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29 Feb 2008 14:42
Pantheon International Participations PLC
Half Yearly Financial Report: 31 December 2007
Financial Summary HIGHLIGHTS 31ST DEC 2007 30TH JUNE 2007 CHANGE Summary of results NAV per share 1052.5p 919.2p 14.5% Total assets less current liabilities ‚£698.8m ‚£610.3m 14.5% Ordinary shares Share price 839.5p 917.5p (8.5)% Discount to NAV 20.2% 0.2% Redeemable shares Share price 857.5p 897.5p (4.5)% Discount to NAV 18.5% 2.4% Investment activity
Invested in private equity assets ‚£146.2m - - Received from private equity assets ‚£84.9m - -
SINCE 1 YEAR 3 YEARS 5 YEARS 10 YEARS INCEPTION* PERFORMANCE % % P.A % P.A % P.A % P.A NAV per share 26.9 22.1 14.8 12.1 14.5 Ordinary share price 2.7 16.9 12.8 13.6 13.8 FTSE All Share 5.3 14.5 15.4 6.2 9.0 MSCI World (sterling) 8.1 12.0 12.7 5.5 7.2 * PIP was launched on 18th September 1987 CAPITAL STRUCTURE Ordinary shares 37,521,013 Redeemable shares 28,871,255 Total 66,392,268
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, bysubscribing for investments in new private equity funds and buying secondaryinterests in existing private equity funds and, occasionally, by acquiringdirect holdings in unquoted companies, usually either where a vendor is seekingto sell a combined portfolio of fund interests and direct holdings or wherethere 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 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 of diversifying investment risk:
* 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; * 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 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 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. Chairman's Statement
I am pleased to report that in the six months to 31st December 2007 we hadstrong growth in net asset value per share which increased by 14.5% to1,052.5p. This compares to an increase in the MSCI World index of 1.3% and adecrease in the FTSE All Share index of 2.1%. PIP's share price decreased by8.5% over the six month period as a result of the discount widening from 0.2%to 20.2% which is a reflection of negative sentiment affecting share prices inthe sector and the wider equity markets. Our total assets rose by ‚£88.5 million to ‚£698.8 million during the period.This resulted mainly from an uplift in the value of investments but alsoincluded favourable currency movements which increased the sterling value ofthe private equity portfolio by ‚£19.0m. INVESTMENT ACTIVITY
The global private equity market continued to be active both in investment andin realisations over the period. However, as the effect of the debt marketcorrection works its way through the system we expect to see a significantslowdown in buyout activity at least in the first half of 2008. PIP invested ‚£146.2 million in underlying private equity assets, an increase of 16% over theequivalent period in the previous year. Of this amount, ‚£76.3m was paid to meetinvestment calls arising from PIP's primary portfolio and ‚£69.9m was applied tothe secondary portfolio. The total amount of cash distributed to PIP as aresult of investment realisations during the six months was ‚£84.9 million, anincrease of 43% over the equivalent six month period in the previous year. Ofthis amount, ‚£32.5m came from the primary portfolio with ‚£52.4m arising fromthe secondary portfolio. PRIMARY COMMITMENTS
Fundraising activity continued at the high levels seen in the previous year with restricted access to many of the most desirable funds. Pantheon's relationships with top-tier private equity fund managers help to ensure that PIP gains access to top quality funds worldwide.
PIP's commitments to primary investments reached ‚£90.4 million in the period,an increase of 4% over the previous year, encompassing six Europe-focused funds(‚£49.1m), nine US-focused funds (‚£37.8m) and a commitment of ‚£3.5m to anIsraeli fund. Through these commitments PIP will continue to gain strategicaccess to buyout, venture and special situations activity globally. PIP'scommitments to Asia are managed through Pantheon's Asian funds of funds whichcontinued to invest in the region by committing to five funds. SECONDARY COMMITMENTS
PIP committed ‚£62.1 million to eight secondary transactions to purchase existing interests in private equity funds. The developing private equity secondary market should give rise to continued growth of more active portfolio management by institutional investors. The secondary market is expected to remain active through the calendar year 2008.
MARKET REVIEW AND PROSPECTS The tightening of the credit market has resulted in an overhang of debt,affecting the financing of new buyouts in particular. While this is clearingslowly it will take some time to be fully accommodated. We are now seeing amaterial reduction in the levels of debt available to support buy out activityand terms and conditions of debt financing are returning to levels seen someyears ago. This has resulted in a reduction in the proportion of debt in buyoutstructures. Consequent reduced level buyout of activity means that calls anddistributions are expected to occur at a lower rate in 2008 than in recentyears. Furthermore any effect on private equity market valuations of declinesin the broader equity markets following on from the credit squeeze has yet
tobe seen. Globally, economic growth is moderating as a result of a reduction in consumerdemand and problems in the debt markets. However, the acquisition activity ofsome corporate buyers indicates that the M&A markets may remain active at somelevel. The venture market has been less affected by the credit market slowdown makingit possible for investment within the venture market to continue in 2008. With29% of the portfolio in venture capital funds, PIP is well placed to benefitfrom any continued activity.
Within the secondary market, deal flow has increased markedly, reflecting growing institutional awareness of the utility of more actively managing private equity portfolios, although pricing remains high in some areas. We expect deal flow to continue to be active and prices to moderate to reflect the higher perception of risk.
Underlying the above is the realisation that, in many cases, private equity canprovide companies with a better form of ownership than public equity, yet itstill accounts for a relatively small proportion of global enterprise value.Despite the nature of market cycles, there is significant opportunity for longterm growth. FINANCING OF INVESTMENTS PIP issued ‚£100m in value of ordinary shares in June 2007 in order to increasethe financing available to implement its investment strategy and in particular,to participate in secondary investments. This has financed an expectedly activeinvestment programme as detailed above. At 31st December 2007 PIP had substantial financial resources available to fundinvestment commitments in the form of cash (‚£10m), banking facilities (‚£150m)and standby equity financing of ‚£120m. The level of new commitments tosecondary purchases continues to be dependent on the level of distributionsfrom the existing portfolio and the amount of new financing raised. TOM BARTLAMChairman29th February 2008 Portfolio Review The underlying companies in the portfolio range from large and matureindustrial enterprises with multinational operations to early-stage venturesoperating at the leading edge of technological development. All the companieshave one factor in common: the influence of professional private equitymanagers who are motivated to maximise the value of each underlying investment.
PORTFOLIO ANALYSIS BY VALUE AS AT 31ST DECEMBER 2007
GEOGRAPHIC SPREAD
While the USA remains the most developed and largest private equity market, theEuropean market continues to mature and grow in relative size. The weighting tothe USA reduced from 59% to 53% over the period. This coincided with anincrease in the weighting to Europe from 35% to 41%. This reflects both theimpact of the higher weighting to Europe in the primary programme and thelocation of secondaries purchased during the period.
Geographic Area Percentage Spread
USA 53 Europe 41 Asia 5 Other 1 STAGE COMPOSITION Below shows the breakdown of the portfolio by the stage focus of the underlyingfunds. Stage Percentage Buyouts 59 Venture 29 Generalist 6 Special Situations 4 Directs 2 MATURITY
PIP's portfolio contains a wide range of fund vintages (referring to the year the fund was established), as shown in the
chart below. Private equity funds typically take up to five years of a fund's life to invest the majority of their available
capital into underlying companies. As a result, significant flows of realised proceeds tend not be returned to investors
until the middle and later stages of a fund's life.
Year Percentage 2007 12 2006 12 2005 11 2004 12 2003 3 2002 4 2001 8 2000 21 1999 7 1998 4 1997 and earlier 6 LISTED COMPANY EXPOSURE
PIP's portfolio of funds primarily comprises private equity assets. These funds may also hold listed companies as a result of recent IPOs within fund portfolios that may be held subject to selling restrictions or in some instances due to private investments in public equity (PIPEs).
Underlying listed company interests are estimated to be approximately 9% of PIP's assets at 31st December 2007.
HEDGING
Due to the uncertain timing of cash flows in and out of underlying privateequity assets, it is not possible to match currency movements perfectly withhedging instruments. For this reason, the present policy of the PIP Board isnot to hedge the portfolio against currency movements except where there is asignificant change in the geographic weighting that is expected to be of ashort-term nature. PIP did not hedge the portfolio against exchange ratemovements during the financial year. The net effect of currency movements onthe net asset value over the period resulted in a ‚£19.0m increase in thesterling value of the portfolio. Activity
PIP has made commitments of ‚£159 million to private equity funds during the past six months. Of this, ‚£90m was committed to new funds and ‚£69m was committed to the purchase of secondary investments and direct co-investments.
NEW INVESTMENTS PIP committed a total of ‚£90.4 million to 16 new funds in the six-month period.Four of the new funds are Europe-focused buyout funds (total ‚£43.2m), two areEurope-focused venture funds (total ‚£5.9m), three are US-focused buyout funds(total ‚£22.6m), six are US-focused venture funds (‚£15.2m) and one is an Israeliventure fund (‚£3.5m). SECONDARY ACQUISITIONS
PIP completed eight secondary purchases during the period at a value of ‚£62.1 million including unfunded commitments. PIP also committed ‚£6.6m to the purchase of three direct co-investments. In addition, PIP made a deferred payment of ‚£13.6m in relation to a previous secondary purchase.
DISTRIBUTIONS
PIP enjoyed a good period for distributions. In all, the Company received ‚£84.9 million in proceeds from the portfolio,
equivalent to approximately 16% of opening private equity asset value.
Market Distribution Primary ‚£32.5m Secondary ‚£52.4m Total ‚£84.9m CALLS PIP has had an active investment period, with cash calls increasing to ‚£146.2million. Portfolio Calls Primary ‚£76.3m Secondary ‚£69.9m Total ‚£146.2m OUTSTANDING COMMITMENTS
PIP's outstanding commitment to investments rose to ‚£556.9m at 31st December 2007, compared with ‚£528.0m at
30th June 2007. FINANCE
PIP maintained its borrowing facilities at ‚£150 million in order to ensure adequate financing. These borrowing facilities allow PIP to maximise the proportion of its assets invested in private equity while ensuring PIP retains sufficient capacity to meet calls arising from the portfolio.
PIP also has in place agreements with certain institutions under which PIP canrequire the institutions to subscribe for Redeemable shares. PIP has availablestandby financing of ‚£120m. PIP pays a fee of 0.5% per annum on thesecommitments. The purpose of these agreements is to provide an additional levelof assurance that PIP will be in a position to meet portfolio calls,irrespective of market appetite for issues of new Redeemable shares and othersources of capital in the short term. PANTHEON VEHICLES In Asia the new fund programme continues to be implemented through commitmentsto Pantheon fund-of-funds vehicles. This is due to the relative size of PIP'sstrategic allocation to the region. Pantheon's policy is to waive managementfees in respect of PIP's holdings in the firm's managed fund-of-funds vehiclesand to ensure that PIP is never disadvantaged in terms of fees compared withits position had it made direct investments into the underlying funds. Interim Management Report and
Responsibility Statement of the Directors
IN RESPECT OF THE HALF YEARLY FINANCIAL REPORT
INTERIM MANAGEMENT REPORT This Half Yearly Financial Report is the first to be published by the Companyunder the Disclosure and Transparency Rules ("DTR"). The Company is required tomake a number of new disclosures, including the following: The important events that have occurred during the period under review, the keyfactors influencing the financial statements and the principal risks anduncertainties for the remaining six months of the financial year are all setout in the Chairman's statement. RESPONSIBILITY STATEMENT
The Directors confirm that to the best of their knowledge:
* the condensed set of financial statements has been prepared in accordance
with the Statement Half Yearly Financial Reports issued by the UK Accounting Standards Board; * the interim management report includes a fair review of the information required by: (a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of thefinancial year and their impact on the condensed set of financial statements;and a description of the principal risks and uncertainties for the remainingsix months of the year; and (b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so. This Half Yearly Financial Report was approved by the Board of Directors on 29February 2008 and the above responsibility statement was signed on its behalfby Tom Bartlam, Chairman.
Condensed Income Statement (unaudited)
FOR THE SIX MONTHS TO 31ST DECEMBER
SIX MONTHS TO 31ST SIX MONTHS TO 31ST YEAR TO 30TH JUNE 2007 DECEMBER 2007 DECEMBER 2006 REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* REVENUE CAPITAL TOTAL* ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Gains on investments ** - 94,747 94,747 - 19,806 19,806 - 77,537 77,537 Currency (losses)/ gains on cash and borrowings - 92 92 - (513) (513) - (625) (625) Income 3,627 - 3,627 3,763 - 3,763 7,179 - 7,179 Investment management fees*** (4,412) (4,379) (8,791) (3,074) - (3,074) (7,189) (1,607) (8,796) Other expenses (477) (314) (791) (960) (191) (1,151) (1,152) (617) (1,769) Return on ordinary activities before financing costs and tax (1,262) 90,146 88,884 (271) 19,102 18,831 (1,162) 74,688 73,526 Interest payable and similar charges (716) - (716) (439) - (439) (1,487) - (1,487) Return on ordinary activities before tax (1,978) 90,146 88,168 (710) 19,102 18,392 (2,649) 74,688 72,039 Tax on ordinary activities 609 (279) 330 - (414) (414) - (1,297) (1,297) Return on ordinary activities after tax for the period (1,369) 89,867 88,498 (710) 18,688 17,978 (2,649) 73,391 70,742 RETURN PER ORDINARY AND REDEEMABLE SHARE (2.06p) 136.25p 134.19p (1.28p) 33.77p 32.49p (4.76p) 131.89p 127.13p
All revenue and capital items in the above statement relate to continuing operations.
No operations were acquired or discontinued during the period.
No Statement of Total Recognised Gains and Losses has been prepared as all gains and losses are shown in the Income Statement.
* 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 movements on investments. *** The charge in the capital column of the income statement relates to an accrual for the performance fee as detailed in note 4 of the notes to the half yearly financial report. Condensed Reconciliation of Movement in Equity Shareholders' Funds (unaudited) CAPITAL CAPITAL CAPITAL SHARE REDEMPTION SHARE SPECIAL RESERVE RESERVE REVENUE CAPITAL RESERVE PREMIUM RESERVE REALISED UNREALISED RESERVE TOTAL ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Movement for the 6 months ended 31st December 2007 OPENING EQUITY SHAREHOLDERS' FUNDS 25,428 26 183,139 99,861 187,543 131,745 (17,481) 610,261 Return for the period - - - - 28,515 61,352 (1,369) 88,498 Costs of buy back of Redeemable shares - - - - - - - - CLOSING EQUITY SHAREHOLDERS' FUNDS 25,428 26 183,139 99,861 216,058 193,097 (18,850) 698,759 Movement for the 6 months ended 31st December 2006 OPENING EQUITY SHAREHOLDERS' FUNDS 18,024 26 91,971 99,897 151,664 94,233 (14,832) 440,983 Return for the period - - - - 13,557 5,131 (710) 17,978 Buy back of Redeemable shares - - - (37) - - - (37) CLOSING EQUITY SHAREHOLDERS' FUNDS 18,024 26 91,971 99,860 165,221 99,364 (15,542) 458,924 Movement for the year ended 30th June 2007 OPENING EQUITY SHAREHOLDERS' FUNDS 18,024 26 91,971 99,897 151,664 94,233 (14,832) 440,983 Return for the year - - - - 35,879 37,512 (2,649) 70,742 Issue of Ordinary shares 7,404 - 92,599 - - - - 100,003 Expenses relating to issue of Ordinary shares - - (1,431) - - - - (1,431) Additional costs of redemption of Redeemable shares - - - (36) - - - (36) CLOSING EQUITY SHAREHOLDERS' FUNDS 25,428 26 183,139 99,861 187,543 131,745 (17,481) 610,261
Condensed Balance Sheet (unaudited)
AS AT AS AT AS AT 31ST DECEMBER 30TH JUNE 31ST DECEMBER 2007 2007 2006 ‚£'000 ‚£'000 ‚£'000 Fixed assets Investments at fair value* 696,544 595,994 462,103 Current assets Debtors 2,253 2,018 2,420 Cash at bank 10,480 17,010 6,640 12,733 19,028 9,060
Creditors: Amounts falling due within
one year Revolving credit facility - - 10,219 Other creditors 10,518 4,761 2,020 10,518 4,761 12,239 NET CURRENT ASSETS / (LIABILITIES) 2,215 14,267 (3,179) TOTAL ASSETS LESS CURRENT LIABILITIES 698,759 610,261 458,924 Capital and reserves Called-up share capital 25,428 25,428 18,024 Capital redemption reserve 26 26 26 Share premium account 183,139 183,139 91,971 Special reserve 99,861 99,861 99,860 Capital reserve - realised gains 216,058 187,543
165,221
Capital reserve - unrealised gains 193,097 131,745 99,364 Revenue reserve (18,850) (17,481) (15,542) TOTAL EQUITY SHAREHOLDERS' FUNDS 698,759 610,261
458,924
Net asset value per share - basic 1,052.5p 919.2p
829.2p
Number of Ordinary shares and
Redeemable shares in issue 66,392,268 66,392,268 55,342,268
* Includes fixed interest investments held for cash management purposes at 31st December 2007 (‚£11,877,000) and 30th June 2007
(‚£34,794,000).
There were no fixed interest investments held as at 31st December 2006.
Condensed Cash Flow Statement (unaudited)
FOR THE SIX MONTHS TO 31ST DECEMBER
SIX MONTHS SIX MONTHS YEAR TO TO 31ST TO 31ST 30 JUNE DECEMBER 2007 DECEMBER 2006 2007 ‚£'000 ‚£'000 ‚£'000
Cash flow from operating activities
Investment income received 3,422 3,922 7,107
Deposit and other interest received 205 10
12
Investment management fees paid (2,790) (2,891) (6,372) Secretarial fees paid (41) (58) (109) Legal and professional fees (136) (351) _ Other cash payments (7) (657) (2,169)
NET CASH INFLOW /(OUTFLOW) FROM OPERATING
ACTIVITIES 653 (25) (1,531)
Returns on investment and servicing of
finance
Revolving credit facility and overdraft
interest paid (34) (4) (571)
Loan commitment and arrangement fees paid (376) (166) (1,071)
Redeemable shares commitment fees paid (414) (252) (477)
NET CASH OUTFLOW FROM RETURNS ON INVESTMENT AND SERVICING OF FINANCE (824) (422) (2,119) Taxation
Withholding tax suffered on limited
partnership distributions (277) (357) (1,230) Income tax recovered 787 - -
NET CASH INFLOW / (OUTFLOW) FROM TAXATION 510 (357) (1,230)
Capital expenditure and financial
investment Purchases of investments (149,175) (128,976) (224,262)
Purchases of short-dated government
securities (23,455) (182,345) (251,677) Disposals of investments 83,394 58,983 149,337
Disposals of short-dated government
securities 82,275 243,503 243,503 Realised currency losses (101) (113) (152)
NET CASH OUTFLOW FROM CAPITAL EXPENDITURE
AND FINANCIAL INVESTMENT (7,062) (8,948) (83,251) NET CASH OUTFLOW BEFORE FINANCING (6,723) (9,752) (88,131) Financing Proceeds from issue of Ordinary shares - - 100,003 Costs of Ordinary share issue - - (968) Drawdown of loan - 10,211 10,211 Repayment of loan - - (10,211)
Realised currency gains on repayment of
revolving credit facility - - 75
Costs to redeem Redeemable shares - (37)
(36) NET CASH INFLOW FROM FINANCING - 10,174 99,074 (DECREASE) / INCREASE IN CASH (6,723) 422 10,943
Notes to the Half Yearly Financial Report (unaudited)
1. FINANCIAL INFORMATION This financial information has been prepared under the historical costconvention as modified by the revaluation of certain investments and inaccordance with the Accounting Standard Board's ("ASB") Statement on HalfYearly Financial Reports, applicable law and Accounting Standards in the UnitedKingdom ("UK GAAP") and with the Statement of Recommended Practice "FinancialStatements of Investment Trust Companies" ("SORP") issued by the Association ofInvestment Companies ("AIC") in January 2003 and revised in December 2005 andin accordance with accounting policies set out in the statutory accounts forthe year ended 30 June 2007. The financial information contained in this Half Yearly Financial Report is notthe company's statutory accounts. The financial information for the six monthsended 31 December 2007 and 31 December 2006 are not for a financial year andhave not been audited. The statutory accounts for the financial year ended 30June 2007 have been delivered to the Registrar of Companies and received anaudit report which was unqualified, did not include a reference to any mattersto which the auditors drew attention by way of emphasis without qualifying thereport, and did not contain statements under section 237(2) and (3) of theCompanies Act 1985.
2. TAX CREDIT / CHARGE ON ORDINARY ACTIVITIES
The tax credit for the half-year is ‚£329,008 (31 December 2006: ‚£414,361 charge; 30 June 2007: ‚£1,296,887 charge) based on an estimated effective tax rate of (0.4%) for the year ending 30 June 2008.
The tax charge to capital consists of Japanese Corporation Tax and tax withheld from capital distributions.
3. RELATED PARTY TRANSACTIONS
Pantheon Ventures Limited, as Investment Manager of the Company, is consideredto be a related party by virtue of its management contract with the Company.During the period, services of a total value of ‚£8,790,398 (31 December 2006: ‚£3,612,123; 30 June 2007: ‚£9,506,579) were purchased by the Company fromPantheon Ventures Limited. At the 31 December 2007, the amount due to PantheonVentures Limited disclosed under creditors was ‚£8,210,298. All amounts are
inclusive of VAT. 4. PERFORMANCE FEE In line with the management agreement the manager is entitled to a performancefee of 5 percent of the amount by which the net asset value at the end of theperiod exceeds 110 percent of the applicable high water mark. For the firstperformance fee the applicable high water mark is the aggregate net asset valueof all shares of the Company in issue at 31 December 2006 (multiplied by 1 +(181/365 x 10%)) compounded annually at 10% for each 12 month period. 5. VAT DISCLOSURE NOTE
Since the previous quarter end HM Revenue & Customs ("HMRC") have confirmed that they accept that fund management services to investment trusts are exempt from VAT. The Manager has confirmed that it has lodged claims with HMRC to recover VAT paid from October 2001.
Negotiations with the investment manager are ongoing and until all remaining uncertainties surrounding the mechanisms of the reclaim process have been cleared, it is not practicable to quantify the amount of VAT which will be recoverable and there will be no recognition of an asset in the accounts.
6. RECONCILIATION OF NET RETURN BEFORE FINANCE COSTS AND TAXATION
TO NET CASH INFLOW / (OUTFLOW) FROM OPERATING ACTIVITIES 6 MONTHS 6 MONTHS TO 31ST TO 31ST YEAR TO DECEMBER DECEMBER 30TH JUNE 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 Net return before finance costs and taxation 88,168 18,392 72,039 Gains on investments (94,747) (19,806) (77,537) Currency losses/(gains) on cash and borrowings 92 513 625 Increase in accrued income 532 440 1,487 Increase in creditors 6,029 323 2,127 Decrease / (Increase) in other debtors 579 113 (272)
NET CASH INFLOW/(OUTFLOW) FROM OPERATING
ACTIVITIES 653 (25) (1,531)
7. RECONCILIATION OF NET CASH FLOWS TO MOVEMENTS IN NET FUNDS
6 MONTHS TO 6 MONTHS TO YEAR TO 31ST DECEMBER 31ST DECEMBER 30TH JUNE 2007 2006 2007 ‚£'000 ‚£'000 ‚£'000 (Decrease)/increase in cash in the year (6,723) 422 10,943 Non-cash movement Exchange (losses)/gains 193 (418) (569) Movement in net debt (6,530) 4 10,374 Net funds at beginning of period 17,010 6,636 6,636 NET FUNDS AT END OF PERIOD 10,480 6,640 17,010 8. ANALYSIS OF NET FUNDS 31ST 1ST JULY EXCHANGE DECEMBER
2007 CASH FLOWS MOVEMENTS 2007 ‚£'000 ‚£'000 ‚£,000 ‚£'000 Cash at bank 17,010 (6,723) 193 10,480 17,010 (6,723) 193 10,480 Independent Review Report
TO PANTHEON INTERNATIONAL PARTICIPATIONS PLC
FINANCIAL INFORMATION FOR THE SIX MONTH PERIOD ENDED 31ST DECEMBER 2007
INTRODUCTION We have been engaged by the company to review the condensed set of financialstatements in the Half Yearly Financial Report for the six months ended 31December 2007 which comprises Income Statement, Reconciliation of Movement inEquity Shareholders' Funds, Balance Sheet, Cash Flow Statement and Notes to theHalf Yearly Financial Report. We have read the other information contained inthe Half Yearly Financial Report which comprises only the Objective andInvestment Policy, Chairman's Statement, Portfolio Review and Activity andconsidered whether it contains any apparent misstatements or materialinconsistencies with the information in the condensed set of financialstatements. 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 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 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", issued in December 2005. The condensed set of financial statementsincluded in this Half Yearly Financial Report has been prepared in accordancewith the Accounting Standards Board Statement "Half Yearly Financial Reports". OUR RESPONSIBILITY Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the Half Yearly Financial Report based on ourreview. 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 condensed set of financial statements in the Half YearlyFinancial Report for the six months ended 31 December 2007 is not prepared, inall material respects, in accordance with the Accounting Standards BoardStatement "Half Yearly Financial Reports" and the Disclosure and TransparencyRules of the United Kingdom's Financial Services Authority. GRANT THORNTON UK LLPAuditorLondon29th February 2008 Directors and Advisors DIRECTORSTom Bartlam (Chairman)Ian BarbyRichard CrowderPeter ReadmanRhoddy SwireSandy Thomson MANAGERPantheon Ventures Limited
Authorised and regulated by the FSA
Norfolk House31 St. James's SquareLondonSW1Y 4JRTelephone: 020 7484 6200
E-mail: pip@pantheonventures.com
Internet: www.pantheonventures.com
SECRETARY & REGISTERED OFFICE
Capita Sinclair Henderson Limited
Beaufort House51 New North RoadExeterEX4 4EPTelephone: 01392 412122 BROKERSDresdner Kleinwort Limited30 Gresham StreetLondonEC2P 2XY REGISTRARSCapita RegistrarsThe Registry34 Beckenham RoadBeckenhamKentBR3 4TU* Telephone: 0871 664 0300
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BANKERS
The Royal Bank of Scotland PLC
Waterhouse Square138-142 HolbornLondonEC1N 2TH HSBC Bank PLC(Also custodian)Global Investor ServicesMariner HousePepys StreetLondonEC3N 4DA AUDITORSGrant Thornton UK LLP30 Finsbury SquareLondonEC2P 2YU SOLICITORSCovington& Burling LLP265 StrandLondonWC2R 1BH
PANTHEON INTERNATIONAL PARTICIPATIONS PLC