,307 | ||||
Additions | 21,144 | 52 | - | 21,196 | ||||
Disposals | (2,120) | (35,436) | (6,777) | (44,333) | ||||
Reclassifications | 7,100 | (1,225) | (5,875) | - | ||||
Realised (losses)/gains on investments | (538) | 2,728 | 558 | 2,748 | ||||
_________ | _________ | _________ | _________ | |||||
Cost at end of period | 111,947 | 12,771 | 10,200 | 134,918 | ||||
Unrealised losses on investments | (13,026) | (6,700) | (10,200) | (29,926) | ||||
_________ | _________ | _________ | _________ | |||||
Fair value at end of period | 98,921 | 6,071 | - | 104,992 | ||||
_________ | _________ | _________ | _________ | |||||
6. | Net changes in fair value of financial assets at fair value through profit or loss | |||
The net realised and unrealised investment gain or loss from financial assets at fair value through profit or loss shown in the Condensed Statement of Comprehensive Income is analysed as follows: | ||||
Six months ended | Six months ended | Year ended | ||
30 September 2010 | 30 September 2009 | 31 March 2010 | ||
US$'000 | US$'000 | US$'000 | ||
Unrealised (losses)/gains on investments | (128) | 13,480 | 12,771 | |
Capital call expenses{A} | (1,063) | (420) | (1,512) | |
Realised gains on investments | 1,732 | 1,329 | 2,748 | |
_________ | _________ | _________ | ||
541 | 14,389 | 14,007 | ||
_________ | _________ | _________ | ||
{A} Capital call expenses relate to management fees and other expenses paid to investees. | ||||
Six months ended | Six months ended | Yearended | ||
30 September 2010 | 30 September 2009 | 31 March2010 | ||
7. | Income | US$'000 | US'000 | US'000 |
Net income from investments in limited partnerships and directly held investments | 39 | 83 | 146 | |
Net interest income from cash and cash equivalents | 170 | - | 1 | |
_________ | _________ | _________ | ||
209 | 83 | 147 | ||
_________ | _________ | _________ |
8. | Taxation |
The Company is domiciled in Guernsey. The Company is exempt from paying income tax in Guernsey. The Company is registered for taxation purposes in Guernsey where it pays an annual exempt status fee (which is currently £600) under The Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 (as amended). |
9. | Earnings per share |
Basic earnings per share is calculated by dividing the returns attributable to holders of shares in a particular class by the weighted average number of shares in that class in issue during the period. There were no potentially dilutive shares in issue at 30 September 2010 (30 September 2009 - nil; 31 March 2010 - nil). |
10. | Net asset value per share |
The net asset value of each Sterling share is determined by dividing the net assets of the Company attributable to the Sterling shares of £114,994,000 (US$181,207,000) (30 September 2009 - £78,132,000 (US$124,957,000); 31 March 2010 - £81,332,000 (US$123,372,000)) by 132,956,736 (30 September 2009 - 90,715,319; 31 March 2010 - 90,825,779) Sterling shares, being the number of Sterling shares in issue at the period end. | |
The US Dollar shares were converted into Sterling shares on 2 July 2010. The net asset value of each US Dollar share was determined by dividing the net assets of the Company attributable to the US Dollar shares on 30 September 2009 of US$ 62,885,000 and 31 March 2010 of US$ 61,862,000 by 78,573,876 US Dollar shares on 30 September 2009 and 78,383,753 US Dollar shares on 31 March 2010, being the number of US Dollar shares in issue on those dates. |
11. | Share capital |
Following approval by shareholders of the Share Conversion Proposal on 3 June 2010, all the US Dollar shares were converted into new Sterling shares on 2 July 2010, on the basis of 0.5810 Sterling shares for every US Dollar share held. Accordingly, 45,540,957 new Sterling shares were issued on 2 July 2010 bringing the number of Sterling shares in issue to 136,366,736. | |
Following the conversion process, 3,410,000 Sterling shares were bought back for cancellation at a total cost of US$ 2,944,000 (2009 - US$ nil) including expenses. |
12. | Revenue reserves |
The revenue reserves reflected in the Balance Sheet at 30 September 2010 includes losses of US$30,500,000 (30 September 2009 - losses of US$29,217,000; 31 March 2010 - losses of US$29,926,000) which relate to the revaluation of investments held at the reporting date. |
13. | Related party disclosure |
Mrs Wick is chief investment officer of Consensus Business Group which acts as adviser to Elsina Limited, which is a substantial shareholder of the Company. At the period end Mr Hebson was a senior fund manager at Merseyside Pension Fund, which is also a substantial shareholder of the Company. |
Independent Review Report to Aberdeen Asian Income Fund Limited
Introduction
We have been engaged by the Company to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010, which comprises the Statement of Comprehensive Income, Balance Sheet, Statement of Changes in Equity, Statement of Cash Flows and related notes. We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in Note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards. The condensed set of financial statements included in this half-yearly financial report has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting'.
Our Responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Disclosure and Transparency Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 September 2010 is not prepared, in all material respects, in accordance with International Accounting Standard 34 and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
25 November 2010
Schedule of Investments
As at 30 September 2010
Investment | |||
Investments | called/cost {A}US$'000 | Fair ValueUS$'000 | % ofNAV |
Private Equity, Specialty & Private Equity Like Funds portfolio | |||
Aarkad Plc{B} | 7,100 | - | - |
Coller International Partners V L.P. | 7,163 | 7,790 | 4.3 |
DFJ Athena L.P. | 6,775 | 6,170 | 3.4 |
Goldman Sachs Capital Partners VI L.P. | 5,875 | 4,445 | 2.5 |
Greenpark International Investors III L.P. | 14,115 | 12,694 | 7.0 |
HIG Bayside Debt & LBO Fund II L.P. | 4,609 | 5,355 | 3.0 |
MatlinPatterson Global Opportunities Partners III L.P. | 6,284 | 4,638 | 2.6 |
Oaktree OCM Opportunities Fund VIIb L.P. | 13,500 | 19,515 | 10.8 |
Pine Brook Capital Partners L.P. | 2,339 | 2,916 | 1.6 |
PineBridge Latin America Partners II L.P. | 1,676 | 1,696 | 0.9 |
Resonant Music I L.P. | 3,741 | 3,510 | 1.9 |
Rho Ventures VI L.P. | 3,300 | 2,767 | 1.5 |
Silver Lake Partners III L.P. | 7,849 | 8,380 | 4.6 |
SVG Strategic Recovery Fund II L.P. | 8,510 | 7,018 | 3.9 |
Tenaya Capital V L.P. | 5,928 | 6,229 | 3.4 |
Terra Firma Capital Partners III L.P. | 11,133 | 4,255 | 2.3 |
Thoma Bravo Fund IX L.P. | 4,254 | 5,614 | 3.1 |
Thomas H Lee Parallel Fund VI L.P. | 8,952 | 8,488 | 4.7 |
_________ | _________ | _________ | |
123,103 | 111,480 | 61.5 | |
_________ | _________ | _________ | |
Investment | |||
Investments | called/cost{A} | Fair Value | % of |
Strategic Hedge Funds portfolio | US$'000 | US$'000 | NAV |
Deephaven Global Multi-Strategy Fund Ltd. | 749 | 569 | 0.3 |
King Street Capital Ltd. Class S Series 9 | 53 | 56 | - |
Rye Select Broad Market XL Portfolio Ltd.{C} | 8,500 | - | - |
_________ | _________ | _________ | |
9,302 | 625 | 0.3 | |
_________ | _________ | _________ | |
Investment | |||
Investments | called/cost{A} | Fair Value | % of |
Transitional portfolio | US$'000 | US$'000 | NAV |
Defender Ltd.{C} | 10,200 | - | - |
_________ | _________ | _________ | |
Total investments | 142,605 | 112,105 | 61.8 |
_________ | _________ | _________ | |
Fair Value | % of | ||
Fixed-term deposits | US$'000 | NAV | |
Wells Fargo | 16,257 | 9.0 | |
Cash | 53,230 | 29.4 | |
Other net current liabilities | (385) | (0.2) | |
_________ | _________ | ||
52,845 | 29.2 | ||
Net assets | 181,207 | 100.0 | |
_________ | _________ | ||
{A} Investment called/cost represents commitments drawn down less net distributions. | |||
{B} Investment is in liquidation and although future realisations are possible the Company is not optimistic of any returns. | |||
{C} Because of their exposure to Bernard L Madoff Investment Securities LLC, these investments were written down to nil value. The Company continues to monitor the situation on behalf of its investors and to make every appropriate effort to seek recovery of the assets. | |||
The Half Yearly Report will shortly be available from the Company's website (www.aberdeenprivateequityfund.co.uk) and will be posted to shareholders in November 2010. Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.