TIDMCDI
24th February 2017
Candover* Investments plc
Preliminary unaudited results for the year ended 31st December 2016
* NAV per share of 163p at 31st December 2016 representing a 10% increase
(15p) over the second half, but a 33% decrease (80p) compared to the prior
year (31st December 2015: 243p)
* Aggregate losses on disposals and portfolio valuation declines were GBP13.7
million (63p)
* Sterling weakness relative to the Euro benefitted NAV by 26p per share
* Proceeds from realisations during the year were GBP30.1 million, with a
further GBP16.7 million of realisations announced post year end
* Net debt decreased to GBP13.7 million at year end (2015: GBP33.2 million)
reflecting realisation proceeds, offset by accrued financing costs together
with an adverse foreign currency movement of GBP2.5 million
Malcolm Fallen, Chief Executive Officer, said:
"Following the portfolio realisations in 2016 and in the first months of this
year, we have entered a new phase. For the first time since 2007, the Company
is no longer indebted. The timing of the disposal of the Parques investment,
the pay down of our current debt facilities and the potential distribution of
value to shareholders are the key matters under consideration. In addition, we
are exploring whether Candover's accumulated tax losses represent a future
realisable asset. Over the coming months, we will ensure this next phase of the
run-off is completed in a timely and efficient way."
Ends.
*Candover means Candover Investments plc and/or one or more of its
subsidiaries.
For further information, please contact:
Candover Investments plc
Malcolm Fallen, CEO +44 20 7489 9848
Chairman's statement
The first half of 2016 was a period of greater realisation activity, albeit in
volatile markets, that generated significant cash inflows for the Company
totalling approximately GBP30 million. Following this, the Board concluded in
June that an early partial repayment of the Company's debt was in shareholders'
interest given the structure and cost of the debt facility.
Over the year, the valuation of our retained investment portfolio reduced by
4.7% which, together with the loss on asset disposals and financing costs, led
to a 33% reduction in NAV per share to 163p. The loss on asset disposals
reflected the impact of the partial realisation by Arle, our third party
investment manager, of Parques Reunidos ("Parques") and Technogym S.p.A.
("Technogym"), by way of Initial Public Offerings ("IPO") in late April, which
both occurred below their 31st December 2015 valuations.
Candover's remaining indirect interests in both Parques and Technogym were
subject to lock up periods which expired in late October and early November
2016 respectively. Both companies had differing fortunes following their IPOs;
through to the year end the share price of Parques declined by 1.5% from the
IPO price, whilst the share price of Technogym increased by 36.4%. Following
the end of the year, Arle then completed both the realisation of the remaining
shares in Technogym and a further block of Parques shares was sold, leaving
Candover's indirect interest at approximately 2.5%.
The profile of Candover following these post year end realisations is quite
different to that at the start of 2016. The portfolio is no longer a private
equity portfolio with over 90% of the portfolio value, after adjusting for the
post year end disposals, being listed shares in Parques. In addition, the
realisation proceeds received post year end means that Candover now has net
cash, rather than net debt, for the first time since 2007.
Furthermore, the impending termination of the Candover Funds, and ensuing
voluntary liquidation of Arle at the end of the first quarter of 2017, will
result in Candover being able to self-manage the final run-off of its
portfolio. In particular, it is anticipated that when the Candover 2005 Fund
terminates, our indirect interest in Parques will be exchanged for a direct
interest in its listed shares.
The Board has, over the course of the second half of 2016, been giving thought
to the options that the Company faces after the end of the first quarter. In
particular, the timing of the disposal of the Parques investment, the pay down
of our current debt facilities and the potential distribution of value to
shareholders are key matters under consideration along with the cost of
managing through this phase of the run-off process. In addition, Candover has
accumulated substantial income tax losses and we are exploring whether this, in
any way, constitutes a future realisable asset.
The Board is not recommending a dividend payment.
The Board continues to be committed to the highest standards of corporate
governance. However, given the significant change in our overall position, we
have concluded that a Board of two members, rather than four, is sufficient to
complete this phase of the run-off. Whilst it is our intention to adhere to as
much of the governance requirements as is practical, we will simplify our
approach wherever possible to reduce costs.
It is, therefore, the current intention that both Jan Oosterveld and I will not
be seeking re-election at this year's AGM.
Richard Stone
Chairman
24th February 2017
CEO's report
When Candover announced in late 2010 that it would no longer make new
investments but instead go in to run off, we set our strategy to achieve a
return of cash to shareholders over time. To support the delivery of this
strategy, our focus has been twofold: first, to ensure that the Company
remained financially stable; and second, to actively review and monitor the
performance of Arle, our investment manager, as it set out to maximise and
realise the value of the portfolio.
Net asset value
The Company's net assets per share of 163p at 31st December 2016 decreased 33%
over the prior year (243p) reflecting the impact of the partial realisation of
Parques and Technogym occurring below their valuations at the start of the year
together with the impact of debt financing costs.
During the first half of the year, NAV declined 95p per share split between
losses on financial instruments in the portfolio (86p), overall favourable
currency movements (16p), the impact of financing costs (20p) and operating
costs (5p). During the second half, NAV increased by 15p per share with gains
on financial instruments in the portfolio (23p) together with favourable
foreign currency movements (10p) offset by financing costs (13p) and operating
costs (5p).
The retained portfolio's aggregate value decreased by GBP10.4 million, on a
constant currency basis, which reflects principally a write down in the value
of Parques of GBP12.3 million offset by a GBP2.0 million increase in the valuation
of Technogym. The impact of foreign currency movements had a positive impact of
GBP8.1 million on the portfolio valuation, reflecting the weakness of Sterling
relative to the Euro.
During 2016, Candover's recurring administrative expenses reduced by 40%,
helping to minimise the adverse impact of costs on NAV performance. Finance
costs increased following the refinancing of the US PP Notes in August 2015.
The rise reflects the higher interest charge associated with the new loan
facility. The movements are set out in Table 1 of the Financial review.
Net debt and funding facilities
Net debt during the year decreased by GBP19.5 million to GBP13.7 million at 31st
December 2016 (31st December 2015: GBP33.2 million). This comprised gross cash
balances of GBP21.3 million and gross debt of GBP35.0 million, including accrued
interest charges. The decrease in net debt reflected the receipt of aggregate
realisation proceeds of GBP30.1 million from the Parques and Technogym IPOs
together with proceeds from completion of the sale of the balance of Stork BV.
This was offset by accrued interest charges, operating expenses and adverse
foreign currency movements.
In May 2016, the Company announced that the Board had concluded that, given
both the length of the lock up period and the structure of Candover's debt
arrangements, the best use of cash balances was to make an initial repayment of
debt rather than make a distribution to shareholders as permitted by the debt
facility. This decision reflected the fact that under the terms of the debt
facility a prepayment of up to EUR19.4 million is allowed, subject to the lender
receiving a minimum return of 1.15x on the principal repaid. If this payment
had been delayed until after 12th August 2016, the minimum return would have
increased to 1.4x principal, diluting net assets by GBP3.85 million. The
repayment was completed in late June.
Following the year end, further realisations generated proceeds of
approximately GBP16.7million, resulting in Candover, on a pro-forma basis,
holding a net cash balance of approximately GBP2.3 million.
Realisation activity
In late April 2016, Candover announced the partial realisation by Arle of its
investments in Parques and Technogym, following the IPOs of Parques in Spain
and Technogym in Italy. In the IPO of Parques, Candover sold 7.7% of its
interest in Parques for net cash proceeds of EUR3.5 million with the remaining
interest in Parques valued at EUR42.1 million at the IPO price. Dealings in the
shares of Parques commenced on 29th April 2016, following which the share price
declined by 1.5% up to 31st December 2016. The retained interest in Parques
represented approximately 3.3% of its share capital.
In the IPO of Technogym, Candover sold 71.9% of its interest in Technogym for
net cash proceeds of EUR17.3 million, after the exercise of the greenshoe
option. Candover's remaining interest in Technogym was valued at EUR7.3 million
at the IPO price. Dealings in the shares of Technogym commenced on 3rd May
2016, following which the share price increased by 36.4% up to 31st December
2016. The retained interest in Technogym represented approximately 0.89% of its
share capital.
Following the respective IPOs, both shareholdings were subject to lock ups of
180 days from the date when shares commenced trading. These lock ups expired
before the year end.
Subsequent to the year end, Candover announced on 5th January 2017 a further
partial realisation of its investment in Parques disposing of 26% of its
interest in Parques for cash proceeds of approximately EUR9.9 million (GBP8.4
million). The remaining interest in Parques is valued at EUR30.4 million (GBP25.9
million) at the closing price of Parques on 4th January 2017 and is subject to
a new 90 day lock up. Candover's interest in Parques was valued at GBP35.3
million at 31st December 2016. Candover retains an interest in Parques of
approximately 2.5%.
Candover also announced on 10th January 2017 the realisation of its remaining
investment in Technogym for cash proceeds of approximately EUR9.5 million (GBP8.2
million). Candover's interest in Technogym was valued at GBP8.2 million at 31st
December 2016.
Foreign currency
Candover's foreign currency exposure was simplified at the time of its
refinancing in August 2015. The debt facilities are denominated in Euros which
partly offsets the portfolio assets and cash balances which are Euro
denominated.
Management of the Candover Funds
The Limited Partners of the Candover 2005 Fund agreed in August 2014 to extend
the original ten-year term of the Fund until March 2017 to enable Arle to
complete the realisation of the portfolio. In the light of the forthcoming
termination of the 2005 Fund, Arle have confirmed that they intend to undertake
a solvent, members' voluntary liquidation of Arle, which will trigger the
termination of the Candover 2008 Fund at the same time.
As a result of the termination of the Funds, Candover will no longer be
required to have its co-investments managed alongside the Funds. Given the
small number of remaining interests, with the significant majority of their
value being the listed interest in Parques, Candover intends to self-manage the
final run off of its portfolio.
Outlook
The profile of Candover following the realisations announced post year end is
quite different to that at the start of 2016. The portfolio is no longer a
private equity portfolio, with over 90% of the portfolio value after adjusting
for the post year end disposals, being listed shares in Parques. In addition,
the realisation proceeds received post year end means Candover now has net
cash, rather than net debt, for the first time since 2007.
Furthermore, the impending termination of the Candover Funds, and ensuing
voluntary liquidation of Arle at the end of the first quarter of 2017 will
result in Candover being able to self-manage its remaining portfolio.
Over the coming months, we will ensure this phase of the run-off is completed
in a timely and efficient way. In particular, the focus will be on the timing
and options to achieve the disposal of the Parques investment, the pay down of
our current debt facilities and the potential distribution of value to
shareholders along with the cost of managing through this phase of the run-off
process.
Malcolm Fallen
Chief Executive Officer
24th February 2017
Financial review
Net asset value per share
Net asset value per share after exceptional non-recurring costs was 163p,
representing a full year decrease of 33% since 31st December 2015 (243p) and an
increase of 10% since 30th June 2016 (148p).
The decrease of 80p per share was split between the loss on disposal of
investments (-15p), a decrease in constant currency investment values (-48p),
overall favourable currency movements (26p), and the impact of ongoing costs
(-43p). These costs comprised loan note interest, our investment manager's fee
and general administration costs.
Table 1
GBPm p/share
Net asset value at 31st December 2015 53.2 243
Loss on financial instruments and other income1 (13.7) (63)
Recurring administrative expenses (2.1) (10)
Finance costs recurring (7.4) (33)
Currency impact:
- Unrealised investments 8.1 37
- Re-translation of cash and cash equivalents 3.5 16
- Translation of loan (6.0) (27)
Net asset value at 31st December 2016 as reported 35.6 163
1 Stated before favourable currency impact of GBP8.1 million
Investments
The valuation of investments, including carried interest and accrued loan note
interest, was GBP46.7 million at 31st December 2016 (31st December 2015: GBP82.6
million). Valuations decreased for the year by GBP10.4 million, before currency
effects and after adjusting for disposals, representing a decrease of 21% on
the value of these investments over their 31st December 2015 value. The overall
decrease of 5% in the value of the portfolio was GBP2.3 million which included GBP
8.1 million of favourable foreign currency movements reflecting the weakening
of Sterling relative to the Euro and the US Dollar.
Table 2
GBPm
Investments at 31st December 2015 82.6
Disposals at valuation (33.6)
Additions at cost -
Investments adjusted for additions and disposals 49.0
Revaluation of investments:
- Valuation movements before currency impact (10.4)
- Currency impact on unrealised investments 8.1
Investments at 31st December 2016 46.7
Net debt
Candover's net debt decreased from GBP33.2 million at 31st December 2015 to GBP13.7
million at 31st December 2016. This reflects the cash inflow from realisations
offset by the impact of interest accrued on borrowings, operating expenses and
adverse foreign currency movements in the period.
Table 3
Net debt 31st December 31st December
2016 2015
GBPm GBPm
Loans and borrowings 34.7 39.4
Deferred costs 0.3 0.3
Value of loan/bonds 35.0 39.7
Cash (21.3) (6.5)
Net debt 13.7 33.2
Profit before and after tax
Net revenue loss before tax and exceptional non-recurring gains and losses from
operations for the year was a loss of GBP15.5 million compared to a profit of GBP
0.6 million in the prior year.
Including capital costs of GBP4.1 million (2015: GBP4.1 million), total
administrative and finance costs in the year were GBP9.5 million (2015: GBP9.9
million), which included GBP0.8 million (2015: GBP1.8 million) of management fees
paid to Arle, linked to the value of investments managed, and GBP7.4 million of
financing costs (2015: GBP6.4 million).
There was no exceptional non-recurring gain or loss in the year (2015: loss GBP
5.1 million).
Reported net revenue loss after taxation was GBP15.5 million compared to GBP6.6
million loss in the prior year.
Manager's portfolio review
ARLE CAPITAL PARTNERS LIMITED
Introduction
Arle is the private equity asset manager of the Candover 2005 Fund and Candover
2008 Fund (together "the Candover Funds" or "Funds"), as well as special
purpose vehicles.
Termination of the Candover Funds
Contractually the Candover 2005 Fund is due to terminate on 31st March 2017.
As a result, and recognising that Arle and the Candover Funds have been in
wind-down for a number of years, Arle has informed investors in the Candover
Funds that it intends to enter a solvent voluntary liquidation at or around
that date, with the Candover 2008 Fund also being terminated on 31st March
2017.
This will allow an orderly wind up of the Candover Funds. Discussions have
taken place with the Advisory Boards of the Candover Funds, together with their
legal and financial advisers, and the Financial Conduct Authority.
Plans for Remaining Investments
Arle intends to realise the investment in Hilding Anders pre-31st March 2017,
and then post the termination of the Candover Funds return cash to investors
and distribute in specie the residual interests in Expro International
("Expro") and Parques.
Over the past year, Arle has partially realised its investment in Parques, via
an initial IPO in Spain and a subsequent placing of additional shares. The
remaining equity stake in Parques is subject to a lock-up until early April
2017. It is therefore proposed that these shares will be distributed directly
to investors, in specie, in early April.
In respect of the Funds' investment in Expro, a new holding vehicle will be
created and managed by Arle to ensure continuity under Expro's banking
arrangements. The current interests in Expro will be transferred to this
holding vehicle prior to 31st March 2017. Investors will then become
shareholders in the new holding vehicle for Expro. This vehicle will be the
entity reporting on Expro and will enable Arle to materially reduce the
complexity of the holding structure of the investment. The Expro investment
remains subject to lock-up until June 2020, although earlier sale opportunities
may be considered and pursued.
The purpose of these steps is to enable an orderly wind-up of the Candover
Funds and related investment vehicles, as well as to reduce on-going costs post
the termination period. Once the Parques and Expro interests are distributed,
there will be no remaining assets in the Candover Funds, such that those funds
can be fully liquidated, and investors will no longer hold any interests
through the Candover Funds.
2016 Portfolio Overview
In 2016, the Candover Funds' portfolio continued to be readied for exit by
optimising the operational and financial performance of its residual companies.
At the year end, the portfolio comprised Parques Technogym, Expro and Hilding
Anders.
During the twelve month period to 31st December 2016, Arle successfully
launched the public listings of two investee companies. In April 2016, Parques
was listed in Spain and Technogym was listed in Italy. In both IPOs, Arle
retained an equity stake with a lock-in period of 180 days.
During the year, Arle also undertook a capital restructuring of Expro and a
sale was agreed to exchange the equity in Hilding Anders for a more liquid
interest in a debt instrument. This transaction is expected to complete,
subject to the customary competition clearances, in Q1 2017.
In early 2017, Arle sold its remaining equity stake in Technogym via an
accelerated share placing in Italy and placed a further 10% of the share
capital in Parques.
The overall valuation of the Candover Funds' portfolio on 31st December 2016
was EUR555 million, compared to EUR485 million in June 2016 and EUR1,229 million on
31st December 2015 with realisation proceeds in the first half of the year of EUR
489 million.
Realisations
The IPO of Parques generated cash proceeds of GBP2.7 million for Candover with a
valuation of the residual listed shares as at 31st December 2016 of GBP35.3
million. This gave a combined value of GBP38.0 million compared to the value at
31st December 2015 of GBP43.4 million.
The IPO of Technogym generated cash proceeds of GBP13.1 million for Candover with
a valuation of the residual listed shares as at 31st December 2016 of GBP8.2
million. This gave a combined value of GBP21.3 million compared to the value at
31st December 2015 of GBP22.5 million.
Post year end, the sale of further shares in Parques and the disposal of Arle's
residual stake in Technogym, generated cash proceeds for Candover of circa GBP8.4
million and GBP8.3 million respectively.
Portfolio composition
The residual portfolio is almost entirely based in Western Europe. Whilst Spain
represented 75.6% of the investments by value, the portfolio companies
themselves are well diversified in the regions in which they trade. The
portfolio was exposed mostly to the services and industrial sector.
Portfolio valuation review
The Candover Funds' portfolio valuation decreased by 15.0% year-on-year with
the decrease in value of Candover's co?investments in the portfolio of GBP6.6
million (30.0 pence per share) representing a 12.3% reduction on its value at
the start of 2016, after adjusting for additions and disposals.
Table 1 shows the valuation movement by reference to each portfolio company.
Table 1
Residual Valuation Additions Valuation Valuation Valuation Valuation
cost1 at 31st and movement movement at 31st movement
December disposals excluding attributable December
Portfolio 2015 FX2 to FX2 2016 pence per
company GBPm GBPm GBPm GBPm GBPm GBPm share
Parques 30.3 43.4 (2.6) (12.3) 6.8 35.3 (25.0)
Reunidos
Technogym 3 8.3 22.5 (13.1) (2.1) 0.9 8.2 (5.0)
Expro 94.4 0.5 0.0 0.0 0.1 0.6 0.0
International
Hilding 24.3 1.5 0.0 (0.1) 0.2 1.6 1.0
Anders
Stork 5.0 14.1 (13.7) (0.1) 0.0 0.3 0.0
Total 162.3 82.0 (29.4) (14.6) 8.0 46.0 (30.0)
investments
Other4 18.1 0.6 0.0 (0.0) 0.1 0.7 0.0
Other 180.4 82.6 (29.4) (14.6) 8.1 46.7 (30.0)
investments
1 Residual cost is original cost less realisations to date
2 Compared to the valuation at 31st December 2015 or acquisition date, if
later
3 During the period a partial realisation of Technogym generated proceeds of GBP
13.1 million. Taking into account the discount to the year-end valuation on
IPO and subsequent upward movement in the value of the investment retained, the
overall value of the investment in Technogym decreased by GBP2.1 million in the
period (excluding FX). From an accounting perspective this movement was
treated as a realised loss on IPO of the investment of GBP3.9 million with a
subsequent uplift in the investment retained from the date of the IPO to 31st
December 2016 of GBP2.0 m
4 Represents other co-investments
The portfolio
1 Parques Reunidos
Industry sector: Services
Geography: Spain
Date of investment: March 2007
Residual cost of investment GBPm: 30.3
Directors' valuation GBPm: 35.3
Change over prior valuation GBPm: (5.5)
Effective equity interest (fully 3.4%
diluted):
% of Candover's net assets: 99.2%
Basis of valuation: Listed price
Dividends received GBPm: -
Year end: September 2016
Sales: EUR584m
Earnings1: EUR188m
Parques is a leading global operator of regional leisure parks and one of the
three truly global leisure park operators. It operates a well-diversified
portfolio of 57 different attraction parks, animal parks, water parks, family
entertainment centres and other attractions which attract approximately 20
million visitors each year.
On 29th April 2016, Arle announced a partial exit as part of the IPO of Parques
on the Madrid, Barcelona, Bilbao and Valencia stock exchanges and on the
Automated Quotation System or Mercado Continuo of the Spanish Stock Exchanges
at EUR15.50 per share, a discount of 23% to the valuation at 31st December 2015.
Net proceeds from the IPO of EUR35.0 million were raised through a sale of 7.7%
of the Candover Fund's investment. On listing, an interest of 33.9% of the
ordinary share capital was retained and was subject to a lock-up period of 180
days.
In January 2017, Arle announced a 10% placement of shares in Parques at EUR14.20
per share through an accelerated book building exercise. This represented a
6.9% discount to the prior day's closing price. The placement was launched
following a positive trading performance which had been reported in its
financial results. Post the sale, Arle retains circa 23 million shares
representing 25.1% of the company's share capital, a reduction of 26% since
IPO. This will be subject to a 90 day lock-up.
On 8th February 2017, Parques reported a first quarter revenue increase of 7.2%
(12.4% like-for-like) to EUR70.5m compared to the prior year and a 45%
improvement in EBITDA (86% like-for-like). Strategic initiatives to extend the
season with off-season events during Q1 delivered positive results. In
particular, Christmas and Halloween campaigns in the parks resulted in a 14%
uplift in sales compared to the prior year.
In Q1 2016/17, Parques delivered positive trading results in all its markets.
However Spain was a key contributor with revenues reaching EUR22.2m, a 15.9%
like-for-like increase compared to the prior year. Revenue in the rest of
Europe grew by 14% on a like-for-like basis. The United States recorded
positive results, with a like-for-like growth of 1.6% and an increase in
pre-sales of 25%.
On 31st December 2016, the Candover Funds' residual stake in the listed shares,
which is held via an intermediate holding company, was valued at EUR415 million.
Candover's valuation reduced by GBP12.3 million, before positive currency
movements of GBP6.8 million (total: -25p per share).
Company website
www.parquesreunidos.com
2 Technogym
Industry sector: Industrials
Geography: Italy
Date of investment: August 2008
Residual cost of investment GBPm: 8.3
Directors' valuation GBPm: 8.2
Change over prior valuation GBPm: (1.2)
Effective equity interest (fully 1.1%
diluted):
% of Candover's net assets: 23.0%
Basis of valuation: Listed price
Dividends received GBPm: -
Year end: December 2015
Sales: EUR512m
Earnings1: EUR87m
Technogym is a world-leading supplier of technology and design-driven products
and services in the Wellness and Fitness industry. Founded in 1983, Technogym
provides a complete range of cardio, strength and functional equipment
alongside a cloud-based digital platform enabling consumers to connect with
their personal wellness experience anywhere, both on Technogym equipment and
via mobile apps on any device. Technogym targets four specific market segments:
Fitness Clubs; Hospitality & Residential; Health, Corporate & Public; and
Consumer.
At the end of April 2016, Arle announced the IPO of Technogym on the Mercato
Telematico Azionario (MTA), organised and managed by the Borsa Italiana S.p.A.
at EUR3.25 per share, a discount of 19% to 31st December 2015 valuation,
resulting in a market capitalisation of EUR650 million. Gross proceeds of EUR186.9
million were raised by Arle by listing 25% of Technogym's share capital and a
further 3.75% from the greenshoe option. A 15% stake was retained by Arle but
this reduced to 11.25% after the greenshoe option was fully utilised.
Technogym's shares performed strongly during the second half of the year and on
4th August 2016, the company reported strong maiden results for the six months
to 30th June 2016. Technogym reported double digit revenue growth of 10.5% to
EUR250 million compared to the same period in 2015. Excluding the foreign
exchange impact, revenue growth was 12.4%. EBITDA growth was also strong with a
22.9% improvement to EUR35.2 million in the first half of 2016. At constant
exchange rates, this was a 30.1% rise.
At the start of 2017, the shares reached a record high post IPO and a share
placement was launched on 9th January 2017, facilitating the sale of Arle's
remaining shareholding in the business, through an accelerated book building
offer. The placement, corresponding to 11.25% of the company's share capital
was priced at EUR4.45 per share, a 1.3% premium to the prior month volume
weighted average price and a 37% premium to the April 2016 IPO price. Demand
for the shares was in excess of three times the offer size.
On 31st December 2016, the Candover Funds' residual stake in the listed shares,
which is held via an intermediate holding company, was valued at EUR96.9 million.
Candover's interests in Technogym was valued at the year-end at GBP8.2 million, a
decrease of GBP2.1 million, before positive foreign currency movements of GBP0.9
million (total: -5p per share).
The full exit from Arle's investment in Technogym generated cash proceeds of GBP
8.2 million for Candover which is in line with the December valuation.
Company website
www.technogym.com
3 Hilding Anders
Industry sector: Industrials
Geography: Sweden
Date of investment: December 2006
Residual cost of investment GBPm: 24.3
Directors' valuation GBPm: 1.6
Change over prior valuation GBPm: 0.2
Effective equity interest (fully 4.3%
diluted):
% of Candover's net assets: 4.5%
Basis of valuation: Multiple of earnings
Dividends received GBPm: -
Year end: December 2015
Sales: SEK8,578m
Earnings1: SEK1,196m
Founded in 1939, Hilding Anders has grown to become the leading bed
manufacturer in Europe, Russia and Asia. The company has 9,500 employees at 23
sites across 19 countries, and sells products in 65 local markets, generating
revenues of EUR917 million in 2015.
In 2016, Hilding Anders delivered a good trading performance in Europe and Asia
while Russia's performance was below plan, driven by more difficult market
conditions. As planned, in Q2 2016 the business successfully exercised a call
option to increase its stake in the Russian subsidiary.
Hilding Anders also successfully extended the maturities of its debt facilities
by 2.5 years in an Amend & Extend process, providing the business with
flexibility and time to execute on the European cost initiative programme, and
to capitalise on the Asian and Russian growth.
On 29th November 2016, an agreement was made to sell Arle's equity interests in
Hilding Anders to KKR in return for a more liquid debt instrument, subject to
regulatory clearances.
Candover's valuation was written down by GBP0.1 million, before positive exchange
movements of GBP0.2 million.
Company website
www.hildinganders.com
4. Expro International
Industry sector: Energy
Geography: UK
Date of investment: July 2008
Residual cost of investment GBPm: 94.4
Directors' valuation GBPm: 0.6
Change over prior valuation GBPm: 0.1
Effective equity interest (fully 0.3%
diluted):
% of Candover's net assets: 1.7%
Basis of valuation: Multiple of earnings
Dividends received GBPm: -
Year end: March 2016
Sales: US$915m
Earnings1: US$228m
Expro is a leading oilfield services provider specialising in well flow
management. The company provides services and products that measure, improve,
control and process flow from high-value oil and gas wells, from exploration
and appraisal through to mature field production optimisation and enhancement.
Expro's vision is to be the market leader in well flow management, using the
industry's best people, to deliver the highest standards of safety, quality and
personalised customer service. Expro's 40 years of experience and innovation
empowers the company to offer tailor-made solutions for customers across the
energy sector, including multinational oil majors, as well as state-owned
national oil companies. With over 4,500 employees across 50 countries, Expro
offers a global service solution.
On 25th October 2016, it was announced that an agreement had been reached
between Expro's shareholders and lenders representing approximately 98% of the
borrowings under its Mezzanine Facility Agreement ("Consenting Lenders") to
implement a capital restructuring. This restructuring eliminated virtually all
of the company's Mezzanine Facility (approximately $784m of $800m).
Consenting Lenders exchanged their entire outstanding principal and accrued PIK
interest for equity in Expro International Group Holdings Ltd, Expro's ultimate
parent company. This significantly reduced the Company's leverage, removed all
of the financial maintenance covenants under the Mezzanine Facility and will
save approximately $40m annually in cash interest. Under the Credit Agreement,
the exchange did not result in a change of control.
The successful restructuring of Expro's capital provides a strong foundation
from which to grow the Company as it positions itself for the next upturn in
the oil and gas industry.
Expro's strategy remains on course and the business will continue to focus on
its strengths of investing in differentiated technology and delivering the
highest standards of safety, technology and service quality to our customers.
Candover's valuation was unchanged with a positive foreign exchange movement of
GBP0.1 million.
Company website
www.exprogroup.com
Arle Capital Partners Limited
24th February 2017
Note:
1 Earnings figures are taken from the portfolio company's most recent
audited accounts or financial statements filed with regulatory bodies. The
figures shown are the total earnings on ordinary activities before exceptional
items, depreciation, goodwill amortisation, interest and tax for the period
The portfolio
Analysis by value at 31st December 2016 (representing 100% of the Arle managed
portfolio)
By valuation method By sector
1. Listed price 95% 1. Services 77%
2. Multiple of earnings 5% 2. Industrials 22%
3. Energy & Natural Resources 1%
By region By age
1. Spain 77% 1. Greater than 5 years 100%
2. Italy 18%
3. Nordic 4%
4. United Kingdom 1%
Group statement of comprehensive income
for the year ended 31st December 2016
Unaudited Audited
Year to 31st December 2016 Year to 31st December
2015
Notes Revenue Capital Total1 Revenue Capital Total1
GBPm GBPm GBPm GBPm GBPm GBPm
Gains/(losses) on financial
instruments
Realised (loss)/gain - (3.4) (3.4) - 0.6 0.6
Unrealised (loss)/gain (10.3) 11.4 1.1 - (54.4) (54.4)
Total (10.3) 8.0 (2.3) - (53.8) (53.8)
Revenue/(expense)
Investment and other income 0.2 - 0.2 6.4 - 6.4
Total 0.2 - 0.2 6.4 - 6.4
Recurring administrative expenses (1.7) (0.4) (2.1) (2.6) (0.9) (3.5)
Exceptional non-recurring costs 2 - - - (5.1) - (5.1)
(Loss)/gain before finance costs and (11.8) 7.6 (4.2) (1.3) (54.7) (56.0)
taxation
Finance costs (3.7) (3.7) (7.4) (3.2) (3.2) (6.4)
Exchange movements on borrowings - (6.0) (6.0) - (1.5) (1.5)
Loss before taxation (15.5) (2.1) (17.6) (4.5) (59.4) (63.9)
Analysed between:
(Loss)/profit before exceptional (15.5) (2.1) (17.6) 0.6 (59.4) (58.8)
non-recurring costs
Exceptional non-recurring costs - - - (5.1) - (5.1)
Taxation - - - (2.1) - (2.1)
Loss after taxation (15.5) (2.1) (17.6) (6.6) (59.4) (66.0)
Total comprehensive loss (15.5) (2.1) (17.6) (6.6) (59.4) (66.0)
Loss per ordinary share:
Total loss per share - basic and (70p) (10p) (80p) (30p) (272p) (302p)
diluted
1 The total column represents the Group statement of comprehensive income
under IFRS
i All of the gain/(loss) for the year and the total comprehensive income/
(loss) for the year are attributable to the owners of the Company
ii The supplementary revenue and capital columns are presented for information
purposes as recommended by the Statement of Recommended Practice issued by the
Association of Investment Companies and updated in November 2014
Group statement of changes in equity
for the year ended 31st December 2016
Unaudited Called Share Other Capital Capital Revenue Total
up premium reserves reserves reserves - reserve Equity
share account -realised unrealised
capital GBPm GBPm GBPm GBPm GBPm GBPm
GBPm
Balance at 1st January 2016 5.5 1.2 (0.1) 309.9 (252.4) (10.9) 53.2
Net revenue after tax - - - - - (5.2) (5.2)
Unrealised gain/(loss) on - - - - 11.4 (10.3) 1.1
financial instruments
Realised (loss)/gain on - - - (114.3) 110.9 - (3.4)
financial instruments
Exchange movements on - - - - (6.0) - (6.0)
borrowing
Costs net of tax - - - (4.1) - - (4.1)
(Loss)/profit after tax - - - (118.4) 116.3 (15.5) (17.6)
Total comprehensive income - - - (118.4) 116.3 (15.5) (17.6)
Balance at 31st December 5.5 1.2 (0.1) 191.5 (136.1) (26.4) 35.6
2016
Audited Called Share Other Capital Capital Revenue Total
up premium reserves reserves reserves - reserve Equity
share account -realised unrealised
capital GBPm GBPm GBPm GBPm GBPm GBPm
GBPm
Balance at 1st January 2015 5.5 1.2 (0.1) 310.4 (193.5) (4.3) 119.2
Net revenue after tax - - - - - (6.6) (6.6)
Unrealised loss on financial - - - - (54.4) - (54.4)
instruments
Realised gain/(loss) on - - - 3.6 (3.0) - 0.6
financial instruments
Exchange movements on - - - - (1.5) - (1.5)
borrowing
Costs net of tax - - - (4.1) - - (4.1)
Loss after tax - - - (0.5) (58.9) (6.6) (66.0)
Total comprehensive income - - - (0.5) (58.9) (6.6) (66.0)
Balance at 31st December 5.5 1.2 (0.1) 309.9 (252.4) (10.9) 53.2
2015
Group statement of financial position
at 31st December 2016
Unaudited Audited
31st December 2016 31st December 2015
GBPm GBPm GBPm GBPm
Non-current assets
Financial investments designated
at fair value through profit and
loss
Portfolio companies 46.0 82.0
Other financial investments 0.7 0.6
46.7 82.6
Trade and other receivables 2.4 3.5
Current assets
Current tax asset - 0.2
Cash and cash equivalents 21.3 6.5
21.3 6.7
Current liabilities
Other payables (0.1) (0.2)
(0.1) (0.2)
Net current assets 21.2 6.5
Total assets less current 70.3 92.6
liabilities
Non-current liabilities
Loans and borrowings (34.7) (39.4)
Net assets 35.6 53.2
Equity attributable to equity
holders
Called up share capital 5.5 5.5
Share premium account 1.2 1.2
Other reserves (0.1) (0.1)
Capital reserve - realised 191.5 309.9
Capital reserve - unrealised (136.1) (252.4)
Revenue reserve (26.4) (10.9)
Total equity 35.6 53.2
Net asset value per share
Basic 163p 243p
Diluted 163p 243p
Group cash flow statement
for the year ended 31st December 2016
Unaudited Audited
Year to 31st Year to 31st
December 2016 December 2015
GBPm GBPm GBPm GBPm
Cash flows from operating
activities
Cash flow from operations (0.6) (4.1)
Interest paid (2.4) (2.3)
Tax received - -
Net cash outflow from operating (3.0) (6.4)
activities
Cash flows from investing
activities
Purchase of financial investments - (2.3)
Sale of financial investments 30.1 8.2
Net cash inflow from investing 30.1 5.9
activities
Cash flows from financing
activities
Loan notes repaid - (54.0)
Loan facility (repaid)/utilised (15.8) 35.0
Net cash outflow from financing (15.8) (19.0)
activities
Increase/(decrease) in cash and 11.3 (19.5)
cash equivalents
Opening cash and cash equivalents 6.5 26.6
Effect of exchange rates and 3.5 (0.6)
revaluation on cash and cash
equivalents
Closing cash and cash equivalents 21.3 6.5
Notes to the financial statements
Note 1
The preliminary results for the year ended 31st December 2016 are unaudited.
The financial information included in this statement does not constitute the
Group's statutory accounts within the meaning of Section 434 of the Companies
Act 2006. Statutory accounts for the year ended 31st
December 2016 will be finalised on the basis of the financial information
presented by the Directors in this preliminary announcement and will be
delivered to the Registrar of Companies in due course.
The information given as comparative figures for the year ended 31st December
2015 does not constitute the Company's statutory accounts for those financial
periods. Statutory accounts for the year ended 31st December 2015, prepared in
accordance with International Financial Reporting Standards as adopted by the
European Union, have been reported on by the Company's auditors and delivered
to the Registrar of Companies. The report of the auditors was unqualified and
did not contain a statement under Section 498 (2) or (3) of Companies Act 2006.
Note 2
Exceptional non-recurring losses for the Group.
There were no exceptional non-recurring gain or loss for the group in the year
(2015: loss GBP5.1 million).
END
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