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26 Feb 2010 16:36
PANTHEON INTERNATIONAL PARTICIPATIONS PLC
HALF YEARLY FINANCIAL REPORT: 31ST DECEMBER 2009
FINANCIAL SUMMARYHIGHLIGHTS 31ST DEC 2009 30TH JUNE 2009 CHANGE Summary of results NAV per share 844.6p 773.6p 9.2% Net assets £560.8m £513.6m 9.2% Ordinary shares Share price 425.0p 295.3p 43.9% Discount to NAV 49.7% 61.8% Redeemable shares Share price 420.0p 350.0p 20.0% Discount to NAV 50.3% 54.8% Investment activity Invested in private equity assets £37.4m Received from private equity assets £32.0m 1 YEAR 3 YEARS 5 YEARS 10 YEARSPERFORMANCE % % P.A % P.A % P.A NAV per share (25.0) 0.7 7.8 6.7 Ordinary share price 77.1 (19.5) (4.2) 1.8
FTSE All-Share Total Return 30.1 (1.3) 6.5 1.6
MSCI World Total Return (sterling) 18.1 1.2 6.1 0.2
PIP was launched on 18th September 1987. £1,000 invested at inception, assuming reinvestment of dividends and capital repayments, would have been worth £5,970 at 31st December 2009.
CAPITAL STRUCTURE Ordinary shares 37,521,013 Redeemable shares 28,871,255 Total 66,392,268 HISTORICAL DATA ORDINARY PRIVATE NAV PER SHARE EQUITY OUTSTANDING NAV* SHARE PRICE PORTFOLIO COMMITMENTS (£M) (PENCE) (PENCE) (£M) (£M) Interim period ended 31st 560.8 844.6 425.0 694 359December 2009 Financial year end (30th June): 2009 513.6 773.6 295.3 648 428 2008 736.1 1,108.7 750.0 806 641 2007 610.3 919.2 917.5 527 528 2006 441.0 796.8 726.5 372 365 2005 381.5 657.9 650.5 315 245 2004 245.2 572.5 463.0 233 137 2003 220.9 546.8 447.0 237 158 2002 196.4 541.6 486.5 175 138 2001 206.1 669.1 574.0 201 138 2000 161.3 599.9 457.5 140 77 1999 145.8 405.6 302.5 78 45 1998 131.3 368.6 294.5 79 50 1997 116.8 328.4 270.0 73 47 1996 106.2 302.5 225.0 48 25 1995 86.9 255.1 207.5 33 8 1994 47.4 239.6 176.5 42 7 1993 30.8 195.5 172.5 28 1 1992 21.3 139.7 93.5 28 0 1991 21.0 129.1 86.5 31 1 1990 20.2 126.7 80.5 32 2 1989 16.7 120.9 95.0 25 2 1988 12.4 102.5 75.0 2 0
* Includes participating loan notes in issue between 2000 and 2004.
CHAIRMAN'S STATEMENT
PIP's net asset value ("NAV") per share increased by 9% to 844.6p in the six months to 31st December 2009. Private equity valuations have been helped by the stock market rally and the stabilisation of the wider economy.
Over the six months to 31st December 2009, the ordinary share price increased by 44% due to both the performance of the Company's net assets and a narrowing of the discount from 62% to 50%. Whilst the discount is broadly in line with the rest of the listed private equity fund of funds sector, cautious market sentiment prevents the price from reflecting the recent improvement in the Company's financial position and quality of the underlying portfolio.
Earlier in 2009 PIP disposed of a number of fund interests in order to improve liquidity. These transactions have now been completed. The Board is therefore confident that the Company has sufficient financial resources to meet its commitments for the foreseeable future, and thereby take advantage of what may be an attractive investment period.
In the six months to 31st December 2009 the NAV increased by £47m. Reported gains by general partners and listed securities amounted to £36m. An additional £17m gain was due to the effects of foreign exchange movements on the Company's portfolio and cash balances. These gains were partially offset by interest and expenses.
INVESTMENT ACTIVITY
The six months to 31st December 2009 has seen most economies stabilising and some improvements in the availability of financing. As a result, levels of both new investments and realisations in the private equity industry have increased from their lows during the depths of the financial crisis. During the December quarter, the Company experienced an increase in call rates and, more notably, distribution rates. In particular, PIP's US venture portfolio saw an increase in distributions, driven primarily by activity from corporate buyers. A sustained recovery in activity and realisation levels will depend on economic performance, the outlook for which remains uncertain.
In the six months to 31st December 2009, PIP invested £37m in underlying private equity assets. Of this amount, £29m was paid to meet investment calls arising from PIP's primary commitments and £8m to pay for calls from the secondary portfolio. The total amount of cash distributed to PIP as a result of investment realisations during the period was £32m. Of this amount, £10m came from the primary portfolio with £22m arising from the secondary portfolio. In total PIP received distributions from more than 150 different funds, demonstrating that a well diversified mature portfolio can consistently produce significant realisation activity.
COMMITMENTS
The Company made no new commitments in the six months to 31st December 2009.
Outstanding commitments decreased by £69m to £359m. The Company paid calls of £ 37m and disposed of fund interests with £41m of outstanding commitments. These reductions were partially offset by the weakening of sterling versus the US dollar and euro.
The Company will only resume its commitment programmes after there has been a sustained recovery in the level of distributions or additional financing has been obtained.
MARKET REVIEW AND PROSPECTS
The six month period to 31st December 2009 has seen a rally in stock markets, driven by an unprecedented injection of liquidity by governments and a more stable world economy. As investor sentiment improved, M&A and IPO markets started to show some signs of a recovery.
However, it is likely to be some time before we see a sustained improvement in the economic environment. The government debt levels of many developed nations have increased to historically high levels, and the world economy remains in a fragile state. The timing of monetary tightening and the long road to reducing deficits will be key themes for some quarters and years to come.
As a result of the recent stabilisation in financial markets, we have seen an increase in investment activity. Debt is available again, albeit at much lower volumes than before the crisis. This has facilitated an increase in buyout activity, but typically with a higher proportion of equity. In general, there still remains a gap between the price expectations of buyers and sellers, although this disconnect is beginning to narrow. PIP is well positioned, via its outstanding commitments to a diversified selection of high quality managers, to take advantage of a continued recovery in investment levels and to participate in the market throughout the current cycle.
There has also been a significant increase in realisation activity in the latter part of the period, principally as a result of increased activity in the M&A markets. In particular, the Company received a number of notable distributions from its venture portfolio. A number of our portfolio companies are potential IPO candidates, and we hope to see more activity in the remainder of the year. We hope also to see a continuation of realisations from M&A, as large corporate acquirers with strong balance sheets look to consolidate or buy niche technology providers.
The FTSE All-Share and MSCI World (sterling) total return indices were up 29% and 25% during the six months to 31st December 2009. Buyout assets, which are valued with reference to earnings and the valuation multiples of listed market comparables, have seen moderate gains in the past two quarters. However, it is possible that the recent government liquidity programmes, which have played some part in the stock market rally, will come to an end in the near future. The sheer scale of the de-leveraging process across the global economy is likely to hinder a significant recovery.
PIP's buyout exposure is biased towards the small/middle market, which generally employed lower levels of leverage than the largest, well publicised private equity transactions of the past few years. The maturity of the venture and growth portfolio, with over 60% of value in vintages that are five years or older, increases the potential for distributions in the near term. Furthermore, PIP's portfolio has a lower weighting than most major indices to many of those sectors, such as financials, property, automobiles and basic resources, which have fared particularly badly since the beginning of the financial crisis.
CAPITAL STRUCTURE AND FINANCING
In 2008, PIP issued £49.5m of unsecured subordinated loan notes (the "Notes") to institutional investors who had previously entered into "standby" agreements to subscribe, if called upon by PIP to do so, for new redeemable shares. In the event of a drawdown by the Company under a "standby" agreement from an institutional investor who is a Noteholder, the Company shall repay an equivalent amount on the Notes held by such investor (or such lesser amount as is outstanding). The Company has commitments from institutional investors under "standby" agreements to subscribe a total of £150m for new redeemable shares.
In the prior financial year, the Company entered into agreements with a number of parties to sell fund interests, some of which remained uncompleted by 30th June 2009. All of the uncompleted sales at 30th June 2009, with the exception of one small transaction that was closed in January 2010, were completed in the in the six months to 31st December 2009. During the period, completed sales resulted in £12m of cash proceeds and a reduction of outstanding commitments by approximately £41m.
At 31st December 2009, PIP had £176.3m of available financing, comprising £ 45.8m cash, £30.0m of unutilised bank loan facility and £100.5m of unutilised standby financing. The sum of the Company's available financing (£176.3m) and its portfolio of assets (£694m) exceeded its outstanding commitments (£359m) by a multiple of 2.4 times, up from 1.9 times as at 30th June 2009.
On 11th February 2010 the Company announced the re-denomination of its £150m revolving credit facility into dollars and euros to better match the foreign exchange profile of its future cash requirements.
OUTLOOK
In addition to private equity managers' close focus on cost control and debt management, the recent increase in the value of comparable quoted companies should provide some support to valuations in the near future. We are encouraged by the economic recovery and improvement of investor sentiment seen in the first half of our financial year. We also expect to see a continuation of the recent increase in investment and realisation activity.
That said, there is a risk that GDP and earnings growth will be constrained if the effects of the de-leveraging process prove to be troublesome and long-lasting. The potential effects of a possible end to the government liquidity programmes are hard to quantify. Consequently, uncertainty surrounding the economy and the financial system could continue to subdue capital markets and investment activity for some time to come.
Notwithstanding this, it is often the case that the best investment periods follow a substantial financial shock, when assets can be acquired at attractive valuations. The Company will be able to participate in any such opportunities and invest throughout the economic cycle via its outstanding commitments of £ 359m.
The Company's financial resources will be directed towards financing calls on outstanding commitments in its existing portfolio.
On 10th February 2010 it was announced that the Company's manager was to be acquired by Affiliated Managers Group, Inc. ("AMG"), subject to certain closing conditions and regulatory approvals. AMG is a well established owner of investment management businesses with a history of preserving the culture of each of its affiliates and allowing their respective management teams to maintain both a significant equity stake and operational independence.
TOM BARTLAMChairman26th February 2010 ACTIVITY
Given the impact on financing capacity of a deteriorating liquidity outlook in 2008, PIP suspended its primary and secondary programmes and made no new commitments in 2009. The Company will only resume its commitment programmes after there has been a sustained recovery in the level of distributions or additional financing has been obtained. The Company continues to invest throughout the economic cycle via its outstanding commitments of £359m.
DISTRIBUTIONS
PIP received £32.0m in proceeds from the portfolio during the six months to 31st December 2009, equivalent to approximately 5% of opening private equity asset value.
Primary £10m Secondary £22m £32m
Distribution rates remained low in the September quarter but showed some signs of a recovery in the December quarter. In particular, distributions from our US venture portfolio increased due to a number of exits via both IPOs and trade buyers. PIP received distributions from over 150 funds in the six months to 31st December 2009, showing that even in a difficult economic environment a well diversified mature portfolio can generate significant realisation activity.
TOP 10 DISTRIBUTIONS DURING THE HALF YEAR TO 31ST DECEMBER 2009
COMPANY/ DISTRIBUTIONVEHICLE DESCRIPTION £M GSI Provides a suite of e-commerce and multichannel Commerce solutions for online business and integration with offline channels. 3.9
Monteverdi Global group of funds focused primarily on venture and 3.5
growth. Buscape.com Provider of online comparison shopping services. 1.2 Papillon Group of secondary venture, buyout and special Partners situations funds based primarily in the USA. 1.0 Guardium Provides solutions for monitoring access to high-value 1.0 databases. Cavium Provides highly integrated semiconductor products for networking, communications and connected home applications. 0.8 Free & Free & Clear specialises in online learning with Clear/ phone-based cognitive behavioural coaching. Visiogen Visiogen develops implantable devices to improve vision impairment. 0.7 United Malt Produces malt for use in the brewing and distilling 0.6Holdings industries. MessageLabs Provider of online messaging and web security 0.6 services. Secondary Group of secondary growth funds based primarily in 0.6Interests I Asia. Ltd
The table above shows the 10 largest individual distributions during the six months to 31st December 2009.
GROSS MULTIPLE BAND NUMBER IN SAMPLE >0.0x to 1.0x 0 >1.0x to 2.0x 2 >2.0x to 3.0x 1 >3.0x to 4.0x 0 >4.0x to 5.0x 2 >5.0x to 7.5x 1 >7.5x 2 Value of sample £8.8m Total distributions six months to 31st December 2009 £32.0m Coverage 28%
The table above shows the range of gross multiples on initial cost achieved by the underlying fund manager on the largest distributions (excluding groups of secondary funds). Five of the eight distributions included in the sample generated gross multiples in excess of 4.0 times for the underlying fund manager.
CALLS
PIP paid £37.4m in calls during the six months to 31st December 2009.
The rate of drawdowns from outstanding commitments remained low in the September quarter but increased in the December quarter, as an improvement in both investor sentiment and debt availability increased investment activity.
Primary £29m Secondary £8m £37m INVESTMENT CASH FLOWS
PIP's net cash outflow from investments in the six months to 31st December 2009 was £5.4m, significantly lower than the outflow of £45.1m in the same period last year. This improvement is, in part, due to the increase in distribution rates. An additional factor is an approximate 50% reduction in outstanding commitments from December 2008, mainly as a result of the fund sales completed in the last three quarters of 2009. This has resulted in a lower level of commitments relative to assets, thereby reducing the Company's future funding requirements.
FINANCE
At 31st December 2009 the Company had £45.8m in cash and £30m remaining of its £150m revolving credit facility.
PIP continues to have in place agreements with certain institutions under which the Company can require the institutions to subscribe for redeemable shares, up to the value of £150m. The purpose of these agreements is to provide an additional level of assurance that PIP will be in a position to meet calls in the near term.
In 2008, PIP issued £49.5m of unsecured subordinated loan notes (the "Notes") to the institutional investors who had previously entered into the standby redeemable agreements. The Notes have a maturity date of 15th November 2010 and accrue interest at LIBOR plus 1.5%. In the event of a drawdown by the Company under a "standby" commitment from an institutional investor who is a Noteholder, the Company shall repay an equivalent amount on the Notes held by such investor (or such lesser amount as is outstanding).
As such, PIP's available financing capacity stood at £176m at 31st December 2009. The sum of the Company's available financing and portfolio value exceeds its outstanding commitments by a multiple of 2.4 times, up from 1.4 times and 1.9 times as at 31st December 2008 and 30th June 2009 respectively.
In the first half of 2009 PIP entered into agreements to sell fund interests to a number of third parties, some of which had not been completed by June 2009. All of the uncompleted sales at 30th June 2009, with the exception of one small transaction that was closed in January 2010, were completed in the six months to 31st December 2009. During the period, completed sales resulted in £12m of cash proceeds and a reduction of outstanding commitments by approximately £41m. In addition £27m was received in July 2009, relating to outstanding payments from completed sales as at 30th June 2009.
On 11th February 2010 the Company announced the re-denomination of its £150m revolving credit facility into dollars and euros to better match the foreign exchange profile of its future cash requirements.
PORTFOLIO REVIEW
The underlying companies in the portfolio range from large and mature industrial enterprises with multinational operations to early-stage ventures operating at the leading edge of technological development. All the companies have one factor in common: the influence of professional private equity managers who are motivated to maximise the value of each underlying investment.
PORTFOLIO ANALYSIS BY VALUE AS AT 31ST DECEMBER 2009
GEOGRAPHIC SPREAD
The weighting to the USA decreased from 60% to 58% over the period whereas the weighting to Europe remained the same at 31%. The weighting to Asia and other regions increased from 9% to 11% in the period.
USA 58% Europe 31% Asia and other 11% 100% STAGE COMPOSITION
PIP's portfolio is well diversified across all the major stages of private equity. The majority of the Company's exposure to buyouts is via mid and small cap funds, which tend to utilise lower levels of leverage within portfolio companies than the very largest funds. In addition PIP has a significant exposure to venture capital and growth-focused funds.
Small/Mid buyouts 35% Venture and growth 34% Large/Mega buyouts 19% Special situations 6% Generalist 5% Directs 1% 100% SECTOR COMPOSITION
PIP's portfolio is diversified by the sectors in which the underlying companies operate. This sectoral diversification helps to minimise the effects of cyclical trends or volatility within particular industry segments.
Other services & manufacturing 28%
Computer-related 17% Consumer-related 14% Medical/Health-related 11% Communications 10% Energy-related 6% Industrial products 5% Other electronics-related 5% Biotechnology & pharmacology 4% 100% MATURITY
PIP's portfolio is well diversified by fund vintage (referring to the year the fund made its first drawdown).
Year Percentage 2008 3% 2007 16% 2006 16% 2005 14% 2004 7% 2003 4% 2002 3% 2001 7% 2000 16% Pre 2000 14% 100% OUTSTANDING COMMITMENTS
PIP's outstanding commitments to fund investments are well diversified by stage and geography and will enable the Company to participate in future investments with many of the highest quality fund managers in the private equity industry.
PIP's outstanding commitments to investments decreased to £359m at 31st December 2009 compared with £428m at 30th June 2009. The Company paid calls of £37m and disposed of fund interests with £41m of outstanding commitments. These reductions were partially offset by the weakening of sterling versus the US dollar and euro.
OUTSTANDING COMMITMENTS ANALYSIS AS AT 31STDECEMBER 2009
GEOGRAPHIC SPREAD
The chart below shows the breakdown of the Company's outstanding commitments by geography. Europe and the USA have the largest outstanding commitments, reflecting the fact that they have the most mature private equity markets. Commitments to Asia and other regions totalled 13%.
USA 44% Europe 43% Asia and other 13% 100% STAGE COMPOSITION
The chart below shows the breakdown of the Company's outstanding commitments by the stage focus of the underlying funds.
Small/Mid buyouts 42% Venture and growth 27% Large/Mega buyouts 21% Special situations 8% Generalist 2% 100% MATURITYThe chart below shows the breakdown of the Company's outstanding commitments bythe vintage (referring to the year the fund made its first drawdown) of theunderlying funds.2009 3% 2008 21% 2007 33% 2006 16% 2005 8% 2004 2% 2003 and earlier 17% 100% PANTHEON VEHICLES
Pantheon Ventures Limited ("Pantheon") is not entitled to management and commitment fees in respect of PIP's holdings in, and outstanding commitments to, the firm's managed fund-of-funds vehicles. In addition, Pantheon has agreed that PIP will never be disadvantaged in terms of fees compared with the position it would have been in had it made investments directly into the underlying funds rather than indirectly through such fund-of-funds vehicles.
TOP 20 MANAGERS BY VALUE AS AT 31ST DECEMBER 2009
% OF PIP'S TOTAL PRIVATE EQUITY ASSETNUMBER MANAGER REGION STAGE BIAS VALUE 1 Apax Partners EUROPE BUYOUT 2.6% 2 Barclays Private Equity EUROPE BUYOUT 2.3% 3 IK Investment Partners EUROPE BUYOUT 2.1% 4 ABS Capital Partners USA GENERALIST 1.9% 5 Vision Capital EUROPE BUYOUT 1.7% 6 CVC Capital Partners EUROPE BUYOUT 1.6% 7 Doughty Hanson & Co EUROPE BUYOUT 1.6% 8 Avista Capital Partners USA BUYOUT 1.5% 9 BrentwoodAssociates USA BUYOUT 1.5% 10 Nordic Capital EUROPE BUYOUT 1.4% 11 BC Partners EUROPE BUYOUT 1.4% 12 Oaktree Capital Management GLOBAL GENERALIST 1.4% 13 ABRY Partners USA BUYOUT 1.4% 14 Nova Capital Management EUROPE BUYOUT 1.4% 15 Oak Investment Partners USA VENTURE & GROWTH 1.4% 16 Golden GateCapital USA BUYOUT 1.3% 17 Carlyle/Riverstone USA SPECIAL SITUATIONS 1.2% 18 Churchill Equity USA BUYOUT 1.2% 19 ProvidenceEquity Partners USA BUYOUT 1.2% 20 Pacven Walden Ventures ASIA VENTURE & GROWTH 1.2%
Figures are adjusted for a fund disposal that had yet to be completed at 31st December 2009.
TOP 20 MANAGERS BY OUTSTANDING COMMITMENTS AS AT 31ST DECEMBER 2009
% OF PIP'S OUTSTANDINGNUMBER MANAGER REGION STAGE BIAS COMMITMENTS 1 Hutton Collins EUROPE SPECIAL 4.0% SITUATIONS 2 CVC Capital Partners EUROPE BUYOUT 3.3% 3 Golden GateCapital USA BUYOUT 3.2% 4 SummitPartners GLOBAL VENTURE & GROWTH 2.6% 5 Barclays Private Equity EUROPE BUYOUT 2.5% 6 Carlyle Group GLOBAL GENERALIST 2.0% 7 Apax Partners EUROPE BUYOUT 2.0% 8 Doughty Hanson & Co EUROPE BUYOUT 1.8% 9 Clessidra Capital Partners EUROPE BUYOUT 1.7% 10 Mercapital EUROPE BUYOUT 1.6% 11 Mid-Europa Partners EUROPE BUYOUT 1.6% 12 Technology Crossover USA VENTURE & GROWTH 1.5% Ventures 13 Private Equity Partners EUROPE BUYOUT 1.5% 14 Arcadia EUROPE BUYOUT 1.4% 15 ProvidenceEquity Partners USA BUYOUT 1.4% 16 BrentwoodAssociates USA BUYOUT 1.4% 17 Baring Vostok Capital REST OF THE BUYOUT 1.3% Partners WORLD 18 Unison Capital ASIA BUYOUT 1.3% 19 Genstar Capital USA BUYOUT 1.3% 20 ABS Capital Partners USA GENERALIST 1.2%
Figures are adjusted for a fund disposal that had yet to be completed at 31st December 2009.
TOP 20 COMPANIES BY VALUE AS AT 31ST DECEMBER 2009
% OF PIP'S TOTAL PRIVATE EQUITY ASSETNUMBER COMPANY SECTOR VALUE 1 Nycomed MEDICAL/HEALTH 1.1% 2 Bibby Scientific OTHER SERVICES AND 1.0% MANUFACTURING 3 Carbolite OTHER SERVICES AND 0.8% MANUFACTURING 4 AMG Advanced Metallurgical INDUSTRIAL PRODUCTS 0.7% Group* 5 SciLabware BIOTECHNOLOGY AND 0.6% PHARMACOLOGY 6 Rosetta Stone* COMPUTER 0.5% 7 Cavium Networks* OTHER ELECTRONICS 0.5% 8 Array OTHER SERVICES AND 0.5% MANUFACTURING 9 InterXion COMPUTER 0.4% 10 Orchid Orthopedic Solutions MEDICAL/HEALTH 0.4% 11 TDC COMMUNICATIONS 0.4% 12 The Teaching Company OTHER SERVICES AND 0.4% MANUFACTURING 13 BrightHouse CONSUMER 0.4% 14 Spectrum Athletic Clubs CONSUMER 0.4% 15 VBrick Systems COMPUTER 0.4% 16 JDR OTHER SERVICES AND 0.3% MANUFACTURING 17 Converteam ENERGY 0.3% 18 Genband COMMUNICATIONS 0.3% 19 Falcon Group COMMUNICATIONS 0.3% 20 Norit OTHER SERVICES AND 0.3% MANUFACTURING
* Quoted holding as at 31st December 2009.
COMPANY STRATEGY, OBJECTIVE AND INVESTMENT POLICY
The Company's primary investment objective is to maximise capital growth by investing in a diversified portfolio of private equity funds and, occasionally, directly in private companies.
COMPANY STRATEGY
The spread of performance in private equity is much wider than in other asset classes and the selection of managers has a significant influence on investment performance. As a specialist fund-of-funds manager monitoring and researching the global private equity market, Pantheon, PIP's Manager, is well positioned to identify fund managers who have the skills and strategies to deliver superior performance within their particular market segments.
PIP's strategy is to invest with leading private equity managers whilst reducing investment risk through diversification of the underlying portfolio by geography, investment stage and sector. This strategy is implemented through PIP's primary and secondary investment programmes. PIP has the flexibility to vary the size of the primary and secondary investment programmes depending on available financing. The portfolio reflects PIP's prolonged access to Pantheon's highly successful primary and secondary investments over the past 22 years. Only funds that have passed rigorous due diligence and research are selected for the primary and secondary programmes.
PRIMARY PROGRAMME
The primary programme invests in private equity funds when they are first formed. Pantheon aims to secure access to superior managers and to identify high quality managers often overlooked by the market. Investments are made on a pro-rata basis alongside Pantheon's regional fund-of-funds.
Through the primary programme, PIP invests in fewer than 2% of the estimated universe of private equity funds and thus is able to substantially outperform the market averages, given the high dispersal of returns between managers.
The primary programme enables PIP to invest strategically in specific areas of the market, put money to work steadily over time and gain access to the very best funds.
SECONDARY PROGRAMME
The secondary programme purchases existing investments in private equity funds. Typically these investments are acquired between three and six years after a fund's inception. PIP benefits from secondaries because the fees and expenses in the first few years have been paid and distributions from the fund will be returned over a shorter time period. This helps to reduce the drag to performance from young and immature funds, known as the "J-curve effect". In addition secondary assets can be purchased at a discount, especially in cases where the seller has liquidity problems, increasing the opportunity for outperformance.
In accordance with the terms of its management agreement with Pantheon, PIP is entitled under Pantheon's allocation policy to the opportunity to co-invest in a predetermined ratio alongside Pantheon's latest global secondary fund, benefiting from access to larger secondary opportunities that it would not have had the capacity to complete alone. The secondary programme enables PIP to acquire attractively priced secondary interests as they become available, and is thus able to outperform market averages through judicious pricing and timing.
The Company will only resume its commitment programmes after there has been a sustained recovery in the level of distributions or additional financing has been obtained. As the Company's finances become less constrained, PIP will be able to participate in new investments, with emphasis on the current opportunities in the secondary market as a priority.
OBJECTIVE AND INVESTMENT POLICY
The Company's primary investment objective is to maximise capital growth by investing in a diversified portfolio of private equity funds and, occasionally, directly in private companies.
The Company's policy is to make unquoted investments, in general, by subscribing for investments in new private equity funds and buying secondary interests in existing private equity funds and, occasionally, by acquiring direct holdings in unquoted companies, usually either where a vendor is seeking to sell a combined portfolio of fund interests and direct holdings or where there is a private equity manager, well known to the Company's Manager, investing on substantially the same terms.
The Company may invest in private equity funds which are quoted. In addition, the Company may from time to time hold quoted investments in consequence of such investments being distributed to the Company from its fund investments or in consequence of an investment in an unquoted company becoming quoted. The Company will not otherwise normally invest in quoted securities although the Company reserves the right to do so should this be deemed to be in the interests of the Company.
The Company may invest in any type of financial instrument, including equity and non-equity shares, debt securities, subscription and conversion rights and options in relation to such shares and securities and interests in partnerships and limited partnerships and other forms of collective investment scheme. Investments in funds and companies may be made either directly or indirectly, through one or more holding, special purpose or investment vehicles in which one or more co-investors may also have an interest.
The Company employs a policy of over-commitment. This means that the Company may commit more than its available uninvested assets to investments in private equity funds on the basis that such commitments can be met from anticipated future cash flows to the Company and through the use of borrowings and capital raisings where necessary.
The Company's policy is to adopt a global investment approach. The Company's strategy is to mitigate investment risk through diversification of its underlying portfolio by geography, sector and investment stage. Since the Company's assets are invested globally on the basis, primarily, of the merits of individual investment opportunities, the Company does not adopt maximum or minimum exposures to specific geographic regions, industry sectors or the investment stage of underlying investments.
In addition, the Company adopts the following limitations for the purpose of diversifying investment risk:
â— the requirement for approval as an investment trust that no holding in a company will represent more than 15% by value of the Company's investments at the time of investment;
â— the aggregate of all the amounts invested by the Company in (including commitments to or in respect of) funds managed by a single management group may not, in consequence of any such investment being made, form more than 20% of the aggregate of the most recently determined gross asset value of the Company and the Company's aggregate outstanding commitments in respect of investments at the time such investment is made;
â— the Company will invest no more than 15% of its total assets in other UK listed closed-ended investment funds (including UK listed investment trusts).
The Company may invest in funds and other vehicles established and managed or advised by Pantheon or any Pantheon affiliate. In determining the diversification of its portfolio and applying the manager diversification requirement referred to above, the Company looks through vehicles established and managed or advised by Pantheon or any Pantheon affiliate.
The Company may enter into derivatives transactions for the purposes of efficient portfolio management and hedging (for example, hedging interest rate, currency or market exposures).
Surplus cash of the Company may be invested in fixed interest securities, bank deposits or other similar securities.
The Company may borrow to make investments and typically uses its borrowing facilities to manage its cash flows flexibly, enabling the Company to make investments as and when suitable opportunities arise and to meet calls in relation to existing investments without having to retain significant cash balances for such purposes. Under the Company's articles of association, the Company's borrowings may not at any time exceed 100% of the Company's net asset value. Typically, the Company does not expect its gearing to exceed 30% of gross assets. However, gearing may exceed this in the event that, for example, the Company's pipeline of future cash flows alters.
The Company may invest in private equity funds, unquoted companies or special purpose or investment holding vehicles which are geared by loan facilities that rank ahead of the Company's investment. The Company does not adopt restrictions on the extent to which it is exposed to gearing in funds or companies in which it invests.
INTERIM MANAGEMENT REPORT AND RESPONSIBILITYSTATEMENT OF THE DIRECTORSIN RESPECT OF THE HALF YEARLY FINANCIAL REPORT
INTERIM MANAGEMENT REPORT
The important events that have occurred during the period under review, the key factors influencing the financial statements and the principal uncertainties for the remaining six months of the financial year are set out above.
The principal risks facing the Company are substantially unchanged since the date of the annual report for the year ended 30th June 2009 and continue to be as set out in that report.
Risks faced by the Company include, but are not limited to, funding of investment commitments, risks relating to investment opportunities, financial risk of private equity, long-term nature of private equity investments, liquidity/marketability risk, valuation uncertainty and market price risk, gearing, interest rate risk, foreign currency risk, competition, the unregulated nature of underlying investments, defaults on commitments, taxation and the risks associated with the engagement of third parties.
RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
â— the condensed set of financial statements has been prepared in accordance with the Statement on Half Yearly Financial Reports issued by the UK Accounting Standards Board and gives a true and fair view of the assets, liabilities and financial position of the Company; and
â— this Half Yearly Financial Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during that period; and any changes in the related party transactions described in the last annual report that could do so.
This Half Yearly Financial Report was approved by the Board of Directors on 26th February 2010 and the above responsibility statement was signed on its behalf by Tom Bartlam, Chairman.
CONDENSED INCOME STATEMENT (unaudited)FOR THE SIX MONTHS TO 31ST DECEMBER SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 2009 31ST DECEMBER 2009 30TH JUNE 2009 REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Gains/ (losses) on investments designated at fair value through profit or loss** - 51,005 51,005 - 40,259 40,259 - (181,805) (181,805) Currency gains/ (losses) on cash and borrowings - 1,793 1,793 - (21,107) (21,107) - (22,335) (22,335) Income 1,742 - 1,742 1,640 - 1,640 2,761 - 2,761 Investment management and performance fees (4,227) - (4,227) (4,374) - (4,374) (11,279) 106 (11,173) Refund of VAT on investment management fees - - - 121 - 121 2,295 - 2,295 Other expenses (378) (195) (573) (623) (192) (815) (1,554) (3,393) (4,947) RETURN ON ORDINARY ACTIVITES BEFORE FINANCING COSTS AND
TAX (2,863) 52,603 49,740 (3,236) 18,960 15,724 (7,777) (207,427) (215,204)
Interest payable and similar charges (2,057) - (2,057) (3,781) - (3,781) (6,882) - (6,882) RETURN ON ORDINARY ACTIVITIES BEFORE TAX (4,920) 52,603 47,683 (7,017) 18,960 11,943 (14,659) (207,427) (222,086) Tax on ordinary activities (528) - (528) - (275) (275) (399) - (399) RETURN ON ORDINARY ACTIVITIES AFTER TAX FOR THE PERIOD (5,448) 52,603 47,155 (7,017) 18,685 11,668 (15,058) (207,427) (222,485) RETURN PER ORDINARY AND REDEEMABLE
SHARE*** (8.21)p 79.23p 71.02p (10.57)p 28.14p 17.57p (22.68)p (312.43)p (335.11)p
All revenue and capital items in the above statement relate to continuing operations.
No operations were acquired or discontinued during the period.
* The total column of the statement represents the Company's profit and loss statement prepared in accordance with UK Accounting Standards. The supplementary revenue return and capital columns are prepared under guidance published by the Association of Investment Companies.
** Includes currency gains on investments.
**\* The return per ordinary and redeemable share as at 31st December 2008 has been restated due to the reallocation of the refund of VAT on investment management fees from capital to revenue. This did not affect the total return per share.
There were no recognised gains or losses other than those passing through the income statement.
The notes form part of these financial statements.
RECONCILIATION OF MOVEMENT IN EQUITY SHAREHOLDERS' FUNDS (unaudited)
CAPITAL CAPITAL OTHER RESERVE ON SHARE SHARE REDEMPTION CAPITAL INVESTMENTS SPECIAL REVENUE CAPITAL PREMIUM RESERVE RESERVE HELD RESERVE RESERVE TOTAL £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 Movement for the six months ended 31st December 2009 OPENING EQUITY SHAREHOLDERS' FUNDS 25,428 183,184 26 175,592 69,541 99,861 (40,010) 513,622 Return for the period - - - (2,289) 54,892 - (5,448) 47,155 Expenses relating to issue of ordinary shares written back - - - - - - - - CLOSING EQUITY SHAREHOLDERS' FUNDS 25,428 183,184 26 173,303 124,433 99,861 (45,458) 560,777 Movement for the six months ended 31st December 2008 OPENING EQUITY SHAREHOLDERS' FUNDS 25,428 183,182 26 227,504 225,056 99,861 (24,952) 736,105 Return for the period - - - (1,453) 20,138 - (7,017) 11,668 Expenses relating to issue of ordinary shares written back - 2 - - - - - 2 CLOSING EQUITY SHAREHOLDERS' FUNDS 25,428 183,184 26 226,051 245,194 99,861 (31,969) 747,775 Movement for the year ended 30th June 2009 OPENING EQUITY SHAREHOLDERS' FUNDS 25,428 183,182 26 227,504 225,056 99,861 (24,952) 736,105 Return for the year - - - (51,912) (155,515) - (15,058) (222,485) Expenses relating to issue of ordinary shares written back - 2 - - - - - 2 CLOSING EQUITY SHAREHOLDERS' FUNDS 25,428 183,184 26 175,592 69,541 99,861 (40,010) 513,622
The notes form part of these financial statements.
CONDENSED BALANCE SHEET (unaudited)
31ST 31ST DECEMBER DECEMBER 30TH JUNE 2009 2008 2009 £'000 £'000 £'000 Fixed assets Investments designated at fair value through profit or loss 694,394 892,837 648,207 Current assets Debtors 526 6,331 27,685 Cash at bank 45,842 17,504 20,512 46,368 23,835 48,197 Creditors: Amounts falling due within one year Other creditors 10,485 13,643 13,282 Bank loan 120,000 105,754 120,000 130,485 119,397 133,282 NET CURRENT LIABILITIES (84,117) (95,562) (85,085) Creditors: Amounts falling due after one year Loan notes 49,500 49,500 49,500 NET ASSETS 560,777 747,775 513,622 Capital and reserves Called-up share capital 25,428 25,428 25,428 Share premium account 183,184 183,184 183,184 Capital redemption reserve 26 26 26 Other capital reserve 173,303 226,051 175,592 Capital reserve on investments held 124,433 245,194 69,541 Special reserve 99,861 99,861 99,861 Revenue reserve (45,458) (31,969) (40,010) TOTAL EQUITY SHAREHOLDERS' FUNDS 560,777 747,775 513,622 NET ASSET VALUE PER SHARE 844.64p 1,126.30p 773.62p Number of ordinary shares and redeemable shares in issue 66,392,268 66,392,268 66,392,268
The notes form part of these financial statements.
CONDENSED CASH FLOW STATEMENT (unaudited)FOR THE SIX MONTHS TO 31ST DECEMBER SIX MONTHS SIX MONTHS TO TO 31ST 31ST YEAR TO DECEMBER DECEMBER 30TH JUNE 2009 2008 2009 £'000 £'000 £'000 Cash flow from operating activities Investment income received 1,739 1,397 2,140 Deposit and other interest received 3 2 621 Investment management fees paid (4,268) - (8,100) Secretarial fees paid (102) (72) (169) Other cash payments (2,922) (494) 269 NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (5,550) 833 (5,239) Returns on investment and servicing of finance Revolving credit facility and overdraft interest paid (1,036) (3,556) (5,459) Loan commitment and arrangement fees paid (109) (225) (429) Redeemable shares commitment fees paid (320) (427) (629) Interest on loan notes paid (606) (73) (824) NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE (2,071) (4,281) (7,341) Taxation Net taxation charge (528) (275) (399) NET CASH OUTFLOW FROM TAXATION (528) (275) (399) Capital expenditure and financial investment Purchases of investments (42,123) (112,830) (164,296) Disposals of investments 73,809 63,471 114,124 Realised currency gains 191 85 93 NET CASH INFLOW/(OUTFLOW) FROM CAPITAL EXPENDITURE AND FINANCIAL INVESTMENT 31,877 (49,274) (50,079)
NET CASH INFLOW/(OUTFLOW) BEFORE FINANCING 23,728 (52,997) (63,058)
Financing Written back/cost of ordinary share issue - 2 2 Drawdown of loan - 75,788 90,034 Repayment of bank loan - (40,000) (40,000) Issue of loan notes - 49,500 49,500 Realised currency losses on repayment of revolving credit facility - (23,515) (23,515) NET CASH INFLOW FROM FINANCING - 61,775 76,021 INCREASE IN CASH 23,728 8,778 12,963
The notes form part of these financial statements.
NOTES TO THE HALF YEARLY FINANCIAL REPORT (unaudited)
1. FINANCIAL INFORMATION
The financial information has been prepared on the historical cost basis of accounting, except for the measurement at fair value of investments and financial instruments, and in accordance with applicable UK accounting standards on the basis that all activities are continuing. The accounting policies set out in the statutory accounts for the year ended 30th June 2009 have been applied to this Half Yearly Financial Report.
Since 30th June 2009, the amendment to FRS 29 made by the Accounting Standards Board has been adopted. This amendment introduces a three-level fair value hierarchy that distinguishes fair value measurements by the significance of the inputs used. The disclosures are expected to provide more information about the relative reliability of the fair value measurements and increase convergence of International Financial Reporting Standards and UK Generally Accepted Accounting Standards.
The accounts have been prepared in accordance with the Statement of Recommended Practice (revised January 2009) issued by the Association of Investment Companies.
The financial information contained in this Half Yearly Financial Report is not the Company's statutory accounts. The financial information for the six months ended 31st December 2009 and 31st December 2008 are not for a financial year and have not been audited but have been reviewed by the Company's auditors and their report it attached. The statutory accounts for the financial year ended 30th June 2009 have been delivered to the Registrar of Companies and received an audit report which was unqualified, did not include a reference to any matters to which the auditors drew attention by way of emphasis without qualifying the report and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.
2. TAX DEBIT ON ORDINARY ACTIVITIES
The tax debit for the half-year is £528,000 (31st December 2008: £275,000; 30th June 2009: £399,000) based on an estimated effective tax rate of (0.4%) for the year ending 30th June 2010.
3. RELATED PARTY TRANSACTIONS
Pantheon Ventures Limited, as Manager of the Company, is considered to be a related party by virtue of its management contract with the Company. Mr R.M. Swire, a Director of the Company, is a director of Pantheon Holdings Limited, the holding company of Pantheon Ventures Limited.
During the period, services of a total value of £4,227,000 (31st December 2008: £4,253,000 following refund of VAT; 30th June 2009: £8,878,000) were purchased by the Company from Pantheon Ventures Limited. At 31st December 2009, the amount due to Pantheon Ventures Limited in management fees and performance fees disclosed under creditors was £5,023,000 and £5,057,000 respectively.
4. PERFORMANCE FEE
The Manager is entitled to a performance fee from the Company in respect of each 12 calendar month period ending on 30th June in each year. The fee payable in respect of each such period is 5% of any increase in the net asset value of the Company at the end of such period over the applicable 'high water mark' plus the hurdle rate of 10%.
The applicable 'high water mark' in respect of any calculation period is the net asset value at the end of the previous calculation period in which a performance fee was payable, compounded annually at the hurdle rate for each subsequent completed calculation period up to the commencement of the calculation period for which the performance fee is being calculated.
5. RECONCILIATION OF RETURN ON ORDINARY ACTIVITIES BEFORE TAX AND FINANCING COSTS TO NET CASH FLOW FROM OPERATING ACTIVITIES
SIX MONTHS SIX MONTHS TO TO 31ST 31ST YEAR TO DECEMBER DECEMBER 30TH JUNE 2009 2008 2009 £'000 £'000 £'000 Return on ordinary activities before financing costs and tax 49,740 15,724 (215,204) (Gains)/losses on investments (51,005) (40,259) 181,805
Currency (gains)/losses on cash and borrowings (1,793) 21,107 22,335
(Decrease)/increase in creditors (2,609) 6,233 5,685 Decrease/(increase) in other debtors 117 (1,972) 140 NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES (5,550) 833 (5,239)
6. RECONCILIATION OF NET CASH FLOW TO THE MOVEMENT IN NET DEBT
SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2009 2008 2009 £'000 £'000 £'000
Increase in cash in the six months/year 23,728 8,778 12,963
Non-cash movement Exchange gains 1,602 2,179 1,002 CHANGE IN NET FUNDS 25,330 10,957 13,965
NET DEBT AT BEGINNING OF PERIOD/YEAR (148,988) (63,419) (63,419)
Loans drawn down* - (75,788) (90,034) Loans repaid* - 40,000 40,000 Issue of loan notes - (49,500) (49,500) NET DEBT AT END OF PERIOD/YEAR (123,658) (137,750) (148,988) * The figures for the loans drawn down and repaid as at 30th June 2009 havebeen restated. This did not have any effect on the net debt position as at 30thJune 2009.7. ANALYSIS OF NET DEBT 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2009 2008 2009 £'000 £'000 £'000 Cash at bank 45,842 17,504 20,512 Bank loan (120,000) (105,754) (120,000) Loan notes (49,500) (49,500) (49,500) (123,658) (137,750) (148,988) 8. DISPOSAL OF INVESTMENTSDuring the first six months of the current financial year PIP disposed of anumber of fund interests to strengthen its finances and reduce outstandingcommitments. VALUE AS AT PROCEEDS BOOKCOST 30TH JUNE 2009 £'000 £'000 £'000 DISPOSAL OF INVESTMENTS 11,502 20,784 20,127 9. FAIR VALUE HIERARCHY
Financial assets at fair value through profit or loss at 31st December 2009
TOTAL LEVEL 1 LEVEL 2 LEVEL 3 £'000 £'000 £'000 £'000 Private equity investments 694,394 - - 694,394 TOTAL 694,394 - - 694,394 Level 3 financial assets at fair value through profit or loss at 31st December2009 PRIVATE EQUITY INVESTMENTS TOTAL £'000 £'000 Opening balance 648,207 648,207 Purchases at cost 42,123 42,123 Sales proceeds (46,941) (46,941) Total gains or losses included in "Gains on investments" in the Condensed Income Statement - on assets sold (5,061) (5,061) - foreign exchange gain on disposal 2,776 2,776 - on assets held as at 31st December 2009 53,290 53,290 CLOSING BALANCE 694,394 694,394 INDEPENDENT REVIEW REPORTTO PANTHEON INTERNATIONAL PARTICIPATIONS PLC
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 31st December 2009 which comprises the Income Statement, Reconciliation of Movement in Equity Shareholders' Funds, Balance Sheet, Cash Flow Statement and Notes to the Half Yearly Financial Report. We have read the other information contained in the Half Yearly Financial Report which comprises only the Financial Summary, Chairman's Statement, Portfolio Review, Activity, Outstanding Commitments, the Company Strategy, Objective and Investment Policy, and Interim Management Report and Responsibility Statement of the Directors, and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
This report is made solely to the Company in accordance with guidance contained in ISRE (UK and Ireland) 2410, "Review of Interim Financial Information performed by the Independent Auditor of the Entity". Our review work has been undertaken so that we might state to the Company those matters we are required to state to them in a review report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company, for our review work, for this report, or for the conclusion we have formed.
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 1, the annual financial statements of the Company are prepared in accordance with applicable United Kingdom law and Accounting Standards (United Kingdom Generally Accepted Accounting Practice) and with the Statement of Recommended Practice "Financial Statements of Investment Trust Companies and Venture Capital Trusts", issued in January 2009. The condensed set of financial statements included in this Half Yearly Financial Report has been prepared in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports" issued in July 2007.
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.
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 31st December 2009 is not prepared, in all material respects, in accordance with the Accounting Standards Board Statement "Half Yearly Financial Reports" and the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
GRANT THORNTON UK LLPChartered AccountantsLondon26th February 2010 DIRECTORS AND ADVISERSDIRECTORS REGISTRARS Tom Bartlam (Chairman) Capita Registrars Ian Barby Northern House Richard Crowder Woodsome Park Peter Readman Fenay Bridge Rhoddy Swire Huddersfield Sandy Thomson West Yorkshire HD8 0GA MANAGER Pantheon Ventures Limited * Telephone: 0871 664 0300 Authorised and regulated by the * Calls cost 10p per minute plus network FSA charges, Norfolk House Lines are open 8.30am - 5.30pm Monday - 31 st. James's Square Friday London * Telephone from overseas: +44(0)20 8639 3399SW1Y 4JR BANKERS The Royal Bank of Scotland PLC Telephone: 020 7484 6200 Waterhouse Square Facsimile: 020 7484 6201 138-142 Holborn Email: pip@pantheonventures.com London Internet: EC1N 2TH www.pantheonventures.com SECRETARY & REGISTERED OFFICE HSBC Bank PLC Capita Sinclair Henderson Limited (Also custodian) (Trading as Capita Financial Global Investor Services Group - Mariner House Specialist Fund Services) Pepys Street Beaufort House London 51 New North Road EC3N 4DA Exeter EX4 4EP AUDITORS Telephone: 01392 412122 Grant Thornton UK LLP 30 Finsbury Square BROKERS London Collins Stewart Europe Limited EC2P 2YU 9th Floor 88 Wood Street SOLICITORS London Covington& Burling LLP EC2V 7QR 265 Strand London WC2R 1BH FIXED INTEREST INVESTMENT ADVISER AllianceBernstein Devonshire House 1 Mayfair Place London W1X 6JJ HALF-YEARLY REPORT
The foregoing represents the full text of the Half-Yearly Report for the six months to 31st December 2009, which will be posted to shareholders shortly. The Report will also be available for download from the following website: www.pipplc.com or on request from the Company Secretary.
Capita Sinclair Henderson Limited26th February 2010
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