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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Apax Global Alpha Limited | LSE:APAX | London | Ordinary Share | GG00BWWYMV85 | ORD NPV |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.40 | 0.28% | 141.40 | 140.80 | 141.40 | 141.60 | 140.80 | 140.80 | 154,932 | 14:18:56 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 70.18M | 53.48M | 0.1089 | 12.98 | 694.42M |
From Apr 2019 to Apr 2024
TIDMAPAX
RNS Number : 2030O
Apax Global Alpha Limited
17 August 2017
AGA Interim 2017
AGA provides investors with access to the investment expertise of Apax Partners, a leading global private equity advisory firm. It aims to provide long-term superior returns to shareholders through its diversified portfolio of Private Equity Investments, as well as Derived Investments in debt and equity.
Overview
Apax Global Alpha Limited ("AGA", "Apax Global Alpha" or the "Company") is a closed-ended investment company that invests in a diversified portfolio of private equity funds and Derived Investments identified as a result of the private equity activities of Apax Partners LLP ("Apax Partners" or "Apax"). The Company was admitted to trading on the Main Market of the London Stock Exchange on 15 June 2015.
Objective
The Company's investment objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company is targeting an annualised Total NAV Return across economic cycles of 12-15%, net of fees and expenses. The Company aims to pay an annualised dividend yield of 5% of Net Asset Value ("NAV") per annum.
Expertise
The Investment Adviser, Apax Partners LLP, is a leading global private equity advisory firm. It has more than 30 years' experience investing in Private Equity. Apax Partners has raised and advised funds totalling over EUR 40bn in aggregate as at 30 June 2017. Apax Partners advises on investments globally in companies across four sectors: Tech & Telco, Services, Healthcare and Consumer.
Highlights 2017
Hot Features
Premium
Total NAV Return(1) Adjusted NAV(2) Adjusted NAV(2)
at per share
1H17 30 June 2017 at 30 June 2017
-0.7% EUR908.1m | GBP796.5m EUR1.85 | GBP1.62
--------------------- ----------------------- ------------------
Dividend per Market capitalisation Percentage of
ordinary share at 30 June 2017 funds invested
in respect of at 30 June 2017
1H17
(EUR/GBP)
4.69c | 4.24p EUR851.1m | GBP746.5m 84%
--------------------- ----------------------- ------------------
1. Total NAV Return for the Company reflects the percentage movement in the period between the closing euro Adjusted NAV (dividend added back) relative to the opening Adjusted NAV
2. Adjusted NAV is calculated by deducting the estimated performance fee reserve from period-end NAV
Our portfolio
Asset type
1H17
----------------- ----
A Private Equity 59%
------------------ ----
B Derived Debt 25%
------------------ ----
C Derived Equity 16%
------------------ ----
Portfolio split by geography
1H17
----------------- ----
A North America 48%
------------------ ----
B Rest of Europe 31%
------------------ ----
C United Kingdom 4%
------------------ ----
D India 10%
------------------ ----
E China 2%
------------------ ----
F Rest of World 5%
------------------ ----
Portfolio split by sector
1H17
--------------- ----
A Tech & Telco 37%
---------------- ----
B Services 31%
---------------- ----
C Healthcare 16%
---------------- ----
D Consumer 15%
---------------- ----
E Other 1%
---------------- ----
Chairman's statement
AGA's Total NAV Return was -0.7% for the first half of 2017. Performance was impacted in particular by the weakness of the US dollar relative to the euro. On a constant currency basis, Total NAV Return was 4.2%. The Investment Manager's report from page 6 discusses the half-year's performance in detail. Adjusted NAV per share fell 3.1% to EUR1.85 reflecting the dividend payment in April 2017 of 4.13 pence per share, equivalent to 4.84 euro cents.
Portfolio summary
Private Equity produced a Total Return of -1.1%. Negative valuation adjustments were made in Full Beauty and Quality Distribution, a US provider of bulk chemical logistics. The challenges these two companies are facing are being addressed by the Investment Adviser through its Operational Excellence Practice ("OEP"). Two positions (Answers and Rue21) were fully written off in the period. Following Evry's IPO, the share price fell affecting its valuation in the portfolio. Elsewhere, Private Equity realised value from its portfolio with a healthy flow of divestments but was also active in redeploying the proceeds in new opportunities with four closed deals and another four recently announced (more details on page 8).
Derived Investments delivered a 3.8% Total Return. A large proportion of the Company's holdings, particularly in the Derived Debt portfolio, are denominated in US dollars and therefore the strength of the euro relative to the US dollar had a negative impact on performance during the half-year. In line with the Investment Manager's stated intention, the proportion of assets invested in Derived Equities has increased over the period. Performance in Derived Equities was strong, with a Total Return of 18.3%. In addition, rapid share price appreciation enabled the Manager to realise gains in a number of newly-established positions earlier than expected. In total, eight equity positions were realised generating gains of EUR17.6m in the period.
Derived Debt produced a Total Return of -3.7%. Adverse currency movements accounted for -5.9% and performance was therefore 2.2% on a constant currency basis. Four debt positions were sold during the first half, realising gains of EUR2.1m in the period. Although this element of the portfolio continued to be a valuable source of interest income for the Company yielding EUR14.9m of cash flows, two debt holdings in the US retail sector suffered substantial write-downs. Rue21, a US fast-fashion apparel and accessories retailer aimed at the teenage market, filed for Chapter 11 bankruptcy in May 2017. The business had been significantly impacted by the structural changes affecting the US apparel retail sector with a shift towards online retail and declines in foot traffic. AGA holds a first lien note. Full Beauty, a plus-size online retailer in the US, continued to face a difficult trading environment due to merchandising issues in several of the company's brands, increased competition in the plus-sized space and an overall challenging retail market. AGA holds a second lien note (more details on page 14).
Investment activity
AGA's Investment Adviser, Apax Partners, continues to seek out investment opportunities in an environment of elevated valuation levels. Apax's investment teams are organised on a sector basis. This focus enables them to identify pockets of value in industry sub-segments which typically receive less attention from investors. Recently announced Private Equity transactions, particularly in Healthcare and Services, demonstrate the benefits of this approach.
Dividend
In line with AGA's dividend policy, the Board has approved the first dividend in respect of 2017 of 4.24 pence per share, in line with the Company's policy of distributing 5% of NAV per annum to shareholders. Using the closing exchange rate of 1.1054(1) on 10 August 2017, the dividend represents 2.5% of AGA's euro NAV at 30 June 2017, equivalent to 4.69 euro cents. The dividend will be paid on 15 September 2017 to members on the register on 25 August 2017. The shares will be marked ex-dividend on 24 August 2017.
Funding and commitments
During the first half of 2017, the Company committed $50m to the Apax Digital Fund ("ADF"), an Apax Partners fund which has yet to hold a final close. This commitment enables AGA to continue its strategy of providing shareholders with access to private equity investments advised by Apax Partners.
Second lock-up release
On 15 June 2017, the second anniversary of the Company's IPO, c.7.5% of AGA's ordinary shares held by Future Fund, former Apax executives and the Apax Foundation were released from lock-up. In keeping with last year, AGA and its corporate broker facilitated a process for the market placement of shares coming out of lock-up. There was no demand on this occasion to sell shares through this placement process, evidence that AGA continues to be regarded as an attractive investment opportunity by its pre-IPO shareholders.
FTSE Indices inclusion
Following this year's lock-up release, AGA's free float increased by 7.5% and is now above 50%. This allows AGA to be considered for inclusion in the FTSE Indices Series. If successful, AGA would join the FTSE Indices by the end of the year.
Market outlook
The views of the Investment Manager with respect to the current market environment and outlook can be found on page 4 of this report.
The Board is confident that AGA will be able to continue to identify new investment opportunities despite the high valuations being seen in public markets in both debt and equity.
Tim Breedon CBE
Chairman
16 August 2017
1. Source: Bloomberg BFIX rate at 16:00 on the 10 August 2017
Investment Manager's market review and outlook
Western financial markets continued to rally in both equities and debt. While valuations are increasingly elevated, the market backdrop offers pockets of value in certain sectors and geographies.
In 1H17, the North American and European stock and credit markets continued to perform as they did in the second half of 2016. The S&P 500 increased by 8.2%(1) after an already healthy 6.7%(1) in 2H16, and the EUR Stoxx 600 increased 5.0%(1) after 9.6%(1) growth in the same period last year. Similarly, major high yield credit indices(2) rose by 2.6%(1) and 3.4%(1) respectively, after having already risen by 9.7%(1) and 2.3%(1) in the last six months of 2016. This remarkable performance was aided by better than expected macroeconomic data, both in the US and Europe, profit expansion and continuing central bank policies of cheap money.
Conversely, emerging markets were more mixed. India's stock market outperformed with the BSE(3) Sensex increasing by 16.1%(1) in the reporting period (after a 1.4%(1) decline in the second half of 2016). In China, although the Hang Seng rose by 17.1%(1) in the first half of this year, the Shanghai and Shenzhen composite indices only delivered 2.8%(1) and -3.6%(1) respectively. Brazil's market(4) celebrated political stability for three quarters beginning in Q3 last year, but 3.2%(1) of the cumulative gains of 26.1%(1) since the middle of last year was lost in 2Q17, with new corruption cases and the implied return of political uncertainty.
Valuation levels in the different geographies differ significantly. Even when adjusted for growth, there appear to be geographic pockets of value (see Fig.1).
Price to earnings ratios in the US are significantly higher than in many European countries, despite the latter having similar or higher growth outlooks. As another example, Israel's stock market has an even larger discount than Europe, even though the country's macroeconomic performance continues to be stronger.
Two extreme countries continue to be India and Brazil, where valuations and the macroeconomic situation are polar opposites. AGA was reasonably active in India in 2017. Within its Derived Investments portfolio, Chola was the most prominent and successful Indian Derived Investments exit during the reporting period. At the current valuation levels, good entry points in India are however more difficult to find. Brazil is an interesting proposition for the Apax Funds, where private equity typically has an investment horizon of four to seven years, allowing it to weather the current turmoil.
Arguably the most difficult market to assess remains China. Although there have been contradictory statistics on the Chinese macroeconomic environment, many indicators such as energy consumption, passenger and shipment volumes suggest that the economy is accelerating again. At the same time, valuation levels remain moderate, which in principle points to an interesting investment environment. The issue in China continues to be the ever-increasing level of indebtedness within the economy. At some point credit expansion will cease and it would not be surprising to witness some systemic instability and market correction.
Our expectation of a hard Brexit has not changed and we believe that the negotiations will be difficult and protracted. With this, there is a significant risk of a slowdown in the UK. We are surprised by how resilient the UK's capital markets have been to date. Currently there appears to be substantial downside risk to the growth rates and valuation levels in the UK.
Many stock markets are trading at or close to peak price to earnings multiples (see Fig.2) and this is also reflected in high prices in the private equity world (see Fig.3). However, there are pockets of relative value in some industries. As Fig.4 depicts, the current valuation levels in various industries differ widely compared to their five-year averages.
Amongst the Apax Partners four specialist sectors of Tech & Telco, Services, Consumer and Healthcare, the Tech & Telco sub-sector of software is a good example illustrating these valuation variances. Software multiples are at an all-time high and continue to increase, whereas multiples in telecoms, services and healthcare are below or close to long-term averages. It is thus no coincidence that three out of the last eight announced Private Equity deals (all in Apax IX) are in Healthcare and two are in Services.
AGA's ability to direct capital towards relatively inexpensive geographies and industries and their sub-segments is a key advantage in the current valuation environment. This approach is likely to favour the aforementioned geographies and sub-sectors for the foreseeable future.
1. Source: Bloomberg
2. BAML US HY CCC & Lower Index and BAML EU HY CCC & Lower Index
3. BSE - Bombay Stock Exchange
4. Bovespa index
Portfolio overview and performance
Portfolio overview
Total NAV Return during the first half of 2017 was -0.7% (see Fig.1). Currency movements had a substantial impact on performance, depressing returns by 4.9%. On a constant currency basis, AGA produced a Total NAV Return of 4.2%. The Derived Equity investments outperformed by contributing 3.6% to Total NAV Return. Performance of the Derived Debt portfolio steadied and added 0.3% to Total NAV Return. Private Equity portfolio companies drove growth organically and through acquisitions contributing 1.7% to Total NAV Return. Due to a number of realisations before period end, the cash position temporarily increased to EUR149.1m.
Capital markets continue to show low levels of volatility and high valuations. The Apax Funds have focused on capitalising on these market conditions to drive realisations, with four full and two partial exits. On the investing side, the Apax Funds have maintained discipline around entry multiples and focused on microeconomic themes that provide a hedge against macroeconomic shocks and tangible levers for value creation. In total the Apax Funds have completed four new investments and announced a further four during the first half of 2017 (more details on page 11).
Derived Investments saw very strong exit activity in the first half of 2017. In a number of cases, the investment thesis played out faster than originally anticipated, leading to accelerated exits. In total four Derived Debt positions and eight Derived Equity investments were realised, with a large proportion realised towards the end of the period (more details on page 17). Some of the proceeds were not reinvested by 30 June 2017, increasing AGA's cleared cash balance at this point in time. At period end, AGA has committed to invest approximately EUR36.8m in to three new debt investments and AGA's portion of Private Equity deals which closed during the period but were bridge funded totalled c.EUR53.8m. It is therefore expected that the cash balance of AGA will reduce significantly during the second half of 2017. The pre-period end deal activity also impacted the composition of the portfolio. Due to the realised proceeds from the Derived Investments not immediately being reinvested, Private Equity's share of the invested portfolio increased from 55% to 59%.
NAV development and portfolio performance
Adjusted NAV, which includes a proforma performance fee reserve calculated on a liquidation basis (see note 10 in the financial statements) was EUR908.1m, down from EUR938.7m at 31 December 2016. As shown in Fig.2, AGA paid out EUR23.8m relating to the final semi-annual dividend of the prior year, representing 2.5% of 31 December 2016 euro NAV. This is in line with AGA's dividend objective of distributing 5% of NAV per annum. On a per share basis, Adjusted NAV was EUR1.85 at 30 June 2017, decreasing from EUR1.91 at 31 December 2016. On a pound sterling basis, Adjusted NAV per share was relatively flat at GBP1.62 vs GBP1.63 at the end of last year.
Total Return metric
AGML, the Investment Manager, routinely considers how best to evaluate, monitor and assess the performance of AGA's three sub-portfolios: Private Equity, Derived Debt and Derived Equity. After careful consideration we believe that a revision is required to improve the manner in which performance is assessed particularly given that realised cash proceeds from divestments are reinvested into new investments. AGML is introducing a revised Total Return calculation focusing on net invested capital rather than flows in and out of the sub-portfolio. We are of the view that it provides a fairer representation of the return achieved on the invested capital at work in the portfolio during a given reporting period. Details of the calculation can be found in the Glossary on page 37. A comparison of this methodology put against the previously reported performance methodology is also available on page 37.
Fig.1: 1H17 performance (%)
%
------------------------------ ------
Private Equity 1.7%
------------------------------ ------
Derived Debt 0.3%
Derived Equity 3.6%
------------------------------ ------
Cost and other movements (0.6%)
------------------------------ ------
Performance fee adjustment(1) (0.8%)
------------------------------ ------
FX losses (4.9%)
------------------------------ ------
Total NAV Return (0.7%)
------------------------------ ------
1. Performance fee adjustment accounting for the movement in estimated performance fee reserve at 30 June 2017. EUR6.6m of a performance fee was paid in March 2017
Fig.2: Adjusted NAV development and performance (EURm)
Private Derived
Equity Investments Total
---------------------------- ------- ------------ ------
Adjusted NAV at 31 December
2016 938.7
---------------------------- ------- ------------ ------
Dividends paid (23.8)
---------------------------- ------- ------------ ------
Expenses and other(2) (17.6)
---------------------------- ------- ------------ ------
Total value gains(1) 2.2 40.6 42.8
---------------------------- ------- ------------ ------
Total value losses(1) (7.4) (24.6) (32.0)
---------------------------- ------- ------------ ------
Adjusted NAV at 30 June
2017 908.1
---------------------------- ------- ------------ ------
1. Total value movement calculated by taking unrealised and realised movements, FX and income earned during the period. Total value gains show the positive contributors and total value losses show the negative contributors
2. Expenses and other consists of: expenses of EUR6.7m; performance fee of EUR7.6m; and FX losses on cash of EUR3.3m
Fig.3: Adjusted NAV development (EURm)
Private Derived
Equity Investments(1) Cash Other Total
------------------------------- ------- --------------- ------- ----- ------
Adjusted NAV at 31 December
2016 494.1 406.2 33.9 4.5 938.7
------------------------------- ------- --------------- ------- ----- ------
+ Investments 14.2 117.4 (131.1) (0.5) -
------------------------------- ------- --------------- ------- ----- ------
- Divestments (50.1) (216.3) 270.7 (4.3) -
------------------------------- ------- --------------- ------- ----- ------
+ Interest and dividend income - - 16.4 (1.2) 15.2
------------------------------- ------- --------------- ------- ----- ------
+ Unrealised FV movement 15.9 2.4 - - 18.3
------------------------------- ------- --------------- ------- ----- ------
+ Realised FV movement - 19.7 - - 19.7
------------------------------- ------- --------------- ------- ----- ------
- FX losses (21.2) (21.2) (3.3) - (45.7)
------------------------------- ------- --------------- ------- ----- ------
+/- Costs and other movements - - (7.1) 0.4 (6.7)
------------------------------- ------- --------------- ------- ----- ------
- Dividends paid - - (23.8) - (23.8)
------------------------------- ------- --------------- ------- ----- ------
+/- Performance fee reserve 0.1 (1.1) (6.6) - (7.6)
------------------------------- ------- --------------- ------- ----- ------
Adjusted NAV at 30 June 2017 453.0 307.1 149.1 (1.1) 908.1
------------------------------- ------- --------------- ------- ----- ------
1. Included in investments, divestments and realised gains are movements related to the restructuring of Answers. AGA received equity, warrants and new second lien debt in lieu of first and second lien debt it previously held
Private Equity
Portfolio split by geography
1H16 1H17
----------------- ---- ----
A North America 51% 42%
----------------- ---- ----
B United Kingdom 3% 1%
----------------- ---- ----
C Rest of Europe 34% 44%
----------------- ---- ----
D India 7% 6%
----------------- ---- ----
E China 1% 1%
----------------- ---- ----
F Rest of World 4% 6%
----------------- ---- ----
Portfolio split by sector
1H16 1H17
--------------- ---- ----
A Tech & Telco 36% 32%
--------------- ---- ----
B Services 31% 31%
--------------- ---- ----
C Healthcare 14% 23%
--------------- ---- ----
D Consumer 18% 13%
--------------- ---- ----
E Other 1% 1%
--------------- ---- ----
Highlights
Private Equity delivered a Total Return of -1.1% in 1H17. FX in the period materially impacted valuations, with the strengthening of the euro against the US dollar reducing the value of US based investments. The performance contribution of 1.7% to AGA's overall Total NAV Return was driven by both organic growth and through acquisitions in the Private Equity portfolio companies.
Apax Funds saw positive momentum in terms of new investment activity with eight investments signed or closed in the period. Whilst the pace of realisations has slowed compared to previous years, Apax Funds continue to crystallise value in its portfolios, with four full and two partial exits announced in the first half of the year (more details on page 12).
Through its commitments to the Apax Funds, AGA had exposure to a Private Equity portfolio of EUR457.6m at 30 June 2017 with investments in, and commitments to, six Apax Funds (see Fig.1). Apax Europe VI ("AEVI") and Apax Europe VII ("AEVII") are fully invested and are focused on realising the remaining investments. Although the investments have been made over a decade, due to AGA's large exposure to Apax VIII ("AVIII"), over half of the portfolio stems from post-2014 vintages. The majority of these investments are yet to complete their value creation phase and therefore continue to have NAV expansion potential. At the reporting date, AVIII is close to being fully invested, with the fund's total investments to date representing c.98% of its committed capital. AVIII will likely reserve the remaining investable capital for future follow-on investments into the existing portfolio. The fund has already started to realise early winners, with distributions from exits such as Chola (EUR7.1m), Garda (EUR9.8m) and a partial exit from Global Logic (EUR31.3m). It is now focusing on continued value generation across the unrealised investments. Apax IX ("AIX") and AMI Opportunities Fund ("AMI") are both in their investment period. AIX, which announced its final close in December 2016, has started well having already completed four investments and announced another three to date, all of which, are expected to bring total investments to c.25% of committed capital by the end of the year. AMI has closed three investments at 30 June 2017 and announced a fourth in June 2017. Once AMI completes the fourth investment, total investments are expected to equal c.30% of the committed capital. AGA has also committed $50m to the Apax Digital Fund ("ADF"), which has yet to hold a final close. The investment strategy of ADF is based on Apax's experience in sourcing, selecting, and adding value to digital companies in the mid-market. Apart from the investments AGA has made in Private Equity as a limited partner in the Apax Funds, AGA also holds a stake in the AEVII carried interest. The value of the AEVII carried interest has increased by 9% during the half year from EUR19.6m at year end to EUR21.3m at 30 June 2017, largely reflecting a movement in timing expectations for when carried interest in AEVII will be paid.
Valuation levels in capital markets remain supportive to private equity valuations. Two positions out of 42 portfolio companies, Quality Distribution and Full Beauty, materially impacted returns. Rue21 and Answers were written off but did not significantly impact Adjusted NAV. Although Evry's IPO dragged down the valuation, this does not represent an underlying company performance issue but a function of the share price achieved at IPO being lower than anticipated by advisers on the listing. As a result, AVIII only sold the minimum required at IPO. Operationally the company continues to perform well and is exhibiting strong top line growth.
AGA's largest fund exposure, AVIII realised successful exits in Chola, Garda and a partial exit from Global Logic. There were also strong valuation gains from Assured Partners, Azelis and Shriram City Union Finance ("SCUF") which were the three companies with the highest valuation movements. Assured Partners' valuation increased mainly due to continued growth through accretive add-on acquisitions. Azelis' valuation benefited in approximately equal measure from strong EBITDA growth and higher valuation multiples, meanwhile SCUF's share price traded up strongly following an improved outlook despite the Indian government's demonetisation policies. Evry, Full Beauty and Quality Distribution were the largest negative contributors to valuation movements with Full Beauty being the main concern. Quality Distribution, a US provider of bulk chemical logistics, continues to see solid revenue growth, however rising maintenance costs in 2017 driven by an increase in the number of company stores impacted margins, which coupled with FX headwinds and an increase in net debt due to add-on acquisitions, impacted its short-term valuation. Full Beauty, a plus -size online retailer in the US, continued to face a difficult trading environment due to competition in online retail. The Investment Adviser is working with the companies' management team on operational improvements in Full Beauty and addressing the cost base at Quality Distribution. Two positions (Answers and Rue21) were written off during the period but as their December 2016 valuations were at or close to zero, they did not materially impact performance in 1H17.
Portfolio companies continued to drive growth both organically and through acquisitions. The return contribution of the resulting earnings growth in the period was 8.8%. The valuation metric is often, but not always EBITDA as for a number of portfolio companies other measures of maintainable earnings are a better valuation basis, for example in the case of some financial services companies. A number of portfolio companies have raised additional debt capital to fund their inorganic growth strategies. As a consequence, net debt balances in the portfolio have increased on an absolute basis. This had a negative impact of 4.8% on returns during the reporting period. Payment of dividends and investments in strategic initiatives have also had an impact on this. However, the ratio of net debt to EBITDA only increased slightly to 4.5x as EBITDA growth during the period largely offset the additional debt raised.
Fig.1: Commitments to Apax Funds
Invested
Commitment and committed NAV at
amount by Apax 30 June
Fund Name Currency Vintage (m) Funds 2017 (EURm)
------------------ --------- -------- ---------- -------------- ------------
Apax Digital
Fund(1) USD tbd $50.0 -% -
------------------ --------- -------- ---------- -------------- ------------
Apax IX USD 2016 $175.0 14% EUR2.7m
EUR 2016 EUR154.5 14% EUR3.7m
--------- --------------------------- ---------- -------------- ------------
AMI Opportunities
Fund USD 2014 $30.0 20% EUR7.7m
------------------ --------- -------- ---------- -------------- ------------
Apax VIII USD 2012 $218.3 98% EUR173.7m
EUR 2012 EUR159.5 98% EUR207.7m
--------- --------------------------- ---------- -------------- ------------
Apax Europe
VII(2) EUR 2007 EUR86.5 107% EUR60.1m
------------------ --------- -------- ---------- -------------- ------------
Apax Europe
VI EUR 2005 EUR10.6 106% EUR2.0m
------------------ --------- -------- ---------- -------------- ------------
Total EUR457.6m
--------------------------------------- ---------- -------------- ------------
1. The fund is yet to hold a final close
2. Includes AGA's exposure to AEVII as a limited partner, valued at EUR38.8m, and through its carried interest holdings, valued at EUR21.3m. The carried interest holdings were acquired through a EUR10.5m investment in 2015
Fig.2: 1H17 performance (%)
%
------------------------------------------- ------
Movement in underlying portfolio companies
earnings 8.8%
------------------------------------------- ------
Movement in net debt(3) (4.8%)
Movement in comparable companies valuation
multiple(2) 1.7%
------------------------------------------- ------
FX (4.4%)
------------------------------------------- ------
One off and other (1.4%)
------------------------------------------- ------
Management fees paid and carried interest
accrued by Apax Funds(1) (1.7%)
------------------------------------------- ------
Movement in AEVII carried interest
fair value 0.7%
------------------------------------------- ------
Movement in performance fee reserve 0.0%
------------------------------------------- ------
Total Return (1.1%)
------------------------------------------- ------
1. Performance fee adjustment accounting for the movement in the estimated performance fee reserve at 30 June 2017
2. Movement in the valuation multiples captures movement in the comparable companies valuation multiples. In accordance with International Private Equity and Venture Capital Valuation ("IPEV") guidelines, the Apax Funds use a multiples based approach where an appropriate valuation multiple (based on both public and private market valuation comparators) is applied to maintainable earnings, which is often but not necessarily represented by EBITDA to calculate enterprise value
3. Represents movement in all instruments senior to equity
Market outlook
The market environment continues to be characterised by record-high valuations, partly reflecting generally positive macroeconomic conditions in both developed and emerging markets. Europe in particular appears to be on a rebound trajectory which we believe will continue for a while.
Apax Funds continue to seek out the niche opportunities off the beaten path and have been able to execute investments at reasonable valuations during 2017. The focus is on transactions where multiple value creation levers can be pulled within the first two years of investment to make sure a value "buffer" is created in case general market valuations contract and/or the economies slow down.
The second half of 2017 looks supportive to these types of transactions and the Apax Funds have a number of attractive new opportunities under review during the summer.
The existing portfolio looks promising with more interesting returns in the second half of 2017, as some of the more difficult investments have been worked through and others are continuing to develop strongly.
Private Equity - Acquisitions
Acquisitions Closed Date Cost(1) ----------------------------------------------------------------------------------- -------------- ----------------- Unilabs Leading European laboratory and radiology service company (AIX(2) , Europe, Healthcare) February 2017 EUR22.4m ----------------------------------------------------------------------------------- -------------- ----------------- Ten10 Operator of discount gas stations in Israel (AMI, Israel, Consumer) March 2017 EUR2.3m ----------------------------------------------------------------------------------- -------------- ----------------- Guotai Junan Securities Securities firm providing a diversified range of services including securities brokerage, underwriting, asset management and credit (AIX, China, Services) April 2017 EUR8.6m ----------------------------------------------------------------------------------- -------------- ----------------- Kepro Provider of beneficiary eligibility and medical cost containment services (AIX, North America, Healthcare) May 2017 EUR6.4m ----------------------------------------------------------------------------------- -------------- ----------------- Announced Date Estimated cost(1) ----------------------------------------------------------------------------------- -------------- ----------------- Syneron Candela April 2017 c.EUR11m Global non-surgical aesthetic device company (AIX, North America, Healthcare) ----------------------------------------------------------------------------------- -------------- ----------------- Safety Kleen May 2017 c.EUR13m Europe's largest service provider of surface treatment and chemical application services (AIX, Europe, Services) ----------------------------------------------------------------------------------- -------------- ----------------- Attenti June 2017 c.EUR7m Carve-out of 3M's electronic monitoring business (AIX, Rest of World, Tech & Telco) ----------------------------------------------------------------------------------- -------------- ----------------- Max June 2017 c.EUR3m Israel's largest general discount retail chain (AMI, Israel, Consumer) ----------------------------------------------------------------------------------- -------------- -----------------
1. Cost and Estimated costs are AGA's indirect exposure to the underlying portfolio companies held by the Apax Funds. Costs may change following final close of the deal
2. The above is in reference to AIX's acquisition of a majority position in Unilabs. AEVI will retain its existing minority stake which it initially acquired in 2007
www.apaxglobalalpha.com investment-portfolio/top-holdings/private-equity-funds/
Divestments
Divestments Closed - fully exited(1) Initial year of purchase MOIC(2) Gross IRR(2) ------------------------------------ --------------------------- ------------------------- ------- ------------ Chola A leading Indian non-bank financial company (AVIII, India, Services) Exited via public markets 2014 2.7x 54% ------------------------------------- --------------------------- ------------------------ ------- ------------ Garda Leading provider of cash logistics services in North America and physical security services in Canada and emerging markets (AVIII, North America, Services) Exited via private sale 2012 2.4x 28% ------------------------------------- --------------------------- ------------------------ ------- ------------ Ascential International B2B media company (AEVII, Europe, Legacy Media) Partial public market sale 2008 1.1x 2% ------------------------------------- --------------------------- ------------------------ ------- ------------ Capio Pan-European hospital and healthcare services operator (AEVI, Europe, Healthcare) Exited via public markets 2006 1.6x 6% ------------------------------------- --------------------------- ------------------------ ------- ------------
Other noteworthy investments not Initial year of MOIC(2) Gross fully exited purchase IRR(2) ------------------------------------ --------------------------- ------------------------- ------- ------------ Global Logic Outsource product developer (AVIII, RoW, Tech & Telco) Partial exit 2013 5.0x 59% ------------------------------------- --------------------------- ------------------------ ------- ------------ Evry IT services provider (AVIII, Europe, Tech & Telco) IPO 2015 2.4x 50% ------------------------------------- --------------------------- ------------------------ ------- ------------ Shiram City Union Finance A non-bank financial company focused on the microenterprises segment (AVIII, India, Services) Recapitalised 2015 1.2x 11% ------------------------------------- --------------------------- ------------------------ ------- ------------ Answers Social content publisher and cloud platform (AVIII, North America, Services) Restructured 2014 0.0x -72% ------------------------------------- --------------------------- ------------------------ ------- ------------ Rue21 In restructuring 2013 0.0x NM(3) % Apparel and accessories retailer (AVIII, North America, Consumer) ------------------------------------- --------------------------- ------------------------ ------- ------------
1. Chola final sale closed January 2017, Capio final sale closed February 2017, Ascential final sale closed March 2017, Garda final sale closed May 2017 and proceeds were distributed in June 2017
2. Gross MOICs and Gross IRRs represent return to the Apax Funds as at 30 June 2017, including unrealised value and total realised proceeds. Calculated since the initial purchase date of the investment. Gross IRR was 10.2% on fully exited deals
3. Not meaningful
Top 30 Private Equity Investments
AGA's indirect exposure at 30 June 2017
Initial % of % of Invested
Fund purchase year Sector Geography Valuation EURm NAV Portfolio
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Assured
Partners* AVIII 2015 Services North America 47.1 5% 6%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Azelis* AVIII 2015 Services Europe 46.8 5% 6%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
EVRY AVIII 2015 Tech & Telco Europe 38.6 4% 5%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Exact Software* AVIII 2015 Tech & Telco Europe 36.0 4% 5%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Global Logic AVIII 2013 Tech & Telco North America 25.0 3% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Engineering AVIII 2016 Tech & Telco Europe 24.6 3% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Unilabs AEVI & AIX 2007 & 2017 Healthcare Europe 23.4 3% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Idealista AVIII 2015 Consumer Europe 23.1 3% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
NuPharm365 AVIII 2016 Healthcare Europe 19.9 2% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Wehkamp AVIII 2015 Consumer Europe 19.3 2% 3%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Shriram City
Union AVIII 2015 Services India 19.3 2% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
One Call AEVII & AVIII 2013 Healthcare North America 17.4 2% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Vyaire Medical AVIII 2016 Healthcare North America 15.8 2% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Acelity AEVII 2011 Healthcare North America 15.3 2% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Cole Haan* AVIII 2013 Consumer North America 14.2 2% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Duck Creek
Technologies AVIII 2016 Tech & Telco North America 13.5 1% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Ideal Protein AVIII 2015 Healthcare North America 12.9 1% 2%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Quality
Distribution* AVIII 2015 Services North America 11.2 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Psagot AEVII 2010 Services Rest of World 9.0 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Guotai Junan
Securities AIX 2017 Services China 8.5 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Tivit AEVI & AEVII 2010 Tech & Telco Rest of World 8.2 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Genex* AEVII & AVIII 2014 Healthcare North America 7.1 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Full Beauty* AVIII 2015 Consumer North America 6.6 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Zensar
Technologies AVIII 2015 Tech & Telco India 6.5 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Boats Group AIX 2016 Services North America 6.5 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Kepro AIX 2017 Healthcare North America 6.3 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Bankrate AEVII 2009 Services North America 5.3 1% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Sophos* AEVI & AEVII 2010 Tech & Telco United Kingdom 4.5 0% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Zap Group AMI 2015 Tech & Telco Rest of World 4.2 0% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Huarong AEVII & AVIII 2014 Services China 4.0 0% 1%
--------------- -------------- --------------- ------------- --------------- -------------- ---- --------------
Other 13.5 1% 2%
-------------------------------------------------------------------------------- -------------- ---- -------------- Total gross investments 513.6 56% 66% -------------------------------------------------------------------------------- -------------- ---- -------------- Carried interest (31.1) -3% -4% -------------------------------------------------------------------------------- -------------- ---- -------------- Capital call facilities and other (24.9) -3% -3% -------------------------------------------------------------------------------- -------------- ---- -------------- Total net investments 457.6 50% 59% -------------------------------------------------------------------------------- -------------- ---- --------------
* The Company also holds Derived Investments in these portfolio companies at 30 June 2017
Derived Investments
Derived Investments by portfolio composition
1H16 1H17
--------- ---- ----
A Debt 77% 62%
--------- ---- ----
B Equity 23% 38%
--------- ---- ----
Derived Investments by geography
1H16 1H17
-------------------- ---- ----
A North America 68% 57%
-------------------- ---- ----
B United Kingdom 3% 8%
-------------------- ---- ----
C Rest of Europe 10% 11%
-------------------- ---- ----
D India 13% 17%
-------------------- ---- ----
E China 2% 4%
-------------------- ---- ----
F Rest of the World 4% 3%
-------------------- ---- ----
Derived Investments by sector
1H16 1H17
--------------- ---- ----
A Tech & Telco 38% 39%
--------------- ---- ----
B Services 24% 35%
--------------- ---- ----
C Healthcare 17% 11%
--------------- ---- ----
D Consumer 20% 14%
--------------- ---- ----
E Other 1% 1%
--------------- ---- ----
Highlights
Total Return for Derived Investments was 3.8%. The performance of the Derived Equity portfolio was a key contributor to performance of Derived Investments during the period with a Total Derived Equity Return of 18.3%. The Derived Debt portfolio performance remained subdued with a Total Derived Debt Return of -3.7%. This is primarily due to AGA's challenged investments in Rue21 and Full Beauty as well as the portfolio's US dollar exposure. Towards the end of the reporting period, the Derived Investments portfolio saw several exits predominantly in Derived Equity as many portfolio investments achieved their investment objectives earlier than originally anticipated.
Fig.1: 1H17 performance (%)
%
------------------------------ ------
Income 3.8%
------------------------------ ------
Realised gains 5.0%
Unrealised gains 0.6%
------------------------------ ------
Performance fee adjustment(1) (0.3%)
------------------------------ ------
FX losses (5.3%)
------------------------------ ------
Total Return 3.8%
------------------------------ ------
1. Performance fee adjustment accounting for the movement in the estimated performance fee reserve at 30 June 2017
Derived Equity
The performance of the Derived Equity portfolio was very strong during the period, with Total Derived Equity Returns of 18.3%.
AGML has been actively shifting focus within the Derived Investments portfolio towards equities in the past 12 months. This was done in light of the relative attractiveness of this asset class compared to debt in the current market environment. Of the 14 Derived Investments made during the period (total invested amount: EUR117.4m), ten investments were in Derived Equity (total invested amount: EUR65.4m) across all four Apax focus sectors (more details on page 16). From a geographic perspective, the majority of investments (four out of ten) were made in Europe and the UK. The consistently improving macroeconomic environment in Europe provided tailwinds to the investment activity. In the UK, AGML was able to crystallise value on some of the investments made during the period. However we remain generally cautious about the UK's mid-term prospects after Brexit.
For a number of investments, the investment objectives were achieved sooner than expected. This has led to a higher turnover in the Derived Equity portfolio with five out of ten investments bought during the period already sold. Four investments were sold shortly before 30 June, which temporarily inflated the cash balance by EUR70.9m. In total, eight equity positions were sold for a total realised amount of EUR101.7m during the period, yielding EUR17.6m in realised gains (Derived Investments total realised gains: EUR19.7m). The largest absolute contributions were from the investments in Liva Nova and N Brown, with realised gains of EUR7.4m and EUR3.0m respectively. The investment thesis for Liva Nova was to acquire the position at a low valuation compared to peers, whilst backing a strong management team to execute on merger synergies and growth. The investment in N Brown was identified as an attractive combination of low valuation and long-term upside from online opportunities in a consumer sub-sector which the Investment Adviser is very familiar with.
The high portfolio turnover in the Derived Equity portfolio impacted the Derived Investments operational metrics (see charts on page 15). As these metrics measure performance of the portfolio at 30 June, portfolio mix changes had a significant impact for the reporting period. The sale of higher growth companies such as Fortinet, Chola and Geometric, coupled with the purchase of lower growth companies such as DCB Bank and Tech Mahindra reduced the average LTM earnings growth from 32% to 5%, however nine out of eleven positions had earnings growth between 0% and 58%.
The euro strengthening against other major currencies has had a dilutive effect on performance during the period. FX losses totalled EUR5.9m and reduced total Derived Equity returns by 4.4%. As at 30 June, 46% of the Derived Equity portfolio was denominated in Indian rupees and the balance in currencies other than the euro.
Derived Debt
Performance of the Derived Debt portfolio was weak during the period with a Total Derived Debt Return of -3.7%.
Two key elements drove Total Return performance in Derived Debt: an ongoing drag on performance from the challenged investments in Rue21 and Full Beauty, as well as currency headwinds. Other than that, the performance of this part of the portfolio was resilient.
As reported before, AGA had made investments into debt instruments issued by Answers, Rue21, and Full Beauty. Answers emerged from a Chapter 11 bankruptcy during the period and AGA received shares, warrants, and new debt instruments in exchange for the prior debt investments. Answers' value was already impaired at 31 December 2016 and therefore no further value loss was generated in the reporting period. AGA will report performance of the shares and warrants received as part of its Derived Equity portfolio going forward. Rue21 and Full Beauty are exposed to significant headwinds in the US retail sector. Rue21 is currently going through a Chapter 11 process. The Investment Adviser is spending considerable resources on Full Beauty which, whilst challenged, has a unique position in the market given its focus on "plus-size" and its online/catalogue business model. Fair market value of the investments held in Answers, Rue21, and Full Beauty at 30 June 2017 were EUR8.2m, EUR3.6m, and EUR15.2m respectively.
FX movements had a large impact on returns as 89% of Derived Debt Investments are held in US dollar denominated instruments. This exposure had an impact of -5.9% on Total Derived Debt Returns. AGML does not hedge the underlying currency exposure of AGA's investment portfolio and therefore FX movements are expected to remain a source of return volatility going forward.
The remaining investments in the Derived Debt portfolio demonstrated strong or resilient results during the period. With the exception of one investment - Paradigm, a software company servicing the oil and gas exploration market - the remaining 16 investments held at period end or exited during the period all delivered positive like-for-like gains (including income received) at an average of 5.9% on a currency adjusted basis.
Record high valuations in loan and bond markets provide a challenging environment for new investments in debt. We made four new investments in Derived Debt positions (Total invested amount: EUR52.0m) during the period, all of which were second lien loans. Three of those four investments were made in companies, which, at the time of investment, were not portfolio companies of the Apax Funds.
AGA realised four Derived Debt investments during the period amounting to EUR114.6m with realised gains of EUR 2.1m. For three of those four realisations - Acelity, Kepro, and Unilabs - AGA was repaid as part of a refinancing of the underlying companies. The investment in Kepro, together with the investment made in Acelity, generated the highest absolute contribution (realised gains and income) to returns with EUR1.6m and EUR1.4m respectively. The Investment Manager completed the sale of Ellucian's unsecured bonds in the second half of the period, having disposed of half its position earlier in 1Q17. Returns on Acelity were mainly driven by the company redeeming the notes as part of a refinancing following the sale of a major business division.
Operational performance in the Derived Debt portfolio when measured by LTM EBITDA growth improved from 2.7% to 5.5% during the period, albeit still at low levels due to six companies (31 December 2016: eight) having had negative LTM EBITDA growth. Average yields to maturity in the portfolio have increased from 12.0% to 13.6%, with the number of investments with yields above 10% increasing from seven to eight positions.
Market outlook
Debt markets are still characterised by very high valuations in a historical context. We are concerned that such valuations will not prove sustainable in the long run. As a consequence, AGML is de-emphasising investment focus on Derived Debt. Despite equity markets trading at peak valuation levels, AGML aims to identify relative value opportunities in sub-sectors that are more attractively priced.
Derived Investments - Acquisitions
Acquisitions(1) Debt Cost(2) --------------------------------------------- -------- Kepro Provider of beneficiary eligibility and medical cost containment services (North America, Healthcare) EUR23.6m --------------------------------------------- -------- Caliber Collision US collision repair multi-shop operator (North America, Consumer) EUR4.7m --------------------------------------------- -------- Assured Partners Middle market insurance brokerage firm (North America, Services) EUR34.6m --------------------------------------------- -------- Misys Provider of financial services software (Europe, Tech & Telco) EUR1.8m --------------------------------------------- -------- Equity(3) --------------------------------------------- -------- Epam Specialised outsourced product development services provider (North America, Tech & Telco)(3) EUR5.3m --------------------------------------------- -------- Liva Nova UK headquartered med-tech company (Europe, Healthcare) EUR28.2m --------------------------------------------- -------- Shiram Transport Finance Non-bank financial company in India (India, Services)(3) EUR4.8m --------------------------------------------- -------- 51 Jobs Leading online job listing website in China (China, Consumer) EUR9.5m --------------------------------------------- -------- Tech Mahindra IT services, outsourcing and consulting company (India, Tech & Telco) EUR12.4m --------------------------------------------- -------- Mitie UK facilities management company (United Kingdom, Services) EUR9.4m --------------------------------------------- -------- DCB Bank Indian commercial bank (India, Services) EUR11.5m --------------------------------------------- -------- N Brown Group plc UK home shopping fashion retailer (United Kingdom, Consumer) EUR7.5m --------------------------------------------- -------- Nets Nordic-based provider of payments, cards and information services (Europe, Tech & Telco) EUR10.0m --------------------------------------------- -------- Strides Shasun An Indian pharmaceutical company (India, Healthcare) EUR17.2m --------------------------------------------- --------
1. During 1H17, AGA's debt holdings in Answers first lien and second lien debt were converted into new second lien notes and equity instruments. These have been excluded from the above
2. Cost represents the current cost of investments held at 30 June 2017 and total cost for investments subsequently sold in 1H17
3. Epam and Shriram were originally purchased in December 2016, There were no further additions to these positions in 1H17
Derived Investments - Divestments
Initial
Divestments(1) year of
Debt purchase IRR(2)
------------------------------ ----------------- ---------- ------
Acelity Second lien
Medical equipment company senior
(North America, Healthcare) secured note 2016 48%
------------------------------ ----------------- ---------- ------
Ellucian
A leader in higher education
technology
(North America, Tech Senior unsecured
& Telco notes 2016 22%
------------------------------ ----------------- ---------- ------
Kepro
Provider of beneficiary
eligibility and medical
cost containment services Senior unsecured
(North America, Healthcare) notes 2017 13%
------------------------------ ----------------- ---------- ------
Unilabs
Provider of beneficiary
eligibility and medical
cost containment services Senior unsecured
(Europe, Healthcare) notes 2016 10%
------------------------------ ----------------- ---------- ------
Equity
------------------------------ ----------------- ---------- ------
Chola
Non-bank financial company
(India, Services) Listed equity 2014 80%
------------------------------ ----------------- ---------- ------
Geometric
IT engineering services
business
(India, Tech & Telco Listed equity 2016 37%
------------------------------ ----------------- ---------- ------
Nets
Nordic-based provider
of payments, cards
and information services
(Europe, Tech & Telco) Listed equity 2017 450%
------------------------------ ----------------- ---------- ------
Fortinet
Security software company
(North America, Tech
& Telco) Listed equity 2016 28%
------------------------------ ----------------- ---------- ------
LivaNova
UK headquartered med-tech
company
(Europe, Healthcare) Listed equity 2016 67%
------------------------------ ----------------- ---------- ------
51 Jobs
Leading online job listing
website in China
(China, Consumer) Listed equity 2017 96%
------------------------------ ----------------- ---------- ------
Mitie
UK facilities management
company
(United Kingdom, Services) Listed equity 2016 88%
------------------------------ ----------------- ---------- ------
N Brown Group plc
UK home shopping fashion
retailer
(United Kingdom, Consumer) Listed equity 2016 169%
------------------------------ ----------------- ---------- ------
1. Full exits
2. Gross IRR calculated since the initial purchase date of the investment. For assets purchased prior to 15 June 2015, the IPO date, the IRR is calculated based on the initial purchase price in PCV. Aggregate Gross IRR on fully exited deals was 26.8% (inclusive of Answers first and second lien debt that was restructured)
Derived Investments portfolio
At 30 June 2017
Derived Initial % of
Investments purchase Valuation % of Invested
portfolio Instrument year Sector Geography EURm NAV Portfolio
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien North
AssuredPartners* debt 2015 Services America 35.9 4% 5%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Tech & United
Sophos* Listed equity 2016 Telco Kingdom 23.8 3% 3%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Rest
Azelis* debt 2015 Services of Europe 20.7 2% 3%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien North
Genex* debt 2014 Healthcare America 19.5 2% 3%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech & North
Rentpath debt 2014 Telco America 18.5 2% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Advantage
Sales & Second lien North
Marketing debt 2014 Consumer America 17.1 2% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Quality Second lien North
Distribution* debt 2015 Services America 16.2 2% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Strides
Shasun Listed equity 2014 Healthcare India 15.8 2% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien North
Full Beauty* debt 2015 Consumer America 15.2 2% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech & Rest
Exact Holdings* debt 2015 Telco of Europe 13.0 1% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Development
Credit Bank Listed equity 2017 Services India 12.6 1% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Tech &
Tech Mahindra Listed equity 2017 Telco India 12.3 1% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Palo Alto Tech & North
Networks Listed equity 2016 Telco America 11.7 1% 2%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech & Rest
Paradigm* debt 2014 Telco of World 11.0 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
China Cinda
Asset Management Listed equity 2015 Services China 10.1 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Tech &
TAKE Solutions Listed equity 2016 Telco India 9.0 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech & North
Vertafore debt 2016 Telco America 8.9 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Tech & North
Epam Systems Listed equity 2016 Telco America 6.7 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech & North
Epicor debt 2015 Telco America 6.5 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Equity and North
Answers(1) warrants 2017 Services America 6.4 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien North
Answers(1) debt 2017 Services America 1.8 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Shriram
Transport
Finance Listed equity 2016 Services India 5.8 1% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Caliber Second lien North
Collision debt 2017 Consumer America 4.5 0% 1%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Zhaopin Listed equity 2016 Consumer China 2.9 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Cengage Legacy North
Learning* Listed equity 2014 Media America 2.5 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
First lien
debt
and DIP North
Rue21 facility 2013 Consumer America 3.6 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Second lien Tech &
Misys debt 2017 Telco Europe 1.8 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
First lien North
Cole Haan* debt 2016 Consumer America 1.0 0% 0%
------------------ -------------- ---------- ----------- ----------- --------- ---- ----------
Total Derived Investments 314.8 34% 41%
---------------------------------- ---------------------------------- --------- ---- ----------
* Investments also held by the Apax Funds at 30 June 2017
1. These represent the new second lien debt, equity and warrants that AGA received as part of the Answers restructuring. The initial purchase year for Answers was 2014
Directors' responsibility statement
Statement of principal risks and uncertainties
As an investment company with an investment portfolio comprising financial assets, the principal risks associated with the Company's business largely relate to financial risks, strategic and business risks, and operating risks.
A detailed analysis of the Company's principal risks and uncertainties are set out on pages 16 to 21 of the Annual Report and Accounts 2016 and have not changed materially since the date of the report. The Company has not identified any new risks that will impact the remaining six months of the financial year.
Statement of Directors' responsibilities in respect of the Interim Report and Accounts
The Directors confirm that to the best of their knowledge:
-- the condensed interim financial statements have been prepared in accordance with IAS34 Interim Financial Reporting as required by DTR4.2.4R;
-- the Chairman's Statement and Investment Manager's report (together constituting the Interim Management Report) together with the statement of principal risks and uncertainties above include a fair review of the information required by DTR4.2.7R, being an indication of important events that have occurred during the period and their impact on these interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and
-- the condensed interim financial statements provide a fair review of the information required by DTR4.2.8R, 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 that period, and any changes in the related party transactions described in the last Annual Report and Accounts that could materially affect the financial position or performance of the Company during that period. Please refer to note 9 of the condensed interim financial statements.
Signed on behalf of the Board of Directors
Tim Breedon CBE
Chairman
16 August 2017
Signed on behalf of the Audit Committee
Susie Farnon
Chairman of the Audit Committee
16 August 2017
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Independent review report
to Apax Global Alpha Limited
Conclusion
We have been engaged by Apax Global Alpha Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 which comprises the condensed statement of financial position, the condensed statement of profit or loss and other comprehensive income, the condensed statement of changes in equity, the condensed statement of cash flows and the related explanatory notes.
Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2017 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the European Union (the "EU") and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").
Scope of review
We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.
A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.
As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.
The purpose of our review work and to whom we owe our responsibilities
This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.
Lee C. Clark
for and on behalf of
KPMG Channel Islands Limited
Chartered Accountants, Guernsey
16 August 2017
Condensed statement of financial position
At 30 June 2017 (Unaudited)
30 June 31 December
2017 2016
Notes EUR'000 EUR'000
-------------------------------- ----- -------- -----------
Assets
-------------------------------- ----- -------- -----------
Non-current assets
-------------------------------- ----- -------- -----------
Investments held at fair
value through profit or loss 8 772,392 911,554
-------------------------------- ----- -------- -----------
Total non-current assets 772,392 911,554
-------------------------------- ----- -------- -----------
Current assets
-------------------------------- ----- -------- -----------
Cash and cash equivalents 149,124 33,862
-------------------------------- ----- -------- -----------
Investment receivables - 4,400
-------------------------------- ----- -------- -----------
Other receivables 1,655 2,794
-------------------------------- ----- -------- -----------
Total current assets 150,779 41,056
-------------------------------- ----- -------- -----------
Total assets 923,171 952,610
-------------------------------- ----- -------- -----------
Liabilities
-------------------------------- ----- -------- -----------
Current liabilities
-------------------------------- ----- -------- -----------
Investment payables 1,023 488
-------------------------------- ----- -------- -----------
Accrued expenses 1,726 2,113
-------------------------------- ----- -------- -----------
Total current liabilities 2,749 2,601
-------------------------------- ----- -------- -----------
Total liabilities 2,749 2,601
-------------------------------- ----- -------- -----------
Capital and reserves
-------------------------------- ----- -------- -----------
Shareholders' capital 14 873,804 873,804
-------------------------------- ----- -------- -----------
Share-based payment performance
fee reserve 10 12,304 11,291
-------------------------------- ----- -------- -----------
Retained earnings 34,314 64,914
-------------------------------- ----- -------- -----------
Total equity 920,422 950,009
-------------------------------- ----- -------- -----------
Total shareholders' equity
and liabilities 923,171 952,610
-------------------------------- ----- -------- -----------
On behalf of the Board of Directors
Tim Breedon
Chairman
16 August 2017
Susie Farnon
Chairman of the Audit Committee
16 August 2017
30 June 30 June 31 December 31 December
2017 2017 2016 2016
EUR GBP equivalent(1) EUR GBP equivalent(1)
------------------------ ------- ------------------ ----------- ------------------
Net Asset Value ("NAV")
('000) 920,422 807,302 950,009 810,852
------------------------ ------- ------------------ ----------- ------------------
Adjusted NAV ('000)(2) 908,118 796,510 938,718 801,215
------------------------ ------- ------------------ ----------- ------------------
NAV per share 1.87 1.64 1.93 1.65
------------------------ ------- ------------------ ----------- ------------------
Adjusted NAV per
share(2) 1.85 1.62 1.91 1.63
------------------------ ------- ------------------ ----------- ------------------
1. The sterling equivalent has been calculated based on the GBP/EUR exchange rate at 30 June 2017 and 31 December 2016 respectively.
2. Adjusted NAV is the NAV net of the share-based payment performance fee reserve. Adjusted NAV per share is calculated by dividing the Adjusted NAV by the total number of shares.
Condensed statement of profit or loss and other comprehensive income
Six months ended 30 June 2017 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
Notes EUR'000 EUR'000
----------------------------------- ----- ---------- ----------
Income
----------------------------------- ----- ---------- ----------
Investment income 15,288 16,824
----------------------------------- ----- ---------- ----------
Net changes on investments
at fair value through profit
or loss 8 (7,820) (20,855)
----------------------------------- ----- ---------- ----------
Realised foreign currency gains 1,435 54
----------------------------------- ----- ---------- ----------
Net unrealised foreign currency
losses (3,301) (423)
----------------------------------- ----- ---------- ----------
Total income 5,602 (4,400)
----------------------------------- ----- ---------- ----------
Operating and other expenses
----------------------------------- ----- ---------- ----------
Performance fee 10 (7,578) 4,186
----------------------------------- ----- ---------- ----------
Management fee 9 (2,687) (2,941)
----------------------------------- ----- ---------- ----------
Administration and other operating
expenses 6 (1,355) (2,009)
----------------------------------- ----- ---------- ----------
Total operating expenses (11,620) (764)
----------------------------------- ----- ---------- ----------
Finance costs 11 (675) (631)
----------------------------------- ----- ---------- ----------
Loss before tax (6,693) (5,795)
----------------------------------- ----- ---------- ----------
Taxation (charge)/credit 7 (138) 22
----------------------------------- ----- ---------- ----------
Loss after taxation for the
period (6,831) (5,773)
----------------------------------- ----- ---------- ----------
Other comprehensive income - -
----------------------------------- ----- ---------- ----------
Total comprehensive income
attributable to shareholders (6,831) (5,773)
----------------------------------- ----- ---------- ----------
Earnings per share 15
----------------------------------- ----- ---------- ----------
Basic (cents) (1.39) (1.18)
----------------------------------- ----- ---------- ----------
Diluted (cents) (1.39) (1.18)
----------------------------------- ----- ---------- ----------
Adjusted (cents)(1) (1.37) (1.16)
----------------------------------- ----- ---------- ----------
1. The Adjusted earnings per share has been calculated based on the profit attributable to ordinary shareholders adjusted for the total accrued performance fee at 30 June 2017 and 30 June 2016 respectively as per note 15 and the weighted average number of ordinary shares.
Condensed statement of changes in equity
Six months ended 30 June 2017 (Unaudited)
Share-based
payment
For the six months Shareholders' Retained performance
ended capital earnings fee reserve Total
30 June 2017 Notes EUR'000 EUR'000 EUR'000 EUR'000
--------------------- ----- ------------- --------- ------------ --------
Balance at 1 January
2017 873,804 64,914 11,291 950,009
--------------------- ----- ------------- --------- ------------ --------
Total comprehensive
income attributable
to shareholders - (6,831) - (6,831)
--------------------- ----- ------------- --------- ------------ --------
Share-based payment
performance fee
reserve movement 10 - - 1,013 1,013
--------------------- ----- ------------- --------- ------------ --------
Dividend paid 16 - (23,769) - (23,769)
--------------------- ----- ------------- --------- ------------ --------
Balance at 30
June 2017 873,804 34,314 12,304 920,422
--------------------- ----- ------------- --------- ------------ --------
For the six months Share-based
ended payment
30 June 2016 Shareholders' Retained performance
and 31 December capital earnings fee reserve Total
2016 Notes EUR'000 EUR'000 EUR'000 EUR'000
--------------------- ----- ------------- --------- ------------ --------
Balance at 1 January
2016 873,804 49,757 12,968 936,529
--------------------- ----- ------------- --------- ------------ --------
Total comprehensive
income attributable
to shareholders - (5,773) - (5,773)
--------------------- ----- ------------- --------- ------------ --------
Share-based payment
performance fee
reserve movement 10 - - (6,290) (6,290)
--------------------- ----- ------------- --------- ------------ --------
Dividend paid 16 - (23,395) - (23,395)
--------------------- ----- ------------- --------- ------------ --------
Balance at 30
June 2016 873,804 20,589 6,678 901,071
--------------------- ----- ------------- --------- ------------ --------
Total comprehensive
income attributable
to shareholders - 66,726 - 66,726
--------------------- ----- ------------- --------- ------------ --------
Share-based payment
performance fee
reserve movement - - 4,613 4,613
--------------------- ----- ------------- --------- ------------ --------
Dividend paid - (22,401) - (22,401)
--------------------- ----- ------------- --------- ------------ --------
Balance at 31
December 2016 873,804 64,914 11,291 950,009
--------------------- ----- ------------- --------- ------------ --------
Condensed statement of cash flows
Six months ended 30 June 2017 (Unaudited)
Six months Six months
ended ended
30 June 30 June
2017 2016
Notes EUR'000 EUR'000
----------------------------------- ----- ---------- ----------
Cash flows from operating
activities
----------------------------------- ----- ---------- ----------
Interest received 16,130 15,981
----------------------------------- ----- ---------- ----------
Interest paid (19) (9)
----------------------------------- ----- ---------- ----------
Dividend received 295 292
----------------------------------- ----- ---------- ----------
Performance fee paid 10 (6,565) (2,104)
----------------------------------- ----- ---------- ----------
Operating expenses paid (4,396) (5,292)
----------------------------------- ----- ---------- ----------
Tax (charge)/credit 7 (138) 22
----------------------------------- ----- ---------- ----------
Net cash used in operating
activities 5,307 8,890
----------------------------------- ----- ---------- ----------
Cash flows from investing
activities
----------------------------------- ----- ---------- ----------
Capital calls paid to Private
Equity Investments (14,218) -
----------------------------------- ----- ---------- ----------
Capital distributions from
Private Equity Investments 50,129 38,733
----------------------------------- ----- ---------- ----------
Purchase of Derived Investments(3) (107,518) (65,383)
----------------------------------- ----- ---------- ----------
Sale of Derived Investments(3) 208,959 68,352
----------------------------------- ----- ---------- ----------
Net cash from investing
activities 137,352 41,702
----------------------------------- ----- ---------- ----------
Cash flows from financing
activities
----------------------------------- ----- ---------- ----------
Financing cost(1) (671) (544)
----------------------------------- ----- ---------- ----------
Dividend paid(2) 16 (23,425) (22,981)
----------------------------------- ----- ---------- ----------
Net cash from financing
activities (24,096) (23,525)
----------------------------------- ----- ---------- ----------
Net increase in cash and
cash equivalents 118,563 27,067
----------------------------------- ----- ---------- ----------
Cash and cash equivalents
at the beginning of the
period 33,862 21,525
----------------------------------- ----- ---------- ----------
Effect of foreign currency
fluctuations on cash and
cash equivalents (3,301) (423)
----------------------------------- ----- ---------- ----------
Cash and cash equivalents
at the end of the period 149,124 48,169
----------------------------------- ----- ---------- ----------
1 Financing costs were included in operating expenses paid in the prior period. These have been restated in the current interim financial statements.
2 Dividend paid represents the cash amount paid to shareholders adjusted for foreign exchange movements. The difference between the amount included in the condensed interim statement of profit or loss and the cash flow statement represents the foreign exchange difference between the liability being booked and the final amount paid.
3 During the period, the Company's first and second lien debt positions in Answers were restructured. At 31 December 2016, these were held at EUR7.2m and EUR0.4m respectively. In lieu of these, the Company received equity of EUR6.9m, warrants of EUR0.2m and new second lien debt of EUR1.9m. As no cash was exchanged, these have been excluded from the cash flows from investing activities.
Notes to the condensed interim financial statements
For the six months ended 30 June 2017
1 Reporting entity
Apax Global Alpha Limited (the "Company" or "AGA") is a limited liability Guernsey company that was incorporated on 2 March 2015. The address of the Company's registered office is PO Box 656, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3PP. The Company was admitted to the premium market of the London Stock Exchange on 15 June 2015 and trades under the ticker Apax.LN. The condensed interim financial statements of the Company for the period from 1 January 2017 to 30 June 2017 comprises the condensed statement of financial position, condensed statement of profit or loss and other comprehensive income, condensed statement of changes in equity, condensed statement of cash flows and related notes. The Company invests in Private Equity funds, listed and unlisted securities including debt instruments.
The Company's main corporate objective is to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company's operating activities are managed by its Board of Directors and its investment activities are managed by Apax Guernsey Managers Limited (the "Investment Manager") under a discretionary investment management agreement. The Investment Manager obtains investment advice from Apax Partners LLP (the "Investment Adviser").
2 Basis of preparation
Statement of compliance
These condensed interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union and should be read in conjunction with the latest annual report and financial statements as at and for the year ended 31 December 2016 which were prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS"). They do not include all the information required for a complete set of IFRS financial statements. However, the explanatory notes are included to explain events and transactions that are significant to an understanding of changes in the Company's financial position and performance since the last financial statements.
Investment entity
On 16 March 2017, the Company completed the liquidation of its two remaining subsidiaries. As a result, the Company no longer holds any subsidiaries at fair value through profit or loss and the investment entity status is no longer applied with respect to these subsidiaries. Please see note 8 for further details.
3 Accounting policies
There are no new standards or changes to standards since the last Annual Report and Accounts 2016 which would impact these condensed interim financial statements. The accounting policies applied by the Company in these condensed interim financial statements are consistent with those set out on pages 67 to 70 of the Annual Report and Accounts 2016.
4 Critical accounting estimates and judgements
The significant judgements made by management in applying the Company's accounting policies and the key sources of estimation and uncertainty remain the same as those applied in the year ended 31 December 2016. The estimate and judgement that has had the most significant effect on the amounts recognised in the Company's condensed interim financial statements is set out below:
(i) Investments at fair value through profit or loss
The fair value of investments traded in an active market at fair value through profit or loss is determined by reference to their bid-market pricing at the reporting date. For underlying instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques and methodologies.
The Investment Manager is responsible for the preparation of the Company's valuations and meets quarterly to approve and discuss the key valuation assumptions. The meetings are open to the Board of Directors, the Investment Adviser and to the external auditors to attend and it invites them to challenge the proposed valuation estimates. On a quarterly basis, the Board of Directors review and approve the final NAV calculation for distribution to the shareholders.
The Investment Manager makes estimates and assumptions concerning the future and the resulting accounting estimates, will by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined in notes 12 and 13.
5 Segmental analysis
The segmental analysis of the Company's results and financial position is set out below. There have been no changes to the reportable segments since those presented in the Annual Report and Accounts 2016.
Reportable Segments
Condensed statement
of profit or loss and
other comprehensive Private
income Equity Derived Central
for the six months ended Investments Investments functions(1) Total
30 June 2017 EUR'000 EUR'000 EUR'000 EUR'000
-------------------------- ------------ ------------ ------------- --------
Investment income - 15,175 113 15,288
-------------------------- ------------ ------------ ------------- --------
Net changes on fair
value of investments
at fair value through
profit or loss ("FVTPL") (6,318) (1,502) - (7,820)
-------------------------- ------------ ------------ ------------- --------
Realised foreign exchange
gains 1,108 327 - 1,435
-------------------------- ------------ ------------ ------------- --------
Net unrealised foreign
currency losses - - (3,301) (3,301)
-------------------------- ------------ ------------ ------------- --------
Total income/(loss) (5,210) 14,000 (3,188) 5,602
-------------------------- ------------ ------------ ------------- --------
Performance fees 104 (7,682) - (7,578)
-------------------------- ------------ ------------ ------------- --------
Management fees (344) (2,343) - (2,687)
-------------------------- ------------ ------------ ------------- --------
Administration and other
operating expenses - - (1,355) (1,355)
-------------------------- ------------ ------------ ------------- --------
Total operating expenses (240) (10,025) (1,355) (11,620)
-------------------------- ------------ ------------ ------------- --------
Finance costs - - (675) (675)
-------------------------- ------------ ------------ ------------- --------
(Loss)/profit before
taxation (5,450) 3,975 (5,218) (6,693)
-------------------------- ------------ ------------ ------------- --------
Taxation charge - (138) - (138)
-------------------------- ------------ ------------ ------------- --------
Total comprehensive
income (5,450) 3,837 (5,218) (6,831)
-------------------------- ------------ ------------ ------------- --------
Cash
Private and
Condensed statement of Equity Derived other
financial position Investments Investments NCA's(2) Total
at 30 June 2017 EUR'000 EUR'000 EUR'000 EUR'000
----------------------- ------------ ------------ --------- --------
Total assets 457,647 314,788 150,736 923,171
----------------------- ------------ ------------ --------- --------
Total liabilities - (1,023) (1,726) (2,749)
----------------------- ------------ ------------ --------- --------
NAV 457,647 313,765 149,010 920,422
----------------------- ------------ ------------ --------- --------
Condensed statement of
profit or loss and other Private
comprehensive income Equity Derived Central
for the six months ended Investments Investments functions(1) Total
30 June 2016 EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- ------------ ------------ ------------- --------
Investment income - 16,824 - 16,824
--------------------------- ------------ ------------ ------------- --------
Net changes on fair value
of investments at FVTPL 5,487 (26,039) (303) (20,855)
--------------------------- ------------ ------------ ------------- --------
Realised foreign exchange
gains/(losses) - (135) 189 54
--------------------------- ------------ ------------ ------------- --------
Net unrealised foreign
currency losses - - (423) (423)
--------------------------- ------------ ------------ ------------- --------
Total income 5,487 (9,350) (537) (4,400)
--------------------------- ------------ ------------ ------------- --------
Performance fees (1,087) 5,273 - 4,186
--------------------------- ------------ ------------ ------------- --------
Management fees (405) (2,536) - (2,941)
--------------------------- ------------ ------------ ------------- --------
Administration and other
operating expenses - - (2,009) (2,009)
--------------------------- ------------ ------------ ------------- --------
Total operating expenses (1,492) 2,737 (2,009) (764)
--------------------------- ------------ ------------ ------------- --------
Finance costs - - (631) (631)
--------------------------- ------------ ------------ ------------- --------
Profit/(loss) before
taxation 3,995 (6,613) (3,177) (5,795)
--------------------------- ------------ ------------ ------------- --------
Taxation credit - - 22 22
--------------------------- ------------ ------------ ------------- --------
Total comprehensive income 3,995 (6,613) (3,155) (5,773)
--------------------------- ------------ ------------ ------------- --------
Cash
Private and
Condensed statement of Equity Derived other
financial position Investments Investments NCA's(2) Total
at 31 December 2016 EUR'000 EUR'000 EUR'000 EUR'000
----------------------- ------------ ------------ --------- --------
Total assets 498,750 419,960 33,900 952,610
----------------------- ------------ ------------ --------- --------
Total liabilities - (488) (2,113) (2,601) ----------------------- ------------ ------------ --------- -------- NAV 498,750 419,472 31,787 950,009 ----------------------- ------------ ------------ --------- --------
1 Central functions represents interest income earned on cash balances held and other general administration costs and financial costs.
2 NCA's refers to net current assets of the Company.
6 Administration and other operating expenses
Six months Six months
ended ended
30 June 30 June
2017 2016
EUR'000 EUR'000
------------------------------------- ---------- ----------
Directors' fees 155 167
------------------------------------- ---------- ----------
Administration and other fees 280 306
------------------------------------- ---------- ----------
General expenses 873 1,481
------------------------------------- ---------- ----------
Auditors' remuneration
------------------------------------- ---------- ----------
Other assurance services - interim
review 46 48
------------------------------------- ---------- ----------
Tax services 1 7
------------------------------------- ---------- ----------
Total administration and other
operating expenses 1,355 2,009
------------------------------------- ---------- ----------
General expenses were EUR0.9m (30 June 2016: EUR1.5m), the significant decrease was mainly due to EUR0.8m of costs related to the extension of the revolving credit facility being paid in the prior period. The Company has no employees and there were no pension or staff cost liabilities incurred during the period.
7 Taxation
The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and is charged an annual exemption fee of GBP1,200.
The Company, at times, may be required to pay tax in other jurisdictions as a result of specific trades in its investment portfolio. During the six months ended 30 June 2017, the Company had a net tax expense of EUR0.1m (30 June 2016: EUR22k credit) related to the sale of listed equities in India. No deferred income taxes were recorded as there are no timing differences.
8 Investments
(a) Unconsolidated subsidiaries
In accordance with IFRS 10, subsidiaries of the Company were determined to be controlled subsidiary investments, which were measured at fair value through profit or loss and are not consolidated. The fair value of these subsidiary investments was determined on a consistent basis to all other investments measured at fair value through profit or loss.
On 16 March 2017, the Company liquidated the last two remaining subsidiaries; RDS Guernsey PCV GP Co Ltd and Twin Guernsey PCV GP Co Ltd. Both entities were special purpose vehicles incorporated in Guernsey. At 31 December 2016, both entities had a nil fair value and the Company held 100% of the voting shares. As at 30 June 2017, the Company does not hold any subsidiaries.
(b) Investments held at fair value through profit or loss
30 June 31 December
2017 2016
EUR'000 EUR'000
--------------------------- --------- -----------
Opening fair value 911,554 915,095
--------------------------- --------- -----------
Additions 131,590 233,826
--------------------------- --------- -----------
Disposals (213,879) (219,854)
--------------------------- --------- -----------
Net change in fair value (56,873) (17,513)
--------------------------- --------- -----------
Closing fair value 772,392 911,554
--------------------------- --------- -----------
Private Equity Investments 457,604 498,750
--------------------------- --------- -----------
Derived Investments 314,788 412,804
--------------------------- --------- -----------
Debt 195,320 284,936
--------------------------- --------- -----------
Equities 119,468 127,868
--------------------------- --------- -----------
Closing fair value 772,392 911,554
--------------------------- --------- -----------
(c) Net changes in value on investments at fair value through profit or loss
Six months Six months
ended ended
30 June 30 June
2017 2016
EUR'000 EUR'000
------------------------------------- ---------- ----------
Private Equity Investments
------------------------------------- ---------- ----------
Gross unrealised gains 33,977 36,692
------------------------------------- ---------- ----------
Gross unrealised losses (40,295) (31,205)
------------------------------------- ---------- ----------
Total net unrealised (losses)/
gains on Private Equity Investments (6,318) 5,487
------------------------------------- ---------- ----------
Derived Investments
------------------------------------- ---------- ----------
Gross unrealised gains 28,199 8,734
------------------------------------- ---------- ----------
Gross unrealised losses (47,269) (37,649)
------------------------------------- ---------- ----------
Net unrealised losses on Derived
Investments (19,070) (28,915)
------------------------------------- ---------- ----------
Gross realised gains 29,285 3,495
------------------------------------- ---------- ----------
Gross realised losses (11,717) (620)
------------------------------------- ---------- ----------
Net realised gains on Derived
Investments 17,568 2,875
------------------------------------- ---------- ----------
Total net losses on Derived
Investments (1,502) (26,039)
------------------------------------- ---------- ----------
Total other net gains/(losses) - (303)
------------------------------------- ---------- ----------
Total net losses on investments
at fair value through
profit or loss (7,820) (20,855)
------------------------------------- ---------- ----------
9 Related party transactions
The Investment Manager was appointed by the Board of Directors under a discretionary Investment Management Agreement ("IMA") dated 22 May 2015 and the amended IMA dated 22 August 2016. Such agreement sets out the allocation and payment of the management fee.
The management fee is calculated in arrears at a rate of 1.25% per annum on the fair value of Derived Investments and non-fee paying Private Equity Investments held by the Company and its subsidiaries which do not already pay a management fee and/or an advisory fee to the Investment Manager or Investment Adviser. During the six months ended 30 June 2017, EUR2.7m (30 June 2016: EUR2.9m) of management fees were earned by the Investment Manager. The Investment Manager is also entitled to a performance fee on realised gains when they reach or exceed a benchmark performance. Please refer to note 10 for further details.
The Investment Adviser, has been engaged by the Investment Manager to provide advice on the investment strategy of the Company. An Investment Advisory Agreement ("IAA"), dated 22 May 2015 and the amendment dated 22 August 2016, exists between the two parties. Though not legally related to the Company, the Investment Adviser has been determined to be a related party. The Company paid no fees and had no transactions with the Investment Adviser during the period (30 June 2016: EURnil). The Company has an Administration Agreement with Aztec Financial Services (Guernsey) Limited ("Aztec") dated 22 May 2015. Under the terms of the agreement, Aztec has delegated certain accounting and bookkeeping services related to the Company to Apax Partners Fund Services Limited ("APFS"), a related party of the Investment Adviser, under a sub administration agreement dated 22 May 2015. A fee of EUR0.3m (30 June 2016: EUR0.3m) was paid by the Company in respect of administration fees and expenses, of which EUR0.1m (30 June 2016: EUR0.1m) was paid to APFS.
Tim Breedon held 70,000 shares (0.01%) of the Company at 30 June 2017 and Susie Farnon held 20,000 shares (0.004%). Sarah Evans' husband held 20,000 shares in the Company representing approximately 0.004% of the Company's issued share capital. On 11 July 2017, Chris Ambler purchased 6,553 shares and on the 13 July 2017, Sarah Evans purchased 20,000 shares. On the same date, Sarah Evans' husband purchased an additional 35,000 shares. Please see note 17 for further details.
All related party transactions disclosed above were made on arms-length basis in the ordinary course of business and are in line with prevailing market standards.
10 Performance fee
Six months
ended Year ended
30 June 31 December
2017 2016
EUR'000 EUR'000
------------------------------------ ---------- ------------
Opening performance fee reserve 11,291 12,968
------------------------------------ ---------- ------------
Transfer from/(to) performance
fee liability - -
------------------------------------ ---------- ------------
Performance fee charge to statement
of profit or loss 7,578 427
------------------------------------ ---------- ------------
Performance fee paid (6,565) (2,104)
------------------------------------ ---------- ------------
Closing performance fee reserve 12,304 11,291
------------------------------------ ---------- ------------
A performance fee is payable on an annual basis once realised gains on the Derived Investments and non- fee paying Private Equity Investments exceed the benchmark of an 8% internal rate of return. Performance fees are only payable to the extent they do not dilute the returns below the 8% benchmark and are calculated at 20% on total realised gains. Where there are realised losses these are carried forward and netted against future performance fees that may become payable.
The performance fee is payable to the Investment Manager by way of ordinary shares of the Company. The mechanics of the payment of the performance fee are explained in the prospectus. In accordance with IFRS 2 "Share-based Payment", performance fee expenses are recognised in the statement of profit or loss and allocated to a share-based payment performance fee reserve in equity.
On 15 June 2015, the Company acquired a performance fee liability that was accrued in the valuation of PCV Lux SCA on acquisition. Post-acquisition the terms of the performance fee payable to the Investment Manager were amended such that it would be equity settled in shares of the Company. Accordingly the liability acquired for performance fees payable to the Investment Manager was transferred to a separate performance fee reserve in equity.
In the six months ended 30 June 2017 a performance fee of EUR6.6m (30 June 2016: EUR2.1m) was paid in cash to the Investment Manager in relation to performance on investments realised during the year ended 31 December 2016. Certain regulatory constraints prevented this payment in shares, however, the intention of the Company remains that future awards should be payable in shares. The Company and the Investment Manager are working to clear and resolve these limitations. As permitted by the IMA, the Company may pay the performance fee in cash if there are restrictions that prevent the Company purchasing shares to be awarded.
At 30 June 2017, management's best estimate of the expected performance fee was calculated on the eligible portfolio on a liquidation basis. Of this, EUR7.7m is related to realised gains earned during the period. The total performance fee outstanding at 30 June 2017 was EUR12.3m (31 December 2016: EUR11.3m). The effect of the performance fee on NAV per share is disclosed in note 15.
11 Loan payable and finance costs
Revolving credit facility
The Company has a multi-currency revolving credit facility with a maximum borrowing limit of EUR140m. The interest rate charged is LIBOR or EURIBOR plus a margin of 210 bps.
During the period EUR12.9k interest was paid on a one month drawdown (30 June 2016: EURnil) and a charge of EUR0.7m (30 June 2016: EUR0.7m) was included in the statement of profit or loss related to a non-utilisation fee on the undrawn facility. Under the Loan Agreement, the Company is required to provide collateral for each utilisation. Collateral can be provided in the form of underlying investments. The loan to value must not exceed 1:5 of the portfolio's NAV. As at 30 June 2017, the facility was unutilised.
12 Financial risk management
The Company maintains positions in a variety of financial instruments in accordance with its Investment Management strategy. The Company's underlying investment portfolio comprises Private Equity Investments and Derived Investments. The Company's exposure to the portfolio is summarised in the table below:
30 June 31 December
2017 2016
--------------------------- ------- -----------
Private Equity Investments 59% 55%
--------------------------- ------- -----------
Derived Investments 41% 45%
--------------------------- ------- -----------
Debt 25% 31%
--------------------------- ------- -----------
Equities 16% 14%
--------------------------- ------- -----------
Total 100% 100%
--------------------------- ------- -----------
The Company's activities expose it to a variety of financial risks: liquidity risk, credit risk and market risk including price risk, foreign currency risk and interest rate risk. As at 30 June 2017, there were no material changes in the Company's exposure to credit risk and market risk since 31 December 2016.
Liquidity risk
The table below summarises the maturity profile of the Company's financial liabilities at 30 June 2017 based on contractual undiscounted repayment obligations. The contractual maturities of most financial liabilities are less than three months, with the exception of commitments to Private Equity Investments.
These commitments in the next 12 months are based on the estimated aggregate amounts these funds are expected to call within a financial year. At 30 June 2017, the Company had undrawn commitments of EUR360.8m and EUR31.6m of recallable distributions (31 December 2016: EUR346.1m undrawn commitments and EUR30.6m recallable distributions) of which EUR103.3m (31 December 2016: EUR84.0m) is expected to be drawn within 12 months. The increase in undrawn commitments was due to the Company committing $50m to Apax Digital in May 2017. In line with the investment strategy of the Company, the Derived Investment portfolio is expected to be invested in equities, predominantly listed equity, and debt. These asset classes provide additional liquidity management options as many of them are readily realisable. As per note 11, the Company also has access to a short- term revolving credit facility upon which it can draw up to EUR 140.0m. The Company may utilise this facility in the short term to bridge Private Equity calls and ensure that it can realise the Derived Investments at the best price available.
The Company does not manage liquidity risk on the basis of contractual maturity. Instead the Company manages liquidity risk based on expected cash flows.
30 June 2017
Up to 3-12
3 months months 1-5 years Total
Contractual maturity EUR'000 EUR'000 EUR'000 EUR'000
---------------------------- --------- -------- --------- --------
Investment payables 1,023 - - 1,023
---------------------------- --------- -------- --------- --------
Accrued expenses 1,726 - - 1,726
---------------------------- --------- -------- --------- --------
Private Equity outstanding
commitments and recallable
distributions 6,910 96,351 289,110 392,371
---------------------------- --------- -------- --------- --------
Total 9,659 96,351 289,110 395,120
---------------------------- --------- -------- --------- --------
31 December 2016
Up to 3-12
3 months months 1-5 years Total
Contractual maturity EUR'000 EUR'000 EUR'000 EUR'000
---------------------------- --------- -------- --------- --------
Investment payables 488 - - 488
---------------------------- --------- -------- --------- --------
Accrued expenses 2,113 - - 2,113
---------------------------- --------- -------- --------- --------
Private Equity outstanding
commitments and recallable
distributions(1) - 83,966 292,746 376,712
---------------------------- --------- -------- --------- --------
Total 2,601 83,966 292,746 379,313
---------------------------- --------- -------- --------- --------
1 The prior year comparative for Private Equity Investments has been amended to include recallable distributions of EUR30.6m.
The Company's outstanding commitments and recallable distributions to Private Equity Investments are summarised below:
30 June 31 December
2017 2016
EUR'000 EUR'000
------------------ -------- -----------
Apax Europe VI 225 225
------------------ -------- -----------
Apax Europe VII 1,529 1,187
------------------ -------- -----------
Apax VIII 30,120 29,524
------------------ -------- -----------
AMI Opportunities 19,845 24,921
------------------ -------- -----------
Apax IX 296,892 320,855
------------------ -------- -----------
Apax Digital 43,760 -
------------------ -------- -----------
Total 392,371 376,712
------------------ -------- -----------
13 Fair value estimation
(a) Investments measured at fair value
The Company classifies for disclosure purposes 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:
-- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
-- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
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 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 asset or liability.
The determination of what constitutes "observable" requires significant judgement by the Company. The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.
The following table analyses within the fair value hierarchy the Company's financial assets (by class) measured at fair value at 30 June 2017:
Level Level Level
1 2 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 457,604 457,604
--------------------------- -------- -------- -------- --------
Derived Investments 110,542 - 204,246 314,788
--------------------------- -------- -------- -------- --------
Debt - - 195,320 195,320
--------------------------- -------- -------- -------- --------
Equities 110,542 - 8,926 119,468
--------------------------- -------- -------- -------- --------
Total 110,542 - 661,850 772,392
--------------------------- -------- -------- -------- --------
The following table analyses within the fair value hierarchy the Company's financial assets (by class) measured at fair value at 31 December 2016:
Level Level Level
1 2 3 Total
Assets EUR'000 EUR'000 EUR'000 EUR'000
--------------------------- -------- -------- -------- --------
Private Equity Investments - - 498,750 498,750
--------------------------- -------- -------- -------- --------
Derived Investments 124,590 65,292 222,922 412,804
--------------------------- -------- -------- -------- --------
Debt - 62,014 222,922 284,936
--------------------------- -------- -------- -------- --------
Equities 124,590 3,278 - 127,868
--------------------------- -------- -------- -------- --------
Total 124,590 65,292 721,672 911,554
--------------------------- -------- -------- -------- --------
Investments whose values are based on quoted market prices in active markets are classified as level 1 investments. At 30 June 2017, the Company holds EUR110.5m (31 December 2016: EUR124.6m) as level 1. There were no transfers to or from level 1 during the period.
Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs, are classified within level 2. As level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information. At 30 June 2017, the Company holds EURnil (31 December 2016: EUR65.3m) classified as level 2 investments. One equity positon transferred from level 2 to level 3 during the period due to the limited availability of observable pricing data. Instead it was valued based on comparable company multiples.
Level 3 investments include Private Equity and Derived Investments in both debt and equity. As they trade infrequently, observable prices are not available for these investments, instead the Company has used valuation techniques to derive the fair value.
The Company values its holding in Private Equity based on the NAV statements it receives from the respective underlying fund. The main input into the valuation models used to determine NAV of the underlying level 3 investments within the private equity funds comprises earnings multiples (based on the budgeted earnings or historical earnings of the issuer and earnings multiples of comparable listed companies). The Company also considers original transaction price, recent transactions in the same or similar instruments and completed third-party transactions in comparable instruments and adjusts the model as deemed necessary. The Company values debt based upon models that take into account factors relevant to each investment and uses third party market data and broker quotes where available.
Fair value measurements using significant unobservable inputs (Level 3):
Six months ended 30 June 2017 Year ended 31 December 2016
--------------------- --------------------------------------------- ----------------------------------------------
Private Equity Derived Investments Total Private Equity Derived Investments Total
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Opening fair value 498,750 222,922 721,672 473,567 328,632 802,199
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Additions 14,218 59,055 73,273 59,527 30,221 89,748
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Disposals and
repayments (17,561) (52,858) (70,419) (26,351) (120,630) (146,981)
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Realised
gains/(losses) - (11,716) (11,716) - 2,240 2,240
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Unrealised
gains/(losses) (37,803) (16,434) (54,237) (7,993) (17,541) (25,534)
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Transfers in/(out) of
level 3 - 3,277 3,277 - - -
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
Closing fair value 457,604 204,246 661,850 498,750 222,922 721,672
--------------------- -------------- ------------------- -------- -------------- ------------------- ---------
The unrealised losses attributable to only assets held at 30 June 2017 were EUR54.2m (31 December 2016: EUR25.5m loss).
(b) Significant unobservable inputs used in measuring fair value
The table below sets out information about significant unobservable inputs used in measuring financial instruments categorised as level 3 in the fair value hierarchy.
Sensitivity
to changes
in significant
Valuation Unobservable unobservable Valuation
Description technique inputs inputs EUR'000
-------------- --------------------- -------------------- ----------------- ----------
NAV adjusted
Private for real and
Equity notional carried See 13 (b)
Investments interest NAV (i) below 457,604
-------------- --------------------- -------------------- ----------------- ----------
Broker quotes,
market yield
movements,
risk premiums,
credit quality
and instrument
repayment
dates. See
table below
Discounted for a summary
cash flow of yield to
models and maturity ("YTM")
income-based ranges of See 13 (b)
Debt models level 3 debt. (ii) below 195,320
-------------- --------------------- -------------------- ----------------- ----------
Discounted
cash flow
models, comparable
company multiples
and precedent
transaction Comparable See 13 (b)
Equities analysis company multiples (iii) below 8,926
-------------- --------------------- -------------------- ----------------- ----------
Fair value Fair value
No. of at % of level No. of at 31 % of level
YTM analysis investments 30 June 3 Debt investments December 3 Debt
of level 30 June 2017 30 June 31 December 2016 31 December
3 debt 2017 EUR'000 2017 2016 EUR'000 2016
------------ ------------ ---------- ---------- ------------ ---------- ------------
7% to 15% 14 167,152 86% 11 165,742 74%
------------ ------------ ---------- ---------- ------------ ---------- ------------
15% to 22% - - -% 2 40,202 18%
------------ ------------ ---------- ---------- ------------ ---------- ------------
> than 22% 3 28,168 14% 3 16,978 8%
------------ ------------ ---------- ---------- ------------ ---------- ------------
Total 17 195,320 100% 16 222,922 100%
------------ ------------ ---------- ---------- ------------ ---------- ------------
(b) (i) The key inputs of Private Equity Investments are the NAV and carried interest as determined by the general partner of the funds. The Company does not apply further discount or liquidity premiums to the valuations as these are already captured in the underlying valuation. This NAV is subject to changes in the valuations of the underlying portfolio companies. These can be exposed to a number of risks, including liquidity risk, price risk, credit risk and interest rate risk. A movement of 10% in the value of Private Equity Investments would move the NAV at the period-end by 5.0% (31 December 2016: 5.2%).
(b) (ii) The fair value of debt is determined by market prices if available and relevant in size and date. Illiquid debt positions are valued via debt valuation models. Valuations derived from these models consider, where appropriate, broker quotes, credit computations, market yield movements, risk premiums, the credit quality of the borrower and expected repayment dates. A movement of 10% in the value of debt would move the NAV at period-end by 2.1% (31 December 2016: 2.3%).
(b) (iii) The fair value of equities is determined by market prices if available. Illiquid equity positions and unlisted equity positions are valued via market valuation models. Valuations derived from these models consider, the companies earnings, comparable company multiples and other relevant data available. A movement of 10% in the value of equity would move the NAV at period-end by 0.1% (31 December 2016: N/A).
14 Shareholders' capital
At 30 June 2017, the Company had 491,100,768 ordinary shares fully paid with no par value in issue (31 December 2016: 491,100,768 shares). All ordinary shares rank pari passu with each other, including voting rights and there has been no change since 31 December 2016.
The Company has one share class; however a number of investors are subject to lock-up periods between five and ten years, which restricts them from disposing of ordinary shares issued at admission. For investors with five-year lock up periods, 20% of ordinary shares are released from lock up each year from the first anniversary of admission, 15 June 2016. For investors with ten-year lock up periods, 20% of ordinary shares are released from lock up each year from the sixth anniversary of admission, 15 June 2021.
15 Earnings and NAV per share
Six months Six months
ended ended
30 June 30 June
Earnings 2017 2016
-------------------------------------- ----------- -----------
Profit or loss for the period
attributable to equity shareholders:
EUR'000 (6,831) (5,773)
-------------------------------------- ----------- -----------
Weighted average number of
shares in issue
-------------------------------------- ----------- -----------
Ordinary shares at end of period 491,100,768 491,100,768
-------------------------------------- ----------- -----------
Shares issued in respect of
performance fee (see note 10) - -
-------------------------------------- ----------- -----------
Total weighted ordinary shares 491,100,768 491,100,768
-------------------------------------- ----------- -----------
Dilutive adjustments - -
-------------------------------------- ----------- -----------
Total diluted weighted ordinary
shares 491,100,768 491,100,768
-------------------------------------- ----------- -----------
Effect of performance fee adjustment
on ordinary shares
-------------------------------------- ----------- -----------
Performance shares to be awarded
based on a liquidation basis(1) 7,099,718 4,813,781
-------------------------------------- ----------- -----------
Adjusted shares(2) 498,200,486 495,914,549
-------------------------------------- ----------- -----------
Earnings per share (cents)
-------------------------------------- ----------- -----------
Basic (1.39) (1.18)
-------------------------------------- ----------- -----------
Diluted (1.39) (1.18)
-------------------------------------- ----------- -----------
Adjusted (1.37) (1.16)
-------------------------------------- ----------- -----------
1 The number of performance shares is calculated inclusive of deemed realised performance shares that would be issued utilising the theoretical performance fee payable calculated on a liquidation basis. However, as described in note 10, the recent performance fee was paid in cash due to regulatory restrictions and is expected to be paid in cash in 2017. If these were excluded, the revised performance fee shares to be awarded would have been 2,670,943 (30 June 2016: 3,832,913) and the revised Adjusted Shares would have been 493,771,711 (30 June 2016: 494,933,681)
2 The calculation of Adjusted Shares above assumes that new shares were issued by the Company to the Investment Manager in lieu of the performance fee. As per the Prospectus, the Company may also purchase shares from the market if the Company is trading at a discount to its NAV per share. In such a case, the Adjusted NAV per share would be calculated by taking the NAV at the year or period end adjusted for the performance fee reserve and then divided by the current number of ordinary shares in issue. At 30 June 2017, the Adjusted NAV per share for both methodologies resulted in an Adjusted NAV per share of EUR1.85 (30 June 2016: EUR1.82)
At 30 June 2017, there were no items that would cause a dilutive effect on earnings per share. The adjusted earnings per share has been calculated based on the profit attributable to shareholders adjusted for the total accrued performance fee at year end over the weighted average number of ordinary shares. This has been calculated on a full liquidation basis inclusive of performance fee attributable to realised investments. Performance shares to be issued are calculated based on the trading price of shares and foreign exchange rate at close of business on 30 June 2017.
16 Dividends
Six months ended Six months ended
30 June 2017 30 June 2016
---------------------------------------------------------------------------- ------------------ ------------------
Dividends paid to shareholders EUR'000 GBP'000 EUR'000 GBP'000
---------------------------------------------------------------------------- -------- -------- -------- --------
Final dividends paid - 4.13 pence per share (30 June 2016: 3.69 pence per
share) 23,769 20,283 23,395 18,122
---------------------------------------------------------------------------- -------- -------- -------- --------
Total 23,769 20,283 23,395 18,122
---------------------------------------------------------------------------- -------- -------- -------- --------
Six months ended 30 June 2017 Six months ended 30 June 2016
------------------- ------------------------------- -------------------------------
Dividends proposed EUR GBP EUR GBP
------------------- --------------- -------------- --------------- --------------
Interim dividends 4.69c 4.24p 4.59c 3.95p
------------------- --------------- -------------- --------------- --------------
On 6 March 2017, the Board approved the final dividend for 2016, 4.13 pence per share (4.84 cents euro equivalent). This represents 2.5% of the Company's euro NAV at 30 June 2017 and was paid on 4 April 2017.
17 Subsequent events
On 11 July 2017, Chris Ambler acquired 6,553 ordinary shares at GBP 1.52588, which are held through a nominee arrangement with Investor Nominees Limited. Following the purchase, Chris Ambler owns 6,553 ordinary shares, representing approximately 0.001% of the Company's total issued share capital.
On 13 July 2017, Sarah Evans acquired 20,000 ordinary shares at GBP1.523, which are held through a nominee arrangement with Hargreaves Lansdown Nominee Limited. Following the purchase, Sarah Evans owns 20,000 ordinary shares, representing approximately 0.004% of the Company's total issued share capital. In addition, Sarah's husband, acquired an additional 35,000 ordinary shares at GBP1.525. Following the purchase, Mr Evans owns 55,000 ordinary shares, representing approximately 0.011% of the Company's total issued share capital.
On 16 August 2017, the Board approved an interim dividend for the six months ended 30 June 2017, 4.24 pence per ordinary share (4.69 cents euro equivalent). This represents 2.5% of the Company's euro NAV at 30 June 2017 and has an expected payment date of 15 September 2017.
Shareholder information and administration
Directors (all non-executive)
Tim Breedon CBE (Chairman)
Susie Farnon (Audit Committee Chair)
Chris Ambler
Sarah Evans
Registered office of the Company
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Investment Manager
Apax Guernsey Managers Limited
Third Floor, Royal Bank Place
1 Glategny Esplanade
St Peter Port
Guernsey GY1 2HJ
Channel Islands
Investment Adviser
Apax Partners LLP
33 Jermyn Street
London
SW1Y 6DN
United Kingdom
www.apax.com
Administrator, Company Secretary and Depositary
Aztec Financial Services (Guernsey) Limited
PO Box 656
East Wing
Trafalgar Court
Les Banques
St Peter Port
Guernsey GY1 3PP
Channel Islands
Tel: +44 (0)1481 749 700
AGA-admin@aztecgroup.co.uk
www.aztecgroup.co.uk
Corporate broker
Jefferies International Limited
Vintners Place
68 Upper Thames Street
London EC4V 3BJ
United Kingdom
Registrar
Capita Registrars (Guernsey) Limited
Mont Crevelt House
Bulwer Avenue
St Sampson
Guernsey GY2 4LH
Channel Islands
Tel: +44 (0) 871 664 0300
www.capitaassetservices.com
shareholderenquiries@capita.co.uk
Independent Auditor
KPMG Channel Islands Limited
Glategny Court
St Peter Port
Guernsey GY1 1WR
Channel Islands
Association of Investment Companies - AIC
The AIC is the trade body for closed-ended
investment companies. It helps its
member companies deliver better returns
for their investors through lobbying, media
engagement, technical advice, training,
and events.
www.theaic.co.uk
Stock information
London Stock Exchange ticker: APAX
SEDOL: BWWYMV8
ISIN number: GG00BWWYMV85
Dividends
Final dividend in respect to second half of
2016 of 4.13 pence per ordinary share was paid
on 4 April 2017
The first interim dividend of 4.24 pence per
ordinary share for period ended 30 June
2017 will be payable on 15 September 2017.
Glossary
Adjusted NAV Calculated by adjusting the NAV at reporting
periods, by the estimated performance
fee reserves.
----------------------- -------------------------------------------------------------------------
Adjusted NAV Calculated by dividing the Adjusted
per share NAV by the number of shares in issue.
----------------------- -------------------------------------------------------------------------
AEVI Means the limited partnerships that
constitute the Apax Europe VI Private
Equity fund.
----------------------- -------------------------------------------------------------------------
AEVII Means the limited partnerships that
constitute the Apax Europe VII Private
Equity fund.
----------------------- -------------------------------------------------------------------------
Apax Global Alpha Means Apax Global Alpha Limited.
or Company or
AGA
----------------------- -------------------------------------------------------------------------
AGML or Investment Means Apax Guernsey Managers Limited.
Manager
----------------------- -------------------------------------------------------------------------
AIX Means the limited partnerships that
constitute the Apax IX Private Equity
fund.
----------------------- -------------------------------------------------------------------------
AMI Means the limited partnerships that
constitute the AMI Opportunities Fund
focused on investing in Israel.
----------------------- -------------------------------------------------------------------------
ADF Means the limited partnerships that
constitute the Apax Digital Fund Private
Equity fund.
----------------------- -------------------------------------------------------------------------
Apax Group Means Apax Partners LLP and its affiliated
entities, including its sub-advisors,
and their predecessors, as the context
may require.
----------------------- -------------------------------------------------------------------------
Apax Partners Means Apax Partners LLP.
or Apax or Investment
Adviser
----------------------- -------------------------------------------------------------------------
Apax Private Means Private Equity funds managed,
Equity Funds advised and/or operated by Apax Partners.
or Apax Funds
----------------------- -------------------------------------------------------------------------
AVIII Means the limited partnerships that
constitute the Apax VIII Private Equity
fund.
----------------------- -------------------------------------------------------------------------
Brexit Refers to the upcoming exit of the United
Kingdom from the European Union ("EU")
following the invocation of Article
50 of the Treaty on the European Union
on 29 March 2017.
----------------------- -------------------------------------------------------------------------
Capital Markets Consists of a dedicated team of specialists
Practice or CMP within the Apax Partners Group having
in depth experience of the leverage
finance debt markets, including market
conditions, participants and opportunities.
The CMP was initially set up to support
the investment advisory teams within
Apax Partners in structuring the debt
component of a private equity transaction.
The CMP has over the years expanded
its mandate to working alongside the
investment advisory teams to advise
on debt Derived Investments.
----------------------- -------------------------------------------------------------------------
Custody Risk The risk of loss of securities held
in custody occasioned by the insolvency
or negligence of the custodian.
----------------------- -------------------------------------------------------------------------
Derived Investments Comprise investments other than Private
Equity Investments, including primarily
investments in public and private debt,
with limited investments in equity,
primarily in listed companies, which
in each case typically are identified
by Apax Partners as part of its private
equity activities.
----------------------- -------------------------------------------------------------------------
Derived Debt Comprise of debt investments held within
Investments or the Derived Investments portfolio.
Derived Debt
----------------------- -------------------------------------------------------------------------
Derived Equity Comprise of equity investments held
Investments or within the Derived Investments portfolio.
Derived Equity
----------------------- -------------------------------------------------------------------------
EBITDA Earnings before interest, tax, depreciation
and amortisation.
----------------------- -------------------------------------------------------------------------
EV Enterprise value
----------------------- -------------------------------------------------------------------------
Gross Asset Value Means the Net Asset Value of the Company
or GAV plus all liabilities of the Company
(current and non--current).
----------------------- -------------------------------------------------------------------------
Gross IRR or Means an aggregate, annual, compound,
Internal Rate internal rate of return calculated on
of Return the basis of cash receipts and payments
together with the valuation of unrealised
investments at the measurement date.
Foreign currency cash flows have been
converted at the exchange rates applicable
at the date of receipt or payment. For
Private Equity Investments, IRR is net
of all amounts paid to the underlying
Investment Manager and/or general partner
of the relevant fund, including costs,
fees and carried interests. For Derived
Investments, IRR does not reflect expenses
to be borne by the relevant investment
vehicle or its investors including,
without limitation, performance fees,
management fees, taxes and organisational,
partnership or transaction expenses.
----------------------- -------------------------------------------------------------------------
Invested Portfolio Means the part of AGA's portfolio which
is invested in Private Equity and Derived
Investments, however excluding any other
investments such as legacy hedge funds
and cash.
----------------------- -------------------------------------------------------------------------
IPO Initial public offering.
----------------------- -------------------------------------------------------------------------
KPI Key performance indicator.
----------------------- -------------------------------------------------------------------------
LSE London Stock Exchange.
----------------------- -------------------------------------------------------------------------
LTM Last twelve months.
----------------------- -------------------------------------------------------------------------
Market Capitalisation Market Capitalisation is calculated
by taking the share price at the reporting
period date multiplied by the number
of shares in issue. The Euro equivalent
is translated using the exchange rate
at the reporting period date.
------------------------- -----------------------------------------------------------------------
MOIC Multiple of invested capital.
------------------------- -----------------------------------------------------------------------
NTM Next twelve months.
------------------------- -----------------------------------------------------------------------
Net Asset Value Means the value of the assets of the
or NAV Company less its liabilities as calculated
in accordance with the Company's valuation
policy. NAV has no adjustments related
to the IPO proceeds or performance fee
reserves.
------------------------- -----------------------------------------------------------------------
Operational Excellence Professionals who support the Apax Funds'
Practice or OEP investment strategy by providing assistance
to portfolio companies in specific areas
such as devising strategies, testing
sales effectiveness and cutting costs.
------------------------- -----------------------------------------------------------------------
OCI Other comprehensive income.
------------------------- -----------------------------------------------------------------------
PCV Means PCV Lux S.C.A.
------------------------- -----------------------------------------------------------------------
PCV Group Means PCV Lux S.C.A and its subsidiaries.
PCV Group was established in August
2008. Irrespective of whether the text
refers to AGA or PCV Group, references
to trading or performance prior to the
IPO on 15 June 2015 refer to trading
as PCV Group.
------------------------- -----------------------------------------------------------------------
Performance fee The performance fee reserve is the estimated
reserve performance fee reserve which commenced
accruing on 1 January 2015 in line with
the Investment Management Agreements
of the PCV Group and AGA.
------------------------- -----------------------------------------------------------------------
P/E Price earnings.
------------------------- -----------------------------------------------------------------------
Private Equity Means primary commitments to, secondary
Investments or purchases of commitments in, and investments
Private Equity in, existing and future Apax Funds.
------------------------- -----------------------------------------------------------------------
Reporting Period Means the period from 1 January 2017
to the current financial reporting period
ending on 30 June 2017.
------------------------- -----------------------------------------------------------------------
SME Small and mid--sized enterprises.
------------------------- -----------------------------------------------------------------------
Total NAV Return For a period means the return on the
movement in the Adjusted NAV per share
at the end of the period together with
all the dividends paid during the period,
to the Adjusted NAV per share at the
beginning of the period/year. Adjusted
NAV per share used in the calculation
is rounded to 5 decimal points.
------------------------- -----------------------------------------------------------------------
Total Return Under the Total Return calculation,
or TR sub-portfolio performance in a given
period can be evaluated by taking total
net gains in the period and dividing
them by the sum of the Adjusted NAV
at the beginning of the period as well
as the investments made during the period.
However, in situations where realised
proceeds are reinvested within the same
period, performance under this calculation
is, via the denominator, impacted by
the re-investment. Therefore, starting
from the 2017 interim report, the Investment
Manager will evaluate sub-portfolio
performance using an amended methodology.
The revised methodology takes total
gains or losses and divides them by
the sum of Adjusted NAV at the beginning
of the period and the time weighted
net invested capital. The time weighted
net invested capital is the sum of investments
made during the period less realised
proceeds received during the period,
both weighted by the number of days
the capital was at work in the portfolio.
This should provide a more reflective
view of actual performance. H1 2016
Total Return has been restated on page
3 of the interim report - see summary
below of the restated return, previous
return and difference: Total Total Return
Return (previous
(restated) methodology)
H1 2016 % % Difference
-------------------- ----------- ------------- ----------
Private Equity 1.0% 0.9% 0.1%
-------------------- ----------- ------------- ----------
Derived Investments -0.4% -0.4% -
-------------------- ----------- ------------- ----------
Debt -0.8% -0.7% -0.1%
Equity 1.1% 0.8% 0.3%
------------------------- -----------------------------------------------------------------------
Total Shareholder For the period means the net share price
Return or TSR change together with all dividends paid
during the period
------------------------- -----------------------------------------------------------------------
Apax Global Alpha Limited
Interim Report and Accounts 2017
www.apaxglobalalpha.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR OKADKABKDKFD
(END) Dow Jones Newswires
August 17, 2017 02:00 ET (06:00 GMT)
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