Pantheon International Regulatory News (PIN)

15 Mar 2006 07:00

PANTHEON INTERNATIONAL PARTICIPATIONS PLC (`PIP')CHAIRMAN'S STATEMENTThe global private equity industry continued to be strong in the first half ofour financial year with a high level of realisations producing good returns forinvestors in many private equity funds. PIP, with its portfolio of investmentsin a wide range of high quality funds, has benefited from this marketenvironment and has seen its Net Asset Value per share increase in the sixmonths to 31 December by 16.9% to 768.9p. This performance was due primarily toan increase in the value of PIP's private equity investments, drivenprincipally by good realisations, and, to a lesser extent, to the beneficialeffect on the portfolio of the 4.2% appreciation of the US dollar, whichaffected approximately 60.8% of the private equity assets.In the first half our ordinary share price moved in line with Net Asset Valueincreasing by 16.3% to 756.5p at 31 December 2005. Our total assets rose in theperiod by ‚£53.6 million to ‚£435 million.Investment ActivityThe six months to end December 2005 was an outstanding period for realisingvalue from the private equity market. The total amount of cash distributed toPIP as a result of investment realisations during the period was ‚£79.3 million.This is a record level of distributions for PIP in any six month period sinceinception and follows on from the ‚£90.1 million received in the twelve monthsto 30 June 2005. These high levels of distributions reflect the maturity ofPIP's underlying portfolio.PIP has also been investing actively in the six months to end December 2005.The total amount of cash PIP invested in private equity assets during theperiod was ‚£59.8 million, of which ‚£26.8 million was paid to meet investmentcalls within PIP's primary portfolio with the balance applied to the secondaryportfolio.Secondary CommitmentsDuring the six months to end December 2005 PIP committed ‚£39.2 million toacquiring secondary interests in private equity funds. The majority of thesefunds were mature US venture funds. PIP's manager, Pantheon, believes that someportfolios of venture funds represent attractive investments at this stage ofthe investment cycle. The ability to purchase secondaries allows PIP to investin more mature assets.Primary CommitmentsGaining access to the best private equity funds continues to be a major issuefor many private equity investors. Pantheon's global expertise and longstandingrelationships have enabled PIP to gain access to many of the invitation-onlyprivate equity funds that have been fundraising in 2005.The amount of capital committed to primary funds during the six months to endDecember 2005 was ‚£71.8 million. PIP continues to diversify across leadingprivate equity managers and over the period made commitments to six US buyoutfunds, two US venture capital funds, two US special situations fund, threeEuropean buyout funds and one European special situations fund. In order tocontinue to be able to reinvest the growing level of distributions receivedfrom PIP's private equity portfolio, the Board has increased the rate that PIPwill commit to primary funds from ‚£300 million to ‚£450 million over athree-year period.Market Review & ProspectsThe global private equity market has continued to grow over the six months toend December 2005. Buyout managers have been active in making new investments,fund-raising has continued to rise and exits have been strong, aided by thefavourable debt markets and strong global stock markets. Venture markets areshowing signs of renewed life, evidenced by a number of prominent trade salesand successful IPOs. PIP's exposure to venture capital funds should provebeneficial if this early promise continues.The outlook for 2006 is positive, with private equity funds expected to carryon returning money to their investors as a result of sales, recapitalisationsand IPOs thereby making good returns for their investors. Low interest ratesand supportive debt markets continue to stimulate the buyout and M&A markets.Fundraising is expected to continue at a high level in 2006.Whilst the current environment of rising company valuations is beneficial foradding value at the point of an exit, it also leads to an increase in theaverage price paid for new investments. It is therefore important to selectfund managers that are able to maximise the value received at exit whilstmaintaining the necessary discipline when making new investments.PIP's manager continues to see a wide range of portfolios through the secondarymarket and, although prices being paid have firmed over recent months, has beenable to identify value in a number of select portfolios that PIP has been ableto purchase.Capital StructureDue to better than expected distributions received from PIP's portfolio, theBoard decided to release some of its surplus cash by redeeming ‚£10m ofredeemable shares in November 2005. The ability to deploy cash throughinvestment or redemptions is advantageous in ensuring that PIP does not sufferfrom performance drag created by holding excessive amounts of cash.Tom H. Bartlam15 March 2006STATEMENT OF TOTAL RETURN OF THE COMPANY (unaudited)(incorporating the revenue account*) for the six months to 31 December 2005 Restated 2004 Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Gains on investments ** - 63,428 63,428 - 5,210 5,210 Currency timing - 352 352 - 421 421 differences Income Income 3,541 - 3,541 864 - 864 Investment management (2,367) - (2,367) (1,829) - (1,829)fee Other expenses (547) (56) (603) (503) - (503) Return on ordinary 627 63,724 64,351 (1,468) 5,631 4,163 activities before financing costs and tax Interest payable and (431) - (431) (560) - (560)similar charges Return on ordinary 196 63,724 63,920 (2,028) 5,631 3,603 activities before tax Tax on ordinary - (247) (247) (2) (44) (46)activities Return on ordinary 196 63,477 63,673 (2,030) 5,587 3,557 activities after tax Earnings per ordinary 110.43p 5.15p and redeemable share - basic Earnings per PLN N/A 8.49p All revenue and capital items in the above statement relate to continuingoperations.* The total column of this statement represents the Company's profit and lossstatement prepared in accordance with UK Accounting Standards. Thesupplementary revenue return and capital columns are both prepared underguidance published by the Association of Investment Trust Companies.** Includes currency movements on investments.SUMMARISED BALANCE SHEET OF THE COMPANY (unaudited) As at 31 As at 30 As at 31 Dec 2005 June 2005 Dec 2004 ‚£'000 ‚£'000 ‚£'000 Investments at fair value * 422,143 371,950 279,571 Investment in subsidiary undertaking - 1 1 Net current assets/(liabilities) 12,991 9,537 (31,642) TOTAL ASSETS LESS CURRENT LIABILITIES 435,134 381,488 247,930 CAPITAL AND RESERVES 435,134 381,488 247,930 Total net assets for the purpose of calculating the net asset value per share 435,134 381,488 247,930 Net asset value per share - basic 768.9p 657.9p 579.0p Number of ordinary shares in issue 26,471,013 26,471,013 26,471,013 Number of redeemable shares in issue 30,117,964 31,513,199 16,353,199 * Includes fixed interest investments held for cash management purposes.SUMMARISED STATEMENT OF CASHFLOWS (unaudited) For the six For the six months to months to 31 December 2005 31 December 2004 ‚£'000 ‚£'000 Net cash inflow/(outflow) from operating 231 (791)activities Servicing of finance Interest paid (6) (50) Loan commitment and arrangement fees (132) (177)paid Redeemable shares commitment fees paid (252) - PLN commitment fees paid - (500) Net cash outflow from servicing of (390) (727)finance Taxation Withholding tax suffered on limited (247) (2)partnership distributions Net cash outflow from taxation (247) (2) Capital expenditure and financial investment Purchases of investments (63,012) (77,549) Purchases of government securities (140,327) - Disposals of investments 77,572 36,799 Disposals of government securities 136,645 - Realised currency gains/(losses) 73 (26) Net cash inflow/(outflow) from capital 10,951 (40,776)expenditure and financial investment Financing Cost of issue of ordinary and redeemable - (500)shares Payments to buy back redeemable shares (10,000) - Drawdown of bank credit facility - 35,488 Net cash (outflow)/ inflow from (10,000) 34,988 financing Increase/(decrease) in cash 545 (7,308)These accounts have been prepared using accounting standards and policiesadopted at the year-end except as explained below.This interim report has been prepared using new accounting standards, whichhave been issued to begin the process of converging UK standards withInternational Financial Reporting Standards ('IFRS'). The applicable standardsthat have been adopted by the Company with effect from 1 July 2005 are FRS 21Events after the Balance Sheet Date; FRS 22 Earnings per share, FRS 23 TheEffects of Changes in Foreign Exchange Rates, FRS 25 Financial Instruments:Disclosure and Presentation, FRS 26 Financial instruments: Measurement and FRS28 Corresponding Amounts.All investments held by the Company are classified as 'fair value throughprofit or loss'. For investments actively traded in organised financialmarkets, fair value is generally determined by reference to Stock Exchangequoted market bid prices at the close of business on the balance sheet date.For investments that are not actively traded on organised financial markets,fair value is determined using reliable valuation techniques as described indetail in the Company's last Annual Report. There is no material effect on theportfolio as a result of this change.Under FRS 25, Participating Loan Notes (PLNs) have been classified as equity.The revaluation of PLNs in the period to 31 December 2004, is now treated as anallocation of profits. This has no effect on the return to ordinary andredeemable shareholders. As the PLNs were converted to ordinary and redeemableshares on 20 September 2004, there is no restatement effect to the BalanceSheet at 31 December 2005, 30 June 2005 or 31 December 2004.This interim statement is not the Company's statutory accounts. The statutoryaccounts for the year ended 30 June 2005 have been delivered to the Registrarof Companies and received an audit report which was unqualified, did notinclude a reference to any matters to which the auditors drew attention by wayof emphasis without qualifying the report, and did not contain statements undersection 237(2) and (3) of the Companies Act 1985.The results for the six months to 31 December 2005 have been reviewed by theCompany's auditors and their report is attached.Signed on behalf of the BoardTom H. BartlamChairmanINDEPENDENT REVIEW REPORT TO PANTHEON INTERNATIONAL PARTICIPATIONS PLCIntroductionWe have been instructed by the Company to review the financial information,which comprises the statement of total return, the balance sheet, the cash flowstatement and the related notes that have been reviewed for the six months to31 December 2005. We have read the other information contained in the interimreport and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. This report is madesolely to the company having regard to guidance contained in Bulletin 1999/4'Review of interim financial information' issued by the Auditing PracticesBoard. To the fullest extent permitted by law, we do not accept or assumeresponsibility to anyone other than the company, for our work, for this report,or for the conclusions we have formed.Directors' responsibilitiesThe interim report, including the financial information contained therein, isthe responsibility of, and has been approved by, the directors. The directorsare responsible for preparing the interim report in accordance with the ListingRules of the Financial Services Authority. The directors are also responsiblefor ensuring that the accounting policies and presentation applied to theinterim figures are consistent with those applied in preparing the precedingannual accounts except where any changes, and the reasons for them, aredisclosed.Review work performedWe conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. Areview consists principally of making enquiries of management and applyinganalytical procedures to the financial information and underlying financialdata and, based thereon, assessing whether the disclosed accounting policieshave been consistently applied, unless otherwise disclosed. A review excludesaudit procedures such as tests of controls and verification of assets,liabilities and transactions. It is substantially less in scope than an auditand therefore provides a lower level of assurance. Accordingly we do notexpress an audit opinion on the financial information.Review conclusionOn the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 31 December 2005.RSM Robson Rhodes LLPChartered AccountantsLondon, England15 March 2006 ENDPANTHEON INTERNATIONAL PARTICIPATIONS PLC