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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| F&C Private Equity Trust | LSE:FPEO | London | Ordinary Share | GB0030738271 | ORD 1P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 336.00 | 331.00 | 337.00 | 0.00 | 01:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| 0 | 0 | N/A | 0 |
TIDMFPEO
RNS Number : 1840I
F&C Private Equity Trust PLC
26 August 2016
Hot Features
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To: Stock Exchange For immediate release:
26 August 2016
F&C Private Equity Trust plc
Unaudited results for the half year to 30 June 2016
Financial Highlights
-- NAV total return for the six months of 8.2 per cent for the Ordinary Shares. -- Share price total return for the six months of 1.6 per cent for the Ordinary Shares. -- Semi-annual dividend of 6.12p per Ordinary Share. -- Annualised dividend yield of 5.1 per cent at the period end.
Chairman's Statement
Your Company continues to make excellent progress. As at 30 June 2016 the Company's net asset value ('NAV') was GBP232.2 million giving a NAV per share of 314.08p. Taking into account last year's final dividend of 5.83p per share paid on 31 May 2016 the NAV total return for the first half of the year was 8.2 per cent. At the end of the period the Company had cash of GBP18.6 million. Together with borrowings of GBP24.3 million under the Company's loan facility, net debt was GBP5.7 million, equivalent to a gearing level of 2.4 per cent. The total of outstanding undrawn commitments at 30 June 2016 was GBP86.8 million and, of this, approximately GBP17 million is to funds where the investment period has expired.
In accordance with the Company's stated dividend policy, the Board declares a semi-annual dividend of 6.12p per ordinary share, payable on 4 November 2016 to shareholders on the register on 14 October 2016. For illustrative purposes only, this dividend represents an annualised yield of 5.1 per cent based on the share price as at 30 June 2016. I would like to remind shareholders of our dividend re-investment plan which can be a convenient and easy way to build up an existing holding.
Throughout the Company's history, there have been several reporting periods where movements in currency were significant and made a material impact, both positively and negatively, on your Company's NAV. Towards the end of the half year, on 23 June, the UK voted in a referendum to leave the European Union, a result that was widely unpredicted. Although sterling was weak ahead of the vote, it has weakened considerably since. With approximately half of our portfolio by value in sterling denominated assets and with all of the balance in euro or dollar linked currencies sterling's weakness before, and especially after, Brexit has been a material factor in the NAV movement in the first half. We estimate that it has added approximately 5.0 per cent over the first six months. The Company's borrowings are held in euros and this has marginally reduced the currency benefit. Despite the dominance of the currency factor, the Company also reports strong underlying progress in valuations based on good trading and successful exits. Whilst there has been an immediate short term positive effect on the Company's NAV, the longer term implications of the UK leaving the EU will take time to discern. Although there are relatively few companies which are directly and immediately affected either positively or negatively, almost all are influenced by the levels of business and consumer confidence that result from the Brexit vote. At this stage the main impact appears to be, unsurprisingly, a tendency in some quarters to hold back or pause before committing to new deals. For deals which involve a UK/EU interface, we should expect some adjustments to timing and terms to reflect the new and projected realities. For a large section of our portfolio, without direct UK involvement, business activity continues relatively uninfluenced. It is also likely that in due course new investment opportunities will be created by the new environment and we would expect a number of our partners to carefully and selectively take these. With a broadly based portfolio, a robust balance sheet and an uncomplicated capital structure your Company remains well placed to deliver further progress for shareholders.
Mark Tennant
Chairman
Manager's Review
Introduction
As noted in the Chairman's Statement the dominant macro-economic or political event of the half year has been the UK Brexit vote. We are closely monitoring our portfolio and liaising with our investment partners as we assess the immediate aftermath and longer term implications for our portfolio and the European private equity market in general. It has provided a short term currency related boost in portfolio value but there are likely to be some distinct buying opportunities for longer term investors over the coming months and years. At the level of our portfolio the early part of the year recorded lower levels of investment and exit activity than we had seen in the immediately preceding period, but this has picked up noticeably as the year has progressed. We do not expect the coincidence of favourable factors which led to 2015 being a record year for realisations to continue this year, but a healthy level of portfolio turnover is to be expected. In the first half of the year we have invested through funds and co-investments a total of GBP19.3 million. Realisations over the period were GBP19.2 million.
New Investments
In order to maintain momentum in shareholder returns it is necessary to renew our portfolio of funds and co-investments steadily. We have a preference for emerging managers where we discern potential for strong performance by motivated managers. We also continue to back successful managers from fund to fund for as long as we assess that they are able to deliver. Most of the managers we back have well defined specialisms centred around a particular size of company in a particular country or region, often with some sectoral specialisms. During the first half of the year six new commitments to funds have been made and two co-investments. Following the period end a further five fund commitments have been made.
A number of UK based funds have been added. GBP4 million was committed to FPE Fund II, a growth equity fund managed by the team formerly part of Stonehage Fleming, Europe's largest multi-family office. We are well acquainted with this team's capabilities through previous co-investments. GBP10 million was committed to August Equity Partners IV, the latest fund from these well-established lower mid-market buyout specialists. GBP3 million was committed to Inflexion Enterprise IV and GBP2 million to Inflexion Supplemental Fund IV. These funds, each of GBP250 million, managed by one of our longest standing and most successful investment partners, will invest respectively in companies with enterprise values of GBP20 million - GBP45 million and in somewhat larger deals alongside the main Inflexion funds. After the period end GBP5 million was committed to Piper Private Equity VI, a GBP100 million fund which will invest in UK lower mid-market companies involved in consumer brands. Most of our portfolio is invested in buyout funds, but we retain a limited appetite for venture capital. Reinforcing and updating our involvement in this asset class a commitment of GBP7.5 million has been made to SEP V, backing one of the UK's most successful venture capital firms.
In Europe EUR8 million was committed to Astorg VI, a France focused mid-market buyout fund which specialises in control investments in B2B companies with market leading positions in niche sectors. Our French exposure has been further renewed through the commitment, after the period end, of EUR5 million to Montefiore IV, a services sector fund investing in companies in the enterprise value size range of EUR25 million - EUR250 million. Two new commitments were made to our leading German speaking Europe investment partner, DBAG. EUR6.3 million was committed to their fund VII and EUR1.2 million to fund VII B. DBAG Fund VII follows DBAG's long term strategy in mittelstand, mainly capital goods, companies and Fund VII B will selectively invest in a limited number of these deals as a 'top up' fund. Lastly after extensive research we have identified a fund to capture the best of the Benelux region. EUR9 million has been committed to Bencis V, a mid-market fund focusing on companies with enterprise values between EUR20 million and EUR100 million.
Two new co-investments were added during the first half of the year. EUR4 million was invested for 6.2 per cent of Calucem, a Croatia based speciality chemicals company which is the world no 2 producer of Calcium Aluminate Cement (CAC), a material which is used in a number of high performance construction and industrial applications. The company has the dual benefits of a competitive cost base in Croatia and a largely German based R&D team. The deal is led by Italian mid-market specialists Ambienta.
GBP4.4 million has been invested for 14.3 per cent of Ashtead, an Aberdeen-based oil services company which rents and services specialist equipment used in inspection maintenance and repair for existing production fields, brownfield extension and new field construction. The deal is led by Buckthorn, a specialist private equity manager focusing on energy and energy services.
The broad range of funds in our portfolio ensures that new investments are made steadily leading to a naturally complementary portfolio of companies spanning many sectors and geographies.
Some of the more notable new investments of the first half of the year illustrate this range.
In the UK RJD Partners III invested GBP1.4 million in Babington, a leading provider of training for apprenticeships in the English Midlands. The company is envisioned to be a beneficiary of the government policy to increase the number of apprenticeships significantly. Lyceum Capital III have invested in telecoms services company Sabio (GBP0.6 million), which provides solutions to contact centres in the UK and overseas. Inflexion have been active calling capital for investment in engineering inspection and consultancy business, British Engineering Services (GBP0.4 million) and for compliance risk management and certification services company Alcumus (GBP0.7 million). FPE arranged a follow on investment in furniture provider David Phillips (GBP0.4 million).
In Europe GCP Capital Partners Europe II invested in Factory-CRO, a Netherlands based contract research organisation focusing exclusively on clinical trials for medical devices (GBP0.9 million). Italian mid-market specialist, ILP III, made a follow-on investment in Italian travel company Alpitour (GBP0.5 million). There were several other smaller investments made by funds in France, Germany, Iberia and the Nordic region.
Realisations
After a slowish start realisations have picked up as the year has progressed with the total for the first half of the year reaching GBP19.2 million. So far the exits and associated distributions have come from a range of funds and countries. These have nearly all achieved excellent returns.
The largest exit in the period was from the sale of surgical robotics company Blue Belt to Smith & Nephew by HealthpointCapital Partners III (GBP2.2 million, 3x, 30% IRR). Same-day courier and logistics services company Citysprint was partially exited by Dunedin Buyout II (GBP1.3 million, 2.8x). Funeral Services Partnership was sold by August Equity Partners III to Montagu Private Equity after a very short hold (GBP1.2 million, 2.5x, 196% IRR). RJD Partners II sold caravan holiday parks company Verdant Leisure to Palatine Private Equity (GBP1.2 million, 1.7x, 11% IRR). Our other investment in this sector, the Caledonia led co-investment in Park Holidays, returned GBP0.8 million after a refinancing of some of the company's debt.
On the Continent there were also several good exits. DBAG V sold bus and coach heating and ventilation company Spheros to trade buyer Valeo (GBP1.4 million, 2.5x, 24% IRR). Capvis III and IV received healthy proceeds from the IPO of vacuum valves company VAT AG on the Swiss stock market (GBP1.1 million, 3.3x). Chequers Capital XVI exited French power tools company Metabo through a sale to Japanese corporate Hitachi Koki (GBP0.8 million, 4.7x, 55% IRR). Further north, Argan Capital realised part of their holding in Swedish healthcare company Humana via a listing on the Stockholm stock exchange (GBP0.5 million, 5x, 24% IRR).
In the USA Camden Partners III sold Biomedical Enterprises, a medical devices company, to a subsidiary of Johnson & Johnson (GBP0.4 million). In Asia, AIF Capital Asia III sold Chinese generic drugs company Bestime to a consortium (GBP0.7 million, 5.2x, 27% IRR).
Following the period end there have been further realisations. Notably our co-investment in French cold sterilisation company Ionisos was sold by deal leader Agilitas to larger French private equity house Ardian (GBP5.2 million, 2.9x, 97% IRR). This was an excellent exit coming barely 18 months after investment.
Valuation Changes
The valuation changes have been related to some of the realisations noted above as well as to underlying trading in portfolio companies. Ionisos is the largest uplift at GBP1.9 million reflecting its post period end sale. The Inflexion Funds have had a strong start to the year and Inflexion 2012 Co-Investment Fund and Inflexion 2010 are up by GBP1.5 million and GBP0.9 million respectively. Park Holidays continues to trade well and profits progression has resulted in a GBP0.9 million uplift. In Sweden Procuritas IV has been uplifted by GBP0.5 million, mainly reflecting the very strong trading of ice cream machine maker Gram. Downgrades have included our co-investment in Meter Provida which has had some weaker trading and is down by GBP0.6 million. Lesser adjustments have been included for some of the mature and older funds with each of August Equity Partners II, PineBridge New Europe II and Candover 2005 down by GBP0.3 million.
Financing
The Company had modest gearing of only 2.4 per cent at the period end. Subsequent realisations have put the Company back into a modest net cash position. This leaves effectively all of the GBP70 million borrowing facility available to fund investments should drawdowns and co-investments exceed the proceeds from realisations. The Company's borrowing facility has almost three years to run. As noted above we expect that the current unusual economic conditions will give rise to investment opportunities and the Company and its investment partners are well placed to take these in due course. The support which the Bank of England has given to the UK banking sector in the wake of the Brexit vote is to be welcomed as this should avert any debt shortage for appropriately priced buy-outs.
Outlook
Macro-economic factors command attention because they can be summarised with a few statistics and facilitate generalisations. They are also famously difficult to predict. Political developments are usually less relevant for the business and investment environment but they can be even more unpredictable and consequently can cause shocks. We are in the immediate aftermath of a political shock with economic consequences. At the level of individual businesses and from the perspective of investors with long term committed and illiquid capital there is no alternative but to proceed with business plans whilst being prepared to adapt and adjust as the background economic landscape changes. As we have noted before, private equity as a mode of investment benefits from, but does not require, a strong economic background for success. Private Equity managers are better used to accepting and pricing risk than most market participants. Many of them also have the skills to help managers of portfolio companies adjust and refresh plans in the light of changed circumstances. It is our conviction that the investment partners managing the funds and co-investments in our portfolio are well equipped to embrace change as an opportunity to build value for their investors. With that in mind returns for shareholders should continue to improve through the remainder of 2016.
Hamish Mair
Investment Manager
F&C Investment Business Limited
F&C Private Equity Trust plc
Statement of Comprehensive Income for the
half year ended 30 June 2016
Unaudited
Revenue Capital Total
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair
value - 23,983 23,983
Exchange losses - (2,928) (2,928)
Investment income 345 - 345
Other income 32 - 32
----------------------------------------- --------- --------- ---------
Total income 377 21,055 21,432
----------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic
fee (277) (832) (1,109)
Investment management fee - performance
fee - (1,331) (1,331)
Other expenses (355) - (355)
----------------------------------------- --------- --------- ---------
Total expenditure (632) (2,163) (2,795)
----------------------------------------- --------- --------- ---------
(Loss)/profit before finance costs
and taxation (255) 18,892 18,637
Finance costs (206) (618) (824)
----------------------------------------- --------- --------- ---------
(Loss)/profit before taxation (461) 18,274 17,813
Taxation - - -
(Loss)/profit for period/total
comprehensive income (461) 18,274 17,813
Return per Ordinary Share - Basic (0.64)p 25.19p 24.55p
----------------------------------------- --------- --------- ---------
Return per Ordinary Share - Fully
diluted (0.62)p 24.71p 24.09p
----------------------------------------- --------- --------- ---------
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with IFRS. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
All income is attributable to the equity holders of F&C Private Equity Trust plc. There are no minority interests.
F&C Private Equity Trust plc
Statement of Comprehensive Income for the
half year ended 30 June 2015
Unaudited
Revenue Capital Total
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair
value - 1,176 1,176
Exchange gains - 3,266 3,266
Investment income 4,307 - 4,307
Other income 16 - 16
----------------------------------------- --------- --------- ---------
Total income 4,323 4,442 8,765
----------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic
fee (247) (742) (989)
Investment management fee - performance
fee - (973) (973)
Other expenses (340) - (340)
----------------------------------------- --------- --------- ---------
Total expenditure (587) (1,715) (2,302)
----------------------------------------- --------- --------- ---------
Profit before finance costs and
taxation 3,736 2,727 6,463
Finance costs (232) (697) (929)
----------------------------------------- --------- --------- ---------
Profit before taxation 3,504 2,030 5,534
Taxation (708) 708 -
Profit for period/total comprehensive
income 2,796 2,738 5,534
Return per Ordinary Share - Basic 3.87p 3.79p 7.66p
----------------------------------------- --------- --------- ---------
Return per Ordinary Share - Fully
diluted 3.77p 3.68p 7.45p
----------------------------------------- --------- --------- ---------
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with IFRS. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
All income is attributable to the equity holders of F&C Private Equity Trust plc. There are no minority interests.
F&C Private Equity Trust plc
Statement of Comprehensive Income for the
year ended 31 December 2015
Audited
Revenue Capital Total
GBP'000 GBP'000 GBP'000
----------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair
value - 17,401 17,401
Exchange gains - 2,072 2,072
Investment income 7,562 - 7,562
Other income 48 - 48
----------------------------------------- --------- --------- ---------
Total income 7,610 19,473 27,083
----------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic
fee (509) (1,528) (2,037)
Investment management fee - performance
fee - (1,342) (1,342)
Other expenses (696) - (696)
----------------------------------------- --------- --------- ---------
Total expenditure (1,205) (2,870) (4,075)
----------------------------------------- --------- --------- ---------
Profit before finance costs and
taxation 6,405 16,603 23,008
Finance costs (448) (1,345) (1,793)
----------------------------------------- --------- --------- ---------
Profit before taxation 5,957 15,258 21,215
Taxation (931) 931 -
Profit for year/total comprehensive
income 5,026 16,189 21,215
Return per Ordinary Share - Basic 6.97p 22.44p 29.41p
----------------------------------------- --------- --------- ---------
Return per Ordinary Share - Fully
diluted 6.78p 21.85p 28.63p
----------------------------------------- --------- --------- ---------
The total column of this statement represents the Statement of Comprehensive Income of the Company, prepared in accordance with IFRS. The supplementary revenue and capital columns are both prepared under guidance published by the Association of Investment Companies.
All revenue and capital items in the above statement derive from continuing operations.
All income is attributable to the equity holders of F&C Private Equity Trust plc. There are no minority interests.
F&C Private Equity Trust plc
Amounts Recognised as Dividends
Six months Six months
ended 30 ended 30
June 2016 June 2015
(unaudited) (unaudited)
GBP'000 GBP'000 Year ended
31 December
2015
(audited)
GBP'000
---------------------------------- ------------- ------------- --------------
Final Ordinary Share dividend
of 5.45p per share for the year
ended 31 December 2014 - 3,939 3,939
Interim Ordinary Share dividend
of 5.58p per share for the year
ended 31 December 2015 - - 4,017
Final Ordinary Share dividend 4,251 - -
of 5.83p per share for the year
ended 31 December 2015
---------------------------------- ------------- ------------- --------------
4,251 3,939 7,956
---------------------------------- ------------- ------------- --------------
F&C Private Equity Trust plc
Balance Sheet
As at 30 As at As at 31
June 2016 30 June December
2015 (unaudited) 2015
(unaudited) (audited)
GBP'000 GBP'000 GBP'000
---------------------------- ------------- ------------------ -----------
Non-current assets
Investments at fair
value through profit
or loss 240,194 223,378 215,711
Current assets
Other receivables 13 32 26
Cash and cash equivalents 18,596 18,617 24,023
---------------------------- ------------- ------------------ -----------
18,609 18,649 24,049
Current liabilities
Other payables (2,285) (16,533) (2,278)
Net current assets 16,324 2,116 21,771
---------------------------- ------------- ------------------ -----------
Total assets less current
liabilities 256,518 225,494 237,482
Non-current liabilities
Interest-bearing bank
loan (24,285) (20,391) (21,357)
---------------------------- ------------- ------------------ -----------
Net assets 232,233 205,103 216,125
---------------------------- ------------- ------------------ -----------
Equity
Called-up ordinary share
capital 739 723 720
Special distributable
capital reserve 17,567 15,679 15,040
Special distributable
revenue reserve 31,403 31,403 31,403
Capital redemption reserve 1,335 1,335 1,335
Capital reserve 172,025 148,568 158,002
Revenue reserve 9,164 7,395 9,625
Shareholders' funds 232,233 205,103 216,125
---------------------------- ------------- ------------------ -----------
Net asset value per
Ordinary Share - Basic 314.08p 283.75p 300.25p
---------------------------- ------------- ------------------ -----------
Net asset value per
Ordinary Share - Fully
diluted 314.08p 279.69p 295.74p
---------------------------- ------------- ------------------ -----------
F&C Private Equity Trust plc
Statement of Changes in Equity
Share Special Special Capital Capital Revenue Total
Capital Distributable Distributable Redemption Reserve Reserve
Capital Revenue Reserve
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30 June 2016 (unaudited)
Net assets at
1 January 2016 720 15,040 31,403 1,335 158,002 9,625 216,125
Issue of Ordinary
Shares 19 2,527 - - - - 2,546
Profit/(loss)
for the period/total
comprehensive
income - - - - 18,274 (461) 17,813
Dividends paid - - - - (4,251) - (4,251)
Net assets at
30 June 2016 739 17,567 31,403 1,335 172,025 9,164 232,233
----------------------------- ---- ------- ------- ------ -------- ------- --------
For the six months ended 30 June 2015 (unaudited)
Net assets at
1 January 2015 723 15,679 31,403 1,335 149,769 4,599 203,508
Profit for the
period/total comprehensive
income - - - - 2,738 2,796 5,534
Dividends paid - - - - (3,939) - (3,939)
Net assets at
30 June 2015 723 15,679 31,403 1,335 148,568 7,395 205,103
----------------------------- ---- ------- ------- ------ -------- ------- --------
For the year ended 31 December 2015 (audited)
Net assets at
1 January 2015 723 15,679 31,403 1,335 149,769 4,599 203,508
Cancellation
of Ordinary Shares (3) (639) - - - - (642)
Profit for the
year/total comprehensive
income - - - - 16,189 5,026 21,215
Dividends paid - - - - (7,956) - (7,956)
Net assets at
31 December 2015 720 15,040 31,403 1,335 158,002 9,625 216,125
----------------------------- ---- ------- ------- ------ -------- ------- --------
F&C Private Equity Trust plc
Cash Flow Statement
Six months Six months Year ended
ended ended
30 June 30 June 31 December
2016 2015 2015
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
-------------------------------- ------------- ------------- -------------
Operating activities
Profit before taxation 17,813 5,534 21,215
Gains on disposals
of investments (4,479) (10,292) (5,965)
(Increase)/decrease
in holding gains (19,504) 9,116 (11,436)
Exchange differences 2,928 (3,266) (2,072)
Interest income (32) (16) (48)
Interest received 32 16 48
Investment income (345) (4,307) (7,562)
Dividends received 345 4,583 7,840
Finance costs 824 929 1,793
Decrease/(increase)
in other receivables 13 (4) -
Increase/(decrease)
in other payables 11 (206) (309)
-------------------------------- ------------- ------------- -------------
Net cash (outflow)/inflow
from operating activities (2,394) 2,087 3,504
-------------------------------- ------------- ------------- -------------
Investing activities
Purchases of investments (19,257) (19,177) (35,271)
Sales of investments 18,757 33,662 73,655
Net cash (outflow)/inflow
from investing activities (500) 14,485 38,384
-------------------------------- ------------- ------------- -------------
Financing activities
Shares issued 2,546 - -
Shares cancelled - - (642)
Repayment of bank
loans - - (14,618)
Interest paid (720) (848) (1,586)
Equity dividends paid (4,251) (3,939) (7,956)
-------------------------------- ------------- ------------- -------------
Net cash outflow from
financing activities (2,425) (4,787) (24,802)
-------------------------------- ------------- ------------- -------------
Net (decrease)/increase
in cash and cash equivalents (5,319) 11,785 17,086
Currency losses (108) (114) (9)
-------------------------------- ------------- ------------- -------------
Net (decrease)/increase
in cash and cash equivalents (5,427) 11,671 17,077
Opening cash and cash
equivalents 24,023 6,946 6,946
-------------------------------- ------------- ------------- -------------
Closing cash and cash
equivalents 18,596 18,617 24,023
-------------------------------- ------------- ------------- -------------
Statement of Principal Risks and Uncertainties
The Directors believe that the principal risks and uncertainties faced by the Company include investment and strategic, external, regulatory, operational, financial and funding. The Company is also exposed to risks in relation to its financial instruments. These risks, and the way in which they are managed, are described in more detail under the heading Principal Risks and Uncertainties and Risk Management within the Business Model and Strategy in the Annual Report for the year ended 31 December 2015. The Company's principal risks and uncertainties have not changed materially since the date of that report and are not expected to change materially for the remaining six months of the Company's financial year. The longer-term implications of Brexit are as yet unknown, but as noted in the Chairman's Statement, the Company has benefited in the short term from the recent weakness in Sterling.
Statement of Directors' Responsibilities in Respect of the Half Year Report
We confirm that to the best of our knowledge:
-- the condensed set of financial statements have been prepared in accordance with IAS 34 'Interim Financial Reporting' and give a true and fair view of the assets, liabilities, financial position and profit of the Company;
-- the Chairman's Statement and Manager's Review (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure and Transparency Rules ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;
-- the Statement of Principal Risks and Uncertainties shown above is a fair review of the information required by DTR 4.2.7R; and
-- the condensed set of financial statements include a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.
On behalf of the Board
Mark Tennant
Chairman
Notes (unaudited)
1. The condensed company financial statements have been prepared in accordance with International Financial Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting' and, except as described below, the accounting policies set out in the statutory accounts for the year ended 31 December 2015. The condensed financial statements do not include all of the information and disclosures required for a complete set of IFRS financial statements and should be read in conjunction with the financial statements for the year ended 31 December 2015, which were prepared under full IFRS requirements.
The Company has adopted the following new amendments to standards, including any consequential amendments to other standards, with a date of initial application of 1 January 2016. The following changes in accounting standards are also expected to be reflected in the Company's financial statements as at and for the year ending 31 December 2016:
-- 'Annual Improvements to IFRSs 2012-2014 Cycle' - The adoption of these improvements does not have a material impact on the Company's financial position and performance.
2. Earnings for the six months to 30 June 2016 should not be taken as a guide to the results for the year to 31 December 2016.
3. Investment management fee:
Six months to Six months to Year ended 31
30 June 2016 30 June 2015 December 2015
(unaudited) (audited)
(unaudited)
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
fee 277 832 1,109 247 742 989 509 1,528 2,037
Investment
management
fee - performance
fee - 1,331 1,331 - 973 973 - 1,342 1,342
277 2,163 2,440 247 1,715 1,962 509 2,870 3,379
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
4. Finance costs:
Six months to Six months to Year ended 31
30 June 2016 30 June 2015 December 2015
(unaudited) (audited)
(unaudited)
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 206 618 824 232 697 929 448 1,345 1,793
5. The basic return per Ordinary Share is based on a net profit on ordinary activities after taxation of GBP17,813,000 (30 June 2015 - GBP5,534,000; 31 December 2015 - GBP21,215,000) and on 72,550,643 (30 June 2015 - 72,282,273; 31 December 2015 - 72,143,369) 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 profit on ordinary activities after taxation of GBP17,813,000 (30 June 2015 - GBP5,534,000; 31 December 2015 - GBP21,215,000) and on 73,941,429 (30 June 2015 - 74,241,429; 31 December 2015 - 74,102,525) shares, being the weighted average number of Ordinary Shares in issue during the period after conversion of the Ordinary Share warrants.
6. The basic net asset value per Ordinary Share is based on net assets at the period end of GBP232,233,000 (30 June 2015 - GBP205,103,000; 31 December 2015 - GBP216,125,000) and on 73,941,429 (30 June 2015 - 72,282,273; 31 December 2015 - 71,982,273) 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 GBP232,233,000 (30 June 2015 - GBP207,649,000; 31 December 2015 - GBP218,671,000) and on 73,941,429 (30 June 2015 - 74,241,429; 31 December 2015 - 73,941,429) shares, being the number of Ordinary Shares in issue at the period end after conversion of the Ordinary Share warrants.
7. The fair value measurements for financial assets and liabilities are categorised into different levels in
the fair value hierarchy based on inputs to valuation techniques used. The different levels are defined as follows:
Level 1 reflects financial instruments quoted in an active market.
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ----------- -------- -----------
30 June 2016
Financial assets 231 - 239,963 240,194
Investments
Financial liabilities
Interest-bearing bank loan - (24,990) - (24,990)
30 June 2015
Financial assets
Investments 406 - 222,972 223,378
Financial liabilities
Interest-bearing bank loan - (21,314) - (21,314)
31 December 2015
Financial assets
Investments 306 - 215,405 215,711
Financial liabilities
Interest-bearing bank loan - (22,172) - (22,172)
There were no transfers between levels in the fair value hierarchy in the period ended 30 June 2016. Transfers between levels of the fair value hierarchy are deemed to have occurred at the date of the event that caused the transfer.
Valuation techniques
Quoted fixed asset investments held are valued at bid prices which equate to their fair values. Unlisted investments are fair valued by the Directors. The fair value of a holding is based on the Company's share of the total net asset value of the fund or share of the valuation of the co-investment calculated by the lead private equity manager on a quarterly basis. The lead private equity manager derives the net asset value of a fund from the fair value of underlying investments. The fair value of these underlying investments and the Company's co-investments is calculated using methodology which is consistent with the International Private Equity and Venture Capital Valuation Guidelines ('IPEG'). In accordance with IPEG these investments are generally valued using an appropriate multiple of maintainable earnings, which has been derived from comparable multiples of quoted companies or recent transactions. The F&C private equity team has access to the underlying valuations used by the lead private equity managers including multiples and any adjustments. The F&C private equity team generally values the Company's holdings in line with the lead managers but may make adjustments where they do not believe the underlying managers' valuations represent fair value. On a quarterly basis, the F&C private equity team present the valuations to the Board. This includes a discussion of the major assumptions used in the valuations, which focuses on significant investments and significant changes in the fair value of investments. If considered appropriate, the Board will approve the valuations. The interest-bearing bank loan is recognised in the Balance Sheet at amortised cost in accordance with IFRS. The fair value of the loan is based on indicative break costs. The fair values of all of the Company's other financial assets and liabilities are not materially different from their carrying values in the balance sheet.
Significant unobservable inputs for Level 3 valuations
The Company's unlisted investments are all classified as Level 3 investments. The fair values of the unlisted investments have been determined principally by reference to earnings multiples, with adjustments made as appropriate to reflect matters such as the sizes of the holdings and liquidity. The weighted average earnings multiple for the portfolio as at 30 June 2016 was 7.9 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) (30 June 2015: 7.9 times EBITDA; 31 December 2015: 7.8 times EBITDA).
The significant unobservable input used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis are shown below:
Period ended Input Sensitivity Effect
used* on fair
value
GBP'000
-------------- --------------------------- ------------ ---------
30 June Weighted average earnings
2016 multiple 1x 46,147
30 June Weighted average earnings
2015 multiple 1x 39,816
31 December Weighted average earnings
2015 multiple 1x 43,081
-------------- --------------------------- ------------ ---------
* The sensitivity analysis refers to an amount added or deducted from the input and the effect this has on the fair value.
The fair value of the Company's unlisted investments are sensitive to changes in the assumed earnings multiples. The managers of the underlying funds assume an earnings multiple for each holding. An increase in the weighted average earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the multiple would lead to a decrease in the fair value.
The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the period:
30 June 30 June 31 December
2016 2015 2015
GBP'000 GBP'000 GBP'000
-------------------------- --------- --------- ------------
Balance at beginning of
period 215,405 233,854 233,854
Purchases 19,257 19,177 35,271
Sales (18,757) (31,383) (71,375)
Gains on disposal 4,479 10,285 6,046
In specie distribution (88) (23) (23)
Increase/(decrease) in
holding gains 19,667 (8,938) 11,632
-------------------------- --------- --------- ------------
Balance at end of period 239,963 222,972 215,405
-------------------------- --------- --------- ------------
8. During the period, the Company issued 1,959,156 Ordinary Shares of 1p each in capital of the Company for a consideration of GBP2,546,000, payable in cash, following the exercise of subscription rights by holders of a corresponding number of management warrants previously issued by the Company in the capital of the Company. The surplus of cash received for the issue of shares over the par value of such shares is GBP2,527,000 and is credited to the special distributable capital reserve. No warrants remain in issue.
9. In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have considered the current cash position of the Company, the availability of the Company's loan facility and compliance with its covenants. They have also considered forecast cash flows, especially those relating to capital commitments and realisations.
As at 30 June 2016, the Company had outstanding undrawn commitments of GBP86.8 million. Of this amount, approximately GBP17 million is to funds where the investment period has expired and the Manager would expect very little of this to be drawn. Of the outstanding undrawn commitments remaining within their investment periods, the Manager would expect that a significant amount will not be drawn before these periods expire.
Based on this information the Directors believe the Company has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of the accounts. Accordingly, the accounts have been prepared on a going concern basis.
10. These are not statutory accounts in terms of Section 434 of the Companies Act 2006 and have not been audited or reviewed by the Company's auditors. The information for the year ended 31 December 2015 has been extracted from the latest published financial statements which received an unqualified audit report and have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 31 December 2015 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Half-Year Report is available at the Company's website address, www.fcpet.co.uk.
For more information, please contact:
Hamish Mair (Fund Manager) 0131 718 1184
hamish.mair@bmogam.com
Scott McEllen (Company 0131 718 1137
Secretary) scott.mcellen@bmogam.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR BUGDIUSDBGLU
(END) Dow Jones Newswires
August 26, 2016 02:01 ET (06:01 GMT)
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