TIDMBPET
RNS Number : 5355N
BMO Private Equity Trust PLC
21 May 2020
To: Stock Exchange For immediate release:
21 May 2020
BMO Private Equity Trust PLC
Quarterly results for the three months to 31 March 2020
(unaudited)
-- NAV total return per Ordinary Share for the three-month
period ended 31 March 2020 of (0.5) per cent.
-- NAV of 405.63p per Ordinary Share.
-- Share price total return for the three months of (23.1) per cent for the Ordinary Shares.
-- Quarterly dividend of 3.99p per Ordinary Share.
Introduction
As at 31 March 2020, the net assets of the Company were GBP299.9
million, giving a Net Asset Value ("NAV") per share of 405.63p,
which taking into account the dividend of 3.87p paid on 31 January
2020, gives a decrease of 0.5 per cent over the quarter. At 31
March 2020 the Company had net debt of GBP48.6 million. Outstanding
undrawn commitments were GBP145.9 million, including GBP15 million
to funds where the investment period has expired.
It is worth noting that this valuation is mainly comprised of
valuations at 31 December 2019 updated for subsequent cashflows.
Only a minority of valuations for 31 March 2020 have been received
at the time of preparation of the valuation. The effects of the
Coronavirus (COVID-19) on company valuations will take some time to
be fully reflected. 19 per cent of the portfolio by value has been
valued based upon 31 March 2020 valuations and of these the
weighted average decrease in NAV is approximately 7 per cent. The
funds element of this was down by 13.4 per cent and the
co-investment element by 3.8 per cent. At this stage it is not
possible to be sure that this is a fully representative sample but
there is no evidence of any subsequent deterioration. By the June
valuation we should have all the March reports and some of the June
reports and this will give a better, although still incomplete,
view of the impact on the Company's portfolio.
In line with the Company's policy to pay dividends quarterly and
in accordance with its published calculation basis, a dividend of
3.92p per share was paid on 30 April 2020 and a further dividend of
3.99p per share will be paid on 31 July 2020 to shareholders on the
register on 10 July 2020 with an ex-dividend date of 9 July 2020.
Please note that this dividend calculation incorporates the
Company's audited NAV for the year ended 31 December 2019 announced
to the market on 15 April 2020.
New Investments
During the first quarter two new commitments to funds were made.
EUR6.0 million has been committed to Poland focused mid-market
buyout fund Avallon MBO III. EUR5.0 million has been committed to
Montefiore V, a France based mid-market buyout fund with an
emphasis on the services sector. Both of these involved backing
management teams that we have backed successfully before. There
were no further new commitments to funds or co-investments from
January onwards. Our approach from here is to be highly cautious
until the outcome of the COVID-19 crisis is clearer and the timing
of recovery is more easily discernible.
The funds in our portfolio have made new investments during the
first quarter. The more significant individual investments are
diverse by sector and geography. Avallon MBO III's first investment
is in Clovin (washing powder) and GBP0.8 million was called for
this. GBP0.7 million has been invested by Czech Republic focused
fund ARX IV in TES Vestin (components for electric motors and
machines). GBP0.7 million has been invested by Nordic fund Summa II
in Olink (protein analysis technology) and Infobric ( access and
energy control solutions) . In the co-investment portfolio there
were some calls for add-ons or re-financings. Our US based
co-investment in electric motor components company Sigma, called
GBP1.3 million for the acquisition of Tooling Dynamics ( metal
stamping and processing company) . There was a capital call of
GBP0.7 million by UK based pet shop chain Jollyes. Our
co-investment in US based restaurant chain Rosa Mexicano was
refinanced with a further investment of GBP0.5 million.
In total the combination of drawdowns from funds and
co-investments amounted to GBP11.7 million in the first
quarter.
Realisations
The largest realisation was the previously announced exit of
Nordic insurance services company Recover Nordic which has been
sold by Agilitas to EQT. The proceeds are being paid in two stages
with the first amount of GBP4.3 million received during the
quarter. The remainder of the proceeds (GBP3.8 million) is expected
imminently. The overall return is 3.7x cost and IRR of 24 per cent.
There were a number of distributions from our fund's portfolio.
Corpfin IV returned GBP1.5 million, much of which related to the
sale of medical equipment distributor Palex which has been sold to
Ergon, achieving an excellent 3.8x cost and 50 per cent IRR. Capvis
III returned GBP0.8 million from the exit of medical OEM supplier
Ondal which has been sold to IK Investment Partners delivering 2.0x
cost and 10 per cent IRR. DBAG V completed its sale of its holding
in packing and process technology company Romaco returning GBP0.4
million which represented 2.5x cost and 16 per cent IRR. In the US
Graycliff Private Equity Partners III has had two exits. GBP0.6
million came in from the sale of electronic systems supplier 901D,
representing an excellent 6.1x cost and 76 per cent IRR. GBP0.6
million was also returned from the exit of logistics and
installation services company NAL Holdings. The total proceeds of
realisations in the first quarter was GBP9.7 million.
Valuation Changes
The largest single influence on valuations this quarter was the
move in currencies with Sterling's relative weakness adding
approximately GBP6.0 million to the valuation after accounting for
the Euro denomination of the Company's debt. There were a number of
uplifts in the co-investment portfolio including Sigma (+GBP2.0
million), TWMA (+GBP0.5 million), CETA (+0.4 million) and Coretrax
(+GBP0.3 million). In each case this reflects good trading and
progress made by 31 March 2020. In the fund's portfolio Life
Science Partners III was up by GBP0.2 million. There were,
unsurprisingly, a number of downgrades. The largest of these was
for Accuvein (-GBP3.2 million) where the postponement of the
anticipated exit and a requirement for new funding has caused this
adjustment. The overall outlook for the company remains promising.
Our large holding in oil services group Ashtead is down by GBP0.7
million and other co-investments such as Avalon (-GBP0.3 million)
and Babington (-GBP0.3 million) are also down.
In addition, there were a number of downward adjustments across
a range of funds internationally. Collectively this gave a marginal
overall decline in the valuation. As noted above this valuation
does not yet fully reflect the impact of the COVID-19 which will
take time to feed through into trading and valuations of the
portfolio companies.
Financing
The Company's net debt of GBP48.6 million at 31 March 2020 gives
gearing of 13.9%. The Company has just under half of its revolving
credit facility available to meet any difference between the
proceeds from realisations and the combined drawdowns for
co-investments and from funds. It is expected that for the next few
months there will be a sharp fall-off in both new investments and
in exits. There are likely to be a series of drawdowns to support
companies with re-financings. We have conducted a detailed review
of our portfolio in conjunction with our investment partners
identifying those companies which expect to have a requirement for
fresh equity. Our assessment is that somewhat fewer than a quarter
of portfolio companies will be in this situation and that the
equity required to support them will in most cases be a small
proportion of the invested capital per company. The Company is well
placed to meet these requirements as they arise. For all companies
it is a serious situation with nearly all of them facing
considerable challenges due to the lockdowns internationally. Most
companies will be able to cope with some months of this upheaval. A
small number are in jeopardy. All of them are receiving intensive
attention from their private equity investors.
Outlook
The overwhelming concern of investors and investee companies
alike is the extent of the impact of COVID-19 on the value and
prospects of portfolio companies. Our portfolio contains over 30
direct holdings in companies and, through its portfolio of over 100
funds, over 400 additional underlying companies. These companies
collectively cover many countries and industrial sectors with no
one area being significantly over-represented. The portfolio's
diversity means that there are literally hundreds of specific
examples of the impact which we could retell in a blizzard of data.
The nearly universal feature is that the lockdowns have radically
altered plans and budgets for 2020 with the great majority
adversely affected. Generalisations are potentially misleading,
however our portfolio companies that are involved in healthcare or
software are the least adversely affected. Those involved in what
can broadly be described as retail, leisure and transport are the
most badly affected and industrial and services companies which
operate business to business are somewhere between the two. Within
these categories there are companies that do not conform. It is
also clear that the relative resilience of companies is likely to
alter as the lockdown is either extended or lifted in different
countries and for different sectors. The various government support
schemes have been actively used by our portfolio companies and
their private equity managers, but a significant proportion of
companies are not eligible under the stringent rules on, for
example, state aid. The first port of call for aid is, quite
rightly, the companies' shareholders. Private equity as a form of
investment management is distinguished by its practitioners being
much more than simple providers of appropriately priced capital.
The provision of expertise above and beyond this through
strategic and operational advice has long been a hallmark. As
has the alignment of interest between the tiers of ownership and
management through incentives which means that the problems faced
by companies and their management teams are very definitely our
problems as well. It is our assessment based on numerous
interactions over the last few months that the private equity
sector is tackling this unprecedented threat with energetic
resourcefulness and that together with similarly motivated company
management they are doing their best to mitigate and adapt to the
situation. Accordingly, our broad portfolio stands a fair chance of
coming through the 'valley' later this year largely intact. There
could also be value opportunities to be taken and we will keep a
lookout for these.
Hamish Mair
Investment Manager
BMO Investment Business Limited
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
three months ended 31 March 2020 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ----------
Income
Gains on investments held at fair value - 1,897 1,897
Exchange losses - (1,982) (1,982)
Investment income 177 - 177
Other income 6 - 6
-------------------------------------------- --------- --------- ----------
Total income 183 (85) 98
-------------------------------------------- --------- --------- ----------
Expenditure
Investment management fee - basic fee (72) (649) (721)
Investment management fee - performance - - -
fee
Other expenses (222) - (222)
-------------------------------------------- --------- --------- ----------
Total expenditure (294) (649) (943)
-------------------------------------------- --------- --------- ----------
Loss before finance costs and taxation (111) (734) (845)
Finance costs (64) (578) (642)
-------------------------------------------- --------- --------- ----------
Loss before taxation (175) (1,312) (1,487)
Taxation - - -
Loss for period/total comprehensive income (175) (1,312) (1,487)
Return per Ordinary Share (0.24)p (1.77)p (2.01)p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
three months ended 31 March 2019 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- -----------
Income
Losses on investments held at fair value - (1,672) (1,672)
Exchange gains - 1,060 1,060
Investment income 634 - 634
Other income 31 - 31
---------------------------------------------- --------- --------- -----------
Total income 665 (612) 53
---------------------------------------------- --------- --------- -----------
Expenditure
Investment management fee - basic fee (68) (619) (687)
Investment management fee - performance - - -
fee
Other expenses (208) - (208)
---------------------------------------------- --------- --------- -----------
Total expenditure (276) (619) (895)
---------------------------------------------- --------- --------- -----------
Profit/(loss) before finance costs and
taxation 389 (1,231) (842)
Finance costs (41) (373) (414)
---------------------------------------------- --------- --------- -----------
Profit/(loss) before taxation 348 (1,604) (1,256)
Taxation (66) 66 -
Profit/(loss) for period/total comprehensive
income 282 (1,538) (1,256)
Return per Ordinary Share 0.38p (2.08)p (1.70)p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
year ended 31 December 2019 (audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 30,687 30,687
Exchange gains - 2,352 2,352
Investment income 3,788 - 3,788
Other income 63 - 63
-------------------------------------------- --------- --------- ---------
Total income 3,851 33,039 36,890
-------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (279) (2,509) (2,788)
Investment management fee - performance
fee - (1,878) (1,878)
Other expenses (844) - (844)
-------------------------------------------- --------- --------- ---------
Total expenditure (1,123) (4,387) (5,510)
-------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 2,728 28,652 31,380
Finance costs (181) (1,632) (1,813)
-------------------------------------------- --------- --------- ---------
Profit before taxation 2,547 27,020 29,567
Taxation - - -
Profit for year/total comprehensive income 2,547 27,020 29,567
Return per Ordinary Share 3.45p 36.54p 39.99p
BMO PRIVATE EQUITY TRUST PLC
Balance Sheet
As at 31 As at 31 As at 31 December
March 2020 March 2019 2019
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------------
Non-current assets
Investments at fair value through
profit or loss 352,588 296,830 348,644
--------------------------------------- ------------ ------------ ------------------
Current assets
Other receivables 42 34 26
Cash and cash equivalents 5,673 14,789 6,509
--------------------------------------- ------------ ------------ ------------------
5,715 14,823 6,535
Current liabilities
Other payables (4,130) (4,126) (3,038)
Interest-bearing bank loan (33,173) (25,799) (27,794)
--------------------------------------- ------------ ------------ ------------------
(37,303) (29,925) (30,832)
Net current liabilities (31,588) (15,102) (24,297)
Total assets less current liabilities 321,000 281,728 324,347
--------------------------------------- ------------ ------------ ------------------
Non-current liabilities
Interest-bearing bank loan (21,072) - (20,070)
--------------------------------------- ------------ ------------ ------------------
Net assets 299,928 281,728 304,277
--------------------------------------- ------------ ------------ ------------------
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 248,884 230,684 253,233
Shareholders' funds 299,928 281,728 304,277
--------------------------------------- ------------ ------------ ------------------
Net asset value per Ordinary Share 405.63p 381.01p 411.51p
BMO PRIVATE EQUITY TRUST PLC
Reconciliation of Movements in Shareholders' Funds
Three months Three months Year ended
ended 31 March ended 31 31 December
2020 March 2019 2019
(unaudited) (unaudited) (audited)
------------------------------------ ---------------- ------------- -------------
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 304,277 285,631 285,631
(Loss)/profit for the period/total
comprehensive income (1,487) (1,256) 29,567
Dividends paid (2,862) (2,647) (10,921)
------------------------------------ ---------------- ------------- -------------
Closing shareholders' funds 299,928 281,728 304,277
------------------------------------ ---------------- ------------- -------------
Notes (unaudited)
1. The unaudited quarterly results have been prepared on the
basis of the accounting policies set out in the statutory accounts
of the Company for the year ended 31 December 2019. Earnings for
the three months to 31 March 2020 should not be taken as a guide to
the results for the year to 31 December 2020.
2. Investment management fee:
Three months ended Three months ended Year ended 31 December
31 March 2020 31 March 2019 2019
(unaudited) (unaudited) (audited)
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 72 649 721 68 619 687 279 2,509 2,788
Investment
management
fee - performance
fee - - - - - - - 1,878 1,878
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
72 649 721 68 619 687 279 4,387 4,666
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3. Finance costs:
Three months ended Three months ended Year ended 31 December
31 March 2020 31 March 2019 2019
(unaudited) (unaudited) (audited)
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 64 578 642 41 373 414 181 1,632 1,813
4. Returns and net asset values
Three months ended Three months Year ended 31
31 March 2020 ended 31 March December 2019
2019
(unaudited) (unaudited) (audited)
The returns and net asset
values per share are based
on the following figures:
Revenue Return (GBP175,000) GBP282,000 GBP2,547,000
Capital Return (GBP1,312,000) (GBP1,538,000) GBP27,020,000
Net assets attributable GBP299,928,000 GBP281,728,000 GBP304,277,000
to shareholders
Number of shares in issue
during the year 73,941,429 73,941,429 73,941,429
Weighted average number
of shares in issue during
the year 73,941,429 73,941,429 73,941,429
5. The financial information for the three months ended 31 March
2020, which has not been audited or reviewed by the Company's
auditor, comprises non-statutory accounts within the meaning of
Section 434 of the Companies Act 2006. Statutory accounts for the
year ended 31 December 2019, on which the auditor issued an
unqualified report, will be lodged shortly with the Registrar of
Companies. The quarterly report will be available shortly on the
Company's website www.bmoprivateequitytrust.com
Legal Entity Identifier: 2138009FW98WZFCGRN66
For more information, please contact:
Hamish Mair (Investment Manager) 0131 718 1184
Scott McEllen (Company Secretary) 0131 718 1137
hamish.mair@bmogam.com / scott.mcellen@bmogam.com
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END
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