Spice Private Equity AG

Earnings Release • Mar 10, 2015

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RNS Number : 0762H

Princess Private Equity Holding Ltd

10 March 2015

Princess Private Equity Holding Limited

For Immediate Release

ANNUAL FINANCIAL RESULTS ANNOUNCEMENT

YEAR ENDED 31 DECEMBER 2014

The Board of Princess Private Equity Holding Limited (Princess or the Company) announces the Audited Consolidated Annual Financial Results of the Company for the year ended 31 December 2014. In accordance with DTR4.1, the full Annual Financial Report will be issued to Shareholders on or about 10 March 2015. The required announcement in accordance with DTR4.1 will be made on the day of issue of the Annual Financial Report.

CHAIRMAN'S REPORT

Dear valued investorAs Chairman of the Board of Princess Private Equity Holding Limited, I present the 2014 Annual Report to you. In 2014 Princess showed a strong NAV performance and passed a significant landmark, with direct investments now comprising the majority of the portfolio.

In 2014 Princess' audited net asset value (NAV) increased by 13.2% to EUR 8.58 per share, adjusted for the total dividend of EUR 0.54 per share distributed over the year. It is encouraging to see that the portfolio is gaining traction with strong performance of underlying portfolio companies feeding through to the NAV of which the outstanding contributors to NAV growth in 2014 were Princess' direct investments. Overall, net revaluation developments across the portfolio during the reporting period amounted to +13.4% and were based on solid earnings results of the Company's underlying portfolio companies.

During 2014, Princess deployed EUR 75.2 million to seven new direct private equity and seven new direct private debt investments. Thanks to this intense activity, the allocation to direct investments reached 56.1% of NAV compared to 39.0% at the end of 2013. Overall, EUR 85.9 million was deployed with the investment level increasing to 85.9% of NAV, up from 70.7% at the start of the year. I believe that the continued focus on new direct investments and disciplined investment approach will be of long-term benefit to Princess shareholders.

Princess' emergence as a leading global mid-market private equity fund should help

to narrow the discount to NAV which at the end of 2014 stood at -18.8% (2013: -22.1%). In addition, the Board's policy of paying an annual aggregate of 5-8% of NAV per share in dividend is expected to have a positive effect on Princess' discount development.

The main contributor to distributions over the reporting period was Princess' legacy third party fund portfolio, which generated a high volume of exits from mature underlying portfolio companies. A number of Princess' direct investments also contributed to the high level of distributions. Such proceeds as well as the monies received from the staggered secondary sale of several third party funds which was signed in 2012, provide Princess with sufficient liquidity to fund further attractive direct investments.

My fellow Directors and I would like to take this opportunity to thank you for the continued confidence you have shown in Princess. It is our belief that the substantial progress made in 2014 with the repositioning of Princess as a direct investment company with a high dividend yield objective has ensured that Princess is well-placed to continue creating value for its shareholders over the years to come.Brian Human Chairman

Guernsey, 9 March 2015

AUDITED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the period from 1 January 2014 to 31 December 2014

	In thousands of EUR	Notes			01.01.2014		01.01.2013
					31.12.2014		31.12.2013
	Net income from financial assets at fair value through profit or loss				103'248		26'478
	Private equity				86'472		22'022
	Interest & dividend income	20			811		355
	Revaluation	10,21			63'340		28'307
	Net foreign exchange gains / (losses)	10,22			22'321		(6'640)
	Private debt				12'448		3'132
	Interest income (including PIK)	20			2'313		2'246
	Revaluation	10,21			4'560		3'859
	Net foreign exchange gains / (losses)	10,22			5'575		(2'973)
	Private real estate				1'738		1'238
	Revaluation	10,21			1'713		1'246
	Net foreign exchange gains / (losses)	10,22			25		(8)
	Private infrastructure				2'590		86
	Revaluation	10,21			2'047		86
	Net foreign exchange gains / (losses)	10,22			543		-
	Net income from short-term investments				-		2
	Revaluation	21			-		2
	Net income from cash & cash equivalents and other income				111		(147)
	Interest income / (expense)	20			(33)		20
	Net foreign exchange gains / (losses)	22			144		(167)
	Total net income				103'359		26'333
	Operating expenses				(12'718)		(16'008)
	Management fees	23			(9'333)		(8'704)
	Incentive fees	14,23			(7'654)		(2'104)
	Administration fees	23			(288)		(295)
	Service fees	23			(250)		(250)
	Other operating expenses				(917)		(1'055)
	Other net foreign exchange gains / (losses)	22			5'724		(3'600)
	Other financial activities				(19'271)		4'704
	Setup expenses - credit facilities				(571)		(1'271)
	Interest expense - credit facilities	20			(364)		-
Other finance cost Net gains / (losses) from hedging activities Surplus / (loss) for the financial period Other comprehensive income for the period; net of tax Total comprehensive income for the period Weighted average number of shares outstanding Basic surplus per share for the financial period Diluted surplus per share for the financial period The Euro earnings per share is calculated by dividing the surplus / (loss) for the financial period by the weighted average number of shares outstanding			11,21	691 (19'027) 71'370 - 71'370 69'168'769.45 1.03 1.03		930 5'045 15'029 - 15'029 69'395'451.63 0.22 0.22

AUDITED CONSOLIDATED STATEMENT OF FINANCIAL POSITION As at 31 December 2014

In thousands of EUR ASSETS Financial assets at fair value through profit or loss		Notes				31.12.2014				31.12.2013
Private equity		10		406'628				317'049
Private debt		10		74'954				57'882
	Private real estate		10		15'862				15'985
Private infrastructure		10		12'436				5'267
Deferred receivables on investments		15		-				50'346
Other long-term receivables				2'646				-
Non-current assets						512'526				446'529
Other short-term receivables				558				1'497
Deferred receivables on investments		15		56'512				51'292
Hedging assets		11		-				345
Cash and cash equivalents		12		45'348				69'761
Current assets						102'418				122'895
TOTAL ASSETS						614'944				569'424
EQUITY AND LIABILITIES
Share capital		13		69				69
Treasury shares		13		-				(432)
Retained earnings				70'013				(1'357)
Reserves		13		523'440				561'832
Total equity						593'522				560'112
Other long term payables				209				205
Liabilities falling due after one year						209				205
Hedging liabilities		11		5'794				-
Accruals and other short-term payables				15'419				9'107
Liabilities falling due within one year						21'213				9'107
TOTAL EQUITY AND LIABILITIES						614'944				569'424

AUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the period from 1 January 2014 to 31 December 2014

In thousands of EUR                     Share capital				Treasury shares	Retained earnings	Reserves	Total
Balance at the beginning of reporting period		69		(432)	(1'357)	561'832	560'112
Dividend paid during the period		-		-	-	(37'343)	(37'343)
Other comprehensive income for the period; net of tax		-		-	-	-	-
Treasury shares cancelled		-		432	-	(432)	-
	Share buyback and cancellation		-	-	-	(617)	(617)
Surplus / (loss) for the financial period		-		-	71'370	-	71'370
Equity at end of reporting period		69		-	70'013	523'440	593'522
for the period from 1 January 2013 to 31 December 2013
In thousands of EUR                         Share capital				Treasury shares	Retained earnings	Reserves	Total
Balance at the beginning of reporting period		70		-	(16'386)	599'459	583'143
Dividend paid during the period		-		-	-	(36'763)	(36'763)
Other comprehensive income for the period; net of tax		-		-	-	-	-
Share buyback and cancellation		(1)		-	-	(864)	(865)
Share buyback for cancellation		-		(432)	-	-	(432)
Surplus / (loss) for the financial period		-		-	15'029	-	15'029
Equity at end of reporting period		69		(432)	(1'357)	561'832	560'112

AUDITED CONSOLIDATED STATEMENT OF CASH FLOWS for the period from 1 January 2014 to 31 December 2014

In thousands of EUR		Notes		01.01.2014		01.01.2013
				31.12.2014		31.12.2013
Operating activities
Surplus / (loss) for the financial period before interest expense				71'734		15'029
Adjustments:
Net foreign exchange (gains) / losses		22		(34'332)		13'388
Investment revaluation		21		(71'660)		(33'500)
Net (gain) / loss on interest		20		(2'732)		(2'621)
Net (gain) / loss on dividends		20		(359)		-
Revaluation on forward hedges		11		19'027		(5'045)
(Increase) / decrease in receivables				49'278		(3'847)
Increase / (decrease) in payables				5'818		894
Realized gains / (losses) from forward hedges		11		(12'889)		9'866
Purchase of private equity investments		10		(56'927)		(37'813)
Purchase of private debt investments		10		(23'843)		(8'251)
	Purchase of private real estate investments		10		(323)		(170)
	Purchase of private infrastructure investments		10		(4'765)		(286)
Distributions from and proceeds from sales of private equity investments		10		53'009		72'681
Distributions from and proceeds from sales of private debt investments		10		17'915		13'798
Distributions from and proceeds from sales of private real estate investments		10		2'184		4'589
Distributions from and proceeds from sales of private infrastructure investments		10		186		-
Purchase of short-term investments				(75'000)		(44'998)
Sale of short-term investments				75'000		45'000
Interest & dividends received				2'082		3'549
Net cash from / (used in) operating activities				13'403		42'263
Financing activities
Dividends paid		13		(37'343)		(36'763)
Share buyback and cancellation		13		(617)		(864)
Treasury shares buyback		13		-		(432)
Net cash from / (used in) financing activities				(37'960)		(38'059)
Net increase / (decrease) in cash and cash equivalents				(24'557)		4'204
Cash and cash equivalents at beginning of reporting period		12		69'761		65'724
Effects of foreign currency exchange rate changes on cash and cash equivalents		22		144		(167)
Cash and cash equivalents at end of reporting period		12		45'348		69'761

INVESTMENT MANAGER'S REPORT

Strong NAV growth of 13.2% in 2014

Princess' audited net asset value (NAV) increased by a strong 13.2% to EUR 8.58 per share over the year, adjusted for the total dividend of EUR 0.54 per share distributed in 2014.

The largest contributors to NAV growth in 2014 were Princess' direct investments. Overall, net revaluation developments during the reporting period amounted to +13.4% and were based on solid earnings results of the Company's underlying portfolio companies. For instance, the last twelve months saw the 50 largest portfolio companies, representing 51.0% of NAV, achieve weighted revenue and earnings (EBITDA) growth of 11.2% and 10.1%, respectively. Over the reporting period, Partners Group has continued to work closely with its portfolio companies in executing value creation initiatives. Several portfolio companies have already achieved tangible results, with the direct investments in MultiPlan, Fermaca, and Action amongst those companies which were written-up.

n MultiPlan

MultiPlan, a US-based provider of transaction based solutions to healthcare operators was revalued upward as a result of its strong financial performance over the reporting period. The performance was above the corresponding prior year period and also outperformed forecast, partly driven by the higher value of claims received. In addition, MultiPlan acquired Medical Audit Review Solutions (MARS), a company that develops analytics and clinically-driven processes to identify wasteful or abusive bills and resolve them before payment is made. The addition of MARS is expected to extend MultiPlan's product portfolio.

n Fermaca

In December, Fermaca was awarded the El Encino - La Laguna natural gas pipeline project by Mexico's state-owned electric utility, Comisión Federal de Electricidad. Contracted under a USD-denominated, 25-year shiporpay contract, the project comprises constructing and operating a 433km pipeline that is designed to transport up to 1'500 million cubic feet of natural gas a day. To facilitate the build-out of the pipeline platform, Fermaca raised additional equity funding from inves-tors. Partners Group wrote up Fermaca's valuation to reflect the price at which the asset had recently transacted in the market.

n Action

Over the course of 2014, Action, a leading Dutch non-food discount retailer, continued to display robust financial performance. The Dutch retailer remains committed to its store expansion plans by accelerating store openings and thereby focusing on countries outside of the Netherlands.

Fourteen new direct investments closed

Within 2014, Princess deployed EUR 75.2 million directly to seven new direct private equity and seven new direct private debt investments bringing the allocation to direct investments to 56.1% of NAV compared to 39.0% at the end of 2013. Overall, the total investment activity amounted to EUR 85.9 million with the investment level increasing to 85.9% of NAV, up from 70.7% at the start of the year. In the fourth quarter of 2014, Princess completed the new direct private equity investment in Varsity Brands and made add-on investments in the direct infrastructure company Fermaca (as mentioned above) and the direct private debt investment Capital-Spring. All seven direct private debt invest-ments acquired in 2014 have a combined capital weighted target IRR of 11.7%.

n Varsity Brands

In December, Princess completed a new direct investment in Varsity Brands, a leading manu-facturer, marketer and distributor of a range of sports and affinity products to K-12 and college students, primarily in the US. The investment amounts to EUR 5.4 million and was made through its commitment to Partners Group Direct Investments 2012 EUR, partially funded through earlier capital calls. The company is the market leader for the majority of its products, commanding a market share that is significantly larger than its closest competitor. Its combined sales amount to over USD 1.2 billion and Varsity Brands employs the largest "K-through-College" sales force, with more than 1'000 sales professionals dedicated to providing products and services to the school and institutional markets. Going forward, Partners Group intends to assist the company in its international expansion and in the execution of add-on acquisitions.

n CapitalSpringIn October, the program made an add-on investment in CapitalSpring Finance Company. CapitalSpring is a US government-supported small business specialty financing company that lends to franchisees of quick-service restaurants. Princess initially invested in Capital-Spring in the third quarter of 2013, to support the company's portfolio growth, support originations and provide additional working capital. The company's loan portfolio is diversified across geographies, brands, franchise concepts as well as obligors, and has a low historical principal loss rate. CapitalSpring continues to be an attractive investment, given the company's expertise in the niche quick-service restaurant lending market.

Total dividend of EUR 0.54 per share paid to investors

Princess paid investors a total dividend of EUR 0.54 per share via two interim dividends, or EUR 37.3 million overall in 2014. This translated to an annualized dividend yield of 6.3% based on the NAV per share as of 31 December 2014, or an annualized dividend yield of 7.7% based on the closing price of EUR 6.97 on the London Stock Exchange at the end of the year.

Also going forward Princess intends to pay dividends with an annual aggregate of 5-8% of NAV per share. The Board of Directors is confident that the strong dividend yield on offer will further enhance the attractiveness of Princess to potential and existing investors alike.

High level of distributions in an attractive exit environment

In 2014, Princess received distribution proceeds from investments of EUR 73.3 million. The main contributor to distributions over the reporting period was Princess' legacy third party fund portfolio, which continued to generate a high volume of exits from mature underlying portfolio companies.

A number of Princess' direct investments also contributed to the high level of distributions. For example, Education Publisher 2, Strategic Partners and CCM Pharma.

n Education Publisher 2

In the fourth quarter of 2014, Education Publisher 2, an international provider of high-quality educational materials, in digital, print and hybrid formats, made a dividend payment to its investors. The dividend was funded from the cash balances of its subsidiary, arising from the company's focus on cost savings and an operational shift to asset-light digital products.

n Strategic PartnersDuring the fourth quarter of 2014, Princess received proceeds from Strategic Partners, a US-based manufacturer and marketer of uniforms and footwear. The distribution was funded by an increase in Strategic Partners' credit facility and cash on the company's balance sheet. The additional credit facility was accompanied by more favorable terms such as lower interest rates and a longer maturity. Including previous realizations, the investment has now returned nearly the entire invested capital.

n CCM Pharma

CCM Pharma, a UK pharmaceutical firm, refinanced its debt with an all-senior debt structure and repaid the mezzanine loan provided by the Program. The proceeds from the newly issued senior term loans were also used to fund a dividend payment to existing shareholders, including Princess. The return on the mezzanine investment was enhanced due to the agreed prepayment penalty, while the equity investment in the company remains outstanding.

In addition, Princess received deferred receivables of EUR 51.4 million in cash in March 2014, relating to the sale of partnership interests in the secondary market in 2012. Under the deferred payment structure a further EUR 54.4 million is due to be received in September 2015.

An undrawn EUR 50 million multicurrency credit facility remains available to address short-term funding needs if and when required. As a result, the Company holds sufficient liquidity to fund new direct investments and the ongoing return of capital to shareholders through semi-annual dividend payments and opportunistic share buybacks.

Price-to-NAV discount

The discount to NAV for Princess narrowed over the course of 2014 and stands at 18.8%, compared with -22.1% at the end of 2013, reflecting the encouraging progress with the repositioning of the portfolio.

Development of unfunded commitments

As of 31 December 2014, Princess' total unfunded commitments amounted to EUR 165.0 million of which EUR 111.1 million related

to Partners Group Direct Investments 2012 EUR, Partners Group Direct Mezzanine 2011 and new direct investments in closing.

Unfunded commitments to Princess' legacy fund portfolio amounted to EUR 53.9 million and 64.8% of these unfunded commitments stemmed from funds with vintage year 2006 or older, many of which have already completed their investment period and are unlikely to call down any further capital. No new third party fund commitments are being made under the policy of focusing on direct transactions.

Outlook

Partners Group believes that careful selection, a thorough comprehension of industry specific dynamics and value creations initiatives are keys to success in the current environment. Partners Group intends to overweigh non-cyclical, defensive or niche markets where it will be able to create value by growing acquired assets internationally through its global platform and broad relationship network.

Examples within Princess' portfolio would be Hofmann Menue Manufaktur, Universal Services of Amercia or Permotio International Learning. Hofmann Menue Manufaktur, a producer and supplier of customized frozen food products to small business canteens and social organi-zations such as retirement homes, hospitals and schools in Germany, successfully entered the Swiss market in November 2014 through the acquisition of a small catering company from which Hofmann Menue Manufaktur will systematically roll out its offering in Switzerland.

Universal Services of America is a provider of diversified security services to building mana-gement companies across the US. The company was written up in 2014 based on strong financial figures, arising from both strong acquisition activity since Partners Group's investment and organic growth.

Permotio International Learning was formed in Q2 2013 to create a leading international private schools group through a "buy & build" strategy and already successfully acquired its first European school in Q2 2014.

After the end of the reporting period, Princess agreed to invest in Dynacast, a US-headquartered manufacturer of small, highly complex precision engineered die cast and metal injection molded components made of zinc, aluminum, magnesium, stainless steel, titanium and copper, with 23 manufacturing plants in 16 countries. The deal funded in January 2015 and fits well into the strategy of growing mid-market leaders internationally, identifying investments with strong downside protection and investing in future growth.

For its mezzanine investments Partners Group sees relative value in the mid-cap space globally, especially in situations such as acquisitions where creative structures are required to support growth strategies.

Therefore, in December 2014, Princess committed to provide add-on financing to Sabre Industries, in support of its planned acquisition of a competitor. Sabre's acquisition of its competitor is envisaged to increase revenues through cross-selling opportunities, as well

as provide cost synergies by streamlining manufacturing operations. The transaction is anticipated to close in the first quarter of 2015. In 2012, Princess first invested in the mezzanine debt of Sabre, a manufacturer of engineered structures for the power and wireless markets, in support of its acquisition by Kohlberg & Company.

Distributions are anticipated to continue from Princess' mature legacy fund portfolio which continues to generate strong cash flows. While facilitating new direct investments such as Dynacast or Sabre Industries, these distributions are also expected to fund future dividend payments. Overall, the Investment Manager remains confident that the dividend policy and the continued transition towards direct investments will enhance value for the company's shareholders.

A detailed analysis and commentary on the developments of Princess during 2014 is presented in the Annual Report published today, which can be accessed via: http://www.princess-privateequity.net/financialreports

A copy of the report has also been submitted to the National Storage Mechanism and will shortly be available for inspection at: http://www.Hemscott.com/nsm.do

Ends.

About Princess

Princess is an investment holding company founded in 1999 and domiciled in Guernsey. It invests, inter alia, in private equity and private debt investments. Princess is advised in its investment activities by Partners Group AG, a global private markets investment management firm with over EUR 37 billion (over USD 40 billion) in investment programs under management in private equity, private debt, private real estate and private infrastructure. Princess aims to provide shareholders with long-term capital growth and an attractive dividend yield. Princess is traded on the London Stock Exchange (ticker symbol: PEY). Further information: www.princess-privateequity.net.

Contacts

Princess Private Equity Holding Limited:

princess@princess-privateequity.net

www.princess-privateequity.net

Registered Number: 35241

Investor relations contact

George Crowe

Phone: +44 (0)20 7575 2771

E-mail: george.crowe@partnersgroup.com

Media relations contact

Partners Group AG

Jenny Blinch

Phone: +41 41 784 65 26

E-mail: Jenny.Blinch@partnersgroup.com

www.partnersgroup.com

This document does not constitute an offer to sell or a solicitation of an offer to buy or subscribe for any securities and neither is it intended to be an investment advertisement or sales instrument of Princess. The distribution of this document may be restricted by law in certain jurisdictions. Persons into whose possession this document comes must inform themselves about, and observe any such restrictions on the distribution of this document. In particular, this document and the information contained therein is not for distribution or publication, neither directly nor indirectly, in or into the United States of America, Canada, Australia or Japan.

This document may have been prepared using financial information contained in the books and records of the product described herein as of the reporting date. This information is believed to be accurate but has not been audited by any third party. This document may describe past performance, which may not be indicative of future results. No liability is accepted for any actions taken on the basis of the information provided in this document. Neither the contents of Princess' website nor the contents of any website accessible from hyperlinks on Princess' website (or any other website) is incorporated into, or forms part of, this announcement.

This information is provided by RNS

The company news service from the London Stock Exchange

END

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