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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Oakley Capital Investments Limited | LSE:OCI | London | Ordinary Share | BMG670131058 | ORD 1P (DI) |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 476.00 | 472.00 | 480.00 | 476.00 | 476.00 | 476.00 | 5,302 | 08:00:00 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Unit Inv Tr, Closed-end Mgmt | 57.09M | 47.49M | 0.2692 | 17.68 | 839.75M |
From Apr 2019 to Apr 2024
TIDMOCI
RNS Number : 5481Y
Oakley Capital Investments Limited
10 September 2020
10 September 2020
Oakley Capital Investments Limited
Interim Results for the Six Months ended 30 June 2020
Oakley Capital Investments Limited(1) (the "Company" or "OCI"), a listed investment vehicle providing consistent long-term returns in excess of the FTSE All-Share Index by investing in the funds managed by Oakley Capital(2) ("Oakley"), today announces its interim results for the six-months ended 30 June 2020.
The Oakley Funds(3) are private equity portfolios that invest primarily in digitally-focused businesses across Western Europe in three distinct sectors: Technology, Education and Consumer. Value creation is achieved through market growth, consolidation and performance improvement.
NAV growth and high cash levels underline OCI's strengths in a period of uncertainty
INTERIM HIGHLIGHTS
Hot Features
Premium
-- NAV per share of 356 pence and NAV of GBP691.9 million
-- Total NAV return of 4% since 31 December 2019 and 13% since 30 June
2019
-- OCI invested GBP94.7 million and received proceeds of GBP291.3 million
-- Cash of GBP261.5 million
-- Outstanding Oakley Fund commitments of GBP528 million, including
a commitment to the Oakley Capital Origin Fund
-- Buy-back and cancellation of 4.3 million shares
-- Interim dividend of 2.25 pence per share, to be paid on 22 October
2020 to shareholders on the register as at 2 October 2020
PORTFOLIO HIGHLIGHTS
-- Resilient portfolio performance despite the significant challenges
posed by the pandemic
-- Average portfolio company year-on-year EBITDA growth of 17.5%
-- Average portfolio company valuation multiple (EV/EBITDA) of 11.8x
and average net debt to EBITDA ratio of 3.7x
-- The key drivers of NAV movement in the period were Inspired (+10
pence), Career Partner Group (+9 pence), Time Out (-26 pence) and
foreign exchange movement (+16 pence)
PROCEEDS
-- OCI's share of proceeds from exits and refinancings was GBP291.3
million during the period
-- Realisations included Fund III's exit of WebPros, the partial realisation
of atHome, the refinancing of Career Partner Group, Fund II's exit
of Inspired, as well as the exit of OCI's direct holding in Inspired
and the repayment of Time Out loans
INVESTMENTS
-- OCI deployed GBP94.7 million of capital during the period
-- Activity included: a re-investment in WebPros and two bolt-on acquisitions
for Ocean Technologies Group via Fund IV, the Iconic BrandCo's acquisition
of Globe-Trotter via Fund III, equity participation in Time Out's
refinancing via Fund I and a direct investment, and direct debt investments
provided to North Sails
-- OCI also completed the buy-back and cancellation of 4.34 million
shares at an average price of 173 pence per share. A further 3.7
million shares were bought-back for cancellation post-period end
CASH & COMMITMENTS
-- The Company has no leverage and has cash on the balance sheet of
GBP261.5 million at 30 June 2020, representing 38% of NAV
-- Outstanding commitments to the Oakley Funds of GBP528 million (76%
of NAV), including OCI's commitment in July of EUR75 million to the
newly launched Oakley Capital Origin Fund
OUTLOOK
-- 12 of the 15 portfolio companies are forecast to meet their expected
full-year budgets or have returned to budgeted run rates in H2 2020,
reflecting their focus on digital services and subscription-based
revenues
-- High level of cash to deploy in the outperforming Oakley Funds, capitalising
on the premium typically returned by post-crisis vintage funds
-- Deal pipeline continues to grow as we enter an attractive period
for investment opportunities
The Half-Year Report and Accounts are available on the Company's website:
ttps://oakleycapitalinvestments.com/investor-centre/publications/
A video overview of the six-month performance is also available here:
https://oakleycapitalinvestments.com/videos/
Caroline Foulger, Chair of Oakley Capital Investments Limited, commented:
"OCI strengthened its position in the first half, despite the challenging environment. The NAV growth achieved was driven by the resilient performance of the portfolio, the continued sale of assets at significant premiums to book value and further share buy backs. This enabled the Company to maintain its consistent performance, delivering an annualised 16% NAV return over the last five years.
This excellent track record and robust performance, combined with the proven ability of the Oakley Capital team to manage businesses through volatile periods, leaves us confident that OCI will continue to create significant value for our shareholders going forward."
Peter Dubens, Managing Partner Oakley Capital Limited, commented:
"We enter the second half of the year with a carefully selected portfolio of market-leading companies and an experienced team that has demonstrated its strength in reacting swiftly and effectively to the challenges posed by the pandemic.
The long-term nature of private equity provides us with the flexibility in the short to medium term to adapt and capitalise on the current unusual circumstances. We enter a period of considerable investment opportunity with funds at an early stage of deployment. This, together with our unique approach to sourcing off-market deals through our network of business founders, and our focus on tech-enabled services and digital platforms, will continue to drive performance."
- ends -
For further information please contact:
Oakley Capital Limited
+44 20 7766 6900
Steven Tredget, Investor Relations
Greenbrook Communications Limited
+44 20 7952 2000
Alex Jones / Gina Bell / James Williams
Liberum Capital Limited (Financial Adviser & Broker)
+44 20 3100 2000
Gillian Martin / Owen Matthews
Notes:
This announcement contains inside information for the purposes of the Market Abuse Regulation (EU) No. 596/2014
LEI Number: 213800KW6MZUK12CQ815
(1) About Oakley Capital Investments Limited ("OCI")
OCI is a Specialist Fund Segment ("SFS") traded investment vehicle that aims to provide shareholders with consistent long-term capital growth in excess of the FTSE All-Share Index by providing liquid access to private equity returns through investment in the Oakley Funds(2) .
A video introduction to OCI is available at https://oakleycapitalinvestments.com/videos/
(2) Oakley Capital, the Investment Adviser
Founded in 2002, Oakley Capital Limited has demonstrated the repeated ability to source attractive growth assets at attractive prices. To do this it relies on its sector and regional expertise, its ability to tackle transaction complexity and its deal generating entrepreneur network.
(3) The Oakley Funds
Oakley Capital Private Equity L.P. and its successor funds, Oakley Capital Private Equity II, Oakley Capital Private Equity III, Oakley Capital IV and Oakley Capital Origin Fund are unlisted lower-mid to mid-market private equity funds that aim to provide investors with significant long-term capital appreciation. The investment strategy of the Funds is to focus on buy-out opportunities in industries with the potential for growth, consolidation and performance improvement.
Important information
Specialist Fund Segment securities are not admitted to the Official List of the Financial Conduct Authority. Therefore, the Company has not been required to satisfy the eligibility criteria for admission to listing on the Official List and is not required to comply with the Financial Conduct Authority's Listing Rules.
The Specialist Fund Segment is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.
Chair's statement
Robust performance and high cash levels underline OCI's strengths.
In the OCI 2019 Annual Report, written in the immediate wake of the COVID-19 outbreak, we advised shareholders that we "anticipated a trading impact across the portfolio, but remained confident that Oakley Capital's investment strategy and sector focus would provide resilience during this period of disruption". We are pleased to report that this has indeed been the case, demonstrated by a net asset value ("NAV") total return for OCI of 4% for the six months to 30 June 2020 and 13% for the last 12 months.
OCI's NAV per share increased from GBP3.45 to GBP3.56 over the period. Although a modest return relative to our track-record, we are pleased, given the circumstances, and encouraged by the overall performance of the portfolio. 12 of the 15 portfolio companies are forecast to remain in a position to meet, or be close to meeting, their full-year budgets, reflecting the focus of the portfolio on digital services and subscription-based revenues.
Realisations and investments
It was another active period for realisations, with Oakley Fund and direct investment exits contributing GBP291 million to OCI's closing cash balance. Most notable was the exit of Inspired at a 25% premium to the year-end valuation, demonstrating the continued conservatism of Oakley's valuation approach.
OCI invested GBP95 million in the first half as Oakley continued to deploy funds through a platform investment, as well as bolt-on acquisitions within Fund III and Fund IV, respectively. In addition, OCI made follow-on direct investments in two existing portfolio companies.
Cash and commitments
OCI had no leverage and holds cash of GBP261 million as at 30 June 2020, equivalent to 134 pence per share. At 38% of NAV, this is a significantly higher level of cash than normal; however, the timing is fortuitous and positions OCI very strongly ahead of what Oakley believes to be a period of significant potential for investments.
In July 2020, OCI committed EUR75 million to the Oakley Capital Origin Fund, which will follow the same investment strategy as the existing Oakley Funds, but target private companies in the lower mid-market. Total outstanding OCI commitments to the Oakley Funds stood at GBP528 million, which we expect to be deployed over a five-year period.
Direct investments
Following exits in the first half, OCI holds one remaining direct equity investment, Time Out, whose value fell in the period reflecting the material impact of COVID-19 on its operations. Outstanding direct debt investments are in Daisy and North Sails, as we continue to support the recovery and growth of the business through a period of disruption. The Board does not expect to initiate any new direct investments as we focus on maximising OCI's returns through exposure to the growing family of Oakley-managed funds.
Governance
The Board maintains its commitment to a high standard of governance, particularly with regard to independence. During the period, Laurence Blackall retired from the Board after over 10 years and Craig Bodenstab also stepped down. We thank them both for their significant contributions to OCI and wish them all the very best for the future. The Company expects to announce the appointment of a new Independent Director shortly.
The Board is disappointed by the widening of the share price discount to NAV per share and remains focused on measures that will assist narrowing it and enhance shareholder value. In the seven months to July 2020, OCI repurchased for cancellation a total of 8 million shares at an average price of 197 pence. Further share buy-backs are anticipated. We also introduced a Director shareholding policy and OCI Board members and Oakley Partners now own a combined 10.3%. In April, a final dividend of 2.25 pence per share was paid for the period ended 31 December 2019 , and we are pleased to announce an interim dividend for 2020 of 2.25 pence per share, to be paid in October 2020.
Safety in the workplace has been critical during this pandemic. Whilst OCI does not have direct employees, we have received regular reports from Oakley, our portfolio company management teams and other service providers to confirm that appropriate staff protection and support measures are in place.
Prospects
Caroline It is clear that the pandemic and its wider economic and social impact will last long into 2021. Whilst the full extent of the impact is unknown, we take much reassurance from how the portfolio weathered the first half of the year, and the recovery in trading we have seen from most of the companies in the early months of the second half. OCI provides exposure to a robust and fast evolving set of portfolio companies which are well positioned given their digital focus. With a high level of cash to deploy, the Board looks forward to OCI's continued participation in the outperformance of the Oakley Funds.
Caroline Foulger
Chair
INVESTMENT ADVISER'S report
Oakley Capital's review of the impact of COVID-19 on its resilient portfolio and the attractive period of investment opportunity that lies ahead.
Overview
The COVID-19 pandemic continues to present a substantial risk to the global economy. The full duration and impact of the virus remain unknown; however, there has been a significant trading impact across public and private companies alike.
As a highly engaged investor, Oakley has strong lines of communication with its portfolio companies and is in continuous dialogue with management teams to understand the likely business impact of COVID-19, support bespoke contingency planning and ensure the safety of all stakeholders. Importantly, Oakley's portfolio companies have benefitted from sharing knowledge and experience from different geographies and industries across Oakley's network.
Oakley's selective approach, combined with its clear focus on software, tech-enabled services, online platforms and subscription-based revenues, has proved valuable, resulting in a portfolio that demonstrated resilience in H1 20. Five of the 15 companies, including business service software, web hosting and education technology businesses, experienced no negative trading impact. Seven companies, including the online consumer platforms, telecoms and education businesses, experienced some short-term disruption, but are expected to return to budgeted run-rates in H2 20. Lastly, as anticipated, the three consumer companies reliant on a physical footprint experienced a significant impact. The Oakley team, alongside all portfolio company management teams, has managed the crisis well during H1 20. This challenging period has demonstrated the strength of our teams, who have reacted swiftly, efficiently and with great care to implement appropriate responses.
Investment strategy
In the first half of 2020, global buyout activity was down 35% versus 2019 and Q2 witnessed the lowest level of deal activity since 2015 (Source: Preqin). This was reflected in Oakley's investment rate, which was lower than usual - a function of material market uncertainty and the resulting asset pricing mismatch.
We are, however, confident that H2 20 will see more Oakley investments, as our deal pipeline continues to grow and we enter a highly attractive period for investment opportunities. Historical data suggests that some of the best fund vintages follow economic crises, as demonstrated by the 68% performance premium returned by post-crisis vintage funds when compared with the preceding late-cycle vintages (Source: Morgan Stanley). Oakley is therefore well-positioned, having recently raised capital for Fund IV, which is currently only c.30% deployed.
Oakley's focus on market-leading companies with tech-enabled services and digital platforms remains important in this environment, alongside its unique approach to sourcing off-market deals through its network of business founders. The current dislocation also presents new origination opportunities in the form of:
-- Stressed sector champions - companies that have experienced a short-term severe shock, but whose medium-term business model remains robust.
-- Distressed corporate carve-outs - businesses that need to dispose of assets to improve their liquidity position may result in quality assets becoming available.
-- Private Equity - funds that are most exposed to COVID-19, or at the end of their life cycles, may look to exit portfolio companies they can no longer support.
Origin Fund
The Origin Fund is a complementary and synergistic extension of Oakley's existing platform. As Oakley's previous funds have become progressively larger, the Origin Fund allows us to continue to invest in opportunities in the lower mid-market that have played a key role in Oakley's success story to date. Since 2008, 14 of the 32 investments made by Oakley have been in the lower mid-market segment - assets that achieved gross returns of 3.6x MM and 67% IRR to date. The 2020-vintage Origin Fund will make investments of EUR10-EUR50 million, in businesses with enterprise values of up to EUR100 million, compared to Oakley's Flagship Funds that concentrate on companies with enterprise values of EUR100-EUR400 million.
The Origin Fund will follow the same investment strategy, use the same sourcing model and benefit from the same entrepreneur network that is in place for the Flagship Funds. It will raise a separate pool of capital with a dedicated Oakley team to focus entirely on lower mid-market deals.
Outlook
Historically, Oakley's portfolio companies have been highly sought-after by larger buyout funds, that at the start of 2020 had a record $1.5 trillion of uninvested capital (Source: Preqin). We expect to continue to benefit from this trend, particularly given the high-quality companies in the portfolio, many of which will emerge from this period of disruption in a stronger, more desirable position. We remain confident looking ahead, as we believe the long-term approach of private equity is beneficial in this environment, as it is enables firms to weather short-term volatility while continuing to create value for the long-term.
OCI NAV overview
OCI's NAV increased by GBP5.9 million to GBP691.9 million, an increase of 0.9% since 31 December 2019.
Six months 12 months
ended ended
30 Jun 2020 31 Dec 2019
GBPm GBPm
Opening net asset value at
the start of the period 686.0 574.8
------------ ------------
Gross revenue 5.5 10.3
------------ ------------
Net expenses (5.5) (17.9)
------------ ------------
Net foreign currency gains/(losses) 15.7 (2.7)
------------ ------------
Realised gains on investments 191.3 17.8
------------ ------------
Net change in unrealised appreciation
on investments (189.1) (127.7)
------------ ------------
Shares purchased and cancelled (7.6) (14.9)
------------ ------------
Dividend (4.4) (9.2)
------------ ------------
Closing net asset value at
the end of the period 691.9 686.0
------------ ------------
Number of shares in issue 194.3 198.6
------------ ------------
NAV per share GBP3.56 GBP3.45
------------ ------------
Net earnings were GBP17.9 million for the six months, comprising:
-- Gross revenue of GBP5.5 million arising from interest income earned on the debt facilities provided by the Company. Expenses of GBP5.5 million were offset by GBP15.7 million of foreign exchange gains. Expenses include fees paid to the Administrative Agent and the Investment Adviser.
-- Realised gains of GBP191.3 million earned from the realisations in the Oakley Funds during the period. Net change in unrealised losses of GBP189.1 million, driven predominantly by the realisations within the period and the decrease in fair
value of Time Out. These amounts are net of fees paid to the Investment Adviser.
The Company bought back 4.3 million shares during the period at open market value, for a total of GBP7.6 million.
The year end dividend for December 2019 of 2.25 pence per share, totalling GBP4.4 million, was paid to shareholders in April 2020.
Outstanding commitments of OCI
Outstanding commitments to the Oakley Funds as at 30 June 2020 were GBP460.2 million, of which GBP336.1 million was to Fund IV.
OCI had a strong cash position at 30 June 2020 leading into what is expected to be an attractive investment environment. The Board is comfortable with the level of commitments to the Funds, which increased post-period end by a EUR75 million commitment to the Origin Fund. Funds I and II are in the realisation phase, Fund III has reached the end of its investment period, and Fund IV is in the early stages of its investment period having made four investments to date. Origin Fund had a first close post-period end and has only just begun investing.
The table below illustrates OCI's outstanding commitments to the Oakley Funds, and their respective percentage of the OCI NAV as at 30 June 2020.
Outstanding Outstanding
as at 30 as at 30
Total commitment June 2020 June 2020
Fund Fund vintage (EURm) (EURm) (GBPm) % NAV
Fund IV 2018 400.0 370.0 336.1 48.6
------------- ---------------- ----------- ----------- -----
Fund III 2016 325.8 120.5 109.5 15.8
------------- ---------------- ----------- ----------- -----
Fund II 2013 190.0 13.3 12.1 1.7
------------- ---------------- ----------- ----------- -----
Fund I 2007 202.4 2.8 2.6 0.4
------------- ---------------- ----------- ----------- -----
506.7 460.2
----------------------- ---------------- ----------- ----------- -----
Cash and cash equivalents 261.5
----------- -----
Net outstanding commitments unfunded
by cash resources 198.7
----------- -----
Overview of OCI's underlying investments
Year of Open Fair
Investments Sector Location investment cost value
Fund IV
Ocean Technologies Education Norway/UK 2019 GBP22.9m GBP23.3m
Group
---------- --------------- ----------- -------- ----------
Seven Miles Consumer Germany 2019 GBP24.8m GBP25.1m
---------- --------------- ----------- -------- ----------
Contabo Technology Germany 2019 GBP5.1m GBP5.3m
---------- --------------- ----------- -------- ----------
WebPros Technology Switzerland/USA 2020 GBP44.4m GBP46.3m
---------- --------------- ----------- -------- ----------
OCI's proportionate allocation of Fund IV investments GBP100.0m
(on a look-through basis)
----------
Other assets and liabilities (GBP83.0m)
----------
OCI's investment in Fund IV GBP17.0m
----------
Fund III
Casa & atHome Consumer Italy/Luxembourg 2017 GBP10.2m GBP27.8m
---------- ---------------- ---- -------- ----------
Schülerhilfe Education Germany 2017 GBP30.8m GBP46.8m
---------- ---------------- ---- -------- ----------
TechInsights Technology Canada 2017 GBP0.5m GBP15.9m
---------- ---------------- ---- -------- ----------
AMOS Education France 2017 GBP7.1m GBP12.5m
---------- ---------------- ---- -------- ----------
CPG Education Germany 2018 GBP1.5m GBP61.3m
---------- ---------------- ---- -------- ----------
Facile Consumer Italy 2018 GBP28.8m GBP40.6m
---------- ---------------- ---- -------- ----------
Ekon Technology Spain 2019 GBP18.0m GBP18.4m
---------- ---------------- ---- -------- ----------
Iconic BrandCo Consumer Italy 2019 GBP15.9m GBP16.2m
---------- ---------------- ---- -------- ----------
OCI's proportionate allocation of Fund III investments GBP239.6m
(on a look-through basis)
----------
Other assets and liabilities (GBP40.4m)
----------
OCI's investment in Fund III GBP199.2m
----------
Fund II
North Sails Consumer Global 2014 GBP37.6m GBP35.4m
-------------- --------- ----- ---------- ---------
Daisy Technology UK 2015 GBP10.5m GBP10.0m
-------------- --------- ----- ---------- ---------
OCI's proportionate allocation of Fund II investments GBP45.5m
(on a look-through basis)
---------
Other assets and liabilities (GBP0.8m)
---------
OCI's investment in Fund II GBP44.7m
---------
Fund I
Time Out Consumer Global 2010 GBP56.8m GBP21.6m
------------ --------- ------ ------------ ---------
OCI's proportionate allocation of Fund I investments GBP21.6m
(on a look-through basis)
---------
Other assets and liabilities (GBP2.8m)
---------
OCI's investment in Fund I GBP18.8m
---------
Year of Open Fair
Investments Sector Location investment cost value
Direct investment:
Equity
---------- -------- ----------- -------- ---------
Time Out Consumer Global 2010 GBP59.8m GBP26.6m
---------- -------- ----------- -------- ---------
Debt
---------- -------- ----------- -------- ---------
Daisy Technology UK 2015 GBP14.2m GBP16.4m
---------- -------- ----------- -------- ---------
North Sails Consumer Global 2014 GBP80.2m GBP96.0m
---------- -------- ----------- -------- ---------
Fund facilities n/a n/a n/a GBP12.6m
---------- -------- ----------- -------- ---------
Total direct investments GBP151.6m
-------- ---------
Total OCI investments GBP431.1m
-------- ---------
Cash, other assets and liabilities GBP260.8m
-------- ---------
Total OCI NAV GBP691.9m
-------- ---------
The OCI look-through values above are calculated as the proportion of OCI's investment in the Fund in which the respective investment is held and are shown net of any performance fees.
"Other assets and liabilities" include the external debt and accrued interest in each of Fund II, III and IV which are EUR10.1 million, EUR119.2 million and EUR345.6 million, respectively. OCI has provided an additional short-term loan to Fund II of EUR4.3 million.
ENVIRONMENTAL, SOCIAL & GOVERNANCE POLICY
Responsible investing
The Board adopted an ESG policy in March 2020 which it plans to evolve further during the year. The Company's business model is intertwined with its investment in the Oakley Funds and as such, OCI's ESG policy is largely reliant upon the relevant policies and practices adopted by the Investment Adviser. In addition, the Company undertakes its own independent activities with regard to ESG and will be continuing to build on these throughout 2020.
The Board has endorsed Oakley's policies to advise on the investment of the Company's resources in a socially responsible manner. Through the work of the Management Engagement Committee, the Board will monitor investment activity to ensure that it is compatible with the Company's policies.
The Company believes that responsible investment is important to protect and create long-term investment value, beyond the drivers of ethics, compliance and risk management.
Oakley recognises that ESG considerations may require different focuses, dependent on the nature of an individual business. Oakley therefore, works together with its portfolio companies to identify and apply good practice with regard to managing ESG matters. This commitment was underscored by Oakley becoming a signatory to the United Nations Principles for Responsible Investment (PRI), in 2016.
Oakley's core ESG principles include:
-- Integrate ESG considerations into all stages of the investment process - from due diligence and throughout the period of ownership, to exit;
-- Pursue alignment, in our ESG approach, with the BVCA Responsible Investing Guidelines, and other industry good practice as it develops;
-- Promote the respect, by Oakley and portfolio companies, of fundamental human rights; -- Avoid bribery or corruption in any of Oakley's or its portfolio companies' dealings; -- Encourage portfolio companies to consider and mitigate the ESG impacts of their operations;
-- Avoid investment in specific sectors which Oakley, or its investors, consider especially sensitive from an ESG or ethical viewpoint; and
-- Seek continuous improvement in responsible investment techniques and ESG performance at Oakley and its portfolio companies.
ESG in the Oakley investment process
Pre-investment Post-investment Prior to exit
Inherent ESG risk assessment: Portfolio companies are Due diligence screening
Environmental required to provide Oakley for restricted industries
Health and Safety with periodic questionnaire-driven (of buyers), sanctions,
Labour / Employees assessment of: political exposure, adverse
Community Governance media, regulatory enforcement
Workplace
Marketplace
Environment
Community
------------------------------------ -------------------------------
Risk-based enhanced ESG
assessments
------------------------------------ -------------------------------
Due diligence screening Where higher ESG risks
for restricted industries, or opportunities have
sanctions, political been identified, these
exposure, adverse media, are considered at Board
regulatory enforcement meetings and monitored
appropriately
------------------------------------ -------------------------------
Overview of Fund portfolio
FUND IV
30 Jun 2020 31 Dec 2019
Fair value Fair value
Oakley Fund IV EURm EURm
Ocean Technologies
Group 89.8 79.9
----------- -----------
Seven Miles 96.6 96.4
----------- -----------
Contabo 20.4 20.3
----------- -----------
WebPros 178.3 -
----------- -----------
Total investments 385.1 196.6
----------- -----------
The investment portfolio of Fund IV is summarised in the table above. The Company holds a 28.6% interest in Fund IV, having made a EUR400 million commitment. Oakley Fund IV held its final close in June 2019 closing above its target size of EUR1.2 billion with total committed capital of EUR1.5 billion. Fund IV continues to deploy capital, now holding four investments across Oakley's core sectors of technology, consumer and education.
In February, Fund IV completed its investment in WebPros, investing $200 million (EUR184.7 million) as a minority partner alongside CVC Fund VII. Fund IV's investment in WebPros provides an opportunity for Oakley to continue its partnership with the management team and co-investors, and to benefit from the significant long-term growth potential in WebPros, and new product developments. CVC brings a complementary skillset and deep relevant expertise to support the strategic vision of the business. OCI's share of the Fund IV investment is EUR52.8 million (GBP44.0 million).
During the period, Ocean Technologies Group, the Fund IV portfolio company, progressed with its M&A agenda, making two bolt-on acquisitions. The Group completed the acquisitions of MTS, a marine e-learning content and distribution business, for $6.0 million and of V Group's e-learning subsidiary, Marlins, for $4.0 million. OCI's combined share of both
of these investments was EUR2.6 million (GBP2.3 million).
The underlying companies in the Fund IV portfolio have continued to show good progress in the six months to 30 June 2020 and have already begun to demonstrate further growth in the second half of the year.
The fair value of all four of the investments is in line with the cost at the period-end, as they have not experienced a significant impact from COVID-19.
As at 30 June 2020, Fund IV had called a total of EUR30 million from OCI, representing 7.5% of OCI's total commitments.
FUND III
30 Jun 31 Dec
2020 2019
Fair value Fair value
Oakley Fund III EURm EURm
Casa & atHome 83.9 124.7
----------- -----------
Schülerhilfe 135.3 147.6
----------- -----------
WebPros - 382.6
----------- -----------
TechInsights 52.1 47.3
----------- -----------
AMOS 37.1 43.6
----------- -----------
Career Partner
Group 201.2 196.3
----------- -----------
Facile 116.0 106.7
----------- -----------
Ekon 49.6 49.6
----------- -----------
Iconic BrandCo 43.9 21.9
----------- -----------
Total investments 719.1 1,120.4
----------- -----------
The investment portfolio of Fund III is summarised in the table above. The Company holds a 40.7% interest in Fund III, which is now fully invested with the exception for future possible follow-on acquisitions. Fund III will begin to evaluate exit options throughout the second half of 2020, as well as continuing to focus on creating value across the businesses.
In February, Fund III completed the sale of WebPros to CVC. This generated returns of 6.9x gross money multiple and a 152% gross IRR. The fund received gross proceeds of EUR407.9 million and OCI's share of which was EUR138.7 million (GBP116.1 million).
Following a successful 2019, CPG continued to perform ahead of expectations allowing the second tranche of its refinancing to be drawn in February 2020. This returned EUR56.8 million to the Fund, of which OCI's share was EUR23.1 million (GBP19.2 million).
In March, Fund III completed the sale of its majority stake in atHome, whilst retaining a minority stake of 21% in the business. The gross proceeds received from the sale were EUR41.9 million, with a portion of this being used to repay part of the underlying fund debt and expenses. Following this, OCI's share of proceeds was EUR9.3 million (GBP8.3 million).
In March, Fund III also completed the acquisition of a majority stake in Globe-Trotter. The investment builds on Oakley's experience with luxury consumer brands and follows Fund III's recent acquisition of Alessi. Alessi and Globe-Trotter are held under a single holding company, Iconic BrandCo.
The majority of the Fund III portfolio has been resilient to the impact of COVID-19. TechInsights, CPG and Facile have exhibited strong growth in the period, reflected in the increase in their fair values. The fair value of the Iconic BrandCo also increased, reflecting the new investment in Globe-Trotter. However, Schülerhilfe and AMOS have been impacted with a reduction in activity and as such, the fair values of both have decreased.
As at 30 June 2020, Fund III had called a total of EUR205.2 million from OCI, representing 63.0% of OCI's total commitments.
FUND II
30 Jun 2020 31 Dec 2019
Oakley Fund Fair value Fair value
II EURm EURm
North Sails 107.6 107.6
----------- -----------
Inspired - 64.9
----------- -----------
Daisy 30.5 35.9
----------- -----------
Total investments 138.1 208.5
----------- -----------
The investment portfolio of Fund II is summarised in the table above. The Company holds a 36.2% interest in Oakley Fund II.
Fund II now has just two investments, having sold its remaining stake in Inspired in April 2020, generating proceeds of EUR77.4 million. OCI received GBP21.1 million, following the repayment of the underlying debt facilities held by the Fund. Following the exit, Inspired has generated returns of 2.7x gross money multiple and a gross IRR of 43%, bringing a total distribution of EUR255.1 million into the Fund.
The fair value of the Fund II portfolio has decreased by EUR70.4 million to EUR138.1 million, EUR64.9 million which is a result of the disposal of Inspired. The remaining decrease is due to a drop in the fair value of Daisy, which was impacted by COVID-19 and an unfavourable movement in FX. North Sails has been significantly impacted by COVID-19, with the closure of factories causing a drop off in revenue, despite seeing a strong order book at the beginning of the year. The fair value of North Sails has remained consistent with December 2019 due to the valuation reflecting a return to "normal" trading for the business in a post-COVID-19 environment.
As at 30 June 2020, Fund II had called a total of EUR176.7 million from OCI, representing 93.0% of OCI's total commitments.
FUND I
30 June
2020 31 Dec 2019
Oakley Fund Fair value Fair value
I EURm EURm
Time Out 33.8 63.3
----------- -----------
Total current
investments 33.8 63.3
----------- -----------
Fund I was launched in 2007 and this year the Fund's term was extended to November 2020. The investment portfolio of Fund I is summarised in the table above, with the Fund holding one remaining investment. OCI holds a 70.4% interest in Fund I.
Fund I's only remaining investment is Time Out Group plc ("Time Out"). This is a publicly quoted entity on AIM of the London Stock Exchange. As such, its fair value is determined by a mark-to-market valuation, based on the 30 June 2020 share price of GBP0.40.
The outbreak of the COVID-19 pandemic has had a significant impact on trading, with the temporary closure of all six
Time Out Markets and a slowing of advertising revenues. As a result, the share price dropped from GBP1.23 at 31 December 2019 to GBP0.40 at 30 June 2020, a decrease of 68%.
On 22 May 2020, Time Out completed an equity placing to raise GBP47.1 million to support working capital requirements of the company and strengthen the balance sheet in the wake of the impact of COVID-19. Through the placing, Oakley Fund I and OCI made a combined equity investment of GBP24.9 million, of which GBP12.3 million is a Fund I investment.
Fund I called EUR17.3 million in May to fund the additional investment in Time Out, representing 6% of total commitments, all of which came from recycled capital.
As lockdown measures have eased globally, Time Out Markets have begun to re-open. The Lisbon and Boston markets re-opened in July, followed by New York, Montréal and Chicago in August. The remaining market in Miami will re-open when local guidelines allow it to and conditions are deemed safe for both employees and customers.
As at 30 June 2020, Fund I had called a total of EUR199.6 million from OCI, representing 98.6% of OCI's total commitments.
ORIGIN FUND
The Company holds an interest in the Origin Fund, with OCI committing EUR75 million post-period end.
The Origin Fund will continue the same successful investment strategy of the Flagship Funds, but focused on the lower mid-market segment. This is defined as companies with an investment cost in the range of EUR10-EUR50 million or enterprise values up to EUR100 million.
Post-period end, the Origin Fund called 3% of its capital commitments from OCI.
Direct investment review
Equity securities
In April, Oakley completed the sale of its remaining investment in Inspired, following partial realisations in 2019 and 2017. Combined with the Fund II Investment, the net proceeds represented a 25% uplift to the 31 December 2019 carrying value. OCI's direct investment realised proceeds of EUR105.6 million (GBP92.6 million).
Following a challenging few months due to the outbreak of COVID-19, Time Out completed an equity placing in May raising GBP47.1 million. OCI invested a total of GBP21.2 million of which GBP12.6 million was a direct investment, as part of the placing. The funds will be used to support general working capital requirements and strengthen Time Out's balance sheet in the wake of the impact of COVID-19.
Debt securities
The Company provides debt facilities to certain underlying entities and portfolio companies. These are provided on an arms-length basis and at a competitive market interest rate, allowing OCI to earn higher returns on part of its cash reserves. During the first six months of 2020, OCI earned GBP4.9 million of interest from the debt facilities provided.
As part of the Time Out placing, the total outstanding loan, including interest, of GBP27.1 million was repaid to OCI. At 30 June 2020, there was no outstanding debt provided by OCI to Time Out.
OCI's outstanding loan to Daisy continued to accrue interest, bringing the total outstanding loan to Daisy to GBP16.4 million at 30 June 2020.
OCI provided an additional GBP19.3 million loan to North Sails during the period. This was used to support the business by providing growth capital for its lifestyle brands, North Kiteboarding and North Sails Apparel. Total loan's outstanding to the North Sails group are GBP95.9 million as at 30 June 2020.
The Company also provides revolving credit facilities to two of the four Oakley Funds. Each drawing under these facilities is for a term of no more than one year. As at 30 June 2020, the outstanding amounts were GBP12.6 million, including accrued interest. The decrease from GBP14.6 million as at 31 December 2019 reflects repayments throughout the period.
Statement of Directors' responsibilities
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 71 and 72 of the annual report and accounts 2019 and have not changed materially since the date of that report. The Company has not identified any new risks that will impact the remaining six months of the financial year.
Statement of Director's responsibilities
The Directors confirm that to the best of their knowledge:
-- the condensed interim report includes a fair review of the development and performance of the business and the position of the Company;
-- the condensed consolidated interim financial statements have been prepared in accordance with IAS 34 interim financial reporting and give a true and fair view of the assets, liabilities, financial position and results of the Company, and are in compliance with the requirements set out in the Bermuda Companies Act 1981
(as amended);
-- the condensed interim report includes a fair review of the information required by:
a) 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
b) 4.2.8R of the Disclosure Guidance and Transparency Rules, being all related party transactions that have taken place in the first six months of the current financial year which 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 annual report and accounts that could materially affect the financial position or performance of the Company during the first six months of the current financial year; and
-- the condensed consolidated interim financial statements should be read in conjunction with the latest annual report and financial statements which were prepared in accordance with IFRS. These financial statements provide the information necessary to assess the Company's position and performance, business model and strategy, and is fair, balanced and understandable.
Consolidated statement of comprehensive income (unaudited)
for the six months ended 30 June 2020
Six months Six months
ended ended
30 June 30 June
2020 2019
Notes GBP'000 GBP'000
Income
----- ---------- ----------
Interest income 5,375 4,543
----- ---------- ----------
Net realised gains on investments
at fair value through profit
and loss 6, 7 191,260 17,840
----- ---------- ----------
Net change in unrealised gains/(losses)
on investments at fair value
through profit and loss 6, 7 (189,109) 72,054
----- ---------- ----------
Net foreign currency gains/(losses) 15,670 (286)
----- ---------- ----------
Other income 147 520
----- ---------- ----------
Total income 23,343 94,671
----- ---------- ----------
Expenses 9 (5,475) (13,211)
----- ---------- ----------
Profit attributable to equity
shareholders/total comprehensive
income 17,868 81,460
----- ---------- ----------
Earnings per share
----- ---------- ----------
Basic and diluted earnings
per share 10 GBP0.09 GBP0.40
----- ---------- ----------
Consolidated balance sheet (unaudited)
as at 30 June 2020
(Audited)
As at As at
30 June 31 December As at
2020 2019 30 June
Notes GBP'000 GBP'000 2019 GBP'000
Assets
----- -------- ------------ -------------
Non-current assets
----- -------- ------------ -------------
Investments 6, 7 431,139 660,966 555,023
----- -------- ------------ -------------
431,139 660,966 555,023
----- -------- ------------ -------------
Current assets
----- -------- ------------ -------------
Trade and other receivables 150 40 106
----- -------- ------------ -------------
Cash and cash equivalents 261,495 48,866 109,194
----- -------- ------------ -------------
261,645 48,906 109,300
----- -------- ------------ -------------
Total assets 692,784 709,872 664,323
----- -------- ------------ -------------
Liabilities
----- -------- ------------ -------------
Current liabilities
----- -------- ------------ -------------
Trade and other payables 892 23,864 13,416
----- -------- ------------ -------------
Total liabilities 892 23,864 13,416
----- -------- ------------ -------------
Net assets attributable
to shareholders 691,892 686,008 650,907
----- -------- ------------ -------------
Equity
----- -------- ------------ -------------
Share capital 12 1,943 1,986 2,044
----- -------- ------------ -------------
Share premium 12 222,179 229,728 243,770
----- -------- ------------ -------------
Retained earnings 467,770 454,294 405,093
----- -------- ------------ -------------
Total shareholders'
equity 691,892 686,008 650,907
----- -------- ------------ -------------
Net asset per ordinary
share
----- -------- ------------ -------------
Basic and diluted
net assets
per share 11 GBP3.56 GBP3.45 GBP3.18
----- -------- ------------ -------------
Ordinary shares in
issue ('000) 12 194,260 198,600 204,400
----- -------- ------------ -------------
Consolidated Statement of changes in equity (unaudited)
for the six months ended 30 June 2020
Share Retained Total shareholders'
capital Share premium earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30
June 2020
-------- ------------- --------- -------------------
Balance at 1 January 2020 1,986 229,728 454,294 686,008
-------- ------------- --------- -------------------
Profit for the period/total
comprehensive income - - 17,868 17,868
-------- ------------- --------- -------------------
Ordinary shares repurchased
and cancelled (43) (7,549) - (7,592)
-------- ------------- --------- -------------------
Dividends - - (4,392) (4,392)
-------- ------------- --------- -------------------
Total transactions with equity
shareholders (43) (7,549) (4,392) (11,984)
-------- ------------- --------- -------------------
Balance at 30 June 2020 1,943 222,179 467,770 691,892
-------- ------------- --------- -------------------
For the six months ended 30
June 2019
-------- ------------- --------- -------------------
Balance at 1 January 2019 2,048 244,533 328,241 574,822
-------- ------------- --------- -------------------
Profit for the period/total
comprehensive income - - 81,460 81,460
-------- ------------- --------- -------------------
Ordinary shares repurchased
and cancelled (4) (763) - (767)
-------- ------------- --------- -------------------
Dividends - - (4,608) (4,608)
-------- ------------- --------- -------------------
Total transactions with equity
shareholders (4) (763) (4,608) (5,375)
-------- ------------- --------- -------------------
Balance at 30 June 2019 2,044 243,770 405,093 650,907
-------- ------------- --------- -------------------
Consolidated Statement of cash flows (unaudited)
for the six months ended 30 June 2020
Six months Six months
ended ended
30 June 30 June
Notes 2020 GBP'000 2019 GBP'000
Cash flows from operating activities
----- ------------- -------------
Purchases of investments 6 (48,320) (52,898)
----- ------------- -------------
Sales of investments 6 280,948 61,880
----- ------------- -------------
Interest income received 4,725 181
----- ------------- -------------
Expenses paid (18,427) (2,716)
----- ------------- -------------
Other income received 147 520
----- ------------- -------------
Net cash provided by/(used) in
operating activities 219,073 6,967
----- ------------- -------------
Cash flows from financing activities
----- ------------- -------------
Purchase of ordinary shares 12 (17,722) (767)
----- ------------- -------------
Dividends paid (4,392) (4,608)
----- ------------- -------------
Net cash provided by/(used)in
financing activities (22,114) (5,375)
----- ------------- -------------
Net increase in cash and cash
equivalents 196,959 1,592
----- ------------- -------------
Cash and cash equivalents at the
beginning
of the period 48,866 107,888
----- ------------- -------------
Effect of foreign exchange rate
changes 15,670 (286)
----- ------------- -------------
Cash and cash equivalents at the
end of the period 261,495 109,194
----- ------------- -------------
Notes to the consolidated interim financial statements
for the six months ended 30 June 2020
1. Reporting entity
Oakley Capital Investments Limited (the "Company") is a closed-end investment company incorporated under the laws of Bermuda on 28 June 2007.
The Company invests in the following private equity funds structures (the "Funds"):
Fund Group
Name Country of establishment Limited Partnerships included
Oakley Capital Private Equity
Fund I Bermuda L.P.*
------------------------ -----------------------------
Fund II Bermuda OCPE II Master L.P.
------------------------ -----------------------------
Oakley Capital Private Equity
II-A L.P.*
------------------------ -----------------------------
Oakley Capital Private Equity
II-B L.P.
------------------------ -----------------------------
Oakley Capital Private Equity
II-C L.P.
------------------------ -----------------------------
Fund III Bermuda OCPE III Master L.P.
------------------------ -----------------------------
Oakley Capital Private Equity
III-A L.P.*
------------------------ -----------------------------
Oakley Capital Private Equity
III-B L.P.
------------------------ -----------------------------
Oakley Capital Private Equity
III-C L.P.
------------------------ -----------------------------
Oakley Capital IV Master
Fund IV Luxembourg SCSP
------------------------ -----------------------------
Oakley Capital Private Equity
IV-A SCSP*
------------------------ -----------------------------
Oakley Capital Private Equity
IV-B SCSP
------------------------ -----------------------------
Oakley Capital Private Equity
IV-C SCSP
------------------------ -----------------------------
OCPE Education Bermuda OCPE Education L.P.
------------------------ -----------------------------
OCPE Education (Feeder) L.P.*
------------------------ -----------------------------
* Denotes the limited partnership in which the Company has made a direct investment.
The defined term "Company" shall, where the context requires for the purposes of consolidation, include the Company's sole and wholly owned subsidiary, OCI Financing (Bermuda) Limited ("OCI Financing") (prior to a name change made on 23 May 2019, OCI Financing was previously known as OCIL Financing (Bermuda) Limited). OCI Financing provides financing to NSG Apparel BV, an entity that forms part of the North Sails Group in which Fund II invests.
The Company is listed on the Specialist Fund Segment ("SFS") of the London Stock Exchange ("LSE"), with the ticker symbol "OCI".
2. Basis of preparation
The condensed consolidated interim financial statements of the Company have been prepared on a going concern basis and under the historical cost convention, except for financial instruments at fair value through profit and loss, which are measured at fair value. The condensed consolidated interim financial statements of the Company are unaudited.
During 2020, the outbreak of COVID-19 and related global responses have caused material disruptions to economies around the world. Global markets have experienced significant volatility and divergence in performance across business sectors. The full impact of COVID-19 on economies and businesses remains uncertain.
The Board of Directors have assessed going concern and in doing so have considered a wide range of information relating to the present and future conditions and varying scenarios for the emergence from COVID-19. This includes the condensed statement of financial position, updates from Oakley Capital Limited (the "Investment Adviser") on the impacts of COVID-19 on the portfolio companies of the Funds as well as the impact on investment and sale expectations for each of the Funds, cash flow projections and the longer-term strategy of the Company.
As part of the assessment, the Board of Directors:
-- Assessed liquidity, solvency and capital management. The Company considered liquidity risk as the risk that the Company will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to the Company. Unfunded commitments to the Funds are irrevocable and can exceed cash and cash equivalents available to the Company. Based on current cash flow projections and barring unforeseen events, the Company expects to be able to meet its obligations as they fall due.
As at 30 June 2020, cash and cash equivalents of the Company amount to GBP261,495,133. The Company has total unfunded capital and unquoted debt security commitments of GBP481,582,000 relating to the Funds which are expected to be called over the next four to five years. Under the Company's bye-laws, the Company is permitted to borrow up to 25% of total shareholders' equity which would have amounted to approximately GBP172,973,000 for the period ending 30 June 2020. As at 30 June 2020, the Company has not made arrangements to secure any debt facilities. The Directors consider the Company to have sufficient resources and liquidity and can continue to operate for a period of at least 12 months.
-- Considered estimates inherent in valuations. The Company's approach to valuations was consistent with prior years, with the key focus as at 30 June 2020 being the impact of COVID-19 on the Funds in which the Company invests. The Board of Directors held regular meetings with the Investment Adviser to consider how COVID-19 impacts were considered in the valuation process of the Funds. In addition, key assumptions and estimates relating to the valuation of the unquoted debt instruments were considered. This included assessment of counterparty risk, interest rates and future cashflow projections.
-- Assessed the operational resilience of the Company's critical functions which includes monitoring the Company's key service providers.
The Board of Directors considers it appropriate to prepare the condensed consolidated interim financial statements of the Company on the going concern basis, having considered the impact of COVID-19 on its operations and that of the portfolio companies of the Funds.
2.1 Basis for compliance
The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 Interim financial requirements and should be read in conjunction with the latest annual report and financial statements as at and for the year ended 31 December 2019, which were prepared in accordance with International Financial Reporting Standards ("IFRS"). These condensed consolidated interim financial statements 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 annual consolidated financial statements.
The condensed consolidated interim financial statements were authorised for issue on 9 September 2020 by the Company's Board of Directors.
2.2 Functional and presentation currency
The condensed consolidated interim financial statements are presented in British Pounds Sterling, which is the Company's functional currency.
3. Significant accounting policies
The accounting policies used are consistent with those applied in the latest annual consolidated financial statements, except for the adoption of new standards effective as of 1 January 2020.
Several amendments and interpretations apply for the first time effective 1 January 2020 but do not have a material effect on the Company's consolidated interim financial statements and did not require retrospective adjustments. The changes in accounting policies will be reflected in the Company's annual consolidated financial statements as at and for the year ending 31 December 2020.
A number of new standards have been issued but are not yet effective as at the period end. The Company is currently analysing the impact of these new standards, amendments to existing standards and annual improvements to IFRS in detail but these are not expected to have a material effect on the consolidated annual financial statements of the Company.
4. Critical accounting estimates, assumptions and judgment
The reported results of the Company are sensitive to the accounting policies, assumptions and estimates that underlie the preparation of its consolidated interim financial statements. IFRS require the Board of Directors, in preparing the Company's condensed consolidated interim financial statements, to select suitable accounting policies, apply them consistently and make judgments and estimates that are reasonable and prudent. The Company's estimates and assumptions are based on historical experience and the Board of Directors' expectation of future events and are reviewed periodically. The actual outcome may be materially different from that anticipated. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods.
The judgments, assumptions and estimates involved in the Company's accounting policies that are considered by the Board of Directors to be most important to Company's results and financial condition are the fair valuation of its investments and the assessment that the Company meets the definition of an investment entity.
In preparing the condensed consolidated interim financial statements, significant judgments were made in applying the Company's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the annual consolidated financial statements as at and for the year ended 31 December 2019.
(a) Fair valuation of investments
The fair values assigned to investments held at fair value through profit and loss are based upon available information at the time and do not necessarily represent amounts which might ultimately be realised. Due to the inherent uncertainty of valuation, these estimated fair values may differ significantly from the values that would have been used had a ready market for the investments existed, and those differences could be material.
Investments held at fair value through profit and loss are valued by the Company in accordance with relevant IFRS requirements. Judgment is required in order to determine the appropriate valuation methodology under these standards and in determining the inputs into the valuation models used for the unquoted debt securities. Inputs include making assessments of future cash flows and determining appropriate discount rates.
There remain many unknown factors over the short, medium, and long-term including the impact of COVID-19 on the Company. In these circumstances, the valuation of the Company's investments as at 30 June 2020 carries significantly more uncertainty than previously. The Investment Adviser has considered the impact of COVID-19 in determining inputs in the valuation models used for the valuations of each of the Funds. Additionally the impact of COVID-19 has been considered in the valuation of the unquoted debt securities.
(b) Assessment as an investment entity
Entities that meet the definition of an investment entity within IFRS 10 are required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit and loss.
The Board of Directors has concluded that the Company meets the definition of an investment entity as its strategic objective is to invest in a portfolio of primarily private equity investments advised by the Investment Adviser for the purpose of generating returns in the form of investment income and capital appreciation.
5. Financial risk management
The Board of Directors, the Company's Risk Committee (the "Risk Committee") and the Investment Adviser attribute great importance to professional risk management, proper understanding and negotiation of appropriate terms and conditions and active monitoring, including a thorough analysis of reports and financial statements and ongoing review of investments made. The Company has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy and has established processes to monitor and control the economic impact of these risks. The Investment Adviser provides the Board of Directors with recommendations as to the Company's asset allocation and annual investment levels that are consistent with the Company's objectives. The Risk Committee develops and agrees policies for managing the risks.
The Company has exposures to the following risks from financial instruments: credit risk, liquidity risk and market risk (including interest rate risk, currency risk, and price risk). The Company's overall risk management process focuses on macroeconomic, sectoral and business specific risks have with the objective of minimising the adverse effects on the Company's financial performance.
As at 30 June 2020, there have been no changes to any of the Company's risk policies since 31 December 2019. As a result, the condensed consolidated interim financial statements do not include all financial risk management information and disclosures required in the annual consolidated financial statements. The condensed consolidated interim financial statements should be read in conjunction with the Company's annual consolidated financial statements as at 31 December 2019.
6. Investments
Investments as at 30 June 2020
30 June
31 December Realised Interest Change in 2020
2019 Purchases/Capital Total sales*/ gains/ and unrealised Fair
Fair value calls Distributions (losses) other gains/(losses) value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Oakley Funds
----------- ----------------- -------------- --------- -------- --------------- --------
Fund I 33,358 10,906 - - - (25,485) 18,779
----------- ----------------- -------------- --------- -------- --------------- --------
Fund II 57,182 - (16,993) 10,455 - (5,983) 44,661
----------- ----------------- -------------- --------- -------- --------------- --------
Fund III 310,068 - (143,666) 107,690 - (74,883) 199,209
----------- ----------------- -------------- --------- -------- --------------- --------
Fund IV 19,708 - - - - (2,751) 16,957
----------- ----------------- -------------- --------- -------- --------------- --------
Total Oakley
Funds 420,316 10,906 (160,659) 118,145 - (109,102) 279,606
----------- ----------------- -------------- --------- -------- --------------- --------
Co-Investment
Funds
----------- ----------------- -------------- --------- -------- --------------- --------
OCPE Education
(Feeder) LP 74,984 - (92,589) 73,115 - (55,510) -
----------- ----------------- -------------- --------- -------- --------------- --------
Total co-investment
Funds 74,984 - (92,589) 73,115 - (55,510) -
----------- ----------------- -------------- --------- -------- --------------- --------
Total Funds 495,300 10,906 (253,248) 191,260 - (164,612) 279,606
----------- ----------------- -------------- --------- -------- --------------- --------
Quoted equity
securities
----------- ----------------- -------------- --------- -------- --------------- --------
Time Out Group
plc 38,510 12,625 - - - (24,497) 26,638
----------- ----------------- -------------- --------- -------- --------------- --------
Total quoted
equity securities 38,510 12,625 - - - (24,497) 26,638
----------- ----------------- -------------- --------- -------- --------------- --------
Unquoted debt
securities
----------- ----------------- -------------- --------- -------- --------------- --------
Ellisfield (Bermuda)
Limited 15,796 - - - 562 - 16,358
----------- ----------------- -------------- --------- -------- --------------- --------
Fund I 9,435 1,000 (2,124) - 326 - 8,637
----------- ----------------- -------------- --------- -------- --------------- --------
Fund II 4,398 1,983 (2,628) - 174 - 3,927
----------- ----------------- -------------- --------- -------- --------------- --------
Fund III - - - - - - -
----------- ----------------- -------------- --------- -------- --------------- --------
NSG Apparel
BV 29,992 4,240 - - 645 - 34,877
----------- ----------------- -------------- --------- -------- --------------- --------
Oakley Capital
III Limited 731 - (732) - 1 - -
----------- ----------------- -------------- --------- -------- --------------- --------
Oakley NS
(Bermuda) LP 43,490 15,066 - - 2,540 - 61,096
----------- ----------------- -------------- --------- -------- --------------- --------
Time Out Group
plc 23,314 2,500 (27,071) - 1,257 - -
----------- ----------------- -------------- --------- -------- --------------- --------
Total unquoted
debt securities 127,156 24,789 (32,555) - 5,505 - 124,895
----------- ----------------- -------------- --------- -------- --------------- --------
Total investments 660,966 48,320 (285,803) 191,260 5,505 (189,109) 431,139
----------- ----------------- -------------- --------- -------- --------------- --------
* Total sales include redemptions, loan repayments and transfers.
Investments as at 30 June 2019
31 December Purchases/ Change in
2018 Capital Total sales*/ Realised Interest unrealised 30 June
Fair value calls Distributions gains/(losses) and other gains/(losses) 2019 Fair
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 value GBP'000
Oakley Funds
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund I 18,159 1,788 - - - 12,037 31,984
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund II 71,794 7,386 (30,197) 19,067 - (1,940) 66,110
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund III 208,628 - (9,712) (1,227) - 17,650 215,339
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund IV - 7,901 - - - (1,810) 6,091
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total Oakley
Funds 298,581 17,075 (39,909) 17,840 - 25,937 319,524
----------- ---------- -------------- --------------- ---------- --------------- --------------
Co-Investment Funds
---------- -------------- --------------- ---------- --------------- --------------
OCPE Education
(Feeder) LP 41,789 374 - - - 32,599 74,762
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total
co-investment
Funds 41,789 374 - - - 32,599 74,762
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total Funds 340,370 17,449 (39,909) 17,840 - 58,536 394,286
----------- ---------- -------------- --------------- ---------- --------------- --------------
Quoted equity securities
---------- -------------- --------------- ---------- --------------- --------------
Time Out Group
plc 22,320 - - - - 13,518 35,838
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total quoted
equity
securities 22,320 - - - - 13,518 35,838
----------- ---------- -------------- --------------- ---------- --------------- --------------
Unquoted debt securities
---------- -------------- --------------- ---------- --------------- --------------
Ellisfield
(Bermuda)
Limited 14,889 - - - 434 - 15,323
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund I 7,035 800 - - 245 - 8,080
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund II 17,412 4,044 (21,846) - 390 - -
----------- ---------- -------------- --------------- ---------- --------------- --------------
Fund III 4,033 11,791 - - 410 - 16,234
----------- ---------- -------------- --------------- ---------- --------------- --------------
NSG Apparel
BV 26,569 - - - 496 - 27,065
----------- ---------- -------------- --------------- ---------- --------------- --------------
Oakley Capital
III Limited 2,169 - (770) - 47 - 1,446
----------- ---------- -------------- --------------- ---------- --------------- --------------
Oakley NS
(Bermuda) LP 14,038 18,814 - - 1,795 - 34,647
----------- ---------- -------------- --------------- ---------- --------------- --------------
Time Out Group
plc 20,914 - - - 1,190 - 22,104
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total unquoted
debt
securities 107,059 35,449 (22,616) - 5,007 - 124,899
----------- ---------- -------------- --------------- ---------- --------------- --------------
Total
investments 469,749 52,898 (62,525) 17,840 5,007 72,054 555,023
----------- ---------- -------------- --------------- ---------- --------------- --------------
* Total sales include redemptions, loan repayments and transfers.
Quoted equity securities and unquoted debt securities are additional direct investments in certain of the portfolio companies of the Oakley Funds.
7. Disclosure about fair value of financial instruments
The Company has adopted IFRS 13 in respect of disclosures about the degree of reliability of fair value measurements. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The Company classifies financial instruments measured at fair value in the investment portfolio according to the following hierarchy:
-- Level I: Quoted prices (unadjusted) in active markets for identical instruments that the Company can access at the measurement date. Level I investments include quoted equity instruments.
-- Level II: Inputs other than quoted prices included within Level I that are observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
-- Level III: Inputs that are not based on observable market data. Level III investments include private equity funds and unquoted debt securities.
The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, considering factors specific to the instrument. The determination of what constitutes "observable" requires significant judgment 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 the Company's investments measured at fair value as of 30 June 2020 by the level in the fair value hierarchy into which the fair value measurement is categorised:
Level I Level III Total
GBP'000 GBP'000 GBP'000
Funds - 279,606 279,606
-------- --------- --------
Quoted equity securities 26,638 - 26,638
-------- --------- --------
Unquoted debt securities - 124,895 124,895
-------- --------- --------
Total investments measured
at fair value 26,638 404,501 431,139
-------- --------- --------
The following table analyses the Company's investments measured at fair value as of 30 June 2019 by the level in the fair value hierarchy into which the fair value measurement is categorised:
Level I Level III Total
GBP'000 GBP'000 GBP'000
Funds - 394,286 394,286
-------- --------- --------
Quoted equity securities 35,838 - 35,838
-------- --------- --------
Unquoted debt securities - 124,899 124,899
-------- --------- --------
Total investments measured
at fair value 35,838 519,185 555,023
-------- --------- --------
Level I
Quoted equity investment values are based on quoted market prices in active markets and are therefore classified within Level I investments. The Company does not adjust the quoted price for these investments.
Level II
The Company did not hold any Level II investments as of 30 June 2020 or 30 June 2019.
Level III
The Company has determined that Funds and unquoted debt securities fall into Level III. Funds and unquoted debt securities are measured in accordance with the IPEV Valuation Guidelines with reference to the most appropriate information available at the time of measurement. The condensed consolidated interim financial statements as of 30 June 2020 include Level III investments in the amount of GBP404,501,403; representing approximately 58.46% of shareholders' equity (2019: GBP519,185,368; 79.76%).
Funds
The Company primarily invests in portfolio companies via the Funds as a Limited Partner. The Funds are unquoted equity securities that invest in unquoted securities. The Company's investments in unquoted equity securities are recognised in the consolidated balance sheet at fair value, in accordance with IPEV Valuation Guidelines and IFRS 13 and are considered Level III investments.
The valuation of unquoted fund investments is generally based on the latest available net asset value ("NAV") of the Fund as reported by the corresponding general partner or administrator, provided that the NAV has been appropriately determined using fair value principles in accordance with IFRS 13.
Level III
Funds
The NAV of a Fund is calculated after determining the fair value of that Fund's investment in any portfolio company. The fair value is determined by the Investment Adviser by calculating the Enterprise Value ("EV") of the portfolio company and then adding excess cash and deducting financial instruments, such as external debt, ranking ahead of the Fund's highest ranking instrument in the portfolio company.
A common method of determining the EV is to apply a market-based multiple (e.g. an average multiple based on a selection of comparable quoted companies) to the "maintainable" earnings or revenues of the portfolio company. This market-based approach presumes that the comparative companies are correctly valued by the market. A discount is sometimes applied to market-based multiples to adjust for points of difference between the comparatives and the company being valued.
As at 30 June 2020, the value of the Funds' investments, other assets and liabilities attributable to the Company based on its respective percentage interest in each Fund was as follows:
Fund I Fund II Fund III Fund IV OCPE Education
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Investments 23,761 50,043 292,849 110,075 -
-------- -------- -------- -------- --------------
Debt financing (6,282) (5,134) (48,072) (98,767) -
-------- -------- -------- -------- --------------
Estimated performance fee payable - - (29,093) - -
-------- -------- -------- -------- --------------
Other net assets 3,195 4,262 3,637 7,361 -
-------- -------- -------- -------- --------------
Total value of the Fund attributable
to the Company (EUR'000) 20,674 49,171 219,321 18,669 -
-------- -------- -------- -------- --------------
Total value of the Fund attributable
to the Company (GBP'000) 18,779 44,661 199,209 16,957 -
-------- -------- -------- -------- --------------
As at 30 June 2019, the value of the Funds' investments, other assets and liabilities attributable to the Company based on its respective percentage interest in each Fund was as follows:
Fund I Fund II Fund III Fund IV OCPE Education
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Investments 39,688 82,106 329,073 22,649 83,259
-------- -------- -------- -------- --------------
Debt financing (6,350) (7,820) (65,762) (22,722) -
-------- -------- -------- -------- --------------
Estimated performance fee payable - (4,696) (27,156) - -
-------- -------- -------- -------- --------------
Other net assets 2,386 4,251 4,367 6,877 246
-------- -------- -------- -------- --------------
Total value of the Fund attributable
to the Company (EUR'000) 35,724 73,841 240,522 6,804 83,505
-------- -------- -------- -------- --------------
Total value of the Fund attributable
to the Company (GBP'000) 31,984 66,110 215,339 6,091 74,762
-------- -------- -------- -------- --------------
The Company does not use valuation models to estimate the fair value of its Fund investments. The NAV as reported by the Funds' general partner or administrator is considered to be the key unobservable input. In addition, the Company has the following control procedures in place to evaluate whether the NAV of the underlying Fund investments is calculated in a manner consistent with IFRS 13:
-- thorough initial due diligence processes and the Board of Directors performing ongoing monitoring procedures, primarily discussions with the Investment Adviser;
-- comparison of historical realisations to the last reported fair values; and
-- review of the quarterly financial statements and the annual Auditor's Report of the respective Fund.
Unquoted debt securities
The fair values of the Company's investments in unquoted debt securities are derived from a discounted cash flow calculation based on expected future cash flows to be received, discounted at an appropriate rate. Expected future cash flows include interest received and principal repayment at maturity.
Unobservable inputs for Level III investments
Funds
In arriving at the fair value of the unquoted Fund investments, the key input used by the Company is the NAV as provided by the general partner or administrator of the relevant Fund. The Company recognises that the NAVs of the Funds are highly sensitive to movements in the fair values of the underlying portfolio companies.
The underlying portfolio companies owned by the Funds may include both quoted and unquoted companies. Quoted portfolio companies are valued by the Investment Adviser based on market prices and no unobservable inputs are used. Unquoted portfolio companies are valued by the Investment Adviser based on a market approach for which significant judgment is applied. Consideration has also been given by the Investment Adviser to the impact of COVID-19 for the valuation at 30 June 2020.
For the purposes of sensitivity analysis, the Company considers a 10% adjustment to the fair value of the unquoted portfolio companies of the Funds as reasonable. For the period ending 30 June 2020, a 10% increase to the fair value of the unquoted portfolio companies held by the Funds would result in a 5.5% movement in net assets attributable to shareholders (2019: 6.5%). A 10% decrease to the fair value of the unquoted portfolio companies held by the Funds would have an equal and opposite effect.
Unquoted debt securities
In arriving at the fair value of the unquoted debt securities, the key inputs used by the Company are future cash flows expected to be received until maturity of the debt securities and the discount factor applied. The discount factor applied is an unobservable input and ranges between 5% and 12% considering contractual interest rates charged on debt, risk free rate and assessment of credit risk.
For the purposes of sensitivity analysis, the Company considers a 1% adjustment to the discount factor applied as reasonable. For the period ending 30 June 2020 a 1% increase to the discount factor would result in a 0.5% movement in net assets attributable to shareholders (2019: 0.4%). A 1% decrease to the discount factor would have an equal and opposite effect.
Transfers between levels
There were no transfers between the Levels during the period ended 30 June 2020 and 30 June 2019.
Level I and Level III reconciliation
The changes in investments measured at fair value, for which the Company has used Level I and Level III inputs to determine fair value as of 30 June 2020 and 2019, are as follows:
As at As at
30 June 30 June
Level I Investments: 2020 GBP'000 2019 GBP'000
Quoted equity securities
------------- -------------
Fair value at the beginning of
the period 38,510 22,320
------------- -------------
Purchases 12,625 -
------------- -------------
Net change in unrealised gains/(losses)
on investments (24,497) 13,518
------------- -------------
Fair value of Level I investments
at the end of the period 26,638 35,838
------------- -------------
Unquoted
Funds debt securities Total
Level III Investments: GBP'000 GBP'000 GBP'000
For the six months ended
30 June 2020
--------- ---------------- ---------
Fair value at the beginning
of the period 495,300 127,156 622,456
--------- ---------------- ---------
Purchases 10,906 24,789 35,695
--------- ---------------- ---------
Proceeds on disposals
(including interest) (253,248) (32,555) (285,803)
--------- ---------------- ---------
Realised gain on sale 191,260 - 191,260
--------- ---------------- ---------
Interest income and other
fee income - 5,505 5,505
--------- ---------------- ---------
Net change in unrealised
gains/(losses)
on investments (164,612) - (164,612)
--------- ---------------- ---------
Fair value at the end
of the period 279,606 124,895 404,501
--------- ---------------- ---------
Unquoted
Funds debt securities Total
GBP'000 GBP'000 GBP'000
For the six months ended
30 June 2019
-------- ---------------- --------
Fair value at the beginning
of the period 340,370 107,059 447,429
-------- ---------------- --------
Purchases 17,449 35,449 52,898
-------- ---------------- --------
Proceeds on disposals
(including interest) (39,909) (22,616) (65,525)
-------- ---------------- --------
Realised gain on sale 17,840 - 17,840
-------- ---------------- --------
Interest income and other
fee income - 5,007 5,007
-------- ---------------- --------
Net change in unrealised
gains/(losses)
on investments 58,536 - 58,536
-------- ---------------- --------
Fair value at the end
of the period 394,286 124,899 519,185
-------- ---------------- --------
Financial instruments not carried at fair value
Financial instruments, other than financial instruments at fair value through profit and loss, where carrying values are equal to fair values:
As at As at
30 June 30 June
2020 2019
GBP'000 GBP'000
Cash and cash equivalents 261,495 109,194
-------- --------
Trade and other receivables 150 106
-------- --------
Trade and other payables 892 13,416
-------- --------
8. Segment information
The Company has two reportable segments, as described below. For each of them, the Board of Directors receives detailed reports on at least a quarterly basis. The following summary describes the operations in each of the Company's reportable segments:
-- fund investments; and -- direct investments.
Balance sheet and income and expense items which cannot be clearly allocated to one of the segments are shown in the column "Unallocated" in the following tables.
The reportable operating segments derive their revenue primarily by seeking investments to achieve an attractive return in relation to the risk being taken. The return consists of interest, dividends and/or unrealised and realised capital gains.
The financial information provided to the Board of Directors with respect to total assets and liabilities is presented in a manner consistent with the consolidated financial statements. The assessment of the performance of the operating segments is based on measurements consistent with IFRS. With the exception of capital calls payable, liabilities are not considered to be segment liabilities but rather managed at the corporate level.
There have been no transactions between the reportable segments during the period ended 30 June 2020 (2019: none).
The segment information for the period ended 30 June 2020 is as follows:
Direct
investments Total operating
Fund investments and loans segments Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net realised gains on financial
assets at fair value through
profit and loss 191,260 - 191,260 - 191,260
---------------- ------------ --------------- ----------- ----------
Net unrealised gains/(losses)
on financial assets at fair
value through profit and
loss (164,612) (24,497) (189,109) - (189,109)
---------------- ------------ --------------- ----------- ----------
Interest income - 5,358 5,358 17 5,375
---------------- ------------ --------------- ----------- ----------
Net foreign currency
gains/(losses) - - - 15,670 15,670
---------------- ------------ --------------- ----------- ----------
Other income - 147 147 - 147
---------------- ------------ --------------- ----------- ----------
Expenses - - - (5,475) (5,475)
---------------- ------------ --------------- ----------- ----------
Profit/(loss) for the period 26,648 (18,992) 7,656 10,212 17,868
---------------- ------------ --------------- ----------- ----------
Total assets 279,606 151,533 431,139 261,645 692,784
---------------- ------------ --------------- ----------- ----------
Total liabilities - - - (892) (892)
---------------- ------------ --------------- ----------- ----------
Net assets 279,606 151,533 431,139 260,753 691,892
---------------- ------------ --------------- ----------- ----------
Total assets include:
---------------- ------------ --------------- ----------- ----------
Financial assets at fair
value through profit and
loss 279,606 151,533 431,139 - 431,139
---------------- ------------ --------------- ----------- ----------
Cash and others - - - 261,645 261,645
---------------- ------------ --------------- ----------- ----------
The segment information for the period ended 30 June 2019 is as follows:
Direct Total operating
Fund investments investments segments Unallocated Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net realised gains on financial
assets at fair value through
profit and loss 17,840 - 17,840 - 17,840
---------------- ------------ --------------- ----------- --------
Net unrealised gains/(losses)
on financial assets at fair
value through profit and loss 58,536 13,518 72,054 - 72,054
---------------- ------------ --------------- ----------- --------
Interest income - 4,487 4,487 56 4,543
---------------- ------------ --------------- ----------- --------
Net foreign currency
gains/(losses) - - - (286) (286)
---------------- ------------ --------------- ----------- --------
Other income - 520 520 - 520
---------------- ------------ --------------- ----------- --------
Expenses - - - (13,211) (13,211)
---------------- ------------ --------------- ----------- --------
Profit/(loss) for the period 76,376 18,525 94,901 (13,441) 81,460
---------------- ------------ --------------- ----------- --------
Total assets 394,286 160,737 555,023 109,300 664,323
---------------- ------------ --------------- ----------- --------
Total liabilities - - - (13,416) (13,416)
---------------- ------------ --------------- ----------- --------
Net assets 394,286 160,737 555,023 95,884 650,907
---------------- ------------ --------------- ----------- --------
Total assets include:
---------------- ------------ --------------- ----------- --------
Financial assets at fair value
through profit and loss 394,286 160,737 555,023 - 555,023
---------------- ------------ --------------- ----------- --------
Cash and others - - - 109,300 109,300
---------------- ------------ --------------- ----------- --------
9. Expenses
Six months Six months
ended ended
30 June 2020 30 June 2019
GBP'000 GBP'000
Performance fees 3,320 10,116
------------- -------------
Operational and advisory fees 621 1,719
------------- -------------
Professional fees 664 714
------------- -------------
Other expenses 870 662
------------- -------------
5,475 13,211
------------- -------------
10. Earnings per share
The earnings per share calculation uses the weighted average number of shares in issue during the period.
Six months Six months
ended ended
30 June 2020 30 June 2019
Basic and diluted earnings per
share GBP0.09 GBP0.40
------------- -------------
Profit for the period (GBP'000) 17,868 81,460
------------- -------------
Weighted average number of shares
outstanding ('000) 196,797 204,572
------------- -------------
11. Net asset value per share
The net asset value per share calculation uses the number of shares in issue at the end of the period.
As at As at
30 June 2020 30 June 2019
Basic and diluted net asset value
per share GBP3.56 GBP3.18
------------- -------------
Net assets attributable to shareholders
(GBP'000) 691,892 650,970
------------- -------------
Number of shares in issue at period
end ('000) 194,260 204,400
------------- -------------
12. Share capital
The authorised share capital of the Company is 280,000,000 ordinary shares of a par value of GBP0.01 each. Ordinary shares are listed and traded on the SFS market of the London Stock Exchange. Each ordinary share confers the right to one vote and shareholders have the right to receive dividends.
On 18 June 2020, the Company purchased 1,340,000 ordinary shares at the market price on that date for a total of GBP2,774,538.
The ordinary shares purchased by the Company were cancelled and are available for re-issue.
On 18 March 2020, the Company purchased 3,000,000 ordinary shares at the market price on that date for a total of GBP4,817,819.
The ordinary shares purchased by the Company were cancelled and are available for re-issue.
On 18 March 2019, the Company purchased 404,100 ordinary shares at the market price on that date for a total of GBP767,442.
The ordinary shares purchased by the Company were cancelled and are available for re-issue.
As at 30 June 2020, the Company's issued and fully paid share capital was 194,259,936 ordinary shares (2019: 204,399,936).
As at As at
30 June 2020 30 June 2019
'000 '000
Ordinary shares outstanding at
the beginning of the period 198,600 204,804
------------- -------------
Ordinary shares purchased (4,340) (404)
------------- -------------
Ordinary shares outstanding at
the end of the period 194,260 204,400
------------- -------------
13. Commitments
The Company had the following capital commitments in euros as at the period end:
Outstanding Outstanding
as at as at
Original 30 June 30 June
commitment 2020 2019
EUR'000 EUR'000 EUR'000
Fund I 202,398 2,834 2,834
----------- ----------- -----------
Fund II 190,000 13,300 13,300
----------- ----------- -----------
Fund III 325,780 120,539 153,117
----------- ----------- -----------
Fund IV 400,000 370,000 391,000
----------- ----------- -----------
Total outstanding commitments
(EUR'000) 1,118,178 506,673 560,251
----------- ----------- -----------
Total outstanding commitments
(GBP'000) 1,015,694 460,235 508,903
----------- ----------- -----------
The Company had the following unquoted debt security commitments at the period end:
Outstanding Outstanding
as at as at
Original 30 June 30 June
commitment 2020 2019
GBP'000 GBP'000 GBP'000
Fund I 5,000 5,000 3,400
----------- ----------- -----------
Fund II 20,000 16,217 20,000
----------- ----------- -----------
Fund III* 20,000 - 4,198
----------- ----------- -----------
Oakley NS (Bermuda) LP** 54,700 130 1,403
----------- ----------- -----------
Total outstanding commitments
(GBP'000) 99,700 21,347 29,001
----------- ----------- -----------
* The unquoted debt security commitment to Fund III was terminated on 6 February 2020.
** As at 30 June 2019, the original commitment to Oakley NS (Bermuda) LP was GBP33,850,000.
14. Related parties
Balances and transactions between the Company and its subsidiary have been eliminated on consolidation and are not disclosed in this note. Related parties as disclosed below are not part of the consolidation and for this reason are not eliminated.
One Director of the Company, Peter Dubens, is also a Director of the Investment Adviser, an entity which provides services to, and receives compensation from, the Company and is also the sole shareholder of Oakley Capital Manager Limited (the "Administrative Agent") which is considered a related party to the Company given the direct control this Director has over this entity.
The agreements between the Company and these service providers are based on normal commercial terms. Throughout the period ending 30 June 2020, no other Director of the Company had a personal interest in any transaction of significance for the Company (2019: none).
Operational fees, advisory fees and performance fees paid to the Administrative Agent are disclosed in Note 9. The Company amended the agreement to adjust the operational and advisory fees, with effect from 1 January 2020, to exclude fees on direct debt investments. The decrease in operational and advisory fees is a function of this change and the change in the net asset value of the underlying assets.
Under the Operational Services Agreement, the Administrative Agent currently recharges costs incurred, either directly or indirectly by its contracted advisors, primarily the Investment Adviser, on behalf of the Company. For the period ending 30 June 2020, the Administrative Agent recharged such costs to the Company totalling GBP397,000 (2019: GBP287,726) which is included in other expenses (Note 9). The agreements between the Company and these service providers are based on normal commercial terms.
15. Events after the balance sheet date
On 6 July 2020, the Company committed EUR75,000,000 to Oakley Capital Origin A SCSp, which together with Oakley Capital Origin B SCSp, Oakley Capital Origin C SCSp (collectively the "Origin Feeder Funds") and Oakley Capital Origin Master SCSp
(the "Origin Master") collectively comprise "Origin Fund". The Origin Fund is an exempted limited partnership established in Luxembourg.
The Board has approved a potential increase to this commitment of up to 30% of the Origin Fund's total commitments, up to a limit of EUR105,000,000.
On 24 July 2020, the Company paid a capital call of EUR2,250,000 (GBP2,047,275) to the Origin Fund.
On 29 July 2020, the Company purchased 3,660,000 Ordinary Shares at the market price on that date for a total of GBP8,317,590. The Ordinary Shares purchased by the Company were cancelled and are available for re-issue.
On 24 August 2020, the Company received a distribution of EUR 9,569,788 (GBP8,635,434) from Fund III arising from the refinancing of Facile.
On 10 September 2020, the Board of Directors declared and approved payment of an interim dividend of 2.25 pence per ordinary share which will result in a dividend payment of GBP4,288,499 payable on 22 October 2020.
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END
IR FFFELAVIAIII
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