Results for the Six Months ended 30 June 2021

RNS Number : 1929L
Oakley Capital Investments Limited
09 September 2021
 

 

9 September 2021

 

Oakley Capital Investments Limited

 

Interim Results for the Six Months ended 30 June 2021

 

Oakley Capital Investments Limited1 ("OCI" or the "Company") today announces its interim results for the six months ended 30 June 2021. OCI is a listed investment company providing consistent, long-term returns in excess of the FTSE All-Share Index by investing in the funds managed by Oakley Capital2 ("Oakley").

The Oakley Funds invest primarily in unquoted, pan-European businesses across three sectors: Technology, Consumer and Education. Oakley creates value and sustainable growth through performance improvement, business transformation and M&A.

 

Strong earnings growth from a digitally-focused portfolio drives total NAV return of 11%. Net Assets reach £804m, with £172m cash available for new investments following four new platform deals

 

INTERIM FINANCIAL HIGHLIGHTS 

 

Net Asset Value ("NAV") per share of 445 pence and NAV of £804 million

Total NAV return of 11% since 31 December 2020 (+45 pence) and 26% since 30 June 2020 (+94 pence)

Increase in portfolio valuation was driven 75% by EBITDA growth and 25% by increase in EV/EBITDA multiple

Total shareholder return of 28%

The Company invested £95 million and its share of proceeds was £51 million

Cash of £172 million at 30 June 2021

Outstanding Oakley Fund commitments of £438 million

Half-year dividend of  2.25 pence per share, to be paid on 14 October 2021 to shareholders on the register on or before 24 September 2021

 

PORTFOLIO HIGHLIGHTS

 

Average portfolio company  year-on-year EBITDA growth of 35% (2020 annual results: 20%)

Average portfolio company valuation multiple (EV/EBITDA) of 12.3x (2020 annual results: 11.8x)

Average net debt to EBITDA ratio of 3.5x (2020 annual results: 3.9x)

14 of 21 portfolio companies met or exceeded their pre-COVID budgets

7 0 % of portfolio companies  delivering their products or services digitally is key performance driver

In addition to the increase in Time Out's share price (+16 pence NAV per share uplift), the largest drivers of NAV movement were:

 

-

IU Group (+15 pence) - financial growth driven by increased student intake, which grew 70% year on year

-

TechInsights (+6 pence) - strong performance underpinned by a continuing shift to recurring revenues and an expected rebound in the semiconductor industry

-

Wishcard Technologies (+5 pence) - voucher sales continue to show robust growth across B2B and online channels

-

Foreign Exchange (-14 pence) - 4.3% increase in GBP:EUR had a negative impact on NAV

 

PROCEEDS

 

OCI's share of proceeds from divestments, refinancings and repayment of loans amounted to £51 million, consisting of:

IU Group - £29 million from refinancing

Daisy Group - £17 million from full repayment of an OCI loan to portfolio company

Daisy Group - £5 million from the exit of Fund II's stake in the Digital Wholesale Solutions division

 

INVESTMENTS IN THE PERIOD

OCI made a total look-through investment of £95 million which, aside from some minor follow-on investments, was attributable to four new platform deals:

idealista (Fund IV) - £43 million - Southern Europe's leading property portal

Dexters (Fund IV) - £13 million - London's premier independent chartered surveyors and estate agents

ICP Education (Fund IV) - £27 million - leading independent group of U.K. children's nurseries

ECOMMERCE ONE (Origin Fund) - £6 million - provider of ecommerce software in German-speaking Europe

 

CASH & COMMITMENTS

Balance sheet - O CI  has no leverage and had cash on the balance sheet of £172 million at 30 June 2021, comprising 21% of NAV

Recent commitments - OCI's total commitment to the Oakley Capital Origin Fund, which closed in January 2021, was €129 (£111) million

Outstanding commitments - total Oakley Fund commitments are £438 million

 

INVESTMENTS POST PERIOD END

Notable transactions completing after 30 June 2021 include:

ACE Education - Fund III exit and Origin follow-on investment: Origin invested alongside Groupe Amaury to benefit from strong growth potential and the commercial and strategic benefits Amaury offers ACE Education, via its strength in the French market

Ekon - transformational acquisition: Fund III's combination of PRIMAVERA with Ekon creates the largest independent provider of business software in Iberia 

WindStar Medical - first bolt-on acquisition: adding L.A.B. Cosmetics to WindStar's platform wins access to the 'clean beauty' industry where growth is outpacing the wider beauty market

Ocean Technologies Group - fifth bolt-on deal: acquiring SAAS provider COMPAS continues the transformation of the business into a diversified software platform for the maritime industry

OCI purchased for cancellation two million ordinary shares at a price of 354 pence per share

 

OUTLOOK

Robust earnings growth, strong prospects for investments and realisations, and ample dry powder lay the foundations for a successful full year:

Earnings growth - the tech-focused portfolio continues to benefit from accelerating megatrends including the shift to online for consumers and businesses, and global demand for quality, accessible education

Cash - significant 'dry powder' means OCI is well-placed to meet its commitments to the Oakley Funds as they make new investments during a period of significant opportunity

Activity - strong prospects for investments and realisations thanks to Oakley's proven and repeatable sourcing strategy, rich pipeline and portfolio of highly attractive assets

 

The Half-Year Report and Accounts are available on the Company's website:

https://oakleycapitalinvestments.com/investor-centre/publications/

 

A video overview of the six-month performance is also available here:

https://oakleycapitalinvestments.com/videos/

 

Caroline Foulger, Chair of Oakley Capital Investments Limited, commented:

"OCI's portfolio has sustained its pattern of strong performance in spite of ongoing COVID-related uncertainty. Impressive earnings growth continues to drive NAV growth, helped by the digital focus of the portfolio companies and the products and services they deliver. The Board is pleased to underline that we remain confident in the long-term outlook for the Oakley Funds and their ability to continue generating consistent value for investors."

 

Peter Dubens, Managing Partner of Oakley Capital Limited, commented:

"During the period, we continued to demonstrate our capacity to originate and execute off-market deals through our network of business founders, laying the foundations for future growth. Looking ahead, our investment pipeline is very encouraging thanks to our track record as partner of choice for ambitious entrepreneurs and management teams, with whom we adopt proven value creation strategies."

 

- ends -

 

Results presentation

 

A live presentation of the results, delivered by Oakley Capital Partner Steven Tredget, will take place at 09:00 BST today, Thursday 9 September 2021. The presentation will available to view via video webcast at the following link: https://www.investis-live.com/oakley-capital/6127a0e2c746d50a00a93918/yelf

 

A recording will be made available on the Company's website shortly after the meeting.

 

For further information please contact:

 

Oakley Capital Limited

+44 20 7766 6900

Steven Tredget, Investor Relations

 

Greenbrook Communications Limited

+44 20 7952 2000

Alex Jones / Michael Russell

 

Liberum Capital Limited (Financial Adviser & Broker)

+44 20 3100 2000

Chris Clarke / Darren Vickers / Owen Matthews

 

Notes:

LEI Number: 213800KW6MZUK12CQ815

About Oakley Capital Investments Limited ("OCI")

OCI is a  Specialist Fund Segment ("SFS")  traded investment vehicle that aims to provide shareholders with consistent long-term capital growth in excess of the FTSE All-Share Index by providing liquid access to private equity returns through investment in the Oakley Funds.

A video introduction to OCI is available at  https://oakleycapitalinvestments.com/videos/

The contents of the OCI website are not incorporated into, and do not form part of, this announcement.

2 The Oakley Funds

Oakley Capital Private Equity L.P. and its successor funds, Oakley Capital Private Equity II, Oakley Capital Private Equity III, Oakley Capital IV and Oakley Capital Origin Fund are unlisted lower-mid to mid-market private equity funds that aim to provide investors with significant long-term capital appreciation. The investment strategy of the Funds is to focus on buy-out opportunities in industries with the potential for growth, consolidation and performance improvement.

Oakley Capital, the Investment Adviser

Founded in 2002, Oakley Capital Limited has demonstrated the repeated ability to source attractive growth assets at attractive prices. To do this it relies on its sector and regional expertise, its ability to tackle transaction complexity and its deal generating entrepreneur network.

Important information

Specialist Fund Segment securities are not admitted to the Official List of the Financial Conduct Authority. Therefore, the Company has not been required to satisfy the eligibility criteria for admission to listing on the Official List and is not required to comply with the Financial Conduct Authority's Listing Rules.

The Specialist Fund Segment is intended for institutional, professional, professionally advised and knowledgeable investors who understand, or who have been advised of, the potential risk from investing in companies admitted to the Specialist Fund Segment.

This announcement may include "forward-looking statements". These forward-looking statements are statements regarding the Company's objectives, intentions, beliefs or current expectations with respect to, amongst other things, the Company's financial position, business strategy, results of operations, liquidity, prospects and growth. Forward-looking statements are subject to risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future.  Accordingly the Company's actual future financial results, operational performance and achievements may differ materially from those expressed in, or implied by, the statements. Given these uncertainties, prospective investors are cautioned not to place any undue reliance on such forward-looking statements, which speak only as at the date of this announcement. The Company expressly disclaims any obligation or undertaking to update or revise any forward-looking statements contained herein to reflect actual results or any change in the Company's expectations with regard to them or any change in events, conditions or circumstances on which any such statements are based unless required to do so by the Financial Services and Markets Act 2000, the Listing Rules or Prospectus Regulation Rules of the Financial Conduct Authority or other applicable laws, regulations or rules.

 

 

CHAIR'S STATEMENT

Digital focus underpins NAV growth and new investments.

It is very pleasing to report that amidst the ongoing disruption caused by COVID-19, OCI has continued to perform strongly during the period, sustaining a pattern of above-average returns. EBITDA growth of 35% across the investment portfolio underpinned a total NAV return per share of 11% in the six-month period (and 26% over 12 months), thanks to the pronounced digital focus of the companies in the portfolio, as well as the active management provided by the Funds' adviser Oakley Capital. OCI has also benefitted from Oakley's ability to continue sourcing promising investment opportunities at attractive valuations, and several new investments were made by the Funds during the period, laying the foundation for future growth.

While some of our underlying companies remain affected by the pandemic, the Board is pleased to see how many businesses continued to perform well, led most notably by IU Group (formerly Career Partner Group). The tech-focused education business was one of the biggest contributors to NAV growth and is now Germany's largest and fastest-growing university, buoyed by increased demand for quality online learning. Another example of strong performance is market-leading property portal idealista, a new platform investment completed early this year which is already reporting robust growth thanks to growing demand across Southern Europe.

There is a common thread running through these stories that also touches so many more Oakley Fund companies: the growth in global internet usage. This is by no means a new megatrend, but it has gained potency during COVID-19 as more businesses and consumers shift to online, driving demand for the services and products that Oakley's portfolio provides. For example, WebPros' webhosting "software-as-a-service" today supports the operations of more than 80 million websites around the world, Grupo Primavera is helping thousands of Iberian SMEs to migrate their IT systems to the cloud. Meanwhile, more and more consumers are logging on to 7NXT's online fitness classes and nutrition plans. The digital focus of the portfolio means that over 75% of revenues are recurring or subscription-based, providing a degree of income certainty.

New investments

We are encouraged to see the same digital focus informing new investments. In addition to idealista, Oakley made three platform investments during the period, including ECOMMERCE ONE whose software supports online sales for merchants across German-speaking Europe. This transaction essentially combines one business introduced through the Oakley Network of entrepreneurs with another company, which demonstrates yet again the Investment Adviser's ability to execute complex transactions in a much sought-after sector by leveraging its connections to source leading opportunities, outside a traditional, often expensive auction process.

Cash and Commitments

A healthy cash balance provides firepower for new investments. At the end of the period, OCI had no debt and cash reserves of £172m, amounting to 21% of NAV. The Board believes this puts OCI in a strong position to take advantage of a promising period for fresh investments in existing Oakley Funds and the opportunity to commit to future funds. History shows that, on average, fund vintages that follow a macroeconomic downturn tend to outperform.

Environmental, Social and Governance & sustainability

At OCI we are committed to promoting responsible investing as a way to de-risk investments and support value creation, since research shows that companies with higher ESG scores tend to outperform the wider market. Oakley integrates ESG considerations throughout its investment cycle, from origination to growth and exit. We have been encouraged by Oakley's further investment in its ESG capabilities, this period helping portfolio companies to adopt more sustainable business practices. This is already beginning to bear fruit: two companies, Alessi and North Sails Apparel, have achieved coveted B Corp status. In addition, OCI is developing its own direct Corporate Social Responsibility strategy to roll out in due course.

Transparency in communications

The Board has made it a priority to enhance shareholder communications and boost transparency by further developing our digital communications. Last year we invested in producing our inaugural digital Annual Report, supported by interactive graphics and video. We are incredibly pleased that this has been recognised by industry body the Association of Investment Companies ('AIC') which awarded OCI "Best Report and Accounts 2021 - Alternative". To boost communication and transparency further we have taken the decision to increase the frequency of OCI's NAV reporting to the market by moving to quarterly updates commencing in 2022.

Discount

At OCI we strongly believe that improved, more frequent communications will help shareholders and would-be investors to better understand our underlying investment strategy, our portfolio and the drivers of NAV growth. While OCI's share price currently sits below the NAV per share, we are confident that these measures, together with ongoing share buybacks and repeated performance, will help the price to better reflect the quality and recurring growth of our underlying assets.

Share purchases

The Board is committed to continuing its programme of share buybacks as an essential tool for value creation, while pursuing a careful approach to cash management that balances buybacks with cash inflows, the pace of existing Fund investment and possible future Fund commitments. Post-period end, the Board authorised a buy-back of 2 million shares, which were acquired and cancelled at a price of 354p. It is also pleasing to see sustained share purchases by Board members and Oakley partners during the period, and their combined holding has now reached 11%, ensuring that the interests of the Board and Oakley Capital are aligned with our shareholders. At the same time, the shareholder registry has further diversified, and the top ten shareholders' combined holding has fallen further from 80% in 2018 to 64% as at 30 June 2021. We continue to welcome an increasing number of private investors onto the register, attracted by the liquid access and superior returns that OCI provides.

Dividend

In April, a final dividend of 2.25 pence per share was paid for the period ended 31 December 2020. We are pleased to announce that an interim dividend of 2.25 pence per share will be paid in October 2021.

Outlook

Whilst the global economy has generally rebounded strongly from the depths of COVID-19, the ongoing pandemic continues to cause uncertainty for certain businesses. In this environment, it is reassuring to see that our underlying portfolio companies have continued to perform well, thanks to the digital focus of their business models, and a strong focus on active management, which you can read more about in the Investment Adviser's report. At the same time, Oakley has continued its solid track record in sourcing promising, proprietary investments, thereby avoiding the more expensive deals that bedevil the wider private equity industry, thus laying the foundations for future, sustainable NAV growth. The Board is pleased to underline that we remain confident in the long-term outlook for the Oakley Funds and their ability to continue generating consistent value for investors.

Caroline Foulger

Chair

8 September 2021

 

INVESTMENT ADVISERS REPORT

Oakley's effective origination strategy means the firm continues to unearth attractive, proprietary investment opportunities.

It is testament to the resilience of private equity that the industry has rebounded so strongly since the depths of the pandemic. Over the past 18 months, deal-making and fundraising have surged to new records, and private equity firms are now sitting on more than $2.2 trillion of so-called "dry powder"1 ready to pour into new investments. That is pushing up valuations, especially in the "hot" sectors that have performed so well during the pandemic, such as technology and business software. This market exuberance inevitably raises investor concerns about the impact it may have on future returns as more money chases fewer deals. The good news is that Oakley's effective origination strategy means the firm continues to unearth attractive, proprietary investment opportunities in sought-after sectors. At the same time, Oakley's portfolio of tech-enabled businesses continues to profit from the exciting megatrends that have accelerated during the pandemic.

Sustaining EBITDA growth

While some companies remain impacted by COVID-19 restrictions, the majority of Oakley's investments performed well during the period. On average, EBITDA across the portfolio grew 35% over the last 12 months, buoyed by growing trends including the shift to online shopping, the migration of business IT to the cloud and the increasing international demand for quality, accessible education. EBITDA growth is also supported by a programme of investment to help portfolio companies realise their full potential. During the period, Oakley continued to enable management teams to recruit key talent, professionalise their business models by enhancing business processes and controls, transform their digital marketing and e-commerce offerings and execute transformational M&A. A strong example of this is Ekon's recent combination with PRIMAVERA to create Iberia's leading independent provider of business software, with a mission to help thousands of SMEs in the region to migrate their IT systems to the cloud. Oakley's focus on sustainability and ESG factors, the screening process pre-investment and through ownership to exit, not only helps mitigate investment risk, but helps build value by de-risking business models for future investors. During the period, North Sails became the second portfolio company to gain coveted B Corp status, underlining the company's commitment to sustainable growth.

Effective origination

Oakley has also continued to benefit from an origination strategy that is proven to uncover the most promising investment deals. The opportunity to invest in ECOMMERCE ONE was introduced to us by a German tech entrepreneur with deep sector expertise who Oakley had previously partnered with on its investment in consumer technology company Wishcard Technologies Group in 2019. The ECOMMERCE ONE deal, completed in June this year, demonstrates the effectiveness of Oakley's entrepreneur network for sourcing proprietary deals as well as leveraging valuable market insights to help assess opportunities. Proactive sector screening is another key part of Oakley's origination strategy. Our investment in children's nursery group ICP Education followed a detailed sector screening exercise that identified attractive and compelling market drivers in early years education. ICP also builds on our significant experience as one of the most active investors in Europe's education sector. Meanwhile, our investment in London estate agents Dexters demonstrates our willingness to embrace complex investment situations, building on our track record and capabilities to unearth pockets of value that can form the foundation for future market leaders. These latest investments have sustained our long-term record: 75% of investments are uncontested deals and 40% are carve-outs.

The case for reinvestments

The growing surplus of capital in the private equity market means there is robust interest in acquiring our businesses when it comes to exit, supporting high valuations. Often, Oakley decides to reinvest in its businesses to ensure investors can continue to benefit from the strong growth of its most promising portfolio companies. In 2019 Oakley reinvested in WebPros, which has continued to generate double-digit earnings growth. In July this year, and immediately after the period end, Origin reinvested in ACE Education alongside France's Groupe Amaury in order to benefit from the growing demand for quality, vocational higher education across Europe. Our collaboration with Amaury also demonstrates Oakley's ability to forge deep strategic partnerships with other like-minded investors that help to expand our networks and capabilities. Our reinvestment in WebPros was made alongside CVC, Europe's largest private equity investor. Meanwhile, our partnership with EQT on idealista builds on our joint collaboration with Facile, Italy's leading price comparison website.

Hybrid working delivers

The disruption caused by the COVID-19 pandemic has forced businesses to completely change the way they work, and private equity is no exception, with key activities including deal-making and fundraising impacted. Last year, Oakley successfully raised the maiden Origin fund, largely completing its investor meetings and due diligence virtually. The benefits of maintaining a flexible approach to hybrid working through a mix of working in the office and at home, sustained by digital communications, are very clear: improved efficiencies, reach and accessibility across the firm. Better collaboration between teams and across offices supports better outcomes in terms of finding new deals and building successful businesses. The success from rolling out our hybrid working model without compromising Oakley's culture has given us the confidence to expand our geographic footprint, even during a pandemic. Oakley's Milan office will open later this year, adding to our existing hubs in London, Munich and Luxembourg, boosting the firm's ability to find new deals, deepen its network and support portfolio companies in an important market for Oakley.

The way ahead

As cash-rich private equity investors explore new strategies to allocate their capital, Oakley remains resolutely focused on its core, proven investment strategy: backing high-growth, attractive private businesses in the European mid-market. Indeed, we believe this strategy will continue to provide promising opportunities as companies remain private for longer, and more founders turn to private equity not just for capital but also to leverage their know-how and support as they seek to grow their businesses post-pandemic. Oakley has a rich pipeline of exciting investment prospects thanks to its strong origination platform. It has the right sector focus and track record, and a well-resourced investment team and operating platform, to help companies grow, generate jobs and wealth, and to sustain strong returns for investors

1 Source: S&P Global Market Intelligence.

 

ENVIRONMENTAL, SOCIAL & GOVERNANCE

The Board has endorsed Oakley's policy to advise on the investment of the Company's resources in a responsible manner. In the period, Oakley has focused on the following key areas of ESG, consistent with its belief that investing responsibly protects and creates value:

Cybersecurity

Cybersecurity maturity assessments have been undertaken across the portfolio (with some still ongoing) and bespoke roadmaps for improvement have been developed.

Climate

Oakley has joined initiative Climate International ('iCI') - a private equity action group on climate change, with a collective commitment to understand and reduce carbon emissions of private equity-backed companies and secure sustainable investment performance.

Diversity & Inclusion

D&I Committee and working groups have been formed with a focus on recruitment, culture and training.

 

OCI NAV OVERVIEW

OCI's NAV grew from £728 million to £804 million, an increase of 11% since 31 December 2020 to 445 pence per share.

Proceeds during the period1

During the period, OCI's share of proceeds from divestments, refinancings and repayment of loans amounted to £51 million, consisting of:

· Realisations - £5 million - the exit of Fund II's stake in the Digital Wholesale Solutions division of the Daisy Group;

· Refinancings - £29 million - the refinancing of IU Group;

· Direct debt repayment - £17 million - the full repayment of a loan to the Daisy Group.

Investments during the period1

During the period, OCI made total look-through investments of £95 million, of which £89 million were platform investments, and £6 million were bolt-on and follow-on investments, comprising:

· Platform investments - £89 million - the acquisitions of idealista (Fund IV), Dexters (Fund IV), ICP Education (Fund IV) and ECOMMERCE ONE (Origin Fund);

· Bolt-on and follow-on investments - £6 million - a bolt-on to Grupo Primavera, and further investments into North Sails and Globe-Trotter.

1 Proceeds and investments are included on a look-through basis.

 

OUTSTANDING COMMITMENTS OF OCI

Outstanding commitments to the Oakley Funds as at 30 June 2021 were £437.8 million, of which £212.9 million was to Fund IV and £107.7 million to the Origin Fund, both of which are currently in their investment period. Funds I and II are in the realisation phase and Fund III has reached the end of its investment period with future acquisitions limited to bolt-on investments to the current portfolio.

OCI has no leverage and had cash on the balance sheet of £171.5 million at 30 June 2021. Cash has decreased from £223.1m at 31 December 2020, largely due to two capital calls to finance Fund IV's investments in idealista and ICP Education. Cash represents 21% of total NAV at 30 June 2021 (31% at 31 December 2020).

Fund

Fund vintage

Total commitment
(€m)

Outstanding
at 30 June 2021
(€m)

Outstanding
at 30 June 2021
(£m)

% of NAV

Oakley Fund I

2007

202.4

2.8

2.4

0

Oakley Fund II

2013

190.0

13.3

11.4

1

Oakley Fund III

2016

325.8

120.6

103.4

13

Oakley Fund IV

2019

400.0

248.0

212.9

27

Origin Fund

2020

129.3

125.4

107.7

13

Outstanding commitments



510.1

437.8

54

Cash and cash equivalents




171.5

21

Net outstanding commitments unfunded by cash resources at the
year end


266.3

33

 

OVERVIEW OF OCI'S UNDERLYING INVESTMENTS

OCI's NAV at 30 June 2021 was £804 million, a NAV per share of 445 pence.

Investments

Sector

Location

Year of investment

Open cost

Fair value


Fund I

Time Out

Consumer

Global

2010

£57.9m

£32.9m

OCI's proportionate allocation of Fund I investments (on a look through basis)


£32.9m

Other Assets and Liabilities


(£3.5m)

OCI's investment in Fund I


£29.4m


Fund II

North Sails

Consumer

Global

2014

£43.8m

£34.3m

Daisy

Technology

UK

2015

£8.5m

£11.5m

OCI's proportionate allocation of Fund II investments (on a look through basis)


£45.8m

Other Assets and Liabilities


£4.0m

OCI's investment in Fund II


£49.8m

Fund III

Casa & atHome

Technology

Italy/Luxembourg

2017

£0.0m

£8.5m

Schülerhilfe

Education

Germany

2017

£30.0m

£45.9m

TechInsights

Technology

Canada

2017

£0.3m

£25.8m

ACE Education

Education

France

2017

£6.9m

£15.8m

IU Group

Education

Germany

2018

£0.0m

£99.0m

Facile

Technology

Italy

2018

£20.0m

£40.3m

Grupo Primavera

Technology

Spain

2019

£22.6m

£22.6m

Iconic BrandCo

Consumer

Italy/UK

2019/2020

16.3m

£16.3m

OCI's proportionate allocation of Fund III investments (on a look through basis)


£274.4m

Other Assets and Liabilities


(£42.1m)

OCI's investment in Fund III


£232.3m

Fund IV

Ocean Technologies Group

Education

Norway/UK

2019

£20.8m

£26.5m

Wishcard Technologies Group

Consumer

Germany

2019

£15.8m

£29.4m

Contabo

Technology

Germany

2019

£4.8m

£18.4m

WebPros

Technology

Switzerland/USA

2020

£43.4m

£55.6m

Windstar

Consumer

Germany

2020

£29.2m

£29.2m

idealista

Technology

Spain

2021

£41.5m

£41.5m

Dexters

Consumer

UK

2021

£13.4m

£14.7m

ICP Education

Education

UK

2021

£26.9m

£26.9m

OCI's proportionate allocation of Fund IV investments (on a look through basis)


£242.2m

Other Assets and Liabilities


(£82.7m)

OCI's investment in Fund IV


£159.5m


Origin Fund

7NXT

Technology

Germany

2020

£10.2m

£13.9m

ECOMMERCE ONE

Technology

Germany

2021

£5.8m

£5.8m

OCI's proportionate allocation of Origin Fund investments (on a look through basis)


£19.7m

Other Assets and Liabilities


(£16.1m)

OCI's investment in Origin Fund


£3.6m


Direct investment

Time Out

Equity

Consumer

Global



£40.1m

North Sails

Debt

Consumer

Global



£66.6m

North Sails Apparel

Debt

Consumer

Global



£44.3m

Fund Facilities

Debt

n/a

n/a



£6.9m

Total direct investments


£157.9m


Total OCI investments


£632.5m

Cash, other assets and liabilities


£171.9m


Total OCI NAV


£804.4m

 

Other Assets and Liabilities comprise OCI's share of, primarily, cash, receivables and third-party fund debt facilities.

Direct equity securities

Investor's confidence in Time Out's ability to bounce back from the pandemic was reflected in a significant increase in the share price from 35.5p at 31 December 2020 to 59.5p at 30 June 2021. 2020 was a challenging year for Time Out due to the unprecedented impact of COVID-19, however the measures that the Company has taken to adapt the re-opening of the Time Out Markets and the further strengthening of the balance sheet by successfully completing an equity placing in April, raising £17 million, has enabled the performance of the business to improve in 2021.

Direct debt securities

The Company provides debt facilities to certain portfolio companies. These are provided at market interest rates, allowing OCI to generate higher returns than would be earned on cash reserves.

Fund II exited the Digital Wholesale Solutions division of the Daisy Group. A direct loan of £17.5 million, including interest was repaid to OCI using part of the proceeds from the realisation. At the period end, loans to the portfolio company North Sails were £110.9 million.

The Company also provides an annual revolving credit facility to Fund I which was renewed in June 2021.

 

SUPPLEMENTARY INFORMATION

 

DIRECTORS' REPORT

Financial prospects and position

The Board has considered the sustainability and resilience of the Company's business model over the long term, including consideration of the impacts of COVID-19, and has based its assessment of the prospects of the Company on this consideration. This period of assessment of long-term prospects is greater than the period over which the Board has assessed the Company's viability.

The Board considers three years as the most appropriate time period over which to assess the long-term viability of the Company, as required by the AIC Code. This time period has been chosen as a reasonable period over which the Board can reasonably, and with a sufficient degree of likelihood, assess the Company's prospects and over which the existing Oakley Fund commitments will largely be drawn.

The Board has established procedures which provide a reasonable basis to make proper judgments on an ongoing basis as to the principal risks, financial position and prospects of the Company.

Regular reporting to the Risk Committee of the Board provides for ongoing analysis and monitoring against risk appetite. Strategic considerations of the Board as it relates to financial prospects of the Company include:

· Use of leverage. The Company has to date chosen not to lever its balance sheet.

· Foreign exchange risk hedging. The Company does not hedge its foreign exchange exposure due to the unpredictable timing and quantum of private equity fund capital calls and distributions.

· Cash management - monitoring of cash flow forecasts enabling the Company to meet ongoing commitments to the Funds.

· Commitment to future Oakley Fund contributions based on analyses of liquidity forecasts and investment opportunities

· Utilising, periodically, surplus cash balances to implement share buy-backs for cancellation.

After making enquiries and given the nature of the Company and its investments, the Directors, after due consideration, conclude that the Company will be able to continue for the foreseeable future (being a period of 12 months from the date of this report). Furthermore, the Directors are not aware of any material uncertainty regarding the Company's ability to do so.

Responsibility statement of the Directors in respect of the Annual Report

Each of the Directors, whose names and functions are listed in the Directors and Advisers section of this report, confirms that, to the best of his/her knowledge:

· the Interim Report includes a fair review of the development and performance of the business and the position of the Company;

· the consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and give a true and fair view of the assets, liabilities, financial position and results of the Company, and are in compliance with the requirements set out in the Bermuda Companies Act 1981 (as amended);

· the Interim Report includes a fair review of the information required by:

a) 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the current financial year and their impact on the consolidated interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and

b) 4.2.8R of the Disclosure Guidance and Transparency Rules, being all related party transactions that have taken place in the first six months of the current financial year which have materially affected the financial position or performance of the Company during that period and any changes in the related party transactions described in the Annual Report and accounts that could materially affect the financial position or performance of the Company during the first six months of the current financial year; and

· the consolidated interim financial statements should be read in conjunction with the latest Annual Report and financial statements which were prepared in accordance with IFRS. These financial statements provide the information necessary to assess the Company's position and performance, business model and strategy, and is fair, balanced and understandable.

On behalf of the Board.

Caroline Foulger

Chair

8 September 2021

 

Principal Risks and Uncertainties

During the period under review, the Risk Committee has continued to identify, assess, monitor and manage risks within the Company, including those that would impact its future performance, solvency, liquidity or reputation. This review includes the monitoring of risk exposure compared with the risk appetite established by the Board.

Key risks and uncertainties of the Company are assessed on a scale, considering their impact and likelihood. The Committee monitors detailed and, wherever possible, quantifiable indicators of the Company's exposure to risk, segmented into five core categories, summarised below. During 2021, regular consideration was given to the impact COVID-19 had in each of the five categories of risk.

Principal risks

 

Financial performance

Risks and uncertainties

Impact

Mitigation




The Company's investment activities expose it to a variety of financial risks that include credit, liquidity, interest rate, currency and valuation risk. Further details are disclosed in Note 5 to the Consolidated Financial Statements.

The main driver of the Company's performance is the valuation of the underlying portfolio companies held by the Oakley Funds as well as its direct investments. The Audit Committee and Risk Committee consider valuation methods and estimates used by Oakley to value the Funds. This includes monitoring the movements in the valuations of the underlying portfolio on a quarterly basis and challenges movements which differ from expectations. Material changes in valuations have a significant impact on performance.

During the period, the Board considered the impact of COVID-19 on valuations. Specifically, this included monitoring the impact on operating and financial performance of portfolio companies. Whilst some impact remains, the portfolio has continued to benefit from an investment focus on technology-enabled businesses.

The credit risk of lending to the Oakley Funds or direct debt investments in portfolio companies is considered on a case-by-case and aggregate basis by the Board and Risk Committee. Direct credit investments continued to be reduced during 2021, with North Sails and a loan to Oakley Fund I being the only investments remaining, as part of a continued strategy towards a clear focus on Fund investments.

Strength in GBP has had a negative impact on the Company's NAV in 2021. However, the Company holds investments in portfolio companies located outside the UK, notably Western Europe, which are valued in non-GBP currencies. The Company may hedge the foreign exchange exposure to any non-GBP investments as deemed appropriate by the Board from time to time. The Risk Committee considers potential hedging strategies for recommendation to the Board, and has to date recommended not to hedge any currency risk aside from keeping a nominal amount of cash holding in GBP for servicing ~three years' operating expenses.

The Company is indirectly exposed to interest rate risk through the debt facilities held by the Oakley Funds. The fixed interest rate direct debt investments on OCI's balance sheet has a weighted duration of less than one year at any given time, thus not considered a material interest rate or inflation risk. This risk is therefore not currently deemed to be significant given the current low interest rate environment, but is regularly monitored by the Board.




 

Company performance

Risks and uncertainties

Impact

Mitigation




The Risk Committee monitors and manages a Board-set appetite on Company performance with a clear focus on stakeholder interests as measured by share price. Shareholder return, NAV return, share price discount to NAV and dividend yield are all actively monitored and actions recommended for Board approval as deemed appropriate.

The Company considers the most impactful drivers of its performance to be the pipeline of Fund investments available for investment, relative to liquid cash positions, and underlying portfolio Company performance in the Fund investments.

Reputational risk, sustainability considerations and dividend policy are also factored into performance management.

Consistent with guidelines and tolerances set by the Board, the Committee considers potential corrective action within its control, in the event of tolerances being exceeded.

The availability of investment pipeline, i.e. future Oakley Fund investment opportunities, are considered in tandem with the opportunity cost of potential cash drag relative to liquidity risk. Dividend policy and share buy-back programmes are also considered in tandem with liquidity risk.




 

Operational risk

Risks and uncertainties Risks and uncertainties

Impact

Mitigation




(i) Outsourcing
The Company relies heavily upon the services provided by contracted third-party advisers. The valuation of the underlying portfolio companies, cyber security, data management, accounting records and maintenance of regulatory and legal requirements, depend on the effective operation of key service providers.

(i) Outsourcing
Significant disruption of service providers could have adverse impacts on timing and quality of financial reporting and safeguarding of assets.

(i) Outsourcing
Through the Management Engagement Committee, regular reviews of the performance of service providers (including the Administrative Agent and Investment Adviser) are conducted. The performance assessment considers cost, efficiency, internal controls, performance, key person risk and compliance with the terms of arrangements. The results of these reviews are shared with the Board and monitored by the Risk Committee as part of the appetite.

From 1 July 2021, Oakley Capital Limited replaced Mayflower Management Services (Bermuda) Limited as the Administrator. The Administrator is responsible for the Company's general administrative requirements such as the calculation of the net asset value and net asset value per share and maintenance of the Company's accounting records.

Oakley Capital Limited is a related party to the Company. Prior to appointment, an independent fairness opinion was obtained and no issues were found with the arrangement. There is a clear segregation of duties between the Administrator and the Investment Adviser functions.




(ii) Governance
The effective operation of the Board, including its composition and skills mix, is key to the continued success of the Company and is monitored by the Risk Committee and overseen by the Nomination Committee of the Board.

(ii) Governance
Strong governance is recognised as a key performance measure and is embedded in all activities of the Company. Good governance has a positive impact on performance.

(ii) Governance
The Company has a clear commitment to governance with tone set by the Board. The Nomination Committee is responsible for selection of Directors and evaluation of the Board and individual Directors annually. The Company implements strict policies to track, monitor and mitigate conflicts of interest on both an individual and transactional basis. All Directors were re-appointed at the AGM of the Company on 26 July 2021.

The Risk Committee maintains a register of potential conflicts of interest for appropriate mitigation in the event of perceived conflicts, and ensures appropriate implementation of necessary protocol when decisions are taken.

 

Regulatory risk

Risks and uncertainties

Impact

Mitigation




Changes in legislation, regulation and/or government policy could significantly impact the Company's performance.

Cost and resourcing implications of new and/or changing regulation can result in material impacts to the Company.

Compliance failures can further result in penalties, censure or reputational damage.

The Governance, Regulatory and Compliance Committee tracks and reports on emerging regulatory, tax and legal developments potentially impacting the Company. These are monitored within the Company's risk framework. The Committee receives regular reporting and input from the Company's legal counsel (both UK and Bermuda), financial adviser, and Oakley's internal compliance team.




 

Liquidity risk

Risks and uncertainties

Impact

Mitigation




As the Company invests in illiquid private equity closed-ended funds and direct private debt and equity investments, forecasting cash flows is a key component in managing liquidity risk. These cash flow forecasts include significant estimates as to timing and quantum of cash inflows and outflows.

The ability to meet ongoing operational liquidity needs and capital calls related to Fund commitments is of the highest priority for the Company. The level of new Fund commitment is driven from longer-term future Fund cash flow projections, which are considered within a range of probabilities.

The Company maintains a level of liquidity to enable it, based on cash flow projections, to meet its capital commitments to the Oakley Funds as well as being able to participate in any other potential investment opportunities within its strategy. Cash flow models are reviewed at least quarterly to manage cash throughout the investment cycle. This enables the Company to fulfil its commitments as they fall due, manage longer-term commitments, actively manage liquid cash resources, and consider the capacity to commit to future Oakley Funds.

The Risk Committee actively monitors future cash flow forecasts with a focus on understanding key assumptions and estimates, and maintenance of liquidity within established risk tolerances.




 

SHAREHOLDER INFORMATION

Financial calendar

The announcement and publication of the Company's results is expected in the months shown below:

January

Trading update for the
year announced

March

Final results for the year announced, Annual Report published

April

Payment of final dividend

July

Interim trading update announced

September

Interim results announced,
Interim Report published

October

Payment of interim dividend

 

Dividend

The final dividend proposed in respect of the period ended 30 June 2021 is 2.25 pence per share.

Ex-dividend date
(date from which
shares are transferred without dividend)

23 September 2021

Record date (last date
for registering transfers
to receive the dividend)

24 September 2021

Dividend payment date

14 October 2021

 

Share dealing

Investors wishing to purchase or sell shares in the Company may do so through a stockbroker, financial adviser, bank or share-dealing platforms.

To purchase this investment, you must have read the Key Information Document ('KID') before the trade can be executed. In accordance with Article 15 of the PRIIPs RTS (2017/653), an updated KID is available on the Company's website at https://oakleycapitalinvestments.com/publication-category/other-publications/

If you are proposing to use Computershare Investor Services PLC to purchase shares, please contact them directly and they will provide you with the KID either by email or post.

You can contact them on +44 370 703 0084.

Important information

Past performance is not a reliable indicator of future results. The value of OCI shares can fall as well as rise and you may get back less than you invested when you decide to sell your shares.

 

WHY INVEST IN LISTED PRIVATE EQUITY?

Private equity targets investments in privately owned businesses across all sectors, from recognisable household names to companies with significant growth potential. It then seeks to help these companies maximise their value during the holding period. While private equity funds are not accessible to most private investors, one attractive alternative is buying shares in listed investment companies that provide access to these funds and the performance of the private companies they back.

A bigger pond and superior performance

The number of public companies in North America and Europe is decreasing by just over 2% per annum, reflecting a simultaneous decline in IPOs and an increase in delistings and take-private transactions. In contrast, private equity continues to grow in scale and sophistication, with the industry reaching $4.5 trillion in global assets under management at the end of the first half of 20201.This has resulted in the number of private equity-backed companies increasing by over 8% per annum, a trend that looks set to continue as businesses favour access to abundant levels of capital and expertise to drive long-term growth, without the distractions of public ownership2.

Global private equity has achieved consistently strong returns throughout the past decade and has continued to outperform during the COVID-19 pandemic, as the asset class's long-term investment horizon is well placed to weather short-term disruption. The sector benefits from portfolio diversity and reduced volatility through exposure to a range of fast-growing companies, often in sectors that are harder to access through public markets. As a result, the global private equity benchmark has consistently outperformed the FTSE All-share index during the past ten years, with both revenue and profit growth consistently superior to listed companies globally.

Democratising access to private equity returns

Due to the investment ticket size and the conventional ten-year term of commitment required, typical private equity fund investors are large institutions such as pension funds, insurance companies or sovereign wealth funds. For most retail investors, private equity funds are unattainable.

Listed private equity offers a solution to these barriers. Private equity investment trusts are publicly listed companies that commit capital to private equity funds. Investors can buy and sell shares as with any public company, reducing the minimum level of investment required to the price of one share. This increases liquidity for the fund, whilst allowing retail investors to benefit from superior returns.

A hands-on approach

Private equity investment isn't solely about access to capital. It also allows high-quality private companies to benefit from private equity managers' operational professionals, who bring deep sector expertise and engage with companies on a daily basis. They may hold seats on boards, enabling them to embed deeply within organisations and directly oversee the enhancement of a company's value.

Management fees reflect the value of this active approach, meaning that they are typically higher than those of a public equity fund. However, the benefits of an engaged, experienced manager are manifested in the Fund's returns. When selecting a manager, therefore, it is important to choose one that has a strong track record.

The Company has been listed since 2007 and provides access to Oakley Capital's proven record of sourcing high-quality, diversified investments; supporting their growth through active management; and selling them at attractive multiples. The companies Oakley backs, typically enjoy a set of key characteristics: market leader in their chosen niche; stable, recurring revenue streams; diversified customer bases; opportunities to expand service proposition; and scope for mergers and acquisitions. The result for shareholders is access to a globally diversified, carefully selected portfolio which provides market-leading returns.

1 Source: Preqin.

2 Source: Pitchbook.

 

FINANCIAL STATEMENTS

 

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED)

The financial statements and notes to the financial statements are unaudited for the periods to and as at 30 June 2020 and 30 June 2021. All 31 December 2020 balance sheet items and 12 month figures to 31 December 2020 are audited.

 


Notes

6 months ended
30 June 2021
£'000

6 months ended
30 June 2020
£'000

Income




Interest income


 4,949

 5,375

Net realised gains (losses) on investments at fair value through profit and loss

6, 7

 21,926

 191,260

Net change in unrealised gains (losses) on investments at fair value through profit and loss

6, 7

 59,458

 (189,109)

Net foreign currency gains (losses)


 (3,945)

 15,670

Other income


 114

 147

Total Income


 82,502

 23,343





Expenses

10

 (1,960)

 (5,475)





Profit attributable to equity shareholders/total comprehensive income


 80,542

 17,868





Earnings per share




Basic and diluted earnings per share

11

 0.45

 0.09

 

CONSOLIDATED BALANCE SHEET (UNAUDITED)  


Notes

As at
30 June 2021
£'000

As at
31 December 2020 £'000

As at
30 June 2020
£'000

Assets





Non-current assets





Investments

6, 7

 632,532

 505,124

 431,139



 632,532

 505,124

 431,139






Current assets





Trade and other receivables


 833

 33

 150

Cash and cash equivalents


 171,517

 223,090

 261,495



 172,350

 223,123

 261,645

Total assets


 804,882

 728,247

 692,784

Liabilities





Current liabilities





Trade and other payables


 453

 297

 892

Total liabilities


 453

 297

 892

Net assets attributable to shareholders


 804,429

 727,950

 691,892

Equity





Share capital

13

 1,806

 1,806

 1,943

Share premium

13

 188,144

 188,144

 222,179

Retained earnings


 614,479

 538,000

 467,770

Total shareholders' equity


 804,429

 727,950

 691,892

Net asset per ordinary share





Basic and diluted net assets per share

12

 4.45

 4.03

 3.56

Ordinary shares in issue


 180,600

 180,600

 194,260

 

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (UNAUDITED)


Share capital
£'000

Share premium
£'000

Retained
earnings
£'000

Total
shareholders'
equity
£'000

Balance at 1 January 2020

 1,986

 229,728

 454,294

 686,008

Profit for the period/total comprehensive income

-

-

 17,868

 17,868

Ordinary shares repurchased and cancelled

 (43)

 (7,549)

-

 (7,592)

Dividends

-

-

 (4,392)

 (4,392)

Total transactions with equity shareholders

 (43)

 (7,549)

 (4,392)

 (11,984)

Balance at 30 June 2020

 1,943

 222,179

 467,770

 691,892

Profit for the period/total comprehensive income

-

-

 74,518

 74,518

Ordinary shares repurchased and cancelled

 (137)

 (34,035)

-

 (34,172)

Dividends

-

-

 (4,288)

 (4,288)

Total transactions with equity shareholders

 (137)

 (34,035)

 (4,288)

 (38,460)

Balance at 31 December 2020

 1,806

 188,144

 538,000

 727,950

Profit for the period/total comprehensive income

-

-

 80,542

 80,542

Ordinary shares repurchased and cancelled

-

-

-

-

Dividends

-

-

 (4,063)

 (4,063)

Total transactions with equity shareholders

-

-

 (4,063)

 (4,063)

Balance at 30 June 2021

 1,806

 188,144

 614,479

 804,429

 

CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)


Notes

6 months ended
30 June 2021
£'000

6 months ended
30 June 2020
£'000

Cash flows from operating activities




Purchases of investments

6

 (87,584)

 (48,320)

Sales of investments

6

 42,806

 280,948

Accrued interest repayments and other income

6

 3,627

 4,855

Expenses paid


 (2,604)

 (18,427)

Bank interest received


 190

 17

Net cash provided by (used in) operating activities


 (43,565)

 219,073

Cash flows from financing activities




Purchase of ordinary shares

13

-

 (17,722)

Dividends paid


 (4,063)

 (4,392)

Net cash provided by (used in) financing activities


 (4,063)

 (22,114)

Net increase in cash and cash equivalents


 (47,628)

 196,959

Cash and cash equivalents at beginning of period


 223,090

 48,866

Net increase (decrease) in cash and cash equivalents


 (47,628)

 196,959

Effect of foreign exchange rate changes


 (3,945)

 15,670

Cash and cash equivalents at end of period


 171,517

 261,495

 

NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS

1. Reporting entity

Oakley Capital Investments Limited (the 'Company') is a closed-end investment company incorporated under the laws of Bermuda on 28 June 2007.

The Company invests in the following private equity funds structures (the 'Funds'):

Fund Group name

Country of establishment

Limited partnerships included

Fund I

Bermuda

Oakley Capital Private Equity L.P.1

Fund II

Bermuda

OCPE II Master L.P.
Oakley Capital Private Equity II-A L.P.1
Oakley Capital Private Equity II-B L.P.
Oakley Capital Private Equity II-C L.P.

Fund III

Bermuda

OCPE III Master L.P.
Oakley Capital Private Equity III-A L.P.1
Oakley Capital Private Equity III-B L.P.
Oakley Capital Private Equity III-C L.P.

Fund IV

Luxembourg

Oakley Capital IV Master SCSp
Oakley Capital Private Equity IV-A SCSp1
Oakley Capital Private Equity IV-B SCSp
Oakley Capital Private Equity IV-C SCSp

Origin Fund

Luxembourg

Oakley Capital Origin Master SCSp
Oakley Capital Private Equity Origin A SCSp1
Oakley Capital Private Equity Origin B SCSp
Oakley Capital Private Equity Origin C SCSp

OCPE Education2

Bermuda

OCPE Education L.P.
OCPE Education (Feeder) L.P.

 

1 Denotes the limited partnership in which the Company has made a direct investment.

2 The Company ceased to invest in OCPE Education on 24 April 2020.

The defined term "Company" shall, where the context requires for the purposes of consolidation, include the Company's sole and wholly owned subsidiary, OCI Financing (Bermuda) Limited ('OCI Financing'). OCI Financing provides financing to NSG Apparel BV, an entity that forms part of the North Sails Group in which Fund II invests.

The Company is listed on the Specialist Fund Segment ('SFS') of the London Stock Exchange ('LSE'), with the ticker symbol "OCI".

2. Basis of preparation

The consolidated interim financial statements of the Company have been prepared on a going concern basis and under the historical cost convention, except for financial instruments at fair value through profit and loss, which are measured at fair value. The consolidated interim financial statements of the Company are unaudited.

COVID-19 continues to cause disruption to economies around the world, however the roll-out of the vaccination programme and adjustment to new ways of working has meant that uncertainty is gradually decreasing. As a result, private equity activity has rebounded strongly during the first six months of 2021 and consequently valuations have increased, particularly in the sectors that have remained resilient, such as technology and business software.

The Board of Directors considers that it is appropriate to adopt the going concern basis of accounting in preparing these consolidated Financial Statements. In reaching this assessment, the Board of Directors has considered a wide range of information relating to the present and future conditions, including the continued impact of COVID-19 on some of the portfolio companies of the Funds, as well as the impact on investment and sale expectations for each of the Funds, cash flow projections and the longer-term strategy of the Company.

As part of the assessment, the Board of Directors:

· Assessed liquidity, solvency, and capital management. The Company considered liquidity risk as the risk that the Company will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to the Company. Unfunded commitments to the Funds are irrevocable and can exceed cash and cash equivalents available to the Company. Based on current cash flow projections and barring unforeseen events, the Company expects to be able to meet its obligations as they fall due.

As at 30 June 2021, cash and cash equivalents of the Company amounted to £171,517,000. The Company had total unfunded capital and unquoted debt security commitments of £439,112,000 relating to the Funds which are expected to be called over the next four to five years. Under the Company's by-laws, the Company is permitted to borrow up to 25% of total shareholders' equity which would amount to approximately £201,107,000 for the period ending 30 June 2021. As at 30 June 2021, the Company had not made arrangements to secure any debt facilities. The Directors consider the Company to have sufficient resources and liquidity and can continue to operate for a period of at
least 12 months.

· Considered the estimates inherent to the valuations of the Funds and the unquoted debt securities. The Company's approach to valuations was consistent with the prior period's approach. In addition, key assumptions and estimates relating to the valuation of the unquoted debt instruments were considered. This included assessment of counterparty risk, interest rates and future cashflow projections.

 

· Assessed the operational resilience of the Company's critical functions which includes monitoring the Company's key service providers.

The Board of Directors considers it appropriate to prepare the consolidated interim financial statements of the Company on the going concern basis, including having consideration of the residual impact of COVID-19 on its operations and that of the portfolio companies of the Funds.

The judgements, assumptions and estimates involved in the Company's accounting policies that are considered by the Board of Directors to be the most important to the Company's results and financial condition are the fair valuation of its investments and the assessment that the Company meets the definition of an investment entity.

2.1 Basis for compliance

The consolidated interim financial statements have been prepared in accordance with IAS 34 Interim Financial Reporting and should be read in conjunction with the latest Annual Report and Financial Statements as at and for the year ended 31 December 2020, which were prepared in accordance with International Financial Reporting Standards ('IFRS'). These consolidated interim financial statements do not include all the information required for a complete set of IFRS financial statements. However, the explanatory notes are included to explain events and transactions that are significant to an understanding of changes in the Company's financial position and performance since the last annual consolidated financial statements.

The consolidated interim financial statements were authorised for issue on 8 September 2021 by the Company's Board of Directors.

2.2 Functional and presentation currency

The consolidated interim financial statements are presented in Pound Sterling ('Pounds'), which is the Company's functional currency.

3. Significant accounting policies

The accounting policies used are consistent with those applied in the latest annual consolidated financial statements. There are no new standards that have been issued or are effective in the period that have an effect on the financial statements. There are some amendments to standards that became effective during the period, however none have an impact on the financial statements.

4. Critical accounting estimates, assumptions, and judgements

The reported results of the Company are sensitive to the accounting policies, assumptions and estimates that underlie the preparation of its consolidated interim financial statements. IFRS require the Board of Directors, in preparing the Company's consolidated interim financial statements, to select suitable accounting policies, apply them consistently and make judgements and estimates that are reasonable and prudent. The Company's estimates and assumptions are based on historical experience and the Board of Directors' expectation of future events and are reviewed periodically. The actual outcome may be materially different from that anticipated. Revisions to accounting estimates are recognised in the period in which the estimates are revised and in any future periods. 

In preparing the consolidated interim financial statements, significant judgements were made in applying the Company's accounting policies and the key sources of estimation uncertainty were consistent with those applied to the annual consolidated financial statements as at and for the year ended 31 December 2020.

(a) Fair valuation of investments

The fair values assigned to investments held at fair value through profit and loss are based upon available information at the time and do not necessarily represent amounts which might ultimately be realised. Because of the inherent uncertainty of valuation, these estimated fair values may differ significantly from the values that would have been used had a ready market for the investments existed, and those differences could be material.

Investments held at fair value through profit and loss are valued by the Company in accordance with relevant IFRS requirements. Judgement is required in order to determine the appropriate valuation methodology under these standards. Subsequently, judgement is required in assessing the net asset value of the Funds and determining the inputs into the valuation models used for the unquoted debt securities. Inputs include making assessments of future cash flows and determining appropriate discount rates.

(b) Assessment as an investment entity

Entities that meet the definition of an investment entity within IFRS 10 are required to account for investments in controlled entities, as well as investments in associates and joint ventures, at fair value through profit and loss.

The Board of Directors has concluded that the Company meets the definition of an investment entity as its strategic objective is to invest in the Funds on behalf of its investors for the purpose of generating returns in the form of investment income and capital appreciation.

5. Financial risk management

The Board of Directors, the Company's Risk Committee (the 'Risk Committee') and Oakley Capital Limited (the 'Investment Adviser') attribute great importance to professional risk management, proper understanding and negotiation of appropriate terms and conditions and active monitoring, including a thorough analysis of reports and financial statements and ongoing review of investments made. The Company has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy and has established processes to monitor and control the economic impact of these risks. The Investment Adviser provides the Board of Directors with recommendations as to the Company's asset allocation and annual investment levels that are consistent with the Company's objectives. The Risk Committee develops and agrees policies for managing the risks.

The Company has exposures to the following risks from financial instruments: credit risk, liquidity risk and market risk (including interest rate risk, currency risk, and price risk). The Company's overall risk management process focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance.

During the period under review, the Risk Committee has continued to identify, assess, monitor, and manage risks within the Company, including those that would impact its future performance, solvency, liquidity, or reputation. This review includes the monitoring of risk exposure compared with the risk appetite established by the Board.

Key risks and uncertainties of the Company are assessed on a scale, considering their impact and likelihood. The Committee monitors detailed and, wherever possible, quantifiable indicators of the Company's exposure to risk, segmented into five core categories. During 2021, regular consideration was given to the impact COVID-19 had in each of the five categories of risk.

6. Investments

Investments as at 30 June 2021:


31 December 2020 Fair Value
£'000

Purchases/
Capital Calls
£'000

Total
Sales1/
Distributions
£'000

Realised gains (losses)2
£'000

Interest
and other
£'000

Change in unrealised
gains (losses)3

£'000

30 June 2021
Fair Value
£'000

Oakley funds








Fund I

 16,149

-

-

 (446)


 13,681

 29,384

Fund II

 53,210

-

-

 834


 (4,200)

 49,844

Fund III

 217,866

-

 (21,998)

 25,392


 11,002

 232,262

Fund IV

 66,360

 76,077

-

 (2,319)


 19,381

 159,499

Origin

 1,133

 645

-

 (1,535)


 3,409

 3,652

Total Oakley funds

 354,718

 76,722

 (21,998)

 21,926

-

 43,273

 474,641

Quoted equity securities








Time Out Group Plc

 23,940


-

-

-

 16,185

 40,125

Total quoted equity securities

 23,940

-

-

-

 -

 16,185

 40,125

Unquoted debt securities








Ellisfield (Bermuda) Limited

 17,264


 (17,545)

-

 281

-

-

Fund I

 6,645

 6,862

 (6,890)

-

 247

-

 6,864

NSG Apparel

 38,709

 4,000


-

 1,630

 -

 44,339

Oakley NS (Bermuda) LP

 63,848



-

 2,715

-

 66,563

Total unquoted debt
securities

 126,466

 10,862

 (24,435)

-

 4,873

-

 117,766

Total investments

 505,124

 87,584

 (46,433)

 21,926

 4,873

 59,458

 632,532

 

1 Total sales include redemptions, loan repayments (including accrued interest and arrangement fees) and transfers.

2 Realised gains/(losses) include realised gains/(losses) on underlying fund portfolio investments sold in the period, and income and expenses of the underlying fund during the period.

3 Unrealised gains/(losses) include FX on the conversion of period end fund holdings from the Fund's reporting currency (Euros) to Pounds, plus unrealised gains/(losses) on the Fund's portfolio investments and any change in OCI's share of fund holdings. Changes in Provisional Profit Allocation ('carry') are apportioned across the realised and unrealised gains.

 

Investments as at 31 December 2020:


31 December 2019 Fair Value
£'000

Purchases/
Capital Calls
£'000

Total
sales1/
Distributions £'000

Realised gains (losses)2
 '000

Interest
and other
£'000

Change in Unrealised gains (losses)3
£'000

31 December 2020
Fair Value
£'000

Oakley funds








Fund I

33,358

10,906

-

-

-

(28,115)

16,149

Fund II

57,182

8,689

(16,993)

10,455

-

(6,123)

53,210

Fund III

310,068

-

(186,493)

123,345

-

(29,054)

217,866

Fund IV

19,708

32,018

-

-

-

14,634

66,360

Origin Fund

-

2,856

-

-

-

(1,723)

1,133

Total Oakley funds

420,316

54,469

(203,486)

133,800

-

(50,381)

354,718

Direct investment funds








OCPE Education (Feeder) LP

74,984

-

(94,210)

74,736

-

(55,510)

-

Total direct investment funds

74,984

-

(94,210)

74,736

-

(55,510)

-

Total funds

495,300

54,469

(297,696)

208,536

-

(105,891)

354,718

Quoted equity securities








Time Out Group Plc

38,510

12,625

-

-

-

(27,195)

23,940

Total quoted equity securities

38,510

12,625

-

-

-

(27,195)

23,940

Unquoted debt securities








Ellisfield (Bermuda) Limited

15,796

-

-

-

1,468

-

17,264

Fund I

9,435

1,000

(4,432)

-

642

-

6,645

Fund II

4,398

3,333

(7,985)

-

254

-

-

NSG Apparel BV

29,992

6,990

-

-

1,727

-

38,709

Oakley Capital III Limited

731

-

(732)

-

1

-

-

Oakley NS (Bermuda) LP

43,490

15,066

-

-

5,292

-

63,848

Time Out Group Plc

23,314

2,500

(27,071)

-

1,257

-

-

Total unquoted debt securities

127,156

28,889

(40,220)

-

10,641

-

126,466

Total investments

660,966

95,983

(337,916)

208,536

10,641

(133,086)

505,124

 

1 Total sales include redemptions, loan repayments (including accrued interest and arrangement fees) and transfers.

2 Realised gains/(losses) include realised gains/(losses) on underlying fund portfolio investments sold in the period, and income and expenses of the underlying fund during the period.

3 Unrealised gains/(losses) include FX on the conversion of period end fund holdings from the Fund's reporting currency (Euros) to Pounds, plus unrealised gains/(losses) on the Fund's portfolio investments and any change in OCI's share of fund holdings. Changes in Provisional Profit Allocation ('carry') are apportioned across the realised and unrealised gains.

Investments as at 30 June 2020:


31 December 2019
Fair value
 '000

Purchases/Capital Calls
£'000

Total
sales1/
Distributions
£'000

Realised gains (losses)2
£'000

Interest
and other
£'000

Change in Unrealised gains (losses)3
£'000

30 June 2020
Fair Value
£'000

Oakley Funds








Fund I

33,358

10,906

-

-

-

(25,485)

18,779

Fund II

57,182

-

(16,993)

10,455

-

(5,983)

44,661

Fund III

310,068

-

(143,666)

107,690

-

(74,883)

199,209

Fund IV

19,708

-

-

-

-

(2,751)

16,957

Total Oakley Funds

420,316

10,906

(160,659)

118,145

-

(109,102)

279,606

Co-investment Funds








OCPE Education (Feeder) LP

74,984

-

(92,589)

73,115

-

(55,510)

-

Total co-investment Funds

74,984

-

(92,589)

73,115

-

(55,510)

-

Total Funds

495,300

10,906

(253,248)

191,260

-

(164,612)

 279,606

Quoted equity securities








Time Out Group Plc

38,510

12,625

-

-

-

(24,497)

26,638

Total quoted equity securities

38,510

12,625

-

-

-

(24,497)

26,638

Unquoted debt securities








Ellisfield (Bermuda) Limited

15,796

-

-

-

562

-

16,358

Fund I

9,435

1,000

(2,124)

-

326

-

8,637

Fund II

4,398

1,983

(2,628)

-

174

-

3,927

Fund III

-

-

-

-

-

-

-

NSG Apparel BV

29,992

4,240

-

-

645

-

34,877

Oakley Capital III Limited

731

-

(732)

-

1

-

-

Oakley NS (Bermuda) LP

43,490

15,066

-

-

2,540

-

61,096

Time Out Group Plc

23,314

2,500

(27,071)

-

1,257

-

-

Total unquoted debt securities

127,156

24,789

(32,555)

-

5,505

-

124,895

Total investments

660,966

48,320

(285,803)

191,260

5,505

(189,109)

431,139

 

1 Total sales include redemptions, loan repayments (including accrued interest and arrangement fees) and transfers.

2 Realised gains/(losses) include realised gains/(losses) on underlying fund portfolio investments sold in the period, and income and expenses of the underlying fund during the period.

3 Unrealised gains/(losses) include FX on the conversion of period end fund holdings from the Fund's reporting currency (Euros) to Pounds, plus unrealised gains/(losses) on the Fund's portfolio investments and any change in OCI's share of fund holdings. Changes in Provisional Profit Allocation ('carry') are apportioned across the realised and unrealised gains.

Quoted equity securities and unquoted debt securities are additional direct investments in certain of the portfolio companies of the Funds.

7. Disclosure about fair value of financial instruments

The Company has adopted IFRS 13 in respect of disclosures about the degree of reliability of fair value measurements. These fair value measurements are categorised into different levels in the fair value hierarchy based on the inputs to valuation techniques used. The Company classifies financial instruments measured at fair value in the investment portfolio according to the following hierarchy:

Level I: Quoted prices (unadjusted) in active markets for identical instruments that the Company can access at the measurement date. Level I investments include quoted equity instruments.

Level II: Inputs other than quoted prices included within Level I that are observable for the instrument, either directly (i.e. as prices) or indirectly (i.e. derived from prices).

Level III: Inputs that are not based on observable market data. Level III investments include private equity funds and unquoted debt securities.

The level in the fair value hierarchy within which the fair value measurement is categorised is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgement, considering factors specific to the instrument. The determination of what constitutes 'observable' requires significant judgement by the Company.

The Company considers observable data to be market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market.

The following table analyses the Company's investments measured at fair value as of 30 June 2021 by the level in the fair value hierarchy into which the fair value measurement is categorised:


Level I
£'000

Level III
£'000

Total
£'000

Funds

-

 474,641

 474,641

Quoted equity securities

 40,125

-

 40,125

Unquoted debt securities

-

 117,766

 117,766

Total investments measured at fair value

 40,125

 592,407

 632,532

 

The following table analyses the Company's investments measured at fair value as of 31 December 2020 by the level in the fair value hierarchy into which the fair value measurement is categorised:


Level I
£'000

Level III
£'000

Total
£'000

Funds

-

354,718

354,718

Quoted equity securities

23,940

-

23,940

Unquoted debt securities

-

126,466

126,466

Total investments measured at fair value

23,490

481,184

505,124

 

The following table analyses the Company's investments measured at fair value as of 30 June 2020 by the level in the fair value hierarchy into which the fair value measurement is categorised:


Level I
£'000

Level III
£'000

Total
£'000

Funds

-

279,606

279,606

Quoted equity securities

26,638

-

26,638

Unquoted debt securities

-

124,895

124,895

Total investments measured at fair value

26,638

404,501

431,139

 

Level I

Quoted equity investment values are based on quoted market prices in active markets and are therefore classified within Level I investments. The Company does not adjust the quoted price for these investments.

Level II

The Company did not hold any Level II investments as of 30 June 2021, 31 December 2020, or 30 June 2020.

Level III

The Company has determined that Funds and unquoted debt securities fall into Level III. Funds and unquoted debt securities are measured in accordance with The International Private Equity and Venture Capital Valuation ('IPEV') Guidelines with reference to the most appropriate information available at the time of measurement. The consolidated interim financial statements as of 30 June 2021 include Level III investments in the amount of £592,407,000; representing approximately 73.64% of shareholders' equity (31 December 2020: £481,184,000; 66.10% and 30 June 2020: £404,501,000; 58.46%).

Funds

The Company primarily invests in portfolio companies via the Funds as a Limited Partner. The Funds are unquoted equity securities. The Company's investments in unquoted equity securities are recognised in the consolidated balance sheet at fair value, in accordance with IPEV Valuation Guidelines and IFRS 13 and are considered Level III investments.

The valuation of unquoted fund investments is based on the latest available net asset value ('NAV') of the Fund as reported by the corresponding general partner or administrator, provided that the NAV has been appropriately determined using fair value principles in accordance with IFRS 13.

The NAV of a Fund is calculated after determining the fair value of that Fund's investment in any portfolio company. The fair value is determined by the Investment Adviser by calculating the Enterprise Value ('EV') of the portfolio company and then adding excess cash and deducting financial instruments, such as external debt, ranking ahead of the Fund's highest-ranking instrument in the portfolio company.

A common method of determining the EV is to apply a market-based multiple (e.g. an average multiple based on a selection of comparable quoted companies) to the "maintainable" earnings or revenues of the portfolio company. This market-based approach presumes that the comparative companies are correctly valued by the market. A discount is sometimes applied to market-based multiples to adjust for points of difference between the comparatives and the company being valued.

As at 30 June 2021, the value of the Funds' investments, other assets and liabilities attributable to the Company based on its respective percentage interest in each Fund was as follows:


Fund I
€'000

Fund II
€'000

Fund III
€'000

Fund IV
€'000

Origin
€'000

Investments

38,299

53,385

366,559

290,650

23,022

Debt financing

(5,625)

(1,087)

(57,419)

(104,664)

(19,079)

Estimated performance fee payable

-

-

(46,891)

(8,454)

(94)

Other net assets

1,558

5,771

8,336

8,297

406

Total value of the Fund attributable to the Company (€'000)

34,233

58,069

270,586

185,829

4,255

Total value of the Fund attributable to the Company (£'000)

29,384

49,844

232,262

159,499

3,652

 

As at 31 December 2020, the value of the Funds' investments, other assets and liabilities attributable to the Company based on its respective percentage interest in each Fund was as follows:


Fund I
€'000

Fund II
€'000

Fund III
€'000

Fund IV
€'000

Origin
€'000

Investments

21,600

58,723

334,940

168,957

11,530

Debt financing

(5,199)

(3,684)

(53,907)

(98,373)

(11,756)

Estimated performance fee payable

-

-

(41,135)

(2,041)

-

Other net assets

1,645

4,420

3,555

5,610

1,493

Total value of the Fund attributable to the Company (€'000)

18,046

59,459

243,453

74,153

1,267

Total value of the Fund attributable to the Company (£'000)

16,149

53,210

217,866

66,360

1,133

 

As at 30 June 2020, the value of the Funds' investments, other assets and liabilities attributable to the Company based on its respective percentage interest in each Fund was as follows:


Fund I
€'000

Fund II
€'000

Fund III
€'000

Fund IV
€'000

Investments

23,761

50,043

292,849

110,075

Debt financing

(6,282)

(5,134)

(48,072)

(98,767)

Estimated performance fee payable

-

-

(29,093)

-

Other net assets

3,195

4,262

3,637

7,361

Total value of the Fund attributable to the Company (€'000)

20,674

49,171

219,321

18,669

Total value of the Fund attributable to the Company (£'000)

18,779

44,661

199,209

16,957

 

The Company records its investments in the Funds at the NAV reported by the Funds which it considers to be fair value. The NAV as reported by the Funds' general partner or administrator is considered to be the key unobservable input. The Company has the following control procedures in place to evaluate whether the NAV of the underlying Fund investments represents a reliable estimate of fair value and is calculated in a manner consistent with IFRS 13:

Thorough initial due diligence processes and the Board of Directors performing ongoing monitoring procedures, primarily discussions with the Investment Adviser.

Comparison of historical realisations to last reported fair values.

Review of the quarterly financial statements and the annual audited NAV of the respective Fund.

Unquoted debt securities

The fair values of the Company's investments in unquoted debt securities are derived from a discounted cash flow calculation based on expected future cash flows to be received, discounted at an appropriate rate. Expected future cash flows include interest received and principal repayment at maturity.

Unobservable inputs for Level III investments

Funds

In arriving at the fair value of the unquoted Fund investments, the key input used by the Company is the NAV as provided by the general partner or administrator of the relevant Fund. The Company recognises that the NAVs of the Funds are highly sensitive to movements in the fair values of the underlying portfolio companies.

The underlying portfolio companies owned by the Funds may include both quoted and unquoted companies. Quoted portfolio companies are valued based on market prices, and no unobservable inputs are used. Unquoted portfolio companies are valued by the Investment Adviser based on a market approach for which significant judgement is applied. Consideration has also been given by the Investment Adviser to the impact of COVID-19 for the valuations at 30 June 2020, 31 December 2020 and 30 June 2021.

For the purposes of sensitivity analysis, the Company considers a 10% adjustment to the fair value of the unquoted portfolio companies of the Funds as reasonable. For the period ending 30 June 2021 a 10% increase to the fair value of the unquoted portfolio companies held by the Funds would result in a 6.8% movement in net assets attributable to shareholders (31 December 2020: 6.1% and 30 June 2020: 5.5%). A 10% decrease to the fair value of the unquoted portfolio companies held by the Funds would have an equal and opposite effect.

Unquoted debt securities

In arriving at the fair value of the unquoted debt securities, the key inputs used by the Company are future cash flows expected to be received until maturity of the debt securities and the discount factor applied. The discount factor applied is an unobservable input and ranges between 6.5% and 10% considering contractual interest rates charged on debt, risk free rate and assessment of credit risk.

For the purposes of sensitivity analysis, the Company considers a 1% adjustment to the discount factor applied as reasonable. For the period ending 30 June 2021 a 1% increase to the discount factor would result in a 0.1% movement in net assets attributable to shareholders (31 December 2020: 0.2% and 30 June 2020: 0.5%). A 1% decrease to the discount factor would have an equal and opposite effect.

Transfers between Levels

There were no transfers between the Levels during the periods ended 30 June 2021, 31 December 2020, or 30 June 2020.

Level I and Level III reconciliation

The changes in investments measured at fair value, for which the Company has used Level I and Level III inputs to determine fair value as of 30 June 2021, 31 December 2020, and 30 June 2020, are as follows:

Level I Investments:

As at
30 June 2021
£'000

As at
31 Dec 2020
£'000

As at
30 June 2020
£'000

Quoted equity securities




Fair value at beginning of period

23,940

38,510

38,510

Purchases

-

12,625

12,625

Net change in unrealised gains (losses) on investments

16,185

 (27,195)

(24,497)

Fair value of Level I investments at end of period

40,125

23,940

26,638

 

Level III Investments:

Funds
£'000

Unquoted
debt securities
£'000

Total
£'000

For the six months ended 30 June 2021




Fair value at beginning of period

 354,718

126,466

 481,184

Purchases

 76,722

 10,862

87,584

Proceeds on disposal (including interest)

 (21,998)

 (24,435)

 (46,433)

Realised gain on sale

 21,926

-

 21,926

Interest income and other fee income

-

 4,873

 4,873

Net change in unrealised gains (losses) on investments

 43,273

-

 43,273

Fair value at end of period

 474,641

117,766

592,407

 

Level III Investments:

Funds
£'000

Unquoted
debt securities
£'000

Total
£'000

For the year ended 31 December 2020




Fair value at beginning of year

495,300

127,156

622,456

Purchases

54,469

28,889

83,358

Proceeds on disposals (including interest)

(297,696)

(40,220)

(337,916)

Realised gain on sale

208,536

-

208,536

Interest income and other fee income

-

10,641

10,641

Net change in unrealised gains (losses) on investments

(105,891)

-

(105,891)

Fair value at end of year

354,718

126,466

481,184

 

Level III Investments:

Funds
£'000

Unquoted
debt securities £'000

Total
£'000

For the six months ended 30 June 2020




Fair value at beginning of period

495,300

127,156

622,456

Purchases

10,906

24,789

35,695

Proceeds on disposals (including interest)

(253,248)

(32,555)

(285,803)

Realised gain on sale

191,260

-

191,260

Interest income and other fee income

-

5,505

5,505

Net change in unrealised gains (losses) on investments

(164,612)

-

(164,612)

Fair value at end of period

279,606

124,895

404,501

 

Financial instruments not carried at fair value

Financial instruments, other than financial instruments at fair value through profit and loss, where carrying values are equal to fair values:


As at 30 June 2021
£'000

As at 31 Dec 2020
£'000

As at 30 June 2020
£'000

Cash and cash equivalents

171,517

223,090

261,495

Trade and other receivables

833

33

150

Trade and other payables

(453)

(297)

(892)

 

8. Segment information

The Company has two reportable segments, as described below. For each of them, the Board of Directors receives detailed reports on at least a quarterly basis. The following summary describes the operations in each of the Company's reportable segments:

· Fund investments

· Direct investments

Balance sheet and income and expense items which cannot be clearly allocated to one of the segments are shown in the column "Unallocated" in the following tables.

The reportable operating segments derive their revenue primarily by seeking investments to achieve an attractive return in relation to the risk being taken. The return consists of interest, dividends and/or unrealised and realised capital gains.

The financial information provided to the Board of Directors with respect to total assets and liabilities is presented in a manner consistent with the consolidated financial statements. The assessment of the performance of the operating segments is based on measurements consistent with IFRS. With the exception of capital calls payable, liabilities are not considered to be segment liabilities but rather managed at the corporate level.

There have been no transactions between the reportable segments during the period ended 30 June 2021 and 2020.

The segment information for the six-month period ended 30 June 2021 is as follows:


Fund
investments
£'000

Direct investments and loans
£'000

Total operating segments
£'000

Unallocated
£'000

Total
£'000

Net realised gains on financial assets at fair value through
profit and loss

 21,926

-

 21,926

-

 21,926

Net unrealised gains (losses) on financial assets at fair value through profit and loss

 43,273

 16,185

 59,458

-

 59,458

Interest Income

-

 4,759

 4,759

 190

 4,949

Net foreign currency gains (losses)

-

-

-

 (3,945)

 (3,945)

Other Income

-

 114

 114

-

 114

Expenses

-

-

-

 (1,960)

 (1,960)

Profit (loss) for the period

 65,199

 21,058

 86,257

 (5,715)

 80,542

Total assets

 474,641

 157,891

 632,532

 172,350

 804,882

Total liabilities

-

-

-

 (453)

 (453)

Net assets

 474,641

 157,891

 632,532

 171,897

 804,429

Total assets include:






Financial assets at fair value through profit and loss

 474,641

 157,891

 632,532

-

 632,532

Cash and others

-

-

-

 172,350

 172,350

 

The segment information for the year ended 31 December 2020 is as follows:


Fund
 investments
£'000

Direct investments and loans
£'000

Total operating segments
£'000

Corporate
£'000

Total
£'000

Net realised gains on financial assets at fair value through
profit and loss

208,536

 -

 208,536

 -

 208,536

Net change in unrealised gains (losses) on financial assets
at fair value through profit and loss

 (105,891)

 (27,195)

 (133,086)

 -

 (133,086)

Interest income

 -

 10,251

 10,251

 215

 10,466

Net foreign currency gains (losses)

 -

 -

 -

 13,700

 13,700

Other income

 -

 390

 390

 -

 390

Expenses

 (4,044)

 (220)

 (4,266)

 (3,354)

 (7,620)

Profit (loss) for the year

 98,601

 (16,774)

 81,825

 10,561

 92,386

Total assets

 354,718

 150,406

 505,124

 223,123

 728,247

Total liabilities

 -

 -

 -

 (297)

 (297)

Net assets

 354,718

 150,406

 505,124

 222,826

 727,950

Total assets include:






Financial assets at fair value through profit and loss

 354,718

 150,406

 505,124

 -

 505,124

Cash and others

 -

 -

 -

 223,123

 223,123

 

The segment information for the six-month period ended 30 June 2020 is as follows:


Fund
investments
£'000

Direct investments and loans
 '000

Total operating segments
£'000

Unallocated
£'000

Total
£'000

Net realised gains on financial assets at fair value through profit and loss

 191,260

-

 191,260

-

 191,260

Net unrealised gains (losses) on financial assets at fair value through profit and loss

 (164,612)

 (24,497)

 (189,109)

-

 (189,109)

Interest income

-

 5,358

 5,358

 17

 5,375

Net foreign currency gains (losses)

-

-

-

 15,670

 15,670

Other income

-

 147

 147

-

 147

Expenses

-

-

-

 (5,475)

 (5,475)

Profit (loss) for the period

 26,648

 (18,992)

 7,656

 10,212

 17,868

Total assets

 279,606

 151,533

 431,139

 261,645

 692,784

Total liabilities

-

-

-

 (892)

 (892)

Net assets

 279,606

 151,533

 431,139

 260,753

 691,892

Total assets include:






Financial assets at fair value through profit and loss

 279,606

 151,533

 431,139

-

 431,139

Cash and others

-

-

-

 261,645

 261,645

 

9. Investment-related fees

Included in Investment related fees are operational and performance fees paid to Oakley Capital Manager Limited (the 'Administrative Agent'). The Administrative Agent has been appointed by the Company to provide operational assistance and services to the Board with respect to the Company's direct investments and generally to administer the assets of the Company, as provided for in the Operational Services Agreement.

a) Operational fees

Prior to 30 June 2020, the Administrative Agent was paid an operational services fee of 2% per annum of the net asset value of certain of the Company's direct investments. During 2019, the operational services fee was calculated by reference to all of the Company's direct investments. With effect from 1 January 2020, operational services fees relating to direct debt investments were eliminated, so that the operational services fee became payable only by reference to the net asset value of the Company's direct equity investments. With effect from 1 July 2020, no further operational services fees are payable by reference to the Company's current direct equity investments.

The operational services fee for the period ended 30 June 2021 were nil (30 June 2020: £621,000). There are no amounts outstanding as at 30 June 2021 (31 December 2020: none; 30 June 2020: none).

b) Performance fees

The Administrative Agent is paid a performance fee of 20% of profits (after expenses) from the full or partial realisation on disposal of any direct equity investments subject to an 8% preferred return. With effect from 1 July 2020, no performance fees have been payable by reference to the Company's current direct equity investments.

There were no performance fees for the period ended 30 June 2021 (30 June 2020: £3,320,000). There are no amounts outstanding as at 30 June 2021 (31 December 2020: none; 30 June 2020: none).

 

10. Expenses


6 months ended
30 June 2021
£'000

6 months ended
30 June 2020
£'000

Performance fees

-

3,320

Operational and advisory fees

-

621

Professional fees

376

664

Other expenses

1,583

870


1,960

5,475

 

11. Earnings per share

The earnings per share calculation uses the weighted average number of shares in issue during the period.


6 months ended
30 June 2021

6 months ended
30 June 2020

Basic and diluted earnings per share

£0.45

£0.09

Profit for the period ('000)

£80,542

£17,868

Weighted average number of shares outstanding ('000)

180,600

196,797

 

12. Net asset value per share

The net asset value per share calculation uses the number of shares in issue at the end of the period.


As at
30 June 2021

As at
31 Dec 2020

As at
30 June 2020

Basic and diluted net asset value per share

£4.45

£4.03

£3.56

Net assets attributable to shareholders ('000)

£804,429

£727,950

£691,892

Number of shares in issue at period end ('000)

180,600

180,600

194,260

 

13. Share capital

The authorised share capital of the Company is 280,000,000 ordinary shares of a par value of £0.01 each. Ordinary shares are listed and traded on the SFS of the LSE. Each ordinary share confers the right to one vote and shareholders have the right to receive dividends.

During the six-month period ending 30 June 2021, the Company did not undertake any share purchases.

During the six-month period ending 31 December 2020, the Company purchased the following ordinary shares:


Number of
ordinary shares

Purchase price (£'000)

3 December 2020

6,947,000

18,068

2 October 2020

3,053,000

7,786

29 July 2020

3,660,000

8,318

 

During the six-month period ending 30 June 2020, the Company purchased the following ordinary shares:


Number of
ordinary shares

Purchase price (£'000)

18 June 2020

1,340,000

2,775

18 March 2020

3,000,000

4,818

 

The ordinary shares purchased by the Company were cancelled and are available for re-issue.

As at 30 June 2021, the Company's issued and fully paid share capital was 180,599,936 ordinary shares (31 December 2020: 180,599,936 and 30 June 2020: 194,259,936).


As at
30 June 2021
'000

As at
31 Dec 2020
'000

As at
30 June 2020
'000

Ordinary shares outstanding at the beginning of the period

180,600

198,600

198,600

Ordinary shares purchased

-

(18,000)

(4,340)

Ordinary shares outstanding at the end of the period

180,600

180,600

194,260

 

As set out in "Events after balance sheet date", following the period end on the 29 July 2021 a share buyback was undertaken by the Company. 2,000,000 Shares were repurchased at a gross price of £3.54 per share for a net consideration of £7,151,000.

14. Commitments

The Company had the following capital commitments in Euros as at period end: 


Original Commitment
'000

Outstanding as at
30 June 2021
'000

Outstanding as at
31 Dec 2020
'000

Outstanding as at
30 June 2020
'000

Fund I

202,398

2,834

2,834

2,834

Fund II

190,000

13,300

13,300

13,300

Fund III

325,780

120,539

120,539

 120,539

Fund IV

400,000

248,000

334,000

 370,000

Origin

129,300

125,420

101,850

-

Total outstanding commitments (€'000)

1,247,478

510,093

572,523

506,673

Total outstanding commitments (£'000)

1,070,797

437,848

512,351

460,235

 

The Company had the following unquoted debt security commitments at period end:


Original Commitment
£'000

Outstanding as at 30 June 2021
£'000

Outstanding as at 31 Dec 2020
£'000

Outstanding as at 30 June 2020
£'000

Fund I

8,000

1,136

5,000

5,000

Fund II

-

-

-

16,217

Oakley NS (Bermuda) LP1

54,710

128

128

130

Total Outstanding Commitments (£'000)

62,710

1,264

5,128

21,347

 

1 As at 30 June 2021, the original commitment to Oakley NS (Bermuda) LP was £33,850,000.

15. Related parties

Related party transactions not disclosed elsewhere in the Consolidated Financial Statements are as follows:

Peter Dubens, a Director of the Company, and his alternate, David Till, are also Directors of the Investment Adviser, an entity which provides services to, and receives compensation from, the Company and is also the sole shareholder of Oakley Capital Manager Limited (the 'Administrative Agent') which is considered a related party to the Company given the direct control this Director has over this entity. Non-investment related fees due to these service providers for the period ended 30 June 2021 were £816,000 (30 June 2020: £397,000). At 30 June 2021 the Company was owed £401,000 by the service providers (31 December 2020: owed £96,000 to the service providers; 30 June 2020: owed £573,000 to the service providers); the balance comprises fees paid in advance for services not yet rendered of £625,000 (31 December 2020: none; 30 June 2020: none) and liabilities of £224,000 (31 December: £96,000; 30 June 2020: £573,000). Investment-related fees are disclosed in Note 9.

The agreements between the Company and these service providers are based on normal commercial terms.

16. Events after balance sheet date

On the 20th July 2021 there were two non-adjusting events which took place. The first was the disposal of ACE Education, an investment within Fund III, with OCI's indirect share of proceeds being £15,899,000. The second was the subsequent acquisition by the Origin Fund of ACE Education as a follow-on investment of which OCI's indirect investment amounted to £9,637,000.

On the 29th July 2021 a share buyback was undertaken by the Company. 2,000,000 shares were repurchased at a gross price of £3.54 per share for a net consideration of £7,151,000.


 

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