TIDMFPEO TIDMFPER
RNS Number : 3667S
F&C Private Equity Trust PLC
30 November 2012
To: Stock Exchange For immediate release:
30 November 2012
F&C Private Equity Trust plc
Quarterly results for the three months to 30 September 2012
-- Adoption of new dividend policy - interim dividend of 4.96p
per Ordinary Share paid since the end of the quarter.
-- Share price total return for the quarter of 6.7 per cent for the Ordinary Shares.
-- NAV total return for the quarter of -1.1 per cent for the Ordinary Shares.
-- Expected final dividend for the Restricted Voting Shares of
1.675p per share, payable on 8 February 2013.
Manager's Review
Introduction
As at 30 September 2012 the Company's net asset value ('NAV')
was GBP185.0 million. The Ordinary Pool's NAV was GBP183.9 million
giving a fully diluted NAV per share of 251.08p, a decrease over
the quarter of 1.1 per cent. The first dividend under the new
distribution policy, of 4.96p per Ordinary Share, was paid on 2
November. The slight dip in NAV this quarter reflects the fact that
the third quarter tends to be fairly quiet for valuation changes.
There was also an adverse influence of about 1.3 per cent from
foreign exchange movements.
The Restricted Voting Pool's NAV as at 30 September 2012 was
GBP1.1 million, giving a NAV per share of 1.66p. Including the
dividend of 3.3p per Restricted Voting Share paid on 28 September,
this represents a decrease of 2.4 per cent over the quarter. Since
the Company's establishment in March 1999 and taking into account
the final dividend of 1.675p per Restricted Voting Share that is
expected to be paid on 8 February 2013, GBP118.0 million will have
been distributed to Restricted Voting shareholders representing
1.76x initial NAV, a NAV total return of 14.7 per cent per annum
and an IRR of 9.6 per cent. Over the same period, the FTSE
All-Share Index has delivered a total return of 1.0 per cent per
annum, equating to an investment multiple of 1.14x and an IRR of
1.0 per cent.
As at 30 September 2012 the Ordinary Share Pool had net cash of
GBP10.6 million. Together with the accrued liability for the Zero
Dividend Preference Shares of GBP37.3 million the Ordinary Share
Pool's total net debt was GBP26.7 million, equivalent to a gearing
level of 12.7 per cent. The Company's GBP50 million committed
revolving credit facility remains undrawn. The total outstanding
undrawn commitments at 30 September 2012 were GBP70.6 million and,
of this, approximately GBP15 million is to funds where the
investment period has expired. During the quarter, combined
realisations and income for both share pools totalled GBP16.5
million and drawdowns were GBP9.0 million.
New Investments
Three commitments to private equity funds were made during the
quarter. As previously reported, a commitment of GBP4.0 million was
made to the UK mid-market fund Lyceum Capital Fund III. Lyceum was
a spin out of WestLB some years ago and since then we have invested
with them through another of our fund of funds. GBP6.0 million was
committed to the Inflexion 2012 Co-investment Fund. This will be a
concentrated fund and the economics are more favourable than for a
conventional fund. The first two investments have already been
made. This commitment reinforces our strong relationship with
Inflexion with whom we have invested successfully for a decade. The
third commitment, of $5.0 million, was to the highly specialised
orthopaedics healthcare fund Healthpoint Capital III. This fund
focuses on an attractive large niche market. The initial portfolio
is already showing signs of promise and the investment could be
considered an advanced primary.
Since the quarter end we have made a direct investment of GBP2.3
million for a 9.5 per cent stake in Avalon, a funeral plans
business operating in the UK and Spain. We have invested alongside
the emerging private equity manager Lonsdale. Lonsdale are backing
an experienced management team in a fast growing niche market. The
business has been acquired on an EV:EBITDA multiple of 4.2x. There
are a number of other fund commitments and co-investments under
consideration and we would expect some of these to be committed
before the year end.
Under the existing fund commitments there were drawdowns
totalling GBP9.0 million during the quarter. The largest individual
new investment was for GBP1.0 million by RJD Partners II for debt
advisory business Harrington Brooks. This was sold by Inflexion and
unusually we have reinvested an almost equivalent amount to the
proceeds from the two Inflexion funds where we previously held this
company. The Inflexion 2012 Co-investment Fund called GBP1.1
million for the two initial investments, CTC, a pilot training
company and Marstons Group, the UK's largest provider of High Court
and Civil enforcement services. Hutton Collins III called GBP0.6
million for an investment in Novus Leisure, a London oriented chain
of 52 bars and restaurants. In Europe, Capvis III called GBP0.7
million for an investment in Ondal, the Germany based leading
manufacturer of medical pendant systems to the medical technology
industry. Capvis III also invested GBP0.5 million in Hessnatur, the
German multi-channel retailer of natural and ecological apparel and
home textiles. In Sweden, Herkules Private Equity III invested
GBP0.5 million in the country's leading branded coffee shop chain,
Espresso House. There were a number of other smaller new
investments.
Realisations
During the quarter realisations totalled GBP16.5 million,
including GBP1.6 million of income. This brings the total of
realisations for the first nine months to GBP44.3 million.
Subsequent to the quarter end the total has increased to GBP53.4
million compared with GBP38.3 million for 2011 as a whole. The
individual exits illustrate healthy levels of activity within the
European mid-market and further afield.
The largest single exit was Capvis III's sale of German
explosives protection company Bartec to Charterhouse. The Company
held this both through the Capvis III fund and directly as a
co-investment. The disposal yielded GBP3.9 million and GBP3.1
million respectively, giving an investment multiple of just over
3.0x and an IRR of 33 per cent. The investment had been held for
four years and despite an exceptionally challenging economic
background the company doubled its profits over the period. In the
US, Blue Point Capital II sold QSR (Quality Synthetic Rubber)
achieving 3.7x cost and an IRR of 35 per cent, yielding GBP1.4
million for the Company. In Spain, Nmas I Private Equity Fund
exited ZIV, a control and metering products provider for power
utilities, through a sale to India's Crompton Greaves. This
achieved an investment multiple of 3.5x and returned GBP0.8 million
to the Company. As noted above, Inflexion sold debt advisory
business Harrington Brooks to RJD. This was held in both
Inflexion's Hickory Fund Portfolio and in Inflexion's 2003 Fund.
The combined proceeds to the Company were GBP1.2 million, achieving
an investment multiple of 3.1x and an IRR of 19 per cent. Lastly
the Company's very longstanding holding in International Mezzanine
Investment distributed GBP1.9 million, representing the proceeds
from its last two holdings, IAC and Hallmark, which have now been
sold. 63 per cent of this amount accrued to the Restricted Voting
Pool.
Following the quarter end there have been some notable
realisations including Enara, the UK care service company, which
was sold by August Equity Partners II to MITIE Group plc for 2.5x
cost and an IRR of 24 per cent, yielding GBP3.7 million to the
Company.
Valuation Changes
There were a number of modest changes to valuations during the
quarter where uplifts and downgrades more or less offset each
other. Uplifts were mainly connected to actual or imminent
realisations. August Equity Partners II was uplifted by GBP1.5
million, principally reflecting the Enara sale noted above. DBAG V
was up by GBP0.9 million in anticipation of the sale of German
machinery manufacturer Coperion, and Procuritas Capital IV was
uplifted by GBP0.7 million reflecting the previously announced sale
of Swedish tire service company Dackia. Nmas I Private Equity Fund
was uplifted by GBP0.7 million, boosted primarily by the excellent
sale of ZIV.
On the negative side there were some downward adjustments in the
valuations of some of the holdings mainly reflecting difficult
trading. Penta F&C Co-investment Fund was down by GBP0.8
million mainly because of weak trading at Blues Clothing which is
still struggling from the loss of a major license. Our
co-investment in Blues Clothing was also down by GBP0.6 million.
Axitea (formerly known as Sicurglobal) was down by GBP0.6 million
as result of a delay in processing some orders and collecting
receivables from Italian municipalities.
Financing
The Company's financial resources are healthy with net cash at
30 September 2012 of GBP10.7 million. Since the quarter end there
have been GBP6.9 million of drawdowns and co-investments and GBP9.0
million of realisations. The cash balance after funding the GBP3.6
million dividend payment on the Ordinary Shares in November
currently stands at approximately GBP7 million. The GBP50 million
revolving credit facility remains undrawn. This provides ample
scope for financing new investments whilst building up resources in
advance of the redemption of the Zero Dividend Preference Shares in
December 2014.
Payment of Final Dividend on, and Cancellation of, the
Restricted Voting Shares
As previously intimated, the Restricted Voting Pool is now too
small to justify the administrative costs of maintaining a separate
class of share. The remaining assets of the Restricted Voting Pool
are all also held in the Ordinary Pool and, as these are very small
positions in old funds and some conditional entitlements to future
payments, a sale to an external third party is not practical nor
likely to prove optimal. Accordingly, subject to a resolution to
amend the Company's articles of association to enable the
cancellation of the Restricted Voting Shares once there are no
assets left in the Restricted Voting Pool (this is necessary in
order to maintain the Company's investment trust status), it is
proposed that the remaining assets of the Restricted Voting Pool
are transferred to the Ordinary Pool at NAV, in return for a
corresponding transfer of cash from the Ordinary Pool to the
Restricted Voting Pool. This will enable a final dividend to be
paid to Restricted Voting shareholders.
A circular convening a general meeting of the Company for 17
January 2013, at which the resolution to amend the articles
referred to above will be proposed, will be sent to shareholders in
due course. Subject to that resolution being passed, the Board will
declare a final dividend on the Restricted Voting Shares, which
will be payable on 8 February 2013 to Restricted Voting
shareholders on the register on 25 January 2013 (with an
ex-dividend date of 23 January 2013). The final dividend is
expected to be be marginally higher than the 30 September NAV per
Restricted Voting Share as it will take into account income
received (net of expenses attributable to the Restricted Voting
Pool) since that date. Based on the income already received to
date, the final dividend is expected to be not less than 1.675p per
share.
Following the payment of the final dividend, the Restricted
Voting Pool will have no assets and, following the changes to the
articles referred to above, will be cancelled. Pending
cancellation, the Company intends to apply to the UKLA for the
suspension of the listing of the Restricted Voting Shares with
effect from 25 January 2012 (the date on which the remaining assets
will be transferred to the Ordinary Pool at NAV in exchange for
cash).
Outlook
The new dealflow for the Company is very healthy with a number
of mid-market buy-out funds coming to market over the next year or
so. The number and quality of co-investment opportunities shown to
us has also improved. However, there remains considerable
uncertainty, principally concerning the Eurozone, and this isn't
helping business confidence nor the associated M&A market.
There are some positive consequences in that the deals that are
completed by private equity buyers have been subject to lengthy and
extensive due diligence and they have generally been made at prices
which factor in challenging times in the medium term at least. As
has been demonstrated in this portfolio, there is a good market for
well managed private equity backed businesses in the European
mid-market. Whilst the most recent quarter has been flat there is
good scope for further appreciation in the NAV in the remainder of
the year and beyond.
Hamish Mair
Investment Manager
F&C Investment Business Limited
F&C Private Equity Trust plc
Consolidated Statement of Comprehensive Income for the
nine months ended 30 September 2012
(Unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 8,588 8,588
Exchange gains - 187 187
Investment income 2,733 - 2,733
Other income 15 - 15
---------------------------------------------- --------- --------- ---------
Total income 2,748 8,775 11,523
---------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee (364) (1,093) (1,457)
Other expenses (617) - (617)
---------------------------------------------- --------- --------- ---------
Total expenditure (981) (1,093) (2,074)
---------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 1,767 7,682 9,449
Finance costs (218) (3,133) (3,351)
---------------------------------------------- --------- --------- ---------
Profit before taxation 1,549 4,549 6,098
Taxation (439) 431 (8)
Profit for period/total comprehensive income 1,110 4,980 6,090
============================================== ========= ========= =========
Return per Ordinary Share - Basic 0.84p 7.70p 8.54p
Return per Ordinary Share - Fully diluted 0.82p 7.50p 8.32p
Return per Restricted Voting Share - Basic 0.75p (0.88)p (0.13)p
============================================== ========= ========= =========
F&C PRIVATE EQUITY TRUST PLC
Consolidated Statement of Comprehensive Income for the
nine months ended 30 September 2011
(Unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- ---------- ---------- ----------
Income
Gains on investments held at fair value - 15,354 15,354
Exchange gains - 387 387
Investment income 2,051 - 2,051
Other income 34 - 34
---------------------------------------------- ---------- ---------- ----------
Total income 2,085 15,741 17,826
---------------------------------------------- ---------- ---------- ----------
Expenditure
Investment management fee (348) (1,122) (1,470)
Other expenses (510) - (510)
---------------------------------------------- ---------- ---------- ----------
Total expenditure (858) (1,122) (1,980)
---------------------------------------------- ---------- ---------- ----------
Profit before finance costs and taxation 1,227 14,619 15,846
Finance costs (151) (2,708) (2,859)
---------------------------------------------- ---------- ---------- ----------
Profit before taxation 1,076 11,911 12,987
Taxation (317) 317 -
Profit for period/total comprehensive income 759 12,228 12,987
============================================== ========== ========== ==========
Return per Ordinary Share - Basic 0.87p 16.16p 17.03p
Return per Ordinary Share - Fully diluted 0.85p 15.73p 16.58p
============================================== ========== ========== ==========
Return per Restricted Voting Share - Basic 0.09p 0.92p 1.01p
============================================== ========== ========== ==========
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
Amounts Recognised as Dividends
Nine months Nine months Year ended
ended ended 31 December
30 September 30 September 2011 (audited)
2012 (unaudited) 2011 (unaudited)
GBP'000 GBP'000 GBP'000
---------------------------------------- ------------------ ------------------ ----------------
Final Ordinary Share dividend of 0.95p
for the year ended 31 December 2010 - 687 687
Final Ordinary Share dividend of 0.80p
for the year ended 31 December 2011 578 - -
---------------------------------------- ------------------ ------------------ ----------------
578 687 687
======================================== ================== ================== ================
On 7 January 2011 a special dividend of 1.30p per Restricted
Voting Share was paid. The total amount paid was GBP872,000.
On 27 January 2012 a special dividend of 1.60p per Restricted
Voting Share was paid. The total amount paid was GBP1,073,000.
On 28 September 2012 a special dividend of 3.30p per Restricted
Voting Share was paid. The total amount paid was GBP2,214,000.
F&C Private Equity Trust plc
Consolidated Balance Sheet
As at 30 As at 30 As at 31
September September December
2012 2011 (unaudited) 2011
(unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------- ------------------ -----------
Non-current assets
Investments at fair value through
profit or loss 212,449 226,419 223,388
--------------------------------------- ------------- ------------------ -----------
Current assets
Other receivables 477 19 23
Cash and short-term deposits 10,745 1,277 4,044
--------------------------------------- ------------- ------------------ -----------
11,222 1,296 4,067
Current liabilities
Other payables (1,398) (12,475) (9,886)
Net current assets/(liabilities) 9,824 (11,179) (5,819)
--------------------------------------- ------------- ------------------ -----------
Total assets less current liabilities 222,273 215,240 217,569
--------------------------------------- ------------- ------------------ -----------
Non-current liabilities
Investment management fee - (75) -
Zero dividend preference shares (37,301) (34,027) (34,822)
--------------------------------------- ------------- ------------------ -----------
(37,301) (34,102) (34,822)
--------------------------------------- ------------- ------------------ -----------
Net assets 184,972 181,138 182,747
======================================= ============= ================== ===========
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 32,527 35,814 35,814
Capital redemption reserve 664 664 664
Capital reserve 133,450 126,723 128,470
Revenue reserve 1,258 864 726
--------------------------------------- ------------- ------------------ -----------
Shareholders' funds 184,972 181,138 182,747
======================================= ============= ================== ===========
Net asset value per Ordinary
Share - Basic 254.37p 244.10p 246.62p
Net asset value per Ordinary
Share - Fully diluted 251.08p 241.08p 243.54p
======================================= ============= ================== ===========
Net asset value per Restricted
Voting Share - Basic 1.66p 7.01p 6.68p
======================================= ============= ================== ===========
F&C Private Equity Trust plc
Reconciliation of Movements in Shareholders' Funds
Nine months Nine months Year ended
ended 30 September ended 30 September 31 December
2012 2011 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
------------------------------------ -------------------- -------------------- -------------
Opening shareholders' funds 182,747 169,710 169,710
Profit for the period/total
comprehensive income 6,090 12,987 14,596
Dividends paid (Ordinary Shares) (578) (687) (687)
Special dividends paid (Restricted
Shares) (3,287) (872) (872)
------------------------------------ -------------------- -------------------- -------------
Closing shareholders' funds 184,972 181,138 182,747
==================================== ==================== ==================== =============
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. Earnings for the nine months to 30 September 2012 should not
be taken as a guide to the results for the year to 31 December
2012.
3. Investment management fee:
Nine months ended Nine months ended Year ended 31 December
30 September 2012 30 September 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 364 1,093 1,457 348 1,047 1,395 467 1,403 1,870
Incentive fee - - - - 75 75 - - -
364 1,093 1,457 348 1,122 1,470 467 1,403 1,870
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
4. Finance costs:
Nine months ended Nine months ended Year ended 31 December
30 September 2012 30 September 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 218 654 872 151 455 606 208 624 832
Finance costs
attributable
to
ZDP Shares - 2,479 2,479 - 2,253 2,253 - 3,048 3,048
218 3,133 3,351 151 2,708 2,859 208 3,672 3,880
---------------- --------- --------- ------------ --------- --------- --------- --------- --------- ---------
5. The basic return per Ordinary Share is based on a net return
on ordinary activities after taxation of GBP6,175,000 (30 September
2011 - GBP12,307,000; 31 December 2011 - GBP14,134,000) and on
72,282,273 (30 September 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
return on ordinary activities after taxation of GBP6,175,000 (30
September 2011 - GBP12,307,000; 31 December 2011 - GBP14,134,000)
and on 74,241,429 (30 September 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 GBP85,000 (30
September 2011 - profit GBP680,000; 31 December 2011 - profit
GBP462,000) and on 67,084,807 (30 September 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.
6. 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 30 September 2012 was
GBP41,250,000 based on the quoted price of 137.50p 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 cost - 2,479
------------------------- ------------- ---------------------
As at 30 September 2012 30,000,000 37,301
------------------------- ------------- ---------------------
7. The basic net asset value per Ordinary Share is based on net
assets at the period end of GBP183,861,000 (30 September 2011 -
GBP176,438,000; 31 December 2011 - GBP178,264,000) and on
72,282,273 (30 September 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 GBP186,407,000 (30 September 2011 -
GBP178,983,000; 31 December 2011 - GBP180,810,000) and on
74,241,429 (30 September 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 GBP1,111,000 (30 September 2011
- GBP4,700,000; 31 December 2011 - GBP4,483,000) and on 67,084,807
(30 September 2011 - 67,084,807; 31 December 2011 - 67,084,807)
shares, being the number of Restricted Voting Shares in issue at
the period end.
8. The financial information for the nine months ended 30
September 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, have been lodged with the Registrar
of Companies. The quarterly report is available at the Company's
website www.fcpet.co.uk.
For more information, please contact:
Hamish Mair (Investment Manager) 0131 718 1184
hamish.mair@fandc.com
Gordon Hay Smith (Company Secretary) 0131 718 1018
gordon.haysmith@fandc.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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