14th Mar 2005 07:00
For release at 0700, Monday 14th March, 2005Candover Investments plcPreliminary resultsCandover*, a leading provider of equity for large European buyouts, todayannounces its preliminary results for the year ended 31st December, 2004.Financial highlights:¢â€" Total net assets increased 22.7% to ‚£312.6 million (2003: ‚£254.7 million) ¢â€" Net assets per share up 22.7% to 1430p (2003:1165p). This compares with an increase of 9.2% in the FTSE All-Share Index over the same period ¢â€" Net assets per share up 15.4% for the six months July to December. This compares to an increase of 8.2% in the FTSE All-Share Index for the same six month period ¢â€" Profit before tax up 6.1% to ‚£19.0 million (2003: ‚£17.9 million) ¢â€" Total dividend per share increased by 10.0% to 44.0p (2003: 40.0p per share) ¢â€" Ten year compound growth in net assets per share of 14.3% per annum; FTSE All-Share Index growth over the same period of 4.7% per annum Operating highlights:¢â€" Six significant realisations completed during the year; Bourne Leisure, Baxi, Clondalkin, Centaur, Earls Court & Olympia and Picard Surgelƒ©s, generating aggregate returns on investment of three times the residual investment ¢â€" Sale of residual shares in Inveresk, giving an overall return on investment of 4.6 times Candover's original investment ¢â€" Four major refinancings of 2001 Fund investee companies undertaken, including two since the year end. Springer and Gala have now returned approximately half of the original investments made, and Kabel Deutschland has returned twice the original investment, and Vetco is expected to return approximately one third of the original investment later in March ¢â€" Invested ‚£55.1 million in five new transactions, Vetco International, Innovia Films, Bureau van Dijk, ALcontrol and Thule Stephen Curran, Chairman of Candover Investments plc, commented:"2004 was an active year for Candover, both in terms of new investments andrealisations. The buyout market comfortably attained record levels of newinvestment and the signs are that the year ahead will be one of furthergrowth. Our focus over the year ahead will be to continue to attract highquality deal flow from which to make further investments throughout Europe, andto continue to monitor the progress of our existing investee companies".Ends*References in this announcement to 'Candover' mean Candover Investments plcand/or, where appropriate, one or more of its subsidiaries.For further information, please contact:CandoverStephen Curran, Chairman +44 20 7489 9848Colin Buffin, Managing Director Tulchan CommunicationsAndrew Grant +44 20 7353 4200Kate Inverarity Chairman's statementCandover's net assets per share increased by 22.7% on the prior year. Theincrease was driven by two main factors. The first of these was therevaluation of a number of our investee companies, while the second was ourability to accomplish a number of successful realisations during the year,which resulted in significant gains over valuation. Realisation proceeds frominvestee companies amounting to ‚£100.7 million were achieved during the year,with the sale of Candover's remaining stake in Inveresk, and the disposals ofPicard Surgelƒ©s and Clondalkin, being the most notable. In the second half of 2004, Candover committed ‚£55.1 million alongside the ‚£431.3 million invested by the 2001 Fund, in five new investments. These werethe US$925.0 million acquisition of Vetco International, a major participant inthe global oilfield services sector; the EURO320.0 million buyout of InnoviaFilms, a manufacturer of specialist polypropylene and cellulose films; thebuyout of Bureau van Dijk, a publisher of specialised financial and companyinformation products; the buyout of ALcontrol, a European environmental andfood testing business; and the SEK 4,215.0 million buyout of Thule, the worldleader in sports utility transportation products.Results for 2004As at 31st December, 2004, the net assets attributable to the ordinary shareswere ‚£312.6 million compared to ‚£254.7 million at 31st December, 2003. Netassets per share were 1430p compared with 1165p at 31st December, 2003 (and1239p at 30th June, 2004). This increase in net assets per share over the 12months to 31st December, 2004 of 22.7% compares with an increase of 9.2% in theFTSE All-Share Index over the same period. The increase in net assets per shareover the six months to 31st December, 2004was 15.4% compared to an increase inthe FTSE All-Share Index over the same period of 8.2%.The compound growth in net assets on a three, five and ten year basis was 8.3%,7.7% and 14.3% respectively, compared to decreases in the FTSE All-Share Indexover three and five years of 1.5% and 5.8% and an increase over ten years of4.7%.The increase in net assets for the year of ‚£57.9 million was after taking intoaccount net realised gains of ‚£27.4 million, a net increase of ‚£31.5 million onthe revaluation of investments, and other movements.The value ascribed to Candover's share of the carried interest in the 1997 Fundwas increased from ‚£15.7 million (72p per share) to ‚£41.4 million (189p pershare). This increase is mainly due to the realisation during the year of mostof the remaining companies in the 1997 Fund portfolio.Profits before tax for the year were ‚£19.0 million compared with ‚£17.9 millionfor the 12 months to 31st December, 2003. The increase in profits was mainlydue to higher income from cash balances and lower administrative costsoffsetting lower management fees. The valuation of fixed asset investments at31st December, 2004 was ‚£198.5 million (2003: ‚£211.2 million). This valuationof ‚£198.5 million was calculated having taken into account realisations, net ofnew investments, amounting to ‚£44.2 million, and a net increase of ‚£31.5million in the revaluation of our investments referred to above. The netincrease in the revaluation of our investments comprised upward movements of ‚£47.7 million and downward adjustments of ‚£16.2 million.Cash and liquid assets totalled ‚£124.8 million (2003: ‚£37.3 million) at theyear end, representing 39.9% of our net assets (2003: 14.6%). This increasein our cash balances over the period is a natural consequence of therealisations achieved during the year. Listed shares (Aspen) at the year endtotalled ‚£8.1 million (2003: ‚£20.4 million), representing 2.6% of our netassets (2003: 8.0%).DividendsAt the half year the board decided to increase the interim dividend by 11.1%from 13.5p per share to 15.0p per share. The board has decided to pay a finaldividend of 29.0p per share (26.5p per share for 2003) making a dividendpayable for the year of 44.0p per share against 40.0p for the previous year, anincrease of 10.0%. Payment of the dividend will be made on 18th May, 2005 toshareholders on the register at 29th April, 2005.Board and staffAs was reported in the interim statement, during the year Chris Russell wasappointed as a non-executive director, and we were joined by two new investmentexecutives, David Brickell and Sƒ©verine de Wulf. Since the year end we havebeen joined by a further investment executive, Owen Wilson, who has recentlycompleted an MBA at Harvard. David and Owen will be based in London, andSƒ©verine will be located in our Paris office.Doug Fairservice and I are announcing our intention to retire as directors ofthe company following the conclusion of the investment period for the 2001Fund. We will therefore have no participation in subsequent funds to bemanaged by Candover. A further announcement on the date of these boardchanges, which are currently expected to take effect during 2006, will be madein due course.Derek Wilson has announced his intention to retire from the board at theconclusion of the next AGM on 10th May, 2005. Derek has served on the Candoverboard for 11 years and we are very grateful for his contribution, both as adirector of the company and for much of that period as Chairman of the auditcommittee, in which role he will be succeeded by Chris Russell. As usual, I would like to thank all the staff for their hard work during whatwas a successful and rewarding year for Candover.Prospects2004 saw significant growth in the value of European buyouts, which comfortablyattained record levels of new investment. Providing there is no significantchange in the economic environment during the year ahead, the favourableconditions for private equity investing across Europe look set to continue. The recovering M&A market, if maintained, should continue to offer us goodquality deal flow, and additionally, may provide us with some exitopportunities, although a slowing down of the realisation pace seen over thelast year or so may be expected.Operational reviewThe European buyout market enjoyed a record year in terms of amounts investedduring 2004, rising 15% on the prior year to EURO76.6 billion. The mid marketsector, deals between EURO150 million and EURO1.5 billion, where Candoverfocuses, continued to be the backbone of the industry, enjoying consistentgrowth in both the UK and on the Continent. We continued to see strong deal flow across our network, and in line with thebuoyant market and the favourable investment environment, Candover led severalsignificant transactions. In total, Candover invested ‚£60.6 million in fivenew transactions and six follow-on investments during the year: ‚£55.1 millionof this ‚£60.6 million was invested alongside the 2001 Fund, which invested ‚£431.3 million in these new transactions.New investmentsVetco InternationalIn July, Candover co-led the private equity syndicate that completed theUS$925.0 million acquisition of part of the oil and gas business of ABB, nowrenamed Vetco International. Vetco is a major participant in the globaloilfield services sector, servicing all the major oil producers around theworld. Candover invested ‚£7.5 million and the 2001 Fund invested ‚£58.6million. The business has significant market positions, strong,long-established brands, and a reputation for innovative and robusttechnology. These factors, combined with the growing market forecasts for thecapital spending of oil exploration and production companies driven by globaldemand for oil and gas, made this an attractive investment opportunity forCandover.Innovia FilmsIn September, Candover led the EURO320.0 million buyout of UCB Films, nowrenamed Innovia Films. The company is a manufacturer of specialistpolypropylene and cellulose films for speciality packaging and labelling, aswell as being the only manufacturer of polymer banknotes in the world via ajoint venture with the Reserve Bank of Australia. Candover invested ‚£9.9million and the 2001 Fund invested ‚£77.9 million.Bureau van DijkIn November, Candover led the buyout of Belgium-based Bureau van Dijk, apublisher of specialised financial and company information products via theinternet and CD/DVDs. The products contain information on over ten millioncompanies worldwide, with a strong emphasis on private companies. Theacquisition presented Candover with the opportunity to invest in the next phaseof development of a profitable, growing business that had a unique anddefensible competitive position. Candover invested ‚£10.2 million and the 2001Fund invested ‚£80.3 million. ALcontrolIn December, Candover led the acquisition of ALcontrol, a leading Europeanlaboratory-based environmental and food testing company, headquartered in theNetherlands. The company's key competitive advantage is a production drivenapproach, employing sophisticated IT systems which enable it to offer highquality testing at a very low cost. ALcontrol operates in a market which willcontinue to benefit from strong growth as regulators impose increasingly tightstandards of health in areas such as food and the environment. Candoverinvested ‚£12.9 million and the 2001 Fund invested ‚£100.0 million.ThuleAlso in December, Candover completed the SEK 4,215.0 million buyout of Thule,the world's leading sports utility transportation company. Headquartered inSweden, Thule manufactures and distributes car racks and boxes, trailers, roofrails and snow chains. It owns a group of strong brands and is the globalnumber one in its core activity of car racks and boxes. It also holds eitherglobal or European market leading positions in all its other product areas. Candover invested ‚£14.6 million and the 2001 Fund invested ‚£114.5 million.Other investmentsSix follow-on investments totalling ‚£5.5 million were made. Three were furtherparticipations in a mid-market French buyout fund and two mezzanine funds, andthree were further commitments to investee companies. The most significant ofthese was an investment of ‚£1.4 million by Candover and ‚£10.7 million by the2001 Fund in Swissport, a global ground handling business, to enable it toacquire Groundstar, a leading UK ground handler. RealisationsNet realised gains over cost achieved by Candover and its managed fundsamounted to ‚£396.7 million, of which Candover's share was ‚£75.5 million. During the year, Candover had six full realisations: In February, BourneLeisure was sold, generating gains over cost for Candover of ‚£4.8 million and ‚£40.0 million for the 1997 Fund. In March, the disposal of three investeecompanies took place: Baxi, with gains over cost of ‚£1.9 million for Candover,‚£0.4 million for the 1991 Fund and ‚£7.4 million for the 1994 Fund; Clondalkin,with gains over cost of ‚£4.8 million for Candover and ‚£39.8 million for the1997 Fund; and Centaur, which was listed on AIM, with gains over cost of ‚£3.6million for Candover. In May, Earls Court & Olympia was sold, with gains overcost, including deferred consideration now received, of ‚£2.9 million forCandover and ‚£24.1 million for the 1997 Fund. In December, Picard Surgelƒ©s wasrealised, with gains over cost of ‚£13.6 million for Candover and ‚£112.2 millionfor the 1997 Fund. These six realisations generated an aggregate return ofthree times the residual investment.In April and July we sold our residual shares in Inveresk, generating gainsover cost of ‚£14.9 million for Candover and ‚£123.8 million for the 1997 Fund,giving an overall return on investment of 4.6 times the original investment.During the year, two 2001 Fund investee companies, Kabel Deutschland andSpringer were refinanced, and a further investee company, Gala, has beenrefinanced since the year end. As a result, Kabel Deutschland has nowreturned all of its cost and a gain of ‚£4.0 million for Candover and ‚£32.6million for the 2001 Fund; and Springer and Gala have returned approximatelyhalf of the original investments made. In addition, agreement has been reachedin relation to a refinancing of Vetco, which is expected to complete in lateMarch, and which will result in Vetco having returned approximately one thirdof its original investment.Outlook2004 was an active year, both in terms of realisations and new investments. With the outlook for buyouts across Europe positive on most fronts, we believewe are well positioned to continue to see interesting investment opportunitiesover the coming year. As always, we will monitor the performance of allinvestee companies closely to ensure performance is in line with expectations,and formulate exit strategies as appropriate.Candover at a glanceNet Assets per share1995 464p 1996 635p 1997 703p 1998 877p 1999 986p 2000 1079p 2001 1127p 2002 1040p 2003 1165p 2004 1430p Pre tax profits‚£0001995 5,222 1996 5,389 1997 7,270 1998 12,069 1999 10,456 2000 11,679 2001 14,408 2002 15,257 2003 17,913 2004 18,952 Net dividend per share1995 13.25p 1996 15.00p 1997 20.00p 1998 25.00p 1999 27.00p 2000 29.00p 2001 32.00p 2002 36.00p 2003 40.00p 2004 44.00p Net assets growthcompared to FTSE All-Share Index FTSE Candover All-Share 1994 100.0 100.0 1995 123.1 118.5 1996 168.4 132.4 1997 186.5 158.5 1998 232.6 175.7 1999 261.5 213.1 2000 286.2 196.1 2001 298.9 165.9 2002 275.9 124.5 2003 309.0 145.1 2004 379.4 158.5 Top 15 investments - analysis by valueThe review of investments at 31st December, 2004 shows the 15 largestinvestments, whereas the 2003 Report & Accounts showed the 20 largestinvestments by value. Although five new investments were made alongside the2001 Fund, six major realisations and one quoted share sale were achievedduring the period, and therefore disclosure of the largest 20 would includeseveral small investments which are not material in the context of Candover'soverall net assets. The top 15 investments represent 99% by value ofCandover's investee companies (top 20 at 31st December, 2003: 99%).Investment by region1 United Kingdom 47% 2 Germany 15% 3 Benelux 10% 4 Scandinavia 10% 5 Switzerland 9% 6 Americas 5% 7 France 4% Investments by sector1 Support services 23% 2 Media 22% 3 Industrials 21% 4 Leisure 14% 5 Financials 9% 6 External funds 8% 7 Health 3% Investments by age1 Less than one year 37% 2 1-2 years 35% 3 2-3 years 14% 4 4-5 years 9% 5 More than five years 5% Investments by valuation method1 Multiple of earnings 64% 2 Cost 31% 3 Discounted stock market price 5% Review of 15 largest investmentsGala Group Limited Location: UKDate of investment: March 2003Candover's investment as at 31st December 2004 2003 Cost of investment ‚£21,728,000 ‚£21,728,000 Directors' valuation ‚£21,728,000 ‚£21,728,000 Effective equity interest (fully diluted) 2.8% 2.8% % of Candover's net assets 7.0% 8.5% Basis of valuation Multiple of earnings Cost Gala is the UK's leading high volume, low stake gaming business.Gala is one of the UK's fastest growing retail gaming companies with two maindivisions: Bingo, the UK's largest operator with 166 clubs that pay out ‚£22.0million in prize money each week and Casinos, a top three UK casino operatorwith 27 sites located throughout the UK. Candover backed a leading managementteam which has consistently demonstrated its ability to grow profits and marketshare. Gala's track record of organic growth, robust cash flows and position inthe casino market should ensure it is well placed to benefit from modernisationof UK gaming regulations. Since the year end, Gala has been refinanced,returning 46% of the original investment.Profit before goodwill amortisation, interest and tax for the year to 25thSeptember, 2004 was ‚£115.3 million on turnover of ‚£544.3 million (Proformaprofit before goodwill amortisation, interest and tax for the year to 27th September, 2003 was ‚£105.3 million on turnover of ‚£461.6 million).No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Leisure www.candover.com/gala Springer Science + Business Media S.A.Location: GermanyDate of investment: January/September 2003Candover's investment as at 31st December 2004 2003 Cost of investment EURO 20,823,000 EURO 33,959,000 (‚£14,303,000) (‚£22,884,000) Directors' valuation EURO 29,317,000 EURO 33,959,000 (‚£20,737,000) (‚£23,928,000) Effective equity interest (fully diluted) 4.0% 4.0% % of Candover's net assets 6.6% 9.4% Basis of valuation Multiple of earnings Cost In September 2003, Kluwer Academic Publishers (KAP) merged withBertelsmannSpringer to create Springer, the world's second largest scientific,technical and medical (STM) publisher.Candover completed the EURO600.0 million acquisition of KAP from Wolters Kluwerin January 2003. The EURO1.1 billion buyout of BertelsmannSpringer wascompleted in September 2003 and the two companies have subsequently beenmerged. Led by a highly regarded management team, the merger will allowSpringer to play a significant role in the ongoing consolidation of thefragmented STM industry. Springer publishes more than 1,400 journals and trademagazines and over 4,000 new book titles each year. A refinancing in August2004 resulted in EURO13.1 million (‚£8.6 million) of loan stock being returned.Full year audited accounts are not yet available for the combined entity.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Media www.candover.com/springer Thule ABLocation: SwedenDate of investment: December 2004Candover's investment as at 31st December 2004 Cost of investment EURO 21,181,000 (‚£14,620,000)* Directors' valuation EURO 21,098,000 (‚£14,923,000) Effective equity interest (fully diluted) 6.7% % of Candover's net assets 4.7% Basis of valuation Cost Candover led the SEK4,215.0 million buyout in December 2004.Thule is a consumer goods company with a strong brand which supplies productsto the outdoor leisure markets. The company manufactures and distributes carracks and boxes, trailers, snow chains and OEM car rails. It is the globalnumber one in its core activity of car racks and boxes with a 40% marketshare. Thule also holds either global or European market leading positions inall its other product areas.Audited accounts for the period since acquisition are not yet available.No dividends were received by Candover for the year ended 31st December, 2004.* This investment was made in SEK and Euros. Sector: Industrials www.candover.com/thule Swissport (SWT (Lux) S.A.)Location: SwitzerlandDate of investment: February 2002Candover's investment as at 31st December 2004 2003 Cost of investment EURO 14,481,000 EURO 12,001,000 (‚£8,891,000)* (‚£8,456,000)* Directors' valuation EURO 20,449,000 EURO 12,963,000 (‚£14,464,000) (‚£9,134,000) Effective equity interest (fully 5.5% 5.5% diluted) % of Candover's net assets 4.6% 3.6% Basis of valuation Multiple of Multiple of earnings earnings In February 2002, Candover backed the management of Swissport, the globalairport ground handling business, in a buyout from Swissair Group AG.Swissport is the largest ground handling agent in the world, active at 166destinations in 36 countries on four continents. With a workforce of some21,000 people, the company provides ground services for over 70 millionpassengers and three million tonnes of cargo a year on behalf of some 600airlines. In 2004, Swissport was named as Global Ground Handler of the Year bythe Institute of Transport Management for the fourth year running. In April2004, Swissport acquired Groundstar, the leading UK ground handler and Candoverinvested a further ‚£0.4 million net of subsequent syndication.Profit before goodwill amortisation, interest and tax for the year to 31stDecember, 2003 was CHF 94.8 million on turnover of CHF 1,148.6 million (Profitbefore goodwill amortisation, interest and tax for the period 7th February,2002 to 31st December, 2002 was CHF 88.6 million on turnover of CHF 976.3million).No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).* This investment was made in CHF and Euros.Sector: Support services www.candover.com/swissport ALcontrol Group Holdings LimitedLocation: UKDate of investment: December 2004Candover's investment as at 31st December 2004 Cost of investment EURO 18,585,000 (‚£12,844,000) Directors' valuation EURO 18,585,000 (‚£13,145,000) Effective equity interest (fully diluted) 6.8% % of Candover's net assets 4.2% Basis of valuation Cost In December 2004 Candover acquired ALcontrol, a leading European environmentaland food testing company.Headquartered in the Netherlands, ALcontrol is a laboratory-based testingbusiness which supplies services to the food and environmental markets. Itranks as number one in the UK, Benelux and Sweden, making it a leading playerin Western Europe. The group comprises 26 laboratories and operates in tencountries.Audited accounts for the period since acquisition are not yet available.No dividends were received by Candover for the year ended 31st December, 2004.Sector: Support services www.candover.com/ALcontrol Bureau Van Dijk Electronic Publishing BVLocation: BelgiumDate of investment: November 2004Candover's investment as at 31st December 2004 Cost of investment EURO 14,597,000 (‚£10,239,000) Directors' valuation EURO 14,597,000 (‚£10,325,000) Effective equity interest (fully diluted) 6.3% % of Candover's net assets 3.3% Basis of valuation Cost Candover led the buyout of Bureau van Dijk (BvD) in November 2004. We acquireda majority stake in the business from the existing management team, who willremain as minority shareholders.BvD is a global publisher of specialised financial and company informationproducts via the internet and on CD/DVDs on over ten million companiesworldwide, with a strong emphasis on private companies. Its main databases aremarket leaders in the niches they target and it currently sells over 20products. The products typically include detailed financial accounts and datasuch as ownership, directors, business descriptions, news and peerperformance. Proprietary software that enables searching, analysis andpresentation by the customer is a key element of the products.Audited accounts for the period since acquisition are not yet available.No dividends were received by Candover for the year ended 31st December, 2004.Sector: Media www.candover.com/bvdep Innovia Films LimitedLocation: UKDate of investment: September 2004Candover's investment as at 31st December 2004 Cost of investment EURO 14,448,000 (‚£9,913,000) Directors' valuation EURO 14,448,000 (‚£10,219,000) Effective equity interest (fully diluted) 8.0% % of Candover's net assets 3.3% Basis of valuation Cost Candover led the EURO320.0 million buyout of Innovia Films in September 2004,from UCB Group, a quoted Belgian pharmaceutical and speciality chemicalcompany.Innovia Films is a manufacturer of specialist bi-orientated polypropylene(BOPP) and cellulose (cello) transparent and coated films. BOPP is derivedfrom oil and cello is derived from wood pulp. The business enjoys strongpositions in niche markets and focuses on higher value-added applications. Thefilms are used primarily in the packaging sector, such as tobacco over-wrap,transparent self-adhesive bottle labels and technically advanced food packagingapplications. The films are also used as a substrate for banknotes, and via ajoint venture with the Reserve Bank of Australia, Innovia is the onlymanufacturer of polymer banknotes in the world.Audited accounts for the period since acquisition are not yet available.No dividends were received by Candover for the year ended 31st December, 2004.Sector: Industrials www.candover.com/innoviafilms Vetco International LimitedLocation: UKDate of investment: July 2004Candover's investment as at 31st December 2004 Cost of investment US$13,870,000 (‚£7,454,000) Directors' valuation US$16,824,000 (‚£8,840,000) Effective equity interest (fully diluted) 2.5% % of Candover's net assets 2.8% Basis of valuation Multiple of earnings In July 2004, Candover acquired Vetco International which was formerly theupstream oil, gas and petrochemicals division of ABB, the Swiss-Swedishengineering group.Vetco International is a major global participant in the oilfield servicessector and supplies a portfolio of hi-tech proprietary products and services. It serves major international and national oil companies as well as independentproducers throughout the world. The Group manufactures drilling and productionequipment for rigs and production platforms, and designs and manages theinstallation of subsea production systems. It also undertakes modification andmaintenance work on existing offshore installations and constructs new buildfixed and floating production facilities. Vetco operates in 31 countries, withheadquarters in the UK and key operating centres in Houston, Oslo andSingapore. A refinancing, which will return approximately one third of theoriginal investment, is expected to complete in March 2005.Audited accounts for the period since acquisition are not yet available.No dividends were received by Candover for the year ended 31st December, 2004.Sector: Support services www.candover.com/vetco Aspen Insurance Holdings LimitedLocation: USDate of investment: June 2002Candover's investment as at 31st December 2004 2003 Cost of investment ‚£7,830,000 ‚£7,830,000 Directors' valuation US$15,360,000 US$16,125,000 (‚£8,071,000) (‚£9,008,000) Effective equity interest (fully 1.0% 1.0% diluted) % of Candover's net assets 2.6% 3.5% Diluted earnings per share US$2.74 US$2.56 Basis of valuation 20% discount on market 17% discount on market price price In 2002, Candover co-led an equity syndicate which committed ‚£448.0 million tothe formation of Aspen Insurance, a new reinsurance and insurance group, whichis one of the largest independent reinsurance vehicles in the UK market.Aspen's key business lines comprise mainly property and casualty reinsurance,but with the business increasingly diversifying into other lines to provide ahighly focused leader in key reinsurance and insurance lines. On 4th December,2003, Aspen successfully completed its listing on the New York Stock Exchangeat an initial offer price of US$22.50 per share.Income on operations before income tax for the year ended 31st December, 2004was US$263.2 million on net premiums earned of US$1,232.8 million (2003:Income on operations before income tax was US$206.6 million on net premiumsearned of US$812.3 million).In the year ended 31st December, 2004 Candover received dividends of US$98,000or ‚£51,000 (2003: ‚£nil).Sector: Financials www.candover.com/aspen Ciclad 3Location: FranceDate of investment: April 2000 Candover's investment as at 31st 2004 2003 December Cost of investment EURO 8,306,000 EURO 7,600,000 (‚£4,854,000) (‚£4,767,000) Directors' valuation EURO 9,975,000 EURO 7,430,000 (‚£7,055,000) (‚£5,235,000) Effective equity interest (fully n/a n/a diluted) % of Candover's net assets 2.3% 2.1% Basis of valuation Multiple of Multiple of earnings earnings In April 2000, Candover committed EURO15.0 million to Ciclad 3, an investmentcompany specialising in French buyouts.A successor of Ciclad 2, Ciclad 3, with EURO82.2 million of commitments,started its investment period in April 2000. Ciclad 3 has invested in 25companies, three of which have been sold and three have been written off.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: External funds www.candover.com/ciclad3 Acertec Holdings LimitedLocation: UKDate of investment: June 1999Candover's investment as at 31st 2004 2003 December Cost of investment ‚£7,043,000 ‚£7,043,000 Directors' valuation ‚£7,043,000 ‚£1,765,000 Effective equity interest (fully 7.9% 7.9% diluted) % of Candover's net assets 2.3% 1.6% Basis of valuation Multiple of Multiple of earnings earnings In June 1999, Candover led the ‚£135.0 million public-to-private buyout of HallEngineering (Holdings) plc, now renamed Acertec Holdings Limited.Acertec consists of four principal businesses: Carrington Wire, a leadingmanufacturer of wire in the UK; BRC Reinforcement, a leading UK supplier ofreinforcement products to the construction industry; Stadco, Acertec'sautomotive pressings business, which is one of the leading European suppliersof body-in-white pressings and assemblies to the car industry; and in the FarEast, BRC Asia, which is the market leader in the supply of prefabricated steelreinforcement systems to the Singapore housing market, and which was listed onthe Singapore Stock Exchange in July 2000.Profit before goodwill amortisation, interest and tax for the year ended 31st December, 2003 was ‚£4.5 million on turnover of ‚£176.8 million (2002: Profitbefore goodwill amortisation, interest and tax was ‚£6.1 million on turnover of‚£172.7 million).No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Industrials ICG Mezzanine Fund 2000Location: UKDate of investment: July 2000Candover's investment as at 31st 2004 2003 December Cost of investment EURO 8,772,000 EURO 11,345,000 (‚£5,519,000) (‚£7,101,000) Directors' valuation EURO 8,772,000 EURO 11,345,000 (‚£6,204,000) (‚£7,994,000) Effective equity interest (fully n/a n/a diluted) % of Candover's net assets 2.0% 3.1% Basis of valuation Multiple of Multiple of earnings earnings In July 2000, Candover committed EURO15.0 million to the EURO475.0 million ICGMezzanine Fund 2000. The Fund has been active in providing mezzanine financethroughout Europe. The investment period for new investments has terminatedand EURO14.6 million of Candover's commitment of EURO15.0 million has beendrawn down.Transactions for which the ICG Mezzanine Fund 2000 provided financing includethe acquisitions of Tetley by Tata Tea, Baxi by Newmond and the buyouts ofPicard Surgelƒ©s and Swissport. During the year, capital repayments werereceived resulting in a reduction in the cost of the investment.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: External funds Equity Trust Holdings S.ƒ¡.r.l.Location: UKDate of investment: May 2003Candover's investment as at 31st December 2004 2003 Cost of investment EURO 7,713,000 EURO 7,713,000 (‚£5,477,000) (‚£5,477,000) Directors' valuation EURO 7,713,000 EURO 7,713,000 (‚£5,455,000) (‚£5,435,000) Effective equity interest (fully diluted) 5.2% 5.2% % of Candover's net assets 1.7% 2.1% Basis of valuation Multiple of earnings Cost In May 2003, Candover backed the existing management team to acquire the trustand fiduciary services business of Insinger de Beaufort for EURO197.5 million.Equity Trust provides client services, primarily based around the formation andongoing administration of onshore and offshore trusts and companies. It has aninternational customer base comprising both private clients and corporateentities, providing them with solutions to business investment, wealth creationand wealth preservation issues.Profit before goodwill amortisation, interest and tax for the period 28th May,2003 to 31st December, 2003 was EURO8.8 million on turnover of EURO35.9million.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Financials www.candover.com/equitytrust Ontex NVLocation: BelgiumDate of investment: January 2003Candover's investment as at 31st 2004 2003 December Cost of investment EURO 26,411,000 EURO 26,058,000 (‚£17,163,000) (‚£16,925,000) Directors' valuation EURO 6,610,000 EURO 19,543,000 (‚£4,675,000) (‚£13,771,000) Effective equity interest (fully 4.4% 4.1% diluted) % of Candover's net assets 1.5% 5.4% Basis of valuation Multiple of Multiple of earnings earnings Candover completed the EURO1.0 billion buyout and delisting of Ontex, a leadingEuropean producer of own-label hygienic disposables, from the Belgian StockExchange in January 2003.Ontex is the leading European manufacturer of retailer-branded diapers andfeminine hygiene products. It also has an adult health care business, which isnumber three in Europe. Ontex supplies supermarket private label products inWestern Europe, and a combination of private label and branded products in therapidly growing markets of Eastern Europe and Turkey. In June 2004 Ontexacquired the Paul Hartmann AG baby diaper business and Candover invested afurther EURO0.3 million.In the period 15th January, 2003 to 31st December, 2003 Ontex generated profitbefore goodwill amortisation, interest and tax of EURO75.3 million on turnoverof EURO743.9 million.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Health www.candover.com/ontex Kabel Deutschland GmbHLocation: GermanyDate of investment: June 2003Candover's investment as at 31st December 2004 2003 Cost of investment EURO 692,000 EURO 1,405,000 (‚£462,000) (‚£1,061,000) Directors' valuation EURO 3,578,000 EURO 1,405,000 (‚£2,530,000) (‚£990,000) Effective equity interest (fully diluted) 0.7% 0.7% % of Candover's net assets 0.8% 0.4% Basis of valuation Multiple of earnings Cost The buyout of Kabel Deutschland (KDG) from Deutsche Telekom was completed inMarch 2003 by a group consisting of Goldman Sachs, Apax Partners and ProvidenceEquity. Candover subsequently took an equity position from Goldman Sachs inJune 2003.KDG is Europe's largest cable TV company, providing cable TV signals to tenmillion homes in Germany.Profit before goodwill amortisation, interest and tax for the year to 31stMarch, 2004 was EURO52.7 million on turnover of EURO984.9 million.No dividends were received by Candover for the year ended 31st December, 2004(2003: ‚£nil).Sector: Media Group statement of total returnincorporating the revenue account for the year ended 31st December, 2004 Unaudited 2004 2003 Revenue Capital Total Revenue Capital Total ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Gains/(losses) on Investments Realised gains and losses - 27,420 27,420 - 1,380 1,380 Unrealised gains and losses - 31,560 31,560 - 26,734 26,734 - 58,980 58,980 - 28,114 28,114 Income - managed funds Net income 60,524 - 60,524 78,921 - 78,921 Less: third party interests in managed funds (60,363) - (60,363) (78,875) - (78,875) Add: management fees 24,633 - 24,633 27,192 - 27,192 Net income from managed funds 24,794 - 24,794 27,238 - 27,238 Income - own funds 17,001 - 17,001 15,434 - 15,434 Total income 41,795 - 41,795 42,672 - 42,672 Administrative expenses (22,832) (6,764) (29,596) (24,744) (6,233) (30,977) Net return before finance costs and taxation 18,963 52,216 71,179 17,928 21,881 39,809 Interest payable & similar charges (11) - (11) (15) - (15) Return on ordinary activities before taxation 18,952 52,216 71,168 17,913 21,881 39,794 Tax on ordinary activities (5,713) 2,029 (3,684) (5,252) 1,871 (3,381) Return on ordinary activities after taxation for the financial year 13,239 54,245 67,484 12,661 23,752 36,413 Dividends (9,584) - (9,584) (8,742) - (8,742) Transfer to reserves 3,655 54,245 57,900 3,919 23,752 27,671 Return per ordinary share Basic and diluted 60.57p 248.19p 308.76p 57.95p 108.72p 166.67p Group balance sheetat 31st December, 2004Unaudited 2004 2003 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Fixed assets Tangible assets 1,091 1,175 Investments Managed funds 1,128,292 1,183,670 Less: third party interests in managed funds (1,086,871) (1,136,386) Net investment in managed funds 41,421 47,284 Investee companies 157,029 163,871 198,450 211,155 Associated undertakings 1 1 198,451 211,156 Current assets Debtors 27,810 26,826 Investments 111,452 110 Cash at bank 13,355 37,196 152,617 64,132 Creditors: amounts falling due within one year (33,463) (13,492) Net current assets 119,154 50,640 Total assets less current liabilities 318,696 262,971 Provisions for liabilities and charges (6,082) (8,257) 312,614 254,714 Capital and reserves Called up share capital 5,464 5,464 Share premium account 1,451 1,451 Capital redemption reserve 290 290 Capital reserve - realised 259,433 188,668 Capital reserve - unrealised 19,280 35,800 Revenue reserve 26,696 23,041 Shareholders' funds 312,614 254,714 Net asset value per share 1430p 1165p Group cash flow statementfor the year ended 31st December, 2004Unaudited 2004 2003 ‚£'000 ‚£'000 ‚£'000 ‚£'000 Net cash inflow from operating activities 26,042 4,168 Returns on investments and servicing of finance Interest paid (11) (15) Taxation UK corporation tax paid (1,194) (33) Capital expenditure and financial investment Purchase of tangible fixed assets (322) (354) Purchase of investments (60,631) (78,533) Sale of investments 131,119 41,771 Sale of tangible fixed assets 31 63 Sale of associated undertaking - 73 Net cash inflow/(outflow) from capital expenditureRelated Shares:
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