CT PRIVATE EQUITY TRUST PLC

Quarterly Report • May 23, 2019

National Storage Mechanism | Additional information

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RNS Number : 0096A

BMO Private Equity Trust PLC

23 May 2019

To: Stock Exchange	For immediate release:
	23 May 2019

BMO Private Equity Trust PLC

Quarterly results for the three months to 31 March 2019 (unaudited)

·      Share price total return for the three months of 8.4 per cent for the Ordinary Shares

·      NAV total return per Ordinary Share for the three month period ended 31 March 2019 of (0.4) per cent.

·      NAV of 381.01p per Ordinary Share.

·      Quarterly dividend of 3.73p per Ordinary Share

Introduction

As at 31 March 2019, the net assets of the Company were £281.7 million, giving a Net Asset Value ("NAV") per share of 381.01p, which taking into account the dividend of 3.58p per share paid on 31 January, gives a decrease of 0.4% over the quarter. The portfolio has gained in value modestly, but this gain was completely offset by currency movements with Euro weakness against Sterling being the principal factor. At 31 March 2019, the Company had net debt of £11.0 million. Outstanding undrawn commitments were £121.2 million, including £18.0m to funds where the investment period has expired.

In line with the Company's policy to pay dividends on a quarterly basis, a dividend of 3.65p per share was paid on 30 April 2019 and a further dividend of 3.73p per share will be paid on 31 July 2019 to shareholders on the register on 5 July 2019 and an ex-dividend date of 4 July 2019.

New Investments

Three new fund commitments and three new co-investments were made during the quarter. After the quarter end a further two new fund commitments have been made.

In the UK £7 million was committed to Kester Capital II, a buy-out fund focusing on the lower mid-market. We are already investors with Kester, an emerging private equity firm, through their first fund and as a co-investor in Jollyes (pet shop chain) and CETA (caravan insurance).

€7 million was committed to Silverfleet European Development Fund, a new fund from the well-established firm Silverfleet, which will focus on lower mid-market buy-outs in the size range of enterprise value between €25 million and €75 million across Europe. These are deals which are somewhat below the size bracket usually targeted by Silverfleet and a dedicated team has been created within Silverfleet to implement this extension to their strategy. SEK 40 million (£3.5 million) has been committed to Summa II, a Nordic focused buyout fund focusing on companies where there is a sustainability angle. This follows on from our current investment in Summa's original fund.  After the quarter end two commitments were made to Inflexion Supplemental Fund V (£2.7 million) and Inflexion Enterprise Fund V (£6.0 million), updating and adding to this long-standing successful relationship.

The new co-investments are diverse by sector and geography. £2.9 million has been invested in San Siro, a funeral services company based in Milan in Northern Italy. The investment is led by Augens, an Italy focused mid-market private equity firm. The investment thesis is centred around expanding from the two initial funeral homes in Milan to establish a small chain in Northern Italy. Unlike in the US, UK or France the funeral services market in Italy is highly fragmented and Augens believe that there is scope to build San Siro into a clear market leader. €3.5 million has been invested in STAXS a Netherlands based supplier of cleanroom consumable products, selling principally to the pharmaceutical sector. The investment is led by the lower mid-market team at Silverfleet, noted above. This company gives exposure to a growing niche market with high barriers to entry and significant scope for internationalisation. Lastly, closer to home for us, £2.1 million has been invested in Unmanned Aerial Vehicle (UAV) company, Cyberhawk. Based in Livingston, near Edinburgh, Cyberhawk has pioneered the use of UAVs to inspect critical energy infrastructure and has a blue-chip customer base in the oil and gas, wind power and utilities sectors. Not only does this allow safer and more efficient inspections of pylons, wind turbines and oil rigs, Cyberhawk delivers inspection results via its proprietary cloud-based asset management software.

The component of the portfolio in co-investments is now 42.3%.

In the funds element of the portfolio a number of diverse new investments were made during the quarter.

In the Benelux region Bencis called £0.7 million for investment in two companies; Bons & Evers (metal forging) and Medsen - Ceban (pharmacy chain and pill compounding). August Equity IV called £1.0 million for Charterhouse Voice and Data (voice and data communications, hosting and cyber security). In Germany DBAG VII called £0.7 million for investment in KEF (steel and textile cutting machines for making tyres). Apiary Capital called £0.4 million for a platform investment for a childrens' nursery chain in Scotland and North West England.

Taking these co-investments and all the drawdowns for the funds together totalled £15.5 million in new investments for the quarter.

Realisations

The largest realisation in the quarter was the exit of August Equity II's holding in UK based cyber security company, SecureData. The company was sold after six and half years to French telecoms company Orange SA. This excellent realisation returned £4.0 million with an investment multiple of 7.2x and an IRR of 35%. Argan Capital has continued to sell down its holding in Swedish healthcare company Humana which is listed on the Stockholm Stock Exchange. During the quarter two tranches were sold returning £1.8 million. So far the investment has yielded 5x the original investment. Hutton Collins exited its longstanding investment in restaurant chain Wagamama through the sale to UK listed Restaurant Group. This yielded £0.9 million (2.6x, IRR 17%). Hutton Collins also exited its holding held in both funds I and II in Healthcare at Home through a sale to private equity group Fram. This returned £0.6 million, representing 0.9x cost. Corpfin IV sold Spanish perfume and cosmetics retail chain Arenal to listed Portuguese company Sonae Group. This yielded £0.8 million, which represents 1.8x, with the potential to improve, through earn-outs and escrows, to 2.4x and an IRR of 32%. Herkules III has exited Stamina Group AS (Hjelp 24) a leading occupational health service provider in the Nordic region through a sale to Norvestor. This investment had not achieved its potential and the £0.7 million received represented a return of cost. TDR Capital Fund II, which now only holds companies comprising the modular buildings group Algeco Scotsman continued its realisation process. During the quarter the US remote accommodation section was spun out into a NASDAQ listed vehicle and the fund returned £1.3 million. Lastly from the Italian portfolio of secondary positions £0.7 million was received from the sale by ILP III of Clouditalia, the fibre optic telecoms network. There were a number of other realisations in the quarter with total realisations and associated income coming to £12.8 million.

Valuation Changes

The largest positive influence in the quarter was the uplift of specialist software company Dotmatics by £1.9 million. This SEP led investment is making good progress against the original plan. In the US electrical components company Sigma is growing well both organically and through bolt on acquisitions and this is uplifted by £1.7 million. August Equity IV was up by £1.1 million mainly reflecting the exit of SecureData noted above.  US Fund Graycliff continues to do well with an uplift of £0.7 million. The Italian portfolio is up by £0.4 million mainly reflecting good progress for furniture company Georgetti. Swiss based adhesive company Schaetti is recovering and is up by £0.6 million.

On the negative side cement company Calucem is slightly behind plan and is down by £0.5 million. Astorg IV is down by £0.3 million reflecting a bumpy start to liver diagnostics equipment company Echosens. Warburg Pincus VIII, which has a number of listed shares which have been under pressure, is down by £0.3 million. Our residual holding in Eventbrite, which was received through the exit of Ticketscript, was realised during April once the lock-up period expired.  Share price weakness since the year end resulted in a valuation reduction of £2.1m.

Financing

As noted above adverse currency movements meant that the progress of the underlying portfolio was offset this quarter. The Company will shortly replace its current borrowing facility with a fresh, larger and somewhat cheaper facility. This will run for five years and provide the Company with plenty of headroom for handling any mismatch of drawdowns and realisations or for securing the acquisition of assets.

Outlook

At this stage of the year, it appears that the levels of activity within the portfolio are very similar to the same point during 2018. There remains a very active market for private equity exits with many of our partners noting record amounts of 'incoming' interest in their portfolio companies. On the other side of the equation finding attractive deals is, as always, competitive with acquirers having to demonstrate a genuine 'edge' when winning over vendors and management teams. This is usually far more than the mere provision of attractively priced capital. Private equity investment harnesses strategic, and sometimes operational, expertise to capital improving the chance of a target company's success being sustained. Ideally the closer the investor's understanding of a company or sector, the more value they can add and the less they will be required to pay to invest. Private equity firms who take this approach can usually find good deals even when markets are competitive. Much fresh capital has been raised for private equity in recent years, but the increase is not out of line with overall growth in deal value, nor is it surprising given that private equity investment is growing in popularity with institutional and retail investors alike, yet at present represents only a low single figure percentage of all equity investment. There are clearly some 'headwinds' for investment ranging from the UK/EU Brexit Impasse to trade tensions between the US and China, however these are factors which are incorporated by private equity investors into their long term investment plans and certainly do not deter our investment partners from their value creation activities nor should they discourage investors looking to participate in the output from their efforts by gaining exposure to our well diversified portfolio. At this early stage in the year we expect further growth for shareholders.

Hamish Mair

Investment Manager

BMO Investment Business Limited

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2019 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
##### Income
Losses on investments held at fair value	-	(1,672)	(1,672)
Exchange gains	-	1,060	1,060
Investment income	634	-	634
Other income	31	-	31
##### Total income	665	(612)	53
##### Expenditure
Investment management fee - basic fee	(68)	(619)	(687)
Investment management fee - performance fee	-	-	-
Other expenses	(208)	-	(208)
##### Total expenditure	(276)	(619)	(895)
Profit/(loss) before finance costs and taxation	389	(1,231)	(842)
Finance costs	(41)	(373)	(414)
Profit/(loss) before taxation	348	(1,604)	(1,256)
Taxation	(66)	66	-
Profit/(loss) for period/total comprehensive income	282	(1,538)	(1,256)
Return per Ordinary Share	0.38p	(2.08)p	(1.70)p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

three months ended 31 March 2018 (unaudited)

	Revenue £'000	Capital £'000	Total £'000
##### Income
Losses on investments held at fair value	-	(2,881)	(2,881)
Exchange gains	-	373	373
Investment income	448	-	448
Other income	24	-	24
##### Total income	472	(2,508)	(2,036)
##### Expenditure
Investment management fee - basic fee	(159)	(476)	(635)
Investment management fee - performance fee	-	-	-
Other expenses	(188)	-	(188)
##### Total expenditure	(347)	(476)	(823)
Profit/(loss) before finance costs and taxation	125	(2,984)	(2,859)
Finance costs	(106)	(319)	(425)
Profit/(loss) before taxation	19	(3,303)	(3,284)
Taxation	(15)	15	-
Profit/(loss) for period/total comprehensive income	4	(3,288)	(3,284)
Return per Ordinary Share	0.01p	(4.45)p	(4.44)p

BMO PRIVATE EQUITY TRUST PLC

Statement of Comprehensive Income for the

year ended 31 December 2018 (audited)

	Revenue £'000	Capital £'000	Total £'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 31 March 2019	As at 31 March 2018	As at 31 December 2018
	(unaudited)	(unaudited)	(audited)
	£'000	£'000	£'000
Non-current assets
Investments at fair value through profit or loss	296,830	259,870	295,242
Current assets
Other receivables	34	304	142
Cash and cash equivalents	14,789	27,893	21,335
	14,823	28,197	21,477
Current liabilities
Other payables	(4,126)	(3,799)	(4,267)
Interest-bearing bank loan	(25,799)	-	(26,821)
	(29,925)	(3,799)	(31,088)
Net current (liabilities)/assets	(15,102)	24,398	(9,611)
Total assets less current liabilities	281,728	284,268	285,631
##### Non-current liabilities
Interest-bearing bank loan	-	(26,033)	-
Net assets	281,728	258,235	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	230,684	207,187	234,587
Revenue reserve	-	4	-
## Shareholders' funds	281,728	258,235	285,631
Net asset value per Ordinary Share	381.01p	349.24p	386.29p

BMO PRIVATE EQUITY TRUST PLC

Reconciliation of Movements in Shareholders' Funds

	### Three months ended ### 31 March ### 2019	### Three months ended ### 31 March ### 2018	### Year ### ended ### 31 December 2018
	### (unaudited)	### (unaudited)	### (audited)
	### £'000	### £'000	### £'000
### Opening shareholders' funds	### 285,631	### 264,144	### 264,144
### Profit for the period/total ### comprehensive income	(1,256)	###     (3,284)	### 32,031
### Dividends paid	### (2,647)	### (2,625)	### (10,544)
### Closing shareholders' funds	### 281,728	### 258,235	### 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.  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:

	### Three months ended ### 31 March 2019                               (unaudited)			### Three months ended ### 31 March 2018                              (unaudited)			### Year ended ### 31 December 2018                                  (audited)
	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000
### Investment management       fee - basic fee	68	619	687	159	476	635	660	1,980	2,640
### Investment management       fee - performance fee	-	-	-	-	-	-	-	2,277	2,277
	68	619	687	159	476	635	660	4,257	4,917

3.   Finance costs:

	### Three months ended ### 31 March 2019                              (unaudited)			### Three months ended ###  31 March 2018                              (unaudited)			### Year ended ### 31 December 2018                                  (audited)
	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000	### Revenue ### £'000	### Capital ### £'000	### Total ### £'000
### Interest payable on bank loans	### 41	### 373	### 414	### 106	### 319	### 425	### 428	### 1,286	### 1,714

4.   Returns and net asset values

	###        Three months ended ### 31 March 2019                         (unaudited)	###   Three months ended ###  31 March 2018                   (unaudited)	###                 Year ended ### 31 December 2018                       (audited)
### The returns and net asset values per share are based on the following figures:
### Revenue Return	### £282,000	### £4,000	### £464,000
### Capital Return	### (£1,538,000)	### (£3,288,000)	### £31,567,000
### Net assets attributable to shareholders	### £281,728,000	### £258,235,000	### £285,631,000
### Number of shares in issue during the year	### 73,941,429	### 73,941,429	### 73,941,429
### Weighted average number of shares in issue during the year	### 73,941,429	### 73,941,429	### 73,941,429

5.   The financial information for the three months ended 31 March 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 2017, 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

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

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