TIDMAPEO
RNS Number : 4174O
abrdn Private Equity Opp Trst plc
31 January 2023
abrdn Private Equity Opportunities Trust plc
Legal Entity Identifier (LEI): 2138004MK7VPTZ99EV13
ANNUAL FINANCIAL REPORT FOR THE YEARED 30 SEPTEMBER 2022
FINANCIAL HIGHLIGHTS
As at As at
30 September 30 September
2022 2021
Net Asset Value Total Return(*+) 14.1% 37.9%
------------------------------------- ------------- -------------
Share Price Total Return(*+) -15.1% 60.6%
------------------------------------- ------------- -------------
FTSE All - Share Index Total Return -4.0% 27.9%
------------------------------------- ------------- -------------
Net Assets GBP1,158.1m GBP1,036.0m
------------------------------------- ------------- -------------
Share Price 410.0p 498.0p
------------------------------------- ------------- -------------
Expense Ratio(*+) 1.06% 1.10%
------------------------------------- ------------- -------------
(*) Considered to be an Alternative Performance Measure.
(+) A Key Performance Indicator by which the performance of the
Manager is measured by the Board.
HIGHLIGHTS TO 30 SEPTEMBER 2022
-- NAV Performance - APEO has shown strong annual Net Asset
Value ("NAV") growth in spite of the difficult backdrop in both the
global economy and financial markets. NAV total return ("NAV TR")
for the year to 30 September 2022 was 14.1% versus -4.0% for the
FTSE All-Share Index. The valuation of the underlying portfolio
increased by 10.5% during the period (excluding FX).
-- Share Price Performance - The deterioration in public market
sentiment during the year led to share price pressures across the
sector during 2022. In that context, APEO's share price total
return was -15.1% during the year to 30 September 2022 and
therefore underperformed the -4.0% total return from the FTSE
All-Share, APEO's comparator index.
-- Investment Activity - APEO made twelve new primary
investments, nine new direct co-investments and two new secondary
investments during the year. Direct co-investment has continued to
grow as a proportion of the portfolio and has now reached a
portfolio of 22 underlying companies and 19.1% of NAV.
-- Realisations - The portfolio generated record levels of
realisations (distributions and secondary sales) during the year
under review, with distributions of GBP210.2 million (30 September
2021: GBP197.6 million). In addition, APEO received an additional
GBP15.7 million (2021: GBP1.1 million) from proceeds from secondary
sales relating to two fund positions.
-- Outstanding Commitments - Outstanding commitments at the
year-end amounted to GBP678.9 million (2021: GBP557.1 million). The
overcommitment ratio of 42.8% at year-end (2021: 32.5%) was at the
lower end of APEO's target range (30-75%).
-- Balance Sheet - APEO had cash and cash equivalents of GBP30.3
million (2021: GBP29.7 million) at year-end. APEO also had GBP138.0
million remaining undrawn on its GBP200.0 million revolving credit
facility at 30 September 2022 (2021: GBP200.0 million undrawn).
Following year-end, the revolving credit facility was increased to
GBP300.0 million in size and extended in duration by a year (to
December 2025).
TEN YEAR FINANCIAL RECORD
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Per share
data
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
NAV
(diluted)
(p)
^ 243.4 257.4 281.6 346.4 389.6 430.2 461.9 501.0 673.8 753.2
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Share price
(p) 198.0 230.0 214.0 267.3 341.5 345.5 352.0 320.0 498.0 410.0
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Discount to
diluted(^)
NAV per
Share
(%)(*+) (18.6) (10.6) (24.0) (22.8) (12.3) (19.7) (23.8) (36.1) (26.1) (45.6)
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Dividend per
Share
(p) 5.00 5.00 5.25 5.40 12.00 12.40 12.80 13.20 13.60 14.40
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Expense
Ratio(*+1)
(%) 0.99 0.96 0.98 0.99 1.14(2) 1.10 1.09 1.10 1.10 1.06
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Returns data
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
NAV Total
Return(*+)
(%) 9.1 7.7 11.9 24.8 14.9 13.3 10.5 11.7 37.9 14.1
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Total
Shareholder
Return(*+)
(%) 23.4 19.1 (4.0) 27.9 31.9 5.8 5.7 (4.6) 60.6 (15.1)
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Portfolio
data
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Net Assets
(GBPm) 401.2 409.1 438.7 532.6 599.0 661.4 710.1 770.3 1,036.0 1,158.1
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Top 10
Managers as
a % of net
assets(3) 68.4 65.0 65.2 65.0 58.9 63.6 67.9 67.8 62.9 65.1
============= ======== ========= ======== ======== ======== ========= =========== ======== ========== ===========
Top 10
investments
as a % net
assets 51.7 52.9 48.6 45.9 47.7 48.4 53.9 48.3 40.3 35.6
------------- -------- --------- -------- -------- -------- --------- ----------- -------- ---------- -----------
Source: The Manager & Refinitiv
1 For further information on the calculation of the expense ratio,
as well as the ongoing charges of the Company, please refer to the
Alternative Performance Measures.
2The incentive fee arrangement ended on 30 September 2016. Following
the end of the incentive fee period, a single management fee of 0.95%
per annum of the NAV of the Company replaced the previous management
and incentive fees.
3 The top 10 managers as a % of net assets do not strictly represent
the current core private equity managers of the APEO portfolio.
* Considered to be an Alternative Performance Measure.
+ A Key Performance Indication by which the performance of the Manager
is measured by the Board.
^ There are no diluting elements to the net asset value per equity
share calculation in 2022.
An introduction to abrdn Private Equity Opportunities Trust plc
(the "Company" or "APEO")
- A diversified portfolio of private equity funds and
co-investments principally focused on the European mid-market.
- APEO partners with some of the leading private equity firms in
Europe, through funds and co-investments. Our 12 core European
private equity relationships represent around 59% of portfolio
NAV.
- Through funds and co-investments, these private equity firms
then invest into market-leading private companies, some of which
are household names, but many of which are not widely known.
- This approach, developed over 21 years, has created a
portfolio that provides underlying exposure to over 650 underlying
private companies via funds and co-investments, well-balanced
across sectors and vintages.
% Exposure as at
Sector 30 September
2022
Information technology 20
Healthcare 20
Industrials 18
Consumer discretionary 14
Consumer staples 12
Financials 11
Materials 4
Energy 1
Based on the latest available information from underlying
managers. Figures represent % of total value of underlying private
company exposure. This excludes any underlying funds and
co-investments held through the Company portfolio.
Our Pillars - The key pillars that have guided our business for
more than 21 years and differentiate us in our industry
Access - APEO gives investors access to high quality private
equity managers and private companies
Private equity can be a challenging asset class to access and
navigate.
Our long-term market presence and local networks provide us with
insights and relationships that, we believe, unlock some of the
best opportunities for investment in private equity funds and
co-investments, alongside our core private equity managers. We work
hard to find and foster these relationships so we become strong and
reliable partners to these core managers. This enables us to build
and maintain a diversified and high quality portfolio of underlying
private companies.
As an investment trust listed on the London Stock Exchange, APEO
offers shareholders an opportunity to invest in these private
equity funds and co-investments for as little as the price of one
share. As APEO's shares are listed on the London Stock Exchange,
they provide daily tradable access to an asset class which is
normally relatively illiquid.
Expertise - The Investment Management team has specialist
knowledge in European markets
The Investment Manager has a large and well established team of
investment professionals. They have managed APEO for over 21 years,
since its inception, and have generated consistent performance over
that time.
The European private equity market is a complex investment
arena, with multiple strategies and managers to choose from, not to
mention the different cultural and technical nuances across the
various countries. The Investment Manager's specialist expertise is
a key asset in navigating these complexities and honing in on the
best private equity managers, funds and co-investments for our
shareholders.
Alongside our European focus, we also have exposure to the North
American market through our European managers and selectively
through North American focused funds.
Geography of the Underlying Portfolio as at 30 September
2022
Exposure %
North America 23
United Kingdom 17
Nordics 14
France 13
Germany 12
Benelux 9
Spain 3
Italy 3
Switzerland 1
Based on the latest available information from underlying
managers. Figures represent % of total value of underlying private
company exposure. This excludes any underlying fund and
co-investments held through APEO's portfolio.
Geographic exposure is defined as the geographic region where
underlying portfolio companies are headquartered.
In addition to the above, 4% of underlying portfolio companies
are based in European countries not separately disclosed above,
while 1% are based in countries outside of Europe, excluding North
America.
APEO has no Russian, Ukrainian or Belarussian headquartered
companies. These three countries make up less than 1% of the
underlying company revenues
Focus - the APEO portfolio is focused on one of the most
established and consistently performing parts of the growing
private markets universe
Our objective is to build and manage a carefully selected and
continually evolving portfolio of the best private equity funds and
co-investments available in the European market. We do this by
partnering with 12 core European private equity manager
relationships, a selective approach in a market where there are
thousands of private equity managers to choose from.
Diversification is a well-recognised means of managing
investment risk and we achieve that through a portfolio of around
50 "active" private equity fund investments, that in turn have
exposure to over 650 underlying portfolio companies. But we also
believe it is important to have conviction and to concentrate our
firepower. We do this by selecting and focusing our capital with a
group of a dozen or so core buyout managers and partnering with
them through primary commitments to their funds, providing
liquidity to their investors through secondary transactions and
making direct co-investments alongside them in private
companies.
Consistency - APEO has a history and track record of more than
20 years
We take a rigorous and disciplined approach to investment
analysis that delivers consistent long term investment returns
across market cycles.
Private equity is often perceived to be a risky business, but
our historic track record proves that steady NAV performance and
consistent growth are possible. What's more, stability does not
have to translate into reduced returns; our NAV has grown over ten
times since launch.
STRATEGIC REPORT
INVESTMENT STRATEGY
Investment Objective
The Company's investment objective is to achieve long-term total
returns through holding a diversified portfolio of private equity
funds and direct investments into private companies alongside
private equity managers ("co-investments"), a majority of which
will have a European focus.
Investment Policy
The Company: (i) commits to private equity funds on a primary
basis; (ii) acquires private equity fund interests in the secondary
market; and (iii) makes direct investments into private companies
via co-investments. Its policy is to maintain a broadly diversified
portfolio by country, industry sector, maturity and number of
underlying investments.
The objective is for the portfolio to comprise around 50
"active" private equity fund investments; this excludes funds that
have recently been raised, but have not yet started investing, and
funds that are close to or being wound up. The Company may also
invest up to 20% of its assets in co-investments.
The Company may also hold direct private equity investments or
quoted securities as a result of distributions in specie from its
portfolio of fund investments. The Company's policy is normally to
dispose of such assets where they are held on an unrestricted
basis.
To maximise the proportion of invested assets, the Company
follows an over-commitment strategy by making commitments which
exceed its uninvested capital. In making such commitments, the
Manager, together with the Board, will take into account the
uninvested capital, the value and timing of expected and projected
cashflows to and from the portfolio and, from time to time, may use
borrowings to meet drawdowns. The Board has agreed that the
over-commitment ratio should sit within the range of 30% to 75%
over the long-term.
The Company's maximum borrowing capacity, defined in its
articles of association, is an amount equal to the aggregate of the
amount paid up on the issued share capital of the Company and the
amount standing to the credit of the reserves of the Company.
However, it is expected that borrowings would not normally exceed
30% of the Company's net assets at the time of drawdown.
The Company's non-sterling currency exposure is principally to
the euro and US dollar. The Company does not seek to hedge this
exposure into sterling, although any borrowings in euros and other
currencies in which the Company is invested would have such a
hedging effect.
Cash held pending investment is invested in short-dated
government bonds, money-market instruments, bank deposits or other
similar investments. Cash held pending investment may also be
invested in other listed investment companies or trusts. The
Company will not invest more than 15% of its total assets in such
listed equities.
The investment limits described above are all measured at the
time of investment.
Portfolio Construction Approach
Investments made by APEO are typically with or alongside private
equity firms with whom the Manager has an established relationship
of more than 10 years.
As at 30 September 2022, APEO directly held 75 separate fund
investments (2021: 64) comprising of primary and secondary fund
interests, as well as 22 co-investments (2021: 13).
Through its portfolio of directly held investments, the Company
indirectly has exposure to a diverse range of underlying private
companies, as well as additional underlying fund of fund and
co-investment interests. At 30 September 2022, APEO's underlying
portfolio included exposure to 655 separate underlying private
companies (2021: 578), 41 underlying fund investments (2021: 36)
and 9 underlying co-investments (2021: 9).
APEO predominantly invests in European mid-market companies.
Around 76% (2021: 79%) of the total value of underlying private
company exposure is invested in European domiciled operating
companies and the Board expects this to remain the case over the
longer term, with a weighting towards North Western Europe. This
has been APEO's
geographic focus since its inception in 2001 and where it has a
strong, long-term track record. However, APEO also selectively
seeks exposure to North American mid-market companies, as a means
to access emerging growth or investment trends that cannot be fully
captured by investing in Europe alone.
APEO has a well-balanced portfolio in terms of non-cyclical and
cyclical exposure. Currently the largest single sector exposure
represents 20% of the total value of underlying private company
exposure(1) (2021: 21%) and it is expected that no single sector
will be more than 30% of the portfolio over the longer term. Over
time, the Manager anticipates a continuation of the recent shift
toward sectors that are experiencing long-term growth (such as
Technology and Healthcare) at the expense of more cyclical sectors,
such as Industrial and Consumer Discretionary.
Environmental, Social and Governance ("ESG") is a strategic
priority for the Board and the Manager. APEO aims to be an active,
long-term responsible investor and ESG is a fundamental component
of APEO's investment process. Further detail on the Manager's
approach to ESG is set out below.
(1) Excludes underlying fund and co-investments indirectly held
through the Company portfolio.
CHAIR'S STATEMENT
Introduction
In my first year as Chair, I am delighted to present APEO's
Annual Report & Accounts for the financial year to 30 September
2022, a year in which the portfolio has delivered a resilient NAV
performance in the face of a challenging backdrop in both the
global economy and financial markets. This performance is credited
to our focused Investment Strategy, the capabilities of our
Investment Manager, and an active Board.
2022 has been a year of some key milestones for APEO. Most
notably, following shareholder approval at the AGM in early March,
the Company changed its name from Standard Life Private Equity
Trust plc to abrdn Private Equity Opportunities Trust plc to align
itself with the Manager's rebrand. And, on the back of a sustained
period of growth for shareholders, APEO was rewarded with a
promotion to the FTSE 250 Index for the first time in its
history.
Of course, I remain mindful that the macroeconomic environment
and financial markets have changed materially in 2022, culminating
in higher borrowing rates and inflationary price pressures. This
will invariably result in a tougher period for both corporate
earnings and the valuation environment in private equity. That
said, APEO has held a focused and consistent strategy for over 21
years, and we continue to take comfort from the quality and
diversified nature of the existing and evolving portfolio.
Investment Performance & Discount
The deterioration in public market sentiment during the year,
including private equity investment trusts, led to share price
pressures across the sector during 2022. Disappointingly, APEO's
share price total return was -15.1% during the year to 30 September
2022 and therefore underperformed the -4.0% total return from the
FTSE All-Share, APEO's comparator index, during the same
period.
In contrast, APEO's NAV performance remained strong during the
year, with NAV per share total return of 14.1%, outperforming the
FTSE All-Share Index. This resilient NAV performance is testament
to APEO's investment and relationship strategy, which has remained
focused on partnering with a relatively small cohort of
high-quality private equity firms, predominately in the European
mid-market.
As a result of the contrast between the share price and NAV
performance during the year, the share price discount to NAV at 30
September 2022 widened to 45.6%. The discount ranged between 11.2%
and 46.7% during the year, and averaged 28.0%, which was slightly
narrower than the 29.9% average of its close peer group.
The Board does not have a stated discount control policy. That
said, the Board and Manager monitor the discount on a regular basis
to ensure that APEO is not an outlier when compared to other
investment companies with a similar investment approach and
shareholder structure. The Board has bought back its own shares in
the past and is seeking shareholder approval to do so again, as we
keep this matter under active and careful consideration. Suffice to
say there is always a balance to consider in terms of buying-back
shares on an accretive discount and preserving cash liquidity for
investment purposes. The Board is also cognisant of APEO's
relatively concentrated shareholder register and, when considering
buybacks, we are mindful of liquidity in the Company's shares,
which we believe is a key long-term focus of our shareholders.
Commitments, Investments & Distributions
The 12 months ended 30 September 2022 was an active year for
investment, continuing the momentum seen in 2021. APEO made
commitments totalling GBP340.3 million (2021: GBP307.1 million). In
line with our investment policy, these commitments were well across
twelve new primary commitments (GBP257.2 million), two new
secondary investments (GBP17.1 million), nine new direct
co-investments (GBP65.7 million), and one follow-on investment in
an existing co-investment. Of particular note is the fact that
direct co-investment has continued to grow as a proportion of the
portfolio and has now reached a portfolio of 22 underlying
companies and 19.1% of portfolio NAV (2021: 13 underlying companies
and 10.5% of portfolio NAV). Outstanding commitments at the year
end amounted to GBP678.9 million (2021: GBP557.1 million).
APEO received GBP210.2 million of distributions (2021: GBP197.6
million) from underlying investments during the year, another
annual record for APEO, exceeding the previous year's record total.
The realised return from the ongoing investment operations of
APEO's core portfolio equated to 2.2 times cost (2021: 2.8 times
cost). In addition, APEO received an additional GBP15.7 million
(2021: GBP1.1 million) from proceeds from secondary sales relating
to two fund positions, meaning that APEO received a total of
GBP225.9 million cash proceeds during the financial year (2021:
GBP198.7 million). The Manager focused on reinvesting distributions
into new investment opportunities during the year, amounting to
total drawdowns of GBP253.6 million (2021: GBP184.2 million).
Dividends
APEO has paid three interim dividends of 3.6 pence per share
and, in December 2022, the Board announced that a fourth interim
dividend of 3.6 pence per share would be paid on 27 January 2023 to
shareholders on the register on
23 December 2022. This will make a total dividend for the year
to 30 September 2022 of 14.4 pence per share. This represents an
increase of 5.9% on the 13.6 pence per share paid for the year to
30 September 2021.
Liquidity and Bank Facility
At the year end, APEO had cash and cash equivalents of GBP30.3
million (2021: GBP29.7 million). APEO also had GBP138.0 million
remaining undrawn (2021: GBP200.0 million undrawn) on its GBP200.0
million revolving credit facility at 30 September 2022.
Following the year-end, the revolving credit facility was
increased to GBP300.0 million and the maturity extended by a year
to December 2025. The larger facility, provided by RBS
International, Société Générale and State Street Bank
International, will provide APEO with additional capacity for new
investments in the months and years ahead.
Environmental, Social & Governance ("ESG")
The Board continues to believe that integrating ESG best
practice into APEO's investment process will help to generate
stronger, more sustainable returns for shareholders over the long
term. Accordingly, the Board monitors the Manager's commitment to
ESG factors closely and encourages it to stay close to the latest
market developments in this area. The majority of our portfolio is
managed by third-party managers and the Board takes comfort from
the Manager's policy to invest only with private equity firms who
the Manager believes are ESG market leaders or have a strong
cultural commitment to improve their ESG credentials.
The Board has encouraged the Manager to continue to raise ESG
standards across the industry and to publicise the work that it has
done in this area. For further detail of the Manager's approach to
ESG, including an ESG case study, is set out below.
Investment Manager
Each year, the Board, through the Management Engagement
Committee, considers whether the continued appointment of the
Manager is in the best interests of shareholders as a whole.
Following its most recent review, the Board considers that the
Manager continues to have suitably qualified personnel and robust
operational processes to deliver APEO's investment objective over
the long term for shareholders.
Board
Christina McComb retired from the Board following the conclusion
of the AGM in March 2022. Christina served on the Board since 2013,
the last 3 years as Chair. On behalf of the Board, I would like to
thank Christina for her considerable contribution to APEO and wish
her well in her future endeavours.
AGM and Manager's Presentation
The Board intends to hold APEO's AGM at the Balmoral Hotel, 1
Princes Street, Edinburgh, EH2 2EQ at 12:30 pm on 22 March 2023.
The meeting will include a presentation by the Manager and will be
followed by lunch. This is a good opportunity for shareholders to
meet the Board and the Manager and the Board encourages you to
attend. The Notice of the Meeting is contained in the Annual
Report.
Outlook
The broader financial markets and the outlook for the global
economy have shifted materially during the year, with the developed
economies of the world moving from a Covid-recovery phase in late
2021 to a much more challenging environment in 2022. Both the Board
and the Manager expect this tough environment to persist in the
short to medium term, which will continue to have an impact on the
performance of APEO as inflationary pressures persist in the
underlying portfolio companies and private equity valuations
continue to experience headwinds.
I have always viewed private equity as a long-term asset class
where new investment decisions are often made with a five-year time
horizon in mind. Whilst the immediate road ahead appears more
uncertain, the governance model of private equity has proved many
times in the past, most notably during the global financial crisis
of 2008-09, that it facilitates nimble and active ownership and
allows underlying businesses to adapt more quickly to changing
market circumstances. Periods of market dislocation have previously
offered up new and different opportunities for investment, which
private equity firms have proved adept at generating and
completing.
A key lesson from past crises is to ensure that you have ample
balance sheet capacity to take advantage of these attractive new
investment opportunities, particularly given distributions from
private equity funds tend to slow down during these periods of
dislocation. In that context, I'd again highlight that, following
the financial year end, APEO increased the size of its revolving
credit facility to GBP300.0 million.
With so much new capital having flowed into private equity in
recent years and some recent dramatic shifts in the shape of
investor portfolios, it is inevitable that investors will look to
re-balance their asset allocations and portfolio weightings over
the coming quarters, which in turn is beginning to fuel activity in
the secondary market - APEO is well placed to take advantage of
opportunities in this part of the market.
APEO has invested for over 21 years, emerging in the aftermath
of the dot-com bubble, through the global financial crisis and the
Covid-19 pandemic. Our strategy has historically worked through the
cycle. I believe that the quality and diversification of the
existing portfolio, and its strong balance sheet, will help to
position APEO well during these challenging market conditions and
will allow APEO to continue to generate attractive long-term
returns to shareholders in the coming years.
Alan Devine
Chair,
30 January 2023
PRINCIPAL RISKS & UNCERTAINITIES
The Board and Audit Committee carry out a regular and robust
review of the risk environment in which APEO operates. The Board
also identifies emerging risks such as a material change in the
geopolitical or macroeconomic environment, or developments in
climate change from an investor attitude or regulatory expectation,
which might affect the APEO's underlying investments.
During the financial year, the outlook for the global economy
changed. The world's developed economies moved from a Covid-19
recovery state to a much more challenging environment as
geopolitical uncertainty impacted equity markets and inflation
impacted the margins of underlying portfolio companies. Private
equity valuations experienced high levels of pressure.
The Board has also discussed the potential impact of climate
change with the Manager. APEO is committed to being an active,
long-term responsible investor and ESG is a fundamental component
of its investment process. The Manager commits APEO's capital with
private equity managers who demonstrate strong adherence to ESG
principles and processes or have a cultural commitment to improve
their ESG credentials. Focus on climate change is part of that
assessment. The private equity industry is still relatively early
in its response to climate change and the Manager is focused on
engaging with its portfolio of private equity managers to help
promote further positive change.
The Board is aware that there are a number of risks which, if
realised, could have a material adverse effect on APEO
and its financial condition, performance and prospects. The
Board monitors APEO's principal and emerging risks
regularly, alongside the Manager, and the operating and control
environment in which APEO operates.
The Board considers its risk appetite in relation to each
principal risk and monitors this on an ongoing basis. Where a risk
is approaching or is outside the tolerance level, the Board will
take action to manage the risk. Currently, the Board considers the
risks to be managed within acceptable levels.
The principal risks faced by APEO relate to the Company's
investment activities and these are set out below.
Risk Definition Tolerance Mitigation / Update
-------------------------------- ---------------------------------- --------- ---------------------------------
Market (increased) a) Pricing risk Medium a) The decline in publicly-listed
APEO is at risk of the economic equities during the year has put
cycle impacting listed financial pressure on private equity
markets and hence potentially valuations. Investments in APEO's
affecting the pricing of portfolio are generally subject
underlying investments and timing to private equity guidelines
of exits. such as IPEV with respect of
b ) Currency risk valuations.
APEO has a material proportion of Private equity market deal
its investments and cash balances activity has declined in 2022 and
in currencies other than this expected to continue into
sterling and is therefore 2023. This will likely extend the
sensitive to movements in foreign timing of some investment exits
exchange rates. and distributions. Subsequent
to the year end, APEO increased
the size of its revolving credit
facility to GBP300.0 million
to help mitigate this risk.
Inflation and interest rate rises
have the potential to impact both
the valuations of the
existing underlying portfolio and
the pricing of new investments in
the future.
Pricing risk is mitigated by APEO
having a diversified portfolio of
fund investments and
co-investments.
b) The Manager monitors APEO's
exposure to foreign currencies
and reports to the Board on
a regular basis. It is not the
APEO's policy to hedge foreign
currency risk. APEO's
non-sterling
currency exposure is primarily to
the euro and the US dollar.
During the year ended 30
September 2022, sterling
depreciated by 2.1% relative to
the euro
(2021: appreciated 5.5%) and
depreciated by 17.2% relative to
the US dollar (2021: appreciated
4.3%).
This movement in the euro and the
US dollar had a net positive
impact on the net assets of
APEO.
================================ ================================== ========= =================================
Liquidity (Unchanged) The risk that APEO is unable to Low APEO manages its liquid
meet short-term financial demands. investments to ensure that
sufficient cash is available to
meet contractual
commitments and also seeks to
have cash available to meet other
short-term needs. Additional
short-term flexibility is
achieved through the use of the
revolving multi-currency loan
facility,
which was extended to GBP300.0
million shortly after the
financial year end.
APEO had cash and cash
equivalents of GBP30.3 million
(2021: GBP29.7 million) as at 30
September
2022.
================================ ================================== ========= =================================
Over-commitment (Unchanged) The risk that APEO is unable to Medium APEO makes commitments to private
settle outstanding commitments to equity funds, which are typically
fund investments. drawn over three to five
years. Hence APEO will tolerate a
degree of over-commitment risk in
order to deliver long-term
investment performance.
In order to mitigate this risk,
the Manager ensures that APEO has
appropriate levels of resources,
whether through resources
available for investment or the
revolving credit facility,
relative
to the levels of overcommitment.
The Manager will also forecast
and assess the maturity of the
underlying portfolio to determine
likely levels of distributions in
the near term.
The Manager will also track the
over-commitment ratio and ensure
that it sits within the range,
agreed with the Board, of 30% to
75% over the long term.
At 30 September 2022 APEO had
GBP678.9 million (2021: GBP557.1
million) of outstanding
commitments,
with GBP69.9 million (2021:
GBP46.7 million) expected not to
be drawn. The over-commitment
ratio was 42.8% (2021: 32.5%).
================================ ================================== ========= =================================
Credit (Unchanged) The exposure to loss from failure Low APEO places funds with authorised
of a counterparty to deliver deposit takers from time to time
securities or cash for and, therefore, is potentially
acquisitions at risk from the failure of such
or disposals of investments or to an institution.
repay deposits. APEO's cash is held by BNP
Paribas Securities Services S.A.,
which is rated 'A+' by S&P Global
Ratings.
The credit quality of the
counterparties is kept under
regular review. Should the credit
quality
or the financial position of
these financial institutions
deteriorate significantly, the
Manager
would move cash balances to other
institutions.
================================ ================================== ========= =================================
Investment selection (Unchanged) The risk that the Manager makes Medium The Manager undertakes detailed
decisions to invest in funds due diligence prior to investing
and/or co-investments that are in, or divesting, any fund
not accretive to APEO's NAV over or co-investment. It has an
the long term. experienced team which monitors
market activity closely. APEO's
management team has
long-established relationships
with the third party fund
managers in the
Company's portfolio which have
been built up over many years.
ESG factors are integrated into
the investment selection process
and the Board and the Manager
believes that will improve
investment decision making and
help to generate stronger, more
sustainable returns.
================================ ================================== ========= =================================
Operational (Unchanged) The risk of loss or a missed Low The Manager's business continuity
opportunity resulting from a plans, and approach to cyber
regulatory failure or a failure security risk, are reviewed
relating to people, processes or on an ongoing basis alongside
systems. those of APEO's key service
providers.
The Board has received reports
from its key service providers
setting out their existing
business
continuity framework. Having
considered these arrangements,
the Board is confident that a
good level of service will be
maintained in the event of an
interruption to business
operations
or other major event, including
another global pandemic.
================================ ================================== ========= =================================
APEO's financial risk management objectives and policies are
contained in note 18 to the financial statements.
Review of performance
An outline of the performance, market background, investment
activity and portfolio during the year under review and the
performance over the longer term, as well as the investment
outlook, are provided in the Highlights, Chair's Statement, and
Investment Manager's Review. Details of APEO's investment
portfolio, the ten largest investments and the top ten underlying
private company investments are shown below.
STAKEHOLDER ENGAGEMENT AND RESPONSIBLE MANAGEMENT
Section 172 Statement
The Board is required to describe how the Directors have
discharged their duties and responsibilities over the course of the
financial year following the guidelines set out in the UK under
section 172 (1) of the Companies Act 2006 (the "s172 Statement").
This Statement provides an explanation of how the Directors have
promoted the success of APEO for the benefit of its shareholders as
a whole, taking into account the likely long-term consequences of
decisions, the need to foster relationships with all stakeholders
and the impact of APEO's operations on the environment.
Stakeholders
APEO is an investment trust and is externally managed, has no
employees, and is overseen by an independent non-executive board of
directors. The Board makes decisions to promote the success of APEO
for the benefit of the shareholders as a whole, with the ultimate
aim of delivering its investment objective to achieve long-term
total returns.
The Directors set APEO's investment mandate, monitor the
performance of all service providers (including the Manager), and
are responsible for reviewing strategy on a regular basis. All this
is done with the aim of preserving and enhancing shareholder value
over the longer term.
The following section discusses how the actions taken by the
Board work towards ensuring that the interests of all stakeholders
are appropriately considered. In line with the FRC Guidance, this
statement focuses on stakeholders that are considered key to APEO's
business and does not therefore cover every one of APEO's
stakeholders.
Shareholders
The Board is committed to maintaining open channels of
communication and to engaging with shareholders. The Board seeks
shareholder feedback in order to ensure that decisions are taken
with the views of shareholders in mind. These shareholder
communications include:
Annual General Meeting
The AGM provides an opportunity for the Directors to engage with
shareholders, answer their questions and meet them informally. At
the AGM there is typically a presentation on APEO's performance and
the future outlook as well as an opportunity to ask questions of
the Manager and Board. The next AGM will take place on 22 March
2023 in Edinburgh and the Board encourages shareholders to attend
the AGM, and for those unable to attend, to lodge their votes by
proxy on all of the resolutions put forward. For more information
on how to lodge proxy votes in advance of the AGM, please see the
Annual Report.
Shareholder Meetings
Unlike trading companies, shareholders in investment companies
often meet representatives of the Manager rather than members of
the Board. Feedback from the Manager's meetings with shareholders
is provided to the Board at every meeting. The Chair, Senior
Independent Director and other members of the Board are also
available to meet with shareholders to understand their views at
any time during the year.
Publications
APEO publishes a full annual report each year that contains a
strategic report, governance section, financial statements and
additional information. The report is available online and in paper
format. APEO also produces a half-yearly report each year. The
purpose of these reports is to provide shareholders with a clear
understanding of APEO's activities, portfolio, financial position
and performance. The Manager also publishes a Monthly Factsheet,
and a Monthly Net Asset Value Statement. The purpose of these
publications is to keep shareholders abreast of APEO's
developments.
Investor Relations and Website
APEO subscribes to the Manager's Investor Relations programme.
APEO's website contains a range of information and includes a full
monthly portfolio listing of APEO's investments as well as podcasts
and presentations by the Manager. Details of financial results, the
investment process and Manager together with APEO announcements and
contact details can be found at: abrdnpeot.co.uk.
Keeping in Touch
The Board encourages shareholder feedback and invites
shareholders to write to the Board at its registered office. The
Board has also set up an email account to encourage shareholders to
write directly to the Board. Shareholders are invited to email any
feedback or questions to the Board at APEOT.Board@abrdn.com. Any
questions received will be replied to by either the Manager or
Board via the Company Secretary.
The Manager
The Manager's performance is critical for APEO to achieve its
investment objective and the Board maintains a close and
constructive working relationship with the Manager. The Board meets
the Manager at formal Board meetings five times per year and more
regularly as necessary. The Board Members also keep in touch with
the Manager informally throughout the year and receive reports and
updates as appropriate. During the year, the Management Engagement
Committee, on behalf of the Board, reviewed the continued
appointment of Manager, and the terms of the Management Agreement,
and believes that the continued appointment of the Manager is in
the best interests of shareholders.
Suppliers
As an investment trust, APEO has outsourced its entire
operations to third party suppliers. The Board is responsible for
selecting the most appropriate outsourced service providers and,
alongside the Investment Manager, monitors their services to ensure
a constructive working relationship. The Board, through the
Investment Manager, maintains regular contact with its key
suppliers, namely the Company Secretary, the Administrator, the
Registrar, the Depositary and the Broker, and receives regular
reporting from them. The Board, via the Management Engagement
Committee, ensures that the arrangements with service providers are
reviewed at least annually. The aim is to ensure that contractual
arrangements remain in line with best practice, services being
offered meet the requirements and needs of APEO and performance is
in line with the expectations of the Board, Manager, and other
relevant stakeholders. The Audit Committee considers the internal
controls at these service providers to ensure they are fit for
purpose.
Debt Providers
On behalf of the Board, the Manager maintains a positive working
relationship with RBS International, Société Générale and State
Street Bank International, the providers of APEO's multi-currency
revolving credit facility, and provides regular updates on business
activity and compliance with its loan covenants.
Investee Funds and Companies
Responsibility for actively monitoring the activities of
investment managers, funds and companies, which make up APEO's
portfolio, has been delegated by the Board to the Manager.
On behalf of the Board and its stakeholders, the Manager invests
in a carefully selected range of private equity managers, built
from years of established relationships and proprietary research.
The Manager assesses all investment opportunities and participates
on the advisory boards of some investments.
The Board is responsible for overseeing the work of the Manager
and this is not limited solely to the investment performance of the
investments. The Board also has regard for environmental (including
climate change), social and governance matters that subsist within
the portfolio companies. Please see the Manager's approach to ESG
below for more details.
Principal Decisions
Pursuant to the Board's aim of promoting APEO's long-term
success, the following principal decisions were taken during the
year:
- The Investment Manager's Review below details the key
investment decisions taken during the year. In the opinion of the
Board, the performance of the investment portfolio is the key
factor in determining the long-term success of APEO. Accordingly,
at each Board meeting the Directors discuss performance in detail
with the Investment Manager. As explained in more detail below,
during the year the Management Engagement Committee decided that
the continuing appointment of the Manager was in the best interests
of shareholders.
- During the year, the Board agreed to increase APEO's
syndicated multi-currency revolving credit facility from GBP200.0
million to GBP300.0 million. The facility, which is provided by RBS
International, Société Générale and State Street Bank
International, was extended in October 2022, subsequent to the year
end. The Board decided to extend the facility in light of the
strong pipeline of investment opportunities in primary funds,
secondaries and co-investments believing that an extended loan
facility would allow the Manager to take advantage of emerging
investment opportunities.
- The level of dividend to be paid to shareholders was carefully
assessed during the financial year. The Board is pleased to have
paid three quarterly dividends of 3.6 pence per share and to have
announced a fourth quarterly dividend payment of 3.6 pence per
share making a total dividend for the year to 30 September 2022 to
14.4 pence per share. This represents a dividend yield of 3.5%,
based on the APEO Share Price at 30 September 2022, and is an
increase of 5.9% on the 13.6 pence per share paid for the year to
30 September 2021.
- Following the Manager's sale of the Standard Life brand the
Phoenix Group in May 2021, the Board agreed to recommend to
shareholders that the Company change its name to abrdn Private
Equity Opportunities Trust plc. Shareholders overwhelmingly voted
in favour of the name change at the AGM in March 2022. The Board
believes that the proposed name change aligns APEO with the
Manager's new brand and comes at an exciting time in APEO's
development.
- As reported in the Annual Report to 30 September 2021, the
Board appointed Alan Devine as Chair on 22 March 2022, following
Christina McComb's retirement from the Board. The Board agreed that
Alan Devine is an experienced Board Member, having served as Senior
Independent Director since 2019 and, has a breadth of experience in
debt markets and private equity backed business.
Board Diversity Policy
The Board's statement on diversity is set out in the Statement
of Corporate Governance in the Annual Report.
At 30 September 2022, there were three male and two female
Directors on the Board.
Modern Slavery Act
Being a company that does not offer goods and services to
customers and has no turnover, the Board considers that APEO is not
within the scope of the Modern Slavery Act 2015. APEO is therefore
not required to make a slavery and human trafficking statement. In
any event, the Board considers APEO's supply chains, dealing
predominantly with professional advisers and service providers in
the financial services industry, to be low risk in relation to this
matter.
Streamlined Energy and Carbon Reporting ("SECR") Statement:
Greenhouse Gas Emissions and Energy Consumption Disclosure
APEO has no employees, premises or operations either as a
producer or provider of goods and services. Therefore, it is not
required to disclose energy and carbon information as there are
zero emissions associated or attributed to the Company and no
underlying global energy consumption.
Viability Statement
The Board has decided that five years is an appropriate period
over which to consider its viability. The Board considers this to
be an appropriate period for an investment trust company with a
portfolio of private equity investments and the financial position
of the Company.
In determining this time period the Directors considered the
nature of APEO's commitments and it's associated cash flows.
Generally the private equity funds and co-investments in which APEO
invests call monies over a five year period, whilst they are making
investments, and these drawdowns should be offset by the more
mature funds and co-investments, which are realising their
investments and distributing cash back to APEO. The Manager
presents the Board with a comprehensive review of APEO's detailed
cash flow model on a regular basis, including projections for up to
five years ahead depending on the expected life of the commitments.
This analysis takes account of the most up to date information
provided by the underlying managers, together with the Manager's
current expectations in terms of market activity and
performance.
The Directors have also carried out an assessment of the
principal risks as noted above and discussed in note 18 to the
financial statements that are facing APEO over the period of the
review. These include those that would threaten its business model,
future performance, solvency or liquidity such as over-commitment,
liquidity and market risks. When considering the risks, the Board
reviewed the impact of stress testing on the portfolio, including
multiple downside scenarios which modelled a reduction in forecast
distributions from 50% to 100% in an extreme downside case and the
impact this would have on liquidity and deployment. Under an
extreme downside scenario which involved i) a 100% reduction in
forecast distributions over a 12 months period; ii) all underlying
General Partner debt facilities being drawn simultaneously; and
iii) a 25% reduction in portfolio valuations spread over a period
of 12 months, a significant adjustment to planned deployment would
be required to maintain sufficient liquid resources over the
financial year to 30 September 2023 and over the period through to
January 2024. From January 2024 onwards, the implied resumption of
forecast distribution activity then provides sufficient liquidity
in this extreme downside scenario.
By having a portfolio of predominantly fund investments,
diversified by manager, vintage year, sector and geography; by
assessing market and economic risks as decisions are made on new
commitments; and by monitoring APEO's cash flows together with the
Manager, the Directors believe APEO is able to withstand economic
cycles. The Directors are also aware of APEO's indirect exposure to
ongoing risks through underlying funds.
These are continually assessed by the Manager monitoring the
underlying managers themselves and by participation on a number of
fund advisory boards.
Based on the results of this analysis, and the ongoing ability
to adjust the portfolio, the Directors have a reasonable
expectation that APEO will be able to continue in operation and
meet its liabilities as they fall due over the five year period
following the date of this report.
Future Strategy
The Board intends to maintain the strategic policies set out in
the Strategic Report for the year ending 30 September 2023 as it is
believes that these are in the best interests of shareholders.
Long-Term Investment
The Manager's investment process seeks to outperform its
comparator index over the longer term. The Board has in place the
necessary procedures and processes to continue to promote APEO's
long-term success. The Board will continue to monitor, evaluate and
seek to improve these processes as APEO continues to grow over
time, to ensure that the investment proposition is delivered to
shareholders and other stakeholders in line with their
expectations.
On behalf of the Board
Alan Devine
Chair
30 January 2023
INVESTMENT MANAGER'S REVIEW
INTRODUCTION TO THE MANAGER - HOW WE INVEST
In order to achieve the investment objective, maintain a
balanced portfolio and take advantage of opportunities as they
arise, APEO invests in three types of private equity
investment:
1. Primary Investment
APEO commits to investing in a new private equity fund. The
committed capital will generally be drawn over a three to five year
period as investments in underlying private companies are made.
Proceeds are then returned to APEO when the underlying companies
are sold, typically over a four to five year holding period.
Primary investment has been the core focus of APEO's Investment
Objective since its inception in 2001. Primary investments can
provide APEO with:
-- consistent exposure to leading private equity managers;
-- underlying portfolio diversification;
-- a steady, predictable cashflow profile; and
-- help drive APEO's dealflow in secondaries and co-investments.
2. Secondary Investment
APEO acquires a single fund interest or a portfolio of fund
interests from another investor, with the prior approval of the
private equity managers of the target funds. APEO pays the seller a
cash amount for the interests and takes on any outstanding
commitments to the target funds.
Typically this would occur at a point where the target funds
have already invested the majority of its capital. The price paid
in this type of transaction will reflect the age profile of the
funds, the quality of the managers and the quality of the
underlying portfolios. Secondaries allow the Manager to gain
exposure to funds of new or existing managers a later stage in a
fund's life.
Therefore they typically have a shorter investment duration than
a primary investment. Secondaries are opportunistic in nature and
their availability is dependent on multiple market and
deal-specific factors.
3. Co-investment
APEO makes direct investments into private companies alongside
other private equity managers. APEO's strategy is to invest
alongside private equity managers with which abrdn Private Equity
has made a primary investment.
Co-investment was introduced to the Investment Objective in
2019. The Manager is seeking to build a diversified portfolio of
around 30 co-investments in order to mitigate concentration
risk.
INVESTMENT MANAGER'S REVIEW
Summary of the Year
The portfolio has shown strong performance during the financial
year, in spite of headwinds in the broader financial markets and
the uncertain global economic backdrop. APEO's 21-year-old strategy
of partnering with a small group of top performing private equity
firms, focusing on underlying businesses in the mid-market
(enterprise values between GBP100 million and GBP1 billion) and
targeting diversification across a range of resilient sectors
continues to position it well. This has been reflected in continued
strong trading in the underlying portfolio and robust realisation
activity, helping APEO to deliver a NAV TR of 14.1% during period,
an outperformance of 18.1% to the FTSE All-Share, which declined by
-4.0%.
A large part of this performance relates to the record
realisation activity that APEO has seen during the year. The
Company received GBP210.2 million of distributions from underlying
funds during the year (2021: GBP197.6 million), exceeding the
record total seen in the prior year. These realisations came at an
average uplift of 20% when compared with the unrealised valuation
two quarters prior, therefore driving valuation increases. Notable
exits in the portfolio were General Life (European fertility clinic
group), Benvic (European developer and producer of thermoplastic
solutions) and Sbanken (Norwegian online bank).
The portfolio of private companies continues to perform well,
with the top 50 largest underlying portfolio companies by value
showing average revenue and EBITDA growth of 23% and 24%
respectively in the twelve months to 30 September 2022.
That has helped drive the resilient valuation performance in the
unrealised book, in spite of declining listed market comparable
multiples. We are particularly pleased about progress in APEO's
co-investment portfolio, which has seen a valuation uplift of 51.8%
on a constant currency basis during the year. The co-investment
portfolio now stands at 22 underlying companies and 19.1% of NAV,
close to our target of 25%.
The impact of listed equity market declines seen in 2022 has
been most apparent in the publicly listed company exposures APEO
has. As a reminder, the Company is not a long-term holder of listed
shares but saw strong IPO activity in the portfolio in 2021, with
successful listings including Moonpig (UK-based online gifting
business), Dr Martens (leading consumer footwear brand) and Inpost
(self-service lockers for ecommerce consumers). Listed companies
equated to 12.4% of the portfolio at the beginning of the financial
year. Through a combination of realisations and a decline in the
aggregate value of this cohort over twelve months to 30 September
2022, listed companies now equate to 5.4%of the portfolio.
The war in Ukraine had a minimal direct impact on APEO during
the year. The Company has no Russian, Belarussian or Ukrainian
headquartered businesses in its portfolio of 655 separate
underlying companies. In addition, through discussions with the
private equity managers in APEO's portfolio, we estimate that
revenues from these countries accounted for less than 1% of
aggregate underlying portfolio company revenues at the start of the
financial year, and have declined further since then. That said,
the indirect impacts are materialising in the portfolio, mainly
through the war exacerbating already elevated energy and raw
materials pricing, impacting upon the margins of many of APEO's
underlying businesses.
On the new investment side, the 12 months ended 30 September
2022 was another active year for investment. APEO made commitments
totalling GBP340.3 million (2021: GBP307.1 million), with twelve
new primary investments, two secondary investments, nine direct
co-investments and one follow-on investment in an existing
co-investment. These new fund commitments are aligned with our
long-term strategy of backing private equity firms that have a
mid-market orientation and have proven expertise within one or more
specified sectors. As aforementioned, we are delighted with the
strong deployment in co-investments during the year and the good
balance in deployment across our key sectors. Whilst secondary
deployment in the year was modest relative to primary and
co-investment, we are excited by the potential of the two new
investments and see a window of strong secondary opportunities
emerging as we move into the new financial year.
In terms of cashflows, the aforementioned exit activity has
helped drive record levels of distributions. The realised return
from the ongoing investment operations of APEO's core portfolio
equated to 2.2 times cost (2021: 2.8 times cost). In addition, APEO
received an additional GBP15.7 million (2021: GBP1.1 million) from
proceeds from secondary sales relating to two fund positions,
meaning that APEO earned a total of GBP225.9 million cash proceeds
during the financial year (2021: GBP198.7 million). We have focused
on reinvesting distributions into new investment opportunities
during the period, and therefore drawdowns during the year totalled
GBP253.6 million (2021: GBP184.2 million). This figure includes
GBP74.7 million of new co-investment and secondaries, which is
deployment directly under the Manager's control. The balance sheet
remains in a strong position with cash and cash equivalents of
GBP30.3 million (2021: GBP29.7 million). APEO also had GBP138.0
million remaining undrawn on its GBP200.0 million revolving credit
facility at 30 September 2022 (2021: GBP200.0 million undrawn). We
are also delighted that, immediately following the year-end, the
revolving credit facility was increased to GBP300.0 million and the
maturity extended by a year to December 2025. The larger facility,
provided by RBS International, Société Générale and State Street
Bank International, will provide APEO with ample liquidity for new
investments in the months and years ahead.
Performance
The NAV TR for the year ended 30 September 2022 was 14.1% versus
-4.0% for the FTSE All-Share Index. The valuation of the portfolio
at 30 September 2022 increased 10.5% on the prior year on a
constant currency basis, with a further increase of 5.1%
attributable to FX gains during the year, principally due to the
weakness of pound sterling compared to US dollar and the Euro.
The increase in value of the NAV on a per share basis was 79.4p.
This was principally made up of unrealised and realised gains and
income of 102.4p, partially offset by dividends and costs
associated with management fee, administrative and financing of
23.0p.
The unrealised gains in the year are attributable to the strong
performance of the underlying portfolio. At 30 September 2022 the
top 50 largest underlying portfolio companies by value in APEO
exhibited average last twelve months ("LTM") revenue and EBITDA
growth of 23% and 24% respectively. Realised gains were derived
from full or partial sales of companies during the 12-month period,
which were at an average uplift of 20% to the unrealised value two
quarters prior.
Pence per share
NAV as at 1 October 2021 673.8
Net unrealised losses at constant
FX on portfolio(1) -5.0
Net realised gains and income from
portfolio 74.0
Net unrealised FX gains on portfolio 32.7
Net income from other assets 0.7
Dividends paid -14.0
Management fee, administrative and
finance costs -9.0
NAV as at 30 September 2022 753.2
(1) Includes the reversal of previously recognised unrealised
gains that have realised during the financial year and are
therefore included in Net realised gains
and income from portfolio.
Drawdowns
Amount - GBPmillion
Vitruvian IV 11.0
Altor V (including secondary purchase) 10.3
Nordic Capital X 9.7
Cinven 7 9.2
Advent Tech II 8.6
Other 204.9
During the year GBP253.6 million was invested into existing and
new underlying companies. GBP176.7 million of this figure related
to primary fund drawdowns, with the remainder related to
co-investment and secondary deployment, which are fully under the
control of the Manager and as planned. Secondary and co-investment
activity are covered in detail later in the review.
Primary fund drawdowns during the year were mainly used to fund
new underlying investments into portfolio companies, with notably
large drawdowns relating to the following new portfolio
companies:
- CFC Underwriting (Vitruvian IV) - global leader and category
innovator in the cyber security insurance market;
- Inovalon (Nordic Capital X) - US-based provider of cloud-based
healthcare software and data analytics;
- BioAgilytix (Cinven 7) - global healthcare contract research organisation;
- McAfee (Advent Tech II) - global provider of cyber security protection;
- STARK Group (CVC Fund VII) - distributor of heavy building materials in Northern Europe.
We estimate that APEO had around GBP113.3 million held on
underlying fund credit facilities at 30 September 2022 (30
September 2021: GBP47.3 million), and we expect that this will all
be drawn over the next 12 months.
Realisations
Amount - GBPmillion
Investindustrial Growth 20.2
Altor Fund IV 16.9
Equistone VI (secondary sale) 15.5
Astorg VI 14.2
Permira V 13.0
Other 146.1
GBP210.2 million of distributions were received from funds
during the year, which is a record annual total for APEO. Exit
activity was driven by the strong market appetite for high quality
private companies in resilient sectors following the global
pandemic. Both trade and financial buyers remain active during the
period, albeit the demand for IPOs declined significantly in the
second half of the year. The headline realised return from the
portfolio equated to 2.2 times cost (30 September 2021: 2.8 times
cost).
In addition, APEO sold its fund positions in Equistone Fund VI
and IK Small Cap Fund III for portfolio management reasons,
contributing a further GBP15.7 million in proceeds and meaning that
an aggregate total of GBP225.9 million was received from
distributions and secondary sales during the period.
Outstanding Commitments
As at 30 September Outstanding Commitments Outstanding commitments
in excess of undrawn loan
facility and case resources
as a % of portfolio NAV
(GBPmillion)
2018 33.6 369.3
2019 47.4 450.3
2020 30.9 471.4
2021 32.5 557.1
2022 42.8 678.9
Commitments
APEO made commitments totalling GBP340.3 million during the year
(2021: GBP307.1 million). These commitments were well diversified,
with twelve new primary investments, two secondary investments,
nine direct co-investments and one follow-on investment in an
existing co-investment. The total outstanding commitments at 30
September 2022
were GBP678.9 million (30 September 2021: GBP557.1 million).
The value of outstanding commitments in excess of liquid
resources as a percentage of portfolio value increased to 42.8% in
the financial year (30 September 2021: 32.5%). This is largely due
to the strong investment activity during the year ended 30
September 2022. This figure is at the lower end of our long-term
target range of 30-75%. We estimate that GBP69.9 million of the
reported outstanding commitments are unlikely to be drawn down, due
to the nature of private equity investing, with private equity
funds not always being fully drawn.
Investment Activity
Primary Funds
GBP257.2 million was committed to twelve new primary funds
during the year ended 30 September 2022 (2021: GBP175.7 million
into eight new primary funds). As a reminder, APEO's primary fund
strategy is to partner with private equity firms, principally in
Europe, that have genuine sector expertise and operational value
creation capabilities and have a core mid-market buyout
orientation, i.e. focusing on businesses with an enterprise value
between GBP100 million and GBP1 billion. The firms that APEO has
partnered with during period fulfil most, if not all, of this
criteria and all are relationships with who the Manager known for
many years, often decades.
Investment GBPm Description
--------------------------------- ---- ---------------------------------------------------------------------------
Capiton VI 16.9 European lower mid-market fund with a focus in Pharma, MedTech, Industrial
Automation and
Sustainable Consumption.
================================= ==== ===========================================================================
Great Hill Equity Partners VIII 14.6 Growth-focused private equity fund based in the United States.
================================= ==== ===========================================================================
Windrose Health Investors Fund VI 15.1 Mid-market buyout fund based in the United States, that has a specialist
focus on the healthcare
sector.
================================= ==== ===========================================================================
PAI VIII 25.1 Pan-European upper mid-market fund focused on Food & Consumer, Business
Services, General
Industrials and Healthcare.
================================= ==== ===========================================================================
IK Partnership II 20.8 Pan-European mid-market fund focused on co-control and minority
opportunities in Food & Consumer,
Business Services, Healthcare and Financial Services.
================================= ==== ===========================================================================
Hg Saturn 3 25.8 European buyout fund focused on Software and B2B Services.
================================= ==== ===========================================================================
Advent Global Private Equity X 25.2 Global buyout fund which focuses on attractive niches within business and
financial services,
healthcare, industrial, retail and technology sectors.
================================= ==== ===========================================================================
ArchiMed MP 2 25.1 Healthcare specialist fund, focused on European and North American
mid-market companies.
================================= ==== ===========================================================================
Investindustrial Growth III 25.2 Southern European lower mid-market fund focused on niches within the
Industrials, Business
Services and Consumer & Leisure sectors.
================================= ==== ===========================================================================
Nordic Capital XI 25.2 Northern European buyout fund, principally focused on the Healthcare,
Technology & Payments
and Financial Services sectors.
================================= ==== ===========================================================================
One Peak Growth III 12.9 European growth fund which targets rapidly growing technology and
tech-enabled
companies.
================================= ==== ===========================================================================
Latour Capital IV 25.4 French mid-market buyout fund which focuses principally on companies in the
Business Services
and Industrials sectors.
--------------------------------- ---- ---------------------------------------------------------------------------
Case study - primary - Investindustrial
Investindustrial is a leading private equity manager in Southern
Europe with excellent networks and a high quality and
well-resourced team.
Investment : Investindustrial Growth III
Fund size : EUR1bn target
APEO's commitment : EUR30 million
Commitment year : 2022
Geographic focus : Western Europe but with a focus on Southern
Europe
Target company size : Lower mid-market
Sectors : Industrials, Healthcare & Services, Consumer and
Technology
Investment strategy : Buyout / Growth
Overview
-- Founded in 1990, out of an industrial conglomerate owned by
the Bonomi family and with more than EUR11 billion of raised fund
capital, Investindustrial is one of Europe's leading private equity
managers. The firm is focused on taking majority or control
positions in mid-market companies, primarily across the Industrial,
Healthcare & Services, Consumer and Technology sectors.
-- Investindustrial has a strong Southern European heritage and
specialism but today operates globally, with a team of c.160
professionals representing 21 nationalities, based across offices
in Switzerland, Spain, United Kingdom, France, United States,
Luxembourg, and China.
-- The firm covers the entire mid-market across its mid-market
and growth investment strategies. The growth strategy is
differentiated by its focus on the attractive lower mid-market
space and specialism in Southern Europe. It also benefits from the
wider Investindustrial platform, with access to the firm's regional
offices and dedicated resources across business development
(focused on driving international organic and acquisitive growth),
capital markets, digitisation and ESG.
APEO's Exposure
-- The Manager's relationship with Investindustrial goes back 15
years, with a first commitment to Investindustrial IV in 2008.
abrdn has committed to every Investindustrial fund since that
time.
-- APEO first invested with Investindustrial in 2018 through
Growth Fund I and subsequently it committed to Investindustrial VII
in 2019.
Previous / current investments
Benvic, GeneraLife, Morgan Motor Company
Secondaries
During the 12 month period, APEO committed GBP17.2 million into
two secondary transactions (2021: GBP54.5 million into two
secondaries).
Investment GBPm Description
---------------- ---- --------------------------------------------------------------------------------------------
Project Concorde 5.1 The acquisition of interests in a French e-commerce business, initially part of a larger
portfolio
process where the acquisition of the remaining assets did not subsequently complete.
================ ==== ============================================================================================
Project Ivy 12.1 The acquisition of interests in three buyout funds managed by American Industrial Partners,
Altor and Vitruvian.
================ ==== ============================================================================================
Case study - secondary - Project Ivy
Compelling opportunity to acquire exposure to high-quality
private equity funds at attractive relative pricing, out of a wider
sale process.
Investments : Portfolio of funds managed by Altor, American
Industrial Partners and Vitruvian Investment Partners which will
provide exposure to 30 underlying companies
Transaction Date : September 2022
Vintage Years : 2011 - 2019
Fund size : Various
APEO's Secondary Exposure : EUR11.6 million
Geographic focus : Europe and North America
Target company size : Mid-Market
Sectors : Diversified: including Business Services, Industrials,
Financial Services, Consumer Goods and Services
Investment strategy : Buyout
Transaction Overview
-- The Seller was looking to manage its eclectic mix of private
markets exposure and generate liquidity via a portfolio sale
comprising numerous funds and strategies.
-- The Manger was able to carve out three specific buyout fund
interests from the wider portfolio sale process.
-- APEO is an existing investor with all three underlying
managers and the Manager had recently undertaken extensive primary
diligence on each manager, which provided strong access, portfolio
insights and competitive positioning.
Underlying Investments
-- Portfolio of three funds with vintages ranging from 2011 to
2019, with the majority of value concentrated in the younger funds
but with near-term cash flows expected from the older assets.
-- 27 high quality underlying portfolio companies, across a range of geographies and sectors.
-- Underlying portfolio likely to grow to around 30 underlying
portfolio companies in due course.
Why We Invested
-- Unusual deal dynamics - rare opportunity to carve out
interests in funds managed by three highly sought-after buyout
managers from a larger portfolio sale at attractive relative
pricing.
-- High conviction in the assets being acquired - the Manager's
existing knowledge of the underlying portfolios and confidence in
the managers of the funds provided the conviction to pursue and
secure this opportunity.
-- Strong portfolio fit and diversified profile - all three
funds are managed by core APEO managers and the underlying
portfolios offer an attractive balance of short-term cash
generation and longer-term value growth potential.
Previous / current investments
Altor Funds, Vitruvian Partners, American Industrial
Partners
Co-investments
During the 12-month period, APEO invested and committed GBP66.1
million into nine new co-investments and one follow-on investment
in an existing co-investment (2021: GBP76.9m into ten new
co-investments).
As a reminder, co-investments were introduced to APEO's
investment objective in 2019 and bring a number of advantages, most
notably greater control over portfolio construction and lower
associated costs (and therefore higher return potential). Over the
longer term the Manager expects co-investments to equate to around
25% of the portfolio.
At 30 September 2022 there were 22 co-investments in APEO's
portfolio, equating to 19.1% of NAV. All companies except one are
at least on plan. Mademoiselle Desserts, the co-investment behind
original plan, was impacted by the global pandemic as the hotel,
restaurant and cafe channel is a core end market for the business.
However, the company has been performing strongly following the
broad reopening of the hospitality sector in Europe and we have
strong conviction in its prospects moving forward.
Investment GBPm Description
--------------------------- ---- ---------------------------------------------------------------------------------
SportPursuit 4.2 Flash sale e-commerce business which sells clearance stock from leading sports
and outdoor
brands. The co-investment was made alongside bd-capital Partners.
=========================== ==== =================================================================================
SuanFarma 6.3 Manufacturer, CDMO and distributor of active pharmaceutical and nutraceutical
ingredients.
The co-investment was made alongside ArchiMed SaS.
=========================== ==== =================================================================================
Tropicana 8.6 A portfolio of well-known beverage brands, including Tropicana and Naked. The
co-investment
was made alongside PAI Partners.
=========================== ==== =================================================================================
CDL Nuclear Technologies 5.2 Provider of turnkey cardiac PET/PET-CT imaging technology solutions and
radioisotope delivery
to independent cardiology practices and hospitals in the US. The co-investment
was made alongside
Excellere Partners.
=========================== ==== =================================================================================
European Camping Group 6.7 European leader in the premium outdoor vacation accommodation market. The
co-investment was
made alongside PAI Partners.
=========================== ==== =================================================================================
NGE 8.9 The leading independent player in the construction and public works sector in
France. The
co-investment was made alongside Montefiore Investment.
=========================== ==== =================================================================================
ACT 8.4 The largest specialist intermediary in the environmental certification market
globally, headquartered
in the Netherlands. The co-investment was made alongside Bridgepoint.
=========================== ==== =================================================================================
Uvesco 8.3 Leading food retail operator in the North of Spain. The co-investment was made
alongside PAI.
=========================== ==== =================================================================================
CFC 9.0 Tech-led insurance platform, who are a global leader and category innovator in
the cyber market.
The co-investment was made alongside Vitruvian Partners.
=========================== ==== =================================================================================
Insightsoftware (follow-on) 0.3 Provider of financial reporting and enterprise performance management (ERM)
software. The
co-investment was made alongside Hg. The initial commitment to this co-investment
was made
in 2021.
=========================== ==== =================================================================================
Case Study - Co-investment- NGE
NGE is a leading French civil works and engineering company
involved in the construction and ongoing maintenance across a range
of infrastructure projects.
Lead Manager : Montefiore
Investment year : 2021
APEO's investment : EUR10.5 million
Geographic focus : France / Global
Company size : Large (>EUR1bn EV)
Sector : Infrastructure Services
Company Overview
-- NGE ("Nouvelles Générations d'Entrepreneurs") is the fourth
largest infrastructure construction business in France and its
growth has consistently outperformed the broader infrastructure
market over the past two decades since its founding in 2002
-- NGE provides services across 7 areas including railways,
water pipes and networks, road, civil engineering, general
earthworks, geotechnical solutions and buildings.
-- NGE differentiates itself to clients through its broad
geographic footprint and flexible business model which allows it to
respond quickly to clients' demands with superior quality.
-- The majority of NGE's clients are public authorities in
France although the business has a significant and growing exposure
internationally. Outside of France NGE is present in 14 countries
across Europe, Latin America and French speaking Africa. Activity
includes larger scale railway projects and also multi-expertise
projects.
The Opportunity
-- Strong growth in the French public works market forecast over
the investment period supported by major projects (e.g. Paris
Metro, Paris Olympic Games 2024).
-- NGE management have an outstanding reputation and have built
a growing, disruptive player in the French market, with an
-- entrepreneurial culture that includes widespread employee ownership.
-- Investing alongside a high-quality private equity manager in
Montefiore, with a strong track record and experience in the
-- French civil engineering market.
-- Strong ESG focus, with NGE's services delivering improvements
and innovations in sustainable infrastructure, specifically
-- addressing multiple UN Sustainable Development Goals ("SDGs").
-- Several value creation initiatives started in recent years
are expected to bear fruit during the investment period. The
most
notable initiatives include offering new and more recurring
services to grow market share amongst local authority clients.
In addition, continued international expansion by strengthening
NGE's position in large scale rail infrastructure projects.
Portfolio Construction
The underlying portfolio consists of over 650 private companies,
largely within the European mid-market and spread across different
countries, sectors and vintages. At 30 September 2022, only 12
underlying private companies equated to more than 1% of APEO NAV
based on the value of underlying private company exposure (2021:
8). The largest single underlying private company exposure is 5.1%,
being Action (2021: Action, 4.0%).
Geographic Exposure(1 2)
We believe that the portfolio is well diversified and that will
position APEO well as we move into a more recessionary
macroeconomic environment. At 30 September 2022, 76% of underlying
private companies, by total value of underlying private company
exposure, were headquartered in Europe (2021: 79%). APEO's
underlying portfolio remains largely positioned to North Western
Europe, with only 6% of underlying private company exposure in
Italy and Spain. APEO is well diversified by region across North
Western Europe, with exposure of 17% in the UK (2021: 17%). North
America has the highest exposure of 23% (2021: 19%) of underlying
private company exposure.
1 Based on the latest available information from underlying
managers. Figures represent % of total value of underlying private
company exposure. This excludes any underlying fund and
co-investments held through the Company portfolio. Geographic
exposure is defined as the geographic region where underlying
portfolio companies are headquartered.
2 In addition to the above, 4% of underlying portfolio companies
are based in European countries not separately disclosed above,
while 1% are based in countries outside of Europe, excluding North
America.
3 APEO has no Russian, Ukrainian or Belarussian headquartered
companies. These three countries make up less than 1% of the
underlying company revenues.
Sector Exposure (1)
At 30 September 2022 Technology and Healthcare represented a
combined 40% of the portfolio (30 September 2021: 41%). When
combined with Consumer Staples, these more stable, less cyclical
sectors equate to 52% of APEO's portfolio (30 September 2021: 53%).
It is worth noting that APEO generally invests in Information
Technology businesses that are profitable and B2B-focused and
therefore has relatively low exposure to higher growth,
unprofitable technology businesses that have been particularly out
of favour in the public markets during 2022.
The other half of the portfolio is exposed to more cyclical
sectors, notably Industrials, Consumer Discretionary and
Financials. That said, there are sub-sectors within these areas
that provide growth opportunities, such as Fintech, ecommerce and
B2B Services, where businesses often have a valuable product or an
essential service offering with a strong digital component.
% Exposure as at
Sector 30 September
2022
Information technology 20
Healthcare 20
Industrials 18
Consumer discretionary 14
Consumer staples 12
Financials 11
Materials 4
Energy 1
1 Based on the latest available information from underlying
managers. Figures represent % of total value of underlying private
company exposure. This excludes any underlying funds and
co-investments held through the Company portfolio.
Maturity Analysis (1)
A large proportion of the portfolio is reaching maturity, with
47% being in vintages of four years and older (30 September 2021:
49%). This should underpin consistent distribution activity moving
forward.
Outlook
We are delighted by APEO's performance during the year, but we
remain cautious as we look ahead. Higher inflation, interest rate
rises and the war in Ukraine have created a high degree of
uncertainty and volatility in financial markets, and we do not
expect these challenging conditions to abate in the immediate
short-term. We also don't think the full impact of high inflation
has been felt by economies and underlying companies yet; the first
half of 2023 will be instructive in this regard.
Specifically in relation to private equity, we are seeing the
levels of dealflow slow down as buyers and sellers attempt to
reconcile differing price expectations and current access to debt
financing is more difficult than in recent years. That will have
implication on cashflows going forward, with less short-term
distributions coming in but less money being drawn too. It will
also have valuation implications, as private equity investments
typically sell at an uplift to carrying value, which helps drive
APEO's NAV in normal times. Dealflow will pick up again soon, given
the record levels of 'dry powder' in private equity, but we expect
that the next twelve months might see a slower pace compared to
recent years.
That said, it is worth reiterating that APEO has navigated
multiple cycles over a 21-year period and the strategy has remained
broadly consistent since its inception in 2001. We take comfort in
the quality of the private equity firms that APEO partners with,
the broad diversification of the underlying portfolio by sector,
geography and maturity, and the Company's strong balance sheet
position, which has been further enhanced by the extension of its
revolving credit facility from GBP200.0 million to GBP300.0
million.
More generally, the governance model of private equity, through
majority control and active ownership, provides the opportunity for
hands-on value creation and for decisions to be taken more
efficiently and effectively in response to changing market
circumstances. The private equity firms that APEO partners with
today are much more specialised within sectors and sub-sectors, and
have deeper value creation toolkits compared to, for example,
before the global financial crisis.
Furthermore, market volatility does provide a silver lining
around attractive new investment opportunities and we believe that
private equity particularly thrives in these periods. Trade and
family owners of attractive businesses can often be more willing to
sell long-held assets for liquidity or portfolio reasons and entry
multiples tend to be lower during these periods. In addition to our
selected managers taking advantage of these market circumstances,
we also expect interesting opportunities in the secondary
investment space to emerge as some investors, that are tackling
liquidity issues or the 'denominator effect', look to rebalance
their portfolios and sell assets. APEO's balance sheet is in a
strong position, and we therefore believe that it is well
positioned to take advantage of opportunities through the remainder
of 2022 and beyond.
In summary, we believe that private equity is a long-term asset
class, and we expect it to continue to deliver outperformance on
both absolute and relative bases. Whilst the road ahead appears to
be more challenging in terms of financial markets and the global
economy, we take comfort in the private equity governance model,
the quality of APEO's current portfolio and its set of core
managers, and the opportunity to make attractive new investments
during this period of greater uncertainty.
Alan Gauld,
Lead Portfolio Manager
For abrdn Capital Partners LLP
30 January 2023
APPROACH TO ESG
ESG is a fundamental component of the Manager's investment
process. We believe that through consideration of ESG factors, we
make better informed investment decisions. We strongly believe that
the private equity model, with its long-term investment horizon and
high degree of shareholder control, is well-suited to add value to
its portfolio companies through responsible investment. As such, we
integrate ESG factors in all stages of the investment process.
APEO is an indirect investor in private companies and therefore
its portfolio of underlying companies is controlled by the private
equity managers that APEO partners with. However, through direct
engagement and legal negotiations, the Manager of APEO can play an
important role in ensuring its private equity manager relationships
are focused and committed to implementing ESG improvements at a
portfolio company level.
The Manager has been a signatory to the Principles for
Responsible Investment ("PRI") since 2007 and was awarded the top
PRI rating for Indirect Private Equity in 2021. Our commitment to
ESG starts at the top. While in 2021 we hired a dedicated ESG
function, the whole investment team takes responsibility to input
and implement our ESG agenda. To strengthen our commitment, we
introduced ESG objectives in the investment team's annual
performance assessment.
The Manager's Investment Committee ("IC") is ultimately
accountable for our ESG policies and to ensure that ESG risks and
opportunities are adequately flagged and discussed for investment
decision making. As ESG has evolved across multiple areas, in
mid-2021 we introduced a cross-functional ESG forum, chaired by our
Head of ESG, to bring together senior team representatives from
Investment, Legal, Operations, Product and Compliance.
The Manager's ESG investment process for primary fund
investments is outlined at a high-level below:
The Manager focuses on the integration of ESG principles into
the operations of underlying private equity managers. Key facets
include culture, governance with senior accountability, full
integration into a manager's investment processes and appropriate
disclosure to assist investors.
There are different ESG approaches depending on the type of
private equity investment:
-- Primary investment - Assessment typically includes analysing
private equity manager's ESG cultural buy-in, its ESG process,
procedures and reporting, its engagement with underlying portfolio
companies, its ESG Survey score and an Operational Due Diligence
review of the manager and the fund.
-- Co-investment - Assessment normally includes a detailed
review of the underlying company's ESG due diligence documents,
sector and company analysis using RepRisk, a third party ESG
database, and leveraging expertise on specific ESG issues, be it
via the Manager's central ESG & Stewardship team or a third
party expert. The primary ESG assessment of the private equity
manager will be taken into account in all cases.
-- Secondary investment - Leverages primary investment and/or
co-investment processes depending on the transaction
characteristics. If the secondary is concentrated in a small number
of underlying portfolio companies then it may follow the
co-investment process. The primary ESG assessment of the private
equity manager will be taken into account where possible.
In summary, the Board and Manager fundamentally believe that
integrating ESG into APEO's strategy and investment processes
improves the investment decision making and ultimately will help to
generate stronger, more sustainable returns for its investors.
ESG Achievements 2022:
-- UNPRI - Top Rating achieved in the UN PRI assessment for indirect Private Equity.
-- Initiative Climate International - abrdn joined the first of
its kind climate initiative for private equity committed to step up
climate action across the industry.
Roadmap to Multistakeholders Success
-- 2015 - ESG Integration - The Manager begins testing the
market with its first ESG survey, for primary funds. ESG
considerations begin to feature the Manager's Investment Committee
papers and ESG terms in legal negotiations.
-- 2019 - Enhanced Side Letters and Products - The Manager
develops more advanced ESG requirements in investment side letters.
More broadly, it launched its first sustainability themed Fund of
Funds.
-- 2020 - ESG Team and Targets - Dedicated ESG resources
appointed to private markets, with a Head of ESG appointed in March
2021. The Manager starts a dedicated ESG co investment survey and
integrates ESG linked performance outcome in investment team's
valuation.
-- 2021 - SDFR Products and ESG Forum - Enhancement of abrdn's
private equity approach to ESG integration to comply with SFDR
standards and integrate market developments. Introduced
consideration related to Biodiversity and Human Rights. Abrdn
launched Article 8 Fund of Funds. abrdn launched private equity
multi functional ESG Forum. Introduced a "Good Governance
Policy".
-- 2022 - Climate and Engagement - abrdn signed up to iC
International and ESG Data Convergence Initiative. Defined a
Climate Strategy and start drafting reporting according to TCFD for
June 2023. More broadly, launched an Article 8+ co-investment
product, with 25% commitment to sustainable investment.
Case Study - ESG - ACT
ACT is a leading global provider of market-based environmental
solutions.
Lead Manager : Bridgepoint
APEO's investment : EUR10.0 million
Investment year : 2022
APEO's investment : EUR10.5 million
Geographic focus : Global
Company size : Large (enterprise value >EUR1bn)
Sector : Technology/Services
Company Overview
-- ACT is the largest specialist intermediary in the
environmental certification market globally, offering 80+ products
to 5000+ customers across five core markets, with its headquarters
in the Netherlands and hubs across Europe, the US and China
-- ACT intermediates between sellers of certificates / offsets
(e.g. renewable energy producers) and buyers (e.g. businesses with
a need to prove compliance with a regulatory standard or offset
emissions), leveraging its large network and technical and
regulatory know-how to advise companies and trade certificates,
often 'making a market' in new areas as a first mover.
Responsible Investment
-- Environmental certificates are an increasingly important
instrument in successfully managing climate change and are becoming
essential for organisations that are required to reduce greenhouse
gases from operations.
-- ACT sourced .APPROX.168 TWh of renewable energy to help its
clients achieve their sustainability goals, equivalent to almost 4%
of the US energy consumption as of the 2021/2022 fiscal year.
-- Through carbon credit sourcing on behalf of its clients, ACT
set aside 48 million metric tons of CO2 to be used for offsetting
solutions, equivalent to 4% of the carbon removed annually by the
Amazon rainforest
-- In supporting its French clients in their energy efficiency
initiatives, ACT helped save 1 TWhc of energy, equivalent to the
annual energy usage of more than 71,000 households in Europe.
-- ACT's activities directly address three of the UN SDGs.
APEO's Investment
-- Having made a primary commitment to Bridgepoint Europe VI
(which led the investment into ACT), APEO made a co-investment
alongside Bridgepoint in ACT in 2022.
-- The Manager has had a close relationship with Bridgepoint
over many years and has monitored the development of its ESG
policies and approach, which are highly rated.
-- The fact that environmental solutions and ESG are at the core
of what ACT offers its clients was a clear attraction for
Bridgepoint (and APEO) in making the investment.
TEN LARGEST INVESTMENTS
at 30 September 2022
1 Action
Since its establishment in 1993,
Benelux-based Action has grown into
the leading non-food discount retailer
in the region with more than 2,100
stores and over 65,000 employees
Fund Size: EUR2.5bn
Sector: Consumer
staples
Location: Netherlands
Year of Investment:
2020
Private Equity Manager:
3i Group plc
Investment: Co-investment
Company Website: 3i 2020 Co-investment
www.action.nl 1 SCSp 30/09/22 30/9/21
--------------------------------
Value (GBP'000) 58,695 41,454
Cost (GBP'000) 22,630 22,630
Commitment (EUR'000) 26,540 26,540
Amount Funded 100.0% 100.0%
5.1% of
NAV (30
September
2021: 4.0%) Income (GBP'000)* - -
---------------------------------------------------- ----------------------------- --------- -----------
2 Advent International Invests in attractive niches within
business & financial services, healthcare,
industrial, retail and technology
sectors
Fund Size: EUR13.0bn
Strategy: Mid to
large buyouts
Enterprise Value
of investments: $200m-$3bn
Geography: Global
with a focus on Europe
and North America Advent International
Website: Global Private
www.adventinternational.com Equity VIII 30/09/22 30/9/21
---------------------------------
Value (GBP'000) 52,171 55,818
Cost (GBP'000) 31,652 31,102
Commitment (EUR'000) 45,000 45,000
Amount Funded 100.0% 95.2%
4.5% of
NAV
(30 September
2021: 5.4%) Income (GBP'000)* - -
------------------------------------------------------- ------------------------------- ----------- -------------
3 CVC Capital Partners Undertakes medium and large sized
buyout transactions across a range
of industries and geographies
Fund Size: EUR16.4bn
Strategy: Mid to
large buyouts
Enterprise Value
of investments: EUR500m-EUR5bn
Geography: Europe
and North America CVC Capital Partners
Website: www.cvc.com VII 30/09/22 30/9/21
-------------------------------------
Value (GBP'000) 44,399 28,902
Cost (GBP'000) 24,862 18,601
Commitment (EUR'000) 35,000 35,000
Amount Funded 84.1% 64.3%
3.8% of
NAV
(30 September
2021: 2.8%) Income (GBP'000)* 50 101
----------------------------------------------------------- ---------------------------- ----------- ------------
4 Hg Invests in medium sized buyout transactions
in the technology and services sectors,
primarily in Northern Europe
Fund Size: GBP2.5
bn
Strategy: Mid-market
buyouts
Enterprise Value
of investments: GBP100m-GBP500m
Geography: Northern
Europe
Website: www.hgcapital.com HgCapital 8 30/09/22 30/9/21
---------------------------------
Value (GBP'000) 42,144 30,769
Cost (GBP'000) 12,668 13,083
Commitment (EUR'000) 22,000 22,000
Amount Funded 79.5% 67.1%
3.6% of
NAV
(30 September
2021: 3.4%) Income (GBP'000)* - -
------------------------------------------------------- ------------------------------- ----------- -------------
5 IK Partner Invests in growth strategies supporting
business transformation. Unique Northern
Continental European footprint
Fund Size: EUR1.9bn
Strategy: Mid-market
buyouts
Enterprise Value
of investments: GBP100m-GBP500m
Geography: Northern
Europe
Website: www.ikinvest.com IK Fund VIII 30/09/22 30/9/21
-----------------------------------
Value (GBP'000) 38,225 35,006
Cost (GBP'000) 22,947 28,909
Commitment (EUR'000) 46,000 46,000
Amount Funded 94.7% 94.7%
3.3% of
NAV
(30 September
2021: 3.4%) Income (GBP'000)* 4 391
--------------------------------------------------------- ------------------------------ ----------- ------------
6 Altor Funds Focuses on investing in and developing
medium-sized companies with a Nordic
origin that offer potential for value
creation through revenue growth,
margin expansion, improved capital
management and strategic re-positioning
Fund Size: EUR2.1bn
Strategy: Mid-market
buyouts
Enterprise Value
of investments: EUR50m-EUR500m
Geography: Northern
Europe
Website: www.altor.com Altor Fund IV 30/09/22 30/9/21
------------------------------------
Value (GBP'000) 37,158 51,229
Cost (GBP'000) 27,886 30,679
Commitment (EUR'000) 55,000 55,000
Amount Funded 73.2% 69.7%
3.2% of
NAV
(30 September
2021: 4.9%) Income (GBP'000)* 847 2,614
---------------------------------------------------------- ----------------------------- ----------- ------------
7 A diversified secondary transaction
comprising large cap buyout funds
in Europe and the US
Fund Size: $125m
Strategy: Various
Enterprise Value
of investments: $
500m-$5bn
Geography: Europe
and North America Structured Solutions
Website: n/a IV Primary Holdings 30/09/22 30/9/21
------------------------
Value (GBP'000) 36,504 28,507
Cost (GBP'000) 27,594 28,093
Commitment (EUR'000) 62,500 62,500
Amount Funded 62.9% 61.5
3.2% of
NAV
(30 September
2021: 2.7%) Income (GBP'000)* - -
---------------------------------------------- ---------------------------- ----------- ------------
8 Nordic Capital Invests in medium to large-sized
buyout deals in Northern Europe,
through five dedicated sector teams,
with the ability to invest in healthcare
on a global basis
Fund size: EUR4.3bn
Strategy: Mid to
large buyouts
Enterprise Value
of investments: EUR200m-EUR800m
Geography: Northern
Europe (Global in
Healthcare) Nordic Capital
Website: www.nordiccapital.com Fund IX 30/09/22 30/9/21
-------------------------------------
Value (GBP'000) 35,841 43,119
Cost (GBP'000) 22,355 21,065
Commitment (EUR'000) 30,000 30,000
Amount Funded 89.0% 79.3%
3.1% of
NAV
(30 September
2021: 4.2%) Income (GBP'000) - -
----------------------------------------------------------- ----------------------------- --------- -----------
9 Exponent Target businesses have strong market
positions, evidence of historical
constraints and are capable of transformation.
Companies often have a significant
international footprint
Fund Size: GBP1.0bn
Strategy: Mid-market
buyouts
Enterprise Value
of investments:
GBP75m-GBP350m Exponent Private
Geography: UK Equity Partners
Website: www.exponentpe.com III, LP. 30/09/22 30/9/21
-------------------------------
Value (GBP'000) 34,963 37,704
Cost (GBP'000) 22,749 25,262
Commitment (GBP'000) 28,000 28,000
Amount Funded 87.5% 87.8%
3.0% of
NAV
(30 September
2021: 3.6%) Income (GBP'000) 411 348
----------------------------------------------------- --------------------------------- ---------- ------------
10 Towerbrook Control-oriented private equity investments
in mid-market companies in Europe
and North America, principally on
a proprietary basis and in situations
characterized by complexity
Fund Size: $3.6bn
Strategy: Mid-market
buyouts
Enterprise Value
of investments: $200m
- $1bn
Geography: Europe
and North America TowerBrook Investors
Website: www.towerbrook.com IV 30/09/22 30/9/21
----------------------------------
Value (GBP'000) 31,936 35,816
Cost (GBP'000) 16,056 16,947
Commitment ($'000) 36,561 36,561
Amount Funded 61.8% 59.9%
2.8% of
NAV
(30 September
2021: 3.6%) Income (GBP'000) 72 456
-------------------------------------------------------- ------------------------------- --------- -----------
Notes
Performance information has been prepared by APEO and has not
been approved by the General Partners of the funds or any of their
Associates.
* Income figures are for the year ended 30 September 2022 and 30
September 2021 respectively.
APEO's position in Action is held through 3i 2020 Co-investment
1 SCSp (formerly known as 3i Venice SCSp, a special purpose vehicle
managed by 3i as co-investment lead).
INVESTMENT PORTFOLIO
at 30 September 2022
Vintage Investment Number Outstanding Cost Valuation Net %
of investments commitments GBP'000 GBP'000(1) multiple(2) of
GBP'000 NAV
3i 2020 Co-investment
2020 1 SCSp (Action)(3,4) 1 - 22,630 58,695 2.7x 5.1
Advent International
Global Private
2016 Equity VIII 29 - 31,652 52,171 2.0x 4.5
CVC Capital Partners
2017 VII 33 4,887 24,862 44,399 1.8x 3.8
2017 HgCapital 8 11 4,504 12,668 42,144 2.5x 3.6
2016 IK Fund VIII 12 2,150 22,947 38,225 1.8x 3.3
2014 Altor Fund IV 16 12,930 27,886 37,158 1.9x 3.2
Structured Solutions
2021 IV Primary Holdings* 50 20,780 27,594 36,504 1.4x 3.2
Nordic Capital
2018 Fund IX 14 2,905 22,355 35,841 1.6x 3.1
Exponent Private
Equity Partners
2015 III, LP. 9 3,511 22,749 34,963 1.9x 3.0
TowerBrook Investors
2013 IV 10 12,497 16,056 34,936 2.4x 2.8
2014 CVC VI 22 2,715 14,889 31,927 2.2x 2.8
Advent International
Global Private
2019 Equity IX 36 2,788 18,401 31,000 1.7x 2.7
Bridgepoint Europe
2018 VI 17 5,341 20,118 28,650 1.5x 2.5
2016 Sixth Cinven Fund 15 1,906 16,651 28,151 1.9x 2.4
2018 PAI Europe VII 18 6,978 19,402 24,801 1.4x 2.1
Investindustrial
2018 Growth 4 6,283 14,201 22,979 2.4x 2.0
2014 PAI Europe VI 12 1,960 13,745 22,510 2.0x 1.9
2014 Permira V 10 739 11,079 22,334 3.5x 1.9
2019 Altor Fund V 18 19,676 17,845 21,271 1.3x 1.8
Nordic Capital
2013 VIII 10 2,745 18,673 20,810 1.6x 1.8
2018 Triton Fund V 17 13,059 13,174 19,887 1.4x 1.7
Bridgepoint Europe
2015 V 9 2,551 13,158 19,273 2.1x 1.7
American Industrial
2019 Partners VII 12 5,115 12,532 16,875 1.4x 1.5
MPI-COI-NAMSA SLP
2020 (NAMSA)(3) 1 2,614 4,863 16,860 2.9x 1.5
2019 Cinven 7 12 9,277 12,362 15,486 1.2x 1.3
Arbor Co-Investment
2021 LP (ACT)(3) 1 - 8,374 15,345 1.8x 1.3
2020 Vitruvian IV 26 8,734 12,707 15,082 1.2x 1.3
Nordic Capital
2015 VII 4 1,599 14,145 15,045 1.4x 1.3
2019 IK IX 12 8,399 13,163 14,590 1.1x 1.3
Vitruvian I CF
2019 LP 5 8,349 10,403 14,369 1.3x 1.2
Equistone Partners
2015 Europe Fund V 12 2,351 16,301 13,893 1.6x 1.2
Nordic Capital
2020 X 16 11,199 10,433 13,499 1.3x 1.2
Investindustrial
2019 VII 11 10,636 11,642 13,485 1.2x 1.2
MSouth Equity Partners
2018 IV 10 8,330 9,282 12,323 1.3x 1.1
MPI-COI-PROLLENIUM
SLP (Undisclosed)(3,
2021 5) 1 1,448 7,133 12,198 1.7x 1.1
Onex Partners IV
2017 LP 8 1,143 10,404 11,222 1.4x 1.0
PAI Strategic
Partnerships
2019 SCSp 2 204 6,579 10,647 1.6x 0.9
Uvesco Co-invest
2022 SCSp (Uvesco)(3) 1 - 8,451 10,443 1.2x 0.9
ECG Co-invest SLP
(European Camping
2021 Group)(3) 1 1,401 5,485 10,355 1.9x 0.9
Hg Isaac Co-Invest
2021 LP (Insightsoftware)(3) 1 174 7,452 10,032 1.3x 0.8
2012 IK Fund VII 4 1,754 9,867 9,991 2.1x 0.8
2016 Astorg VI 5 4,033 205 9,825 1.7x 0.8
Hg Riley Co-Invest
2021 LP (Riskalyze)(3) 1 - 6,836 9,440 1.4x 0.8
2020 Capiton VI 10 9,815 7,522 9,265 1.2x 0.8
IK Co-invest Questel
2021 (Questel)(3) 1 - 8,554 9,222 1.1x 0.8
2021 MI NGE S.L.P. (NGE)(3) 1 847 8,153 9,102 1.1x 0.8
2020 Vitruvian III 28 1,664 5,001 9,080 2.0x 0.8
Great Hill Partners
2019 VII 18 2,402 6,581 8,779 1.6x 0.7
Advent Technology
2021 II 10 18,765 8,630 8,479 1.0x 0.7
2020 Hg Saturn 2 6 6,896 5,966 8,362 1.3x 0.7
Eurazeo Payment
Luxembourg Fund
SCSp
2021 (Planet)(3) 1 1,103 7,798 8,088 1.0x 0.7
Bengal Co-Invest
SCSp (Tropicana
Brands
2021 Group)(3) 1 2,756 6,198 7,973 1.3x 0.7
Hg Vardos Co-invest
2020 L.P. (Visma)(3) 1 - 4,871 7,893 1.6x 0.7
2020 Hg Genesis 9 12 7,045 5,979 7,630 1.2x 0.7
Excellere Partners
2021 Fund IV 3 23,567 7,045 7,308 1.0x 0.6
2015 Capiton V 10 930 6,929 6,500 0.9x 0.6
Equistone Partners
2012 Europe Fund IV 7 648 8,762 6,448 2.2x 0.6
2011 Montagu IV 5 663 5,740 6,418 1.8x 0.5
CDL Coinvestment
2021 SPV (CDL)(3) 1 - 5,294 6,292 1.2x 0.5
Latour Co-invest
2021 Funecap (Funecap)*(3) 1 811 4,287 5,879 1.3x 0.5
Triton Smaller
2020 Mid-Cap Fund II 8 14,751 6,944 5,788 0.9x 0.5
MPI-COI-SUAN SLP
2021 (Suanfarma)(3) 1 991 5,452 5,587 1.0x 0.5
Capiton VI Wundex
2021 Co-Investment (Wundex)3 1 3,263 5,352 5,050 1.0x 0.5
PAI Mid-Market
2020 I 5 16,786 4,987 5,339 1.1x 0.5
bd-capital Partners
Chase (Sport
2021 Pursuit)(3) 1 - 4,279 5,304 1.2x 0.5
Seidler Equity
2020 Partners VII L.P. 4 10,873 4,085 5,167 1.2x 0.4
2020 Hg Mercury 3 8 6,742 4,015 5,148 1.3x 0.4
2022 AV Invest B3* 1 413 4,691 4,841 1.0x 0.4
Alphaone International
S.à.r.l.
(Mademoiselle
2019 Desserts)(3) 1 1,740 3,522 4,773 1.4x 0.4
2021 VIP SIV I LP (CFC)(3) 1 5,085 3,915 4,483 1.1x 0.4
WindRose Health
Investors Fund
2021 VI 4 13,253 4,493 4,461 1.0x 0.4
Advent International
Global Private
2012 Equity VII 13 834 5,496 4,370 2.1x 0.4
ArchiMed - Med
2022 Platform 2 2 22,525 3,642 4,015 1.1x 0.3
IK Partnership
2021 II 2 18,562 3,375 3,374 1.0x 0.3
Nordic Capital
WH1 Beta, L.P.
2021 (Boost.ai)(3) 1 1,193 2,524 3,070 1.1x 0.3
2001 CVC III* 0 466 4,283 2,258 2.7x 0.2
Bridgepoint Europe
2013 IV 5 794 2,920 1,801 1.6x 0.2
ASI Omega Holdco
2021 Limited (KD Pharma)(3) 1 2,832 1,462 1,785 1.2x 0.2
American Industrial
2011 Partners V 7 13 1,257 1,715 1.4x 0.1
2008 CVC V* 1 438 4,329 1,161 2.4x 0.1
2006 3i Eurofund V 1 - 11,308 834 2.7x 0.1
Advent International
Global Private
2022 Equity X 1 25,406 944 756 0.8x 0.1
2021 ArchiMed III 3 12,379 759 540 0.7x 0.0
Gilde Buy-Out Fund
2019 IV 1 - 2,262 525 1.2x 0.0
Investindustrial
2022 Growth III 0 25,789 521 193 0.4x 0.0
Permira Growth
2021 Opportunities II 9 28,845 2,303 121 0.1x 0.0
Industri Kapital
2007 2007 Fund 0 1,523 5,545 68 1.4x 0.0
Capiton IV GmbH
& Co. Beteiligungs
2009 KG 5 149 241 41 1.1x 0.0
Borromin Capital
2019 Fund III L.P. 0 212 808 6 1.6x 0.0
Great Hill Equity
2021 Partners VIII 4 17,916 - - 0.0x 0.0
2022 Hg Saturn 3 1 31,195 157 - 0.0x 0.0
2006 HgCapital 5 0 - 5,642 - 1.7x 0.0
Latour Capital
2022 IV* 0 26,327 - - 0.0x 0.0
Nordic Capital
2021 Evolution Fund 4 26,327 - - 0.0x 0.0
Nordic Capital
2022 Fund XI 0 26,327 - - 0.0x 0.0
One Peak Growth
2022 III 4 13,027 133 - 0.0x 0.0
2022 PAI Europe VIII 0 26,237 - - 0.0x 0.0
Total investments(6) 735 678,880 846,318 1,192,380 103.0
Non-portfolio
assets less liabilities (34,328) (-3.0)
Total shareholders'
funds 1,158,052 100.0
1 All funds are valued by the manager of the relevant fund or
co-investment as at 30 September 2022, with the exception of those
funds suffixed with an * which were valued as at 30 June 2022 or
initial funding amount paid.
2 The net multiple has been calculated by the Manager in
sterling on the basis of the total realised and unrealised return
for the interest held in each fund and coinvestments. These figures
have not been reviewed or approved by the relevant fund or its
manager.
3 Co-investment position. The name of the underlying
co-investment which is indirectly held by APEO has been included
within the bracketed text.
4 Formerly known as 3i Venice SCSp.
5 Due to disclosure restrictions associated with this
investment, the underlying Company name cannot be disclosed.
6 The 735 underlying investments represent holdings in 655
separate underlying private companies, 41 underlying fund
investments and 9 underlying co-investments.
TOP 30 UNDERLYING PRIVATE COMPANY INVESTMENTS
at 30 September 2022(1)
Entity Description Fund/Co-investment Year of %
Investment(1) of
NAV(2)
Action Non-food discount retailer 3i Venice SCSp 2020 5.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Access Group Software solutions HgCapital 8 2018 2.3%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Arbor Co-Investment
Leading global provider of market-based LP/Bridgepoint Europe
ACT sustainability solutions VI 2021 1.5%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
NAMSA Provider of medical devices MPI-COI-NAMSA SLP 2020 1.5%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
TowerBrook Investors
R1 RCM Healthcare revenue services IV 2016 1.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
European leader in outdoor ECG Co-invest SLP/PAI
ECG accommodation market Europe VII 2021 1.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
PAI Strategic Partnerships
Ice cream manufacturer for take SCSp / PAI Europe
Froneri home and private label segments VII 2019 1.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Uvesco Co-invest
SCSp/PAI Mid- Market
Uvesco Leading Spanish regional grocer I 2022 1.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
MPI-COI-PROLLENIUM
Undisclosed(4) Medical aesthetics company SLP 2021 1.1%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Binding Site Clinical laboratory diagnostics Nordic Capital VII 2011 1.0%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Financial reporting and enterprise
performance management software Hg Isaac Co-Invest
Insightsoftware provider LP / Hg Saturn 2 2021 1.0%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
B2B professional information TowerBrook Investors
InfoPro Digital services IV 2016 1.0%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Hg Riley Co-Invest
Riskalyze Risk tolerance software LP/ Hg Mercury 3 2021 0.9%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Global leader in the cyber insurance VIP SIV I LP/Vitruvian
CFC market IV 2022 0.9%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Manufacturer of polyethylene
Trioplast film Altor Fund IV 2018 0.9%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Provides support to the medical CDL Coinvestment
profession SPV/Excellere
CDL through advanced diagnostics Partners Fund IV 2021 0.9%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Bengal Co-Invest
SCSp/PAI Europe
Tropicana Global portfolio of juice brands VII 2022 0.9%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Hg Vardos Co-invest
L.P. / Hg Saturn
Visma Accounting software and services 2 2020 0.8%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Eurazeo Payment
Leading provider of integrated Luxembourg Fund
payment SCSp/Advent International
solutions for hospitality and Global Private Equity
Planet retail IX 2021 0.8%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Alphaone International
Mademoiselle S.à.r.l. /
Desserts Dessert and confectionery producer IK Fund VIII 2018 0.8%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Questel Intelligence Software IK Co-invest Questel 2021 0.8%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Independant public works concessions
Groupe NGE group MI NGE S.L.P. 2021 0.8%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Metallic parts formation and
preparation
Norican industry Altor Fund IV 2015 0.7%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Transcom Customer management specialist Altor Fund IV 2015 0.7%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Medical device solutions provider
for the
diagnosis and treatment of patients
with
central nervous and sensory ArchiMed - Med Platform
Natus systems disorders 2 2022 0.7%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Software provider to automotive Advent International
collision repairers, parts suppliers Global Private Equity
Undisclosed(4) and insurers VIII 2017 0.7%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Specialist international life
RL360 assurance provider Vitruvian I CF LP 2019 0.7%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Industrial equipment for bakery,
dairy, pharma
Linxis Group and cosmetics manufacturing IK Fund VIII 2017 0.6%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Cybersecurity and secure networking
Infradata solutions IK Fund VIII 2019 0.6%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Nordic Capital Fund
Trustly Online payment provider IX 2018 0.6%
----------------- ----------------------------------------- ---------------------------- ---------------- --------
Total 32.8%
------------------------------------------------------------------------------------------------------------ --------
1 Based on latest available information. This excludes any
underlying fund and co-investments held through the Company
portfolio.
2 Year of investment is disclosed as the first year of
investment by a portfolio investment.
3 All % of NAV figures are based on gross valuations, before any
carry provision.
4 Due to disclosure restrictions associated with our holding in
the associated investments, we are unable to name the underlying
private company.
LARGEST 10 UNDERLYING PRIVATE COMPANIES
at 30 September 2022(1,2)
The below represents the ten largest underlying private
companies which are indirectly held through APEO's fund investments
and/or co-investments.
1 5.1% ACTION Since its establishment in 1993,
of NAV Sector: Consumer staples Benelux-based Action has grown
Location: Netherlands into the leading non-food discount
Year of Investment: 2020 retailer in the region with more
Private Equity Manager: than 2,100 stores and over 65,000
3i Group plc employees.
Investment: 3i 2020 Co-investment
1 SCSp
Company Website: www.action.nl
2 2.3% access Founded in 1991, the Access Group
of NAV Sector: Information technology ("Access") is a leading UK mid
Location: UK market Enterprise Resource Planning
Year of Investment: 2018 business, providing financial
Private Equity Manager: management systems and human
HgCapital capital management software,
Investment: HgCapital as well as industry specific
8 software solutions. Access' software
Company Website: www.theaccessgroup.com helps over 75,000 customers across
commercial and not for- profit
organisations to work efficiently,
with expertise across numerous
industries.
3 1.5% ACT ACT is the leading global provider
of NAV Sector: Industrials of market-based sustainability
Location: Netherlands solutions. It is headquartered
Year of Investment: 2021 in the Netherlands but operates
Private Fund Manager: from a global platform, and is
Bridgepoint Capital the largest specialist intermediary
Investments: Arbor Co-Investment in the global environmental certificate
LP/Bridgepoint Europe VI sector. ACT acts as an intermediary
Company Website: www.actcommodities.com between corporates seeking to
purchase certificates and suppliers
with whom it has entrenched relationships.
It also provides advisory services,
helping clients to navigate this
rapidly evolving market and meet
their environmental goals.
4 1.5% NAMSA NAMSA is the global industry
of NAV Sector: Healthcare leading Contract Research Organisation
Location: United States ("CRO") for preclinical and clinical
Year of Investment: 2020 medical device companies, and
Private Fund Manager: a global market leader in preclinical
ArchiMed SaS and biocompatibility testing.
Investment: MPI-COI-NAMSA
SLP
Company Website: www.namsa.com
5 1.1% R1 RCM R1 RCM, headquartered in Chicago,
of NAV Sector: Healthcare provides outsourced revenue cycle
Location: USA management services that help
Year of Investment: 2016 healthcare providers to more
Private Fund Manager: efficiently and cost effectively
TowerBrook Investors manage their revenue cycles through
Investment: TowerBrook people, processes and integrated
Investors IV technology and analytics solutions.
Company Website: www.r1rcm.com The company offers a fully outsourced
end-to-end-technology enabled
solution, which spans the entire
revenue cycle from patient registration
to collection from patients and
third-party payors.
6 1.1% European Camping Group European Camping Group is a leading
of NAV Sector: Consumer Discretionary outdoor accommodation operator
Location: France in Europe. At acquisition, ECG
Year of Investment: 2021 operated a fleet of 21,000 high-quality
Private Equity Manager: holiday lets across over 300
PAI Partners European sites. It operates under
Investments: ECG Co-invest a number of strong brands, including
SLP/PAI Europe VII Eurocamp and Homair.
Company Website: www.europeancampinggroup.com
7 1.1% FRONERI Froneri is a global ice cream
of NAV Sector: Consumer Discretionary manufacturer, and largest pure-play
Location: United Kingdom ice-cream manufacturer globally,
Year of Investment: 2019 benefitting from market-leading
Private Equity Manager: positioning in both branded and
PAI Partners private label ice cream. It was
Investments: PAI Strategic formed as a joint venture
Partnerships SCSp/PAI Europe between R&R Ice cream plc and
VII Nestlé in 2016.
Company Website: www.froneri.com
8 1.1% UVESCO Uvesco is a leading food retailer
of NAV ocation: Spain in the North of Spain with a
Year of Investment: 2022 growing presence in Madrid. The
Private Equity Manager: company follows a differentiated
PAI Partners model based on proximity stores
Investments: Uvesco Co-Invest and a high-quality offering,
SCSp/PAI Mid-Market I including a significant fresh
Company Website: www.uvesco.es product component that is locally
sourced and sold through its
network of over 270 stores across
six regions.
9 1.1% UNDISCLOSED Medical aesthetics company.
of NAV Sector: Healthcare
Location: Canada Due to disclosure restrictions
Year of Investment: 2021 associated with this investment,
Private Equity Manager: no further information can be
ArchiMed SaS provided.
Investment: MPI-COI-PROLLENIUM
SLP
Company Website: restricted
10 1.0% Binding Site Binding Site provides specialist
of NAV Sector: Healthcare diagnostic products to
Location: United Kingdom clinicians and laboratory professionals
Year of Investment: 2011 worldwide,
Private Equity Manager: principally for the diagnosis
Nordic Capital Partners of blood cancers and
Investment: Nordic Capital immune system disorders. Founded
VII by researchers
Company Website: www.bindingsite.com at the University of Birmingham,
Binding Site has
continued to build on its strong
scientific foundations,
supporting research and development
within their
field and responding to the changing
needs of
patients, researchers and clinicians
for over 25 years.
1 All % of APEO's NAV figures are based on gross valuations,
before any carry provision.
2 Based on latest available information. This excludes any
underlying fund and co-investments held through the Company
portfolio.
DIRECTORS' REPORT
The Directors present their report and the audited financial
statements of the Company for the year ended 30 September 2022.
The Directors consider that the Annual Report and Accounts,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
position, performance, business model and strategy.
Results and Dividends
The financial statements for the year ended 30 September 2022
are set out below. Interim dividends of 3.6 pence per Ordinary
share were paid in April, July and October 2022. The Board
declared, on 14 December 2022, a fourth interim dividend for the
year to 30 September 2022 of 3.6 pence per share to be paid on 27
January 2023 to shareholders on the register on 23 December
2022.
Principal Activity and Status
The Company is registered as a public limited company in
Scotland under company number SC216638, is an investment company
within the meaning of Section 833 of the Companies Act 2006 and
carries on business as an investment trust.
The Company has applied for and has been accepted as an
investment trust under Sections 1158 and 1159 of the Corporation
Tax Act 2010 and Part 2 Chapter 1 of Statutory Instrument
2011/2999. This approval relates to accounting periods commencing
on or after 1 October 2012. The Directors are of the opinion that
the Company has conducted its affairs so as to be able to retain
such approval.
The Company intends to manage its affairs so that its Ordinary
shares continue to be a qualifying investment for inclusion in the
stocks and shares component of an Individual Savings Account.
Capital Structure and Voting Rights
The Company's issued share capital at 30 September 2022
consisted of 153,746,294 (2021: 153,746,294) Ordinary shares of 0.2
pence each in issue.
Each ordinary shareholder is entitled to one vote on a show of
hands and, on a poll, to one vote for every Ordinary share
held.
Management Agreement
The Company has appointed abrdn Capital Partners LLP, a wholly
owned subsidiary of abrdn, as its alternative investment fund
manager ("AIFM") and Manager (the "Manager"). abrdn Capital
Partners LLP has been appointed to provide investment management,
risk management, administration and company secretarial services,
and promotional activities to the Company. abrdn Capital Partners
LLP has sub-delegated administrative and secretarial services to
abrdn Holdings Limited (previously known as Aberdeen Asset
Management PLC) and promotional activities to abrdn.
The management fee, payable quarterly, is calculated as 0.95%
per annum of the Company's net asset value at the end of the
relative quarter. No fee is payable on any investments in any
investment trust, collective investment scheme or any other company
or fund managed, operated or advised by the Manager or any other
subsidiary of abrdn where there is an entitlement to a fee on that
investment.
Further details of the fees payable to the Manager are shown in
notes 3 and 4 to the financial statements.
The management agreement is terminable on not less than twelve
months' written notice.
External Agencies
The Board has contractually delegated depositary services (which
include the custody and safeguarding of the Company's assets) to
IQ-EQ Depositary Company (UK) Limited and the share registration
services to Equiniti Limited. These contracts were entered into
after full and proper consideration by the Board of the quality and
cost of services offered in so far as they relate to the affairs of
the Company.
Substantial Interests
Information provided to the Company by major shareholders
pursuant to the FCA's Disclosure, Guidance and Transparency Rules
is published by the Company via a Regulatory Information
Service.
The table below sets out the interests in 3% or more of the
issued share capital of the Company, of which the Board was aware
as at 30 September 2022 .
Shareholder Number of Ordinary shares % held
----------------------------------------- -------------------------- -------
Phoenix Group Holdings(1) 86,736,912 56.4
========================================= ========================== =======
Interactive investor 7,609,065 5.0
========================================= ========================== =======
Hargreaves Lansdown 5,676,406 3.7
========================================= ========================== =======
Oxfordshire County Council Pension Fund 4,839,784 3.2
----------------------------------------- -------------------------- -------
Quilter Cheviot Investment Management 4,589,572 3.0
========================================= ========================== =======
(1) The voting rights of these shares are retained by abrdn.
The Company has not been notified of any changes to these
holdings as at the date of this Report.
Relationship Agreement with Standard Life Assurance Limited
The Company's largest shareholder, Phoenix Group Holdings, holds
its shares through Standard Life Assurance Limited ("SLAL", which
is 100% owned by Phoenix Group Holdings). SLAL has irrevocably
undertaken to the Company that, at any time when SLAL and its
Associates (meaning any company which is a member of the SLAL
group) are entitled to exercise or control 30% or more of the
rights to vote at general meetings of the Company, it will not (and
will procure that none of its Associates will) seek to nominate
directors to the Board of the Company who are not independent of
SLAL and its Associates, enter into any transaction or arrangement
with the Company which is not conducted at arm's length and on
normal commercial terms, take any action that would have the effect
of preventing the Company from carrying on an independent business
as its main activity or from complying with its obligations under
the Listing Rules or propose or procure the proposal of any
shareholder resolution which is intended or appears to be intended
to circumvent the proper application of the Listing Rules.
Directors
Each of the Directors of the Company as at 30 September 2022,
whose biographies are shown on in the Annual Report are considered
by the Board to be independent of the Company and the Manager and
free of any relationship which could materially interfere with the
exercise of their independent judgement on issues of strategy,
performance, resources and standards of conduct.
All of the Directors held office throughout the year under
review and up to the date of signing the financial statements.
The Directors attended scheduled Board and Committee meetings
during the year ended 30 September 2022 as follows (with their
eligibility to attend the relevant meetings in brackets):
Board Meetings Audit Committee Management Engagement
Meetings and Nomination
Committee Meetings
------------------------- -------------- --------------- ------------------------
Dugald Agble(1) 5 (5) 2 (2) 1 (1)
========================= ============== =============== ========================
Alan Devine 5 (5) 2 (2) 1 (1)
========================= ============== =============== ========================
Christina McComb(1) 3 (3) 1 (1) 1 (1)
========================= ============== =============== ========================
Diane Seymour-Williams 5 (5) 2 (2) 1 (1)
========================= ============== =============== ========================
Yvonne Stillhart(1) 5 (5) 2 (2) 1 (1)
========================= ============== =============== ========================
Calum Thomson 5 (5) 2 (2) 1 (1)
========================= ============== =============== ========================
(1) Retired from the Board on 22 March 2022..
The Board and Committees meet more frequently when business
needs require. There are a number of matters reserved for the
Board's approval which include overall strategy, investment policy,
borrowings, dividend policy and Board composition.
All of the Directors will retire and, being eligible, will offer
themselves for re-election at the Annual General Meeting.
The Board believes that each Director has the requisite high
level and range of business, investment and financial experience
which enables the Board to provide clear and effective leadership
and proper governance of the Company. Each Director remains
independent and free from any relationship which could materially
interfere with the exercise of their judgement on issues of
strategy, performance, resources and standards of conduct.
Following the Company's formal annual performance evaluation, the
Board concluded that each Director's performance continues to be
effective and each Director demonstrates commitment to the role,
and their individual performances contribute to the long-term
sustainable success of the Company. The Board therefore recommends
the re-election, of each of the Directors at the Annual General
Meeting. The biographies set out their range of skills and
experience as well as length of service and their contribution to
the Board during the year.
Board's Policy on Tenure
In normal circumstances, it is the Board's expectation that
Directors will not serve beyond the Annual General Meeting
following the ninth anniversary of their appointment. However, the
Board takes the view that independence of individual Directors is
not necessarily compromised by length of tenure on the Board and
that continuity and experience can add significantly to the Board's
strength. The Board believes that recommendation for re-election
should be on an individual basis following a rigorous review which
assesses the contribution made by the Director concerned, but also
taking into account the need for regular refreshment and
diversity.
It is the Board's policy that the Chair of the Board will not
normally serve as a Director beyond the Annual General Meeting
following the ninth anniversary of his or her appointment to the
Board. However, this may be extended in certain circumstances or to
facilitate effective succession planning and the development of a
diverse Board. In such a situation the reasons for the extension
will be fully explained to shareholders and a timetable for the
departure of the Chair clearly set out. Alan Devine was appointed
to the Board on 28 May 2014, and as Chairman on 22 March 2022, and
the Annual General Meeting in March 2023 follows the eighth
anniversary of his appointment.
Board Diversity
The Board recognises the importance of having a range of
skilled, experienced individuals with appropriate knowledge
represented on the Board in order to allow it to fulfil its
obligations. The Board also recognises the benefits and is
supportive of the principle of diversity in its recruitment of new
Board members. The Board will not display any bias for age, gender,
race, sexual orientation, religion, ethnic or national origins, or
disability in considering the appointment of its Directors. In view
of its size, the Board will continue to ensure that all
appointments are made on the basis of merit against the
specification prepared for each appointment. The Board does not
therefore consider it appropriate to set measurable objectives in
relation to its diversity.
However, the Board will take account of the diversity targets
set out in the FCA's Listing Rules, which are set out below. The
Board voluntarily discloses the following information in relation
to its diversity.
As an externally managed investment company, the Board employs
no executive staff, and therefore does not have a chief executive
officer ("CEO") or a chief financial officer ("CFO") both of which
are deemed senior board positions by the FCA. Other senior board
positions recognised by the FCA are chair of the board and senior
independent director ("SID"). In addition, the Board has resolved
that the Company's year end date be the most appropriate date for
disclosure purposes.
The following information has been provided by each Director.
There have been no changes since 30 September 2022.
Number of Percentage Number of
Board of the Board senior
members positions on
the Board
-------- --------- ------------- ----------------
Men 3 60 2
======== ========= ============= ================
Women 2 40 (1) 0
======== ========= ============= ================
(1) Meets target of at least 40% as set out in LR 9.8.6R
(9)(a)(i)..
Number of Percentage Number of
Board of the Board senior
members positions on
the Board
-------------------------------- --------- ------------- ----------------
White British or other White
(including minority-white
groups) 3 60 2
================================ ========= ============= ================
Black/African/Caribbean/Black
British 1 20 (1) 0
================================ ========= ============= ================
(1) Meets target of at least one individual from a minority
background as set out in LR 9.8.6R (9)(a)(i).
The Role of the Chair and Senior Independent Director
Alan Devine is the Chair and Calum Thomson is the Senior
Independent Director.
The Chair is responsible for providing effective leadership to
the Board, by setting the tone of the Company, demonstrating
objective judgement and promoting a culture of openness and debate.
The Chair facilitates the effective contribution and encourages
active engagement by each Director. In conjunction with the Company
Secretary, the Chair ensures that Directors receive accurate,
timely and clear information to assist them with effective decision
making. The Chair leads and acts upon the results of the formal and
rigorous annual Board and Committee evaluation process by
recognising strengths and addressing any weaknesses of the Board.
He also ensures that the Board engages with major shareholders and
that all Directors understand shareholder views.
The Senior Independent Director acts as a sounding board for the
Chair and acts as an intermediary for other directors, when
necessary. Working closely with the Nomination Committee, the
Senior Independent Director takes responsibility for an orderly
succession process for the Chair, and leads the annual appraisal of
the Chair's performance. The Senior Independent Director is also
available to shareholders to discuss any concerns they may
have.
Directors' and Officers' Liability Insurance
The Company maintains insurance in respect of directors' and
officers' liabilities in relation to their acts on behalf of the
Company. The Company's articles of association provide that any
director or other officer of the Company is to be indemnified out
of the assets of the Company against any liability incurred by him
as a director or other officer of the Company to the extent
permitted by law.
Management of Conflicts of Interest
The Board has a procedure in place to deal with a situation
where a Director has a conflict of interest. As part of this
process, each Director discloses other positions held and all other
conflict situations that may need to be authorised either in
relation to the Director concerned or his or her connected persons.
The Board considers each Director's situation and decides whether
to approve any conflict or other external positions, taking into
consideration what is in the best interests of the Company and
whether the Director's ability to act in accordance with his or her
wider duties is affected. Each Director is required to notify the
Company Secretary of any potential, or actual, conflict situations
that will need authorising by the Board. Authorisations given by
the Board are reviewed at each Board meeting.
No Director has a service contract with the Company although all
Directors are issued with letters of appointment. There were no
contracts during, or at the end of the year, in which any Director
was interested.
The Company has a policy of conducting its business in an honest
and ethical manner. The Company takes a zero-tolerance approach to
bribery and corruption and has procedures in place that are
proportionate to the Company's circumstances to prevent them. The
Manager also adopts a group-wide zero-tolerance approach and has
its own detailed policy and procedures in place to prevent bribery
and corruption. Copies of the Manager's anti-bribery and corruption
policies are available on its website. In relation to the corporate
offence of failing to prevent tax evasion, it is the Company's
policy to conduct all business in an honest and ethical manner. The
Company takes a zero-tolerance approach to facilitation of tax
evasion whether under UK law or under the law of any foreign
country and is committed to acting professionally, fairly and with
integrity in all its business dealings and relationships.
Financial Risk Management
The principal risk and uncertainties facing the Company are set
out above. The principal financial risks and the Company's policies
for managing these risks are set out in note 18 to the financial
statements.
Corporate Governance
The Company is committed to high standards of corporate
governance. The Board is accountable to the Company's shareholders
for good governance and this statement describes how the Company
has applied the principles identified in the UK Corporate
Governance Code as published in July 2018 (the "UK Code"), which is
available on the Financial Reporting Council's (the "FRC") website:
frc.org.uk.
The Board has also considered the principles and provisions of
the AIC Code of Corporate Governance as published in February 2019
(the "AIC Code"). The AIC Code addresses the principles and
provisions set out in the UK Code, as well as setting out
additional provisions on issues that are of specific relevance to
the Company. The AIC Code is available on the AIC's website:
theaic.co.uk.
The Board considers that reporting against the principles and
provisions of the AIC Code, which has been endorsed by the FRC,
provides more relevant information to shareholders.
The Board confirms that, during the year, the Company complied
with the principles and provisions of the AIC Code and the relevant
provisions of the UK Code, except as set out below.
The UK Code includes provisions relating to:
- interaction with the workforce (provisions 2, 5 and 6);
- the role and responsibility of the chief executive (provisions 9 and 14);
- previous experience of the chair of a remuneration committee (provision 32); and
- executive directors' remuneration (provisions 33 and 36 to 40).
The Board considers that these provisions are not relevant to
the position of the Company, being an externally managed investment
company. In particular, all of the Company's day-to-day management
and administrative functions are outsourced to third parties. As a
result, the Company has no executive directors, employees or
internal operations. The Company has therefore not reported further
in respect of these provisions.
The full text of the Company's Corporate Governance Statement
can be found on its website.
Board Committees
The Board has appointed a number of Committees, as set out
below. Copies of their terms of reference, which clearly define the
responsibilities and duties of each Committee, are available on the
Company's website, or upon request from the Company.
The performance of the Committees and their terms of reference
are reviewed by the Board on an ongoing basis and formally at least
annually.
Audit Committee
The Audit Committee is chaired by Calum Thomson who is a
Chartered Accountant and has recent and relevant financial
experience. The Committee comprises all non-executive Directors.
The Chair of the Board is a member of the Audit Committee as the
Audit Committee and Board consider that Alan Devine was independent
on appointment, and continues to be independent of the Manager.
Given the size of the Board, and the continued independence of Alan
Devine, the Board believes that it is appropriate for all the
independent Directors, including the Chair, to constitute the Audit
Committee. The Board is satisfied that the Committee as a whole has
competence relevant to the investment trust sector.
The Audit Committee's Report is contained in the Annual
Report.
Management Engagement Committee
The Management Engagement Committee comprises the full Board and
was chaired by Alan Devine during the financial year. Given the
size of the Board, the Board believes that it is appropriate for
all the independent Directors to constitute the Management
Engagement Committee. Subsequent to the financial year end, Yvonne
Stillhart was appointed as Chair of the Management Engagement
Committee with effect from 13 December 2022. The main
responsibilities of the Committee include:
- monitoring and evaluating the performance of the Manager;
- reviewing at least annually the continued retention of the Manager;
- reviewing, at least annually, the terms of appointment of the
Manager including, but not limited to, the level and method of
remuneration and the notice period of the Manager; and
- reviewing the performance and remuneration of the other key service providers to the Company.
The Committee met in respect of the year ended 30 September 2022
to review of performance and the terms of appointment of the
Manager. Following which, the Committee recommended to the Board
that the continuing appointment of the Manager was in the best
interests of the shareholders and the Company as a whole.
In reaching this decision, the Committee considered the
Company's long-term performance record and concluded that it
remained satisfied with the capability of the Manager to deliver
satisfactory investment performance, that its processes are
thorough and robust and that it employs a well-resourced team of
skilled and experienced fund managers. In addition, the Committee
is satisfied that the Manager has the secretarial, administrative
and promotional skills required for the effective operation and
administration of the Company.
Nomination Committee
The Nomination Committee comprises the full Board and was
chaired by Alan Devine during the financial year. Given the size of
the Board, the Board believes that it is appropriate for all the
independent Directors to constitute the Nomination Committee.
Subsequent to the financial year end, Diane Seymour-Williams was
appointed as Chair of the Nomination Committee with effect from 13
December 2022. The Committee met once during the year to carry out
its responsibilities. The main responsibilities of the Committee
include:
- regularly reviewing the structure, size and composition
(including the skills, knowledge, experience, diversity and gender)
of the Board;
- undertaking succession planning, taking into account the
challenges and opportunities facing the Company and identifying
candidates to fill vacancies;
- recruiting new Directors, undertaking open advertising or
engaging external advisers to facilitate the search, as
appropriate, with a view to considering candidates from a wide
range of backgrounds, on merit, and with due regard for the
benefits of diversity on the Board, taking care to ensure that
appointees have enough time available to devote to
the position;
- ensuring that new appointees receive a formal letter of
appointment and suitable induction and ongoing training;
- arranging for the annual Board and Committee performance
evaluations and ensuring that Directors are able to commit the time
required to properly discharge their duties;
- making recommendations to the Board as to the position of
Chair, Senior Independent Director and Chair of the Nomination,
Audit and Management Engagement Committees;
- assessing, on an annual basis, the independence of each Director; and
- approving the re-election of any Director, subject to the UK
Code, the AIC Code, or the Articles of Association, at the Annual
General Meeting, having due regard to their performance, ability to
continue to contribute to the Board in the light of the knowledge,
skills and experience required and the need for progressive
refreshing of the Board.
Going Concern
The Board has considered its obligation to satisfy itself as to
the appropriateness of the adoption of the going concern assumption
as a basis for the preparation of the financial statements.
At 30 September 2022, the Company had a GBP200.0 million (2021:
GBP200.0 million) committed, multi-currency syndicated revolving
credit facility, under which GBP62.0 million (2021: GBPnil) had
been drawn down. The facility is provided by Citi, Société Générale
and State Street Bank International. Following the year end, the
revolving credit facility was increased to GBP300.0 million and the
maturity extended by a year to December 2025. The larger facility
is provided by RBS International, Société Générale and State Street
Bank International.
The Directors are mindful of the Principal Risks and
Uncertainties disclosed in the Strategic Report, including the
difficult conditions in the global economy and financial markets,
and they believe that the Company has adequate financial resources
to continue its operational existence for a period of not less than
12 months from the date of approval of this Report. They have
arrived at this conclusion having reviewed the Company's revolving
credit facility, the future cash flow projections, including the
impact of stress testing on the portfolio, the ongoing expenses
forecasts for the coming year, and taking into account that the
Company had net resources available for investment at the year
end.
Accordingly, the Directors believe that it is appropriate to
continue to adopt the going concern basis in preparing the
financial statements.
Accountability and Audit
The respective responsibilities of the Directors and the
Independent Auditor in connection with the financial statements
appear in the Annual Report.
The Directors confirm that, so far as they are each aware, there
is no relevant audit information of which the Company's Independent
Auditor was unaware, and that each Director has taken all the steps
that they might reasonably be expected to have taken as a Director
to make themselves aware of any relevant audit information and to
establish that the Company's Independent Auditor was aware of that
information.
Independent Auditor
Shareholders approved the re-appointment of BDO LLP as the
Company's Independent Auditor at the AG on 22 March 2022 and
resolutions to approve its reappointment for the year to 30
September 2023 and to authorise the Directors to determine its
remuneration will be proposed at the AGM on 22 March 2023.
Relations with Shareholders
The Board recognises the importance of promoting the Company to
prospective investors both for improving liquidity and enhancing
the value and rating of the Company's shares. One of the benefits
of being managed by abrdn is the ability to subscribe to, and
participate in, the promotional programme run by abrdn on behalf of
a number of investment trusts under its management. The Company's
financial contribution to the programme is matched by abrdn. The
Company also supports abrdn's investor relations programme which
involves regional roadshows, promotional and public relations
campaigns. abrdn's promotional and investor relations teams report
to the Board on a quarterly basis giving analysis of the
promotional activities as well as updates on the shareholder
register and any changes in the make-up of that register.
Shareholders and investors may obtain up to date information on
the Company through its website and the Manager's Customer Services
Department.
The Board also communicates directly with shareholders and their
representative bodies without the involvement of the management
group (including the Company Secretary or the Manager) in
situations where direct communication is required, and
representatives from the Manager and Board meet with major
shareholders on at least an annual basis in order to gauge their
views, and report back to the Board on these meetings. In addition,
the Company Secretary only acts on behalf of
the Board, not the Manager, and there is no filtering of
communication.
The Company's Annual General Meeting provides a forum for
communication primarily with private shareholders and is attended
by the Board. The Manager makes a presentation to the meeting and
all shareholders have the opportunity to put questions to both the
Board and the Manager at the meeting.
The notice of the Annual General Meeting is sent out at least 20
working days in advance of the meeting. All shareholders have the
opportunity to put questions to the Board and Manager at the
meeting.
Additional Information
Where not provided elsewhere in the Directors' Report, the
following provides the additional information required to be
disclosed by Part 15 of the Companies Act 2006.
There are no restrictions on the transfer of Ordinary shares in
the Company issued by the Company other than certain restrictions
which may from time to time be imposed by law. The Company is not
aware of any agreements between shareholders that may result in a
transfer of securities and/or voting rights.
The rules governing the appointment of Directors are set out in
the Directors' Remuneration Report in the Annual Report. The
Company's Articles of Association may only be amended by a special
resolution passed at a general meeting of shareholders.
Annual General Meeting
The Notice of the Annual General Meeting, which will be held at
12:30pm at the Balmoral Hotel, 1 Princes Street, Edinburgh, EH2
2EQ, Edinburgh on Wednesday, 22 March 2023, and related notes, may
be found in the Annual Report.
Shareholders are encouraged vote on the resolutions proposed in
advance of the AGM and submit questions to the Board and the
Manager by emailing APEOT.Board@abrdn.com.
Resolutions including the following business will be
proposed:
Dividend Policy
As a result of the timing of the payment of the Company's
interim dividends, the Company's shareholders are unable to approve
a final dividend each year. In line with good corporate governance,
the Board therefore proposes to put the Company's dividend policy
to shareholders for approval at the Annual General Meeting and on
an annual basis thereafter.
The Company's dividend policy is that interim dividends on the
Ordinary shares are payable quarterly. Resolution 4 will seek
shareholder approval for the dividend policy.
Issue of Ordinary Shares
Resolution 12, which is an ordinary resolution, will, if passed,
renew the Directors' authority to allot new Ordinary shares up to
10% of the issued share capital of the Company (excluding treasury
shares) as at the date of the passing of the resolution.
Resolution 13, which is a special resolution, will, if passed,
renew the Directors' existing authority to allot new Ordinary
shares or sell treasury shares for cash without the new Ordinary
shares first being offered to existing shareholders in proportion
to their existing holdings. This will give the Directors authority
to allot Ordinary shares or sell shares from treasury on a non
pre-emptive
basis for cash up to an aggregate nominal amount of GBP30,749.25
(representing 10% of the issued ordinary share capital of the
Company (excluding treasury shares) as at 30 January 2023).
New Ordinary shares, issued under this authority, will only be
issued at prices representing a premium to the last published net
asset value per share.
The authorities being sought under Resolutions 12 and 13 shall
expire at the conclusion of the Company's next AGM
in 2024 or, if earlier, on the expiry of 15 months from the date
of the passing of the resolutions, unless such authorities are
renewed, varied or extended prior to such time. The Directors have
no current intention to exercise these authorities and will only do
so if they believe it is advantageous and in the best interests of
shareholders as a whole.
Purchase of the Company's Ordinary Shares
Resolution 14, which is a special resolution, seeks to renew the
Board's authority to make market purchases of the Company's
Ordinary shares in accordance with the provisions contained in the
Companies Act 2006 and the FCA's Listing Rules. Accordingly, the
Company will seek authority to purchase up to a maximum of 14.99%
of the issued share capital (excluding treasury shares) at the date
of passing of the resolution at a minimum price of 0.2 pence per
share (being the nominal value). Under the Listing Rules, the
maximum price that may be paid on the exercise of this authority
must not exceed the higher of: (i) 105% of the average of the
middle market quotations (as derived from the Daily Official List
of the London Stock Exchange) for the shares over the five business
days immediately preceding the date of purchase; and (ii) the
higher of the last independent trade and the highest current
independent bid on the trading venue on which the purchase is
carried out.
The Board does not intend to use this authority to purchase the
Company's Ordinary shares, unless to do so would result in an
increase in the net asset value per Ordinary share and would be in
the best interests of shareholders. Any Ordinary shares purchased
shall either be cancelled or held in treasury. The authority being
sought shall expire at the conclusion of the AGM in 2024 or, if
earlier, on the expiry of 15 months from the date of the passing of
the resolution unless such authority is renewed prior to such
time.
Notice of General Meetings
The Companies Act 2006 provides that the minimum notice period
for general meetings of listed companies is 21 days, but with an
ability for companies to reduce this period to 14 days (other than
for annual general meetings) provided that two conditions are met.
The first condition is that the company offers a facility,
accessible to all shareholders, to appoint a proxy by means of a
website. The second condition is that there is an annual resolution
of shareholders approving the reduction of the minimum notice
period from 21 days to 14 days.
The Board is therefore proposing Resolution 15 as a special
resolution to approve 14 days as the minimum period of notice for
all general meetings of the Company other than annual general
meetings, renewing the authority passed at last year's annual
general meeting. The approval would be effective until the end of
the Company's next annual general meeting, when it is intended that
the approval be renewed.
The Board would consider on a case by case basis whether the use
of the flexibility offered by the shorter notice period is merited,
taking into account the circumstances, including whether the
business of the meeting is time sensitive and it would therefore be
to the advantage of the shareholders to call the meeting on shorter
notice.
Recommendation
The Board considers that the resolutions to be proposed at the
Annual General Meeting are in the best interests of the Company and
most likely to promote the success of the Company for the benefit
of its members as a whole. Accordingly, the Board recommends that
shareholders vote in favour of the resolutions as they intend to do
in respect of their own beneficial shareholdings, amounting to
64,457 Ordinary shares, representing 0.04% of the issued share
capital.
By order of the Board
abrdn Holdings Limited
Company Secretary
1 George Street
Edinburgh EH2 2LL
30 January 2023
STATEMENT OF DIRECTORS' RESPONSIBILITIES IN RESPECT OF THE
ANNUAL REPORT AND THE FINANCIAL STATEMENTS
Directors' Responsibilities
The Directors are responsible for preparing the Annual Report
and the financial statements in accordance with applicable law and
regulations. Company law requires the Directors to prepare
financial statements for each financial year. Under that law the
Directors have elected to prepare the financial statements in
accordance with UK Accounting Standards.
Under company law the Directors must not approve the financial
statements unless they are satisfied that they give a true and fair
view of the state of affairs of the Company and of the profit or
loss for the Company for that period.
In preparing these financial statements, the Directors are
required to:
- select suitable accounting policies and then apply them consistently;
- make judgements and accounting estimates that are reasonable and prudent;
- state whether they have been prepared in accordance with
applicable UK Accounting Standards, subject to any material
departures disclosed and explained in the financial statements;
- prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business; and
- prepare a Directors' Report, a Strategic Report and Directors'
Remuneration Report which comply with the requirements of the
Companies Act 2006.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company's
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and enable them to ensure that
the financial statements comply with the Companies Act 2006.
They are also responsible for safeguarding the assets of the
Company and hence for taking reasonable steps for the prevention
and detection of fraud and other irregularities. The Directors are
responsible for ensuring that the annual report and accounts, taken
as a whole, are fair, balanced, and understandable and provides the
information necessary for shareholders to assess the company's
position and performance, business model and strategy.
Website publication
The Directors are responsible for ensuring the Annual Report and
the financial statements are made available on a website. Financial
statements are published on the Company's website in accordance
with legislation in the United Kingdom governing the preparation
and dissemination of financial statements, which may vary from
legislation in other jurisdictions. The maintenance and integrity
of the Company's website is the responsibility of the Directors.
The Directors' responsibility also extends to the ongoing integrity
of the financial statements contained therein.
Directors' responsibilities pursuant to DTR4
The Directors confirm to the best of their knowledge:
- the financial statements have been prepared in accordance with
applicable accounting standards and give a true and fair view of
the assets, liabilities, financial position and profit and loss of
the Company; and
- the Annual Report includes a fair review of the development
and performance of the business and the financial position of the
Company, together with a description of the principal risks and
uncertainties that they face.
On behalf of the Board
Alan Devine
Chair
30 January 2023
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 30 September 2022
For the year ended For the year ended
30 September 2022 30 September 2021
Notes Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Total capital gains on investments 9 - 147,940 147,940 - 291,578 291,578
Currency gains / (losees) 14 - 942 942 - (2,368) (2,368)
Income 2 9,368 - 9,368 8,968 - 8,968
Investment management fee 3 (1,060) (9,540) (10,600) (884) (7,959) (8,843)
Administrative expenses 4 (1,054) - (1,054) (1,020) - (1,020)
------------------------------------ ------ -------- -------- --------- -------- -------- --------
Profit before finance costs
and taxation 7,254 139,342 146,596 7,064 281,251 288,315
Finance costs 5 (318) (1,907) (2,225) (323) (1,568) (1,891)
------------------------------------ ------ -------- -------- --------- -------- -------- --------
Profit before taxation 6,936 137,435 144,371 6,741 279,683 286,424
Taxation 6 (1,174) 414 (760) (735) 587 (148)
------------------------------------ ------ -------- -------- --------- -------- -------- --------
Profit after taxation 5,762 137,849 143,611 6,006 280,270 286,276
------------------------------------ ------ -------- -------- --------- -------- -------- --------
Earnings per share - basic
and diluted 8 3.75p 89.66p 93.41p 3.91p 182.29p 186.20p
------------------------------------ ------ -------- -------- --------- -------- -------- --------
The Total columns of this statement represents the profit and loss account
of the Company.
There are no items of other comprehensive income, therefore this statement
is the single statement of comprehensive income of the Company.
All revenue and capital items in the above statement are derived from
continuing operations.
No operations were acquired or discontinued in the year.
The dividend which has been recommended based on this Statement of Comprehensive
Income is 14.40p (2021: 13.60p) per ordinary share.
The accompanying notes form an integral part of these financial statements.
STATEMENT OF FINANCIAL POSITION
As at 30 September 2022
As at As at
30 September 30 September
2022 2021
Notes GBP'000 GBP'000
------------------------------------------- ------ -------------- --------------
Non-current assets
Investments 9 1,192,380 1,007,843
------------------------------------------- ------ -------------- --------------
Current assets
Receivables 10 1,056 1,144
Cash and cash equivalents 30,341 29,714
------------------------------------------- ------ -------------- --------------
Total Current assets 31,397 30,858
Creditors: amounts falling due within
one year
Payables 11 (3,713) (2,734)
Revolving credit facility 12 (62,012) -
------------------------------------------- ------ -------------- --------------
Net current (liabilities) / assets (34,328) 28,124
------------------------------------------- ------ -------------- --------------
Total assets less current liabilities 1,158,052 1,035,967
------------------------------------------- ------ -------------- --------------
Capital and reserves
Called-up share capital 13 307 307
Share premium account 14 86,485 86,485
Special reserve 14 51,503 51,503
Capital redemption reserve 14 94 94
Capital reserves 14 1,019,663 897,578
Revenue reserve 14 - -
------------------------------------------- ------ -------------- --------------
Total shareholders' funds 1,158,052 1,035,967
------------------------------------------- ------ -------------- --------------
Net asset value per equity share 15 753.2p 673.8p
------------------------------------------- ------ -------------- --------------
The accompanying notes form an integral part of these financial statements.
The Financial Statements of abrdn Private Equity Opportunities Trust
plc, registered number SC216638 were approved and authorised for issue
by the Board of Directors on 30 January 2023 and were signed on its
behalf by Alan Devine, Chair.
Alan Devine
Chair
30 January 2023
STATEMENT OF CHANGES IN EQUITY
For the year ended 30 September 2022
Notes Called-up Share Special Capital Capital Revenue Total
Share premium reserve redemption reserves reserve
Capital account reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
Balance at 1 October
2021 307 86,485 51,503 94 897,578 - 1,035,967
Profit after taxation - - - - 137,849 5,762 143,611
Dividends paid 7 - - - - (15,764) (5,762) (21,526)
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
Balance at 30 September
2022 13,14 307 86,485 51,503 94 1,019,663 - 1,158,052
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
For the year ended 30 September
2021
Notes Called-up Share Special Capital Capital Revenue Total
share premium reserve redemption reserves reserve
capital account reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
Balance at 1 October
2020 307 86,485 51,503 94 631,904 - 770,293
Profit after taxation - - - - 280,270 6,006 286,276
Dividends paid 7 - - - - (14,596) (6,006) (20,602)
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
Balance at 30 September
2021 13,14 307 86,485 51,503 94 897,578 - 1,035,967
------------------------ ------- ---------- ---------- --------- ------------- ---------- --------- ----------
The accompanying notes form an integral part of these financial statements.
STATEMENT OF CASH FLOWS
For the year For the year
ended ended
30 September 30 September
2022 2021
Notes GBP'000 GBP'000
--------------------------------------------- ------ ------------- -------------
Cashflows from operating activities
Profit before taxation 144,371 286,424
Adjusted for:
Finance costs 5 2,225 1,891
Gains on disposal of investments 9 (107,007) (96,065)
Revaluation of investments 9 (41,433) (195,839)
Currency gains / (losses) 14 (942) 2,368
Increase / (decrease) in debtors (6) 60
Increase in creditors 854 1,394
Tax deducted from non-UK income 6 (760) (148)
--------------------------------------------- ------ ------------- -------------
Net cash (outflow) / inflow from operating
activities (2,698) 85
Investing activities
Purchase of investments 9 (245,270) (185,338)
Purchase of secondary investments 9 (8,347) -
Distributions of capital proceeds received
by investments 201,557 187,772
Disposal of quoted investments 9 - 2,193
Receipt of proceeds from disposal of
unquoted investments 9 15,714 16,376
--------------------------------------------- ------ ------------- -------------
Net cash inflow / (outflow) from investing
activities (36,346) 21,003
Financing activities
Revolving credit facility - amounts
drawn 12 79,031 -
Revolving credit facility - amounts
repaid 12 (17,019) -
Interest paid and arrangement fees (1,757) (1,539)
Ordinary dividends paid 7 (21,526) (20,602)
--------------------------------------------- ------ ------------- -------------
Net cash inflow / (outflow) from financing
activities 38,729 (20,602)
--------------------------------------------- ------ ------------- -------------
Net decrease in cash and cash equivalents (315) (1,053)
Cash and cash equivalents at the beginning
of the year 29,714 33,135
Currency gains / (losses) on cash and
cash equivalents 942 (2,368)
--------------------------------------------- ------ ------------- -------------
Cash and cash equivalents at the end
of the year 30,341 29,714
--------------------------------------------- ------ ------------- -------------
Cash and cash equivalents consist
of:
Money-market funds - 16,414
Cash 30,341 13,300
--------------------------------------------- ------ ------------- -------------
Cash and cash equivalents 30,341 29,714
--------------------------------------------- ------ ------------- -------------
Included in profit before taxation is dividends received from investments
of GBP3,964,000 (2021: GBP3,651,000), interest received from investments
of GBP4,538,000 (2021: GBP5,305,000) and interest received from cash
balances and money market funds of GBP46,000 (2021: GBP12,000).
The accompanying notes form an integral part of these financial statements.
NOTES TO THE FINANCIAL STATEMENTS
1. Accounting policies
(a) Basis of Accounting
The financial statements have been prepared in accordance with
the Companies Act 2006, Financial Reporting Standard 102 and with
the Statement of Recommended Practice 'Financial Statements of
Investment Trust Companies and Venture Capital Trusts (the "SORP"),
updated in July 2022. They have also been prepared on the
assumption that approval as an investment trust will continue to be
granted. The financial statements have been prepared on a going
concern basis. The Directors believe that this is appropriate for
the reasons outlined in the Directors' Report in the Annual Report.
The principal accounting policies adopted are set out below. These
policies have been applied consistently throughout the current and
prior year.
Rounding is applied to the disclosures in these financial
statements, where considered relevant.
(b) Revenue, Expenses and Finance Costs
Dividends and income from unquoted investments are included when
the right to receipt is established, which is the notice value
date. Dividends are accounted for as revenue in the Statement of
Comprehensive Income. Interest receivable is dealt with on an
accruals basis.
All expenses are accounted for on an accruals basis. Expenses
are charged through the revenue account of the Statement of
Comprehensive Income except as follows:
-- transaction costs incurred on the purchase and disposal of
investments are recognised as a capital item in the Statement of
Comprehensive Income;
-- the Company charges 90% of investment management fees and
finance costs to capital, in accordance with the Board's expected
long-term split of returns between capital gains and income from
the Company's investment portfolio. Bank interest expense has been
charged wholly to revenue.
(c) Investments
Investments are accounted for at fair value through profit or
loss as detailed below. On the date of making a legal commitment to
invest in a fund or co-investment, such commitment is recorded and
disclosed. When funds are drawn in respect of these commitments,
the resulting investment is recognised in the financial statements.
The investment is removed when it is realised or when the
investment is wound up. Gains and losses arising from changes in
fair value are included as a capital item in the Statement of
Comprehensive Income and are ultimately recognised in the capital
reserves.
Unquoted investments are stated at the directors' estimate of
fair value and follow the recommendations of the European Private
Equity & Venture Capital Association ("EVCA") and the British
Private Equity & Venture Capital Association ("BVCA"). The
estimate of fair value is normally the latest valuation placed on
an investment by its manager as at the Statement of Financial
Position date. The valuation policies used by the manager in
undertaking that valuation will generally be in line with the joint
publication from the EVCA and the BVCA, 'International Private
Equity and Venture Capital Valuation guidelines'. Where formal
valuations are not completed as at the Statement of Financial
Position date, the last available valuation from the manager is
adjusted for any subsequent cash flows occurring between the
valuation date and the Statement of Financial Position date. The
Company's Manager may further adjust such valuations to reflect any
changes in circumstances from the last manager's formal valuation
date to arrive at the estimate of fair value.
For listed investments, which were actively traded on recognised
stock exchanges, fair value is determined by reference to their
quoted bid prices on the relevant exchange as at the close of
business on the last trading day of the Company's financial
year.
(d) Dividends payable
Dividends are recognised in the period in which they are
paid.
(e) Capital and Reserves
Share Premium - The share premium account represents the premium
above nominal value received by the Company on issuing shares net
of issue costs.
Special Reserve - Court approval was given on 27 September 2001
for 50% of the initial premium arising on the issue of the ordinary
share capital to be cancelled and transferred to a special reserve.
The reserve is a distributable reserve and may be applied in any
manner as a distribution, other than by way of a dividend.
Capital Redemption Reserve - This reserve is used to record the
amount equivalent to the nominal value of any of the Company's own
shares purchased and cancelled in order to maintain the Company's
capital.
Capital Reserve - Gains/(Losses) on Disposal - Represents gains
or losses on investments realised in the period that have been
recognised in the Statement of Comprehensive Income, in addition to
the transfer of any previously recognised unrealised gains or
losses on investments within "Capital reserve - revaluation" upon
disposal. This reserve also represents other accumulated capital
related expenditure such as management fees and finance costs, as
well as other currency gains/losses from non-investment
activity.
Capital Reserve - Revaluation - Represents increases and
decreases in the fair value of investments that have been
recognised in the Statement of Comprehensive Income during the
period.
Revenue Reserve - The revenue reserve represents accumulated
revenue profits retained by the Company that have not currently
been distributed to shareholders as a dividend.
The revenue and capital reserves - Gains/(losses) on disposal
represent the amount of the Company's reserves distributable by way
of dividend.
(f) Taxation
i) Current taxation - Provision for corporation tax is made at
the current rate on the excess of taxable income net of any
allowable deductions. In line with the recommendations of the SORP,
the allocation method used to calculate tax relief on expenses
presented against capital in the Statement of Comprehensive Income
is the "marginal basis". Under this basis, if taxable income is
capable of being offset entirely by expenses presented in the
revenue column of the Statement of Comprehensive Income, then no
tax relief is transferred to the capital column. Withholding tax
suffered on income from overseas investments is taken to the
revenue column of the Statement of Comprehensive Income.
ii) Deferred taxation is recognised in respect of all timing
differences that have originated but not reversed at the Statement
of Financial Position date, where transactions or events that
result in an obligation to pay more or a right to pay less tax in
future have occurred at the Statement of Financial Position date,
measured on an undiscounted basis and based on enacted tax rates.
This is subject to deferred tax assets only being recognised if it
is considered more likely than not that there will be suitable
profits from which the future reversal of the underlying timing
differences can be deducted. Timing differences are differences
arising between the Company's taxable profits and its results as
stated in the financial statements which are capable of reversal in
one or more subsequent periods.
Due to the Company's status as an investment trust company, and
the intention to continue meeting the conditions required to obtain
approval in the foreseeable future, the Company has not provided
deferred tax on any capital gains and losses arising on the
revaluation or disposal of investments.
(g) Foreign currency translation, functional and presentation
currency
Foreign currency translation - Transactions in foreign
currencies are converted to sterling at the exchange rate ruling at
the date of the transaction. Overseas assets and liabilities are
translated at the exchange rate prevailing at the Company's
Statement of Financial Position date. Gains or losses on
translation of investments held at the year end are accounted for
in the Statement of Comprehensive Income through inclusion in total
capital gains/losses on investments and is transferred to capital
reserves. Gains or losses on the translation of overseas currency
balances held at the year end are also accounted for through the
Statement of Comprehensive Income and are transferred to capital
reserves.
Functional and presentation currency - For the purposes of the
financial statements, the results and financial position of the
Company is expressed in sterling, which is the functional currency
and the presentation currency of the Company.
Rates of exchange to sterling at 30 September were:
2022 2021
----------------- ------- -------
Euro 1.1395 1.1635
US Dollar 1.1163 1.3484
Canadian Dollar 1.5339 1.7082
----------------- ------- -------
Transactions in overseas currency are translated at the exchange
rate prevailing on the date of transaction.
The Company's investments are made in a number of currencies.
However, the Board considers the Company's functional currency to
be sterling. In arriving at this conclusion, the Board considers
that the shares of the Company are listed on the London Stock
Exchange. The Company is regulated in the United Kingdom,
principally having its shareholder base in the United Kingdom, pays
dividends as well as expenses in sterling.
(h) Cash and Cash Equivalents
Cash comprises bank balances and cash held by the Company. Cash
equivalents comprise money-market funds which are used by the
Company to provide additional short-term liquidity. Cash
equivalents are short-term, highly liquid investments that are
readily convertible to known amounts of cash and which are subject
to an insignificant risk of changes in value .
(i) Debtors
Debtors are recognised initially at transaction price. They are
subsequently measured at amortised cost using the effective
interest method, less the appropriate allowances for estimated
irrecoverable amounts.
(j) Creditors
Creditors are recognised initially at transaction price. They
are subsequently stated at amortised cost using the effective
interest method.
(k) Revolving Credit Facility
Revolving credit facility drawdowns are recognised initially at
cost, being the fair value of the consideration received. They are
subsequently stated at amortised cost using the effective interest
method.
(l) Segmental Reporting
The Directors are of the opinion that the Company is engaged in
a single segment of business activity, being investment business.
Consequently, no business segmental analysis is provided.
(m) Judgements and Key Sources of Estimation Uncertainty
The preparation of financial statements requires the Company to
make estimates and assumptions and exercise judgements in applying
the accounting policies that affect the reported amounts of assets
and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses arising during the year.
Estimates and judgements are continually evaluated and based on
historical experience and other factors, including expectations of
future events that are believed to be reasonable under the
circumstances. The area where estimates and assumptions have the
most significant effect on the amounts recognised in the financial
statements is the determination of fair value of unquoted
investments, as disclosed in note 1(c).
2. Income
Year to Year to
30 September 30 September
2022 2021
GBP'000 GBP'000
---------------------------------------------- ------------- -------------
Dividends from investments 4,759 3,651
Income from investments 4,538 5,305
Interest from cash balances and money-market
funds 71 12
Total income 9,368 8,968
------------- -------------
3. Investment Management Fees
Year to 30 September Year to 30 September
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- ------------ -------- -----------
Investment management fee 1,060 9,540 10,600 884 7,959 8,843
The Manager of the Company is abrdn Capital Partners LLP. In
order to comply with the Alternative Investment Fund Managers
Directive, the Company appointed abrdn Capital Partners LLP as its
Alternative Investment Fund Manager from 1 July 2014.
The investment management fee payable to the Manager is 0.95%
per annum of the NAV of the Company. The investment management fee
is allocated 90% to the realised capital reserve - gains/(losses)
on disposal and 10% to the revenue account. Effective 1 October
2022, the investment management fee will be allocated 95% to the
realised capital reserve - gains/(losses) on disposal and 5% to the
revenue account. The management agreement between the Company and
the Manager is terminable by either party on twelve months written
notice.
Investment management fees due to the Manager as at 30 September
2022 amounted to GBP2,888,000 (30 September 2021:
GBP2,227,000).
4. Administrative Expenses
Year to Year to
30 September 30 September
2022 2021
GBP'000 GBP'000
------------------------------------- ------------- -------------
Directors' fees 269 224
Employers' national insurance 32 26
Secretarial and administration fees 247 222
Marketing fees 243 244
Fees and subscriptions 78 67
Auditor's remuneration 63 45
Depositary fees 59 53
Professional and consultancy fees 49 49
Legal fees 12 2
Other expenses 2 88
Total 1,054 1,020
------------- -------------
No non-audit services were provided by the Company auditor, BDO
LLP during the year to 30 September 2022.
Irrecoverable VAT has been shown under the relevant expense
line.
The administration fee payable to IQ EQ Administration Services
(UK) Ltd is adjusted annually in line with the retail prices index.
The administration agreement is terminable by the Company on three
months' notice.
The secretarial fee payable to abrdn Holdings plc (formerly
known as Aberdeen Asset Management plc) is adjusted annually in
line with the retail price index. The secretarial agreement is
terminable by the Company on six months' notice.
The emoluments paid to the directors during the year can be
found in the Directors' Remuneration Report in the Annual
Report.
5. Finance Costs
Year to 30 September Year to 30 September
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
--------------------------- -------- -------- -------- -------- -------- --------
Revolving credit facility
interest expense 107 965 1,072 - - -
Revolving credit facility
commitment fee 70 634 704 140 1,260 1,400
Revolving credit facility
arrangement fee 34 308 342 34 308 342
Bank interest expense 107 - 107 149 - 149
Total 318 1,907 2,225 323 1,568 1,891
-------- -------- -------- -------- -------- --------
6. Taxation
Analysis of the tax charge throughout
(a) the year
Year Year
to to
30 September 30 September
2022 2021
GBP'000 GBP'000
Overseas withholding tax 760 148
-------------------------------------------- -------- --------- --------- -------- ------------- -------------
Year to 30 September Year to 30 September
2022 2021
Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Factors affecting the
(b) total tax charge for the
year
Profit before taxation 6,936 137,435 144,371 6,741 279,683 286,424
-------- --------- --------- -------- ------------- -------------
The tax assessed for the year is different from the standard rate
of corporation tax in the UK. The differences are explained below.
Profit multiplied by the
effective rate of corporation
tax in the UK - 19.0% (2021:
19.0%) 1,318 26,113 27,431 1,281 53,140 54,421
Non-taxable capital gains
on investments (1) - (28,109) (28,109) - (55,400) (55,400)
Non-taxable currency (gains)/losses - (179) (179) - 450 450
Non-taxable income (904) - (904) (694) - (694)
Overseas withholding tax 760 - 760 148 - 148
Surplus management expenses
and loan relationship deficits
not relieved - 1,761 1,761 - 1,223 1,223
-------- --------- --------- -------- ------------- -------------
Total tax charge/(credit)
for the year 1,174 (414) 760 735 (587) 148
-------- --------- --------- -------- ------------- -------------
1 The Company carries on business as an investment trust company with
respect to sections 1158-1159 of the Corporation Tax Act 2010. As
such any capital gains are exempt from UK taxation.
Factors that may affect future tax charges
(c)
At the year end there is a potential deferred tax asset of GBP5,764,000
(2020: GBP3,157,000) in relation to excess management expenses carried
forward. The deferred tax asset is unrecognised at the year end in
line with the Company's stated accounting policy.
The Corporation Tax main rate for the years 1 April 2020 and 2021
was 19%. A proposed revision to Corporation Tax was introduced in
Finance Bill 2021, which retains the main rate at 19% from 1 April
2022, followed by an increase to 25% from 1 April 2023. Deferred taxes
at the Statement of Financial Position date have been measured at
these enacted rates and reflected in these financial statements.
7. Dividend on Ordinary Shares
Year to Year to
30 September 30 September
2022 2021
GBP'000 GBP'000
----------------------------------------------- ------------- -------------
Amount recognised as a distribution to equity
holders in the year:
2021 third quarterly dividend of 3.40p (2020:
3.30p) per ordinary share paid on 29 October
2021 (2020: paid on 30 October 2020) 5,227 5,074
2021 fourth quarterly dividend of 3.40p
per ordinary share (2020: 3.30p) paid on
28 January 2022 (2020: paid on 29 January
2021) 5,227 5,074
2022 first quarterly dividend of 3.60p (2021:
3.40p) per ordinary share paid on 22 April
2022 (2021: paid on 20 April 2021) 5,536 5,227
2022 second quarterly dividend of 3.60p
(2021: 3.40p) per ordinary share paid on
29 July 2022 (2021: paid on 27 July 2021) 5,536 5,227
----------------------------------------------- ------------- -------------
Total 21,526 20,602
----------------------------------------------- ------------- -------------
Set out below are the total dividends paid and proposed in respect
of the financial year, which is the basis on which the requirements
of sections 1158-1159 of the Corporation Tax Act 2010 are considered.
Of the total profit after taxation for the year of GBP143,611,000
(2021: GBP286,276,000), the total revenue and capital profits which
are available for distribution by way of a dividend for the year
is GBP102,755,000 (2021: GBP90,437,000).
Year to Year to
30 September 30 September
2022 2021
GBP'000 GBP'000
----------------------------------------------- ------------- -------------
2022 first quarterly dividend of 3.60p (2021:
3.40p) per ordinary share paid on 22 April
2022 (2021: paid on 20 April 2021) 5,536 5,227
2022 second quarterly dividend of 3.60p
(2021: 3.40p) per ordinary share paid on
29 July 2022 (2021: paid on 27 July 2021) 5,536 5,227
2022 third quarterly dividend of 3.60p (2021:
3.40p) per ordinary share paid on 28 October
2022 (2021: paid on 29 October 2021) 5,536 5,227
Proposed 2022 fourth quarterly dividend
of 3.60p per ordinary share (2021: 3.40p
per ordinary share) paid on 27 January 2023
(2021: 28 January 2022). 5,536 5,227
----------------------------------------------- ------------- -------------
Total 22,144 20,908
----------------------------------------------- ------------- -------------
8. Earnings Per Share - Basic and Diluted
Year to Year to
30 September 30 September 2021
2022
p GBP'000 p GBP'000
------------------------------------- ------ ------------ ------- -------------------
The net return per ordinary share
is based on the following figures:
Revenue net return 3.75 5,762 3.91 6,006
Capital net return 89.66 137,849 182.29 280,270
Total net return 93.41 143,611 186.20 286,276
------ ------------ ------- -------------------
Weighted average number of ordinary
shares in issue: 153,746,294 153,746,294
There are no diluting elements to the earnings per share calculation
in 2022 (2021: none).
9. Investments
Year to 30 September Year to 30 September 2021
2022
Quoted Unquoted Quoted Unquoted
Investments Investments Total Investments Investments Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ---------------- ------------ ----------- ------------------------------ ------------------------------- ----------------------------
Fair value
through
profit or loss:
Opening market
value - 1,007,843 1,007,843 - 721,650 721,650
Opening
investment
holding gains - ( 304,629) ( 304,629) - (108,790) (108,790)
---------------- ------------------- ------------ ----------- ------------------------------ ------------------------------- ----------------------------
Opening book
cost - 703,214 703,214 - 612,860 612,860
Movements in
the
year:
Additions at
cost - 245,270 245,270 2,422 147,656 150,078
Secondary
purchases - 8,347 8,347 - 35,260 35,260
Distribution of
capital
proceeds - ( 201,806) ( 201,806) - (187,772) (187,772)
Disposal of
quoted
investments - - - (2,193) - (2,193)
Secondary sales - ( 15,714) ( 15,714) - (1,084) (1,084)
- 739,311 739,311 229 606,920 607,149
Gains on
disposal
of underlying
investments - 107,007 107,007 - 96,294 96,294
Losses on
disposal
of quoted
investments - - - (229) - (229)
Closing book
cost - 846,318 846,318 - 703,214 703,214
Closing
investment
holding gains - 346,062 346,062 - 304,629 304,629
Closing market
value - 1,192,380 1,192,380 - 1,007,843 1,007,843
------------------- ------------ ----------- ------------------------------ ------------------------------- ----------------------------
Year ended 30 September Year ended 30 September
2022 2021
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------- ------------ ----------- ------------------------------ ------------------------------- ----------------------------
Gains/(losses)
on investments
held at fair
value
through profit
or loss based
on
historical
costs. - 107,007 107,007 (229) 96,294 96,065
(Gains)/losses
recognised as
unrealised
in previous
years
in respect of
distributed
capital
proceeds
or disposal of
investments. - (44,999) (44,999) - 3,370 3,370
Gains/(losses)
on
distribution
of capital
proceeds
or disposal of
investments
based
on the
carrying
value at the
previous
year end date - 62,008 62,008 (229) 99,664 99,435
Net movement in
unrealised
investment
gains - 86,432 86,432 - 192,469 192,469
Total capital
gains/(losses)
on investments
held at fair
value
through profit
or loss - 148,440 148,440 (229) 292,133 291,904
------------------- ------------ ----------- ------------------------------ ------------------------------- ----------------------------
Transaction
costs
During the year expenses were incurred in acquiring or disposing
of investments. These have been expensed through capital and are
included within capital gains on investments of GBP147,940,000 (2021:
GBP291,578,000) in the Statement of Comprehensive Income. The total
costs were as follows:
30 30
September September
2022 2021
GBP'000 GBP'000
Transaction costs 500 326
10. Receivables
30 September 30 September
2022 2021
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Amounts falling due within one year:
Unamortised bank loan arrangement fees 748 1,091
Investments receivable 249 -
Prepayments 34 53
Investments receivable 25 -
Total 1,056 1,144
------------- -------------
11. Payables
30 September 30 September
2022 2021
GBP'000 GBP'000
-------------------------------------- ------------- -------------
Amounts falling due within one year:
Management fee 2,888 2,227
Accruals 719 448
Secretarial and administration fee 105 48
Bank interest 1 11
Total 3,713 2,734
------------- -------------
12. Revolving Credit Facility
30 September 30 September
2022 2021
GBP'000 GBP'000
-------------------------- ------------- -------------
Revolving credit facility 62,012 -
-------------------------- ------------- -------------
As at 30 September 2022, the Company had a GBP200.0 million
syndicated revolving credit facility provided by Citi, Société
Générale and State Street Bank International GmbH, which was to
expire in December 2024.
The interest rate on the facility at that time was calculated as
the defined reference rate of the currency drawn plus 1.625%,
rising to 2.0% depending on the level of facility utilisation. The
commitment fee rate payable on non-utilisation was 0.7% per
annum.
On 10 October 2022, the Company announced an expansion of the
credit facility which increased from GBP200.0 million to GBP300.0
million with The Royal Bank of Scotland International Limited
joining as a lender and Natwest Markets Plc replacing Citibank
Europe plc as Agent in the syndicate of banks providing the
revolving credit facility, alongside current providers Société
Générale and State Street Bank International GmbH.
The interest rate on the expanded facility is unchanged, whilst
the commitment fee rate payable on non-utilisation is now between
0.7% and 0.8% per annum based on the level of facility
utilisation.
13. Called-up Share Capital
30 September 30 September
2022 2021
GBP'000 GBP'000
------------------------------------------ -------------- --------------
Issued and fully paid:
Ordinary shares of 0.2p
Opening balance of 153,746,294 (2021:
153,746,294) ordinary shares 307 307
Closing balance of 153,746,294 (2021:
153,746,294) ordinary shares 307 307
-------------- --------------
The Company may buy back its own shares where it is judged to be
beneficial to shareholders, taking into account the
discount between the Company's Net Asset Value and the share price,
and the supply and demand for the Company's
shares in the open market.
No shares were bought back during the year (2021: Nil).
14. Reserves
Capital reserves
------------------------
Share Special Capital Gains/ Revaluation Revenue
premium reserve redemption (losses) reserve
on
account reserve disposal
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
---------------------------- -------- -------- ----------- ---------- ------------ --------
Opening balances at
1 October 2021 86,485 51,503 94 592,949 304,629 -
Gains on disposal of - - - 107,007 - -
investments
Management fee charged - - - ( 9,540) - -
to capital
Finance costs charged - - - ( 1,907) - -
to capital
Transaction costs - - - (500) - -
Tax relief on management - - - 414 - -
fee and finance costs
above
Currency gains / (losses) - - - 1,514 ( 572) -
Revaluation of investments - - - - 41,433 -
Return after taxation - - - - -
Dividends during the - - - ( 15,764) -
year
Closing balances at
30 September 2022 86,485 51,503 94 674,173 345,490 -
-------- -------- ----------- ---------- ------------ --------
The revenue and capital reserve - gains/(losses) on disposal represent
the amounts of the Company's reserve distributable by way of dividend.
15. Net Asset Value Per Equity Share
30 September 30 September
2022 2021
------------------------------------- ----------------- -----------------
Basic and diluted:
Ordinary shareholders' funds GBP1,158,052,447 GBP1,035,967,006
Number of ordinary shares in issue 153,746,294 153,746,294
Net asset value per ordinary share 753.2p 673.8p
------------------------------------- ----------------- -----------------
The net asset value per ordinary share and the ordinary shareholders'
funds are calculated in accordance with the Company's articles
of association.
There are no diluting elements to the net asset value per equity
share calculation in 2022 (2021: none).
16. Commitments and Contingent Liabilities
30 September 30 September
2022 2021
GBP'000 GBP'000
---------------------------------------- --------------- ---------------
Outstanding calls on investments 678,880 557,051
--------------- ---------------
This represents commitments made to fund and co-investment interests
remaining undrawn.
17. Parent Undertaking, Related Party Transactions and
Transactions with the Manager
The ultimate parent undertaking of the Company is Phoenix Group
Holdings. The results for the year to 30 September 2022 are
incorporated into the group financial statements of Phoenix Group
Holdings, which will be available to download from the website
www.thephoenixgroup.com .
Standard Life Assurance Limited ("SLAL", which is 100% owned by
Phoenix Group Holdings), and the Company have entered into a
relationship agreement which provides that, for so long as SLAL and
its Associates exercise, or control the exercise, of 30% or more of
the voting rights of the Company, SLAL and its Associates, will not
seek to enter into any transaction or arrangement with the Company
which is not conducted at arm's length and on normal commercial
terms, take any action that would have the effect of preventing the
Company from carrying on an independent business as its main
activity or from complying with its obligations under the Listing
Rules or propose or procure the proposal of any shareholder
resolution which is intended or appears to be intended to
circumvent the proper application of the Listing Rules. During the
year ended 30 September 2022, SLAL received dividends from the
Company totalling GBP11,533,000 (2021: GBP11,539,000).
During the year ended 30 September 2022 the Manager charged
management fees totalling GBP10,600,000 (2021: GBP8,843,000) to the
Company in the normal course of business. The balance of management
fees outstanding at 30 September 2022 was GBP2,888,000 (30
September 2021: GBP2,227,000).
abrdn Investment Management Limited, which shares the same
ultimate parent as the Manager, received fees for the provision of
promotional activities of GBP145,200 (2021: GBP240,000) during the
year. The balance of promotional fees outstanding at 30 September
2022 was a payable of GBP325,000 (30 September 2021: payable of
GBP180,000).
The Company Secretarial services for the Company are provided by
abrdn Holdings plc (formerly known as Aberdeen Asset Management
plc), which shares the same ultimate parent as the Manager. During
the year ended 30 September 2022, the Company incurred secretarial
fees of GBP70,000 (2021: GBP71,000). The balance of secretarial
fees outstanding at 30 September 2022 was GBP104,000 (2021:
GBP35,000).
The Company previously invested in liquidity funds managed by
abrdn Investments Luxembourg S.A. (formerly known as Aberdeen
Standard Investments (Lux)), which share the same ultimate parent
as the Manager. During the year ended 30 September 2022, the
Company received interest amounting to GBP2,000 (30 September 2021:
GBP10,000) on sterling denominated positions and GBPnil on euro
denominated positions (30 September 2021: GBPnil). The Company
realised its holding in the liquidity funds in November 2021.
No other related party transactions were undertaken during the
year ended 30 September 2022.
18. Risk Management, Financial Assets and Liabilities
Financial Assets and Liabilities
The Company's financial instruments comprise fund and other
investments, money-market funds, cash balances, debtors and
creditors that arise from its operations. The assets and
liabilities are managed with the overall objective of achieving
long-term total returns for shareholders.
Summary of Financial Assets and Financial Liabilities by
Category
The carrying amounts of the Company's financial assets and
financial liabilities, as recognised at the Statement of Financial
Position date of the reporting periods under review, are
categorised as follows:
30 September 30 September
2022 2021
GBP'000 GBP'000
---------------------------------------- ------------- -------------
Financial assets
Financial assets measured at fair
value through profit or loss:
Fixed asset investments 1,192,380 1,007,843
Financial assets measured at amortised
cost:
Investments receivable 249 -
Money-market funds, cash and
short-term deposits 30,341 29,714
---------------------------------------- ------------- -------------
1,222,970 1,037,557
Non-financial assets
Other receivables 807 1,144
---------------------------------------- ------------- -------------
807 1,144
Financial Liabilities
Measured at amortised cost:
Creditors: amounts falling due -
within one year:
Accruals 3,713 2,734
Revolving credit facility 62,012 -
65,725 2,734
Assets/Liabilities Measured at Amortised Cost
The carrying value of the current assets and liabilities is
deemed to be fair value due to the short-term nature of the
instruments and/or the instruments bearing interest at the market
rates.
Risk Management
The Directors manage investment risk principally through setting
an investment policy and by contracting management of the Company's
investments to an investment manager under terms which incorporate
appropriate duties and restrictions and by monitoring performance
in relation to these. The Company's investments are in private
equity funds, typically unquoted limited partnerships and
co-investments. These are valued by their managers generally in
line with the EVCA and the BVCA guidelines, which provide for a
fair value basis of valuation. The funds may hold investments that
have become quoted or the co-investment may become quoted and these
will be valued at the appropriate listed price, subject to any
discount for marketability restrictions.
As explained in the Company's investment policy, risk is spread
by investing across a range of countries and industrial sectors,
thereby reducing excessive exposure to particular areas. The
Manager's investment review and monitoring process is used to
identify and, where possible, reduce risk of loss of value in the
Company's investments.
The Company's investing activities expose it to various types of
risk that are associated with the financial instruments and markets
in which it invests. The most important types of financial risk to
which the Company is exposed are market risk, overcommitment risk,
liquidity risk, credit risk and interest rate risk.
The nature and extent of the financial instruments outstanding
at the Statement of Financial Position date and the risk management
policies employed by the Company are discussed below.
Market Risk
a) Price Risk
The Company is at risk of the economic cycle impacting the
listed financial markets and hence potentially affecting the
pricing of new underlying investments, the valuation of existing
underlying investments and the price and timing of exits. By having
a diversified and rolling portfolio of investments the Company is
well placed to take advantage of economic cycles.
100% of the Company's investments are held at fair value. The
valuation methodology employed by the managers of the unquoted
investments may include the application of EBITDA ratios derived
from listed companies with similar characteristics. Therefore, the
value of the Company's portfolio is indirectly affected by price
movements on listed financial exchanges. A 10% increase in the
valuation of investments at 30 September 2022 would have increased
the net assets attributable to the Company's shareholders and the
total return for the year by GBP119,238,000 (2021: GBP100,784,000);
a 10% change in the opposite direction would have decreased the net
assets attributable to the Company's shareholders and the total
return for the year by an equivalent amount. Due to the private
nature of the underlying companies in which the Company's
investments are invested, it is not possible for the Company to
pinpoint the effect to the Company's net assets of changes to the
EBITDA ratios of listed markets any more accurately.
b) Currency Risk
The Company makes fund and co-investment commitments in
currencies other than sterling and, accordingly, a significant
proportion of its investments and cash balances are in currencies
other than sterling. In addition, the Company's syndicated
revolving credit facility is a multi-currency facility. Therefore,
the Company's NAV is sensitive to movements in foreign exchange
rates.
The Manager monitors the Company's exposure to foreign
currencies and reports to the Board on a regular basis. It is not
the Company's policy to hedge foreign currency risk. It is expected
that the majority of the Company's commitments and investments will
be denominated in euros. Accordingly, the majority of the Company's
indebtedness will usually be held in that currency. No currency
swaps or forwards were used during the year.
The table below sets out the Company's currency exposure.
30 September 2022 30 September 2021
Local Sterling Local Sterling
Currency Equivalent Currency Equivalent
'000 GBP'000 '000 GBP'000
Fixed asset investments:
Euro 1,045,818 917,787 951,223 817,588
Sterling 86,894 86,894 69,213 69,213
US Dollar 209,527 187,698 163,206 121,042
Money-market funds,
cash and short-term
deposits:
Euro 17,596 15,442 12,243 10,523
Sterling 5,624 5,624 16,523 16,523
US Dollar 10,351 9,273 3,596 2,667
Canadian Dollar 3 2 3 1
Investment receivable
US Dollar 278 249 - -
Revolving credit
facility:
Euro (53,000) (46,512)
Sterling (15,500) (15,500)
Other debtors and
creditors:
Euro (86) (75) (14) (12)
Sterling 2,817 2,817 (1,537) (1,537)
US Dollar (16) (14) (55) (41)
Total 1,158,052 1,035,967
----------- --------------------------
Outstanding commitments:
Euro 525,075 460,794 463,209 398,134
Sterling 13,100 13,100 10,878 10,878
US Dollar 228,826 204,986 199,608 148,039
Total 678,880 557,051
c) Currency Sensitivity
During the year ended 30 September 2022 sterling depreciated by
2.1% relative to the euro (2021: appreciated 5.5%) and depreciated
by 17.2% relative to the US dollar (2021: appreciated 4.3%).
To highlight the sensitivity to currency movements, if the value
of sterling had weakened against both of the above currencies by
10% compared to the exchange rates at 30 September 2022, the
capital gain for the year would have increased by GBP120,428,000
(2021: GBP105,752,000); a 10% change in the opposite direction
would have decreased the capital gain for the year by GBP98,532,000
(2021: GBP86,524,000).
The calculations above are based on the portfolio valuation and
cash and revolving credit facility balances as at the respective
Statement of Financial Position dates and are not necessarily
representative of the year as a whole.
Based on similar assumptions, the amount of outstanding
commitments would have increased by GBP73,976,000 at the year end
(2021: GBP60,686,000), a 10% change in the opposite direction would
have decreased the amount of outstanding commitments by
GBP60,525,000 (2021: GBP49,652,000).
Liquidity Risk
The Company has significant investments in unquoted investments
which are relatively illiquid. As a result, the Company may not be
able to quickly liquidate its investments at an amount close to
their fair value in order to meet its liquidity requirements,
including the need to meet outstanding undrawn commitments. The
Company manages its liquid investments to ensure sufficient cash is
available to meet contractual commitments and also seeks to have
cash available to meet other short-term financial needs. Short term
flexibility is achieved, where necessary, through the use of the
syndicated revolving credit facility. Liquidity risk is monitored
by the Manager on an ongoing basis and by the Board on a regular
basis. Payables, as disclosed in note 11, all fall due within one
year and the revolving credit facility, as described in note 12,
has drawn GBP62,012,000 as at 30 September 2022 (2021: undrawn),
with an amount of GBP137,988,000 (2021: GBP200,000,000) still
available to be drawn.
Credit Risk
Credit risk is the exposure to loss from failure of a
counterparty to deliver securities or cash for acquisitions or
disposals of investments or to repay deposits. The Company places
funds with authorised deposit takers from time to time and,
therefore, is potentially at risk from the failure of any such
institution. At the year end, the Company's financial assets
exposed to credit risk amounted to the following:
30 September 30 September
2022 2021
GBP'000 GBP'000
Money-market funds, cash and
short-term deposits 30,341 29,714
Investment receivable 249 -
30,590 29,714
------------- -------------
The Company's cash is held by BNP Paribas Securities Services
S.A., which is rated 'A+' by Standard and Poors. The Company's
money-market funds are held in two Aberdeen Standard Investments
(Lux) Liquidity funds, rated 'A' by Standard and Poors. Should the
credit quality or the financial position of either bank deteriorate
significantly, the Manager would move the cash balances to another
institution.
The investment receivable relates to distribution proceeds
payable to the Company as at 30 September 2022 which were received
subsequent to the financial year end and is therefore no longer at
risk of default.
Interest Rate Risk
The Company will be affected by interest rate changes as it
holds some interest bearing financial assets and liabilities which
are shown in the table below, however, the majority of its
financial assets are investments in private equity investments
which are non-interest bearing. Interest rate movements may affect
the level of income receivable on money-market funds and cash
deposits and interest payable on the Company's variable rate
borrowings. The possible effects on the cash flows that could arise
as a result of changes in interest rates are taken into account
when making investment and borrowing decisions. Derivative
contracts are not used to hedge against any exposure to interest
rate risk.
Interest Risk Profile
The interest rate risk profile of the portfolio of financial
assets and liabilities at the Statement of Financial Position
date
was as follows:
30 September 2022 30 September 2021
Weighted Weighted
average average
interest interest
rate rate
% GBP'000 % GBP'000
---------------------------------- ---------- -------- ---------- --------
Floating rate
Financial assets: Money-market
funds, cash and short-term
deposits 1.06 30,341 (0.24) 29,714
Financial liabilities: Revolving
credit facility 0.40 62,012 - -
---------------------------------- ---------- -------- ---------- --------
Fixed rate
Financial liabilities: Revolving
credit facility 1.63 62,012
---------------------------------- ---------- -------- ---------- --------
The weighted average interest rate on the bank balances is based
on the interest rate payable, weighted by the total value of the
balances. The weighted average period for which interest rates are
fixed on the bank balances is 31.0 days (2021: 31.0 days).
The weighted average interest rate on the revolving credit
facility is based on the interest rate paid on the individual loan
balances, weighted by the duration and value of each individual
loan balance outstanding during the financial year.
Interest rate Sensitivity
An increase of 1% in interest rates would have decreased the net
assets attributable to the Company's shareholders and decreased the
total gain for the year ended 30 September 2022 by GBP530,000
(2021: GBP1,000). A decrease of 1% would have increased the net
assets attributable to the Company's shareholders and increased the
total gain for the year ended 30 September 2022 by GBP158,000
(2021: GBP1,000). The calculations are based on the interest paid
and received during the year.
19. Fair Value hierarchy
FRS 102 requires an entity to classify fair value measurements
using a fair value hierarchy that reflects the significance of the
inputs used in making the measurements. The fair value hierarchy
has the following classifications:
-- Level 1: The unadjusted quoted price in an active market for
identical assets or liabilities that the entity can access at the
measurement date.
-- Level 2: Inputs other than quoted prices included within
Level 1 that are observable (i.e., developed using market data) for
the asset or liability, either directly or indirectly.
-- Level 3: Inputs are unobservable (i.e., for which market data
is unavailable) for the asset or liability.
The Company's financial assets and liabilities, measured at fair
value in the Statement of Financial Position, are grouped into the
following fair value hierarchy at 30 September 2022:
Level 1 Level Level Total
2 3
Financial assets at fair value GBP'000 GBP'000 GBP'000 GBP'000
through profit or loss
-------------------------------- --------- --------- ---------- ----------
Unquoted investments - - 1,192,380 1,192,380
-------------------------------- --------- --------- ---------- ----------
Net fair value - - 1,192,380 1,192,380
-------------------------------- --------- --------- ---------- ----------
As at 30 September 2021
Level 1 Level Level Total
2 3
Financial assets at fair value GBP'000 GBP'000 GBP'000 GBP'000
through profit or loss
-------------------------------- --------- --------- ---------- ----------
Unquoted investments - - 1,007,843 1,007,843
-------------------------------- --------- --------- ---------- ----------
Net fair value - - 1,007,843 1,007,843
-------------------------------- --------- --------- ---------- ----------
Unquoted Investments
Unquoted investments are stated at the directors' estimate of
fair value and follow the recommendations of the EVCA and the BVCA.
The estimate of fair value is normally the latest valuation placed
on an investment by its manager as at the Statement of Financial
Position date. The valuation policies used by the manager in
undertaking that valuation will generally be in line with the joint
publication from the EVCA and the BVCA, 'International Private
Equity and Venture Capital Valuation guidelines'. Fair value can be
calculated by the manager of the investment in a number of
ways.
In general, the managers with whom the Company invests adopt a
valuation approach which applies an appropriate comparable listed
company multiple to a private company's earnings or by reference to
recent transactions. Where formal valuations are not completed as
at the Statement of Financial Position date, the last available
valuation from the manager is adjusted for any subsequent cash
flows occurring between the valuation date and the Statement of
Financial Position date. The Company's Manager may further adjust
such valuations to reflect any changes in circumstances from the
last manager's formal valuation date to arrive at the estimate of
fair value.
ALTERNATIVE PERFORMANCE MEASURES
Alternative performance measures ("APMs") are numerical measures
of the Company's current, historical or future performance,
financial position or cash flows, other than financial measures
defined or specified in the applicable financial framework. The
Company's applicable financial framework includes FRS 102 and the
AIC SORP.
In selecting these Alternative Performance Measures, the
Directors considered the key objectives and expectations of typical
investors in an investment trust such as APEO.
Discount
The amount by which the market price per share is lower than the
net asset value per share of an investment trust. The discount is
normally expressed as a percentage of the net asset value per
share.
As at As at
30 September 30 September
2022 2021
------------------------------ -------------- ------------- -------------
Share price (p) a 410.0 498.0
============================== ============== ============= =============
Net Asset Value per share (p) b 753.2 673.8
============================== ============== ============= =============
Discount (%) c = (b-a) / b 45.6 26.1
------------------------------ -------------- ------------- -------------
Dividend Yield
The total dividend per ordinary share in respect of the
financial year divided by the share price, expressed as a
percentage, calculated at the year end date of the Company:
2022 2021
---------------------------------- ----- -----
Dividend per share (p) a 14.4 13.6
======================= ========== ===== =====
Share price (p) b 410.0 498.0
======================= ========== ===== =====
Dividend yield (%) c = a / b 3.5 2.7
----------------------- ---------- ----- -----
NAV Total Return/NAV TR
NAV total return shows how the NAV has performed over a period
of time in percentage terms, taking into account both capital
returns and dividends paid to shareholders.
This involves reinvesting the net dividend into the NAV at the
end of the quarter in which the shares go ex-dividend. Returns are
calculated to each quarter end in the year and then the total
return for the year is derived from the product of these individual
returns .
NAV per share (p) as at 30 September 2021 a 673.8
========================================== ================ =====
NAV per share (p) as at 30 September 2022 b 753.2
========================================== ================ =====
Price Movement c = (b - a) / 1 11.8%
========================================== ================ =====
Dividend Reinvestment(1) d 2.3%
========================================== ================ =====
NAV Total return e = c + d 14.1%
------------------------------------------ ---------------- -----
1 NAV total return assumes investing the dividend in the NAV of
the Company on the date on which that dividend goes
ex-dividend.
Ongoing Charges Ratio/Expense Ratio
The ongoing charges ratio is calculated as management fees and
all other recurring operating expenses that are payable by the
Company, excluding the costs of purchasing and selling investments,
performance fees, finance costs, taxation, non-recurring costs, and
the costs of any share buy-back transactions, expressed as a
percentage of the average NAV during the period. The ratio also
includes an allocation of the look-through expenses of the
Company's underlying investments, excluding performance-related
fees.
The ongoing charges ratio has been calculated in accordance with
the applicable guidance issued by the Association of Investment
Companies ("AIC"), which was last updated in October 2020 .
Year ended Year ended
30 September 2022 30 September 2021
GBP'000 GBP'000
-------------------------- ---------- ------------------ ------------------
Investment management fee a 10,600 8,843
========================== ========== ================== ==================
Administrative expenses b 1,054 1,020
========================== ========== ================== ==================
Ongoing charges c = a + b 11,654 9,863
========================== ========== ================== ==================
Average net assets d 1,099,764 899,097
========================== ========== ================== ==================
Expense ratio e = c / d 1.06% 1.10%
========================== ========== ================== ==================
Look-through expenses f 1.67% 1.69%
========================== ========== ================== ==================
Ongoing charges ratio g = e + f 2.73% 2.79%
-------------------------- ---------- ------------------ ------------------
The look-through expenses represent an allocation of the
management fees and other expenses charged by the underlying
investments held in the portfolio of the Company. Performance
related fees, such as carried interest, are excluded from this
figure. This is calculated over a five year historic average, and
is recalculated on an annual basis based on the previous calendar
year.
Over-commitment Ratio
Outstanding commitments less cash and cash equivalents and the
value of undrawn loan facilities divided by portfolio NAV.
As at As at
30 September 2022 30 September 2021
GBP000 GBP000
---------------------------------------- -------------- ------------------ ------------------
Undrawn Commitments a 678,880 557,051
======================================== ============== ================== ==================
Less undrawn loan facility b ( 137,988) (200,000)
======================================== ============== ================== ==================
Less resources available for investment c ( 30,341) (29,714)
======================================== ============== ================== ==================
Net outstanding commitments d = a - b - c 510,550 327,337
======================================== ============== ================== ==================
Portfolio NAV e 1,192,380 1,007,843
======================================== ============== ================== ==================
Over-commitment ratio f = d / e 42.8% 32.5%
---------------------------------------- -------------- ------------------ ------------------
Share Price Total Return
The theoretical return derived from reinvesting each dividend in
additional shares in the Company on the day that the share price
goes ex-dividend .
Share
Date price (p)
---------------------------------------- ---------------- ----------
Share price (p) as at 30 September 2021 a 498.0
======================================== ================ ==========
Share price (p) as at 30 September 2022 b 410.0
======================================== ================ ==========
Price Movement c = (b / a) - 1 -17.7%
======================================== ================ ==========
Dividend Reinvestment 1 d 2.6%
======================================== ================ ==========
NAV Total return e = c + d -15.1%
---------------------------------------- ---------------- ----------
1 Share price total return assumes reinvesting the dividend in
the share price of the Company on the date on which that dividend
goes ex-dividend.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 30 September 2022
or 2021 but is derived from those accounts. Statutory accounts for
2021 have been delivered to the registrar of companies, and those
for 2022 will be delivered in due course. The auditor has reported
on those accounts; their reports were (i) unqualified, (ii) did not
include a reference to any matters to which the auditor drew
attention by way of emphasis without qualifying their report and
(iii) did not contain a statement under section 498 (2) or (3) of
the Companies Act 2006
The statutory accounts for the financial year ended 30 September
2022 have been approved by the Board and audited but will not be
filed with the Registrar of Companies until after the Company's
Annual General Meeting which will be held at the Balmoral Hotel,
Edinburgh at 12:30 on 22 March 2023.
The Annual Report will be posted to shareholders shortly and
copies will be available from the Manager or from the Company's
website (www.abrdnpeot.co.uk).
For abrdn Private Equity Opportunities Trust plc
abrdn Holdings Limited, Company Secretary
For further information please contact:
Alan Gauld,
Lead Portfolio Manager, abrdn Capital Partners LLP
Tel: 0131 528 4424
William Hemmings
Client Director, Investment Trusts, abrdn
Tel: 020 7463 6223
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.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR BBMMTMTJJBFJ
(END) Dow Jones Newswires
January 31, 2023 05:49 ET (10:49 GMT)
Abrdn Private Equity Opp... (LSE:APEO)
Historical Stock Chart
From Jun 2024 to Jul 2024
Abrdn Private Equity Opp... (LSE:APEO)
Historical Stock Chart
From Jul 2023 to Jul 2024
