RNS Number : 5446W
Oakley Capital Investments Limited
12 June 2008
12 June 2008
Oakley Capital Investments Limited (the 'Company')
Preliminary results for the period ended 31 December 2007
Oakley Capital Investments Limited (AIM : OCL), the AIM-listed company established to provide investors with access to the investment strategy being pursued by Oakley Capital Private Equity L.P. (the 'Oakley Fund') today announces its results for the period from incorporation on 28 June 2007 to 31 December 2007.
The Company was admitted to trading on the AIM market of the London Stock Exchange on 3 August 2007, having raised £100 million from the issue of 100,000,000 ordinary shares at 100 pence each together with the issue of 50,000,000 warrants.
The primary objective of the Oakley Fund is to invest in a diverse portfolio of private mid-market UK and European businesses, aiming to provide investors with significant long-term capital appreciation. On 10 October 2007 the Oakley Fund announced its first closing, to which the Company committed €140 million. During the period to 31 December 2007 the Oakley Fund called down €4.2 million (£2.9 million) from the Company. At the end of the period the Company's Net Assets were £99.4 million.
Developments post year-end:
On 2 April 2008 a wholly-owned subsidiary of the Oakley Fund acquired the Hosting and Network Services Division of FREEDOM4 Communications plc for a total enterprise value of £120 million. The consideration was satisfied by a vendor loan note for £17.5 million (issued by a wholly-owned subsidiary of the Oakley Fund), the assumption of approximately £10 million in debt, and the balance in cash. The cash element of £92.5 million included approximately £49.2 million contributed by the Company, in the form of equity drawn down by the Oakley Fund and through a secured mezzanine instrument.
The acquired businesses include a leading provider of web-hosting and domain names in the UK and of web-hosting in Germany. Trading under the brand-names 123-Reg and Webfusion, the business is the UK's largest domain registrar, offering easy-to-use, high quality, cost-effective products to consumers, hobbyists and businesses. In Germany, the business trades under the name Host Europe.
The acquired businesses also include Vialtus Solutions (formerly Pipex Business Services) a provider of integrated communications solutions to large organisations and mid-market companies. With a focus on using IP technologies, Vialtus Solutions' products include managed hosting, mobile worker and remote office security solutions, voice services and IP networking.
Peter Dubens, Director, commented
'The web-hosting and network services businesses acquired by the Oakley Fund in April 2008 represent a sound investment for the Company, through our exposure to the Oakley Fund's investment strategy.
'Since its launch in mid-2007 the Oakley Fund has built up a strong pipeline of attractive new opportunities, across a number of industry sectors, and we are confident that a number of further investments will be completed by the Oakley Fund during the remainder of 2008.'
For further information please contact:
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Oakley Capital Investments Limited
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020 7766 6900
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Peter Dubens (Director)
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Financial Dynamics
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020 7831 3113
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Juliet Clarke / Edward Bridges / Erwan Gouraud
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Collins Stewart Europe Limited
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020 7523 8350
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Helen Goldsmith
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Notes:
The Company has been set up to invest primarily in Oakley Capital Private Equity L.P., (the 'Oakley Fund') a private equity fund established by a team of experienced investment professionals led by Peter Dubens, executive chairman of FREEDOM4 Communications plc and former chairman of 365 Media Group plc.
The Oakley Fund will invest primarily in mid-market buy-outs in the UK and Europe. It will seek to acquire controlling positions in companies with scope for performance improvement, and in industries with strong underlying growth drivers and the potential for consolidation. The Oakley Fund will utilise the investment advisory team's proven ability to self-source transactions and actively manage portfolio companies to improve operational performance. The Oakley Fund will target equity transactions in the range of €30 million to €140 million and will seek to deliver gross IRR on its investments in excess of 25 per cent. per annum and a blended gross multiple of three times.
OAKLEY CAPITAL INVESTMENTS LIMITED
Statement of Assets and Liabilities
31 December, 2007
(Expressed in £ Sterling)
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2007
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Assets
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Investment in Limited Partnership, at fair value
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(cost £2,925,726) (Note 6)
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£ 2,378,310
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Cash and cash equivalents (Note 3)
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97,154,262
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Other receivables
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303,475
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Total assets
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£ 99,836,047
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Liabilities
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Accounts payable and accrued expenses
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395,548
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Bank overdraft
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12,632
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Total liabilities
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408,180
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Net assets attributable to shares
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£ 99,427,867
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Number of Shares outstanding (Note 8)
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100,000,000
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Net asset value per Share
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£ 0.99
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See accompanying notes to the financial statements
OAKLEY CAPITAL INVESTMENTS LIMITED
Statement of Operations
Period from 28 June, 2007 (date of incorporation) to 31 December, 2007
(Expressed in £ Sterling)
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2007
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Investment income
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Interest
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£ 2,117,617
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Total income
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2,117,617
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Expenses
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Organization expenses
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4,593,684
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Management fee (Note 4(a))
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156,318
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Other
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83,041
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Professional fees
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65,395
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Interest
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141
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Total expenses
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4,898,579
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Net investment loss
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(2,780,962)
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Realized and unrealized gain on investments and foreign exchange
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Net realized loss on foreign exchange
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(681)
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Net unrealized gain on foreign exchange
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2,756,926
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Net increase in unrealized depreciation on investments
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(547,416)
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Net realized and unrealized gain on investments and
foreign exchange
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2,208,829
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Net decrease in net assets resulting from operations
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£ (572,133)
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Net loss per share
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£(0.01)
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See accompanying notes to the financial statements
OAKLEY CAPITAL INVESTMENTS LIMITED
Statement of Changes in Net Assets
Period from 28 June, 2007 (date of incorporation) to 31 December, 2007
(Expressed in £ Sterling)
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2007
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Net decrease in net assets resulting from operations
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Net investment loss
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£ (2,780,962)
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Net realized loss on foreign exchange
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(681)
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Net realized and unrealized gain on foreign exchange
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2,756,926
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Net increase in unrealized depreciation on investments
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(547,416)
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Net decrease in net assets resulting from operations
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(572,133)
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Capital share transactions
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Proceeds on issue of Shares
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100,000,000
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Net increase in net assets from capital share transactions
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100,000,000
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Net increase in net assets
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99,427,867
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Net assets at beginning of year
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-
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Net assets at end of year
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£ 99,427,867
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See accompanying notes to the financial statements
OAKLEY CAPITAL INVESTMENTS LIMITED
Notes to the Financial Statements
31 December, 2007
1. The Company
Oakley Capital Investments Limited (the 'Company') is closed-ended investment company which was incorporated under the laws of Bermuda on 28 June, 2007. The principal objective of the Company is to achieve long-term capital appreciation through investments in a diversified portfolio of private mid-market UK and European businesses. The Company achieves its investment objective primarily through an investment in Oakley Capital Private Equity L.P. (the “Limited Partnership”).
The Company listed on the London Stock Exchange - AIM market on 3 August, 2007.
2. . Significant accounting policies
The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America. The following are the significant accounting policies adopted by the Company:
(a) Use of estimates
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of increases and decreases in net assets from operations during the reporting period. Actual results could differ from those estimates.
(b) Security transactions and valuation
Security transactions are accounted for on a trade date basis based on the capital drawdown and proceeds distribution dates from the Limited Partnership
The Company’s investment in the Limited Partnership is valued at the balance on the Company’s capital account in the Limited Partnership as at the reporting date. Any difference between the capital introduced and the balance on the Company’s capital account in the Limited Partnership is recognized in unrealized gains and losses on investments in the Statement of Operations.
Realized gains and losses are recorded when the security acquired is sold. The net realized gains and losses on sale of securities is determined on a average cost basis.
The accounting policies followed by the Limited Partnership in valuing investments and recognizing income and gains and losses on security transactions are described in the notes to its financial statements.
(c) Income recognition
Interest income and expense are recognized on the accruals basis.
(d) Foreign currency translation
Investments and other monetary assets and liabilities denominated in foreign currencies are translated into British Pound amounts at exchange rates at the reporting date. Capital drawdowns and proceeds of distributions from the Limited Partnership and foreign currencies and income and expense items denominated in foreign currencies are translated into British Pound amounts at the exchange rate on the respective dates of such transactions.
Foreign exchange gains and losses on other monetary assets and liabilities are recognized in net realized and unrealized gain or loss from foreign exchange in the statement of operations.
The Partnership does not isolate unrealized or realized foreign exchange gains and losses arising from changes in the fair value of investments. All such foreign exchange gains and losses are included with the net realized and unrealized gain or loss from investments in the statement of operations.
(e) Cash and cash equivalents
The Company considers all short-term deposits with a maturity of 90 days or less as equivalent to cash.
3. Cash and cash equivalents
Cash and cash equivalents at 31 December, 2007 consist of the following:
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2007
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Cash
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£ 3,743
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Short-term deposits
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97,150,519
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£ 97,154,262
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4. Management and performance fees
(a) The Company has entered into a Management Agreement with Oakley Capital (Bermuda) Limited (the “Manager”) to manage the Company’s investment portfolio. The Investment Manager will not receive a management fee from the Company in respect of funds either committed or invested by the Company in the Limited Partnership or any successor fund managed by the Manager. The Manager will receive a management fee at a rate of 1% per annum in respect of those funds that are not committed to the Limited Partnership or any successor fund (but including in respect of the proceeds of any realisations), which are invested in cash, cash deposits or near cash deposits and a management fee at the rate of 2% per annum in respect of those funds which are invested directly in co-investments. The management fee is payable monthly in arrears. As at 31 December, 2007, there were no management fees payable to the Manager.
The Manager may also receive a performance fee of 20% of the excess of the amount earned by the Company over and above an 8% hurdle rate per annum on any monies invested as a co-investment with the Limited Partnership or any successor limited partnership. Any co-investment will be treated as a segregated pool of investments by the Company. If the calculation period is greater than 1 year, the hurdle rate shall be compounded on each anniversary of the start of the calculation period for each segregate co-investment. If the Manager does not exceed the hurdle rate on any given co-investment that co-investment shall be included in the next calculation on a co-investment so that the hurdle rate is measured across both co-investments. No previous payments of performance fee will be affected if any co-investment does not reach the hurdle rate of return. As at 31 December, 2007, there were no performance fees payable to the Manager.
(b) The Manager has entered into an Investment Advisory Agreement with Oakley Capital Limited (the “Investment Adviser”) to advise the Manager on the investment of the assets of the Company. The Investment Adviser will not receive a management or performance fee from the Company. Any fees due to the Investment Adviser will be paid by the Manager out of the management fee it receives from the Company.
5. Administration fee
Under the terms of the Company Administration Agreement dated 30 July, 2007 between Mayflower Management Services (Bermuda) Limited (the “Administrator”) and the Company, the Administrator receives an annual administration fee at prevailing commercial rates, subject to a minimum monthly fee of US$4,000 per month. During the period ended 31 December, 2007, the Company incurred Administration Fees of £23,903 which is included in professional fees in the statement of operations.
6. Investment in Limited Partnership
The Company intends to invest its assets in the Limited Partnership, an exempted limited partnership established in Bermuda on 10 July 2008. The Limited Partnerships’ primary objective is to invest in a diversified portfolio of private mid-market UK and European businesses, aiming to provide investors with significant long term capital appreciation. As at 31 December, 2007 the Company accounted for 66% of the total capital and commitments in the Partnership.
As at 31 December 2007 and for the period then ended, the Limited Partnership had called 3 per cent. of its commitments. The proceeds were used to pay its management fee and other operating expenses with the remainder being invested in cash and cash equivalents at 31 December 2007.
The Company may also make co-investments with the Limited Partnership based on the recommendations of the Manager. As at 31 December, 2007 the Company has not made any such co-investments. Co-investments may amend the outstanding capital commitments to the Limited Partnership.
7. Capital Commitment
The Company made a capital commitment to invest €140,000,000 in the Limited Partnership. The Limited Partnership may draw upon the capital commitment at any time subject to 2 weeks notice on an as needed basis. During the year, capital in the amount of €4,200,000 was called by the Limited Partnership. As at 31 December, 2007, the amount of capital commitment available to be called was €135,800,000.
8. Share capital and warrants
(a) Share capital
The authorised share capital of the Company on incorporation was $1,000 divided into 1,000 shares of par value $1.00 each. On incorporation, 1 ordinary share of par value $1.00 was issued to Codan Trust Company Limited (the “Initial Subscriber”). The currency denomination of the Company's authorised share capital was subsequently changed from US Dollars to Euros, the shares were subdivided and the authorised share capital increased to €2,500,000 divided into 250,000,000 shares of par value €0.01 each. The currency denomination of the Company's authorised share capital was further changed from Euros to Sterling, the shares were consolidated, divided and redenominated and the authorised share capital increased to £2,000,000 divided into 200,000,000 shares of par value 1 pence each. After the consolidation, division and redenomination the Initial Subscriber was the registered shareholder of 1 Ordinary Share of par value 1 pence. This Ordinary Share was made available, under the terms of the Placing (see Note 1). The Placing Price of £1.00 per Ordinary Share represented a premium of 99 pence to the nominal value of an Ordinary Share issued under the Placing.
The Placing of the Company’s Shares was fully subscribed, so that immediately after the Placing, the authorised share capital of the Company consisted of 200,000,000 Ordinary Shares and the issued share capital of the Company consisted of 100,000,000 Ordinary Shares.
(b) Warrants
50,000,000 warrants were issued in conjunction with the subscription of Ordinary Shares at a ratio of one warrant for every two shares. Each warrant confers on the holder the right to purchase one fully paid Ordinary Share at an exercise price of £1.30 as adjusted in accordance with Condition 2.3 of the AIM Admission Document. Warrants may be exercised at the option of the holder at any time prior to the close of business on AIM of the third anniversary of the date of admission of the warrants to AIM (see Note 1).
As the price of the Ordinary Shares as at 31 December, 2007 was below the exercise price of the Warrants, there was no dilution in the net asset value and loss per share.
9. Related parties
Certain directors of the Company are also directors, shareholders or a partner of Oakley Capital (Bermuda) Limited, Palmer Capital Associates (International) Limited and Mayflower Management Services (Bermuda) Limited; entities which provide services to and receive compensation from the Company.
Certain Directors of the Company are also directors of Oakley Capital GP Limited, the General Partner of the Limited Partnership.
10. Taxation
Under current Bermuda law, the Company is not obligated to pay any taxes in Bermuda on either income or capital gains. The Company has received an undertaking from the Minister of Finance in Bermuda pursuant to the provisions of the Exempted Undertakings Tax Protection Act 1966 which exempts the Company from any such taxes, at least until the year 2016.
11. Financial highlights
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2007 £
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Per share operating performance
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Net asset value per share, at date of
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subscription/start of period
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1.00
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Loss from investment operations
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Net investment income
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(0.03)
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Net realized and unrealized gain on investments
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and foreign exchange
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0.02
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Total from investment operations
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(0.01)
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Net asset value per share, end of period
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0.99
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Total return for period 1
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Percentage
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Total return before incentive fee
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(0.60)
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Incentive fee
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–
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Total return after incentive fee
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(0.60)
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Ratio of expenses to average net assets 1,2
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Operating expenses
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4.91
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Incentive fee
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–
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Total expenses
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4.91
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Ratio of net investment income to average net assets 1,2
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Net investment income before incentive fee
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(2.79)
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Incentive fee
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–
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Total net investment income
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(2.79)
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1 Not annualized for periods less than or greater than a year.
2 Expenses include interest expense of £141
12. Subsequent events
On 14 March 2008 the Limited Partnership called 31.5% of the committed capital, primarily for investment purposes. The Company’s committed share of the total amount called was €44.1 million.
On 2 April 2008 a wholly-owned subsidiary of the Limited Partnership acquired the Hosting and Network Services Division of FREEDOM4 Communications plc for a total deal value, including bank finance, of £120 million. The consideration was satisfied by a vendor loan note for £17.5 million (issued by a wholly-owned subsidiary of the Limited Partnership), the assumption of approximately £10 million in debt, and the balance of £92.5 million in cash. The cash element included approximately £49.2 million contributed by the Company, comprising equity and loan notes of £29.8 million invested through the Company's commitment to the Limited Partnership, along with £19.4 millionin debt finance, in the form of a secured mezzanine instrument from the Company. This instrument carries a fixed interest rate of 15.25% maturing on the earlier of 31 December 2015 or the date of sale or IPO.
This information is provided by RNS
The company news service from the London Stock Exchange
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FR FKBKPOBKKDAD
