REG - Petershill Prtnrs - Interim Results Statement
17/09/2024 07:00
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RNS Number : 4142E Petershill Partners PLC 17 September 2024
Petershill Partners
Operated by Goldman Sachs Assets Management
Interim results statement
For the six months ended 30 June 2024
GOOD STRATEGIC PROGRESS AND POSITIVE EARNINGS MOMENTUM
Key Highlights
§ Strong first half results with double digit growth in Partner Fee Related
Earnings with good momentum in asset raising and growth in Aggregate
Fee-paying AuM. We completed a number of strategic acquisitions and disposals,
further focusing the Company on private market strategies, and continue to
return significant capital to shareholders. We reiterate our guidance for
2024.
§ Higher Adjusted Profit After Tax1 for the six months ended 30 June 2024.
§ Total income of $146m (1H 2023: $138m) and Adjusted EBIT1 of $128m (1H
2023: $120m) with Adjusted Profit After Tax1 of $94m (1H 2023: $68m) and
Adjusted EPS1 of 8.5 cents (1H 2023 6.0 cents).
§ IFRS Profit After Tax of $136m (1H 2023: $112m) and IFRS EPS of 12.3 cents
(1H 2023: 9.9 cents), includes the unrealised change in the carrying value of
investments.
§ Completed four acquisitions totalling $205m including the previously
announced acquisition of a stake in Kennedy Lewis Investment Management and
additional interests in three existing Partner-firms.
§ Sold a partial interest in AKKR back to management totalling $51m, a slight
premium to the fair value at 31 December 2023.
§ Total capital return of $222m during the first half 2024, including 2023
final dividend payment of $113m, tender offer of $103m(2) and $6m buyback.
§ Announcement of a special dividend of 9.0 cents (USD) per share, equivalent
to $97m, reflecting the majority return of the upfront cash proceeds relating
to the sale of the stake in LMR Partners announced on 4 September 2024, in
addition to an interim dividend of 5.0 cents (USD) per share.
§ Partner Distributable Earnings (DE)(3) of $140m, up 12% (1H 2023: $125m).
§ Partner Fee Related Earnings (FRE) 3 of $112m, up 13% (1H 2023: $99m).
o Net management fees3 14% higher year-on-year and 16% higher year-on-year
gross of transaction fees and offsets3
o Partner FRE margin3 of 58% (1H 2023: 59%)
§ Partner Realised Performance Revenues (PRE) 3 of $19m, up 27% (1H 2023:
$15m).
§ PRE as a percentage of Partner Revenues3 9% (1H 2023: 8%), and 13% based on
last twelve months (LTM) to June 2024 (LTM June 2023: 22%).
§ Partner Private Markets Accrued Carried Interest(3) at $696m, 14% higher
year-on-year (1H 2023: $608m).
§ Robust Partner-firm asset raising and AuM growth with $14bn gross fee
eligible assets raised in the first half 2024.
§ Aggregate Partner-firm AuM3 of $332bn and Aggregate Fee-paying AuM3 of
$238bn, up 11% and 21% respectively year-over-year.
§ $8bn of fee-eligible assets at 30 June 2024 are expected to turn on and
generate revenues in future periods.
§ Balance Sheet and capital return remain strong.
§ Free cash flow (FCF) 1 conversion increased to 123% (1H 2023: 105%)
supporting growth and the progressive dividend policy.
§ Investments at fair value were $5.5bn at 30 June 2024, an increase of 5%
since the year end (31 December 2023: $5.3bn)
§ Cash and investments in money market funds totalling $97m at June 2024 (31
December 2023: $305m).
§ Book value per share1 of 439 cents at June 2024 (31 December 2023: 431
cents).
§ Purchased 2.6m Ordinary Shares for $6m through 30 June 2024 as part of the
$50m buyback programme announced in March 2023. A total of $32m of the
announced $50m programme was completed which was terminated and replaced with
the tender offer, which purchased 37.9m Ordinary Shares for $103m and
completed in June 2024.
Ali Raissi-Dehkordy and Robert Hamilton Kelly commented:
"During the first six months of 2024, we were pleased with our Partner-firms'
ability to raise $14 billion of fee eligible assets, despite the challenging
fund-raising environment. The robust asset raising and growth in Fee-Paying
AuM has translated into good growth in gross management fees and FRE during
the period. We also completed $205m of acquisitions during the period,
including a stake in the alternative credit manager Kennedy Lewis Investment
Management which further diversifies our AuM exposure across private market
strategies. The recently announced disposal of our stake in LMR Partners is
consistent with our strategy and increases the focus on private market
strategies and demonstrates our ability to exit positions at or above carrying
value.
The Board continues to focus on capital efficiency and has announced a special
dividend payment to shareholders of 9.0 cents (USD) per share, in addition to
the tender offer we completed during the period and our progressive dividend.
Whist economic uncertainty persists and may impact near term PRE and
Investment Income, we remain confident in our diverse portfolio of
high-quality Partner-firms, which combined with our high profitability margin,
significant level of accrued performance revenues and strong cash conversion,
underpins our strategy for growth and capital return to shareholders".
(1. ) Financial measure defined as Alternative Performance Measure, or
("APM"). Further information on APMs on page 36.
(2. ) Excludes capitalised costs of $3.4m.
(3. ) Partner-firm key operating metric. Refer to the glossary on page 33
for additional information.
2024 Guidance
§ $20 - $25bn organic fee-eligible AuM raise and realisations of $5 - $10bn
in fee-paying AuM.
§ $200 - $230m full year Partner FRE.
§ PRE of 15% - 30% of total Partner Revenues.
§ Acquisitions in 2024 expected to be in-line with medium-term range of $100
- $300m per annum.
§ 85% - 90% Company Adjusted EBIT margin.
Subsequent Events
Subsequent to the period end, the Company completed the disposal of its stake
in LMR Partners for total consideration of up to $258m, with the accounting
fair value of the sale consideration at closing marginally above the carrying
value of the investment in LMR Partners as at 31 December 2023 which was
$195m. The transaction is consistent with Petershill Partners' strategic focus
on private market alternative asset firms. The impact of the sale is not
expected to have a material impact on Partner FRE given the majority of
earnings going forward from LMR Partners were expected to consist of PRE.
Transaction costs relating to the disposal of LMR Partners of approximately
$3m are expected to be incurred during 2H 2024.
Interim Dividend
The Board has approved an interim dividend payment of 5.0 cents (USD) per
share, in-line with our policy of the interim dividend being one-third of the
prior full year dividend per share, payable on 31 October 2024 to shareholders
on the register as at close of business on 27 September 2024, with ex-dividend
date of 26 September 2024. Shareholders should note that the default payment
currency is USD, however, shareholders can elect to have their dividends paid
in either GBP or EUR. The last day for currency elections to be registered is
11 October 2024. Currency elections should be submitted via CREST1 in the
usual manner.
Special Dividend
The Board has approved a special dividend payment of 9.0 cents (USD) per
share, payable on 31 October 2024 to shareholders on the register as at close
of business on 27 September 2024, with ex-dividend date of 26 September 2024.
Shareholders should note that the default payment currency is USD, however,
shareholders can elect to have their dividends paid in either GBP or EUR. The
last day for currency elections to be registered is 11 October 2024. Currency
elections should be submitted via CREST1 in the usual manner.
(1. ) CREST: Certificates Registry for Electronic Share Transfer -
electronic system for holding securities.
Management results
For the six months ended
30 June
2024 2023
$m
$m
Income
Partner Fee Related Earnings1 111.7 99.1
Partner Realised Performance Revenues1 19.3 15.1
Partner Realised Investment Income1 9.3 10.6
Total Partner Distributable Earnings1 140.3 124.8
Interest income 6.0 13.2
Total Income 146.3 138.0
Operating costs
Board of Directors' fees and expenses (0.8) (0.8)
Operator charge (10.5) (9.4)
Profit sharing charge (0.7) -
Other operating expenses (5.9) (8.2)
Total operating costs (17.9) (18.4)
Adjusted Earnings Before Interest and Tax (EBIT) 128.4 119.6
Finance income 0.3 -
Finance cost (17.3) (18.6)
Adjusted Earnings Before Tax (EBT) 111.4 101.0
Tax and tax related expenses (17.7) (32.6)
Adjusted profit after tax 93.7 68.4
Reconciliation of Adjusted profit after tax to IFRS profit for the period
after tax
Adjusted profit after tax 93.7 68.4
§ Movement in financial assets and liabilities held at fair value 72.3 48.3
§ Divestment fee expense (17.8) (5.7)
§ Transaction costs(2) (1.1) -
§ Non-recurring operating credit3 - 1.2
§ Change in liability for Tax Receivables Agreement (0.9) (15.5)
§ Adjustment for Tax and tax related expenses4 (10.2) 15.7
IFRS profit for the period after tax 136.0 112.4
(1. ) Partner-firm key operating metrics. Refer to the glossary on page 33
for additional information.
(2. ) 2024 amount includes $1.1m of deal transaction costs.
(3. ) 2023 amount includes $1.2m in relation to a VAT reclaim.
(4. ) Includes deferred tax (expense) / credit related to movement in
financial assets and liabilities held at fair value.
Key Partner-firm metrics
Petershill Partners Operating Metrics
As at 30th June As at 30th June
2024 2023 Δ 2024 2023 Δ
Aggregate Partner-firm AuM ($bn) 332 300 11% 332 300 11%
Aggregate Fee-paying Partner-firm AuM ($bn) 238 196 21% 238 196 21%
Ownership Weighted Partner-firm AuM ($bn) 40 37 8% 40 37 8%
Ownership Weighted Fee-Paying Partner-firm AuM ($bn) 30 26 15% 30 26 15%
For the six months ended 30th June For the last twelve months ended 30th June
2024 2023 Δ 2024 2023 Δ
Partner Blended Net Management Fee Rate (%) 1.35% 1.27% 8 bps 1.35% 1.33% 2 bps
Implied Blended Partner-firm FRE Ownership (%) 12.6% 13.6% -100 bps 12.9% 13.5% -60 bps
Partner Net Management and Advisory Fees ($m) 192 169 14% 373 343 9%
Management Fees ($m) 202 174 16% 384 347 11%
Fee Offsets ($m) (11) (10) 10% (18) (25) (28%)
Transaction and Advisory Fees ($m) 1 5 (80%) 7 21 (67%)
Partner Fee Related Expenses ($m) (80) (70) 14% (157) (141) 11%
Partner FRE ($m) 112 99 13% 216 202 7%
Partner Realised Performance Revenues (PRE) ($m) 19 15 27% 59 101 (42%)
Partner Realised Investment Income ($m) 9 11 (18%) 33 24 38%
Partner Distributable Earnings ($m) 140 125 12% 308 327 (6%)
Partner FRE Margin (%) 58% 59% -1 pts 58% 59% -1 pts
Partner Distributable Earnings Margin (%) 64% 64% 0 pts 66% 70% -4 pts
Partner Realised PRE as a percentage of Partner Revenue (%) 9% 8% 1 pt 13% 22% -9 pt
Partner Realised PRE over Average Aggregate Performance Fee Eligible (bps) 0.7 bps 0.6 bps 0.1 bps 2.1 bps 3.9 bps -1.8 bps
Partner-firm AuM*
* Realised Performance Fee Revenues for the period divided by the Average
Aggregate Performance Fee Eligible Partner-firm AuM. The Average Aggregate
Performance Fee Eligible Partner-firm AuM represents the average of the
beginning and ending period stated.
Petershill Partners Operating Metrics***
30 Jun 2024 31 Mar 2024 31 Dec 2023 30 Sep 2023 30 Jun 2023 YTD**
Δ
Aggregate Partner-firm AuM ($bn) 332 312 304 303 300 9%
Aggregate Fee-paying Partner-firm AuM ($bn) 238 225 221 197 196 8%
Average Aggregate Fee-paying Partner-firm AuM* ($bn) 215 207 201 193 190 7%
Aggregate Performance Fee Eligible Partner-firm AuM ($bn) 294 281 275 276 274 7%
Average Aggregate Performance Fee Eligible Partner-firm AuM* ($bn) 280 274 270 265 258 4%
Additional metrics:
Partner Private Markets Accrued Carried Interest ($m) 696 661 615 613 608 13%
Investment Capital ($m) 398 423 423 398 398 (6%)
* Average Aggregate AuM figures represent the twelve month mean and use the
start and each quarter end of the reporting period adjusted for acquisitions
and dispositions where applicable.
** Percentage change relative to 31 December 2023.
*** Represents key Operating Metrics that reflect data
reported to the Operator on a three-month lag.
Details of results presentation
There will be a call for investors and analysts at 9.00am BST today, 17
September 2024, hosted by Ali Raissi-Dehkordy, Adam Van de Berghe and Gurjit
Kambo to discuss these results, followed by a Q&A session.
All interested parties are invited to participate via telephone or the audio
webcast. Please click here
(https://event.webcasts.com/starthere.jsp?ei=1509448&tp_key=4ccdad6376) to
access the webcast.
Conference Call Information:
Domestic: +44(0) 330-165-3658
Domestic Freephone: 0800-279-7165
International: +1-929-477-0449
International Tollfree: 800-289-0572
Conference ID: 3387188
All participants are asked to dial in approximately 5-10 minutes prior to the
call, referencing "Petershill Partners" when prompted.
Replay Information:
An archived replay of the call will be available on the webcast link.
Please direct any questions regarding obtaining access to the conference call
to Petershill Partners Investor Relations, via e-mail,
at PHP-Investor-Relations@gs.com Analyst / Investor enquiries:
Gurjit Kambo +44 (0) 207 051 2564
Media enquiries:
Brunswick Group phll@brunswickgroup.com
Simone Selzer +44 (0) 207 404 5959
About Petershill Partners
Petershill Partners plc (the "Company" or "Petershill Partners") and its
Subsidiaries (the "Group") is a diversified, global alternatives investment
group focused on private equity and other private capital strategies. Through
our economic interests in alternative asset management firms
("Partner-firms"), we provide investors with exposure to the growth and
profitability of the alternative asset management industry. The Company
completed its initial acquisition of the portfolio of Partner-firms on 28
September 2021 and was admitted to listing and trading on the London Stock
Exchange on 1 October 2021 (ticker: PHLL). The Company is operated by Goldman
Sachs Asset Management ("Goldman Sachs" or the "Operator") and is governed by
a diverse and fully independent Board of Directors (the "Board").
Through our Partner-firms, we have exposure to $332 billion of Aggregate
Partner-firm AuM, comprising a diverse set of more than 250 long-term private
equity and other private capital funds where capital is typically locked in
over a multi-year horizon. These underlying funds generate recurring
management fees and the opportunity for meaningful profit participation over
the typical weighted average 8+ year lifecycle of such funds. We believe our
approach is aligned with the founders and managers of our Partner-firms and,
as a result, allows the Company to participate in these income streams in a
way that provides high-margin, diversified and stable cash flows for our
shareholders.
For more information, visit https://www.petershillpartners.com/homepage.html.
Information on the website is not incorporated by reference into this press
release and is provided merely for convenience.
The Operator's Report
The Company's purpose is to give investors the opportunity to participate in
the growth of the alternative asset management industry. Despite the
industry's reputation for complexity, the Company's model is simple. Investors
share in the fees generated by first-class Partner-firms that manage
alternative investments predominantly in private markets and other unquoted
assets.
To assist readers, we refer throughout this section to adjusted measures which
the Company considers to be Alternative Performance Measures or APMs and
Operating Metrics. APMs are non-IFRS measures that analyse our performance,
using a variety of measures that are not specifically defined under IFRS;
while Operating Metrics are non-IFRS measures that are based on the
performance of the Partner-firms which are not related to the Group's
financial statements.
APMs and Operating Metrics are used by the Directors and the Operator to
analyse the business and financial performance, track the Company's progress,
and help develop long-term strategic plans and they also reflect more closely
the cash flow of the Company. The Directors believe that these APMs and
Operating Metrics are useful to investors, analysts and other interested
parties as supplemental measures of performance and liquidity.
Definitions of APMs and Operating Metrics, along with reconciliations to the
relevant IFRS measures for APMs, where appropriate, can be found in the
Glossary of Key Operating Metrics on pages 33 to 35 and Alternative
Performance Measures on pages 36 to 39.
The IFRS numbers discussed and presented below include changes in fair value
of investments, and it should be noted that, while permitted, it is not the
Company's core strategy to exit or realise these investments. Therefore,
management results are also presented, excluding the change in investments at
fair value through profit and loss and related divestment fee expense.
The Company's results for the six months ended 30 June 2024 represent the
period from 1 January 2024 through 30 June 2024 and are presented with
comparative data for the six months ended 30 June 2023.
Company Performance
The Company's income increased for the first six months of 2024 due to higher
Ownership Weighted Fee-Paying Partner-firm AuM driving a 16% year-on-year
increase in management fees with Partner Fee Related Expenses increasing by
14%. Partner Fee Related Earnings increased 13%, Partner Performance Related
Earnings increased 27% and Partner Realised Investment Income decreased 18%,
resulting in an overall increase in Partner Distributable Earnings of 12%
compared to the first six months of 2023. Fund-raising by Partner-firms was
robust despite a challenging asset raising environment. The $14 billion
fee-eligible AuM raised in the first half 2024 is attributable to the high
quality of our Partner-firms and the diversification of our portfolio.
Aggregate Partner-firm AuM grew 11% to $332 billion and Aggregate Fee-paying
AuM grew 21% to $238 billion year-over-year. Ownership Weighted Partner-firm
AuM increased 8% to $40 billion and Ownership Weighted Partner-firm Fee-paying
AuM increased 15% to $30 billion.
The Company's revenue model combines three types of income from Partner-firms:
management fee income, performance fee income and investment income. Of these
three, management fee income in particular provides stable, recurring profits.
Management fee income for the first six months was $112 million (1H 2023: $99
million), performance fee income was $19 million (1H 2023: $15 million), and
investment income was $9 million (1H 2023: $11 million).
The IFRS Profit for the period after tax was $136 million (1H 2023: $112
million) equating to an Earnings Per Share (EPS) of 12.3 cents (1H 2023: 9.9
cents). This includes an increase in financial assets and liabilities held at
fair value of $72 million (1H 2023: $48 million), a divestment fee expense of
$18 million (1H 2023: $6 million), transaction costs of $1 million (1H 2023:
$nil), non-recurring operating expenses of $nil (1H 2023: $1 million credit),
change in liability towards Tax Receivables Agreement of $1 million (1H 2023:
$16 million), an increase in deferred tax of $23 million (1H 2023: $nil) and
excludes an expected payment towards the Tax Receivables Agreement of $12
million (1H 2023: $16 million).
The Company's Adjusted Profit after tax1 was $94 million (1H 2023: $68
million). The Company's Adjusted EBIT1 for the period was $128 million (1H
2023: $120 million), resulting in an Adjusted EBIT margin1 of 88% (1H 2023:
87%). This highlights the key characteristics of Petershill Partners as a
business with significant growth of capital, delivering stable and recurring
revenues with a highly efficient Adjusted EBIT margin and significant cash
flow.
Dividends
The Board expects to operate a progressive dividend policy which will reflect
earnings growth over time. The Board reviews the distributable reserves
periodically, including consideration of any material changes since the most
recent audited financial statements, ahead of proposing any dividend. The
interim dividend is set to one-third of the prior year's annual dividend per
share amount, and the final dividend proposed is set at a level to reach the
distribution for the year.
The Company paid a 2023 final dividend of $113 million (1H 2023: $125 million)
or 10.1 cents per share (1H 2023: 11.0 cents) to shareholders during the six
months ended 30 June 2024.
The Board has approved an interim dividend payment of 5.0 cents (USD) per
share payable on 31 October 2024 to shareholders on the register as at close
of business on 27 September 2024, with ex-dividend date of 26 September 2024.
Shareholders should note that the default payment currency is USD, however,
shareholders can elect to have their dividends paid in either GBP or EUR. The
last day for currency elections to be registered is 11 October 2024. Currency
elections should be submitted via CREST in the usual manner.
The Board has also approved a special dividend payment of 9.0 cents (USD) per
share payable on 31 October 2024 to shareholders on the register as at close
of business on 27 September 2024, with ex-dividend date of 26 September 2024.
Shareholders should note that the default payment currency is USD, however,
shareholders can elect to have their dividends paid in either GBP or EUR. The
last day for currency elections to be registered is 11 October 2024. Currency
elections should be submitted via CREST in the usual manner.
(1. ) Financial measure defined as Alternative Performance Measure, or
("APM"). Further information on page 36.
Investments at Fair Value through Profit or Loss
For the six months ended 30 June 2024
$m
At beginning of period 5,254.7
Investments (includes new, follow on, and prior commitments, net of disposals) 173.6
Change in fair value of investments through profit and loss 66.7
At end of period 5,495.0
The fair value of the Company's investments in Partner-firms as of 30 June
2024 was $5,495 million (31 December 2023: $5,255 million). The increase in
fair value was predominately due to the impact of net investment activity.
During the six months ended 30 June 2024, the Company made an acquisition in
Kennedy Lewis Investment Management and additional investments in three other
existing Partner-firms and disposed fully of its holding of FORT Investment
Management and partially of its holdings of Accel-KKR LLC.
In addition, there was an increase in the fair value of investments through
profit and loss of $67 million for the six months ended 30 June 2024 (1H 2023:
$54 million). The fair value of the Company's investments in Partner-firms is
determined using both earnings multiples and discounted cash flow techniques,
which are common industry approaches. In valuing the investments, key
assumptions include estimates of future AuM growth, expected management and
performance fee margins, expected current and future underlying fund returns
and timing of realisations. The weighted average discount rate used to value
private markets fee related earnings decreased modestly to 12.6% as of 30 June
2024 from 13.0% as of 31 December 2023. The weighted average discount rate
used to value private markets performance fee related earnings increased
modestly to 25.4% for the six months ended 30 June 2024 (31 December 2023:
25.2%). Refer to Note 3, Investments at fair value through profit or loss,
beginning on page 24 for additional details.
Cash and Investments in Money Market Funds
The Company's balance sheet is strong and well-capitalised with sufficient
cash and money market investments to support its operational needs. On 14
December 2023, the Company entered into a fixed term deposit of $150 million,
which matured on 15 March 2024. The Company had $47 million in cash and cash
equivalents (31 December 2023: $243 million) held at its custodian, which has
a credit rating of AA and $50 million invested in money market funds (31
December 2023: $62 million) with a credit rating of AAA for both the current
and comparative periods.
Borrowing
The Company has $500 million of long-term, unsecured debt with an effective
interest rate of 6.2% and a range of maturities between August 2029 and August
2042. This debt was issued in 2022 and the proceeds were used to retire $350
million of notes outstanding at the time.
On 6 January 2023 the Company entered into a $100 million revolving credit
facility with a term of three years. The Company is subject to a fee on the
drawn and undrawn amounts. The rate for any drawn amount is based on a
reference rate plus a spread. The interest rate on the revolving credit
facility is subject to changes in market interest rates. During the six months
ended 30 June 2024, the Company did not draw down on the revolving credit
facility. Any interest expense incurred is included in finance cost.
Deferred Payment Obligations
Certain investments in Partner-firms are purchased with deferred payment
terms, including certain acquisitions noted above. These deferred payment
obligations represent amounts owed by the Company at various dates in the
future. When the Company enters into deferred payment obligations, a portion
of the purchase price is recognised as finance cost through the settlement of
the payables under the effective interest method. The interest rate used is
based on the reasonable borrowing rate for the Company at the time of the
transaction. For the first six months ended 30 June 2024, the Company incurred
finance costs including $3 million (1H 2023: $3 million) arising from deferred
payment obligations.
Deferred Consideration Receivable
Certain investments in Partner-firms have been sold in the six months ended 30
June 2024 with deferred payment terms. This deferred consideration represents
amounts owed to the Company at various dates in the future. When the Company
enters into a deferred consideration agreement, a portion of the sale price is
recognised as finance income through the settlement of the receivables under
the effective interest method. The interest rate used is based on the
reasonable borrowing rate for the Company at the time of the transaction. For
the first six months ended 30 June 2024, the Company earned finance income
included $0.3 million (1H 2023: $nil) arising from deferred consideration
receivable.
Contingent assets and liabilities at fair value through profit or loss
When certain investments in Partner-firms are purchased or sold, it is
probable that the Company may have to pay or receive additional consideration
based on the underlying terms of the purchase or sale agreement respectively.
As a result of deal transactions, the Company has recorded a contingent
liability of $4 million at 30 June 2024 (31 December 2023: $6 million)
representing a portion of the total consideration which is probably payable in
connection with its purchases of investments in certain Partner-firms, based
on the Partner-firms' ability to raise capital or meet certain revenue
thresholds as defined in the investment agreements. In addition, the Company
has recorded a contingent asset of $3 million at 30 June 2024 (31 December
2023: $nil) representing a portion of the total consideration which is
probably receivable in connection with its sale of investments in certain
Partner-firms.
Tax Receivable Agreement
The Company entered into a Tax Receivables Agreement as part of the Initial
Acquisition on 28 September 2021. The agreement provides for the payment of
75% of cash tax savings, if any, in U.S. federal, state and local income tax
that the Company actually realises. The cash tax savings are defined as the
difference between the taxes actually due, and the taxes due had there been no
step-up in tax basis from the Initial Acquisition. The Company expects these
payments to arise over a period of at least 15 years. The value of these
estimated payments was $176 million at 30 June 2024 (31 December 2023: $175
million) assuming an 18% discount rate and using the Company's most recent
projections relating to the estimated timing of the payments. The change in
liability for the Tax Receivables Agreement was $1 million (1H 2023: $16
million).
The Company makes annual payments in relation to the Tax Receivables
Agreement. The amount of the payment estimated in relation the full year of
2024 is approximately $25 million, of which the 1H portion is expected to be
$12 million (1H 2023: $16 million).
Refer to note 3 on page 96 of the 2023 Annual Report for additional
information.
Operating Expenses
Operating expenses were $37 million (1H 2023: $23 million). Included in
operating expenses for the six months ended 30 June 2024 was $18 million
expense (1H 2023: $6 million) related to the fee payable on the divestment of
investments. The accrual is calculated and charged to the income statement
based on the fair value of the Company's investment in Partner-firms at the
balance sheet date. Divestment fees only become payable once gains
are realised. The Operator is entitled to such divestment fee calculated at
20% of the realised profit on the exit of an investment. Although the Company
does not intend to exit all of its investments, an accrual is reflected
representing an amount that would be payable if the Company were to exit all
of its investments. At 30 June 2024, the fee payable on divestment of
investments was $113 million (31 December 2023: $95 million). No payment was
made in the six months ended 30 June 2024.
Excluding the accrual of the divestment fee, operating expenses were $19
million (1H 2023: $17 million).
The Operator is entitled to a fee (Operator charge) of 7.5% of Income from
investments in Partner-firms. The Operator charge for the period was $11
million (1H 2023: $9 million).
The Operator is entitled to a Profit Sharing Charge on a quarterly basis. The
Profit Sharing Charge is equal to 20% of total income from investments in
Partner-firms, as defined under IFRS, from new investments made post
admission, in the relevant quarter and only after a two-year ownership period
from the date on which the investment is closed, and subject to the relevant
investment achieving an investment return of at least 6.0 per cent. The Profit
Sharing Charge for the period was $0.7 million (1H 2023: $nil).
The Directors' fees and expenses for the period were $0.8 million (1H 2023:
$0.8 million). Fees paid to Directors for the period are unchanged in local
currency.
Other operating costs included transaction costs of $1 million (1H 2023: $nil)
and other operating expenses of $6 million (1H 2023: $8 million).
The Adjusted EBIT margin for the period was 88% (1H 2023: 87%) reflecting the
relatively low cost to operate the Company.
Finance Cost
The finance cost for the six months ended 30 June 2024 was $17 million (1H
2023: $19 million). Finance cost primarily comprised the interest expense of
the Company's $500 million unsecured debt. Also included in the finance cost
for the six months ended 30 June 2024 is an amount of $3 million (1H 2023: $3
million) of imputed interest relating to deferred payment obligations and a
fee of $0.7 million relating to the $100m revolving credit facility (1H 2023:
$1 million).
Tax Expense
The Company's tax charges comprise primarily certain taxes in the United
States (where the 2024 federal corporate tax rate was 21% and state and local
taxes may vary) as well as certain taxes in the United Kingdom (where the 2024
corporate tax rate was 25%). Accordingly, the effective tax rate payable by
the Company may vary from year to year based on the geographic mix and nature
of the income earned by the Company. Notably, a substantial amount of income
derived from Management fee income will be subject to United States federal
corporate tax as well as applicable state and local taxes. Income derived from
Performance fee income and Investment income may be subject to taxes in the
jurisdiction in which the investment in the Partner-firm is held, including
the United Kingdom.
As a result of the above considerations, as well as the items discussed above
under "Tax Receivables Agreement", the Company calculates tax and related
expenses and its Adjusted tax and related expense rate by combining the
estimated payment under the Tax Receivables Agreement and the current tax.
Current tax expenses comprise obligations to tax authorities related to
current period reporting. Deferred tax expenses arise with respect to
temporary differences between carrying amounts of assets and liabilities and
their tax bases.
Analysis of Tax
For the six months ended 30th June
Analysis of tax 2024 2023
$m
$m
Analysis of tax on profit
Current tax 5.4 16.8
Deferred taxation 22.5 0.1
Tax expense 27.9 16.9
The tax expense does not include the related expected payments under the Tax
Receivables Agreement for the period. The amount of the payment estimated in
relation the full year of 2024 is approximately $25 million, of which the 1H
portion is expected to be $12 million (1H 2023: $16 million).
The tax and related expenses(1) for the period, which considers both the
current tax and the expected payment under the Tax Receivable Agreement
("TRA") were $18 million (1H 2023: $33 million) and the adjusted tax and tax
related expense rate(1) was 15.9% (1H 2023: 32.3%). The amount in 2023
included $13 million related to estimates from the prior period and excluding
that amount, tax and related expenses for 1H 2023 were $20 million and the
Adjusted tax and tax related expense rate for 1H 2023 was 19.4%.
(1. ) Financial measure defined as Alternative Performance Measure, or
("APM"). Further information on page 36.
Capital
At 30 June 2024, the Company's issued share capital comprised of 1,081,708,167
ordinary shares (31 December 2023: 1,122,202,824). During the six months ended
30 June 2024, the Company purchased 2.6 million Ordinary Shares (1H 2023: 1.8
million) for $6 million (1H 2023: $4 million), including transaction costs, as
part of its share buyback programme which commenced in 2023 and was
subsequently terminated in April 2024 to facilitate the tender offer. The
Company also purchased 37.9 million Ordinary Shares for $107 million including
transaction costs under a tender offer completed in June 2024.
Total shareholders' funds were $4,744 million as at 30 June 2024 (31 December
2023: $4,834 million). As at 30 June 2024, there were retained earnings of
$3,043 million (31 December 2023: $3,133 million). These retained earnings
include the change in fair value of investments for the period of $67 million
(31 December 2023: $227 million) which does not contribute to realised
profits.
During the six months ended 30 June 2024, the Company paid dividends totalling
$113 million and bought back Ordinary Shares from the share buyback programme
and share tender totalling $113 million, including transaction costs,
resulting in a reduction in capital of $226 million from aggregate capital
return to shareholders.
As at 30 June 2024, approximately 80% (31 December 2023: 77%) of Petershill
Partners plc shares are held by long-dated private funds managed by Goldman
Sachs Asset Management. Goldman Sachs Asset Management is the manager of these
shares and exercises discretion over how and when they could be sold in the
future, on behalf of the investors in those funds.
Subsequent Events
On 16 September 2024, the Board of Directors approved an interim dividend of
5.0 cents (USD) per share with respect to the six months ended 30 June 2024.
The record date for the dividend is 27 September 2024 and the payment date is
31 October 2024.
On 16 September 2024, the Board of Directors also approved a special dividend
payment of 9.0 cents (USD) per share. The record date for the dividend is 27
September 2024 and the payment date is 31 October 2024.
Partner-firm performance
for the six months ended 30 June 2024
(continuing operator's report)
Key Operating Metrics
We provide detail on our Partner-firms in our Key Operating Metrics as this
gives investors insight into the revenues and revenue model of the Company.
For the six months ended 30 June 2024, fundraising continued across the
Company's Partner-firms with Aggregate Fee-paying Partner-firm AuM growing 8%
to $238 billion, when compared to 31 December 2023. Ownership weighted
Fee-paying AuM grew 7% to $30 billion for the six months ended 30 June 2024
(31 December 2023: $28 billion). Strong Aggregate Partner-firm AuM and
Aggregate Fee-paying AuM growth are the basis for future earnings development
and highlight the positive operating dynamics and pricing power of our
high-quality Partner-firms. This growth has translated into robust, recurring,
and high-quality earnings from our Partner-firms - with first half Partner
Distributable Earnings of $140 million, an increase of 12% compared to the
comparable period in 2023 (1H 2023: $125m).
Petershill Partners is not reliant on any one firm, one fund-raising, one
track record, or one brand. Our approach is to invest in a range of
high-quality, high-performing alternative asset management firms, who manage a
diverse range of funds, giving the Company stable, high-quality, recurring
earnings.
Our total AuM for the six months ended 30 June 2024 comprised over 250 funds,
spanning private equity, absolute return and other private capital funds, with
a weighted average life cycle of 8+ years. That means their capital is locked
in for an average duration of 8 years, generating recurring management fees
and the opportunity for meaningful profit participation throughout this time.
We believe our long-term approach differentiates us and provides for enhanced
alignment with the key principals at each Partner-firm and, as a result,
allows the Company to participate in their income streams in a way that
provides high-margin, diversified and stable cash flows for our shareholders.
Partner Fee Related Earnings (FRE)
Partner FRE, drawn from management fees, increased 13% for the six months
ended 30 June 2024 to $112 million (1H 2023: $99 million), reflecting a 16%
increase in management fees to $202 million (1H 2023: $174 million), resulting
from the increase in Ownership Weighted Partner Fee-paying AuM over the
period. Partner Fee Related Expenses were $80 million, up 14% (1H 2023: $70
million), broadly in-line with the growth in Partner Net Management and
Advisory Fees. Partner FRE margin was 58%, compared with 59% for the six
months ended 30 June 2023.
Transaction and advisory fees were $1 million for the six months ended 30 June
2024, down from $5 million for the six months ended 30 June 2023. Whilst there
were signs of a recovery in the transaction environment during the first half
of 2024, the timing of transactions closing can impact the level of fees
generated in a single period. Partner Net Management and Advisory Fees during
1H 2024 totalled $192 million, an increase of 14% (1H 2023: $169 million). The
Partner Blended Net Management Fee Rate was 1.35% (1H 2023: 1.27%).
Partner Realised Performance Revenues (PRE)
PRE, which represents direct participation in the upside performance of
Partner-firms' funds and products, increased period-over-period to $19 million
for the six months ended 30 June 2024 compared to $15 million during 1H 2023,
a steady recovery reflecting a continued muted realisation environment. $18
million was attributable to the private markets strategy for the six months
ended 30 June 2024 (1H 2023: $15 million). 9% of total Partner Revenue for the
six months ended 30 June 2024 was derived from PRE (1H 2023: 8%).
Partner-firms manage a variety of performance fee-eligible funds at different
stages of their life cycle. Due to this diversification, the Company
anticipates that Realised Performance Revenues will be earned regularly from a
wide range of funds going forward, with a range of 15% - 30% of total
Partner-firm revenues over the medium term, assuming market conditions and
environment are broadly supportive.
Partner Private Markets Accrued Carried Interest was $696 million at 30 June
2024, an increase of 14% compared with the $615 million at 31 December 2023.
Partner Realised Investment Income
As an owner in the Partner-firms, the Company shares in a percentage of the
investment and balance sheet income of the Partner-firms and realises this
through a number of direct positions in the funds of underlying Partner-firms,
known as Realised Investment Income. This totalled $9 million for the six
months ended 30 June 2024, slightly below the $11 million in 1H 2023.
Principal Risks and Uncertainties
The Company's underlying investments are high-risk and illiquid assets within
the alternative investment industry. Its principal risks are therefore related
to revenue generated by the alternative asset managers in which the Company
invests and the performance of the Partner-firms, their funds, and the
products they manage. The Operator seeks to mitigate these risks through
active engagement and action as outlined in the Acquisition Strategy and
Investment Policy on pages 25 to 27 of the 2023 Annual Report and by carrying
out due diligence work on potential targets before entering into any
investments. The Company's business model involves the acquisition of
non-control investments in independent Partner-firms, and although the Company
has certain controls as part of contractual rights, the Company does not
control the risk tolerance of the underlying Partner-firms.
The Board thoroughly considers the process for identifying, evaluating and
managing any significant risks faced by the Company on an ongoing basis, and
these risks are reported and discussed at Board meetings. The Board ensures
that effective controls are in place to mitigate these risks and that a
satisfactory compliance regime exists to ensure all applicable local and
international laws and regulations are upheld.
The key areas of risk faced by the Company are the following:
1. Alternative asset industry risk;
2. Partner-firm revenue risk;
3. Investment diligence risk;
4. Macroeconomic risk;
5. Regulatory risk;
6. Key person risk;
7. Operator, administrator and service provider resiliency and performance
risk;
8. Partner-firm reporting risk;
9. Cyber / information security risk.
10. Liquidity risk
The principal risks and uncertainties of the Company remain those identified
in further detail in the 2023 Annual Report.
The principal risks and uncertainties outlined above remain the most likely to
affect the Company and its investments in the second half of the year.
Statement of Directors' Responsibilities in Respect of the Interim Results Statement
The Directors are responsible for preparing this Interim Results Statement in
accordance with applicable laws and regulations. The Directors confirm that to
the best of their knowledge:
The unaudited condensed interim consolidated financial statements have been
prepared in accordance with UK adopted IAS 34 Interim Financial Reporting and
in accordance with the Disclosure Guidance and Transparency Rules sourcebook
of the United Kingdom's Financial Conduct Authority, give a true and fair view
of the assets, liabilities, financial position and profit or loss of the
Group; and
The Operator's Report includes a fair review of the information required by:
§ DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an
indication of important events that have occurred during the first six months
of the financial year and their impact on the interim Financial Statements;
and a description of the principal risks and uncertainties for the remaining
six months of the year; and
§ DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being
material related party transactions that have taken place in the first six
months of the year and that have materially affected the financial position or
the performance of the entity during that period; and any changes in the
related party transactions described in the 2023 Annual Report that could do
so.
The Directors of Petershill Partners plc are listed on pages 48 to 49 of the
2023 Annual Report. A list of current Directors is maintained on the Company's
website which can be found at www.petershillpartners.com.
On behalf of the Board
Naguib Kheraj
Chairman
16 September 2024
Independent Review Report to
Petershill Partners PLC
Report on the condensed interim consolidated financial statements
Our conclusion
We have reviewed Petershill Partners plc's condensed interim consolidated
financial statements (the "interim financial statements") in the Interim
Results Statement of Petershill Partners plc for the 6 month period ended 30
June 2024 (the "period").
Based on our review, nothing has come to our attention that causes us to
believe that the interim financial statements are not prepared, in all
material respects, in accordance with UK adopted International Accounting
Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
The interim financial statements comprise:
§ the Condensed Interim Consolidated Statement of Financial Position as at 30
June 2024;
§ the Condensed Interim Consolidated Statement of Comprehensive Income for
the period then ended;
§ the Condensed Interim Consolidated Statement of Changes in Equity for the
period then ended;
§ the Condensed Interim Consolidated Statement of Cash Flows for the period
then ended; and
§ the explanatory notes to the Condensed Interim Consolidated Financial
Statements.
The interim financial statements included in the Interim Results Statement of
Petershill Partners plc have been prepared in accordance with UK adopted
International Accounting Standard 34, 'Interim Financial Reporting' and the
Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's
Financial Conduct Authority.
Basis for conclusion
We conducted our review in accordance with International Standard on Review
Engagements (UK) 2410, 'Review of Interim Financial Information Performed by
the Independent Auditor of the Entity' issued by the Financial Reporting
Council for use in the United Kingdom ("ISRE (UK) 2410"). A review of interim
financial information consists of making enquiries, primarily of persons
responsible for financial and accounting matters, and applying analytical and
other review procedures.
A review is substantially less in scope than an audit conducted in accordance
with International Standards on Auditing (UK) and, consequently, does not
enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express
an audit opinion.
We have read the other information contained in the Interim Results Statement
and considered whether it contains any apparent misstatements or material
inconsistencies with the information in the interim financial statements.
Conclusions relating to going concern
Based on our review procedures, which are less extensive than those performed
in an audit as described in the Basis for conclusion section of this report,
nothing has come to our attention to suggest that the Directors have
inappropriately adopted the going concern basis of accounting or that the
Directors have identified material uncertainties relating to going concern
that are not appropriately disclosed. This conclusion is based on the review
procedures performed in accordance with ISRE (UK) 2410. However, future events
or conditions may cause the Group to cease to continue as a going concern.
Responsibilities for the interim financial statements and the review
Our responsibilities and those of the Directors
The Interim Results Statement, including the interim financial statements, is
the responsibility of, and has been approved by the Directors. The Directors
are responsible for preparing the Interim Results Statement in accordance with
the Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority. In preparing the Interim Results
Statement, including the interim financial statements, the Directors are
responsible for assessing the Group's ability to continue as a going concern,
disclosing, as applicable, matters related to going concern and using the
going concern basis of accounting unless the Directors either intend to
liquidate the Group or to cease operations, or have no realistic alternative
but to do so.
Our responsibility is to express a conclusion on the interim financial
statements in the Interim Results Statement based on our review. Our
conclusion, including our Conclusions relating to going concern, is based on
procedures that are less extensive than audit procedures, as described in the
Basis for conclusion paragraph of this report. This report, including the
conclusion, has been prepared for and only for the Company for the purpose of
complying with the Disclosure Guidance and Transparency Rules sourcebook of
the United Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility for any
other purpose or to any other person to whom this report is shown or into
whose hands it may come save where expressly agreed by our prior consent in
writing.
PricewaterhouseCoopers LLP
Chartered Accountants
London
16 September 2024
CONDENSED INTERIM Consolidated Statement of Comprehensive Income
For the six months ended 30 June 2024
Note For the six months ended For the six months ended
30 June 2024
30 June 2023
(Unaudited)
(Unaudited)
$m
$m
Income
Income from investments in Partner-firms derived from: 2
Management fee income 111.7 99.1
Performance fee income 19.3 15.1
Investment income 9.3 10.6
Total income from investments in Partner-firms 140.3 124.8
Interest income from investments in money market funds 3 4.4 13.2
Interest income from other assets 4 1.6 -
Total interest income 6.0 13.2
Total income 146.3 138.0
Movement in financial assets and liabilities held at fair value
Change in investments at fair value through profit or loss 3 66.7 48.3
Change in contingent consideration at fair value through profit or loss 3 5.6 -
Total movement in financial assets and liabilities held at fair value 72.3 48.3
Expenses
Board of Directors' fees and expenses 16 (0.8) (0.8)
Operator charge 5, 16 (10.5) (9.4)
Profit sharing charge 5, 16 (0.7) -
Divestment fee expense 5, 16 (17.8) (5.7)
Other operating expenses (7.0) (7.0)
Total expenses (36.8) (22.9)
Operating profit for the period 181.8 163.4
Finance income / (expense)
Finance income 3 0.3 -
Finance cost 7 (17.3) (18.6)
Change in liability for Tax Receivables Agreement 16 (0.9) (15.5)
Total finance income / (expense) (17.9) (34.1)
Profit for the period before tax 163.9 129.3
Tax expense 6 (27.9) (16.9)
Profit for the period after tax 136.0 112.4
Profit and total comprehensive income for the period 136.0 112.4
Profit and total comprehensive income attributable to:
Equity holders of the Company 136.0 112.4
Earnings per share
Basic and diluted earnings per share (cents) 8 12.27 9.90
The accompanying notes on pages 20 to 32 form an integral part of these
condensed interim consolidated financial statements.
CONDENSED INTERIM Consolidated Statement of Financial Position
As at 30 June 2024
Note 30 June 31 December
2024
2023
(Unaudited)
(Audited)
$m
$m
Non-current assets
Investments at fair value through profit or loss 3 5,495.0 5,254.7
Contingent consideration at fair value through profit or loss 3 3.2 -
Deferred consideration receivable 3 12.2 -
5,510.4 5,254.7
Current assets
Investments in money market funds at fair value through profit or loss 3 49.6 62.3
Cash and cash equivalents 4 47.1 242.9
Deferred consideration receivable 3 11.4 -
Trade and other receivables 9 92.3 127.4
200.4 432.6
Total assets 5,710.8 5,687.3
Non-current liabilities
Unsecured notes payable 10 494.1 493.8
Deferred payment obligations 2, 3 34.9 7.3
Liability for Tax Receivables Agreement 16 151.0 150.5
Contingent consideration at fair value through profit or loss 3 - 3.9
Deferred tax liability 6 30.7 8.2
Fee payable on divestment of investments 5, 16 112.6 94.8
823.3 758.5
Current liabilities
Trade and other payables 6.4 6.9
Deferred payment obligations 2, 3 91.5 44.6
Interest payable 11 10.0 10.0
Profit sharing charge payable 5, 16 0.4 0.1
Operator charge payable 5, 16 6.3 6.6
Contingent consideration at fair value through profit or loss 3 4.0 2.5
Liability for Tax Receivables Agreement 16 24.6 24.2
143.2 94.9
Total liabilities 966.5 853.4
Net assets 4,744.3 4,833.9
Equity
Share capital 12 10.8 11.2
Share premium 12 - -
Other reserve 12 1,689.6 1,689.6
Capital redemption reserve 12 0.9 0.5
Retained earnings 13 3,043.0 3,132.6
Total shareholders' funds 4,744.3 4,833.9
Number of ordinary shares in issue at period / year end 12 1,081,708,167 1,122,202,824
Net assets per share (cents) 14 438.59 430.75
The condensed interim consolidated financial statements (unaudited) of the
Group were approved and authorised for issue by the Board of Directors on 16
September 2024 and signed on its behalf by:
Naguib Kheraj Mark Merson
Chairman Director
The accompanying notes on pages 20 to 32 form an integral part of these
condensed interim consolidated financial statements.
Condensed interim consolidated statement of changes in equity
For the six months ended 30 June 2024 (unaudited)
Note Share capital Share premium Other reserve Capital redemption reserve Retained Total
$m
$m
$m
$m
earnings
$m
$m
Opening net assets attributable to shareholders at 1 January 2024 11.2 - 1,689.6 0.5 3,132.6 4,833.9
Repurchase and cancellation of Ordinary Shares 12 (0.4) - - 0.4 (112.5) (112.5)
Dividends paid 15 - - - - (113.1) (113.1)
Profit and total comprehensive income - - - - 136.0 136.0
Closing net assets attributable to shareholders at 30 June 2024 10.8 - 1,689.6 0.9 3,043.0 4,744.3
For the six months ended 30 June 2023 (unaudited)
Note Share capital Share premium Other reserve Capital redemption reserve Retained Total
$m
$m
$m
$m
losses
$m
$m
Opening net assets attributable to shareholders at 1 January 2023 11.4 3,346.7 1,689.6 0.3 (328.7) 4,719.3
Repurchase and cancellation of Ordinary Shares 12 (0.1) - - 0.1 (3.5) (3.5)
Dividends paid 15 - - - - (124.9) (124.9)
Share premium cancellation 12 - (3,346.7) - - 3,346.7 -
Profit and total comprehensive income - - - - 112.4 112.4
Closing net assets attributable to shareholders at 30 June 2023 11.3 - 1,689.6 0.4 3,002.0 4,703.3
The accompanying notes on pages 20 to 32 form an integral part of these
condensed interim consolidated financial statements.
CONDENSED INTERIM CONSOLIDATED STATEMENT OF CASH FLOWS
For the six months ended 30 June 2024
Note For the six months ended 30 June 2024 For the six months ended 30 June 2023
(Unaudited
(Unaudited
$m)
$m)
Cash flows from operating activities
Profit for the period before tax 163.9 129.3
Adjustments to reconcile operating profit for the financial period to net cash
flows from operating activities:
Reinvestment of income from investments in Partner-firms (19.5) (23.9)
Movement in investments at fair value through profit or loss 3 (66.7) (48.3)
Movement in trade and other receivables 29.2 26.1
Movement in trade and other payables 0.3 (5.2)
Movement in fee payable on divestment of investments 5 17.8 5.7
Movement in profit sharing charge payable 5 0.3 -
Movement in operator charge payable 5 (0.3) (16.3)
Movement in contingent consideration at fair value through profit or loss 3 (5.6) -
Finance income / expense 17.9 34.1
Purchase of investments in money market funds 3 (663.3) (122.8)
Sale of investments in money market funds 3 680.5 166.4
Reinvested interest income from investments in money market funds 3 (4.4) (13.2)
Taxes paid (7.4) (8.2)
Net cash inflows from operating activities 142.7 123.7
Cash flows from investing activities
Purchase of investments at fair value through profit or loss (124.2) (45.2)
Disposal of investments at fair value through profit or loss 26.2 -
Net cash outflows from investing activities (98.0) (45.2)
Cash flows from financing activities
Dividends paid 15 (113.1) (124.9)
Interest expense payments 11 (14.1) (14.1)
Repayment and cancellation of share capital 12 (113.3) (3.5)
Payment under Tax Receivables Agreement 16 - (8.5)
Net cash outflows from financing activities (240.5) (151.0)
Net decrease in cash and cash equivalents during the period (195.8) (72.5)
Cash and cash equivalents at the beginning of the period 242.9 97.6
Cash and cash equivalents at the end of the period 47.1 25.1
Non-cash investing activities
In kind distribution of investments at fair value through profit or loss 0.7 -
The accompanying notes on pages 20 to 32 form an integral part of these
condensed interim consolidated financial statements.
Notes to the Condensed Interim Consolidated Financial Statements (Unaudited)
For the six months ended 30 June 2024
1. General Information
Petershill Partners plc (the "Company") is a company limited by shares,
incorporated, registered and domiciled in England and Wales, whose shares are
publicly traded on the main market of the London Stock Exchange. The
unaudited condensed interim consolidated financial statements of
Petershill Partners plc for the period from 1 January 2024 to 30 June 2024
comprise the Company, its subsidiaries and its indirect subsidiaries
together referred to as the "Group".
The Company was incorporated, registered and domiciled in England and Wales
under the UK Companies Act 2006 (as amended) as a private company limited by
shares under the name Delta Epsilon Limited on 24 March 2021 with the
registered number 13289144. On 12 August 2021, the Company was re-registered
as a public limited company as Delta Epsilon plc, and on 2 September 2021, the
Company was renamed Petershill Partners plc.
2. Basis of preparation and significant accounting policies
i. Basis of preparation
The unaudited condensed interim consolidated financial statements of the Group
have been prepared and approved by the Board of Directors in accordance with
the Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority and IAS 34 Interim Financial Reporting as adopted for use in the
UK. The unaudited condensed interim consolidated financial statements should
be read in conjunction with the 2023 Annual Report and Financial Statements
(together "Annual Report") prepared and approved by the Board of Directors in
accordance with UK-adopted International Accounting Standards ("IFRS") and
with the requirements of the Companies Act 2006 as applicable to companies
reporting under those standards.
The unaudited condensed interim consolidated financial statements are
presented to the nearest million United States Dollar ($m), the functional and
reporting currency of the Company.
The financial information for the six months ended 30 June 2024 contained
within this half year financial report does not constitute statutory accounts
as defined in section 434 of the Companies Act 2006. The statutory accounts
for the year to 31 December 2023 have been reported on by
PricewaterhouseCoopers LLP and delivered to the Registrar of Companies. The
report of the auditors (i) was unqualified, (ii) did not include a reference
to any matters which the auditors drew attention by way of emphasis without
qualifying their report, and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
The unaudited condensed interim consolidated financial statements have been
prepared on a going concern basis under the historical cost convention, as
modified by the revaluation of financial assets and liabilities at fair value
through profit or loss.
The principal accounting policies are set out below.
Certain figures for the six months ended 30 June 2023 in the Condensed Interim
Consolidated Statement of Financial Position and Condensed Interim
Consolidated Statement of Cash Flows have been re-categorised to conform to
current year presentation. The Operator charge payable has been disaggregated
from Trade and other payables. This re-categorisation did not have any impact
on the consolidated financial result for the six months ended 30 June 2024 and
30 June 2023.
ii. Significant accounting policies
The accounting policies applied by the Group for the unaudited condensed
interim consolidated financial statements are consistent with those described
on pages 84 to 95 of the 2023 Annual Report. There was no change in the
current period to the critical accounting estimates and judgements applied in
2023, which are stated on pages 95 to 97 of the 2023 Annual Report. On 1
January 2024, there was a restructure of the Group and the accounting policies
as disclosed in the 2023 Annual Report have been consistently applied to
account for the restructure. Further information on the restructure is
disclosed in notes 2(viii) and 16.
iii. Segmental reporting
As discussed in the 2023 Annual Report, the Operator serves as the Group's
alternative investment fund manager for purposes of the UK Alternative
Investment Fund Managers Regulations and EU Alternative Investment Fund
Managers Directive, and pursuant to the Operator Agreement has delegated its
portfolio management functions to the Investment Manager, which has further
delegated the provision of portfolio management services to the Investment
Advisor. The Investment Advisor, acting as the chief operating decision-maker,
is responsible for allocating resources and assessing performance of the
operating segments. The management of the Group including assessment of
performance, budgets and liquidity is managed for the portfolio as a whole and
not by discrete segments. Hence, the Investment Advisor has concluded that the
Group is organised into one main operating segment.
For the six months ended 30 June 2024, the Group derived 83% (1H 2023: 90%) of
its current income from North America and the remaining 17% (1H 2023: 10%)
from Europe. 90% (31 December 2023: 91%) of the Group's non-current assets are
located in North America and the remaining 10% (31 December 2023: 9%) are
located in Europe.
iv. Related parties
The Group restructure, as noted in notes 2(viii) and 16, resulted in changes
to the Group's related parties. There was no change to the overall amounts or
timing of transactions with related parties. Further information is disclosed
in note 5.
v. Share capital
Financial instruments issued by the Company are treated as equity if the
holder has only a residual interest in the assets of the Company after the
deduction of all liabilities. The Company's Ordinary Shares are classified as
equity instruments.
Incremental costs directly attributable to the issue of new shares ("Share
issue costs") are shown as a deduction against proceeds from share premium.
The cost of repurchasing Ordinary Shares including the related stamp duty and
transactions costs is charged to Retained earnings and dealt with in the
Unaudited Condensed Interim Consolidated Statement of Changes in Equity. Share
repurchase transactions are accounted for on a trade date basis. The nominal
value of ordinary share capital and Redeemable Deferred Shares repurchased and
cancelled is transferred out of 'Share capital' and into the 'Capital
redemption reserve'.
vi. New and amended standards and interpretations
Accounting standards and interpretations have been published and will be
mandatory for the Group's and Company's accounting periods beginning on or
after 1 January 2024 or later periods. The following are the new or amended
accounting standards or interpretations applicable to the Group.
§ Disclosure of Accounting Policies - Amendments to IAS 1 and IFRS Practice
Statement 2 - Non-current Liabilities with Covenants (issued October 2022 and
effective for annual periods beginning on or after 1 January 2024); and
§ Amendments to IAS 1 - Classification of Liabilities as Current or
Non-current (issued January 2020 and effective for annual periods beginning on
or after 1 January 2024).
These amendments have been adopted and the impact of these amendments to the
Company and the Group is not material.
Certain amendments to the accounting standards have been published that are
not mandatory for 30 June 2024 reporting periods and have not been early
adopted by the Group. These amendments are not expected to have a material
impact to the Company and the Group in the current or future reporting periods
or on foreseeable future transactions.
§ Amendments to IFRS 9 and IFRS 7 - Classification and Measurement of
Financial Instruments (issued May 2024 and effective for annual periods
beginning on or after 1 January 2026); and
§ IFRS 18 - Presentation and Disclosure in Financial Statements (issued April
2024 and effective for annual periods beginning on or after 1 January 2027).
vii. Assessment of investment entity
The Board of Directors has determined that the Company and its Subsidiaries
are not an investment entity and therefore the Company's financial statements
have been prepared on a consolidated basis, as required by IFRS 10
'Consolidated Financial Statements'. Accordingly, the Company has not applied
the provisions of Para 31 of IFRS 10 that requires an investment company to
measure its investment in subsidiaries at fair value through profit or loss.
Instead, the Company will consolidate the subsidiaries that it controls.
Please refer to page 92 of the 2023 Annual Report for a detailed discussion.
viii. Basis of consolidation of subsidiaries
IFRS 10 requires a parent to consolidate the subsidiaries that it controls.
Consolidation of the subsidiaries shall begin from the date the parent obtains
control of the subsidiaries and ceases when the parent loses control of the
subsidiaries. A parent controls the subsidiaries when the parent is exposed,
or has rights, to variable returns from its involvement with the subsidiaries
and has the ability to affect those returns through its power over the
subsidiaries.
The Company consolidates its subsidiaries to the extent it is exposed or has
rights to variable returns from its involvement with the subsidiaries and has
the ability to affect those returns through its power over the subsidiaries.
The unaudited condensed interim consolidated financial statements of the Group
include the accounts of the Company and its subsidiaries listed below. Refer
to page 92 and 93 of the 2023 Annual Report for a detailed discussion of the
basis of consolidation of Subsidiaries. There have been no changes in the
basis of consolidation of subsidiaries since 31 December 2023.
Name of Subsidiary Registered office Purpose Interest as at Interest as
30-Jun-24
at
31-Dec-23
Held directly
Petershill Partners Ltd1 One Nexus Way Camana Bay, KY1-9005, Cayman Islands Investment holding company 100% 100%
Petershill Partners II Ltd1 One Nexus Way Camana Bay, KY1-9005, Cayman Islands Investment holding company 100% 100%
Petershill Partners, Inc.1 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
Petershill Partners II, Inc.1,3 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% -
United States of America
Held indirectly
PHP DE 1 LP2,3 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% -
United States of America
PHP DE 2 LP2,3 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% -
United States of America
PHP C1 LP2,3 One Nexus Way Camana Bay, KY1-9005, Cayman Islands Investment holding company 100% -
PHP C2 LP2,3 One Nexus Way Camana Bay, KY1-9005, Cayman Islands Investment holding company 100% -
Petershill Partners GP Sub I Series LLC4 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
Petershill Partners GP Sub II Series LLC4 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
Petershill Partners GP Sub III Series LLC4 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
Petershill Partners GP Sub IV Series LLC4 251 Little Falls Drive Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
PHP Aggregator GP Ltd5 One Nexus Way Camana Bay, KY1-9005, General Partner of Cayman domiciled Petershill holding companies 100% 100%
Cayman Islands
Cook Holdings Series LLC6 251 Little Falls Drive, Wilmington, DE 19808, Investment holding company 100% 100%
United States of America
Knight Holdings Series LLC6 251 Little Falls Drive, Wilmington, DE 19808, Investment holding company 100% 100%
United States of America States of America
Lyndhurst Holdings LP6 One Nexus Way, Camana Bay, KY1-9005, Investment holding company 100% 100%
Cayman Islands
Plum Holdings LP6 One Nexus Way, Camana Bay, KY1-9005, Investment holding company 100% 100%
Cayman Islands
Peasy Holdings LP6 One Nexus Way, Camana Bay, KY1-9005, Investment holding company 100% 100%
Cayman Islands
(1. ) Referred to as Petershill Subsidiaries.
(2. ) Referred to as Petershill Splitter Subsidiaries.
(3. ) Acquired by the Group on 1 January 2024.
(4. ) Held through the Petershill Splitter Subsidiaries and referred to as
Petershill Blockers.
(5. ) Held through Petershill Partners Ltd.
(6. ) Held through the Petershill Blockers and the Petershill Splitter
Subsidiaries and referred to as Petershill holding companies.
I. Consolidation of Petershill Subsidiaries and Petershill Blockers
The Company wholly owns the issued interests of the Petershill Subsidiaries
and is able to exercise control and power over the Petershill Subsidiaries.
Petershill Partners Ltd wholly owns the shares of the Petershill Blockers
listed above. The financial statements of the Petershill Subsidiaries and
Petershill Blockers are consolidated in preparing the financial statements of
the Group.
II. Consolidation of Petershill Splitter Subsidiaries
On 1 January 2024, new subsidiaries (the "Petershill Splitter Subsidiaries")
were introduced into the Group structure to enable employees of the Operator
to be direct beneficiaries of a portion of the Profit Sharing Charge and
Divestment Fee (if any) payable by the Group to the Operator. This was done to
align the interests in the incentives of the Group, the Operator and the
employees of the Operator. There is no change to the amount or timing of any
Profit Sharing Charge and Divestment Fee payable by the Group under the
original Operator Agreement. Furthermore, this arrangement is not expected to
give rise to any material tax consequences for the Group and all initial and
ongoing costs of implementing this arrangement are borne by the Operator.
Effective from 1 January 2024, each of the Petershill Subsidiaries entered
into a Contribution Agreement with the appropriate Petershill Splitter
Subsidiary whereby the Petershill Subsidiaries transferred all of their
investments, including their interest in the Petershill Blockers and
Petershill holding companies, to the Petershill Splitter Subsidiaries in
return for interest in the Petershill Splitter Subsidiaries at the carrying
value of the same date (the "Restructure"). The Petershill Splitter
Subsidiaries are substantially owned by the respective Petershill Subsidiaries
and are fully consolidated into the Group's net asset value. The remainder of
the Petershill Splitter Subsidiaries are owned by the respective special
limited partners (the "Special Limited Partners"). The Special Limited
Partners are invested in the Petershill Splitter Subsidiaries to share a
portion of the Profit Sharing Charge and the Divestment Fee along with the
Operator and do not have any other economic interest in the Petershill
Splitter Subsidiaries (refer to notes 5 and 16). The transaction is not
considered to be a business combination due to the nature of involving
entities under common control, which falls outside of the scope of IFRS 3.
III. Consolidation of Petershill holding companies
The Company has consolidated its investment in series and classes of assets
that it wholly owns and controls in the Petershill holding companies. Such
classes of assets and liabilities are ring-fenced from the overall legal
entity and treated as a silo in line with IFRS 10. Such assets of a series or
class cannot be used for payment of liabilities of another series or class.
Holders of other series or class do not have rights or obligations related to
the assets or to residual cash flows from those assets of other series or
classes. Series or classes that are not directly or indirectly controlled by
the Company are not considered to be Subsidiaries and are accordingly not
consolidated.
The Petershill Subsidiaries, Petershill Splitter Subsidiaries, Petershill
Blockers and Petershill holding companies are collectively referred to as the
Subsidiaries.
ix. Elimination of intra-group balances and transactions
Intra-group balances and any unrealised gains arising from intra-group
transactions are eliminated in preparing the condensed interim consolidated
financial statements. Unrealised losses are eliminated unless the costs cannot
be recovered. The financial results of Subsidiaries that are included in the
condensed interim consolidated financial statements are included from the date
that control commences until the date that control ceases.
x. Going Concern
In accordance with the Companies Act 2006, the Board of Directors has a
responsibility to evaluate whether the Group has adequate resources to
continue its operational existence for the foreseeable future and at least for
the 12 months following the issuance of the financial statements.
The Board of Directors has made an assessment of going concern, which takes
into account the current performance and the Group's outlook, including future
projections of profitability and cash flows as well as a downside scenario
using information that is available as of the date of these financial
statements, and the Group's access to the revolving credit facility and its
debt arrangements, details of which are set out in the Operator's Report on
page 8.
The Group's business model involves earning income from investments in
Partner-firms. The Group's investments in Partner-firms are long-term and the
Group has no exit strategy for its investments. As a result, the Group expects
long-term recurring revenues from its investments in Partner-firms. Income
from investments in Partner-firms is derived from management fee income,
performance fee income and investment income. Management fee income is
typically based on private capital commitment funds managed by the
Partner-firms with a weighted average life cycle of 8 or more years. The
income from management fees is therefore stable and recurring. Income derived
from performance fee income and investment income from Partner-firms is
dependent on underlying fund and underlying investment performance of the
Partner-firms. The Group has a low, and relatively predicable, cost structure.
When taken together with the visibility into the income from investments in
Partner-firms, the Group has reasonably stable earnings.
As at 30 June 2024, the Group has $47.1 million (31 December 2023: $242.9
million) of cash and cash equivalents along with $49.6 million (31 December
2023: $62.3 million) of investments in money market instruments and a
revolving credit facility of $100.0 million, none of which has been drawn down
(refer to note 11 for further details) reflecting a strong liquidity position
to meet operating costs. In making the assessment of going concern, the Board
has considered a downside scenario in the future outlook. A downside scenario
includes: a reduction in income from Partner-firms derived from performance
fee income and investment income as well as a decline in fee-paying AuM held
by absolute return funds.
The Board of Directors acknowledges its responsibilities related to the
financial statements. Based on this analysis outlined above, the Board of
Directors is comfortable that the Group has sufficient cash to support its
ongoing operations and meet its liquidity requirements in the downside
scenario.
Given the above, the Board of Directors considers it appropriate to prepare
the financial statements of the Group on a going concern basis for the period
of at least twelve months from the date of issue of these unaudited condensed
interim consolidated financial statements as set out in note 2(i).
3. Investments at fair value through profit or loss
Non-current investments
The Group's non-current investments comprise of investments in Partner-firms,
which manage a diversified portfolio of investments in private equity,
absolute return, private credit, and private real assets.
For the six months ended 30 June 2024 For the
$m
year ended
31 December 2023
$m
Opening balance 5,254.7 4,958.9
Additions1 222.3 66.8
Disposals (49.4) -
In kind distributions of investments in Partner-firms2 0.7 0.2
Other movements - 1.8
Change in investments at fair value through profit or loss3 66.7 227.0
Closing balance 5,495.0 5,254.7
(1. ) Of the above additions, an amount of $105.8 million (31 December
2023: $57.0 million) comprises consideration payable on a deferred basis and
dividend reinvestments and an amount of $116.5 million (31 December 2023: $9.8
million) comprises consideration payable on an upfront basis.
(2. ) This represents in kind distribution of investments at fair value
through profit or loss.
(3. ) Of the above, a gain of $67.4 million (31 December 2023: gain of
$227.0 million) relates to unrealised gain/(loss) on fair value of investments
held at period/year end and a (loss) of $0.7 million (31 December 2023: $nil)
relates to realised gain/(loss) on fair value of investments on disposals.
Current investments
The Group invests certain cash balances in money market funds representing a
collective investment scheme promoted by an affiliate of the Operator. The
Money Market Funds are AAA rated and the Group holds these investments for
cash management purposes with the intent to manage excess cash and ensure
these can be readily liquidated to meet the Group's investment commitments.
These investments are redeemable at short notice and have been classified as
debt investments. As at 30 June 2024, the Group held investments in Money
Market Funds of $49.6 million (31 December 2023: $62.3 million) and during the
six months ended 30 June 2024 earned interest of $4.4 million (1H 2023: $13.2
million).
Fair value measurements
IFRS 13 requires disclosure of fair value measurement by level. The level of
fair value hierarchy within the financial assets or financial liabilities is
determined on the basis of the lowest level input that is significant to the
fair value measurement. Financial assets and financial liabilities are
classified in their entirety into only one of the following three levels:
§ Level 1 - quoted prices (unadjusted) in active markets for identical assets
or liabilities;
§ Level 2 - inputs other than quoted prices included within Level 1 that are
observable for the assets or liabilities, either directly (i.e., as prices) or
indirectly (i.e., derived from prices); and
§ Level 3 - inputs for assets or liabilities that are not based on observable
market data (unobservable inputs).
The determination of what constitutes "observable" requires significant
judgement by the Group. The Board of Directors considers observable data to be
market data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by independent sources
that are actively involved in the relevant market.
The following tables analyse within the fair value hierarchy the assets and
liabilities (by class) measured at fair value:
Level 1 Level 2 Level 3 Total
30 June 2024 $m $m $m $m
Assets
Investments in money market funds at fair value through profit or loss - 49.6 - 49.6
Investments in Partner-firms at fair value through profit or loss - - 5,495.0 5,495.0
Contingent consideration at fair value through profit or loss - 3.2 - 3.2
Liabilities
Contingent consideration at fair value through profit or loss (current and - - (4.0) (4.0)
non-current)
Level 1 Level 2 Level 3 Total
31 December 2023 $m $m $m $m
Assets
Investments in money market funds at fair value through profit or loss - 62.3 - 62.3
Investments in Partner-firms at fair value through profit or loss 0.2 - 5,254.5 5,254.7
Liabilities
Contingent consideration at fair value through profit or loss (current and - - (6.4) (6.4)
non-current)
The fair value of investments in money market funds is based on the daily
published net asset value of each fund and is therefore considered Level 2.
Due to the nature of the investments in Partner-firms, they are always
expected to be classified as Level 3. The fair value of contingent
consideration is determined based on a combination of unobservable inputs,
including discounted cash flow models, probability-weighted scenarios, and the
Operator's assessment of performance targets. Given the reliance on
significant judgment and estimation, the fair value measurement can be
classified as Level 3. However, if observable market data significantly
influences the valuation, it may be classified as Level 2.
There have been no transfers between levels during the period. Any transfers
between the levels would be accounted for on the last day of each financial
period.
Sensitivity analysis to significant changes in unobservable inputs within Level 3 hierarchy
Key assumptions including the future fund raises by Partner-firms, future
performance of funds managed by the Partner-firms, the timing of exits of
investments managed by Partner-firms and margins of the Partner-firms are
estimates made by the Operator and are not certain. The choice of discount
rate or market multiple is somewhat correlated to the assumptions made above.
The discount rates and multiples are therefore considered to be the
significant unobservable inputs used in the fair value measurement categorised
within Level 3 of the fair value hierarchy. These, together with a
quantitative sensitivity analysis as at 30 June 2024 and 31 December 2023, are
as shown below:
Level 3 Investments Market Value Significant unobservable Range of significant unobservable inputs as at Weighted Average Reasonable Shift4 Valuation Sensitivity
as at 30 June 2024
inputs by valuation technique1
30 June 2024
Investments in Management Companies: Private Markets Market Approach: -/+ - +
1,203.8 Profit Multiple - FRE2 10.0x - 23.5x 13.9x 1.0x $(90.6) $91.8
380.8 Asset Based Multiple 1.0x 1.0x 10.0% (38.1) 38.1
Income Approach:
1,725.3 Terminal Multiple - FRE2 5.4x - 17.0x 13.1x 0.7x (45.5) 47.8
Discount Rate - FRE 8.0% - 18.4% 12.6% 1.0% (111.4) 123.8
1,517.2 Terminal Multiple - PRE3 3.2x - 10.0x 5.6x 0.8x (24.6) 25.4
Discount Rate - PRE 13.0% - 33.0% 25.4% 2.0% (105.0) 121.1
139.7 Calibrated Price of Recent Investment n/a n/a 10.0% (14.0) 14.0
Investments in Management Companies: Absolute Return Market Approach: -/+ - +
134.4 Profit Multiple - FRE2 7.4x 7.4x 1.6x $(10.6) $10.6
83.0 Profit Multiple - PRE3 4.1x - 5.6x 4.7x 2.0x (13.2) 13.2
17.5 Asset Based Multiple 1.0x 1.0x 10.0% (1.7) 1.7
Income Approach:
192.7 Terminal Multiple - FRE2 5.7x - 7.4x 7.3x 1.1x (14.5) 19.0
Discount Rate - FRE 13.6% - 17.6% 13.8% 2.0% (14.5) 19.0
100.6 Terminal Multiple - PRE3 3.3x - 5.6x 4.5x 0.7x (7.1) 9.5
Discount Rate - PRE 18.0% - 30.0% 22.8% 3.3% (7.1) 9.5
Level 3 Investments Market Value Significant unobservable Range of significant unobservable inputs as at Weighted Average Reasonable Shift4 Valuation Sensitivity
as at 31 December 2023
inputs by valuation technique1
31 December 2023
Investments in Management Companies: Private Markets Market Approach: -/+ - +
$1,201.9 Profit Multiple - FRE2 10.0x - 23.5x 14.5x 1.0x $(87.3) $87.4
405.6 Asset Based Multiple 1.0x 1.0x 10.0% (40.6) 40.6
Income Approach:
1,670.3 Terminal Multiple - FRE2 4.7x - 17.5x 13.2x 0.7x (42.0) 43.4
Discount Rate - FRE 8.0% - 21.4% 13.0% 1.0% (110.1) 122.3
1,460.9 Terminal Multiple - PRE3 2.7x - 10.0x 5.5x 0.8x (32.9) 34.1
Discount Rate - PRE 13.0% - 37.0% 25.2% 2.0% (107.0) 123.6
Investments in Management Companies: Absolute Return Market Approach: -/+ - +
135.2 Profit Multiple - FRE2 8.2x 8.2x 1.6x $(10.1) $10
.1
82.8 Profit Multiple - PRE3 4.5x - 5.0x 4.7x 2.0x (14.2) 14.
2
17.5 Asset Based Multiple 1.0x 1.0x 10.0% (1.7) 1.7
Income Approach:
178.1 Terminal Multiple - FRE2 6.1x - 7.5x 7.4x 1.1x (13.2) 17.
4
Discount Rate - FRE 13.3% - 16.4% 13.6% 2.0% (13.2) 17.4
102.0 Terminal Multiple - PRE3 3.3x - 5.3x 4.5x 0.7x (7.6) 10.
1
Discount Rate - PRE 19.0% - 30.3% 22.9% 3.4% (7.5) 10.1
(1. ) The fair value of any one instrument is determined using multiple
valuation techniques. For example, market comparable and discounted cash flows
may be used together to determine fair value. Therefore, the Level 3 balance
encompasses both of these techniques.
(2. ) The range consists of multiples on management fee related earnings
("FRE") and may represent historical or forward-looking multiples.
(3. ) The range consists of multiples on performance related earnings
("PRE") and may represent historical or forward-looking multiples.
(4. ) The increase or decrease in the unobservable inputs may not be
shifted negatively and positively by an equal amount. For the asset categories
that have different reasonable possible shifts, the above table discloses the
weighted average of the respective negative and positive shifts.
As the Group's investments are generally not publicly quoted, valuations
require meaningful judgement to establish a range of values, and the ultimate
value at which an investment is realised may differ from its most recent
valuation and the difference may be significant.
An increase / decrease in the underlying discount rate of 1% would result in a
decrease / increase in the fair value of the contingent consideration of
-$0.02 million / +$0.04 million (31 December 2023: -$0.04 million / +$0.02
million) respectively.
The below is a reconciliation of Level 3 assets and liabilities held at fair
value through profit or loss:
Level 3 Instrument For the six months For the year ended
ended 30 June 2024
31 December 2023
$m
$m
Assets
Opening balance 5,254.5 4,958.9
Additions1 222.3 66.8
Disposals (48.5) -
Other movements - 1.8
Change in investments at fair value through profit or loss2 66.7 227.0
Closing balance 5,495.0 5,254.5
(1. ) Of the above, an amount of $105.8 million (31 December 2023: $57.0
million) relates to consideration payable on a deferred basis and dividend
reinvestments and an amount of $116.5 million (31 December 2023: $9.8 million)
includes consideration payable on an upfront basis.
(2. ) Of the above, an amount of $67.4 million (31 December 2023: $227.0
million) relates unrealised gain/(loss) on fair value of investments held at
period/year end.
In addition to above, the Group has $3.2 million (31 December 2023: $nil) of
Level 2 assets and $4.0 million (31 December 2023: $6.4 million) of Level 3
liabilities as at 30 June 2024. The assets represent a portion of the total
consideration which is probable under the contingent consideration agreements
in connection with its sale of investments in certain Partner-firms, wherein
the Group may receive additional consideration based on the underlying terms
of the sale agreement. The liabilities represent a portion of the total
consideration which is probable under the contingent consideration agreements
in connection with investments in certain Partner-firms wherein the Group may
have to pay additional consideration based on the underlying Partner-firm's
ability to raise capital or meet certain revenue thresholds as defined in the
investment agreements. The Group recorded a net fair value movement in
contingent consideration of $5.6 million in the Condensed Interim Consolidated
Statement of Comprehensive Income, comprising of $3.2 million increase in
contingent consideration assets and $2.4 million decrease in contingent
consideration liabilities.
Deferred consideration receivable
The Group has $23.6 million (31 December 2023: $nil) of deferred consideration
receivable recorded in the Condensed Interim Consolidated Statement of
Financial Position as at 30 June 2024. The assets represent a portion of the
total consideration which is due to the Group on a deferred basis in
connection with its sale of investments in certain Partner-firms. The assets
are held at amortised cost. During the six months ended 30 June 2024, the
Group recorded $0.3 million (1H 2023: $nil) of finance income in the Condensed
Interim Consolidated Statement of Comprehensive Income in relation to the
accretion of the assets.
Deferred payment obligations
The Group has $126.4 million (31 December 2023: $51.9 million) of deferred
payment obligations recorded in the Condensed Interim Consolidated Statement
of Financial Position as at 30 June 2024. These liabilities represent a
portion of the total consideration which is due from the Group on a deferred
basis in connection with its purchases of investments in certain Partner-firms
wherein the Group is required to pay additional consideration on an agreed
future date. The liabilities are held at amortised cost. During the six months
ended 30 June 2024, the Group recorded $2.5 million (1H 2023: $3.3 million) of
finance cost in in the Condensed Interim Consolidated Statement of
Comprehensive Income in relation to the amortisation of the liabilities.
4. Cash and cash equivalents
30 June 31 December 2023
2024
$m
$m
Cash at bank 47.1 92.9
Fixed term deposit - 150.0
47.1 242.9
On 14 December 2023, the Company entered into a fixed term deposit of $150.0
million, which matured on 15 March 2024. Interest was earned on the fixed term
deposit at a rate of 5.4% per annum. During the six months ended 30 June 2024,
the Company earned $1.6 million (1H 2023: $nil) of interest in relation to the
fixed term deposit which is recorded as interest income from other assets in
the Condensed Interim Consolidated Statement of Comprehensive Income.
5. Operator charges
On 1 January 2024, the Special Limited Partner contributed to each of the
Petershill Splitter Subsidiaries as part of the Restructure (see note 2(viii))
in return for a share in the Profit Sharing Charge and Divestment Fee
previously due solely to the Operator. The total fees due to be paid by the
Group does not change as a result.
Recurring Operating Charges
Under the Operator Agreement, the Operator is entitled to a recurring
operating charge on a quarterly basis, such Recurring Operating Charges
consisting of, in aggregate, 7.5% of the Group's relevant income from
investments, as defined under IFRS, for the relevant quarter. For the six
months ended 30 June 2024, the income attributable to assets owned by the
Group on which Recurring Operating Charges was earned amounted to $140.3
million (1H 2023: $124.8 million).
Amounts recorded as Recurring Operating Charges during the six months ended 30
June 2024 were $10.5 million (1H 2023: $9.4 million) and an amount of $6.3
million (31 December 2023: $6.6 million) was outstanding as at 30 June 2024.
These amounts will be paid in accordance with the terms of the Operator
Agreement.
Profit Sharing Charge
The Operator and Special Limited Partner are entitled to a profit sharing
charge (the "Profit Sharing Charge") on a quarterly basis in arrears, which in
aggregate shall be an amount equal to 20% of the total dividend income from
each new investment ("New Investment") made by the Group after the Admission
in the relevant fiscal quarter (net of any Recurring Operating Charges in
respect of such New Investment), beginning in the ninth fiscal quarter from
the date on which the New Investment closed and subject to such New Investment
having achieved a return of 6% per annum calculated using the total invested
capital funded to the pertinent date. These amounts will be paid in accordance
with the terms of the Operator Agreement.
The aggregate of the Recurring Operating Charges and the Profit Sharing Charge
is capped at 15% of the Group's income from investments in Partner-firms for
the relevant quarter excluding any Divestment Fee payable for such quarter.
Amounts recorded as Profit Sharing Charge during the six months ended 30 June
2024 were $0.3 million and $0.4 million to the Operator and Special Limited
Partner respectively (1H 2023: $nil and $nil), and an amount of $0.1 million
and $0.3 million (31 December 2023: $0.1 million and $nil) was outstanding to
the Operator and Special Limited Partner as at 30 June 2024 respectively.
These amounts will be paid in accordance with the terms of the Operator
Agreement.
Divestment Fee
The Operator and Special Limited Partner are entitled to a divestment fee
("Divestment Fee") calculated at 20% of the total Divestment Profit in the
relevant quarter in relation to the Group's investments. Divestment Profit
refers to the cash flows realised from the sale or divestment of assets
calculated as the sale price minus the contribution value of such asset,
excluding any dividend income received over the holding period and on which
the Group has already paid Recurring Operating Charges and, in the case of New
Investments, Profit Sharing Charges.
Although the Group does not have an exit strategy for its investments, it may
be subject to exits or realisations at underlying Partner-firms, as such an
accrual is reflected in the accounts representing an amount that would be
payable if the Group were to exit all of its investments at the fair value
reflected on these financial statements. As at 30 June 2024, a Divestment Fee
expense amount of $112.6 million, of which $89.7 million and $22.9 million is
due to the Operator and Special Limited Partner respectively (31 December
2023: $94.8 million and $nil respectively) has been accrued towards divestment
fee payable, of which $6 thousand is realised.
6. Tax
The Group's interim income tax expense or benefit is calculated using the best
estimate of the weighted average annual effective tax rate for the full
financial year applied to the year-to-date profit/(loss) before tax. Items not
included in the weighted average annual effective tax rate are recognised in
full in the interim period and relate to the impact of (1) the Company's
year-to-date unrealised gains and losses; (2) movement in unrecognised
deferred tax; (3) de-recognition of the deferred tax assets related to the
sale of certain Partner-firms; (4) unrealised changes in contingent
consideration and divestment fee expense; and (5) income and expenses in
jurisdictions that are either not subject to tax or cannot be reasonably
estimated. The Group's effective tax rate differs from the standard rate of
corporation tax due to the following: (1) tax rates in certain jurisdictions;
(2) income and expenses not included for tax purposes; (3) temporary
differences subject to initial recognition exception; and (4) de-recognition
of the deferred tax assets related to the sale of certain Partner-firms.
The Group's effective tax rate for the six months ended 30 June 2024 was 17.0%
(1H 2023: 13.9%), resulting in a corporate tax expense of $27.9 million (1H
2023: $16.9 million). The increase in the effective tax rate is attributable
to the discrete expense related to the de-recognition of the deferred tax
assets related to the sale of certain Partner-firms.
In 2022, the UK Government confirmed its intention to implement the
G20-Organisation for Economic Co-operation and Development Inclusive Framework
Pillar 2 rules in the UK, including a Qualified Domestic Minimum Top-Up Tax
and Income Inclusion rule. This legislation, which was enacted in 2023, will
seek to ensure that UK headquartered multinational enterprises pay a minimum
tax rate of 15 per cent on UK and overseas profits arising after 31 December
2023. The legislation applies for a period to groups with revenues in excess
of €750 million in at least two of the previous four periods and so the
Group is not currently expected to be within the scope of the legislation for
either the 2024 or 2025 periods and any future periods will continue to be
assessed going forward.
7. Finance cost
For the six months ended For the six months ended
30 June 2024
30 June 2023
Interest on Deferred payment obligations 2.5 3.3
Interest on Unsecured Notes 14.1 14.1
Commitment fees 0.2 0.2
Borrowing cost amortisation 0.3 0.3
Other finance charges 0.2 0.7
17.3 18.6
8. Earnings per share
For the six months ended For the six months ended
30 June 2024
30 June 2023
Profit attributable to equity holders of the Company - $m 136.0 112.4
Weighted average number of Ordinary Shares in issue 1,108,758,893 1,135,192,342
Basic and diluted earnings per Share from continuing operations in the period 12.27 9.90
(cents)
The weighted average number of shares for the six months ended 30 June 2024
and 30 June 2023 is calculated on a time weighted basis based on the timing of
issue and redemption of Ordinary Shares. There are no dilutive shares in
issue.
9. Trade and other receivables
30 June 2024 31 December 2023
$m
$m
Amounts receivable from Investments 72.7 105.9
Tax recoverable 13.8 10.4
Prepayments 1.3 1.9
Other receivables 4.5 9.2
92.3 127.4
10. Unsecured notes payable
On 24 August 2022, the Petershill Partners, Inc. issued US private placement
senior unsecured notes (the "Unsecured Notes") to a group of institutional
investors. The Unsecured Notes issued by the Petershill Partners, Inc. are
guaranteed by the Company.
The Notes are comprised of five tranches:
Notes Notional Tenor Maturity Fixed
(US$)
(years)
Coupon
Series A 125,000,000 7 2029 5.51%
Series B 175,000,000 10 2032 5.54%
Series C 80,000,000 12 2034 5.69%
Series D 80,000,000 15 2037 5.84%
Series E 40,000,000 20 2042 6.14%
Petershill Partners, Inc. may be subject to pay a Make-Whole Amount (as
contained in the Note Purchase Agreement) contingent upon certain principal
repayment, prepayment, or redemption of the Unsecured Notes in accordance with
the provisions of the Note Purchase Agreement. Absent an intent by the Group
to prepay the Unsecured Notes, no accrual for such Make-Whole Amount has been
made as at 30 June 2024.
In accordance with the Note Purchase Agreement, Petershill Partners, Inc. is
subject to various financial and non-financial covenants. The two financial
covenants that Petershill Partners, Inc. must adhere to are (1) the leverage
ratio shall not exceed 4:1 and (2) the AuM shall not be less than the required
minimum AuM amount (as defined in the Note Purchase Agreement). The Operator
monitors the covenant requirements on at least a six-monthly basis. There have
been no breaches of these covenants during the period.
As at 30 June 2024, the outstanding amount of the Unsecured Notes was $500
million (31 December 2023: $500 million). The carrying value of the Unsecured
Notes was reported at amortised cost and was net of unamortised debt issuance
costs of $5.9 million (31 December 2023: $6.2 million) in an amount of
$494.1million (31 December 2023: $493.8 million). For the six months ended 30
June 2024, the effective interest rate on the Unsecured Notes was 6.2% (1H
2023: 6.2%) per annum.
As at 30 June 2024, the fair value of the Unsecured Notes payable is estimated
at $482.0 million (31 December 2023: $467.0 million) calculated based on
discounted cash flows using a discount rate of 6.2% at 30 June 2024 (31
December 2023: 6.6%). The Unsecured Notes payable would be classified as Level
3 in the fair value hierarchy due to the use of unobservable inputs, including
the Group's own credit risk. A 3% increase / decrease in the underlying
discount rate would result in a movement in net assets of approximately -$88.0
million / +$114.0 million respectively (31 December 2023: -$87.0 million /
+$113.6 million) or -18.3% / +23.7% (31 December 2023: -18.6% / +24.3%).
11. Net Debt Reconciliation
30 June 2024 31 December 2023
$m
$m
Unsecured Notes Payable 494.1 493.8
Interest payable 10.0 10.0
504.1 503.8
Liabilities from financing activities for the six months ended 30 June 2024:
Unsecured Notes Payable Interest Payable
$m
$m
Net debt at 1 January 2024 493.8 10.0
Repayment of interest - (14.1)
Interest expense - 14.1
Borrowing cost amortised 0.3 -
Net debt as at 30 June 2024 494.1 10.0
Liabilities from financing activities for the year ended 31 December 2023:
Unsecured Notes Payable Interest Payable
$m
$m
Net debt at 1 January 2023 493.2 10.0
Repayment of interest - (28.3)
Interest expense - 28.3
Borrowing cost amortised 0.6 -
Net debt as at 31 December 2023 493.8 10.0
On 9 January 2023, three of the Petershill Subsidiaries (Petershill Partners,
Inc., Petershill Partners Ltd and Petershill Partners II Ltd) entered into a
revolving credit facility of $100.0 million with a financial institution.
Interest charged on the facility is the aggregate of Margin plus the Term
Reference Rate. The entities did not draw on the facility during the six
months ended 30 June 2024 or year ended 31 December 2023. Costs incurred in
relation to this arrangement have been capitalised as a prepayment and are
amortised over the length of the facility, and are recorded within Trade and
other receivables on the Condensed Interim Consolidated Statement of Financial
Position.
12. Share capital and other reserves
For the six months ended 30 June 2024
Date Issued and fully paid Number of shares issued / (cancelled) Share capital Share premium Other reserve Capital redemption reserve Total
$m
$m
$m
$m
$m
Shares at
1 January 2024 1,122,202,824 11.2 - 1,689.6 0.5 1,701.3
Repurchase and cancellation of Ordinary Shares - $0.01 (40,494,657) (0.4) - - 0.4 -
Closing balance as at 30 June 2024 1,081,708,167 10.8 - 1,689.6 0.9 1,701.3
For the six months ended 30 June 2023
Date Issued and fully paid Number of shares issued / (cancelled) Share capital Share premium Other reserve Capital redemption reserve Total
$m
$m
$m
$m
$m
Shares at
1 January 2023 1,135,399,597 11.4 3,346.7 1,689.6 0.3 5,048.0
Repurchase and cancellation of Ordinary Shares - $0.01 (1,801,091) (0.1) - - 0.1 -
Share premium cancellation - - (3,346.7) - - (3,346.7)
Closing balance as at 30 June 2023 1,133,598,506 11.3 - 1,689.6 0.4 1,701.3
On 17 May 2023, the Company commenced a share buyback programme of up to $50
million. During the six months ended 30 June 2024, the Company repurchased and
cancelled 2,623,705 Ordinary Shares (1H 2023: 1,801,091 Ordinary Shares) as
part of its buyback program for a total consideration of $5.8 million (1H
2023: $3.5 million) including transaction costs. The programme was
subsequently terminated on 11 April 2024.
The Company's shareholders approved the cancellation of the amount standing to
the credit of the Company's share premium account in full (the "Reduction of
Capital") at its annual general meeting held on 24 May 2023. A formal approval
of the same was obtained on 20 June 2023 by His Majesty's High Court in
England (the "Court"), Accordingly, the Reduction of Capital became effective
which created additional distributable reserves of approximately $3,346.7
million. Accordingly, the amount standing to the credit of the share premium
account was transferred to Retained earnings.
On 23 April 2024, the Company proposed a tender of up to $100 million of
Ordinary Shares. On 31 May 2024, the tender offer closed and 37,870,952
Ordinary Shares were purchased and cancelled for a total consideration of
$106.7 million, including transaction costs.
As at 30 June 2024, the Company's issued share capital comprised 1,081,708,167
Ordinary Shares (31 December 2023: 1,122,202,824 Ordinary Shares) of $0.01
each. Ordinary shareholders are entitled to all dividends paid by the Company.
The Company does not have a limited amount of authorised capital.
13. Retained earnings
For the six months ended 30 June 2024 For the year ended 31 December 2023
$m
$m
Opening balance 3,132.6 (328.7)
Profit and total comprehensive income 136.0 321.1
Dividends paid (113.1) (180.2)
Repurchase and cancellation of Ordinary Shares (112.5) (26.3)
Share premium cancellation - 3,346.7
Closing balance 3,043.0 3,132.6
14. Net assets per share
30 June 2024 31 December 2023
Net Assets ($m) 4,744.3 4,833.9
Number of ordinary shares issued 1,081,708,167 1,122,202,824
Net assets per share (cents) 438.59 430.75
15. Dividends declared and paid
Dividends on Ordinary shares were paid during the six months ended 30 June
2024 of $113.1 million (1H 2023: $124.9 million) being 10.1 cents (USD) per
share (1H 2023: 11.0 cents (USD) per share). The dividends were paid on 14
June 2024.
16. Related party transactions
Board of Directors
Directors' fees for the six months ended 30 June 2024 amounted to $0.8 million
(1H 2023: $0.8 million), and an amount of $0.1 million was outstanding as at
30 June 2024 (31 December 2023: $nil). Amounts paid to the Board of Directors
as reimbursements of travel and other incidental expenses during the six
months ended 30 June 2024 amounted to $39 thousand (2023: $15 thousand), and
an amount of $nil was outstanding as at 30 June 2024 (31 December 2023: $nil).
The Board of Directors held beneficial interest in 1,134,999 Ordinary Shares
in the Company as at 30 June 2024 (31 December 2023: 1,094,999
Ordinary Shares).
Money Market Funds
As at 30 June 2024, the Group held an investment of $49.6 million (31 December
2023: $62.3 million) in money market funds that are managed by affiliates of
the Operator. During the six months ended 30 June 2024, the Group earned
interest income of $4.4 million (1H 2023: $13.2 million) from investments held
in such money market funds managed by affiliates of the Operator.
Transactions with Petershill Funds
As at 30 June 2024, the Petershill Funds, managed by wholly owned subsidiaries
of the Goldman Sachs Group acting as the investment manager, owned
approximately 79.5% (31 December 2023: 76.6%) of the Company. As at 30 June
2024, the Group had amounts payable to the Petershill Funds of $2.1 million
(31 December 2023: $0.2 million) and amounts receivable from the Petershill
Funds of $2.4 million (31 December 2023: $6.1 million). These will be settled
in the ordinary course of business.
Tax Receivables Agreement
As discussed in note 2(v)(ii) of the 2023 Annual Report, the Group has entered
into a Tax Receivables Agreement with Petershill Funds, an affiliate of the
Operator and the Goldman Sachs Group, which will require the Group to pay 75%
of the amount of cash tax savings, if any, in US federal, state and local
income tax that the Group realises as a result of the tax benefits associated
with the increase in tax basis that arose on the Group's acquisition of the
Partner-firms from the Petershill Funds. As of 30 June 2024, the carrying
value of liability for the Tax Receivables Agreement was $175.6 million (31
December 2023: $174.7 million). During the six months ended 30 June 2024,
payments totalling $nil (1H 2023: $8.5 million) were made in relation to the
Tax Receivables Agreement liability.
Operator
The Operator is an affiliate and wholly owned subsidiary of the Goldman Sachs
Group and provides advice to the Group on the origination and completion of
new investments, the management of the portfolio and on realisations, as well
as on funding requirements, subject to approval by the Board of Directors. For
the provision of services under the Operator Agreement, the Operator earns a
Profit Sharing Charge, Recurring Operating Charges and Divestment Fee, as
detailed in note 5.
The Operator may, in its discretion, pay certain of the Group's fees or
expenses and the Group will reimburse the Operator for the payment of any such
fee or expense. During the six months ended 30 June 2024, the Operator did not
pay any of the Group's fees or expenses under this arrangement (1H 2023: none)
and no amount was due at period end.
Special Limited Partner
The Special Limited Partner is an affiliate of the Goldman Sachs Group and
acts as a special limited partner to the Petershill Splitter Subsidiaries. The
Special Limited Partner earns a Profit Sharing Charge and Divestment Fee, as
detailed in note 5.
Transactions with Goldman Sachs Bank USA
Goldman Sachs Bank USA ("GSBUSA") is an affiliate and wholly owned subsidiary
of the Goldman Sachs Group. On 14 December 2023, the Company placed a fixed
term deposit with GSBUSA for $150.0 million. The fixed term deposit matured on
15 March 2024 and accrued interest at a rate of 5.40% per annum. During the
six months ended 30 June 2024, interest of $1.6 million (1H 2023: $nil) was
earned and was received upon maturity.
17. Ultimate controlling party
The Board of Directors has reviewed the shareholders of the Company and has
concluded that there is no ultimate controlling party. The Company has a
diversified investor base that does not cede control to any single investor or
a group of investors. Although the Petershill Funds own 79.5% (31 December
2023: 76.6%) of the Company, Goldman Sachs Asset Management and its affiliates
were the beneficial owner of less than 1% of the Ordinary Shares of the
Company as at 30 June 2024.
The Petershill Funds are managed by Goldman Sachs Asset Management and its
affiliates acting as the investment manager of the Petershill Funds under the
supervision of an independent board of directors of the Petershill Funds.
Goldman Sachs Asset Management and its affiliates act in in their capacity as
agent for the Equity shareholders of the Company and such a relationship does
not give rise to controlling ownership.
18. Subsequent events
The Directors have evaluated activity through 16 September 2024, the date that
the unaudited interim consolidated financial statements were available to
be issued.
On 16 September 2024, the Board of Directors approved an interim dividend of
5.0 cents (USD) per share with respect to the six months ended 30 June 2024.
The record date for the dividend is 27 September 2024 and the payment date is
31 October 2024.
On 16 September 2024, the Board of Directors approved a special dividend
payment of 9.0 cents (USD) per share. The record date for the dividend is 27
September 2024 and the payment date is 31 October 2024.
The Directors concluded that no other events took place that would require
material adjustments to the amounts recognised in these unaudited interim
consolidated financial statements.
glossary of key operating metrics
This document contains certain key operating metrics that are not defined or
recognised under IFRS.
The Operator and the Directors use these key operating metrics to help
evaluate trends, assess the performance of the Partner-firms and the Company,
analyse and test dividends received from the Partner-firms and inform
operating, budgeting and re-investment decisions. The Directors believe that
these metrics, which present certain operating and other information in
respect of the Partner-firms, provide an enhanced understanding of the
underlying portfolios and performance of the Partner-firms and are therefore
essential to assessing the investments and performance of the Company.
The key operating metrics described in this section are derived from financial
and other information reported to the Operator by the Partner-firms. The
Operator, with the assistance of an independent accounting firm, performs due
diligence procedures on the information provided by the Partner-firms. It
should be noted, however, that these due diligence procedures do not
constitute an audit.
In addition, each Partner-firm may account for and define certain financial
and other information differently from one another. For example, each
Partner-firm may calculate its fee-paying AuM differently, the result of which
being that the inputs of the Company's Aggregate Fee-paying AuM are not
consistently calculated.
Whilst the operating metrics described in this section are similar to those
used by other alternative asset managers, there are no generally accepted
principles governing their calculation, and the criteria upon which these
metrics are based can vary from firm to firm. These metrics, by themselves, do
not provide a sufficient basis to compare the Partner-firms' or the Company's
performance with that of other companies.
None of Partner Distributable Earnings, Partner FRE, Partner Realised
Performance Revenues or Partner Realised Investment Income are measures of or
provide any indication of profits available for the purpose of a distribution
by the Company within the meaning of section 830 of the Companies Act 2006, or
of any Partner-firm in accordance with the equivalent applicable rules.
Aggregate Fee-paying AuM
Aggregate Fee-paying AuM is defined as the portion of Aggregate Partner-firm
AuM for which Partner-firms are entitled to receive management fees, as
reported by the Partner-firms to the Operator. The principal difference
between Aggregate Fee-paying AuM and Aggregate Partner-firm AuM is that
Aggregate Fee-paying AuM typically excludes co-investment on which
Partner-firms generally do not charge fees and, to a lesser extent, fund
commitments in Partner-firm funds (i) on which fees are only earned on
investment, rather than from the point of commitment and (ii) where capital
has been raised but fees have not yet been activated. This may also include
legacy assets where fees are no longer being charged.
The Operator and the Directors consider Aggregate Fee-paying AuM to be a
meaningful measure of the Partner-firms' capital base upon which they earn
management fees and use the measure in assessing the management fee-related
performance of the Partner-firms and to inform operating, budgeting and
re-investment decisions.
Aggregate Partner-firm AuM
Aggregate Partner-firm AuM is defined as the sum of (a) the net asset value of
the Partner-firms' underlying funds and investment vehicles, and in most cases
includes co-investment vehicles, GP commitments and other non fee-paying
investment vehicles and (b) uncalled commitments from these entities, as
reported by the Partner-firms to the Operator from time to time and aggregated
by the Operator without material adjustment. This is an aggregated figure
across all Partner-firms and includes Partner-firm AuM outside of the
Company's ownership interest in the Partner-firms.
The Operator and the Directors consider Aggregate Partner-firm AuM to be a
meaningful measure of the size, scope and composition of the Partner-firms, as
well as of their capital-raising activities. The Operator uses Aggregate
Partner-firm AuM to inform operating, budgeting and reinvestment decisions.
Aggregate Performance Fee Eligible Partner-firm AuM
The amount of Aggregate Partner-firm AuM that is eligible for performance
fees.
AuM and Associated Data
The data presented in this document for the following key operating metrics
reflects AuM data reported to the Operator on a three-month lag. This
three-month data lag is due to the timing of the financial information
received by the Operator from the Partner-firms, which generally require at
least 90 days following each period end to present final financial information
to the Operator. The key operating metrics reflected on a three-month lag are:
§ Aggregate Partner-firm AuM
§ Aggregate Fee-paying Partner-firm AuM
§ Average Aggregate Fee-paying Partner-firm AuM
§ Aggregate Performance Fee Eligible Partner-firm AuM
§ Average Aggregate Performance Fee Eligible Partner-firm AuM
§ Partner Blended Net Management Fee Rate
§ Implied Blended Partner-firm FRE Ownership
§ Investment Capital
Implied Blended Partner-firm FRE Ownership
Implied Blended Partner-firm FRE Ownership is defined as the weighted average
of the Company's ownership stake in the Partner-firms' management fee-related
earnings and is calculated based on the contribution of average Aggregate
Fee-paying AuM from Partner-firms in each period. It will therefore be
expected to change to some degree from period to period based on the
contribution to average Aggregate Fee-paying AuM of each Partner-firm, even if
the actual ownership of each underlying Partner-firm does not change. Excludes
new acquisitions where Petershill has not yet started to receive or have only
received partial period amounts of Partner Net Management and Advisory Fees.
The Operator and the Directors consider Implied Blended Partner-firm FRE
Ownership to be a meaningful measure of the composition of the Company's
investments.
Investment Capital
Investment Capital is defined as the sum of the reported value of the balance
sheet investments from the Partner-firms. The Operator and the Directors
consider Investment Capital to be a meaningful measure of the performance of
the Partner-firms' balance sheet investments and potential future Partner
Realised Investment Income. The Operator therefore uses Investment Capital to
assess future expected Partner Realised Investment Income and inform
operating, budgeting and reinvestment decisions.
In respect of Investment Capital, the data may be adjusted for any known
valuation impacts following the reporting date of the information received
from the Partner-firms.
Ownership weighted AuM
Ownership weighted AuM represents the sum of the Company's ownership stakes in
each Partner-firm's AuM.
Ownership weighted Fee-Paying AuM
Ownership weighted Fee-paying AuM represents the sum of the Company's
ownership stakes in each Partner-firm's Fee-paying AuM.
Partner Blended Net Management Fee Rate
Partner Blended Net Management Fee Rate is defined as Partner Net Management
and Advisory Fees for the period, divided by the average Aggregate Fee-paying
AuM weighted for the Company's ownership interests in each Partner-firm. The
average Aggregate Fee-paying AuM is calculated as the mean of the Aggregate
Fee-paying AuM at the start and the end of the reporting period and excludes
new acquisitions where the Company has not yet started to receive or have only
received partial period amounts of Partner Net Management and Advisory Fees.
The Operator and the Directors consider Partner Blended Net Management Fee
Rate to be a key metric in assessing the Company's overall management
fee-related performance.
Partner Distributable Earnings and Partner Distributable Earnings Margin
Partner Distributable Earnings is defined as the sum of Partner FRE, Partner
Realised Performance Revenues and Partner Realised Investment Income. Partner
Distributable Earnings Margin is defined as Partner Distributable Earnings
divided by the sum of Partner Net Management and Advisory Fees, Partner
Realised Performance Revenues and Partner Realised Investment Income.
The Operator and the Directors consider Partner Distributable Earnings and
Partner Distributable Earnings Margin to be meaningful measures of the overall
performance of the Partner-firms and key performance indicators of the
Company's total income from investments in management companies. The Operator
uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and re-investment
decisions. These measures reflect any contractual margin protections or
revenue share interests that the Company may have with the Partner-firms,
which means that the Partner Distributable Earnings Margin may differ from the
margins achieved by other shareholders or partners of the Partner-firms.
Partner Fee Related Earnings (FRE) and Partner FRE Margin
Partner FRE is defined as Partner Net Management and Advisory Fees, less the
Partner-firms' operating expenses, fixed and bonus compensation, net interest
income/(expense) and taxes (but not performance fee-related expenses)
allocable to the Company's share of Partner Net Management and Advisory Fees,
as reported by the Partner-firms to the Operator, and subject to applicable
contractual margin protections in respect of certain Partner-firms. Partner
FRE Margin is defined as Partner FRE divided by Partner Net Management and
Advisory Fees.
The Operator and the Directors consider Partner FRE and Partner FRE Margin to
be meaningful measures of the management fee-related earnings of the
Partner-firms and key performance indicators of the Company's income from
investments in management companies derived from management fee income. The
Operator uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and reinvestment
decisions.
Petershill Funds
The Petershill Funds refers to the following entities: Petershill II L.P. and
Petershill II Offshore L.P., Petershill Private Equity L.P., Petershill
Private Equity Offshore L.P., Vintage VII L.P. and related entities and
certain co-investment vehicles.
Partner Net Management and Advisory Fees
Partner Net Management and Advisory Fees is defined as the Company's aggregate
proportionate share of the Partner-firms' net management fees (as reported by
the Partner-firms to the Operator), including monitoring and advisory fees and
less any management fee offsets, payable by the Partner-firms' funds to their
respective Partner-firms for the provision of investment management and
advisory services.
Certain Partner-firms provide transaction and advisory services, as well as
services to monitor ongoing operations of portfolio companies. Management fees
paid to the Partner-firms may be subject to fee offsets, which are reductions
to management fees and are based on a percentage of monitoring fees and
transaction and advisory fees paid by portfolio companies to the
Partner-firms.
The Operator and the Directors consider Partner Net Management and Advisory
Fees to be a meaningful measure of the management fee-related performance of
the Partner-firms, and the Operator uses this metric to analyse and test
income received from the Partner-firms and to inform operating, budgeting and
reinvestment decisions.
Partner Private Markets Accrued Carried Interest
Partner Private Markets Accrued Carried Interest is defined as the Company's
proportionate share of the Partner-firms' balance sheet accrued carry (as
reported by the Partner-firms to the Operator) and represents the Company's
proportionate share of the accumulated balance of unrealised profits from the
Partner-firms' funds.
The Operator and the Company consider Partner Accrued Carried Interest to be a
meaningful measure of the performance of the private markets Partner-firms and
potential future private markets Partner Realised Performance Revenues.
Absolute return performance fees are not accrued and are instead realised
annually. The Operator uses Partner Accrued Carried Interest to assess future
expected carried interest payments and inform operating, budgeting and
re-investment decisions. This key operating metric reflects data reported to
the Operator on a three-month lag.
Partner Realised Investment Income
Partner Realised Investment Income is defined as the Company's aggregate
proportionate share of Partner-firm earnings resulting from the realised gains
and losses, or any distributed income, from the investments held on
Partner-firms' balance sheets, as reported by the Partner-firms to the
Operator. Partner Realised Investment Income is also realised by the Company
through a limited number of direct stakes in certain Partner-firms' funds.
Realised Investment Income includes income that has been realised but not yet
paid, as well as amounts that are realised and either fully or partially
reinvested.
The Company's share of the Partner-firms' investment and balance sheet income
will be lower than its share of the Partner-firms' management fee-related
earnings because the Company's ownership stake in the Partner-firms'
investment and balance sheet income is lower than its ownership stake in the
Partner-firms' management fee-related earnings.
The Operator and the Directors consider Partner Realised Investment Income to
be a meaningful measure of the investment performance of certain assets held
by the Partner-firms and key performance indicator of the Company's income
from investments in management companies derived from investment income. The
Operator uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and reinvestment
decisions.
Partner Realised Performance Revenues
Partner Realised Performance Revenues is defined as the Company's aggregate
proportionate share of the Partner-firms' realised carried interest
allocations and incentive fees payable by the Partner-firms' funds to their
respective Partner-firms, less any realised performance fee-related expenses
of the Partner-firms allocable to the Company's share of performance
fee-related revenues, as reported by the Partner-firms to the Operator.
The Company's share of the Partner-firms' performance fee-related earnings
will be lower than its share of the Partner-firms' management fee-related
earnings because the Company's ownership stake in the Partner-firms'
performance fee-related earnings is lower than its ownership stake in the
Partner-firms' management fee-related earnings.
The Operator and the Directors consider Partner Realised Performance Revenues
to be a meaningful measure of the performance fee-related earnings of the
Partner-firms and key performance indicator of the Company's income from
investments in management companies derived from performance fee income. The
Operator uses this metric to analyse and test dividends received from the
Partner-firms, as well as to inform operating, budgeting and reinvestment
decisions.
Partner Revenues
Partner Revenues is defined as the sum of Partner Net Management and Advisory
Fees, Partner Realised Performance Revenues and Partner Realised Investment
Income.
The Operator and the Directors consider Partner Revenues to be a meaningful
measure of the overall performance of the Partner-firms. The Operator uses
this metric to inform operating, budgeting and re-investment decisions.
Weighted Average Capital Duration
Weighted Average Capital Duration is a key measure of the long term, locked-up
capital of Aggregate Fee-paying Partner-firm AuM. It is defined as the average
life of the underlying Partner-firm funds weighted based on Fee-paying AuM.
Alternative Performance Measures ("APMs")
The IFRS and APM basis numbers discussed and presented below include
significant 'unrealised' and non-cash items that include changes in fair value
of investments, and it should be noted that while permitted, it is not the
Company's core strategy to exit or realise these investments. Therefore,
management results are also presented excluding the unrealised change in fair
value of investments at fair value through profit and loss and related
divestment fee expense.
APMs are used by the Directors and the Operator to analyse the business and
financial performance, track the Company's progress, and help develop
long-term strategic plans and they also reflect more closely the cash flow of
the Company. The Directors believe that these APMs are used by investors,
analysts and other interested parties as supplemental measures of performance
and liquidity.
Net cash position at end of period / year
Cash and cash equivalents plus investments in money market funds and deferred
consideration receivable less deferred payment obligations, long term debt and
contingent consideration at fair value through profit or loss.
30 June 2024 31 December 2023
$m
$m
Cash and cash equivalents 47.1 242.9
Investments in money market funds at fair value through profit or loss 49.6 62.3
Deferred consideration receivable 23.6 -
Deferred payment obligations (126.4) (51.9)
Unsecured Notes payable (gross) (500.0) (500.0)
Contingent consideration at fair value through profit or loss (4.0) (6.4)
Net cash position at period / year end (510.1) (253.1)
Free cash flow
The Net cash flows from operating activities less Purchase of investments in
money market funds, Sale of investments in money market funds, Reinvestment of
income from investments in Partner-firms and money market funds and Taxes paid
as a percent of the Adjusted EBIT. This amount can differ period over period
as the timing of settlement of certain income from investments in
Partner-firms may vary.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m
$m
Net cash inflows from operating activities 142.7 123.7
Purchase of investments in money market funds 663.3 122.8
Sale of investments in money market funds (680.5) (166.4)
Reinvestment of income from investments in Partner-firms 19.5 23.9
Reinvestment of interest income from investments in money market funds 4.4 13.2
Taxes paid 7.4 8.2
Adjusted net cash inflows from operating activities 156.8 125.4
Adjusted EBIT 128.4 119.6
Free cash flow 122.1% 104.8%
Book value
Total shareholders' funds
30 June 2024 31 December 2023
$m
$m
Total shareholders' funds 4,744.3 4,833.9
Book value per share
Total shareholders' funds divided by the number of Ordinary Shares in issue at
period / year end.
30 June 2024 31 December 2023
Total shareholders' funds ($m) 4,744.3 4,833.9
Number of Ordinary Shares in issue at period / year end 1,081,708,167 1,122,202,824
Book value per share (cents) 438.59 430.75
Adjusted Earnings before interest and tax ("EBIT")
Sum of total income and expenses excluding transaction costs and non-recurring
operating charges before net finance result and before income taxes, change in
investments at fair value through profit or loss, change in contingent
consideration at fair value through profit or loss and divestment fee expense.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Total income 146.3 138.0
Board of Directors' fees and expenses (0.8) (0.8)
Operator charge (10.5) (9.4)
Profit sharing charge (0.7) -
Other operating expenses (7.0) (7.0)
Transaction costs 1.1 -
Non-recurring operating credit - (1.2)
Adjusted Earnings before interest and tax (EBIT) 128.4 119.6
Adjusted EBIT margin
Adjusted EBIT divided by Total income.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Total income 146.3 138.0
Adjusted EBIT 128.4 119.6
Adjusted EBIT margin 87.8% 86.7%
Adjusted Earnings Before Tax ("EBT")
Sum of total income and expenses excluding divestment fee expense, income
taxes, change in liability for Tax Receivables Agreement, change in
investments at fair value through profit or loss, change in contingent
consideration at fair value through profit or loss, transaction costs and
non-recurring operating charges.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Total income 146.3 138.0
Board of Directors' fees and expenses (0.8) (0.8)
Operator charge (10.5) (9.4)
Profit sharing charge (0.7) -
Other operating expenses (7.0) (7.0)
Finance income 0.3 -
Finance cost (17.3) (18.6)
Transaction costs 1.1 -
Non-recurring operating credit - (1.2)
Adjusted Earnings before tax (EBT) 111.4 101.0
Tax and tax related expenses
The current tax plus the actual / expected payment under the Tax Receivables
Agreement for the current period.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Current tax (5.4) (16.9)
Expected payment under the Tax Receivables Agreement (12.3) (15.7)
Tax and tax related expenses (17.7) (32.6)
Adjusted tax and tax related expense rate
The Tax and tax related expenses divided by the Adjusted EBT.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Tax and related expenses (17.7) (32.6)
Adjusted Earnings before tax (EBT) 111.4 101.0
Adjusted tax and tax related expense rate 15.9% 32.3%
Adjusted profit after tax
Sum of total income and expense excluding divestment fee expense, income
taxes, change in liability for Tax Receivables Agreement, change in
investments at fair value through profit or loss, change in contingent
consideration at fair value through profit or loss, transaction costs and
non-recurring operating charges and including tax and related expenses under
Tax Receivables Agreement.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
$m $m
Total income 146.3 138.0
Board of Directors' fees and expenses (0.8) (0.8)
Operator charge (10.5) (9.4)
Profit sharing charge (0.7) -
Other operating expenses (7.0) (7.0)
Finance income 0.3 -
Finance cost (17.3) (18.6)
Transaction costs 1.1 -
Non-recurring operating credit - (1.2)
Tax and tax related expenses (17.7) (32.6)
Adjusted profit after tax 93.7 68.4
Adjusted Earnings Per Share ("EPS")
Adjusted profit after tax divided by weighted average number of Ordinary
Shares in issue.
For the six For the six
months ended
months ended
30 June 2024
30 June 2023
Adjusted profit after tax ($m) 93.7 68.4
Weighted average number of Ordinary Shares in issue 1,108,758,893 1,135,192,342
Adjusted Earnings per share (EPS) (cents) 8.45 6.03
This results announcement has been prepared solely to provide additional
information to shareholders and meets the relevant requirements of the
Disclosure Guidance and Transparency Rules of the Financial Conduct Authority.
The results announcement should not be relied on by any other party or for any
other purpose. Whilst the Company aims to provide a diversified investment
approach, diversification does not protect an investor from market risk and
does not ensure a profit.
These written materials are not an offer of securities for sale in the United
States. Securities may not be offered or sold in the United States absent
registration under the US Securities Act of 1933, as amended, or an exemption
therefrom. The issuer has not and does not intend to register any securities
under the US Securities Act of 1933, as amended, and does not intend to offer
any securities to the public in the United States. Any securities of
Petershill Partners plc referred to herein have not been and will not be
registered under the US Investment Company Act of 1940, as amended, and may
not be offered or sold in the United States or to "U.S. persons" (as defined
in Regulation S under the US Securities Act of 1933, as amended) other than to
"qualified purchasers" as defined in the US Investment Company Act of 1940, as
amended. No money, securities or other consideration from any person inside
the United States is being solicited and, if sent in response to the
information contained in these written materials, will not be accepted.
Any tender offer made by the Company would be made in the US pursuant to an
exemption from certain US tender offer rules and otherwise in accordance with
the requirements of UK legislation. In accordance with normal UK market
practice and Rule 14e-5(b) of the US Exchange Act, the Company, its nominees,
its brokers (acting as agents), any financial advisers or any of their
respective affiliates could from time to time make certain purchases of, or
arrangements to purchase, Company securities outside the United States, other
than pursuant to any such tender offer, before or during the period in which
such tender offer remains open for acceptance, including sales and purchases
of securities effected by any financial advisers acting as market makers in
the Company securities. These purchases could occur either in the open market
at prevailing prices or in private transactions at negotiated prices. Any
information about such purchases would be disclosed as required in the United
Kingdom, would be reported to a Regulatory Information Service and would be
available on the London Stock Exchange website,
http://www.londonstockexchange.com.
FORWARD-LOOKING STATEMENTS
This press release may contain forward-looking statements that involve
substantial risks and uncertainties. You can identify these statements by the
use of forward-looking terminology such as "may," "will," "should," "expect,"
"anticipate," "project," "target," "estimate," "intend," "continue," or
"believe" or the negatives thereof or other variations thereon or comparable
terminology. You should read statements that contain these words carefully
because they discuss our plans, strategies, prospects and expectations
concerning the business, operating results, financial condition and other
similar matters. These statements represent the Company's belief regarding
future events that, by their nature, are uncertain and outside of the
Company's control. There are likely to be events in the future, however, that
we are not able to predict accurately or control. Any forward-looking
statement made by us in this press release is based upon information known to
the Company on the date of this press release and speaks only as of such date.
Accordingly, no assurance can be given that any particular expectation will be
met and readers are cautioned not to place undue reliance on forward looking
statements. Additionally, forward looking statements regarding past trends or
activities should not be taken as a representation that such trends or
activities will continue in the future. Other than in accordance with its
legal or regulatory obligations (including under the UK Listing Rules and the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority), the Company undertakes no obligation to publicly update or revise
any forward-looking statement, whether as a result of new information, future
events or otherwise.
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