30th Aug 2012 07:00
For immediate release on 30th August 2012
Candover Investments plc
Interim results for the half year ended 30th June 2012
- Net assets per share of 642p at 30th June 2012 (31st December 2011: 717p), a10% decrease reflecting a drop in the value of the investment portfolio andadverse currency movements together with management and financing costs whichhave been cut by £1.7 million compared to the first half of 2011. Net assetswere £140.4 million (31st December 2011: £156.6 million)- Investment portfolio declined by £11.3 million, a 6.5% reduction since theyear-end. Constant currency valuations dropped by £6.2 million with adverseforeign currency movements on investments totalling £5.1 million. Technogymwas written up, driven by improved trading, but this was offset by reductionsin Parques Reunidos and Qioptiq which was a reflection of weaker trading, andStork, where comparable listed multiples fell during the period- Net debt of £16.5 million at 30th June 2012, reduced from £38.0 million atthe year-end with the ratio of net debt to net assets falling to 11.8% (31stDecember 2011: 24.3%). Since 30th June the receipt of deferred proceeds andcarried interest from an earlier realisation reduced net debt on a pro-formabasis to £13.8 million
- Loan-to-value covenant improved to 11.2% from 20.6% at the year-end, and on a pro-forma basis improves to 9.3% after taking into consideration the deferred proceeds and carried interest received since the half year
- Prepayment at par to noteholders of £7.5 million, financed by some of the proceeds from the realisation of Capital Safety Group, lowering ongoing financing costs
- Outstanding commitments to the Candover 2005 Fund at 30th June 2012 were £13.9 million (31st December 2011: £14.9 million). In August a further €9.9 million (£8.0 million) was drawn down as part of the Stork restructuring, reducing uncalled commitments to £5.9 million
Malcolm Fallen, Chief Executive Officer, said:
"During the first half of 2012 we have cut our net debt further and reducedthe costs associated with running the business. However, portfolio valuationscontinue to be affected by economic volatility and although there were someupward movements, these were offset by both valuation writedowns and adversecurrency movements. The combination of lower investment values and the costdrag of the business, principally interest costs and manager's fees, resultedin the fall in net assets per share during the first half of the year.For the remainder of the year we will continue to keep a tight control on thefriction costs of the business. In parallel, the recovery in the value andrealisation of the portfolio remain essential tasks for our investment managerArle. We continue to believe that there is significant potential realisablevalue in the underlying portfolio and will look to progressively return thatvalue to shareholders over time as realisations are achieved by Arle."
Ends.
For further information, please contact:
Malcolm Fallen, CEO, Candover Investment plc - +44 20 7489 9848
Helen Walsh, Communications - +44 7747 868347
Business and financial review
Overview
Net assets per share decreased by 10% during the six months to 30th June 2012compared to an increase in the FTSE All-Share of 1.2% over the same period.NAV growth is dependent on improvements in the valuation of the portfoliomanaged by Arle, which is needed to offset the costs of running the business.While there were some upward movements, these were offset by both valuationwritedowns and adverse currency movements which together with the cost drag,led to a fall in NAV.
We have significantly reduced our net debt and cut the friction costs associated with running the business. During the first six months we have continued to explore ways to mitigate our property liabilities which were fully provided for last year. Since the end of June we have found a solution which, subject to completing some outstanding conditions, could see our liability reduced by approximately £2.0 million.
The realisation of Capital Safety Group in January enabled us to pay down afurther £7.5 million of our loan notes at par which will reduce our financingcosts during 2012 and beyond. Additionally, the proceeds contributed to thehalving of net debt from £38.0 million at 31st December 2011 to £16.5 millionat 30th June 2012 and a further improvement in the loan-to-value ratio from20.6% at the year end to 11.2% at 30th June 2012.
Since the half year, the receipt of deferred proceeds and carried interest relating to the realisation of Wood Mackenzie in 2009, has resulted in a further reduction in net debt on a pro-forma basis to £13.8 million, with the loan-to-value covenant further improving to 9.3%.
Our outstanding commitments to co-investments alongside the Candover 2005 Fundwere largely unchanged over the first half as a result of limited follow-oninvestment activity in the portfolio that required external funding. In Augusta further €9.9 million (£8.0 million) was drawn down as part of the Storkrestructuring, reducing uncalled commitments to £5.9 million.
Net asset value per share
Net assets per share decreased by 10% from 717p to 642p over the six months to30th June 2012. The decline of 75p per share was split between valuationreductions before currency (29p), adverse currency movements (24p), and theeffect of ongoing business costs (22p). In the first half, these comprised thenet interest costs associated with the loan notes and investment manager'sfee, offset by interest income, together with the one off impact of a writedown of deferred tax assets and the benefit of the deferred proceeds from WoodMackenzie (see Manager's report). See Table 1.
Table 1
£m p/share
Net asset value at 31st December 2011 as reported 156.6 717
Loss on financial instruments and other income1 (6.2) (29) Recurring administrative expenses
(2.5) (11)Finance costs (2.6) (12)Other (including tax) 0.3 1 (11.0) (51)Currency impact:- Unrealised investments (5.1) (23)
- Retranslation of cash and cash equivalents (0.3) (1) - Translation of loan and fair value hedge adjustment Balances
0.2 - (5.2) (24)
Net asset value at 30th June 2012 as reported 140.4 642 1 Stated before adverse currency impact of £5.1 million
Investments
The valuation of investments at 30th June 2012, including carried interest andaccrued loan note interest, was £164.0 million. Valuations decreased in theperiod, before currency effects, by £6.2 million, representing a decrease of3.5% on the value of these investments over their 31st December 2011 value.The overall reduction in the valuation of the portfolio in the period was£11.3 million.See Table 2.Table 2 £mInvestments at 31st December 20111 204.0 Disposals at valuation (29.2)Additions at cost 0.5Investments adjusted for additions 175.3
and disposals
Revaluation of investments: - Valuation movements before currency impact (6.2) - Currency impact on unrealised investments (5.1) Investments at 30th June 2012
164.01 Comprises financial investments designated at fair value through profit andloss account at 31st December 2011 of £174.8 million together with financialinvestments held for sale of £29.2 million relating to CSG
Net debt position and loan-to-value covenant
Candover's net debt has fallen from £38.0 million at 31st December 2011 to£16.5 million at 30th June 2012. This reflects net investment inflows of £28.7million, offset by interest charges of £5.1 million. A repayment at par of£7.5 million of the loan notes was completed using some of the proceeds fromthe sale of Capital Safety Group. At this level of net debt the loan to valueratio of the Company's net debt was 11.2% compared to 20.6% at the year end.See Table 3.Table 3 30th June 2012 31st December 2011 £m £mLoans and borrowings 157.1 167.1Less fair value hedge adjustment (9.4) (11.6)Deferred costs 0.5 0.6Value of bonds 148.2 156.1Cash (131.7) (118.1)Net debt 16.5 38.0
On a pro-forma basis, taking into account deferred proceeds and carried interest received from the realisation of Wood Mackenzie the net debt of the Company would be £13.8 million, with a resulting loan-to-value ratio of 9.3%.
See Table 4.Table 4 Pro-forma £m
Net debt as reported at 30th June 2012 16.5
Deferred proceeds1 (1.9)Carried interest2 (0.8) Pro-forma net debt 13.8
1 Deferred proceeds are in relation to the 2009 sale of Wood Mackenzie and have been included as a receivable in the financial statements
2 Carried interest as at 30th June exchange rates
The outstanding commitment to the Candover 2005 Fund fell to £13.9 millionover the period from £14.9 million at the year end, due to two small follow-oninvestments in the portfolio and foreign currency movements. After the periodend, Candover provided funding for a small follow-on investment in Expro and amajor restructuring of Stork to create two separate businesses. Followingthese investments, outstanding commitments have reduced to €7.3 million (£5.9million).Profit before and after tax
Following the writedown of investments in Stork and Parques Reunidos, £6.6million of accrued income previously recognised has been reversed in theperiod. As a consequence, net revenue before exceptional items and tax was aloss of £7.6 million compared to a profit of £4.4 million in the comparableperiod.Including capitalised costs of £2.0 million, total administrative and financecosts in the period were £5.1 million (2011: £6.8 million), which included£1.3 million of management fees payable to Arle linked to the value ofinvestments managed and £2.6 million of financing costs.
A tax charge of £2.5 million (2010: nil) has been incurred as a result of writing back £2.5m of a deferred tax asset recognised in the balance sheet at 31st December 2011. This follows a reassessment of the timing and likely utilisation of tax losses carried forward.
Board
There were no changes to the Board during the period.
Dividend
The Board is not recommending a dividend payment, but the payments of dividends in the future will be reviewed in the context of our focus on delivering a progressive return of cash to shareholders over time.
Outlook
Careful stewardship of the portfolio will remain an essential task for ourinvestment manager Arle. The team's Active Management framework will be ofcritical importance to recovery of value in the portfolio in the near term.When realisations are achieved, we can then consider the most efficientmechanism, consistent with our status as an Investment Trust, to return cashto shareholders. For the remainder of the year we will continue to focus onkeeping a tight control on the friction costs of the business. Until theeconomic environment settles and earnings in the underlying portfolio improveand drive valuations upwards, such costs will inevitably act as a drag on NAV.Manager's reportArle Capital LLPArle is an independent private equity partnership based in London and is theManager and General Partner of the Candover 2001 Fund and the Manager of theCandover 2005 and 2008 Funds. Candover Investments plc is a co-investor ineach of the Funds.During the first half of 2012, Arle's focus has been to continue to workclosely with our portfolio companies as volatility in the Eurozone continuesunabated. Despite the uncertain and testing trading environment, Arle's activeownership approach has enabled the investment team to make headway, resultingin:- improvement in the capital structures in five portfolio companies followingsuccessful refinancings, restructurings, 'amend and extends', covenant resetsand bond tenders
- completion of the sale of Capital Safety Group
- the sale of Expro's Connectors & Measurements division to Siemens for US$630 million
- three add-on acquisitions for portfolio companies
- five external appointments to strengthen boards
Inside Arle, the team has been augmented and is almost at full complement. InH1 2012, a further two Investment Managers were appointed, bringing the teamto thirty eight people spanning fifteen nationalities. Two seniorindustrialists joined as Arle Partners to sit alongside Fredrik Arp, formerCEO of Volvo Cars and Trelleborg. In January 2012, Anders Pettersson, formerCEO of Thule AB and Capital Safety Group joined Arle and in June 2012, Arlewelcomed Sir George Buckley as its new Chairman. Sir George was formerlyChairman, President and CEO of 3M and has recently been appointed tonon-executive positions at Hitachi and PepsiCo.
Sir George has joined the boards of Expro International and Technogym, bringing to bear his deep sector experience. Anders Pettersson has been appointed CEO at Hilding Anders and this year, Fredrik Arp has joined the Boards of Technogym and of Parques Reunidos as Chairman.
Portfolio Overview - Active Ownership in practice
Overall, revenue and EBITDA in the portfolio increased by 2% and 1% sinceDecember 2011 mainly driven by growth in emerging markets, new acquisitionsand recent contract wins. Notwithstanding this, the Funds managed by Arledecreased by 3% to €1.85 billion in the first six months of 2012, against thebackdrop of a weak economic environment in Europe. Candover's investmentsshowed a decrease of 6% with the differing level of performance reflecting theforeign currency translation effect between the Euro, the Fund's basecurrency, and Sterling, Candover's reporting currency.A £1.9 million (9p per share) uplift was achieved at Technogym, while Innoviadelivered an uplift of £1.2 million (5p per share). Stork was written down by£5.2 million (24p per share) due to comparable multiple decline, whilstParques Reunidos was written down by £4.7 million (22p per share) with tradingaffected by the negative economic conditions in Italy and Spain. Qioptiq waswritten down by £2.5 million (11p per share) because of a weaker tradingoutlook for its defence business.Expro International's performance for the year ended 31st March 2012 remainedstable although it ended below expectations. However, subsequent tradingduring 2012 has been strong with year-to-date earnings over 30% ahead of prioryear. The company has secured some valuable new contracts and its order bookis now growing strongly.¢â‚¬Æ'The Board of Expro has been further strengthened with the appointments of JeanVernet as Chief Financial Officer and, as already highlighted, Sir GeorgeBuckley as Chairman. In May 2012, Expro International sold its Connectors &Measurements division to Siemens AG at a valuation of US$630 million. The netproceeds were retained by the group to finance the growth strategy of its corebusiness and to repay existing borrowings, and
following completion of the sale, Expro International announced a cash tender offer to pay down US$425 million
of its 8.50% senior secured loan notes due in 2016. With regards to 2012-13, Arle expects to see a continued improvement in performance at Expro, reflecting the strengthening demand for its services from the international oil & gas sector and the benefits of increased capital expenditure on new equipment.
During the first half, Parques Reunidos made two major park acquisitionsfunded from existing cash reserves, buying Noah's Ark, the largest water parkin the US, as well as acquiring Slagharen, a leading attractions park in theNetherlands. The company received consent from its lenders to complete anextension of its credit facilities to align the maturity of its European debtfacilities with that of its US financing arrangements which expire in 2016.
A covenant reset was also successfully completed. This has secured the capital structure required for Parques to execute its strategic growth plan through until 2016.
DX Group acquired Nightfreight, the market leader for larger and heavierparcel traffic in the B2C and B2B markets. This acquisition was financed by DXfrom existing balance sheet resources. The enlarged group is now one of the UKand Ireland's leading independent mail, courier and logistics networkoperators.
At Hilding Anders, Arle Partner Anders Pettersson was appointed as Chief Executive Officer to implement a refreshed growth strategy and an organisational restructuring.
Both Qioptiq and Innovia have successfully completed covenant resets in H1 2012. At Innovia, Malcolm Fallen, CEO of Candover Investments plc, was appointed to the Board as Non-Executive Chairman.
At ETG, which was written off at 31st December 2011, we were unable to reachagreement with the lenders on both a satisfactory restructuring of the debtand an appropriate valuation for the business. Consequently, we chose not toinvest further equity into ETG and agreed to the lenders taking over controlof the business.Investments
During the six months to 30th June 2012, Candover Investments plc invested £0.5 million alongside the Candover Funds in support of follow-on investments in the following companies:
- £0.4 million in Alma to fund the restructuring of the management of the group
- £0.1 million in Expro International
In August 2012, Stork was refinanced in order to create two separatebusinesses: Fokker Technologies and Stork Technical Services. With separatecapital structures, both companies are now well positioned to developindependently in their respective markets of defence and providing technicalservices to the energy sector. As part of the new financing arrangement, newequity was injected into the business, of which Candover's share was €9.9million. The refinancing restructured all of Stork's existing creditfacilities and closed on 16th August.As at 30th June 2012, outstanding commitments to the Candover 2005 Fund were€17.3 million (£13.9 million). Following the investments made post the halfyear, outstanding commitments had reduced to €7.3 million (£5.9 million).
Realisations
The Candover Funds managed by Arle achieved realisation proceeds totalling€362.7 million in the six months to 30th June 2012. Candover Investments plc'sshare was £29.6 million. Total realisation proceeds during 2012 to date amountto €387.4 million, of which Candover's share is £32.3 million.In January, Arle completed the sale of Capital Safety Group. The salegenerated cash proceeds for Candover of £29.6 million, comprising an initialpayment of £27.3 million received on completion and a deferred element of £2.3million received in April 2012.
Post the half year, Wood Mackenzie, a former 2001 Fund investment, was sold by Charterhouse to Hellman & Friedman, triggering a deferred consideration payment of €24.7 million (Candover's share £1.9 million). As a result, Candover received a further carried interest payment of £0.8 million.
The principal realisations are set out in the table below:
Candover Total proceeds Realisation type £m €mPortfolioCapital Safety Group 29.6 362.7 Private equity saleWood Mackenzie1 1.9 24.7 Deferred considerationOther
Candover 2001 Fund carried interest1 0.8 - Crystallisation of carried interest Total realisations - 2012 to date 32.3 387.4
1 Proceeds received post the period end
Valuations
The existing portfolio of 11 companies is largely based in Western Europe buttheir operations extend into more than 130 countries. The portfolio is splitbetween the industrial, energy and services sectors with the principalexposure being to industrials via investments in Stork, Qioptiq, Innovia,Technogym and Hilding Anders.
The ten largest investments are shown below. The eleventh investment is a residual 1.5% minority interest in ONO.
Residual Valuation Additions Valuation Valuation Valuation Valuation cost1 at 31st and movement movement at movement £m December disposals excluding attributable 30th June pence perPortfolio 2011 £m FX2 to 2012 share2company £m £m FX2 £m £mStork 34.7 42.5 - (3.5) (1.7) 37.3 (24)Parques 30.0 42.0 - (3.1) (1.6) 37.3 (22)ReunidosExpro 92.1 37.8 0.1 (2.1) 0.1 35.9 (9)InternationalTechnogym 29.2 13.6 - 2.5 (0.5) 15.6 9Qioptiq 6.8 10.5 - (2.1) (0.4) 8.0 (11)Innovia Films 2.7 4.6 - 1.3 (0.2) 5.7 5Alma 15.3 4.4 0.4 - (0.2) 4.6 (1)ConsultingGroupHilding Anders 24.3 3.8 - - (0.1) 3.7 -Get 1.7 2.5 - 0.3 - 2.8 1DX Group 21.4 2.7 - - - 2.7 -Ten largest 258.2 164.4 0.5 (6.7) (4.6) 153.6 (52)investments3 Capital Safety - 29.2 (29.2) - - - -GroupOno 2.2 1.6 - 0.1 - 1.7 -EurotaxGlass's 14.5 - - - - - -Candover 2001 - 8.0 - 0.4 (0.3) 8.1 -Fund carriedinterestOther 18 0.8 - - (0.2) 0.6 -Other 34.7 39.6 (29.2) 0.5 (0.5) 10.4 -investmentsTotal 292.9 204.0 (28.7) (6.2) (5.1) 164.0 (52)
1 Residual cost is original cost less realisations to date
2 Compared to the valuation at 31st December 2011 or acquisition date, if later
3 Excluding Candover 2001 Fund carried interest
Outlook
We believe that the second half of the year will continue to see low levels ofactivity and high levels of volatility and nervousness across Europe. We seedebt markets remaining challenged and macro-economic uncertainty continuingthrough to the year end. Arle will continue to actively manage its portfoliocompanies to safeguard and secure value throughout this volatile period.
Ten largest investments
Analysis by value at 30th June 2012
By valuation method
1. Multiple of earnings 100.0%
By region1. United Kingdom 34.1%2. Benelux 24.3%3. Spain 24.3%4. Italy 10.1%5. Scandinavia 4.2%6. France 3.0%By sector1. Industrials 45.7%2. Services 30.9%3. Energy 23.4%By age1. 3-4 years 33.5%2. 4-5 years 29.1%3. >5 years 37.4%Ten largest investmentsat 30th June 2012 % of Basis of Valuation Valuation Valuation Effective net valuation Residual at 31st movement movement
Valuation at equity assets
cost of December excluding FX attributable
30th June interest
investment 2011 £m to FX 2012 (fullyInvestment £m £m1 £m £m diluted) Stork 34.7 42.5 (3.5) (1.7) 37.3 4.6% 26.1% Multiple ofEngineering earningsconglomerate Parques 30.0 42.0 (3.1) (1.6) 37.3 3.9% 26.1% Multiple ofReunidos earningsOperator ofattraction parks Expro 92.1 37.9 (2.1) 0.1 35.9 4.7% 25.1% Multiple ofInternational earningsOilfield services Technogym 29.2 13.6 2.5 (0.5) 15.6 3.2% 10.8% Multiple ofPremium fitness earningsequipment andwellness products Qioptiq 6.8 10.5 (2.1) (0.4) 8.0 5.4% 5.6% Multiple ofOptical earningsengineering Innovia Films 2.7 4.6 1.3 (0.2) 5.7 5.7% 4.1% Multiple ofTransparent and earningscoated films andpolymer banknotes Alma Consulting Group 15.3 4.8 0.0 (0.2) 4.6 3.6% 3.2% Multiple ofCost reduction and tax earningsrecovery services Hilding Anders 24.3 3.8 0.0 (0.1) 3.7 4.3% 2.6% Multiple ofBed and mattress earningsmanufacturer 0.5% 2.0%Get 1.7 2.5 0.3 0.0 2.8 Multiple ofCable TV earnings 4.0% 1.9%DX Group 21.4 2.7 0.0 0.0 2.7 Multiple ofMail services earnings
1 Adjusted for additions and disposals in the period
Principal risks and uncertainties
Details of the principal risks and uncertainties facing the Group were set outin the risk review on pages 40 to 43 of the 2011 Report and Accounts, a copyof which is available on our website (www.candoverinvestments.com).
The principal risks and uncertainties identified in the 2011 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 2012. Our views on the current market conditions are reflected in the business and financial 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 in this interim reporthave been prepared in accordance with International Accounting Standard 34`Interim Financial Reporting' as adopted by the EU, gives a fair view of theassets, liabilities, financial position and profit or loss of CandoverInvestments plc, or the undertakings included in the consolidation as a wholeand that the Manager's report includes a fair review of the informationrequired by DTR 4.2.7R and DTR 4.2.8R.
The Directors of Candover Investments plc are listed on the page entitled Further information in this interim financial statement.
By order of the BoardJohn Ellman BrownCompany Secretary30th August 2012
Independent review report to Candover Investments plc
Introduction
We have reviewed the condensed set of financial statements in the half-yearlyfinancial report of Candover Investments plc for the six months ended 30 June2012 which comprises the Group statement of comprehensive income, Groupstatement of changes in equity, Group statement of financial position, Groupcash flow statement and the related notes. We have read the other informationcontained in the half yearly financial report and considered whether itcontains any apparent misstatements or material inconsistencies with theinformation in the condensed set of financial statements.This report is made solely to the company's members, as a body, in accordancewith International Standard on Review Engagements (UK and Ireland) 2410,'Review of Interim Financial Information performed by the Independent Auditorof the Entity'. Our review work has been undertaken so that we might state tothe company's members those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone otherthan the company and the company's members as a body, for our review work, forthis report, or for the conclusion 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 International Financial Reporting Standards asadopted by the European Union. The condensed set of financial statementsincluded in this half-yearly financial report has been prepared in accordancewith International Accounting Standard 34, 'Interim Financial Reporting', asadopted by the European Union.
Our responsibility
Our responsibility is to express a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity'. A review of interimfinancial information consists of making enquiries, primarily of personsresponsible for financial and accounting matters, and applying analytical andother review procedures. A review is substantially less in scope than an auditconducted in accordance with International Standards on Auditing (UK andIreland) and consequently does not enable us to obtain assurance that we wouldbecome aware of all significant matters that might be identified in an audit.Accordingly, we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30 June 2012 is not prepared, in allmaterial respects, in accordance with International Accounting Standard 34,'Interim Financial Reporting', as adopted by the European Union and theDisclosure and Transparency Rules of the United Kingdom's Financial ServicesAuthority.Grant Thornton UK LLPAuditorLondon30th August 2012Group statement of comprehensive incomefor the period ended 30th June 2012£ million Six months to 30th June 2012 Six months to 30th June 2011 Year to 31st December 2011Unaudited Revenue Capital Total Revenue Capital Total Revenue Capital TotalGain/(loss) on financialinstrumentsat fair value through profitand lossRealised gains - 12.0 12.0 - - - - - -Unrealised (losses) and - (16.3) (16.3) - 6.3 6.3 - (20.0) (20.0)gains - (4.3) (4.3) - 6.3 6.3 - (20.0) (20.0)RevenueInvestment and other (4.5) - (4.5) 8.6 - 8.6 15.3 - 15.3incomeRecurring administrative (1.8) (0.7) (2.5) (2.6) (1.0) (3.6) (4.5) (2.0) (6.5)expensesExceptional non-recurring - - - - - - (3.5) - (3.5)costs
(Loss)/profit before finance (6.3) (5.0) (11.3) 6.0
5.3 11.3 7.3 (22.0) (14.7)costs and taxationFinance costs (1.3) (1.3) (2.6) (1.6) (1.6) (3.2) (2.1) (2.1) (4.2)Movement in the fair value - - - - (0.3) (0.3) - (0.3) (0.3)of derivativesExchange movements on - 0.2 0.2 - (0.3) (0.3) - (0.1) (0.1)borrowings(Loss)/profit before (7.6) (6.1) (13.7) 4.4 3.1 7.5 5.2 (24.5) (19.3)taxationAnalysed between:(Loss)/profit before (7.6) (6.1) (13.7) 4.4 3.1 7.5 8.7 (24.5) (15.8)exceptional non-recurringcostsExceptional non-recurring - - - - - - (3.5) - (3.5)costsTaxation (2.5) - (2.5) - - - - - -
(Loss)/profit after taxation (10.1) (6.1) (16.2) 4.4
3.1 7.5 5.2 (24.5) (19.3)from continuingoperations(Loss)/gain from CPL - - - (1.8) - (1.8) (1.8) - (1.8)disposal group("discontinued operations") (Loss)/profit after taxation (10.1) (6.1) (16.2) 2.6
3.1 5.7 3.4 (24.5) (21.1)Other comprehensiveincome:Exchange differences on - - - (0.2) - (0.2) (0.2) - (0.2)translation of foreignoperationsTotal comprehensive (10.1) (6.1) (16.2) 2.4 3.1 5.5 3.2 (24.5) (21.3)income Earnings per ordinary share:Continuing operations - (46p) (28p) (74p) 20p 14p 34p 24p (112p) (88p)basic and dilutedDiscontinued operations - - - - (9p) - (9p) (8p) - (8p)basic and dilutedTotal earnings per share - (46p) (28p) (74p) 11p 14p 26p 16p (112p) (96p)basic and diluted
Dividends 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 loss for the period and the total comprehensive income for the period is attributable to the owners of the Company
No interim dividend is proposed
Group statement of changes in equityfor the period ended 30th June 2012£ million Called Share Other Capital Capital Revenue TotalUnaudited up premium reserves reserve - reserve - reserve equity share account realised unrealised capital
Balance at 1st January 5.5 1.2 (0.1) 311.6 (163.0) 1.4 156.62012Net revenue after tax - - - - - (10.1) (10.1)Unrealised loss on - - - - (6.1) - (6.1)financialinstrumentsRealised gain/(loss) on - - - 12.0 (10.2) - 1.8financialinstrumentsMovement in fair value - - - - - -of derivativesExchange movements on - - - - 0.2 - 0.2borrowingCosts net of tax - - - (2.0) - - (2.0)Profit after tax - - - 10.0 (16.1) (10.1) (16.2)Other comprehensiveincomeExchange differences on - - - - - - -translation offoreign operationsTotal comprehensive - - - 10.0 (16.1) (10.1) (16.2)incomeBalance at 30th June 5.5 1.2 (0.1) 321.6 (179.1) (8.7) 140.42012 UnauditedBalance at 1st January 5.5 1.2 0.1 360.5 (187.4) (2.0) 177.92011Net revenue after tax - - - - - 2.6 2.6Unrealised gain on - - - - 6.3 - 6.3financialinstrumentsRealised (loss)/gain on - - - (42.7) 42.7 - -financialinstrumentsMovement in fair value - - - - (0.3) - (0.3)of derivativesExchange movements on - - - - (0.3) - (0.3)borrowingCosts net of tax - - - (2.6) - - (2.6)Profit/(loss) after tax - - - (45.3) 48.4 2.6 5.7Other comprehensiveincomeExchange differences on - - (0.2) - - - (0.2)translation offoreign operationsTotal comprehensive - - (0.2) (45.3) 48.4 2.6 5.5incomeBalance at 30th June 5.5 1.2 (0.1) 315.2 (139.0) 0.6 183.42011 AuditedBalance at 1st January 5.5 1.2 0.1 360.5 (187.4) (2.0) 177.92011Net revenue after tax - - - - - 3.4 3.4Unrealised loss on - - - - (20.0) - (20.0)financial instrumentsRealised (loss)/gain on - - - (44.8) 44.8 - -financialinstrumentsMovement in fair value - - - - (0.3) - (0.3)of derivatives- continuing operationsExchange movements on - - - - (0.1) - (0.1)borrowingCosts net of tax - - - (4.1) - - (4.1)Profit/(loss) after tax - - - (48.9) 24.4 3.4 (21.1)Other comprehensiveincomeExchange differences on - - (0.2) - - - (0.2)translation offoreign operationsTotal comprehensive - - (0.2) (48.9) 24.4 3.4 (21.3)incomeBalance at 31st 5.5 1.2 (0.1) 311.6 (163.0) 1.4 156.6December 2011Group statement of financial positionat 30th June 2012£ million 30th June 30th June 31st DecemberUnaudited Notes 2012 2011 2011Non-current assetsProperty, plant and equipment - - - Financial investments designated atfair value through profit and lossInvestee companies 4 155.5 221.4 166.4Other financial investments 4 8.5 12.5 8.4 164.0 233.9 174.8 Trade and other receivables 7.6 8.2 8.1Deferred tax asset 1.0 3.5 3.5 172.6 245.6 186.4 Current assetsTrade and other receivables 2.2 1.0 0.1
Derivative financial instruments - 38.6
-Current tax asset 0.2 0.1 0.1Cash and cash equivalents 131.7 111.6 118.1 134.1 151.3 118.3
Financial investments held for sale - -
29.2 134.1 151.3 147.5Current liabilitiesTrade and other payables (3.5) (4.6) (3.6)
Derivative financial instruments - (35.5)
-Provisions (5.7) (4.5) (6.6) (9.2) (44.6) (10.2) Net current assets 124.9 106.7 137.3
Total assets less current liabilities 297.5 352.3
323.7 Non-current liabilitiesLoans and borrowings (157.1) (168.9) (167.1)Net assets 140.4 183.4 156.6 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) (0.1) (0.1)Capital reserve - realised 321.6 315.2 311.6
Capital reserve - unrealised (179.1) (139.0)
(163.0)Revenue reserve (8.7) 0.6 1.4Total equity 140.4 183.4 156.6 Net asset value per shareBasic 642p 839p 717pDiluted 642p 839p 717pGroup cash flow statement
for the period ended 30th June 2012
£ million Notes Six months to Six months to Year toUnaudited 30th June 30th June 31st December 2012 2011 2011Cash flow from operating activitiesCash flow from operations 3 7.5 (6.1) (13.2)Interest paid (5.1) (3.1) (7.0)Net cash inflow/(outflow) from operating activities 2.4
(9.2) (20.2)
Cash flows from investing activitiesPurchase of financial investments (0.5) (21.8) (20.3)Sale of financial investments 19.5 86.8 89.2Net cash inflow from investing activities 19.0 65.0 68.9 Cash flows from financing activitiesSwap sale proceeds - - 12.8Loan notes repayment (7.5) (27.2) (27.2)Net cash outflow from financing activities (7.5)
(27.2) (14.4)
Increase in cash and cash equivalents 13.9 28.6 34.3 Opening cash and cash equivalents 118.1 79.9 79.9Effect of exchange rates and revaluation on cashand cash equivalents (0.3) 3.1 3.9Closing cash and cash equivalents 131.7
111.6 118.1
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 Act2006. Statutory accounts for the year ended 31st December 2011 were approvedon 29th March 2012. These accounts which contained an unqualified audit reportunder Section 495 of the Companies Act 2006 and which did not make anystatements under Section 498 of the Companies Act 2006, have been delivered tothe Registrar of Companies in accordance with Section 441 of the Companies Act2006.
Note 2 - Basis of accounting
The Group financial statements are prepared under International FinancialReporting Standards (IFRS) as adopted by the European Union. This statementhas been prepared using accounting policies and presentation consistent withthose applied in the preparation of the accounts for the Group for the yearended 31st December 2011, and in accordance with IAS 34 `Interim FinancialReporting' (Revised). New standards adopted this period are IAS 24 'RelatedParty Disclosures' (Revised) and IFRS 7 'Financial Instruments: Disclosures'(Revised).Note 3 - Reconciliation of operating income to net cash flow from operatingactivities£ million Six months to Six months to Year to 31st 30th 30th December June 2012 June 2011 2011Total income (4.5) 8.6 15.3Administrative expenses (2.5) (5.5) (11.6)Operating (loss)/profit (7.0) 3.1 3.7Decrease/(increase) in 15.8 3.2 (0.7)trade andother receivables(Decrease)/increase in (1.3) (12.4) (16.3)trade andother payablesDepreciation - - 0.1Net cash 7.5 (6.1) (13.2)inflow/(outflow) fromoperating activities
Note 4 - Financial investments designated at fair value through profit and
loss£ million Six months to Six months to Year to 31st 30th 30th December 2011 June 2012 June 2011Opening valuation 204.0 310.0 310.0Disposals at valuation (29.2) (32.6) 20.2Additions at cost 0.5 21.8 (34.4)Investments realised on - (82.3) (82.4)sale ofstripValuation movements (11.3) 17.0 (9.4)Closing valuation 164.0 233.9 204.0
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 13 on page 73 of the 2011 Report and Accounts.
As at 30th June 2012, Candover's investments as a Special Limited Partner inthe Candover 2001 and 2005 and Funds were valued at £8.1 million and £0.4million respectively (31st December 2011, Candover 2001 Fund £8.4 million, andCandover 2005 Fund £0.4 million). The movement in valuation of the Candover2001 Fund is due mainly to movements in the exchange rates.
Note 6 - Outstanding commitments
At 30th June 2012, the Company had an outstanding commitment to fund investments alongside the Candover 2005 Fund of £13.9 million (31st December 2011: £14.9 million).
Note 7 - Subsequent events
Post the interim period Candover provided funding for two follow-on investments. July saw further investment in Expro, followed in August by a refinancing of Stork (see also Manager's report). As a result the outstanding commitment figure has reduced to £5.9 million.
Candover's property liabilities were fully provided for at 31st December 2011.Since the end of June a solution has been found which, subject to completingsome outstanding conditions, could see the liability reduced by approximately£2.0 million.
Since the half year, Candover has received deferred proceeds and carried interest relating to the realisation of Wood Mackenzie in 2009 totalling £2.7 million.
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