27 Nov 2012 07:00
ABERDEEN PRIVATE EQUITY FUND LIMITED
UNAUDITED HALF YEARLY REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2012
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 2012.
Performance
The Company's NAV per share fell by 2.7% over the six months to 30 September 2012 (from 105.76p to 102.95p). The US Dollar declined versus Sterling over the period under review by approximately 1%, which negatively impacted the NAV. The decline in NAV should also be set in the context that the Company paid a dividend during the period under review. The Company announced that it will aim to pay out 10% of distributions received, and has committed to pay a minimum of 1p. During the period we announced and paid a 2p dividend, representing a yield of 3.1% on the ex-dividend date.
Market Overview
It has been interesting to note that competition to complete deals at the larger end of the buyout spectrum remains strong, but that mid-market buyout valuations appear to be more competitive, with transaction multiples noticeably lower than this time last year.
The nascent recovery in the US's economic fortunes, at a time when China is going through both a generational change in leadership and some degree of economic recalibration presents significant opportunities in both their respective Private Equity markets. A number of the investment decisions made by the Manager in the recent past look set to benefit from these changes with, for example, Gores Capital Partners' focus on largely US industrial turnaround opportunities and Pangaea Two Parallel's investment in the Chinese Burger King franchise, which is perhaps timely as a play on the introduction of lower price point Western consumer brands into the Chinese market.
Private Equity exits continue to hold up well, continuing to be driven by the high cash levels on major global corporates' balance sheets. The IPO market has continued to see quite narrow windows where demand and confidence are such that IPOs will be priced successfully. It is likely therefore that we will continue to see trade sales as being the primary Private Equity sale route. These levels of corporate firepower give the Board a high degree of confidence that Private Equity is capable of continuing to generate good returns for investors.
Share Buybacks
It is pleasing to report that the share price strengthened by 17.7% (rising from 55.63p to 65.5p) over the period. The Company purchased 212,000 Ordinary shares in the market for cancellation in the period.
Portfolio Commentary
The period under review has continued to be eventful in respect of underlying activity levels, with the Company participating in a number of large PE buyout deals. Notwithstanding that, the Manager has generally eschewed primary fund raises in the 'mega' space and thus looks set to be more attractively positioned on an on-going basis given the prolonged market imbalance between large deal pricing versus that of smaller deals.
The Company made its first co-investment, opting to invest alongside Lion Capital in Alain Afflelou, a French chain of opticians. There are specific insurance reimbursement characteristics to this market that we are confident will negate the broader economic concerns of mainland Europe, though as with most Private Equity investment the Company has positioned itself for the longer term.
We also concluded the sale of our investment in the Terra Firma III fund in the Secondary market (at a more attractive discount than we would have achieved when we first considered selling in the wake of Terra Firma's widely publicised EMI foray). This also serves to return cash to the portfolio sooner than expected, thus bolstering the Company's commitment cover ratio, which has already been enhanced with the addition of a multi-currency £10m loan facility from RBS.
Outlook
Your Board remains positive about the immediate and longer term outlook for the asset class, much of it driven by on-going structural dislocations in global markets and also corporate cash levels, as discussed above. The Manager continues to review a wide opportunity set and also continues with its research programmes. The Board supports the Manager's focus on finding potential opportunities off the beaten track. Recent research visits include Mexico, which, if the incoming administration can achieve their aim of increasing growth from 4% to 6%, could auger well for the opportunities that are presenting themselves in Private Equity there.
The Manager has continued to assess the value opportunities that lie in Secondary deals, often from more established larger names in the sector. Dependent on pricing, these can represent good opportunities for the Company and we would expect them to be complimentary to other strategies in the portfolio.
The Manager has continued to market the Company's shares during the period under review, and a series of roadshows has brought a number of new holders onto the share register. As a result the Company has seen a healthy increase in the monthly levels of share turnover, which helped to reduce the discount to NAV from 47% to 36% over the period under review. At the time of writing the shares are trading at a discount of 34.2%.
Jonathan Carr
Chairman
26 November 2012
Interim Board Report
Principal Risk Factors
The Company's principal risks and uncertainties are as noted below. The financial risks faced by the Company, and the way in which they are managed, are described in more detail within note 19 to the Financial Statements in the Company's Annual Report for the year ended 31 March 2012. The Company's principal risks and uncertainties have not changed materially since the date of that Annual Report.
Shares
The market price and the realisable value of the shares, as well as being affected by their underlying net asset value ("NAV"), also reflect supply and demand for the shares, market conditions and general investor sentiment in the Private Equity sector. As such, the market price and the realisable value of the shares may fluctuate and vary considerably from the net asset value of the 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 shares when the return on the Company's underlying assets exceeds the cost of borrowing, it will have the opposite effect when the underlying return is less than the cost of borrowing. At present and throughout the period under review the Company did not have any borrowings.
Market Risks
The fair value of 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. Investment in Private Equity generally involves a greater degree of risk than that usually associated with investment in listed securities markets.
General
Shareholders have no right to redeem their Shares and in normal circumstances will only be able to realise their investment through the market. The Company has introduced a three-yearly continuation vote commencing at the Annual General Meeting in 2013 and if shareholders vote against the Ordinary Resolution to continue, the Company will be wound up or reconstructed.
Taxation and Exchange Controls
Any change in the Company's tax status or in exchange control and 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 a material impact on the performance of the Company. The Board regularly considers the Company's investment strategy and the Manager's recommendations for investments and divestments, and monitors performance at each Board meeting.
Portfolio Risks
Private Equity investments are long-term in nature and they may take a considerable period to be realised. The great majority 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.
Regulatory Developments
The European Commission published the Alternative Investment Fund Managers Directive on 1 July 2011 (the "AIFM Directive"). The AIFM Directive, which came into force on 21 July 2011, is due to be implemented through secondary legislation in the UK by 22 July 2013, and is likely to have a significant impact on the management of almost all investment funds. It is also likely there will be an increase, potentially a material increase, in the Company's governance and administration expenses in complying with the AIFM Directive if the Company wishes to take advantage of the proposed marketing "passport" in order to market within the EU. The Board and the Company's advisers will continue to monitor the progress and likely implications of the AIFM Directive for the Company.
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) include a fair review of the information required by the Disclosure and Transparency Rules (DTR) 4.2.7R and 4.2.8R, namely:
The Directors of the Company are listed in the Half-Yearly Report.
For and on behalf of the Board of Aberdeen Private Equity Fund Limited
Jonathan Carr
Chairman
26 November 2012
Manager's Review
At the end of the period, approximately 88.5% of the Company's NAV was invested in Private Equity investments and 11.5% in cash. The Company held 23 funds and one co-investment in its portfolio at 30 September 2012.
We set out here a summary of the NAV and share price performance:
Cumulative Performance (%) | |||||||
As at 30 Sept 2012 | 1m | 3m | 6m | 1yr | 3yr | 5yr | |
Share price | 65.5p | 2.5 | 14.9 | 21.3 | 12.5 | 26.2 | -31.8 |
NAV | 102.9p | 0.0 | -0.5 | -0.8 | 4.6 | 21.8 | 7.9 |
Discrete Performance (%) | |||||
30 Sept 2012 | 30 Sept 2011 | 30 Sept 2010 | 30 Sept 2009 | 30 Sept 2008 | |
Share price | 12.5 | -10.4 | 25.2 | -32.7 | -19.7 |
NAV | 4.6 | 16.0 | 0.4 | -11.4 | 0.1 |
Total Return; NAV to NAV, Net Income Reinvested, GBP
Source: Aberdeen Asset Managers Limited and Morningstar
During the first half of the Company's financial year the NAV fell by 2.7% on a capital return basis of which 1.1% arose due to a fall in the US Dollar against Sterling which is the Company's reporting currency.
Market News and Private Equity environment
The interim period has been characterised by a subdued level of deal activity, in particular outside the US. Dealogic reported that overall global Private Equity deal volume (and also value) for Q2 was down compared to the same period last year.
Our view however is that deals will be done, albeit not in a homogeneous fashion across markets and geographies. Competition at the large end of the market is still high (from previous vintages' uncalled dry powder and significant new fund raises). In the mid-market we appear to have seen less deal activity. A consequence of this is that mid-market buyout valuations have fallen by just over 14% (H1 12 at 6.6x EBITDA vs. H2 11 at 7.7x EBITDA).1
From an economic perspective, specifically in the US, the environment seems to be moving to, and holding at, a 'cautiously OK' state subject to some delicate caveats (getting through the 2013 fiscal cliff2, momentum in housing starts etc.) with some stimulus being maintained with the help of the US Federal Reserve's Quantitative Easing programme. We expect to see weaker export growth resulting from continuing difficult global conditions, but a mildly resilient US consumer which should bode well for associated sectors. Therefore, it is no surprise that the value of US retail LBOs year to date has hit $7.7bn3, some way above the equivalent figure for 2011 ($4.5bn).
Perhaps not surprisingly, given this background, US fund raising remains positive with over 300 funds raising $130bn in the first three quarters of 20124 and optimism about the US remains high with the managers we meet. However this probably masks a number of fund raises that fall considerably short of target. Anecdotally, fund raising remains tough for most GPs, with the time to final close increasing, although there appears to be strong polarisation in the market with brand recognition working in larger managers' favour.
One area that is also doing well on the fundraising front is that of Secondaries funds. Both the GPs and LPs in this space continue to be positive about the prospects for this sub sector, not least because of the large volumes of buyout capital raised pre-crisis. This is exemplified by the success that the bigger Secondaries funds have had in raising new asset pools. Coller VI closed at $5.5bn, Axa's fund V at $7.1bn and CS Strategic Partners closed at $2.9bn (all on top of Lexington's $7bn raise last year).
In Asia we note with interest the slowing rate of growth in China (from, in our view, unsustainably high levels). Hong Kong retail sales only grew 8.8% in June, the lowest since September 2009, reflecting a cutback of spending by mainland tourists. China Purchasing Managers indices are also falling with the lowest readings for 10 months posted in June. The Peoples Bank of China responded by cutting rates in July (as did the Bank of Korea, unexpectedly cutting rates for the first time in 3 years). These developments carry many broader implications for regional Asian equity markets. One is that many of the pre-IPO Chinese PE funds that have established themselves over the last few years are likely to find themselves falling short of expectations. We have avoided this segment of the market to date and see no catalyst for a change of view.
___________________________________
1 Efinancial news 25 July, quoting Epsilon Research and Argo Soditic (French buyout manager).2 The consensus definition being a coming together of a number of events such as ending of the Bush Tax cuts (and its effect on the economy) and government spending cuts. 3 Data from Dealogic, quoted from The Week in PE, Evercore, Issue XLIV, October 2012.4 LP source, quoted from The Week in PE, Evercore, Issue XLVI, October 2012.
Portfolio Commentary
During the period the Company was involved in three of the largest PE buyout deals globally. Thomas H Lee purchased Party City ($2.7bn) in a secondary transaction from a consortium headed by Advent International. Silver Lake purchased Global Blue (€1bn) in another secondary transaction, this time from Equistone (the former Barclays fund). Terra Firma purchased Four Seasons Healthcare (£825m) from RBS. Such a high level of activity was unusual for the period but, with these three funds approaching the end of their investment periods, perhaps not surprising.
HIG Bayside also commented that they are struggling to deploy capital in mid-cap distressed deals, instead finding better value at the smaller end. This perhaps explains why they are only c53% drawn which is much lower than we would expect for a distressed fund nearly five years into its investment period. However, with continued dislocations in lending markets, we expect that this patience should reward the fund in due course.
During the interim period under review the Company closed a co-investment in Alain Afflelou, alongside Lion Capital. Alain Afflelou is a French optical product retailer (optician) whose sales are strongly supported by the insurance reimbursement nature of the French optical market. We also sold, in the secondary market, our position in Terra Firma III. This fund has struggled to meet investor expectations and we were able to dispose of this holding at an attractive discount. This sale has also served to bolster the Company's cash reserves. We note for completeness' sake that Terra Firma had made an investment in The Garden Centre prior to our disposal of the position.
The Tenaya successor fund in which we recently invested, Fund VI, made its first investments - GoodData Corporation (cloud based analytics / warehousing), Baihe (Chinese online dating) and Edmodo (teacher / pupil social networking). Shortly preceding this, Tenaya's Fund V made its last investment in Kaminario, a Storage Area Network (SAN) business. Despite a relatively sparse IPO market, Tenaya were able to successfully list Palo Alto Networks and Kayak in July. Both have been trading well and at the time of writing they are respectively 34% and 28% above their IPO price, with Tenaya opting not to sell shares in the initial offering.
In the venture capital space we note that Zynga have written off half of the purchase price of OMGPop, sold by one of our venture managers for cash. Zynga is now off 77% since the IPO in December last year. Northzone are now holding two of their early investments at nearly 2.0x although a series of recent investments, held at cost, means that the overall fund valuation has slipped to 1.15x. This is as expected and Northzone is best described as now trending to a normal J curve profile.
On the distressed side, Oaktree paid out another 6% in August making it the first fund in the Company to pay out more capital than was paid in. MatlinPatterson has been going well as US homebuilding statistics and surveys caused a surge in the shares of homebuilder Standard Pacific.
Despite the slowdown in exits alluded to above, the Company has still been getting money back from Thomas H Lee who have been refinancing investments and taking dividends out of them. West Corporation raised a senior loan, refinancing an existing term loan and paying the rest out as a dividend which has returned 0.5x the investment cost. SMS undertook a similar exercise, returning 0.4x the investment cost.
Portfolio Strategy and Outlook
As noted above the Company made its first co-investment in the period under review. We intend to build a small allocation to co-investments mindful of the fee burden mitigation that this provides to the Company, though we are ardent believers this tail should not in itself wag the investment dog. Any exposure here will be built in a measured way, using our established investment process, which is predicated on quality as the primary screen.
We continue to review all opportunities that come our way, and note that in the last three years we have formally reviewed approximately 1,000 funds. These are spread across all geographies, sectors and Private Equity stages. We are also mindful of the opportunities in the Secondary funds space and continue to evaluate opportunities here on an as and when basis.
The Company maintains a prudent approach with respect to its cash commitment levels. At the end of the period, including the Company's facility, the cash commitment ratio was 51.5%. The Company continues to maintain a physical hedge for undrawn US commitments by holding US Dollars in cash.
The investment team have been active in helping to market the Company's shares and we are delighted that a series of roadshows carried out over the period under review has seen a number of new shareholders join the Company's register.
Alexander Barr
Aberdeen Asset Managers Limited
Manager
26 November 2012
Condensed Statement of Comprehensive Income
Six months ended | Six months ended | Yearended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Gains on investments | 7 | 2,879 | 3,959 | 19,777 |
Income | 8 | 46 | 148 | 234 |
Currency losses | (91) | (952) | (1,209) | |
Investment management fees | (1,357) | (1,323) | (2,616) | |
Performance fee | - | - | (442) | |
Other operating expenses | (754) | (642) | (1,038) | |
Tax incurred on distribution income | 9 | (259) | (50) | (221) |
Profit attributable to equity shareholders | 464 | 1,140 | 14,485 | |
_________ | _________ | _________ | ||
Earnings per share (pence) | 10 | 0.26 | 0.62 | 8.09 |
_________ | _________ | _________ | ||
The Company does not have any income or expense that is not included in profit for the period, and therefore the "Profit attributable to equity shareholders" is also the "Total comprehensive income for the period", as defined in International Accounting Standard 1 (revised). | ||||
All items in the above statement derive from continuing operations. | ||||
All income is attributable to the equity shareholders of Aberdeen Private Equity Fund Limited. | ||||
Condensed Balance Sheet
As at | As at | As at | ||
30 September 2012 | 30 September 2011 | 31 March2012 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Non-current assets | ||||
Financial assets held at fair value through profit or loss | 6 | 160,892 | 137,649 | 163,421 |
Current assets | _________ | _________ | _________ | |
Cash and cash equivalents | 21,058 | 32,413 | 22,335 | |
Trade and other receivables | 240 | 302 | 89 | |
_________ | _________ | _________ | ||
21,298 | 32,715 | 22,424 | ||
_________ | _________ | _________ | ||
Creditors: amounts falling due within one year | ||||
Trade and other payables | (389) | (469) | (850) | |
_________ | _________ | _________ | ||
Net current assets | 20,909 | 32,246 | 21,574 | |
_________ | _________ | _________ | ||
Net assets | 181,801 | 169,895 | 184,995 | |
_________ | _________ | _________ | ||
Capital and reserves | ||||
Share capital | 12 | - | - | - |
Share premium | 12 | 229,200 | 227,650 | 229,405 |
Revenue reserves | 13 | (47,399) | (57,755) | (44,410) |
_________ | _________ | _________ | ||
Equity shareholders' funds | 181,801 | 169,895 | 184,995 | |
_________ | _________ | _________ | ||
Net asset value per share (pence): | ||||
Sterling shares | 11 | 102.95 | 100.34 | 105.76 |
_________ | _________ | _________ |
Condensed Statement of Changes in Equity
Six months ended 30 September 2012 (unaudited) | |||
Share capital &Share premium | Revenuereserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2012 | 229,405 | (44,410) | 184,995 |
Repurchase of shares | (205) | - | (205) |
Profit from operations | - | 464 | 464 |
Dividend paid | - | (3,453) | (3,453) |
_________ | _________ | _________ | |
As at 30 September 2012 | 229,200 | (47,399) | 181,801 |
_________ | _________ | _________ | |
Six months ended 30 September 2011 (unaudited) | |||
Share capital &Share premium | Revenuereserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2011 | 247,229 | (58,895) | 188,334 |
Repurchase of shares | (18,591) | - | (18,591) |
Tender offer costs | (988) | - | (988) |
Profit from operations | - | 1,140 | 1,140 |
_________ | _________ | _________ | |
As at 30 September 2011 | 227,650 | (57,755) | 169,895 |
_________ | _________ | _________ | |
Year ended 31 March 2012 (audited) | |||
Share capital &Share premium | Revenuereserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2011 | 247,229 | (58,895) | 188,334 |
Issue of shares | 1,818 | - | 1,818 |
Repurchase of shares | (18,654) | - | (18,654) |
Tender offer costs | (988) | - | (988) |
Profit from operations | - | 14,485 | 14,485 |
_________ | _________ | _________ | |
As at 31 March 2012 | 229,405 | (44,410) | 184,995 |
_________ | _________ | _________ |
Condensed Statement of Cash Flows
Six months ended | Six months ended | Yearended | |
30 September 2012 | 30 September 2011 | 31 March2012 | |
(unaudited) | (unaudited) | (audited) | |
US$'000 | US$'000 | US$'000 | |
Cash flows from operating activities | |||
Profit for the period | 464 | 1,140 | 14,485 |
Net interest income from cash and cash equivalents | (46) | (148) | (234) |
Gains on investments | (2,879) | (3,959) | (19,777) |
Decrease in trade and other payables | (461) | (398) | (17) |
(Increase)/decrease in trade and other receivables | (151) | (116) | 97 |
_________ | _________ | _________ | |
Net cash outflow from operating activities | (3,073) | (3,481) | (5,446) |
Cash flows from investing activities | |||
Net interest income from cash and cash equivalents | 46 | 148 | 234 |
Distribution income from investments | 1,282 | 1,870 | 2,109 |
Realised gains on investee distributions | 6,110 | 1,973 | 9,282 |
Capital call expenses | (2,210) | (852) | (3,717) |
Purchase of investments | (16,241) | (12,314) | (37,319) |
Sales of investments | 16,467 | 7,763 | 19,949 |
_________ | _________ | _________ | |
Net cash inflow/(outflow) from investing activities | 5,454 | (1,412) | (9,462) |
Cash flows from financing activities | |||
Repurchase of shares | (205) | (18,591) | (18,654) |
Tender offer costs | - | (988) | (988) |
Equity dividends paid | (3,453) | - | - |
_________ | _________ | _________ | |
Net cash outflow from financing activities | (3,658) | (19,579) | (19,642) |
_________ | _________ | _________ | |
Net change in cash and cash equivalents for the period | (1,277) | (24,472) | (34,550) |
Cash and cash equivalents at beginning of the period | 22,335 | 56,885 | 56,885 |
_________ | _________ | _________ | |
Cash and cash equivalents at the end of the period | 21,058 | 32,413 | 22,335 |
_________ | _________ | _________ |
Notes to the Financial Statements
1. | General information |
The Company is a limited liability company incorporated and domiciled in Guernsey. The address of the registered office is 1 Royal Plaza, Royal Avenue, St Peter Port, Guernsey GY1 2HL, Channel Islands. The Company is listed on the London Stock Exchange. This condensed interim financial information was approved for use on 26 November 2012. 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 2012 were approved by the Board of Directors on 19 June 2012. 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 2012 has been reviewed by the auditors but not audited. |
2. | Basis of preparation |
This condensed interim financial information for the half year ended 30 September 2012 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 2012, which have been prepared in accordance with International Financial Reporting Standards. | |
The Company's operations are not affected by seasonality or cyclicality and as such these factors have no impact on the condensed unaudited financial statements. |
3. | Accounting policies |
The accounting policies are consistent with those of the annual financial statements for the year ended 31 March 2012, with the exception of an additional accounting policy in respect of dividends payable, which has been necessitated by the Company's first payment of a dividend during the period: | |
Dividends payable | |
Dividends which are proposed as final dividends for shareholder approval are recognised upon shareholder approval being granted. Interim dividends which are declared by the Board and do not require shareholder approval are recognised upon their declaration. | |
New IFRS/IAS Standards | |
At the date of authorisation of these interim financial statements, the following Standards were in issue but not yet effective: | |
IFRS 9 Financial Instruments (effective 1 January 2015) | |
IFRS 10 Consolidated Financial Statements (effective 1 January 2013) | |
IFRS 11 Joint Arrangements (effective 1 January 2013) | |
IFRS 12 Disclosure of Interests in Other Entities (effective 1 January 2013) | |
IFRS 13 Fair Value Measurement (effective 1 January 2013) | |
IAS 27 Separate Financial Statements (effective 1 January 2013) | |
IAS 28 (Revised) Associates and Joint Ventures (effective 1 January 2013) | |
Presentation of Items of Other Comprehensive Income - Amendments to IAS 1 (effective 1 July 2012) | |
Offsetting Financial Assets and Financial Liabilities - Amendments to IAS 32 (effective 1 January 2014) | |
Disclosures - Offsetting Financial Assets and Financial Liabilities - Amendments to IFRS 7 (effective 1 January 2013) |
4. | Segmental information |
The Company was engaged in one segment of business during the period: investment in the Private Equity & Private Equity Like Funds portfolio. A reconciliation of movements in value during the period can be found in notes 6 and 7. | |
The Company is domiciled in Guernsey. 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 may account for more than 20% of the Company's net assets at the date of investment. |
Six months ended | Six months ended | Yearended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
5. | Dividends on equity shares | US$'000 | US$'000 | US$'000 |
Amounts recognised as distributions to equity holders in the period: | ||||
Interim dividend for 2012 - 2.00p (2011 - nil) | 3,453 | - | - | |
_________ | _________ | _________ |
6. | Financial assets at fair value through profit or loss | |||
The financial assets of the operating segments of the business at fair value through profit or loss are analysed below. As of 31 March 2012 there has only been one operating segment, being Private Equity & Private Equity Like Funds. | ||||
Private Equity {A} | ||||
& Private Equity Like | ||||
Funds portfolio | ||||
30 September 2012 | US$'000 | |||
Cost at beginning of period | 139,552 | |||
Additions | 16,241 | |||
Disposals | (16,467) | |||
Realised losses on investments | (8,142) | |||
_________ | ||||
Cost at end of period | 131,184 | |||
Unrealised gains on investments | 29,708 | |||
_________ | ||||
Fair value at end of period | 160,892 | |||
_________ | ||||
Private Equity{A} | ||||
& Private Equity Like | StrategicHedge Funds | |||
Funds portfolio | portfolio | Total | ||
30 September 2011 | US$'000 | US$'000 | US$'000 | |
Cost at beginning of period | 127,224 | 575 | 127,799 | |
Additions | 12,314 | - | 12,314 | |
Disposals | (11,366) | (240) | (11,606) | |
Realised losses on investments | (7,100) | (335) | (7,435) | |
_________ | _________ | _________ | ||
Cost at end of period | 121,072 | - | 121,072 | |
Unrealised gains on investments | 16,577 | - | 16,577 | |
_________ | _________ | _________ | ||
Fair value at end of period | 137,649 | - | 137,649 | |
_________ | _________ | _________ | ||
Private Equity{A} | ||||
& Private Equity Like | StrategicHedge Funds | |||
Funds portfolio | portfolio | Total | ||
31 March 2012 | US$'000 | US$'000 | US$'000 | |
Cost at beginning of period | 127,224 | 575 | 127,799 | |
Additions | 39,137 | - | 39,137 | |
Disposals | (19,709) | (240) | (19,949) | |
Realised losses on investments | (7,100) | (335) | (7,435) | |
_________ | _________ | _________ | ||
Cost at end of period | 139,552 | - | 139,552 | |
Unrealised gains on investments | 23,869 | - | 23,869 | |
_________ | _________ | _________ | ||
Fair value at end of period | 163,421 | - | 163,421 | |
_________ | _________ | _________ | ||
{A} Includes direct investments and co-investments | ||||
7. | Net changes in fair value of financial assets at fair value through profit or loss | |||
The net realised and unrealised investment gain or loss from financial assets at fair value through profit or loss shown in the Condensed Statement of Comprehensive Income is analysed as follows: | ||||
Six months ended | Six months ended | Yearended | ||
30 September 2012 | 30 September 2011 | 31 March2012 | ||
US$'000 | US$'000 | US$'000 | ||
Unrealised gains on investments | 5,839 | 8,403 | 19,538 | |
Capital call expenses | (2,210) | (852) | (3,717) | |
Realised losses on disposal of investments | (8,142) | (7,435) | (7,435) | |
Realised gains on investee distributions | 6,110 | 1,973 | 9,282 | |
Distribution income from investments | 1,282 | 1,870 | 2,109 | |
_________ | _________ | _________ | ||
2,879 | 3,959 | 19,777 | ||
_________ | _________ | _________ | ||
Capital call expenses relate to management fees and other expenses paid to investees. | ||||
Six months ended | Six months ended | Yearended | ||
30 September 2012 | 30 September 2011 | 31 March 2012 | ||
8. | Income | US$'000 | US'000 | US'000 |
Net interest income from cash and cash equivalents | 46 | 148 | 234 | |
_________ | _________ | _________ |
9. | Taxation |
The Company is exempt from paying income tax as it is domiciled and 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). The Company is however subject to irrecoverable tax on income received from certain of its underlying portfolio holdings. |
10. | Earnings per share |
The basic earnings per share is calculated by dividing the returns attributable to shareholders by the weighted average number of shares in issue during the period. There were no potentially dilutive shares in issue at 30 September 2012 (30 September 2011 - nil; 31 March 2012 - nil). |
11. | Net asset value per share |
The net asset value of each share is determined by dividing the net assets of the Company attributable to the shares of £112,348,000 (US$181,801,000) (30 September 2011 - £108,677,000 (US$169,895,000); 31 March 2012 - £115,644,000 (US$184,995,000)) by 109,131,199 (30 September 2011 - 108,313,199; 31 March 2012 - 109,343,199) shares, being the number of shares in issue at the period end. |
12. | Share capital and share premium |
During the period to 30 September 2012 212,000 (30 September 2011 - 17,000,000 shares; 31 March 2012 - 17,070,000) shares were bought back for cancellation at a total cost of US$205,000 (30 September 2011 - US$18,591,000; 31 March 2012 - US$18,654,000) excluding expenses. |
13. | Revenue reserves |
The revenue reserves reflected in the Condensed Balance Sheet at 30 September 2012 include unrealised gains of US$29,708,000 (30 September 2011 - US$16,577,000; 31 March 2012 - US$23,869,000) which relate to the revaluation of investments held at the reporting date. |
14. | Related party disclosure |
The Company has an agreement with Aberdeen Asset Managers Limited (the Manager) for the provision of management services. The management fee is payable monthly in arrears based on an annual amount of 1.5% of the net asset value of the Company as at the last business day of each month. During the period US$1,357,000 of management fees were payable (30 September 2011 - US$1,323,000; 31 March 2012 - US$2,616,000) and US$228,000 (30 September 2011 - US$214,000; 31 March 2012 - US$232,000) was outstanding at the period end. | |
In addition, the Manager is entitled to a performance fee of 10% based on the total increase in the audited NAV - adjusted to remove the contribution to performance from all share purchases for cancellation from launch and to add back the value of any dividends that have been paid to shareholders during the period - of the shares at the end of each performance year (ending 31 March each year). For a performance fee to be paid, the Manager must achieve returns in excess of 8% (subject to a high watermark). A performance fee of US$442,000 was paid during the period in relation to the year ended 31 March 2012. No accrual has been made for the period ended 30 September 2012 (30 September 2011 - nil; 31 March 2012 - US$442,000). | |
As intimated in the Annual Report for the year ended 31 March 2012, during the period the Company amended the terms of the investment management agreement to clarify that (i) performance fees are only payable in respect of the audited year end NAV as adjusted; (ii) performance fee payments are not crystallised upon the purchase by the Company of its own shares, in the market, for cancellation; and (iii) future audited NAVs used in performance fee calculations will be adjusted to add back the value of any dividends that have been paid during the period to shareholders. Consequently, future audited NAVs used in performance fee calculations will be adjusted to add back the value of any dividends that have been paid and it has also been agreed that the aggregate fees payable by the Company to the Manager pursuant to this Agreement in respect of the financial year ending 31 March 2013 and each subsequent financial year ending 31 March thereafter will be capped at 4.99 per cent. of the audited, unadjusted Net Asset Value of the Company as at 31 March in the immediately preceding calendar year (as reported in the relevant annual financial statements of the Company). |
15. | Subsequent events |
There have been no material or significant events subsequent to the period end to disclose. |
Independent Review Report to Aberdeen Private Equity 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 2012, which comprises the Condensed Statement of Comprehensive Income, Condensed Balance Sheet, Condensed Statement of Changes in Equity, Condensed 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 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the International Auditing and Assurance Standards Board. 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 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 2012 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
26 November 2012
Schedule of Investments
As at 30 September 2012
Total | Investment | |||
Investments | Commitments | called/cost{C} | Fair Value | % of |
Private Equity{A} & Private Equity Like Funds portfolio | US$'000{B} | US$'000 | US$'000 | NAV |
Coller International Partners V L.P. | 15,000 | 5,754 | 9,317 | 5.1 |
DFJ Athena L.P. | 10,000 | 8,192 | 9,125 | 5.0 |
Goldman Sachs Capital Partners VI L.P. | 15,000 | 8,556 | 8,506 | 4.7 |
Gores Capital Partners III L.P. | 10,000 | 3,536 | 3,271 | 1.8 |
Greenpark International Investors III L.P. | €14,600 | 11,251 | 10,941 | 6.0 |
HIG Bayside Debt & LBO Fund II L.P. | 15,000 | 6,735 | 7,667 | 4.2 |
Lion Capital Fund III L.P. | €10,000 | 4,945 | 5,817 | 3.2 |
Lion/Seneca Cayman 3 L.P.{D} | €810 | 988 | 1,036 | 0.6 |
Longreach Capital Partners Ireland 1, L.P. | 7,500 | 8,840 | 7,671 | 4.2 |
Longreach Capital Partners 2 - USD, L.P. | 7,425 | - | - | 0.0 |
MatlinPatterson Global Opportunities Partners III L.P. | 10,000 | 7,215 | 5,832 | 3.2 |
Northzone VI L.P. | €10,000 | 6,094 | 7,960 | 4.4 |
Oaktree OCM Opportunities Fund VIIb L.P. | 15,000 | - | 9,023 | 5.0 |
Pangaea Two Parallel L.P. | 5,000 | 674 | 664 | 0.4 |
Pine Brook Capital Partners L.P. | 10,000 | 4,826 | 6,724 | 3.7 |
Pinebridge Latin America Partners II L.P. | 2,611 | 1,668 | 1,104 | 0.6 |
Resonant Music 1 L.P. | 5,453 | 5,136 | 4,893 | 2.7 |
RHO Ventures VI L.P. | 10,000 | 7,810 | 8,779 | 4.8 |
Silver Lake Partners III L.P. | 15,000 | 7,720 | 9,523 | 5.2 |
SVG Strategic Recovery Fund II L.P. | £7,500 | 6,534 | 7,800 | 4.3 |
Tenaya Capital V L.P. | 12,500 | 8,325 | 12,952 | 7.1 |
Tenaya Capital VI L.P. | 5,000 | 282 | 273 | 0.2 |
Thoma Bravo IX Fund L.P. | 10,000 | 6,593 | 10,600 | 5.8 |
Thomas H Lee Parallel Fund VI L.P. | 15,000 | 9,510 | 11,414 | 6.3 |
_______ | _________ | _______ | ||
131,184 | 160,892 | 88.5 | ||
_______ | _________ | _______ | ||
Cash | 21,058 | 11.6 | ||
Other net current liabilities | (149) | (0.1) | ||
_______ | _________ | |||
20,909 | 11.5 | |||
_______ | _________ | |||
Net assets | 181,801 | 100.0 | ||
_______ | _________ | |||
{A} Includes direct investments and co-investments. | ||||
{B} Unless otherwise specified. | ||||
{C} Investment called/cost represents commitments drawn down less net distributions. | ||||
{D} Co-investment alongside Lion Capital III, in co-investment vehicle Lion/Seneca Cayman 3 which holds only one direct investment (Alain Afflelou). | ||||
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 2012.
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.