INTERIM REPORT 30 JUNE 2007

Transcription

1 INTERIM REPORT 30 JUNE 2007

2 2 PARTNERS GROUP HOLDING INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 (UNAUDITED) PASSION FOR TRANSPARENCY

3 3 INTERIM CONSOLIDATED INCOME STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND June 30 June In thousands of Swiss francs Note Revenues from management and advisory services, net 4 & 6 143'832 89'002 Share of results of associates 2'856 2'022 Net revenues 146'688 91'024 Third party services 1'507 3'001 Personnel expenses 7 25'596 16'646 General & administrative expenses 4'018 3'161 Marketing & representation expenses 3'008 1'561 EBITDA 112'559 66'655 Depreciation and amortization 1'826 1'781 EBIT 110'733 64'874 Changes in fair value of derivatives arising from insurance contracts 4 & 13 14'094 12'300 Income from investment companies Other finance income, net 5'473 2'654 Finance cost 1' Profit before tax 129'212 79'884 Income tax expense 7'661 5'104 Net profit for the period 121'551 74'780 Attributable to: Equity holders of the parent 121'396 74'724 Minority interest Basic earnings per share (Swiss francs) Diluted earnings per share (Swiss francs)

4 4 INTERIM CONSOLIDATED BALANCE SHEET AS OF 30 JUNE 2007 AND 31 DECEMBER June 31 December In thousands of Swiss francs Note Assets Property, plant and equipment 4'015 3'668 Intangible assets 52'715 52'415 Investments in associates 3'246 4'462 Other investments 8 83'416 40'837 Other financial assets 9 90'362 83'369 Deferred tax assets 10'969 16'318 Total non-current assets 244' '069 Prepaid expenses 3'869 2'219 Trade receivables 54'094 37'297 Other receivables 8' Marketable securities 10'560 23'095 Cash and cash equivalents 36' '698 Total current assets 112' '764 Total assets 357' '833 Equity and liabilities Share capital Own equity instruments '177 60'354 Share premium Retained earnings ' '941 Equity attributable to equity holders of the parent 246' '072 Minority interest Total equity 246' '499 Liabilities Interest-bearing loans and borrowings Pension fund liabilities 1'857 2'575 Derivatives arising from insurance contracts 13 70'799 82'755 Total non-current liabilities 72'678 85'352 Trade payables 17'693 8'970 Income taxes payable Accrued expenses 18'463 14'934 Other current liabilities 1'526 2'557 Total current liabilities 38'214 26'982 Total liabilities 110' '334 Total equity and liabilities 357' '833

5 5 INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND 2006 In thousands of Swiss francs Attributable Other Total to equity Share Own equity Share Translation Hedging retained retained holders of Minority capital instruments premium reserves reserve earnings earnings the parent interest Total Balance at 1 January ' ' ' ' ' '240 Acquisition of treasury shares 22'902 22'902 22'902 Sale of treasury shares* 35'899 25'250 25'250 10'649 10'649 Equity settled transactions Translation adjustment 4'284 4'284 4'284 4'284 Net profit for the period 74'724 74'724 74' '780 Total recognized income and expense 4'284 74'724 70'440 70' '496 Balance at 30 June ' ' ' ' '717 Balance at 1 January ' ' ' ' ' '499 Acquisition of treasury shares 88'045 88'045 88'045 Sale of treasury shares* 7'367 7'067 7' Equity settled transactions 1'095 1'095 1'095 1'095 Transfer of repurchased share options 10'855 10'855 10'855 Tax effect resulting from equity settled transactions 1'732 1'732 1'732 1'732 Dividends paid to shareholders 66'624 66'624 66'624 66'624 Translation adjustment 4'396 4'396 4'396 4'396 Fair value changes of cash flow hedges 1'246 1'246 1'246 1'246 Net profit for the period 121' ' ' '551 Total recognized income and expense 4'396-1' ' ' ' '701 Balance at 30 June ' ' ' ' ' '658 * including settlement of employee option plans

6 6 INTERIM CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND June 30 June In thousands of Swiss francs Note Operating activities Net profit for the period 121'551 74'780 Adjustments: Share of results of associates 2'856 2'022 Income from other investments Net financial result 4'383 2'598 Income tax expenses 7'661 5'104 Depreciation of property, plant and equipment Amortization of intangible assets 1'179 1'223 Share-based expenses 1' Change in fair value of derivative assets arising from insurance contracts 1'237 Change in fair value of derivative liabilities arising from insurance contracts 13 14'094 13'593 Change in fair value of assets held by insurance trusts 1'777 1'392 Change in defined benefit obligation Gain / (loss) realized on other derivatives Other non-cash items Operating cash flow before changes in working capital 107'727 63'262 (Increase) / decrease in receivables 24'735 1'643 Increase / (decrease) in payables 8'391 5'518 Financial expenses (other than interest) paid Cash generated from operations 91'304 70'362 Income taxes paid Net cash provided by operating activities 90'732 69'977

7 7 INTERIM CONSOLIDATED CASH FLOW STATEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND 2006 CONTINUED 30 June 30 June In thousands of Swiss francs Note Investing activities (Purchase) / disposal of marketable securities 13'860 1'428 Purchase of property, plant and equipment Purchase of intangible assets Cost recovered from disposal of other investments 8 2' Realized gain / (loss) on disposal of other investments 478 Purchase of other investments 8 42'523 12'672 Investments in assets held by insurance trust and experience account 2'155 6'877 Change in other financial assets Interest received 3'875 2'210 Dividends received 4'311 3'039 Net cash used in investing activities 21'663 12'365 Financing activities Repayment of borrowings 2 Interest paid Dividends paid to third parties 10 66'624 Purchase of treasury shares 88'045 22'902 Disposal of treasury shares '649 Net cash used in financing activities 154'531 12'277 Net increase in cash and cash equivalents 85'462 45'335 Cash and cash equivalents at beginning of the period 121'698 36'680 Effect of foreign exchange rate changes Cash and cash equivalents at end of the period 36'302 81'984

8 8 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND GENERAL INFORMATION Partners Group Holding (the Company) is a company domiciled in Switzerland whose shares are publicly traded. The interim condensed consolidated financial statements of the Company and its subsidiaries (together referred to as the Group) were authorized for issue in accordance with a resolution of the directors on 24 August SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of preparation The interim condensed consolidated financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting. The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Group's annual financial statements for the year ended 31 December The accounting policies adopted in the preparation of the interim condensed consolidated financial statements are consistent with those followed in the preparation of the Group's annual financial statements for the year ended 31 December 2006, except for the adoption of the following amendments mandatory for annual periods beginning on or after 1 January 2007: IFRS 7 Financial Instruments: Disclosures and the Amendment to IAS 1 Presentation of Financial Statements: Capital Disclosures Recognition which requires extensive disclosures about the significance of financial instruments for an entity s financial position and performance, and qualitative and quantitative disclosures on the nature and extent of risks. The Group will disclose the required information in its annual report IFRIC 8 Scope of IFRS 2 Share-based Payment which addresses the accounting for share-based payment transactions in which some or all of goods or services received cannot be specifically identified. IFRIC 9 Reassessment of Embedded Derivatives which requires that a reassessment of whether an embedded derivative should be separated from the underlying host contract should be made only when there are changes to the contract. IFRIC 10 Interim Financial Reporting and Impairment which prohibits the reversal of an impairment loss recognized in a previous interim period in respect of goodwill, an investment in an equity instrument or a financial asset carried at cost. The adoption of these standards and interpretations did not affect the Group s results of operations or financial position. 3. CHANGES IN SCOPE OF CONSOLIDATION On 22 February 2007, the Group incorporated Penta Management Limited, Guernsey. The company s main purpose is to serve as investment manager for Penta CLO 1 S.A. On 5 April 2007, the Group filed for amalgamation of Partners Group Holding and Partners Group Trading as well as of Partners Group Holding and Partners Group Investments, retrospectively as of 31 December 2006, with the commercial registry in Zug / Switzerland.

9 9 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND CHANGES IN PRESENTATION OF INCOME STATEMENT For the six months ended 30 June 2007, the presentation of the interim consolidated income statement has been changed compared to previous periods. The following presentation changes have been applied: Revenues from management and advisory services, net the revenues are disclosed net of revenue deductions in the income statement. However, the gross amounts are disclosed in note 6. The respective amounts for the prior year period have been amended accordingly. Changes in fair value of derivatives arising from insurance contracts the revaluation of the derivatives from insurance contracts is presented in the finance income and cost part of the income statement whereas the position was included in net revenues in the prior periods. The Group considers the nature of these non-cash revaluation movements as finance income or cost and believes that the reclassification is supportive for the understanding of the Group s business related revenues. Income from investment companies this position has also been moved to the finance income and cost part of the income statement as it represents finance income from investments in investment companies. 5. SEGMENT INFORMATION The Group comprises the following main business segments: Private Equity Hedge Funds The Group discloses no inter-segment transactions, as there are none; consequently no eliminations are necessary. The Group also pursues business activities in the areas of traditional wealth management for private individuals and private debt investments, focusing on mezzanine and other types of debt financing. Both activities however do not meet the minimum criteria for separate segmental presentation and are disclosed in "other / nonattributable". Segment results include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise: Income statement Depreciation on property, plant and equipment Non-attributable part of amortization of intangible assets Pension cost Non-attributable part of net financial result Income tax expense

10 10 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND SEGMENT INFORMATION (CONTINUED) Private Equity Hedge Funds Other / Non-attributable Total In thousands of Swiss francs 30 June 30 June 30 June 30 June 30 June 30 June 30 June 30 June Revenues from management and advisory services, net 105'318 66'522 25'830 16'784 12'684 5' '832 89'002 Share of result of associates 2'856 2'022 2'856 2'022 Net revenues 108'174 68'544 25'830 16'784 12'684 5' '688 91'024 Segment result 109'424 68'039 16'165 11'192 5'478 1' '067 80'679 Net financing result not allocated 1' Income tax expense 7'661 5'104 Net profit for the period 121'551 74'780

11 11 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND REVENUES FROM MANAGEMENT AND ADVISORY SERVICES, NET The Group operates in different businesses (refer to note 5). Within these different businesses, it earns income for its various services as follows: 30 June 30 June In thousands of Swiss francs Private equity Private equity investment management 115'530 66'497./. Revenue deductions 15'538 9'541 Net private equity investment management 99'992 56'956 Private equity administration 1'173 1'078 Private equity insurance premiums 13'569 15'022./. Insurance fees, where Group acts as policyholder only 13'569 12'225 Net private equity insurance premiums 2'797 Private equity organizational fees 10'533 11'364./. Revenue deductions 6'380 5'673 Net private equity organizational fees 4'153 5'691 Total revenues from private equity, net 105'318 66'522 Hedge funds Hedge funds investment management 38'620 28'824./. Revenue deductions 12'790 12'040 Total revenues from hedge funds, net 25'830 16'784 Other revenues Wealth management 2'573 1'788./. Revenue deductions Net wealth management 2'400 1'625 Private debt investment management 7'271 3'625./. Revenue deductions Net private debt investment management 6'438 3'340 Private debt organizational fees 1'266 1'124./. Revenue deductions Net private debt organizational fees Other revenues 3' Total other revenues, net 12'684 5'696 Revenues from management and advisory services, net 143'832 89'002

12 12 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND REVENUES FROM MANAGEMENT AND ADVISORY SERVICES, NET (CONTINUED) 30 June 30 June In thousands of Swiss francs Summary Total gross revenues 193' '454./. Revenue deductions 36'147 28'227./. Insurance fees, where Group acts as policyholder only 13'569 12'225 Revenues from management and advisory services, net 143'832 89'002 Details on included performance fees: Private equity 2'158 2'732 Hedge funds 6'280 3'565 Total performance fees received 8'438 6' PERSONNEL EXPENSES 30 June 30 June In thousands of Swiss francs Wages and salaries 21'333 14'425 Retirement schemes defined contribution plans 1' Retirement schemes defined benefit plans Other social security expenses 1' Share-based payments 1' Sundry personnel expenses Total personnel expenses 25'596 16'646 The average number of employees during the reporting period was 199 (2006: 146). 8. OTHER INVESTMENTS Acquisitions and disposals During the six months ended 30 June 2007, the Group acquired assets with a cost of CHF 42'523'204 (2006: CHF 12'672'244), of which CHF 36'478'918 (2006: CHF 5'229'585) related to capital calls for limited partnership commitments and CHF 6'044'286 to a new investment in PGAS Yellow cell. Assets with a net book value of CHF 2'704'838 (2006: CHF 954'460) were disposed of by the Group during the six months ended 30 June 2007.

13 13 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND OTHER FINANCIAL ASSETS 30 June 31 December In thousands of Swiss francs Assets in insurance trust / experience account 88'969 82'755 Restricted cash and cash equivalents 88'969 82'755 Loans to third parties and related parties 1' Other financial assets Total 90'362 83' CAPITAL AND RESERVES Share capital and share premium 30 June 30 June In effective number of shares Issued at 1 January 26'700'000 26'700'000 Issued during year Issued at 30 June fully paid in 26'700'000 26'700'000 Own equity instruments Own equity instruments include treasury shares of the Company. They are recognized at cost and presented separately within equity. At the balance sheet date the Group held (2006: 1'192'159) of the Company's own shares. The Group holds treasury shares to provide shares for the existing stock option program. Until 31 December 2006 a total cost of CHF has been included in this category relating to the repurchase of share options in 2004, which were subsequently cancelled. The Group has transferred this amount to retained earnings during the reporting period. As of 24 March 2007, the Group re-purchased shares from one of its partners for a total cost of CHF (CHF 140 per share). As of 24 April 2007, the Group re-purchased shares from its partners and principals for a total cost of CHF (CHF per share) at a pre-set pricing calculation mechanism. As of 12 April 2007, the Group sold shares to one of its partners who exercised options from the existing stock option program. Dividends A dividend of CHF 2.65 (2006: CHF 0.00) per share was paid out to shareholders as of 3 May The Group s treasury shares were not eligible for a dividend payment.

14 14 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND CAPITAL AND RESERVES (CONTINUED) Outstanding shares The computation of the weighted average number of ordinary shares outstanding during the period is based on the following figures: Shares Treasury Out- In effective number of shares issued shares standing 2006 Balance at 1 January '700'000 6'244'800 20'455'200 Purchase of treasury shares for cash 307' '384 Sale of treasury shares for cash 5'360'025 5'360'025 Balance at 30 June '700'000 1'192'159 25'507'841 Weighted average number of shares outstanding during the period (180 days) 23'284'451 Shareholders above 5% (in % of shares issued) Shares held in % Gantner Alfred 3'767' % Erni Marcel 3'767' % Wietlisbach Urs 3'767' % Shares Treasury Outissued shares standing 2007 Balance at 1 January '700'000 1'190'915 25'509'085 Purchase of treasury shares for cash 589' '706 Sale of treasury shares for cash 162' '556 Balance at 30 June '700'000 1'618'065 25'081'935 Weighted average number of shares outstanding during the period (180 days) 25'351'469 Shareholders above 5% (in % of shares issued) Shares held in % Gantner Alfred 3'767' % Erni Marcel 3'767' % Wietlisbach Urs 3'767' %

15 15 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND EARNINGS PER SHARE 30 June 30 June Basic earnings per share (in CHF) Diluted earnings per share (in CHF) SHARE-BASED PAYMENTS During the six months ended 30 June 2007, the Group granted no further options (2006: 26'700). As of 30 June 2007 the Group had 3'131'429 options outstanding (2006: 2'568'540). 13. DERIVATIVES ARISING FROM INSURANCE CONTRACTS (a) Basic assumptions The Group recognizes assets and liabilities arising from insurance and reinsurance contracts insuring the repayment of the principal amount of a bond issued by Pearl Holding Limited ("Pearl"). Pearl Management Limited only acts as policyholder and pays a fixed amount into the experience account. Therefore its exposure is limited to the sum of the balance paid into the experience account plus the initial put option value, although the actual insurance liability resulting from the transaction may be higher. In 1999 Princess Private Equity Holding Limited ("Princess") had launched a convertible bond with a maturity of 31 December 2010, which was insured by Princess Management Limited and reinsured by Swiss Re. On 5 December 2006 the bondholders approved a transaction proposed by the board of directors of Princess, which included an early conversion of the convertible bond into shares of Princess as of 8 December Therefore the derivative asset and the derivative liability arising from the Princess insurance contract were derecognized as no further liability exists due to the early conversion of the convertible bond. Both the asset as well as the liability is valued applying a Black-Scholes-Merton model. The following assumptions have been made for the input parameters of the model: Pearl Princess 30 June 31 December 30 June 30 June 31 December 30 June Net asset value (in millions) EUR EUR EUR n/a n/a USD 784 Strike price (in millions) EUR EUR EUR n/a n/a USD 700 Dividend yield 4.32% 4.24% 4.29% n/a n/a 3.50% Risk free interest rate (government bonds) 4.80% 4.16% 4.21% n/a n/a 4.84% Implicit volatility 12% 12% 12% n/a n/a 12% Term of option n/a n/a Strike price for valuation of asset (in millions) n/a n/a n/a n/a n/a USD 514

16 16 NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND DERIVATIVES ARISING FROM INSURANCE CONTRACTS (CONTINUED) (b) Derivative liabilities arising from insurance contracts In thousands of Swiss francs Pearl Princess 30 June 31 December 30 June 30 June 31 December 30 June Balance at beginning of year 82'755 30'594 30'594 n/a 31'724 31'724 Recognition of initial put option value 44'770 44'274 n/a Changes in fair value 14'094 5'235 2'496 n/a 19'880 16'033 Effect of settlement of insurance contract n/a 10'337 Effects of movement in FX 2'138 2' n/a 1'507 1'622 Balance at end of period 70'799 82'755 77'654 n/a 14' CAPITAL COMMITMENTS As of 30 June 2007 the Group had capital commitment contracts with private equity partnerships for CHF 99'844'759 (2006: CHF 33'499'752), whereof CHF 54'666'593 (2006: CHF 20'710'590) were not yet called by the relevant investment manager. The Company is further subject to a commitment to settle the unpaid share capital of Princess Management Limited, Guernsey, of CHF 2'321'319 / USD 1'900'000 (31 December 2006: CHF 1'158'903 / USD 950'076), which has no effect on the consolidated financial statements. 15. SUBSEQUENT EVENTS As of 1 July 2007 the Group acquired a 100% interest in PCA Real Estate Asset Management LLC ("PGRE"), San Francisco for CHF 6'108'735 (USD 5'000'000) in cash. The purchase agreement also stipulates contingent payments in 130'849 shares of the Group (equivalent to CHF 21'524'661) based on future revenue targets and that the seller is still employed with PGRE for a certain period of time. The Group considers the payment of the first tranche of the contingent payments as probable and that this will result in further recognition of a purchase consideration of CHF 7'174'832 in 43'616 shares of the Group. The pre-acquisition carrying amount of PGRE was CHF 61'087 (USD 50'000) and was determined based on applicable IFRSs immediately before the acquisition. The determination of the fair values of the acquired assets, liabilities and contingent liabilities has not been completed yet. The provisional goodwill subject to identification of identifiable intangible assets such as customer relationships amounts to CHF 13'222'480.

17 17 Up to 24 August 2007, the following closings were held since 30 June 2007: Name of partnership Date of Currency Funds raised General General Partner closing of fund at closing Partner commitment PG Asia-Pacific USD 71'717'172 PG Management II Limited PG Global Mezzanine EUR 40'404'040 PG (Luxembourg) S.à r.l. 1'671'717 PG European Buyout 2008 (B) EUR 85'000'000 PG Management Limited PG U.S. Buyout USD 10'101'010 PG Management II Limited 893'939 PG European Growth EUR 30'000'000 PG Management II Limited PG European Buyout 2008 (A) EUR 22'222'222 PG Management Limited 222'222 PG U.S. Venture USD 30'303'030 PG Management V Limited 1'020'202 These closings will have the effect of generating additional fee income for the Group. The Group's financial commitment is disclosed above under "General Partner commitment". No other events took place between 30 June 2007 and 24 August 2007 that would require adjustments to the amounts recognized in these interim consolidated financial statements or would need to be disclosed under this heading.

18 18 P A S S I O N F O R A L T E R N A T I V E I N V E S T M E N T S

19 19 PARTNERS GROUP WORLDWIDE CONTACTS Zug: Zugerstrasse Baar-Zug Switzerland Phone Fax London: 1 Angel Court 19th Floor London EC2R 7HJ United Kingdom Phone Fax Guernsey: Tudor House, 3rd Floor Le Bordage St Peter Port GY1 1BT Guernsey Phone Fax New York: 450 Lexington Avenue 39th Floor New York, NY USA Phone Fax San Francisco: 150 Spear Street 18th Floor San Francisco, CA USA Phone Fax Singapore: 3 Church Street Samsung Hub #28-06 Singapore Phone Fax Tokyo: Otemachi First Square East Tower 4F Otemachi, Chiyoda-ku Tokyo Japan Phone Fax partnersgroup@partnersgroup.net

20 ZUG l LONDON l GUERNSEY l NEW YORK l SAN FRANCISCO l SINGAPORE l TOKYO