TIDMPIN
RNS Number : 2564K
Pantheon International PLC
20 September 2016
PANTHEON INTERNATIONAL PLC (the "Company" or "PIP")
ANNUAL FINANCIAL REPORT FOR THE YEARED 30(TH) JUNE 2016
The full Annual Report and Accounts 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 invests in
private equity funds globally, today publishes its Annual Financial
Report for the year ended 30(th) June 2016.
A good year as PIP continues to deliver on its strategy of
maximising capital growth over the long term.
FULL YEAR PERFORMANCE
-- NAV per share increased by 22%, from 1,532.4p to 1,873.6p.
-- Net assets increased to GBP1,187m (June 2015: GBP1,000m)
-- The ordinary share price increased from 1,272.0p to 1,285.0p,
an increase of 1%. However, the discount widened from 17% to
31%.
-- The redeemable share price decreased from 1,285.0p to
1,175.0p, a decrease of 9%, as the discount widened from 16% to
37%.
Portfolio update
-- Assets in the portfolio generated underlying (pre-FX) returns of 6.8%.
-- Distributions received in the twelve months to 30(th) June
2016 were GBP252m, equivalent to an annualised rate of 29% of
opening private equity assets. After funding GBP62m of calls, net
cash flow from the portfolio totalled GBP190m.
-- GBP346m of new investment commitments were made during the
year with GBP192m drawn at the time of purchase
Post-period end update
-- Since the year end, the ordinary and redeemable share prices
have increased, narrowing the discounts to 18% and 28%
respectively.
Commenting on PIP's full year performance, Tom Bartlam,
Chairman, said:
"PIP has delivered a good performance over the past 12 months,
which has been reflected in the strong growth in the NAV per share.
During the year, our managers have continued to benefit from the
strong exit environment and the Company has maintained a
disciplined approach when committing capital to new investment
opportunities. I am also pleased to note that the discounts on the
ordinary and redeemable share prices have materially decreased
since the period end. As I step down from the Board after 13 years
as a member and 12 years as Chairman, I am confident that the
Company has the financial strength, and an experienced Board and
Manager that will enable it to continue to focus on investing well
in the best private equity opportunities globally and generating
attractive returns for shareholders over the long term."
For more information please contact:
Andrew Lebus or Vicki Bradley
Pantheon
+44 (0)20 3356 1800
PIP will host a webcast at 10.30am BST today to discuss the 2016
Annual Report and Accounts.
The presentation can be viewed on the day via
www.meetingzone-event.com/?pak=7180160920164781. Please refer to
the numbers below for your local dial-in details. When you dial in
for the webcast, you will be asked to provide your name, company
name and the password Pantheon.
Dial-in details:
Standard International Access: +44 (0) 20 3003 2666
UK Toll Free: 0808 109 0700
Password: Pantheon
STRATEGIC REPORT
CHAIRMAN'S STATEMENT
In my final Chairman's Statement, I am pleased to report that
PIP has delivered a good performance over the past 12 months. For
the financial year, the Company's net assets stood at just under
GBP1.2bn and it recorded an increase of 22.3% in NAV per share.
Since I joined the Board in 2003, PIP's NAV per share has more than
trebled to 1,873.6p as at the end of June 2016, delivering
annualised NAV growth of around 10%. Shareholders have been
increasingly able to access a diversified portfolio of high quality
private equity assets, which are usually only available to
institutional investors.
I am disappointed that over the last year PIP's ordinary and
redeemable shares have traded at significant discounts, which
reflect a sector-wide trend that has arisen against a backdrop of
continued uncertainty in the global financial markets. However,
since the financial year end, the discounts on PIP's ordinary and
redeemable shares have narrowed materially and, at the time of
writing, are 18% and 28% respectively. This reflects an increase in
the ordinary share price from 1,285.0p to 1,545.0p and an increase
in the redeemable share price from 1,175.0p to 1,350.0p.
PIP's strong financial position means it is well positioned to
withstand any regional challenges and to take advantage of
compelling opportunities in the global private equity market as
they arise.
Performance Update
In the full year to 30th June 2016, PIP's NAV per share
demonstrated strong growth, increasing by 22.3% to 1,873.6p, and
net assets rose from GBP1,000m to GBP1,187m. Assets in the
underlying portfolio generated returns of 6.8% and foreign exchange
gains added 17.2% to NAV per share, reflecting the weighting of
PIP's portfolio in non-UK assets and the depreciation of sterling
towards the latter part of the financial year. These gains were
offset by a provision in relation to asset sales (-0.7%) and
expenses and taxes (-1.7%).
Our portfolio is weighted towards companies based in North
America and the stronger Northern European economies, and buyout
portfolios in those regions demonstrated good performance. The
energy funds within Special Situations have continued to feel the
adverse effects of declining oil prices, however it should be noted
that the Company has also been able to take advantage of the
cyclical nature of the sector and has acquired additional energy
assets at attractive prices. We intend to maintain our current
weighting towards energy assets within our Special Situations
portfolio at up to approximately 10% of the portfolio.
On 23rd June 2016, the UK held a referendum which resulted in a
majority voting to leave the European Union. Although our
internationally diversified portfolio has only a small minority
that is exposed to the UK economy, the result of the referendum has
created great political and economic uncertainty, and the long-term
consequences remain unclear. However, we are confident that our
manager, Pantheon ("the Manager"), has put in place robust
contingency plans and is well prepared to respond effectively to
the eventual outcomes. We believe that the inherent characteristics
of the private equity asset class should continue to deliver
attractive risk-adjusted returns as we enter a new era for
Europe.
Investment Activity
During the year, our managers continued to benefit from the
strong exit environment, particularly in the healthcare, consumer
and information technology sectors, and PIP's portfolio generated
GBP252m of distributions, equivalent to a rate of 29% of opening
portfolio assets. Trade sales and secondary buyouts represented the
most significant source of exit activity during the year. Calls
from underlying private equity funds were GBP62m, equivalent to an
annualised call rate of 16% of opening undrawn commitments. This
resulted in a net portfolio cash flow of GBP190m during the period
before new investment commitments are taken into account. The
weighted average fund age of 7.3 years supports the cash-generative
nature of PIP's mature portfolio.
New Investments
We continue to see interesting opportunities across all our
sectors however, as we consider the current high valuation
environment, we have maintained our disciplined approach when
committing capital to new investments. It is important that the
interests of investors and their managers are aligned and that our
managers target companies with high earnings potential. I am
therefore pleased to note that the high levels of earnings growth
seen over the previous years has continued during the past twelve
months.
PIP made 59 new investments in the year, amounting to GBP345.9m
in commitments with GBP192m drawn at the time of purchase. This
included GBP173.2m committed to 13 secondary and late primary
funds, GBP78.8m to 26 co-investments alongside selected private
equity managers and, in line with its focus on managing the
maturity profile and gaining exposure to niche funds, the Company
also added GBP93.9m in primary commitments. Since the year end, the
Company has committed an additional GBP19.4m.
Share Buybacks
During the full year to 30th June 2016, the Company invested
GBP21.9m in share buybacks by acquiring 1.9m redeemable shares.
This resulted in an uplift to NAV per share of 17.3p or 1.1%.
Buybacks can be a good investment for the Company from time to
time, when considered alongside other new investment opportunities,
and since August 2011 the Company has bought back just over 16% of
its issued share capital, representing an investment of GBP108.3m.
The Board is supportive of further buybacks for investment purposes
and recognises that they can be particularly attractive when the
discount on the shares is wide. However, the Company must also
consider its flexibility to grow the NAV over the long term while
achieving accretive returns in the short term. We believe that this
balanced approach is of benefit to all our shareholders.
Balance Sheet
The Company has maintained its strong financial position, which
enables it to respond effectively to all capital deployment
requirements. As at 30th June 2016, it held cash of GBP116m and the
balance sheet remained ungeared. The Company's unutilised credit
facility of $100m and EUR46m, equivalent to GBP113m as at 30th June
2016, is in place until November 2018. As a result, the Company had
total liquid resources of GBP229m and its undrawn commitment cover
was 3.4x, which reflects a higher level of total commitments than
in recent periods, and remains at a comfortable level. The Board
monitors the level of undrawn commitments carefully, both in regard
to the scale and maturity of its assets as well as in relation to
its liquid resources.
Board Changes
It was announced on 8th September 2016 that I would be stepping
down from the Board as Non-executive Chairman and Director of the
Company with effect from the Company's Annual General Meeting
("AGM"), which is to be held on 23rd November 2016. It was
announced at the same time that the Board had accepted the
Nomination Committee's recommendation that, following due and
careful consideration, Sir Laurie Magnus should be appointed as
Chairman of the Board with effect from the conclusion of the AGM.
Sir Laurie Magnus was appointed to PIP's Board in November 2011 and
became Senior Independent Director from 2014. As Sir Laurie takes
up the chairmanship, Susannah Nicklin will become Senior
Independent Director. I would like to wish Sir Laurie and Susannah
well in their new roles as Chairman and Senior Independent Director
respectively. The Board intends to appoint an additional
Non-executive Director and an announcement will be made in due
course.
Outlook
Many regions continue to grapple with macroeconomic and
political challenges and this has been reflected in the volatility
of the global financial markets. Credit availability has fluctuated
as markets have become uneasy about the projected slowdown in
global growth, a sentiment that has been worsened by low commodity
prices and the impact of this on some emerging economies.
Nevertheless, equity prices have remained high. Against this
backdrop, it is more critical than ever that we only invest in
assets with attractive long-term growth potential and with managers
that have successful track records of managing assets through
economic cycles.
We continue to see interesting opportunities in the secondaries
market where pricing has seen a modest decrease. The Manager has
been able to use the privileged insights it gains from extensive
interactions with private equity managers to evaluate funds with
identifiable growth prospects at entry or assets that may, upon
realisation, deliver significant uplifts to their holding value.
Our portfolio strategy emphasises secondary investments in order to
maintain a mature portfolio profile and thus benefit from the cash
distributions that allow us to maintain our financial strength and
investment pace. We will also continue to add more recent vintages
to the portfolio by selectively committing to primary funds and
co-investing directly in assets alongside private equity managers.
The strong distributions seen in the first half of PIP's financial
year moderated in the second half, and we expect this to continue
as distributions return to long-term average levels.
As I step down from the Board after 13 years as a member and 12
years as Chairman, I am confident that the Company has the
financial strength, and an experienced Board and Manager that will
enable it to continue to focus on investing well in the best
private equity opportunities globally and generating attractive
returns for shareholders over the long term. I would like to extend
my best wishes for the Company's continued success.
The Strategic Report has been approved and signed on the Board's
behalf.
TOM BARTLAM
Chairman
19(th) September 2016
INVESTMENT RATIONALE AND COMPANY STRATEGY
PIP's strategy is to invest with leading private equity managers
internationally.
Private equity is the term used for investments made in
non-public companies through privately negotiated transactions.
More than 7,400 private equity managers collectively manage
approximately $4.2tn in assets globally(1) . The asset class covers
a broad range of strategies, which all share a common theme -
capital structure optimisation that aligns investors' interests
with management, combined with long-term investment horizons and
hands-on management support. For investors looking for attractive
risk-adjusted returns relative to other asset classes, private
equity has strong credentials. A broad range of institutions
including pension funds, sovereign wealth funds and endowments, as
well as high net worth individuals, invest in private equity as it
can offer a meaningful boost to the performance of their investment
portfolios.
(1) Source: Preqin 2016 Global Private Equity and Venture
Capital Report, January 2016
The Private Equity Investment Approach
Private equity managers typically specialise in market sectors
in which they already have extensive investment experience and in
which they are well placed to identify attractive investment
opportunities based on proprietary research. Private equity
investors acquire influential or controlling shareholdings in
businesses where there is an opportunity to work closely with a
company's management to implement both strategic and operational
change, which can transform a company's value. Better alignment
between management and shareholders can be achieved by ensuring
that a company's management are investing at the same time while
also using leverage to create an efficient capital structure.
The spread of performance in private equity is much wider than
in other asset classes and the selection of managers has a
significant influence on investment performance. The high level of
outperformance of public market benchmarks achieved by top quartile
managers in private equity, evident through multiple cycles,
provides the opportunity for Pantheon to identify and select
highly-skilled and strategic managers within a diversified
portfolio. This approach mitigates the risk of being overexposed to
any single fund, region or investment style. The Board of PIP
believes that investing the Company's capital in private equity
funds flexibly between the primary and secondary markets, or
directly co-investing in companies alongside leading,
individually-selected private equity managers provides a good
opportunity to generate attractive long-term investment
performance.
By investing directly into private equity funds, rather than
investing indirectly in such funds through Pantheon's funds of
funds, the Company has full control over portfolio construction.
PIP has the flexibility to vary the size and emphasis of its
investments depending on its investment priorities at the time and
available financing. In addition, this approach allows PIP to have
greater control over the management of its balance sheet, cash and
the maturity profile of the portfolio.
The current portfolio reflects PIP's prolonged access to
Pantheon's carefully selected primary and secondary investments
over the past 29 years. Only funds that have passed through
rigorous research and analysis can be selected for investment.
OUR BUSINESS MODEL
PIP's aim is to maximise capital growth and deliver long-term
shareholder value. It achieves this through its access to
Pantheon's well-established platform and investing in high quality
private equity assets globally. PIP manages its portfolio by making
primary and secondary investments in private equity funds as well
as co-investing directly in companies alongside leading private
equity managers.
Secondaries
It is the Board's current intention to emphasise secondary
investment as the Company makes new commitments.
Secondary purchases of existing interests in private equity
funds are typically acquired many years after a fund's inception,
when such funds are substantially invested. PIP benefits from
secondaries because the fees and expenses in the first few years
have been paid and distributions from the fund will be returned
over a shorter time period. This helps to reduce the drag to
performance from young and immature funds, known as the "J-curve
effect". In addition, secondary assets can sometimes be purchased
at a discount, especially in cases where the seller has a need for
liquidity, increasing the opportunity for outperformance. As the
Company continues to build its financial resources through net
portfolio realisations, the shorter duration of secondary
investments and lower associated undrawn commitments will enable
the Company to maintain a mature, cash-generative profile.
In accordance with the terms of its management agreement with
Pantheon, PIP is entitled under Pantheon's allocation policy to the
opportunity to co-invest alongside Pantheon's latest global
secondary fund, Pantheon Global Secondary Fund V, benefiting from
access to larger secondary opportunities that it would not have had
the capacity to complete alone. The secondary programme enables PIP
to acquire attractively priced secondary interests as they become
available, and aims to outperform market averages through judicious
selection, pricing and timing.
Co-investments
The Company also participates in co-investments alongside
established private equity managers. The extent of Pantheon's
General Partner ("GP") relationships provide a significant
advantage for the sourcing and evaluation of co-investments. As
with secondary investing, co-investments allow the Company to put
money to work at the time an investment is made. In addition, as
there are lower or no management fees charged on co-investments by
the underlying private equity manager, co-investing can represent a
cost-efficient way of investing, whilst providing PIP with exposure
to current vintages. It is the Board's current intention that
co-investments will not, on average, account for more than 30% of
PIP's new commitments.
Primary Investments
Investing in private equity through a primary commitment
strategy (e.g. commitments to new private equity funds), by
increasing the proportion of immature assets in its portfolio and
by increasing its undrawn commitments relative to its assets, can
reduce PIP's financial flexibility. New primary investments have
longer payback periods, requiring the Company to maintain higher
levels of standby financing against undrawn commitments. For these
reasons, the Board limits primary commitments. However, the Company
will consider making primary commitments on a targeted basis for
portfolio construction purposes. The investment rationale for any
new primary commitments will always be weighed against their
effects on the Company's financial flexibility so as to keep the
undrawn commitments to a level that can comfortably be expected to
be financed from internally generated cash flows.
Social, Environmental, Community, Human Rights and Employment
Issues
The Company has no employees and the Board consists entirely of
non-executive Directors. At the end of the year under review, the
Board was comprised of five male Directors and one female Director.
As an investment trust, the Company has no direct impact on the
community or the environment. The Manager is committed to the
Principles for Responsible Investment and its policies are set out
in the full Annual Report and Accounts. These Principles are
integrated into Pantheon's investment analysis and decision-making
process, as well as post-investment monitoring procedures.
OBJECTIVE AND INVESTMENT POLICY
Investment Objective
The Company's primary investment objective is to maximise
capital growth by investing in a diversified portfolio of private
equity funds and directly in private companies.
Investment Policy
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 holding, 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(th) 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;
-- 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 alters.
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.
PRINCIPAL RISKS AND UNCERTAINTIES
The Company is exposed to a variety of risks and uncertainties.
The Board, through delegation to the Audit Committee, has
undertaken a robust assessment and review of the principal risks
facing PIP, together with a review of any new risks that may have
arisen during the year, including those that would threaten its
business model, future performance, solvency or liquidity. A
summary of the risk management and internal control processes can
be found in the Corporate Governance Statement in the full Annual
Report.
1. Funding of investment commitments and default risk
Risk: In the normal course of its business, the Company
typically has outstanding commitments to private equity funds which
are substantial relative to the Company's assets and may be drawn
down at any time. The Company's ability to meet these commitments
is dependent upon it receiving cash distributions (the timing and
amount of which can be unpredictable) from its private equity
investments and, to the extent these are insufficient, on the
availability of financing facilities.
Mitigation: The Company has a mature portfolio that is naturally
cash generative and does not ordinarily gear its balance sheet for
the purpose of enhancing performance. The Board intends to manage
the Company so that undrawn commitments remain at a conservative
level relative to its assets and available financing. The total
available financing as at 30(th) June 2016 stood at GBP229m,
comprising GBP116m in cash balances and GBP113m in undrawn bank
facilities. As a result, the available financing along with the
private equity portfolio exceeded the outstanding commitments by a
factor of 3.4 times. The Company ordinarily expects to finance the
majority of calls from undrawn commitments out of distributions. In
the event that the levels of cash distributions and cash balances
are insufficient to cover capital calls, the Company has the
ability to draw funds from a credit facility (see Gearing section
below for details of the credit facility).
2. Risks relating to investment opportunities
Risk: There is no guarantee that the Company will find a
sufficient number of suitable investment opportunities, or that the
private equity funds in which it invests will find suitable
investment opportunities, in order to achieve the level of
diversification which the Company seeks to achieve in relation to
its investment portfolio.
Mitigation: In line with the Objective and Investment Policy
section above, the Manager has put in place a dedicated investment
management process that is designed to help maximise the chances of
the Board's intended investment strategy being achieved. The Board
periodically reviews investment and financial reports from the
Manager to monitor the effectiveness of the Manager's investment
management process.
3. Financial risk of private equity
Risk: The Company invests in private equity funds and unquoted
companies, which are less readily marketable than quoted
securities. In addition, such investments may carry a higher degree
of risk than investments in quoted securities.
Mitigation: The Manager's investment management process is
designed to produce the best possible risk-adjusted returns from
private equity investments. Where the Company commits to private
equity funds, such funds are structured as limited life funds where
the manager is incentivised to realise investments and return
proceeds to investors within the funds' limited life span. As part
of the investment process for secondaries and co-investments, an
assessment is made to understand the possible impact of the
underlying assets' illiquidity on projected exit outcomes. As part
of the investment process for primaries, an assessment is made to
understand a manager's approach to underlying company
illiquidity.
4. Long-term nature of private equity investments
Risk: Private equity investments are long term in nature and it
may take some years before they reach a level of maturity at which
they can be realised. Accordingly, it is possible that the Company
may not receive a return on its investments for a number of
years.
Mitigation: The Company pursues a flexible investment strategy,
emphasising secondary investments which will typically have shorter
exit horizons on average than co-investment and primary
commitments. Therefore, this flexible investment strategy results
in a range of likely exit horizons for underlying investments,
mitigating this risk.
5. Valuation uncertainty
Risk: By valuing its investments in private equity funds and
unquoted companies and publishing its NAV, the Company relies to a
significant extent on the accuracy of financial and other
information provided by these funds and companies to the Manager.
There is the potential for inconsistency in the valuation methods
adopted by the managers of these funds and companies. In addition,
the information provided is typically more than 60 days old at the
time the Company's NAV per share is reported.
Mitigation: In the case of the Company's investment in private
equity funds, and direct investments managed by private equity
managers, the valuation of investments is based on the periodically
audited valuations that are provided by the private equity
managers. Pantheon carries out a formal valuation process involving
a monthly review of these valuations, verification of the latest
audited reports coverage, as well as a review of any potential
adjustments that are required to ensure reasonable valuation of the
underlying investments and in accordance with the fair market value
principles required under Generally Accepted Accounting Principles
("GAAP").
6. Gearing
Risk: The use of gearing can cause the magnification of both
gains and losses in the asset value of the Company. The Company may
also invest in private equity funds or unquoted companies which are
geared by loan facilities that rank ahead of the Company's
investment both for payment of interest and capital. As a
consequence, the Company may be exposed from time to time to
gearing through the borrowings of such private equity funds and
companies, increasing its investment risk.
Mitigation: While debt is commonly used within the capital
structure of private equity funds' portfolio investments, it is not
commonly used at the fund level other than for working capital
purposes. Thus, leverage risk is typically non-recourse between
portfolio companies operating independently within the same
portfolio.
For working capital purposes, the Company maintains a revolving
credit facility arranged by The Royal Bank of Scotland Group plc,
due to expire in November 2018, and comprising facilities of $100m
and EUR46m. The principal covenant that applies to the loan
facility ensures that the Company is limited to a maximum gearing
of 30% of adjusted gross asset value. The facility was unutilised
as at 30(th) June 2016.
7. Foreign currency risk
Risk: The Company makes investments in US dollars, euros and
other currencies as well as sterling. Accordingly, the Company is
exposed to fluctuations in currency exchange rates.
Mitigation: The Manager monitors the Company's underlying
foreign exchange exposure and seeks to balance the risks associated
with holding different currencies through diversification and
cost-averaging effects. Furthermore, as part of the investment
management process, the Manager will assess the risk-return of a
specific investment, taking into consideration the currency
denomination of the investment and the potential impact of currency
risk. However, foreign currency risk tends to be mitigated over
longer investment horizons.
8. Unregulated nature of underlying investments
Risk: The private equity funds and underlying unquoted
investments that form the basis of the majority of the Company's
portfolio are not necessarily subject to regulation by the
Financial Conduct Authority ("FCA") or an equivalent regulatory
body. Funds and unquoted companies in which the Company invests
(directly or indirectly) may be domiciled in jurisdictions which do
not have a regulatory regime that provides an equivalent level of
investor protection to that provided under the laws of the United
Kingdom.
Mitigation: The Manager's investment management process for
primary and secondary investments requires verification of the
regulatory jurisdiction of underlying funds. In addition, the
managers of the underlying funds are mostly regulated by the FCA,
U.S. Securities and Exchange Commission ("SEC"), or an equivalent
body in the managers' respective jurisdictions.
9. Taxation
Risk: Any change in the Company's tax status, or in taxation
legislation or practice, could affect the value of the investments
and the Company's performance. In addition, the Company's income
and gains from its investments may suffer withholding tax, which
may not be reclaimable in the countries where such income and gains
arise.
Mitigation: The Manager's investment management process
incorporates an assessment of the tax impact of each primary or
secondary fund investment, or co-investment that is purchased. For
every investment, the Manager also reviews the appropriateness of
an investment's legal structure and any action required, including
the establishment of special purpose, and/or blocker vehicles, to
tailor an investment's structure to minimise the potential tax
impact on the Company.
10. The Manager and other third party advisers
Risk: Like most investment trust companies, the Company has no
employees and the Directors are all non-executive. The Company is
dependent upon the services of Pantheon as its Manager and may be
adversely affected if the services of Pantheon cease to be
available to the Company.
Mitigation: The Board keeps the performance of the Manager under
continual review. In addition, the Management Agreement is subject
to a notice period that is designed to provide the Board with
adequate time to put in place alternative arrangements in the event
the services of Pantheon cease to be available.
Retail Investors Advised by IFAs
The Company currently conducts its affairs so that its shares
can be recommended by independent financial advisers to retail
private investors in accordance with the Financial Conduct
Authority's ("FCA") rules in relation to non-mainstream investment
products.
The shares are excluded from the FCA's restrictions which apply
to non-mainstream investment products because they are shares in a
UK-listed investment trust.
Viability Statement
Pursuant to provision C.2.2 of the UK Corporate Governance Code
2014, the Board has assessed the viability of the Company over a
three year period from 30th June 2016. It has chosen this period as
it falls within the Board's strategic planning horizon. The Company
invests in an internationally diversified portfolio of private
equity assets, both through funds and by co-investing directly into
companies alongside selected private equity managers. The Company
invests significantly in the private equity secondaries market as
this allows the Company to maintain a more mature portfolio profile
that is naturally cash-generative in any particular year.
Commitments to new funds are restricted relative to the
Company's assets, so as to maintain a reasonable expectation of
being able to finance the calls, which arise from such commitments,
out of cash flow that is generated internally. In addition, the
Company has put in place a revolving credit facility to ensure that
it is in a position to finance such calls in the event that
distributions received from investments in the period are
insufficient to finance calls. The Board reviews the Company's
financing arrangements at least quarterly to ensure that the
Company is in a strong position to finance all outstanding
commitments on existing investments as well as being able to
finance new investments.
In reviewing the Company's viability, the Board has considered
the Company's position with reference to its business model, its
business objectives, the principal risks and uncertainties as
detailed above and of its present and expected financial position.
In addition, the Board has also considered the Company's
conservative balance sheet, which allows it to take advantage of
significant investment opportunities, and the appropriateness of
the Company's current investment objectives in the prevailing
investment market and environment. The Board regularly reviews the
prospects for the Company's portfolio and the opportunities for new
investment under a range of potential scenarios to ensure it can
expect to be able to continue to finance its activities for the
medium-term future.
The full Annual Report contains the following statements
regarding responsibility for the Annual Report and financial
statements.
On behalf of the Board
Tom Bartlam
19(th) September 2016
MANAGER'S REVIEW
The Manager (Pantheon)
Pantheon, one of the world's foremost private equity
specialists, has acted as Manager to PIP since its inception in
1987. Pantheon evaluates and manages investments on PIP's behalf in
line with the strategy agreed by the Board. Pantheon is also one of
the largest and most experienced secondary managers, having
committed more than $10bn to secondary investments over the last 30
years.
At a Glance
-- $34.3bn(1) Assets under management
-- >400 Clients
-- >200 Employees(2)
-- >70 Investment professionals(2)
(1) As at 31(st) March 2016. The figure includes assets subject
to discretionary or non-discretionary management, advice, or those
limited to a reporting function.
(2) All staff figures are as at 1(st) August 2016.
Strong Private Equity Track Record
Pantheon is one of the leading private equity fund investors in
the world, with global assets under management of $34.3bn, on
behalf of over 400 institutional investors.
Pantheon has a strong and consistent private equity investment
track record. Over 30 years, Pantheon has made investments in more
than 1,400 private equity funds, gaining exceptional insight and
access to many of the most attractive funds in all the major
private equity markets.
Pantheon has broad experience of investing across all types of
private equity, including buyout, venture capital, growth capital
and special situations. It started out as a primary investor in
private equity funds and has witnessed at first-hand the
transformation and expansion of the industry over numerous market
cycles. In its history, Pantheon has committed US$20.6bn to 593
primary investments, US$10.2bn to 337 secondary transactions and
US$1.9bn to 117 co-investments (as at 31st March 2016). It has
invested in private equity primaries since 1983, secondaries since
1988 and co-investments since 1997.
Diversification
Pantheon has substantial experience of investing in private
equity through various economic cycles and in different regional
markets. The firm's asset allocation, diversification strategies
and disciplined investment process are structured with the
objective of producing the best possible risk-adjusted returns.
Pantheon's diversification strategy limits portfolio risk by
including a multi-strategy approach, targeting funds with a variety
of different return characteristics and deploying capital over a
number of vintage years, generally ensuring that the most
attractive segments of the market are represented in the portfolio.
When applying this approach, the Board works closely with Pantheon
to ensure that the management of the Company is in line with its
agreed strategy.
Reputation as a Preferred Investor
Pantheon has been investing in private equity for over 30 years
and has a solid reputation in the industry. Pantheon is often
considered a preferred investor due to its reputation, active
approach and scale of commitments. In addition, Pantheon generally
seeks advisory board seats to contribute actively to governance
during the life of the fund. As such, Pantheon is represented on
over 340 advisory boards worldwide. Long-standing partnerships with
managers on a global basis can also enhance the firm's deal flow in
the secondary market.
Team-based Culture
Pantheon draws upon a wide pool of resources that contributes to
a team-based culture. With teams operating in London, San
Francisco, New York, Hong Kong, Bogotá and Seoul, Pantheon adopts a
collegiate approach to investment decision-making, globally
leveraging the collective experience and expertise of its
investment professionals. The team's experience is also brought to
bear on the evaluation, selection and ongoing monitoring of fund
investments. Pantheon's team of over 70 investment professionals,
supported by over 130 other professionals, work together with the
ultimate aim of producing strong and consistent results.
MARKET REVIEW
Global financial stability has been tested again in 2016. Credit
quality has declined in some sectors, with rising defaults and
increased financial stress particularly affecting borrowers
operating in the energy sector. Borrowing spreads have widened for
most corporate borrowers and balance sheet repair has slowed owing
to disruption in the global capital markets. Unfavourable
demographic trends in major advanced economies combined with low
productivity growth and continuing debt overhang, especially in
Europe, all make for fairly tepid medium-term growth prospects in
advanced economies. While a continuation of global economic
recovery is still the most likely medium-term scenario, risks to
recovery remain. Despite this subdued outlook, we continue to
believe that there is still a good volume of investment
opportunities for private equity managers that are able to manage
assets through volatile conditions.
The global economy is expected to grow by just 2.4%(1) in 2016,
roughly the same pace as in 2015. The key factors contributing to
the slowdown in the global economy relative to expectations are
easy to identify. Firstly, financial market volatility at the start
of the year raised concerns among investors about the soundness of
the global capital markets. Secondly, low commodity prices,
especially for oil, have increased economic stress in a number of
large emerging markets such as Russia and Brazil. Thirdly,
investors increasingly worry that Chinese policy makers may not be
capable of managing a smooth transition away from an investment-
and export-driven economy towards a more sustainable
consumption-led growth model. These factors, together with the
increased uncertainties facing policy makers such as was
illustrated in June by the "Brexit" vote, have contributed to
heightened investor uncertainty and a slowdown in global investment
spending, which was already weak to start with.
Economic and political developments difficult to predict in the
US
Low productivity and continuing employment growth are starting
to raise inflation expectations in the US. While there were signs
of the US Federal Reserve's intention to slow the pace of US
interest rate rises early in 2016 in the face of global capital
market volatility, it appears that financial market participants
might be underestimating the speed with which the Fed intends to
tighten monetary policy over the remainder of 2016. If the US
unexpectedly tightens monetary policy while the European Central
Bank and the Bank of Japan continue to pursue aggressive monetary
stimulus, we believe that a further bout of global currency
instability is likely. This could nip any recovery in emerging
markets in the bud, and in extreme cases could see some major
emerging economies suffer an outflow of foreign capital with
corresponding negative knock-on effects for domestic demand. A
higher dollar might also dampen the recent rally in oil prices.
While the cost of a barrel of oil has recovered to within sight of
$50 a barrel(2) , oil prices are still not high enough to justify
the level of government expenditures planned for many oil-dependent
economies, especially in the Middle East, Latin America and
Russia.
(1Global Economic Prospects, Divergences and Risks, World Bank
Group June 2016)
(2US Energy Information Administration, June 2016)
While economic conditions in the US are more conducive to
normalising monetary policy, raising interest rates in the US while
other advanced economies are still weak will likely lead to
significant upward pressure on the US currency. Dollar strength
would dampen US exports, especially manufacturing exports, and slow
the pace of overall US growth. The potential ramifications of the
upcoming US presidential election results can also not be
ignored.
The majority of PIP's portfolio is invested in the US, which has
the deepest and most established private equity market in the
world, and we expect this to continue as we work with leading
managers who have experience of investing well through cycles of
economic and political uncertainty.
Emerging markets expected to be the driver for future economic
growth
Concerns over the transition in the Chinese economic model
extend far beyond the borders of China. China is currently a top 10
trading partner for over 100 countries representing about 80% of
global GDP and 40% of global metals demand(3) . China's position as
a lynchpin for Asian regional and global supply chains makes it a
potential flashpoint for the transmission of global trade
shocks.
However, despite the headwinds, the IMF expects emerging markets
to drive the recovery of the global economy in 2017 and beyond(4) .
The IMF's medium-term forecasts assume conditions in several large
emerging markets will stabilise by 2017; that Chinese economic
rebalancing will occur smoothly; and the outlook for global
commodity exporters will improve, most especially for oil
exporters.
While Asia and emerging markets represent a smaller part of
PIP's portfolio, when compared to the more established North
American and European regions, acquiring assets in these regions
secures access to faster-growing economies.
Uncertainty continues to weigh on Europe
Despite exceptionally loose monetary policy, the continuing risk
of deflation remains highest in the Eurozone. This is particularly
troubling given the high debt burden of some large Eurozone
economies, most notably Italy, that would be further exacerbated by
a general decline in prices. In addition, European policy makers
continue to struggle with resolving the Greek and Italian debt
bailouts, and co-ordinating a response to managing the risks of
global terrorism and to handling the Syrian migration crisis.
In June, many European banks saw their share prices tumble as a
result of "Brexit" and, although market commentators for the
secondary market have reported that activity has been largely
unaffected by the uncertainty following the Brexit vote, with only
a brief hiatus in activity and an impact that seems to have been
confined to UK-focused private equity funds, the long-term
consequences of Brexit are still unknown. Pantheon is well-placed
to respond effectively to the eventual outcomes and we continue to
believe that the inherent characteristics of the private equity
asset class should continue to deliver attractive risk adjusted
returns as we enter a new era for Europe.
On a more positive note, consumer spending is expected to be the
main driver of growth in many regions and private equity managers
are well-placed to benefit from this as they seek new investment
opportunities. Despite the ongoing challenges in Europe, Pantheon
continues to see good value in the region and believes that the
fragmented nature of the private equity market is conducive to
producing interesting deal opportunities.
(3) IMF World Economic Outlook (WEO) April 2016
(4) IMF World Economic Outlook (WEO) April 2016
Pantheon has maintained a disciplined approach to
investments
Private equity is not immune to economic and political events,
however global deal activity has remained strong in the past year.
The majority of this activity has continued to be in buyout deals
as private equity managers identify the growth potential in
companies and the opportunities to streamline processes, strengthen
management teams and introduce efficiencies.
In terms of exits, corporate buyers, looking to fulfil their
growth strategies and make use of cash on their balance sheets,
continued to be the main source for exits in 2015 and this was also
the case for the majority of exits seen in PIP's portfolio. The
signs are that this trend is set to continue in 2016 - in Q1 2016,
over 65%5 of exits were reported as trade sales.
There remains a strong fundraising environment - approximately
$317bn of private equity capital was raised globally across 843
funds in 2015(5) - which has resulted in high levels of dry powder
available for investment. The knock-on effect of this is the
propulsion of asset prices. Staying disciplined in the face of
rising valuations is exactly the right approach to mitigate the
effect of high asset prices on returns. It is also worth
remembering that even though private equity is long term and
illiquid both by nature and design, the inherent activist approach
adopted by fund managers in this asset class provides additional
levers for value creation aside from just floating on the tide of
market valuations. Where we have concerns about high asset prices,
it makes sense to realise more mature investments at the higher
prices that typically prevail in the latter stages of a general
bull market. An example of this is the healthcare sector where
Pantheon has been able to benefit from manager selling activity
amidst a high valuation environment.
Continued strong demand in the secondary markets
After two years of record-breaking deal flow, transactions in
the first half of 2016 reached $10.5bn(6) , lower than the $12bn
transacted in the same period last year, and perhaps reflecting
seller sentiment after January's market volatility, with many
adopting a "wait and see" approach to the macro environment prior
to launching transactions.
The secondary market saw a modest decrease in pricing, with
average high bid levels at 87%7 of NAV, down from 92% in the same
period last year, and 90% overall for the whole of 2015. Buyout
pricing levels remained consistent with 2015 levels at 94% of NAV,
reflecting strong demand in the secondary market where there is
over $60bn of dry powder. The overall reductions in pricing reflect
more venture transactions being completed during the period. The
Company sought to take advantage of the market conditions to
dispose of 34 tail-end fund interests with a NAV of GBP32.9m(7) ,
comprising mainly North American venture and buyout funds formed
between 2000 and 2007. The Manager considers opportunistic sales to
be part of actively managing PIP's portfolio, where it expects to
be able to redeploy the proceeds into more attractive investment
opportunities.
Amongst sellers, public pension plans represented over 42%(7) of
the market by volume, and have historically tended to constitute
the largest secondary transactions. This category of seller,
together with endowments and foundations, made up half of the
market in the first half of 2016. Aside from transactions involving
limited partnership stakes, GP manager-led transactions involving
fund restructurings or secondary directs again played a significant
part in the market, representing over 30%8 of first half deal
volume, up from 21% in 2015.
During the year, Pantheon screened over $45bn of potential
opportunities, committing $888m to 13 different transactions, the
majority of which involved purchases of individual fund stakes.
Given the broader pricing environment, Pantheon's focus has been on
funds with identifiable growth prospects at entry, including
leading investments with strong growth prospects or where potential
liquidity events can give rise to significant upside relative to
holding valuations. Pantheon is able to use the privileged insights
it receives from managers as a pre-eminent investor in private
equity to target attractive secondary opportunities.
Given the improvement in public market sentiment, and the roster
of sellers that have delayed activity from the first half of the
year, the second half of the year is expected to see an increase in
activity with intermediaries projecting overall 2016 deal flow to
be only slightly behind the levels of 20159.
(5) Source: Preqin. Excludes venture.
(6) Source: Greenhill Cogent: Secondary Market Trends &
Outlook July 2016. Figures excluding real estate transactions.
(7) Source: Greenhill Cogent: Secondary Market Trends &
Outlook July 2016.
(8) As at the record date of 30(th) September 2015
9 Lazard Review H1 2016
Pantheon continues to generate high quality co-investment
opportunities
During the year, the co-investment market, mainly comprising
sovereign wealth funds, pension funds, family offices and other
co-investment funds, remained competitive. In addition, valuation
and leverage levels of buyout transactions continued to be high.
Despite these headwinds, Pantheon has been able to generate
sufficient and high quality deal flow by proactively approaching
deal sponsors and providing funding solutions in the underlying
transactions. Pantheon competes effectively in the co-investment
market in a variety of ways including being highly responsive to
deal sponsors' timetables, participating in sizeable
co-investments, co-sponsoring transactions early in the
underwriting process and leveraging its industry network and
portfolio company knowledge. Pantheon conducts a detailed due
diligence process, and has continued to co-invest in opportunities
with strong downside protection, favourable demographic trends,
attractive growth features and that, crucially, represent a strong
sector, geographic and style fit with the investment strategy of
the deal sponsors. Looking ahead, we expect to maintain our
competitive position and deliver solid performances across the
portfolio pursuant to our established co-investment strategy.
Outlook
It is clear that private equity, along with other markets, is
currently facing many challenges: slowing global growth,
macroeconomic and political turbulence, as well as volatile equity
and debt markets are all contributing to the uncertainty in the
financial markets. These dynamics, along with the high asset
prices, are prompting managers to consider even more carefully how
and where they can achieve the best returns. However, it should be
noted that these challenges can also present opportunities for
those private equity managers who are able to manage assets through
economic cycles and can effectively target industry sectors and
geographies that are capable of outperformance. Market
dislocations, mispricing and distressed situations can create deal
opportunities for long-term investors. For example, Pantheon and
its managers have been able to take advantage of the highly
cyclical nature of the energy sector and acquire assets at
attractive prices. Selecting the best managers and deals are more
important than ever and Pantheon has a solid track record of
achieving those objectives.
Therefore while we are cautious on the medium-term global
economic outlook and believe that valuations are still too high, we
feel that the best response is to maintain our discipline by only
investing in the most attractive, value-creating deals. This
backdrop also places a greater emphasis on freeing up capital where
appropriate from older deals that have finished their value
creation phase. While we do not get to choose the economic
environment we face, we believe we are well-positioned to adapt to
it and manage our assets accordingly.
PORTFOLIO OVERVIEW
-- 7% Underlying (pre-FX) return relative to opening assets
-- GBP190m Net cash flow generated from PIP's portfolio
(--) 34% Average uplift on exit realisations(1)
-- GBP252m Distributions
-- 29% Distributions as a percentage of opening portfolio
-- GBP62m Calls made from existing undrawn commitments
-- GBP346m New investment commitments, GBP192m of which was drawn
-- GBP1,072m Portfolio value
-- 7.3 years Weighted-average fund age of portfolio
(1) Realisation events are classified as exit realisations when
proceeds equate to at least 80% of total investment value and once
confirmation of exit realisation is received from the manager.
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 analysis only includes exit
realisations that occurred during the financial year and disregards
the impact of any proceeds received outside of the six month period
covered in the uplift analysis. Exit realisations represented
approximately 46% of PIP's gross distributions for the year to 30th
June 2016.
The Company offers a global, diversified selection of private
equity assets, which have been carefully selected by Pantheon for
their quality. The diversification of PIP's portfolio, with assets
spread across different investment styles and stages, including
buyout, venture and growth, and special situations, helps to reduce
the volatility of both returns and cash flows. The maturity profile
of the portfolio ensures that PIP is not overly exposed to any one
vintage. PIP's geographical diversification extends its exposure
beyond the US and Europe, to regions with higher rates of economic
growth such as Asia.
Portfolio Analysis by Value as at 30(th) June 2016(1)
(1) Fund geography, stage, maturity and
primary/secondary/co-investment charts are based upon underlying
fund valuations and account for 100% of PIP's overall portfolio
value. Company sector and company geography charts are based upon
latest available underlying company valuations at 30(th) June 2016
and account for approximately c.90% of PIP's overall portfolio
value.
Fund Geography
The majority of PIP's geographical exposure is focused on the US
and Europe, reflecting the fact that these regions have the most
developed private equity markets.
Portfolio assets based in Asia and other regions provide access
to faster-growing economies.
USA 58%
Europe 27%
Asia and EM(2) 13%
Global(3) 2%
(2) EM: Emerging Markets
(3) Global category contains funds with no target allocation to
any particular region equal to or exceeding 60%.
Fund Stage
PIP's portfolio is well diversified across different private
equity investment styles and stages.
Buyout funds continue to constitute the majority of PIP's
portfolio.
Special situation investments are comprised of funds investing
primarily in the energy sector and distressed securities, as well
as some mezzanine funds.
Small/Mid Buyout 32%
Large/Mega Buyout 28%
Venture 16%
Growth 14%
Special Situations 9%
Generalist 1%
Pantheon Vehicles
At 30th June 2016, 3% of PIP's portfolio value and 2% of PIP's
outstanding commitments were comprised of funds-of-funds directly
managed by Pantheon. Pantheon is not entitled to management and
commitment fees in respect of PIP's holdings in, and outstanding
commitments to, the firm's managed funds-of-funds vehicles. In
addition, Pantheon has agreed that PIP will never be disadvantaged
in terms of fees compared with the position it would have been in
had it made investments directly into the underlying funds rather
than indirectly through such funds-of-funds vehicles.
Fund Maturity
The portfolio is well diversified by fund vintage.
New primary commitments and co-investments increase PIP's
exposure to more recent vintages, and the 2010 and later segment of
the portfolio increased to 35% (from 19%) during the year.
The portion of the portfolio exposed to funds that are older
than 2010 has reduced to 65% compared to 81% last year.
2016 5%
2015 11%
2014 7%
2013 4%
2010 - 2012 8%
2009 1%
2008 14%
2007 20%
2006 12%
2005 9%
2004 and earlier 9%
Investment Type
Secondary investments continue to constitute the largest
component of PIP's portfolio.
Co-investments are becoming a more established part of PIP's
portfolio at 20% of value (from 13% as at 30(th) June 2015).
Primary 46%
Secondary 34%
Co-investment 20%
Company Sectors
PIP's sectoral exposure diversifies the effects of cyclical
trends within different industry segments.
Relative to the FTSE All-Share and MSCI World indices, PIP has
greater exposure to information technology, and lower exposure to
the banking, mining and energy sectors.
Consumer 28%
Information Technology 26%
Healthcare 15%
Industrials 13%
Financials 8%
Energy 6%
Materials 3%
Telecommunication
Services 1%
Company Geography
Over half of the portfolio is invested in companies based in
North America, which benefit from greater capital market scope and
depth.
PIP's European exposure, which represents approximately a third
of the portfolio, is predominantly in companies based in the
stronger Northern European economies including the UK, Scandinavia
and Germany.
16% of PIP's portfolio is based in Asia and other regions,
providing access to faster-growing economies such as China and
India.
North America 55%
Asia 16%
UK 9%
Scandinavia 4%
Germany 4%
Central and Eastern
Europe 4%
France 2%
Benelux 2%
Other Europe 2%
Italy 1%
Iberia 1%
PORTFOLIO ANALYSIS
Portfolio Performance by Stage for the Year to 30(th) June
2016(1)
-- PIP's portfolio generated investment returns, prior to
foreign exchange effects, of 6.8% during the year.
-- Buyouts showed strong performance during the period.
-- Special Situations include energy assets which underperformed
during the year, mainly as a result of declining oil prices.
(1) Portfolio stage returns include income, exclude gains and
losses from foreign exchange movements, and look through feeders
and funds-of-funds to the underlying funds.
Debt Multiples(2)
Venture, Growth and buyout investments have differing leverage
characteristics.
-- The Venture and Growth portfolio has little or no reliance on leverage.
-- Debt multiples in PIP's underlying companies indicate an increased dependence on leverage.
-- The average debt multiple for large/mega buyouts increased
from 4.7 times to 5.0 times between 30(th) June 2015 and 30(th)
June 2016, while the average debt multiple for small/mid buyouts
increased from 3.7 times to 3.8 times during the same period.
PORTFOLIO ANALYSIS - BUYOUT
Valuation Multiple(2)
-- Accounting standards require private equity managers to value
their portfolio at fair value. Public market movements can be
reflected in valuations.
-- Sample-weighted average enterprise value/EBITDA for the year
to 31(st) December 2015 was 10.4 times, compared to 12.1 times and
11.7 times for the FTSE All-Share and MSCI World indices.
Revenue and EBITDA Growth(2)
-- Weighted average revenue growth for the sample buyout
companies was +8.5% in the 12 months to 31(st) December 2015,
compared to -17.0% and -8.0% for the FTSE All Share and MSCI World
indices.
-- Weighted average EBITDA growth for the sample buyout
companies was +9.3% in the 12 months to 31(st) December 2015,
compared to -14.2% and -12.2% for the FTSE All Share and MSCI World
indices.
-- Strong top-line performance, disciplined cost control and
good earnings growth, together with an efficient use of capital,
underpin the investment thesis of many private equity managers.
(2) The data is based on a sample of PIP's buyout funds. Buyout
Sample Methodology: The sample buyout figures for the 12 months to
31(st) December 2015 were calculated from the companies, where
information was available. The figures are based on unaudited data.
The revenue and EBITDA figures were based upon the last 12 months
to 31(st) December 2015 or, where not available, the closest annual
period disclosed, and provide coverage of 65% and 61% (for revenue
and EBITDA growth) of PIP's buyout portfolio. Individual company
revenue and EBITDA growth figures were capped between +100% and
-100% to avoid large distortions from excessive outliers. Sample
data for 2011-2015 is based on the same methodology and provides
coverage of 60-75% of the portfolio in each year. Enterprise value
is defined as carrying value + net debt. The net debt and
enterprise value figures were based on underlying valuations as at
31(st) December 2015, or the closest period end disclosed. The
valuation multiple sample covers approximately 38% of PIP's buyout
portfolio. The debt multiple sample covers 57% of PIP's buyout
portfolio. Data sourced from Bloomberg.
PORTFOLIO ANALYSIS - VENTURE AND GROWTH
Venture and Growth Portfolio Analysis
-- Before foreign exchange effects, PIP's venture and growth
funds generated a return of approximately 5% in the year to 30(th)
June 2016.
-- Although vintage 2006 and earlier funds generated flat
returns during the year, these vintages continue to produce
substantial levels of distributions.
-- 2007 and later funds, which constitute the largest segment of
the venture and growth portfolio (just under half), generated
pre-FX returns of 16% and distributed at an annualised rate of 22%
of opening assets.
DISTRIBUTIONS IN THE YEAR TO 30(TH) JUNE 2016
PIP received more than 1,700(1) distributions in the year, with
many reflecting realisations at significant uplifts to carrying
value. PIP's mature portfolio should continue to generate
significant distributions.
(1) This figure looks through feeders and funds-of-funds.
Distributions
Distributions by Region and Stage
PIP received GBP252m in proceeds from the portfolio in the year
to 30(th) June 2016, equivalent to 29% of opening private equity
assets.
The US accounted for the majority of PIP's distributions, where
market conditions supported a good level of exits among larger
buyouts.
Europe continues to generate significant distributions despite
its lower portfolio weighting.
Distributions by Region =
GBP252m
USA 53%
Europe 34%
Asia and other 13%
Distributions by Stage = GBP252m
Small/Mid Buyout 32%
Large/Mega Buyout 42%
Venture and
Growth 21%
Special Situations 3%
Generalist 2%
Distribution Rates
Quarterly Distribution Rates(2)
Quarterly distribution rates remain strong, averaging at around
29% on an annualised basis during the year. The high distribution
rates seen in the early part of PIP's financial year have moderated
in the second half to be in line with long-term average
distribution levels.
Distribution Rates(2) in the Year to 30(th) June 2016 by
Vintage
Mature vintages continue to distribute at higher rates, with
2009 and earlier funds distributing at an average rate of 30% of
opening value. With a weighted fund maturity of 7.3 years, PIP's
portfolio should continue to generate significant
distributions.
(2) Distribution rate equals distributions in the period
(annualised) divided by opening portfolio value.
EXIT REALISATIONS IN THE YEAR TO 30(TH) JUNE 2016
Cost Multiples on Exit Realisations for the Year to 30(th) June
2016(1)
On a sample of exit realisations, the value-weighted average
cost multiple of the sample was 3.8 times, highlighting significant
value creation over the course of an investment.
(1) The data in the sample represented approximately 46% by
value of PIP's gross distributions for the year to 30(th) June
2016. A company with an excessively high multiple (>50 times)
was removed from this analysis to avoid skewing of overall results.
The data is based upon gross cost multiples available at the time
of the distribution.
Uplifts on Exit Realisations for the Year to 30(th) June
2016(2)
On a sample of exit realisations, the value-weighted average
uplift in the year was 34%. This average uplift is consistent with
our view that realisations can be significantly incremental to
returns. PIP's mature portfolio is well-placed to continue to
generate a good level of distributions from exit realisations in
the coming year.
(2) Realisation events are classified as exit realisations when
proceeds equate to at least 80% of total investment value and once
confirmation of exit realisation is received from the manager.
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 analysis only includes exit
realisations that occurred during the year and disregards the
impact of any proceeds received outside of the twelve month period
covered in the uplift analysis. Exit realisations represented
approximately 46% of PIP's gross distributions for the year to
30(th) June 2016.
Exit Realisations by Sector and Type
The portfolio benefited from strong realisation activity,
particularly in the healthcare, consumer and information technology
sectors.
Trade sales and secondary buyouts represented the most
significant source of exit activity during the year.
Exit Realisations by Sector
Information Technology 28%
Consumer 24%
Healthcare 21%
Industrials 18%
Financials 7%
Materials 2%
Exit Realisations by Type
Trade Sales 48%
Secondary Buyout 38%
Refinancing and Recapitalisation 9%
IPO and Secondary Share
Sale 5%
INVESTMENTS CALLED IN THE YEAR TO 30(TH) JUNE 2016
Investments called during the year ranged across regions and
sectors, including cloud-based software, logistics,
telecommunications infrastructure and oil and gas exploration
companies.
Calls
Calls by Region and Stage
PIP paid GBP62m to finance calls on undrawn commitments during
the year to 30(th) June 2016.
Calls by Region = GBP62m
USA 63%
Europe 23%
Asia & EM 14%
Calls by Stage = GBP62m
Small/Mid Buyout 39%
Venture and Growth 36%
Large/Mega Buyout 14%
Special Situations 10%
Generalist 1%
Quarterly Call Rate(1)
Average quarterly call rate for the year to 30(th) June 2016 was
22%.
(1) 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.
Calls by Sector
A high proportion of capital calls were due to new investments
in the information technology and consumer sectors, the largest
sectors within PIP's overall portfolio.
Calls by Sector
Information Technology 28%
Consumer 23%
Industrials 20%
Financials 15%
Energy 7%
Materials 3%
Healthcare 3%
Telecommunication
Services 1%
NEW COMMITMENTS
PIP committed GBP346m to new investments during the year, mostly
to buyout and growth equity funds. GBP192m was drawn at the time of
purchase.
New Commitments by Region
Just over half of the commitments made in the year were to
US-focused private equity funds, reflecting a greater number of
suitable investment opportunities in the region.
USA 52%
Europe 24%
Asia and EM 16%
Global 8%
New Commitments by Stage
During the year, the largest commitments by stage were to small
and mid-market buyout managers.
Small/Mid Buyout 36%
Large/Mega Buyout 26%
Venture and Growth 25%
Special Situations 13%
New Commitments by Deal Type
Secondary transactions accounted for half of all new
commitments, with primaries and co-investments representing a
broadly equal proportion of the balance of new commitments.
Secondary 50%
Primary 27%
Co-investment 23%
New Commitments by Vintage
Primaries and co-investments, which accounted for half of the
total new commitments, provide exposure to more recent
vintages.
2016 31%
2015 28%
2014 3%
2013 1%
2012 4%
2011 6%
2010 1%
2008 9%
2007 11%
2006 2%
2005 and earlier 4%
NEW COMMITMENTS:
SECONDARY AND PRIMARY (FUNDS)
PIP committed approximately GBP173m to 13 secondary transactions
during the year, with the largest proportion of commitments in
small and medium-sized buyout funds. In addition, PIP committed
GBP93m to 20 primaries, adding current vintage exposure with high
quality managers.
New Secondary and Primary Commitments(1)
Secondary Commitments in the Year to 30(th) June 2016
COMMITMENTS % FUNDED(2)
REGION STAGE DESCRIPTION GBPM
--------------- -------------------- -------------------- ------------ ------------
Portfolio of
Global buyout
Global Buyout funds 34 35%
Portfolio of
US and European
Global Buyout buyout funds 33 84%
European buyout
Europe Buyout funds 26 73%
US growth equity
funds focused
on the financial
North America Growth Equity services sector 16 73%
Asian growth
Asia Growth Equity equity fund 14 79%
North American
growth equity
North America Growth Equity fund 13 43%
European buyout
Europe Buyout fund 11 97%
Portfolio of
US large buyout
North America Buyout funds 6 87%
North American
North America Buyout buyout funds 5 45%
Portfolio of
North America Special Situations energy assets 4 57%
European venture
and growth equity
Europe Growth Equity fund 4 100%
North American
North America Buyout buyout funds 4 57%
US large buyout
fund focused
on healthcare
and business
North America Buyout services sectors 3 92%
Total 173 68%
----------------------------------------------------------- ------------ ------------
Primary Commitments in the Year to 30(th) June 2016
COMMITMENTS
INVESTMENT STAGE DESCRIPTION GBPM
----------------------- -------------------- ----------------------- ------------
North American small
Parthenon V Buyout buyout fund 12
Yorktown Energy North American energy
Partners XI Energy private equity fund 11
Australian mid-market
CHAMP IV Buyout buyout fund 10
Special situations
fund specialising
Searchlight Capital in distressed debt
II Special Situations strategies 10
Advent Global Private Global large buyout
Equity VIII Buyout fund 10
European mid-market
Apax France IX Buyout buyout fund 9
Shamrock Capital US growth equity
Growth IV Growth Equity fund 9
US growth equity
Essex Woodlands fund focused on
IX Growth Equity healthcare sector 4
Other Various Various funds 18
TOTAL 93
---------------------------------------------------------------------- ------------
(1) Funds acquired in new secondary transactions are not named
due to non-disclosure agreements.
(2) The funding level does not include deferred payments,
notably for the GBP34m portfolio of large global buyout funds.
Including the deferred payment, the funding level would be 74% for
secondary commitments made in the year.
OUTSTANDING COMMITMENTS
PIP's outstanding commitments(1) to fund investments are
well-diversified by stage and geography and will enable the Company
to participate in future investments with many of the highest
quality fund managers in private equity worldwide. The Board and
Manager keep the level of outstanding commitments under review so
as not to exceed an amount that can be financed (comfortably) out
of cash flows generated internally and of which the Company's
liquid resources and unutilised bank facilities can provide
sufficient cover in the event that distributions received from the
portfolio slow down in adverse market conditions.
Analysis of Outstanding Commitments as at 30(th) June 2016
PIP's outstanding commitments to investments increased to
GBP382m at 30th June 2016 compared with GBP256m at 30th June 2015.
The Company paid calls of GBP62m and added an additional GBP154m of
outstanding commitments associated with new investments made in the
year. Foreign exchange movements accounted for most of the
remaining GBP34m increase.
Geography
The US and Europe have the largest outstanding commitments,
reflecting the Company's investment emphasis. Commitments to Asia
and other regions provide access to faster-growing economies.
USA 52%
Europe 29%
Asia and EM 12%
Global 7%
Stage
PIP's undrawn commitments area diversified across the major
stages, with an emphasis on small and mid-market buyout managers
that reflects the focus of recent primary commitments.
Small/Mid Buyout 42%
Large/Mega Buyout 28%
Venture and Growth 18%
Special Situations 11%
Generalist 1%
Maturity
Approximately 33% of PIP's undrawn commitments are in the 2008
vintage or older where draw-downs may naturally occur at a slower
pace. It is likely that a portion of these commitments will not be
drawn.
The rise in 2015 and 2016 vintage undrawn commitments reflects
PIP's recent primary commitment activity.
2016 25%
2015 26%
2014 8%
2013 3%
2012 2%
2011 1%
2010 1%
2009 1%
2008 7%
2007 10%
2006 5%
2005 and earlier 11%
(1) Capital committed to funds that to date remains undrawn.
FINANCE AND SHARE BUYBACKS
Finance
Cash and Available Bank Facility
At 30th June 2016, PIP had cash balances of GBP116m.
In addition to these cash balances, PIP can also finance
investments out of its multi-currency revolving credit facility
agreement ("Loan Facility"). The Loan Facility is due to expire in
November 2018 and comprises facilities of $100m and EUR46m which,
using exchange rates at 30(th) June 2016, amount to a sterling
equivalent of GBP113m. At 30(th) June 2016, the Loan Facility
remained fully undrawn.
Undrawn Commitment Cover
At 30(th) June 2016, the Company had GBP229m of available
financing, comprised of its cash balances and Loan Facility. The
sum of PIP's available financing and private equity portfolio
provide 3.4 times cover relative to undrawn commitments. When a
fund is past its investment period, which is typically between five
and six years, it generally cannot make any new investments and
only draws capital to fund existing follow-on investments or pay
expenses. As a result, the rate of capital calls in these funds
tends to slow dramatically. Approximately one third of the
Company's undrawn commitments are in fund vintages that are older
than six years old.
Share Buybacks
In the year to 30th June 2016, PIP bought back 1.9m redeemable
shares at discounts ranging from 26% and 34% compared to the most
recently published NAV per share at the time of purchase, resulting
in a total uplift to NAV per share of 17.3p. The discounts at which
the Company's shares trade from time to time may make buybacks an
attractive investment opportunity relative to other potential new
investment commitments.
THE LARGEST 50 MANAGERS BY VALUE
Largest 50 Managers by Value as at 30(th) June 2016
% OF PIP'S TOTAL(1)
PRIVATE EQUITY
NUMBER MANAGER REGION(2) STAGE BIAS ASSET VALUE
--------- ----------------------- ------------ ------------------- --------------------
Providence Equity
1 Partners USA Buyout 6.5%
2 Texas Pacific Group Global Buyout 4.3%
Baring Private
3 Equity Asia Asia Buyout 2.3%
Warburg Pincus
4 Capital Global Buyout 2.1%
5 Essex Woodlands USA Buyout 1.9%
6 KKR Global Generalist 1.5%
Quantum Energy
7 Partners USA Buyout 1.5%
The Banc Funds
8 Company USA Buyout 1.5%
9 EQT(3) Asia Buyout 1.4%
10 KRG Capital Partners USA Buyout 1.3%
Venture and
11 Index Ventures Europe Growth 1.2%
12 Golden Gate Capital USA Special Situations 1.2%
MatlinPatterson
13 Global Advisers USA Buyout 1.2%
14 Vision Capital Europe Buyout 1.1%
Brentwood Associates Venture and
15 Private Equity USA Growth 1.1%
16 Bridgepoint Partners Europe Buyout 1.1%
17 Carlyle Group Europe Buyout 1.1%
Francisco Partners Venture and
18 Management USA Growth 1.1%
19 Yorktown Partners USA Special Situations 1.0%
20 Ares Management USA Buyout 1.0%
Venture and
21 Abris Capital Europe Growth 1.0%
22 Nordic Capital Europe Buyout 1.0%
Shamrock Capital
23 Advisors USA Buyout 0.9%
24 Apollo Advisors USA Buyout 0.9%
25 ABS Capital Partners USA Special Situations 0.9%
26 Gemini Capital Europe Buyout 0.9%
Venture and
27 Mid-Europa Partners Europe Growth 0.9%
CVC Capital Partners
28 Europe Limited Europe Buyout 0.9%
29 Hutton Collins Europe Special Situations 0.8%
Venture and
30 Summit Partners USA Growth 0.8%
31 IK Investment Partners Europe Buyout 0.8%
32 Blackstone Group USA Buyout 0.8%
Venture and
33 ABRY Partners USA Growth 0.8%
34 Altor Capital Europe Buyout 0.7%
35 Thomas H. Lee Partners USA Buyout 0.7%
Venture and
36 Lee Equity Partners USA Growth 0.7%
37 Kayne Anderson USA Buyout 0.7%
Polaris Venture Venture and
38 Partners USA Growth 0.7%
Apax Partners &
39 Co Limited Europe Buyout 0.7%
Venture and
40 Stone Point Capital USA Growth 0.7%
41 Bain Capital USA Buyout 0.7%
Insight Venture Venture and
42 Partners USA Growth 0.7%
43 Herkules Capital Europe Special Situations 0.7%
Equistone Partners
44 Europe Europe Buyout 0.6%
Technology Crossover Venture and
45 Management USA Growth 0.6%
46 Sun Capital Partners USA Special Situations 0.6%
Venture and
47 Andreessen Horowitz USA Growth 0.6%
Baring Vostok Capital Venture and
48 Partners Asia Growth 0.6%
Oak Investment Venture and
49 Partners USA Growth 0.6%
50 Veritas Capital USA Buyout 0.5%
--------- ----------------------- ------------ ------------------- --------------------
COVERAGE OF PIP'S TOTAL PRIVATE EQUITY ASSET VALUE 58.8%
--------------------------------------------------------------------- --------------------
(1) Percentages look through feeders and funds-of-funds.
(2) Refers to the regional exposure of funds.
(3) The majority of PIP's remaining investments in EQT is held
in EQT Greater China II.
THE LARGEST 50 COMPANIES BY VALUE
Largest 50 Companies by Value as at 30(th) June 2016(1)
% OF PIP'S TOTAL
PRIVATE EQUITY
NUMBER COMPANY COUNTRY SECTOR ASSET VALUE
--------- ------------------------------- ---------- ------------------ -----------------
1 LBX Pharmacy(3) China Consumer 1.22%
Information
2 Spotify Sweden Technology 0.85%
Grupo Farmaceutico
3 Bitoscana(2) Colombia Healthcare 0.84%
4 ALM Media(2) USA Consumer 0.82%
5 GlobalTranz Enterprises(2) USA Industrials 0.66%
Information
6 Abacus Data Systems(2) USA Technology 0.66%
Information
7 ZeniMax Media USA Technology 0.65%
8 Standard Pacific(3) USA Consumer 0.55%
StandardAero Business
9 Aviation Services USA Industrials 0.55%
10 American Tire Distributors(2) USA Consumer 0.54%
Information
11 Blackboard USA Technology 0.53%
12 Confidential(2) USA Consumer 0.53%
Applied Medical
13 Resources(2) USA Healthcare 0.52%
Telecommunication
14 Vertical Bridge USA Services 0.50%
15 Confidential(2) Hong Kong Industrials 0.50%
16 McGraw-Hill Education(2) USA Consumer 0.50%
17 CPL Industries UK Energy 0.49%
18 EUSA Pharma(2) France Healthcare 0.47%
19 ConvaTec Healthcare USA Healthcare 0.47%
20 IMS Health(3) USA Healthcare 0.46%
21 Nord Anglia Education(3) Hong Kong Consumer 0.45%
Information
22 Alarm.Com(3) USA Technology 0.45%
23 Financial Company(2) Mexico Financials 0.44%
24 Confidential(2) Singapore Healthcare 0.43%
Information
25 Burning Glass International(2) USA Technology 0.42%
Information
26 SoftBrands USA Technology 0.41%
Information
27 Ministry Brands(2) USA Technology 0.40%
Information
28 Verimatrix USA Technology 0.39%
29 S-Process Equipment Germany Industrials 0.39%
30 Home Shopping Europe Germany Consumer 0.39%
31 Univision USA Consumer 0.39%
32 ILX(2) USA Energy 0.38%
33 Confidential(2) UK Consumer 0.38%
34 BrightHouse UK Consumer 0.38%
35 Confidential UK Industrials 0.37%
Extraction Oil
36 & Gas(2) USA Energy 0.37%
37 Rightpoint Consulting(2) USA Industrials 0.36%
38 Standard Pacific(3) USA Consumer 0.35%
39 USI(2) USA Financials 0.34%
40 Virgin Pulse(2) USA Industrials 0.34%
41 Confidential(2) USA Financials 0.34%
42 Vitruvian Exploration USA Energy 0.34%
43 Jimmy John's USA Consumer 0.33%
Information
44 Indus Towers India Technology 0.33%
Information
45 Confidential USA Technology 0.33%
46 Michaels Stores(3) USA Consumer 0.32%
Information
47 Confidential USA Technology 0.31%
Antero Resources
48 Corporation(3) USA Energy 0.31%
Heptagon Advanced Information
49 Micro-Optics(2) Singapore Technology 0.31%
50 K-Mac USA Consumer 0.30%
--------- ------------------------------- ---------- ------------------ -----------------
COVERAGE OF PIP'S NET ASSET VALUE 23.36%
-------------------------------------------------------------------------- -----------------
(1) The largest 50 companies table is based upon underlying
company valuations at 30(th) June 2016, adjusted for known calls,
distributions, new investment commitments and post valuation
information.
(2) Co-investments/directs.
(3) Listed companies.
THE DIRECTORS
The Directors in office at the date of this report are:
Tom Bartlam* (Chairman)
Ian Barby* (Audit Committee Chairman)
Sir Laurie Magnus* (Senior Independent Director)
Susannah Nicklin*
David Melvin*
Rhoddy Swire
* Independent of the Manager
EXTRACTS FROM THE DIRECTORS' REPORT
Share Capital
As at 30(th) June 2016, and as at the date of this Report, the
Company had shares in issue as shown in the table below, all of
which were admitted to the official list maintained by the FCA and
admitted to trading on the London Stock Exchange. No shares were
held in treasury at the year end.
During the year, there were no purchases of ordinary shares made
by the Company.
During the year, 1,900,000 redeemable shares (with an aggregate
nominal value of GBP19,000 and representing 5.9% of the redeemable
share capital in issue on 30(th) June 2015) were purchased in the
market for cancellation for a total consideration of GBP21.9m.
No purchases of either classes of shares have been made since
30(th) June 2016 to date.
Share capital % OF TOTAL
and voting NUMBER OF VOTING RIGHTS NUMBER OF VOTING RIGHTS
rights at 19th SHARES IN ATTACHED TO SHARES REPRESENTED
September 2016 ISSUE EACH SHARE HELD IN TREASURY BY EACH CLASS
-------------------- ------------ ---------------- ------------------- ---------------
ORDINARY SHARES
AT GBP0.67
EACH 33,062,313 1 - 100
REDEEMABLE 30,297,534 - - -
SHARES AT GBP0.01
EACH
TOTAL VOTING
RIGHTS 33,062,013
-------------------- ------------ ---------------- ------------------- ---------------
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 Strategic
Report and Manager's Review.
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 at least 12
months from the approval of the financial statements. For this
reason, they consider it appropriate to continue to adopt the going
concern basis in preparing the financial statements.
Statement of Directors' Responsibilities
IN RESPECT OF THE FINANCIAL STATEMENTS
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations.
Company law requires the Directors to prepare financial
statements for each financial year. Under that law the Directors
have elected to prepare financial statements in accordance with
United Kingdom Generally Accepted Accounting Practice ("UK GAAP").
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss of the Company for that period. In preparing these financial
statements, the Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgements and estimates that are reasonable and prudent;
-- state whether applicable UK accounting standards have been
followed, subject to any material departure disclosed and explained
in the financial statements; and
-- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
The Directors are responsible for ensuring that the Strategic
Report, Directors' Report and other information in the Annual
Report is prepared in accordance with company law in the United
Kingdom, and that the Annual Report includes information required
by the Listing Rules of the FCA. They also have responsibility for
safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
The Directors are responsible for the maintenance and integrity
of the corporate and financial information included on the
Company's website. Legislation in the United Kingdom governing the
preparation and dissemination of financial statements may differ
from legislation in other jurisdictions.
The Directors consider that the Annual Report, and financial
statements taken as a whole, is fair, balanced and understandable
and provides the necessary information for shareholders to assess
the Company's position and performance, business model and
strategy.
The Directors confirm that, to the best of their knowledge:
-- the financial statements have been prepared in accordance
with UK accounting standards, give a true and fair view of the
assets, liabilities, financial position and return of the Company;
and
-- the Strategic Report includes a fair review of the
development and performance of the business and the position of the
Company, together with a description of the principal risks and
uncertainties that it faces.
On behalf of the Board
TOM BARTLAM
Chairman
19(th) September 2016
NON-STATUTORY ACCOUNTS
The financial information set out below does not constitute the
Company's statutory accounts for the years ended 30(th) June 2016
and 2015 but is derived from those accounts. Statutory accounts for
2015 have been delivered to the Registrar of Companies, and those
for 2016 will be delivered in due course. The Auditors have
reported on those accounts; their report was (i) unqualified, (ii)
did not include a reference to any matters to which the Auditors
drew attention by way of emphasis without qualifying their report
and (iii) did not contain a statement under Section 498 (2) or (3)
of the Companies Act 2006. The text of the Auditors' report can be
found in the Company's full Annual Report and Accounts at
www.piplc.com.
Income Statement
YEARED 30(TH) JUNE 2016
2016 2015
revenue capital total* revenue capital TOTAL*
note GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
Gains on investments at fair value
through profit or loss** 9b - 191,298 191,298 - 101,905 101,905
Currency gains on cash and
borrowings 16 - 22,864 22,864 - 6,337 6,337
Investment income 2 11,832 - 11,832 14,959 - 14,959
Investment management fees 3 (11,249) - (11,249) (9,972) - (9,972)
Other expenses 4 (1,531) (896) (2,427) (1,284) (437) (1,721)
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
RETURN ON ORDINARY ACTIVITIES
BEFORE
FINANCING COSTS AND TAX (948) 213,266 212,318 3,703 107,805 111,508
Interest payable and similar
charges/finance
costs 6 (1,261) - (1,261) (1,510) - (1,510)
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
RETURN ON ORDINARY ACTIVITIES
BEFORE
TAX (2,209) 213,266 211,057 2,193 107,805 109,998
Tax on ordinary activities 7 (1,985) - (1,985) (1,437) - (1,437)
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
RETURN ON ORDINARY ACTIVITIES FOR
THE YEAR, BEING TOTAL
COMPREHENSIVE
INCOME FOR THE YEAR (4,194) 213,266 209,072 756 107,805 108,561
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
RETURN PER ORDINARY AND REDEEMABLE
SHARE 8 (6.47)p 328.99p 322.52p 1.15p 164.05p 165.20p
------------------------------------- ------- ---------- ---------- ---------- ---------- ---------- ----------
* The Company does not have any income or expense that is not
included in the return for the year and accordingly the return for
the year is also the total comprehensive income for the year. The
total column of the statement represents the Company's Statement of
Total Comprehensive Income prepared in accordance with Financial
Reporting Standards ("FRS"). 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.
No operations were acquired or discontinued during the year.
There were no recognised gains or losses other than those
passing through the Income Statement.
The Notes form part of these financial statements.
Statement of Changes in Equity
YEARED 30(TH) JUNE 2016
CAPITAL
CAPITAL OTHER RESERVE ON
SHARE SHARE REDEMPTION CAPITAL INVESTMENTS SPECIAL REVENUE
CAPITAL PREMIUM RESERVE RESERVE HELD RESERVE* RESERVE* TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Movement for
the year ended
30(th) June
2016
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,475 283,555 3,070 409,584 324,062 13,010 (55,692) 1,000,064
Return for the
year - - - 115,148 98,118 - (4,194) 209,072
Redeemable
shares bought
back for
cancellation (19) - 19 (9,012) - (13,010) - (22,022)
---------------- --------- ---------- ------------ ---------- ------------ ----------- ----------- ------------
CLOSING
EQUITY
SHAREHOLDERS'
FUNDS 22,456 283,555 3,089 515,720 422,180 - (59,886) 1,187,114
Movement for
the year ended
30(th) June
2015
OPENING EQUITY
SHAREHOLDERS'
FUNDS 22,787 283,555 2,758 337,152 288,689 23,198 (56,448) 901,691
Return for the
year (-) - - 72,432 35,373 - 756 108,561
Ordinary shares
bought back
for
cancellation (308) - 308 - - (5,799) - (5,799)
Redeemable
shares bought
back for
cancellation (4) - 4 - - (4,389) - (4,389)
---------------- --------- ---------- ------------ ---------- ------------ ----------- ----------- ------------
CLOSING
EQUITY
SHAREHOLDERS'
FUNDS 22,475 283,555 3,070 409,584 324,062 13,010 (55,692) 1,000,064
---------------- --------- ---------- ------------ ---------- ------------ ----------- ----------- ------------
* Reserves that are distributable by way of dividends. In
addition, the Special Reserve and Other Capital Reserve can be used
for share buybacks.
The Notes form part of these financial statements.
Balance Sheet
AS AT 30(TH) JUNE 2016
2016 2015
NOTE GBP'000 GBP'000
Fixed assets
Investments at fair value 9a/b 1,071,876 862,029
------------------------------------------------------ ------- ----------- -----------
Current assets
Debtors 11 3,654 1,805
Cash at bank 115,522 137,483
------------------------------------------------------ ------- ----------- -----------
119,176 139,288
------------------------------------------------------ ------- ----------- -----------
Creditors: Amounts falling due within one year
Other creditors 12 3,938 1,253
3,938 1,253
NET CURRENT ASSETS 115,238 138,035
NET ASSETS 1,187,114 1,000,064
Capital and reserves
Called-up share capital 13 22,456 22,475
Share premium 14 283,555 283,555
Capital redemption reserve 14 3,089 3,070
Other capital reserve 14 515,720 409,584
Capital reserve on investments held 14 422,180 324,062
Special reserve 14 - 13,010
Revenue reserve 14 (59,886) (55,692)
------------------------------------------------------ ------- ----------- -----------
TOTAL EQUITY SHAREHOLDERS' FUNDS 1,187,114 1,000,064
NET ASSET VALUE PER SHARE - ORDINARY AND REDEEMABLE 15 1,873.62p 1,532.44p
The Notes form part of these financial statements.
The financial statements were approved by the Board of Pantheon
International Plc on 19(th) September 2016 and were signed on its
behalf by
TOM Bartlam
Chairman
Company No. 2147984
Cash Flow Statement
YEARED 30(TH) JUNE 2016
2016 2015
NOTE GBP'000 GBP'000
Cash flow from operating activities
Investment income received 11,664 14,855
Deposit and other interest received 159 60
Investment management fees paid (11,011) (9,876)
Secretarial fees paid (232) (209)
Depositary fees paid (193) (148)
Other cash payments (1,730) (1,370)
Withholding tax deducted (1,985) (1,437)
NET CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES 16 (3,328) 1,875
------------------------------------------------------ ------ ---------- ----------
Cash flows from investing activities
Purchases of investments (263,203) (171,799)
Disposals of investments 244,540 225,971
------------------------------------------------------ ------ ---------- ----------
NET CASH (OUTFLOW)/INFLOW FROM INVESTING ACTIVITIES (18,663) 54,172
------------------------------------------------------ ------ ---------- ----------
Cash flows from financing activities
Ordinary shares purchased for cancellation - (6,872)
Redeemable shares purchased for cancellation (22,022) (4,389)
Loan commitment and arrangement fees paid (992) (1,953)
NET CASH OUTFLOW FROM FINANCING ACTIVITIES (23,014) (13,214)
(DECREASE)/INCREASE IN CASH IN YEAR (45,005) 42,833
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 137,483 88,346
FOREIGN EXCHANGE GAINS 23,044 6,304
------------------------------------------------------ ------ ---------- ----------
NET CASH AND CASH EQUIVALENTS AT OF YEAR 115,522 137,483
------------------------------------------------------ ------ ---------- ----------
The Notes form part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting Policies
Pantheon International Plc is a listed public limited company
incorporated in England and Wales. In November 2015, ordinary
shareholders approved the simplification of the Company's name from
Pantheon International Participations Plc. A summary of the
principal accounting policies, all of which have been applied
consistently throughout the year, is set out below.
(A) Basis of Preparation
The Company applies UK GAAP in preparing its financial
statements, on a going concern basis, and has adopted FRS 102 for
its financial year ended 30(th) June 2016. FRS 102 became mandatory
for companies with a financial year beginning from 1(st) January
2015. The date of transition to FRS 102 was 1(st) July 2014 and the
results for the year ended 30(th) June 2016 represent the Company's
first annual financial statements prepared on this basis and have
been prepared in accordance with its accounting policies under FRS
102. The Directors have determined these financial statements to be
compliant with FRS 102. They have also been prepared on the
assumption that approval as an investment trust will continue to be
granted. The Company's financial statements are presented in
sterling and all values are rounded to the nearest thousand pounds
(GBP'000) except when indicated otherwise.
The Directors have undertaken an assessment of the impact of
adoption of FRS 102 and have concluded that there are no impacts
with regards to the recognition and measurement of asset,
liabilities, income and expenses on adoption of FRS 102. In
substance the accounting policies are consistent with those set out
in the financial statements for the year ended 30(th) June 2015.
There has been no measurement impact on the Company's Income
Statement, Balance Sheet or Statement of Changes in Equity
(previously called the Reconciliation of Movements in Equity
Shareholders' Funds) for years previously reported. The Cash Flow
Statement previously reported has been restated to comply with the
new disclosure requirements of the revised reporting standard.
The Company has early adopted the amendments made in FRS 102
paragraphs 34.22 issued in March 2016, revising the fair value
hierarchy disclosure requirements.
(B) AIC SORP
The financial statements have been prepared in accordance with
the SORP (as amended in November 2014) for the financial statements
of investment trust companies and venture capital trusts issued by
the AIC.
(C) Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business, being investment business.
(D) Valuation of Investments
Given the nature of the Company's assets which comprise
predominantly unlisted fund investments, while the Company operates
a robust and consistent valuation process, there is significant
estimation uncertainty in the underlying fund valuations, as these
are comprised of individual unlisted company valuations estimated
at a point in time. Accordingly, while the Company considers
circumstances where it might be appropriate to apply an override,
for instance in response to a market crash, this will be exercised
only where it is judged necessary to show a true and fair view.
Similarly, while relevant information received after the
measurement date is considered, the Directors will only consider an
adjustment to the financial statements if it were to have a
significant impact. In the view of the Directors a significant
impact would be a movement of greater than 5% of the overall
estimate of the investment portfolio made at the measurement
date.
The Company has fully adopted sections 11 and 12 of FRS 102. All
investments held by the Company are classified as "fair value
through profit or loss". As the Company's business is investing in
financial assets with a view to profiting from their total return
in the form of interest, dividends or increases in fair value,
investments are designated as fair value on initial recognition.
The Company manages and evaluates the performance of these
investments on a fair value basis in accordance with its investment
strategy. For investments actively traded in organised financial
markets, fair value is generally determined by reference to Stock
Exchange quoted market bid prices at the close of business at the
Balance Sheet date. For investments that are not actively traded in
organised financial markets, fair value is determined using
reliable valuation techniques as described below:
(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.
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.
(ii) Quoted investments are valued at the bid price on the
relevant stock exchange.
The Company may engage in financing transactions if payment for
an investment is deferred beyond normal business terms. If the
arrangement constitutes a financing transaction, the Company
initially measures the financial liability at the present value of
the future payments discounted at a market rate of interest for a
similar debt instrument. The difference between the present value
and the discounted value is amortised over the life of the
transaction and shown as a finance cost in the revenue column in
the Income Statement.
(E) Income
Dividends receivable on quoted equity shares are brought into
account on the ex-dividend date.
Dividends receivable on equity shares where no ex-dividend date
is quoted are brought into account when the Company's right to
receive payment is established. The fixed return on a debt security
is recognised on a time apportionment basis so as to reflect the
effective interest rate on the security.
Other interest receivable is included on an accruals basis.
(F) Taxation
Corporation tax payable is based on the taxable profit for the
year. The charge for taxation takes into account taxation deferred
or accelerated because of timing differences between the treatment
of certain items for accounting and taxation purposes. Full
provision for deferred taxation is made under the liability method,
without discounting, on all timing differences that have arisen but
not reversed by the Balance Sheet date.
The tax effect of different items of income/gain and
expenditure/loss is allocated between capital and revenue on the
same basis as the particular item to which it relates, using the
marginal method.
Dividends receivable are recognised at an amount that may
include withholding tax (but excludes other taxes, such as
attributable tax credits). Any withholding tax suffered is shown as
part of the revenue account tax charge.
(G) Expenses
All expenses are accounted for on an accruals basis. Expenses,
including investment management fees, are charged through the
revenue account except as follows:
-- expenses which are incidental to the acquisition or disposal
of an investment are treated as capital costs and separately
identified and disclosed in Note 9;
-- expenses of a capital nature are accounted for through the capital account; and
-- investment performance fees.
(H) Foreign Currency
The currency of the Primary Economic Environment in which the
Company operates ("the functional currency") is pounds sterling
("sterling"), which is also the presentation currency. Transactions
denominated in foreign currencies are recorded in the local
currency at actual exchange rates as at the date of transaction.
Monetary assets and liabilities denominated in foreign currencies
at the year end are reported at the rates of exchange prevailing at
the year end. Any gain or loss arising from a change in exchange
rates subsequent to the date of the transaction is included as an
exchange gain or loss in the Income Statement. For non-monetary
assets these are covered by fair value adjustments.
(I) Other Capital Reserve
The following are accounted for in this reserve:
-- investment performance fees;
-- gains and losses on the realisation of investments;
-- realised exchange differences of a capital nature; and
-- expenses of a capital nature.
Capital distributions from investments are accounted for on a
reducing cost basis; cash received is first applied to reducing the
historical cost of an investment; any gain will be recognised as
realised only when the cost has been reduced to nil.
(J) Capital Reserve on Investments Held
The following are accounted for in this reserve:
-- increases and decreases in the value of investments held at the year end.
(K) Investment Performance Fee
The Manager is entitled to a performance fee from the Company in
respect of each 12 calendar month period ending on 30(th) 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 calculation
period ended 30(th) June 2016, the notional performance fee hurdle
is a net asset value per share of 2,506.49p. 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.
(L) Significant judgements and estimates
The preparation of financial statements requires the Manager to
make judgements, estimates and assumptions that affect the reported
amounts of assets and liabilities at the financial reporting date
and the reported amounts of revenue and expenses during the
reporting period. Actual results may differ from these estimates.
Details of any estimates are provided in Section (D) of this Note
in the Valuation of Investments policy and also within the Market
Price Risk section in Note 18.
2. Income
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
------------------------------- ----------------- -----------------
Income from investments
Investment income 11,673 14,898
------------------------------- ----------------- -----------------
11,673 14,898
------------------------------- ----------------- -----------------
Other income
Interest 159 59
Other income - 3
Exchange difference on income - (1)
------------------------------- ----------------- -----------------
159 61
------------------------------- ----------------- -----------------
TOTAL INCOME 11,832 14,959
------------------------------- ----------------- -----------------
Total income comprises
Dividends 11,673 14,898
Bank interest 159 59
Other income - 3
Exchange difference on income - (1)
------------------------------- ----------------- -----------------
11,832 14,959
------------------------------- ----------------- -----------------
Analysis of income from
investments
Unlisted 11,673 14,898
------------------------------- ----------------- -----------------
11,673 14,898
------------------------------- ----------------- -----------------
Geographical analysis
UK 505 1,709
US 6,929 6,352
Other overseas 4,239 6,837
------------------------------- ----------------- -----------------
11,673 14,898
------------------------------- ----------------- -----------------
3. Investment Management Fees
30(TH) JUNE 2016 30(TH) JUNE 2015
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Investment management
fees 11,249 - 11,249 9,972 - 9,972
----------------------- --------- --------- --------- --------- --------- ---------
11,249 - 11,249 9,972 - 9,972
----------------------- --------- --------- --------- --------- --------- ---------
The investment management fee is payable monthly in arrears at
the rate set out in the Directors' Report in the full Annual
Report.
During the year, services with a total value of GBP11,824,000
(2015: GBP10,563,000), being GBP11,249,000 (2015: GBP9,972,000)
directly from Pantheon Ventures (UK) LLP and GBP575,000 (2015:
GBP591,000) via Pantheon managed fund investments were purchased by
the Company.
The value of investments in and outstanding commitments to,
investment funds managed or advised by the Pantheon group
("Pantheon Funds") are excluded in calculating the monthly
management fee and the commitment fee. The value of holdings in
investments managed by the Pantheon group totalled GBP34,855,000 as
at 30th June 2016 (2015: GBP47,730,000). In addition, the Manager
has agreed that the total fees (including performance fees) payable
by Pantheon Funds to members of the Pantheon group and attributable
to the Company's investments in Pantheon Funds shall be less than
the total fees (excluding the performance fee) that the Company
would have been charged under the Management Agreement had it
invested directly in all of the underlying investments of the
relevant Pantheon Funds instead of through the relevant Pantheon
Funds.
At 30th June 2016 GBP1,080,000 (2015: GBP842,000) was owed for
investment management fees. No performance fee is payable in
respect of the 12 calendar month period to 30th June 2016 (2015:
GBPnil). The basis upon which the performance fee is calculated is
explained in Note 1(K) and in the Directors' Report in the full
Annual Report.
4. Other Expenses
30(TH) JUNE 2016 30(TH) JUNE 2015
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------------------------------------------ -------- -------- -------- -------- -------- --------
Secretarial and accountancy services 225 - 225 219 - 219
Depositary fees 194 - 194 180 - 180
Fees payable to the Company's Auditor
for the audit of the annual financial
statements 39 - 39 35 - 35
Fees payable to the Company's Auditor
for
* audit-related assurance services - Half-Yearly Report
8 - 8 7 - 7
* other assurance services - net asset value
calculations 13 - 13 12 - 12
Directors' remuneration (see Note
5) 231 - 231 203 - 203
Employer's National Insurance 22 - 22 9 - 9
Irrecoverable VAT 134 - 134 61 - 61
Legal and professional fees 282 896 1,178 200 437 637
Printing 53 - 53 46 - 46
Other 330 - 330 312 - 312
------------------------------------------------------------------ -------- -------- -------- -------- -------- --------
1,531 896 2,427 1,284 437 1,721
------------------------------------------------------------------ -------- -------- -------- -------- -------- --------
The Directors do not consider that the provision of other
assurance services work to the Company affects the independence of
the Auditors.
5. Directors' Remuneration
Directors' emoluments comprise Directors' fees and reclaimed
travel expenses. A breakdown is provided in the Directors'
Remuneration Report in the full Annual Report.
6. Interest Payable and Similar Charges
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
--------------------------------- ----------------- -----------------
Amortised costs associated
with finance transaction 35 -
Loan commitment and arrangement
fees 1,226 1,510
--------------------------------- ----------------- -----------------
1,261 1,510
--------------------------------- ----------------- -----------------
On 14(th) November 2014, the Company renewed its 4 year
multi-currency revolving credit facility agreement with improved
terms and a revised maturity date of November 2018. The size of the
facility with The Royal Bank of Scotland plc and Lloyds Bank plc
remains GBP100m equivalent which, using exchange rates as at 14(th)
November 2014, has been redominated to $100m and EUR46m. The
agreement also contains an accordion feature that would allow the
total facility to expand by a further GBP50m, subject to the
Company obtaining additional commitments to the accordian facility
and complying with financial covenants. Each individual drawdown
bears interest at a variable rate agreed for the period of the
drawdown and a commitment fee of 0.94% per annum is payable in
respect of the amounts available for drawdown in each denomination.
The Company paid to The Royal Bank of Scotland plc an upfront fee
of GBP900,000 representing 0.90% of the total facility. This fee is
being amortised over the life of the facility.
7. Tax on Ordinary Activities
30(TH) JUNE 2016 30(TH) JUNE 2015
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------------- --------- --------- --------- --------- --------- ---------
Withholding tax
deducted from distributions 1,985 - 1,985 1,437 - 1,437
------------------------------- --------- --------- --------- --------- --------- ---------
Tax Charge
The tax charge for the year differs from the standard rate of
corporation tax in the UK for the prior year only (20%). The
differences are explained below:
Net return on ordinary
activities before
tax (2,209) 213,266 211,057 2,193 107,805 109,998
------------------------------ ---------- ----------- ----------- ---------- ----------- -----------
Theoretical tax
at UK corporation
tax rate of 20%
(2015: 20.75%)* (442) 42,653 42,211 455 22,370 22,825
Non-taxable investment,
derivative and currency
gains - (42,832) (42,832) - (22,461) (22,461)
Effect of expenses
in excess of taxable
income - 179 179 - 91 91
Utilised management
expenses 442 - 442 (455) - (455)
Withholding tax
deducted from distributions (1,985) - (1,985) (1,437) - (1,437)
------------------------------ ---------- ----------- ----------- ---------- ----------- -----------
(1,985) - (1,985) (1,437) - (1,437)
------------------------------ ---------- ----------- ----------- ---------- ----------- -----------
* The corporation tax rate applied is based on the average tax
rates for the financial years ended 30(th) June 2016 and 30(th)
June 2015. The actual rates were 21% until 31(st) March 2015 and
20% from 1(st) April 2015.
Factors That May Affect Future Tax Charges
The Company is an investment trust and therefore is not subject
to tax on capital gains. Deferred tax is not provided on capital
gains and losses arising on the revaluation or disposal of
investments because the Company meets (and intends to meet for the
foreseeable future) the conditions for approval as an investment
trust company.
No deferred tax asset has been recognised in respect of excess
management expenses and expenses in excess of taxable income as
they will only be recoverable to the extent that there is
sufficient future taxable revenue. As at 30(th) June 2016, excess
management expenses are estimated to be in excess of GBP135m (2015:
GBP133m).
At 30(th) June 2016, the Company had no unprovided deferred tax
liabilities (2015: GBPnil).
8. Return per share
30(TH) JUNE 2016 30(TH) JUNE 2015
REVENUE CAPITAL TOTAL REVENUE CAPITAL TOTAL
-------------------------- ---------- ---------- ------------- -------- ---------- -------------
Return on ordinary
activities after
tax for the financial
year in GBP'000 (4,194) 213,266 209,072 756 107,805 108,561
Weighted average
ordinary and redeemable
shares 64,823,481 65,716,081
Return per ordinary
and redeemable share (6.47)p 328.99p 322.52p 1.15p 164.05p 165.20p
-------------------------- ---------- ---------- ------------- -------- ---------- -------------
There are no dilutive effects to earnings per share.
9a. Movements on Investments
30TH JUNE 2016 30TH JUNE 2015
GBP'000 GBP'000
---------------------------------------- --------------- ---------------
Book cost brought forward 539,089 527,392
Acquisitions at cost 264,900 187,546
Capital distributions - proceeds (246,470) (242,380)
Capital distributions - realised
gains on sales 93,299 66,531
---------------------------------------- --------------- ---------------
BOOK COST AT 30(TH) JUNE 650,818 539,089
---------------------------------------- --------------- ---------------
Unrealised appreciation of investments
Unlisted investments 420,667 320,535
Listed investments 391 2,405
---------------------------------------- --------------- ---------------
VALUATION OF INVESTMENTS AT 30(TH)
JUNE 1,071,876 862,029
---------------------------------------- --------------- ---------------
9b. Analysis of Investments
The method of valuation of the fixed asset investments is
described in Note 1D above. The nature of the Company's fixed asset
investments, with a high proportion of the portfolio invested in
unquoted securities, means that the investments are valued by the
Directors after due consideration of the available information at
the measurement date. Since the measurement date, 29 July 2016,
investment valuations have been received for 87% at a proportion of
total number of funds in the portfolio which, whilst incomplete,
would indicate a valuation uplift of GBP27.8m. As per the
accounting policy this is less than the 5% tolerance set by the
Directors, beyond which an adjustment would be considered, and
therefore no adjustment has been made. Investments are principally
comprised of unlisted limited partnership interests.
30TH JUNE 2016 30TH JUNE 2015
GBP'000 GBP'000
------------------------------------- --------------- ---------------
Sterling
Unlisted investments 51,508 49,048
51,508 49,048
------------------------------------- --------------- ---------------
US dollar
Unlisted investments 798,276 647,812
Listed investments 1,369 3,225
799,645 651,037
------------------------------------- --------------- ---------------
Euro
Unlisted investments 201,600 150,536
Listed investments - 450
------------------------------------- --------------- ---------------
201,600 150,986
------------------------------------- --------------- ---------------
Other
Unlisted investments 19,123 10,958
------------------------------------- --------------- ---------------
19,123 10,958
------------------------------------- --------------- ---------------
1,071,876 862,029
------------------------------------- --------------- ---------------
Realised gains on sales 93,299 66,531
Amounts previously recognised
as unrealised appreciation on
those sales 2,405 (8)
Increase in unrealised appreciation 95,713 35,381
Revaluation of amounts owed to
brokers (119) 1
------------------------------------- --------------- ---------------
GAINS ON INVESTMENTS 191,298 101,905
------------------------------------- --------------- ---------------
Further analysis of the investment portfolio is provided in the
Manager's Review above. Transaction costs, (incurred at the point
of the transaction) incidental to the acquisition of investments
totalled GBPnil (2015: GBPnil) and to the disposals of investments
totalled GBP15,000 (2015: GBP8,000) for the year. In addition,
legal fees incidental to the acquisition of investments totalled
GBP896,000 (2015: GBP437,000) as disclosed in Note 4, have been
taken to the capital column in the Income Statement since they are
capital in nature.
9c. Material Investments
At the year end, the Company held material holdings in the
following investments:
CLOSING NET ASSETS
INVESTMENT %OWNERSHIP VALUE GBPM
-------------------------- ----------- -------------------
PASIA V LP 6.2 25.0
Monteverdi 26.7 22.3
Pantheon Midway Series A 15.2 20.6
10. Fair Value Hierarchy
Financial Assets at Fair Value Through Profit or Loss at 30(th)
June 2016
LEVEL
LEVEL 1 LEVEL 2 3 TOTAL
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ------------ ------------
Unlisted holdings - - 1,070,507 1,070,507
Listed holdings 1,369 - - 1,369
--------------------- --------- --------- ------------ ------------
1,369 - 1,070,507 1,071,876
--------------------- --------- --------- ------------ ------------
Financial Assets at Fair Value Through Profit or Loss at 30(th)
June 2015
LEVEL
LEVEL 1 LEVEL 2 3 TOTAL
GBP'000 GBP'000 GBP'000 GBP'000
--------------------- --------- --------- ---------- ----------
Unlisted holdings - - 858,354 858,354
Listed holdings 3,675 - - 3,675
--------------------- --------- --------- ---------- ----------
3,675 - 858,354 862,029
--------------------- --------- --------- ---------- ----------
11. Debtors
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
-------------------------------- ----------------- -----------------
Amounts owed by investment
funds 2,996 875
Prepayments and accrued income 658 930
-------------------------------- ----------------- -----------------
3,654 1,805
-------------------------------- ----------------- -----------------
12. Creditors Amounts Falling Due Within One Year
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
------------------------------ ----------------- -----------------
Investment management fees 1,080 842
Amounts owed to brokers 2,213 -
Other creditors and accruals 645 411
------------------------------ ----------------- -----------------
3,938 1,253
------------------------------ ----------------- -----------------
13. Called-up Share Capital
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
--------------------------------- ----------------- -----------------
Allotted, called-up and fully
paid:
33,062,013 (2015: 33,062,013)
ordinary shares of 67p each 22,153 22,153
30,297,534 (2015: 32,197,534)
redeemable shares of 1p each 303 322
--------------------------------- ----------------- -----------------
22,456 22,475
--------------------------------- ----------------- -----------------
During the year 1,900,000 (2015: 375,000) redeemable shares and
nil (2015: 460,000) ordinary shares were bought back in the market
for cancellation. The total consideration paid, including
commission and stamp duty, was GBP22,022,000 (2015: GBP4,389,000)
and GBPnil (2015: GBP5,799,000) respectively.
Redeemable shares rank equally with ordinary shares regarding
dividend rights and rights on winding up or return of capital
(other than a redemption or purchase of shares). The holders of
redeemable shares have the right to receive notice of and attend
all general meetings of the Company but not to speak or vote. Each
holder of ordinary shares is entitled, on a show of hands, to one
vote and, on a poll, to one vote for each ordinary share held.
The redeemable shares are redeemable at the option of the
Company, at the prevailing net asset value per share, within 60
days following the end of each monthly NAV calculation date or
within 60 days of any other business day which is determined by the
Directors to be a NAV calculation date.
14. Reserves
CAPITAL
CAPITAL OTHER RESERVE ON
SHARE REDEMPTION CAPITAL INVESTMENTS SPECIAL REVENUE
PREMIUM RESERVE RESERVE HELD RESERVE* RESERVE*
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------------- ---------- ------------- ---------- ------------- ----------- -----------
Beginning of year 283,555 3,070 409,584 324,062 13,010 (55,692)
Net gain on realisation of - - 93,299 - - -
investments
Increase in unrealised appreciation - - - 95,713 - -
Transfer on disposal of investments - - - 2,405 - -
Revaluation of amounts owed to - - (119) - - -
brokers
Exchange differences on currency - - 23,044 - - -
Exchange differences on other capital - - (180) - - -
items
Legal and professional costs charged - - (896) - - -
to capital
Share cancellations - 19 - - - -
Share buybacks - - (9,012) - (13,010) -
Revenue return for the year - - - - - (4,194)
-------------------------------------- ---------- ------------- ---------- ------------- ----------- ----------- OF YEAR 283,555 3,089 515,720 422,180 - (59,886)
-------------------------------------- ---------- ------------- ---------- ------------- ----------- -----------
* Reserves that are distributable by way of dividends.
In addition, the Special Reserve and Other Capital Reserve can
be used for share buybacks.
15. Net Asset Value per Share
30(TH) JUNE 2016 30(TH) JUNE 2015
-------------------------------- ----------------- -----------------
Net assets attributable in
GBP'000 1,187,114 1,000,064
Ordinary and redeemable shares 63,359,547 65,259,547
Net asset value per share
- ordinary and redeemable 1,873.62p 1,532.44p
-------------------------------- ----------------- -----------------
16. Reconciliation of Return on Ordinary Activities Before
Financing Costs and Tax to Net Cash Flow from Operating
Activities
30(TH) JUNE 2016 30(TH) JUNE 2015
GBP'000 GBP'000
--------------------------------- ----------------- -----------------
Return on ordinary activities
before finance costs and tax 212,318 111,508
Withholding tax deducted (1,985) (1,437)
Gains on investments (191,298) (101,905)
Currency gains on cash and
borrowings (22,864) (6,337)
Increase in creditors 466 141
Decrease/(increase) in other
debtors 35 (95)
--------------------------------- ----------------- -----------------
NET CASH FLOW FROM OPERATING
ACTIVITIES (3,328) 1,875
--------------------------------- ----------------- -----------------
17. Contingencies, Guarantees and Financial Commitments
At 30(th) June 2016 there were financial commitments outstanding
of GBP381.9m (2015: GBP256.3m) in respect of investments in partly
paid shares and interests in private equity funds. Further detail
of the available finance cover is provided in Note 18.
18. Analysis of Financial Assets and Liabilities
The primary investment objective of the Company is to seek to
maximise long-term capital growth for its shareholders by investing
in funds specialising in unquoted investments, acquiring unquoted
portfolios and participating directly in private placements.
Investments are not restricted to a single market but are made when
the opportunity arises and on an international basis.
The Company's financial instruments comprise securities and
other investments, cash balances and debtors and creditors that
arise from its operations, for example sales and purchases awaiting
settlement and debtors for accrued income.
The principal risks the Company faces in its portfolio
management activities are:
-- liquidity/marketability risk;
-- interest rate risk;
-- market price risk; and
-- foreign currency risk.
The Company has little exposure to credit risk. The Manager
monitors the financial risks affecting the Company on a daily basis
and the Directors regularly receive financial information, which is
used to identify and monitor risk.
In accordance with FRS 102 an analysis of financial assets and
liabilities, which identifies the risk to the Company of holding
such items, is given below.
Liquidity Risk
Due to the nature of the Company's investment policy, the
largest proportion of the portfolio is invested in unquoted
securities, many of which are less readily marketable than, for
example, "blue-chip" UK equities. The Directors believe that the
Company, as a closed-end fund with no fixed wind-up date, is
ideally suited to making long-term investments in instruments with
limited marketability. The investments in unquoted securities are
monitored by the Board on a regular basis.
There are times when opportunities for the Company to acquire
secondary unquoted portfolios of interests or co-investments may be
limited due to the cyclical nature of their occurrence. As a
result, at times of low investment opportunity, some funds may be
held on deposit or invested in gilts and other fixed interest
government bonds. It is the nature of investment in private equity
that a commitment (see Note 17 for outstanding commitments as at
30(th) June 2016) to invest will be made and that calls for
payments will then be received from the unlisted investee entity.
These payments are usually on an ad-hoc basis and may be called at
any instance over a number of years. The Company's ability to meet
these commitments is dependent upon it receiving cash distributions
from its private equity investments and, to the extent these are
insufficient, on the availability of financing facilities. In order
to cover any shortfalls, the Company has entered into a
multi-currency revolving credit facility with The Royal Bank of
Scotland plc and Lloyds Bank plc, due to
expire in November 2018, and comprising facilities of $100m and
EUR46m of which at 30(th) June 2016 the sterling equivalent of
GBPnil (30(th) June 2015: GBPnil) was drawn down (see Note 6 for
further information).
The principal covenant that applies to the loan facility is that
gross borrowings do not exceed 30% of adjusted gross asset
value.
Total available financing as at 30(th) June 2016 stood at
GBP228.7m (2015: GBP233.8m), comprising GBP115.5m (2015: GBP137.5m)
in cash balances and GBP113.2m (2015: GBP96.3m) (sterling
equivalent) in undrawn bank facilities. The available financing
along with the private equity portfolio exceeded the outstanding
commitments by 3.4 times (2015: 4.3 times).
Interest Rate Risk
The Company may use gearing to achieve its investment objectives
and manage cash flows and uses a multi-currency revolving credit
facility for this purpose.
Interest on the revolving credit facility is payable at variable
rates determined subject to drawdown. Variable rates are defined as
LIBOR or EURIBOR + 2.35%, dependent on the currency drawn. The
interest rate is then fixed for the duration that the loan is drawn
down. At 30(th) June 2016 the sterling equivalent of GBPnil funds
drawn down on the loan facilities (30(th) June 2015: GBPnil). A
commitment fee of 0.94% per annum is payable in respect of the
amounts available for drawdown in each facility.
Non-interest rate exposure
The remainder of the Company's portfolio and current assets are
not subject to interest rate risks.
Financial assets for 2016 and 2015 consisted of investments,
cash and debtors (excluding prepayments). As at 30(th) June 2016,
the interest rate risk and maturity profile of the Company's
financial assets was as follows:
FIXED
INTEREST
NO MATURES MATURES AVERAGE
MATURITY WITHIN AFTER INTEREST
TOTAL DATE 1 YEAR 1 YEAR RATE
30(TH) JUNE 2016 GBP'000 GBP'000 GBP'000 GBP'000 %
-------------------- ---------- ----------- ---------- ---------- ----------
No interest rate
risk financial
assets
Sterling 79,547 79,547 - - -
US dollar 885,464 885,464 - - -
Euro 204,627 204,627 - - -
Other 20,817 20,817 - - -
-------------------- ---------- ----------- ---------- ---------- ----------
1,190,455 1,190,455 - - -
-------------------- ---------- ----------- ---------- ---------- ----------
The interest rate and maturity profile of the Company's
financial assets as at 30(th) June 2015 was as follows:
FIXED
INTEREST
NO MATURES MATURES AVERAGE
MATURITY WITHIN AFTER INTEREST
TOTAL DATE 1 YEAR 1 YEAR RATE
30(TH) JUNE 2015 GBP'000 GBP'000 GBP'000 GBP'000 %
-------------------- ---------- ----------- ---------- ---------- ----------
No interest rate
risk financial
assets
Sterling 49,640 49,640 - - -
US dollar 784,923 784,923 - - -
Euro 154,342 154,342 - - -
Other 11,576 11,576 - - -
-------------------- ---------- ----------- ---------- ---------- ----------
1,000,481 1,000,481 - - -
-------------------- ---------- ----------- ---------- ---------- ----------
Financial Liabilities
At 30(th) June 2016 the Company had drawn the sterling
equivalent of GBPnil (2015: GBPnil) of its four-year committed
revolving dollar and euro credit facilities, expiring November
2018, of $100m and EUR46m respectively with The Royal Bank of
Scotland plc and Lloyds Bank plc. Interest is incurred at a
variable rate as agreed at the time of drawdown and is payable at
the maturity date of each advance. At the year end, interest of
GBPnil (2015: GBPnil) was accruing.
At 30(th) June 2016 and 30(th) June 2015, all financial
liabilities were due within one year and comprised short-term
creditors.
Market Price Risk
The method of valuation of the fixed asset investments is
described in Note 1(D) above. The nature of the Company's fixed
asset investments, with a high proportion of the portfolio invested
in unquoted securities, means that the investments are valued by
the Directors after due consideration of the most recent available
information from the underlying investments.
PIP's portfolio is well diversified by the sectors in which the
underlying companies operate. This sectoral diversification helps
to minimise the effects of cyclical trends within particular
industry segments.
If the investment portfolio fell by 20% from the 30(th) June
2016 valuation, with all other variables held constant, there would
have been a reduction of GBP216,519,000 (2015 based on a fall of
20%: GBP174,130,000) in the return before taxation. An increase of
20% would have increased the return before taxation by
GBP212,231,000 (2015 based on a 20% increase: GBP170,682,000).
Foreign Currency Risk
Since it is the Company's policy to invest in a diverse
portfolio of investments based in a number of countries, the
Company is exposed to the risk of movement in a number of foreign
exchange rates. A geographical analysis of the portfolio and hence
its exposure to currency risk is given above. Although it is
permitted to do so, the Company did not hedge the portfolio against
the movement in exchange rates during the financial year.
The investment approach and the Manager's consideration of the
associated risk are discussed in further detail in the Strategic
Report and the Manager's Review above. The Company settles its
transactions from its bank accounts at an agreed rate of exchange
at the date on which the bargain was made. As at 30(th) June 2016,
realised exchange losses of GBP180,000 (2015: realised exchange
gains of GBP33,000) and realised gains relating to currency of
GBP23,044,000 (2015: realised gains of GBP6,304,000) have been
taken to the capital reserve.
The Company's exposure to foreign currency excluding private
equity investments is shown below. In relation to this exposure, if
the sterling/dollar and sterling/euro exchange rate had reduced by
10% from that obtained at 30(th) June 2016, it would have the
effect, with all other variables held constant, of increasing
equity shareholders' funds by GBP7,932,000 (2015: GBP14,631,000).
If there had been an increase in the sterling/dollar and
sterling/euro exchange rate of 10% it would have the effect of
decreasing equity shareholders' funds by GBP9,570,000 (2015:
GBP13,095,000). The calculations are based on the financial assets
and liabilities and the exchange rate as at 30(th) June 2016 of
1.3368 (2015: 1.5727) sterling/dollar and 1.2033 (2015: 1.4115)
sterling/euro.
An analysis of the Company's exposure to foreign currency is
given below:
30(th) 30(TH) JUNE 30(TH) JUNE 30(TH) JUNE
JUNE 2016 2015 2015
2016 LIABILITIES ASSETS LIABILITIES
ASSETS GBP'000 GBP'000 GBP'000
GBP'000
------------------- --------- ------------- ------------ -------------
US dollar 85,818 2,213 133,886 -
Euro 3,027 - 3,356 -
Swedish krone 1,465 - 54 -
Norweigan krone 6 - 28 -
Australian dollar 223 - 511 -
Japanese Yen - - 25 -
------------------- --------- ------------- ------------ -------------
90,539 2,213 137,860 -
------------------- --------- ------------- ------------ -------------
Fair Value of Financial Assets and Financial Liabilities
The investments of the Company are held at fair value and the
remaining financial assets, and all of the financial liabilities
are held at amortised cost, which is not materially different from
fair value.
Managing Capital
The Company's equity comprises ordinary shares and redeemable
shares as described in Note 13. Capital is managed so as to
maximise the return to shareholders while maintaining a capital
base that allows the Company to operate effectively in the
marketplace and sustain future development of the business.
As at 30(th) June 2016 and 30(th) June 2015 the Company had bank
debt facilities to increase the Company's liquidity. Details of
available borrowings at the year end can be found earlier in this
Note.
The Company's assets and borrowing levels are reviewed regularly
by the Board of Directors with reference to the loan covenants.
The Company's capital requirement is reviewed regularly by the
Board of Directors.
19. Transactions with the Manager and Related Parties
The amounts paid to the Manager, together with the details of
the Investment Management Agreement, are disclosed in Note 3. 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 are disclosed in the Directors' Remuneration
Report in the full Annual Report.
There are no other identifiable related parties at the year
end.
AIFMD DISCLOSURES
The Company is an alternative investment fund ("AIF") for the
purposes of the Alternative Investment Fund Managers Directive
(Directive 2011/61/EU) ("AIFMD") and the Manager was appointed as
its alternative investment fund manager ("AIFM") for the purposes
of the AIFMD with effect from 21st July 2014.
The AIFMD requires certain disclosures to be made in the Annual
Report of the Company. Many of these disclosures were already
required by the listing rules and/or United Kingdom Accounting
Standards and these continue to be presented in other sections of
the Annual Report, principally the Strategic Report the Manager's
Review and the financial statements. This section completes the
disclosures required by the AIFMD.
Assets subject to special arrangements
The Company holds no assets subject to special arrangements
arising from their illiquid nature.
Remuneration disclosure
The total number of staff of the Manager for the year ended
30(th) June 2016 was approximately 209, of which 14 were senior
management or other members of staff whose actions have a material
impact on the risk profile of the Company ("Identified Staff").
Some staff performing certain activities on behalf of the Manager
in respect of the Company are remunerated by affiliates of the
Manager.
The total remuneration paid by the Manager and its affiliates to
staff of the Manager in respect of the financial year ended 30(th)
June 2016 attributable to work relating to the Company was as
follows:
Fixed Variable Total
GBP'000 GBP'000 GBP'000
------------------- --------- --------- ---------
Senior management 763 846 1,609
Identified staff 358 373 731
Total Staff 1,912 1,520 3,432
No carried interest was paid in respect of the Company during
the year.
The above disclosures reflect only that element of the
individuals' remuneration which is attributable to the activities
of the Manager relating to the Company. It is not possible to
attribute remuneration paid to individual staff directly to income
received from any fund and hence the above figures represent a
notional approximation only calculated by reference to the assets
under management of the Company as a proportion of the total assets
under management of the Pantheon group.
In accordance with the FCA's guidance on the AIFMD remuneration
code, the information above relates only to the financial year of
the Company ended 30 June 2016, being the first full financial year
following the Manager's authorisation as an AIFM. It would not be
useful to provide a remuneration disclosure for the previous
financial year of the Company because it would not provide a
meaningful basis for like-for-like comparison. Comparative data
will be provided in coming years.
General information relating to the Pantheon Ventures Group's
remuneration policies and practices for staff can be found at
www.pantheon.com.
Leverage
The AIFMD requires the Manager of the Company to set leverage
limits for the Company. For the purposes of the AIFMD, leverage is
any method by which the Company's exposure is increased, whether
through the borrowing of cash or by the use of derivatives or by
any other means. The AIFMD requires leverage to be expressed as a
ratio between the Company's exposure and its net asset value and
prescribes two methodologies, the gross method and the commitment
method (as set out in Commission Delegated Regulation No.
231/2013), for calculating such exposure. The following leverage
limits have been set for the Company:
(i) borrowings shall not exceed 100% of the Company's net asset
value or such lower amount as is agreed from time to time with the
Company's lenders;
(ii) leverage calculated as the ratio between the exposure of
the Company calculated in accordance with the gross method referred
to above and its net asset value shall not exceed 200%; and
(iii) leverage calculated as the ratio between the exposure of
the Company calculated in accordance with the commitment method
referred to above and its net asset value shall not exceed
200%.
Using the methodologies prescribed under the AIFMD, the
Company's leverage as at 30th June 2016 is shown below:
Gross method Commitment
method
---------------- ------------- -----------
Leverage ratio 92% 102%
Risk profile and risk management
The principal risks to which the Company is exposed and the
approach to managing those risks are set out in the Strategic
Report and also in Note 18 of the financial statements. The risk
limits currently in place in relation to the Company's investment
activities are set out in the Investment Policy and under "Board
Responsibilities and Relationship with the Manager" in the
Statement on Corporate Governance. Additionally, the individual
counterparty exposure limit for deposits with each of the Company's
bank counterparties has been set at GBP60m or the equivalent in
foreign currencies. The Manager's risk management system
incorporates regular review of the principal risks facing the
Company and the risk limits applicable to the Company and the
establishment of appropriate internal control processes to mitigate
the risks. These risk limits have not been exceeded in the period
to 30th June 2016.
Article 23(1) disclosures to investors
The AIFMD requires certain information to be made available to
investors in the Company before they invest and requires that
material changes to this information be disclosed in the Annual
Report of the Company. The information required to be disclosed is
contained in the document "Information for Investors" which is
available on the Company's website at www.piplc.com.
There have been no material changes to this information
requiring disclosure.
ANNUAL GENERAL MEETING
The Company's Annual General Meeting will be held on Wednesday,
23(rd) November 2016 at 10.30am at The British Academy, 10-11
Carlton House Terrace, London SW1Y 5AH.
NATIONAL STORAGE MECHANISM
A copy of the Annual Report and Financial Statements will be
submitted shortly to the National Storage Mechanism ("NSM") and
will be available for inspection at the NSM, which is situated at:
www.morningstar.co.uk/uk/nsm.
ENDS
Neither the contents of the Company's website nor the contents
of any website accessible from hyperlinks on this document (or any
other website) is incorporated into, or forms part of, this
announcement.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR LLMPTMBTBBAF
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