TIDMFPEO TIDMFPER
RNS Number : 9342D
F&C Private Equity Trust PLC
23 May 2012
To: Stock Exchange For immediate release:
23 May 2012
F&C Private Equity Trust plc
Quarterly results for the three months to 31 March 2012
(unaudited)
-- Realisations GBP8.1 million, drawdowns GBP5.7 million
-- Renewal of loan facility
-- Adoption of new dividend policy
-- NAV total return for the three months of -0.9 per cent for the Ordinary Shares
-- NAV total return for the three months of -1.6 per cent for the Restricted Voting Shares
Manager's Review
Introduction
The Company's net assets at 31 March 2012 were GBP179.9 million.
The net assets of the Ordinary Share Pool were GBP176.6 million
giving a fully diluted net asset value ('NAV') per Ordinary Share
of 241.27p, a decrease over the quarter of 0.9 per cent. The net
assets of the Restricted Voting Pool were GBP3.3 million giving a
NAV per share of 4.97p. Taking into account the 1.6p special
dividend paid on 27 January 2012, this is a decrease of 1.6 per
cent over the quarter. The first dividend under the new policy,
relating to the first half of the year, will be paid in
November.
The first quarter of 2012 was a fairly active one for the
Company's portfolio, which is belied by the minimal change in the
NAV. There have been limited changes in the portfolio valuation
since our last report of less than two months ago. We are awaiting
first quarter reports from many funds and some of the realisations
reported below were already 'priced in' in the last valuation. The
first quarter tends also to be quiet in terms of valuation
movements as it is too early in the year to assess progress towards
budgets.
The net debt of the Ordinary Share Pool at 31 March 2012 was
GBP4.9 million. The accrued liability for the Group's Zero Dividend
Preference Shares ('ZDPs') is now GBP35.6 million. Together, this
gives total debt, reduced slightly since the year end, of GBP40.5
million, and results in gearing of 18.7 per cent of total assets
within the Ordinary Pool at the end of the period. The Restricted
Voting Pool had a cash balance of GBP0.4 million at the end of the
period. Outstanding undrawn commitments stood at GBP67.6 million,
down from GBP73.2 million at the year end.
New Investments and Drawdowns
There were no new investments during the first quarter. A small
number of fund commitments and co-investments are under
consideration and we expect to be able to announce some of these at
the half year stage. There are a significant number of mid-market
funds seeking or planning to seek fresh capital for funds over the
next 18 months or so. Our policy remains to be highly selective in
making these commitments, reserving our capital for exceptional
emerging managers and managers whom we know from experience have a
track record of delivering strong performance. The market
environment for investment is subdued with volumes of new European
mid-market buy-outs down by 50 per cent year on year. This is a
function of a further reduction in debt availability as a result of
the continuing pressures on banks as well as the dampening effect
on confidence of the persistent and as yet not fully resolved
sovereign and private sector debt problems in the Eurozone. This is
not very evident in the portfolio, with drawdowns at similar levels
to a year ago at GBP5.7 million and realisations more than 100 per
cent up year on year at GBP8.1 million.
The new investments are typically diverse by sector and
geography. Contrary to received wisdom there are good deals to be
done in Spain, where N+1 Private Equity Fund II called GBP1.1
million, mainly for investment in EYSA, the leading company in
Spain in the on-street parking sector. This company has a 25 per
cent market share in the city-centre paying parking zones. In
Germany, DBAG Fund V called GBP0.5 million, mainly for investment
in Brotje Automation, a company which develops machines and
production lines for the automated production of aircraft. This
includes riveting, joining and assembling metal or carbon-composite
fuselages. This deal was a spin out of a non core division of a
larger group.
In the UK, new investments included GBP0.8 million called by
Primary Capital III for Leisure Pass Group, the world's leading
provider of smart card-based multi-attraction tourist passes and
associated operating systems. Hutton Collins Capital Partners III
called GBP0.6 million for a mezzanine investment into premium
wellington boot company Hunter Boot. Also with a consumer focus,
Inflexion 2010 Fund invested GBP0.4 million on the Company's behalf
in television shopping channel, Ideal Shopping, and Piper Private
Equity Fund V called GBP0.3 million for investment in Loungers, a
fresh take on the bar/cafe concept with 22 regional outlets to
date. Whilst anecdotal evidence suggests that it can be highly
competitive to secure good mid-market deals, it would appear that
our investment partners continue to find interesting and
well-priced companies across a range of sectors and
geographies.
Realisations
Distributions during the quarter were healthy at GBP8.1 million,
comfortably exceeding the drawdowns of GBP5.7 million referred to
above. The largest exit was from Spain, where Portobello Capital II
sold civil explosives company Maxam to Advent, returning GBP1.6
million to the Company, representing a multiple of 3.4x and an IRR
of 28 per cent. One of the Company's longstanding holdings, the
Candover 2005 Fund, now under the new management of Arle, sold
Capital Safety Group, the leading fall protection equipment
manufacturer, to KKR. The Company's share of the proceeds was
GBP1.2 million, an investment multiple of 2.7x and an IRR of 26 per
cent. As previously reported, RJD Partners sold the mainly French
holiday company European Boating Holidays to a French consortium.
The company was a victim of the recession but had recovered from
its low point. Whilst the exit was at a loss, with an overall
investment multiple of 0.77x, it was almost GBP1 million above our
valuation immediately prior to confirmation of the exit (30
September 2011). The Company received GBP1.0 million from its
co-investment. An additional GBP0.4 million is being rolled over
into loan stock in the acquiring vehicle which will yield Euribor +
2 per cent until that entity is sold some years in the future.
Other smaller realisations include the sale of Fish Insurance by
Inflexion 2006 Buyout Fund to Capita. This business, which provides
insurance to disabled people, was suffering from the austerity
squeeze and Inflexion made a loss, recovering 0.8x of their
investment (GBP114,000 for the Company). RJD Partners Equity Fund
II achieved a creditable partial exit of Raphael Healthcare, an
operator of low secure accommodation for women with mental health
issues. The multiple was 1.5x returning GBP0.2 million to the
Company. RJD's remaining investment in Raphael is via 18 per cent
loan stock maturing in 2015. This investment was rather stymied
when a planning decision went against them restricting their
ability to grow as planned. From the global funds, the notable
performers have been Warburg Pincus funds VIII and IX which have
returned GBP0.3 million each this quarter.
In summary, this was a fairly active quarter with exits achieved
in several different territories. Interestingly, some of our
experienced investment partners are taking sub-optimal but
nevertheless substantial exits where the investment thesis hasn't
worked out. There is an appetite from investors for cash, and the
managers can also keep IRRs up by achieving partial recoveries of
underperforming holdings.
Valuation Changes
Changes in valuations have been fairly limited this quarter
following an unusually comprehensive and up to date review for the
full year figures published only seven weeks ago. A number of the
realisations noted above were already factored into the year end
valuation. The underlying portfolio valuation was up by
approximately 0.5 per cent over the quarter. There was a negative
influence of 0.4 per cent from foreign exchange movements, largely
as a result of the US dollar depreciating by 2.8 per cent against
sterling. The movement in the sterling/Euro exchange rate was
minimal, with the Euro slipping only 0.2 per cent over the
period.
The larger movements included a GBP0.4 million uplift in TDR
Capital II, mainly accounted for by good fundamental progress by
vacant property manager, VPS, and pub chain Stonegate. Pinebridge
New Europe II was uplifted by GBP0.3 million, principally as a
result of a 50 per cent increase in the listed share price of
Polish car battery recycler Orzel Bialy. Warburg Pincus VIII, which
has had several small but useful realisations, was up by GBP0.2
million. The largest individual fund downgrades were from AIF
Capital Asia Fund III (GBP154,000), Blue Point Capital II
(GBP153,000) and Herkules Private Equity III (GBP144,000). In the
first two, these were adjustments related to changes in the
valuation of comparable companies and some updated information from
the manager. In the case of Herkules Private Equity III it relates
mainly to a reduction of value for Odlo, the sports underwear
company, which has suffered from the warm winter in Northern
Europe.
Financing
The new facility, arranged in February, was GBP6.7 million drawn
at 31 March 2012. Currently, just under GBP10 million is drawn. We
have drawn the facility entirely in Euros as this provides a slight
hedge against any further Euro weakness. The first quarter saw
realisations exceed drawdowns. The current quarter at present is
showing an outflow requiring greater utilisation of the facility.
However, there is a good chance of significant realisations coming
in by the quarter end which would effectively repay the drawings
under the facility.
Outlook
The continuing problems of the Eurozone create an unhelpful
backdrop for all kinds of business and consumer activity, including
private equity investment, even in the economies which are less
directly affected. There are two main interrelated problems. The
first problem is the risk to the banking system across Europe which
could arise from a disorderly default by Greece and an accompanying
exit from the Euro currency. The priorities of governments, central
banks and supranational financial institutions must be to control
events and thus avoid a second banking crisis. To date there has
been a tendency towards half measures, most recently seen in Spain,
and procrastination. The second problem of subdued business and
consumer confidence largely derives from the first and is
effectively restraining growth in Europe. Despite this there do
remain many businesses and private equity funds that can see
through these problems and investments continue with these risks
being priced in as well as possible. The experience of the
portfolio in recent years has shown that at the level of the
underlying companies, growth and therefore build of long term
equity value is possible even with a difficult economic background.
Whilst it is early, the start to 2012 gives us confidence that our
private equity investment partners are continuing to create value
notwithstanding the macro-economic challenges.
Hamish Mair
Investment Manager
F&C Investment Business Limited
F&C PRIVATE EQUITY TRUST PLC
Consolidated Statement of Comprehensive Income for the
three months ended 31 March 2012 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- --------- ---------
Income
Losses on investments held at fair value - (720) (720)
Exchange gains - 6 6
Investment income 693 - 693
Other income 3 - 3
------------------------------------------------- --------- --------- ---------
Total income 696 (714) (18)
------------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee (118) (354) (472)
Other expenses (206) - (206)
------------------------------------------------- --------- --------- ---------
Total expenditure (324) (354) (678)
------------------------------------------------- --------- --------- ---------
Profit/(loss) before finance costs and taxation 372 (1,068) (696)
Finance costs (62) (991) (1,053)
------------------------------------------------- --------- --------- ---------
Profit/(loss) before taxation 310 (2,059) (1,749)
Taxation (96) 81 (15)
Profit/(loss) for period/total comprehensive
income 214 (1,978) (1,764)
Return per Ordinary Share - Basic 0.30p (2.64)p (2.34)p
Return per Ordinary Share - Fully diluted 0.29p (2.57)p (2.28)p
Return per Restricted Voting Share - Basic (0.01)p (0.10)p (0.11)p
------------------------------------------------- --------- --------- ---------
F&C PRIVATE EQUITY TRUST PLC
Consolidated Statement of Comprehensive Income for the
three months ended 31 March 2011 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 8,011 8,011
Exchange losses - (12) (12)
Investment income 690 - 690
Other income 27 - 27
---------------------------------------------- --------- --------- ---------
Total income 717 7,999 8,716
---------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee (114) (496) (610)
Other expenses (172) - (172)
---------------------------------------------- --------- --------- ---------
Total expenditure (286) (496) (782)
---------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 431 7,503 7,934
Finance costs (48) (871) (919)
---------------------------------------------- --------- --------- ---------
Profit before taxation 383 6,632 7,015
Taxation (107) 107 -
Profit for period/total comprehensive income 276 6,739 7,015
Return per Ordinary Share - Basic 0.37p 8.30p 8.67p
Return per Ordinary Share - Fully diluted 0.36p 8.08p 8.44p
Return per Restricted Voting Share - Basic 0.01p 1.10p 1.11p
---------------------------------------------- --------- --------- ---------
F&C PRIVATE EQUITY TRUST PLC
Consolidated Statement of Comprehensive Income for the
year ended 31 December 2011 (audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 17,923 17,923
Exchange gains - 911 911
Investment income 2,176 - 2,176
Other income 37 - 37
-------------------------------------------- --------- --------- ---------
Total income 2,213 18,834 21,047
-------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee (467) (1,403) (1,870)
Other expenses (694) - (694)
-------------------------------------------- --------- --------- ---------
Total expenditure (1,161) (1,403) (2,564)
-------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 1,052 17,431 18,483
Finance costs (208) (3,672) (3,880)
-------------------------------------------- --------- --------- ---------
Profit before taxation 844 13,759 14,603
Taxation (223) 216 (7)
Profit for year/total comprehensive income 621 13,975 14,596
Return per Ordinary Share - Basic 0.80p 18.75p 19.55p
Return per Ordinary Share - Fully diluted 0.78p 18.26p 19.04p
Return per Restricted Voting Share - Basic 0.06p 0.63p 0.69p
-------------------------------------------- --------- --------- ---------
F&C PRIVATE EQUITY TRUST PLC
Consolidated Balance Sheet
As at 31 As at 31 As at 31 December
March 2012 March 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------------
Non-current assets
Investments at fair value through
profit or loss 220,771 220,798 223,388
--------------------------------------- ------------ ------------ ------------------
Current assets
Prepayments and other receivables 542 16 23
Cash and short term deposits 2,183 2,854 4,044
--------------------------------------- ------------ ------------ ------------------
2,725 2,870 4,067
Current liabilities
Other payables (7,959) (15,315) (9,886)
Net current liabilities (5,234) (12,445) (5,819)
--------------------------------------- ------------ ------------ ------------------
Total assets less current liabilities 215,537 208,353 217,569
Non-current liabilities
Zero dividend preference shares (35,627) (32,500) (34,822)
Net assets 179,910 175,853 182,747
--------------------------------------- ------------ ------------ ------------------
Equity
Called-up ordinary share capital 1,394 1,394 1,394
Special distributable capital
reserve 15,679 15,679 15,679
Special distributable revenue
reserve 34,741 35,814 35,814
Capital redemption reserve 664 664 664
Capital reserve 126,492 121,234 128,470
Revenue reserve 940 1,068 726
Shareholders' funds 179,910 175,853 182,747
--------------------------------------- ------------ ------------ ------------------
Net asset value per Ordinary Share
- Basic 244.29p 236.69p 246.62p
Net asset value per Ordinary Share
- Fully diluted 241.27p 233.88p 243.54p
--------------------------------------- ------------ ------------ ------------------
Net asset value per Restricted
Voting Share - Basic 4.97p 7.11p 6.68p
--------------------------------------- ------------ ------------ ------------------
F&C PRIVATE EQUITY TRUST PLC
Reconciliation of Movement in Shareholders' Funds
Three months Three months Year ended
ended 31 March ended 31 31 December
2012 March 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ ---------------- ------------- -------------
Opening shareholders' funds 182,747 169,710 169,710
(Loss)/profit for the period/total
comprehensive income (1,764) 7,015 14,596
Dividends paid (Ordinary Shares) - - (687)
Special dividends paid (Restricted
Voting Shares) (1,073) (872) (872)
------------------------------------ ---------------- ------------- -------------
Closing shareholders' funds 179,910 175,853 182,747
------------------------------------ ---------------- ------------- -------------
Notes (unaudited)
1. The unaudited quarterly results have been prepared on the
basis of the accounting policies set out in the statutory accounts
of the Group for the year ended 31 December 2011.
2. Investment management fee:
Three months ended Three months ended Year ended 31 December
31 March 2012 31 March 2011 2011
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
management
fee - basic 118 354 472 114 344 458 467 1,403 1,870
-incentive - - - - 152 152 - - -
118 354 472 114 496 610 467 1,403 1,870
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3. Finance costs:
Three months ended Three months ended Year ended 31 December
31 March 2012 31 March 2011 2011
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Interest payable
on bank loans
and overdrafts 62 186 248 48 145 193 208 624 832
Finance costs
attributable to
ZDP Shares - 805 805 - 726 726 - 3,048 3,048
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
62 991 1,053 48 871 919 208 3,672 3,880
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
4. The basic return per Ordinary Share is based on a net loss on
ordinary activities after taxation of GBP1,690,000 (31 March 2011-
profit GBP6,269,000; 31 December 2011 - profit GBP14,134,000) and
on 72,282,273 (31 March 2011 - 72,282,273; 31 December 2011 -
72,282,273) shares, being the weighted average number of Ordinary
Shares in issue during the period.
The fully diluted return per Ordinary Share is based on a net
loss on ordinary activities after taxation of GBP1,690,000 (31
March 2011 - profit GBP6,269,000; 31 December 2011 - profit
GBP14,134,000) and on 74,241,429 (31 March 2011 - 74,241,429; 31
December 2011 - 74,241,429) shares, being the weighted average
number of Ordinary Shares in issue during the period after
conversion of the Ordinary Share warrants.
The basic return per Restricted Voting Share is based on a net
loss on ordinary activities after taxation of GBP74,000 (31 March
2011 - profit GBP746,000; 31 December 2011 - profit GBP462,000) and
on 67,084,807 (31 March 2011 - 67,084,807; 31 December 2011 -
67,084,807) shares, being the weighted average number of Restricted
Voting Shares in issue during the period.
5. Zero Dividend Preference Shares
The Zero Dividend Preference Shares ('ZDP Shares') of F&C
Private Equity Zeros plc were issued on 14 December 2009 at 100
pence per share and redeem on 15 December 2014 at 152.14 pence per
share, an effective rate of 8.75 per cent per annum.
The fair value of the ZDP Shares at 31 March 2012 was
GBP40,164,000 based on the quoted offer price of 133.88p per ZDP
Share.
Amount due
to ZDP shareholders
Number of GBP'000
ZDP Shares
-------------------------- ------------ ---------------------
As at 31 December 2011 30,000,000 34,822
ZDP Shares finance costs - 805
-------------------------- ------------ ---------------------
As at 31 March 2012 30,000,000 35,627
-------------------------- ------------ ---------------------
6. The basic net asset value per Ordinary Share is based on net
assets at the period end of GBP176,575,000 (31 March 2011 -
GBP171,087,000; 31 December 2011 - GBP178,264,000) and on
72,282,273 (31 March 2011 - 72,282,273; 31 December 2011 -
72,282,273) shares, being the number of Ordinary Shares in issue at
the period end.
The fully diluted net asset value per Ordinary Share is based on
net assets at the period end of GBP179,121,000 (31 March 2011 -
GBP173,632,000; 31 December 2011 - GBP180,810,000) and on
74,241,429 (31 March 2011 - 74,241,429; 31 December 2011 -
74,241,429) shares, being the number of Ordinary Shares in issue at
the period end after conversion of the Ordinary Share warrants.
The basic net asset value per Restricted Voting Share is based
on net assets at the period end of GBP3,335,000 (31 March 2011 -
GBP4,766,000; 31 December 2011 - GBP4,483,000) and on 67,084,807
(31 March 2011 - 67,084,807; 31 December 2011 - 67,084,807) shares,
being the number of Restricted Voting Shares in issue at the period
end.
7. The financial information for the three months ended 31 March
2012, which has not been audited or reviewed by the Company's
auditors, comprises non-statutory accounts within the meaning of
Section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2011, on which the auditors issued an
unqualified report, will be lodged with the Registrar of Companies.
The quarterly report is available on the Company's website
www.fcpet.co.uk.
For more information, please contact:
Hamish Mair 0131 718 1184
Gordon Hay Smith 0131 718 1018
F&C Investment Business Limited
hamish.mair@fandc.com / gordon.haysmith@fandc.com
This information is provided by RNS
The company news service from the London Stock Exchange
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