NEW STAR PRIVATE EQUITY INVESTMENT TRUST PLC
Statement of Results for the six months to 30 June 2008
New Star Private Equity Investment Trust PLC (the "Company") today announces
its results for the six months ended 30 June 2008.
Investment Objective
The Company's investment objective is to produce capital gains through exposure
to a diversified portfolio of private equity investments.
Highlights for the six months ended 30 June 2008
* Net Asset Value per share increase d by 2.0% since 31 December 2007 and by
11.6% since 30 June 2007.
* Realisation of Healthcare Homes on a 2.7 times multiple of the original
investment.
* Commitments of Euro7.0m each made to French mid-market funds Astorg IV and
Pragma II.
30 June 2008 31 December 2007 Change
Net Asset Value �73.0m �74.5m -2.0%
Net Asset Value per share 385.0p 377.6p +2.0%
Share price 262.5p 299.0p - 12.2%
Discount 31.8% 20.8% N/A
FTSE All Share Index 2,855.7 3,286.7 - 13.1%
For further information please contact:
Nick Brind, New Star Asset Management Limited, 020 7225 6052
Paul Craig, New Star Asset Management Limited, 020 7225 9527
Chairman's Statement
I am pleased to report a total return for the six months to 30 June 2008 of
2.0%, with the net asset value at 30 June 2008 being 385.0p per Ordinary share
compared to 377.6p at 31 December 2007.
Valuation
At 30 June 2008 the value of the Company's investments, including cash and
government bonds, was �75.1 million. This included private equity fund
interests of �65.2 million. The value of the Company's interests in limited
partnerships was �52.4 million.
During the period to 30 June 2008 there were net realised gains of �0.6 million
and net unrealised losses of �0.1 million.
Unfortunately as a result of the disclosure and transparency rules requirement
to issue the half year accounts by 31 August, it has not been practical to
update all limited partnership interests for the final valuations at 30 June
2008; 82% of the portfolio is valued using final valuations at 30 June 2008;
14% of the portfolio is valued using preliminary valuations at 30 June 2008 and
4% of the portfolio is valued at 31 March 2008 valuations, as amended for any
subsequent cash flows. All limited partnership valuations for 30 June 2008 are
expected to be fully reflected in the net asset value for 30 September 2008
which is due to be published in mid October 2008.
Further information on the Company's portfolio, including details of the
underlying investments held via limited partnership interests, can be found
below.
Liquidity
Aggregate cash and government bonds were approximately �8.9 million at 30 June
2008. Including listed private equity vehicles, the Company had �19.1 million
of liquidity. In addition, the Company had undrawn loan facilities of �30
million. These liquid resources of �49.1 million compare to current outstanding
commitments to funds still in their initial investment period of �62.6 million
which are expected to be drawn down over the next few years ; the excess will
be funded by future realisations.
Investment activity
The first six months of 2008 were relatively quiet as far as investment
activity was concerned.
Existing portfolio
The Company had only one realisation through a limited partnership, namely that
of Healthcare Homes, an investment in August Equity Partners I ("AEP I"), which
was sold at a multiple of 2.7 times the original investment, after taking into
account follow-on investments.
There were five partial realisations, the largest being Wolstenholme, an
investment in Rutland Fund I, but also Planit Holdings, Hat Trick Productions
and Imagine Publishing, all investments in AEP I.
New investments were limited, reflecting the more difficult environment for
funding buy-outs but also disparity in vendors' expectations for the value of
their businesses. Nevertheless, August Equity Partners II completed the
acquisition of Enara Community Care ("Enara") to pursue a buy-and-build
strategy in the domiciliary care market in London and the South East. Enara has
completed two bolt-on acquisitions since its purchase. In addition there have
been a small number of follow-on investments.
New commitments
Two new commitments of Euro7.0 million each were made to Astorg IV and to Pragma
II, both French mid-market buy-out funds . Further commitments are under
consideration particularly seeking to take advantage of the opportunities that
the weakness in financial markets and worsening economic environment are
creating. Against this the Company needs to balance the expected drawdown
profile of the Company's current commitments and likely slowdown in
realisations over the next few years.
Listed investments
European listed private equity companies fell by 15.9% in the six months to 30
June 2008, as illustrated by the LPX Europe Price Index , against a fall of
13.1% in the broader equity market as reflected by the FTSE All-Share Index.
The opportunity was taken to add only selectively to the Company's holdings in
listed private equity companies as we are conscious of the short-term downside
risks. In this respect a holding in SVG Capital ordinary shares was sold and
part of the proceeds re-invested into an 8.25% convertible unsecured loan stock
issued by the same company.
Share price
The discount on the Company's shares compared to net asset value widened
significantly to approximately 31.8% at 30 June 2008. This widening of the
discount was a sector-wide phenomenon, with the sector average discount at 30
June 2008 being 21.7%. The Company's share price reflects quite a negative
outlook; it seems for the discount to narrow, general sentiment towards equity
investments needs to improve significantly.
As set out last year's annual report, the Board believes it is appropriate to
seek to maintain a discount level broadly in line with the peer group average
and to this end, since the publication of the annual results to 31 December
2007; the Company has repurchased 762,000 shares, of which 712,000 shares are
held in treasury.
Market environment
The severe downturn in credit markets and macro economic outlook continues to
weigh heavily on activity in the public and private markets. Valuations across
private equity portfolios continue to be viewed with some scepticism and hence
the severe movement in share prices of listed private equity funds from close
to net asset value a year ago to the current wide discounts to net asset value.
Whilst the Manager's recent discussions with general partners suggest that the
current valuations are reasonable, the Company's portfolio has some sensitivity
to the macro economic environment.
Perhaps as important, the Company's undrawn commitments provide the opportunity
to benefit from lower valuations that are likely to prevail in European
mid-market transactions where the Company focuses. This should create
opportunities for upside as conditions improve over the next few years.
Opportunities to trade listed private equity vehicles provide another tool for
the Manager and offer potential for continued growth in net asset value.
Clearly there is a risk that a continued downturn in the economy and/or
financial markets will impact valuations at 31 December 2008. However, the
Board believes the Company's portfolio should prove to be relatively robust.
John Mackie CBE
Chairman
29 August 2008
Investment Portfolio
The Company's investments at 30 June 2008 were:
Company Category Country / Valuation % of
Region
�000 Portfolio
Rutland Fund I Limited Partnership UK 18,270 24.3
August Equity Partners I Limited Partnership UK 12,466 16.6
Parallel Ventures 2006 Limited Partnership UK / 10,667 14.2
Europe
August Equity Partners II Limited Partnership UK 5,854 7.8
Logic Group Direct UK 2,500 3.3
Graphite Enterprise Listed UK 2,100 2.8
Rutland Fund II Limited Partnership UK 1,457 1.9
Astorg IV Limited Partnership France 1,419 1.9
Hg Capital Trust Listed UK 1,285 1.7
Renewable Energy Generation Listed UK 1,080 1.4
Ten largest investments 57,098 75.9
Reconstruction Capital II Listed Eastern 990 1.3
Europe
Evolvence India Listed India 975 1.3
Century Capital Partners Limited Partnership US 822 1.1
Fund IV
Quorum Oil & Gas Technology Listed Global 810 1.1
SVG Capital 8.25% Listed UK 727 1.0
Convertible Bonds 2016
ARC Capital Listed China 681 0.9
Pragma II Limited Partnership France 535 0.7
Dinamia Listed Spain 458 0.6
Wendel Investments Listed Europe 434 0.6
Private Equity Investor Listed US 371 0.5
Twenty largest investments 63,901 85.0
Elderstreet Capital Partners Limited Partnership UK 301 0.4
London Asia Chinese Private Listed China 289 0.4
Equity Fund
KB Fund III B Limited Partnership UK 235 0.3
Zeus Private Equity Fund Limited Partnership UK 209 0.3
Global Telecom & Technology Direct investment US 146 0.2
KB Fund III Limited Partnership UK 118 0.2
Total investments 65,199 86.8
French Treasury 4.0% 12/09/ 4,710 6.3
09
UK Treasury 4.0% 07/03/2009 992 1.3
Cash 4,188 5.6
Total Portfolio 75,089 100.0
Portfolio Analysis
Underlying investments
The Company's 10 largest underlying investments at 30 June 2008 were:
Investment General Sector Vintage Valuation % of
Partner portfolio
�'000
Notemachine Rutland I Financial 2006 11,017 14.7
Lifeways August I Healthcare 2007 3,822 5.1
Community Care
Enara Community Care August II Healthcare 2008 3,597 4.8
Boat International August I Consumer 2006 3,016 4.0
Services
Wolstenholme Rutland I Industrial 2000 2,941 3.9
Logic Group Direct Technology 2007 2,500 3.3
Rollford Group August I Consumer 2006 2,448 3.3
Goods
The Music Group Rutland I Consumer 2003 2,354 3.1
Goods
Planit Holdings August I Technology 2006 1,817 2.4
Advantage Rutland I Healthcare 2005 1,795 2.4
Type of investment
Type of investment Percentage of portfolio
Limited partnerships 70%
Listed funds 14%
Cash and treasury 13%
Direct investment 3%
Geographic exposure of underlying investments
Country or region Percentage of portfolio
UK 77%
Europe 19%
North America 2%
China 1%
India 1%
Sector exposure of limited partnerships
Sector Percentage of portfolio
Financial 25%
Healthcare 20%
Technology 19%
Industrial 11%
Goods 14%
Services 9%
Other 2%
Limited partnership by vintage
Vintage Percentage of portfolio
Less than 1 year 16%
1 - 2 years 53%
2 - 3 years 16%
More than 3 years 15%
Valuation basis of limited partnerships
Valuation basis Percentage of portfolio
Cost 46%
Earnings 54%
Interim Management Report
Performance
At 30 June 2008 net asset value per share, share price and discount were as
follows:
30 June 31 December 30 June
2008 2007 2007
Net asset value per share 385.0p 377.6p 345.1p
Share price 262.5p 299.0p 310.0p
Discount 31.8% 20.8% 10.2%
The Chairman's Statement and the Investment Management Report include details
of the Company's performance during the period.
Issued share capital
At 30 June 2008 the issued share capital of the Company was as follows:
30 June 31 December 30 June
2008 2007 2007
Issued share capital 19,682,212 19,732,212 27,079,500
(including treasury shares)
Treasury shares 712,000 - -
Issued share capital 18,970,212 19,732,212 27,079,500
(excluding treasury shares)
In the six months to 30 June 2008, the Company repurchased a total of 762,000
shares . Of these shares 50,000 were cancelled whilst 712,000 were placed into
treasury. No shares were repurchased or issued in the six months ended 30 June
2007. In the year ended 31 December 2007, the Company repurchased a total of
10,881,800 shares (including 10,831,800 shares repurchased pursuant to a tender
offer); 3,534,512 shares were issued pursuant to the merger with Rutland Trust
PLC.
Principal risks and uncertainties
The principal risks associated with the Company include the following:
Investment strategy
Inappropriate long-term strategy, asset allocation and manager selection might
lead to the underperformance of the Company.
Long term nature of private equity investments
Private equity investments are long term in nature and it may take several
years before they can be realised.
Financial risks of private equity
A substantial proportion of the Company's assets are invested in limited
partnerships which invest in private companies. These unquoted investments are
less readily marketable than quoted securities. In addition, such investments
may carry a higher degree of risk than quoted securities.
Valuation uncertainty
In valuing its investments in unlisted private equity funds or limited
partnerships and in calculating its net asset value, the Company relies to a
significant extent on the accuracy of financial and other information provided
by these funds to the Manager. Limited partnerships typically only provide
updated valuations on a quarterly or six monthly basis.
Regulatory risk
Failure to comply with applicable legal and regulatory requirements could lead
to the suspension or loss of the Company's Stock Exchange listing or result in
financial penalties. Breach of Section 842 of the Income and Corporation Taxes
Act 1988 could lead to the loss of the Company's investment trust status,
leading to the Company being subject to tax on its capital gains. The latest
period in respect of which the Company has received approval from HM Revenue
and Customs as an investment trust is the year ended 31 December 2007.
Investment Manager
The quality of the management team employed by the Investment Manager is an
important factor in delivering good performance and the loss by New Star of key
staff could adversely affect investment returns. In addition, the failure of
the Investment Manager's core fund management systems might lead to the loss of
data or inaccurate reporting.
Business conditions and general economy
The Company's investment returns are influenced by general economic conditions
in the UK and globally. Factors such as interest rates, inflation, investor
sentiment, the availability and cost of credit could adversely affect the
performance of both the Company and its underlying investments.
Further details of the risks facing the Company, and how the Company seeks to
manage them, may be found in the Report and Accounts for the year ended 31
December 2007.
Directors
The Directors of the Company are:
John Mackie (Chairman)
Terry Connor (Senior Independent Director)
Barry Dean
John Duffield (alternate: Howard Covington)
Ian Orrock
Each of the Directors served throughout the period. Howard Covington , the
Chief Executive of New Star Asset Management Group PLC, replaced Ravi Anand as
John Duffield's alternate with effect from 29 August 2008.
Related parties Transactions
During the first six months of the current financial year, no transactions with
related parties have taken place that materially affected the financial
position or performance of the Company during the period.
Auditors
The half-yearly financial report has not been audited or reviewed by auditors .
Responsibility Statement
We confirm that to the best of our knowledge:
* The condensed set of financial statements contained within the half yearly
report to 30 June 2008 has been prepared in accordance with IAS 34 "Interim
Financial Reporting".
* The interim directors' report includes a fair review of important events
that have occurred during the first six months of the financial year and
their impact on financial statements
* The interim directors' report includes a description of the principal risks
and uncertainties for the remaining six months of the year.
* The interim management report includes a fair review of the information
concerning related party transactions as required by DTR 4.2.8R of the
FSA's Disclosure and Transparency Rules.
By order of the Board
New Star Asset Management Limited, Secretary
29 August 2008.
Income Statement
for the six months ended 30 June 2008 (unaudited)
Six months to 30 June 2008
Notes Revenue Capital Total
�'000 �'000 �'000
Gains on investments held at - 467 467
fair value through profit or
loss
Gains on foreign exchange - (39) (39)
Income 2 1,235 - 1,235
Investment Management fee 3 (433) - (433)
Administration expenses (454) - (454)
Return on ordinary 348 428 776
activities before finance
costs and taxation
Interest payable and similar (37) - (37)
charges
Return on ordinary 311 428 739
activities before taxation
Taxation (96) - (96)
Return on ordinary 215 428 643
activities after finance
costs and taxation
Return per Ordinary share 6 1.1p 2.2p 3.3p
(based on average number of
shares during the period)
Number of Ordinary shares in 18,970,212
issue at period end
Weighted average number of 19,668,679
Ordinary shares during the period
The total columns of this statement are the profit and loss account for the
Company and the revenue and capital columns represent supplementary
information. The total columns represent all the information required to be
disclosed in the Statement of Total Recognised Gains and Losses ("STRGL"). For
this reason a STRGL is not presented.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the current or prior
periods.
Income Statement
for the six months ended 30 June 2007 (unaudited) and the year ended 31
December 2007 (audited)
Six months to Year ended
30 June 2007 31 December 2007
Notes Revenue Capital Total Revenue Capital Total
�'000 �'000 �'000 �'000 �'000 �'000
Gains on - 4,803 4,803 - 11,212 11,212
investments held at
fair value through
profit or loss
Gains on foreign - - - - 21 21
exchange
Income 2 1,590 - 1,590 2,323 - 2,323
Investment 3 (505) - (505) (913) (323) (1,236)
Management fee
Administration (115) - (115) (553) (1,018) (1,571)
expenses
Return on ordinary 970 4,803 5,773 857 9,892 10,749
activities before
finance costs and
taxation
Interest payable - - - (176) - (176)
and similar charges
Return on ordinary 970 4,803 5,773 681 9,892 10,573
activities before
taxation
Taxation (376) - (376) (290) 97 (193)
Return on ordinary 594 4,803 5,397 391 9,989 10,380
activities after
finance costs and
taxation
Return per Ordinary 6 2.2p 17.7p 19.9p 1.7p 42.6p 44.3p
share (based on
average number of
shares during the
period)
Number of Ordinary 27,079,500 19,732,212
shares in issue at
period end
Weighted average 27,079,500 24,436,058
number of Ordinary
shares in issue
during the year
The total columns of this statement are the profit and loss account for the
Company and the revenue and capital columns represent supplementary
information. The total columns represent all the information required to be
disclosed in the Statement of Total Recognised Gains and Losses ("STRGL"). For
this reason a STRGL is not presented.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the current or prior
periods.
Reconciliation of Movement in Shareholders' Funds
for the six months ended 30 June 2008 (unaudited)
Called up Share Capital Realised Revaluation Revenue Shareholders'
share premium redemption capital capital Reserve funds
capital
account reserve reserve reserve
�'000 �'000 �'000 �'000 �'000 �'000 �'000
(Unaudited)
Balance at 1 987 17,321 702 35,840 18,036 1,630 74,516
January 2008
Net loss on - - - (36) - - (36)
listed
investments
Net gain on - - - 645 - - 645
unlisted
investments
Transfer on - - - 2,593 (2,593) - -
disposal of
investments
Decrease in - - - - (1,159) - (1,159)
unrealised
appreciation
on listed
investments
Increase in - - - - 1,017 - 1,017
unrealised
appreciation
on unlisted
investments
Net loss on - - - (39) - - (39)
foreign
exchange
Dividends - - - - - (130) (130)
paid
Revenue - - - - - 215 215
attributable
to Ordinary
Shareholders
Shares (3) - 3 (128) - - (128)
bought back
and
cancelled
Shares - - - (1,862) - - (1,862)
bought back
and held in
treasury
Balance at 3 984 17,321 705 37,013 15,301 1,715 73,039
0 June 2008
Reconciliation of Movement in Shareholders' Funds
for the six months ended 30 June 2007 (unaudited)
Called up Share Capital Realised Revaluation Revenue Shareholders'
share premium redemption capital capital Reserve funds
capital account reserve reserve reserve
�'000 �'000 �'000 �'000 �'000 �'000 �'000
(Unaudited)
Balance at 1 1,354 5,145 158 70,887 9,271 2,661 89,476
January 2007
Net loss on - - - (1,298) - - (1,298)
listed
investments
Net loss on - - - (336) - - (336)
unlisted
investments
Transfer on - - - (5,954) 5,954 - -
disposal of
investments
Increase in - - - - - - -
unrealised
appreciation
on listed
investments
Increase in - - - - 6,437 - 6,437
unrealised
appreciation
on unlisted
investments
Net gains on - - - - - - -
foreign
exchange
Dividends - - - - - (1,422) (1,422)
paid
Revenue - - - - - 594 594
attributable
to Ordinary
Shareholders
Balance at 1,354 5,145 158 63,299 21,662 1,833 93,451
30 June 2007
Reconciliation of Movement in Shareholders' Funds
for the year ended 31 December 2007 (audited)
Called up Share Capital Realised Revaluation Revenue Shareholders'
share premium redemption capital capital Reserve funds
capital account reserve reserve reserve
�'000 �'000 �'000 �'000 �'000 �'000 �'000
(Audited)
Balance at 1 1,354 5,145 158 70,887 9,271 2,661 89,476
January 2007
Net loss on - - - (1,231) - - (1,231)
listed
investments
Net loss on - - - (6,680) - - (6,680)
unlisted
investments
Transfer on - - - 10,358 (10,358) - -
disposal of
investments
Increase in - - - - 19 - 19
unrealised
appreciation
on listed
investments
Increase in - - - - 19,104 - 19,104
unrealised
appreciation
on unlisted
investments
Net gains on - - - 21 - - 21
foreign
exchange
Dividends paid - - - - - (1,422) (1,422)
Revenue - - - - - 391 391
attributable
to Ordinary
Shareholders
Shares bought (3) - 3 (156) - - (156)
back and
cancelled
Capital (364) 12,176 541 (36,115) - - (23,762)
reorganisation
Performance - - - (226) - - (226)
fee (net of
tax relief)
Reconstruction - - - (1,018) - - (1,018)
expenses
Balance at 31 987 17,321 702 35,840 18,036 1,630 74,516
December 2007
Balance Sheet
at 30 June 2008
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
Fixed assets
Investments 70,901 42,233 71,150
Current assets
Debtors 305 763 969
Cash at bank 4,188 50,293 5,173
4,493 51,056 6,142
Creditors
Amounts falling due within one (2,355) (838) (2,776)
year
Net current assets 2,138 50,218 3,366
Net assets 73,039 93,451 74,516
Capital and reserves
Called up share capital 984 1,354 987
Share premium 17,321 5,145 17,321
Capital redemption reserve 705 158 702
Capital reserve 52,314 84,961 53,876
Revenue reserve 1,715 1,833 1,630
Shareholders' funds 73,039 93,451 74,516
Net asset value per Ordinary 8 385.0p 345.1p 377.6p
Share
Approved by the Board of Directors on 29 August 2008.
Cash Flow Statement
for the six months ended 30 June 2008 (unaudited)
30 June 30 June 31 December
2008 2007 2007
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
Net cash (outflow)/inflow from (81) 2,066 1,365
operating activities
Taxation
Tax received / (paid) 127 - (313)
Financial investment
Purchase of listed fixed asset (12,528) - (14,849)
investments
Purchase of unlisted fixed asset (8,624) (6,770) (49,636)
investments
Sale of listed fixed asset 10,355 44,163 44,727
investments
Sale of unlisted fixed asset 12,146 8,061 44,997
investments
Net cash inflow from financial 1,349 45.454 25,239
investment
Equity dividends paid (127) (1,422) (1,422)
Net cash inflow before financing 1,268 46,098 24,869
Financing
Issue of Ordinary Shares - - 12,353
Purchase of Ordinary Shares for (128) - (36,271)
cancellation
Purchase of Ordinary Shares held (1,856) - -
in treasury
Bank interest paid (43) - (169)
Reconstruction costs - (1,018)
(Decrease) / Increase in cash (759) 46,098 (236)
Net funds at start of the period 3,980 4,195 4,195
(Losses)/Gains on foreign (39) - 21
exchange
Net funds at the end of the 3,182 50,293 3,980
period
Represented by:
Cash at bank 4,188 50,293 5,173
Bank overdraft (1,006) - (1,193)
3,182 50,293 3,980
Notes (unaudited)
* Accounting policies
The financial statements have been prepared under the historical cost
convention, modified to include the revaluation of investments and in
accordance with applicable United Kingdom accounting standards.
The Company is not an investment company within the meaning of Section 833 of
the Companies Act 2006. However, it conducts its affairs as an investment trust
for taxation purposes under Section 842 of the Income and Corporation Taxes Act
1988. As such, the Directors consider it appropriate to present the accounts in
accordance with the Statement of Recommended Practice "Financial Statements of
Investment Trust Companies" (the "SORP"), as issued by the Association of
Investment Companies in December 2005.
The financial statements for each of the six month periods ended 30 June 2008
and 30 June 2007 comprise non-statutory accounts within the meaning of Section
240 of the Companies Act 1985. The financial information for the year ended 31
December 2007 has been extracted from published accounts that have been
delivered to the Registrar of Companies and on which the report of the auditors
was unqualified. The interim accounts have been prepared on the same basis as
the annual accounts.
The Company's accounting policies have not varied from those described in the
Report and Accounts for the year to 31 December 2007.
2 Income
Six months Six months Year ended
ended Ended 31 December 2007
30 June 2008 30 June 2007 (Audited)
(Unaudited) (Unaudited) �'000
�'000 �'000
Income from fixed asset
investments
Franked income:
Dividends from listed UK 84 - -
investments
Dividends from unlisted UK - 1 1
investments
84 1 1
Unfranked income:
Dividends from listed overseas 44 - -
investments
Listed UK treasury gilts 85 1,108 1,155
Listed UK loan stock 4 - -
investments
Listed overseas treasury gilts 7 - -
Unlisted UK loan stock 889 372 723
investments
1,029 1,480 1,878
Total income from fixed asset 1,113 1,481 1,879
investments
Other income
Deposit interest 120 108 347
Other income 2 1 97
122 109 444
1,235 1,590 2,323
3 Investment management fee
30 June 2008 30 June 2007 31 December 2007
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
Investment management fee - 433 505 913
charged to revenue
Performance fee - charged to - - 323
capital
433 505 1,236
The investment management agreement provides for a management fee of 1.25% per
annum of the Company's assets (at valuation) invested in limited partnerships
and direct private equity interests and 0.75% per annum on the remainder of the
Company's assets. In addition, the Company's Investment Manager will also be
entitled to an annual performance fee of 10% of any return in excess of 8% per
annum. The investment management agreement may be terminated by either party by
giving 12 months notice in writing, subject to there being an initial period of
24 months (i.e. from 2 July 2007 to 1 July 2009).
4 Commitments
30 June 2008 30 June 2007 31 December 2007
(Unaudited) (Unaudited) (Audited)
�'000 �'000 �'000
August Equity Partners II 23,688 - 27,888
Rutland Fund I 9,001 - 9,068
Rutland Fund II 8,314 - 8,386
Lyceum Fund II 4,914 - 5,000
Pragma II 4,787 - -
Astorg IV 4,051 - -
Parallel Ventures 2006 2,269 2,348 2,269
Century Capital Partners IV 1,631 - 1,886
August Equity I 1,315 11,258 2,439
KB Fund III and KB Fund III B 1,790 1,790 1,790
Zeus Private Equity 764 - 1,000
Elderstreet Capital Partners 31 49 49
The Logic Group - 1,000 -
Outstanding commitments 62,555 16,445 59,775
Gains and losses on investments
5Gains and losses on investments
Six months Six months Year
ended ended ended
30 June 30 June 30 June
2008 2007 2008
(unaudited) (unaudited) (unaudited)
�'000 �'000 �'000
Realised gains / (losses)
Listed investments (36) (1,298) (1,231)
Unlisted investments 645 (336) (6,680)
609 (1,634) (7,911)
Unrealised gains / (losses)
Listed investments (1,159) - 19
Unlisted investments 1,017 6,437 19,104
(142) 6,437 19,123
Total gains / (losses) 467 4,803 11,212
6 Return per ordinary share
Six months Six months Year ended
ended Ended 31 December 2007
30 June 2008 30 June 2007 (Audited)
(Unaudited) (Unaudited) �'000
�'000 �'000
Revenue return 215 594 391
Capital return 428 4,803 9,989
Total return 643 5,397 10,380
Weighted average number of 19,668,679 27,079,500 23,436,058
ordinary shares in issue
Revenue return 1.1p 2.2p 1.7p
Capital return 2.2p 17.7p 42.6p
Total return 3.3p 19.9p 44.3p
7. Called up share capital
During the six months to 30 June 2008, the Company repurchased and cancelled
50,000 ordinary shares at a cost of �128,000. A further 712,000 ordinary shares
were repurchased and held in treasury at a cost of �1,849,000. This reduced the
number of ordinary shares in issue to 18,970,212.
The ordinary shares held in treasury have no voting rights and are not entitled
to dividends.
8 Net asset value per share
30 June 2008 30 June 2007 31 December 2007
(Unaudited) (Unaudited) (Audited)
Net assets attributable to 73,039 93,451 74,516
ordinary shareholders (�'000)
Ordinary shares in issue at 18,970,212 27,079,500 19,732,212
period end
Net asset value per ordinary 385.0p 345.1p 377.6p
share
9. Contingent asset
The Association of Investment Companies and JPMorgan Claverhouse Investment
Trust lodged a joint appeal in 2004 for the payment of management and
performance fees ("fees") by investment trusts to be treated as exempt from
VAT. In June 2007 the European Court of Justice ("ECJ") found in favour of the
appellants, declaring that investment trusts should be exempted from VAT on
fees. HM Revenue and Customs ("HMRC") have announced that they will not appeal
the ECJ decision.
New Star Asset Management Limited was appointed Manager subsequent to the ECJ
judgement. Accordingly the Company has not paid any VAT on fees in respect of
the period since 2 July 2007. The amounts recoverable by the former manager on
behalf of the Company, and the timing of those recoveries, are dependent upon
negotiations between the former manager and HMRC on the one hand, and between
the former manager and the Company on the other. At present it is not possible
to quantify the amount that will be recovered by the Company with any
certainty.
10 Related party transactions
Mr John Duffield is a non-executive Director of the Company. Mr Duffield is
Chairman of New Star Asset Management Limited, which was appointed the
Company's Manager with effect from 2 July 2007. Funds managed by New Star Asset
Management Limited ha ve an interest in 46.02% of the issued share capital of
the Company (excluding treasury shares). However , New Star Asset Management
Limited has undertaken to exercise no more than 39.0% of the votes of the
issued share capital.
11 2007 Accounts
The figures and financial information for the years ended 31 December 2007 are
extracted from the latest published accounts of the Company and do not
constitute statutory accounts for the year.
Those accounts have been delivered to the Registrar of Companies and included
the Report of the Auditors which was unqualified and did not contain a
reference to any matters to which the auditors drew attention by way of
emphasis without qualifying the report, and did not contain a statement under
s237(2) or 237(3) Companies Act 1985.
12 Website
The Company's report and accounts for the six months ended 30 June 2008 may be
found at:
www.newstaram.com /alternative-investments/closed-end-funds
By Order of the Board
New Star Asset Management Limited, Secretary
29 August 2008
END
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