TIDMBPET
RNS Number : 9893J
BMO Private Equity Trust PLC
23 August 2019
To: Stock Exchange For immediate release:
23 August 2019
BMO Private Equity Trust PLC
LEI: 2138009FW98WZFCGRN66
Unaudited results for the half year to 30 June 2019
Financial Highlights
-- NAV of 388.05p per Ordinary Share reflecting a total return
for the six months of 2.4% for the Ordinary Shares.
-- Share price total return for the six months of 13.7% for the Ordinary Shares.
-- Total quarterly dividends of 7.54p per Ordinary Share year to date.
-- Quarterly dividend of 3.73p paid on 31 July 2019
-- Quarterly dividend of 3.81p to be paid on 31 October 2019
-- Dividend yield of 4.3% based on the period end share price (1).
Chairman's Statement
As at 30 June 2019 the Net Asset Value ("NAV") of BMO Private
Equity Trust PLC ("the Company") was GBP286.9 million giving a NAV
per share of 388.05p. Taking account of dividends paid the NAV
total return for the six-month period was 2.4%. In addition, with
the share price discount having fallen to 9.0% at 30 June 2019 and
5.7% at the time of writing, compared to 17.9% at 31 December 2018,
the share price total return for the period was an impressive
13.7%.
In accordance with the Company's stated dividend policy, the
Board declares a quarterly dividend of 3.81p per ordinary share,
payable on 31 October 2019 to shareholders on the register on 4
October 2019 with an ex-dividend date of 3 October 2019. For
illustrative purposes only, this dividend and that paid on 31 July
2019 represent an annualised yield of 4.3% based on the share price
as at 30 June 2019. I would like to remind shareholders of our
dividend re-investment plan, which can be a convenient and easy way
to build up an existing holding.
On 19 June 2019, the Company entered into a new five-year
unsecured facility agreement with The Royal Bank of Scotland
International Limited ("RBSI"). This facility is comprised of a
EUR25 million term loan and a GBP75 million multi-currency
revolving credit facility. This new facility replaced the Company's
previous arrangements with Royal Bank of Scotland plc. The previous
facility comprised a EUR30 million term loan and a GBP45 million
multi-currency revolving credit facility.
The Board is pleased to have secured this new, larger and
cheaper facility which will allow the Company to maintain a
moderately but flexibly geared structure with the ability to draw
borrowings in multiple currencies.
As at 30 June 2019, the Company had cash of GBP6.7 million. With
borrowings of GBP25.2 million under the new loan facility, net debt
was GBP18.5 million, equivalent to a gearing level of 6.0%. The
total of outstanding undrawn commitments at 30 June 2019 was
GBP111.9 million and, of this, approximately GBP16.4 million is to
funds where the investment period has expired.
There is a healthy two-way market in private equity
internationally underpinned by increasing interest in the asset
class over the longer term. In this reporting period the Company
invested GBP28.0 million in new investments and we received through
realisations and income GBP25.4 million. Most of the portfolio is
invested in niche companies where there is a long-term growth
thesis based around a specific market, product or service. These
'secular' growth characteristics can provide useful resilience when
the background economic conditions are challenging. The broadly
diversified nature of the Company's portfolio is also a source of
strength.
Mark Tennant
Chairman
(1) Calculated as dividends of 3.73p paid on 31 July 2019 and
3.81p payable on 31 October 2019 annualised divided by the
Company's share price as at 30 June 2019.
Manager's Review
New Investments
In the first half of the year five new fund commitments and
three new co-investments have been made. Most of this activity was
in the first quarter.
GBP7 million has been committed to Kester Capital, a buy-out
fund focusing on the UK lower mid-market. We have previously
co-invested with Kester in Jollyes (pet shop chain) and CETA
(caravan insurance). EUR7 million was committed to Silverfleet
European Development Fund, a new initiative from this
well-established firm focusing on lower mid-market buy-outs across
Europe which lie in the size range with enterprise value between
EUR25 and EUR75 million. SEK 40 million (GBP3.5 million) has been
committed to Summa II, a Nordic focused buy-out fund with a
sustainability angle.
In the second quarter two new fund investments were made in
Inflexion Enterprise Fund V (GBP2.7 million) and Inflexion
Supplemental Fund V (GBP6.0 million). These are the latest in a
series of investments with this leading UK based mid-market buy-out
group.
Three co-investments were made in the first half of the year,
all of them in the first quarter. GBP2.9 million was invested in
San Siro, the market leading funeral services company based in
Milan, Italy. Led by Augens the plan is to build out a small chain
of funeral parlours. EUR3.5 million has been invested in STAXS the
Netherlands based provider of cleanroom consumables principally for
the pharmaceuticals industry. The deal is led by Silverfleet.
GBP2.1 million has been invested in Unmanned Aerial Vehicle (UAV)
company, Cyberhawk. Using the UAVs to inspect critical energy
infrastructure Cyberhawk delivers the results to clients via its
own cloud-based asset management software, iHawk. This deal is led
by energy specialists Magnesium.
In the second quarter many of the funds in the portfolio have
been active with a wide range of new investments being established.
Total drawdowns in the quarter were GBP12.6 million bringing the
total for new investments for the first half to GBP28.0 million. As
is typical, the new investments cover a diverse range of industrial
sectors and geographies. Some of the more notable ones illustrate
this mix.
In the UK GBP2.4 million was drawn by deal leaders Buckthorn for
a follow-on investment in oil services company Coretrax. This was
for the acquisition of US company Mohawk, which designs,
manufactures and operates a range of downhole tools which are
complementary to Coretrax's suite of well bore cleanup and plug and
abandonment products. August Equity IV called GBP0.8 million for
veterinary imaging business Hallmarq. SEP V called GBP0.6 million
for Immedis, a cloud-based payroll and employment tax software
provider. Our co-investment in Apposite Capital led care provider
Swanton made two follow-on acquisitions and an additional GBP0.5
million was called for these. RJD III called GBP0.7 million, of
which GBP0.6 million was for new investment in Survey Solutions, a
land and buildings survey company. The balance was for a
refinancing of training company Babington. We also contributed
GBP0.4 million to the refinancing of our co-investment in
Babington.
In Continental Europe Silverfleet European Development Fund
invested GBP0.6 million in Netherlands based cleanroom consumables
company STAXS complementing our GBP3.0 million co-investment made
in the company noted above. In France Montefiore IV invested GBP0.4
million in MCS Groupe, a credit management services company.
The US component of the portfolio has seen some new deals.
Graycliff III called GBP0.9 million for Sweeteners Plus, a New York
State based manufacturer and distributor of liquid and dry
sweeteners which are sold into restaurants and the beverage,
bakery, confectionary and pharmaceutical sectors. Bluepoint Capital
IV called GBP0.3 million for W.A. Kendall, a Georgia based company
providing vegetation management services to utilities, specifically
to ensure the safety of powerlines. They also called GBP0.4 million
for TAS Environmental Services, a Texas based company involved in
specialised environmental and industrial cleaning and waste
transportation.
Realisations
Total realisations and income received in the first half
amounted to GBP25.4 million. This was slightly behind the total of
GBP29.9 million at the same point last year.
Earlier in the year the Company benefitted from a number of
excellent exits from across the portfolio. Notable realisations
included GBP4 million coming in from August Equity's sale of cyber
security company SecureData (7.2x, 35% IRR). The further sell down
by Argan Capital of Swedish healthcare company Humana returned
GBP1.8 million bringing the return on this investment so far to 5x
cost. Hutton Collins returned GBP0.9 million on the exit of
restaurant chain Wagamama through its sale to the listed Restaurant
Group (2.6x, 17% IRR). In Spain Corpfin IV sold perfume company
Arenal to listed Portuguese company Sonae Group returning GBP0.8
million (1.8x, with potential to reach 2.4x and 32% IRR, through
earn out).
The flow of realisations has continued more recently. The
largest distribution in the second quarter came from the sale of
shares in Eventbrite, which we had received as consideration for
our holding in cloud enabled ticketing software company
Ticketscript. Eventbrite was listed in New York in September 2018.
After a strong debut the shares fell back and once the lock up had
expired FPE, the deal leaders, were able to exit at $19.4, some way
below the peak of $40. The net proceeds to us were GBP3.1 million,
which meant that the final return for the total holding was 2.0x
cost and an IRR of 17%. Collingwood, the Gibraltar based niche
motor insurer, returned GBP1.9 million through repayment of loan
notes along with interest and dividends. This was a result of a
debt refinancing of the company and this repays 80% of the cost of
the investment. Healthpoint Capital distributed GBP0.8 million
following the sale of Orthospace, an Israel based company with
disruptive technology for the treatment of rotator cuff injuries.
The initial consideration may be doubled if certain performance
milestones are met and this could result in a return of 3.7x cost
and an IRR of 43%. The Italian fund NEM Impresse distributed GBP0.8
million following the sale of plastic packaging for household,
personal care and cosmetics company Taplast. This
represented 2.8x cost and an IRR of over 100% since our
acquisition in January 2018. Portobello Capital III exited
Iberconsa, the Spanish hake, shrimp and squid fishing business
through the sale to Platinum Equity. Our proceeds were GBP0.7
million representing 3.6x cost and 50% IRR. In France Ciclad 5 had
two good exits. GBP0.6 million came in from the sale of
Slat&Infodis, a secure power supplies company (2.4x cost, 24%
IRR). A further GBP0.6 million came from the sale of Val'Eco &
Nord Coffrage, specialists in rental equipment for the building
industry (2.6x, 31% IRR).
Valuation Movements
The valuation movements in the first half of the year were quite
broadly spread. The largest uplift, of GBP2.9 million was from
medical device company Accuvein, which is seeing strong revenue
growth on the back of a new product launch. Our co-investment in US
based electrical motors company Sigma was up by GBP2.7 million
reflecting growth in revenues and EBITDA of 15% for the year ended
March 2019. Dotmatics, the specialist software company was up by
GBP1.9 million. Specialist Care provider Swanton was up by GBP0.5
million reflecting good progress with the roll out and in trading.
Chequers Capital XV was up by GBP0.4 million due to the last
remaining holding Thermocoax (temperature measurement systems)
being sold after the quarter end to Spirax-Sarco plc.
There were some negative movements. Ambio was adjusted down by
GBP1.3 million due to a weakening of sales momentum. Weird Fish was
down by GBP0.7 million due to continuing trading difficulties in a
weak market. Pinebridge New Europe Fund II was down by GBP0.6
million on the back of weak trading in some of its key remaining
holdings and the lowish exit value of car battery recycler Orzel
Bialy. In the US Camden Partners IV was down by GBP0.6 million
mainly due a number of adverse portfolio movements driven by weaker
trading. Lastly our holding in Environmental Technologies Fund was
down by GBP0.5 million due to the administration of their
longstanding holding in metals refiner, Metalysis.
Financing
As noted above on 19 June the Company entered into a new
five-year unsecured facility agreement with The Royal Bank of
Scotland International Limited (RBSI) comprising a EUR25 million
term loan and a GBP75 million multi-currency revolving credit
facility. At present the term loan is fully drawn (EUR25 million)
with another GBP4 million of the revolver drawn. This leaves GBP71
million of the revolving credit facility potentially available,
subject to compliance with the various covenants. The Company is
therefore well placed to fund any gap between drawdown and
realisations as well as having good scope for the acquisition of
co-investments or secondaries.
Outlook
The economic and political background has deteriorated over the
last few months with a resolution to the Brexit impasse appearing
no nearer and the threat of 'no deal', or something close to it,
rising in probability. Both the UK and German economies appear to
be at real risk of dipping into recession and similar trends are
seen elsewhere in Europe. Notwithstanding these challenges there is
a very healthy amount of activity within the private equity market
internationally. Our portfolio has recorded a slightly lower amount
of exit activity in the first half of the year compared with last
year, which was a record year, with total proceeds to date around
15% down. There has been exit activity in every section of the
portfolio and the mature element of the portfolio is expected to
continue to yield a healthy flow of realisations in the second half
of the year. There are some companies in the portfolio facing
challenges, but the general picture is one of good progress and the
broadly-based rise in valuations underlines this. Our dealflow in
both funds and co-investments is strong and we expect to add a
number of new investments over the remainder of the year. Our
assessment is that there is excellent scope for further growth in
shareholder value between now and the year end.
Hamish Mair
Investment Manager
BMO Investment Business Limited
BMO Private Equity Trust PLC
Statement of Comprehensive Income for the
half year ended 30 June 2019
Unaudited
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 8,692 8,692
Exchange gains - 95 95
Investment income 2,083 - 2,083
Other income 49 - 49
---------------------------------------------- --------- --------- ---------
Total income 2,132 8,787 10,919
---------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (138) (1,244) (1,382)
Investment management fee - performance
fee - (1,624) (1,624)
Other expenses (414) - (414)
---------------------------------------------- --------- --------- ---------
Total expenditure (552) (2,868) (3,420)
---------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 1,580 5,919 7,499
Finance costs (85) (767) (852)
---------------------------------------------- --------- --------- ---------
Profit before taxation 1,495 5,152 6,647
Taxation (284) 284 -
Profit for period/total comprehensive income 1,211 5,436 6,647
Return per Ordinary Share 1.64p 7.35p 8.99p
---------------------------------------------- --------- --------- ---------
The total column is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from
continuing operations.
BMO Private Equity Trust PLC
Statement of Comprehensive Income for the
half year ended 30 June 2018
Unaudited
Revenue Capital Total
GBP'000 GBP'000 GBP'000
------------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 8,387 8,387
Exchange gains - 98 98
Investment income 495 - 495
Other income 40 - 40
------------------------------------------------- --------- --------- ---------
Total income 535 8,485 9,020
------------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (320) (961) (1,281)
Investment management fee - performance
fee - (2,032) (2,032)
Other expenses (387) - (387)
------------------------------------------------- --------- --------- ---------
Total expenditure (707) (2,993) (3,700)
------------------------------------------------- --------- --------- ---------
(Loss)/profit before finance costs and taxation (172) 5,492 5,320
Finance costs (210) (631) (841)
------------------------------------------------- --------- --------- ---------
(Loss)/profit before taxation (382) 4,861 4,479
Taxation - - -
(Loss)/profit for period/total comprehensive
income (382) 4,861 4,479
Return per Ordinary Share (0.52)p 6.58p 6.06p
------------------------------------------------- --------- --------- ---------
The total column is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from
continuing operations.
BMO Private Equity Trust PLC
Statement of Comprehensive Income for the
year ended 31 December 2018
(Audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 36,966 36,966
Exchange gains - 35 35
Investment income 2,340 - 2,340
Other income 81 - 81
-------------------------------------------- --------- --------- ---------
Total income 2,421 37,001 39,422
-------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (660) (1,980) (2,640)
Investment management fee - performance
fee - (2,277) (2,277)
Other expenses (760) - (760)
-------------------------------------------- --------- --------- ---------
Total expenditure (1,420) (4,257) (5,677)
-------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 1,001 32,744 33,745
Finance costs (428) (1,286) (1,714)
-------------------------------------------- --------- --------- ---------
Profit before taxation 573 31,458 32,031
Taxation (109) 109 -
Profit for year/total comprehensive income 464 31,567 32,031
Return per Ordinary Share 0.63p 42.69p 43.32p
-------------------------------------------- --------- --------- ---------
The total column is the profit and loss account of the
Company.
All revenue and capital items in the above statement derive from
continuing operations.
BMO Private Equity Trust PLC
Amounts Recognised as Dividends
Six months Six months
ended 30 ended 30
June 2019 June 2018
(unaudited) (unaudited)
GBP'000 GBP'000 Year ended
31 December
2018
(audited)
GBP'000
Quarterly Ordinary Share dividend of 3.55p
per share for the quarter ended 30 September
2017 2,624 2,624
------------- ------------- --------------
Quarterly Ordinary Share dividend of 3.57p
per share for the quarter ended 31 December
2017 - 2,640 2,640
------------- ------------- --------------
Quarterly Ordinary Share dividend of 3.57p
per share for the quarter ended 31 March
2018 2,640
------------- ------------- --------------
Quarterly Ordinary Share dividend of 3.57p
per share for the quarter ended 30 June
2018 - - 2,640
------------- ------------- --------------
Quarterly Ordinary Share dividend of 3.58p 2,647 - -
per share for the quarter ended 31 September
2018
------------- ------------- --------------
Quarterly Ordinary Share dividend of 3.65p
per share for the quarter ended 31 December
2018 2,699
------------- ------------- --------------
5,346 5,264 10,544
------------- ------------- --------------
BMO Private Equity Trust PLC
Balance Sheet
As at 30 June As at 30 As at 31
2019 June 2018 December
(unaudited) 2018
(unaudited) (audited)
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- ------------- -----------
Non-current assets
Investments at fair value through
profit or loss 308,737 286,352 295,242
Current assets
Other receivables 17 32 142
Cash and cash equivalents 6,693 7,017 21,335
----------------------------------- -------------- ------------- -----------
6,710 7,049 21,477
Current liabilities
Other payables (3,362) (3,726) (4,267)
Interest-bearing bank loan (4,000) - (26,821)
----------------------------------- -------------- ------------- -----------
(7,362) (3,726) (31,088)
----------------------------------- -------------- ------------- -----------
Net current (liabilities)/assets (652) 3,323 (9,611)
Non-current liabilities
Interest-bearing bank loan (21,153) (26,316) -
----------------------------------- -------------- ------------- -----------
Net assets 286,932 263,359 285,631
----------------------------------- -------------- ------------- -----------
Equity
Called-up ordinary share capital 739 739 739
Share premium account 2,527 2,527 2,527
Special distributable capital
reserve 15,040 15,040 15,040
Special distributable revenue
reserve 31,403 31,403 31,403
Capital redemption reserve 1,335 1,335 1,335
Capital reserve 235,888 212,697 234,587
Revenue reserve - (382) -
Shareholders' funds 286,932 263,359 285,631
----------------------------------- -------------- ------------- -----------
Net asset value per Ordinary
Share 388.05p 356.17p 386.29p
----------------------------------- -------------- ------------- -----------
BMO Private Equity Trust PLC
Statement of Changes in Equity
Share Share Special Special Capital Capital Revenue Total
Capital Premium Distributable Distributable Redemption Reserve Reserve
Account Capital Revenue Reserve
Reserve Reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
For the six months ended 30 June 2019 (unaudited)
Net assets at 1 January
2019 739 2,527 15,040 31,403 1,335 234,587 - 285,631
Profit/(loss) for
the period/total
comprehensive income - - - - - 5,436 1,211 6,647
Dividends paid - - - - - (4,135) (1,211) (5,346)
Net assets at 30
June 2019 739 2,527 15,040 31,403 1,335 235,888 - 286,932
------------------ ---- ------ ------- ------- ------ -------- --------
For the six months ended 30 June 2018 (unaudited)
Net assets at 1 January
2018 739 2,527 15,040 31,403 1,335 213,100 - 264,144
Profit/(loss) for
the period/total
comprehensive income - - - - - 4,861 (382) 4,479
Dividends paid - - - - - (5,264) - (5,264)
Net assets at 30
June 2018 739 2,527 15,040 31,403 1,335 212,697 (382) 263,359
------------------ ---- ------ ------- ------- ------ -------- ------ --------
For the year ended 31 December 2018 (audited)
Net assets at 1 January
2018 739 2,527 15,040 31,403 1,335 213,100 - 264,144
Profit/(loss) for
the year/total comprehensive
income - - - - - 31,567 464 32,031
Dividends paid - - - - - (10,080) (464) (10,544)
Net assets at 31
December 2018 739 2,527 15,040 31,403 1,335 234,587 - 285,631
------------------ ---- ------ ------- ------- ------ -------- --------
BMO Private Equity Trust PLC
Cash Flow Statement
Six months Six months Year ended
ended ended
30 June 2019 30 June 2018 31 December
2018
(unaudited) (unaudited) (audited)
GBP000 GBP000 GBP000
------------------------------------- -------------- -------------- -------------
Operating activities
Profit before taxation 6,647 4,479 32,031
Gains on disposals of investments (10,611) (13,525) (41,549)
Decrease/ (increase) in
holding gains 1,919 5,138 4,583
Exchange differences (95) (98) (35)
Interest income (49) (40) (81)
Interest received 49 40 81
Investment income (2,083) (495) (2,340)
Dividends received 2,083 495 2,340
Finance costs 852 841 1,714
Decrease/ (increase) in
other receivables 103 (6) (2)
(Decrease)/ increase in
other payables (676) 655 999
------------------------------------- -------------- -------------- -------------
Net cash outflow from operating
activities (1,861) (2,516) (2,259)
------------------------------------- -------------- -------------- -------------
Investing activities
Purchases of investments (28,019) (40,528) (71,909)
Sales of investments 23,216 29,306 80,261
Net cash (outflow)/ inflow
from investing activities (4,803) (11,222) 8,352
------------------------------------- -------------- -------------- -------------
Financing activities
Drawdown of bank loans, 4,000 - -
net of costs
Arrangement cost from issue (1,203) - -
of loan facilities
Net movement in loan facilities (4,457) - -
Interest paid (967) (743) (1,310)
Equity dividends paid (5,346) (5,264) (10,544)
------------------------------------- -------------- -------------- -------------
Net cash outflow from financing
activities (7,973) (6,007) (11,854)
------------------------------------- -------------- -------------- -------------
Net decrease in cash and
cash equivalents (14,637) (19,745) (5,761)
Currency (losses)/gains (5) (3) 331
------------------------------------- -------------- -------------- -------------
Net decrease in cash and
cash equivalents (14,462) (19,748) (5,430)
Opening cash and cash equivalents 21,335 26,765 26,765
------------------------------------- -------------- -------------- -------------
Closing cash and cash equivalents 6,693 7,017 21,335
------------------------------------- -------------- -------------- -------------
Statement of Principal Risks and Uncertainties
The Directors believe that the principal risks and uncertainties
faced by the Company include investment, strategic, external,
regulatory, operational, financial and funding. The Company is also
exposed to risks in relation to its financial instruments. These
risks, and the way in which they are managed, are described in more
detail under the heading Principal Risks and Uncertainties and Risk
Management within the Business Model, Strategy and Policies Section
in the Annual Report for the year ended 31 December 2018. The
Company's principal risks and uncertainties have not changed
materially since the date of that report and are not expected to
change materially for the remaining six months of the Company's
financial year.
Directors' Statement of Responsibilities in Respect of the Half
Yearly Financial Report
In accordance with Chapter 4 of the Disclosure Guidance and
Transparency Rules, the Directors confirm that to the best of their
knowledge:
-- the condensed set of financial statements has been prepared
in accordance with applicable International
Financial Reporting Standards on a going concern basis, and
gives a true and fair view of the assets, liabilities, financial
position and net return of the Company;
-- the half-yearly report includes a fair review of the
development and performance of the Company and
important events that have occurred during the first six months
of the financial year and their impact on the
financial statements;
-- the Directors' Statement of Principal Risks and Uncertainties
shown above is a fair review of the principal risks and
uncertainties for the remainder of the financial year; and
-- the half-yearly report includes a fair review of the related
party transactions that have taken place in the first six months of
the financial year.
On behalf of the Board
Mark Tennant
Chairman
Notes (unaudited)
1. The condensed company financial statements have been prepared
on a going concern basis in accordance with International Financial
Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting'
and the accounting policies set out in the statutory accounts for
the year ended 31 December 2018. The condensed financial statements
do not include all of the information and disclosures required for
a complete set of IFRS financial statements and should be read in
conjunction with the financial statements for the year ended 31
December 2018, which were prepared under full IFRS
requirements.
During the year to 31 December 2018, the management fee and bank
loan interest were allocated 75 per cent to capital and 25 per cent
to revenue. In accordance with the Board's expected long-term
splits of returns in the form of capital gains and income, with
effect from 1 January 2019 the allocation basis has been revised to
90 per cent to capital and 10 per cent to revenue.
2. Earnings for the six months to 30 June 2019 should not be
taken as a guide to the results for the year to 31 December
2019.
3. Investment management fee:
Six months to 30 Six months to 30 Year ended 31 December
June 2019 June 2018 (unaudited) 2018 (audited)
(unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
management
fee - basic fee 138 1,244 1,382 320 961 1,281 660 1,980 2,640
Investment
management
fee - performance
fee - 1,624 1,624 - 2,032 2,032 - 2,277 2,277
138 2,868 3,006 320 2,993 3,313 660 4,257 4,917
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
4. Finance costs:
Six months to 30 Six months to 30 Year ended 31 December
June 2019 June 2018 (unaudited) 2018 (audited)
(unaudited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Interest payable
on bank loans 85 767 852 210 631 841 428 1,286 1,714
5. The return per Ordinary Share is based on a net profit on
ordinary activities after taxation of GBP6,647,000 (30 June 2018 -
GBP4,479,000; 31 December 2018 - GBP32,031,000) and on 73,941,429
(30 June 2018 -73,941,429; 31 December 2018 -73,941,429) shares,
being the weighted average number of Ordinary Shares in issue
during the period.
6. The net asset value per Ordinary Share is based on net assets
at the period end of GBP286,932,000 (30 June 2018 - GBP263,359,000;
31 December 2018 - GBP285,631,000) and on 73,941,429 (30 June 2018
- 73,941,429; 31 December 2018 - 73,941,429) shares, being the
number of Ordinary Shares in issue at the period end.
7. The fair value measurements for financial assets and
liabilities are categorised into different levels in the fair value
hierarchy based on inputs to valuation techniques used. The
different levels are defined as follows:
Level 1 reflects financial instruments quoted in an active
market.
Level 2 reflects financial instruments whose fair value is
evidenced by comparison with other observable current market
transactions in the same instrument or based on a valuation
technique whose variables includes only data from observable
markets.
Level 3 reflects financial instruments whose fair value is
determined in whole or in part using a valuation technique based on
assumptions that are not supported by prices from observable market
transactions in the same instrument and not based on available
observable market data.
Level Level Level Total
1 2 3
GBP'000 GBP'000 GBP'000 GBP'000
----------------------------- -------- ----------- -------- -----------
30 June 2019
Financial assets 503 - 308,234 308,737
Investments
Financial liabilities
Interest-bearing bank loan - (22,394) - (22,394)
30 June 2018
Financial assets 800 - 285,552 286,352
Investments
Financial liabilities
Interest-bearing bank loan - (26,539) - (26,539)
31 December 2018
Financial assets
Investments 629 - 294,613 295,242
Financial liabilities
Interest-bearing bank loan - (26,932) - (26,932)
There were no transfers between levels in the fair value
hierarchy in the period ended 30 June 2019. Transfers between
levels of the fair value hierarchy are deemed to have occurred at
the date of the event that caused the transfer.
Valuation techniques
Quoted fixed asset investments held are valued at bid prices
which equate to their fair values. When fair values of publicly
traded equities are based on quoted market prices in an active
market without any adjustments, the investments are included within
Level 1 of the hierarchy. The Company invests primarily in private
equity funds and co-investments via limited partnerships or similar
fund structures. Such vehicles are mostly unquoted and in turn
invest in unquoted securities. The fair value of a holding is based
on the Company's share of the total net asset value of the fund or
share of the valuation of the co-investment calculated by the lead
private equity manager on a quarterly basis. The lead private
equity manager derives the net asset value of a fund from the fair
value of underlying investments. The fair value of these underlying
investments and the Company's co-investments is calculated using
methodology which is consistent with the International Private
Equity and Venture Capital Valuation Guidelines ('IPEG'). In
accordance with IPEG these investments are generally valued using
an appropriate multiple of maintainable earnings, which has been
derived from comparable multiples of quoted companies or recent
transactions. The BMO private equity team has access to the
underlying valuations used by the lead private equity managers
including multiples and any adjustments. The BMO private equity
team generally values the Company's holdings in line with the lead
managers but may make adjustments where they do not believe the
underlying managers' valuations represent fair value. On a
quarterly basis, the BMO private equity team present the valuations
to the Board. This includes a discussion of the major assumptions
used in the valuations, which focuses on significant investments
and significant changes in the fair value of investments. If
considered appropriate, the Board will approve the valuations.
The interest-bearing bank loan is recognised in the Balance
Sheet at amortised cost in accordance with IFRS. The fair value of
the loan is based on indicative break costs. The fair values of all
of the Company's other financial assets and liabilities are not
materially different from their carrying values in the balance
sheet.
Significant unobservable inputs for Level 3 valuations
The Company's unlisted investments are all classified as Level 3
investments. The fair values of the unlisted investments have been
determined principally by reference to earnings multiples, with
adjustments made as appropriate to reflect matters such as the
sizes of the holdings and liquidity. The weighted average earnings
multiple for the portfolio as at 30 June 2019 was 8.9 times EBITDA
(Earnings Before Interest, Tax, Depreciation and Amortisation) (30
June 2018: 8.7 times EBITDA; 31 December 2018: 8.9 times
EBITDA).
The significant unobservable input used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis are shown
below:
Period ended Input Sensitivity Effect on
used* fair value
GBP'000
-------------- --------------------------- ------------ ------------
Weighted average earnings
30 June 2019 multiple 1x 49,796
Weighted average earnings
30 June 2018 multiple 1x 52,064
31 December Weighted average earnings
2018 multiple 1x 47,260
-------------- --------------------------- ------------ ------------
* The sensitivity analysis refers to an amount added or deducted
from the input and the effect this has on the fair value.
The fair value of the Company's unlisted investments are
sensitive to changes in the assumed earnings multiples. The
managers of the underlying funds assume an earnings multiple for
each holding. An increase in the weighted average earnings multiple
would lead to an increase in the fair value of the investment
portfolio and a decrease in the multiple would lead to a decrease
in the fair value.
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and the end of the period:
30 June 30 June 31 December
2019 2018 2018
GBP'000 GBP'000 GBP'000
-------------------------------- --------- --------- ------------
Balance at beginning of period 294,613 265,580 265,580
Purchases 28,019 40,528 71,794
Sales (23,216) (29,099) (80,054)
Gains on disposal 10,611 13,525 41,549
Increase in holding losses (1,793) (4,982) (4,256)
-------------------------------- --------- --------- ------------
Balance at end of period 308,234 285,552 294,613
-------------------------------- --------- --------- ------------
8. In assessing the going concern basis of accounting the
Directors have had regard to the guidance issued by the Financial
Reporting Council. They have considered the current cash position
of the Company, the availability of the Company's loan facility and
compliance with its covenants. They have also considered forecast
cash flows, especially those relating to capital commitments and
realisations.
As at 30 June 2019, the Company had outstanding undrawn
commitments of GBP111.9 million. Of this amount, approximately
GBP16.4 million is to funds where the investment period has
expired, and the Manager would expect very little of this to be
drawn. Of the outstanding undrawn commitments remaining within
their investment periods, the Manager would expect that a
significant amount will not be drawn before these periods
expire.
Based on this information the Directors believe the Company has
the ability to meet its financial obligations as they fall due for
a period of at least twelve months from the date of approval of the
accounts. Accordingly, the accounts have been prepared on a going
concern basis.
9. These are not statutory accounts in terms of Section 434 of
the Companies Act 2006 and have not been audited or reviewed by the
Company's auditors. The information for the year ended 31 December
2018 has been extracted from the latest published financial
statements which received an unqualified audit report and have been
filed with the Registrar of Companies. No statutory accounts in
respect of any period after 31 December 2018 have been reported on
by the Company's auditors or delivered to the Registrar of
Companies. The Half-Year Report is available at the Company's
website address, www.bmoprivateequitytrust.com.
For more information, please contact:
Hamish Mair (Fund Manager) 0131 718 1184
hamish.mair@bmogam.com
Scott McEllen (Company Secretary) 0131 718 1137
scott.mcellen@bmogam.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR BLGDIGDDBGCD
(END) Dow Jones Newswires
August 23, 2019 02:00 ET (06:00 GMT)
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