ABERDEEN PRIVATE EQUITY FUND LTD ABERDEEN PRIVATE EQUITY FUND LIMITED
UNAUDITED HALF YEARLY REPORT
FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2017
CHAIRMAN'S STATEMENT
I am pleased to present to shareholders the Half Yearly Report and condensed financial statements of the Company for the six months ended 30 September 2017.
Performance and Dividend
During the period under review the Net Asset Value ('NAV') per Share fell by 1.4% to 150.1p. Inclusive of the 2.0p dividend paid in September 2017, shareholders received a Sterling NAV total return of -0.1% for the period.
The negative movement in the Company's Sterling NAV was principally due to Dollar weakness vs. Sterling over the period (-6.3%). Performance of the investment portfolio, in local currency terms, was positive.
Owing to timing differences in committing to new private equity funds and co-investments, and the varying nature of many of the underlying assets, there is no appropriate benchmark with which to compare the Company's performance.
At the September 2016 Annual General Meeting the Company announced that in the absence of unforeseen circumstances, the Board would expect to pay each year minimum total dividends of 4.0p per Share per annum. Your Board is therefore pleased to announce an interim dividend of 2.0p per Share (2017 - 2.0p) which will be payable on 16 March 2018 to Shareholders on the register on 23 February 2018.
Share Capital Management
During the period under review no Shares were purchased in the market. Notwithstanding my comments in the subsequent Corporate Strategy section, the Board will continue to monitor the level of discount to NAV at which the shares trade, both in absolute terms and against the discounts of comparable companies. Given my comments, the Board has no plans to buy back shares in the near term though has approval to do so should circumstances warrant.
Discount
On 30 September 2017 the share price discount to NAV stood at 14.9%. Since the period end the NAV has decreased to 149.8p per Share (based upon 31 October 2017 figures ,) and the discount has narrowed to 13.8%, based on the share price as at that date.I noted in my full year Reportthat the then prevailing discount of 23.1% felt anomalous given that the drivers of growth and realisations for private equity were solidly in place. I also suggested that situations such as these could often be short lived. It is therefore pleasing to report a material tightening of the discount by eight percentage points over the period under review, though clearly this falls short of a full equalisation. Substantive ongoing efforts made by the Manager to address the causes of the discount (as detailed in that full year Report) have undoubtedly helped, while the longer term trend of listed private equity's value being more appreciated by investors appears to have had an influence.
I make further comments in respect of the Company's NAV and discount in my Corporate Strategy comments later in this report.
Gearing
On 31 March 2016 the Company entered into a new £40m revolving credit facility with Lloyds Banking Group. The facility was renewed at this higher level (previously£15m) to support increased investment and to ensure efficient capital usage. To date the Manager has not drawn on this facility.
Continuation Vote
In 2011 the Company's Articles of Incorporation were amended to introduce a three-yearly continuation vote with the first vote being passed in 2013. The second three-yearly vote took place in September 2016 and was passed. At the Annual General Meeting convened on 13 September 2016 the Company announced that it would hold an annual continuation vote (to replace the triennial vote) commencing at the AGM held on 15 September 2017, and this was also passed .Activity Levels
The following investments were completed over the period:
- APPE US LLC, a holding structure for an investment into a US specialist consumer fund
- TrueNoord, an aircraft leasing business headquartered in Amsterdam
- TWMA, a UK headquartered business focused on waste disposal for the oil and gas industry
One secondary transaction was completed over the period, the sale of Lion Capital III, a buyout fund with exposure to European and US consumer businesses. The Company has continued to see high levels of activity within the funds in its portfolio.
Portfolio Performance
Your Board is pleased to note the good performance from the investment portfolio which has again been generated across a wide range of investments.
Of particular note is the positive performance of the recent investment into the 2013 vintage French fund Sagard III, a secondary transaction executed in 2016. The uplift was driven by increases in valuations from a number of Sagard holdings, although the principal driver to this was the announced exit of Alvest, an aircraft ground support business.
The secondary sale of Lion Capital III was completed at a premium to held value and was therefore accretive to overall performance.
Whilst there were a number of funds that delivered negative performance over the period none of these were material on a stand-alone basis (though they are discussed in further detail within the Manager's Report).
Outlook
Considering the macro environment, should the global economy in 2017 and 2018 progress as economists forecastwe will then have experienced the most sustained period of robust global growth since the initial recovery from the global financial crisis of 2007/8. We do however need to be aware of policy risk: with the US labour market rebounding, and with the unemployment rate falling (now at a 17-year low of 4.1%), we expect to see further small rate rises in 2018 following the 13 December 2017 rise of 25 bps. In Asia, it is likely that we will see a slight cooling of growth, with increased focus on curbing credit growth and financial excesses (though not at the expense of GDP growth and the Chinese state's significant role in businesses).
Within Private Equity, fundraisingremains strong, driven by buoyant return expectations and a growing level of global allocations to the sector. However a key feature of the current market is that fewer funds are raising a bigger proportion of the total capital raised.
Accordingly there has been little change to our outlook on Private Equity. This remains positive, notwithstanding my Corporate Strategy comments below, though we remain mindful of continued expensive valuations. However, these are being supported by ongoing demand for the asset class, the growth of 'private equity to private equity' transactions, and the excess dry powder within the overall PE market. These are all issues which we have discussed at length in our recent reports, but they have the feel of structural rather than temporary features of the asset class.
Aberdeen Merger Update
The Board notes the completion of the merger between Aberdeen Asset Management and Standard Life. To date the merger process has not created any problems for the Company but we shall continue to ensure that the management team remain focussed upon looking after the interests of the Company and its shareholders during the integration of the two businesses.
Corporate Strategy
In the course of engagement with the Company's shareholders following the AGM in September, it has become clear that a substantial majority, representing approximately 69% of the issued share capital, no longer wish to remain invested. The Board understands that the reasons include variously a change in the shareholders' investment objectives, the discount to net asset value at which the Company's shares have traded, its size and limited liquidity.
In order to meet the aspirations of Shareholders who wish to realise their shares at the best possible price, the Board commissioned Campbell Lutyens, a specialist in the restructuring of private equity portfolios, to ascertain potential secondary market interest for the Company's investment portfolio. Pursuant to that process, proposals were received from a number of interested parties and it was determined that the highest bid was the most attractive option.
The Company has announced today that it has entered into a Sale and Purchase Agreement to sell its entire investment portfolio at a modest premium to its 31 October 2017 valuation, net of associated sale costs.
It is expected that the bulk, if not all, of the proceeds from the sale will be received in one tranche on or soon after 31 March 2018, and it is the Board's intention to return capital to shareholders as and when proceeds are received. It is estimated currently that the total return to shareholders will be close to net asset value as at 31 October 2017, however the proceeds received from the purchaser and final shareholder return will be subject to various factors including, but not limited to, foreign exchange fluctuations and liquidation costs.
The proposed sale is subject to a number of conditions contained within the SPA, including, but not limited to, shareholders approving a change in the Company's investment policy to that of a divestment policy to enable a sale of the entire portfolio to be made. It is intended that following completion of the sale and the capital return to shareholders, the Company will be placed in liquidation. The Company will issue a circular in early 2018 to convene an extraordinary general meeting to approve, inter alia, the change of investment policy, the mechanism for shareholder returns and to provide further details, including the expected timescale for the return of capital to shareholders. Shareholders representing 69 per cent. of the Company have given irrevocable undertakings to vote in favour of the resolutions at the EGM.
Howard Myles
Chairman
18 December 2017
INTERIM BOARD REPORT
Principal Risk Factors
The principal risks and uncertainties affecting the Company are set out in detail on pages 9 and 10 of the Annual Report and Financial Statements for the year ended 31 March 2017 and there have been no significant changes. They can be summarised under the following headings:
- Investment Strategy and Objectives- the setting of an unattractive strategic proposition to the market and the failure to adapt to changes in investor demand may lead to the Company becoming unattractive to investors, a decreased demand for shares and a widening discount;
- Investment Portfolio and Investment Management - poor investment selection, inadequate due diligence, lack of effective monitoring and investing outside of the investment restrictions and guidelines set by the Board could result in poor performance and inability to meet the Company's objectives;
- Gearing - increasing the level of gearing could result in the Company becoming over-geared, unable to meet its financial obligations, or unable to take advantage of potential opportunities and any of these could result in a loss of shareholder value;
- Financial - the financial risks associated with the portfolio could result in losses to the Company;
- Operational Risks- the Company is dependent on third parties for the provision of all systems and services (in particular, those of the Aberdeen Group and Ipes) and any control failures and gaps in these systems and services could result in a loss or damage to the Company. In addition, failure to comply with relevant regulation (including Guernsey Company Law, the Financial Services and Markets Act, the Alternative Investment Fund Managers Directive, Accounting Standards and the FCA's Listing Rules, Disclosure Guidance and Transparency Rules and Prospectus Rules) may have an impact on the Company; and,
- PE Investment - PE investments are long-term in nature and they may take a considerable period to be realised. Unquoted investments are less readily realisable than quoted securities. Such investments may therefore carry a higher degree of risk than quoted securities. In valuing its investments the Company relies to a significant extent on the accuracy of financial and other information the funds in its portfolio provided to the Manager; this information is typically audited annually with further unaudited updates issued on a quarterly or six-monthly basis. Furthermore, PE Investments valuations are subject to the economic performance of the countries that the companies are based in or trade with, wider global economic trends and the performance of listed peer multiples which may influence valuations significantly. If public markets decline or economic growth falters then this will impact negatively.
Alternative Investment Fund Managers Directive ('AIFMD')
To comply with the AIFMD, the Company has appointed AFML as its AIFM. The management agreement with AFML complies with the AIFMD regulatory regime and under this arrangement, AFML has been appointed to provide investment management, risk management, administration and promotional activities. The Company's portfolio is managed by AAML by way of a group delegation agreement in place between AFML and AAML. In addition, AFML has sub-delegated promotional services to AAML.
AFML has notified the UK Financial Conduct Authority in accordance with the requirements of the UK National Private Placement Regime of its intention to market the Company (as a non-EEA AIF under the Directive) in the UK. The Alternative Investment Fund Managers Directive requires AFML, as the AIFM of the Company, to make available to investors certain information prior to such investors' investment in the Company. The Company's Pre-investment Disclosure Document ('PIDD') is available for viewing on the Company's website, aberdeenprivateequity.co.uk.
Going Concern
Note 20 to the Annual Report and financial statements for the year ended 31 March 2017 includes the Company's objectives, policies and processes for managing its capital; its financial risk management objectives; details of its financial instruments and its exposure to credit risk and liquidity risk. The Directors have undertaken a rigorous review of the Company's ability to continue as a going concern including reviewing the level of the Company's assets and significant areas of financial risk including liquidity, the estimated draw down of commitments and timing of realisations from the portfolio.
Notwithstanding (i) the proposed sale of the entire portfolio detailed under Corporate Strategy in the Chairman's Statement and (ii) the introduction of an annual ordinary resolution to be proposed at each AGM to approve the continuation of the Company; having reassessed the principal risks, the Directors have, at the time of approving these financial statements considered it appropriate to adopt the going concern basis of accounting in preparing the Half Yearly Report and Condensed Half Yearly financial statements of the Company.
Directors' Responsibility Statement
The Directors are responsible for preparing this Half Yearly Report in accordance with applicable law and regulations.
The Directors confirm that:
- the Half Yearly Report and Condensed HalfYearly Financial Statements have been prepared in accordance with IAS 34 'Interim Financial Reporting';
- the Condensed Half Yearly Financial Statements give a true and fair view of the assets, liabilities, financial position and profit of the Company as required by the Disclosure and Transparency Rules (DTR) 4.2.4R; and,
- the Chairman's Statement, Interim Board Report and Manager's Report (together constituting the Interim Management Report) include a fair review of the information required by DTR 4.2.7R (being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed set of financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year) and 4.2.8R (being related party transactions that have taken place during the first six months of the financial year and that have materially affected the financial position of the Company during that period; and any changes in the related party transactions described in the last Annual Report that could so do).
The Directors of the Company are listed on page 26 of the printed version of the Half Yearly Report.
For and on behalf of the Board of Aberdeen Private Equity Fund Limited
David Staples
Director
18 December 2017
MANAGER'S REPORT
At the end of September 2017, 84.6% of the Company's NAV was invested in 34 private equity funds and 13.2% in 11 co-investments.
Performance Commentary
The 34 private equity funds in the Company's portfolio invest across a wide range of sectors, geographies and private equity stages, providing exposure in aggregate to 348 underlying companies.
In local currency terms the portfolio generated a total return of 5.2% for the period under review. Sagard 3, a 2013 vintage fund which the Company committed to in 2016, was the single largest contributor to performance. Performance across the portfolio was broadly positive.
We show below the movement of the Company's investment portfolio from the opening value to the closing value:
Largest Positive Performance by Fund
Fund | Performance (US$m) |
Sagard 3 FCPI | 2.5 |
CSP Ergon Investment L.P. | 1.6 |
Lion Capital Fund III L.P. | 1.3 |
Wisequity IV | 1.3 |
Silver Lake Partners III L.P. | 1.2 |
Rest of the portfolio | +3.9 |
The Company completed a secondary transaction in Sagard 3 at the end of 2016. At the time of that deal, this fund contained six investments, and it completed a seventh shortly after we closed the transaction. The fund has since performed well, with valuation uplifts in Grand Frais and Safic-Alcan. The largest contributor was Alvest, an airport ground support equipment business. Sagard recently announced the sale of Alvest to Canadian pension fund CDPQ and private equity house Ardian. This transaction values Sagard's investment at c4x their original cost, a significant uplift to the previous carrying value.
CSP Ergon Investmentis the holding structure for the Indecomm co-investment. Indecomm is a cross-border IT services and outsourcing company. This business was able to achieve its projected EBITDA target and complete the acquisition of Nearsoft during the period.
The positive performance produced by the Company's Lion Capital Fund III holding was due to the premium to NAV achieved on the sale of our full holding to a secondary fund buyer.
The value of the Wisequity IV holding increased due to a valuation uplift in Corob, a leading provider of advanced tinting equipment to the paints and coatings industry. The GP's valuation uplift was due to strong performance and a change in valuation basis.
Silver Lake Partners III generated good performance over the period with positive contributions from Global Blue, WME IMG, Alibaba, GoDaddy and SMART Modular.
Largest Negative Performance by Fund
Fund | Performance (US$m) |
Northzone Ventures VI L.P. | -0.9 |
Gores Capital Partners III L.P. | -0.7 |
HIG Bayside Debt & LBO Fund II L.P. | -0.5 |
RHO Ventures VI L.P. | -0.3 |
StepStone International Investors III L.P. | -0.3 |
The performance for Northzone Ventures VIwas negative due to weaker performance from three holdings: Trustpilot, SpaceApe and Sticky. With regards to Trustpilot, their sales model in the US has switched from a value to volume focus and this has had a short-term impact on the business's revenue figures.
Gores Capital Partners III's performance was impacted by a valuation decrease in Imagine Communications and to a smaller extent, in portfolio companies US Farathane, Tweddle and Hovis.
The negative performance of HIG Bayside Debt & LBO Fund II was driven by the share price decline of publicly-listed Surgery Partners as well as privately-held Caraustar Industries and Interdent Holdings.
The valuation of Rho Ventures VI fell due to a share price decline in publicly-listed portfolio company Cara Therapeutics. Cara's Q2 2017 results showed a wider net loss versus Q2 2016.
StepStone International Investors III's performance was marginally negative following small declines from a number of underlying funds.
Portfolio Activity
During the period under review the Company made one further fund commitment to a specialist US consumer fund, which is now held via the APPE US LLC holding structure.
We also completed two co-investment transactions, as discussed in the Chairman's Statement. The first of these was a £2.2m investment in April in TWMA, alongside UK based Buckthorn Partners. TWMA is a specialist drilling waste and environmental solutions business that reduces drilling costs and maximises operational effectiveness for operators in this space. Demand for their services is being driven by a combination of increased ethical awareness and legislative 'push', amongst other factors.
The second transaction was a $3m investment into TrueNoord in July, alongside UK based Bregal Freshstream. TrueNoord is a regional aircraft leasing business based in Amsterdam which is focused on expanding their fleet of aircraft, not only in Europe but also in Asia, Africa, North America and Latin America. The demand for local short-haul journeys is increasing, with c50% of all air travel being carried on journeys of less than 500 nautical miles.
Lastly WME-IMG, a Silver Lake Partners III ('SLP III') portfolio company was rolled (by Silver Lake) into a Special Purpose Vehicle ('SPV'), and is now shown as a separate portfolio holding, SL SPV Feeder I LP. We have elected to treat this holding as a standalone fund (rather than a direct holding), though we note that when considering this investment alongside the SLP III fund, there is no change to the look-through exposure to underlying companies as existed prior to this transaction.
Calls for new investments
The Company paid calls of $28.8m during the period under review in relation to new investments (same period 2016: $16.1m) funding a number of new and follow-on underlying investments.
Five Largest Aggregate Fund Calls (excluding Co - investments) | US$m |
MTS Health Investors IV L.P. | 4.6 |
CCMP Capital Investors III L.P. | 4.2 |
Exponent Private Equity Partners III L.P. | 3.3 |
Summa Equity Fund 1 (No.2) AB | 2.5 |
Resolute Fund III L.P. | 1.9 |
MTS Health Investors IV was particularly active over the period completing four acquisitions, namely in Trumpet Behavioural Health, Accuity Delivery Systems, Medical Knowledge Group and AGS Health.
CCMP Capital Investors III announced the acquisitions of Truck Hero, Hayward and also Eating Recovery Center which provides eating disorder treatment for adults, adolescents and children.
Capital was called from Exponent Private Equity Partners III to fund its investments in Evergreen Garden Care, previously the European and Australian operations of Scotts Miracle-Gro, and Enva Group, a provider of hazardous and dry waste collection, treatment and recycling services.
Summa Equity Fund 1 announced the acquisitions of four new investments over the period: IVBAR, Pagero, EcoOnline and Milarex.
The Resolute Fund III called capital to fund investments in DuBois Chemicals, Invo Group Holdings and Quick International Couriers, Inc.
Distributions
The Company received cash distributions of $30.6m during the period under review (same period 2016: $11.7m).
Five Largest Aggregate Fund Distributions (excluding sold investments) | US$m |
The Resolute Fund III L.P. | 3.7 |
H.I.G. Bayside Debt & LBO Fund II L.P. | 3.2 |
Pine Brook Capital Partners L.P. | 1.6 |
Goldman Sachs Capital Partners VI L.P. | 1.5 |
Apax-8 (A8-A(feeder)) L.P. | 1.4 |
A large proportion of The Resolute Fund III's distributions came from the exits of Transcendia, which was sold to Goldman Sachs, and DiversiTech Corporation, which was sold to Permira after a single-year hold period.
H.I.G. Bayside Debt & LBO Fund II distributed proceeds in relation to the exits of Surgery Partners and Cornerstone Chemical Company. Smaller proceeds were received from Arctic Glacier and Wonder Holdings.
A significant proportion of proceeds received from Pine Brook Capital Partners resulted from the sales of Third Point Reinsurance, Aurigen Capital Limited and Essent Group.
Goldman Sachs Capital Partners VI distributed proceeds from the sales of a number of portfolio companies including TransUnion, Hyatt Hotels, Anhui Kouzi Distillery, Max India and Flynn Restaurant.
Proceeds from Apax 8 '(A8-A(feeder)) LP' came from a number of underlying companies.
Market News and Private Equity Environment
In the 31 March 2017 Annual Report we drew attention to the lower levels of volatility in public equity markets, which we noted may have been due to the immediate aftermath of busier than usual global electoral activity and an increasingly prevalent pro-domestic bias in the US, or 'Trump effect'. To some extent, this remains the case, and unsurprisingly the VIX index remains at comparatively low levels. As we note below, short of an exogenous event, the immediate outlook appears to be a case of 'set fair', although the strength in public equities cannot continue indefinitely.
Based on Q2 2017 data, the US economy looks to have rebounded. We believe that income growth will continue to support consumer spending and we note that business investment is rising, probably due to this global backdrop and a pick-up in energy activity. As a result we do expect the US Federal Reserve to proceed with further gradual rate rises.
The Eurozone's economic recovery has gained further momentum. Healthier global demand should continue to benefit exports, though a stronger Euro could temper any further significant gains. Business confidence and investment are likely to be supported by a perceived reduction in 'populism risks' following President Macron's election success in France.
In the UK, after displaying a surprising degree of resilience last year, activity looks set to slow as higher inflation erodes consumer spending. With annual CPI reaching a four year high, the Bank of England's Monetary Policy Committee have adopted a more 'hawkish' tone, but there are signs that the forces underpinning inflation are gradually retreating. The general election result has certainly increased uncertainty and could weigh on economic activity, but the possibility of more growth-friendly fiscal policies could also be positive. Brexit and the machinations around this process continue to dominate, though the early December 2017 agreement on the size of the 'divorce settlement' and other matters have settled markets and investors are now focusing on the next phase of talks.
From an international relations perspective there is we comment on three areas, all of which have some bearing on how we think about the risks inherent in what we do. The first is to note the increasing reportage of Russia's (and others') purported cyber meddling in affairs of commerce and state around the World. These are serious accusations and a visible reminder of the importance of data security. This is not only an important area for us to focus on in respect of our due diligence work on underlying investments, but also an increasingly important potential investment area in its own right, particularly as venture and growth funds become much more active here.
Secondly, sabre rattling from both sets of protagonists above and below the 38th parallel has continued to keep global newswires reporting military exercises and new missile tests. Whilst we do not underestimate the impact that renewed conflict on the Korean peninsula could have on our private equity investments, vested interests for both sides are such that maintaining the status quo could be, on balance, the most likely short to medium term outcome.
Lastly, and closer to home, unrest in Catalonia has triggered some uncertainty on the outlook for Spanish private equity, although recent rhetoric seems to be more conciliatory. We remain committed investors into the country and our long-held investment thesis remains intact. This includes - but is not limited to - opportunities arising out of Spanish multi-generational family-owned businesses.
With regard to asset class fundamentals, Private Equity fundraising has remained strong, driven as much by still buoyant return expectations as by a growing level of global allocations to the sector. However a key feature of this current market is that fewer funds are raising a bigger element of the total capital raised. To illustrate that, in Q2 this year, 63% of capital raised was secured by the top 10 funds that closed during the quarter alone. US Buyout deal volumes have risen dramatically with c$55bn of deals closed in the quarter twice that recorded in Q1.
We remain positive on the asset class, and notwithstanding factors specific to listed private equity, discussed by the Chairman in previous reports, and the proposed liquidation of the investment portfolio (and proposed return of capital to shareholders) as outlined in his report above, we remain positive on the outlook for private equity, and indeed for sustained high quality returns from the funds we invest in.
Alexander Barr & Colin Burrow
Aberdeen Asset Managers Limited
18 December 2017
FINANCIAL HIGHLIGHTS
(Unaudited) | (Audited) | ||
30 September 2017 | 31 March 2017 | % Change | |
Net assets (US$'000) | 219,732 | 207,751 | +5.8 |
Share price (mid-market) (pence) | 127.75 | 117.13 | +9.1 |
Net asset value per share (pence) | 150.07 | 152.24 | -1.4 |
Discount to net asset value | 14.9% | 23.1% |
PERFORMANCE (TOTAL RETURN)
Six months ended | Year ended | |
30 September 2017 | 31 March 2017 | |
Share price | +9.1% | +38.5% |
Net asset value per share | -0.1% | +17.5% |
Source: Standard Life Aberdeen & Morningstar | ||
{A} Total return represents capital return plus dividends reinvested on the dividend date. | ||
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Six months ended | Six months ended |
Year | ||
30 September 2017 | 30 September 2016 |
31 March | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Net changes in fair value of financial assets at fair value through profit or loss | 8 | 17,193 | 4,782 | 10,641 |
Income | 9 | 63 | 77 | 117 |
Currency (losses)/gains | (73) | (10) | 45 | |
Investment management fee | 14 | (962) | (1,437) | (2,361) |
Performance fee | 14 | - | (713) | (1,887) |
Other operating expenses | (772) | (790) | (1,492) | |
Tax incurred on distribution income | 10 | (662) | (158) | (263) |
_________ | _________ | _________ | ||
Profit attributable to equity shareholders | 14,787 | 1,751 | 4,800 | |
_________ | _________ | _________ | ||
Earnings per share | 11 | |||
US Dollar (cents) | 13.55 | 1.60 | 4.40 | |
Sterling (pence) | 10.10 | 1.24 | 3.52 | |
_________ | _________ | _________ | ||
The Company does not have any income or expense that is not included in profit for the period, and therefore the 'Profit attributable to equity shareholders' is also the 'Total comprehensive income for the period', as defined in International Accounting Standard 1 (revised). | ||||
All items in the above statement derive from continuing operations. | ||||
All income is attributable to the equity shareholders of Aberdeen Private Equity Fund Limited. | ||||
The accompanying notes are an integral part of these condensed set of interim financial statements. | ||||
CONDENSED BALANCE SHEET
As at | As at | As at | ||
30 September 2017 | 30 September 2016 | 31 March 2017 | ||
(unaudited) | (unaudited) | (audited) | ||
Notes | US$'000 | US$'000 | US$'000 | |
Non-current assets | ||||
Financial assets held at fair value through profit or loss | 6 | 214,922 | 185,515 | 197,804 |
Current assets | ||||
Cash and cash equivalents | 5,132 | 22,882 | 14,332 | |
Other receivables | 516 | 587 | 594 | |
5,648 | 23,469 | 14,926 | ||
_________ | _________ | _________ | ||
Creditors: amounts falling due within one year | ||||
Other payables | (838) | (1,412) | (4,979) | |
_________ | _________ | _________ | ||
Net current assets | 4,810 | 22,057 | 9,947 | |
_________ | _________ | _________ | ||
Creditors: amounts falling due after more than one year | ||||
Other payables | - | (143) | - | |
_________ | _________ | _________ | ||
Net assets | 219,732 | 207,429 | 207,751 | |
_________ | _________ | _________ | ||
Capital and reserves | ||||
Share capital | 229,199 | 229,199 | 229,199 | |
Revenue reserves | 13 | (9,467) | (21,770) | (21,448) |
_________ | _________ | _________ | ||
Equity shareholders' funds | 219,732 | 207,429 | 207,751 | |
_________ | _________ | _________ | ||
Net asset value per share | 12 | |||
US Dollar (cents) | 201.35 | 190.07 | 190.37 | |
Sterling (pence) | 150.07 | 146.32 | 152.24 | |
_________ | _________ | _________ | ||
CONDENSED STATEMENT OF CHANGES IN EQUITY
Six months ended 30 September 2017 (unaudited) | |||
Share | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2017 | 229,199 | (21,448) | 207,751 |
Profit attributable to equity shareholders | - | 14,787 | 14,787 |
Dividend paid | - | (2,806) | (2,806) |
_________ | _________ | _________ | |
As at 30 September 2017 | 229,199 | (9,467) | 219,732 |
_________ | _________ | _________ | |
Six months ended 30 September 2016 (unaudited) | |||
Share | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2016 | 229,199 | (20,064) | 209,135 |
Profit attributable to equity shareholders | - | 1,751 | 1,751 |
Dividend paid | - | (3,457) | (3,457) |
_________ | _________ | _________ | |
As at 30 September 2016 | 229,199 | (21,770) | 207,429 |
_________ | _________ | _________ | |
Year ended 31 March 2017 (audited) | |||
Share | Revenue | ||
capital | reserves | Total | |
US$'000 | US$'000 | US$'000 | |
As at 31 March 2016 | 229,199 | (20,064) | 209,135 |
Profit attributable to equity shareholders | - | 4,800 | 4,800 |
Dividend paid | - | (6,184) | (6,184) |
_________ | _________ | _________ | |
As at 31 March 2017 | _________ | _________ | _________ |
CONDENSED STATEMENT OF CASH FLOWS
Six months ended | Six months ended |
Year | |
30 September 2017 | 30 September 2016 |
31 March | |
(unaudited) | (unaudited) | (audited) | |
US$'000 | US$'000 | US$'000 | |
Cash flows from operating activities | |||
Profit for the period | 14,787 | 1,751 | 4,800 |
Net interest income from cash and cash equivalents | (63) | (77) | (117) |
Gains on investments | (17,193) | (4,782) | (10,641) |
Distribution income from investments | 598 | 1,334 | 3,866 |
Realised gains on investee distributions | 10,283 | 6,344 | 16,778 |
Realised currency gains on investee distributions | (241) | (312) | (764) |
Capital calls in relation to investee expenses | (1,738) | (1,424) | (4,647) |
Purchases of investments including calls | (28,826) | (18,008) | (48,386) |
Sales of investments and returns of capital | 19,999 | 4,437 | 19,094 |
(Decrease)/increase in trade and other payables | (4,141) | 346 | 3,770 |
Decrease in trade and other receivables | 78 | 79 | 72 |
_________ | _________ | _________ | |
Net cash (outflow)/inflow from operating activities | (6,457) | (10,312) | (16,175) |
Cash flows from investing activities | |||
Net interest income from cash and cash equivalents | 63 | 77 | 117 |
_________ | _________ | _________ | |
Net cash inflow from investing activities | 63 | 77 | 117 |
Cash flows from financing activities | |||
Equity dividend paid | (2,806) | (3,457) | (6,184) |
_________ | _________ | _________ | |
Net cash outflow from financing activities | (2,806) | (3,457) | (6,184) |
_________ | _________ | _________ | |
Net change in cash and cash equivalents for the period | (9,200) | (13,692) | (22,242) |
Cash and cash equivalents at beginning of the period | 14,332 | 36,574 | 36,574 |
_________ | _________ | _________ | |
Cash and cash equivalents at the end of the period | 5,132 | 22,882 | 14,332 |
_________ | _________ | _________ |
NOTES TO THE FINANCIAL STATEMENTS
1. | General information |
Aberdeen Private Equity Fund Limited (the 'Company') was incorporated with limited liability and registered in Guernsey on 5 January 2007. The Company's shares were listed on 9 July 2007 whereupon the Company became a closed-ended investment company, domiciled in Guernsey. The Company is authorised by the Guernsey Financial Services Commission. The principal activity of its subsidiary, APEF Investments (Europe) S.a.r.l. which was incorporated with limited liability and registered in Luxembourg on 30 September 2016, is to hold the investment in Nazca Fund IV FCR. This condensed interim financial information was approved by the Board on 18 December 2017. This condensed interim financial information does not comprise statutory accounts within the meaning of the Companies (Guernsey) Law, 2008. Statutory accounts for the year ended 31 March 2017 were approved by the Board of Directors on 26 June 2017 and the opinion of the auditors on those accounts was unqualified. This interim financial information for the half year period ended 30 September 2017 has been reviewed by the auditors but not audited. |
2. | Basis of preparation |
This condensed interim financial information for the half year ended 30 September 2017 has been prepared on a going concern basis in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority in the UK and with IAS 34, 'Interim Financial Reporting'. The condensed interim financial information should be read in conjunction with the statutory accounts for the year ended 31 March 2017, which have been prepared in accordance with International Financial Reporting Standards ('IFRS') and with the requirements of Guernsey law. | |
Significant judgements | |
The preparation of financial statements in conformity with IFRS requires the use of certain critical accounting estimates and which requires management to exercise its judgement in the process of applying the accounting policies. In preparing these condensed half yearly financial statements, the significant judgements made by management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the annual audited financial statements for the year ended 31 March 2017. |
3. | Accounting policies |
The accounting policies are consistent with those of the annual financial statements for the year ended 31 March 2017. | |
New accounting standards | |
At the date of authorisation of these interim financial statements, the following Standard and Amendments were in issue but not yet effective: | |
IAS 7 Amendment - Disclosure Initiative | |
IAS 12 Amendment - Recognition of Deferred Tax Assets for Unrealised Losses | |
IFRS 9 - Financial Instruments | |
IFRS 15 - Revenue from Contracts with Customers | |
IFRS 16 - Leases | |
IFRS 12 Amendment (AI 2014 -16) - Clarification of the scope of the Standard | |
IFRIC 22 - Foreign Currency Transactions and Advance Consideration | |
The Board has assessed the potential impact of the above Standards and Amendments and does not anticipate that their adoption in future periods will materially impact the Company's financial results in the period of initial application although there will be revised presentations to the financial statements and additional disclosures. In forming this opinion the Board specifically notes the fundamental rewrite of accounting rules for financial instruments under IFRS 9 and introduces a new classification model for financial assets that is more principles-based than the current requirements under IAS 39 Financial Instruments: Recognition and Measurement. Financial assets are classified according to their contractual cash flow characteristics and the business models under which they are held. Instruments will be classified either at amortised cost, the newly established measurement category fair value through other comprehensive income or fair value through profit of loss. The Company's portfolio does not include any holdings which have contractual cash flows and the Board has determined it will be appropriate to continue to classify the portfolio investments at fair value through profit or loss. In further considering the Company's business model, the Board is mindful that the Manager manages and evaluates the performance of the Company on a fair value basis and is compensated based on the fair value of assets managed. |
4. | Segmental information |
The Company engaged in a single segment of business during the period: investment in the Private Equity Funds (including direct and co-investments) portfolio. A reconciliation of movements in value during the period can be found in notes 6 and 8 where additional information has been provided for the benefit of shareholders. | |
The Company is domiciled in Guernsey. All of the Company's income from investments is from underlying investments that are incorporated in countries other than Guernsey. | |
The Company has a diversified portfolio of investments and in accordance with the Company's investment policy no single investment may account for more than 20% of the Company's net assets at the date of investment. |
Six months ended | Six months ended |
Year | ||
30 September 2017 | 30 September 2016 | 31 March 2017 | ||
5. | Dividends on equity shares | US$'000 | US$'000 | US$'000 |
Amounts recognised as distributions to equity holders in the period: | ||||
Final dividend for 2017 - 2.00p (2016 - 2.20p) | 2,806 | 3,457 | 3,457 | |
Interim dividend for 2017 - 2.00p (2016 - nil) | - | - | 2,727 | |
_________ | _________ | _________ | ||
2,806 | 3,457 | 6,184 | ||
_________ | _________ | _________ |
30 September 2017 | 30 September 2016 | 31 March 2017 | ||
Private |
Private | Private Equity Funds | ||
6. | Financial assets at fair value through profit or loss | US$'000 | US$'000 | US$'000 |
Cost at beginning of period | 175,704 | 142,967 | 142,967 | |
Additions | 28,826 | 18,008 | 48,386 | |
Disposals and returns of capital | (19,999) | (4,437) | (19,094) | |
Realised gains on disposal of investments | 4,074 | - | 3,445 | |
_________ | _________ | _________ | ||
Cost at end of period | 188,605 | 156,538 | 175,704 | |
Unrealised gains on investments | 26,317 | 28,977 | 22,100 | |
_________ | _________ | _________ | ||
Fair value at end of period | 214,922 | 185,515 | 197,804 | |
_________ | _________ | _________ | ||
As at 30 September 2017, 30 September 2016 and 31 March 2017 there was one operating segment, being Private Equity Funds (including direct and co-investments), in addition to the Company owning 100% of the share capital of its subsidiary, APEF Investments (Europe) S.a.r.l, an investment holding company registered in Luxembourg. | ||||
7. | Fair value hierarchy | |||||
IFRS 7 'Financial Instruments: Disclosures' requires an entity to classify fair value measurements using a fair value hierarchy that reflects the subjectivity of the inputs used in making measurements. | ||||||
Fair value estimation | ||||||
The Company has adopted IFRS 13 'Fair Value Measurement'. The fair value of financial assets and liabilities traded in active markets is based on quoted market prices at the close of trading on the period end. If a significant movement in fair value occurs immediately subsequent to the close of trading on the period end date, valuation techniques will be applied to determine the fair value. An active market is a market in which transactions for the asset or liability take place with sufficient frequency and volume to provide pricing information on an ongoing basis. | ||||||
Investments in private equity funds, including co-investments, may not have a readily available market and are therefore valued based on the fair value of each private equity fund as reported by the respective general partner as per the capital account summary statement, normally updated and received on a calendar quarterly basis, which includes estimates made by those general partners. The Board and Manager believe that this value, in most cases, represents fair value as of the relevant statement date, although, if other factors lead the Board or Manager to conclude that the fair value attributed by the general partner does not match their estimate of actual fair value, the Board and Manager will adjust the value of the investment from the general partner's estimate. The Board and Manager estimate fair value using publicly available information and the most recent financial information provided by the general partners, as adjusted for cash flows since the date of the most recent financial information. As the key input into the model is official valuation statements, we do not consider it appropriate to put forward a sensitivity analysis on the basis insufficient value is likely to be derived by the end user. 99% by value of the portfolio has been valued using 30 September 2017 quarter-end valuations and 1% has been valued using valuations based on the 30 June 2017 quarter-end. | ||||||
The Company has classified fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following 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 liability, either directly (ie as prices) or indirectly (ie derived from prices); and | ||||||
Level 3: inputs for the asset or liability that are not based on observable market data (unobservable inputs). | ||||||
The level in the fair value hierarchy within which the fair value measurement is categorised in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement of the instrument in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the financial asset or liability. | ||||||
The determination of what constitutes 'observable' requires significant judgement by the Directors in consultation with the Investment Manager. The Directors consider observable data to be that 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 summarise by level within the fair value hierarchy the Company's financial assets and liabilities at fair value as follows: | ||||||
Level 1 | Level 2 | Level 3 | Total | |||
30 September 2017 | US'000 | US'000 | US'000 | US'000 | ||
Financial assets at fair value through profit and loss | - | - | 214,922 | 214,922 | ||
_______ | _______ | _______ | _______ | |||
Level 1 | Level 2 | Level 3 | Total | |||
30 September 2016 | US'000 | US'000 | US'000 | US'000 | ||
Financial assets at fair value through profit and loss | - | - | 185,515 | 185,515 | ||
_______ | _______ | _______ | _______ | |||
Level 1 | Level 2 | Level 3 | Total | |||
31 March 2017 | US'000 | US'000 | US'000 | US'000 | ||
Financial assets at fair value through profit and loss | - | - | 197,804 | 197,804 | ||
_______ | _______ | _______ | _______ | |||
A reconciliation of fair value measurements in Level 3 is set out in the following table (Private Equity Funds includes co-investments): | ||||||
Private Equity | ||||||
Funds | ||||||
Six months ended 30 September 2017 | US'000 | |||||
Opening balance | 197,804 | |||||
Purchases including calls | 28,826 | |||||
Sales and returns of capital | (19,999) | |||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | ||||||
- on assets sold | 4,074 | |||||
- on assets held at the period end | 4,217 | |||||
_________ | ||||||
214,922 | ||||||
_________ | ||||||
Private Equity | ||||||
Funds | ||||||
Six months ended 30 September 2016 | US'000 | |||||
Opening balance | 173,104 | |||||
Purchases including calls | 18,008 | |||||
Sales and returns of capital | (4,437) | |||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | ||||||
- on assets sold | - | |||||
- on assets held at the period end | (1,160) | |||||
_________ | ||||||
185,515 | ||||||
_________ | ||||||
Private Equity | ||||||
Funds | ||||||
Year ended 31 March 2017 | US'000 | |||||
Opening balance | 173,104 | |||||
Purchases including calls | 48,386 | |||||
Sales and returns of capital | (19,094) | |||||
Total gains or losses on investments included in Condensed Statement of Comprehensive Income: | ||||||
- on assets sold | 3,445 | |||||
- on assets held at the year end | (8,037) | |||||
_________ | ||||||
197,804 | ||||||
_________ | ||||||
Financial assets and liabilities other than those at fair value through profit or loss are measured at amortised cost. Due to their short-term nature, the carrying values are considered to approximate to their fair values. | ||||||
8. | Net changes in fair value of financial assets at fair value through profit or loss | |||
The net realised and unrealised investment gain or loss from financial assets at fair value through profit or loss shown in the Condensed Statement of Comprehensive Income is analysed as follows: | ||||
Six months | Six months ended |
Year | ||
30 September 2017 | 30 September 2016 |
31 March | ||
US$'000 | US$'000 | US$'000 | ||
Unrealised gains/(losses) on investments | 4,217 | (1,160) | (8,037) | |
Capital calls in relation to investee expenses{A} | (1,738) | (1,424) | (4,647) | |
Realised gains on disposal of investments | 4,074 | - | 3,445 | |
Realised gains on investee distributions | 10,283 | 6,344 | 16,778 | |
Realised currency losses on investee distributions | (241) | (312) | (764) | |
Distribution income from investments | 598 | 1,334 | 3,866 | |
_________ | _________ | _________ | ||
17,193 | 4,782 | 10,641 | ||
_________ | _________ | _________ | ||
{A} Capital call expenses relate to management fees and other expenses paid to investees. | ||||
The Company does not experience any seasonality or cyclicality in its investing activities. | ||||
Six months | Six months ended |
Year | ||
30 September 2017 | 30 September 2016 |
31 March | ||
9. | Income | US$'000 | US'000 | US'000 |
Net interest income from cash and cash equivalents | 63 | 77 | 117 | |
_________ | _________ | _________ |
10. | Taxation |
The Company is subject to federal and state tax on effectively connected income ('ECI') received from certain of its underlying portfolio holdings in the US. Such taxes are deducted by the investee from income before being paid to the Company. Upon filing the Company's annual tax return with US authorities the Company will be able to assess whether any ECI tax paid on its behalf may be recoverable. The amount identified as recoverable at 30 September 2017 was US$ nil (30 September 2016 - US$ nil; 31 March 2017 - US$ nil). In certain circumstances, the Company is also in a position to receive recoverable withholding taxes on distribution income from underlying holdings. During the period ended 30 September 2017, the Company incurred state taxes of US$8,000 and withholding tax expenses of US$654,000 and received withholding tax refunds of US$nil, therefore amounting to a net tax expense for the period of US$662,000. The Company is domiciled and registered for taxation purposes in Guernsey where it pays an annual exempt status fee (which is currently £1,200) under The Income Tax (Exempt Bodies) (Guernsey) Ordinances 1989 (as amended). Consequently, the Company does not pay income or corporation taxes there and, other than in the US as noted above, does not currently suffer such taxes anywhere else. |
11. | Earnings per share |
The basic earnings per share is calculated by dividing the returns attributable to shareholders by the weighted average number of shares in issue during the period, being 109,131,199 (30 September 2016 and 31 March 2017 - 109,131,199). There were no potentially dilutive shares in issue at 30 September 2017 (30 September 2016 and 31 March 2017 - nil). Whilst the Company has chosen to report basic earnings per share in a currency other than its functional and presentation currency as supplementary information it has complied with the requirements of IFRS including the translation method. |
12. | Net asset value per share |
The net asset value per share is determined by dividing the net assets of the Company attributable to the shares of £163,778,000 (US$219,732,000) (30 September 2016 - £159,684,000 (US$207,429,000)) (31 March 2017 - £166,141,000 (US$207,751,000) by 109,131,199 (30 September 2016 and 31 March 2017 - same) shares, being the number of shares in issue at the period end. Whilst the Company has chosen to report net asset value per share in a currency other than its functional and presentation currency as supplementary information it has complied with the requirements of IFRS including the translation method. |
13. | Revenue reserves |
The revenue reserves reflected in the Condensed Balance Sheet at 30 September 2017 include cumulative unrealised gains of US$26,317,000 (30 September 2016 - US$28,977,000; 31 March 2017 - US$22,100,000) which relate to the revaluation of investments held at the reporting date. |
14. | Transactions with the Manager |
During the period AFML provided management services to the Company. | |
Under the terms of the management agreement the Manager is paid a monthly fee of one-twelfth of 0.9% per annum of the NAV of the Company after deducting liabilities but excluding long-term structured debt. The fee is calculated and accrued as at the last business day of each month and is paid monthly in arrears. During the period US$962,000 of management fees were payable (30 September 2016 - US$1,437,000); 31 March 2017 - US$2,361,000) and US$165,000 (30 September 2016 - US$246,000; 31 March 2017 - US$157,000) was outstanding at the period end. | |
In addition, the Manager is entitled to a performance fee subject to certain conditions. | |
In order to earn a performance fee all of the following criteria must be met in a performance fee period: | |
- the NAV must have risen by more than 8% in the performance fee period | |
- the NAV must exceed the high watermark at which a fee was last paid (ie 152.24p being the NAV as at 31 March 2017) | |
- the NAV must have risen by more than 8% per annum compound over the previous three performance periods | |
The performance itself is calculated at 10% of the NAV gain above the hurdle rate in the performance period. Furthermore, the total of fees payable to the Manager in any performance period is capped at 3% of NAV. As at 30 September 2017 no accrual has been made in respect of a performance fee being payable (30 September 2016 - US$713,000; 31 March 2017 - US$1,887,000). | |
The Company also has an agreement with AAML for the provision of promotional activities in relation to the Company's participation in the Aberdeen Investment Trust Share Plan and ISA. The total fees paid and payable under the agreement were £36,000 (US$45,000) (30 September 2016 - £41,000 (US$53,000); 31 March 2017 - £77,000 (US$107,000)) and the sum due to AAML at the period end was £18,000 US$(24,000) (30 September 2016 - £18,000 (US$23,000); 31 March 2017 - £18,000 (US$23,000)). |
15. | Related party transactions and transactions with Service Providers |
During the period, the Company had an agreement with AFML for the provision of management services. AFML also acts as the alternative investment fund manager (AIFM) of the Company and delegates the portfolio management of and the provision of promotional activities for the Company to AAML. AFML and AAML are all wholly owned subsidiaries of Standard Life Aberdeen PLC. Details of transactions during the period and balances outstanding at the period end are disclosed in note 14. | |
Pursuant to the Corporate Strategy proposals announced on 18 December 2017, the Company has served notice to the Manager in accordance with the terms of the Management Agreement. | |
As at 30 September 2017, the Company had holdings amounting to US$3,416,000 (30 September 2016 - US$15,218,000; 31 March 2017 - US$2,037,000) in Aberdeen Liquidity Funds which are managed and administered by AAML, a wholly owned subsidiary of Standard Life Aberdeen PLC. The Company pays a management fee of 0.9% per annum on the value of these holdings which is part of and not in addition to the monthly management fee referred to in note 14, but no fee is chargeable at the underlying fund level. Details of these holdings can be found within the Investment Portfolio. |
16. | Subsequent events |
The Company announced on 18 December 2017 that it has entered into a Sale and Purchase Agreement to sell its entire investment portfolio at a modest premium to its 31 October 2017 valuation, net of associated sale costs. It is expected that the bulk, if not all, of the proceeds from the sale will be received in one tranche on or soon after 31 March 2018, and it is the Board's intention to return capital to shareholders as and when proceeds are received. It is estimated currently that the total return to shareholders will be close to net asset value as at 31 October 2017, however the proceeds received from the purchaser and final shareholder return will be subject to various factors including, but not limited to, foreign exchange fluctuations and liquidation costs. The proposed sale is subject to a number of conditions contained within the SPA, including, but not limited to, shareholders approving a change in the Company's investment policy to that of a divestment policy to enable a sale of the entire portfolio to be made. It is intended that following completion of the sale and the capital return to shareholders, the Company will be placed in liquidation. The Company will issue a circular in early 2018 to convene an extraordinary general meeting to approve, inter alia, the change of investment policy, the mechanism for shareholder returns and to provide further details, including the expected timescale for the return of capital to shareholders. Shareholders representing 69 per cent. of the Company have given irrevocable undertakings to vote in favour of the resolutions at the EGM. | |
Independent Review Report to Aberdeen Private Equity Fund Limited
Our Conclusion
We have reviewed the accompanying condensed interim financial information of Aberdeen Private Equity Fund Limited (the 'Company') as of 30 September 2017. Based on our review, nothing has come to our attention that causes us to believe that the accompanying condensed interim financial information is not prepared, in all material respects, in accordance with International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Emphasis of Matter - Going Concern
Without modifying our conclusion, we draw your attention to the corporate strategy disclosures in the Chairman's Statement. The Company intends to issue a Circular to shareholders during the early part of 2018 with proposals to seek shareholder approval to dispose of the investment portfolio. Should these proposals be passed, then the Directors would likely over time seek to wind up the Company once all aspects of the investment portfolio disposal have been completed and proceeds distributed to shareholders. This interim financial information does not include the adjustments that would result should the shareholders approve the resolutions to dispose of the investment portfolio.
Without modifying our conclusion, we also draw your attention to the going concern disclosures in the Interim Board Report, to the basis of preparation disclosures in note 2 to the condensed interim financial information and to the commentary on the passing of the annual continuation vote included in the Chairman's Statement. These note that the Company is now subject to an annual continuation vote being proposed to the shareholders at the Annual General Meeting to approve that the Company continues its business as a closed-ended investment company. Should this resolution not be passed by the shareholders, then the Directors would need to take appropriate steps to reorganise the Company and to effectively propose for an orderly winding down of the Company over time. This interim financial information does do not include the adjustments that would result should the continuation vote not be passed.
What We Have Reviewed
The accompanying condensed interim financial information comprise:
- the condensed balance sheet as at 30 September 2017;
- the condensed statement of comprehensive income for the six-month period then ended;
- the condensed statement of changes in equity for the six-month period then ended;
- the condensed statement of cash flows for the six-month period then ended; and
- the notes, comprising a summary of significant accounting policies and other explanatory information.
The condensed interim financial information has been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting' and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our Responsibilities and those of the Directors
The Directors are responsible for the preparation and presentation of this condensed interim financial information in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom's Financial Conduct Authority.
Our responsibility is to express a conclusion on this condensed interim financial information based on our review. 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.
Scope of Review
We conducted our review in accordance with International Standard on Review Engagements 2410, 'Review of interim financial information performed by the independent auditor of the entity' issued by the International Auditing and Assurance Standards Board. A review of interim financial information consists of making inquiries, 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 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 half yearly report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.
PricewaterhouseCoopers CI LLP
Chartered Accountants
Guernsey, Channel Islands
18 December 2017
Publication of Interim Financial Report
(i) The maintenance and integrity of the Company's website is the responsibility of the Directors; the work carried out by the auditors does not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the condensed interim financial statements since they were initially presented on the website.
(ii) Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
SCHEDULE OF INVESTMENTS
AS AT 30 SEPTEMBER 2017
Total | Investment | |||
Investments | Commitments | called/cost{B} | Fair Value | % of |
Private Equity Funds Portfolio | US$'000{A} | US$'000 | US$'000 | NAV |
Apax 8 (A8-A(feeder)) L.P. | € 10,000 | 9,830 | 12,636 | 5.8 |
APPE US LLC | 13,000 | - | - | - |
CCMP Capital Investors III L.P. | 15,000 | 11,272 | 13,701 | 6.2 |
Coller International Partners V L.P.{B} | 15,000 | - | 2,037 | 0.9 |
CVC Capital Partners Asia Pacific IV L.P. | 10,000 | 2,588 | 3,297 | 1.5 |
Exponent Private Equity Partners III L.P. | £10,000 | 9,637 | 10,935 | 5.0 |
FFL Parallel Fund IV L.P. | 10,000 | 3,325 | 3,714 | 1.7 |
Goldman Sachs Capital Partners VI L.P. | 15,000 | 4,605 | 3,011 | 1.4 |
Gores Capital Partners III L.P. | 10,000 | 5,898 | 4,168 | 1.9 |
HIG Bayside Debt & LBO Fund II L.P. | 15,000 | 8,747 | 8,491 | 3.9 |
Latour Capital II | € 10,000 | 1,769 | 1,878 | 0.9 |
Longreach Capital Partners Ireland 1, L.P. | 7,425 | 8,213 | 4,072 | 1.9 |
Longreach Capital Partners 2 - USD, L.P. | 7,500 | 3,659 | 8,708 | 4.0 |
MatlinPatterson Global Opportunities Partners III L.P. | 10,000 | 6,997 | 6,316 | 2.9 |
MML Capital Partners Fund VI L.P. | € 13,000 | 7,763 | 8,959 | 4.0 |
Montagu V L.P. | € 8,000 | 1,786 | 2,254 | 1.0 |
MTS Health Investors IV L.P. | 15,000 | 6,258 | 6,215 | 2.8 |
Nazca Fund IV FCR{C} | € 10,000 | 1,861 | 2,087 | 0.9 |
Northzone Ventures VI L.P. | € 10,000 | 5,292 | 5,824 | 2.7 |
Northzone Ventures VIII L.P. | € 12,000 | 3,451 | 4,088 | 1.9 |
Oaktree OCM Opportunities Fund VIIb L.P. | 15,000 | - | 1,170 | 0.5 |
Pangaea Two Parallel L.P. | 5,000 | 2,927 | 4,599 | 2.1 |
Pine Brook Capital Partners L.P. | 10,000 | 4,890 | 5,578 | 2.5 |
Resolute Fund III L.P. | 15,000 | 7,448 | 8,445 | 3.8 |
RHO Ventures VI L.P. | 10,000 | 9,466 | 8,742 | 4.0 |
Sagard 3 FCPI | € 10,000 | 4,443 | 8,209 | 3.7 |
Silver Lake Partners III L.P. | 13,777 | 4,423 | 6,809 | 3.1 |
SL SPV Feeder I | 1,223 | 1,223 | 2,548 | 1.2 |
StepStone International Investors III L.P. | € 14,600 | 6,070 | 2,697 | 1.2 |
Summa Equity Fund 1 (No.2) AB | SEK 145,500 | 3,942 | 4,637 | 2.1 |
Tenaya Capital V L.P. | 12,500 | 7,451 | 8,206 | 3.7 |
Tenaya Capital VI L.P. | 5,000 | 4,007 | 4,410 | 2.0 |
Thoma Bravo IX Fund L.P. | 10,000 | 704 | 1,137 | 0.5 |
Wisequity IV | € 10,000 | 4,563 | 6,266 | 2.9 |
164,508 | 185,844 | 84.6 | ||
Co-investments | ||||
BP INV3 LP | £2,200 | 2,485 | 2,683 | 1.2 |
CCMP Co-Invest III A L.P. | 1,500 | 1,500 | 1,499 | 0.7 |
Color Wind S.p.A. | € 3,325 | 2,148 | 2,364 | 1.1 |
CSP Ergon Investment L.P. | 2,087 | 2,087 | 3,654 | 1.6 |
Diamond Hill L.P. | 3,000 | 3,000 | 2,999 | 1.3 |
Finvest L.P. | £2,900 | 3,052 | 3,289 | 1.5 |
Hg Capital 5 Co-Invest 1 L.P. | £3,000 | 4,638 | 2,875 | 1.3 |
Lion Seneca Cayman 3 L.P. | € 810 | 988 | 1,017 | 0.5 |
LVM LP Co-Investment L.P. | 1,500 | 625 | 3,270 | 1.5 |
SLP Denali Co-Invest L.P. | 2,080 | 2,074 | 3,928 | 1.8 |
TrueNoord Co-Investment II LP | 3,000 | 1,500 | 1,500 | 0.7 |
24,097 | 29,078 | 13.2 | ||
_________ | _________ | ______ | ||
Total investments | 188,605 | 214,922 | 97.8 | |
_________ | _________ | ______ | ||
{A} All commitments are in US$ unless otherwise stated. | ||||
{B} Investments called/cost represents commitments drawn down less net distributions. Where net distributions exceed drawdowns a nil amount is shown. | ||||
{C} Held via a 100% owned subsidiary. | ||||
The Half Yearly Report will shortly be available from the Company's website (aberdeenprivateequity.co.uk) and will be posted to shareholders in late December 2017.
Neither the content of the Company's website nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is (or is deemed to be) incorporated into, or forms (or is deemed to form) part of this announcement.
18 December 2017
Aberdeen Private Equity Fund Limited published this content on 18 December 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 18 December 2017 13:14:09 UTC.
Original documenthttp://lt.morningstar.com/nsw9i6p7ec/stockreport/newsItem.aspx?id=394969487693103
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