Pantheon International Regulatory News (PIN)

PANTHEON INTERNATIONAL PARTICIPATIONS PLC HALF-YEARLY FINANCIAL REPORT SIX MONTHS TO 31ST DECEMBER 2013 The Half-Yearly Financial Report can be accessed via the Company's website atwww.pipplc.com or by contacting the Company Secretary by telephone on01392 412122. PIP will host a webcast on Monday 3rd March 2014 at 9:30am GMT. Dial in detailscan be found below. Presentationwww.meetingzone.com/presenter/?partCEC=5208702&hostCEC=1199595Participant PIN: 5208702Password: PIP interim results Audio+44 (0) 20 3003 2666 - Standard International Access0808 109 0700 - UK Toll Free PERFORMANCE SUMMARY -2.1% NAV per share decrease +5.7% Return on underlying assets (excluding foreign exchange movements) £872m Net asset value at 31st December 2013 £74m Net cash flow generated from PIP's portfolio £96m New investment commitments, mainly focused on buyout assets in the US through secondaries £10m Invested in share buybacks in the half-year, generating 0.3% uplift to NAV per share -1.3% Ordinary share price decrease -3.6% Redeemable share price decrease +4.1% PIP's NAV per share outperformance per annum versus the MSCI World Index since inception NAV AND SHARE PRICE PERFORMANCE • NAV per share decreased by 2.1%, from 1,331.9p to 1,303.9p. • The ordinary share price decreased from 1,042.0p to 1,028.0p, a decrease of 1.3%. The discount decreased from 21.8% to 21.2%. • The redeemable share price decreased from 1,050.0p to 1,012.5p, a decrease of 3.6%. The discount increased from 21.2% to 22.3%. NET INVESTMENT CASH FLOW • Distributions received in the six months to 31st December 2013 were £93.2m, equivalent to 11% of opening private equity assets. • PIP paid £88.9m for investments in the half-year across calls (£19.0m), new investments (£59.9m)and share buybacks(£10.0m). • Net investment cash flow was £4.3m, as PIP reinvested portfolio cash flows. SINCEPERFORMANCE AT 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION31ST DECEMBER 2013 % % P.A. % P.A. % P.A. % P.A. NAV per share 8.1 10.0 3.0 9.2 11.2 Ordinary share price 16.5 18.0 33.8 7.9 10.7 FTSE All-Share Total Return 20.8 9.4 14.3 8.8 8.2 MSCI World Total Return (sterling) 24.9 9.9 12.8 8.4 7.1 PIP was launched on 18th September 1987. The figures since inception assumereinvestment of dividends, capital repayments and cash flows from the exerciseof warrants. CAPITAL STRUCTURE AT 31ST DECEMBER 2013 Ordinary shares 33,832,013 Redeemable shares 33,012,534 Total 66,844,547 CHAIRMAN'S STATEMENT During the period, underlying portfolio growth of 5.7% was offset by negativeforeign exchange movements as sterling strengthened against the US dollar,resulting in a decrease in the NAV per share of 2.1% to 1,303.9p per share. Theshare prices of the ordinary and redeemable shares declined by 1.3% and 3.6%respectively. Our belief in the positive outlook for continued portfolio valuegrowth is based on the following key factors: • Cash generative portfolio: the Company continues to see strong realisations allowing for active portfolio renewal. • Good growth potential: underlying portfolio relative earnings and revenue growth, while slowing,continued to compare positively to index growth rates exhibited by the FTSE All-Share and MSCI World indices. • Uplifts on exit: the largest realisations have occurred at an average uplift to the previous holding value,once again highlighting the benefit to performance of high levels of realisations. • Investing actively: during the period we committed £96m to 17 new investments, mainly in secondary interests. • Strong balance sheet: PIP has no debt, an undrawn loan facility and positive cash flows. • Investment access: Pantheon's well-resourced global investment platform enables the Company to benefit from high-quality deal flow worldwide. Performance Developed markets showed more signs of recovery over the second half of 2013,thriving on continuing quantitative easing measures ("QE") in the US, Europeand Japan. The faster growing economies of the emerging markets have slowed,but attractive investments can be made by experienced managers that are used tothe high levels of market volatility typically associated with these markets.Seeking only high-quality assets managed by the best managers remains our keypriority, given that the course of economic and market recovery remainsvulnerable to the effects of monetary policy. Against this backdrop, before foreign exchange effects, PIP's underlying assetsgenerated a return of 5.7%. Share buybacks added 0.3% to the NAV per share.Sterling's strength against the US dollar, up by 9.2% during the period, led tonegative foreign exchange effects of 7.1% on NAV per share as approximately 70%of the portfolio is denominated in US dollars. Excluding foreign exchangeeffects, the larger buyout, and venture and growth portfolio segments were thebest performers, gaining 8.2% and 6.5% respectively over the period. US assetsperformed strongest regionally, returning 8.1%. Underlying Earnings Growth Private equity managers impose a set of disciplines on their investments toboost growth through a well-aligned, capital-efficient investment model.Underlying growth rates within the Company's portfolio indicate encouragingtrends, with those sampled showing earnings growth of 12.0%, higher than thoseshown for the equivalent periods for the MSCI World and FTSE All-Share indices. Share Buybacks The listed private equity sector average discount remains substantially widerthan the average investment trust discount. In our view, there is scope forfurther narrowing of PIP's share price discounts which, at 21% for the ordinaryshares and 22% for the redeemable shares at 31st December 2013, do not reflectthe Company's strength and potential. The discounts at which the Company'sshares trade from time to time may make buybacks an attractive investmentopportunity relative to other potential new investment commitments. The Companybegan buying back shares in August 2011 and so far has invested £68.6m inbuying back 11.5% of the Company's shares. During the half-year to 31stDecember 2013, PIP invested £10.0m to buy back and cancel 0.7m ordinary sharesand 0.3m redeemable shares, resulting in an uplift to NAV per share of 4.4p or0.3% of PIP's NAV per share at 30th June 2013. Activity and Balance Sheet Distributions of £93m were received in the period, equivalent to an annualisedrate of 23% of opening portfolio assets. Calls from underlying private equityfunds totalled £19m. PIP's positive net cash flows are a function of theportfolio's maturity, which has a weighted average fund age of 7.8 years. Exitsoften occur at an uplift to their previous holding value as managers are ableto realise a premium on sale. PIP's largest 50 distributions, representing 31%by value of total distributions, occurred at an average uplift of 24%. Thiscontributed significantly to NAV growth in the period and remains an importantfactor for future performance given the maturity of PIP's portfolio. Balance Sheet The Company's net cash at 31st December 2013 stood at £68m. The Company's loanfacility, amounting to approximately £97m and which expires in June 2015,remained fully unutilised. Undrawn commitments of £188m as at 31st December2013 were covered by assets and loan facilities by a factor of 5.2 times.Additionally, more than 60% of the undrawn commitments are older than six yearsand therefore unlikely to be fully called down. This provides ample flexibilityto take advantage of new investment opportunities. New Investments PIP has continued to actively redeploy capital during the period. Secondaryactivity picked up in the second half of 2013 and in December the Companycommitted £70.7m to four secondaries, the majority of which comprised US buyoutfunds. PIP also committed £20.2m to 11 new co-investments and made two primaryfund commitments for £5.1m. Our strategic focus on secondary interests ensureswe can continue to take advantage of the liquid market conditions to realiseinvestment returns. Outlook Our objective is to optimise PIP's ability to deploy capital systematicallythrough long-term relationships with a large number of high-quality managersworldwide in order to maximise capital growth and generate returns in excess ofpublic markets. We expect to see high volumes in the secondary market within which PIP'sManager can seek out good- quality assets with a focus on relative value. Wewill continue to add co-investments alongside best of breed managers to buildour investment exposure to current vintages and will make limited primarycommitments to access those opportunities not yet so readily available throughthe secondary market. This enables us to build a portfolio that is naturallyhighly cash-generative. This also enables the Company to buy back its shareswhen this presents an attractive investment opportunity. Our flexible approach to investing enables us to maintain PIP's relatively lowrisk profile, exercising firm control over the level of undrawn commitments. The outlook for investing in secondary interests remains good. Despite a slowstart in 2013, an estimated $27.5bn of secondary deals were transacted, anincrease on 2012 according to Cogent, an intermediary active in the secondarymarket. We expect to see a similar level of deal activity in 2014. 2013 saw exit markets flourish. We think the increased M&A trends aresustainable across many sectors and the increasingly active IPO markets can addsignificantly to the potential for private equity exits. The Company's mature,US-weighted portfolio is well-positioned to benefit, and for new investments,our focus on secondaries is an excellent way to take further advantage of theseconditions. TOM BARTLAM Chairman 27th February 2014 COMPANY STRATEGY PIP's strategy is to invest with leading private equity managers whilst reducinginvestment risk through diversification of the underlying portfolio by geography,investment stage and sector. This strategy is implemented through PIP's accessto Pantheon's primary, secondary and co-investment activities. PIP has theflexibility to vary the size and emphasis of its investments depending on itsavailable financing. The spread of performance in private equity is much wider than in other assetclasses and the selection of managers has a significant influence on investmentperformance. As a specialist fund-of-funds manager monitoring and researchingthe global private equity market, Pantheon, PIP's Manager, is well-positionedto identify fund managers who have the skills and strategies to deliversuperior performance within their particular market segments. The current portfolio reflects PIP's prolonged access to Pantheon's highlysuccessful primary and secondary investments over the past 26 years. Onlyinvestments that have passed through rigorous research and analysis can beselected. Secondary Programme Emphasis It is the Board's current intention to emphasise secondary investment as theCompany makes new commitments. Secondary purchases of existing interests in private equity funds are typicallyacquired between three and seven years after a fund's inception, when such fundsare substantially invested. As a result, they tend to have relatively low levelsof undrawn commitments. PIP benefits from secondaries because the fees andexpenses in the first few years have been paid and distributions from the fundswill be returned over a shorter time period. This helps to reduce the drag toperformance from young and immature funds, known as the "J-curve effect".In addition, secondary assets can be purchased at a discount, especially in caseswhere the seller has a need for liquidity, increasing the opportunity foroutperformance. The shorter duration of secondary investments and lower associated undrawncommitments will enable the Company to maintain its financial strength. UnderPantheon's allocation policy, and in accordance with the terms of its managementagreement, PIP is entitled to invest alongside Pantheon's latest global secondaryfund, Pantheon Global Secondary Fund V, in a predetermined ratio, benefiting fromaccess to larger secondary opportunities that it would not have had the capacityto complete alone. The secondary programme enables PIP to acquire attractivelypriced secondary interests as they become available, and aims to outperformmarket averages through judicious selection, pricing and timing. Co-investments Whilst the intention is to emphasise secondary investment, the Company will alsoparticipate in co-investments alongside established private equity managers. Thebreadth and depth of Pantheon's General Partner relationships provide asignificant advantage for the sourcing and evaluation of co-investments. As withsecondary investing, co-investments allow the Company to put money to work at thetime it is committed. In addition, as there are lower or no management feescharged on co-investments by the underlying private equity manager, co-investingcan represent a cost-efficient way of investing, whilst providing PIP withexposure to current vintages. Primary Commitments Investing in private equity through a primary commitment strategy (e.g.commitments to new private equity funds) can reduce the Company's financialflexibility by increasing the proportion of immature assets in its portfolioand by increasing its undrawn commitments relative to its assets. New primaryinvestments have longer payback periods, requiring the Company to maintainhigher levels of financing facilities against undrawn commitments. For thesereasons and because the current outlook for secondary investment andco-investment is favourable, the Board de-emphasises primary commitments.However, the Company will consider making primary commitments on a targetedbasis for portfolio construction purposes. The investment rationale for any new primary commitments will always be weighedagainst their effects on the Company's financial flexibility so as to keep theundrawn commitments to a level that can comfortably be expected to be financedfrom internally generated cash flows. Share Buybacks In certain circumstances, usually where the Company's shares are quoted at asignificant discount to NAV, the Board may view the shares as presenting anattractive investment opportunity relative to other uses of cash, such as newinvestment commitments. In such circumstances, the Board will consider targetedbuybacks of ordinary and redeemable shares instead of, or in addition to, newinvestments. THE MANAGER'S REVIEW MARKET REVIEW Five years after plunging into financial crisis, the world's financial systemsare repairing themselves. Many developed economies are faring better, or areapproaching the point at which they seem set to improve. Banks and financialinstitutions are better capitalised, while global regulation aims to preventfurther shocks to the system. Emerging markets, and in particular China andIndia, could pick up steam again, although the former seems unlikely to returnto double-digit economic growth. As we leave 2013 behind us, changes to monetary policy in the US and economicreforms in China, the world's two largest economies, loom large onmacroeconomic and political agendas in the year ahead. Tapering, which signalsthe end to the Federal Reserve's massive QE programme, comes with recognitionof a job done, at least in part, as the US economy beats initial estimates toregister annualised growth of 4.1% in the third quarter of 2013.(1) Meanwhile,financial and social reforms in China signal an intention to keep modernisingthe economy, which continues to slow as it shifts from an export-led model toone oriented towards domestic consumption. What happens in the US and China has far-reaching consequences, but the keytheme for policymakers everywhere this year remains growth - not just how toget it, but how to keep it. The green shoots that had emerged in the US a yearago have continued to grow. European economies are following suit as the IMFpredicts 0.5% growth for Germany and 1.7% for the UK in 2013,(2) while theirdomestic policymakers expect better outcomes. Growth in many emerging marketsis slowing but still exceeds growth in developed economies, continuing thetrend of global rebalancing towards Asia, where some four billion of theworld's seven billion people live. But despite these welcome improvements,risks remain. Inflating economies with cheap capital is one thing, having thecourage to carry out necessary structural reforms to sustain growth is anotheraltogether. Politicians can obstruct as much as they have the potential to pavethe way for change. A scrap between Democrats and Republicans in the US during2013 over raising the debt ceiling spooked markets globally, even though theright decision was taken at the eleventh hour. Meanwhile, simmering tensionsbetween China and Japan over the Senkaku Islands point to non-economic risksthat could have significant consequences. US Slows Money Printing Press The Federal Reserve's QE has succeeded in shoring-up bank balance sheets but ithas now cut its bond-buying programme from $85bn a month to $65bn a month.(3)The move has been well trailed, but the impact of removing the $2.8 trillioneconomic crutch will be felt widely and arguably most keenly in emergingmarkets where much of the surplus liquidity flowed during 2013. The irony isthat the US market felt a positive liquidity shock in anticipation of the startof tapering, as financial institutions started to bring money home. We haveentered uncharted territory as global markets have never before experiencedsuch a significant withdrawal of liquidity.(4) Cheap energy prices have provided a subsequent boost to US businesses andconsumers, helping to create an attractive investment backdrop for the USindustrial sector in particular. Signs that the US is considering the merits ofexporting shale gas could eventually also have a beneficial impact onbusinesses in importing countries with high gas prices, including those in Asiaand Europe. Internal politics remain the US's worst enemy. The scuffle over the debtceiling rattled markets, as did the US government shutdown in October 2013,which took an estimated $24bn out of the economy, or 0.6% from GDP growth, inthe final quarter of 2013.(5) The impact on economic activity may have beenmarginal given the acceleration in underlying economic growth in the US, butthe impact on sentiment was significant. The message to the world is that theUS system faces crisis every time an important economic or political decisionmust be taken. Emerging Markets Feel the Brunt of US and China Policies Markets spent much of 2013 trying to figure out the impact of tapering. Brazil,India, Indonesia, Turkey and South Africa may see the greatest impact due toreliance on rapid credit growth and weak current account balances. Emergingmarket currencies will likely weaken, and stock markets and bond prices willremain volatile - the question is how governments will react. Managing a soft landing in emerging markets exposed to China and the US will bedifficult and could require currency depreciation to restart growth, as well asstructural reforms. In the long term, positive demographics point toopportunities after short-term turbulence. Indonesia, as an example, has theworld's fourth largest population of 237m, high basic literacy of 96.8%(6) andan ambitious target GDP per head of $5,000 in 2014, even if the reality waslagging at $3,592 in 2012.(7) New Growth in Europe Meanwhile, sentiment towards Europe has turned a corner. Overseas investorsreturned as their fears about a break-up of the Eurozone receded. Improvingsentiment has impacted European private equity also, with North Americaninstitutions providing 25% of commitments to European funds closed in 2012 and2013, up from 11% in 2010 and 2011.(8) Furthermore, renewed domestic investorbelief in domestic business prospects has catalysed the IPO market across thecontinent. A total of 158 IPOs in 2013 raised $30bn, double the amount raisedin 2012.(9) Confidence in Northern Europe, notably Scandinavia and Germany, is strongerthan in Southern European countries, particularly Spain, Italy and Greece, butpainful readjustments to reduce wage bills and improve Spain's competitiveposition have had some success and the country's outlook is brightening. As theIMF marked down its forecasts for emerging markets, it wrote them up forEurope; even Spain is now expected to grow 0.6% in 2014 as the Eurozone expands1%.(10) In Europe, serious concerns remain however, not least for youth unemployment.According to the latest data, 58% of those aged under 25 in Greece areunemployed, almost matched by 57% in Spain. Across the European Union as awhole, youth unemployment is lower, but still worrying at 24%.(11) Creatingjobs for young people is critical to sustaining growth and containing socialunrest. US and Europe Remain Core to Investment Strategy Conditions in both regions remain supportive of private equity activity ascredit market conditions are unusually accommodating and IPO activity isrecovering. High yield bond issuance increased in 2013, particularly in Europe,(12) as pricing remains low and covenants flexible. Investor demand for creditcontinues to grow, absorbing the higher issuance volumes. Recovering GDP, lowbase rates and low default rates are likely to support credit markets thisyear. In 2013, $163.0bn was raised in 864 IPOs globally, a 27% increase on 2012(13)despite China's IPO market suspension, reflecting increased investor confidencein public market gains and signs of global recovery. Although 2014 was set fora strong start, the public market volatility in January shows that marketsremain vulnerable to investor anxiety over the rate of monetary tightening. In spite of recent political drama, the US market is central to global privateequity. We remain positive on the prospects for industrial and servicesbusinesses that benefit directly and indirectly from technological developmentand the domestic energy boom as well as those positioned to benefit fromdomestic economic recovery. In Europe, while the picture is more mixed, we expect to continue to sourceinvestments in portfolios and businesses that can benefit from recovery in thedeveloped markets both within Europe and outside, and also those export andservice businesses that can take advantage of significant consumer trends inemerging markets. Through the secondary market, we can target high-qualityportfolios that have significant potential for near-term realisation activityso as to benefit from the supportive M&A and IPO markets, as well as furtherpotential accommodation from the credit markets. Opportunities in Emerging Markets Despite Threats As the global economy has started to recover from the financial crisis, so toohas the private equity industry. More exits, as corporate buyers return to M&Amarkets and IPOs recover, have increased the flow of capital back to LPs;private equity has shown good returns even from the depths of the cycle.(14)With renewed confidence and increased liquidity generated from profitable exits,capital is flowing back into private equity once more. Some emerging anddeveloped markets offer opportunities, but in view of such significant transition,caution is needed when selecting managers and investments that can prosper in amore volatile environment. Market weakness during 2013 in a number of important emerging markets presentsan opportunity for a patient investor to take advantage of better pricingconditions to acquire investments that have strong positioning in their markets. Secondary Market Opportunities 2013 was a record year in the secondary market, with volume reaching $27.5bn,(15) a 10% increase versus 2012. After a slow first half, mainly due to a lullin bank selling activity, secondary market volume rebounded significantly inthe second half of 2013 and surged as the year drew to a close. This positivemomentum is likely to continue through 2014, supported by an improvingmacroeconomic outlook and secondary market price stability, in part driven bystrong distribution activity. Public pension plans and financial institutions still represent a substantialportion of secondary market volume (57% of activity by dollar in 2013).(15)Banks are likely to remain active sellers in 2014 with the finalisation of theVolcker rule. The seller universe continues to broaden, with new sellersattracted towards more active portfolio management by valuation stability.Another key theme is the increasing number of transactions, including fundrecapitalisation or wind-downs from managers of tail-end funds approachingtheir termination date. Pantheon has significant experience structuringfavourable outcomes in such situations. Pantheon screened over $54bn of deals across approximately 300 sellers duringthe calendar year 2013, committing to transactions representing nearly 4% byvalue of all deals reported. With a likely backdrop of rising prices, Pantheonwill continue to target investment opportunities that are less competitivewhere assets are undervalued. Conclusion The recovery may be more established than last year, but we are not out of thewoods yet. Political inaction, or governments taking the wrong action, couldquickly stifle economic growth. Structural reforms need to accompany fiscal andmonetary stimulus to cement the recovery. That could mean more pain and moreshocks, though such crises now seem less likely to mutate into globalcontagion. For private equity, maintaining balanced allocations across geographies andvintages has always been the key to smoothing out the effects of boom and bustcycles. Spotting undervalued sectors and businesses and having the knowledgeand skills to carve out new niches can yield great results. Private equitystands well-positioned to benefit. (1) Bureau of Economic Analysis data released 30th January 2014(2) International Monetary Fund, Report World Economic Outlook: Update 21st January 2014(3) Federal Reserve Board press release, 29th January 2014(4) Financial Times, US stocks set record as Fed steps back, 19th December 2013, Global shares rally after taper move, 19th December 2013, World markets braced for "Dectaper", 18th December 2013(5) Impact of the Debt Ceiling Debate on the U.S. Economy - Getting Worse by the Day, Standard & Poor's, 16th October 2013(6) Indonesia Demographic and Health Survey 2012(7) http://www.indonesia-investments.com/finance/macroeconomic-indicators(8) Preqin data; Revolving door of investors boosts Europe fundraising, Private Equity News, 1st October 2013(9) Ernst & Young Global IPO Trends Q4 2013(10) IMF Report World Economic Outlook: Update 21st January 2014(11) Euro area unemployment rate at 12.1%, Eurostat press release, 29th November 2013(12) BC Partners(13) Global IPO Trends, Q4 2013, Ernst & Young(14) Preqin data comparison Q3 2012 and Q3 2013; Preqin data 1989-2011 Private equity returns compared to MSCI World Index(15) Cogent Partners Secondary Market Trends & Outlook, January 2014 PORTFOLIO OVERVIEW £93m Distributions from PIP's mature portfolio 23% Annualised distribution rate 24% Average uplift on PIP's 50 largest distributions £19m Calls made on existing commitments £76m New commitments made to private equity funds, mainly secondaries £20m Committed to 11 co-investments £74m Net portfolio cash flow generated 5.7% Return on underlying assets 7.8 years - Weighted average age of portfolio DISTRIBUTIONS FOR THE HALF-YEAR TO 31ST DECEMBER 2013 PIP received more than 800(1) distributions in the half-year, with many atsignificant uplifts to carrying value. The Company's mature and diversifiedportfolio should continue to generate significant distributions in the comingquarters. (1) This figure looks through feeders and funds-of-funds. Distributions by Region and Stage PIP received £93m in proceeds from the portfolio in the six months to 31stDecember 2013, implying an annualised distribution rate of 23% of the openingprivate equity assets. The US accounted for the majority of PIP's distributions, where marketconditions enabled a good level of exits. European distributions were alsostrong, consistent with the signs of recovery shown by the wider Europeaneconomy. Distributions by Region = £93m USA 55% Europe 36% Asia and other 9% Total 100% Distributions by Stage = £93m Small/Mid Buyout 35% Large/Mega Buyout 29% Venture and Growth 26% Special Situations 5% Co-investments 3% Generalist 2% Total 100% Cost Multiples on a Sample of the Largest Distributions in the Half-Year to31st December 2013(1) On a sample of the largest 50 distributions, where information was available,the value-weighted average cost multiple was 3.0 times, highlighting the continuedability of private equity managers to create significant value over the course ofan investment. (1) The available data in the sample represented approximately 31% by value of PIP's total distributions for the half-year to 31st December 2013. This data is based upon gross cost multiples available at the time of the distribution. Uplifts on Liquidity Event on a Sample of the Largest Distributions in theHalf-Year to 31st December 2013(2). On a sample of the largest 50 distributions, where information was available,the value-weighted average uplift on liquidity event was 24%. This average upliftis consistent with PIP's view that realisations tend to be significantly incrementalto returns. PIP's mature portfolio is well placed to continue to generate a good levelof distributions in the coming year. (2) Uplift on liquidity event compares the value received upon realisation against the investment's carrying value prior to the transaction taking place. In the event of an IPO, the uplift is the difference between the carrying value prior to the IPO and the value post IPO. The available data in the sample represented approximately 31% by value of PIP's total distributions for the half-year to 31st December 2013. INVESTMENTS CALLED IN THE HALF-YEAR TO 31ST DECEMBER 2013 Investments called during the half-year ranged across many sectors and regions,from retail firms to restaurant chains, IT companies to specialisedmanufacturers and from financial services companies to oil and gas explorationcompanies. Calls by Region and Stage PIP paid £19m of fund calls in the six months to 31st December 2013, anannualised call rate of 20% of opening undrawn commitments. Calls by Region = £19m USA 42% Europe 40% Asia and other 18% Total 100% Calls by Stage = £19m Venture and Growth 29% Small/Mid Buyout 25% Special Situations 24% Large/Mega Buyout 22% Total 100% New Commitments PIP committed £96m to new investments during the half-year, concentrated on USbuyout assets. These commitments were on average approximately 62% funded oncompletion, resulting in an initial investment of £60m. New Commitments by Region 79% of new commitments were made to private equity funds which concentrate onthe US market. The US is the most developed private equity market and in ourview currently offers some of the most attractive growth opportunities. USA 79% Europe 13% Asia and other 8% Total 100% New Commitments by Stage The majority of investments were in funds which focus on buyout transactions.Buyout funds tend to have shorter payback periods relative to venture andgrowth assets. Large/Mega Buyout 57% Co-investments 21% Small/Mid Buyout 18% Special Situations 2% Venture and Growth 2% Total 100% New Commitments by Deal Type In line with our investment strategy, the majority of new commitments wereacross four secondary transactions. The four transactions saw PIP committing to29 funds. PIP also invested in 11 co-investments, and made two primarycommitments, taking advantage of attractive opportunities. Co-investments offerPIP access to private equity investments at a lower management cost. Secondaries 74% Co-investments 21% Primaries 5% Total 100% New Commitments by Fund Maturity 59% of new commitments were to funds of vintage 2005 to 2008, reflective of thesupply of these funds in the secondary market. Co-investments and primarycommitments offer PIP exposure to more recent vintages which are currently lessavailable in the secondary market. 2009-2013 27% 2008 16% 2007 11% 2006 15% 2005 16% 2004 4% 2003 2% 2002 4% 2001 and earlier 5% Total 100% Pantheon Vehicles At 31st December 2013, 7% of PIP's portfolio value and 9% of PIP's outstandingcommitments were comprised of funds-of-funds directly managed by Pantheon.Pantheon is not entitled to management and commitment fees in respect of PIP'sholdings in, and outstanding commitments to, the firm's managed fund-of-fundsvehicles. In addition, Pantheon has agreed that PIP will never be disadvantagedin terms of fees compared with the position it would have been in had it madeinvestments directly into the underlying funds rather than indirectly throughsuch fund-of-funds vehicles. PORTFOLIO OVERVIEW The Company offers a global, diversified selection of private equity assets,carefully selected by Pantheon for their quality. The diversification of PIP'sportfolio, with assets spread across different investment styles and stagesincluding buyout, venture and growth, and special situations, helps to reducevolatility both of returns and cash flows. The maturity profile of theportfolio ensures that PIP is not overly exposed to any one vintage. PIP'sgeographical diversification extends its exposure beyond the US and Europe, toregions with higher rates of economic growth such as Asia. Portfolio Analysis by Value as at 31 December 2013(1) (1) Fund geography, stage, maturity and primary/secondary tables are based upon underlying fund valuations and account for 100% of PIP's overall portfolio value. Company sector and company geography tables are based upon underlying company valuations at 30th June 2013 and account for greater than 95% of PIP's overall portfolio. Fund Geography The majority of PIP's geographical exposure is focused on the US and Europe,reflecting the fact that these regions have the most developed private equitymarkets. PIP's assets based in Asia and other regions provide access to faster-growingeconomies. USA 54% Europe 33% Asia and other 13% Total 100% Fund Stage PIP's portfolio is well-diversified across different private equity investmentstyles and stages. PIP's portfolio is predominantly made up of buyout funds. Exposure to thesefunds increased in the half-year driven by new investments. Exposure toco-investments, largely buyout in nature, increased to 5% (from 3%) duringthe half-year, also due to new investments. PIP has a significant exposure to venture and growth-focused funds, many ofwhich were acquired through the secondary market. The size of PIP's ventureand growth portfolio is reducing as a result of distributions and theCompany's emphasis on buyouts when making new investments. Small/Mid Buyout 32% Large/Mega Buyout 29% Venture and Growth 27% Special Situations 5% Co-investments 5% Generalist 2% Total 100% Investment Maturity PIP's portfolio is well diversified by fund vintage (referring to the year thefund made its first investment). PIP's secondary focus is expected to lead tocontinued high exposure to the high fundraising years of 2006-2008. Newco-investments are increasing PIP's exposure to more recent vintages. 2009-2013 5% 2008 14% 2007 26% 2006 23% 2005 13% 2004 4% 2003 2% 2002 1% 2001 and earlier 12% Total 100% Primary/Secondary 57% of the portfolio is derived from primary transactions. However, PIP'sstrategic emphasis means that secondaries are becoming an increasingly largeproportion of the portfolio. Primary 57% Secondary 43% Total 100% Company Sectors PIP's sectoral diversification helps to minimise the effects of cyclical trendswithin particular industry segments. Relative to the FTSE All-Share and MSCIWorld indices, PIP has higher exposure to information technology, and lowerexposure to the banking, mining and utilities sectors. Consumer 28% Information Technology 24% Healthcare 14% Industrials 14% Financials 8% Energy 6% Materials 4% Telecom Services 2% Total 100% Company Geography Half of PIP's portfolio is in companies based in North America which has, inour view, better growth prospects than many other areas of the developed world.PIP's European exposure, which represents just over one-third of the portfolio,is predominantly in companies based in the stronger Northern Europeaneconomies, including the UK, Scandinavia and Germany. Approximately 15% ofPIP's portfolio companies are principally active in Asia and other regions,providing access to faster-growing economies such as China and India. North America 52% Asia and other 15% UK 11% Scandinavia 5% Germany 4% Benelux 3% Central and Eastern Europe 3% France 2% Italy 2% Iberia 2% Other Europe 1% Total 100% PORTFOLIO ANALYSIS Portfolio Performance by Stage for the Half-Year to 31st December 2013(1) • The portfolio generated an investment return of 5.7% in the half-year, prior to foreign exchange effects. • Returns were highest in the large/mega buyout segment of the portfolio, which benefited from significant distributions and earnings growth from the underlying companies. PIP's recent new investments, which have been concentrated in these areas, have shown positive early performance. Debt Mutiples(2) Venture and growth and buyout investments have differing leveragecharacteristics. • The venture and growth portfolio accounts for 27% of portfolio value and has very little or no reliance on leverage. • The small/mid buyout portfolio sampled contains a moderate level of debt, with net debt/EBITDA of 3.2 times at 30th June 2013. • The large/mega buyout funds sampled contain higher levels of debt, with net debt/EBITDA of 4.4 times as at 30th June 2013. Investments made between 2006-2008, a time period associated with high debt levels, had net debt/EBITDA of 4.4 times, consistent with the remainder of the sample. PORTFOLIO ANALYSIS - BUYOUT Valuation Multiple(2) • Accounting standards require private equity managers to value their portfolio at fair value. As public markets move, this can be reflected in valuations. • Sample-weighted average enterprise value/EBITDA for the year to 30th June 2013 was 9.5 times, broadly in line with public market benchmarks. Revenue and EBITDA Growth(2) • Weighted average EBITDA growth for the sample buyout companies was +12.0% in the 12 months to 30th June 2013, compared to -3.6% and -0.7% for the FTSE All-Share and MSCI World indices. • Weighted average revenue growth for the sample buyout companies was +9.1% compared to +9.4% and +1.1% for the FTSE All-Share and MSCI World indices. • This strong top-line performance with efficient cost control is a principal objective of PIP's investment focus, where opportunities for managers to add value provides scope for outperformance under the private equity model. (1) Portfolio returns include income, exclude gains and losses from foreign exchange movements, and look through feeders and funds-of-funds. (2) Buyout Sample Methodology-The sample buyout figures for the 12 months to 30th June 2013 were calculated from the companies in PIP's largest 50 buyout funds and direct investments at 30th June 2013. The figures are based on unaudited data collected by Pantheon from managers with which PIP is invested. The revenue and EBITDA figures were based upon the 12 months to 30th June 2013 and provide coverage of 47% and 48% respectively of PIP's buyout portfolio.Individual company revenue and EBITDA growth figures were calculated in local currency and capped between +100% and -100% to avoid large distortions from excessive outliers. Enterprise value is defined as carrying value + net debt. The net debt and enterprise value figures were based upon 30th June 2013 underlying valuations. The valuation multiple sample covers approximately 50% of PIP's buyout portfolio. The debt multiple sample covers 45% of PIP's buyout portfolio. The weightings are by portfolio NAV. Historical figures are consistent with PIP's prior annual reports and do not contain the same sampled companies as the current period. Index statistics sourced from S&P Capital IQ and Bloomberg. PORTFOLIO ANALYSIS - VENTURE AND GROWTH Venture and Growth Performance • Prior to foreign exchange effects, PIP's venture and growth funds generated a return of 6.5% in the six months to 31st December 2013. Funds of vintage from 2002 to 2006 performed most strongly, with returns of 8.2%. These funds constitute 46% of the venture and growth portfolio. • The venture and growth portfolio generated significant cash flow during the six months to 31st December 2013, particularly the older vintage funds. Distributions were a key driver of returns, with distributing funds achieving returns of 10.8% in the half-year. • In our view, the venture and growth portfolio, which has a weighted average age of 8.8 years, can continue to produce a substantial level of distributions. FINANCE AND SHARE BUYBACKS Cash and Available Bank Facility At 31st December 2013 PIP had cash balances of £68m. In addition to these cash balances, PIP can also finance investments out of itsmulti-currency revolving credit facility agreement ("Loan Facility"). The LoanFacility is due to expire in June 2015 and comprises facilities of $82m and€57m which, using exchange rates at 31st December 2013, amount to a sterlingequivalent of £97m. At 31st December 2013 the Loan Facility remained fullyundrawn. Undrawn Commitment Cover At 31st December 2013, the Company had £165m of available financing, comprisedof its cash balances and Loan Facility. The sum of PIP's available financingand private equity portfolio provides 5.2 times cover relative to undrawncommitments. It should be noted that a portion of the Company's undrawn commitments of £188mare unlikely to be called in full by the underlying managers. When a fund ispast its investment period, which is typically between five and six years, itgenerally cannot make any new investments (only drawing capital to fundexisting follow-on investments or pay expenses). As a result, the rate ofcapital calls in these funds tends to slow dramatically. Approximately 63% ofthe Company's undrawn commitments are in fund vintages that are greater thansix years old. Share Buybacks PIP bought back 1.4% of its shares in the half-year,(1) taking advantage of theinvestment opportunity offered by its shares continuing to trade at highdiscounts. In total, 0.7m ordinary shares and 0.3m redeemable shares werebought back at weighted average discounts of 22% and 25% respectively,resulting in a total uplift to NAV per share of 4.4p, or 0.3% of opening NAVper share. Whilst PIP's shares trade at high discounts the Board will continueto consider further share buybacks for investment purposes. (1) 1.4% is calculated using the number of shares bought back in the half-year divided by the number of shares outstanding at 30th June 2013. OUTSTANDING COMMITMENTS PIP's outstanding commitments to fund investments are diversified by stage andgeography. Analysis of Outstanding Commitments as at 31st December 2013 PIP's outstanding commitments to investments decreased to £188m at 31stDecember 2013 compared with £195m at 30th June 2013. The Company paid calls of£19m and acquired an additional £36m of outstanding commitments associated withnew investments made in the half-year. The remaining movements of -£24m werecaused by foreign exchange movements and cancellations of outstandingcommitments in the portfolio's underlying funds. Geography The US and Europe have the largest outstanding commitments, reflecting theCompany's investment emphasis. Commitments to Asia and other regions provideaccess to faster-growing economies. USA 58% Europe 27% Asia and other 15% Total 100% Stage PIP's undrawn commitments are diversified across all major stages of privateequity. Large/Mega Buyout 42% Small/Mid Buyout 31% Venture and Growth 18% Special Situations 5% Co-investments 3% Generalist 1% Total 100% Maturity 63% of PIP's undrawn commitments are in the 2007 vintage or older. Most relateto funds that are outside their investment periods and, as such, are expectedto have slower call rates. It is likely that a portion of these commitmentswill not be drawn. 2005 and earlier 27% 2006 15% 2007 21% 2008 23% 2009 3% 2010 1% 2011 0% 2012 0% 2013 10% Total 100% LARGEST 50 MANAGERS BY VALUE AS AT 31ST DECEMBER 2013(1) % OF PIP'S TOTAL PRIVATE EQUITYNUMBER MANAGER REGION(2) STAGE BIAS ASSET VALUE 1 TPG Global Buyout 4.2% 2 Providence Equity Partners USA Buyout 2.4% 3 Carlyle Group Global Generalist 2.4% 4 Apax Partners Europe Buyout 2.3% 5 Blackstone Capital Partners USA Buyout 2.2% 6 Vision Capital Europe Buyout 2.1% 7 CVC Capital Partners Global Buyout 2.1% 8 Apollo Management USA Buyout 2.0% 9 Hutton Collins Europe Special Situations 1.7% 10 Brentwood Associates USA Buyout 1.6% 11 Golden Gate Capital USA Buyout 1.6% 12 EQT Global Buyout 1.6% 13 Cinven Partners Europe Buyout 1.4% 14 Equistone Europe Buyout 1.4% 15 Baring Vostok Capital Partners Russia Buyout 1.3% 16 Oak Investment Partners USA Venture and Growth 1.2% 17 Baring Private Equity Asia Asia Growth 1.2% 18 Bain Capital USA Buyout 1.2% 19 Doughty Hanson & Co Europe Buyout 1.2% 20 Nova Capital Management Europe Buyout 1.1% 21 IK Investment Partners Europe Buyout 1.1% 22 Permira Europe Buyout 1.0% 23 Mid-Europa Partners Europe Buyout 1.0% 24 Nordic Capital Europe Buyout 1.0% 25 Mercapital Europe Buyout 0.9% 26 Summit Partners Global Generalist 0.9% 27 Avista Capital Partners USA Buyout 0.9% 28 Riverstone Holdings USA Energy 0.9% 29 Altor Capital Europe Buyout 0.9% 30 Francisco Partners USA Buyout 0.9% 31 Polaris Venture Partners USA Venture and Growth 0.9% 32 Matlin Patterson USA Special Situations 0.9% 33 Genstar Capital Partners USA Buyout 0.9% 34 ABS Capital Partners USA Venture and Growth 0.9% 35 Canaan Partners USA Venture and Growth 0.9% 36 New Enterprise Associates USA Venture and Growth 0.8% 37 Warburg Pincus Partners Global Generalist 0.8% 38 Catalyst Investors USA Venture and Growth 0.8% 39 Tricor US Management USA Buyout 0.8% 40 Sterling Investment Partners USA Buyout 0.8% 41 Technology Crossover Ventures USA Venture and Growth 0.8% 42 Bridgepoint Partners Europe Buyout 0.7% 43 KKR Global Buyout 0.7% 44 Bencis Capital Partners Europe Buyout 0.7% 45 Thomas H Lee Partners USA Buyout 0.7% 46 Index Ventures Europe Venture and Growth 0.7% 47 ARCH Venture Partners USA Venture and Growth 0.7% 48 Hony Capital Asia Buyout 0.6% 49 Weston Presidio Capital USA Venture and Growth 0.6% 50 Yorktown Partners USA Energy 0.6% COVERAGE OF PIP'S TOTAL PRIVATE EQUITY ASSET VALUE 61.0% (1) Percentages look through feeders and funds-of-funds. (2) Refers to the regional exposure of the funds in which PIP is invested. LARGEST 50 COMPANIES BY VALUE AS AT 31ST DECEMBER 2013 % OF PIP'S TOTAL PRIVATE EQUITYNUMBER COMPANY COUNTRY SECTOR ASSET VALUE 1 Attendo Sweden Healthcare 1.0% 2 JDR USA Energy 0.9% 3 Spotify Sweden Information Technology 0.8% 4 Bibby Scientific UK Industrials 0.8% 5 Applied Medical Resources USA Healthcare 0.7% 6 InterXion Netherlands Information Technology 0.7% 7 Convatec USA Healthcare 0.5% 8 LBX Pharmacy Chain China Consumer 0.5% 9 SoftBrands USA Information Technology 0.5% 10 Fairway Market USA Consumer 0.5% 11 Oriental Brewery Company South Korea Consumer 0.4% 12 CSPC Pharmaceutical China Healthcare 0.4% 13 Alarm.com USA Industrials 0.4% 14 CPL Industries UK Energy 0.4% 15 CPI Card Group USA Industrials 0.4% 16 Cosan Brazil Energy 0.4% 17 Nord Anglia Education China Consumer 0.4% 18 EP Energy USA Energy 0.4% 19 The Teaching Company USA Consumer 0.4% 20 Property Portfolio UK Financials 0.4% 21 PRA International USA Healthcare 0.3% 22 AutoTrader Group USA Information Technology 0.3% 23 Mindbody USA Information Technology 0.3% 24 Zoe's Kitchen USA Consumer 0.3% 25 Michaels Stores USA Consumer 0.3% 26 GGC Credit Opps USA Financials 0.3% 27 Standard Pacific Corporation USA Consumer 0.3% 28 Wrist Denmark Industrials 0.3% 29 Evonik Germany Materials 0.3% 30 Allison Transmission USA Industrials 0.3% 31 China Yongda Automobiles China Consumer 0.3% 32 Jimmy John's USA Consumer 0.3% 33 Classic Fine Foods Singapore Consumer 0.3% 34 Booz Allen Hamilton USA Industrials 0.3% 35 TMF Netherlands Financials 0.3% 36 BrightHouse UK Consumer 0.3% 37 Vitruvian Exploration USA Energy 0.3% 38 Byron Burger UK Consumer 0.3% 39 USI USA Financials 0.3% 40 Siltron South Korea Information Technology 0.3% 41 Standard Bancshares USA Financials 0.3% 42 Heptagon USA Information Technology 0.3% 43 Syniverse Technologies USA Telecommunication Services 0.3% 44 Wagamama UK Consumer 0.2% 45 Allied Glass Europe Industrials 0.2% 46 K-Mac Enterprises USA Consumer 0.2% 47 Visma Norway Information Technology 0.2% 48 Caffè Nero UK Consumer 0.2% 49 ATI USA Healthcare 0.2% 50 Sapphire Energy USA Energy 0.2% TOTAL 19.2% The largest 50 companies table is based upon underlying company valuations at30th June 2013, adjusted for known calls, distributions, new investmentcommitments and post-valuation information. OBJECTIVE AND INVESTMENT POLICY The Company's primary investment objective is to maximise capital growth byinvesting in a diversified portfolio of private equity funds and directly inprivate companies. The Company's policy is to make unquoted investments, in general by subscribingfor investments in new private equity funds ("Primary Investment") and bybuying secondary interests in existing private equity funds ("SecondaryInvestment"), and from time to time to capitalise further on its fund investmentactivities by acquiring direct holdings in unquoted companies, usually eitherwhere a vendor is seeking to sell a combined portfolio of fund interests anddirect holdings or where there is a private equity manager, well known to theCompany'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 ofsuch investments being distributed to the Company from its fund investments orin consequence of an investment in an unquoted company becoming quoted. TheCompany will not otherwise normally invest in quoted securities, although theCompany reserves the right to do so should this be deemed to be in theinterests of the Company. The Company may invest in any type of financial instrument, including equityand non-equity shares, debt securities, subscription and conversion rights andoptions in relation to such shares and securities and interests in partnershipsand 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 whichone or more co-investors may also have an interest. The Company employs a policy of over-commitment. This means that the Companymay commit more than its available uninvested assets to investments in privateequity funds on the basis that such commitments can be met from anticipatedfuture cash flows to the Company and through the use of borrowings and capitalraisings where necessary. The Company's policy is to adopt a global investment approach. The Company'sstrategy is to mitigate investment risk through diversification of itsunderlying portfolio by geography, sector and investment stage. Since theCompany's assets are invested globally on the basis, primarily, of the meritsof individual investment opportunities, the Company does not adopt maximum orminimum exposures to specific geographic regions, industry sectors or theinvestment stage of underlying investments. In addition, the Company adopts the following limitations for the purpose ofdiversifying investment risk: • that no holding in a company will represent more than 15% by value of the Company's investments at the time of investment (in accordance with the requirement for approval as an investment trust which applied to the Company in relation to its accounting periods ended on and before 30th June 2012); • 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; • 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 oradvised by Pantheon or any Pantheon affiliate. In determining thediversification of its portfolio and applying the manager diversificationrequirement referred to above, the Company looks through vehicles establishedand managed or advised by Pantheon or any Pantheon affiliate. The Company may enter into derivatives transactions for the purposes ofefficient 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, bankdeposits or other similar securities. The Company may borrow to make investments and typically uses its borrowingfacilities to manage its cash flows flexibly, enabling the Company to makeinvestments as and when suitable opportunities arise and to meet calls inrelation to existing investments without having to retain significant cashbalances for such purposes. Under the Company's articles of association, theCompany's borrowings may not at any time exceed 100% of the Company's net assetvalue. Typically, the Company does not expect its gearing to exceed 30% ofgross 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 specialpurpose or investment holding vehicles which are geared by loan facilities thatrank ahead of the Company's investment. The Company does not adopt restrictionson the extent to which it is exposed to gearing in funds or companies in whichit invests. INTERIM MANGEMENT REPORT AND RESPONSIBILITY STATEMENT 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 keyfactors influencing the financial statements and the principal uncertaintiesfor the remaining six months of the financial year are set out in the Chairman'sStatement and the Manager's Review. The principal risks facing the Company are substantially unchanged since thedate of the Annual Report for the year ended 30th June 2013 and continue to beas set out in that report. Risks faced by the Company include, but are not limited to, funding ofinvestment commitments, risks relating to investment opportunities, financialrisk of private equity, long-term nature of private equity investments,liquidity risk, valuation uncertainty, gearing, foreign currency risk, theunregulated nature of underlying investments, defaults on commitments,taxation, the risks associated with the engagement of the Manager or otherthird party advisers and the implementation of the Alternative Investment FundManagers' Directive ("AIFMD"). Responsibility Statement Each Director confirms that to the best of their knowledge: • the 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, financial position and return of the Company; and • 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 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 on27th February 2014 and the above responsibility statement was signed on itsbehalf by Tom Bartlam, Chairman. INCOME STATEMENT (UNAUDITED)FOR THE SIX MONTHS TO 31ST DECEMBER 2013 SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 2013 31ST DECEMBER 2012 30TH JUNE 2013 REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 (Losses)/gains oninvestmentsdesignatedat fairvaluethroughprofit orloss** - (15,946) (15,946) - 3,319 3,319 - 82,202 82,202 Currency(losses)/gains oncash andborrowings - (7,466) (7,466) - (1,401) (1,401) - 3,720 3,720 Investmentincome 7,925 - 7,925 6,600 - 6,600 12,410 - 12,410 Investmentmanagementfees (4,232) - (4,232) (4,317) - (4,317) (8,839) - (8,839) Otherexpenses (615) - (615) (543) - (543) (1,134) - (1,134) RETURN ONORDINARYACTIVITIESBEFOREFINANCINGCOSTS ANDTAX 3,078 (23,412) (20,334) 1,740 1,918 3,658 2,437 85,922 88,359 Interestpayable andsimilarcharges/financecosts (724) - (724) (715) - (715) (1,453) - (1,453) RETURN ONORDINARYACTIVITIESBEFORE TAX 2,354 (23,412) (21,058) 1,025 1,918 2,943 984 85,922 86,906 Tax onordinaryactivities (612) - (612) (1,037) - (1,037) (2,401) - (2,401) RETURN ONORDINARYACTIVITIESAFTER TAXFOR THEPERIOD*** 1,742 (23,412) (21,670) (12) 1,918 1,906 (1,417) 85,922 84,505 * The total column of the statement represents the Company′s profit and lossstatement prepared in accordance with UK Accounting Standards. Thesupplementary revenue return and capital columns are prepared under guidancepublished by the Association of Investment Companies. ** Includes currency movements on investments. *** Return per ordinary and redeemable share is shown in note 6. All revenue and capital items in the above statement relate to continuingoperations. No operations were acquired or discontinued during the period. There were no recognised gains or losses other than those passing through theIncome Statement. The Notes form part of these financial statements. RECONCILIATION OF MOVEMENTS 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 forthe sixmonths ended31st December2013 OPENINGEQUITYSHAREHOLDERS'FUNDS 23,454 283,555 2,091 314,138 296,763 41,304 (58,021) 903,284 Return for - - - 10,969 (34,381) - 1,742 (21,670)the period Ordinaryshares boughtback forcancellation (452) - 452 - - (7,044) - (7,044) Redeemableshares boughtback forcancellation (3) - 3 - - (3,005) - (3,005) CLOSINGEQUITYSHAREHOLDERS'FUNDS 22,999 283,555 2,546 325,107 262,382 31,255 (56,279) 871,565 Movement forthe sixmonths ended31st December2012 OPENINGEQUITYSHAREHOLDERS'FUNDS 24,549 283,555 996 265,724 259,255 67,939 (56,604) 845,414 Return for - - - 19,581 (17,663) - (12) 1,906the period Ordinaryshares boughtback forcancellation (718) - 718 - - (9,074) - (9,074) Redeemableshares boughtback forcancellation (8) - 8 - - (6,951) - (6,951) CLOSINGEQUITYSHAREHOLDERS'FUNDS 23,823 283,555 1,722 285,305 241,592 51,914 (56,616) 831,295 Movement forthe yearended 30thJune 2013 OPENINGEQUITYSHAREHOLDERS'FUNDS 24,549 283,555 996 265,724 259,255 67,939 (56,604) 845,414 Return forthe year - - - 48,414 37,508 - (1,417) 84,505 Ordinaryshares boughtback forcancellation (1,081) - 1,081 - - (14,764) - (14,764) Redeemableshares boughtback forcancellation (14) - 14 - - (11,871) - (11,871) CLOSINGEQUITYSHAREHOLDERS'FUNDS 23,454 283,555 2,091 314,138 296,763 41,304 (58,021) 903,284 The Notes form part of these financial statements. BALANCE SHEET (UNAUDITED) AS AT AS AT AS AT 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2013 2012 2013 £'000 £'000 £'000 Fixed assets Investments designatedat fair value throughprofit or loss 803,366 766,719 826,423 Current assets Debtors 967 1,998 1,051 Cash at bank 68,103 69,915 78,387 69,070 71,913 79,438 Creditors: amounts falling duewithin one year Other creditors 871 7,337 2,577 871 7,337 2,577 NET CURRENT ASSETS 68,199 64,576 76,861 NET ASSETS 871,565 831,295 903,284 Capital and reserves Called-up share capital 22,999 23,823 23,454 Share premium 283,555 283,555 283,555 Capital redemption reserve 2,546 1,722 2,091 Other capital reserve 325,107 285,305 314,138 Capital reserve on investments held 262,382 241,592 296,763 Special reserve 31,255 51,914 41,304 Revenue reserve (56,279) (56,616) (58,021) TOTAL EQUITY SHAREHOLDERS' FUNDS 871,565 831,295 903,284 NET ASSET VALUE PER SHARE - ORDINARYAND REDEEMABLE 1,303.87p 1,206.32p 1,331.89p NUMBER OF ORDINARY SHARES IN ISSUE 33,832,013 35,049,013 34,507,013 NUMBER OF REDEEMABLE SHARES IN ISSUE 33,012,534 33,862,534 33,312,534 TOTAL SHARES IN ISSUE 66,844,547 68,911,547 67,819,547 The Notes form part of these financial statements. CASH FLOW STATEMENT (UNAUDITED)FOR THE SIX MONTHS TO 31ST DECEMBER 2013 SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2013 2012 2013 £'000 £'000 £'000Cash flow from operating activities Investment income received 7,899 6,570 12,357 Deposit and other interest received 26 30 53 Investment management fees paid (4,481) (4,387) (9,574) Performance fee paid - - (5,057) Secretarial fees paid (115) (127) (211) Other cash payments (477) (68) (1,077) Withholding tax deducted (612) (1,037) (2,401) NET CASH INFLOW/(OUTFLOW)FROM OPERATINGACTIVITIES 2,240 981 ( 5,910) Servicing of finance Loan commitment and arrangement fees paid (551) (539) (1,138) NET CASH OUTFLOWFROM RETURNS ON INVESTMENTAND SERVICING OF FINANCE (551) (539) (1,138) Capital expenditure and financial investment Purchases of investments (78,866) (63,262) (128,198) Disposals of investments 85,811 99,024 183,995 NET CASH INFLOW FROMCAPITAL EXPENDITURE ANDFINANCIAL INVESTMENT 6,945 35,762 55,797 NET CASH INFLOW BEFORE FINANCING 8,634 36,204 48,749 Financing Ordinary shares purchased for cancellation (8,484) (9,074) (13,324) Redeemable shares purchased for cancellation (3,005) (6,951) (11,871) NET CASH OUTFLOW FROM FINANCING (11,489) (16,025) (25,195) (DECREASE)/INCREASE IN CASH (2,855) 20,179 23,554 The Notes form part of these financial statements. NOTES TO THE HALF-YEARLY FINANCIAL STATEMENTS (UNAUDITED) 1. Financial Information The financial information has been prepared using the accounting policies setout in the statutory accounts for the year ended 30th June 2013 and are inaccordance with the Accounting Standards Board Statement 'Half-Yearly FinancialReports' issued in July 2007. These accounting policies are based on the historical cost basis of accounting,except for the measurement at fair value of investments and financialinstruments, and are in accordance with applicable UK accounting standards. The accounting policies are also consistent with the Statement of RecommendedPractice (revised January 2009) issued by the Association of InvestmentCompanies. The financial information contained in this Half-Yearly Financial Report is notthe Company′s statutory accounts. The financial information for the six monthsended 31st December 2013 and 31st December 2012 are not for a financial yearand have not been audited but have been reviewed by the Company's auditors andtheir report is attached. The statutory accounts for the financial year ended30th June 2013 have been delivered to the Registrar of Companies and receivedan audit report which was unqualified, did not include a reference to anymatters to which the auditors drew attention by way of emphasis withoutqualifying the report and did not contain any statements under section 498 (2)and (3) of the Companies Act 2006. 2. Going Concern The Company's business activities, together with the factors likely to affectits future development, performance and position, including its financialposition, are set out in the Chairman's Statement and Manager's Review above. At each Board meeting, the Directors review the Company's latest managementaccounts and other financial information. Its commitments to private equityinvestments are reviewed, together with its financial resources, including cashheld and the Company's borrowing capability. One-year cash flow scenarios arealso presented to each meeting and discussed. After due consideration of the balance sheet and activities of the Company andthe Company's assets, liabilities, commitments and financial resources, theDirectors have concluded that the Company has adequate resources to continue inoperation for the foreseeable future. For this reason, they consider itappropriate to continue to adopt the going concern basis in preparing thefinancial statements. 3. Tax on Ordinary Activities The tax charge for the six months to 31st December 2013 is £612,000 (six monthsto 31st December 2012: £1,037,000; year to 30th June 2013: £2,401,000). The taxcharge is wholly comprised of irrecoverable withholding tax suffered.Investment gains are exempt from capital gains tax owing to the Company'sstatus as an investment trust. 4. Related Party Transactions Under the FCA listing rules, the Manager, Pantheon Ventures (UK) LLP, isregarded as a related party of the Company. During the period, services with a total value of £4,522,000, being £4,232,000directly from Pantheon Ventures (UK) LLP and £290,000 via Pantheon managed fundinvestments (31st December 2012: £4,620,000, £4,317,000 and £303,000; year to30th June 2013: £9,454,000, £8,839,000 and £615,000 respectively) werepurchased by the Company. At 31st December 2013, the amount due to PantheonVentures (UK) LLP in management fees disclosed under creditors was £520,000. 5. Fees The Manager is entitled to a monthly management fee at an annual rate of (i)1.5% on the value of the Company's investment assets up to £150m and (ii) 1% onthe value of such assets in excess of £150m. In addition, the Manager isentitled to a monthly commitment fee of 0.5% per annum on the aggregate amountcommitted (but unpaid) in respect of investments, up to a maximum amount equalto the total value of the Company's investment assets. The Manager is entitled to a performance fee from the Company in respect ofeach 12 calendar month period ending on 30th June in each year. The performancefee payable in respect of each such calculation period is 5% of the amount bywhich the net asset value at the end of such period exceeds 110% of theapplicable "high-water mark", i.e. the net asset value at the end of theprevious calculation period in respect of which a performance fee was payable,compounded annually at 10% for each subsequent completed calculation period upto the start of the calculation period for which the fee is being calculated.For the six month period ended 31st December 2013, the notional performance feehurdle is a net asset value per share of 1,932.06p. The performance fee is calculated so as to ignore the effect on performance ofany performance fee payable in respect of the period for which the fee is beingcalculated or of any increase or decrease in the net assets of the Companyresulting from any issue, redemption or purchase of any shares or othersecurities, the sale of any treasury shares or the issue or cancellation of anysubscription or conversion rights for any shares or other securities and anyother reduction in the Company's share capital or any distribution toshareholders. 6. Return per Ordinary and Redeemable Share SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 2013 31ST DECEMBER 2012 30TH JUNE 2013 REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTALReturn onordinaryactivitiesafter tax£'000 1,742 (23,412) (21,670) (12) 1,918 1,906 (1,417) 85,922 84,505 Weightedaverageordinaryandredeemableshares 67,389,248 70,204,792 69,296,879 Return perordinaryandredeemableshare 2.58p (34.74)p 32.16)p (0.02)p 2.73p 2.71p (2.04)p 123.99p 121.95p 7. Net Asset Value per Share 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2013 2012 2013Net assetsattributable in £'000 871,565 831,295 903,284 Ordinary and redeemable shares 66,844,547 68,911,547 67,819,547 Net asset value per share- ordinary and redeemable 1,303.87p 1,206.32p 1,331.89p 8. Reconciliation of Return on Ordinary Activities before Financing Costs andTax to Net Cash Flow from Operating Activities SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2013 2012 2013 £'000 £'000 £'000 Return on ordinaryactivities beforefinancing costs and tax (20,334) 3,658 88,359 Withholding tax deducted (612) (1,037) (2,401) Losses/(gains) on investments 15,946 (3,319) (82,202) Currency losses/(gains)on cash and borrowings 7,466 1,401 (3,720) (Decrease)/increase in creditors (266) 261 (5,921) Decrease/(increase) in other debtors 40 17 (25) NET CASH INFLOW/(OUTFLOW)FROM OPERATING ACTIVITIES 2,240 981 (5,910) 9. Reconciliation of Net Cash Flows to Movements in Net Funds SIX MONTHS TO SIX MONTHS TO YEAR TO 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2013 2012 2013 £'000 £'000 £'000 (Decrease)/increase incash in the period (2,855) 20,179 23,554 Non-cash movement- foreign exchange (losses)/gains (7,429) (1,407) 3,690 Movement in net cash flows (10,284) 18,772 27,244 Net cash at beginning of period 78,387 51,143 51,143 NET FUNDS AT END OF PERIOD 68,103 69,915 78,387 10. Analysis of Net Funds 31ST DECEMBER 2013 31ST DECEMBER 2012 30TH JUNE 2013 £'000 £'000 £'000 Cash at bank 68,103 69,915 78,387 68,103 69,915 78,387 11. Fair Value Hierarchy Financial Assets at Fair Value through Profit or Loss at 31st December 2013 LEVEL 1 LEVEL 2 LEVEL 3 TOTAL £'000 £'000 £'000 £'000 Unlisted holdings - - 803,327 803,327 Listed holdings 39 - - 39 TOTAL 39 - 803,327 803,366 Level 3 Financial Assets at Fair Value through Profit or Loss at 31st December 2013 PRIVATE EQUITY INVESTMENTS £'000 Opening balance 826,224 Purchases at cost 78,866 Transfer of book cost to level 1* (892) Sales proceeds (84,371) Total gains or losses included in "Gains on investments"in the Income Statement - on assets sold 17,761 - on assets held as at 31st December 2013 (34,261) CLOSING BALANCE 803,327 * The transfer of book cost to level 1 is due to stock distributions receivedfrom private equity investments. 12. Contingencies, Guarantees and Financial Commitments At 31st December 2013 there were financial commitments outstanding of £187.8m(31st December 2012: £183.0m; 30th June 2013: £195.1m) in respect of investmentsin partly paid shares and interests in private equity funds. INDEPENDENT REVIEW REPORTTO PANTHEON INTERNATIONAL PARTICIPATIONS PLC Introduction We have been engaged by the Company to review the financial information in theHalf-Yearly Financial Report for the six months ended 31st December 2013 whichcomprises the Income Statement, Reconciliation of Movements in EquityShareholders' Funds, Balance Sheet, Cash Flow Statement and Notes to theHalf-Yearly Financial Statements. We have read the other information containedin the Half-Yearly Financial Report which comprises only the PerformanceSummary, Chairman's Statement, Manager's Review and the Interim ManagementReport and Responsibility Statement of the Directors and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the set of financial statements. This report is made solely to the Company in accordance with guidance containedin ISRE (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity'. Our review work has beenundertaken so that we might state to the Company those matters we are requiredto state to them in a review report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the Company, for our review work, for this report, or for theconclusion we have formed. Directors' Responsibilities The Half-Yearly Financial Report is the responsibility of, and has beenapproved by, the Directors. The Directors are responsible for preparing theHalf-Yearly Financial Report in accordance with the Disclosure and TransparencyRules of the United Kingdom's Financial Conduct Authority. As disclosed in Note 1, the annual financial statements of the Company areprepared in accordance with applicable United Kingdom law and AccountingStandards (United Kingdom Generally Accepted Accounting Practice) and with theStatement of Recommended Practice 'Financial Statements of Investment TrustCompanies and Venture Capital Trusts', issued in January 2009. The financialinformation in the Half-Yearly Financial Report has been prepared in accordancewith 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 financialinformation in the Half-Yearly Financial Report based on our review. Scope of Review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof 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 tobelieve that the financial information in the Half-Yearly Financial Report forthe six months ended 31st December 2013 is not prepared, in all materialrespects, in accordance with the Accounting Standards Board Statement'Half-Yearly Financial Reports' and the Disclosure and Transparency Rules ofthe United Kingdom's Financial Conduct Authority. GRANT THORNTON UK LLP Auditor London 27th February 2014 NATIONAL STORAGE MECHANISM A copy of the Half-Yearly Financial Report will be submitted shortly to theNational Storage Mechanism ("NSM") and will be available for inspection at theNSM, which is situated at: http://www.morningstar.co.uk/uk/nsm Ends Neither the contents of the Company's website nor the contents of any websiteaccessible from hyperlinks on the Company's website (or any other website) isincorporated into, or forms part of this announcement.