TIDMHPEQ
HENDERSON PRIVATE EQUITY INVESTMENT TRUST PLC
Annual Financial Report for the year ended 31 December 2009
29 April 2010
This announcement contains regulated information
Investment Objective
The Company's investment objective is to produce capital gains through a
diversified portfolio of private equity investments.
Performance Summary
31 December 31 December Change
2009 2008
Net Assets(1) GBP57.1m GBP61.0m -6.5%
Net Asset Value per share(1) 302.7p 323.7p -6.5%
Share price(2) 130.0p 84.0p +54.8%
Discount(1) 57.1% 74.1% N/A
FTSE All Share Index(2) 2,760.8 2,209.3 +25.0%
LPX Europe Index (sterling 253.2 189.2 +33.8%
adjusted) (2)
LPX Indirect Index (sterling 26.8 21.0 +27.6%
adjusted) (2)
1. Source: Henderson Global Investors Limited.
2. Source: Datastream.
MANAGEMENT REPORT
Chairman's Statement
The financial year ended 31 December 2009 was another difficult period for the
European private equity sector. Despite this, your Company performed creditably
in a demanding economic environment. Over the course of the year the Company's
share price recovered some of the ground lost during the financial turmoil of
2008 and early 2009, and whilst the Company's Net Asset Value ("NAV") per share
experienced a moderate decline, the value of the Company's investment portfolio
showed increased stability as the year progressed.
Share Price and Valuation
During the year ended 31 December 2009, the Company's share price rose by 54.8%
to 130.0p. Despite such a marked improvement, this still represented a 57.1%
discount to NAV of 302.7p per share at the year end. The Board believes this
discount does not fully reflect the strengths of the Company's investment
portfolio.
At 31 December 2009 the total value of the Company's investments, including
cash, was GBP65.1 million, compared to GBP62.0 million at 31 December 2008. Further
information on the Company's investment portfolio is provided in the Investment
Review and Portfolio Analysis on pages 4 to 11 of the Annual Report.
Liquidity and Commitments
Cash resources of GBP3.5 million combined with GBP5.5 million of listed holdings
meant the Company held GBP9.0 million of liquid assets at 31 December 2009. In
addition, the Company had committed bank facilities of GBP30.0 million, of which
GBP7.7 million was drawn at 31 December 2009. The Company therefore had GBP31.3
million of liquid assets and funding capacity at the year end.
At 31 December 2009, the Company had outstanding commitments to limited
partnerships of GBP51.1 million of which it is anticipated that up to GBP38.0
million will be drawn over the three years to 31 December 2012.
The Board works closely with the Portfolio Manager to assess and update the
Company's cashflow projections. This process takes into account the timescales
over which existing limited partnership commitments may be drawn down and
investments realised. In the opinion of the Board the Company has sufficient
resources to meet future commitments.
Your Company's liquidity position has been strengthened since the year end with
the extension of its GBP30.0 million of committed banking facilities to 1 May
2012.
Manager
On 9 April 2009, New Star Asset Management Group plc, the parent company of the
then Manager, was acquired by Henderson Group plc ("Henderson"). On 1 May 2009
Ian Barrass, head of private equity Fund of Funds at Henderson, assumed the
role of Portfolio Manager. Consequently, a new management agreement with
Henderson Global Investors Limited on substantially the same terms was signed
by the Board.
The Board is pleased with the progress that Ian Barrass and his colleagues at
Henderson have made to date.
Change of Name
On 18 June 2009, the Company changed its name to Henderson Private Equity
Investment Trust plc, which better reflects the Company's association with
Henderson and its stable of investment trusts.
Investment Strategy
As described in the Company's report for the half year to 30 June 2009, the
Board reviewed the Company's investment strategy with the Portfolio Manager in
May last year. As a result, it was decided that the Company will strengthen its
focus on the European mid-market buy-out sector and will continue to operate as
a private equity fund of funds. Any new investment activity will be focused on
the best unlisted and listed opportunities in this market segment.
Related Party Transactions
During the year ended 31 December 2009, no transactions with related parties
have taken place that materially affected the financial position or performance
of the Company during the period. Details of related party transactions are
detailed below and contained in Note 20 on page 52 of the Annual Report.
Dividend
It is the Company's policy to pay dividends only to the extent required to
maintain investment trust status. No dividend has been declared in respect of
the year ended 31 December 2009. Shareholders should note the level of dividend
will vary from year to year, as the Company's income is expected to fluctuate.
Outlook
While there is still uncertainty with respect to the pace of recovery, there
are signs that Europe's economies are beginning to improve. Your Company is
well positioned to benefit from the recovery through its existing portfolio,
its clear strategic focus and its sound liquidity position. The Board remains
confident that the Company is capable of providing attractive shareholder
returns over the medium term.
Business Review
Performance Measurement and Key Performance Indicators
In order to measure the success of the Company in meeting its objectives and to
evaluate the performance of Henderson Global Investors Limited ("the Manager"),
the Directors take into account the following key performance indicators:
? Discount to Net Asset Value ("NAV") and peer group
The Board monitors the level of the Company's discount to NAV on a continual
basis and reviews the average discount of the Company's peer group and the
relevant Association of Investment Companies ("AIC") sector at each Board
meeting. The Company publishes a NAV per share figure on a monthly basis
through a regulated news service. The NAV figure is calculated in accordance
with the AIC formula.
? Performance against the Benchmark
While performance is not directly benchmarked against any specific stock market
index, the LPX Indirect Index represents the private equity companies most
comparable to the Company traded on a European exchange and is therefore used
by the Board and Portfolio Manager as a reference for performance comparison
purposes.
? Total Expense Ratio ("TER")
The TER is a measure of the total expenses incurred by the Company, expressed
as a percentage of the average shareholders' funds over the year. The TER is
defined here as the total annual pre-tax operating expenses (management fee and
other administration costs) expressed as a percentage of average shareholders'
funds over the year. The TER, before performance fees and borrowing costs and
excluding the VAT reclaim in 2008, amounted to 2.4% (2008: 2.6%) of the net
assets of the Company. No performance fee was paid during the year (2008: nil).
The Board regularly monitors all Company expenses to ensure they are managed
effectively.
Principal Risks and Uncertainties
The Board has established a matrix of risks facing the Company and has put in
place a schedule of investment limits and restrictions, appropriate to the
investment objective and policy, to mitigate these risks as far as possible.
The principal risks which have been identified and the steps taken by the Board
to mitigate these are:
? Investment strategy and performance
Inappropriate long-term investment strategies in terms of, inter alia, asset
allocation, level of gearing or manager selection may result in
underperformance of the Company against the selected comparable benchmark index
or companies within the peer group. The Board regularly considers the Company's
investment strategy and monitors performance at each Board meeting.
? Long term nature of private equity investments
Private equity investments are long-term in nature and it may take a
considerable period to be realised.
? Financial risks of private equity
A substantial proportion of the Company's assets are invested in limited
partnerships which invest in private companies. These unquoted investments are
less readily realisable than quoted securities. Such investments may therefore
carry a higher degree of risk than quoted securities.
? Business conditions and general economy
The Company's investment returns are influenced by economic conditions in the
UK and globally. Factors such as interest rates, inflation, investor sentiment
and the availability and cost of credit could adversely affect the performance
of both the Company and its underlying investments. The Company's assets are
invested on a fund-of-funds basis. This helps mitigate investment risk by
providing access to a range of private equity funds and private equity
managers. In addition, the underlying portfolio is diversified across a spread
of different vintages, sectors and countries. The Board regularly monitors the
Company's asset allocation, investment selection and performance. A detailed
analysis of the portfolio may be found on pages 6 to 11 of the Annual Report.
Further information on how the Company manages risk may be found in the
Internal Controls section on pages 23 and 24 and in note 18 on pages 45 to 52
of the Annual Report.
? Valuation uncertainty
In valuing its investments in unlisted private equity funds or limited
partnerships and in calculating its NAV, the Company relies to a significant
extent on the accuracy of financial and other information provided by these
funds to the Manager. Limited partnerships typically provide updated
(unaudited) valuations on a quarterly or six-monthly basis.
? Regulatory risk
Failure to comply with applicable legal and regulatory requirements could lead
to the suspension or loss of the Company's Stock Exchange listing or result in
financial penalties. Breach of Section 842 of the Income and Corporation Taxes
Act 1988 could lead to the loss of the Company's investment trust status,
leading to the Company being subject to tax on its capital gains. A breach of
the UKLA Listing Rules could result in suspension of the Company's shares,
while a breach of the Companies Act 2006 could lead to criminal proceedings,
financial or reputational damage. The Board receives quarterly internal control
reports produced by the Manager to confirm or otherwise regulatory compliance
during the year.
? Manager
The quality of the management team employed by the Manager is an important
factor in delivering good quality performance and the loss by the Manager of
key staff could adversely affect investment returns. In addition, the failure
of the Manager's core fund management systems might lead to the loss of data or
inaccurate reporting. The performance of the Manager is reviewed by the Board
on an ongoing basis. In addition, the Board undertakes a formal annual review.
? Operational
Disruption to, or failure of, the Manager's accounting, dealing or payment
systems or the Custodian's records could prevent the accurate reporting and
monitoring of the Company's financial position. The Company is also exposed to
the operational risk that one or more of its suppliers may not provide the
required level of service. Details of how the Board monitors the services
provided by the Manager and its other suppliers and the key elements designed
to provide effective internal control, are explained further in the Internal
Controls section on pages 23 and 24 of the Annual Report.
Related Party Transactions
Investment management, accounting, company secretarial and administration
services are provided to the Company by wholly-owned subsidiary companies of
Henderson Group plc ("Henderson"). This is the only related party transactions
currently in place. There have been no material transactions with this related
party affecting the financial position or performance of the Company during the
year under review. Global Custody Services are provided by BNP Paribas
Securities Services. As detailed within the Substantial share interests on page
24 of the Annual Report funds managed by Henderson have interests in 38.9% of
the issued share capital of the Company (excluding treasury shares).
Statement under Disclosure and Transparency Rule 4.1.12
The Directors of the Company each confirm to the best of their knowledge that:
? the financial statements, prepared in accordance with the applicable set of
accounting standards, give a true and fair view of the assets, liabilities,
financial position and profit or loss of the Company; and
? the Report of the Directors includes a fair review of the development and
performance of the business and the Company, together with a description of the
principal risks and uncertainties that it faces.
John Mackie CBE
Chairman
29 April 2010
Investment Review
Following the severe market turmoil of the second half of 2008, the year ended
31 December 2009 was a period of consolidation for the Company. The combination
of intensive operational management of portfolio companies by the managers of
the Company's limited partnership investments and improved public market
valuations served to limit the year's Net Asset Value ("NAV") decline to 6.5%
in what remained a generally difficult economic environment across Europe.
Whilst the Company's stock price rose 54.8% during the year, the discount to
NAV per share was 57.1% at 31 December 2009. Narrowing this discount is a key
priority for the Portfolio Manager and the Board in the current financial year.
The Company's investment objective focus, the European mid-market buy-out
sector, remained becalmed during the year. Contributing factors to low levels
of investment and realisation activity included reduced availability of debt
finance, uncertainty regarding deliverability of business plans, reluctance of
potential sellers to dispose of businesses at reduced prices and a dormant IPO
market.
Investment Activity
Limited Partnership Investments
No new limited partnership commitments were made during 2009 compared with GBP
18.0 million in 2008. This reflected caution regarding the Company's existing
level of commitments, particularly given the scarcity of realisation proceeds
during the period.
In 2009 drawdowns under limited partnerships totalled just over GBP11.0 million,
including eight new investments with a combined value of GBP7.1 million. The
largest of these was August Equity Partners II's investment in Funeral Services
Partnership, the Company's share of this being GBP3.0 million. The balance of the
drawdowns related primarily to follow-on investments in existing portfolio
companies as opportunities arose to make add-on acquisitions at value accretive
entry multiples.
The only new company realisation during the year, was the sale of Hat Trick
Productions by August Equity Partners I in December, proceeds of which were
used to repay bank debt. Additionally, a distribution was received from Rutland
Fund I, when in February the Company received cash from the release of a tax
indemnity in connection with the sale of H&T Group Limited in 2006. In total,
limited partnership distributions amounted to GBP2.9 million.
After the year end, the Company announced on 5 March 2010 a High Court ruling
against Rutland Fund I in connection with the H&T Group Limited transaction but
damages have not yet been finalised. It should be noted that Rutland Fund I has
included a provision in its year end valuation which is incorporated in these
accounts.
Listed Investments
No new listed investments were made during the year thereby preserving the
Company's cash resources.
The listed investment portfolio underwent rationalisation during the year to
increase its focus on the European mid-market buy-out sector and to raise cash
for the Company. Consequently, investments in Quorum Oil and Gas Technology
(ordinaries), Renewable Energy Generation, ARC Capital and China Growth
Opportunities (partial) were disposed of before the year end, at prices higher
than those at 31 December 2008. The Company's holding in a French Government
security was also sold during the year. Total proceeds from these disposals
were GBP3.5 million. After the year end, the remaining holding in China Growth
Opportunities and the Company's investment in Greenwich Loan Income Fund were
also sold.
Portfolio Valuation
At 31 December 2009 the total value of the Company's investments including cash
was GBP65.1 million of which GBP53.7 million represented investments in limited
partnerships. This compares with GBP62.0 million and GBP50.4 million respectively
at the 31 December 2008 year end.
Limited Partnership Investments
The portfolio management skills of the Company's limited partnership
investments were put to the test during the year. Overall, the 67 businesses
which comprised the underlying company limited partnership portfolio at the
year end performed satisfactorily. Whilst cost reduction was an obvious area
for value protection across the portfolio, some companies were able to expand
their activities through add-on acquisitions at attractive prices. Also, debt
multiples in the Company's main area of focus, the mid-market buy-out sector,
tended to be lower than in the large buy-out arena and, as a result, the impact
of leverage was generally less severe on valuations.
Despite the difficult trading environment, a number of the Company's underlying
investments made progress during the year and delivered increased operating
profitability leading to additional value creation. Some portfolio company
valuations also benefited from improvements in public market comparators. Given
the harsh economic environment it was, however, inevitable that there would be
some portfolio difficulties leading to specific falls in business valuations.
It however should be noted, that there remains the potential for these
businesses to recover value against a backdrop of improved trading conditions
and higher multiples.
Generally, the Company's limited partnerships provide a good level of detail
regarding multiples used in valuing their portfolios. This allows for review
and discussion on valuations to assess their reasonableness and, if necessary,
for any adjustments to be made. No such adjustments were considered necessary
at the 31 December 2009 year end.
FSA Disclosure and Transparency Rule 4.2 requires the Company to release its
full year accounts by 30 April 2010. It has not been possible to update all
limited partnership valuations using audited reports for the year ended 31
December 2009. It should be noted that discussions with those limited
partnerships that have not yet provided their audited reports indicate any
valuation changes to be immaterial.
Additional information on the Company's portfolio, including details of
underlying investments held through limited partnerships, can be found on pages
6 to 11 of the Annual Report.
Listed Investments
As stated above, a number of listed investments were sold during the year. The
remaining listed portfolio was valued at GBP5.5 million at the year end. This
compared with GBP5.0 million at 31 December 2008 on a like-for-like basis.
Liquidity
Some of the Company's fund of funds peer group chose to address liquidity
concerns during the year by selling limited partnership interests sometimes at
significant discounts to NAV. Your Company did not consider it necessary to
follow the same strategy. This helped preserve portfolio value during the year.
Since the year end, the Company's GBP30.0 million of banking facilities provided
by Lloyds Banking Group have been extended to mature on 1 May 2012, providing
the Company with a stable funding platform to finance existing limited
partnership commitments. Whilst total existing commitments are stated at GBP51.1
million in the Company's accounts, a portion of these commitments is unlikely
to be drawn in full given that some of the limited partnerships are now past
their initial five-year investment period. Limited partnerships also often
reserve a portion of their commitments as a contingency. In view of these
factors, it is anticipated that up to GBP38.0 million of the GBP51.1 million year
end commitments are likely to be drawn over the next three years.
At the year end the Company had liquid assets of GBP9.0 million and undrawn
committed bank facilities of GBP22.3 million to contribute towards the estimated
funding requirement of up to GBP38.0 million over the next three years. With the
Company's banking facilities now extended to 1 May 2012, the liquidity position
has been strengthened considerably. With regard to realisation proceeds, whilst
there is some exit activity currently underway within the limited partnership
portfolio, it is not expected that realisations will provide significant cash
inflows until 2011. This is reflected in the Company's cashflow projections.
Outlook
Despite continued uncertainty about the pace of economic recovery across Europe
and the modest level of new investment and exit activity in the European
mid-market buy-out sector, the outlook for your Company is more positive than
it has been for some time. The investment portfolio has generally performed
well during a period of severe economic strain and is positioned to benefit
from gradual market recovery. New investments by the Company's existing limited
partnership interests over the next few years will be made at an attractive
stage in the economic cycle. The Company's liquidity position has also been
strengthened by the extension of its banking facilities.
The Board however remains concerned about the current discount to NAV. Whilst
the existing business is well-positioned, work continues to identify ways to
grow the Company to the benefit of all shareholders.
Ian Barrass
Portfolio Manager
29 April 2010
Investment Portfolio
The Company's investments as at 31 December 2009 were:
Company Category Country/ Valuation % of
Region GBP'000 Portfolio
August Equity Partners II Limited UK 10,787 16.6
Partnership
August Equity Partners I Limited UK 10,775 16.5
Partnership
Parallel Ventures 2006 Limited UK 9,734 14.9
Partnership
Rutland Fund I Limited UK 8,064 12.4
Partnership
Astorg IV Limited France 4,400 6.8
Partnership
Rutland Fund II Limited UK 2,991 4.6
Partnership
Logic Group Direct UK 2,500 3.8
Investment
Century Capital Partners Fund Limited US 1,957 3.0
IV Partnership
Pragma Capital II Limited France 1,828 2.8
Partnership
Fondinvest Capital VIII Limited France 1,665 2.6
Partnership
Ten largest investments 54,701 84.0
Graphite Enterprise Listed UK 1,500 2.3
Hg Capital Trust Listed UK 1,254 1.9
Lyceum Capital Fund II Limited UK 656 1.0
Partnership
Zeus Private Equity Fund Limited UK 596 0.9
Partnership
SVG Capital 8.25% Convertible Listed UK 562 0.9
Bonds 2016
EIH (previously Evolvence Listed India 557 0.9
India)
Reconstruction Capital II Listed Eastern 371 0.6
Europe
Greenwich Loan Income Fund Listed UK 325 0.5
Wendel Investments Listed Europe 323 0.5
Dinamia Listed Spain 283 0.4
Twenty largest investments 61,128 93.9
Private Equity Investor Listed US 242 0.4
Elderstreet Capital Partners Limited UK 198 0.3
Partnership
China Growth Opportunities Listed China 39 0.1
KB Fund III B Limited UK 19 -
Partnership
KB Fund III Limited UK 8 -
Partnership
Quorum Oil & Gas Technology Listed UK 5 -
(warrants)
Total investments 61,639 94.7
Cash (net of bank overdraft) 3,481 5.3
Total portfolio 65,120 100.0
Portfolio Analysis
As at 31 December 2009
Source: Henderson Global Investors Limited
Type of investment by value
Type of investment Percentage of Percentage of
portfolio 2009 portfolio 2008
Limited partnerships 83% 81%
Listed funds 8% 11%
Cash 5% 4%
Direct unquoted 4% 4%
Geographical exposure of investments by value
Country or region Percentage of Percentage of
portfolio 2009 portfolio 2008
UK 68% 68%
Europe 28% 25%
Other 4% 7%
Sector exposure of underlying companies in limited partnerships by value
Sector Percentage of Percentage of
portfolio 2009 portfolio 2008
Healthcare 29% 26%
Manufacturing 25% 26%
Business Services 15% 14%
Consumer Services 7% 2%
Media 6% 10%
Software 6% 6%
Financial 5% 5%
Consumer Goods 1% 1%
Telecoms 1% 1%
Other 5% 9%
Underlying companies in limited partnerships investment vintages by value
Vintage Percentage of Percentage of
portfolio 2009 portfolio 2008
Less than 1 year 11% 18%
1 - 2 years 16% 28%
2 - 3 years 20% 39%
More than 3 years 53% 15%
Portfolio Analysis - Limited Partnerships
Astorg Partners
Astorg Partners ("Astorg") is an independent French private equity manager
whose origins date back to 1983 when it was created as a joint-venture between
SUEZ and state-owned Institut de Dévelopment Industriel. Astorg will invest at
least EUR15 million of equity in companies primarily in the healthcare,
professional services and retail sectors valued between EUR100 million and EUR800
million. www.astorg-partners.com
August Equity Partners
August Equity Partners ("August") provides equity capital for management
buy-outs, buy-ins, development capital and replacement capital in growing
businesses. August will invest between GBP10 million and GBP50 million of equity in
UK companies in the healthcare, media and technology, industrial products and
services and business services sectors. www.augustequity.com
Century Capital Management
Century Capital Management ("Century") is a Boston based investment adviser
whose origins date back to 1928. It formed its first private equity fund in
1987 and specialises in the North American mid-market financial services
industry, with a focus on insurance. Century will invest equity of between
US$10 million and US$30 million in individual transactions. www.centurycap.com
Elderstreet Capital Partners
Elderstreet Capital Partners ("Elderstreet") is a UK venture capital fund
manager investing in early stage businesses within the UK. Elderstreet
typically provides between GBP0.5 million and GBP5.0 million in funding for
management buy-outs and development capital. Elderstreet invests in a range of
industry sectors and has a specialist technology practice investing in the
software and computer services market. www.elderstreet.com
Fondinvest Capital
Fondinvest Capital ("Fondinvest") was founded in 1994 and is a specialist
primary fund of funds and secondary funds investor. Fondinvest launched one of
the first secondary funds in Europe in 1996 and currently manages over EUR2
billion in private equity funds. Fondinvest has offices in Paris, Tokyo and San
Francisco. www.fondinvest.com
Lyceum Capital
Established in 1999 and formerly known as West Private Equity prior to their
buy-out from West LB, Lyceum Capital ("Lyceum") invests in UK companies valued
at between GBP10 million and GBP75 million in most segments of the UK market, where
consolidation strategies can be actively pursued. Lyceum invests in companies
requiring between GBP10 million and GBP40 million in equity.
www.lyceumcapital.co.uk
Parallel Private Equity
Established in 1997, Parallel Private Equity ("Parallel") operates formal
co-investment agreements with a number of UK and European mid-market private
equity managers which source, complete, and actively manage investments in
investee companies. Parallel has invested more than GBP1.4 billion in over 330
deals. In realising over 220 deals to date, in excess of GBP1.9 billion has been
returned to investors. Parallel will invest up to GBP10 million of equity per
transaction in companies valued at between GBP10 million and GBP400 million.
www.parallelprivateequity.com
Pragma Capital
Pragma Capital ("Pragma") is an independent French private equity manager
founded in 2002 from a spin-out of Crédit Agricole and Crédit Lyonnais. Pragma
focuses in the French middle-market and will typically invest between EUR10
million to EUR35 million into companies, across a wide variety of sectors, valued
at between EUR50 million and EUR250 million. www.pragmacapital.fr
Rutland Partners
Rutland Partners ("Rutland"), founded in 1986, invests in UK and European
companies which may be underperforming, in need of restructuring or entering a
period of change. Rutland does not focus on any specific sectors and provides
equity for management buy-outs, buy-ins, institutional buy-outs,
public-to-privates, turnarounds, secondary purchases and replacement capital.
Rutland will invest between GBP10 million and GBP50 million of equity per
investment into UK companies valued at between GBP20 million and GBP200 million.
www.rutlandpartners.com
Zeus Private Equity
Zeus Private Equity ("Zeus") was formed in 2005 by a team who had previously
worked together at Aberdeen Murray Johnstone Private Equity. Zeus provides
funding for management buy-outs, buy-ins, equity release and restructuring
opportunities for businesses in the UK valued at up to GBP50 million in a wide
range of sectors. www.zeusprivateequity.co.uk
Portfolio Analysis 10 Largest "Underlying" Investments
1. Enara
Limited partnership August Equity Partners II
Valuation GBP5.6 million
Percentage of Portfolio 8.6%
Enara is a leading provider of both private and social services-based home care
in London and the Home Counties. It focuses on care for the elderly and adults
with learning difficulties and mental health needs.
www.enara.co.uk
2. Advantage Healthcare
Limited partnership Rutland Fund I
Valuation GBP4.6 million
Percentage of Portfolio 7.0%
Advantage Healthcare was formed following the acquisition of a group of
businesses from BUPA and specialises in flexible healthcare staffing. It has a
significant database of temporary nurses, doctors, allied health professionals
and carers which are provided to the NHS, BUPA and other private carers to
cover staff shortfalls and fluctuating workloads.
www.advantagehealthcare.com
3. Notemachine
Limited partnership Rutland Fund I
Valuation GBP4.5 million
Percentage of Portfolio 7.0%
Rutland formed Notemachine in September 2006 via a recommended offer for
AIM-listed Scott Tod, a UK company involved in the provision of ATM services
throughout the UK. In January 2007, Rutland acquired TRM (ATM) Limited, a
complementary business involved in the deployment of ATMs in the UK and
Germany. The combined business currently operates approximately 6,000 ATMs in
the UK. www.notemachine.com
4. Liberty Acquisitions ("Lifeways")
Limited partnership August Equity Partners I
Valuation GBP4.4 million
Percentage of Portfolio 6.8%
Lifeways is a market leading provider of supported living for people with
complex needs and is the only provider offering nationwide coverage. Lifeways
offers specialist care to over 900 people with challenging needs, including
autism, psychiatric or learning disabilities and acquired brain injuries, in
their own home or a community setting.
www.lifeways.co.uk
5. Rollford Holdings ("Rixonway")
Limited partnership August Equity Partners I
Valuation GBP3.3 million
Percentage of Portfolio 5.1%
Rixonway is a UK kitchen manufacturing business with a particular focus on the
social housing market. The company was established in 1979 and is located in
Dewsbury near Leeds.
www.rixonway.co.uk
6. Funeral Services Partnership ("FSP")
Limited partnership August Equity Partners II
Valuation GBP3.2 million
Percentage of Portfolio 4.9%
FSP, founded in 2007, is a consolidator of funeral care providers in the UK.
August acquired FSP in 2009 and has committed GBP23 million to finance FSP as a
buy-and-build platform in the funeral services sector.
7. Logic Group ("Logic")
Direct investment
Valuation GBP2.5 million
Percentage of Portfolio 3.8%
Logic delivers the secure provision of card transaction processing, loyalty and
insight programmes through its software and support services. Logic's customers
include BT Expedite, BP Oil and Tesco. www.the-logic-group.com
8. ONO Packaging ("ONO")
Limited partnership Parallel Ventures 2006
Valuation GBP2.3 million
Percentage of Portfolio 3.6%
ONO is a French food tray manufacturer that was acquired through a management
buy-out by iXO Private Equity (formerly ICSO Private Equity) and Parallel.
9. Boat International ("Boat")
Limited partnership August Equity Partners I
Valuation GBP2.0 million
Percentage of Portfolio 3.1%
Boat is an international publisher of market leading magazines and websites and
an events organiser targeted at the super yacht industry. Boat produces over
1.4 million magazines each year that sell in over 57 countries worldwide and
are published in six different languages. They organise eight annual events
across the world in London, Monaco, Fort Lauderdale, Venice, Port Cervo and New
York. During 2009, Boat acquired SBI, a leading US boat magazine publisher.
www.boatinternational.com
10. 4Projects
Limited partnership August Equity Partners II
Valuation GBP2.0 million
Percentage of Portfolio 3.1%
4Projects is a leading UK provider of project collaboration solutions. The
software solutions are delivered principally to the architecture, engineering
and construction sectors. 4Projects solutions are used to co-ordinate large
scale, multi-party construction projects and for the management of complex
property estates.
www.4projects.com
Income Statement
for the year ended 31 December 2009
Year ended 31 December 2009 Year ended 31 December 2008
Revenue Capital Total Revenue Capital Total
return return return return
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Losses on investments - (4,167) (4,167) - (11,105) (11,105)
held at fair value
through profit or loss
Gains on foreign - 90 90 - 99 99
exchange
Income 932 - 932 2,378 - 2,378
Investment management (756) - (756) (377) - (377)
fee
Administrative expenses (682) - (682) (934) - (934)
--------- ---------- ----------- --------- ---------- -----------
Return on ordinary (506) (4,077) (4,583) 1,067 (11,006) (9,939)
activities before
finance costs and
taxation
Interest payable and (45) - (45) (70) - (70)
similar charges
--------- ---------- ----------- --------- ---------- -----------
Return on ordinary (551) (4,077) (4,628) 997 (11,006) (10,009)
activities before
taxation
Taxation 668 - 668 (1,066) - (1,066)
--------- ---------- ----------- --------- ---------- -----------
Return on ordinary 117 (4,077) (3,960) (69) (11,006) (11,075)
activities after
finance costs and
taxation
--------- ---------- ----------- --------- ---------- -----------
Return per Ordinary 0.6p (21.6p) (21.0p) (0.4p) (57.0p) (57.4p)
Share
--------- ---------- ----------- --------- ---------- -----------
Number of Ordinary 18,850,212 18,850,212
Shares in issue at year
end
Average number of 18,850,212 19,280,488
Ordinary Shares in
issue during the year
The total columns of this statement represent the profit and loss account of
the Company. The revenue and capital columns are supplementary to this and are
provided in accordance with guidance issued by the Association of Investment
Companies. The Company has no recognised gains or losses other than those
disclosed in the Income Statement and the Reconciliation of Movements in
Shareholders' Funds. Accordingly, no Statement of Total Recognised Gains and
Losses is presented.
All revenue and capital items in the above statement derive from continuing
operations. No operations were acquired or discontinued in the current or prior
year.
Reconcilliation of Movement in Shareholders' Funds
for the year ended 31 December 2009
Year ended 31 Called-up Share Capital Capital Revenue Shareholders'
December 2009 share premium redemption reserves reserve* funds
capital account reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 984 17,321 705 40,573 1,431 61,014
January 2009
Net return from - - - (4,077) 117 (3,960)
ordinary
activities
Rebate of - - - 4 - 4
commission on
share buybacks
---------- ---------- ---------- ---------- ---------- ----------
Balance at 31 984 17,321 705 36,500 1,548 57,058
December 2009
====== ====== ====== ====== ====== ======
Year ended 31 Called-up Share Capital Capital Revenue Shareholders'
December 2008 share premium redemption reserves reserve* funds
capital account reserve
Balance at 1 987 17,321 702 53,876 1,630 74,516
January 2008
Net return from - - - (11,006) (69) (11,075)
ordinary
activities
Dividend paid in - - - - (130) (130)
respect of year
ended 31 December
2007
Shares bought back (3) - 3 (128) - (128)
and cancelled
Shares bought back - - - (2,169) - (2,169)
and held in
Treasury
---------- ---------- ---------- ---------- ---------- ----------
Balance at 31 984 17,321 705 40,573 1,431 61,014
December 2008
====== ====== ====== ====== ====== ======
* The revenue reserve represents the amount of the Company's reserves
distributable by way of a dividend.
Balance Sheet
at 31 December 2009
2009 2008
GBP'000 GBP'000
Fixed assets
Investments held at fair value 61,639 61,079
through profit or loss
----------- -----------
Current assets
Debtors 428 197
Cash at bank 4,610 2,277
---------- ----------
5,038 2,474
---------- ----------
Creditors
Amounts falling due within one (9,619) (2,539)
year
---------- ----------
Net current liabilities (4,581) (65)
---------- ----------
Net assets 57,058 61,014
====== ======
Capital and reserves
Called up share capital 984 984
Share premium 17,321 17,321
Capital redemption reserve 705 705
Capital reserve 36,500 40,573
Revenue reserve 1,548 1,431
---------- ----------
Equity Shareholders' funds 57,058 61,014
====== ======
Net asset value per Ordinary 302.7p 323.7p
Share
====== ======
Cash Flow Statement
for the year ended 31 December 2009
2009 2008
GBP'000 GBP'000
Net cash (outflow)/inflow from (534) 550
operating activities
Servicing of finance
Bank interest paid (47) (74)
Taxation
Tax (paid) / received (1) 119
Financial investment
Purchase of listed fixed asset (13) (13,228)
investments
Purchase of unlisted fixed asset (11,116) (16,395)
investments
Sale of listed fixed asset 3,499 15,288
investments
Sale of unlisted fixed asset 2,903 13,056
investments
Net cash outflow from financial (4,727) (1,279)
investment
Equity dividends paid - (130)
------------ ------------
Net cash outflow before (5,309) (814)
financing
Financing
Purchase of Ordinary Shares 4 (2,297)
Bank loan draw down 7,728 -
------------ ------------
Increase / (decrease)in cash 2,423 (3,111)
Net funds at start of the year 968 3,980
Gains on foreign exchange 90 99
------------ ------------
Net funds at end of the year 3,481 968
======= =======
Notes to the Financial Statements
1. Accounting policies
The principal accounting policies have been applied consistently
throughout the year ended 31 Decmeber 2009, are unchanged from 2008 and
are set out below.
The financial statements have been prepared on a going concern basis, as
described in note 18(e) of the Annual Report under the historical cost
convention, modified to include the revaluation of investments and in
accordance with applicable United Kingdom Accounting Standards.
The Company is not an investment company within the meaning of Section
833, of the Companies Act 2006. However, it conducts its affairs as an
investment trust for taxation purposes under Section 842 of the Income and
Corporation Taxes Act 1988. As such, the Directors consider it appropriate
to present the financial statements in accordance with the Statement of
Recommended Practice `Financial Statements of Investment Trust Companies
and Venture Capital Trusts' (the `SORP'), issued by The Association of
Investment Companies in January 2009 (adopted early), which has not
resulted in the restatement of prior years figures.
The Company has adopted an amendment to FRS 29: `Financial Instruments:
Disclosures', issued in May 2009, in these financial statements. The
amendment introduces new disclosures relating to financial instruments.
This amendment does not have any impact on the valuation of the Company's
financial instruments.
2. Income 2009 2008
GBP'000 GBP'000
Income from fixed asset investments
Franked income:
Dividends from listed UK investments 60 86
Dividends from unlisted UK investments 4 -
----------- -----------
64 86
Unfranked income:
Dividends from listed overseas investments 101 119
Distributions from UK unlisted investments 695 1,730
Listed UK treasury gilts - 90
Listed UK loan stock investments 62 35
Listed overseas treasury gilts 5 90
----------- -----------
863 2,064
Total income from fixed asset investments 927 2,150
Other income
Deposit interest 5 168
Other income - 60
----------- -----------
5 228
----------- -----------
932 2,378
======= =======
Income from fixed asset investments:
Listed 228 420
Unlisted 699 1,730
----------- -----------
927 2,150
====== ======
3. Investment Management Fees
2009 2008
GBP'000 GBP'000
Investment management fee - charged to revenue 756 803
VAT on management fee recovered from HMRC - (426)
----------- -----------
756 377
====== ======
4. Taxation
2009 2009 2009 2008 2008 2008
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
a) Analysis of tax charge (14) - (14) 775 - 775
for the year:
UK corporation tax at 28%
(2008: 28.5*%)
Adjustment in respect of (654) - (654) 291 - 291
prior years
----------- ----------- ----------- ----------- ----------- -----------
Total tax for the year (668) - (668) 1,066 - 1,066
(note 4b)
====== ====== ====== ====== ====== ======
b) Factors affecting tax charge for the year:
The tax assessed for the year is lower than that resulting from applying the
standard rate of corporation tax in the UK: 28% (2008: 28.5%*). The differences
are explained below:
Return on ordinary activities before (551) (4,077) (4,628) 997 (11,006) (10,009)
taxation
----------- ----------- ----------- ----------- ----------- -----------
Tax thereon at 28% (2008: 28.5%*) (154) (1,142) (1,296) 284 (3,136) (2,852)
Tax on undistributed income of 334 - 334 516 - 516
limited partnerships
Non taxable UK dividend income (175) - (175) (25) - (25)
Non taxable foreign dividend income (19) - (19) - - -
Non taxable capital losses - 1,142 1,142 - 3,136 3,136
Prior year adjustment# (654) - (654) 291 - 291
----------- ----------- ----------- ----------- ----------- -----------
Current tax charge (668) - (668) 1,066 - 1,066
====== ====== ====== ====== ====== ======
* Under the Finance Act 2008, the rate of corporation tax was lowered to 28%
from 1 April 2008.
# The prior year adjustment primarily relates to an estimated provision raised
in the 2008 year that has been released in the current year following
successful negotiation with the Inspector of Taxes. This negotiation resulted
in refunds due which have been included within debtors.
5. Dividends on Ordinary Shares 2009 2008
Amounts recognised as distribution to ordinary GBP'000 GBP'000
shareholders in the year.
Dividends paid on Orindary Shares of 5p each: - 130
2008 Final: nil (2007 Final: 0.66p per Ordinary
share paid on 19,732,212 shares)
----------- -----------
- 130
======= ======
No dividend is proposed in respect of the year ended 31 December 2009
(2008: nil)
6. Return per Ordinary 2009 2009 2009 2008 2008 2008
Share
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Attributable to 117 (4,077) (3,960) (69) (11,006) (11,075)
Ordinary Shareholders
----------- ----------- ----------- ----------- ----------- -----------
Return per Ordinary 0.6p (21.6p) (21.0p) (0.4p) (57.0p) (57.4p)
Share
====== ====== ====== ====== ====== ======
The return per Ordinary Share is based on the weighted average number of
18,850,212 Ordinary Shares in issue (2008: 19,280,488)
7. Commitments 2009 2008
The level of outstanding commitments at the year GBP'000 GBP'000
end was:
August Equity Partners II 16,423 20,014
Rutland Fund I 8,233 8,537
Rutland Fund II 7,072 8,210
Lyceum Capital Fund II 4,216 4,615
Fondinvest Capital VIII 3,693 4,005
Pragma Capital II 3,665 5,072
Astorg IV 1,794 3,576
KB Fund III and KB Fund IIIB 1,791 1,791
Parallel Ventures 2006 1,678 2,218
Century Capital Partners Fund IV 1,310 1,946
August Equity Partners I 691 1,174
Zeus Private Equity Fund 527 694
Elderstreet Capital Partners 31 31
----------- -----------
Outstanding commitments 51,124 61,883
======= ======
In addition, the Company had a potential commitments of GBP186,000 (2008: GBP
209,000) in respect of exercise of warrants.
As explained in the Investment Review above, it is unlikely that these
commitments will be fully called as some partnerships are now past their
initial five-year investment period and also as a portion of commitments
tend to be reserved as a contingency. It is expected that likely drawdowns
over the next three years will be GBP38.0 million.
8. Net Asset Value per Ordinary Share
The Net Asset Value per Ordinary Share (which equals the net value
attributable to the Ordinary Shares at the year end calculated in
accordance with the Articles of Association) was as follows:
2009 2008
Net Asset Value per Ordinary Share 302.7p 323.7p
Net Asset Value attributable to Ordinary GBP57,058,000 GBP61,014,000
Shares of 5p
The Net Asset Value per ordinary share is based on 18,850,212 (2008:
18,850,212) ordinary shares in issue at the year end.
9. 2009 Financial Information
The figures and financial information for 2009 are extracted from the
annual financial statements for that period and do not constitute the
statutory accounts. The Company's annual financial statements for the year
ended 31 December 2009 have been audited but have not yet been delivered
to the Registrar of Companies. The auditors' report on the 2009 annual
financial statements was unqualified, did not include a reference to any
matter to which the auditors drew attention without qualifying the report,
and did not contain any statements under section 498 of the Companies Act
2006.
10. 2008 Financial Information
The figures and financial information for 2008 are extracted from the
published Annual Report and Financial Statements for the year ended 31
December 2008 and do not constitute the statutory accounts for that year.
The 2008 Annual Report and Financial Statements has been delivered to the
Registrar of Companies and included the Report of the Independent Auditors
which was unqualified and did not contain a statement under either section
237(2) or section 237(3) of the Companies Act 1985.
11. Annual Report and Financial Statements
Copies of the Annual Report and Financial Statements will be posted to
shareholders in May 2010 and will be available on the Company's website
(www.hendersonprivateequity.com) or in hard copy format from the
Registered Office, 201 Bishopsgate, London EC2M 3AE.
12. Annual General Meeting
The Annual General Meeting will be held on Thursday 17 June 2010 at 3.00
pm at 201 Bishopsgate, London EC2M 3AE.
For further information please contact:
Ian Barrass Portfolio Manager
Henderson Private Equity Investment Trust plc
Telephone: 020 7818 2964
Sarah Gibbons-Cook Investor Relations and PR Manager
Henderson Global Investors Limited
Telephone: 020 7818 3198
Robert Peel Stockbroker
Winterflood Securities Limited
Telephone: 020 7100 0291
END
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