To: Stock Exchange | For immediate release: |
| 29 August 2024 |
CT Private Equity Trust PLC
LEI: 2138009FW98WZFCGRN66
Unaudited results for the half year ended 30 June 2024
Financial Highlights
· NAV of 694.28p per Ordinary Share as at 30 June 2024 reflecting a total return for the six-month period of +0.8%.
· Dividend yield of 6.5% based on the period end share price (1).
· Strong realisations and associated income in the period of £52.3m. This represents an increase of 31.4% compared to the same period last year.
· Realisations in the first half at a 35% premium to prior valuation.
· Share price total return for the six-month period of -4.5%.
· Total quarterly dividends of 14.02p per Ordinary Share year to date.
· Quarterly dividend of 7.01p paid on 31 July 2024
· Quarterly dividend of 7.01p to be paid on 31 October 2024
· As at 30 June 2024 net debt was £91.3 million equivalent to a gearing level of 15.5%.
(1) Calculated as dividends of 7.01p paid on 31 January 2024, 7.01p paid on 30 April 2024, 7.01p paid on 31 July 2024 and 7.01p payable on 31 October 2024, divided by the Company's share price of 433.50p as at 30 June 2024.
Chairman's Statement
Introduction
This report is for the six-month period ended 30 June 2024. At the period end, the Net Asset Value ("NAV") of CT Private Equity Trust PLC ("the Company") was £496.4 million giving a NAV per share of 694.28p. Taking account of dividends paid the NAV total return for the six-month period was 0.8%. With the discount widening, the share price total return for the period was -4.5%.
At 30 June the Company had net debt of £91.3m. The outstanding undrawn commitments were £206.9m of which £25.7m was to funds where the investment period had expired.
A dividend of 7.01p was paid on 31 July 2024 and in accordance with the Company's dividend policy, the Board declares a further quarterly dividend of 7.01p per ordinary share, payable on 31 October 2024 to Shareholders on the register on 4 October 2024 with an ex-dividend date of 3 October 2024. Together with the last three dividends paid this represents a dividend yield of 6.5% based on the period end share price.
For the six-month period ended 30 June 2024, the Company has recorded a small positive NAV total return. This is after a negative foreign exchange influence at the portfolio level of around 1.0% principally as a result of the euro weakening against sterling.
After a period of adjustment precipitated by higher inflation, higher interest rates and some external events creating uncertainty there now appears to be a mild but definite pick-up in activity. The clearest manifestation in our portfolio is the substantial increase in realisations over the course of this reporting period with some more significant ones to come in the near future. Realisations are usually at a significant premium to recent carrying value and so have the benefit of enhancing NAV as well as strengthening the balance sheet and creating more shareholder value.
The price of private companies, represented by multiples of profit, has gradually moderated, whilst the fundamentals of the investee companies has generally continued to improve, making investment more attractive. There are many investable funds and co-investments being appraised by our managers. Experience shows that investments made during, or immediately after, economic slowdowns usually perform very well. Judicious husbanding of capital is essential to have the resources to take these opportunities as they arise. Your Company is well resourced financially and managerially to find and execute the best of these opportunities.
Financing
To reflect the growth in the size of the Company, during February 2024, the Company entered into a revised loan agreement with RBSI and State Street. The revised loan agreement increased the €25m term loan with RBSI to €60m and retained the revolving credit facility with RBSI and State Street at £95m. The term of the agreement, which was due to expire in June 2024, was extended to February 2027. At 30 June 2024 exchange rates, these borrowing facilities, resulted in a total borrowing capacity of approximately £145.9m.
As at 30 June 2024, the Company had cash of £22.1m. With borrowings of £113.4m from the facilities, net debt was £91.3m, equivalent to a gearing level of 15.5% (31 December 2023: 14.6%). The total of outstanding undrawn commitments at 30 June 2024 was £206.9m and, of this, approximately £25.7m was to funds where the investment period had expired.
Capital Allocation
The Board regularly reviews the Company's capital allocation strategy. This strategy seeks to balance the benefits of an immediate enhancement to NAV from share buybacks against the anticipated longer-term returns from new investment. It must also seek to ensure the maintenance of the Company's dividend policy, be mindful of the need to maintain an efficient balance sheet and meet comfortably any drawdown requests from investments.
The Company's innovative dividend policy was introduced in 2012 and remains an important factor in the Company's capital allocation strategy. The Company aims to pay quarterly dividends with an annual yield equivalent to not less than 4% of the average of the published NAVs per Ordinary Share as at the end of its last four financial quarters prior to the announcement of the relevant quarterly dividend or, if higher, equal to the highest quarterly dividend previously paid. Based on the period end share price, the annual dividend yield for the period is 6.5%.
Since 1 January 2013 the Company has returned £136m of dividends to Shareholders.
The Company does not have a stated discount management policy. However, the Board recognises the importance of movements in the Company's discount upon the return that Shareholders receive and monitors closely the discount's absolute and relative levels. At the Annual General Meeting held on 29 May 2024, the Board sought and received from Shareholders the authority to buy back up to 14.99% of the Company's share capital. Buybacks can only be made at a cost per share which is below the prevailing NAV.
During the six-month period ended 30 June 2024 the Company bought back, to be held in treasury, a total of 1.25m shares. This equated to 1.7% of the shares in issue, excluding those held in treasury, at 31 December 2023. The shares were bought back in two tranches at 460 pence per share and cost, in total, £5.8m. Based on NAV at time of purchase, these buybacks occurred at an average discount of 32.8% and resulted in an enhancement to NAV for continuing Shareholders of £2.8m or 0.6% of NAV. As at 30 June 2024, the share price discount was 37.6% (31 December 2023: 33.4%).
The Company continues to appraise the relative merits of using capital for share buybacks versus new investment whilst protecting and growing the dividend.
Outlook
Your Company has continued to make progress so far this year and there are good grounds for confidence that further substantial gains will be possible in the second half. Specifically, the partial hiatus in dealmaking which typified the period of adjustment last year and the start of this year now appears to have passed. An uptick in activity is generally positive for asset values. Whilst new fund raising in the private equity sector is currently fairly challenging, there remains a very significant amount of committed but uninvested capital available internationally for the asset class which our investment partners and their peers will carefully deploy over the next few years. The returns from the asset class are expected to improve as the required return from private equity investors has not changed. This is for strong absolute returns well in excess of what listed markets can offer. As the expectations of buyers and sellers of private companies converge capital and expertise will come together with strong management. Their closely aligned interests provide the drive in the private equity investment model and underpins long term value creation.
Richard Gray
Chairman
Manager's Review
Introduction
The first half of the year witnessed an improving environment for deal-making internationally with a distinct increase in activity towards the end of the period. This reflects the gradual adjustment which the private equity sector, and those seeking funding from it, have been making to a higher interest rate environment where economic growth has been absent or modest. The price that investors will pay and the proportion and availability of debt for buyouts has come down noticeably. Vendors' price expectations take time to catch up with this reality and the result is a quiet period for deals followed by a more active catch up phase. If the underlying investee companies continue to make good progress on their respective investment theses this can lead to excellent buying opportunities for careful and experienced investors. Our recent portfolio activity demonstrates this well.
New Investments
Dealflow of funds and co-investments remains very strong with hundreds of investment opportunities appraised. These come from investment partners which we have invested with for many years and from others who are newer in our network.
Four new fund commitments were made during the first half.
£6.0m has been committed to Corran Environmental II, a UK lower mid-market growth fund with a focus on clean energy and environmental companies. Corran is led by former SEP partner Gary Le Sueur and continues with a similar strategy to SEP's Environmental Energies Fund which he led. Indeed the initial asset for the fund, Vital Energi, has been acquired from the Environmental Energies Fund. Vital is a district heating and energy efficiency specialist which also owns and operates an energy-from-waste plant at Drakelow in Derbyshire. The initial drawdown covering Vital was £2.8m.
€5.0m has been committed to the Agilitas Human Investment Fund. We have invested with Agilitas both through funds and co-investments several times over the years. The Human Investment Fund has an explicit investment objective of helping people that are disadvantaged or in need. It is an Article 9 fund under the Sustainable Finance Disclosure Regulation.
€3.0m has been committed to ARCHIMED MED Rise. ARCHIMED is the leading France-based healthcare specialist with whom we have invested several times. This fund targets buyouts of small healthcare businesses operating within attractive niches.
Lastly, we have finalised our commitment to August Equity VI, the latest in a series of commitments to this accomplished lower mid-market UK buyout specialist. We have committed £10m to this fund.
There was one new co-investment in the first half and there were five significant follow-on investments to existing investments.
£4.0m was invested in Accounts IQ, a B2B cloud-based accounting software provider for mid-sized companies in the UK and Ireland. The company operates a SaaS model which gives an attractive financial profile enabling the company to grow by 30% per annum over the last three years. This co-investment (£2.6m) is led by Axiom I, the enterprise software focussed lower mid-market fund, which drew an additional £1.4m for investment in Accounts IQ.
The follow-ons for the co-investments were diverse by sector and geography.
£4.2m has been added to Breeze Group (CAS), the Manchester-based manufacturer of microbiological safety cabinets. The new investment is to fund two complementary acquisitions. Amercare is a UK-based designer and supplier of isolators for medical and pharmaceutical applications, including products which address higher growth subsectors including cell therapy and radiopharmacy. BioSpherix is a US-based niche provider of cleanroom grade containment solutions aimed at the cell therapy market. These products control the environmental conditions to optimise cell health and reproducibility.
£2.2m has been called by deal leader Persistence Capital for MedSpa, the Canada-based chain of aesthetics clinics to finance three acquisitions.
£0.7m has been added to Aurora Payments Solutions, the US-based digital payments solution provider for over 20,000 merchants across the USA in sectors including hospitality, transport and hotel sectors. This additional amount is our share of a deferred consideration agreement and will be used to fund several add-on acquisitions that are well progressed.
£0.7m was invested in the US focussed Mexican restaurant chain Rosa Mexicano which has struggled with a slower than anticipated recovery in custom post-COVID. This has necessitated focus on a smaller number of more profitable sites, considerable overhead cut-backs and a new Executive Chairman. Our investment provides working capital to help enable these changes.
£0.5m has been added to our co-investment in GT Medical, the developer of the brain cancer treatment GammaTile. This will contribute to the funding for the recent acquisition of Isoray, the company that makes the radioactive caesium seeds that are embedded with the GammaTile. The company remains on an exciting trajectory with a strengthening of management, improved clinical data, promising early results and supply chain efficiencies.
Despite relatively limited new investment activity in the first half, many of the funds in our portfolio were active initiating or adding to investments.
Our UK-based funds made a number of new investments with a technology or scientific theme.
SEP VI invested a combined £1.6m in Braincube, the France-based internet of industrial things software company which specialises in optimising manufacturing processes, and Cora, an Irish software company specialising in project management software for the aerospace, defence, healthcare and life sciences sectors.
Kester Capital III called £0.7m mainly for GXP Exchange, a leading provider of good clinical/pharmacovigilance practice audit and related consulting services to the pharmaceutical and biotech sectors.
MVM VI called £1.4m for three healthcare companies with innovative products; Bioprotect (biodegradable products which help with the treatment of prostate cancer), Gynesonics (minimally invasive medical devices for the treatment of uterine fibroids) and Isotec (carbon composite implants for the treatment of cancer of the spine).
FPE III called £1.1m during the quarter. £0.5m for refinancing the subscription facility and £0.5m for Vanda Research, a provider of specialist research and data products for hedge funds and investment banks.
August Equity V called £0.7m mainly for Polaris Software (formerly StarTraq) (£0.5m), the provider of compliance software to police and local authorities, which completed its second add-on acquisition.
In Continental Europe and in North America there were also some interesting new investments.
Corsair VI, the financial services specialists called £1.1m for MJM, a leading independent commercial insurance broker in Poland. Also in Poland Avallon III called £0.6m for MPPK, a dog and cat food company.
There was considerable activity in the Nordics. Verdane Edda III called £0.6m for two companies; Hornet Security (B2B cloud-based email security products) and Verified Global (B2B SaaS for digitising business processes around identification and authorisation). Verdane Capital XI called £0.5m for a number of follow on investments. Vaaka IV called £0.9m to primarily invest in Finnish IT infrastructure provider Tietokeskus alongside a continuation vehicle. We had existing exposure to this business through the commitment to Vaaka II.
In Italy, Wisequity VI called £1.1m for Serbios a leading Italian biocontrols company (providing biological alternatives to pesticides and agrochemicals). This is the first acquisition within Greenexta, a newly established buy-and-build platform for natural solutions for agriculture. Wisequity VI also called £0.6m for Case Della Piada, a leading Italian producer of flatbreads.
Inflexion Buyout Fund VI called £1.6m for two European investments. DSS+ (£0.8m) is a Swiss health and safety focussed management consultancy and Nomentia (£0.7m) is a Finland-based cash and treasury management software provider.
Hg Saturn 3 called £0.5m for GGW, a European insurance brokerage platform for SMEs in Germany's Mittelstand.
Procuritas VII called £0.5m for Precision Biologic, a Canadian supplier of high-quality reagents used for haemostasis (blood coagulation) diagnostics serving a mainly North American customer base of over a thousand laboratories, hospitals, universities and research centres.
Lastly in the USA MidOcean VI called £0.5m for MPearlRock (consumer products) and Re-Sourcing (staffing and consulting for the finance, compliance and IT sectors).
The total drawn for new investments by funds and co-investments in the first half of 2024 was £35.9m.
Realisations
Despite the market slowing down considerably at the start of the year volumes have picked up and there were a number of realisations and associated distributions. These came from a wide range of sectors and geographies.
The largest realisation was the previously announced exit of large format pet retailer Jollyes, which was sold by Kester Capital to TDR Capital with the transaction completing in April. Initial proceeds were £18.6m with a further £0.4m expected in final proceeds representing 4.2x cost and an IRR over the six-year hold of 27%. The company doubled EBITDA to £11m and built its chain from 64 stores to 100 during the hold. Kester is the latest example of an emerging manager in the UK lower mid-market whom we have backed early to good effect.
There was another substantial co-investment exit with the sale of Aberdeen-based Coretrax to large listed energy services group Expro. This investment in the wellbore plug and abandonment company was led by energy specialists Buckthorn Partners. During the quarter £3.4m was received in cash. Since the quarter end a further £10.3m has been received as Buckthorn successfully sold down the shares which comprised the bulk of the consideration. There remains around £0.5m of shares held in escrow; the investment has achieved 1.8x cost and an IRR of 12%. Given the volatile conditions in energy markets since the investment was made in 2018 this is a fair outcome.
August Equity IV returned £3.5m through the sale of Agilio, the healthcare compliance software company, achieving an exceptional return of 9.2x cost and an IRR of 72%.
Graycliff IV returned £2.4m through the sale of EMC, a switches and transformers manufacturer, achieving another exceptional outcome of 8.2x cost and an IRR of 146%. This was a relatively short hold of only two and a half years.
Summa I returned £1.7m through the sale of Pagero, a procure to pay software as a service company, to Thomson Reuters. This represented 5.6x cost.
Montefiore IV returned £2.5m with the sale to a continuation vehicle of two of its holdings; EDG (digital services for French companies) and Groupe Premium (life and pension insurance broker).
Avallon MBO II Fund made a final distribution of £1.4m with the sale of ORE (consulting and IT solutions for purchasing managers) and escrows from Novotech (Polymer products).
In the UK Apiary exited TAG, the leading travel management company servicing the global live music and entertainment touring industry. The investment was made in 2018 and after a very promising start the business was rendered temporarily loss-making as a result of a cessation of activity for nearly two years due to COVID. The company has made a spectacular recovery as the postponed shows returned and market share was captured from non-surviving competitors giving a very strong bounce back. In the circumstances the £1.5m returned which represents 4.0x cost and 29% IRR is highly creditable.
Inflexion Enterprise Fund IV sold ATG, a global automative data and software company. The return was £0.9m which is a very impressive 6.7x cost and 40% IRR over the five-year hold.
SEP V made a distribution of £0.6m which marked a further stage in the exit of payroll software company Immedis which was agreed in Q3 2023. The return on full exit will be 3.1x cost and 31% IRR.
Silverfleet European Development Fund returned, as a final distribution from this fund, £0.9m from OneStock, a stock optimisation software company, achieving 2.5x cost and 35% IRR.
In the Netherlands, Bencis V returned £1.1m with the sale of Tech Tribes, a digital transformation consultancy making 7.2x cost and 34% IRR. This fund also returned £0.9m from the sale of Netherlands-based Ceban Pharmaceuticals. The business specialises in compounding drugs in different formats and owns a major pharmacy chain Medsen. The return was 4.7x cost and 36% IRR. In Q1, Bencis V returned £1.9m with the sale of Kooi, the mobile security systems company. This also represented an exceptional return of 13.9x cost and 61% IRR.
MED II, the ARCHIMED managed healthcare fund, returned £0.9m with the sale of French company Clean Biologics which focuses on biosafety testing. This was sold to a continuation vehicle for 5.0x cost.
As noted, Vaaka II exited Finnish IT infrastructure provider Tietokeskus to a continuation vehicle returning £0.6m (2.8x, 17% IRR).
In Spain, Corpfin IV exited Dimoldura, the doors, mouldings and accessories manufacturer to a strategic buyer returning £1.1m (2.5x cost, 17% IRR). Additionally the fund returned £0.3m, consisting of dividends from Elastora (£0.2m) and earn out payment from Grupo 5 (£0.2m).
Lastly there were some excellent realisations in the USA. Stellex Capital achieved three exits in H1 collectively amounting to £1.3m all at excellent multiples and IRRs. Fenix, a recycler and reseller of OEM automotive parts was sold to a Stellex continuation vehicle; Officine Maccaferri, a sustainable engineering solutions company was sold to Ambienta; and CGMH, a material handling conveyor systems company, was sold to trade.
Graycliff has had two strong exits. Graycliff III sold sweeteners manufacturer Ingredients Plus returning £2.1m (3.3x, 34% IRR). Graycliff IV exited safety material handling equipment manufacturer Ballymore returning £1.0m (4.0x, 60% IRR).
The total of realisations and associated income for the first half of 2024 is £52.3m. This compares with £39.8m at this point last year and £61.8m for the whole of 2023.
Valuation Changes
Whilst there have been many changes in valuation in the first half the net effect is not large. It is worth remembering that mostly these are March valuations used for June, with only around 15% of valuations being fully up to date 30 June 2024 valuations.
The largest uplift was £4.1m for ATEC, the specialist insurer, which Kester has agreed to sell to private equity house Perwyn. This transaction is agreed and should go through in September once the necessary regulatory approval has been received. The valuation is at the exit price and represents 5.0x cost.
Our co-investment in Denmark-based care company Habitus has been trading well and is up by £2.6m. Other co-investments that have been trading well and are uplifted significantly include CARDO Group (+£1.2m) and Utimaco (+£2.0m). Our holding in Inflexion Strategic Partners is up by £1.4m reflecting Inflexion's impressive growth in assets under management.
Amongst the funds there have been a number of upgrades based on the trading of investee companies and, in some cases, good exits. These include Axiom I (+£2.6m), Apposite III (+£1.2m), SEP V (+£0.8m) and Graycliff IV (+£0.8m).
There were a few significant downgrades. Magnesium I was down by £1.6m as a result of the fund growing substantially and our initial gain on the original positions being diluted by the incoming money.
Our investment in Horizon-managed Agilico has been written down. Agilico was originally a managed print services ('MPS') company before also integrating workflow services software into its offering. As Horizon, the lead manager, review exit opportunities they have reduced the valuation by £1.3m to reflect more realistic expectations. Our co-investment in Omlet, online provider of premium pet products, has experienced tough trading and is down by £1.2m. Leader, the electric bike company in Bulgaria, continues to work through a serious destocking phase which is affecting the whole industry and is down by £0.9m. Rosa Mexicano, the Mexican restaurant chain was down by £1.4m with weaker trading necessitating a refinancing, which has now been completed. Tier I CRM (now known as Alessa), the provider of cloud-based software for KYC and AML compliance, has struggled with a substantial change in business model and market conditions since we invested and is down by £1.3m.
Financing
The Company's debt has reduced slightly during the quarter. Net debt at £91.3m is at a perfectly manageable level. Looking towards the year end we should be able to reduce debt noticeably as expected, but not yet received, receipts alone would amount to circa £17m whilst other realisations are likely.
As noted above in April, the Company bought back 1.25m shares at 460p per share which amounted to 1.7% of the issued share capital, excluding shares held in treasury, at a cost of £5.8m. The estimated enhancement for continuing shareholders is £2.8m or 0.6% of NAV. The Company continues to appraise the relative merits of using capital for share buy-backs versus new investment whilst protecting and growing the dividend.
Outlook
The private equity market in most of our significant markets is showing signs of improvement. This is clearly the case in the UK where this has been underlined by our recent significant exits which have been completed at or above target valuations and within the expected timescales. Some of the Northern European geographies, such as Germany and the Nordics, are more cautious, but parts of Southern Europe are more overtly optimistic. For the last eighteen months the private equity market has been adjusting to a different economic environment with higher prevailing interest rates. This has resulted in a slowdown in M&A activity with some connected pricing and valuation multiple adjustments. The fundamentals of most of our investee companies have continued to make progress with revenue and profits growth continuing. As the underlying growth of the companies offsets the adjustment in valuation multiples, overall asset values will once again move back towards the longer term positive trend. A key determinant in this will be business confidence which is difficult to measure in real time and is susceptible to external global events. Despite this, from our recent discussions with our investment partners, we can identify an improving trend and we expect that this will, in due course, lead to further good growth in shareholder value in the remainder of 2024 and beyond.
Hamish Mair
Investment Manager
Columbia Threadneedle Investment Business Limited
Portfolio Summary
Portfolio Distribution at 30 June 2024 | % of Total 30 June 2024 | % of Total 31 December 2023 |
Buyout Funds - Pan European* | 10.4 | 10.5 |
Buyout Funds - UK | 18.0 | 16.2 |
Buyout Funds - Continental Europe† | 16.9 | 18.2 |
Secondary Funds | 0.1 | 0.1 |
Private Equity Funds - USA | 4.2 | 5.0 |
Private Equity Funds - Global | 2.0 | 1.7 |
Venture Capital Funds | 4.3 | 3.7 |
Direct Investments/Co-investments | 44.1 | 44.6 |
| 100.0 | 100.0 |
* Europe including the UK. † Europe excluding the UK. | | |
Ten Largest Holdings As at 30 June 2024 | Total Valuation £'000 | % of Total Portfolio |
Inflexion Strategic Partners | 16,342 | 2.7 |
Sigma | 15,893 | 2.7 |
ATEC (CETA) * | 14,619 | 2.5 |
Aliante Equity 3 | 11,477 | 1.9 |
August Equity Partners V | 11,112 | 1.9 |
TWMA | 11,008 | 1.8 |
Coretrax * | 10,800 | 1.8 |
Axiom 1 | 10,594 | 1.8 |
San Siro | 10,307 | 1.7 |
Aurora Payment Solutions | 9,806 | 1.6 |
121,958 | 20.4 |
*Realised following the period end
Portfolio Holdings
Investment | Geographic Focus
| Total Valuation £'000 | % of Total Portfolio |
Buyout Funds - Pan European | | | |
Stirling Square Capital II | Europe | 9,157 | 1.5 |
Apposite Healthcare III | Europe | 9,038 | 1.5 |
Apposite Healthcare II | Europe | 8,754 | 1.5 |
F&C European Capital Partners | Europe | 8,722 | 1.5 |
MED II | Western Europe | 3,650 | 0.6 |
Agilitas 2015 Fund | Northern Europe | 3,077 | 0.5 |
Astorg VI | Western Europe | 3,032 | 0.5 |
Magnesium Capital 1 | Europe | 2,482 | 0.4 |
Verdane XI | Northern Europe | 1,700 | 0.3 |
Wisequity VI | Italy | 1,678 | 0.3 |
Volpi III | Northern Europe | 1,666 | 0.3 |
Summa III | Northern Europe | 1,417 | 0.2 |
TDR Capital II | Western Europe | 1,351 | 0.2 |
Agilitas 2020 Fund | Europe | 1,210 | 0.2 |
TDR II Annex Fund | Western Europe | 1,153 | 0.2 |
ARCHIMED MED III | Global | 1,105 | 0.2 |
MED Platform II | Global | 1,010 | 0.2 |
KKA II | Europe | 905 | 0.2 |
Verdane Edda III | Northern Europe | 583 | 0.1 |
Agilitas 2024 HIF | Europe | 239 | - |
Volpi Capital | Northern Europe | 39 | - |
Inflexion Partnership III | Europe | 36 | - |
MED Rise | Global | 20 | - |
Total Buyout Funds - Pan European | | 62,024 | 10.4 |
| | | |
Buyout Funds - UK | | | |
Inflexion Strategic Partners | United Kingdom | 16,342 | 2.7 |
August Equity Partners V | United Kingdom | 11,112 | 1.9 |
Axiom 1 | United Kingdom | 10,594 | 1.8 |
Inflexion Supplemental V | United Kingdom | 8,129 | 1.4 |
Inflexion Buyout Fund V | United Kingdom | 6,000 | 1.0 |
Apiary Capital Partners I | United Kingdom | 4,859 | 0.8 |
August Equity Partners IV | United Kingdom | 4,522 | 0.8 |
Inflexion Buyout Fund VI | United Kingdom | 4,093 | 0.7 |
Kester Capital II | United Kingdom | 4,019 | 0.7 |
Piper Private Equity VI | United Kingdom | 3,827 | 0.6 |
FPE Fund III | United Kingdom | 3,751 | 0.6 |
FPE Fund II | United Kingdom | 3,634 | 0.6 |
Inflexion Partnership Capital II | United Kingdom | 3,615 | 0.6 |
Inflexion Enterprise Fund V | United Kingdom | 3,358 | 0.6 |
Inflexion Enterprise Fund IV | United Kingdom | 2,889 | 0.5 |
Corran Environmental II | United Kingdom | 2,773 | 0.5 |
Inflexion Buyout Fund IV | United Kingdom | 2,688 | 0.4 |
Piper Private Equity VII | United Kingdom | 2,215 | 0.4 |
Inflexion Supplemental IV | United Kingdom | 1,499 | 0.2 |
GCP Europe II | United Kingdom | 1,344 | 0.2 |
RJD Private Equity Fund III | United Kingdom | 1,185 | 0.2 |
Inflexion Partnership Capital I | United Kingdom | 1,104 | 0.2 |
Horizon Capital 2013 | United Kingdom | 1,067 | 0.2 |
Kester Capital III | United Kingdom | 969 | 0.2 |
Primary Capital IV | United Kingdom | 929 | 0.2 |
August Equity Partners VI | United Kingdom | 300 | - |
Piper Private Equity V | United Kingdom | 221 | - |
Dunedin Buyout Fund II | United Kingdom | 13 | - |
Total Buyout Funds - UK | | 107,051 | 18.0 |
| | | |
| | | |
Investment | Geographic Focus
| Total Valuation £'000 | % of Total Portfolio |
Buyout Funds - Continental Europe | | | |
Aliante Equity 3 | Italy | 11,477 | 1.9 |
Bencis V | Benelux | 6,998 | 1.2 |
Avallon MBO Fund III | Poland | 5,768 | 1.0 |
DBAG VII | DACH | 5,748 | 1.0 |
DBAG VIII | DACH | 5,478 | 0.9 |
Vaaka III | Finland | 5,196 | 0.9 |
Capvis III CV | DACH | 5,021 | 0.9 |
Summa II | Nordic | 4,920 | 0.8 |
Chequers Capital XVII | France | 4,846 | 0.8 |
Verdane Edda | Nordic | 4,211 | 0.7 |
Montefiore V | France | 4,174 | 0.7 |
Procuritas VI | Nordic | 3,837 | 0.7 |
ARX CEE IV | Eastern Europe | 3,166 | 0.5 |
Corpfin V | Spain | 2,911 | 0.5 |
Procuritas Capital IV | Nordic | 2,597 | 0.4 |
Procuritas VII | Nordic | 2,592 | 0.4 |
Italian Portfolio | Italy | 2,444 | 0.4 |
NEM Imprese III | Italy | 2,337 | 0.4 |
Vaaka IV | Finland | 2,059 | 0.4 |
Capvis IV | DACH | 2,050 | 0.3 |
Montefiore IV | France | 1,954 | 0.3 |
Aurica IV | Spain | 1,543 | 0.3 |
Corpfin Capital Fund IV | Spain | 1,488 | 0.3 |
Summa I | Nordic | 1,393 | 0.2 |
Portobello Fund III | Spain | 1,208 | 0.2 |
DBAG VIIB | DACH | 1,085 | 0.2 |
DBAG VIIIB | DACH | 765 | 0.1 |
Vaaka II | Finland | 763 | 0.1 |
DBAG Fund VI | DACH | 739 | 0.1 |
Chequers Capital XVI | France | 688 | 0.1 |
PineBridge New Europe II | Eastern Europe | 498 | 0.1 |
Ciclad 5 | France | 305 | 0.1 |
Procuritas Capital V | Nordic | 231 | - |
Montefiore Expansion | France | 92 | - |
Gilde Buyout Fund III | Benelux | 91 | - |
N+1 Private Equity Fund II | Iberia | 89 | - |
Capvis III | DACH | 51 | - |
DBAG Fund V | DACH | 5 | - |
Herkules Private Equity III | Nordic | 4 | - |
Total Buyout Funds - Continental Europe | | 100,822 | 16.9 |
| | | |
Private Equity Funds - USA | | | |
Blue Point Capital IV | North America | 7,845 | 1.3 |
Camden Partners IV | United States | 3,197 | 0.5 |
Graycliff IV | North America | 2,556 | 0.5 |
Level 5 Fund II | United States | 2,474 | 0.5 |
Purpose Brands (Level 5) | United States | 2,395 | 0.4 |
Blue Point Capital III | North America | 1,981 | 0.3 |
MidOcean VI | United States | 1,680 | 0.3 |
Stellex Capital Partners | North America | 1,675 | 0.3 |
Graycliff III | United States | 747 | 0.1 |
Blue Point Capital II | North America | 151 | - |
HealthpointCapital Partners III | United States | 32 | - |
Total Private Equity Funds - USA | | 24,733 | 4.2 |
| | | |
Investment | Geographic Focus | Total Valuation £'000 | % of Total Portfolio |
Private Equity Funds - Global | | | |
Corsair VI | Global | 7,077 | 1.2 |
Hg Saturn 3 | Global | 3,226 | 0.5 |
PineBridge GEM II | Global | 675 | 0.1 |
F&C Climate Opportunity Partners | Global | 536 | 0.1 |
Hg Mercury 4 | Global | 354 | 0.1 |
AIF Capital Asia III | Asia | 102 | - |
PineBridge Latin America II | South America | 58 | - |
Warburg Pincus IX | Global | 9 | - |
Total Private Equity Funds - Global | | 12,037 | 2.0 |
Venture Capital Funds | | | |
SEP V | United Kingdom | 9,687 | 1.6 |
MVM V | Global | 4,045 | 0.7 |
SEP VI | Europe | 2,973 | 0.5 |
Kurma Biofund II | Europe | 2,839 | 0.5 |
MVM VI | Global | 2,224 | 0.4 |
Northern Gritstone | United Kingdom | 1,750 | 0.3 |
SEP IV | United Kingdom | 1,083 | 0.2 |
Pentech Fund II | United Kingdom | 385 | 0.1 |
SEP II | United Kingdom | 273 | - |
Life Sciences Partners III | Western Europe | 252 | - |
Environmental Technologies Fund | Europe | 56 | - |
SEP III | United Kingdom | 36 | - |
Total Venture Capital Funds | | 25,603 | 4.3 |
Secondary Funds | | | |
The Aurora Fund | Europe | 585 | 0.1 |
Total Secondary Funds | | 585 | 0.1 |
Direct Investments/Co-investments | | | |
Sigma | United States | 15,893 | 2.7 |
ATEC | United Kingdom | 14,619 | 2.5 |
TWMA | United Kingdom | 11,008 | 1.8 |
Coretrax | United Kingdom | 10,800 | 1.8 |
San Siro | Italy | 10,307 | 1.7 |
Aurora Payment Solutions | United States | 9,806 | 1.6 |
Weird Fish | United Kingdom | 9,534 | 1.6 |
Breeze Group (CAS) | United Kingdom | 9,273 | 1.6 |
Cyclomedia | Netherlands | 9,064 | 1.5 |
Utimaco | DACH | 9,003 | 1.5 |
Cyberhawk | United Kingdom | 8,500 | 1.4 |
Amethyst Radiotherapy | Europe | 7,970 | 1.3 |
Velos IoT (JT IoT) | United Kingdom | 6,893 | 1.2 |
Asbury Carbons | North America | 6,783 | 1.1 |
Habitus | Denmark | 6,679 | 1.1 |
Prollenium | North America | 6,291 | 1.1 |
CARDO Group | United Kingdom | 6,130 | 1.0 |
Family First | United Kingdom | 6,000 | 1.0 |
Swanton | United Kingdom | 5,968 | 1.0 |
Rosa Mexicano | United States | 5,822 | 1.0 |
Orbis | United Kingdom | 5,693 | 1.0 |
Cybit (Perfect Image) | United Kingdom | 5,176 | 0.9 |
AccuVein | United States | 4,917 | 0.8 |
StarTraq | United Kingdom | 4,808 | 0.8 |
123Dentist | Canada | 4,748 | 0.8 |
Braincube | France | 4,523 | 0.8 |
MedSpa Partners | Canada | 4,420 | 0.7 |
Dotmatics | United Kingdom | 4,199 | 0.7 |
LeadVenture | United States | 4,177 | 0.7 |
1Med | Switzerland | 4,009 | 0.7 |
Walkers Transport | United Kingdom | 3,316 | 0.6 |
Educa Edtech | Spain | 3,114 | 0.5 |
PathFactory | Canada | 3,000 | 0.5 |
Omlet | United Kingdom | 2,832 | 0.5 |
Vero Biotech | United States | 2,721 | 0.5 |
Collingwood Insurance Group | United Kingdom | 2,671 | 0.5 |
AccountsIQ | United Kingdom | 2,552 | 0.4 |
Agilico (DMC Canotec) | United Kingdom | 2,462 | 0.4 |
GT Medical | United States | 2,373 | 0.4 |
Neurolens | United States | 2,236 | 0.4 |
Leader96 | Bulgaria | 2,130 | 0.4 |
Alessa (Tier1 CRM) | Canada | 2,068 | 0.3 |
OneTouch | United Kingdom | 1,857 | 0.3 |
Bomaki | Italy | 1,494 | 0.3 |
Rephine | United Kingdom | 1,362 | 0.2 |
Avalon | United Kingdom | 1,234 | 0.2 |
Ambio Holdings | United States | 1,132 | 0.2 |
Jollyes | United Kingdom | 397 | 0.1 |
TDR Algeco/Scotsman | Europe | 286 | - |
Total Direct Investments/Co-investments | | 262,250 | 44.1 |
Total Portfolio | | 595,105 | 100.0 |
CT Private Equity Trust PLC
Statement of Comprehensive Income for the
half year ended 30 June 2024
| Unaudited
| ||
| Revenue £'000 | Capital £'000 | Total £'000 |
Income | | | |
Gains on investments held at fair value | - | 4,240 | 4,240 |
Exchange gains | - | 2,480 | 2,480 |
Investment income | 1,665 | - | 1,665 |
Other income | 468 | - | 468 |
Total income | 2,133 | 6,720 | 8,853 |
| | | |
Expenditure | | | |
Investment management fee - basic fee | (245) | (2,202) | (2,447) |
Investment management fee - performance fee | - | - | - |
Other expenses | (593) | - | (593) |
Total expenditure | (838) | (2,202) | (3,040) |
| | | |
Profit before finance costs and taxation | 1,295 | 4,518 | 5,813 |
| | | |
Finance costs | (456) | (4,108) | (4,564) |
| | | |
Profit before taxation | 839 | 410 | 1,249 |
| | | |
Taxation | - | - | - |
| | | |
Profit for period/total comprehensive income | 839 | 410 | 1,249 |
| | | |
Return per Ordinary Share | 1.16p | 0.57p | 1.73p |
The total column is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
CT Private Equity Trust PLC
Statement of Comprehensive Income for the
half year ended 30 June 2023
|
The total column is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
CT Private Equity Trust PLC
Statement of Comprehensive Income for the
year ended 31 December 2023
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| |
|
The total column is the profit and loss account of the Company.
All revenue and capital items in the above statement derive from continuing operations.
CT Private Equity Trust PLC
Amounts Recognised as Dividends
| Six months ended 30 June 2024 (unaudited) £'000 | Six months ended 30 June 2023 (unaudited) £'000 |
Year ended 31 December 2023 (audited) £'000 |
Quarterly Ordinary Share dividend of 6.62p per share for the quarter ended 30 September 2022 | - | 4,822 | 4,822 |
Quarterly Ordinary Share dividend of 6.79p per share for the quarter ended 31 December 2022 | - | 4,946 | 4,946 |
Quarterly Ordinary Share dividend of 7.01p per share for the quarter ended 31 March 2023 | - | - | 5,063 |
Quarterly Ordinary Share dividend of 7.01p per share for the quarter ended 30 June 2023 | - | - | 5,106 |
Quarterly Ordinary Share dividend of 7.01p per share for the quarter ended 30 September 2023 | 5,100 | -
| - |
Quarterly Ordinary Share dividend of 7.01p per share for the quarter ended 31 December 2023 | 5,030 | - | - |
| 10,130 | 9,768 | 19,937 |
CT Private Equity Trust PLC
Balance Sheet
| As at 30 June 2024(unaudited) | As at 30 June 2023(unaudited) | As at 31 December 2023(audited) |
| £'000 | £'000 | £'000 |
Non-current assets |
|
| |
Investments at fair value through profit or loss | 595,105 | 554,164 | 605,603 |
| | | |
Current assets | | | |
Other receivables | 1,044 | 704 | 841 |
Cash and cash equivalents | 22,086 | 13,343 | 9,879 |
| 23,130 | 14,047 | 10,720 |
| | | |
Current liabilities | | | |
Other payables | (8,420) | (3,782) | (8,121) |
Interest-bearing bank loan | (63,801) | (68,534) | (97,109) |
| (72,221) | (72,316) | (105,230) |
Net current liabilities | (49,091) | (58,269) | (94,510) |
Non-current liabilities | | | |
Interest-bearing bank loan | (49,581) | - | - |
Net assets | 496,433 | 495,895 | 511,093 |
| | | |
Equity | | | |
Called-up ordinary share capital | 739 | 739 | 739 |
Share premium account | 2,527 | 2,527 | 2,527 |
Special distributable capital reserve | 3,818 | 10,026 | 9,597 |
Special distributable revenue reserve | 31,403 | 31,403 | 31,403 |
Capital redemption reserve | 1,335 | 1,335 | 1,335 |
Capital reserve | 456,611 | 449,865 | 465,492 |
Shareholders' funds | 496,433 | 495,895 | 511,093 |
| | | |
Net asset value per Ordinary Share | 694.28p | 680.75p | 702.50p |
CT Private Equity Trust PLC
Statement of Changes in Equity
| Share Capital | Share Premium Account | Special Distributable Capital Reserve | Special Distributable Revenue Reserve | Capital Redemption Reserve | Capital Reserve | Revenue Reserve | Total |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 |
For the six months ended 30 June 2024 (unaudited) |
| | | | | | | | |
Net assets at 1 January 2024 | 739 | 2,527 | 9,597 | 31,403 | 1,335 | 465,492 | - | 511,093 |
Buyback of ordinary shares | - | - | (5,779) | - | - | - | - | (5,779) |
Profit for the period/total comprehensive income | - | - | - | - |
- |
410 | 839 |
1,249 |
Dividends paid | - | - | - | - | - | (9,291) | (839) | (10,130) |
| | | | | | | | |
Net assets at 30 June 2024 | 739 | 2,527 | 3,818 | 31,403 | 1,335 | 456,611 | - | 496,433 |
| | | | | | | | |
| | | | | | | |
For the six months ended 30 June 2023 (unaudited) |
| | | | | | | | |
Net assets at 1 January 2023 | 739 | 2,527 | 10,026 | 31,403 | 1,335 | 471,645 | - | 517,675 |
Buyback of ordinary shares | - | - | - | - | - | - | - | - |
(Loss)/profit for the period/total comprehensive income | - | - | - | - |
- |
(12,579) | 567 |
(12,012) |
Dividends paid | - | - | - | - | - | (9,201) | (567) | (9,768) |
| | | | | | | | |
Net assets at 30 June 2023 | 739 | 2,527 | 10,026 | 31,403 | 1,335 | 449,865 | - | 495,895 |
|
For the year ended 31 December 2023 (audited) |
| | | | | | | | |
Net assets at 1 January 2023 | 739 | 2,527 | 10,026 | 31,403 | 1,335 | 471,645 | - | 517,675 |
Buyback of ordinary shares | - | - | (429) | - | - | - | - | (429) |
Profit for the period/total comprehensive income | - | - | - | - |
- |
12,443 | 1,341 |
13,784 |
Dividends paid | - | - | - | - | - | (18,596) | (1,341) | (19,937) |
| | | | | | | | |
Net assets at 31 December 2023 | 739 | 2,527 | 9,597 | 31,403 | 1,335 | 465,492 | - | 511,093 |
| | | | | | | | |
CT Private Equity Trust PLC
Cash Flow Statement
| Six months ended 30 June 2024 (unaudited) | Six months ended 30 June 2023 (unaudited) | Year ended 31 December 2023 (audited) |
| £'000 | £'000 | £'000 |
| | | |
Operating activities | | | |
Profit/(loss) before taxation | 1,249 | (12,012) | 13,784 |
Adjustments for: | | | |
Gain on disposals of investments | (25,940) | (21,084) | (26,349) |
Loss on amount of fair value movement | 21,700 | 31,474 | 1,123 |
Exchange differences | (2,480) | (1,643) | (863) |
Interest Income | (468) | (389) | (689) |
Income received | 429 | 389 | 668 |
Finance costs | 4,564 | 1,914 | 5,129 |
Increase in other receivables | (19) | (4) | (8) |
Decrease in other payables | (100) | (4,253) | (497) |
Net cash outflow from operating activities |
(1,065) |
(5,608) |
(7,702) |
| | | |
Investing activities | | | |
Purchases of investments | (35,913) | (74,468) | (110,784) |
Sales of investments | 50,651 | 38,471 | 58,964 |
Net cash inflow/(outflow) from investing activities |
14,738 |
(35,997) |
(51,820) |
Financing activities | | | |
Drawdown of bank loans, net of costs | 19,986 | 31,437 | 59,023 |
Arrangement cost of loan facility | (1,468) | (28) | (27) |
Interest paid | (3,975) | (1,426) | (3,995) |
Buyback of ordinary shares | (5,779) | - | (429) |
Equity dividends paid | (10,130) | (9,768) | (19,937) |
Net cash (outflow)/inflow from financing activities | (1,366) | 20,215 |
34,635 |
Net increase/ (decrease) in cash and cash equivalents |
12,307 |
(21,390) |
(24,887) |
Currency (losses)/gains | (100) | 273 | 306 |
Net increase/(decrease) in cash and cash equivalents |
12,207 |
(21,117) |
(24,581) |
Opening cash and cash equivalents | 9,879 | 34,460 | 34,460 |
Closing cash and cash equivalents |
22,086 |
13,343 |
9,879 |
| | | |
Directors' Statement of Principal Risks and Uncertainties
The principal risks identified in the Annual Report and Accounts for the year ended 31 December 2023 were:
• Economic, macro and political;
• Liquidity and capital structure;
• Regulatory;
• Personnel issues;
• Fraud and cyber;
• Market;
• ESG; and
• Operational.
These risks are described in more detail under the heading "Principal Risks" within the Strategic Report in the Company's Annual Report and Accounts for the year ended 31 December 2023.
At present the global economy continues to suffer considerable disruption due to the war in Ukraine, events in the Middle East, disputes in the South China Sea and the after effects of a high inflation environment. The Directors continue to review the key risk matrix for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them.
It is also noted that:
· An analysis of the performance of the Company since 1 January 2024 is included within the Chairman's Statement and the Manager's Review.
· The Company's borrowing facility is composed of a €60 million term loan and a £95 million multi-currency revolving credit facility. As at 30 June 2024 borrowings were £113.4 million. The interest rate payable is variable.
· Note 9 details the Board's consideration for the continued applicability of the principle of Going Concern when preparing this report.
On behalf of the Board
Richard Gray
Chairman
Statement of Directors' Responsibilities in Respect of the Interim Report
We confirm that to the best of our knowledge:
• the condensed set of financial statements have been prepared in accordance with applicable UK-adopted International Accounting Standards on a going concern basis and give a true and fair view of the assets, liabilities, financial position and return of the Company;
• the Chairman's Statement, Manager's Review and the Directors' Statement of Principal Risks and Uncertainties (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure Guidance and Transparency Rule ('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 financial statements;
• the Directors' Statement of Principal Risks and Uncertainties is a fair review of the principal risks and uncertainties for the remainder of the financial year; and
• the half-yearly report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.
On behalf of the Board
Richard Gray
Chairman
Notes (unaudited)
1. The condensed company financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting' and the accounting policies set out in the statutory accounts for the year ended 31 December 2023. The condensed financial statements do not include all of the information and disclosures required for a complete set of IFRS financial statements and should be read in conjunction with the financial statements for the year ended 31 December 2023, which were prepared in accordance with the Companies Act 2006 and UK adopted international accounting standards.
2. Earnings for the six months to 30 June 2024 should not be taken as a guide to the results for the year to 31 December 2024.
3. Investment management fee:
| Six months to30 June 2024(unaudited) | Six months to30 June 2022(unaudited) | Year ended31 December 2023(audited) | ||||||
| Revenue£'000 | Capital£'000 | Total£'000 | Revenue£'000 | Capital£'000 | Total£'000 | Revenue£'000 | Capital£'000 | Total£'000 |
| | | | | | | | | |
Investment management fee - basic fee | 245 | 2,202 | 2,447 | 234 | 2,110 | 2,344 | 474 | 4,263 | 4,737 |
Investment management fee - performance fee | - | - | - | - | - | - | - | 4,767 | 4,767 |
| | | | | | | | | |
| 245 | 2,202 | 2,447 | 234 | 2,110 | 2,344 | 474 | 9,030 | 9,504 |
| | | | | | | | | |
4. Finance costs:
| Six months to30 June 2024(unaudited) | Six months to30 June 2023(unaudited) | Year ended31 December 2023(audited) | ||||||
| Revenue£'000 | Capital£'000 | Total£'000 | Revenue£'000 | Capital£'000 | Total£'000 | Revenue£'000 | Capital£'000 | Total£'000 |
| | | | | | | | | |
Interest payable on bank loans | 456 | 4,108 | 4,564 | 192 | 1,722 | 1,914 | 513 | 4,616 | 5,129 |
| | | | | | | | | |
5. The return per Ordinary Share is based on a net profit on ordinary activities after taxation of £1,249,000 (30 June 2023 - loss £12,012,000; 31 December 2023 - profit £13,784,000) and on 72,193,155 (30 June 2023-72,844,938; 31 December 2023 -72,838,637) shares, being the weighted average number of Ordinary Shares in issue during the period.
6. The net asset value per Ordinary Share is based on net assets at the period end of £496,433,000 (30 June 2023 - £495,895,000; 31 December 2023 - £511,093,000) and on 71,502,938 (30 June 2023 - 72,844,938; 31 December 2023 - 72,752,938 shares, being the number of Ordinary Shares in issue at the period end.
7. The fair value measurements for financial assets are categorised into different levels in the fair value hierarchy based on inputs to valuation techniques used. The different levels are defined as follows:
Level 1 reflects financial instruments quoted in an active market.
Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.
Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.
|
|
|
|
|
| Level 1 | Level 2 | Level 3 | Total |
| £'000 | £'000 | £'000 | £'000 |
30 June 2024 | | | | |
| | | | |
Financial assets | | | | |
Investments
| -
| -
| 595,105
| 595,105
|
| | | | |
30 June 2023 | | | | |
| | | | |
Financial assets | | | | |
Investments
| 5,185 | -
| 548,979 | 554,164 |
| | | | |
31 December 2023 | | | | |
| | | | |
Financial assets | | | | |
Investments | -
| - | 605,603 | 605,603 |
| | | | |
| | | | |
There were no transfers between levels in the fair value hierarchy in the period ended 30 June 2024. Transfers between levels of the fair value hierarchy are deemed to have occurred at the date of the event that caused the transfer.
Valuation techniques
Quoted fixed asset investments held are valued at bid prices which equate to their fair values. When fair values of publicly traded equities are based on quoted market prices in an active market without any adjustments, the investments are included within Level 1 of the hierarchy. The Company invests primarily in private equity funds and co-investments via limited partnerships or similar fund structures. Such vehicles are mostly unquoted and in turn invest in unquoted securities. The fair value of a holding is based on the Company's share of the total net asset value of the fund or share of the valuation of the co-investment calculated by the lead private equity manager on a quarterly basis. The lead private equity manager derives the net asset value of a fund from the fair value of underlying investments. The fair value of these underlying investments and the Company's co-investments is calculated using methodology which is consistent with the International Private Equity and Venture Capital Valuation Guidelines ('IPEG'). In accordance with IPEG these investments are generally valued using an appropriate multiple of maintainable earnings, which has been derived from comparable multiples of quoted companies or recent transactions. The Columbia Threadneedle private equity team has access to the underlying valuations used by the lead private equity managers including multiples and any adjustments. The Columbia Threadneedle private equity team generally values the Company's holdings in line with the lead managers but may make adjustments where they do not believe the underlying managers' valuations represent fair value. On a quarterly basis, the Columbia Threadneedle private equity team present the valuations to the Board. This includes a discussion of the major assumptions used in the valuations, which focuses on significant investments and significant changes in the fair value of investments. If considered appropriate, the Board will approve the valuations.
The fair values of all of the Company's other financial assets and liabilities are not materially different from their carrying values in the balance sheet.
Significant unobservable inputs for Level 3 valuations
The Company's unlisted investments are all classified as Level 3 investments. The fair values of the unlisted investments have been determined principally by reference to earnings multiples, with adjustments made as appropriate to reflect matters such as the sizes of the holdings and liquidity. The weighted average earnings multiple for the portfolio as at 30 June 2024 was 11.0 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation).
The significant unobservable input used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis are shown below:
Period ended | Input | Sensitivity used* | Effect on fair value £'000 |
30 June 2024 | Weighted average earnings multiple | 1x | 73,732 |
30 June 2023 | Weighted average earnings multiple | 1x | 64,954 |
31 December 2023 | Weighted average earnings multiple | 1x | 76,444 |
* The sensitivity analysis refers to an amount added or deducted from the input and the effect this has on the fair value.
The fair value of the Company's unlisted investments is sensitive to changes in the assumed earnings multiples. The managers of the underlying funds assume an earnings multiple for each holding. An increase in the weighted average earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the multiple would lead to a decrease in the fair value.
The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the period:
| 30 June 2024 | 30 June 2023 | 31 December 2023 |
| £'000 | £'000 | £'000 |
Balance at beginning of period | 605,603 | 523,080 | 523,080 |
Purchases | 35,913 | 74,468 | 110,784 |
Sales | (50,651) | (37,140) | (52,142) |
Gains on disposal | 25,940 | 19,753 | 19,527 |
Holding losses/gains | (21,700) | (31,182) | 4,354 |
Balance at end of period | 595,105 | 548,979 | 605,603 |
8. Share Capital:
| Total Issued | Held in Treasury | Total issued excluding shares held in treasury | |||
| £'000 | Number | £'000 | Number | £'000 | Number |
Balance at 1 January 2024 | 739 | 73,941,429 | 12 | 1,188,491 | 727 | 72,752,938 |
Ordinary shares brought back and held in treasury | - | - | 12 | 1,250,000 | (12) | (1,250,000) |
Balance at 30 June 2024 | 739 | 73,941,429 | 24 | 2,438,491 | 715 | 71,502,938 |
During the six months to 30 June 2024, the Company issued nil Ordinary Shares. During the six months to 30 June 2024, the Company bought back 1,250,000 of its ordinary shares at an average price of 460 pence per share to be held in treasury.
9. In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council. They have considered the current cash position of the Company, the availability of the Company's loan facility and compliance with its banking covenants. They have also considered period end cash balances and forecast cashflows, the operational resilience of the Company and its service providers and the annual dividend.
As at 30 June 2024, the Company had outstanding undrawn commitments of £206.9 million. Of this amount, approximately £25.7 million is to funds where the investment period has expired and the Manager would expect very little of this to be drawn. Of the outstanding undrawn commitments remaining within their investment periods, the Manager would expect that a significant amount will not be drawn before these periods expire. The Company has a committed borrowing facility comprising a term loan of €60 million and a revolving credit facility of £95 million. This facility is due to expire in February 2027.
At 30 June 2024 the Company had fully drawn the term loan of €60 million and had drawn £63.8 million of the revolving credit facility, leaving £31.2 million of the revolving credit facility available. This available proportion of the facility can be used to fund any shortfall between the proceeds received from realisations and drawdowns made from funds in the Company's portfolio or funds required for co-investments. Under normal circumstances this amount of 'headroom' in the facility would be more than adequate to meet any such shortfall.
At present the global economy continues to suffer disruption due to the war in Ukraine, events in the Middle East, disputes in the South China Sea and the after effects of a high inflation environment and the Directors have given serious consideration to the consequences of these for the private equity market in general and for the cashflows and asset values of the Company specifically over the next twelve months. The Company has a number of loan covenants and at present the Company's financial situation does not suggest that any of these covenants are close to being breached.
Furthermore, the Directors have considered in detail a number of remedial measures that are open to the Company which it may take if such a covenant breach appears possible. These include reducing commitments and raising cash through engaging with the private equity secondaries market. The Managers have considerable experience in the private equity secondaries market through the activities of the Company and through the management of other private equity funds. The Directors have considered other actions which the Company may take in the event that a covenant breach was imminent including taking measures to increase the Company's asset base through an issuance of equity either for cash or pursuant to the acquisition of other private equity assets.
The Directors have also considered the likelihood of the Company making alternative banking arrangements with its current lenders or another lender. Having considered the likelihood of the events which could cause a covenant breach and the remedies available to the Company, the Directors are of the view that the Company is well placed to manage such an eventuality satisfactorily.
Based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements. Accordingly, these financial statements have been prepared on a going concern basis.
10. These are not statutory accounts in terms of Section 434 of the Companies Act 2006 and have not been audited or reviewed by the Company's auditors. The information for the year ended 31 December 2023 has been extracted from the latest published financial statements which received an unqualified audit report and have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 31 December 2023 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Half-Year Report will be available shortly at the Company's website address, www.ctprivateequitytrust.com.
For more information, please contact:
Hamish Mair (Fund Manager) | 0131 718 1184 |
Scott McEllen (Company Secretary) |
0131 718 1137 scott.mcellen@columbiathreadneedle.com
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