29th Feb 2012 07:00
Press release For immediate release on 29th February 2012
Candover Investments plc
Preliminary unaudited results for the year ended 31st December 2011
* NAV - net assets per share of 717p at 31st December 2011, a 12.0% decrease
compared to the prior year (814p), with portfolio valuations down 4.4% over
the year. First half valuation uplifts were overturned in the second half
by the volatile economic environment and adverse currency movements.
* Net debt - decreased by £53m to £38.0m at 31st December 2011 (31st December
2010: £91.0m) following the sale of the portfolio strip for £64.6m. There
was a corresponding improvement in the loan-to-value ratio which fell to
20.6% (31st December 2010: 32.6%).
* Outstanding commitments - reduced to £14.9m at 31st December 2011 (31st
December 2010: £38.9m). The decline reflects the impact of follow-on
investments of £20.3m, together with the transfer of part of the liability
to the strip purchaser. * Of the 13 portfolio investments, on a constant currency basis, 6 were written up, 4 were unchanged and 3 were written down. Most significant
movements were a write-down of Expro International of £25.6m (117p) and a £15.0m
uplift (69p) of Capital Safety Group.
* Further reduction in net debt post year end, on a pro-forma basis, to £8.8m
with a loan-to-value ratio of 5.6% following the disposal of Capital Safety
Group.
* Financial stability enhanced and a revised operating model now in place.
Malcolm Fallen, Chief Executive Officer, said:
"Our priorities for 2011 were to make Candover1 financially stable in order toprotect and enhance value, and to create an operating model that allows us todeliver that value to shareholders as portfolio realisations are achieved byArle2, our investment manager.In the near term, the continuing market uncertainty may adversely affect boththe growth in the value of the portfolio and the pace of realisationsachievable by Arle. The proceeds received from Capital Safety Group post theyear-end reduce net debt on a pro-forma basis to £8.8 million, moving us a stepfurther along our path towards returning cash to shareholders. Our assessmentof Arle's realisation estimates means we currently believe that this return ofcash could be completed by 2016.Active management of the portfolio will remain an essential task for Arle inthe current climate and we will continue to monitor their progress as they seekto deliver the portfolio's inherent value."
1 Candover means Candover Investments plc and / or one or more of its subsidiaries
2 Arle means Arle Capital Partners Limited For further information, please contact:
Candover +44 20 7895 2826 Malcolm Fallen - CEO Helen Walsh - Communications Chairman's statement
2011 was another important year for Candover in terms of delivering both stability for the Company and finalising a governance and operating model that will allow us to accomplish our strategy of a progressive return of cash to shareholders.
During the first half of the year we focused on the completion of the sale ofCandover Partners Limited ("CPL") to Arle Capital LLP ("Arle") and the sale ofa strip of our investments in the portfolio to an entity backed by Arle andPantheon. These events underpinned the transformation of the Company'sfinancial position. The second half of 2011 provided us with an opportunity tocomplete the implementation of our revised governance and operating model andto fine tune it to match the return of cash strategy.We believe the transparency of that model makes it easier to understand how thevalue in the Company will be delivered to shareholders over time. Deliveringvalue will be dependent on the effective management of our assets, whichcomprise the investment portfolio managed by Arle, and our cash; and ourliabilities, which comprise the private loan notes and our property leaseobligations. The use of high quality third party service providers to help inthis process is key, and we have carefully selected our partners in thisrespect. Together with a tight focus on administrative costs, and a continuingemphasis on open communication with stakeholders, this is how your Board plansto run the Company going forward.Our net asset performance during the year, a decrease of 12.0% to 717p, wasinevitably impacted by the volatility seen in the markets as concerns about thefinancial stability of the Eurozone and a more general slowdown in the globaleconomy intensified in the final few months of the year.First half valuation uplifts, which reflected solid progress in the portfolio,were reversed in the second half due to the impact of those external factorsand adverse Euro/Sterling currency movements. A significant downward valuationin Expro International, where earnings have been impacted by a protractedrecovery in activity, and the multiples of listed comparable companies havefallen considerably, has had a marked impact on net asset value.
We have, however, achieved a significant reduction in our net debt over the year, which the Board considers to be key to executing our return of cash strategy. The proceeds from the strip sale were the principal contributor during the year. The completion of the sale of Capital Safety Group in January of this year has further improved our net debt position.
The Board is not recommending a dividend payment, but the payment 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 as realisations are achieved by the investment manager.
As reported at the half year, I took over as Chairman in April following theretirement of Gerry Grimstone, and in May we appointed a new non-executivedirector, Scott Longhurst to take over my previous Board position of Chair ofthe Audit, Risk and Valuation Committee. His experience of both PLC and privateequity environments and his background in energy and energy services are veryrelevant to Candover and we are delighted to welcome him on board.The year ahead will be characterised by continued economic uncertainty on aglobal scale. Active management of the portfolio will remain an essential taskfor our investment manager as it seeks to deliver the portfolio's inherentvalue and allow us to return cash to our shareholders. Our assessment of Arle'srealisation estimates means we currently believe that this return of cash couldbe completed by 2016.Richard StoneChairman29th February 2012CEO's reportOur priorities for 2011 were to make sure that Candover was financially stablein order to protect and enhance value; and to create an operating model thatwill allow us to deliver that value to shareholders.
Performance
The progress we are making in terms of executing our strategy of a return ofcash can be measured by analysing the relative performance of three metrics -net assets per share, net debt and outstanding commitments.
Net asset value
The Company's net assets per share of 717p at 31st December 2011 decreased by 12.0% over the full year from 31st December 2010 (814p).
The nature of our operational model going forward means that there are now twoclear components to NAV progression. These are the value of the portfolioassets and any changes therein; and the costs incurred in running the business,principally the investment manager's fees and the net interest costs associatedwith the loan notes. These costs are to a greater extent fixed; their impact onNAV will either be offset by increases in the valuation of the portfolio duringany financial period or will exacerbate reductions in valuations.During 2011, the overall portfolio valuation for the full year fell by £9.4million and recurring costs further eroded NAV. These movements are set out inTable 1 of the Financial review. First half valuation uplifts, which reflectedsolid progress in the portfolio and actual and anticipated disposals, wereoverturned in the second half by the effect of a volatile economic environmentand adverse currency movements, particularly in respect of a weaker Eurorelative to Sterling.The most significant movements amongst our assets were a write-down of ExproInternational of £25.6m (117p per share) and a £15.0 million uplift (69p pershare) of Capital Safety Group.At the year-end it was decided to fully provide for the remaining propertyliability of £3.5 million (16p per share). The uncertain economic environmentcombined with the short term nature of our property lease led us to concludethat our ability to offset any of the remaining costs by subletting is morelimited now than at this time last year.
Net debt
During the year, Candover received total realisation proceeds of £99.7 million.Proceeds of £23.3 million came from the sale of Equity Trust and receipt of adeferred payment relating to the sale of Ontex in 2010. The sale of the stripof the portfolio, the sale of other investments and the payment of carriedinterest realised a further £76.4 million. Follow on investments totalling £20.3 million were made to support a number of portfolio companies.
Inflows from realisations more than offset the combination of follow-on investments and operating and financing costs which resulted in net debt decreasing by £53.0 million (58.0%) from £91.0 million at 31st December 2010 to £38.0 million at the year end. Our loan to value ratio saw a corresponding improvement from 32.6% at 31st December 2010 to 20.6% at the year end.
Since the year end, the completion of the sale of Capital Safety Group by Arlehas generated further proceeds of £27.3 million together with deferred saleproceeds of £2.3 million. On a pro-forma basis, net debt reduces to £8.8million at year end exchange rates and the loan-to-value covenant reduces to5.6%.Outstanding commitments
Outstanding commitments to the Candover 2005 Fund at 31st December 2011 were £ 14.9 million, compared to £38.9 million at the end of 2010. The reduction reflects the impact of follow-on investments made during the year, together with the transfer of part of the liability to the strip purchaser. These commitments expire on 26th August 2013.
Key events during the year
The sale of the strip and the disposal of CPL to Arle were completed on 19thApril 2011. The strip sale comprised the disposal of 29.1% of certain of ourinvestments which generated proceeds of £64.6 million. As can be seen in theanalysis above, the sale of the strip has significantly improved our net debtand loan to value covenant, as well as reducing the level of outstandingliabilities to the Candover 2005 Fund.Following completion of the sale of the strip, an offer was made for voluntaryprepayment of the loan notes up to a maximum of the cash proceeds. As a resultof this offer, prepayment at par of £27.2 million was made in May, which hasstarted to reduce our financing costs. A further consequence of the prepaymenthas been to accelerate a partial write back of the fair value hedge adjustmentcarried in the balance sheet by £2.2 million. The remaining balance at year endis £11.6 million.The disposal of CPL to Arle has created a fully independent private equitymanager, with whom we have an arm's length contract for the management of ourassets. The disposal triggered a review of the administration servicesarrangement we previously had with Arle, and in October this was transferred toa third party, Ipes (UK) Limited, who have been appointed to provide bothadministration services and to act as Company Secretary.
We now have third party providers in place for all of our administrative functions, as well as the management of our assets. We believe that this outsourced model, overseen by the Board, is the most appropriate way of managing our business as we focus on returning value to shareholders over time.
During the year, we also reviewed our hedging arrangements which were put inplace when the US private placement notes were issued in 2007. The arrangementsinvolved both a series of cross currency swaps and an interest rate swap fromfixed to floating rates and were structured to match the currency of ourindebtedness against the currency of our investments.In light of the change in our investment policy, together with the repayment ofpart of the loan notes in May, we considered that this structure was no longeroptimal. The arrangements were unwound at the end of September which resultedin a cash inflow of £12.8 million.
Outlook
Candover is now positioned to undertake a progressive return of cash to shareholders when portfolio realisations are accomplished by the investment manager and a net cash position has been achieved.
While the continuing market uncertainty may slow both the growth in value ofthe portfolio and the pace of realisations achievable by Arle in the near term,the proceeds received post the year-end from the sale of Capital Safety Groupreduce net debt on a pro-forma basis to £8.8 million, which means we are a stepfurther along our path as we start 2012. Subsequent to the year end, we havealso launched another offer to prepay at par more of the loan notes using theproceeds from the sale of Capital Safety Group which will potentially furtherreduce our financing costs.Malcolm FallenChief Executive Officer29th February 2012Financial reviewNet asset value per share
Net asset value per share after discontinued operations and exceptional non-recurring costs was 717p, a decrease of 11.9% since 31st December 2010 (814p) and a decrease of 14.5% since 30th June 2011 (839p). The effect of the losses from discontinued operations and exceptional non-recurring costs has been to reduce net assets per share by 24p. See Table 1.
Table 1 £m p/share
Net asset value at 31st December 2010 177.9 814 Loss on financial instruments and other income1 (5.9)
(27)
Recurring administrative expenses (6.5) (30) Finance costs (4.2) (19) Others (including tax) (0.4) (2) Currency impact: - Unrealised investments (3.5) (16)
- Restatement of cash and cash equivalents 4.9 23 - Translation of loan and swap balances (0.4)
(2)
Loss from CPL disposal group (discontinued operations) (1.8) (8)
Exceptional non-recurring costs: property (3.5) (16)provision
Net asset value at 31st December 2011 as reported 156.6 717
1 Stated before adverse currency impact of £3.5 million
Investments
The valuation of investments, including carried interest and accrued loan noteinterest, was £204.0 million at 31st December 2011 (31st December 2010: £310.0million). Valuations decreased for the year before currency effects by £5.9million, representing a decrease of 2.8% on the value of these investments overtheir 31st December 2010 value, and a decrease of 8.8% since 30th June 2011.The overall reduction in the portfolio across the year was £9.4 million. SeeTable 2.Table 2 £m Investments at 31st December 2010 310.0 Disposals at valuation (34.4) Additions at cost 20.2 Investments realised on sale of strip
(82.4)
Less: release of financial liability on equity commitments - Investments adjusted for additions and disposals 213.4 Revaluation of investments: - Valuation movements before currency impact
(5.9)
- Currency impact on unrealised investments
(3.5)
Investments at 31st December 2011 (including assets held for 204.0sale) Investments held for sale (29.2) Investments at 31st December 2011
174.8
Net debt and loan-to-value covenant
Candover's net debt decreased from £91.0 million at 31st December 2010 to £38.0million at 31st December 2011. This reflects net operating outflows of £20.2million, including £7.0 million of net interest paid. Over the course of theyear a further £20.3 million of follow-on investments were made, offset byinflows from realisations of £89.2 million (£99.7 million including incomeproceeds). See Table 3.Table 3 31st December 31st December 2011 2010 £m £m Loans and borrowings 167.1 200.5 Fair value hedge adjustment (11.6) (16.5) Deferred costs 0.6 1.0 Value of bonds 156.1 185.0 Value of related swaps - (14.1) Cash (118.1) (79.9) Net debt 38.0 91.0At this level of net debt the year end loan-to-value covenant on the Company'sborrowings was 20.6% compared to 32.6% at 31stDecember 2010 and 18.8% at 30thJune 2011.
On a pro-forma basis, taking into account the initial proceeds from the realisation of Capital Safety Group the net debt of the Company would be £8.8 million, with a resulting loan-to-value ratio of 5.6%. See Table 4.
Table 4 Pro-forma £m Net debt as reported at 31st December 2011
38.0
Proceeds from Capital Safety Group realisation1 (29.2) Pro-forma net debt 8.8
1 Proceeds from Capital Safety Group include initial proceeds and proceeds held in escrow as at year-end exchange rates.
In addition the impact of the strip realisation has also reduced the outstanding commitment of the Company to the Candover 2005 Fund from £38.9 million to £14.9 million. In the second half of the year Candover and the Limited Partners in the Candover 2005 Fund agreed to extend the term of the follow-on investment period by two years to 26th August 2013.
Profit before and after tax
Profit before tax for continuing operations for the year was £8.7 million compared to £0.3 million in the prior year. This reflects a £7.2 million increase in investment income recognised on financial investments principally related to Capital Safety Group and higher income on other fixed interest securities consistent with the increased level of cash held by the Group.
The Group has reported £1.8 million of losses on discontinued operations (2010:£21.7 million) comprising additional advisor costs, redundancy costs andadministration costs relating to the separation of the business following thedisposal of CPL. Exceptional non-recurring costs of £3.5 million (2010: £5.1million) primarily comprise an increase in the provision against the ongoingproperty liability.
Reported profit after taxation was £3.4 million compared to a loss of £23.1 million in the prior year.
Manager's portfolio review
ARLE CAPITAL PARTNERS LIMITED
Introduction
Arle is an independent private equity partnership established in April 2011 viathe sale of CPL to its investment team. Arle is the General Partner of theCandover 2001 Fund and Manager of the Candover 2005 Fund, Candover 2008 Fundand Preston LP Inc (together "the Funds"). Candover is a co-investor alongsidethe Funds. At 31st December 2011, Candover and the Funds had a combinedportfolio of 13 investments in the energy, industrials and services sectors,valued at a total of €2.3 billion.
A year of transition
Following completion of the buyout in April 2011, we launched a new brandidentity, relocated offices, reviewed and enhanced our risk management andgovernance procedures, refined our investment strategy and expanded the Arleteam. The team now comprises 35 people, which includes 14 investment executivesand senior global industrialists, drawn from nine different nationalities.Currently Arle's principal focus is to maximise the value of each of theportfolio companies for all our stakeholders.Since the year-end, we have announced the appointment of our new Chairman, SirGeorge Buckley, who will be joining Arle on 1st June following his retirementas Chairman, President and CEO of 3M.
Active ownership
Throughout the year we have continued to concentrate on our active ownershipapproach. The Arle team assumed responsibility for the Funds in the second halfof 2009 and since then we have worked hard to stabilise and improve theperformance of each of the investments.We firmly believe that the best route to retain and build value in theportfolio companies is to work closely with their respective management teams.During 2011 we continued to take steps to ensure that each company had theright leadership team in place and robust strategies to ride out a sustainedeconomic downturn. We also reviewed, and where appropriate, amended the capitalstructures of our portfolio companies to ensure that they have appropriate debtstructures.During the year we enhanced our active ownership model through the creation ofthe Operational Review Board ("ORB"), which combines the skills of seniorglobal industrialists with Arle's investment team. While Arle's investmentpartners retain primary responsibility for each portfolio company, the ORBmeets quarterly to perform a detailed review of the operating performance andgrowth strategy of each investment. Drawing on decades of global businessleadership, the ORB offers both our investment and management teams guidanceand advice based on first-hand operating experience.
Active ownership in practice
During the year, we managed a broad range of activity across the portfolio:
* We augmented the boards of a number of our portfolio companies with new
senior executives;
* Four portfolio companies were supported with further equity to fund organic
growth and undertake acquisitions with a bias towards emerging markets; * We put in place a new financing instrument for Stork to help fund its successful acquisition of RBG Holdings and supported Palace (the US
subsidiary of Parques Reunidos) in its issue of a six year high yield bond
which created a pool of funds to support further acquisitions; and * We agreed the sale of Capital Safety Group in November 2011 which successfully completed in January 2012. This was the third realisation achieved by the Arle team since it assumed responsibility for the
portfolio. The three disposals have in total returned €730.0 million (£
609.1 million) to Fund investors, including €78.2 million (£65.2 million)
for Candover. The economic environmentOverall, 2011 was a year of two distinct halves. The first half of the yearshowed signs of improving confidence and increased availability in leveragedloans, which drove up buyout activity levels. The second half of 2011 saw amarked increase in volatility arising from the European sovereign debt crisisand concerns about the global macroeconomic outlook. This resulted in acontraction of the debt markets and a significant decline in buyout activity.As a consequence of both falling business and consumer confidence, tradingconditions deteriorated across the portfolio and heightened efforts wererequired to ensure that business strategies and capital structures were asresilient as possible.In 2011, despite the challenging trading environment across Europe and the US,nine of the top ten investments have seen an increase in revenues compared tothe year-end position in 2010.
Realisations
During 2011, Arle achieved realisation proceeds for Candover of £23.3 million.The sale of the strip of the portfolio, the sale of other interests and thepayment of carried interest realised a further £76.4 million, bringingCandover's total proceeds for the year to £99.7 million. Since the year-end,the sale of Capital Safety Group has generated further proceeds of €328.6million for the Candover 2005 Fund, of which £27.3 million has been received byCandover.
The principal realisations are set out in Table 1.
Table 1 Candover Total Type £m Proceeds £m3 Portfolio Equity Trust 15.2 134.7 Private equity sale Ontex 8.0 70.7 Deferred payment Capital Safety Group 0.1 1.0 Other Candover 2001 Fund carried 9.0 - Crystallisation of carriedinterest1 interest Sale of Strip assets 64.6 - Partial sale of portfolio assets ICG 2003 2.3 - Sale of fund interest ICG 2000 0.2 - Sale of fund interest Other 0.3 - Total realisations2 - 2011 99.7 206.4 Capital Safety Group 27.3 289.8 Private equity sale
Total realisations2 - 2012 to 27.3 289.8 date 1 The carried interest receipts are distributed to the Company from the fundreceipts2 Proceeds shown above include loan interest income3 Includes proceeds received by Funds, Candover and other co-investorsIn January 2011, Arle completed the sale of Equity Trust to Doughty Hanson fora consideration of €350 million. This generated initial cash proceeds forCandover of £13.7 million, including £3.9 million of carried interest. Anadditional deferred payment of £5.4 million was paid in June 2011, with therelated carried interest element of £2.0 million being received in July. Thetotal proceeds received by the Candover 2001 Fund resulted in a return of 1.5x theoriginal investment.In March 2011, Candover received £11.1 million from the early redemption of theguaranteed deferred consideration relating to the sale of Ontex in 2010. Thisincluded further carried interest of £3.1 million in respect of the Candover2001 Fund.In November 2011, Arle agreed to sell Capital Safety Group to KKR forUS$1.12bn. The sale, which closed in January 2012, generated proceeds of €362.3million for the Candover 2005 Fund (Candover's share £29.6 million), equatingto a return of 2.7x the original investment. Of these proceeds, Candoverreceived £27.3 million in January 2012 with a further £2.3 million held inescrow to be paid to Candover in two tranches over a three month period.
Extensions to the Candover 2001 and 2005 Funds
During the year, Candover and the Limited Partners in the Candover 2001 Fundagreed to extend the term of the Candover 2001 Fund by a further two years to12th June 2013 to allow the remaining investments to be realised at an optimumtime and value.Additionally, Candover and the Limited Partners in the Candover 2005 Fundagreed to extend the term of the follow-on investment period of the Candover2005 Fund by a further two years to 26th August 2013. This extension includedformalising the ability for the Manager to recycle previously distributed saleproceeds of up to £53.1 million (Candover's share £4.4 million). This hasensured that the remaining capital in the Candover 2005 Fund can continue to beavailable, if required, to support portfolio growth.
Follow-on investments
During the year, Candover invested a total of £20.3 million in follow-on investments alongside the Candover 2005 Fund. These investments are summarised below:
Expro International€64.1 million (Candover's share £2.2 million) was invested to fund growth capexas levels of new business began to increase. Following the restructuring of theCandover 2008 Fund in 2010, Candover is only obliged to co-invest in ExproInternational through its participation in the Candover 2005 Fund.
EurotaxGlass's
€5.0 million (Candover's share £0.6 million) was invested to fund the acquisition of Autovista, a Finnish based business supplying valuation data products predominately to the Finnish and Dutch automotive market using a superior statistics based valuation model.
Capital Safety Group
€11.3 million (Candover's share £0.9 million) was invested to fund acquisitions in Colombia and the UK.
Parques Reunidos€139.2 million (Candover's share £16.6 million) was invested to facilitate thesuccessful refinancing of the US business and create a pool of funds to enablethe group to make further acquisitions.As at 31st December 2011, an additional €179.9 million (Candover's share £14.9million) remained available for follow-on investments by the 2005 Fund. At theyear end, €45.4 million (Candover's share nil) remained available for follow oninvestments by the Candover 2008 Fund in its sole investment, ExproInternational.Since 31st December 2011, €3.3 million has been invested in Expro Internationalby the Candover 2005 Fund and the Candover 2008 Fund (Candover's share £0.1million) to fund the development of the company's AX-S project. The technologyis being developed as a means to provide well intervention services on deep water wells without the requirement of a higher cost deep water rig.
Candover portfolio composition
The portfolio is largely based in Western Europe with a strong focus on theindustrials sector. Whilst the UK represented 45% of the top ten investments byvalue during the year, the portfolio companies themselves are well diversifiedin the regions in which they trade. The portfolio was mostly exposed to theindustrials sector (54%) during the year via investments in Stork, CapitalSafety Group, Qioptiq, Technogym and Hilding Anders.
The ten largest portfolio companies represented 94% by investment value of the portfolio during the year, with the Candover 2001 Fund carried interest representing a further 4%.
The portfolio will become increasingly concentrated on fewer assets with valueacross these assets also likely to be concentrated as realisations occur. Thethree largest investments, which at 31st December 2011 were all of a similarvalue, represented 60.0% of the portfolio (2010: 59.3%).
Candover portfolio valuation review
The Funds managed by Arle reported a 5.9% valuation uplift year on yearcompared to Candover's co-investments in the portfolio which showed a decreaseof 4.4% or £9.4 million (43p per share). The differing level of performance isas a result of three contributing factors: Candover's weighting in ExproInternational, the dilutive effect of not reinvesting alongside the Candover2008 Fund in Expro International, and the foreign currency translation effectbetween the Euro, the Funds' base currency, and Sterling, Candover's currencyfor reporting purposes.Valuation uplifts of £17.0 million were achieved during the first half of 2011,including £3.9 million of favourable exchange movements following strongtrading momentum at Parques Reunidos, Capital Safety Group, Technogym and DXGroup. During the second half of the year, however, the worsening economicenvironment and its knock-on effect on valuations, including a write-down atExpro International of £25.6m (117p per share), together with adverse currencymovements due to a weak Euro, reversed the first half gains.Within the portfolio, Expro International accounted for 18.5% of the value atthe end of the year; therefore, movements in its valuation have a significantimpact on the value of the portfolio and net asset value. Whilst some of thecompany's divisions continued to perform well in 2011 including Connectors andMeasurements and Subsea Safety Systems, profitability has been impacted bychallenges in specific geographies and a protracted recovery in offshore marketactivity that has resulted in the deferral of some projects. However, tradingat the start of 2012 has been more encouraging and the business has secured anumber of new contracts and important renewals.
Table 2 shows the valuation movement by reference to each portfolio company.
Table 2Portfolio Residual Valuation Strip Additions Valuation Valuation Valuation Valuationcompany cost1 at 31st Sale and movement movement at 31st movement £m December £m disposals excluding attributable December pence per 2010 £m FX2 to FX2 2011 share2 £m £m £m £m Stork 34.7 61.5 (17.9) 0.0 (1.1) 42.5 (5) Parques 30.0 36.0 (15.3) 16.6 5.6 (0.9) 42.0 22Reunidos Expro 92.0 86.4 (25.2) 2.2 (25.3) (0.3) 37.8 (117)International Capital Safety 9.3 18.9 (5.5) 0.8 15.1 (0.1) 29.2 69Group Technogym 29.2 16.0 (4.6) 2.5 (0.3) 13.6 10 Qioptiq 6.8 17.1 (5.0) (1.3) (0.3) 10.5 (7) Innovia Films 2.7 6.8 (2.0) 0.0 (0.2) 4.6 (1) Alma 14.9 6.2 (1.7) 0.0 (0.1) 4.4 (1)Consulting Group Hilding Anders 24.3 5.5 (1.6) 0.0 (0.1) 3.8 (1) DX Group 21.4 2.2 (0.6) 1.1 0.0 2.7 5 Ten largest 265.3 256.6 (79.4) 19.6 (2.3) (3.4) 191.1 (26)investments3 Get 1.7 2.7 (0.8) 0.6 0.0 2.5 3 Ono 2.2 1.4 (0.4) 0.6 0.0 1.6 3 Equity Trust 0.0 15.3 0.0 (15.3) 0.0 0.0 0.0 0 EurotaxGlass's 14.5 5.6 (1.8) 0.6 (4.4) 0.0 0.0 (20) Candover 2001 0.0 17.5 0.0 (9.0) (0.4) (0.1) 8.0 (3)Fund carried interest Other 38.3 10.9 0.0 (10.1) 0.0 0.0 0.8 0 Other 56.7 53.4 (3.0) (33.8) (3.6) (0.1) 12.9 (17)investments Total 322.0 310.0 (82.4) (14.2) (5.9) (3.5) 204.0 (43)
1 Residual cost is original cost less realisations to date 2 Compared to the valuation at 31st December 2010 or acquisition date, if later 3 Excluding Candover 2001 Fund carried interest
Ten largest investments1. StorkIndustry sector: Industrials Geography: The Netherlands Date of investment: January 2008 Residual cost of investment £m: 34.7 Directors' valuation £m: 42.5 Change over prior valuation £m:
(1.1)
Effective equity interest (fully 4.6%diluted): % of Candover's net assets: 27.1% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: €1,669.0m Earnings1: €156.0mStork is a diversified Dutch engineering conglomerate active in aerospace(Fokker Technologies) and in technical services to the oil and gas, chemicalsand power industries (Stork Technical Services or "STS"). Operationalmanagement have been separated between the two businesses to develop clearstrategies for driving value. In May 2011, STS completed the acquisition ofRBG, an offshore oil & gas maintenance services provider. The deal transformedSTS into a truly global business and resulted in a combined geographicalfootprint covering major oil and gas-producing regions including the UK,Continental Europe, the Americas, the Caspian Sea, the Middle East and Asia
Pacific. The acquisition also integrated service portfolios to provide a unique range of assessment, inspection and repair services.
Whilst the core STS business reported flat revenues in 2011 as a result of thedepressed market conditions in the Benelux, RBG traded strongly, takingadvantage of high levels of activity in its key regions. Fokker Technologiesexperienced strong growth in the core part of the business despite competitiveprice pressure in one of its smaller divisions from low cost suppliers. Thevaluation of Stork represents a £1.1 million decrease (5p per share) from theDecember 2010 valuation due to adverse foreign exchange movements.2. Parques ReunidosIndustry sector: Services Geography: Spain Date of investment: March 2007 Residual cost of investment £m: 30.0 Directors' valuation £m: 42.0 Change over prior valuation £m:
4.7
Effective equity interest (fully 3.9%diluted): % of Candover's net assets: 26.8% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: September 2011 Sales: €538.5m Earnings1: €179.5mParques Reunidos ("Parques") consolidated its position during the year as oneof the world's leading operators of attraction parks. Parques enjoys strongpositions in all its key markets and the majority of its parks are the leadingfamily attractions in their respective surrounding area.Parques performed well in the year to September 2011 despite the challengingmacro-economic environment and adverse weather conditions in both the US andNorthern Europe throughout the summer. A strong performance in Spain served to underline the resilience of its business model. Management continue to drive operational improvements throughout the park portfolio, particularly in those acquired in the past 12 to 18 months. In February 2011 the equity bridges relating to the original investment were repaid in full. At the same time, the US business was refinanced with a high yield bond, freeing up cash to provide Parques with additional acquisition capability going forward. This has resulted in a valuation uplift of £4.7 million (22p per share) to £42.0 million after adverse foreign exchange movements.3. Expro InternationalIndustry sector: Energy Geography: UK Date of investment: July 2008 Residual cost of investment £m: 92.0 Directors' valuation £m: 37.8 Change over prior valuation £m:
(25.6)
Effective equity interest (fully 4.7%diluted): % of Candover's net assets: 24.1% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: March 2011 Sales: US$989.8m Earnings1: US$242.7mExpro International is one of the leading oilfield service providersspecialising in well flow management, with a particular focus on the mosttechnically challenging deep water environments. Expro International'soperations are critical to the development of oil and gas reservoirs and areutilised by multinational oil majors as well as state-owned national oilcompanies. Whilst some divisions continued to perform well in 2011, includingConnectors and Measurements and Subsea Safety Systems, profitability has beenimpacted by challenges in some geographies as well as a protracted recovery inoffshore market activity that has resulted in the deferral of some projects. InFebruary 2012 Expro International announced the appointment of Sir GeorgeBuckley who will be joining in June following his retirement as Chairman,President and CEO of 3M. Whilst trading at the start of 2012 has been moreencouraging and the business has secured a number of new contracts andrenewals, Candover's investment has been written down by £25.6 million (adecrease of 117p per share) to £37.8 million of which £0.3 million isattributable to adverse foreign exchange movements.4. Capital Safety GroupIndustry sector: Industrials Geography: UK Date of investment: June 2007 Residual cost of investment £m: 9.3 Directors' valuation £m: 29.2 Change over prior valuation £m:
15.0
Effective equity interest (fully 5.1%diluted): % of Candover's net assets: 18.6% Basis of valuation: Sale price Dividends received £m: - Year end: March 2011 Sales: US$243.0m Earnings1: US$64.1m
Capital Safety Group, one of the global market leaders in height safety andfall protection equipment, was sold in January 2012 for $1.12 billion. The salegenerated proceeds of £29.6 million, including a deferred payment of £2.3million, due in the first half of 2012. These proceeds are valued at £29.2 million (31st December 2011 exchange rates) and represent an uplift of £15.0 million (69p per share). The sale by Arle represents a 2.7x return on the original investment made by Candover and the Candover 2005 Fund.5. TechnogymIndustry sector: Industrials Geography: Italy Date of investment: August 2008 Residual cost of investment £m: 29.2 Directors' valuation £m: 13.6 Change over prior valuation £m:
2.2
Effective equity interest (fully 3.2%diluted): % of Candover's net assets: 8.7% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: €351.6m Earnings1: €43.2mTechnogym is a global leader in the design and manufacture of premium brandedfitness equipment and wellness solutions and enjoys strong brand recognitioninternationally. In 2011, the business performed strongly in its two mainproduct categories "Cardio" and "Strength" and also across all market segmentsand geographies. During the year, Technogym made a significant investment innew product development with a strong focus on software and networkingsolutions for mobile fitness management. During 2012 the group is looking toconsolidate its business in the core European markets while growing in newmarket segments including "Home" and "Health" and penetrating new geographiessuch as Latin America and Asia Pacific. Technogym has been appointed as theofficial supplier of fitness equipment for the forthcoming London 2012 Olympicsand will equip 20 gyms for the 15,000 athletes taking part in both the Olympicand Paralympic Games. This is Technogym's fourth consecutive Olympics in thiscapacity. The investment has been written up by £2.2 million (10p per share)after adverse foreign exchange movements of £0.3 million.6. QioptiqIndustry sector: Industrials Geography: UK Date of investment: December 2005 Residual cost of investment £m: 6.8 Directors' valuation £m: 10.5 Change over prior valuation £m:
(1.6)
Effective equity interest (fully 5.4%diluted): % of Candover's net assets: 6.7% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: US$377.0m Earnings1: US$74.9mQioptiq is one of the world's leaders in high-precision optical and photonictechnologies. During 2011, the business traded slightly above prior year inrevenue terms, with stable earnings driven by less favourable exchange ratesand a change in product mix. This was achieved despite a softening in the US defence market and a more challenging environment in commercial markets during the last months of the year. Exit options for Qioptiq were explored in 2011. However, the volatile economic environment meant that whilst there was strong interest in the asset, bidders found it too expensive to secure financing. Whilst the macro outlook remains uncertain for the business in 2012 and tradingat the start of the year has softened, Qioptiq's prospects remain good. Thecompany is well positioned to develop commercially and secure new contracts indefence, as well as improve internal efficiencies through performanceimprovement projects. It has been decided, therefore, to retain the businessand support the management in pulling these value creation levers. Due toweaker trading at listed comparable companies, the valuation has been writtendown by £1.6 million (7p per share) to £10.5 million, including adverse foreignexchange movements of £0.3 million.7. Innovia FilmsIndustry sector: Industrials Geography: UK Date of investment: September 2004 Residual cost of investment £m: 2.7 Directors' valuation £m: 4.6 Change over prior valuation £m:
(0.2)
Effective equity interest (fully 5.7%diluted): % of Candover's net assets: 2.9% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: €437.6m Earnings1: €67.7m
Innovia Films manufactures speciality films primarily for packaging and is theonly established manufacturer of polymer bank note substrate in the world via ajoint venture (Securency) with the Reserve Bank of Australia. In 2011, the corebusiness had a challenging year due to the rising of cost of raw materialswhich adversely impacted profitability in the polypropylene film and cellophanedivisions. However, the Securency business materially outperformed expectationson the back of new contract wins and recurring volumes from existing customers.As a result of the challenging trading environment for the core business, thevaluation has been retained at the December 2010 level, but adverse currencymovements have resulted in a small negative movement of £0.2 million (1p pershare).8. Alma Consulting GroupIndustry sector: Services Geography: France Date of investment: December 2007 Residual cost of investment £m: 14.9 Directors' valuation £m: 4.4 Change over prior valuation £m:
(0.1)
Effective equity interest (fully 3.6%diluted): % of Candover's net assets: 2.8% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: €270.6m Earnings1: €83.6mAlma Consulting Group ("Alma") is one of the European leaders in cost reductionand optimisation, offering a wide range of consulting services based on asuccess fee model. In 2011, trading in Alma's core business was in line withexpectations but impacted by regulatory changes and the run-off of one profitable product. The weaker performance of small business units was offset by better cost control. Vincent Taupin, formerly CEO of Boursorama and Credit du Nord , joined Alma as CEO in January 2012. His initial focus will be to prepare a new three-year plan to re-energise the business and recover growth. It is expected that the recentreforms will continue to impact the core business in 2012, although theopportunity to recover growth through new products and the turnaround of smallbusiness units remains. As a result, the valuation has been retained at theDecember 2010 valuation, but adverse foreign exchange movements have resultedin a small negative movement of £0.1 million.9. Hilding AndersIndustry sector: Industrials Geography: Sweden Date of investment: December 2006 Residual cost of investment £m: 24.3 Directors' valuation £m: 3.8 Change over prior valuation £m:
(0.1)
Effective equity interest (fully 4.3%diluted): % of Candover's net assets: 2.4% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: December 2010 Sales: SEK 6,693.0m Earnings1: SEK 985.0mHilding Anders is Europe's largest bed and mattress manufacturers and isheadquartered in Sweden. It has leading market positions in more than 40countries in Europe and Asia, has over 30 manufacturing facilities and circa6,000 employees. Hilding Anders has an innovative and diverse portfolio ofproducts sold as private label or branded products. It has grown bothorganically and through acquisitions and in more recent years, hassignificantly reinforced its presence in emerging markets. The Asian andRussian operations performed particularly well within the group during theyear, although trading was held back by the challenging European macroenvironment, particularly in Southern Europe. The December 2010 valuation hasbeen retained, but adverse foreign exchange movements have resulted in a smallnegative movement of £0.1 million.10. DX GroupIndustry sector: Services Geography: UK Date of investment: September 2006 Residual cost of investment £m: 21.4 Directors' valuation £m: 2.7 Change over prior valuation £m:
1.1
Effective equity interest (fully 4.0%diluted): % of Candover's net assets: 1.7% Basis of valuation: Multiple of earnings Dividends received £m: - Year end: June 2011 Sales: £164.0m Earnings1: £28.8m
DX Group is one of the largest independent end-to-end operators in the UK postal and express markets offering mail and parcels solutions for both businesses and B2C secure deliveries. Key customers include the legal sector, financial institutions, national and local government agencies, the health and pharmaceutical sector, high street retailers and e-retailers. Since undergoing a financial restructuring in 2010, DX has performed well. During
2011, DX has seen strong profit growth and cash generation, driven by the benefits of the organisational and operational efficiency improvement projects implemented by the new management team over the past 18 months. DX is now also starting to see the fruits of its efforts on the commercial side, with like-for-like revenue growth against prior year, particularly through the expansion of its parcels and packets offering for high street and home deliveries. The outlook remains positive for the business with furtherdeleveraging through cash flow generation. The investment has been written upby £1.1 million (5p per share).
Notes:
1 Earnings figures are taken from the portfolio company's most recent audited
accounts or financial statements filed with regulatory bodies. The figures
shown are the total earnings on ordinary activities before exceptional items,
depreciation, goodwill amortisation, interest and tax for the period.
Other investments
The remainder of the portfolio comprises:
1. EurotaxGlass's
EurotaxGlass's, a provider of automotive intelligence, is predominantly a B2Bsubscription business providing valuation data to all sectors of the automotiveindustry. In early 2011, a new senior management team was appointed and acomprehensive three year turnaround plan was quickly put in place. Despite thepositive momentum arising from the arrival of the new team, there are a numberof operational issues as well as market challenges that will impact on thetiming and delivery of the planned turnaround. Consequently Candover'sinvestment has been written down to zero (a decrease of 20p per share).
2. GET
GET, a cable network operator, operates in Oslo and the major cities ofSouthern Norway, passing around 55% of households in Norway's metropolitanregions. It is the only cable operator within its franchise area and offers"triple play" services - TV, high speed broadband and telephony - to theresidential market. GET was sold in December 2007, with Candover and theCandover 2005 Fund reinvesting some of the exit proceeds for a small minoritystake. The valuation of Candover's reinvestment has increased by £0.6 million(3p per share).3. OnoOno is the leading Spanish cable operator in which Candover and the Candover2001 Fund have a small minority interest. Despite the challenging economicconditions, Ono performed well in 2011 following the implementation of a newstrategy in 2010 driven by the launch of ultra-high speed broadband and the newHD interactive TV interface. It also completed the acquisition of a 2.6GHzmobile spectrum licence in nine regions. The investment has been written up by£0.6 million (3p per share).
4. Candover 2001 Fund carried interest
Candover's share of the Candover 2001 Fund carried interest was valued at £8.0 million, representing a £0.5 million (3p per share) decrease from 2010 including adverse foreign exchange movements.
Outlook for 2012
At the start of 2012, the Eurozone sovereign debt crisis remains unresolved andconcerns over the global macroeconomic outlook continue to prevail. Businessconfidence and consumer sentiment remain fragile and corporate and buyoutactivity levels remain low. Whilst these issues are likely to persist for sometime, we believe that buyout activity will begin to recover in the latter halfof 2012 as private equity managers seek to deploy committed capital ahead ofapproaching fund expiry dates. Mid-market secondary buyouts are likely to leadthe way as lenders maintain their bias towards known borrowers.Throughout 2012, we will continue to focus on preserving value and helping theportfolio companies to define and execute their growth strategies. We will takea disciplined approach to realisations, selling only when we are confident ofachieving full value.Arle Capital Partners Limited29th February 2012Ten largest investmentsat 31st December 2011Investment Date of Residual Directors' Movement Effective % of Basis of investment cost of valuation from equity Candover's valuation investment £m 31st Dec interest net assets £m 2010 (fully diluted) Stork Jan-08 34.7 42.5 (1.1) 4.6% 27.1% MultipleEngineering ofconglomerate earnings Parques Reunidos Mar-07 30.0 42.0 4.7 3.9% 28.8% MultipleOperator of ofattraction parks earnings Expro Jul-08 92.0 37.8 (25.6) 4.7% 24.1% MultipleInternational ofOilfield services earnings Capital Safety Jun-07 9.3 29.2 15.0 5.1% 18.6% SaleGroup priceFall protection equipment Technogym Aug-08 29.2 13.6 2.2 3.2% 8.7% MultiplePremium fitness ofequipment and earningswellness products Qioptiq Dec-05 6.8 10.5 (1.6) 5.4% 6.7% MultipleOptical ofengineering earnings Innovia Films Sep-04 2.7 4.6 (0.2) 5.7% 2.9% MultipleTransparent and ofcoated films and earningspolymer bank notes Alma Consulting Dec-07 14.9 4.4 (0.1) 3.6% 2.8% MultipleGroup ofCost reduction earningsand optimisation Hilding Anders Dec-06 24.3 3.8 (0.1) 4.3% 2.4% MultipleBed manufacturer of earnings DX Group Sep-06 21.4 2.7 1.1 4.0% 1.7% MultipleMail services of earningsTen largest investments
Analysis by value at 31st December 2011
By valuation method By sector 1. Multiple of earnings 85% 1. Industrial 54% 2. Sale price 15% 2. Energy 20% 3. Services 26% By region By age 1. United Kingdom 45% 1. 3-4 years 49% 2. Benelux 22% 2. 4-5 years 40% 3. Spain 22% 3. >5 years 11% 4. Italy 7% 5. France 2% 6. Nordic 2% Group statement of comprehensive incomefor the year ended 31st December 2011 Unaudited Audited Year to 31st December Year to 31st December 2011 2010 Notes Revenue Capital Total1 Revenue Capital Total1 £m £m £m £m £m £m
Gains/(losses) on financial
instruments at fair value through profit and loss Realised gains and losses - - - - (2.7) (2.7)
Unrealised gains and losses - (20.0) (20.0) - 2.1
2.1 Total - (20.0) (20.0) - (0.6) (0.6) Revenue
Investment and other income 15.3 - 15.3 8.1 -
8.1 Total 15.3 - 15.3 8.1 - 8.1 Recurring administrative (4.5) (2.0) (6.5) (4.5) (2.5) (7.0)expenses Exceptional non-recurring 2 (3.5) - (3.5) (5.1) - (5.1)costs
Profit/(loss) before finance 7.3 (22.0) (14.7) (1.5) (3.1)
(4.6)costs and taxation Finance costs (2.1) (2.1) (4.2) (3.3) (3.2) (6.5) Movement in the fair value - (0.3) (0.3) - (0.8) (0.8)of derivatives Exchange movements on - (0.1) (0.1) - 0.8 0.8borrowings Profit/(loss) before 5.2 (24.5) (19.3) (4.8) (6.3) (11.1)taxation Analysed between: Profit/(loss) before 8.7 (24.5) (15.8) 0.3 (6.3) (6.0)exceptional non-recurring costs Exceptional non-recurring (3.5) - (3.5) (5.1) - (5.1)costs Taxation - - - 3.4 - 3.4
Profit/(loss) after taxation 5.2 (24.5) (19.3) (1.4) (6.3)
(7.7)from continuing operations Loss from CPL disposal group 3 (1.8) - (1.8) (21.7) - (21.7)(discontinued operations) Loss relating to assets - - - - (19.6) (19.6)subject to the strip disposal (discontinued operations) (1.8) - (1.8) (21.7) (19.6) (41.3)
Profit/(loss) after taxation 3.4 (24.5) (21.1) (23.1) (25.9)
(49.0)
Other comprehensive income:
Exchange differences on (0.2) - (0.2) (0.1) - (0.1)translation of foreign operations
Total comprehensive income 3.2 (24.5) (21.3) (23.2) (25.9)
(49.1)
Earnings per ordinary share:
Continuing operations - 24p (112p) (88p) (7p) (29p) (36p)basic and diluted Discontinued operations - (8p) - (8p) (99p) (90p) (189p)basic and diluted Total earnings per share 16p (112p) (96p) (106p) (119p) (225p)
(continuing and discontinued
operations) - basic and diluted
1 The total column represents the Group statement of comprehensive income under IFRS
i All of the loss for the year and the total comprehensive income for the year are attributable to the owners of the Company
ii The supplementary revenue and capital columns are presented for informationpurposes as recommended by the Statement of Recommended Practice issued by theAssociation of Investment Companies
iii The CPL disposal group result reflects the trading activities of CPL, including costs recharged to CPL by other parts of the Group, which will not form part of the continuing operations
iv The loss relating to assets subject to the strip disposal include the movements on those assets during the year and the movement in fair value of the related derivative at the year end
Group statement of changes in equityfor the year ended 31st December 2011Unaudited Called Share Other Capital Capital Revenue Total up premium reserves reserves reserves - reserve equity share account £m - unrealised £m £m capital £m realised £m £m £m Balance at 1st 5.5 1.2 0.1 360.5 (187.4) (2.0) 177.9January 2011 Net revenue after - - - - - 3.4 3.4tax Unrealised loss on - - - - (20.0) - (20.0)financial instruments Realised (loss)/ - - - (44.8) 44.8 - -gain on financial instruments Movement in fair value of derivatives - continuing - - - - (0.3) - (0.3)operations Exchange movements on borrowing - - - - (0.1) - (0.1) Costs net of tax - - - (4.1) - - (4.1) Profit after tax - - - (48.9) 24.4 3.4 (21.1) Other comprehensive income Exchange - - (0.2) - - - (0.2)differences on translation of foreign operations Total - - (0.2) (48.9) 24.4 3.4 (21.3)comprehensive income Balance at 31st 5.5 1.2 (0.1) 311.6 (163.0) 1.4 156.6December 2011 Audited Called Share Other Capital Capital Revenue Total up premium reserves reserves reserves - reserve equity share account £m - unrealised £m £m capital £m realised £m £m £m Balance at 1st 5.5 1.2 0.2 359.5 (160.5) 21.1 227.0January 2010 Net revenue after - - - - - (23.1) (23.1)tax Unrealised gain on financial - - - - 2.1 - 2.1instruments Realised gain/ (loss) on financial - - - 6.7 (9.4) - (2.7)instruments Movement in fair value of derivatives - continuing - - - - (0.8) - (0.8)operations Loss relating to assets subject to the strip disposal - discontinued - - - - (19.6) - (19.6)operations Exchange movements on borrowing - - - - 0.8 - 0.8 Cost of net tax - - - (5.7) - - (5.7) Profit after tax - - - 1.0 (26.9) (23.1) (49.0) Other comprehensive income Exchange - - (0.1) - - - (0.1)differences on translation of foreign operations Total - - (0.1) 1.0 (26.9) (23.1) (49.1)comprehensive income Balance at 31st 5.5 1.2 0.1 360.5 (187.4) (2.0) 177.9December 2010 Group statement of financial positionat 31st December 2011 Unaudited Audited 31st December 2011 31st December 2010 £m £m £m £m Non-current assets Property, plant and equipment - 0.1
Financial investments designated at fair value through profit and
loss Portfolio companies 166.4 212.1 Other financial investments 8.4 17.9 174.8 230.0 Trade and other receivables 8.1 6.5 Deferred tax asset 3.5 3.5 186.4 240.1 Current assets Trade and other receivables 0.1 1.8
Derivative financial instruments - 44.1
Current tax asset 0.1 0.1 Cash and cash equivalents 118.1 78.9 118.3 124.9
Financial investments held for 29.2
-sale Financial investments held for -
80.0
sale (discontinued operations) Assets of CPL disposal group -
2.3(discontinued operations) 147.5 207.2 Current liabilities Trade and other payables (3.6) (15.9)
Financial liability on equity - -
commitments
Derivative financial instruments - (29.9)
Provisions (6.6) (4.5) (10.2) (50.3) Derivative financial instruments - (17.4)(discontinued operations) Liabilities of CPL disposal group - (1.2)(discontinued operations) (10.2) (68.9) Net current assets 137.3 138.3 Total assets less current 323.7 378.4liabilities Non-current liabilities Loans and borrowings (167.1) (200.5) Net assets 156.6 177.9 Equity attributable to equity holders Called up share capital 5.5 5.5 Share premium account 1.2 1.2 Other reserves (0.1) 0.1 Capital reserve - realised 311.6 360.5 Capital reserve - unrealised (163.0) (187.4) Revenue reserve 1.4 (2.0) Total equity 156.6 177.9 Net asset value per share Basic 717p 814p Diluted 717p 814pGroup cash flow statementfor the year ended 31st December 2011 Unaudited Audited Year to 31st Year to 31st December 2011 December 2010 £m £m £m £m Cash flows from operating activities Cash flow from operations (13.2) (15.2) Interest paid (7.0) (6.1) Tax received - 0.8 Net cash outflow from operating (20.2) (20.5)activities Cash flows from investing activities
Purchase of property, plant and - (0.4)
equipment
Purchase of financial investments (20.3) (34.7)
Sale of property, plant and - - equipment
Sale of financial investments 89.2 35.5 Net cash inflow from investing 68.9 0.4activities Cash flows from financing activities Swap sale proceeds 12.8 - Loan notes repayment (27.2) -
Net cash outflow from financing (14.4)
-activities Increase/(decrease) in cash and 34.3 (20.1)cash equivalents Opening cash and cash equivalents 79.9 106.3 Effect of exchange rates and 3.9 (6.3)revaluation on cash and cash equivalents Closing cash and cash equivalents 118.1
79.9
Note to the financial statements
Note 1
The preliminary results for the year ended 31st December 2011 are unaudited.The financial information included in this statement does not constitute theGroup's statutory accounts within the meaning of Section 434 of the CompaniesAct 2006. Statutory accounts for the year ended 31st December 2011 will befinalised on the basis of the financial information presented by the directorsin this preliminary announcement and will be delivered to the Registrar ofCompanies in due course.The information given as comparative figures for the year ended 31st December2010 does not constitute the Company's statutory accounts for those financialperiods. Statutory accounts for the year ended 31st December 2010, prepared inaccordance with International Financial Reporting Standards as adopted by theEuropean Union, have been reported on by the Company's auditors and deliveredto the Registrar of Companies. The report of the auditors was unqualified anddid not contain a statement under Section 498 (2) or (3) of Companies Act 2006.
Note 2
Exceptional non-recurring costs for the continuing group.
Exceptional non-recurring costs for the continuing group include a provision of£2.1m in respect of an onerous lease and £1.4m of current year property costsincurred since the completion of the CPL sale in April 2011.
Note 3
Loss from CPL disposal group ("discontinued operations")
2011 2010 £m
£m
Management fees from third parties 4.5 14.6 Management fees charged to continuing Group 1.5 5.0 Total fee income 6.0 19.6 Payroll and administrative expenses (6.6) (20.1)
Redundancy costs (0.3) (2.3) Net operating deficit (0.9) (2.8)
Write-off on deferred tax asset - (3.4) Net loss before exceptional non-recurring (0.9) (6.2)administrative expenses Exceptional non-recurring charges: Discretionary contribution to EBT - (3.3) Payment of future deferred incentives - (0.9)
Advisor costs (0.9) (3.6) Bond consent fee - (0.9)
Write-off of property, plant and equipment - (2.1) Accelerated write-off on deferred incentive - (4.7)arrangements Placing agents - - Loss from CPL disposal group ("discontinued (1.8) (21.7)operations") The disposal of CPL to Arle, an entity formed by the executives of CPL, wascompleted on 19th April 2011. Under the terms of the sale and purchaseagreement the disposal for nominal consideration was structured by reference tothe 31st December 2010 balance sheet of CPL at which point CPL retained netassets equivalent to the minimum required level of regulatory capital of £50,000. In addition, under the terms of the disposal, the right to the economicinterest in CPL, the discontinued business of Candover, passed to Arleeffective from 1st January 2011. Whilst final completion was subject to anumber of remaining conditions, notably regulatory clearances, restrictionswere agreed in the sale and purchase agreement to prevent the distribution ofdividends from CPL as well as requirements as to how CPL would be managed inthe ordinary course of business up to the point the transaction becameunconditional in all respects. As the disposal completed on the terms set outin both the circular to shareholders dated 6th December 2010 and consistentwith the presentation of the results for the year ended 31st December 2010,Arle assumed the risk and reward of the economic interest in CPL from the 1stJanuary 2011.
In the year ended 31st December 2011 additional costs relating to the discontinued Candover Group of £1.8 million were provided for, covering additional advisor costs of £0.9 million due to the extended timeline to complete the disposals, redundancy costs of £0.3 million and £0.6 million of administrative costs relating to the separation of the businesses.
XLONRelated Shares:
CDI.L