ING Private Equity Access Limited ABN 48 107 843 381 Appendix 4D Half-Yearly Report For the half-year ended 31 2012 1. Reporting period: This report is for the reporting period from 1 July 2012 to 31 2012 and the corresponding period is from 1 July 2011 to 31 2011. 2. Results for announcement to the market: Up/(Down) % $ Revenue from ordinary activities () Down 70 2,890 Profit from ordinary activities after tax attributable to members () Up 469 1,690 Net profit for the period attributable to members () Up 469 1,690 Interim Dividend (cents per share) % Franked 2.25 100% Record date for determining dividend 29 October 2012 entitlement Dividend payment date 9 November 2012 Refer to attached narrative for explanation of results in the current period. 3. Net tangible assets (NTA): Dec 2012 (per share) Dec 2011 (per share) NTA after tax $0.49 $0.53 This report is based on the Half-Yearly Financial Report which has been subject to review by the Company s auditors. All the documents comprise the information required by Listing Rule 4.2A. This information should be read in conjunction with the most recent Annual Report and any public announcements made by ING Private Equity Access Limited during the period in accordance with its continuous disclosure obligations. ING Private Equity Access Limited 1 2012
ING Private Equity Access Limited ABN 48 107 843 381 21 February 2013 The Board of Directors of ING Private Equity Access Limited presents its results for the half year ended 31 2012: Review Introduction Net profit after tax: $1.69 million Net assets $67.16 million Net tangible asset backing (post tax): $0.49 per share Net debt $1.7 million Debt facility limit $12 million Interim dividend paid 2.25 cents per share Number of private equity funds 16 Number of underlying investments 67 Undrawn commitments $12.6 million In spite of very modest levels of activity in the Australian private equity sector it was pleasing that the Company was in a position to pay its second dividend (with significant tax benefits attached) for the 2012 calendar year. The Australian listed equity market enjoyed strong gains over the six months to 31 even though macro-economic indicators remained very mixed and there was continued turmoil in the middle-east and North Africa. There are some positive signs emerging for China and the USA and if these continue, the next six months may be able to hold recent market gains as Australia follows that overseas lead. Financial results The half year produced a profit of $1.69 million compared with a loss of $0.46 million in the prior corresponding period. The drivers of the change were a flow of distributions from the portfolio and an improvement in unrealised valuations (net of any changes due to the realisation of assets). Net Tangible Assets ( NTA ) per share at 31 was $0.46 pre-tax ($0.47 at 30 June) and $0.49 post-tax ($0.50 at 30 June). The decline was the net result of improvements in unrealised values reduced by the payment of the 2.25 cents per share dividend in November. The cash for that dividend largely came from a single realisation in the NBC III portfolio when it sold its interest in Fenix Holdings. At the time of declaring the dividend the debt facility was undrawn and undrawn commitments had also declined so it was pleasing to be able to pay the second dividend within a six month period and again with significant tax benefits attached (100% franked and 100% LIC capital gains). The Company will continue to return cash to shareholders when it is feasible and prudent to do so. ING Private Equity Access Limited 2 2012
Capital management At 31 2012 the Company had $12.6 million ($17.8 million at 30 June) of undrawn private equity commitments, much of which will not be drawn for some years. The majority of that $5.2 million reduction was funded by existing cash reserves but towards the end of the half year, the Company did draw on its $12 million debt facility (expiry in July 2014). At period end, net debt was $1.7 million (net debt was zero at 30 June). The Company will continue to assess its capital requirements but currently, the expectations of cash inflows and the available debt facility appear adequate and appropriate to the Company s needs. Private Equity Portfolio The Company s private equity fund portfolio was unchanged over the last six months, with total fund commitments of approximately $126 million across 16 funds and 11 managers. Activity within the portfolio reflected the modest levels witnessed in the overall Australian private equity sector with very few exits, some follow-on activity and a few new deals. NBC Capital achieved a good result with the sale of its fitness clubs business to the listed Ardent Leisure but that was the only exit within the portfolio. In contrast, the prior corresponding period was very active. In addition to the sale of Ausfuel by Archer 4, announced in early February, we are aware of a number of other exit processes that are currently taking place and hope for significant cash inflows over the six months to 30 June. Quadrant 2 managed to recapitalise its investment in Virtus Health and returned some capital to investors. We may see more of this type of activity if the potential buyers of assets do not meet the vendors price expectations for well-run cash generative businesses. There were four new investments added to the portfolio. Pacific Equity Partners IV acquired Peters Ice Cream and the Spotless Group to its portfolio, Wolseley Partners II purchased the Caxton Print Group and NBC Capital III will be seeking to expand the Fusion/Degani business that it announced in. Five businesses received follow-on funding. The valuations of businesses within the portfolio appear to reflect cautious optimism by the managers concerned. Overall, the uplift in unrealised valuations did not fully reflect the change in the listed sector as there is still some concern over the sustainability of the gains that sector has enjoyed. That appears to be a prudent approach. There are still 67 companies in the underlying private equity funds, providing well diversified exposure across a range of industry sectors. To keep up to date with the Company s portfolio, investors are encouraged to visit the website at www.ingpeal.com.au which contains links to the funds and, from those sites, to most of the underlying portfolio companies. ING Private Equity Access Limited 3 2012
Summary of Private Equity Funds Portfolio holdings at 31 2012 are outlined below Fund name Investment Fund size Committed Capital Capital Cash stage focus drawn to be drawn back $m $m $m $m $m Archer Capital Fund 3 Buyouts 428.5 7.1 6.5 0.6 11.6 Archer Capital Fund 4 Buyouts 1,360.0 10.0 8.9 1.1 6.5 Catalyst Buyout Fund 1 Buyouts 390.0 8.0 8.0-0.9 CM Capital Venture Trust 4 Venture Capital 153.5 8.0 7.0 1.0 0.4 Direct Capital Partners III ($A equiv) Hastings Private Equity Fund II Expansion / Buyouts Expansion / Buyouts 56.8 6.9 6.7 0.3 7.1 180.5 8.0 7.9 0.1 3.7 Ironbridge Capital 2003/4 Fund Buyouts 450.0 5.0 4.8 0.2 3.8 NBC Private Equity Fund II Expansion / Buyouts NBC Private Equity Fund III Expansion / Buyouts 98.6 6.0 6.0-0.4 101.2 10.0 7.1 2.9 3.8 Pacific Equity Partners Fund III Pacific Equity Partners Fund IV Buyouts 1,254.0 7.9 7.5 0.4 2.0 Buyouts 3,761.0 9.3 7.1 2.2 - Propel Private Equity Fund II Expansion / Buyouts Quadrant Private Equity No. 1 Expansion / Buyouts Quadrant Private Equity No. 2 Expansion / Buyouts Wolseley Partners Fund I Expansion / Buyouts Wolseley Partners Fund II Expansion / Buyouts 70.8 3.4 3.4-5.2 265.0 8.0 7.9 0.1 8.4 500.0 10.0 8.7 1.3 6.7 107.4 8.0 8.0-1.8 235.0 10.0 7.5 2.5 - Total 125.7 113.0 12.6 62.3 ING Private Equity Access Limited 4 2012
Summary of new investments in the period Fund Company Description Pacific Equity Partners Fund IV Peters Ice Cream Ice cream manufacturer Spotless Group Outsourced facilities management and services NBC Private Equity Fund III Fusion Food Group/Degani Bakery Café Licensor of Degani Bakery Cafés, supplying coffee and other consumables Wolseley Partners Fund II Caxton Print Group Commercial printing and related services In addition to the new investments, five existing investments received follow-on funding. Summary of realisations Fund Company Total return as a multiple of cost Archer Capital Fund 4 Funtastic 0.3x NBC Private Equity Fund III Fenix Fitness 2.1x Summary of 20 largest private equity exposures (by value as a percentage of the Company s total assets as at 31 2012). Company Percentage Date settled Fund Veda Advantage 4.9% Jul 07 PEP III & IV Link Administration 4.7% Sep 06 PEP III Summerset Retirement (NZX: SUM) 4.4% Apr 09 Quadrant 2 Guardian Childcare 4.0% Dec 10 Wolseley II Griffins Food 3.7% Jun 06 PEP III Caxton Print Group 3.2% Nov 12 Wolseley II Cox Gomyl 3.1% Apr 07 Wolseley I & II Virtus Health 2.8% Apr 08 Quadrant 2 Sentia Media 2.7% Jul 10 Quadrant 2 Global Television 2.6% Jan 07 Catalyst I Energy Developments (ASX:ENE) 2.6% Jan 10 PEP IV Ausfuel 2.6% May 10 Archer 4 Quick Service Restaurants 2.2% Jun 11 Archer 4 Spotless Group 2.2% Aug 12 PEP IV Abergeldie Group 2.2% Jul 10 Wolseley II Layby Services 2.1% Aug 08 NBC III Next Media Holdings 2.1% Jan 08 Wolseley I Ezibuy 2.0% Feb 07 Catalyst I The PAS Group 2.0% Nov 04 Propel II Independent Pub Group 2.0% Dec 07 Quadrant 2 Total 58.1% Summary of vintages (calendar year) Number of underlying companies that were acquired in a particular year (excluding realisations). 2004 2005 2006 2007 2008 2009 2010 2011 2012 2 1 11 19 13 4 6 6 5 ING Private Equity Access Limited 5 2012
Private Equity Industry sector exposure at period end Industry sector exposure at 31 2012 Industry Sector Exposure Information Utilities 2% Technology 6% Materials 4% Financials 12% Industrials 15% Healthcare 17% Consumer Discretionary 30% Consumer Staples 14% ING Private Equity Access Limited 6 2012
ING Private Equity Access Limited ABN 48 107 843 381 Interim Financial Report: 31 2012 ING Private Equity Access Limited 7 2012
Directors report The directors submit their report for the half-year ended 31 2012. Directors The names and details of the Company s directors in office during the half-year and until the date of this report are as follows: Director Name Position Appointment Date Geoff Brunsdon Independent, Non-Executive Director and 3 February 2004 Chairman Jon Schahinger Managing Director 3 February 2004 Don Stammer Independent, Non-Executive Director 3 February 2004 Review and results of operations During the reporting period, the Company engaged in its principal activity, holding long term investments in private equity funds, the results of which are enclosed in the attached financial statements. Operating Results for the Period In spite of very modest levels of activity in the Australian private equity sector, the result for the period reflected the strength in the listed equity markets and profit was driven by an increase in unrealised valuations and distributions received. Transactional activity was well down on the comparative period but still sufficient to enable the payment of an interim dividend. During the period, the Company made a net profit for the period of $1,690,380 after providing for income tax. (2011: net loss: $458,445). Earnings per share for the reporting period based on the weighted average number of ordinary shares 2012 2011 Basic earnings/(loss) per share (cents per share) 1.24 (0.34) Diluted earnings/(loss) per share (cents per share) 1.24 (0.34) Significant changes in the state of affairs There were no significant changes in the state of affairs of the Company that occurred during the financial half-year. Dividends Dividends paid or declared by the Company since the end of the previous financial year were: Declared and paid during the year Cents per share Total amount $ 000 Payment date Interim 2013 2.25 3,073 9 November 2012 Matters subsequent to the end of the financial half-year No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company. ING Private Equity Access Limited 8 2012
Directors report (continued) Rounding The amounts contained in the financial report have been rounded to the nearest $1,000 (where rounding is applicable) as available to the Company under ASIC Class Order 98/100. The Company is an entity to which the Class Order applies. Auditor s independence declaration A statement of independence has been provided by our auditor, Grant Thornton, and is attached to the Directors Report on the following page. Signed in accordance with a resolution of the Directors. Geoff Brunsdon Chairman Sydney 21 February 2013 ING Private Equity Access Limited 9 2012
Statement of financial position As at 31 2012 2012 June 2012 Current assets Cash and cash equivalents 315 2,929 Receivables 61 80 Prepayments 73 48 Total current assets 449 3,057 Non-current assets Unlisted private equity investments 65,007 61,402 Deferred tax assets 4,058 4,878 Total non-current assets 69,065 66,280 Total assets 69,514 69,337 Current liabilities Payables and other liabilities 104 132 Loans and borrowings 2,009 - Current tax liabilities 243 659 Total current liabilities 2,356 791 Non-current liabilities Deferred tax liabilities - 5 Total non-current liabilities - 5 Total liabilities 2,356 796 Net assets 67,158 68,541 Equity Issued capital 73,005 73,005 Accumulated loss (5,847) (4,464) Total equity 67,158 68,541 The above Statement of financial position should be read in conjunction with the accompanying notes to the financial statements set out on pages 15 to 18. ING Private Equity Access Limited 11 2012
Statement of comprehensive income For the half-year ended 31 2012 2012 2011 Revenue Dividend and distribution revenue 2,148 9,345 Net increase in fair value of investments 742 - Expenses Net decrease in fair value of investments - (9,301) Management fees (281) (326) Directors fees (48) (48) Other expenses (225) (172) Results from operating activities 2,336 (502) Finance income 28 66 Finance expenses (102) (391) Net finance expense (74) (325) Profit/(Loss) before income tax 2,262 (827) Income tax (expense)/benefit (572) 369 Other comprehensive income for the period - - Total comprehensive income/(loss) for the period 1,690 (458) Earnings per share (EPS) 2012 2011 EPS based on the weighted average number of ordinary shares (cents per share) Basic and diluted earnings/(loss) per share for the half year 1.24 (0.34) The above Statement of comprehensive income should be read in conjunction with the accompanying notes to the financial statements set out on pages 15 to 18. ING Private Equity Access Limited 12 2012
Statement of changes in equity For the half-year ended 31 2012 Issued Capital Accumulated Losses Total At 30 June 2012 73,005 (4,464) 68,541 Total comprehensive income for the period Profit for the period - 1,690 1,690 Total comprehensive income for the period - 1,690 1,690 Transactions with owners, recorded directly in equity Dividends paid - (3,073) (3,073) Total transactions with owners - (3,073) (3,073) At 31 2012 73,005 (5,847) 67,158 For the half-year ended 31 2011 Issued Capital Accumulated Losses Total At 30 June 2011 73,005 (188) 72,817 Total comprehensive income for the period Loss for the period - (458) (458) Total comprehensive income for the period - (458) (458) Transactions with owners, recorded directly in equity Total transactions with owners - - - At 31 2011 73,005 (646) 72,359 The above Statement of changes in equity should be read in conjunction with the accompanying notes to the financial statements set out on pages 15 to 18. ING Private Equity Access Limited 13 2012
Statement of cash flows For the half-year ended 31 2012 2012 2011 Cash flows from operating activities Dividends and distributions received 2,148 9,290 Interest received 42 64 Interest paid - (219) Taxes paid (173) (1,297) Payments to suppliers and directors (699) (766) Net cash flows from operating activities 1,318 7,072 Cash flows from investing activities Proceeds from sale of listed private equity investments 5 - Proceeds from sale of unlisted private equity investments 15 - Purchases of unlisted private equity investments (5,272) (2,800) Proceeds from capital returned on unlisted private equity investments 2,299 9,123 Proceeds of loans to shareholders of coinvestments 94 47 Net cash flows (used in)/from investing activities (2,859) 6,370 Cash flows from financing activities Proceeds from debt drawdown 2,000 - Repayment of debt facility - (9,500) Dividends paid (3,073) - Net cash flows used in financing activities (1,073) (9,500) Net (decrease)/increase in cash & cash equivalents held (2,614) 3,942 Add opening cash and cash equivalents brought forward 2,929 821 Cash and cash equivalents at end of the period 315 4,763 The above Statement of cash flows should be read in conjunction with the accompanying notes to the financial statements set out on pages 15 to 18. ING Private Equity Access Limited 14 2012
Notes to the financial statements For the half-year ended 31 2012 1. Corporate Information The half-year financial report of ING Private Equity Access Limited for the period ended 31 2012 was authorised for issue in accordance with a resolution of the board of directors on 21 February 2012. ING Private Equity Access Limited is a Company limited by shares incorporated in Australia whose shares are publicly traded on the Australian Stock Exchange. 2. Summary of significant accounting policies The half-year financial report does not include all notes of the type normally included within the annual financial report and therefore cannot be expected to provide as full an understanding of the financial performance, financial position, and financing and investing activities of the Company as the full financial report. The half-year financial report should be read in conjunction with the annual financial report of ING Private Equity Access Limited as at 30 June 2012. It is also recommended that the half-year financial report be considered together with any public announcements made by ING Private Equity Access Limited during the half-year ended 31 2012 in accordance with the continuous disclosure obligations arising under the Australian Stock Exchange Listing Rules and the Corporations Act 2001. (a) Statement of compliance These interim financial statements have been prepared in accordance with AASB 134: Interim Financial Reporting. They do not include all of the information required for full annual financial statements, and should be read in conjunction with the financial statements of the company as at and for the year ended 30 June 2012. (b) Basis of preparation The half-year financial report has been prepared on a historical cost basis, except for the Company s private equity investments that have been measured at fair value. The financial report is presented in Australian dollars and all values are rounded to the nearest thousand dollars ($'000) unless otherwise stated under the option available to the Company under ASIC class order 98/100. The Company is an entity to which the class order applies. For the purpose of preparing the half-year financial report, the half-year has been treated as a discrete reporting period. (c) Changes in accounting policies The accounting policies applied by the Company in the half-year financial statements are the same as those applied by the Company in its annual financial statements for the year ended 30 June 2012. (d) Estimates The preparation of interim financial reports requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these estimates. The significant judgements made by management in applying the Company s accounting policies and the key sources of estimation uncertainty were the same as those applied to the financial report as at and for the year ended 30 June 2012. ING Private Equity Access Limited 15 2012
Notes to the financial statements (continued) For the half-year ended 31 2012 3. Dividends paid and proposed The following dividends were declared and paid by the Company: Cents per share Total amount Payment date 000 Interim 2013 2.25 3,073 9 November 2012 There were no dividends declared in the previous corresponding period. The Company s dividend reinvestment plan has been suspended. No dividends have been declared since the end of the period. 4. Operating Segments The Company has one operating segment: Investments in Private Equity. For this segment, the Managing Director reviews internal management reports in relation to the Company s private equity investments on at least a monthly basis. Reportable segment information Private Equity Investment Segment $ 000 $ 000 2012 2011 External revenues 2,890 9,345 Interest expense (9) (149) Reportable segment profit/(loss) before income tax 2,395 (715) 2012 June 2012 Reportable segment assets 65,098 61,452 Reportable segment liabilities (2,060) - Reconciliation of external revenues 2012 2011 Total revenue for reportable segment 2,890 9,345 Total revenue 2,890 9,345 Reconciliation of reportable segment profit /(loss) 2012 2011 Total profit/(loss) before income tax for reportable segment 2,395 (715) Unallocated amounts: Non segment revenues 28 66 Other corporate expenses (161) (178) Profit/(loss) before income tax 2,262 (827) ING Private Equity Access Limited 16 2012
Notes to the financial statements (continued) For the half-year ended 31 2012 Reconciliation of reportable segment assets June 2012 2012 Total assets for reportable segment 65,098 61,452 Other assets 4,416 7,885 Total assets 69,514 69,337 Reconciliation of reportable segment liabilities June 2012 2012 Total liabilities for reportable segment 2,060 - Other liabilities 296 796 Total liabilities 2,356 796 Geographical segments The Company s investments are managed by Pomona Australia Pty Limited in Australia, but its investments are domiciled in Australia and New Zealand. In presenting information on the basis of geographical segments, segment revenue and noncurrent assets are based on the geographical location of investments. Revenues 2012 $ 000 2011 $ 000 Australia 2,562 9,691 New Zealand 328 (346) Total revenue 2,890 9,345 Non-current investment assets 2012 $ 000 June 2012 $ 000 Australia 62,621 59,235 New Zealand 2,386 2,167 Total non-current investment assets 65,007 61,402 5. Income tax (expense)/benefit Income tax (expense)/benefit is recognised based on the Company s best estimate of the weighted average annual income tax rate expected for the full financial year applied to the pre-tax income of the interim period. The Company s effective tax rate for the six months ended 31 2012 was 25% (2011: (40%)). ING Private Equity Access Limited 17 2012
Notes to the financial statements (continued) For the half-year ended 31 2012 6. Commitments Estimated commitments contracted for, but yet to be called as at 31 2012 are $12.6 million (30 June 2012: $17.8 million). These long term commitments reflect the commitment in respect of future investments in current private equity investments held. Due to the inherent nature of private equity investments, the timeframe of these commitments cannot be predicted because capital can be called by investment managers at any time. Although these commitments may be called at any time, past experience of the Board and the investment manager indicate that it is highly unlikely that the Company would be required to pay all of their private equity investment commitments at one time. This is supported by historical evidence. Generally, drawdowns by a specific fund are substantially made over the 5 year period from first commitment to a fund. Consequently, it has been typical, particularly amongst later stage private equity funds, which form the bulk of the portfolio, for there to be realisations and consequential distributions from underlying funds before all drawdowns by these funds need to be met. This creates significant internal cash generation to meet outstanding commitments. It is also common for a private equity fund to terminate without having drawn down the full commitment, further reducing the actual commitment to be met. The directors expect the Company to finance the future drawdown of its outstanding commitments, if required, by one or a combination of the following options: Utilising cash on hand; Utilising the current debt finance facility of the Company; Distributions expected to be received by the Company as a result of realisations of assets by private equity investments; Disposal of some private equity commitments in order to reduce demands on capital and generate cash; Capital raised through a share placement or rights issue. 7. Contingent liabilities and contingent assets (a) Contingent liabilities There have not been any changes in contingent liabilities since the last reporting date. The contingent liabilities of the Company are nil. (June 2012: $nil). (b) Contingent assets There have not been any changes in contingent assets since the last reporting date. The contingent assets of the Company are nil. (June 2012: $nil). 8. Subsequent events No matters or circumstances have arisen since the end of the reporting period which significantly affected or may significantly affect the operations of the Company, the results of those operations or the state of affairs of the Company. ING Private Equity Access Limited 18 2012
Directors Declaration In the opinion of the Directors of ING Private Equity Access Limited (the Company): (a) the financial statements and notes set out on pages 11 to 18 are in accordance with the Corporations Act 2001, including: (i) giving a true and fair view of the Company s financial position as at 31 2012 and of its performance for the half-year ended on that date; and (ii) complying with Accounting Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001; and (b) there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and payable. Signed in accordance with a resolution of the Directors: Geoff Brunsdon Chairman Sydney 21 February 2013 ING Private Equity Access Limited 19 2012