TIDMBPET
RNS Number : 2767U
BMO Private Equity Trust PLC
22 November 2019
To: Stock Exchange For immediate release:
22 November 2019
BMO Private Equity Trust PLC
Quarterly results for the three months to 30 September 2019
(unaudited)
-- Share price total return for the three months of 3.4 per cent for the Ordinary Shares
-- Net asset value of 390.81p per Ordinary Share reflecting a
total return for the three months of 1.7 per cent for the Ordinary
Shares
-- Quarterly dividend of 3.87p per Ordinary Share to be paid on 31 January 2020
Introduction
As at 30 September 2019, the net assets of the Company were
GBP289.0 million giving a net asset value ("NAV") per share of
390.81p and a total return over the quarter of 1.7%. For the first
nine months of the year, the NAV total return was 4.1%. With the
discount reducing from 17.9% at 31 December 2018 to 7.6% at 30
September 2019 the share price total return for this nine-month
period was an impressive 17.6%. At 30 September 2019 the Company
had net debt of GBP27.5 million. Outstanding undrawn commitments
were GBP124.1 million with approximately GBP17.5 million of these
to funds where the investment period has expired and where we would
expect only a small proportion to be drawn.
The next quarterly dividend of 3.87p per share will be paid on
31 January 2020 to shareholders on the register on 10 January 2020.
The ex-dividend date is 9 January 2020.
New Investments
There were no new investments in the third quarter. A
substantial 'follow-on' investment of GBP3.0 million was made into
oil services company Ashtead Technology. This was to enable our
investor group, led by energy specialists Buckthorn, to buy-out a
large minority shareholder. Ashtead has made good progress recently
as demand for its subsea monitoring equipment has picked up.
After the quarter end we completed a co-investment of GBP4.1
million into Amethyst Radiotherapy. This is a chain of radiotherapy
clinics located across Europe from Poland to France. The investment
is led by The Rohatyn Group, who specialise in Central and Eastern
Europe. The investment case centres on a significant expansion of
the number of clinics across Europe. Advances in medical science
mean that radiotherapy clinics with the latest equipment are in
strong demand. Also, in our co-investment portfolio GBP0.3 million
was added to RGI, the Italy based provider of software for the
insurance sector, which has made an acquisition of a complementary
business operating in German speaking Europe.
The funds in our portfolio have been active in building out
their portfolios. The larger drawdowns are quite diverse by
geography and industrial sector. In the UK August Equity Partners
IV called GBP0.6 million for Esland (residential care for young
people with special needs). Piper Private Equity VI called GBP0.3
million for Mous Products (tech accessories). In Germany Bencis V
called GBP0.4 million for Gebhardt-Stahl (steel reinforcement
profiles for the HVAC systems and PVCu window frames). DBAG VII
called GBP0.5 million for Kraft&Bauer (fire extinguishing
systems for tooling machinery). In the Nordic region the funds have
also been active. Procuritas Capital VI called GBP0.4 million for
Temporary Space (temporary accommodation for schools, health
centres and offices). Summa I called GBP0.3 million for LOGEX Group
(data analytics software to improve healthcare outcomes). Vaaka
Partners Buyout Fund III called GBP0.3 million for Lyyti (Finnish
market leader for event management software). In the USA Stellex
called GBP0.3 million for the combined investment in ship repair
companies MHI and Vigor. MHI was an existing Stellex investment
that has been merged with and sold into Vigor. The Carlyle Group
has backed the deal and assumed the leadership position.
Total drawdowns and co-investments in the third quarter were
GBP11.2 million bringing the total for the year to date to GBP39.2
million. This is approximately 25% below the cumulative investments
by this stage last year.
Realisations
Realisations and income received for the quarter was GBP6.4
million giving a total for the year of GBP31.8 million.
It has been a fairly quiet quarter with no large exits from the
co-investment portfolio. There were several smaller realisations
from across the fund's portfolio. In the UK Horizon Capital
(formerly Lyceum) made a partial exit of media company AgriBriefing
through a refinancing returning GBP0.7 million, 1.5x cost.
Inflexion 2010 Fund sold agricultural laboratory testing services
business Cawood Scientific to Waterland Private Equity returning
GBP0.4 million or 2.8x cost and 43% IRR. Venture capital fund SEP
IV sold cloud storage and document collaboration business Workshare
to trade buyer Litera Microsystems returning GBP0.2 million, 2.0x
cost, 11% IRR.
In France, as previously reported, Chequers Capital XV exited
thermal solutions and temperature measurement systems for cables
company Thermocoax returning GBP0.7 million, 2.7x cost. In Germany
DBAG VI sold specialised films for consumer goods packaging
business Infiana to financial buyer Pamplona returning GBP0.4
million, 2.1x cost, 25% IRR. Lastly and, most significantly, in the
USA Blue Point Capital III sold The Hilsinger Company, a global
supplier of optical accessories and products, returning GBP1.1
million, 3.7x cost, 28% IRR.
Valuation Changes
There were a number of valuation changes in both directions this
quarter. The largest positive (GBP1.4 million) was from our
co-investment in Croatia based large format pet retailer Pet
Network (TRG Pluto) which has traded strongly. There was another
uplift of GBP1.3 million from the receipt, after the quarter end,
of a deferred consideration relating to our previous holding in
fishing tackle company Fox. This was sold by Nextwave to Mayfair
Partners in 2015 with the deal including the potential for the
vendors to benefit from a subsequent sale. Mayfair have now sold
Fox to a strategic buyer in the US and that has triggered a
deferred payment of GBP1.3 million. As we were carrying this
entitlement at nil value it is an effective uplift of the full
amount. Elsewhere in the portfolio there has been good progress
with an uplift of GBP0.8 million from TDR II mainly driven by the
movement in the share price of Williams Scotsman, the modular
buildings company. Volpi Capital I is up by GBP0.7 million
reflecting good progress in its portfolio. In Spain Corpfin Capital
IV is up by GBP0.7 million reflecting actual and imminent
realisations within a strongly performing portfolio. Astorg VI also
has a performing portfolio and is uplifted by GBP0.6 million.
August Equity Partners IV is doing well and a broadly-based uplift
totalled GBP0.5 million.
There were a few setbacks in valuations. Avalon, the funeral
plans provider, faces a difficult market which is down, at least in
part, in response to some regulatory changes which will see the FCA
start regulating the sale of funeral plans. In the longer term this
should benefit Avalon but in the short term it has necessitated a
downgrade of GBP2.1 million. Our holding in clothing company Weird
Fish has been struggling against a very soft market and this is
downgraded by GBP1.4 million. Our US based restaurant chain Rosa
Mexicano has experienced poor trading and has been written down by
GBP1.0 million. Following the quarter end Rosa Mexicano has been
refinanced.
Financing
The Company has a large amount of headroom on its borrowing
facility with the term loan of EUR25 million (GBP20.9 million)
fully drawn and GBP9.7 million of the GBP75 million revolving
credit facility drawn giving GBP66 million available subject to
covenant compliance. With net debt of GBP27.5 million, or just
under 10% of NAV, this is a useful amount of gearing which should
enhance shareholder returns. It looks likely that the total
proceeds from realisations for 2019 will be some way below the
record total for 2018. This quarter is unusual of late in that
there was no net effect from currency movements.
Outlook
Activity within the private equity market internationally
remains at healthy levels albeit below 2018 levels. This is backed
by on going appetite for the asset class and strong fund raising.
New deals are being initiated in all markets in near record
volumes. The very strong market for exits which has characterised
the last three years is showing some signs of catching its breath.
The trading performance of the portfolio is robust with a limited
number of sector or company specific areas of concern. The price of
new deals remains high by historic standards driven in part by the
considerable amounts of private equity commitments and abundant
cheap debt. Despite this the lower mid market in Europe remains
relatively less expensive and continues to be a good hunting ground
for our value-oriented investment partners. The heterogenous nature
of our dealflow also continues. At this stage in the year, there is
considerable scope to build further shareholder value.
Hamish Mair
Investment Manager
BMO Investment Business Limited
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
nine months ended 30 September 2019 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
------------------------------------------ --------- --------- ---------
Income
Gains on investments held at fair value - 13,081 13,081
Exchange gains - 588 588
Investment income 3,010 - 3,010
Other income 56 - 56
------------------------------------------ --------- --------- ---------
Total income 3,066 13,669 16,735
------------------------------------------ --------- --------- ---------
Expenditure
Investment management fee - basic fee (206) (1,858) (2,064)
Investment management fee - performance
fee - (1,289) (1,289)
Other expenses (619) - (619)
------------------------------------------ --------- --------- ---------
Total expenditure (825) (3,147) (3,972)
------------------------------------------ --------- --------- ---------
Profit before finance costs and taxation 2,241 10,522 12,763
Finance costs (132) (1,190) (1,322)
------------------------------------------ --------- --------- ---------
Profit before taxation 2,109 9,332 11,441
Taxation (401) 401 -
Profit for period/total comprehensive
income 1,708 9,733 11,441
Return per Ordinary Share 2.31p 13.16p 15.47p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
nine months ended 30 September 2018 (unaudited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
---------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 20,913 20,913
Exchange gains - 216 216
Investment income 944 - 944
Other income 49 - 49
---------------------------------------------- --------- --------- ---------
Total income 993 21,129 22,122
---------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (486) (1,457) (1,943)
Investment management fee - performance
fee - (2,123) (2,123)
Other expenses (582) - (582)
---------------------------------------------- --------- --------- ---------
Total expenditure (1,068) (3,580) (4,648)
---------------------------------------------- --------- --------- ---------
(Loss)/profit before finance costs and
taxation (75) 17,549 17,474
Finance costs (320) (958) (1,278)
---------------------------------------------- --------- --------- ---------
(Loss)/profit before taxation (395) 16,591 16,196
Taxation - - -
(Loss)/profit for period/total comprehensive
income (395) 16,591 16,196
Return per Ordinary Share (0.53)p 22.44p 21.91p
BMO PRIVATE EQUITY TRUST PLC
Statement of Comprehensive Income for the
year ended 31 December 2018 (audited)
Revenue Capital Total
GBP'000 GBP'000 GBP'000
-------------------------------------------- --------- --------- ---------
Income
Gains on investments held at fair value - 36,966 36,966
Exchange gains - 35 35
Investment income 2,340 - 2,340
Other income 81 - 81
-------------------------------------------- --------- --------- ---------
Total income 2,421 37,001 39,422
-------------------------------------------- --------- --------- ---------
Expenditure
Investment management fee - basic fee (660) (1,980) (2,640)
Investment management fee - performance
fee - (2,277) (2,277)
Other expenses (760) - (760)
-------------------------------------------- --------- --------- ---------
Total expenditure (1,420) (4,257) (5,677)
-------------------------------------------- --------- --------- ---------
Profit before finance costs and taxation 1,001 32,744 33,745
Finance costs (428) (1,286) (1,714)
-------------------------------------------- --------- --------- ---------
Profit before taxation 573 31,458 32,031
Taxation (109) 109 -
Profit for year/total comprehensive income 464 31,567 32,031
Return per Ordinary Share 0.63p 42.69p 43.32p
BMO PRIVATE EQUITY TRUST PLC
Balance Sheet
As at 30 As at 30 As at 31 December
September September 2018
2019 2018
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------------
Non-current assets
Investments at fair value through
profit or loss 318,825 278,914 295,242
--------------------------------------- ------------ ------------ ------------------
Current assets
Other receivables 21 23 142
Cash and cash equivalents 3,188 23,239 21,335
--------------------------------------- ------------ ------------ ------------------
3,209 23,262 21,477
Current liabilities
Other payables (2,389) (3,179) (4,267)
Interest-bearing bank loan (9,732) - (26,821)
--------------------------------------- ------------ ------------ ------------------
(12,121) (3,179) (31,088)
Net current (liabilities)/assets (8,912) 20,083 (9,611)
--------------------------------------- ------------ ------------ ------------------
Total assets less current liabilities 309,913 298,997 285,631
Non-current liabilities
Interest-bearing bank loan (20,945) (26,561) -
Net assets 288,968 272,436 285,631
--------------------------------------- ------------ ------------ ------------------
Equity
Called-up ordinary share capital 739 739 739
Share premium account 2,527 2,527 2,527
Special distributable capital
reserve 15,040 15,040 15,040
Special distributable revenue
reserve 31,403 31,403 31,403
Capital redemption reserve 1,335 1,335 1,335
Capital reserve 237,924 221,787 234,587
Revenue reserve - (395) -
Shareholders' funds 288,968 272,436 285,631
--------------------------------------- ------------ ------------ ------------------
Net asset value per Ordinary Share 390.81p 368.45p 386.29p
BMO PRIVATE EQUITY TRUST PLC
Reconciliation of Movements in Shareholders' Funds
Nine months Nine months Year ended
ended 30 September ended 30 31 December
2019 September 2018
2018
(unaudited) (unaudited) (audited)
------------------------------ -------------------- ------------ -------------
GBP'000 GBP'000 GBP'000
Opening shareholders' funds 285,631 264,144 264,144
Profit for the period/total
comprehensive income 11,441 16,196 32,031
Dividends paid (8,104) (7,904) (10,544)
------------------------------ -------------------- ------------ -------------
Closing shareholders' funds 288,968 272,436 285,631
------------------------------ -------------------- ------------ -------------
Notes (unaudited)
1. The unaudited quarterly results have been prepared on the
basis of the accounting policies set out in the statutory accounts
of the Company for the year ended 31 December 2018. Earnings for
the nine months to 30 September 2019 should not be taken as a guide
to the results for the year to 31 December 2019.
During the year to 31 December 2018, the management fee and bank
loan interest were allocated 75 per cent to capital and 25 per cent
to revenue. In accordance with the Board's expected long term split
of returns in the form of capital gains and income, with effect
from 1 January 2019 the allocation basis has been revised to 90 per
cent to capital and 10 per cent to revenue.
2. Investment management fee:
Nine months ended Nine months ended Year ended 31 December
30 September 2019 30 September 2018 2018
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
Investment
management
fee - basic fee 206 1,858 2,064 486 1,457 1,943 660 1,980 2,640
Investment
management
fee - performance
fee - 1,289 1,289 - 2,123 2,123 - 2,277 2,277
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
206 3,147 3,353 486 3,580 4,066 660 4,257 4,917
------------------- --------- --------- --------- --------- --------- --------- --------- --------- ---------
3. Finance costs:
Nine months ended Nine months ended Year ended 31 December
30 September 2019 30 September 2018 2018
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------ --------- --------- --------- --------- --------- --------- --------- --------- ---------
Interest payable
on bank loans 132 1,190 1,322 320 958 1,278 428 1,286 1,714
4. Returns and net asset values
Nine months ended Nine months Year ended 31
30 September 2019 ended 30 September December 2018
2018
(unaudited) (unaudited) (audited)
The returns and net asset
values per share are based
on the following figures:
Revenue Return GBP1,708,000 (GBP395,000) GBP464,000
Capital Return GBP9,733,000 GBP16,591,000 GBP31,567,000
Net assets attributable GBP288,968,000 GBP272,436,000 GBP285,631,000
to shareholders
Number of shares in issue
at end of period 73,941,429 73,941,429 73,941,429
Weighted average number
of shares in issue during
the year 73,941,429 73,941,429 73,941,429
5. The financial information for the nine months ended 30
September 2019, which has not been audited or reviewed by the
Company's auditor, comprises non-statutory accounts within the
meaning of Section 434 of the Companies Act 2006. Statutory
accounts for the year ended 31 December 2018, on which the auditor
issued an unqualified report, have been lodged with the Registrar
of Companies. The quarterly report is available on the Company's
website www.bmoprivateequitytrust.com
Legal Entity Identifier: 2138009FW98WZFCGRN66
For more information, please contact:
Hamish Mair (Investment Manager) 0131 718 1184
Scott McEllen (Company Secretary) 0131 718 1137
hamish.mair@bmogam.com / scott.mcellen@bmogam.com
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END
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