TIDMCCPG
RNS Number : 4354B
CVC Credit Partners European OpsLtd
20 September 2018
20 September 2018
FOR IMMEDIATE RELEASE
RELEASED BY BNP PARIBAS SECURITIES SERVICES S.C.A., JERSEY
BRANCH
HALF-YEARLY RESULTS ANNOUNCEMENT
THE BOARD OF DIRECTORS OF CVC CREDIT PARTNERS EUROPEAN
OPPORTUNITIES LIMITED ANNOUNCE HALF-YEARLY RESULTS FOR THE SIX
MONTHSED 30 JUNE 2018
HALF YEARLY BOARD report
financial highlights, performance summary and dividend
history
Financial highlights
Performance summary
As at As at
30 June 31 December
2018 2017
Net Asset Value ("NAV")
per Euro Share EUR1.0962 EUR1.0933
Euro Share price (bid price)(1) EUR1.1100 EUR1.1000
Premium to NAV (based on published NAV)(2) 1.26% 0.61%
Net Asset Value per Sterling GBP1.1273 GBP1.1190
Share
Sterling Share price (bid GBP1.1300 GBP1.1250
price)(1)
Premium to NAV (based on published NAV)(2) 0.24% 0.53%
Period highs and lows
Six months ended Year ended 31 December
30 June 2018 2017
High Low High Low
Net Asset Value per
Euro Share EUR1.1024 EUR1.0878 EUR1.1085 EUR1.0560
Euro Share price (bid
price)(1) EUR1.1100 EUR1.0500 EUR1.1300 EUR1.0080
Net Asset Value per
Sterling Share GBP1.1313 GBP1.1149 GBP1.1314 GBP1.0720
Sterling Share price
(bid price)(1) GBP1.1400 GBP1.0950 GBP1.1550 GBP1.0200
Number of shares in issue as at 30 June 2018:
121,344,131 Euro Shares(3) (31 December 2017: 122,972,583 Euro
Shares)(3)
300,948,694 Sterling Shares(4) (31 December 2017: 296,201,850
Sterling Shares)(4)
Market capitalisation as at 30 June 2018:
Euro Share class: EUR134,691,985 (31 December 2017:
EUR135,269,841)
Sterling Share class: GBP340,072,024 (31 December 2017:
GBP333,227,081)
Dividend history
Year ended Total dividend paid Total dividend paid
per Euro Share per Sterling Share
2014 EUR0.0350 GBP0.0350
2015 EUR0.0500 GBP0.0500
2016(5) EUR0.0625 GBP0.0625
2017(6) EUR0.0525 GBP0.0525
Dividends paid during the period ended 30 June 2018
Payment date Dividend paid Dividend paid
per Euro Share per Sterling Share
16/03/2018 EUR0.01375 GBP0.01375
15/06/2018 EUR0.01375 GBP0.01375
Please refer to note 14 for further information subsequent to
the reporting period.
(1) - Source: Bloomberg
(2) - As the Company ordinary shares are traded on the London
Stock Exchange's Main Market, the share price may be higher or
lower than the NAV. The difference is known as a discount or
premium. The Company's premium to NAV is calculated by expressing
the difference between the period end Euro and Sterling Share price
(bid price) and the period end NAV per share as a percentage of the
NAV per share.
(3) - Excludes 10,000,000 (31 December 2017: 49,856,335) Euro
Shares held as treasury shares
(4) - Excludes 56,926,490 (31 December 2017: 25,810,040)
Sterling Shares held as treasury shares
(5) - As a result of the Company amending the frequency of its
dividend payments to a quarterly basis rather than a semi-annual
basis during 2016, shareholders received an additional EUR0.0125
and GBP0.0125 dividend per Euro and Sterling Share
respectively.
(6) - During the prior year the Company increased its target
annual dividend to 5.5 cents per Euro Share and 5.5 pence per
Sterling Share.
chairman's statement
Introduction
I am pleased to be able to write to you to report another
successful six months for the Company. The EUR and GBP class net
asset values per share increased by 0.26% and 0.74% respectively
over the period. A detailed analysis of the performance of the
Investment Vehicle's portfolio is set out in the Investment Vehicle
Manager's report below and is thus not repeated here, but it is
notable that once again the credit opportunity sub-class delivered
significant returns, whilst performing credit yields continued to
track at historically low levels, albeit showing improvement from
the previous half-year.
Performance in Context
I reflected in my statement accompanying the audited financial
statements for the year ended 31 December 2017 that the future
economic direction of developed markets would depend on the
reaction of monetary policy makers to global growth. We have seen,
and expect to continue to see, monetary tightening in the US
through rate rises and the EU through constrained QE, and thus far
the pace of adjustments seems commensurate with a controlled and
measured economic expansion. This continues to provide a benign
economic backdrop to our asset class, with this view tempered only
by the UK's continuing inability to bring Brexit negotiations to a
satisfactory close, with increasing potential for economic
disruption arising from an uncontrolled exit from the EU, and the
ongoing attempts by the Trump administration to structurally change
the US's terms of trade with the international community. We have
seen no material negative effects from these features within our
portfolio to date, but continue to monitor both carefully. As
anticipated in our base case for 2018, the positive macro
environment has seen new primary supply via M&A activity along
with a strong secondary underpinning through the macro environment,
and we have not varied our base case during the year to date.
As a result, we continue to be of the opinion that the
Investment Vehicle Manager is well placed to continue to source
attractive risk adjusted positions for the Investment Vehicle that
have the capacity to continue to deliver target total returns.
Corporate Activities
The Company has continued to see demand for its shares during
2018 to date, resulting in ongoing issuance from our stock of
treasury shares. As a result, the Company has instructed its
advisors to prepare a placing programme prospectus for release in
September 2018, thus enabling the Company to continue to expand the
Company's market capitalisation and diversify the share register,
should market conditions permit.
Dividend Yield
The Company's dividend yield has remained stable during the
period.
Other Matters
As always, I would like to thank my fellow Directors, the
portfolio management team at CVC Credit Partners Investment
Management Limited, our advisors and investment bankers for their
support and wise counsel, and would also like to extend thanks to
all of our shareholders for your continuing commitment to the
Company.
Richard Michael Boléat
Chairman
20 September 2018
executive sUMMARY
Corporate summary
The Company is a closed-ended investment company limited by
shares, registered and incorporated in Jersey under the Companies
(Jersey) Law 1991 on 20 March 2013, with registration number
112635. The Company's Share capital consists of Euro Shares and
Sterling Shares and is denominated in Euro and Sterling
respectively. The Company's Euro Shares and Sterling Shares are
listed on the Official List of the UK Listing Authority and
admitted to trading on the Main Market of the London Stock
Exchange. Details of the shares in issue are detailed within the
financial highlights section above.
The Company is self-managed and the Directors have invested the
net proceeds from share issues into Compartment A of an existing
European credit opportunities investment vehicle, CVC European
Credit Opportunities S.à r.l. (the "Investment Vehicle"), managed
by CVC Credit Partners Investment Management Limited (the
"Investment Vehicle Manager").
The Company is a member of the Association of Investment
Companies ("AIC") and is regulated by the Jersey Financial Services
Commission.
Significant events during the six months ended 30 June 2018
Sale of treasury shares
Excluding shares sold to Conversion SPV Limited (the "Conversion
Vehicle") as detailed below, the Company completed the following
sale of Euro and Sterling treasury shares during the period. All
treasury shares were sold at a premium to the relevant published
NAV.
Euro Shares Sterling Shares
Treasury shares sold 2,225,000 4,400,000
Gross proceeds received EUR2,455,813 GBP4,965,180
Contractual quarterly tenders
The Company completed the following tenders under its
Contractual Quarterly Tender mechanism during the period. All of
the shares tendered were transferred into the Company's name and
held in treasury.
Quarterly Settlement Euro Shares Euro Share Sterling Sterling
tender date tendered tender price Shares Share
tendered tender price
December 12/02/2018 - - 14,660 GBP1.1090
2017
March 2018 15/05/2018 3,933,091 EUR1.0855 24,433 GBP1.1135
Please refer to note 6 and note 10 for further details.
Scrip dividend
The Company issued the following shares under the scrip dividend
scheme during the period.
Scrip issue date Euro scrip Euro Shares Sterling Sterling
reference issued scrip reference Shares issued
price price
16/03/2018 EUR1.1020 311,042 GBP1.1275 105,310
15/06/2018 EUR1.0930 71,534 GBP1.1340 20,912
Announcement of placing of treasury shares
On 5 June 2018, the Company announced a placing of the Company's
shares that were held in treasury. Ahead of the placing close, the
Company converted all but 10,000,000 Euro treasury shares into
Sterling Shares (see below). The placing closed on 5 July 2018
(refer to note 14 for further detail).
Treasury share convertor mechanism
At the 2016 Annual General Meeting the Company requested, and
received, shareholder approval to create a mechanism whereby
treasury shares held by the Company be converted from one currency
denomination to another in accordance with the procedure set out in
the Articles. As the conversion cannot take place while the
treasury shares are held by the Company it was proposed that a
facility be created so that some or all of the treasury shares be
sold to a related party, who would be willing to facilitate the
conversion of the treasury shares from one currency denomination to
another. The treasury share convertor mechanism was put in place to
provide the Company with a means of converting one class into
another to meet the demand in the market from time to time.
Accordingly on the 11 September 2017, the Company established
the CCPEOL Purpose Trust (the "Trust"), a business purpose trust
established under Jersey law. The purpose of the Trust is the
facilitation of the conversion of the treasury shares by the
incorporation of a company, Conversion SPV Limited (the "Conversion
Vehicle"), who would purchase the treasury shares from the Company,
convert them into shares of the other currency denomination and
sell those converted shares back to the Company. The Chairman of
the Company was appointed as the enforcer of the Trust.
The Company completed the following share conversions under the
treasury share convertor mechanism during the period:
On 21 June 2018, the Company announced the sale of 41,564,426
Euro treasury shares to the Conversion Vehicle, which completed on
22 June 2018. Subsequently, the Company issued a facilitation
request pursuant to the Share Subscription, Conversion and
Repurchase Agreement to the Conversion Vehicle requiring the
Conversion Vehicle to convert those 41,564,426 Euro Shares held by
it into Sterling Shares. The 41,564,426 Euro Shares were converted
into 35,477,357 Sterling Shares at a ratio of 0.853551, calculated
in accordance with the share conversion provisions appearing in the
Company's Articles.
On 28 June 2018, the conversion process was completed with the
Company purchasing 35,477,357 Sterling Shares from the Conversion
Vehicle and holding them in treasury. The transactions had no
material impact on the Company's liquidity or its NAV.
Investment Objective and Policy
Company investment objective
The Company's investment objective is to provide shareholders
with regular income returns and capital appreciation from a
diversified portfolio of predominantly sub-investment grade debt
instruments.
Company asset allocation
On 26 June 2018, the shareholders approved an amendment to the
Company's investment policy whereby the minimum level of the
Investment Vehicle's gross assets invested in obligations of
companies/borrowers domiciled, or with material operations, in
Western Europe was reduced from 70 per cent. to 60 per cent. The
revised investment policy is detailed below:
The Company's investment policy is to invest predominantly in
companies domiciled, or with material operations in Western Europe
across various industries. The Company's investments are focused on
senior secured obligations of such companies but investments are
also made across the capital structure of such borrowers.
The investment policy of the Investment Vehicle is subject to
the following limits (the "investment limits"):
-- A minimum of 50 per cent. of the Investment Vehicle's gross
assets will be invested in senior secured obligations (which, for
the purposes of this investment limit will include cash and cash
equivalents).
-- A minimum of 60 per cent. of the Investment Vehicle's gross
assets will be invested in obligations of companies/borrowers
domiciled, or with material operations, in Western Europe.
-- A maximum of 7.5 per cent. of the Investment Vehicle's gross
assets will be invested at any given time in obligations of a
single borrower subject to a single exception at any one time
permitting investment of up to 15 per cent. in order to participate
in a loan to a single borrower, provided the exposure is sold down
to a maximum of 7.5 per cent. within 12 months of acquisition.
-- A maximum of 7.5 per cent. of the Investment Vehicle's gross
assets will be invested in credit loan obligation securities.
-- A maximum of 25 per cent. of the Investment Vehicle's gross
assets will be invested in CVC Capital Portfolio Company debt
obligations calculated as invested cost as a percentage of the
Investment Vehicle's gross assets.
The Investment Vehicle is permitted to borrow up to an amount
equal to 100 per cent. of the NAV of the Investment Vehicle at the
time of borrowing (the "borrowing limit").
General
The investment objective and investment policy of the Investment
Vehicle are consistent with the investment objective and investment
policy of the Company. In the event that changes are made to the
investment objective or investment policy of the Company or of the
Investment Vehicle (including the investment limits and/or the
borrowing limit), the Directors will seek Shareholder approval of
changes which are either material in their own right or, when
viewed as a whole, together with previous non-material changes,
constitute a material change from the published investment
objective or policy of the Company.
Company borrowing limit
The Company may borrow up to 15 per cent. of the NAV of the
Company for the sole purpose of purchasing or redeeming its own
shares otherwise than pursuant to Contractual Quarterly
Tenders.
Investment strategy and approach
The Company gave effect to its investment policy by subscribing
for Preferred Equity Certificates, (the "PEC's"), Series 4 and 5,
issued by the Investment Vehicle. Series 4 and 5 PECs are
denominated in Euro and Sterling respectively and are income
distributing.
The Investment Vehicle Manager's investment strategy for the
Investment Vehicle is to make loan or bond investments in companies
based on detailed fundamental analysis of the operations and market
position of each company and its capital structure.
The Investment Vehicle invests in the debt of larger companies
which offer a number of differing characteristics relative to the
broader market, including but not limited to:
(i) larger, more defensive market positions;
(ii) access to broader management talent;
(iii) multinational operations which may reduce individual
customer, sector or geographic risk and provide diverse
cashflow;
(iv) working capital and capital expenditure which can be
managed in the event of a slowdown in economic growth; and
(v) wider access to both debt and equity capital markets.
Based on the market opportunity and relative value, the
Investment Vehicle invests in a range of different credit
instruments across the capital structure of target companies
(including but not limited to senior secured, second lien and
mezzanine loans and senior secured, unsecured and subordinated
bonds).
Assets are sourced in both the new issue and secondary markets,
using the sourcing networks of the Investment Vehicle Manager and
CVC Group generally.
The Investment Vehicle Manager's access to deals is supported by
the network of contacts and relationships of its leadership team
and investment professionals, as well as the strong positioning of
the CVC Group in the European leveraged finance markets. The
Investment Vehicle Manager analyses the risk of credit loss for
each investment on the basis it will be held to maturity but takes
an active approach to the sale of investments once the investment
thesis has been realised.
The liquidity terms of the Investment Vehicle are also an
important factor considered in determining the composition of the
investment portfolio.
Further information in respect to the Investment Vehicle Manager
portfolio and performance as at 30 June 2018 can be found in the
Investment Vehicle Manager Report which is incorporated within this
Half Yearly Financial Report below.
Director interests
Information on each Director is shown below.
No Director has any other interest in any contract to which the
Company is a party and no Director has held or holds any management
or ordinary shares in the Company.
Principal risks and uncertainties
When considering the total return of the Company, the Directors
take account of the risk which has been taken in order to achieve
that return. The Directors have carried out a robust assessment of
the principal risks facing the Company including those which would
threaten its business model, future performance, solvency or
liquidity. The following risk factors have been identified and are
listed below:
-- Supply and demand
-- Investment portfolio concentration
-- Liquidity
-- Foreign exchange risk
-- Macro-economic factors
-- Capital management risks
Information on these risks and how they are managed is given in
the Annual Financial Report for the year ended 31 December 2017. In
the view of the Board these principal risks and uncertainties are
as applicable to the remaining six months of the current financial
year as they were in the six months under review.
Events after the reporting date
The Directors are not aware of any developments that might have
a significant effect on the operations of the Company in subsequent
financial periods not already disclosed in this report or the
condensed attached financial statements.
Going concern
Under the AIC Code of Corporate Governance ("AIC Code") and
applicable regulations, the Directors are required to satisfy
themselves that it is reasonable to assume that the Company is a
going concern from the date of approval of this Half Yearly
Financial Report.
After reviewing the Company's budget and cash flow forecast for
the next twelve months, the Directors are satisfied that, at the
time of approving these condensed financial statements, no material
uncertainties exist that may cast significant doubt concerning the
Company's ability to continue for a period of at least twelve
months from the date of approval of the condensed financial
statements. The Directors consider it is appropriate to adopt the
going concern basis in preparing this Half Yearly Financial
Report.
Future strategy
The Board continues to believe that the investment strategy and
policy adopted by the Investment Vehicle is appropriate for and is
capable of meeting the Company's objectives. The overall strategy
remains unchanged and it is the Directors' assessment that the
Investment Vehicle Manager's resources are appropriate to properly
manage the Investment Vehicle's portfolio in the current and
anticipated investment environment.
Please refer to the Investment Vehicle Manager's report for
detail regarding performance to date of the Investment Vehicle's
investments and the main trends and factors likely to affect the
future development, performance and position of those
investments.
Board members
All the Directors are non-executive.
CHAIRMAN
Richard Michael Boléat. Appointed 20 March 2013.
Richard qualified as a Chartered Accountant with Coopers &
Lybrand in the United Kingdom in 1987 and subsequently worked in
the Middle East, Africa and the United Kingdom for a number of
commercial and financial services groups, during which time he
acted as a buy-side high yield credit analyst for an Arabian
investment bank.
From 1996 he was a Principal of Channel House, a Jersey based
financial services group, which was acquired by Capita Group plc in
September 2005 and led their financial services client practice in
Jersey until September 2007.
He currently acts as a non-executive director of a number of
substantial collective investment and investment management
entities and is active in a number of asset classes including
global macro, super-senior corporate CDS, long/short equity, fund
of funds and EM real estate. He presently acts as Chairman of Yatra
Capital Limited, which is listed on Euronext, and Phaunos Timber
Fund Limited and Funding Circle SME Income Fund Limited both of
which are listed on the London Stock Exchange. He is personally
regulated by the Jersey Financial Services Commission in the
conduct of financial services business and is a member of the
Alternative Investment Management Association (AIMA).
Directors
Mark Richard Tucker. Appointed 20 March 2013.
In 1997 Mark joined Arborhedge Investments, Inc. (formally HFR
Investments, Inc.) a Chicago based, boutique broker dealer
specialising in the placement of hedge fund interests to
institutions globally. Mark served as the President and Chief
Executive Officer of Arborhedge until his return to Jersey in 2002,
after which he remained a director and shareholder until 2012.
Previously, Mark held a variety of retail and private banking roles
in Jersey with both HSBC and Cater Allen Bank.
In 1988 Mark relocated first to London, where he joined GNI
Limited in a financial futures business development role, and later
to New York where he was responsible for the alternative investment
program of Gresham Asset Management, Inc. and later for the asset
allocation and manager selection activities of Mitsui &
Company.
Mark is personally regulated by the Jersey Financial Services
Commission in the conduct of financial services business, and he is
an Associate of the Chartered Institute of Bankers, a Chartered
Fellow of the Chartered Institute for Securities and Investment and
a member of the Institute of Directors. Mark also serves as a
non-executive director to several other offshore structures.
David Alan Wood. Appointed 20 March 2013.
David was a founding partner of CVC Cordatus (a predecessor to
CVC Credit Partners Group) in 2006, but retired in April 2012. He
was a member of CVC Credit Partners Advisory Board until April
2015. With 36 years of industry experience, David joined from
Deutsche Bank where he was Co-Head of European Leveraged Finance.
Prior to this, he was a Managing Director at JP Morgan/Chase
Manhattan where he worked in leveraged finance and corporate
banking. Mr Wood continues to sit on the CVC Credit Partners
Conflicts Committee.
investment vehicle manager's report
Summary
The Investment Vehicle Manager is pleased with the portfolio
performance for the period ended 30 June 2018. Each strategy has
performed to expectations and the Investment Vehicle Manager
remains optimistic with regards to the growing opportunity within
the Performing Credit and Credit Opportunities segments of the
portfolio given the continued flow of assets seen across the
desk.
Portfolio
As at 30 June 2018 the Investment Vehicle portfolio was invested
in-line with investment policy, was diversified with 80 issuers(1)
across 29 different industries and 14 different countries, and had
exposure of no more than 5.2% to any single issuer.
Portfolio Statistics
As at As at
30 June 2018 31 December
2017
Percentage of Portfolio in
Floating Rate Assets 91.5% 87.6%
------------- ------------
Percentage of Portfolio in
Fixed Rate Assets 8.5% 12.3%
------------- ------------
Percentage of Portfolio in
Other - 0.1%
------------- ------------
Weighted Average Price(3) 95.3 94.9
------------- ------------
Yield to Maturity 8.2% 7.1%
------------- ------------
Current Yield 6.3% 5.8%
------------- ------------
Weighted Average Fixed Rate
Coupon 7.6% 7.1%
------------- ------------
Weighted Average Floating Rate
plus Margin 5.0% 5.0%
------------- ------------
5 Largest Issuers as at 30 June 2018(1)
Issuer % of Gross Assets Industry Country
Saur 5.2 Ecological France
-------------------- ---------------- --------
Camaieu 3.1 Retail France
-------------------- ---------------- --------
Zodiac 3.1 Leisure France
-------------------- ---------------- --------
Ambac 3.0 Finance U.S.
-------------------- ---------------- --------
Celsa 2.9 Metals & Mining Spain
-------------------- ---------------- --------
5 Largest Issuers as at 31 December 2017(1)
Issuer % of Gross Assets Industry Country
------------------ ------------------------- --------
Saur 5.1 Ecological France
------------------ ------------------------- --------
Camaieu 3.2 Retail France
------------------ ------------------------- --------
Ambac 3.0 Finance U.S.
------------------ ------------------------- --------
Ceva 2.9 Transport & Logistics UK
------------------ ------------------------- --------
Dubai World 2.9 Diversified/Conglomerate UAE
Service
------------------ ------------------------- --------
5 Largest Industry Positions as at 30 June
2018(1)
Retail Store 13.6%
-----
Diversified/Conglomerate Service 9.1%
-----
Broadcasting and Entertainment 7.5%
-----
Electronics 6.8%
-----
Chemicals, Plastics and Rubber 6.0%
-----
5 Largest Industry Positions as at 31 December
2017(1)
Diversified/Conglomerate Service 11.0%
-----
Retail Store 11.0%
-----
Electronics 10.0%
-----
Finance 6.0%
-----
Ecological 6.0%
-----
(1) - Excludes 6 (31 December 2017: 11) structured finance
positions.
(2) - Note: all metrics exclude cash unless otherwise
stated.
(3) - Average market price of the portfolio weighted against the
size of each position.
Geographical Breakdown by issuer As at As at
country(1) 30 June 2018 31 December
2017
France 22.2% 24.0%
------------- ------------
UK 21.9% 21.8%
------------- ------------
U.S. 17.7% 22.8%
------------- ------------
Spain 9.4% 5.6%
------------- ------------
Netherlands 8.9% 7.1%
------------- ------------
Luxembourg 7.5% 4.9%
------------- ------------
Germany 4.1% 6.3%
------------- ------------
UAE 3.0% 3.5%
------------- ------------
Other 5.3% 4.0%
------------- ------------
Currency Breakdown As at As at
30 June 2018 31 December
2017
EUR 51.5% 43.1%
------------- ------------
USD 33.2% 39.8%
------------- ------------
GBP 15.3% 17.1%
------------- ------------
Asset Breakdown As at As at
30 June 2018 31 December
2017
Loans (1st Lien) 70.9% 59.1%
------------- ------------
Senior Secured Bonds 15.4% 11.4%
------------- ------------
Loans (2nd Lien) 7.4% 8.9%
------------- ------------
PIK 3.1% 2.9%
------------- ------------
Structured 1.2% 3.6%
------------- ------------
Cash 3.7% 14.3%
------------- ------------
Other -1.7% -0.2%
------------- ------------
Performance
As at the end of June 2018, floating rate instruments comprised
91.5% of the portfolio. Current yield of the asset pool at period
end was 6.3%.
The Investment Vehicle Manager was pleased with the performance
through H1 2018. The portfolio's total return (net of fees,
including dividends reinvested) was 2.8% to Euro investors and 3.3%
to Sterling investors. The Credit Suisse Western European HY Index
hedged to Euro was down 1.37% for the year to date and the Credit
Suisse European Leveraged Loan Index hedged to Euro was up 0.90%
for the year to date.
The Core Income segment of the portfolio delivered 0.3% to gross
portfolio performance based on a 42% average allocation of the
portfolio. The Credit Opportunities segment of the portfolio
delivered a gross 7% return, which equates to a 3.5% gross
portfolio performance contribution based on a 49% average
allocation of the portfolio.
Market Review and Outlook
Through the first half of the year, the divergent monetary
policy across the US and Europe continued to impact markets. A
strong US economy gave the Fed the reason to raise interest rates
again in June and signal 2 further hikes to come this year,
followed by 3 more next year. In contrast, after more disappointing
data and low core inflation, the ECB guided that while quantitative
easing would come to an end, interest rates will be held until
mid-2019. In the UK, the BoE was expected to raise rates in May
following positive UK retail sales and the lowest unemployment
measure since 1975 indicating firming wage pressure, however, the
BoE took until early August to implement a 25bp increase with
further rises likely to be tied to the outcome of Brexit
negotiations.
Despite a sharp increase in Italian government borrowing, costs
post elections (and expected fiscal largesse from the new
government), contagion to other European bond markets was minimal.
Surveys suggest that support for the Euro in Italy has actually
risen, with only 29% in favour of leaving the Euro, 61% in favour
of staying and the rest unsure. As a result, it feels as though
Italian politics is unlikely to become a systemic issue for
European markets but it could remain a source of volatility in the
near term. The other area of weight on markets through 2018 has
been the initiation of protectionist trade policies. This impacted
emerging market equities and European equities, specifically in
automobiles which are suffering from fears that US tariffs could be
applied to car imports. The conclusion of this posturing is hard to
predict, but the longer this drags on the greater the risk that it
starts to impact sentiment more broadly.
Year to date ("YTD") issuance of EUR104.5bn (EUR104.5bn last
year) comprises EUR62.5bn loans (EUR58.4bn) and EUR42.0bn High
Yield ("HY") (EUR46.1bn). YTD loan volumes have been 70%
acquisition, 23% refinancing with the balance being recaps. YTD
bond volumes have been 59% refinancing, 31% acquisitions with the
balance being recaps and general corporate purposes.(a)
Term Loan B new issue spreads leading into the end of H1 were
E+375 which compares with E+364 at the start of the year (Jun'18
Yield to Maturity ("YTM") 4.06% vs. 3.75% Jan'18) while total
leverage stats have actually declined, from 5.56x to 5.16x (first
Lien leverage down from 4.84x to 4.48x).(a)
In the HY space, single B new issue YTMs on a rolling 3 month
basis widened out to 6.24% from 5.31% at the end of 2017 (+93bps),
with BB new issue hitting 3.80% versus 2.91% (+89bps). YTD'18 has
seen 47% of single B deal prices at or wide of guidance versus 15%
for YTD'17 (42% versus 17% for BB deals). Again, as seen in loans,
the actual leverage for bond deals have declined over the period,
being 4.5x for Q2'18, 5.2x for Q4'17 and 4.9x Q2'17. B versus BB
spread differential has remained at 240-245bps throughout the
period.(a)
Market Opportunity in Credit Opportunities
As highlighted at the start of 2018, the Investment Vehicle
Manager continues to identify opportunities in the credit
markets.
Most notably, the themes across industry segments (Retail,
Energy) and geography (UK, Italy) continue to create periods of
asset price volatility and this is expected to continue through the
year. Protectionist trade policies are also becoming a
consideration as the impact for now, although relatively small, may
change the operating model of a number of industries as this
evolves.
In addition, the impact of continued divergent monetary policy
in developed economies is driving investors to consider asset
allocations - in particular as the US economy sees positive
momentum giving the Fed room to normalise rates and now also in
Europe where the ECB has begun the gradual reduction in stimulus
and looks towards 2019 for a policy change. In context, the US
economy is showing signs of moving towards a late credit cycle
where higher rates (although somewhat mitigated by other fiscal
reforms) may build stress on levered balance sheets as the cycle
continues to mature and corporates adjust.
The Investment Vehicle Manager continues to evaluate credits in
the Telecom, Steel, Construction, Industrials, Manufacturing,
Energy, Pharma and Retail space across multiple geographies.
By taking advantage of the growing CVC global network, the
Investment Vehicle Manager expects to be able to continue to
identify investment opportunities and deploy capital for this
strategy.
Source: (a) S&P LCD - July 2018
Conclusion
The portfolio has once again outperformed broader market
indices. The combination of Performing Credit providing stable
yield exposure alongside the higher yielding Credit Opportunities
strategy provides a balanced portfolio risk profile in differing
market environments.
Overall, economic growth still looks broadly healthy across
geographies and corporate earnings are growing, but we see a number
of risks going into H2 2018, particularly political and rate risks.
Both of these are building opportunities across the credit spectrum
for the strategy.
CVC Credit Partners Investment Management Limited
Investment Vehicle Manager
20 September 2018
The indices referred to herein (including the Credit Suisse
Western European HY Index hedged to Euro and the Credit Suisse
Western ELLI hedged to Euro) are widely recognised, unmanaged
indices of market activity and have been included as general
indicators of market performance. There are significant differences
between the types of investments made or expected to be made by
funds under management and the investments covered by the indices,
and the methodology for calculating returns. For example, the
Credit Suisse Western European HY Index is designed as an objective
proxy for the investable universe of the Western European high
yield debt market. Additionally, the Credit Suisse Western ELLI is
designed to mirror the investable universe of the Western European
leveraged loan market where the loans eligible for inclusion must
be denominated in US$ or Western European currencies and must have
a minimum outstanding amount of 100m (in local currency). In
contrast, CVC Credit Partners may have discretion whether to
reinvest such payments during any relevant commitment period.
Moreover, coupon payments received by a fund after the expiration
of any commitment period typically will not be reinvested.
It should not be assumed that a fund will invest in any specific
equity or debt investments, such as those that comprise the
indices, nor should it be understood that there will be a
correlation between any fund's returns and those of the indices. It
should not be assumed that correlations to the indices based on
historical returns will persist in the future. No representation is
made that a fund will replicate the performance of any of the
indices. The indices are included for general, background
informational purposes only and recipients should use their own
judgment to appropriately weight or discount their relevance to the
fund.
Directors' Statement of Responsibilities
The Directors are responsible for preparing the Half Yearly
Financial Report in accordance with applicable Jersey law and
regulations.
The Directors confirm to the best of their knowledge that:
-- the unaudited condensed financial statements within the Half
Yearly Financial Report have been prepared in accordance with IAS
34 - Interim Financial Reporting, as adopted by the European Union
("EU") and give a true and fair view of the state of the affairs of
the Company as at 30 June 2018, as required by the Financial
Conduct Authority's ("FCA") Disclosure Guidance and Transparency
Rule ("DTR") 4.2.4R;
-- the Chairman's Statement, the Investment Vehicle Manager's
Report, the Executive Summary and the notes to the condensed
financial statements include a fair review of the information
required by:
a) DTR 4.2.7R, being an indication of important events that have
occurred during the six months ended 30 June 2018 and their impact
on the unaudited condensed financial statements; and a description
of the principal risks and uncertainties for the remaining six
months of the year; and
b) DTR 4.2.8R, being related party transactions that have taken
place during the six months ended 30 June 2018 and that have
materially affected the financial position or performance of the
Company during that period.
Richard Michael Boléat Mark Richard Tucker
Chairman Audit Committee Chairman
20 September 2018
INDEPENT REVIEW REPORT TO CVC CREDIT PARTNERS EUROPEAN
OPPORTUNITIES LIMITED
Introduction
We have been engaged by the CVC Credit Partners European
Opportunities Limited (the 'Company') to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2018 which comprises the Condensed
Statement of Comprehensive Income, the Condensed Statement of
Financial Position, the Condensed Statement of Changes in Net
Assets, the Condensed Statement of Cash Flows, and the related
notes 1 to 15 to the Condensed Financial Statements. We have read
the other information contained in the half yearly financial report
and considered whether it contains any apparent misstatements or
material inconsistencies with the information in the condensed set
of financial statements.
This report is made solely to the Company in accordance with
guidance contained in International Standard on Review Engagements
2410 (ISRE) "Review of Interim Financial Information Performed by
the Independent Auditor of the Entity" issued by the Auditing
Practices Board. To the fullest extent permitted by law, we do not
accept or assume responsibility to anyone other than the Company,
for our work, for this report, or for the conclusions we have
formed.
Directors' Responsibilities
The half-yearly financial report is the responsibility of, and
has been approved by, the directors. The directors are responsible
for preparing the half-yearly financial report in accordance with
the Disclosure Guidance and Transparency Rules of the United
Kingdom's Financial Conduct Authority.
As disclosed in note 2, the annual financial statements of the
Company are prepared in accordance with International Financial
Reporting Standards as adopted by the European Union. The condensed
set of financial statements included in this half-yearly financial
report has been prepared in accordance with International
Accounting Standard 34, "Interim Financial Reporting" as adopted by
the European Union.
Our Responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Scope of Review
We conducted our review in accordance with International
Standard on Review Engagements 2410 (ISRE), "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" issued by the Auditing Practices Board for use in the
United Kingdom. A review of interim financial information consists
of making enquiries, primarily of persons responsible for financial
and accounting matters, and applying analytical and other review
procedures. A review is substantially less in scope than an audit
conducted in accordance with International Standards on Auditing
(UK) and consequently does not enable us to obtain assurance that
we would become aware of all significant matters that might be
identified in an audit. Accordingly, we do not express an audit
opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2018 is not prepared, in all material respects, in accordance
with International Accounting Standard 34 as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
of the United Kingdom's Financial Conduct Authority.
Ernst & Young LLP
London
20 September 2018
CONDENSED Statement of comprehensive income
For the six months ended 30 June 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
(Unaudited) (Unaudited)
Notes EUR EUR
------------------------------------------------- ------ ------------- ------------
Income
Investment income 3 14,094,301 9,737,677
Net gains on financial assets held at
fair value through profit or
loss 6 2,340,454 15,707,173
Foreign exchange gain/(loss) on financial
assets held at fair value through profit
or loss 6 1,409,989 (7,209,075)
Foreign exchange (loss)/gain
on ordinary shares 12 (1,418,284) 7,204,361
Other net foreign currency exchange gain/(loss)
through profit or loss 4,937 (16,241)
16,431,397 25,423,895
------------------------------------------------- ------ ------------- ------------
Expenses
Operating expenses 4 (545,465) (408,953)
Partial termination fee 7 (19,804) (291,829)
-------------------------------------------------- ------ ------------- ------------
(565,269) (700,782)
------------------------------------------------- ------ ------------- ------------
Profit before finance costs
and taxation 15,866,128 24,723,113
-------------------------------------------------- ------ ------------- ------------
Bank charges (6,565) (4,630)
Share issue costs 4 (81,014) (31,066)
Finance costs - dividend payment 10 (12,715,721) (8,941,379)
-------------------------------------------------- ------ ------------- ------------
Profit before taxation 3,062,828 15,746,038
-------------------------------------------------- ------ ------------- ------------
Taxation - -
Increase in net assets attributable to
shareholders from operations 3,062,828 15,746,038
-------------------------------------------------- ------ ------------- ------------
Earnings per Euro Share 10 EUR0.007231 EUR0.048516
-------------------------------------------------- ------ ------------- ------------
Earnings per Sterling Share (Sterling
equivalent) 10 GBP0.006362 GBP0.035172
-------------------------------------------------- ------ ------------- ------------
All items in the above statement are derived from continuing
operations.
The Company has no items of other comprehensive income, and
therefore the increase in net assets attributable to ordinary
shareholders for the period is also the total comprehensive
income.
The notes form an integral part of these condensed financial
statements.
CONDENSED statement of financial position
As at 30 June 2018
30 June 31 December
2018 2017
(Unaudited) (Audited)
Notes EUR EUR
----------------------------------------- --- ------ -------------- --------------
Assets
Cash and cash equivalents 1,303,308 588,911
Prepayments 65,540 36,856
Financial assets held at fair value
through profit or loss 6 515,341,685 507,308,415
---------------------------------------------- ------ -------------- --------------
Total assets 516,710,533 507,934,182
---------------------------------------------- ------ -------------- --------------
Liabilities
Payables 7 (211,134) (256,050)
Total liabilities (211,134) (256,050)
---------------------------------------------- ------ -------------- --------------
Net assets attributable to shareholders 11 516,499,399 507,678,132
---------------------------------------------- ------ -------------- --------------
The condensed financial statements were approved by the Board of
Directors on 20 September 2018 and signed on its behalf by:
Richard Michael Boléat Mark Richard Tucker
Chairman Audit Committee Chairman
The notes form an integral part of these condensed financial
statements.
CONDENSED statement of changes in net assets
For the six months ended 30 June 2018 (Unaudited)
Net assets
attributable
to shareholders
Note EUR
------------------------------------------------------------- -----------------
As at 1 January 2018 507,678,132
-------------------------------------------------------- --- -----------------
Issuance and subscriptions arising from conversion
of ordinary shares 10 9,340,054
Redemption payments arising on conversion and tender
of ordinary shares 10 (4,999,899)
Increase in net assets attributable to shareholders
from operations 3,062,828
Net foreign currency exchange loss on opening ordinary
shares and ordinary
shares issued during the year 1,418,284
As at 30 June 2018 516,499,399
-------------------------------------------------------- --- -----------------
For the six months ended 30 June 2017 (Unaudited)
Net assets
attributable
to shareholders
Note EUR
------------------------------------------------------------- -----------------
As at 1 January 2017 405,526,279
-------------------------------------------------------- --- -----------------
Subscriptions arising from sale of treasury shares 10 3,472,906
Redemption payments arising on conversion and tender
of ordinary shares 10 (31,211,030)
Increase in net assets attributable to shareholders
from operations 15,746,038
Net foreign currency exchange gain on opening ordinary
shares and ordinary
shares issued during the year (7,204,361)
As at 30 June 2017 386,329,832
-------------------------------------------------------- --- -----------------
The notes form an integral part of these condensed financial
statements.
CONDENSED statement of cash flows
For the six months ended 30 June 2018
Six months Six months
ended ended
30 June 30 June
2018 2017
(Unaudited) (Unaudited)
Notes EUR EUR
--------------------------------------------- ------ -------------- --------------
Cash inflow from operating activities
Profit from ordinary activities before
taxation(1) 3,062,828 15,746,038
Adjustments to reconcile profit before
tax to net cash flows:
Net gain on financial assets held at
fair value through profit or loss 6 (2,340,454) (15,707,173)
Foreign exchange (gain)/loss on investments
held at fair value through profit or
loss 6 (1,409,989) 7,209,075
Foreign currency exchange loss/(gain)
on ordinary shares 12 1,418,284 (7,204,361)
Bank charges 6,565 4,630
Share issue costs 4 81,014 -
Finance costs - dividend payment 10 12,715,721 8,941,379
13,533,969 8,989,588
--------------------------------------------- ------ -------------- --------------
Changes in working capital
(Increase)/decrease in prepayments (28,684) 2,888
(Decrease)/increase in payables (44,916) 101,222,110
--------------------------------------------- ------ -------------- --------------
Cash provided by operations 13,460,369 110,214,586
--------------------------------------------- ------ -------------- --------------
Purchase of financial assets held at
fair value through profit or loss 6 (9,267,021) (104,936,106)
Proceeds from redemption of financial
assets held at fair value through profit
or loss 6 4,984,194 31,162,304
Net cash provided by operating activities 9,177,542 36,440,784
--------------------------------------------- ------ -------------- --------------
Financing activities
Proceeds from issuance and/or subscription
arising from conversion of ordinary shares 10 9,340,054 3,472,906
Payments for redemption of ordinary shares 10 (4,999,899) (31,211,030)
Share issue costs paid 4 (81,014) -
Dividends paid 10 (12,715,721) (8,941,379)
Bank charges paid (6,565) (4,630)
--------------------------------------------- ------ -------------- --------------
Net cash used in financing activities (8,463,145) (36,684,133)
--------------------------------------------- ------ -------------- --------------
Net increase/(decrease) in cash and cash
equivalents in the period 714,397 (243,349)
--------------------------------------------- ------ -------------- --------------
Cash and cash equivalents at beginning
of the period 588,911 1,567,742
Cash and cash equivalents at the end
of the period 1,303,308 1,324,393
--------------------------------------------- ------ -------------- --------------
(1) Includes investment income of EUR14,094,301 (2017:
EUR9,737,270) and interest income of EURnil (2017: EUR407).
The notes form an integral part of these condensed financial
statements.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
1. General information
The Company was incorporated on 20 March 2013 and is registered
in Jersey as a closed-ended Investment Company. Euro Shares and
Sterling Shares were admitted to the Official List of the UK
Listing Authority and admitted to trading on the Main Market of the
London Stock Exchange on 25 June 2013.
The Company's registered address is IFC1, The Esplanade, St
Helier, Jersey, JE1 4BP.
2. Accounting policies
The Annual Financial Report is prepared in accordance with the
Disclosure Guidance and Transparency Rules of the Financial Conduct
Authority ("FCA") and with International Financial Reporting
Standards ("IFRS") as adopted by the European Union which comprise
standards and interpretations approved by the International
Accounting Standards Board, and interpretations issued by the
International Financial Reporting Standards and Standing
Interpretations Committee as approved by the International
Accounting Standards Committee which remain in effect. The Half
Yearly Financial Report has been prepared in accordance with
International Accounting Standards (IAS) 34 - Interim Financial
Reporting ("IAS 34") as adopted by the European Union. They have
also been prepared using the same accounting policies applied for
the year ended 31 December 2017 Annual Financial Report, which was
prepared in accordance with IFRS, except for new standards adopted
by the Company as set out below. The Company has not early adopted
any other standard, interpretation or amendment that has been
issued but is not yet effective.
The Company applies, for the first time, IFRS 15 - Revenue from
Contracts with Customers ("IFRS 15") and IFRS 9 - Financial
Instruments ("IFRS 9") that became effective on 1 January 2018.
These standards do not result in a restatement of previous
financial statements. As required by IAS 34, the nature and effect
of these changes are disclosed below.
(a) IFRS 15 replaces IAS 11 - Construction Contracts, IAS 18 -
Revenue and related Interpretations
IFRS 15 requires entities to recognise revenue to depict the
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the entity expects to be
entitled in exchange for those goods or services.
As disclosed in the Annual Financial Report, the Directors
believe that the application of IFRS 15 will not be applicable as
the Company does not have any revenue that should be accounted for
under IFRS 15.
(b) IFRS 9 replaces IAS 39 - Financial Instruments: Recognition
and Measurement
IFRS 9 introduced a new approach to the classification of
financial assets which is driven by the business model in which the
asset is held and their cash flow characteristics. A new business
model approach was introduced which does allow certain financial
assets to be categorised as "fair value through other comprehensive
income" in certain circumstances. IFRS 9 carries forward the
derecognition requirements of financial assets and liabilities from
IAS 39.
The Board applied IFRS 9 from 1 January 2018 for the first time.
As disclosed in the Annual Financial Report, the Board has
undertaken an assessment of the impact of IFRS 9 on the Company's
financial statements and concluded that there will be no impact to
the classification and measurement of the Company's financial
assets and financial liabilities. Refer to note 2.3 for the
accounting policies on financial instruments.
2.1. Going concern
After reviewing the Company's budget and cash flow forecast for
the next financial period, the Directors are satisfied that, at the
time of approving the Half Yearly Financial Report, no material
uncertainties exist that may cast significant doubt concerning the
Company's ability to continue for a period of at least twelve
months from the date of approval of the condensed financial
statements. The Directors consider it is appropriate to adopt the
going concern basis in preparing the condensed financial
statements.
2.2. Segmental reporting
The Directors view the operations of the Company as one
operating segment, being the investment business. All significant
operating decisions are based upon analysis of the Company's
investments as one segment. The financial results from this segment
are equivalent to the financial results of the Company as a whole,
which are evaluated regularly by the chief operating decision-maker
(the Board with insight from the Investment Vehicle Manager).
2.3 Financial instruments
Financial assets
(a) Classification
The Company classifies its investments as financial assets held
at fair value through profit or loss. These debt securities do not
possess contractual terms which give rise to cash flows on
specified dates that are solely payments of principal and interest
on the principal amount outstanding. Financial assets also include
cash and cash equivalents as well as other receivables which are
measured at amortised cost.
Debt securities at fair value through profit or loss at
inception
Debt securities at fair value through profit or loss at
inception are financial instruments that are managed, and their
performance is evaluated on a fair value basis in accordance with
the Company's documented investment strategy. These financial
assets are neither held to collect contractual cash flows nor to
sell the financial assets.
The Company's policy requires the Investment Vehicle Manager and
the Board to evaluate the information about these financial assets
on a fair value basis together with other related financial
information.
(b) Recognition, measurement and derecognition
Purchases and sales of investments are recognised on the trade
date - the date on which the Company commits to purchase or sell
the investment. Financial assets at fair value through profit or
loss are measured initially and subsequently at fair value.
Transaction costs are expensed as incurred and movements in fair
value are recorded in the Statement of Comprehensive Income.
Financial assets are derecognised when the rights to receive
cash flows from the investments have expired or the Company has
transferred substantially all risks and rewards of ownership.
(c) Fair value estimation
Fair value is the price that would be received to sell an asset
or paid to transfer a liability in an orderly transaction between
market participants at the measurement date. The Company holds
Preferred Equity Certificates ("PECs") issued by the Investment
Vehicle. These investments are not listed or quoted on any
securities exchange and are not traded regularly and, on this
basis, no active market exists.
The Company relies on the board of the Investment Vehicle making
fair value estimates of an equivalent basis to those that would be
made under IFRS. As at 30 June 2018, the Directors reviewed
documentary evidence of the valuation of Investment Vehicle
investments and scrutinised fair value estimates used to gain
assurances as to the appropriateness and robustness of the
valuation methodology applied by the Investment Vehicle to its
underlying portfolio assets and hence to the Company investments in
the Investment Vehicle. The Directors then incorporated those fair
value estimates into the Company's Statement of Financial
Position.
(d) Valuation process
The Directors met with representatives of the Investment Vehicle
Manager in order to verify how the PECs are valued and the
composition of the NAV of the PECs as of the date of the Statement
of Financial Position.
The Directors are in regular communications with the Investment
Vehicle Manager and receive monthly performance reports from the
Investment Vehicle Manager in respect of the Investment Vehicle and
its underlying investments, which are presented to the Directors by
the Investment Vehicle Manager and discussed by these parties.
The Directors consider the impact of general credit conditions
on the valuation of both the PECs and Investment Vehicle portfolio,
as well as specific credit events in the European corporate
environment. The Directors also analyse the Investment Vehicle
portfolio in terms of both investment mix and fair value
hierarchy.
PECs
The PECs are valued taking into consideration a range of factors
including the audited NAV of the Investment Vehicle as well as
available financial and trading information of the Investment
Vehicle and of its underlying portfolio; the price of recent
transactions of PECs redeemed and advice received from the
Investment Vehicle Manager; and such other factors as the
Directors, in their sole discretion, deem relevant in considering a
positive or negative adjustment to the valuation.
The estimated fair values may differ from the values that would
have been realised had a ready market existed and the difference
could be material.
The fair value of investments is assessed on an ongoing basis by
the Board.
Investment Vehicle Portfolio
The Directors also discuss the Investment Vehicle Manager's
monthly valuation process to understand the valuation methodology
of Level 3 debt securities and collateralised loan obligations
(CLOs) held in the Investment Vehicle portfolio. As part of this
they consider the assumptions used and significant fair value
changes during the period.
Investments in CLOs are primarily valued based on the bid price
as provided by a third party pricing service and may be amended
following consideration of the NAV published by the administrator
of the CLOs. Furthermore, such a NAV is adjusted when necessary, to
reflect the effect of the time passed since the calculation date,
liquidity risk, limitations on redemptions and other factors.
Depending on the fair value level of a CLO's assets and liabilities
and on the adjustments needed to the NAV published by that CLO, the
Investment Vehicle classifies the fair value of these investments
as Level 3.
Investments in debt securities for which there are limited
broker quotes and no other evidence of existing liquidity are
classified as Level 3. These Level 3 securities are valued by
considering in detail the limited broker quotes available for
evidence of outliers that may skew the average. Any such outliers
are removed and then the range of the remaining quotes is
considered. If there are no broker quotes, the Investment Vehicle
Manager produces a pricing memorandum for the Company's holding in
the Investment Vehicle underlying portfolio drawing on the
International Private Equity Valuation guidelines, which is
discussed, reviewed and accepted by the board of the Investment
Vehicle and the independent service provider.
If the Investment Vehicle Manager and the relevant independent
service provider have difficulty in establishing an agreed upon
valuation for an asset, they will discuss and agree alternative
valuation methods.
Financial liabilities
(e) Classification
The Company classifies its ordinary shares as financial
liabilities held at amortised cost. Financial liabilities also
include payables which are also held at amortised cost.
(f) Recognition, measurement and derecognition
Financial liabilities are recognised initially at fair value
plus any directly attributable incremental costs of acquisition or
issue and are subsequently carried at amortised cost. Financial
liabilities are derecognised when the obligation specified in the
contract is discharged, cancelled or expires.
Ordinary shares are carried at amortised cost being the carrying
amount of ordinary share value at which investors have the
opportunity to partially tender their shareholding in accordance
with the Company's Quarterly Contractual Tender facility.
Gains and losses are recognised in the Statement of
Comprehensive Income when the liabilities are derecognised.
3. Investment income
Six months Six months
ended ended
30 June 2018 30 June 2017
(Unaudited) (Unaudited)
EUR EUR
Investment income 14,094,301 9,737,270
Bank interest income - 407
Total investment income 14,094,301 9,737,677
-------------------------- -------------- --------------
4. Operating expenses
Six months Six months
ended ended
30 June 2018 30 June 2017
(Unaudited) (Unaudited)
EUR EUR
Administration fees 115,494 91,506
Directors' fees (see note 5) 90,436 92,203
Regulatory fees 53,133 26,862
Audit fees 20,843 30,600
Non-audit fees - interim review services 11,038 10,200
Professional fees 85,129 40,639
Brokerage fees 22,772 22,735
Registrar fees 44,198 30,229
Advisor fees 28,162 -
Commission fees 22,034 -
Sundry expenses 52,226 63,979
------------------------------------------- -------------- --------------
Total operating expenses 545,465 408,953
------------------------------------------- -------------- --------------
The costs and expenses of the sale of treasury shares
attributable to the Company have been expensed in the Statement of
Comprehensive Income and amounted to a total of EUR81,014 (30 June
2017: EUR31,066).
The Corporate Services Manager agreed to provide the services of
Mr. Justin Atkinson to assist with the marketing and promotion of
the Company's shares (the "Advisor fees"). The Corporate Services
Manager recharges the Company for Mr. Atkinson's cost. During the
period, Advisor fees incurred were EUR28,162 (30 June 2017:
EURnil).
Commission fees relate to the commission payable to the CCPEOL
Purpose Trust (the "Trust"). During the period, Commission fees
incurred were EUR22,034 (30 June 2017: EURnil). Refer to note 10
for further details on the treasury share convertor mechanism.
5. Directors' fees and interests
Director fees are as follows:
Richard Boleat (Chairman): GBP65,000 per annum
Mark Tucker: GBP43,750
David Wood: GBP42,500 per annum
Mark Tucker in his capacity as the Chairman of the Audit
Committee receives an additional GBP6,250 for his services in this
role.
Director's fees payable as at 30 June 2018 were EURnil (30 June
2017: EURnil).
None of the Directors hold shares in the Company. No pension
contributions were payable in respect of any of the Directors.
The Company has no employees.
Richard Boléat acts as the enforcer of the CCPEOL Purpose Trust.
Please refer to note 13 for further detail.
David Wood holds an investment in a CVC entity and sits on the
CVC Credit Partners Conflicts Committee (the "Conflicts
Committee").
CVC Credit Partners Group has established an independent
Conflicts Committee of independent directors drawn from its group
board and the boards of certain of its funds and investment
vehicles for the purpose of providing review and guidance to the
relevant investment committee with respect to any situation where
there is the potential for (or perception of) a material conflict
of interest.
The Independent Conflicts Committee currently consists of two
independent directors from CVC Investment Services' board of
directors (being Douglas Maccabe and Stephen Linney), and David
Wood. Any such conflict is required to be presented to the
Conflicts Committee by the relevant portfolio manager and, if
necessary, CVC Credit Partners Group's chief executive officer
and/or chief investment officer.
6. Financial assets held at fair value through profit or
loss
30 June 31 December
2018 2017
(Unaudited) (Audited)
EUR EUR
PECs - Unquoted investment 515,341,685 507,308,415
----------------------------- ------------ ------------
During the period, the Company subscribed for 2,227,406.05 Euro
PECs (31 December 2017: 14,067,049.99) and 4,373,804.83 Sterling
PECs (31 December 2017: 91,973,380.49) issued by the Investment
Vehicle. 382,707.42 (31 December 2017: 307,753.43) Euro PECs and
126,472.99 (31 December 2017: 22,105.71) Sterling PECs were
subscribed for as a result of the scrip dividend scheme.
During the period, 459,679.64 (31 December 2017: 4,906,918.83)
Euro PECs were converted into 395,570.84 Sterling PECs (31 December
2017: 4,231,745.05) and 137,895.02 Sterling PECs (31 December 2017:
292,630.38) were converted into 159,820.35 Euro PECs (31 December
2017: 323,604.10) as part of the monthly share conversion process.
3,905,410.00 Euro PECs (31 December 2017: 15,719,762.00) and
38,854.97 (31 December 2017: 14,837,291.00) Sterling PECs, were
redeemed as part of the Quarterly Contractual Tender.
As at 30 June 2018, the Company held 120,192,036.91 (31 December
2017: 121,787,192.73) Euro PECs and 298,830,476.20 (31 December
2017: 294,111,377.53) Sterling PECs. Please refer below for
reconciliation of PECs from 1 January 2017:
Compartment A
Sterling
Date Transaction type Euro PECs PECs
As at 1 January
2017 127,715,466.04 213,014,064.66
--------------------------------------- --------------- ---------------
02/01/2017 Quarterly tender (6,227,806.00) (7,920,070.00)
08/03/2017 PEC subscription - 643,093.56
08/03/2017 PEC subscription - 248,155.42
03/04/2017 Quarterly tender (5,503,287.00) (6,917,221.00)
17/04/2017 PEC subscription - 501,278.29
17/04/2017 PEC subscription - 250,638.69
17/04/2017 PEC subscription - 250,638.69
17/04/2017 PEC subscription - 250,638.69
19/05/2017 PEC subscription - 349,180.30
19/05/2017 PEC subscription - 198,594.10
30/06/2017 PEC subscription 12,526,467.90 68,783,681.54
03/07/2017 Quarterly tender (3,988,669.00) -
18/08/2017 PEC subscription - 199,482.83
12/09/2017 PEC subscription 198,376.46 -
12/09/2017 PEC subscription - 198,594.07
12/09/2017 PEC subscription - 247,992.31
29/09/2017 Monthly conversion 323,604.10 (292,630.38)
11/10/2017 PEC subscription 198,216.00 390,113.64
11/10/2017 PEC subscription 100,499.14 17,476,724.18
11/10/2017 PEC subscription 151,089.27 -
13/11/2017 PEC subscription 99,540.12 199,249.93
13/11/2017 PEC subscription 792,861.10 199,249.93
13/11/2017 PEC subscription - 1,091,208.28
30/11/2017 Monthly conversion (594,200.08) 510,511.63
12/12/2017 Scrip issue 307,753.43 22,105.71
12/12/2017 PEC subscription - 247,368.52
12/12/2017 PEC subscription - 247,500.52
29/12/2017 Monthly conversion (4,312,718.75) 3,721,233.42
----------------- -------------------- --------------- ---------------
As at 31 December 2017 121,787,192.73 294,111,377.53
--------------------------------------- --------------- ---------------
08/01/2018 PEC subscription 75,459.00 251,692.47
15/01/2018 PEC subscription 150,919.02 151,015.12
16/01/2018 PEC subscription 553,372.51 -
18/01/2018 PEC subscription - 249,480.39
22/01/2018 PEC subscription - 250,297.28
31/01/2018 Monthly conversion (148,553.58) 128,955.00
01/02/2018 Quarterly tender - (14,561.97)
13/02/2018 PEC subscription 148,754.20 446,800.22
07/03/2018 PEC subscription 594,337.68 148,772.29
12/03/2018 PEC subscription - 1,634,908.90
14/03/2018 PEC subscription - 892,717.28
16/03/2018 Scrip issue 311,445.47 105,410.30
20/03/2018 PEC subscription - 348,120.88
27/03/2018 PEC subscription 704,563.64 -
29/03/2018 Monthly conversion 121,214.24 (104,810.90)
01/04/2018 Quarterly tender (3,905,410.00) (24,293.00)
30/04/2018 Monthly conversion (297,154.47) 254,663.40
30/04/2018 Monthly conversion 34,754.83 (29,788.35)
31/05/2018 Monthly conversion (221.04) 189.21
31/05/2018 Monthly conversion 3,418.17 (2,925.26)
15/06/2018 Scrip issue 71,261.95 21,062.69
29/06/2018 Monthly conversion 433.11 (370.51)
29/06/2018 Monthly conversion (13,750.55) 11,763.23
As at 30 June 2018 120,192,036.91 298,830,476.20
--------------------------------------- --------------- ---------------
The Investment Vehicle's investment objective is to provide
investors with regular income returns and capital appreciation from
a diversified portfolio of sub-investment grade debt instruments.
The Company is entitled to receive income distributions every
quarter, which will equate to not less than 75% of the net income
of the Company's investment in the Investment Vehicle.
The Investment Vehicle Manager pursues the Investment Vehicle's
investment policy subject to the Investment Vehicle's Investment
Limits and Borrowing Limit as explained in the Executive
Summary.
Fair value hierarchy
IFRS 13 'Fair Value Measurement' ("IFRS 13") requires an
analysis of investments valued at fair value based on the
reliability and significance of information used to measure their
fair value.
The Company categorises its financial assets and financial
liabilities according to the following fair value hierarchy
detailed in IFRS 13, that reflects the significance of the inputs
used in determining their fair values:
Level 1: Quoted market price (unadjusted) in an active market
for an identical instrument.
Level 2: Valuation techniques based on observable inputs, either
directly (i.e., as prices) or indirectly (i.e., derived from
prices). This category includes instruments valued using: quoted
market prices in active markets for similar instruments; quoted
prices for identical or similar instruments in markets that are
considered less than active; or other valuation techniques where
all significant inputs are directly or indirectly observable from
market data.
Level 3: Valuation techniques using significant unobservable
inputs. This category includes all instruments where the valuation
technique includes inputs not based on observable data and the
unobservable variable inputs have a significant effect on the
instrument's valuation. This category includes instruments that are
valued based on quoted prices for similar instruments where
significant unobservable adjustments or assumptions are required to
reflect differences between the instruments.
As at 30 June 2018 Level 1 Level 2 Level 3 Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
EUR EUR EUR EUR
Financial assets
------------ ------------ ------------ ------------
Financial investments held
at fair value
through profit or loss - - 515,341,685 515,341,685
------------ ------------ ------------ ------------
Financial liabilities
------------ ------------ ------------ ------------
Ordinary shares (*) 519,075,394 - - 519,075,394
------------ ------------ ------------ ------------
Level 1 Level 2 Level 3 Total
As at 31 December 2017 (Audited) (Audited) (Audited) (Audited)
EUR EUR EUR EUR
Financial assets
------------ ----------- ------------ ------------
Financial investments held
at fair value through profit
or loss - - 507,308,415 507,308,415
------------ ----------- ------------ ------------
Financial liabilities
------------ ----------- ------------ ------------
Ordinary shares (*) 510,483,535 - - 510,483,535
------------ ----------- ------------ ------------
* - Please note for disclosure purposes only, ordinary shares
have been disclosed at fair value using the quoted price in
accordance with IFRS 13. As disclosed in note 2.3, the Company
classifies its ordinary shares as financial liabilities held at
amortised cost.
Level 3 reconciliation - Compartment A PECs
The following table shows a reconciliation of all movements in
the fair value of financial instruments categorised within Level 3
between the beginning and the end of the reporting period.
30 June
2018
(Unaudited)
EUR
------------------------------------------------------ --- --- -------------
Balance as at 1 January 2018 507,308,415
---------------------------------------------------------------- -------------
Purchases of investments (PECs) 8,581,749
Subscriptions arising from conversion of investments
(PECs) 685,272
Redemption proceeds arising from conversion
of investments (PECs) (685,106)
Redemption proceeds arising from quarterly
tenders of investments (PECs) (4,299,088)
Net gains on investments held at fair value 2,340,454
Foreign exchange gain on investments held at
fair value 1,409,989
Balance as at 30 June 2018 515,341,685
---------------------------------------------------------------- -------------
Change in unrealised gain related to investments
still held at six months ended 30 June 2018 2,047,755
---------------------------------------------------------------- -------------
During the six months ended 30 June 2018, there were no
reclassifications between levels of the fair value hierarchy.
31 December
2017
(Audited)
EUR
------------------------------------------------------ --- --- -------------
Balance as at 1 January 2017 404,603,610
---------------------------------------------------------------- -------------
Purchases of investments (PECs) 132,697,195
Subscriptions arising from conversion of investments
(PECs) 5,738,095
Redemption proceeds arising from conversion
of investments (PECs) (5,795,819)
Redemption proceeds arising from quarterly
tenders of investments (PECs) (35,502,351)
Net gains on investments held at fair value 16,793,912
Foreign exchange loss on investments held at
fair value (11,226,227)
Balance as at 31 December 2017 507,308,415
---------------------------------------------------------------- -------------
Change in unrealised gain related to investments
still held at year ended 31 December 2017 14,573,869
---------------------------------------------------------------- -------------
During year ended 31 December 2017, there were no
reclassifications between levels of the fair value hierarchy.
Quantitative information of significant unobservable inputs -
Level 3 - PECs
30 June
2018
Valuation Unobservable Range / weighted
Description (Unaudited) technique input average
EUR
------------- ------------- ------------- ------------------- -----------------
Adjusted Net Discount for
PECs 515,341,685 Asset Value lack of liquidity 0-3%
31 December
2017
Valuation Unobservable Range / weighted
Description (Audited) technique input average
EUR
------------- ------------ ------------- ------------------- -----------------
Adjusted net Discount for
PECs 507,308,415 asset value lack of liquidity 0-3%
The Board believes that it is appropriate to measure the PECs at
the NAV of the investments held at the Investment Vehicle, adjusted
for percentage holding of PECs in the Investment Vehicle.
The net asset value of the Investment Vehicle attributable to
each PEC unit is 1.23 (31 December 2017: 1.22).
Sensitivity analysis to significant changes in unobservable
inputs within Level 3 hierarchy - Level 3 - PECs
The significant unobservable inputs used in the fair value
measurement categorised within Level 3 of the fair value hierarchy
together with a quantitative sensitivity analysis as at 30 June
2018 and comparative are as shown below:
As at 30 June 2018 (Unaudited)
Description Input Sensitivity Effect on fair
used value
EUR
------------- ------------------ ------------ ---------------
Discount of lack
PECs of liquidity 3% (15,460,251)
------------- ------------------ ------------ ---------------
As at 31 December 2017 (Audited)
Description Input Sensitivity Effect on fair
used value
EUR
------------- ------------------ ------------ ---------------
Discount of lack
PECs of liquidity 3% (15,219,252)
------------- ------------------ ------------ ---------------
Please refer to note 2.3 for valuation methodology of PECs.
7. Payables
30 June 31 December
2018 2017
(Unaudited) (Audited)
EUR EUR
Administration fees 31,133 33,750
Audit fees 42,373 20,434
Advisor fees 54,689 47,292
Commission fees 22,034 -
Other payables 60,905 154,574
----------------------- ------------ ------------
Total payables 211,134 256,050
----------------------- ------------ ------------
Partial termination fee expense of EUR19,804 (30 June 2017:
EUR291,829) was incurred during the period, of which EUR19,804 (31
December 2017: EURnil) is payable to the Corporate Services Manager
as at 30 June 2018. In the case of any shareholder tendering shares
through a contractual quarterly tender, the Company becomes liable
to pay a partial termination fee to the Corporate Services Manager
and records an expense in accordance with the prospectus. A fee is
built into the tender price of 1% of the placing price of the
contractual quarterly tender facility to cover this partial
termination fee. No further partial termination fees are payable
beyond March 2018, at which point the entire 1% fee built into the
tender price in respect of tenders beyond that date accrues to the
Company.
As at 30 June 2018, advisor fees of EUR54,689 (31 December 2017:
EUR47,292) is payable to the Corporate Services Manager and
commission fees of EUR22,034 (31 December 2017: EURnil) is payable
to the Trust.
8. Contingent liabilities
As at 30 June 2018, the Company had no contingent liabilities
(31 December 2017: EURnil).
9. Stated capital
Number of Number of
shares Stated capital shares Stated capital
30 June 30 June 30 June 30 June
2018 2018 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
EUR EUR EUR EUR
-------------------
Management shares 2 - 2 -
-------------------- ------------ --------------- ------------ ---------------
Management shares are non-redeemable, have no par value and no
voting rights, and also no profit allocated to them for the
earnings per share calculation.
10. Ordinary shares
Number of Number of
shares(1) Stated capital shares(1) Stated capital
30 June 30 June 30 June 30 June
2018 2018 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
EUR EUR
Euro Shares 121,344,131 122,010,918 117,147,455 117,242,303
Sterling Shares 300,948,694 354,043,860 202,610,969 231,178,183
------------ --------------- ------------ ---------------
Total 422,292,825 476,054,778 319,758,424 348,420,486
----------------- ------------ --------------- ------------ ---------------
(1) - Excludes 10,000,000 (30 June 2017: 110,001,299) Euro
Shares and 56,926,490 (30 June 2017: 70,239,838) Sterling Shares
held as treasury shares.
Total
(Unaudited)
EUR
Balance as at 1 January 2018 470,296,339
----------------------------------------------- -------------
Issue of ordinary shares 8,654,777
Subscriptions arising from conversion of
ordinary shares 685,277
Redemption payments arising from conversion
of ordinary shares (685,111)
Redemption payments arising from quarterly
tenders of ordinary shares (4,314,788)
Foreign currency exchange gain on ordinary
shares 1,418,284
----------------------------------------------- -------------
Balances as at 30 June 2018 476,054,778
----------------------------------------------- -------------
Total
(Unaudited)
EUR
Balance as at 1 January 2017 383,362,971
----------------------------------------------- -------------
Issue of ordinary shares 3,472,906
Subscriptions arising from conversion of -
ordinary shares
Redemption payments arising from conversion -
of ordinary shares
Redemption payments arising from quarterly
tenders of ordinary shares (31,211,030)
Foreign currency exchange gain on ordinary
shares (7,204,361)
----------------------------------------------- -------------
Balances as at 30 June 2017 348,420,486
----------------------------------------------- -------------
Ordinary shares
The Company has two classes of ordinary shares, being Euro
Shares and Sterling Shares.
Each Euro Share holds 1 voting right, and each Sterling Share
holds 1.17 voting rights.
Sale of treasury shares
Excluding shares sold to Conversion SPV Limited (the "Conversion
Vehicle") as detailed below, the Company completed the sale of
2,225,000 Euro and 4,400,000 Sterling treasury shares during the
six months ended 30 June 2018. Refer above for details.
Voluntary conversion
The Company offers a monthly conversion facility pursuant to
which holders of ordinary shares of one class may convert such
shares into ordinary shares of any other class, subject to
regulatory considerations as detailed in the prospectus.
Such conversion will be effected on the basis of the ratio of
the NAV per class to be converted (calculated in Euro less the
costs of effecting such conversion and adjusting any currency
hedging arrangements and taking account of dividends resolved to be
paid), to the NAV per class of the shares into which they will be
converted (also calculated in Euro), in each case on the relevant
conversion calculation date being the first business day of the
month. During the period 464,105 Euro Shares (30 June 2017: nil, 31
December 2017: 4,954,779) were converted into 398,583 Sterling
Shares (30 June 2017: nil, 31 December 2017: 4,266,370) and 138,868
Sterling Shares (30 June 2017: nil, 31 December 2017: 294,967) were
converted into 161,168 Euro Shares (30 June 2017: nil, 31 December
2017: 326,524).
Treasury share convertor mechanism
At the 2016 Annual General Meeting the Company requested, and
received, shareholder approval to create a mechanism whereby
treasury shares held by the Company be converted from one currency
denomination to another in accordance with the procedure set out in
the Articles. As the conversion cannot take place while the
treasury shares are held by the Company it was proposed that a
facility be created so that some or all of the treasury shares be
sold to a related party, who would be willing to facilitate the
conversion of the treasury shares from one currency denomination to
another. The treasury share convertor mechanism was put in place to
provide the Company with a means of converting one class into
another to meet the demand in the market from time to time.
Accordingly on the 11 September 2017, the Company established
the Trust, a business purpose trust established under Jersey law.
The purpose of the Trust is the facilitation of the conversion of
the treasury shares by the incorporation of a company, the
Conversion Vehicle, who would purchase the treasury shares from the
Company, convert them into shares of the other currency
denomination and sell those converted shares back to the Company.
The Chairman of the Company was appointed as the enforcer of the
Trust.
On 21 June 2018, the Company announced the sale of 41,564,426
Euro treasury shares to the Conversion Vehicle, which completed on
22 June 2018. Subsequently, the Company issued a facilitation
request pursuant to the Share Subscription, Conversion and
Repurchase Agreement to the Conversion Vehicle requiring the
Conversion Vehicle to convert those 41,564,426 Euro Shares held by
it into Sterling Shares. The 41,564,426 Euro Shares were converted
into 35,477,357 Sterling Shares at a ratio of 0.853551, calculated
in accordance with the share conversion provisions appearing in the
Company's Articles.
On 28 June 2018, the conversion process was completed with the
Company purchasing 35,477,357 Sterling Shares from the Conversion
Vehicle and holding them in treasury. The transactions had no
material impact on the Company's liquidity or NAV.
Contractual quarterly tender facility
As the Company has been established as a closed-ended vehicle,
there is no right or entitlement attaching to the ordinary shares
that allows them to be redeemed or repurchased by the Company at
the option of the shareholder. The Company has, however,
established a contractual quarterly tender facility that enables
shareholders to tender their shares in the Company in accordance
with a stated contracted mechanism.
The Directors believe that the Company's contractual quarterly
tender facility should provide shareholders with additional
liquidity when compared with other listed closed-ended investment
companies.
The offer of contractual quarterly tenders is subject to annual
shareholder approval and subject to the terms, conditions and
restrictions as set out in the prospectus. The Company is subject
to annual shareholder approval to tender each quarter for up to
24.99 per cent. of the shares of such class in issue at the
relevant quarter record date, (being the date on which the number
of shares then in issue will be recorded for the purposes of
determining the restrictions), subject to a maximum annual limit of
50 per cent. of the shares of such class in issue.
However, it is important to note that contractual quarterly
tenders, if made, are contingent upon certain factors including,
but not limited to, the Company's ability to finance tender
purchases through submitting redemption requests to the Investment
Vehicle to redeem a pro rata amount of Company Investment Vehicle
Interests.
Factors, including restrictions at the Investment Vehicle level
on the amount of PECs which can be redeemed, may mean that
sufficient Company Investment Vehicle Interests cannot be redeemed
and, consequently, tender purchases in any given quarter may be
scaled back on a pro rata basis.
Shareholders should therefore have no expectation of being able
to tender their shares to the Company successfully on a quarterly
basis.
In addition to the contractual quarterly tender facility, the
Directors seek annual shareholder approval to grant them the power
to make ad hoc market purchases of shares. If such authority is
subsequently granted, the Directors will have complete discretion
as to the timing, price and volume of shares to be purchased.
Shareholders should not place any reliance on the willingness or
ability of the Directors so to act.
In the absence of the availability of the contractual quarterly
tender facility shareholders wishing to realise their investment in
the Company will be required to dispose of their shares on the
stock market.
Accordingly, shareholders' ability to realise their investment
at any particular price and/or time may be dependent on the
existence of a liquid market in the shares.
During the six months ended 30 June 2018, 3,933,091 Euro Shares
(30 June 2017: 11,814,129, 31 December 2017: 15,827,693) and 39,093
Sterling Shares (30 June 2017: 14,938,350, 31 December 2017:
14,938,350) were redeemed as part of the contractual quarterly
tender facility and held by the Company in the form of treasury
shares. Refer to above for details. Treasury shares do not carry
any right to attend or vote at any general meeting of the Company.
In addition, the contractual quarterly tenders and the voluntary
conversion facility are not available in respect of Treasury
shares.
As at 30 June 2018, 10,000,000 Euro Shares (30 June 2017:
110,001,299, 31 December 2017: 49,856,335) and 56,926,490 Sterling
Shares (30 June 2017: 70,239,838, 31 December 2017: 25,810,040)
were held as treasury shares.
Dividends
The ordinary shares of each class carry the right to receive all
income of the Company attributable to such class of ordinary share,
and to participate in any distribution of such income made by the
Company and within each such class such income shall be divided
pari passu among the shareholders in proportion to the
shareholdings of that class.
Please refer below for amounts recognised as dividend
distributions to ordinary shareholders in the year ended 31
December 2017 and the period ended 30 June 2018.
Ex-dividend
date Payment date GBP equivalent EUR
Euro - EUR0.0125 per
share(1) 02/02/2017 24/02/2017 - 1,533,639
Sterling - GBP0.0125
per share(1) 02/02/2017 24/02/2017 2,585,957 2,952,387
Euro - EUR0.0125 per
share(1) 04/05/2017 26/05/2017 - 1,464,343
Sterling - GBP0.0125
per share(1) 04/05/2017 26/05/2017 2,525,762 2,883,662
Euro - EUR0.01375 per
share(1) 10/08/2017 01/09/2017 - 1,728,958
Sterling - GBP0.01375
per share(1) 10/08/2017 01/09/2017 3,737,362 4,266,945
Euro - EUR0.01375 per
share(1) 02/11/2017 15/12/2017 - 1,742,385
Sterling - GBP0.01375
per share(1) 02/11/2017 15/12/2017 3,986,308 4,551,167
21,123,486
Euro - EUR0.01375 per
share(2) 01/02/2018 16/03/2018 - 1,699,464
Sterling - GBP0.01375
per share(2) 01/02/2018 16/03/2018 4,086,727 4,645,382
Euro - EUR0.01375 per
share(2) 03/05/2018 15/06/2018 - 1,667,639
Sterling - GBP0.01375
per share(2) 03/05/2018 15/06/2018 4,137,625 4,703,236
12,715,721
(1) - Recognised in the year ended 31 December 2017
(2) - Recognised in the period ended 30 June 2018
Please refer to note 14 for further information subsequent to
the reporting period.
Earnings per share
30 June 30 June 30 June 30 June
2018 2018 2017 2017
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
GBP equivalent EUR GBP equivalent EUR
Euro Shares
Increase in net assets for
the period - 896,674 - 5,817,243
Earnings per share - 0.007231 - 0.048516
Sterling Shares
Increase in net assets for
the period 1,905,652 2,166,154 7,197,908 9,928,795
Earnings per share 0.006362 0.007231 0.035172 0.048516
Earnings per share have been calculated on a weighted average
basis. The weighted average number of ordinary shares held during
the six months ended 30 June 2018 was 423,542,201 (30 June 2017:
324,544,463), comprising 123,996,264 Euro Shares (30 June 2017:
119,903,957) and 299,545,937 Sterling Shares (30 June 2017:
204,650,506).
11. Net asset value per share
30 June 30 June 31 December 31 December
2018 2018 2017 2017
(Unaudited) (Unaudited) (Audited) (Audited)
GBP equivalent EUR GBP equivalent EUR
Euro Shares
Net Asset Value - 133,019,761 - 134,451,748
Net Asset Value
per share - 1.0962 - 1.0933
Sterling Shares
Net Asset Value 339,272,439 383,479,638 331,462,152 373,226,384
Net Asset Value
per share 1.1273 1.2742 1.1190 1.2600
Net assets attributable to
shareholders - 516,499,399 - 507,678,132
Net asset per share has been calculated based on the share
capital in issue as at period end. The issued share capital as at
30 June 2018 comprised of 121,344,131 Euro Shares (31 December
2017: 122,972,583) and 300,948,694 Sterling Shares (31 December
2017: 296,201,850).
12. Reconciliation of liabilities arising from financing
activities
Balance as at 1 January 2018 507,678,132
-------------------------------------------- -------------
Cash flow movements
Proceeds from issuance and subscriptions
arising from conversion of ordinary
shares 9,340,054
Payments from redemption of
ordinary shares (4,999,899)
Share issue costs paid (81,014)
Dividends paid (12,715,721)
Bank charges (6,565)
Non cash flow movements
Foreign currency exchange loss
on ordinary shares 1,418,284
Profit before finance costs
and taxation 15,866,128
Balance as at 30 June 2018 516,499,399
-------------------------------------------- -------------
13. Related party disclosure
The Directors are entitled to remuneration for their services.
Please refer to note 5 for further detail.
Please refer to note 4 and note 7 for transactions between the
Company and the Corporate Services Manager.
Richard Boleat acts as the enforcer of the CCPEOL Purpose Trust,
a business purpose trust established under Jersey law and settled
by the Company. The role has arisen as a result of the
implementation of the resolution passed at the Company's Annual
General Meeting on 4 April 2016 which authorised the Company to
make arrangements to enable the conversion of treasury shares held
by the Company from time to time from one currency denomination to
another. The position is unremunerated and represents an alignment
of interests with those of the Company.
14. Events after the reporting period
Management has evaluated subsequent events for the Company
through 20 September 2018, the date the financial statements were
available to be issued, and has concluded that the material events
listed below do not require adjustment of the condensed financial
statements.
Placing of treasury shares
On 5 July 2018, the Company sold 496,442 Euro treasury shares
and 20,663,959 Sterling treasury shares at a price of EUR1.1086 per
Euro treasury share and GBP1.1397 per Sterling treasury share
respectively.
Sale of treasury shares
Date Euro Shares Price per treasury Sterling Shares Price per treasury
share share
09/07/2018 - - 500,000 GBP1.1397
13/07/2018 150,000 EUR1.1086 2,200,000 GBP1.1397
17/07/2018 - - 500,000 GBP1.1397
20/07/2018 - - 500,000 GBP1.1386
23/07/2018 - - 1,000,000 GBP1.1388
27/07/2018 - - 1,600,000 GBP1.1417
09/08/2018 - - 650,000 GBP1.1338
10/08/2018 250,000 EUR1.1027 250,000 GBP1.1338
15/08/2018 - - 500,000 GBP1.1338
22/08/2018 - - 500,000 GBP1.1396
28/08/2018 250,000 EUR1.1066 500,000 GBP1.1396
03/09/2018 150,000 EUR1.1074 686,832 GBP1.1407
10/09/2018 1,000,000 EUR1.1088 - -
14/09/2018 - - 1,500,000 GBP1.1426
Contractual quarterly tender
On 24 July 2018, the Company announced it had received
applications from shareholders to tender 25 Euro Shares and 608
Sterling Shares under the June 2018 Contractual Quarterly Tender.
On 17 August 2018, the June 2018 Contractual Quarterly Tender
completed with 25 Euro Shares and 608 Sterling Shares being
repurchased and transferred into the Company's name and held as
treasury shares.
Dividend declaration
On 1 August 2018, the Company declared a dividend of GBP0.01375
per Sterling Share and EUR0.01375 per Euro Share payable on 20
September 2018 to shareholders on the register as at 10 August
2018.
Issue of scrip dividend shares
On 17 September 2018, the Company announced that application had
been made to the UK Listing Authority ("UKLA") and the London Stock
Exchange ("LSE") for 308,921 Euro Shares and 450,777 Sterling
Shares, to be listed on the premium segment of the Official List of
the UKLA and to be admitted to trading on the main market of the
LSE. The shares will be issued pursuant to the Company's scrip
dividend scheme in respect of the dividend declared on 1 August
2018. Dealings in the shares are expected to commence at 8.00 a.m.
on 21 September 2018.
Voluntary share conversion
On 18 September 2018, the Company announced it had received
applications from shareholders to convert 750,006 Euro Shares into
Sterling Shares and 10,457 Sterling Shares into Euro Shares.
15. Controlling party
In the Directors' opinion, the Company has no ultimate
controlling party.
Company information
Registered Office Advocates to the Company
IFC1, The Esplanade (as to Jersey law)
St Helier, Jersey Bedell Cristin
JE1 4BP 26 New Street
St Helier, Jersey
JE2 3RA
Investment Vehicle Manager Custodian
BNP Paribas Securities Services
CVC Credit Partners Investment S.C.A.,
Management Limited Jersey Branch
IFC1, The Esplanade
111 Strand, London St Helier, Jersey
WC2R 0AG JE1 4BP
Corporate Services Manager Auditor
CVC Credit Partners Investment
Services Ernst & Young LLP
Management Limited 25 Churchill Place
1 Waverly Place, Union Street
St Helier, Jersey Canary Wharf
JE1 1SG London, E14 5EY
Corporate Brokers Administrator and Company Secretary
Goldman Sachs International BNP Paribas Securities Services
Peterborough Court, 133 Fleet S.C.A.,
Street Jersey Branch
IFC1, The Esplanade
London St Helier, Jersey
EC4A 2BB JE1 4BP
Winterflood Securities Limited
The Atrium Building
Cannon Bridge House BNP Paribas Securities Services
25 Dowgate Hill S.C.A. Jersey Branch is regulated
London by the Jersey Financial Services
EC4R 2GA Commission.
Solicitors to the Company Registrar
Computershare Investor Services
(as to English law) (Jersey)
Herbert Smith Freehills LLP Limited
Exchange House Queensway House
Primrose Street Hilgrove Street
London St Helier
EC2A 2EG Jersey
JE1 1ES
For Investors in Switzerland:
The Prospectus, the Memorandum and Articles of Association as
well as the annual and half yearly financial reports of the Company
may be obtained free of charge from the Swiss Representative. In
respect of the Shares distributed in and from Switzerland to
Qualified Investors, the place of performance and the place of
jurisdiction is at the registered office of the Swiss
Representative.
Swiss Representative: FIRST INDEPENDENT FUND SERVICES LTD.,
Klausstrasse 33, CH-8008 Zurich, Switzerland.
Swiss Paying Agent: Helvetische Bank AG, Seefeldstrasse 215,
8008 Zurich, Switzerland.
-END-
BNP Paribas Securities Services S.C.A., Jersey Branch.
IFC1 - The Esplanade - St Helier - Jersey - JE1 4BP
Company Secretary
Tel: +44 (0) 1534 709181
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
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Kingdom. Terms and conditions relating to the use and distribution
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contact rns@lseg.com or visit www.rns.com.
END
IR LBLFLVKFFBBE
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