Annual Report and Accounts 2016
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Pantheon International Plc Annual Report and Accounts 2016 Pantheon International Plc (”PIP” or the “Company”) invests in a diversified portfolio of private equity assets managed by third party managers across the world. Private equity funds purchase large equity stakes in private companies. This gives investors access to a broader universe of opportunities than that offered by public markets. Private equity managers are long-term, disciplined investors who can bring about beneficial changes to businesses and align shareholder interests with those of company management through majority ownership. The Manager, Pantheon, is one of the world’s foremost private equity specialists. With more than 30 years’ experience, and a team of over 70 investment professionals globally, Pantheon is well positioned to guide PIP towards its objective of maximising capital growth. Contents Strategic Report Year at a Glance 1 Performance Summary 2 Chairman’s Statement 6 Investment Rationale & Company Strategy 9 Our Business Model 10 Objective and Investment Policy 12 Principal Risks and Uncertainties 13 Manager’s Review 17 The Directors’ Report 60 Statement on Corporate Governance 70 Audit Committee Report 77 Directors’ Remuneration Report 79 Statement of Directors’ Responsibilities 82 Independent Auditor’s Report 83 Income Statement 86 Statement of Changes in Equity 87 Balance Sheet 88 Cash Flow Statement 89 Notes to the Financial Statements 90 AIFMD Disclosures 102 Notice of Annual General Meeting 104 Glossary of Terms 108 Directors and Contacts 109 Year at a Glance 1 Year at a Glance to 30th JUNE 2016 Key Performance Indicators Other Indicators +22% +1% -9% ReportStrategic NAV per share increase Ordinary share price increase Redeemable share price decrease FTSE All-Share TR: +2% FTSE All-Share TR: +2% FTSE All-Share TR: +2% MSCI World TR: +15% MSCI World TR: +15% MSCI World TR: +15% 31% £ 1 ,1 8 7 m 1,873.6p Manager’s Report Manager’s Ordinary share price Net Asset Value NAV per share discount to NAV JUN 2015: 17% JUN 2015: £1,000m JUN 2015: 1,532.4p 37% £190m £346m Redeemable share price Net cash flow generated New investment commitments, discount to NAV from PIP’s portfolio £192m of which was drawn Full Year Results Year Full JUN 2015: 16% JUN 2015: £198m JUN 2015: £238m 1.34% 7.3 years 3.4x Total ongoing charges Weighted average Ratio of assets and available excluding tax fund age of portfolio financing to undrawn commitments JUN 2015: 1.33% JUN 2015: 7.9 years JUN 2015: 4.3x This report contains terminology that may be unfamiliar to some readers. The Glossary on page 108 gives definitions for frequently used terms. 2 Pantheon International Plc Performance Summary NAV and Share Price Performance 2,000 • NAV per share increased by 22%, 1,800 from 1,532.4p to 1,873.6p. 1,600 31% 1,400 17% • The ordinary share price increased from 16% 1,200 22% 1,272.0p to 1,285.0p, an increase of 1,000 39% 1.0%. The discount to NAV increased 800 GBp/Share from 17% to 31%. 600 400 The redeemable share price decreased 200 • 0 from 1,285.0p to 1,175.0p, a decrease 2012 2013 2014 2015 2016 of 8.6%. The discount to NAV increased from 16% to 37%. NAV per Share Ordinary Share Price Discount Net Investment Cash Flow £300m • Distributions received in the year to 30th June 2016 were £251.8m, £200m equivalent to an annualised rate of 29% £100m of opening private equity assets. £0m • PIP funded investments of £275.9m in the year to 30th June 2016 across calls -£100m (£62.0m), new investments (£192.0m) -£200m and share buybacks (£21.9m). -£300m 2012 2013 2014 2015 2016 Distributions Calls New Investments Share Buybacks Net Investment Cash Flow NAV per Share Reconciliation 2,000 263.0 17.3 (10.6) (26.2) 1,873.6 1,900 1,800 1.700 79.4 18.3 1,600 1,532.4 1,500 GB Pence GB 1,400 +5.2% +1.2% +17.2% +1.1% (0.7%) (1.7%) 1,300 1,200 NAV PER SHARE VALUATION INVESTMENT FOREIGN SHARE PROVISION FOR EXPENSES NAV PER SHARE 30TH JUNE GAINS INCOME EXCHANGE BUYBACKS ASSET SALES AND TAXES* 30TH JUNE 2015 IMPACT 2016 The above chart reconciles the opening and closing NAV per share for the year ended 30th June 2016. * Taxes relate to withholding taxes on investment distributions. Performance Summary 3 Performance at 30th June 2016 1 YEAR 3 YEARS 5 YEARS 10 YEARS SINCE INCEPTION % % P.A. % P.A. % P.A. % P.A. ReportStrategic NAV per share* 22.3 12.0 11.2 8.9 11.6 Ordinary share price* 1.0 7.2 12.5 5.9 10.7 FTSE All-Share Total Return 2.2 5.9 6.3 5.4 7.7 MSCI World Total Return (sterling) 15.1 12.2 11.2 8.5 7.5 * PIP was launched on 18th September 1987. The figures since inception assume reinvestment of dividends, capital repayments and cash flows from the exercise of warrants. Historical Record 2,500 2,000 Manager’s Report Manager’s 1,500 PERFORMANCE (REBASED TO 100) 1,000 500 0 87 88 89 90 91 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 16 PIP FINANCIAL YEAR ENDED 30TH JUNE PIP Ordinary Share Price* NAV* MSCI World Total Return (sterling) FTSE All-Share Total Return * Includes the effects of dividends, capital repayments and warrants. NAV figure based upon adjusted NAV per share where applicable. Full Year Results Year Full Capital Structure at 30th June 2016 Ordinary shares 33,062,013 Redeemable shares 30,297,534 Total 63,359,547 4 Pantheon International Plc Historical Data NAV ORDINARY PRIVATE EQUITY OUTSTANDING NAV 1,2 PER SHARE 2 SHARE PRICE PORTFOLIO COMMITMENTS (£M) (PENCE) (PENCE) (£M) (£M) Financial year end (30th June): 2016 1,187 1,873.6 1,285.0 1,072 382 2015 1,000 1,532.4 1,272.0 862 256 2014 902 1,364.2 1,150.0 815 176 2013 903 1,331.9 1,042.0 826 195 2012 845 1,193.5 725.5 800 191 2011 733 1,104.1 714.0 810 243 2010 637 958.7 486.0 763 331 2009 514 773.6 295.3 648 428 2008 736 1,108.7 750.0 806 641 2007 610 919.2 917.5 527 528 2006 441 796.8 726.5 372 365 2005 382 657.9 650.5 315 245 2004 245 572.5 463.0 233 137 2003 221 546.8 447.0 237 158 2002 196 541.6 486.5 175 138 2001 206 669.1 574.0 201 138 2000 161 599.9 457.5 140 77 1999 146 405.6 302.5 78 45 1998 131 368.6 294.5 79 50 1997 117 328.4 270.0 73 47 1996 106 302.5 225.0 48 25 1995 87 255.1 207.5 33 8 1994 47 239.6 176.5 42 7 1993 31 195.5 172.5 28 1 1992 21 139.7 93.5 28 0 1991 21 129.1 86.5 31 1 1990 20 126.7 80.5 32 2 1989 17 120.9 95.0 25 2 1988 12 102.5 75.0 2 0 1 Includes participating loan notes in issue between 2000 and 2004. 2 Historical NAV and NAV per share figures disclosed in the table above relate to adjusted NAV and adjusted NAV per share where applicable. Strategic Report 5 SectionStrategic Name Report 6 Pantheon International Plc StrategicChairman’s Report Statement In my final Chairman’s Statement, I am pleased to report that PIP has delivered a good performance over the past 12 months. For the financial year, the Company’s net assets stood at just under £1.2bn and it recorded an increase of 22.3% in NAV per share. Since I joined the Board in 2003, PIP’s NAV per share has more than trebled to 1,873.6p as at the end of June 2016, delivering annualised NAV growth of around 10%. Shareholders have been increasingly able to access a diversified portfolio of high quality private equity assets, which are usually only available to institutional investors. I am disappointed that over the last year PIP’s ordinary and to NAV per share, reflecting the weighting of PIP’s portfolio in redeemable shares have traded at significant discounts, which reflect non-UK assets and the depreciation of sterling towards the latter a sector-wide trend that has arisen against a backdrop of continued part of the financial year. These gains were offset by a provision in uncertainty in the global financial markets. However, since the relation to asset sales (-0.7%) and expenses and taxes (-1.7%). financial year end, the discounts on PIP’s ordinary and redeemable shares have narrowed materially and, at the time of writing, are 18% Our portfolio is weighted towards companies based in North and 28% respectively. This reflects an increase in the ordinary share America and the stronger Northern European economies, and price from 1,285.0p to 1,545.0p and an increase in the redeemable buyout portfolios in those regions demonstrated good performance. share price from 1,175.0p to 1,350.0p. The energy funds within Special Situations have continued to feel the adverse effects of declining oil prices, however it should be PIP’s strong financial position means it is well positioned to withstand noted that the Company has also been able to take advantage any regional challenges and to take advantage of compelling of the cyclical nature of the sector and has acquired additional opportunities in the global private equity market as they arise.