TIDMPIN
RNS Number : 2003R
Pantheon International PLC
27 February 2019
PANTHEON INTERNATIONAL PLC (the "Company" or "PIP")
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHSED 30 NOVEMBER
2018
The full Half-Yearly Financial Report can be accessed via the
Company's website at www.piplc.com or by contacting the Company
Secretary by telephone on +44 (0)1392 477500.
Pantheon International Plc (the "Company" or "PIP")
Pantheon International Plc, an investment trust that provides
access to a global and diversified portfolio of private equity,
today publishes its Interim Report for the half year ended 30
November 2018.
PIP's objective is to generate capital gains which outperform
the equity returns of broader public markets over the long term.
PIP had a busy half year during which it capitalised on its active
deal pipeline and its portfolio delivered a strong performance.
Annualised performance as at 30 November 2018
1 yr 3 yrs 5 yrs 10y yrs Since inception
Nav per share 19.1% 18.2% 15.3% 8.8% 11.9%
Ordinary share price 9.7% 16.5% 14.8% 20.1% 11.5%
FTSE All Share, TR -1.5% 7.0% 5.3% 9.9% 7.7%
MSCI World TR (Sterling) 6.9% 15.3% 12.8% 13.6% 8.0%
Share price outperformance
Versus FTSE All Share,
TR +11.2% +9.5% +9.5% +10.2% +3.8%
Versus MSCI World
TR (Sterling) +2.8% +1.2% +2.0% +6.5% +3.5%
HIGHLIGHTS - SIX MONTHSED 30 NOVEMBER 2018
Performance update
-- NAV per share grew by 10.7% to 2,674.3p.
-- Net assets at 30 November 2018 increased to GBP1,447m (May 2018: GBP1,307m).
-- The ordinary share price increased from 2,010.0p to 2,050.0p,
an increase of 2% however the discount widened from 17% to 23%,
reflecting a sector-wide trend.
Portfolio update
-- Assets in the portfolio generated underlying (pre-FX) returns of 8.9%.
-- Distributions received in the six months to 30 November 2018
were GBP134m, equivalent on an annualised basis to 23% of the
opening attributable portfolio. After funding GBP55m of calls, net
cash flow from the portfolio totalled GBP79m.
-- GBP203m was committed to 37 new investments during the half
year of which GBP118m was funded at the time of purchase.
Financial position update
-- New four-year GBP175m multi-currency credit facility agreed
in June to replace facility that was due to expire in November
2018; the facility remains undrawn.
-- Undrawn commitment cover comfortable at 3.6x.
Commenting on PIP's performance for the half year, Sir Laurie
Magnus, Chairman, said:
"PIP has made good progress during the first half of its
financial year. Our performance was helped by the strong flow of
distributions from exits. These have been used by our Manager to
replenish the portfolio with a range of compelling, carefully
selected new investments. The Board is confident, in view of PIP's
strong balance sheet and liquidity, that it is well placed both to
take advantage of opportunities and to withstand possible headwinds
that may emerge from the uncertain political and economic
environment that lies ahead."
For more information please contact:
Andrew Lebus or Vicki Bradley
Pantheon
+44 (0)20 3356 1800
A video of Andrew Lebus and Helen Steers, Partners at Pantheon,
discussing PIP's financial half year is available on our website at
www.piplc.com.
CHAIRMAN'S STATEMENT
During the half year, with economic conditions remaining broadly
positive while market conditions were more mixed, PIP continued to
execute its strategy of building a global, diversified portfolio
with a rigorous focus on risk management underpinned by a strong
and prudently-managed balance sheet.
IN SUMMARY
* Strong performance from the underlying portfolio
* We made 37 new investments amounting to GBP203m in
commitments
* GBP134m of distributions received, equivalent on an
annualised basis to 23% of the opening
attributable portfolio.
* PIP continues to benefit from managers who are nimble
and have a proven track record of investing through
multiple economic cycles.
KEY STATISTICS
11% NAV per share increase
2% Ordinary share price increase
GBP1,447m Net asset value
GBP79m Portfolio net cash flow
Performance for six months to 30 November 2018
During the six months to 30 November 2018, PIP's NAV per share
increased by 10.7% to 2,674.3p and net assets increased from
GBP1,307m to GBP1,447m. NAV growth (net of Asset Linked Note
movements) reflected strongly positive net investment gains from
the underlying portfolio (+8.0%) and foreign exchange movements
(+3.6%) offset by expenses and taxes (-0.9%).
PIP's investment strategy emphasises the mid-market through both
buyout and growth stages. The extent of the gains in all areas of
the portfolio was encouraging, relative to broader equity markets,
although the returns within the buyout portfolio were more muted,
held back by a number of company-specific events, especially among
the larger buyouts. Nonetheless, Pantheon's managers continue to
find value in the mid-market where, typically, there is more
favourable pricing compared with other stages of investment, more
levers to pull in order to maximise the growth potential in those
assets and several routes to exit.
The growth assets, representing 19% of the Company's portfolio,
performed very strongly, driven by value-accretive refinancings as
well as IPOs. Special situations (consisting of energy, distressed
and mezzanine funds) and venture performed well during the
period.
In the six months to 30 November 2018, PIP's ordinary share
price increased by 2% but the discount to NAV at which the shares
trade widened to 23%. This trend aligns with a more negative market
sentiment that has widened the discounts at which shares trade as
whole in the listed private equity sector. The discount has since
narrowed to 17% at the time of writing. It is the Board's view that
PIP's share price discount is excessive when considered in the
context of the Company's long-term track record. PIP's dedicated
communications team has strengthened its marketing and investor
relations efforts, emphasising PIP's differentiated approach and
successful track record, in order to stimulate demand for PIP's
shares.
Investment and realisation activity
During the period, PIP continued to benefit from the current
benign exit environment, generating GBP134m of distributions
attributable to shareholders, equivalent on an annualised basis to
23% of the opening attributable portfolio. Sales to corporate
buyers remained the most significant sources of exit realisations.
In the half year, calls from existing commitments to private equity
funds amounted to GBP55m, equivalent on an annualised basis to 25%
of opening undrawn commitments. This resulted in a net cash inflow
from the portfolio of GBP79.2m during the period, before taking
account of new investments. The weighted average fund age was 5.4
years during the six months to 30 November 2018 (31 May 2018: 5.7
years). By maintaining the average vintage maturity profile of the
portfolio between 4 and 6 years, PIP benefits from a strong flow of
distributions from the realisation of more mature assets while
still being exposed to investments in the active value creation
phase. This ensures that PIP can generate sufficient cash from
distributions to remain an active investor over the course of the
cycle.
Institutional support for private equity fundraising has
continued to be strong during the first half of the financial year,
with valuations and the levels of dry powder in the market
remaining high. Despite this worrying risk of exuberance and the
increased competition for deals, the Board believes that Pantheon's
extensive network of relationships and its privileged access to
information have allowed it to continue selectively to source
compelling opportunities. PIP is able to participate in all the
private equity deals that are sourced by Pantheon's large team of
approximately 80 investment professionals worldwide. By investing
directly in primary and secondary deals and in companies through
co-investments, rather than by feeding through Pantheon's
collective investment funds, PIP retains more flexible control over
portfolio construction and is better able to meet its investment
and liquidity objectives.
Investors are becoming increasingly aware of the importance of
investing responsibly and the Board is satisfied that Pantheon's
detailed due diligence process includes an evaluation of how its
managers incorporate sound Environmental, Social and Governance
("ESG") practices both within selected General Partners, as well as
within their underlying portfolio businesses. In addition, the
Board recognises the strong culture and values embedded within
Pantheon's entire workforce and its long history of being a
responsible steward of its clients' capital.
PIP made 37 new investments in the half year, amounting to
GBP203.4m in commitments, of which GBP117.6m was drawn at the time
of purchase. These investments comprised GBP74.6m committed to
seven secondaries, GBP69.6m committed to 10 primaries and GBP59.2m
committed to 20 co-investments. Since the period end, PIP has
committed a further GBP11m to four investments.
PIP has a policy to buy back its own shares opportunistically.
Since the period end, the Company has bought back 25,000 shares for
cancellation.
Financial position and strength
PIP has a strong balance sheet and sources of liquidity which
provide protection in downturns and permits counter-cyclical
investing in most foreseeable scenarios.
The unlisted Asset Linked Note ("ALN"), issued with an opening
value of GBP200m at the end of October 2017, is due to mature in
August 2027. Repayment of the ALN is made only out of cash
distributions that have been received from a reference portfolio of
older assets. PIP has made total ALN repayments of GBP104m since it
was issued and, as at 30 November 2018, the ALN was valued at
GBP115m.
In June, the Company announced that it had agreed a new GBP175m
multi-currency revolving credit facility to replace the GBP150m
loan facility agreement that was due to expire in November 2018.
The facility, denominated as to US$163m and EUR60m, will expire in
June 2022 with an option to extend, by agreement, the maturity date
by another year. As at 30 November 2018, PIP held net available
cash of GBP104m and the undrawn facility was equivalent to GBP181m,
giving the Company total liquid resources of GBP285m. With undrawn
commitments of GBP487m as at 30 November 2018, PIP's undrawn
commitment cover, which measures the sum of PIP's undrawn
commitments against its available financing and the value of its
private equity portfolio, was comfortable at 3.6 times.
Outlook
The global economy performed well during 2018 but geopolitical
challenges and trade tensions show no sign of abating. This,
together with the volatility seen in the public markets towards the
end of 2018, mean that the outlook for 2019 is less positive.
In the event of a downturn, there may be a fall in the valuation
of private equity assets and a slowdown in deal activity as
business vendors and purchasers adjust to the changing environment.
However, this could also be an opportunity for PIP to acquire some
assets more cheaply, particularly if some investors come under
pressure to trim their private equity exposure. As a leader in the
secondaries market, Pantheon is well-positioned to access that deal
flow, which would support PIP's investment strategy of emphasising
younger vintages in its portfolio to boost returns.
The Board believes that PIP is continuing to benefit from
Pantheon's close relationships with managers who have a proven
track record of investing in businesses through multiple cycles,
have a cautious approach to the use of leverage, are able to take
advantage of market dislocations and are able to add value by
identifying exciting investment opportunities capable of
outperformance over the long term. In addition, the Board is
confident that PIP's strong balance sheet, the careful control of
its undrawn commitments ratio and its disciplined, flexible and
selective investment approach, means it is well-positioned to
withstand the uncertainty that we face both at home and abroad
during the year ahead.
SIR LAURIE MAGNUS
Chairman
26 February 2019
Key Performance Indicators
The Board has selected five key performance indicators ("KPIs")
to ensure that PIP is using the most appropriate measures to
monitor progress in delivering against its objective of maximising
capital growth over the long term. A detailed explanation of the
chosen KPIs, along with the historical performance for each, can be
found below.
What it is How we have Link to our Examples of
performed strategic related
objective factors that we
monitor
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Performance
5-Year cumulative Total shareholder 1 year -- PIP's ordinary -- Maximise -- Rate of NAV
total shareholder return 9.7% shares had a shareholder growth relative
return demonstrates closing returns through to listed
99.0% the return to 3 years (cum) price of 2,050.0p long-term capital markets.
investors, after 58.2% as at 30 November growth.
taking into 2018. -- Trading
account 5 years (cum) -- Promote better volumes
share price 99.0% -- The ordinary market liquidity for the Company's
movements share price by building shares.
(capital growth) discount demand for the
and, if to NAV Company's shares. -- Share price
applicable, increased from discount to NAV.
any dividends 17% to 23% during
paid during the the
period. six-month period,
reflecting a
sector-wide
trend.
NAV per share NAV per share 11M to 31 May -- NAV per share -- Investing -- Valuations
growth during reflects the 2017 increased by flexibly provided by
the year attributable 16.9% 259.5p with top-tier private
10.7%* value of a to 2,674.3p private equity equity managers.
shareholder's 12M to 31 May during managers to
holding in PIP. 2018 the year. maximise -- Fluctuations
The provision 10.3% long-term capital in currency
of consistent -- Strong growth. exchange
long-term NAV 6M to 30 Nov 2018 performance rates.
per share growth 10.7% further enhanced -- Containing
is central to by foreign costs and risks -- Ongoing
our strategy. exchange by constructing charges
movements. a relative to NAV
NAV per share well-diversified growth and
growth in any portfolio in a private
period is shown cost-efficient equity peer
net of all costs manner. group.
associated with
running the -- Potential tax
Company. leakage from
investments.
-- Effect of
financing
(cash drag) on
performance.
Portfolio Portfolio 11M to 31 May -- Strong -- Maximise -- Performance
investment investment 2017 performance shareholder relative to
return return measures 16.2% in the underlying returns through listed
8.9%* the total portfolio. long-term capital market and
movement 12M to 31 May growth. private
in the valuation 2018 -- PIP continues equity peer
of the underlying 15.4% to benefit from group.
funds and good earnings
companies 6M to 30 Nov 2018 growth in its -- Valuations
comprising PIP's 8.9% underlying provided by
portfolio portfolio private
expressed and from the equity managers.
as a percentage favourable exit
of the opening environment.
portfolio value,
before taking
foreign exchange
effects and other
expenses into
account.
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
Liquidity
Net portfolio Net portfolio 11M to 31 May -- PIP's -- Maximise -- Relationship
cash flow cash flow is 2017 portfolio long-term between
GBP79m* equal GBP211m generated GBP134m capital growth outstanding
to fund of distributions through ongoing commitments and
distributions 12M to 31 May versus GBP55m portfolio renewal NAV.
less capital 2018 of calls. while controlling
calls GBP194m financing risk. -- Portfolio
to finance -- The Company maturity
investments, 6M to 30 Nov 2018 made new and distribution
and reflects the GBP79m commitments rates by vintage.
Company's of GBP203m during
capacity the year, GBP118m -- Commitment
to finance calls of which was rate to new
from existing drawn investment
investment at the time of opportunities.
commitments the transaction.
and to make new
investments.
PIP manages its
maturity profile
through a mix
of primaries,
secondaries and
co-investments
to ensure that
its portfolio
remains
cash-generative
at the same time
as maximising
the potential
for growth. With
a weighted
average
fund age of
5.4 years,(1)
PIP is achieving
this objective.
Liquidity ratio The liquidity 11M to 31 May -- The current -- Flexibility -- Relative
1.1x* ratio is the 2017 level of in portfolio weighting
ratio 1.0x commitments construction, of primary,
of outstanding is consistent allowing the secondary
commitments to 12M to 31 May with PIP's Company and
available 2018 conservative to flex between co-investments
financing, 1.0x approach to primary, in the portfolio.
with the latter balance secondary
being the sum 6M to 30 Nov 2018 sheet management. and -- Level of
of net available 1.1x co-investments, undrawn
cash, the and vary commitments
unutilised investment relative
portion of any pace, to achieve to gross assets.
loan facilities long-term capital
and 10% of growth. -- Trend in
private distribution
equity assets. rates.
The liquidity
ratio is an -- Ability to
indicator access debt
of the Company's markets
ability to meet on favourable
outstanding terms.
commitments,
even in the event
of a market
downturn.
Under the terms
of its current
loan facilities,
PIP is required
to
maintain a
liquidity
ratio of below
3.0 times.
* Excludes valuation gains and / or cash flows associated with
the Asset Linked Note.
(1) Excludes the portfolio of the reference portfolio
attributable to the Asset Linked Note.
INVESTMENT POLICY
Our investment policy is constructed around maximising capital
growth
The Company's policy is to make unquoted investments, in general
by subscribing for investments in new private equity funds
("Primary Investment") and by buying secondary interests in
existing private equity funds ("Secondary Investment"), and from
time to time to capitalise further on its fund investment
activities by acquiring direct holdings in unquoted companies
("Co-investments"), usually either where a vendor is seeking to
sell a combined portfolio of fund interests and direct holdings or
where there is a private equity manager, well known to the
Company's Manager, investing on substantially the same terms.
The Company may invest in private equity funds which are quoted.
In addition, the Company may from time to time hold quoted
investments in consequence of such investments being distributed to
the Company from its fund investments or in consequence of an
investment in an unquoted company becoming quoted. The Company will
not otherwise normally invest in quoted securities, although it
reserves the right to do so should this be deemed to be in the
interests of the Company.
The Company may invest in any type of financial instrument,
including equity and non-equity shares, debt securities,
subscription and conversion rights, and options in relation to such
shares and securities, and interests in partnerships and limited
partnerships and other forms of collective investment scheme.
Investments in funds and companies may be made either directly or
indirectly, through one or more holdings, special purpose or
investment vehicles in which one or more co-investors may also have
an interest.
The Company employs a policy of over-commitment. This means that
the Company may commit more than its available uninvested assets to
investments in private equity funds on the basis that such
commitments can be met from anticipated future cash flows to the
Company and through the use of borrowings and capital raisings
where necessary.
The Company's policy is to adopt a global investment approach.
The Company's strategy is to mitigate investment risk through
diversification of its underlying portfolio by geography, sector
and investment stage. Since the Company's assets are invested
globally on the basis, primarily, of the merits of individual
investment opportunities, the Company does not adopt maximum or
minimum exposures to specific geographic regions, industry sectors
or the investment stage of underlying investments.
In addition, the Company adopts the following limitations for
the purpose of diversifying investment risk:
-- that no holding in a company will represent more than 15% by
value of the Company's investments at the time of investment
(in accordance with the requirement for approval as an investment
trust which applied to the Company in relation to its accounting
periods ended on and before 30 June 2012);
-- the aggregate of all the amounts invested by the Company in (including
commitments to or in respect of) funds managed by a single management
group may not, in consequence of any such investment being made,
form more than 20% of the aggregate of the most recently determined
gross asset value of the Company and the Company's aggregate
outstanding commitments in respect of investments at the time
such investment is made; and
-- the Company will invest no more than 15% of its total assets
in other UK-listed closed-ended investment funds (including UK-listed
investment trusts).
The Company may invest in funds and other vehicles established
and managed or advised by Pantheon or any Pantheon affiliate. In
determining the diversification of its portfolio and applying the
manager diversification requirement referred to above, the Company
looks through vehicles established and managed or advised by
Pantheon or any Pantheon affiliate.
The Company may enter into derivatives transactions for the
purposes of efficient portfolio management and hedging (for
example, hedging interest rate, currency or market exposures).
Surplus cash of the Company may be invested in fixed interest
securities, bank deposits or other similar securities.
The Company may borrow to make investments and typically uses
its borrowing facilities to manage its cash flows flexibly,
enabling the Company to make investments as and when suitable
opportunities arise and to meet calls in relation to existing
investments without having to retain significant cash balances for
such purposes. Under the Company's articles of association, the
Company's borrowings may not at any time exceed 100% of the
Company's net asset value. Typically, the Company does not expect
its gearing to exceed 30% of gross assets. However, gearing may
exceed this in the event that, for example, the Company's pipeline
of future cash flows alter.
The Company may invest in private equity funds, unquoted
companies or special purpose or investment holding vehicles which
are geared by loan facilities that rank ahead of the Company's
investment. The Company does not adopt restrictions on the extent
to which it is exposed to gearing in funds or companies in which it
invests.
MANAGER'S MARKET REVIEW
Market Review
The private equity market has continued to grow against a more
sombre and complex economic backdrop as investors increasingly
recognise that top quartile private equity funds have historically
generated returns that consistently outperform public markets.
However, as we approached the end of the year, financial markets
started to show signs of weakness and the economic outlook for 2019
appears to be on shakier ground. Pantheon continues to be
selective, ensuring that it is sourcing deal flow from managers who
invest defensively, taking advantage of opportunities created by
market dislocations, and who have the expertise and track record of
managing assets through political and economic uncertainty.
In 2018, the global economy outperformed market expectations.
Growth was strong and more globally synchronised, while inflation
remained largely quiescent on the back of subdued wage growth.
However, the challenge in sustaining this is greater than it was
last year. More than a decade since the Global Financial Crisis
("GFC"), the true costs arising from that period have yet to be
calculated. The long-run effects of global financial imbalances
that have arisen from Central Bank efforts to stem financial
uncertainty, as well as the emergence of populist political
sentiment, are still major uncertainties.
Regional outlook
The USA, which represents the majority of PIP's portfolio,
continues to enjoy a strong domestic economy and US companies are
generally experiencing a period of robust earnings growth.
Furthermore, the tax changes signed into law have encouraged the
repatriation of profits previously held overseas by US corporates
and have helped finance a share buyback boom in the US public
markets. The stimulatory effects of the easier US fiscal policy
will decline going into 2019 and, while robust US corporate
earnings growth and share buybacks will likely continue for some
time, we believe that on balance these trends have been largely
reflected in current stock price levels. While alert to political
and macroeconomic developments in the USA, Pantheon continues to
believe that the more developed and sophisticated US private equity
market will be the most significant source of compelling deal flow
for PIP's portfolio in 2019.
The initial strong economic growth in the Eurozone lost momentum
towards the end of the year, with political turbulence, faced by
several countries during 2018, weighing on sentiment. On 29 March
2019, the UK is expected to leave the European Union and, at the
time of writing, it is still not clear which Brexit scenario will
occur. From a private equity perspective, the UK continues to be a
relatively attractive jurisdiction for investment on a long-term
basis. Nonetheless, Pantheon and its managers are taking a careful
approach to deployment of capital in the UK and it should be noted
that the UK only represents a minority (less than 10%) of PIP's
portfolio. Furthermore, many of the European managers that Pantheon
backs are regional or pan-European managers who are able to deploy
capital in different countries as economic events unfold during an
investment period.
China's economy experienced a slowdown in 2018, and the outlook
for 2019 is for lower GDP growth. However, the growing trade
disharmony between the USA and China is even more concerning and
the implications could be global. This is especially true of the
technology sector, which has been one of the main beneficiaries of
the bull run in global equity valuations over the latter part of
the current financial cycle. Technology also forms a large part of
the investment focus for private equity investors, particularly
those actively investing in venture and growth capital. There are
cross-border technology businesses with exposure to both the US and
Chinese markets and they could be adversely impacted as a result.
Pantheon will add new exposure to these areas where there are clear
indications of growth potential in those assets regardless of the
possible challenges being faced by the sector.
There are indications that, although the wider Asian region
benefited from solid domestic demand, it is likely to be negatively
impacted by US-China tensions, and economic growth may decelerate
from the level projected for 2018.
It appears that Latin America's economic recovery slumped
towards the end of the year and, following a busy year of elections
across the region, the focus is now on how policymakers will
respond to try and reverse this trend.
Asia and Emerging Markets represent a smaller part of PIP's
portfolio, when compared with the USA and Europe, and Pantheon
remains focused on only acquiring assets that it believes will be
additive to PIP's long-term returns.
Recent trends in the private equity market
Global fundraising for private equity continued to surge in 2018
and seems likely to surpass the previous record of US$453bn set in
2017.(1) As with past peaks in the fundraising cycle, the boom was
led by large and mega buyout funds. Although coming from a much
lower base, venture capital and growth equity also recorded strong
growth. The increase in fundraising for mid-sized and small
buyouts, traditionally the focus of Pantheon's private equity
activities, was more modest. The scale and composition of recent
private equity fundraising growth are consistent with prior
episodes of peak market valuations (notably around the immediate
pre-GFC period of 2007-8).
Dry powder within the private equity industry (approximately
US$1.3tn(1) ) is equivalent to nearly three years of current record
fundraising and approximately two years of investment deployment.
If the downturn in public equity market valuations continues in
2019 and this translates into lower private equity valuations, the
fact that the industry has so much spare firepower is encouraging
as it would allow this large pool of capital to be deployed in a
better valuation environment. However, it could also result in the
investment periods for recent funds being extended for longer if a
slowdown in deal volumes occurred in line with a decline in deal
valuations.
The wave of fundraising has been supported by further
significant growth in debt issuance, with record volumes of private
equity-backed loans and high yield issuance in both the USA and
Europe. The experience of the global private equity industry both
before, during and after the GFC should remind us that private
equity capital flows are pro-cyclical. If the downturn in stock
prices observed in public equity markets at the end of 2018 proves
to be a longer term trend, we would expect there to be a similar
impact on the currently high private equity valuations.
Record investment activity in the secondary market
Activity in the private equity secondary market passed a new
milestone during 2018, with $70bn deal volume transacted during the
year(2) , a significant increase over 2017. Historically, sales of
private equity fund positions were often motivated by distressed
sellers. However, the industry has matured, and nowadays secondary
activity is underpinned by the desire to actively manage private
equity portfolios, due to shifts in portfolio strategy. In 2018,
active portfolio management continued to motivate sales of limited
partnership interests, fuelling almost two thirds of secondary deal
volume(3) .
Other parts of the secondary market experienced considerable
growth during the year, with manager-led transactions in particular
seeing a noteworthy increase, growing from $18bn(2) of volume in
2017 to $26bn(2) of volume in 2018. Manager-led transactions have
now become a more established part of the market, encompassing all
types of deals from preferred capital investments in individual
companies (or portfolios of companies) to end-of-fund liquidity
solutions including both fund restructurings and tender offers.
Amidst a fully priced valuation environment, Pantheon remains
disciplined in underwriting prospective secondary opportunities. We
have eschewed broad market exposure by targeting more concentrated
portfolios managed by investment institutions that are well known
to us, where we can identify durable value drivers and where the
underlying business models are less susceptible to a broader
macroeconomic or market decline. We have been avoiding highly
diversified, large portfolios of mature fund investments where
value creation in the underlying portfolio has already been largely
achieved, and where eventual exit values are more susceptible to
broader market volatility. Sectors in which we have transacted
during the half year include energy, for-profit education services
and healthcare services.
Although Pantheon's investment pipeline remains strong, in the
short term the recent period of market volatility may moderate the
record pace of secondary transactions, with an expectation that
some sellers will wait until the publication of 2018 year-end
valuation marks prior to launching sale processes. Nevertheless,
the medium-term prospects for the secondary market remain strong:
the larger funds that have recently been raised in the broader
private equity market are expected to propel the future growth of
trades in fund interests, with manager-led transactions adding
materially to potential transaction volume. As a pioneer in the
secondary market and given the breadth and depth of our existing
manager relationships, Pantheon is well placed to capitalise on the
projected long-term growth in secondary deal volume.
(1) Preqin Global Private Equity Report 2018.
(2) Setter Capital Volume Report FY 2018, January 2019.
(3) Evercore YE 2018 Secondary Market Review, January 2019.
Co-investment market has further growth potential
Since its establishment 37 years ago, Pantheon has focused on
building strong relationships with its managers and has developed a
core of high-quality relationships that have been instrumental in
providing the vast majority of Pantheon's recent co-investment deal
activity. Through our flexible and dedicated platform, we can
support a manager's acquisition of a company with rapid execution
as well as by offering a broad range of capital to each investment
opportunity, which can range from $10m to over $100m. Importantly,
Pantheon can also co-underwrite transactions alongside
managers.
Through active management, Pantheon is able to secure attractive
co-investment opportunities. We are leveraging our relationships to
secure the types of opportunities that will help mitigate the risks
posed by a relatively full pricing environment. As a current
investment theme, we are interested in co-investing in buy and
build opportunities where there is the potential to make
significant add-on acquisitions at lower purchase price multiples,
growing these businesses and extracting synergies. We also have an
appetite for companies with defensive characteristics that are less
correlated to the broader economic cycle. Sectors in which we have
transacted during the half-year period include healthcare services,
financial services and software-as-a service providers.
Notwithstanding the public market volatility at the end of 2018,
the prospects for co-investment market activity remain strong,
buttressed by the significant level of uninvested capital raised in
the broader private equity market; this capital is expected to
support deal activity, even in the event of a significant
dislocation in the credit markets or a global economic
downturn.
Summary and outlook
Global economic growth was good in 2018; however, financial
markets showed signs of weakness as we approached the end of the
year. Our analysis leads us to conclude that, while not certain,
the US-China trade dispute could be the catalyst for a sustained
financial market correction.
Pantheon has adopted a cautious approach to investing in this
environment and is investing in opportunities where we have
conviction in a manager's sector expertise and track record of
helping to create value at the underlying company level, of
assisting companies to navigate potential challenges as a result of
the broader macroeconomic environment, and of delivering robust
returns over several market cycles. At the same time, we are also
backing managers who are nimble, who actively avoid businesses with
excessive leverage and who are prepared and are able to take
advantage of any market dislocations that may arise as we move
through 2019.
PORTFOLIO
Our portfolio is well diversified by investment type, geography,
sector and maturity, resulting in an asset risk profile that we
believe is consistent with a typical balanced portfolio of publicly
listed equities.
Investment type(1)
Flexible approach to portfolio construction increases potential
for outperformance.
INVESTMENT TYPE
Secondary 42%
Co-investments 32%
Primary 26%
-----
Total 100%
-----
Fund region(1)
Weighted towards the more developed private equity markets in
the USA and Europe while Asia and EM provide access to
faster-growing economies.
FUND REGION
USA 56%
Europe 25%
Asia and EM(2) 11%
Global(3) 8%
-----
Total 100%
-----
Fund stage(1)
Well diversified with an emphasis on the mid-market through
buyout and growth stages.
FUND STAGE
Small/mid buyout 35%
Large/mega buyout 27%
Growth 19%
Special Situations 13%
Venture 6%
-----
Total 100%
-----
Fund maturity(1)
Maturity profile is managed to enhance performance while
maintaining a cash-generative portfolio.
of which
FUND MATURITY %
co-investments
2018 10% 5%
2017 10% 6%
2016 14% 8%
2015 19% 10%
2014 6% 2%
2013 5% 1%
2012 5% 0%
2011 4% 0%
2010 3% 0%
2009 2% 0%
2008 9% 0%
2007 9% 0%
pre 2007 4% 0%
(1) Fund investment type, region, stage and maturity charts are
based upon underlying fund valuations and account for 100% of PIP's
overall portfolio value. The charts exclude the portion of the
reference portfolio attributable to the Asset Linked Note.
(2) EM: Emerging Markets.
(3) Global category contains funds with no target allocation to
any particular region equal to or exceeding 60%.
Performance
Overall, PIP's underlying portfolio continues to deliver healthy
returns
Private equity portfolio movements(1)
-- PIP's total portfolio generated investment returns, prior to
foreign exchange effects, of 8.7%.
-- Excluding returns attributable to the Asset Linked Note
("ALN") share of the portfolio, PIP's portfolio generated returns
of 8.9% during the half-year.
Valuation gains by stage(1)
-- PIP experienced strong performance from the growth segment of the portfolio.
-- Venture performed better than in recent years, primarily due
to successful exits by a handful of funds.
-- Buyout performance was impacted by company-specific valuation
events and weak performance in a small number of US
investments.
Valuation gains by region(1)
-- Strong performance in European investments during the half year.
-- USA impacted by valuation declines in a small number of buyout investments
-- Asia and EM underperformance affected by share price
movements in a small number of companies in the region.
(1) Portfolio returns include income, exclude gains and losses
from foreign exchange movements, and look through feeders and
funds-of-funds to the underlying funds. Portfolio returns exclude
returns generated by the portion of the reference portfolio
attributable to the Asset Linked Note.
DISTRIBUTIONS
PIP received approximately 1,000(1) distributions in the half
year, with many reflecting realisations at significant uplifts to
carrying value. PIP's mature portfolio should continue to generate
significant distributions.
Distributions by Region and Stage(2)
PIP received GBP134m in proceeds from the portfolio in the six
months to 30 November 2018 with distributions strongest in the
developed markets, in particular from growth and buyout assets.
DISTRIBUTIONS BY REGION = GBP134M
USA 59%
Europe 30%
Asia and EM 6%
Global 5%
-------
Total 100%
-------
DISTRIBUTIONS BY STAGE = GBP134M
Small/mid Buyout 44%
Large/mega Buyout 23%
Growth 23%
Venture 7%
Special situations 3%
-------
Total 100%
-------
Quarterly Distribution Rates(2)
The annualised distribution rate for the six months to 30
November 2018 was equivalent to 23%(3) of PIP's opening portfolio
value.
Distribution Rates in the half year to 30 November 2018 by
Vintage(2)
With a weighted fund maturity of 5.4 years,(4) PIP's portfolio
should continue to generate sufficient cash to remain an active
investor over the course of the cycle.
(1) This figure looks through feeders and funds-of-funds.
(2) Excludes distributions attributable to the Asset Linked
Note.
(3) Including distributions attributable to the Asset Linked
Note, the annualised distribution rate for the half year was
25%.
(4) Calculation for weighted average age excludes the portion of
the reference portfolio attributable to the Asset Linked Note.
Cost multiples on exit realisations for the half year to 30
November 2018(1)
On a sample of exit realisations, where information was
available, the range of multiples on initial cost achieved by the
underlying fund manager on exit realisations during the period. The
average cost multiple of the sample was 3.4 times, highlighting
value creation over the course of an investment.
Uplifts on exit realisations for the half year to 30 November
2018(1)
On a sample of exit realisations, a range of uplifts were
achieved by the underlying fund manager on exit realisations in the
period. Uplift on full exit compares the value received upon
realisation against the investment's carrying value up to six
months prior to the transaction taking place.
The value-weighted average uplift in the half year to 30
November 2018 was 28%. This average uplift is consistent with our
view that realisations can be significantly incremental to
returns.
(1) see the Glossary of the full Interim Report for sample
calculations and disclosures.
Exit Realisations by Sector and Type
The portfolio benefited from a lot of realisation activity,
particularly in the consumer, information technology
and industrials sectors.
Trade sales represented the most significant source of exit
activity during the half year.
The data represents 100% (for exit realisations by sector) and
62% (for exit realisations by type) of proceeds from exit
realisations received during the period.
EXIT REALISATIONS BY SECTOR
Consumer 44%
Information Technology 31%
Industrials 11%
Healthcare 6%
Financials 4%
Materials 2%
Others 2%
-----
Total 100%
-----
EXIT REALISATIONS BY TYPE
Trade Sale 72%
Public Market Sale 18%
Secondary Buyout 9%
Refinancing and Recapitalisation 1%
Total 100%
-----
CALLS
Calls during the period were used to finance investments in
businesses such as insurance services, healthcare service providers
and application software technology companies.
Calls by Region and Stage(1)
PIP paid GBP55m to finance calls on undrawn commitments during
the half year.
The calls were predominantly made by managers in the buyout and
growth segments, reflecting the focus of PIP's recent primary
commitments.
CALLS BY REGION = GBP55m
USA 52%
Europe 26%
Asia & EM 12%
Global 10%
--------
Total 100%
--------
CALLS BY STAGE = GBP55m
Small/mid Buyout 43%
Growth 25%
Large/mega Buyout 21%
Special situations 10%
Venture 1%
Total 100%
-----
Calls by Sector(1)
A large proportion of calls were for new investments made in the
healthcare, financials and information technology sectors.
CALLS BY SECTOR = GBP55m
Healthcare 25%
Financials 21%
Information Technology 17%
Consumer 13%
Energy 8%
Industrials 7%
Materials 5%
Telecommunication Services 3%
-----
Total 100%
-----
Quarterly Call Rate(1,2)
The annualised call rate for the six months to 30 November 2018
was equivalent to 25% of opening undrawn commitments.
(1) Excludes distributions attributable to the Asset Linked
Note.
(2) Call rate equals calls in the period (annualised) divided by
opening undrawn commitments. All call figures exclude the
acquisition cost of new secondary and co-investment
transactions.
New Commitments
The six months to 30 November 2018 was characterised by a very
active pipeline of deal flow. PIP committed GBP203m across 37 new
investments during the period. Of the total commitments made,
GBP118m was drawn at the time of purchase.
New Commitments by Region
The majority of commitments made in the half year were to the
USA, reflecting PIP's overall focus.
USA 60%
Europe 23%
Global 9%
Asia and EM 8%
-----
Total 100%
-----
New Commitments by Stage
The majority of new commitments made in the half year were to
buyout funds, with particular emphasis on small and mid
buyouts.
Small/mid Buyout 35%
Large/mega Buyout 27%
Growth 25%
Special Situations 12%
Venture 1%
Total 100%
-----
New Commitments by Investment Type
New commitment activity was split across the three investment
types, in line with PIP's flexible investment approach.
Secondary 37%
Primary 34%
Co-Investment 29%
-----
Total 100%
-----
New Commitments by Vintage
Primaries and co-investments, which accounted for more than 60%
of total commitments during the year, offer exposure to current
vintages.
2018 81%
2017 5%
2015 4%
2013 4%
2012 1%
2011 3%
2009 and earlier 2%
Total 100%
-----
Secondary Commitments (1)
Secondary investments allow the Company to access funds at a
stage when the assets are closer to generating cash
distributions.
GBP75m was committed to seven secondary transactions during the
half year.
The private equity secondary market has grown significantly over
the last ten years, both in scale and complexity. PIP continues to
see compelling opportunities derived from Pantheon's global
platform and uses its expertise in executing complex secondary
transactions over which it may have proprietary access. Over the
last six months, in addition to traditional secondary transactions,
PIP has participated in manager-led secondary opportunities with
significant upside potential.
EXAMPLES OF SECONDARY COMMITMENTS MADE DURING THE HALF YEAR:
COMMITMENTS
REGION STAGE DESCRIPTION GBPM % FUNDED(2)
-------- -------------- ----------------------------- ------------ ------------
Portfolio of four US
USA Growth growth funds 19.2 95%
UK mid-market buyout
Europe Small/mid fund 13.2 61%
Secondary acquisition
of a minority interest
in an ophthalmology
USA Small/mid company 13.0 100%
Secondary investment
in a US oil and gas
USA Special sits producer 12.1 100%
Secondary acquisition
of a minority interest
in a US financial services
USA Small/mid company 11.6 100%
Primary Commitments
Investing in primary funds allows PIP to gain exposure to
complementary niche investments as well as to smaller funds that
might not typically be traded on the secondary market. Our focus
remains on investing with high-quality managers who have the proven
ability to drive value at the underlying company level, and
generate strong returns across market cycles. In addition, we
target funds with market-leading specialisms in high-growth sectors
such as healthcare and information technology.
GBP70m was committed to ten primaries during the half year.
EXAMPLES OF PRIMARY COMMITMENTS MADE DURING THE HALF YEAR:
COMMITMENTS
INVESTMENT STAGE DESCRIPTION GBPM
--------------------- ------------ --------------------------- ------------
Mid-market fund focused
ECI 11 Small/Mid on the UK 15.0
North American fund
targeting growth-stage
Growth Fund(3) Growth technology companies 11.0
Baring Asia Private
Equity Fund VII Large/Mega Asian large buyout fund 10.7
EW Healthcare Fund North American healthcare
II Growth specialist growth fund 10.4
HIG Advantage Fund North American mid-market
I Small/Mid buyout fund 10.4
Co-investments
PIP's co-investment programme continues to benefit from
Pantheon's considerable primary investment platform which has
enabled PIP to gain access to proprietary deals. PIP invests
alongside managers who have the sector expertise to source and
acquire attractively priced assets and build value through
operational enhancements, organic growth and buy-and-build
strategies.
GBP59m was committed to 20 co-investments during the half
year.
The information technology, financials and healthcare sectors in
the USA offered compelling investment opportunities.
CO-INVESTMENTS BY GEOGRPAHY
USA 79%
Europe 7%
Asia & EM 8%
Global 6%
Total 100%
---------
CO-INVESTMENTS BY SECTOR
Information Technology 29%
Healthcare 25%
Financials 21%
Consumer 9%
Industrials 8%
Energy 8%
Total 100%
-----
(1) Funds acquired in new secondary transactions are not named
due to non-disclosure agreements.
(2) Funding level does not include deferred payments.
(3) Confidential.
Buyout Analysis(1)
Valuation Multiple(1)
Accounting standards require private equity managers to value
their portfolios at fair value.
PIP's sample-weighted average enterprise value/EBITDA was 11.5
times. The FTSE All Share and MSCI World indices were, on average,
valued at 9.3 times and 11.5 times respectively.
Revenue and EBITDA growth(1)
Weighted average revenue and EBITDA growth for the sample buyout
companies in PIP's portfolio continued to exceed growth rates seen
amongst companies that constitute the MSCI World Index.
The weighted average revenue and EBITDA growth for the sample
buyout companies was +25.0% and 16.6% respectively during the 12
months to 30 June 2018.
Strong top-line performance, disciplined cost control, good
earnings growth, together with an efficient use of capital,
underpin the investment thesis of many private equity managers.
Debt Multiples(1)
Venture, growth and buyout investments have differing leverage
characteristics.
Average debt multiples for small/medium buyout investments,
which represent the majority of PIP's buyout portfolio, are
typically lower than debt levels in the large/mega buyout
segment.
(1) See the Glossary in the full Interim Report for sample
calculations and disclosures.
Undrawn Commitments
PIP's undrawn commitments(1) will enable the Company to
participate in future private equity investments as they arise
Movement in Undrawn Commitments for the Half Year to 30 November
2018(2)
PIP's undrawn commitments to investments increased to GBP487m as
at 30 November 2018 from GBP440m as at 31 May 2018. The Company
paid calls of GBP55m and added GBP86m of undrawn commitments
associated with new investments made in the period. Foreign
exchange effects and fund terminations accounted for the remainder
of the movement.
Undrawn Commitments by Region
The USA and Europe have the largest undrawn commitments,
reflecting the Company's investment emphasis. Commitments to Asia
and other regions provide access to faster-growing economies.
USA 55%
Europe 32%
Asia and EM 9%
Global 4%
Total 100%
-----
Undrawn Commitments by Stage
PIP's undrawn commitments are diversified by stage, with an
emphasis on small and mid-market buyout managers.
Small/Mid Buyout 40%
Large/Mega Buyout 33%
Special Situations 10%
Growth 16%
Venture 1%
Total 100%
-----
Undrawn Commitments by Vintage
Approximately 25% of PIP's undrawn commitments are in vintage
2012 or older funds, where drawdowns may naturally occur at a
slower pace. The rise in more recent vintages reflects PIP's recent
primary commitment activity.
2018 27%
2017 17%
2016 16%
2015 11%
2014 3%
2013 2%
2012 2%
2009 - 2011 2%
2008 5%
2007 7%
2006 and earlier 8%
Total 100%
-----
(1) Capital committed to funds that to date remains undrawn.
(2) Includes undrawn commitments attributable to the reference
portfolio underlying the Asset Linked Note.
FINANCE AND SHARE BUYBACKS
Efficient balance sheet management supports PIP's investment
strategy
Cash and Available Bank Facility
At 30 November 2018, PIP had net available cash1 balances of
GBP104m. In addition to these cash balances, PIP can also finance
investments out of its multi-currency revolving credit facility
agreement ("Loan Facility") which was renewed in June 2018. The
Loan Facility is due to expire in June 2022 and comprises
facilities of $163m and EUR60m which, using exchange rates at 30
November 2018, amounted to a sterling equivalent of GBP181m.
At 30 November 2018, the Loan Facility remained undrawn.
Asset Linked Note
As part of the share consolidation effected on 31 October 2017,
PIP issued an Asset Linked Note ("ALN") with an initial principal
amount of GBP200m to the noteholder. Repayments under the ALN are
made quarterly in arrears and are linked to the ALN share
(approximately 75%) of the net cash flow from a reference portfolio
which is comprised of interests held by PIP in over 300 of its
oldest private equity funds, substantially 2006 and earlier
vintages. PIP retains the net cash flow relating to the remaining
c.25% of the reference portfolio.
The ALN is unlisted and subordinated to PIP's existing Loan
Facility (and any refinancing), and is not transferable, other than
to an affiliate of the noteholder. The ALN is expected to mature on
31 August 2027, at which point the Company will make the final
repayment under the ALN. PIP has made total repayments of GBP104m
since it was issued and as at 30 November 2018, the ALN was valued
at GBP115m. Please see below for more information on the ALN.
Undrawn Commitment Cover
At 30 November 2018, the Company had GBP285m of available
financing, comprising its net available cash balance and Loan
Facility less the current portion payable under the ALN. The sum of
PIP's available financing and private equity portfolio provides 3.6
times cover relative to undrawn commitments. Generally, when a fund
is past its investment period, which is typically between five and
six years, it cannot make any new investments and only draws
capital to fund follow-on investments into existing portfolio
companies, or to pay expenses. As a result, the rate of capital
calls by these funds tends to slow dramatically. Approximately a
quarter of the Company's undrawn commitments are in fund vintages
that are six years and older.
Share Buybacks
No share buybacks were completed in the six month period to 30
November 2018. Following the half year end, PIP bought back 25,000
ordinary shares at a 26% discount to the NAV per share as at 30
November 2018.
LARGEST 50 MANAGERS BY VALUE AS AT 30 NOVEMBER 2018
% OF PIP'S TOTAL
PRIVATE EQUITY
RANK MANAGER REGION(2) STAGE ASSET VALUE(1)
1 Providence Equity Partners USA Buyout 5.9%
2 Growth Fund(4) USA Growth 3.7%
3 Essex Woodlands USA Growth 3.1%
4 Energy Minerals Group USA Special Situations 2.9%
5 Texas Pacific Group USA Buyout 2.7%
6 Ares Management USA Buyout 2.7%
7 Baring Private Equity Asia Asia & EM Growth 2.6%
8 Warburg Pincus Capital Global Growth 2.3%
9 NMS Management USA Buyout 2.1%
10 Apax Partners SA Europe Buyout 2.1%
11 Venture Fund(4) Europe Venture 2.0%
12 Veritas Capital USA Buyout 1.9%
13 Quantum Energy Partners USA Special Situations 1.9%
14 IK Investment Partners Europe Buyout 1.7%
15 J.C. Flowers & Co USA Buyout 1.6%
16 Sheridan Production Partners USA Special Situations 1.4%
17 Yorktown Partners USA Special Situations 1.4%
18 Calera Capital USA Buyout 1.2%
19 Mid-Europa Partners Europe Buyout 1.2%
20 ABRY Partners USA Buyout 1.2%
21 EQT(2) Asia & EM Buyout 1.1%
22 Gemini Capital Europe Venture 1.1%
23 Lee Equity Partners USA Buyout 1.1%
24 Growth Fund(4) USA Growth 1.1%
25 Hellman & Friedman USA Buyout 1.0%
26 Francisco Partners Management USA Buyout 1.0%
27 IVF Advisors Asia & EM Buyout 1.0%
28 Abris Capital Europe Buyout 0.9%
29 First Reserve Corporation USA Special Situations 0.9%
30 Buyout Fund(4) USA Buyout 0.9%
31 Altor Capital Europe Buyout 0.9%
32 Marguerite Europe Special Situations 0.9%
33 Stone Point Capital USA Buyout 0.9%
34 Searchlight Capital Partners Global Special Situations 0.9%
35 Altas Partners USA Buyout 0.8%
36 Chequers Partenaires Europe Buyout 0.7%
37 Equistone Partners Europe Europe Buyout 0.7%
38 AION Capital Partners Asia & EM Buyout 0.7%
39 CHAMP Private Equity Asia & EM Buyout 0.7%
40 KKR Europe Buyout 0.7%
41 Parthenon Capital USA Buyout 0.7%
42 Advent International Global Buyout 0.7%
43 The Banc Funds Company USA Growth 0.7%
44 ABS Capital USA Growth 0.6%
45 Horizon Capital Europe Buyout 0.6%
46 Summit Partners USA Growth 0.6%
47 Bridgepoint Partners Europe Buyout 0.6%
48 Shamrock Capital Advisors USA Buyout 0.6%
49 TPG Capital Asia Asia & EM Buyout 0.6%
50 The Vistria Group USA Buyout 0.6%
COVERAGE OF PIP's TOTAL PRIVATE EQUITY ASSET VALUE(1) 69.9%
--------------------------------------------------------------------------- ----------------
(1) Percentages look through feeders and funds-of-funds and
excludes the portion of the reference portfolio attributable to the
Asset Linked Note.
(2) Refers to the regional exposure of funds.
(3) The majority of PIP's investments in EQT is held in EQT
Greater China II and a co-investment in Sivantos, a company
headquartered in Singapore.
(4) Confidential.
LARGEST 50 COMPANIES BY VALUE(1)
% OF PIP'S
NET
NUMBER COMPANY COUNTRY SECTOR ASSET VALUE
1 EUSA Pharma(2) UK Healthcare 2.2%
2 Abacus Data Systems(2) USA Information Technology 1.2%
3 Confidential(2) USA Energy 1.2%
4 Confidential(2) USA Healthcare 1.0%
5 StandardAero(2) USA Industrials 1.0%
6 Adyen(3) Netherlands Information Technology 1.0%
7 Confidential(2) USA Healthcare 0.9%
8 LBX Pharmacy(3) China Consumer 0.8%
9 Confidential(2) USA Information Technology 0.8%
10 Confidential(2) USA Financials 0.8%
11 Permian Resources(2) USA Energy 0.8%
12 Orangefield Group(2,3) Netherlands Industrials 0.7%
13 Sivantos(2) Singapore Healthcare 0.7%
14 Confidential(2) France Telecommunication Services 0.7%
15 Kyobo Life Insurance(2) South Korea Financials 0.6%
16 Nexi(2) Italy Information Technology 0.6%
17 Atria Convergence Technologies(2) India Telecommunication Services 0.6%
18 Confidential(2) USA Information Technology 0.6%
19 Salad Signature(2) Belgium Consumer 0.6%
20 GE Capital Services India(2) India Financials 0.6%
21 ALM Media(2) USA Industrials 0.6%
22 ZeniMax USA Information Technology 0.5%
23 National Veterinary Associates USA Consumer 0.5%
24 Apollo Education(2) USA Consumer 0.5%
25 Alliant Insurance(2) USA Financials 0.5%
26 Farfetch(3) UK Consumer 0.5%
27 Vertical Bridge(2) USA Telecommunication Services 0.5%
28 Confidential(2) Luxembourg Consumer 0.5%
29 Arnott(2) USA Consumer 0.5%
30 Capital Vision USA Healthcare 0.4%
31 Coronado Group USA Energy 0.4%
32 NIBC Bank(2,3) Netherlands Financials 0.4%
33 Colisée(2) France Healthcare 0.4%
34 OWP Butendiek Germany Utilities 0.4%
35 Extraction Oil & Gas(2,3) USA Energy 0.4%
36 Ministry Brands(2) USA Information Technology 0.4%
37 Centric(2) USA Consumer 0.4%
38 Engencap(2) Mexico Financials 0.4%
39 Gourmet Food Holdings Australia Consumer 0.4%
40 Confidential(2) Hong Kong Consumer 0.4%
41 RightPoint Consulting(2) USA Industrials 0.4%
42 Mobilitie(2) USA Industrials 0.3%
43 Shawbrook(2) UK Financials 0.3%
44 Affinity Education(2) Australia Consumer 0.3%
45 Profi Rom(2) Romania Consumer 0.3%
46 Cell Care Australia Australia Healthcare 0.3%
47 Tug Hill USA Energy 0.3%
48 Melita(2) Malta Consumer 0.3%
49 Confidential(2) USA Industrials 0.3%
50 Jagged Peak Energy USA Energy 0.3%
COVERAGE OF PIP's PRIVATE EQUITY NET ASSET VALUE 29.5%
---------------------------------------------------------------------------------- -----------
(1) The largest 50 companies table is based upon underlying
company valuations at 30 September 2018 adjusted for known call and
distributions to 30 November 2018, and includes the portion of the
reference portfolio attributable to the Asset Linked Note.
(2) Co-investments/secondary directs.
(3) Listed companies.
Portfolio Concentration as at 30 November 2018
Approximately 70(2) managers and 580 companies(3) account for
80% of PIP's total exposure.(1)
(1) Exposure is equivalent to the sum of the NAV and undrawn
commitments.
(2) Excludes the portion of the portfolio attributable to the
Asset Linked Note.
(3) Includes the portion of the portfolio attributable to the
Asset Linked Note.
INTERIM MANGEMENT REPORT AND RESPONSIBILITY STATEMENT OF THE
DIRECTORS
Interim Management Report
In Respect of the Half-Yearly Financial Report
The important events that have occurred during the period under
review, the key factors influencing the financial statements and
the principal uncertainties for the remaining six months of the
financial year are set out in the Chairman's Statement and the
Manager's Review.
The principal risks facing the Company are substantially
unchanged since the date of the Annual Report for the financial
period ended 31 May 2018 and continue to be as set out in that
report.
Risks faced by the Company include, but are not limited to,
funding of investment commitments and default risk, risks relating
to investment opportunities, financial risk of private equity,
long-term nature of private equity investments, valuation
uncertainty, gearing, foreign currency risk, the unregulated nature
of underlying investments, counterparty risk, taxation, the risks
associated with the engagement of the Manager or other third-party
advisers, Brexit and cybersecurity risks.
Responsibility Statement
Each Director confirms that to the best of their knowledge:
-- The condensed set of financial statements has been prepared
in accordance with FRS 102 and FRS 104 'Interim Financial
Reporting'; and gives a true and fair view of the assets,
liabilities, financial position and return of the Company;
-- This Half-Yearly Financial Report includes a fair review of the information required by:
(a) DTR 4.2.7R of the Disclosure Guidance and Transparency
Rules, being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the set of financial statements; and a description of the
principal risks and uncertainties for the remaining six months of
the year; and
(b) DTR 4.2.8R of the Disclosure Guidance and Transparency
Rules, being related party transactions that have taken place in
the first six months of the current financial year and that have
materially affected the financial position or performance of the
Company during that period; and any changes in the related party
transactions described in the last annual report that could do
so.
This Half-Yearly Financial Report was approved by the Board on
26 February 2019 and was signed on its behalf by Sir Laurie Magnus,
Chairman.
CONDENSED INCOME STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2018
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
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
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
Gains on
investments
at fair value
through
profit or loss** - 149,056 149,056 - 46,220 46,220 - 149,778 149,778
Losses on financial
instruments at fair
value
through profit or
loss - ALN (834) (10,562) (11,396) (236) (1,444) (1,680) (1,083) (10,083) (11,166)
Currency
(losses)/gains
on cash and
borrowings - 4,652 4,652 - (4,416) (4,416) - (1,929) (1,929)
Investment income 9,282 - 9,282 7,804 - 7,804 15,504 - 15,504
Investment management
fees (8,216) - (8,216) (7,568) - (7,568) (15,020) - (15,020)
Other expenses (18) (320) (338) (337) (2,519) (2,856) (296) (2,974) (3,270)
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
RETURN BEFORE
FINANCING
COSTS AND TAXATION 214 142,826 143,040 (337) 37,841 37,504 (895) 134,792 133,897
Interest payable
and similar expenses (1,321) - (1,321) (984) - (984) (1,950) - (1,950)
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
RETURN BEFORE
TAXATION (1,107) 142,826 141,719 (1,321) 37,841 36,520 (2,845) 134,792 131,947
Taxation (Note 4) (1,312) - (1,312) (5,156) - (5,156) (9,170) - (9,170)
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
RETURN FOR THE PERIOD
BEING TOTAL
COMPREHENSIVE
INCOME FOR THE
PERIOD
(Note 9) (2,419) 142,826 140,407 (6,477) 37,841 31,364 (12,015) 134,792 122,777
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
RETURN PER
SHARE BASIC AND
DILUTED
(Note 9) (4.47)p 263.93p 259.46p (10.48)p 61.21p 50.73p (20.72)p 232.48p 211.76p
---------------------- -------- --------- --------- --------- -------- -------- --------- --------- ---------
* The Company does not have any income or expense that is not
included in the return for the period therefore the period is also
the total comprehensive income for the period. The supplementary
revenue and capital columns are prepared under guidance published
in the Statement of Recommended Practice ("SORP") issued by the
Association of Investment Companies ("AIC").
** Includes currency movements on investments.
All revenue and capital items in the above statement relate to
continuing operations.
The total column of the statement represents the Company's
Statement of Total Comprehensive Income prepared in accordance with
Financial Reporting Standards ("FRS").
No operations were acquired or discontinued during the
period.
There were no recognised gains or losses other than those
passing through the Income Statement.
The Notes form part of these financial statements.
CONDENSED STATEMENT OF CHANGES IN EQUITY
(UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2018 CAPITAL
CAPITAL OTHER RESERVE ON
SHARE SHARE REDEMPTION CAPITAL INVESTMENTS REVENUE
CAPITAL PREMIUM RESERVE RESERVE HELD RESERVE* TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------- ---------- ---------- ----------- ----------- ------------ --------- -----------
Movement for
the six months
to 30 November
2018
OPENING EQUITY
SHAREHOLDERS'
FUNDS 36,257 269,535 3,308 572,278 500,079 (74,693) 1,306,764
Return for the
period - - - 82,153 60,673 (2,419) 140,407
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,257 269,535 3,308 654,431 560,752 (77,112) 1,447,171
Movement for
the six months
to 30 November
2017
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 645,011 496,100 (62,678) 1,387,533
Return for the
period - - - 45,067 (7,226) (6,477) 31,364
Ordinary shares
bought back
for cancellation (61) - 61 (1,671) - - (1,671)
Redemption of
redeemable shares
to ALN (91) - 91 (200,000) - - (200,000)
Bonus issue
of deferred
shares to
redeemable shareholders 14,020 (14,020) - - - - -
Conversion of
deferred and
redeemable
shares to ordinary
shares (14,232) - - - - - (14,232)
Ordinary shares
issued following
conversion of
deferred and
redeemable shares
as part of the
share class
consolidation 14,232 - - - - - 14,232
--------------------------
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,324 269,535 3,241 488,407 488,874 (69,155) 1,217,226
--------------------------
Movement for
the year ended
31 May 2018
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 645,011 496,100 (62,678) 1,387,533
Return for the
year - - - 130,813 3,979 (12,015) 122,777
Ordinary shares
bought back
for cancellation (128) - 128 (3,546) - - (3,546)
Redemption of
redeemable shares
to ALN (91) - 91 (200,000) - - (200,000)
Bonus issue
of deferred
shares to
redeemable shareholders 14,020 (14,020) - - - - -
Conversion of
deferred and
redeemable
shares to ordinary
shares (14,232) - - - - - (14,232)
Ordinary shares
issued following
conversion
of deferred
and redeemable
shares as part
of
the share class
consolidation 14,232 - - - - - 14,232
CLOSING EQUITY
SHAREHOLDERS'
FUNDS 36,257 269,535 3,308 572,278 500,079 (74,693) 1,306,764
-------------------------- ---------- ---------- ----------- ----------- ------------ --------- -----------
* Reserves that are distributable by way of dividends. In
addition, the Other capital reserve can be used for share
buybacks.
The Notes form part of these financial statements.
CONDENSED BALANCE SHEET
(UNAUDITED)
AS AT 30 NOVEMBER 2018
30 NOVEMBER 30 NOVEMBER 31 MAY
2018 2017 2018
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ -----------
Fixed assets
Investments at fair value 1,447,542 1,252,502 1,274,737
--------------------------------- ------------ ------------ -----------
Current assets
Debtors 3,324 1,299 3,891
Cash at bank 113,882 112,867 162,292
--------------------------------- ------------ ------------ -----------
117,206 114,166 166,183
--------------------------------- ------------ ------------ -----------
Creditors: amounts falling
due within one year
Other creditors 12,179 11,747 19,046
12,179 11,747 19,046
--------------------------------- ------------ ------------ -----------
NET CURRENT ASSETS 105,027 102,419 147,137
--------------------------------- ------------ ------------ -----------
TOTAL ASSETS LESS CURRENT
LIABILITIES 1,552,569 1,354,921 1,421,874
--------------------------------- ------------ ------------ -----------
Creditors: Amounts falling
due after one year
Asset Linked Note (Note
7) 105,398 137,695 115,110
--------------------------------- ------------ ------------ -----------
105,398 137,695 115,110
--------------------------------- ------------ ------------ -----------
NET ASSETS 1,447,171 1,217,226 1,306,764
--------------------------------- ------------ ------------ -----------
Capital and reserves
Called-up share capital
(Note 8) 36,257 36,324 36,257
Share premium 269,535 269,535 269,535
Capital redemption reserve 3,308 3,241 3,308
Other capital reserve 654,431 488,407 572,278
Capital reserve on investments
held 560,752 488,874 500,079
Revenue reserve (77,112) (69,155) (74,693)
--------------------------------- ------------ ------------ -----------
TOTAL EQUITY SHAREHOLDERS'
FUNDS 1,447,171 1,217,226 1,306,764
--------------------------------- ------------ ------------ -----------
NET ASSET VALUE PER SHARE
- ORDINARY (NOTE 10) 2,674.28p 2,245.21p 2,414.82p
--------------------------------- ------------ ------------ -----------
TOTAL ORDINARY SHARES
IN ISSUE (NOTE 8) 54,114,447 54,214,447 54,114,447
--------------------------------- ------------ ------------ -----------
The Notes form part of these financial statements.
CONDENSED CASH FLOW STATEMENT (UNAUDITED)
FOR THE SIX MONTHS TO 30 NOVEMBER 2018
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- ------------
Cash flow from operating
activities
Investment income
received 7,899 7,409 13,619
Deposit and other
interest received 634 396 830
Investment management
fees paid (8,052) (6,250) (14,969)
Secretarial fees
paid (114) (110) (223)
Depositary fees paid (103) (125) (229)
Other cash payments 753 (2,207) (5,857)
Withholding tax deducted (1,339) (5,235) (10,483)
---------------------------- ----------------- ----------------- ------------
NET CASH OUTFLOW
FROM OPERATING ACTIVITIES (322) (6,122) (17,312)
---------------------------- ----------------- ----------------- ------------
Cash flows from investing
activities
Purchases of investments (180,619) (171,504) (254,426)
Disposals of investments 157,135 188,549 351,335
---------------------------- ----------------- ----------------- ------------
NET CASH (OUTFLOW)/
INFLOW FROM INVESTING
ACTIVITIES (23,484) 17,045 96,909
---------------------------- ----------------- ----------------- ------------
Cash flows from financing
activities
ALN payment (26,829) (58,327) (77,152)
Ordinary shares purchased
for cancellation - (1,666) (3,546)
Loan commitment and
arrangement fees
paid (2,439) (817) (1,577)
NET CASH OUTFLOW
FROM FINANCING ACTIVITIES (29,268) (60,810) (82,275)
---------------------------- ----------------- ----------------- ------------
DECREASE IN CASH
IN THE PERIOD (53,074) (49,887) (2,678)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 162,292 167,252 167,252
FOREIGN EXCHANGE
(LOSSES)/GAINS 4,664 (4,498) (2,282)
CASH AND CASH EQUIVALENTS
AT OF PERIOD 113,882 112,867 162,292
---------------------------- ----------------- ----------------- ------------
The Notes form part of these financial statements.
NOTES TO THE HALF-YEARLY FINANCIAL STATEMENTS (UNAUDITED)
1. Financial Information
The Company applies FRS 102 and the AIC's Statement of
Recommended Practice (issued in November 2014 and updated in
February 2018) for its financial year ending 31 May 2018 in its
financial statements. The financial statements for the six months
to 30 November 2018 have therefore been prepared in accordance with
FRS 104 'Interim Financial Reporting'. The financial statements
have been prepared on the same basis as the accounting policies set
out in the statutory accounts for the year to 31 May 2018. They
have also been prepared on the assumption that approval as an
investment trust will continue to be granted.
The financial information contained in this Interim Financial
Report and the comparative figures for the financial year to 31 May
2018 are not the Company's statutory accounts for the financial
year, but are based on those accounts. The financial information
for the six months to 30 November 2018 and 30 November 2017 are not
for a financial year and have not been audited but have been
reviewed by the Company's auditors and their report can be found
below. The statutory accounts for the financial year to 31 May 2018
have been delivered to the Registrar of Companies. The report of
the auditors was (i) unqualified, (ii) did not include a reference
to any matters which the auditors drew attention by way of emphasis
without qualifying the report, and (iii) did not contain statements
under section 498 (2) and (3) of the Companies Act 2006.
2. Going Concern
The Company's business activities, together with the factors
likely to affect its future development, performance and position,
including its financial position, are set out in the Chairman's
Statement and Manager's Market Review above.
At each Board meeting, the Directors review the Company's latest
management accounts and other financial information. Its
commitments to private equity investments are reviewed, together
with its financial resources, including cash held and the Company's
borrowing capability. One-year cash flow scenarios are also
presented to each meeting and discussed.
After due consideration of the balance sheet and activities of
the Company and the Company's assets, liabilities, commitments and
financial resources, the Directors have concluded that the Company
has adequate resources to continue in operation for the foreseeable
future and for a period of at least 12 months from the date of this
report. For this reason, they consider it appropriate to continue
to adopt the going concern basis in preparing the financial
statements.
3. Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business.
4. Tax on Ordinary Activities
The tax charge for the six months to 30 November 2018 is
GBP1,312,000 (six months to 30 November 2017:
GBP5,156,000; year to 31 May 2018: GBP9,170,000). The tax charge
wholly comprises irrecoverable withholding tax suffered. Investment
gains are exempt from capital gains tax owing to the Company's
status as an investment trust.
5. Transactions with the Manager and Related Parties
During the period, services with a total value of GBP8,490,000,
being GBP8,216,000 directly from Pantheon Ventures (UK) LLP and
GBP274,000 via Pantheon managed fund investments (30 November 2017:
GBP7,828,000; GBP7,568,000; and GBP260,000; year to 31 May 2018:
GBP15,510,000, GBP15,020,000 and GBP490,000 respectively). At 30
November 2018, the amount due to Pantheon Ventures (UK) LLP in
management fees and performance fees disclosed under creditors was
GBP1,448,000 and GBPnil respectively.
The existence of an Independent Board of Directors demonstrates
that the Company is free to pursue its own financial and operating
policies and therefore, under the AIC SORP, the Manager is not
considered to be a related party.
The Company's related parties are its Directors. Fees paid to
the Company's Board for the six months to 30 November 2018 totalled
GBP132,000 (six months to 30 November 2017: GBP132,000; year to 31
May 2018: GBP264,000).
There are no other identifiable related parties at the period
end.
6. Performance Fee
The Manager is entitled to a performance fee from the Company in
respect of each 12 calendar month period ending on 31 May in each
year and, prior to 31 May 2017, the period of 12 calendar months
ending 30 June in each year. The performance fee payable in respect
of each such calculation period is 5% of the amount by which the
net asset value at the end of such period exceeds 110% of the
applicable "high-water mark", i.e. the net asset value at the end
of the previous calculation period in respect of which a
performance fee was payable, compounded annually at 10% for each
subsequent completed calculation period up to the start of the
calculation period for which the fee is being calculated. For the
six-month calculation period ended 30 November 2018, the notional
performance fee hurdle is a net asset value per share of 3,297.65p.
The performance fee is calculated using the adjusted net asset
value.
The performance fee is calculated so as to ignore the effect on
performance of any performance fee payable in respect of the period
for which the fee is being calculated or of any increase or
decrease in the net assets of the Company resulting from any issue,
redemption or purchase of any shares or other securities, the sale
of any treasury shares or the issue or cancellation of any
subscription or conversion rights for any shares or other
securities, and any other reduction in the Company's share capital
or any distribution to shareholders.
7. Asset Linked Note ("ALN")
On 31 October 2017, the Company issued an ALN with an initial
principal amount of GBP200m. Payments to the noteholder are made
quarterly in arrears and are linked to the ALN share (c.75%) of the
net cash flow from a reference portfolio which consists of
interests held by PIP in over 300 of its oldest private equity
funds, substantially 2006 and earlier vintages. PIP retains the net
cash flow relating to the remaining c.25% of the reference
portfolio.
The ALN is held at fair value through profit or loss and
therefore movements in fair value are reflected in the Condensed
Income Statement. The Directors do not believe there to be a
material own credit risk, due to the fact that repayments are only
due out of net cash already received from the reference portfolio.
Fair value is calculated as the sum of the ALN share of fair value
of the reference portfolio plus the ALN share of undistributed net
cash flow which is equivalent to the amount which would be required
to be repaid had the ALN matured on 30 November 2018. Therefore no
fair value movement has occurred during the period as a result of
changes to credit risk.
A pro rata share of the Company's Total ongoing charges is
allocated to the ALN, reducing each quarterly payment ("the Expense
Charge") and deducted from Other expenses in the Condensed Income
Statement.
The ALN's share of net cash flow is calculated after withholding
taxation suffered. These amounts are deducted from Taxation in the
Condensed Income Statement.
During the six months to 30 November 2018, the Company made
repayments totalling GBP26.8m, representing the ALN share of the
net cash flow for the three-month period to 31 May 2018 and
three-month period to 31 August 2018. The fair value of the ALN at
30 November 2018 was GBP115.3m, of which GBP9.9m represents the net
cash flow for the three months to 30 November 2018, due for
repayment on 28 February 2019.
8. Called Up Share Capital
ALLOTED, CALLED-UP AND
FULLY PAID:
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
SHARES GBP'000 SHARES GBP'000 SHARES GBP'000
--------------------------- ----------- -------- ------------- --------- ------------- ---------
Ordinary Shares of 67p
each
Opening position 54,114,447 36,257 33,062,013 22,153 33,062,013 22,153
Issue of shares following
conversion - - 21,242,434 14,232 21,242,434 14,232
Cancellation of shares - - (90,000) (61) (190,000) (128)
--------------------------- ----------- -------- ------------- --------- ------------- ---------
CLOSING POSITION 54,114,447 36,257 54,214,447 36,324 54,114,447 36,257
--------------------------- ----------- -------- ------------- --------- ------------- ---------
Redeemable Shares of 1p
each
Opening position - - 30,297,534 303 30,297,534 303
Redemption of shares to
ALN - - (9,055,100) (91) (9,055,100) (91)
Conversion to ordinary
shares - - (21,242,434) (212) (21,242,434) (212)
--------------------------- ----------- -------- ------------- --------- ------------- ---------
CLOSING POSITION - - - - - -
--------------------------- ----------- -------- ------------- --------- ------------- ---------
Deferred shares of 66p
each
Opening position - - - - - -
Bonus issue of shares to
redeemable shareholders - - 21,242,434 14,020 21,242,434 14,020
Conversion to ordinary
shares - - (21,242,434) (14,020) (21,242,434) (14,020)
--------------------------- ----------- -------- ------------- --------- ------------- ---------
CLOSING POSITION - - - - - -
--------------------------- ----------- -------- ------------- --------- ------------- ---------
TOTAL SHARES IN ISSUE 54,114,447 36,257 54,214,447 36,324 54,114,447 36,257
--------------------------- ----------- -------- ------------- --------- ------------- ---------
During the year to 31 May 2018, the Company consolidated its
ordinary and redeemable share capital into a single class of
ordinary shares. The Company also issued an unlisted ALN - see Note
7 for further information.
The reorganisation of the share capital was implemented on 31
October 2017 and consisted of:
a) a redemption by the Company of 9,055,100 redeemable shares
owned by the Investor for an aggregate consideration of GBP200m and
the subsequent application of these redemption proceeds for the
subscription for the ALN by the Investor;
b) a bonus issue of new deferred shares of 66p each in the
capital of the Company; and
c) the subsequent consolidation, sub-division and re-designation
of the remaining redeemable shares and the new deferred shares into
new ordinary shares of 67p each in the capital of the Company,
ranking pari passu in all respects with the existing ordinary
shares.
During the six months to 30 November 2018, no ordinary shares
were bought back in the market for cancellation (six months to 30
November 2017: 90,000; year to 31 May 2018: 190,000). The total
consideration paid, including commission and stamp duty, was GBPnil
(six months to 30 November 2017: GBP1,671,000; year to 31 May 2018:
GBP3,546,000).
As at 30 November 2018, there were 54,114,447 ordinary shares in
issue (30 November 2017: 54,214,447 ordinary shares; 31 May 2018:
54,114,447 ordinary shares). Each holder of ordinary shares is
entitled, on a show of hands, to vote and, on a poll, to one vote
for each ordinary share held.
Subsequent to 30 November 2018, the Company bought back 25,000
ordinary shares for cancellation for a total consideration,
including commission and stamp duty, of GBP498,736.
9. Return per Share
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
----------------- -------- -------- ----------- --------- -------- ----------- --------- -------- -----------
Return for the
financial
period
GBP'000 (2,419) 142,826 140,407 (6,477) 37,841 31,364 (12,015) 134,792 122,777
Weighted average
no. of shares 54,114,447 61,822,126 57,980,242
Return per share (4.47p) 263.93p 259.46p (10.48p) 61.21p 50.73p (20.72)p 232.48p 211.76p
10. Net Asset Value per Share
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
------------------------- ----------------- ----------------- ------------
Net assets attributable
in GBP'000 1,447,171 1,217,226 1,306,764
Ordinary shares 54,114,447 54,214,447 54,114,447
Net asset value
per share - ordinary 2,674.28p 2,245.21p 2,414.82p
11. Reconciliation of Return Before Financing Costs and Tax to
Net Cash Flow from Operating Activities
SIX MONTHS TO SIX MONTHS TO YEAR TO
30 NOVEMBER 2018 30 NOVEMBER 2017 31 MAY 2018
GBP'000 GBP'000 GBP'000
---------------------------- ----------------- ----------------- ------------
Return before finance
costs and taxation 143,040 37,504 133,897
Withholding tax
deducted (1,312) (5,156) (9,170)
Gains on investments (149,056) (46,220) (149,778)
Interest reinvested (1,788) - -
Currency losses/(gains)
on cash and borrowings (4,652) 4,416 1,929
Increase/(decrease)
in creditors 53 2,235 (31)
Decrease/(increase)
in other debtors 2,812 (270) (2,896)
Losses on financial
instruments at fair
value through profit
or loss - ALN 11,396 1,680 11,166
Expenses and taxation
associated with
ALN (815) (311) (2,429)
NET CASH OUTFLOW
FROM OPERATING ACTIVITIES (322) (6,122) (17,312)
---------------------------- ----------------- ----------------- ------------
12. Fair Value Hierarchy
(i) Unquoted fixed asset investments are stated at the estimated
fair value
In the case of investments in private equity funds, this is
based on the net asset value of those funds ascertained from
periodic valuations provided by the managers of the funds and
recorded up to the measurement date. Such valuations are
necessarily dependent upon the reasonableness of the valuations by
the fund managers of the underlying investments. In the absence of
contrary information the values are assumed to be reliable. These
valuations are reviewed periodically for reasonableness and
recorded up to the measurement date. If a class of assets were sold
post year end, management would consider the effect, if any, on the
investment portfolio.
The Company may acquire secondary interests at either a premium
or a discount to the fund manager's valuation. Within the Company's
portfolio, those fund holdings purchased at a premium are normally
revalued to their stated net asset values at the next reporting
date. Those fund holdings purchased at a discount are normally held
at cost until the receipt of a valuation from the fund manager in
respect of a date after acquisition, when they are revalued to
their stated net asset values, unless an adjustment against a
specific investment is considered appropriate.
In the case of direct investments in unquoted companies, the
initial valuation is based on the transaction price. Where better
indications of fair value become available, such as through
subsequent issues of capital or dealings between third parties, the
valuation is adjusted to reflect the new evidence. This information
may include the valuations provided by private equity managers who
are also invested in the company. Valuations are reduced where the
company's performance is not considered satisfactory.
(ii) Quoted investments are valued at the bid price on the
relevant stock exchange
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 quoted market holdings at the date of the latest
fund accounts are reviewed and compared with the value of those
holdings at the year end. If there has been a material movement in
the value of these holdings, the valuation is adjusted to reflect
this.
All investments are initially recognised and subsequently
measured at fair value. Changes in fair value are recognised in the
Income Statement.
The fair value hierarchy consists of the following three
levels:
-- Level 1 - The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date;
-- Level 2 - Inputs other than quoted prices included within
level 1 that are observable (i.e. developed using market data) for
the asset or liability, either directly (i.e. as prices) or
indirectly (i.e. derived from prices); and
-- Level 3 - Inputs are unobservable (i.e. for which market data
is unavailable) for the asset or liability.
In accordance with FRS 104, the Company must disclose the fair
value hierarchy of financial instruments.
Financial Assets at Fair Value through Profit or Loss at 30
November 2018
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,446,702 1,446,702
Listed holdings 840 - - 840
------------------- -------- -------- ---------- ----------
TOTAL 840 - 1,446,702 1,447,542
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 30
November 2018
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 115,337 115,337
TOTAL - - 115,337 115,337
------- --------- --------- -------- --------
Financial Assets at Fair Value through Profit or Loss at 31
December 2017
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,252,258 1,252,258
Listed holdings 244 - - 244
------------------- -------- -------- ---------- ----------
TOTAL 244 - 1,252,258 1,252,502
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 30
November 2017
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 143,042 143,042
TOTAL - - 143,042 143,042
------- --------- --------- -------- --------
Financial Assets at Fair Value through Profit or Loss at 31 May
2018
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------------------- -------- -------- ---------- ----------
Unlisted holdings - - 1,274,167 1,274,167
Listed holdings 570 - - 570
------------------- -------- -------- ---------- ----------
TOTAL 570 - 1,274,167 1,274,737
------------------- -------- -------- ---------- ----------
Financial Liabilities at Fair Value through Profit or Loss at 31
May 2018
LEVEL LEVEL LEVEL 3 TOTAL
1 2
GBP'000 GBP'000 GBP'000 GBP'000
------- --------- --------- -------- --------
ALN - - 131,585 131,585
TOTAL - - 131,585 131,585
------- --------- --------- -------- --------
13. Subsequent Events
As detailed in Note 8, the Company bought back 25,000 Ordinary
Shares for cancellation for a total consideration of
GBP498,736.
Independent Review Report
Introduction
We have reviewed the condensed set of financial statements in
the half-yearly financial report of Pantheon International plc (the
'Company') for the six months ended 30 November 2018 which
comprises the Condensed Income Statement, Condensed Statement of
Changes in Equity, Condensed Balance Sheet, Condensed Cash Flow
Statement, and Notes to the Half Yearly Financial Statements. We
have read the other information contained in the half yearly
financial report, which comprises only the Key Performance
Indicators, Chairman's Statement, Investment Policy, Manager's
Review, and Interim Management Report and Responsibility Statement,
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 1, the annual financial statements of the
Company are prepared in accordance with Financial Reporting
Standard 102 'The Financial Reporting Standard applicable in the UK
and Republic of Ireland'. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with Financial Reporting Standard 104 'Interim Financial
Reporting'.
Our responsibility
Our responsibility is to express a conclusion to the Company on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity'. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
November 2018 is not prepared, in all material respects, in
accordance with Financial Reporting Standard 104 'Interim Financial
Reporting' and the Disclosure Guidance and Transparency Rules of
the United Kingdom's Financial Conduct Authority.
Use of our report
This report is made solely to the Company, as a body, in
accordance with International Standard on Review Engagements (UK
and Ireland) 2410, 'Review of Interim Financial Information
performed by the Independent Auditor of the Entity'. Our review
work has been undertaken so that we might state to the Company
those matters we are required to state to it in an independent
review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to
anyone other than the company as a body, for our review work, for
this report, or for the conclusion we have formed.
Grant Thornton UK LLP
Statutory Auditor, Chartered Accountants
London
26 February 2019
NATIONAL STORAGE MECHANISM
A copy of the Half-Yearly Financial Report will be submitted
shortly to the National Storage Mechanism ("NSM") and will be
available for inspection at the NSM, which is situated at:
http://www.morningstar.co.uk/uk/nsm
LEI: 2138001B3CE5S5PEE928
Ends
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on the Company's website
(or any other website) is incorporated into, or forms part of this
announcement.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR SEUFAMFUSEFE
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