31st Aug 2010 07:00
For immediate release on 31st August 2010
Candover Investments plc Interim results for the half year ended 30th June 2010 · Net assets per share of 903p at 30th June 2010 (31st December 2009:1038p), a 13.0% decrease. This reduction comprises a decline of 106p to reflectfalling multiples at 30th June, together with a net adverse currency impact oninvestments and net debt of 29p per share. The majority of the decline ininvestment value relates to Expro, following recent volatility in the oil andgas sector.
· Outstanding commitments to the Candover 2005 Fund at 30th June 2010 were £72.7 million
(31st December 2009: £80.7 million), with the ratio of outstanding commitmentsto net assets being 36.9%. Since the period end, follow-on investmentstotalling £33.6 million have been made, reducing the outstanding commitments to£39.1 million based upon period end exchange rates. · Net debt reduced by 21.0% at 30th June 2010 to £58.8 million (31stDecember 2009: £74.8 million), with the loan to value ratio of 25.0% being wellwithin the required threshold of 40.0% (31st December 2009: 26.4%) · Cash and undrawn bank facilitiesat 30th June 2010 were £200.1 million(31st December 2009: £206.3 million), meaning outstanding commitments are
2.8times covered.
· Ten largest investments comprised 90.4% of Candover's investment value at 30th June 2010 with Expro individually accounting for 32.2%.
Malcolm Fallen, Chief Executive Officer, said:
"The first half of the year has seen further progress in Candover'sstabilisation. We have used this period to review our options for the Companyand believe that the best way to optimise value is likely to be a move towardsimplementing a plan to return cash to shareholders. The Board continues tobelieve there is significant value in the underlying investments in theportfolio. Such a plan means Candover is likely to remain as a listedinvestment trust, focused on distributing value to investors over time asportfolio realisations are achieved by Candover Partners. The Board willupdate shareholders in due course." Ends.
*Candover means Candover Investments plc and / or one or more of its
subsidiaries
** Candover Investments means Candover Investments plc ***Candover Partners means Candover Partners Limited
For further information, please contact:
Candover +44 20 7489 9848 Tulchan Communications +44 20 7353 4200 Malcolm Fallen Susanna Voyle Helen Walsh Peter Hewer
Business and financial review
Business review Strategy and priorities During the first half of this year we have continued to build upon last year'smomentum aimed at delivering greater stability for the business. Thetermination agreement reached with Candover Partners and the Limited Partnersof the Candover 2008 Fund in January of this year was a milestone in thisrespect and leaves us in a solid position with regard to meeting ouroutstanding commitments to ongoing funds. In the first half we received an unsolicited approach from a third party to buythe whole of the Company. Recognising that your Board has a fiduciary duty toconsider any credible approach, we began discussions with this third partyaimed at understanding how such a potential offer might bring further financialstability to Candover and maximise the value for shareholders. These talkscame to an end in early July when the Board requested that the potentialofferor clarify its position. It confirmed that it was no longer consideringmaking an offer. Whilst the talks were constructive they never reached a pointwhere a clear proposal was forthcoming that could be considered by the Board orshareholders. We have used this first half to review our options for the Company based uponour belief that there is significant value in the underlying investments in theportfolio. We consider that the best way to optimise value for shareholders islikely to be Candover remaining as a listed investment trust, with the solepurpose of returning cash to investors over time as portfolio realisations aremade by Candover Partners. We are therefore reviewing the range of returnsthat could be achieved, the likely timescales, and the best way of returningcapital to shareholders.
The interests of the Company and Candover Partners remain closely aligned, withthe principal aim being to maximise the value of the existing portfolio in theinterests of all investors. We remain committed to supporting the team toassist them in delivering this value.
Further announcements will be made to shareholders in due course.
Performance
Our results for the half year reflect the instability in the markets, both interms of company valuations - with the FTSE 100 on 30th June approaching itslowest point this year - and adverse foreign exchange movements. During thefirst six months, our net assets fell by 13.0% to 903p, compared to a 7.9% fallin the FTSE All-Share over the same period. The concentration of the portfolioin Expro International and its resultant exposure to volatility in the oil andgas sector, influenced by the events in the Gulf of Mexico, had a marked effecton our first half valuations. However, since the period end, there has been astabilisation in the market, with all major indices improving. In the preliminary statement in March, we outlined certain key metrics which weintend to use to provide clarity of performance and to demonstrate shareholdervalue: Net assets per share ("NAV")The Company's net assets per share of 903p after currency movements decreasedby 13.0% over the period to 30th June 2010 (31st December 2009: 1038p). Excluding Expro International, this decrease was principally caused by adversecurrency movements (54p) and the combined write down of Alma and EurotaxGlass'sto reflect lower multiples (52p). In the case of Expro International, adownward revaluation was made to reflect volatility in the oil and gas sectorand the resultant decline in multiples of comparable quoted companies. Thisaccounted for 65p of the decrease in NAV, offset by a favourable currencyimpact of 25p relating to that asset.
Outstanding commitments
Outstanding commitments to the Candover 2005 Fund at 30th June 2010 were £72.7 million (31st December 2009: £80.7 million), with the ratio of outstanding commitments to net assets being 36.9%. Since the period end, investments totalling £33.6 million have been made in DX Group, EurotaxGlass's, Expro International, Hilding Anders and Technogym, reducing the outstanding commitments to £39.1 million at period end exchange rates.
Net debt
As at 30th June 2010, net debt was £58.8 million (31st December 2009: £74.8 million), with the loan to value ratio of 25.0% (31st December 2009: 26.4%) being well within the required threshold of 40.0%. Expected proceeds from Ontex, as announced on 14th July 2010, and the follow-on commitments noted above, will result in a net investment outflow of £17.2 million during the second half of the year assuming no further investments or realisations.
Cash and undrawn bank facilities
At 30th June 2010, cash and undrawn bank facilities were £200.1 million (31stDecember 2009: £206.3 million), meaning our outstanding commitments are 2.8times covered.
Concentration of the portfolio
At 30th June 2010, the ten largest investments comprised 90.4% of Candover'sinvestment value, with Expro International individually accounting for 32.2%. Following the sale of Ontex, concentration of the portfolio will haveincreased, and this trend will continue as further realisations occur. Board We have now transitioned to a smaller Board to reflect our status as a smallercompany, with Antony Hichens, Chris Russell and Nicholas Jones stepping down atthe AGM in May. Dividend
The Board continues to feel that it is not appropriate to recommence paying dividends to shareholders at this stage. As part of the cash maximisation strategy, we will determine the appropriate mechanisms to return capital to shareholders, including looking at restarting dividends in due course.
Outlook Looking ahead, the portfolio continues to demonstrate its potential forlong-term value and whilst the outlook for the macro environment remains hardto predict, both the broader mergers and acquisitions and private equitymarkets in Europe have seen a steady increase in activity which should supportour value maximisation strategy. Financial review Net asset value per share
Net assets per share, including currency movements, reduced by 135p to 903p a decrease of 13.0% since 31st December 2009. The decrease over the six month period compares with a fall in the FTSE All-Share of 7.9% over the same period.
Two-thirds of our investments are Euro denominated and therefore the valuationof these assets is exposed to the Euro/Sterling exchange rate. Candover hashedged its currency exposure in order to mitigate any adverse impact on itsloan to value covenant through the denomination of its cash, debt and swapsrather than the potential currency impacts on net asset values. As a result,currency fluctuations can have a material impact on net assets. Table 1 belowsummarises the movements in net assets during the first half. The net adverseimpact of currency movements on both investments and net debt reduced reportedNAV by 29p to 903p. At 30th June 2010, net assets per share, before currency movements were 932pcompared to 1038p at 31st December 2009, a reduction of 106p over the period. Of this, Expro International accounted for 65p, with valuation reductions onAlma and EurotaxGlass's accounting for the balance. Table 1 £m £m p/share p/ share
Net asset value at 31st December 2009 as 227.0 1038 reported Loss on financial instruments at fair value (13.9) (64) through profit and loss before currency1
Profit after taxation (6.9) (31)
Capitalised expenses (net of tax) (2.9) (13)
Others 0.5 2 203.8 932 Currency impact: - Unrealised investments (13.6) (62)
- Restatement of cash and cash equivalents (10.0) (46) - Translation of loan and swap balances 17.2 79
(6.4) (29) Net asset value at 30th June 2010 as 197.4 903 reported
1 Includes valuation movements as shown in Table 2, realised gains on investments of £1.5 million, gains on reducing financial liabilities on equity commitments of £0.9 million, but excludes decreases in accrued investment income of £4.2 million (recognised in profit after taxation).
Investments
The valuation of investments, including accrued loan note interest, at 30th June 2010 was £270.7 million
(31st December 2009: £319.9 million). Table 2 below summarises the movement in our investments over the first half.
Table 2 £m £m
Investments at 31st December 2009 319.9
Disposals at valuation (15.1) Additions -
Revaluation of investments: - Valuation movements before currency (20.5) - Currency impact on unrealised investments (13.6)
(34.1)
Investments at 30th June 2010 270.7
Net debt position Candover's net debt has fallen from £74.8 million as at 31st December 2009 to£58.8 million as at 30th June 2010, principally due to the receipt ofrealisation proceeds of £17.7 million. Table 3 below analyses our net debt. Table 3 £ million 30th June 2010 31st December 2009 Loans and borrowings 203.6 194.6 Fair value hedge adjustment (17.7) (13.3) Deferred costs 1.2 1.3 Value of loan note 187.1 182.6 Value of related swaps (28.2) (1.5) Cash (100.1) (106.3) Net debt 58.8 74.8
The outstanding commitment to the Candover 2005 Fund fell to £72.7 million over the period from £80.7 million at the year end, largely due to currency movements.
Net revenue before tax For the six month period net revenue before exceptional items and tax was aloss of £6.2 million compared to a gain of £5.2 million in the comparableperiod. This resulted from a £9.4 million adverse variance in investment andother income reflecting the impact of lower valuations on the level of accruedincome that is recognised. Table 4 below analyses the makeup of net revenue.
In light of the change in our focus on realisation rather than investment, wehave reviewed and revised the allocation of expenses between revenue andcapital. In particular, this change reflects the impact of longer hold periodson investments before realisations which will result in a greater proportion ofthe anticipated future return being received as loan stock interest, ratherthan capital gains, which would therefore be recognised as revenue rather thancapital return. Table 4 £ million 30th June 2010 30th June 2009
Management fees from managed funds 6.8 9.8 Costs before exceptional items and (8.4) (11.1) taxation taken to revenue before adjustment to capitalised expenses allocation basis (1.6) (1.3) Adjustment to capitalised expenses (1.7) - allocation basis Investment and other income (2.9) 6.5 (Loss)/profit before exceptional (6.2) 5.2
items and taxation Manager's report The European buyout market continues to show renewed signs of activity, withdeal values of €25.2 billion in the first half of the year only ten per centlower than the value of all buyouts completed in the year to 31st December2009. The increase in buyout activity is encouraging in the context of exits,and to this end Candover Partners has realised its investment in SpringerScience+Business Media and has entered into an agreement to sell Ontex. TheSpringer and Ontex transactions are two of the largest buyouts announced in
Europe in the past 12 months. Investments
The Candover 2008 Fund's investment period was terminated in January and as a result no new investments were made during the first six months of the year.
However, Candover Partners continues to explore ways to enhance portfoliocompany values both organically and through add-on acquisition. Since theperiod end, Expro International has agreed to acquire Production TestersInternational, an Asian based oilfield services company. Candover will invest £1.5 million and the Candover 2005 and 2008 Funds will invest £25.0 million
inthe transaction.
In addition, since the period end Candover has invested in the following portfolio companies:
§ £2.2 million in DX Group as part of a balance sheet restructuring;
§ £2.3 million in EurotaxGlass's as part of a restructuring;
§ £6.7 million in Hilding Anders to repay a facility put in place to fund acquisitions; and
§ £20.9 million in Technogym to repay a debt facility put in place at the time of the original acquisition.
Portfolio company Candover Funds £m £m DX Group 2.2 13.1 EurotaxGlass's 2.3 13.7 Expro International 1.5 25.0 Hilding Anders 6.7 40.7 Technogym 20.9 126.4 Total investments - post period end 33.6 218.9 Realisations Candover and its managed funds achieved realisation proceeds totalling £52.2million during the period. Candover's share was £17.7 million of which £16.8million was from its managed funds. In February, Candover and the 2001 Fund realised its holding in SpringerScience+Business Media. The sale generated proceeds of £16.3 million forCandover, of which £12.6 million resulted from the crystallisation of thecarried interest. The Candover 2001 Fund received proceeds of £32.1 million,before payment of carried interest, which including proceeds from three earlierrefinancings, equates to an overall multiple of 1.8 times the originalinvestment. In May, Candover Partners and the equity syndicate reached agreement with thelenders of Gala Coral on a new capital structure, which resulted in themezzanine holders taking 100% of the equity. The transaction completed in Juneand generated proceeds for Candover of £0.5 million including £0.2 million fromthe crystallisation of the carried interest; the Candover 2001 Fund received £2.4 million. When combined with earlier proceeds realised from the sale of anequity stake and two refinancings, the Gala Coral investment will have achievedan investment multiple of 0.6 times the original investment. Since the period end, Candover Partners has agreed to sell its holding inOntex. The sale, which is expected to complete before the year end, willgenerate initial estimated cash proceeds for Candover of £16.4 million,including £4.6 million of carried interest. A guaranteed, interest accruingdeferred payment, will result in further proceeds valued today at £7.1 millionand will be payable between completion and September 2012. The carried interestfrom this deferred payment will return an additional £2.8 million. The Candover2001 Fund will receive estimated initial proceeds of £92.0 million and afurther £55.7 million from the deferred payment, giving an investment multiple,before carried interest, of 0.7 times the original investment. Company Capital proceeds Exit route Candover Funds £m £m Gala Coral 0.3 2.4 Restructuring Springer Science+Business 3.7 32.1 Private equity sale Media Candover 2001 Fund carried 12.8 - Crystallisation of carried interest interest Other 0.9 Total realisations to 30th 17.7 34.5 June 2010 Ontex 18.9 147.7 Private equity sale Candover 2001 Fund carried 7.4 - Crystallisation of carried interest interest
Total realisations post period 26.3 147.7
end Valuations
During the period under review, the portfolio has shown continued signs ofstabilisation. Of the top ten investments, six are trading ahead at theearnings level on a 12 month rolling basis compared to the year end position,with the remainder trading in line with expectations. Over the same period,eight investee companies have reduced their net debt position, with theportfolio weighted average net debt to EBITDA multiple of 4.3 times (December2009: 4.8 times). This excludes Expro International, which replaced its seniordebt with a high yield bond in December 2009 in order to ensure its financialstructure was better suited to the cyclical nature of the oil and gas sector. The ten largest companies represent 90.4% of the portfolio, with the 2001 Fundcarried interest representing a further 6.7%. Within the portfolio, ExproInternational accounts for 32.2% of the value, and movements in its valuationtherefore have a significant impact on the value of the portfolio and thereforenet asset value. During the period, Expro International was written down by 14.6% on a constantcurrency basis to reflect the volatility in the oil and gas sector and theresultant decline in multiples of quoted comparables which have been adverselyimpacted by the Macondo well incident in the Gulf of Mexico. By way ofillustration, the Dow Jones Global Oil Equipment and Services Index (theclosest industry index) fell by 16.8% during the same period. The oilfieldservices market has continued to be challenging over the period with oil andgas operators continuing to be impacted by the uncertainty in the globalmarkets. Despite this, Expro International has displayed resilientcharacteristics and the lead indicators of the business are increasinglyencouraging. The business has seen a significant increase in customer inquirylevels versus the prior year; it has recently secured over £250.0 million ofcontract wins across its operations worldwide and has a global order book ofover £800.0 million. The business is geographically diversified with onlyaround 5.0% of revenues derived from the Gulf of Mexico area. Expro International sees significant opportunity as the market recovers givenit is one of the leading providers to operators in developing complex oilreserves with its suite of safe and value enhancing products and services. Thebusiness is accelerating its investment in its people, technology and regionalinfrastructure to capitalise on these opportunities and overcome the structuralsupply challenges faced by the industry. This also includes the acquisition ofProduct Testers International which will enhance its product and serviceoffering. The acquisition is expected to complete in September 2010. As aresult of these investments, Candover Partners believes Expro International iswell positioned to maximise the opportunities offered by the medium tolong-term fundamentals of the oil and gas sector, which continue to remain
robust. Ten largest investments
Analysis by value as at 30th June 2010
By valuation method 1. Multiple of earnings 92%2. Sale price 8% By region 1. United Kingdom 53%2. Benelux 24%3. Spain 13%4. France 9%5. Switzerland 1% By sector 1. Energy 36%2. Industrials 28%3. Financials 14%4. Leisure 13%5. Health 8%6. Support services 1%7. Media nil% By age 1. 5 years 14% Outlook
Candover Partners believes that the portfolio continues to perform well in whatremains an uncertain trading environment. Its focus remains on maximisingvalue, working closely with each company and management team to ensure they arewell positioned to trade profitably, as well as build value for the future. Ten largest investmentsas at 30th June 2010 Valuation Valuation Valuation at 31st movement movement Residual December excluding attributable Effective cost of 2009 FX to FX equity investment Valuation interest % of £m £m £m £m at 30th (fully net Basis of Investment June diluted) assets valuation £m Expro 109.4 95.8 (14.2) 5.5 87.1 7.2% 44.1% Multiple International of earnings Oilfield services Stork 48.9 43.8 - (4.4) 39.4 6.4% 20.0% Multiple of Engineering earnings conglomerate Parques 25.7 34.7 - (3.5) 31.2 5.6% 15.8% Multiple Reunidos of earnings Operator of attraction parks AlmaConsulting 20.5 30.9 (4.5) (3.1) 23.3 5.4% 11.8% Multiple Group of earnings Cost reduction and tax recovery services Ontex 21.3 19.8 1.1 (2.0) 18.9 4.9% 9.6% Sale price Hygienic disposables Qioptiq 9.6 15.8 - (1.6) 14.2 7.2% 7.2% Multiple of Optical earnings engineering Capital Safety 11.9 10.8 - 0.6 11.4 6.7% 5.8% Multiple Group of earnings Fall protection equipment Equity Trust 8.3 12.6 - (1.3) 11.3 5.6% 5.7% Multiple of Trust services earnings Innovia Films 3.8 5.0 - (0.5) 4.5 8.0% 2.3% Multiple Limited of Chemicals earnings EurotaxGlass's 17.4 11.4 (6.8) (1.1) 3.5 8.0% 1.8% Multiple of Automotive earnings data intelligence
Principal risks and uncertainties
Details of the principal risks and uncertainties facing the Group were set outin the risk review on pages 36 to 39 of the 2009 Report and Accounts, a copy ofwhich is available on our website (www.candoverinvestments.com).
The principal risks and uncertainties identified in the 2009 Annual Report, and the policies and procedures for minimising these risks and uncertainties, remain unchanged and each of them has the potential to affect the Group's results during the remainder of 2010. Our views on the current market conditions are reflected in the business review and the manager's report.
Statement of directors' responsibilities
The directors of Candover Investments plc confirm that, to the best of theirknowledge, the condensed set of financial statements have been prepared inaccordance with International Accounting Standard 34 'Interim FinancialReporting' as adopted by the EU, and that the interim management reportincludes a fair review of the information required by DTR 4.2.4, DTR 4.2.7
andDTR 4.2.8. The directors of Candover Investments plc are listed on the last page of thisstatement. By order of the Board Philip PriceCompany Secretary31st August 2010
Independent review report to Candover Investments plc
Introduction We have been engaged by the Company to review the condensed consolidated set offinancial statements in the half-yearly financial report for the six monthsended 30th June 2010 which comprises the Group statement of comprehensiveincome, Group statement of changes in equity, Group statement of financialposition, Group cash flow statement and the related notes. We have read theother information contained in the half-yearly financial report and consideredwhether it contains any apparent misstatements or material inconsistencies withthe information in the condensed set of financial statements. This report is made solely to the Company in accordance with guidance containedin ISRE (UK and Ireland) 2410, 'Review of Interim Financial Informationperformed by the Independent Auditor of the Entity'. Our review work has beenundertaken so that we might state to the Company those matters we are requiredto state to them in a review report and for no other purpose. To the fullestextent permitted by law, we do not accept or assume responsibility to anyoneother than the Company, for our review work, for this report, or for theconclusion we have formed. Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in Note 2, the annual financial statements of the Group areprepared in accordance with IFRSs as adopted by the European Union. Thecondensed set of financial statements included in this half-yearly financialreport has been prepared in accordance with International Accounting Standard34, 'Interim Financial Reporting', as adopted by the European Union. Our responsibility Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview. Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion. Conclusion Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30th June 2010 is not prepared, inall material respects, in accordance with International Accounting Standard 34as adopted by the European Union and the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority. Grant Thornton UK LLPRegistered AuditorLondon31st August 2010
Group statement of comprehensive income
for the period ended 30th June 2010
£ million Six months to 30th June Six months to 30th June Year to 31st December 2010 2009 2009Unaudited Revenue Capital Total Revenue Capital Total Revenue Capital Total(Loss)/gain on financial instrumentsat fair value through profit and lossRealised gains and losses - (2.8) (2.8) - (12.4) (12.4) - (9.8) (9.8)Unrealised gains and losses - (18.8) (18.8) - (0.4) (0.4) - 30.5 30.5 - (21.6) (21.6) - (12.8) (12.8) - 20.7 20.7RevenueManagement fees from managed funds 6.8 - 6.8 9.8 - 9.8 18.6 - 18.6Investment and other income (2.9) - (2.9)
6.5 - 6.5 13.3 - 13.3
3.9 - 3.9 16.3 - 16.3 31.9 - 31.9Recurring administrative expenses (8.7) (1.4) (10.1) (10.1) (3.6) (13.7) (19.7) (5.2) (24.9)Exceptional non-recurring costs - - - (15.4) - (15.4) (17.1) - (17.1)(Loss)/Profit before finance costs and (4.8) (23.0) (27.8) (9.2) (16.4) (25.6) (4.9) 15.5 10.6taxationFinance costs (1.4) (1.5) (2.9) (1.0) (4.1) (5.1) (1.8) (7.1) (8.9)Movement in the fair value of - 0.3 0.3 - (1.0) (1.0) - (0.8) (0.8)derivativesExchange movements on borrowings - 1.8 1.8 - 5.8 5.8 - 3.7 3.7(Loss)/Profit before taxation (6.2) (22.4) (28.6) (10.2) (15.7) (25.9) (6.7) 11.3 4.6Analysed between:(Loss)/Profit before exceptional (6.2) (22.4) (28.6) 5.2 (15.7) (10.5) 10.4 11.3 21.7non-recurring costsExceptional non-recurring costs - - - (15.4) - (15.4) (17.1) - (17.1)Taxation (0.7) - (0.7) (0.8) - (0.8) (2.3) - (2.3)(Loss)/Profit after taxation (6.9) (22.4) (29.3) (11.0) (15.7) (26.7) (9.0) 11.3 2.3Other comprehensive income:Exchange differences on translation of (0.3) - (0.3) (0.4) - (0.4) 0.4 - 0.4foreign operationsTotal comprehensive income (7.2) (22.4) (29.6) (11.4) (15.7) (27.1) (8.6) 11.3 2.7Earnings per ordinary share:Before exceptional non-recurring costsBasic and diluted (33p) (103p) (136p) 18p (72)p (54)p 37p 52p 89pAfter exceptional non-recurring costsBasic and diluted (33p) (103p) (136p) (52)p (72)p (124)p (41p) 52p 11pDividends paid (£ millions) - - -
- - - - - -
The total column represents the group statement of comprehensive income underIFRS. The supplementary revenue and capital columns are presented forinformation purposes as recommended by the Statement of Recommended Practiceissued by the Association of Investment Companies.
All of the profit for the period and the total comprehensive income for the period is attributable to the owners of the Company.
All items in the above Statement derive from continuing operations. No operations were acquired or discontinued in the period.
No interim dividend is proposed.
Group statement of changes in equityfor the period ended 30th June 2010
£ million Called up Share Other Capital Capital Revenue TotalUnaudited share premium reserves
reserve - reserve - reserve equity
capital account realised unrealisedBalance at 1st January 2010 5.5 1.2 0.2 359.5 (160.5) 21.1 227.0Net revenue after tax - - - - - (6.9) (6.9)Unrealised loss on financial instruments - - - - (18.8) - (18.8)Realised gain/(loss) on financial - - - 3.2 (6.0) - (2.8)instrumentsMovement in fair value of derivatives - - - - 0.3 - 0.3Exchange movements on borrowing - - -
- 1.8 - 1.8Costs net of tax - - - (2.9) - - (2.9)(Loss) after tax - - - 0.3 (22.7) (6.9) (29.3)Exchange differences on translation offoreign operations - - (0.3) - - - (0.3)Total comprehensive income - - (0.3) 0.3 (22.7) (6.9) (29.6)Balance at 30th June 2010 5.5 1.2 (0.1) 359.8 (183.2) 14.2 197.4 UnauditedBalance at 1st January 2009 5.5 1.2 (0.2) 369.8 (182.1) 30.1 224.3 Dividends - - - - - (8.7) (8.7)Share based payments - - 1.2 - - - 1.2
Transactions with equity holders - - 1.2 - - (8.7) (7.5) Net revenue after tax - - - - - (11.4) (11.4)Unrealised loss on financial instruments - - - - (0.4) - (0.4)Realised gain/(loss) on financial - - - 24.1 (36.5) - (12.4)instrumentsMovement in fair value of derivatives - - - - (1.0) - (1.0)Exchange movements on borrowing - - -
- 5.8 - 5.8Costs net of tax - - - (7.7) - - (7.7)Profit/(loss) after tax - - - 16.4 (32.1) (11.4) (27.1)
Exchange differences on translation of - - (0.4) - - 0.4 -foreign operationsTotal comprehensive income - - (0.4) 16.4 (32.1) (11.0) (27.1)Balance at 30th June 2009 5.5 1.2 (0.6)
386.2 (214.2) 19.1 197.2
Audited
Balance at 1st January 2009 5.5 1.2 (0.2)
369.8 (182.1) 30.1 224.3
Net revenue after tax - - - - - (9.0) (9.0)Unrealised loss on financial instruments - - - - 30.5 - 30.5Realised gain/(loss) on financialinstruments - - - 2.0 (11.8) - (9.8)Movement in fair value of derivatives - - - - (0.8) - (0.8)Exchange movements on borrowing - - -
- 3.7 - 3.7Costs net of tax - - - (12.3) - - (12.3)Profit/(loss) after tax - - - (10.3) 21.6 (9.0) 2.3Exchange differences on translation offoreign operations - - 0.4 - - - 0.4Total comprehensive income - - 0.4 (10.3) 21.6 (9.0) 2.7Balance at 31st December 2009 5.5 1.2 0.2
359.5 (160.5) 21.1 227.0
Group statement of financial position
at 30th June 2010£ million 30th June 30th June 31st DecemberUnaudited Notes 2010 2009 2009Non-current assets
Property, plant and equipment 2.4 3.5 2.7 Financial investments designated atfair value through profit and lossInvestee companies 4 256.3 230.9 291.6Other financial investments 4 14.4 25.7 28.3 270.7 256.6 319.9 Trade and other receivables 5.3 2.9 4.7Deferred tax asset 2.8 5.9 3.4 281.2 268.9 330.7 Current assetsTrade and other receivables 10.1 7.7 8.2Derivative financial instruments 49.3 32.9 38.4Current tax asset 0.1 - 0.9Cash and cash equivalents 100.1 151.9 106.3 159.6 192.5 153.8Current liabilitiesTrade and other payables (7.4) (22.0) (13.8)Financial liability on equity commitments (11.3) (27.3) (12.2)Derivative financial instruments (21.1) (27.6) (36.9)Current tax liabilities - (0.2) - (39.8) (77.1) (62.9) Net current assets 119.8 115.4 90.9Total assets less current liabilities 401.0 384.3 421.6Non-current liabilitiesLoans and borrowings (203.6) (187.1) (194.6)Net assets 197.4 197.2 227.0 Equity attributable to equity holdersCalled up share capital 5.5 5.5 5.5Share premium account 1.2 1.2 1.2Other reserves (0.1) (0.6) 0.2Capital reserve - realised 359.8 386.2 359.5Capital reserve - unrealised (183.2) (214.2) (160.5)Revenue reserve 14.2 19.1 21.1Total equity 197.4 197.2 227.0 Net asset value per shareBasic 903p 902p 1038pDiluted 903p 902p 1038p Group cash flow statement
for the period ended 30th June 2010
£ million Notes Six months to Six months to Year toUnaudited 30th June 2010 30th June 2009 31st December 2009Cash flow from operating activitiesCash flow from operations 3 (10.2) (3.6) (16.1)Interest paid (3.0) (7.2) (11.0)Tax reclaimed/(paid) 0.7 3.9 3.8
Net cash from operating activities (12.5) (6.9) (23.3) Cash flows from investing activitiesPurchase of property, plant and equipment (0.3) - (0.1)Purchase of financial investments - (0.1) (40.0)Sale of property, plant and equipment - - 0.1Sale of financial investments* 16.6 41.6 44.4Net cash inflow from investing activities 16.3 41.5 4.4 Cash flows from financing activities - - - Increase/(decrease) in cash and cash equivalents 3.8 34.6 (18.9)Opening cash and cash equivalents 106.3 133.2 133.2Effect of exchange rates and revaluation on cashand cash equivalents (10.0) (15.9) (8.0)Closing cash and cash equivalents 100.1 151.9 106.3 Whilst rolled-up loan note interest is disclosed within "Financial investmentsdesignated at fair value through profit and loss" on the balance sheet, anyinterest received or receivable is shown within the revenue column of the"Statement of comprehensive income" and so included in cash flow from operatingactivities above.
Notes to the financial statements
Note 1 - General information
This condensed consolidated half-year financial information does not comprisestatutory accounts within the meaning of Section 434 of the Companies Act 2006.Statutory accounts for the year ended 31st December 2009 were approved on 24thMarch 2010. These accounts which contained an unqualified audit report underSection 495 of the Companies Act 2006 and which did not make any statementsunder Section 498 of the Companies Act 2006, have been delivered to theRegistrar of Companies in accordance with Section 441 of the Companies Act
2006. Note 2 - Basis of accountingThe Group financial statements are prepared under International FinancialReporting Standards (IFRS) as adopted by the European Union. This statement hasbeen prepared using accounting policies and presentation consistent with thoseapplied in the preparation of the accounts for the Group for the year ended31st December 2009, and in accordance with IAS 34 'Interim FinancialReporting'. New standards adopted this period are IAS 27 Consolidated andSeparate Financial Statements (Revised) and IFRS 3 Business Combinations(Revised). Note 3 - Reconciliation of operating income to net cash flow from operatingactivities £ million Six months to 30th June Six months to 30th Year to 31st December 2010 June 2009 2009 Total income 3.9 16.3 31.9 Administrative expenses (10.1) (29.1) (42.0) Operating (deficit) (6.2) (12.8) (10.1) Increase/(decrease) in 1.7 6.0 (1.9) trade and other receivables (Decrease)/increase in (6.3) 2.8 (4.4) trade and other payables Depreciation 0.4 0.5 1.2 Option cost - (0.1) (0.8) (Profit)/loss on 0.2 - - disposal of fixed assets Net cash (outflow) from (10.2) (3.6) (16.1) operating activities Note 4 - Financial investments designated at fair value through profit and loss £ million Six months to 30th June Six months to 30th June Year to 31st December 2010 2009 2009 Opening valuation 319.9 313.9 313.9 Additions at cost - 0.1 40.0 Disposals (15.1) (46.8) (48.9) Valuation movements (34.1) (10.6) 14.9 Closing valuation 270.7 256.6 319.9
'Other financial investments' comprise the Company's valuation of its investment as a Special Limited Partner in managed funds.
There was a change in accounting policy during the year ended 31st December2009 in relation to the disclosure of the rolled-up loan note interest. As thevalue of rolled-up loan note interest recognised is based on the overall valueof the investment, the Directors feel it more appropriate to disclose rolled-uploan note interest in the Group statement of financial position withinfinancial investments designated at fair value through profit and loss ratherthan in trade and other receivables.
Note 5 - Related party transactions
The nature of the Company's interest in the Candover 1997, 2001, 2005 and 2008 Funds is disclosed in note 10 on page 64 of the 2009 Report and Accounts.
As at 30th June 2010, Candover's investments as a Special Limited Partner in the Candover 2001, 2005 and 2008
Funds were valued at £18.0 million, £0.2 million and £0.1 million respectively(31st December 2009 Candover 2001 Fund £27.9 million, Candover 2005 Fund £0.3million, and Candover 2008 Fund £0.1 million). The movement in valuation ofthe Candover 2001 Fund is due mainly to realisations.
The Company's subsidiaries are listed in note 11 on page 67 of the 2009 Report and Accounts, which includes a description of the nature of their business.
During the period the Company undertook transactions with Candover Partners Limited which provided investment and administration services to the Company, for which the Company was charged £2.8 million (2009: £4.6 million).
Note 6 - Outstanding commitments
At 30th June 2010, the Company had an outstanding commitment to fund investments alongside the Candover 2005 Fund of £72.7 million (31st December 2009: £80.7 million). The reduction in the period was due to currency movements.
Further information Share price
The Company's shares are listed on the London Stock Exchange under share code 'CDI'. The share price is quoted daily in the Financial Times, The Daily Telegraph, The Times, The Independent and the Evening Standard and is also available on our website at www.candoverinvestments.com/ and www.candoverinvestments.com/investor-info/price-graph.
ISA status
The Board has considered the ISA status of Candover's shares and for the time being considers that a decision to make Candover's shares eligible for inclusion in an ISA will impose constraints on the Company's investment criteria that will not be in the overall interests of shareholders.
Website
For the latest information about Candover Investments plc visit our website:
Home page:www.candoverinvestments.com Latest plc news
www.candoverinvestments.com/media/latest-plc-news
Dividend History
www.candoverinvestments.com/financial-performance/dividend-history
Registrars Enquiries concerning registered shareholdings, including changes of address,should be referred to:Capita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldWest Yorkshire HD8 0GA
Telephone 0871 664 0300 (from UK)*
+44 (0) 20 8639 3399 (from Overseas)
Facsimile +44 (0)1484 600911
Email [email protected]
* Calls cost 10p per minute plus network extras, lines are open 8.30 am - 5.30 pm Monday - Friday
Board of directors G E Grimstone *†Non-executive Chairman, Nominations Committee Chairman M J FallenChief Executive Officer Lord Jay of Ewelme GCMG §*†Non-executiveSenior Independent Director J Oosterveld §*Non-executive, Remuneration Committee Chairman R A Stone FCA §*†Non-executive, Audit, Risk and Valuation Committee Chairman * Member of the Remuneration Committee§ Member of the Audit, Risk and Valuation Committee†Member of the Nominations committee
vendorRelated Shares:
CDI.L