Interim Results

Pantheon Intl Participations PLC 16 March 2001 For Immediate Release 16 March 2001 PANTHEON INTERNATIONAL PARTICIPATIONS ANNOUNCES INTERIM RESULTS The Board of Pantheon International Participations PLC (PIP) today announces the unaudited results for the six months to 31 December 2000. For further information, please contact: Rhoddy Swire, Director Pantheon International Participations PLC 020 7484 6200 Robin Hepburn/Sorrel Dunger Golin/Harris Ludgate 020 7324 8888 More.... CHAIRMAN'S STATEMENT (in full) Results and Valuation I am pleased to report that the Company's fully diluted Net Asset Value (NAV) per share increased by 8.9% to 653.41p in the six months to 31 December 2000 (30 June 2000: 599.9p). Following the major reorganisation of its share capital in May 2000, the Company's capital structure now comprises Participating Loan Notes (PLNs) as well as ordinary shares and warrants. The Adjusted Redemption Value of the PLNs stood at 643.57p at 31 December 2000, reflecting the small discount to asset value on redemption. During the period under review, PIP issued £21.3 million of PLNs to an institutional fund manager as part of the secondary purchase of a portfolio of private equity funds from that institution. The Company's valuation policy for private equity funds is to base the valuation on the latest accounts produced by the fund managers. In the case of the valuation as at 31 December 2000 the majority of these accounts are dated 30 September 2000. Private equity funds may contain a proportion of quoted shares from time to time, for example where the underlying company investments have been taken public but the holdings have not yet been sold. The Manager has reviewed the quoted market holdings at the date of the latest fund accounts and has considered the value of those holdings at 31 December 2000. As there has been a fall in the value of these holdings, in accordance with normal practice the Directors have made appropriate adjustment to reflect this. Despite the turbulence experienced by quoted markets worldwide during the period under review, the effect of the substantial decline in technology stock valuations was mitigated by the broad diversification of the Company's investment portfolio. The net asset value of the Company's shares fell by less than 2% during the final quarter compared with a 32% fall in the NASDAQ index during the same period. Against this background, the Company's performance further demonstrates the benefits of the fund-of-funds approach and the resultant extensive diversification of the underlying portfolio, both within the technology sector itself and across a broad range of non-technology industry sectors. Activity in the Period Substantial worldwide declines in the value of quoted technology stocks in the half year to 31 December 2000 were generally reflected by a decrease in the number of flotations and, in the private equity markets, by a slowing down in both the pace of fund raising and the flow of realised proceeds to investors. However, the Company received cash proceeds totalling £38.7 million from investments during the period, an increase of 67% over the half year to December 1999, reflecting the ability of its selected managers to deliver liquidity even in a difficult climate. Among the funds making significant distributions to the Company during the period were BC European Capital V, a later-stage pan-European fund, and Apax UK VI, a balanced-stage fund, each of which made cash and stock distributions totalling more than £4.2 million. Distributions from Pantheon USA II totalled more than £3.5 million. More.... The level of increase in distributions during the period was mirrored in the Company's investment activity: commitments to new funds totalled £48.7 million, 67% up on the half year to 31 December 1999. The vast majority of new commitments are for a mix of venture and later-stage vehicles investing either in the USA or regionally across Western Europe, all with experienced managers. The new funds included, in Europe, Advent Private Equity Partners III and CVC European Equity Partners III and, in the USA, Battery Ventures VI, InterWest Partners VIII and Menlo Ventures IX. Venture-stage funds predominate among the US commitments, reflecting the Manager's opinion that such funds are well placed to capitalise on the lower entry valuations now prevailing. Notwithstanding levels of distributions and investments during the period, the geographic spread of the Company's portfolio by value remains substantially unaltered from 30 June 2000, save for an increase from 20% to 25% in assets in the United Kingdom. US investments, as befits the largest and most mature private equity market, constitute the majority of the portfolio at 56% (30 June 2000: 59%). As a result of the expanded new fund investment programme, the Company's outstanding commitments stood at £105 million at 31 December 2000. In addition to new fund commitments, the Company's purchases of secondary interests in the half year totalled £28.3 million. The principal secondary acquisition during the six months involved the purchase of three portfolios of interests in 26 US and European private equity funds with a large underlying quoted element; this transaction was substantially completed for £24 million at 31 December 2000, the majority of the consideration having been satisfied by the issue of further PLNs. Outlook Despite continuing public market volatility and the downturn in the US economy, I am optimistic with regard to performance prospects for private equity. The correction in technology, media and telecoms (TMT) values in the public markets represents a healthy readjustment of expectations following a period of irrational exuberance. The basic technology paradigm and the forces driving restructuring still apply and should ensure a continuing flow of investment opportunities. While the markets for flotations are expected to remain unreceptive in the short term, making liquidity harder to achieve, venture and private equity funds have historically sold more companies to trade purchasers than they have taken public. I have great confidence in the professionalism of the Company's underlying fund managers, each of which is appropriately motivated through carried interest to deliver value. Global venture and private equity fund raising is not expected to continue at the levels seen in recent years, not least because the trend for groups to return to the market sooner than expected and with increased targets is unlikely to persist in the current exit environment. Availability of capital for new fund investments is likely to be restricted in comparison with the recent past since some investing institutions, particularly in the US, are currently at, or close to, their maximum alternative asset allocations. Managers with capital currently in hand for investment are therefore in a position to benefit both from more realistic entry prices and a less competitive environment - an encouraging prospect for the Company. Meanwhile, secondaries are gaining wider credibility both with vendors, as a route to liquidity and a tool for asset reallocation, and with investors, as a means of enhancing portfolio diversification. Thanks to a proportional co-investment agreement with the Pantheon Global Secondaries Fund, the Company is in a strong position to benefit from the Manager's deal flow and expertise in this arena. More.... Warrants I remind warrant holders that the outstanding warrants expire during October 2001 and accordingly must be sold before or exercised at that time. I will be writing to warrant holders again in September but in the meantime would recommend that they take steps to locate their share certificates and take appropriate advice. Conclusion Your Company has shown during its 13-year life that it can benefit from the expertise of the private equity industry on a global basis without the volatility normally associated with the sector. The flexibility conferred by the restructuring in May allows the Company to increase its investments on behalf of shareholders without the cash drag to which its performance was subject in the past. More.... PANTHEON INTERNATIONAL PARTICIPATIONS PLC Summarised Statement Of Total Return of the Company (unaudited) (incorporating the revenue account*): Six months to 31 December 2000 1999 Revenue Capital Total Revenue Capital Total £'000s £'000s £'000s £'000s £'000s £'000s -------- -------- ------- --------- -------- -------- Gains on investments - 17,948 17,948 - 19,375 19,375 Currency gains/(losses) on capital items - 242 242 - (258) (258) Income 913 - 913 2,550 - 2,550 Investment management fee (1,358) - (1,358) (1,107) - (1,107) Other expenses (989) (989) (502) (502) ------- -------- ------- ------- -------- ------- Return on ordinary activities before financing (1,434) 18,190 16,756 941 19,117 20,058 costs and tax Interest payable (121) - (121) - - - Revaluation of participating (5,084) (5,084) loan notes -------- --------- --------- -------- -------- ------- Return on ordinary activities (1,555) 13,106 11,551 941 19,117 20,058 before tax Tax on ordinary activities (270) (270) ---------- --------- -------- ------- --------- ------- Return on ordinary activities after tax (1,555) 13,106 11,551 671 19,117 19,788 ======= ====== ====== ==== ====== ====== Return per ordinary share - Basic** (8.74p) 73.69p 64.95p 1.98p 56.33p 58.31p - Diluted + 65.69p 57.90p 1.90p 54.27p 56.17p * The revenue column of this statement is the profit and loss account of the Company. ** Interest is payable to PLN holders in an amount equal to the net dividend paid on the Ordinary shares. The basic return per Ordinary share does not reflect the effect of interest which would be payable to PLN holders arising from the declaration of a dividend payable in respect of the Ordinary shares. + In order to comply with Financial Reporting Standard No.14: Earnings per Share, the returns per share which are not dilutive have not been shown. All revenue and capital items in the above statement derive from continuing activities PANTHEON INTERNATIONAL PARTICIPATIONS PLC Summarised Balance Sheet of the Company (unaudited) As at 31 As at 30 As at 31 Dec 2000 June 2000 Dec 1999 £'000s £'000s £'000s Investments 194,822 150,049 152,191 Investment in subsidiary undertaking 1 1 - Net current assets 5,485 11,277 13,396 ----------- ---------- --------- Total assets less current liabilities 200,308 161,327 165,587 ----------- ----------- ----------- Creditors: amounts falling due after one year Participating loan notes 63,199 36,836 - Capital and reserves 137,109 124,491 165,587 ----------- ----------- ----------- Amount attributable to shareholders and participating loan note holders 200,308 161,32 165,587 ======= ======= ======= Total net assets for the purposes of calculating the net assets per ordinary share**** 137,109 124,491 164,916 ----------- ----------- ----------- Net asset value per ordinary share**** Basic 760.4p 702.7p 485.9p Fully diluted* 653.4p 599.9p 454.4p Adjusted redemption value per participating loan note 643.6p 591.8p - Number of ordinary shares in issue 18,031,567 17,715,805 33,940,276 Number or warrants in issue ** 4,811,912 5,238,632 5,238,632 Number of participating loan notes in issue*** 9,820,099 6,224,471 - * The fully diluted net asset values per ordinary share assume that all existing warrants are exercised at a subscription price of 250p. ** On 22 November 2000, 426,720 warrants were exercised at a price of 250p per share. As a result of the reorganisation of the capital structure, for every 100 warrants, a warrant holder is entitled to subscribe for 74 Ordinary shares and 26 PLNs. At 31 December 2000 the PLN entitlement resulting from the exercise of warrants on 22 November 2000 had yet to be allotted and issued. *** On 10 August 2000 3,595,628 participating loan notes were issued at a price of 591.8p, being the adjusted redemption value as at 30 June 2000. **** The figures for total net assets for the purpose of calculating the net asset value per Ordinary share as at 31 December 2000 are stated including the current period deficit. The comparative figures as at 30 June 2000 are stated including the current period revenue and those at 31 December 1999 are stated excluding current period revenue. More... PANTHEON INTERNATIONAL PARTICIPATIONS PLC Summarised Statement of Cashflow (unaudited) For the 6 months For the 6 months to 31 December 2000 to 31 December 1999 £'000s £'000s Net cash (outflow)/inflow from operating activities (3,241) 1,855 ---------- --------- Servicing of finance Payment of participating loan note interest (158) - -------- -------- Net cash outflow from servicing of finance (158) - -------- -------- Tax recovered 23 - -------- -------- Capital expenditure and financial investment Purchases of investments (97,405) (79,186) Sales of investments 76,903 81,370 Realised currency gains/(losses) on settlement 72 (25) ----------- ---------- Net cash (outflow)/inflow from capital expenditure and financial investment (20,430) 2,159 ----------- ---------- Equity dividends paid (354) (679) ----------- ---------- Financing Proceeds from issue of participating loan notes 21,279 - Proceeds of warrant conversion 1,067 10 ---------- --------- Net cash inflow from financing 22,346 10 ---------- --------- (Decrease)/Increase in cash (1,814) 3,345 ======= ======= Signed on behalf of the Board L.G. Stopford Sackville Chairman 15 March 2000 - Ends - NOTES TO EDITORS PIP * Pantheon International Participations ('PIP') is a £200 million investment trust, managed by Pantheon Ventures Ltd., which uses an international fund of funds approach to private equity investment. * PIP has investments in over 140 private equity funds whose portfolios contain investments in over 2,100 companies. * The Company is the only independent, private equity capital fund of funds investor quoted on the London Stock Exchange. PIP enables individuals as well as institutions to gain access to a substantial portfolio of unquoted companies in the USA, UK, Continental Europe and Asia, within funds managed by experienced private equity managers. * Within its stated primary investment objective, the Company invests in private equity funds both as secondary interests and by subscribing to new funds. As an adjunct to this activity, the Company may occasionally acquire direct holdings in unquoted companies usually where a vendor is seeking to sell a combined portfolio of funds and direct holdings. PIP's investment policy also extends to investing directly in companies where there is a private equity manager well known to the Company investing on the same terms. Pantheon Ventures Limited * Pantheon Ventures Ltd. has been active in the private equity sector since 1982 and currently manages over £3.3 billion, invested in over 450 private equity funds in over 30 countries.

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