1st Quarter Results

RNS Number : 4160M
F&C Private Equity Trust PLC
24 May 2010
 



To: Stock Exchange

For immediate release:


24 May 2010

 

F&C Private Equity Trust plc

Quarterly results for the three months to 31 March 2010
 

 

·      Ordinary share price total return of 27.6 per cent

·      Fourth consecutive quarterly increase in the ordinary share NAV, up 1.7 per cent

·      Realisation of Entec, returns £3.0m, at a 2.0x multiple and 30% IRR

·      Diverse new investments across Europe and US

·      Scope for new investments and commitments

 

Manager's Review

 

Introduction

 

The valuation of the ordinary share pool at 31 March 2010 was £152.1 million, giving a fully diluted NAV per share of 208.3p, an increase over the quarter of 1.7 per cent.  The net assets of the restricted voting shares were £5.4m giving an NAV per share of 8.0p, an increase over the quarter of 6.3 per cent. The ordinary share pool had net cash of £7.6m and outstanding undrawn commitments at the end of March of £111m. The Company's revolving credit facility of £40m was completely undrawn.

 

New Investments

 

No new commitments were made to private equity funds or to co-investments during the quarter. There was an increase in new investment activity by the funds in the portfolio and a limited number of refinancings of certain co-investments.  Over the quarter total drawdowns amounted to £9.4m.  This was nearly double the quarterly run rate during 2009.  There has been an observable improvement in confidence and this has resulted in a number of new deals being completed.  The new investments covered a typically wide range of mid market companies.  It is worth highlighting the more notable ones.  £1.1m was drawn by August Equity II for investment in Active Assistance, a company which provides a national live-in care service for adults and children with spinal cord injuries and neurological conditions; this builds on August Equity's substantial expertise in the homecare market. TDR Capital II called £0.6m for VPS, a provider of products and services to protect vacated properties in Europe.  Piper Private Equity IV called £0.5m for investment in Weird Fish, a leading UK wholesaler of outdoor clothing.  Primary Capital III invested £0.5m in AMTECH Group, a producer of software and data services for the mechanical and electrical building services industry.  Further afield, Accession Mezzanine II has invested £0.4m in Masterlease Polska, one of the largest Polish leasing companies.  In the US our investment partners have also been active, with Camden Strategic Partners IV calling £0.8m for two investments; Patient Safe Solutions, a San Diego based patient safety and clinical quality solutions company, and The Princeton Review, a higher education support service company.  Blue Point Capital Partners invested £0.4m in Atlas Railroad Construction Company, a Pennsylvania based railroad maintenance of way services company.

 

There were also several refinancings of existing investments.  The most significant of these was for our co-investment in 3si (anti-theft systems) where an additional £1.7m has been invested.  This investment has strengthened the company's position with its bank and gives us an excellent chance of making a strong return on this investment in due course.  We also invested £0.8m in another Stirling Square led investment, Whittan (metal lockers and pallet racking).  This was also used to reduce bank debt and give the company more room for manoeuvre.  There were also refinancings for Rollover, the hotdog vending company led by Piper (£0.3m) and for Delsey, the luggage company led by Argan (£0.1m).

 

Realisations

 

Total distributions in the quarter were £4.4m.  The major realisation in the portfolio was the sale of Entec (environmental consultancy) to Amec plc.  This was anticipated in last quarter's valuation and had minimal impact on this quarter's valuation.  F&C PET received £2.3m from the direct investment and £0.7m from the position held through the fund, making a total return of 2.0x and an IRR of 30 per cent.  There is also the potential for an additional earn-out component which could boost the return slightly.  This is an excellent result for the lead managers, Growth Capital Partners, who have a relatively unusual investment style involving the provision of debt as well as equity.  The other inflows during the quarter were minor with the exception of £0.7m received from Stirling Square Capital II as an equalisation amount following the admission of additional partners into their fund.

 

Valuation Changes

 

There were relatively few valuation changes during the quarter reflecting the comprehensive review that most funds conducted at 31 December 2009 and a general reluctance to write up investments too quickly whilst the economic conditions remain uncertain.  The largest individual uplift was of £0.9m for Nursing Agency ICS, which has continued to trade well and has been refinanced again, returning £0.5m of capital immediately after the quarter end. Inflexion have applied a small uplift in valuation multiple.  Other upgrades include an uplift of £0.3m from Candover Investments, £0.3m from Argan Capital and £0.2m from Alto Capital II. Downgrades include several within the venture capital sub sector and some within the global funds section of the portfolio.  The influence of foreign exchange movements was positive, mainly because of the strength of the dollar versus sterling; foreign exchange added £2.5m to the portfolio's value during the quarter.

 

 

Financing

 

There are no issues on financing at present with the Company continuing to achieve a flow of distributions which finances a large part of the commitments to the funds as they are drawn down.  The net outflow this quarter has been £5.0m, which is rather more than was usual during 2009.  This reflects some pick up in investment activity and also the refinancing of some of our co-investments.  The former should feed through to more realisations in due course and the latter are effectively 'one off' events. The Company retains very substantial capacity to meet existing commitments and to make selected new investments during the remainder of the year.

 

Outlook

 

The economic situation globally is clearly much improved from the worst points of last year, but it remains replete with potential problems, most notably the drag factor of very large fiscal deficits.  The current difficulties in the Euro zone have to date had little direct impact on our portfolio; but, if the problems of Greece, where we have no investments, spread to Spain, where we have approximately 5% exposure, there could be pressures, although many of the problem companies in our Spanish funds have already been written down.  Closer to home, the improved confidence levels of many UK based companies could be tested by the currently fragile economic recovery and the as yet unclear long term implications of the new coalition government.  The banking situation appears to have improved slightly, with those funds with good banking relationships and with modest appetites for debt, being able to implement small deals.  Our positioning in the mid-market has ensured that a reasonable level of portfolio activity has been maintained.  The current annual meeting season is indicating some improvement from the extremely quiet conditions of 2009, with a number of funds examining an improving pipeline of deals.  Once private equity funds consider that they are definitely investing on the upslope of recovery investment activity will improve.  The common refrain in 2009 was that vendors' price expectations were too high; there are some signs of more reasonable pricing returning.  In the meantime, our investment partners continue to labour with management teams to build value for the long term.

 

Hamish Mair

 

 

 

For more information, please contact:

 

 

Hamish Mair

0131 718 1184

Martin Cassels

0131 718 1095

hamish.mair@fandc.com  / martin.cassels@fandc.com



 



F&C PRIVATE EQUITY TRUST PLC

 

Consolidated Statement of Comprehensive Income for the

three months ended 31 March 2010

 

 


Unaudited

 


Revenue

£'000

Capital

£'000

Total

£'000

 

Capital gains on investments




Gains on investments held at fair value

-

3,526

3,526

Currency gains

-

92

92


-

3,618

3,618

Revenue




Investment income

518

-

518

Other income

20

-

20

Total income

538

3,618

4,156





Expenditure




Investment management fee

(105)

(315)

(420)

Other expenses

(118)

-

(118)

Total expenditure

(223)

(315)

(538)





Profit before finance costs and taxation

315

3,303

3,618





Finance costs

(10)

(672)

(682)





Profit before taxation

305

2,631

2,936





Taxation

(88)

88

-





Total comprehensive income

217

2,719

2,936





Return per ordinary share - Basic

0.30p

3.31p

3.61p





Return per ordinary share - Fully diluted

0.29p

3.22p

3.51p





Return per restricted voting share - Basic

0.00p

0.48p

0.48p

 

 



 

 

F&C PRIVATE EQUITY TRUST PLC

 

Consolidated Statement of Comprehensive Income for the

three months ended 31 March 2009

 

 

 


Unaudited

 


Revenue

£'000

Capital

£'000

Total

£'000

 

Capital (losses)/gains on investments




Losses on investments held at fair value

-

(12,041)

(12,041)

Currency gains

-

1,635

1,635


-

(10,406)

(10,406)

Revenue




Investment income

512

-

512

Other income

11

-

11

Total income

523

(10,406)

(9,883)





Expenditure




Investment management fee

(87)

(259)

(346)

Other expenses

(153)

-

(153)

Total expenditure

(240)

(259)

(499)





Profit/(loss) before finance costs and taxation

283

(10,665)

10,382





Finance costs

(76)

(229)

(305)





Profit/(loss) before taxation

207

(10,894)

(10,687)





Taxation

(60)

60

-





Total comprehensive income

147

(10,834)

(10,687)





Return/(loss) per ordinary share - Basic

0.20p

(15.19)p

(14.99)p





Return/(loss) per ordinary share - Fully diluted

0.20p

(14.79)p

(14.59)p





Return/(loss) per restricted voting share - Basic

0.00p

0.21p

0.21p

 



 

F&C PRIVATE EQUITY TRUST PLC

 

Consolidated Statement of Comprehensive Income for the

year ended 31 December 2009

 

 


Audited

 


Revenue

£'000

Capital

£'000

Total

£'000

 

Capital (losses)/gains on investments




Losses on investments held at fair value

-

(12,896)

(12,896)

Currency gains

-

3,767

3,767


-

(9,129)

(9,129)

Revenue




Investment income

1,813

-

1,813

Other income

42

-

42

Total income

1,855

(9,129)

(7,274)





Expenditure




Investment management fee

(356)

(1,067)

(1,423)

Other expenses

(720)

-

(720)

Total expenditure

(1,076)

(1,067)

(2,143)





Profit/(loss) before finance costs and taxation

779

(10,196)

(9,417)





Finance costs

(195)

(709)

(904)





Profit/(loss) before taxation

584

(10,905)

(10,321)





Taxation

(164)

164

-





Total comprehensive income

420

(10,741)

(10,321)





Return/(loss) per ordinary share - Basic

0.58p

(14.89)p

(14.31)p





Return/(loss) per ordinary share - Fully diluted

0.56p

(14.49)p

(13.93)p





Return/(loss) per restricted voting share - Basic

0.00p

0.03p

0.03p



 

 

F&C PRIVATE EQUITY TRUST PLC

 

Balance Sheets

 

 

 


As at 31 March 2010

As at 31 March 2009

As at 31 December 2009


(unaudited)

(unaudited)

(audited)


£'000

£'000

 £'000

Non-current assets




Investments at fair value through profit or loss

179,585

185,119

171,011


179,585

185,119

171,011





Current assets




Other receivables

152

649

157

Cash and cash equivalents

8,454

3,061

13,509


8,606

3,710

13,666





Current liabilities




Other payables

(1,021)

(33,945)

(1,106)

Net current assets/(liabilities)

7,585

(30,325)

12,560

Total assets less current liabilities

187,170

154,884

183,571

Non-current liabilities




Zero dividend preference shares

(29,655)

-

(28,992)

Net assets

157,515

154,884

154,579





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

37,357

37,692

37,537

Capital redemption reserve

664

664

664

Capital reserve

101,533

98,721

98,814

Revenue reserve

888

734

671

Shareholders' funds

157,515

154,884

154,579





Net asset value per ordinary share - Basic

210.45p

206.17p

206.84p

Net asset value per ordinary share - Fully diluted

 

208.33p

 

204.15p

 

204.81p

Net asset value per restricted voting share - Basic

 

8.04p

 

8.74p

 

7.56p

 



F&C PRIVATE EQUITY TRUST PLC

           

Reconciliation of Movement in Shareholders' Funds

 

 

 

 

 

Three months ended 31 March 2010

Three months ended 31 March 2009

Year ended

31 December 2009

 

(unaudited)

(unaudited)

(audited)

 

£'000

£'000

£'000

Opening shareholders' funds

154,579

165,571

165,571

Total comprehensive income

2,396

(10,687)

(10,321)

Dividends paid

-

-

(336)

Special dividends paid

-

-

(335)

Closing shareholders' funds

157,515

154,884

154,579

 

 


 

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 Company for the year ended 31 December 2009. 

 

2.   These are not full statutory accounts in terms of Section 434 of the Companies Act 2006.  The full audited accounts for the year to 31 December 2009, which were unqualified, have been lodged with the Registrar of Companies.  The quarterly report will be available on the Company's website.

 

3.   Returns per Restricted Voting share are based on the average number of shares in issue during the period of 67,084,807.

 

Returns per Ordinary share are based on the following average number of shares in issue during the period:-

Basic                72,282,273

Fully diluted       74,241,429

 

Basic net asset value per Restricted Voting share is based on 67,084,807 shares in issue at the end of the period.

 

Basic net asset value per Ordinary share is based on 72,282,273 shares in issue at the end of the period.

Fully diluted net asset value per Ordinary share is based on 74,241,429 shares in issue at the end of the period.


This information is provided by RNS
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