In the first half of the financial year 2003/2004, the fair value decreased from EUR 40.95 to EUR 35.91 per share.
The reporting period closed with a net profit of EUR 1.6 million (first six months 2002/2003: net loss EUR 50.0 million). The major positive contributors were income from a profit-sharing arrangement with CSFB on the sale of some of the funds included in the CSFB transaction and realized foreign exchange gains from the swap transactions, which are booked under other income. On the negative side, permanent write-downs of EUR 17.4 million were recorded in the income statement.
Total investments (long-term assets) declined from EUR 181.5 million (April 1, 2003) to EUR 157.6 million (September 30, 2003). During the reporting period, temporary value adjustments of net EUR 5.7 million were booked against equity. The main reasons for these adjustments were necessary valuation corrections due to market developments, operational issues of fund investee companies and currency effects.
In the reporting period, total commitments declined from EUR 274.9 million as of April 1, 2003 to EUR 255.9 million as of September 30, 2003. In line with this, outstanding commitments declined from EUR 38.1 million as of April 1, 2003 to EUR 28.6 million as of September 30, 2003. Contributing to this reduction were the sale of 50% of Europe Capital Partners IV in the past quarter and paid capital calls.
Change in Reporting Currency
With the goal of minimizing the impact from currency fluctuations on the accounts of Private Equity Holding, the Board of Directors has decided to change the reporting currency from Swiss Francs to Euro. Private Equity Holding will issue its reports in Euro starting September 30, 2003, whilst the listing on the SWX Swiss Exchange will remain in Swiss Francs.
Executing the CSFB Transaction
The transfer of the sold funds is in its final stages. The majority of the funds have been transferred, and we expect the CSFB transaction to be completed on schedule by the end of November.
Outlook
The management of the liquidity remains an important task. We expect the liquidity constraints to ease further in the mid-term as distributions should exceed capital calls in 2004. The reduction of outstanding commitments continues to be one of our foremost priorities and we are actively negotiating opportunities in this respect. Furthermore, a number of follow-on investment opportunities in the direct portfolio are being thoroughly evaluated with the objective of maximizing returns on the existing investments.
The private equity market has shown some positive developments in the past months and we remain confident regarding the future. This development, the restructured portfolio and a potential capital increase as allowed for by the creation of new authorized capital will allow us to participate in primary and secondary investment opportunities in the future market recovery.
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The complete Half-Year Report as of September 30, 2003 is available on our website at www.peh.ch from November 4, 2003.
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Private Equity Holding AG (SWX: PEHN), managed by Swiss Life Private Equity Partners, offers investors the opportunity to invest, within a simple legal and tax optimized structure, in a broadly diversified and professionally managed private equity portfolio. For further information: www.peh.ch or Tamara Krebs, Investor Relations and Communications (phone +41 41 726 79 80).
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