TIDMOCI
RNS Number : 8723R
Oakley Capital Investments Limited
11 March 2021
11 March 2021
Oakley Capital Investments Limited
Final Results for the Year Ended 31 December 2020
Oakley Capital Investments Limited(1) (the "Company" or "OCI"),
a listed investment vehicle providing consistent long-term returns
in excess of the FTSE All-Share Index by investing in the funds
managed by Oakley Capital(2) ("Oakley"), today announces its final
results for the year ended 31 December 2020.
The Oakley Funds(3) are private equity portfolios that invest
primarily in digitally-focused businesses across Western Europe in
three core sectors: Technology, Consumer and Education. Value
creation is achieved through market growth, consolidation and
performance improvement.
Portfolio strength delivers sustainable growth
FINANCIAL HIGHLIGHTS
-- Net Asset Value ("NAV") per share of 403 pence and NAV of GBP728
million
-- Total NAV return of 18%
-- The Company invested GBP152 million and received proceeds of GBP341
million
-- Year-end cash of GBP223 million
-- Outstanding commitments to the Oakley Funds of GBP534 million, including
the Origin Fund commitment
-- Total Origin Fund commitment of GBP116 million
-- Buy-back and cancellation of 18 million shares
-- Full-year dividend of 2.25 pence per share, to be paid on 15 April
2021 to shareholders on the register on or before 26 March 2021
PORTFOLIO HIGHLIGHTS
-- 10 of 17 portfolio companies met or exceeded their pre-COVID budgets
-- 70% of portfolio companies deliver their products or services digitally
-- Average portfolio company year-on-year EBITDA growth of 20%
-- Average portfolio company valuation multiple (EV/EBITDA) of 11.8x
and average net debt to EBITDA ratio of 3.9x
-- The key drivers of NAV movement in the period were Career Partner
Group (+34 pence), Inspired (+10 pence), Casa (+10 pence) and Time
Out (-30 pence)
PROCEEDS
-- OCI's share of proceeds from exits and refinancings was GBP341 million
during the period
-- Realisations included Fund III's exits of WebPros and Casa, as well
as the partial realisation of atHome, along with Fund II's exit of
Inspired, and the realisation of OCI's direct holding in Inspired
-- Refinancings included Career Partner Group, Wishcard Technologies
Group and Facile
-- Direct debt repayment of Time Out loans and fund facilities
INVESTMENTS
-- OCI made a total look-through investment of GBP152 million during
the period
-- Activity included the acquisitions of WebPros (Fund IV), Globe-Trotter
(Fund III), 7NXT (Origin Fund) and WindStar Medical (Fund IV)
-- OCI also continued its ongoing share buy-back programme, completing
the buy-back and cancellation of 18 million shares at an average
price of 230 pence per share, enhancing NAV per share by 12.6 pence
CASH & COMMITMENTS
-- OCI had no leverage and had cash on the balance sheet of GBP223 million
at 31 December 2020, representing 31% of NAV
-- Outstanding commitments to the Oakley Funds of GBP534 million (73%
of NAV), including OCI's commitment to the newly launched Origin
Fund
OUTLOOK
-- Activity levels have remained high so far in 2021 with the completion
of two new investments (idealista & Dexters), the agreed sale of
Daisy's Digital Wholesale Solutions division and a further refinancing
of Career Partner Group
-- Strength of the tech-focused portfolio continues, as digital tools
become increasingly popular B2C and B2B solutions
-- A current strong pipeline of investment prospects demonstrates the
repeatability of Oakley's unique sourcing model, which allows Oakley
to continue to uncover attractive, often proprietary opportunities
-- OCI's high cash levels will allow it to meet its commitments to the
Oakley Funds as they deploy capital during a period of significant
opportunity
The Annual Report and Accounts are available on the Company's
website:
https://oakleycapitalinvestments.com/investor-centre/publications/
A summary of 2020, including a video overview of the performance
in the year, is also available here:
https://oakleycapitalinvestments.com/2020-annual-report/
Caroline Foulger, Chair of Oakley Capital Investments Limited,
commented:
"In a year of significant disruption, it is testament to the
strength of OCI's proposition that, despite unprecedented global
events, its value has grown materially over the last year. This
strength has been underpinned by the quality of the portfolio
companies whose earnings grew at an average 20%; the support and
leadership that Oakley Capital and investee company management have
shown throughout the pandemic; and the value-enhancing measures
taken in the year.
It has been positive to see OCI continuing to facilitate private
investor access to the strong returns that are possible from
investing in high-quality private companies such as those in the
Oakley portfolio."
Peter Dubens, Managing Partner of Oakley Capital Limited,
commented:
" 2020 posed unforeseen challenges for all our investee
companies, however our focus on businesses that provide
technology-led solutions served us well, with the majority of the
portfolio performing as expected over the year.
As we evaluate an increasing pool of opportunities, the most
important feature is the entrepreneurs or management teams behind
them. Since Oakley's inception the common thread of investment
success has been the individuals that we have backed, in some cases
on numerous occasions. We are grateful for their skill in
navigating through the pandemic and for the education and
inspiration they continue to provide."
- ends -
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 / James Williams
Liberum Capital Limited (Financial Adviser & Broker)
+44 20 3100 2000
Gillian Martin / Owen Matthews
Notes:
This announcement is deemed by the Company to constitute inside
information as stipulated under the Market Abuse Regulation (EU)
No. 596/2014 as amended by The Market Abuse (Amendment) (EU Exit)
Regulations 2019.
LEI Number: 213800KW6MZUK12CQ815
(1) 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 (2) .
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) 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.
(3) 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.
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
Portfolio strength delivers sustainable growth
In a year of significant disruption, it is testament to the
strength of OCI's proposition that, despite unprecedented global
events, its value has grown materially over the last year. This
strength has been underpinned by three factors: the quality of the
portfolio companies whose earnings grew an average 20% in 2020; the
support and leadership that Oakley Capital and investee company
management have shown throughout the pandemic; and the
value-enhancing measures taken in the year, including the buy-back
and cancellation of 18 million OCI shares.
Portfolio performance
A total net asset value ('NAV') return of 18% in 2020 exceeded
the five-year compound annual growth rate of 16%. This repeated
level of performance highlights the sustained growth of the
portfolio companies and the repeatability of Oakley Capital's
origination model, which is described within the Strategic Report.
The largest contributor to the rise in portfolio value was the
growth in investee companies' earnings. With a large majority of
the companies delivering their products or services digitally, the
portfolio benefited from the rising adoption of consumer and
business technology solutions - an already growing trend which
accelerated rapidly during the year.
A stand-out performer within the portfolio was online private
university company, Career Partner Group ('CPG'), which added 34
pence to the NAV per share in the period. As a digitally native
business, CPG benefited from the growing appetite for online
education and achieved record student intake growth of 98%
year-on-year. CPG's market-leading position and the structural tail
winds it enjoys both typify an Oakley business, and the Board is
encouraged by its prospects and continued contribution to OCI's NAV
growth.
Portfolio activity
The Funds' Investment Adviser, Oakley Capital, has maintained a
high level of activity, despite the restrictions on travel and the
challenge of price discovery during a period of considerable
uncertainty. Eight deals were completed, including four bolt-ons,
which resulted in a total look-through investment for OCI of GBP152
million.
Exits and refinancings also continued unabated, including two
significant realisations of investments, in Inspired and WebPros,
from which OCI received proceeds totalling GBP341 million. Most
notable is the premium achieved at exit, with the average weighted
premium over the latest disclosed book value since inception rising
to 44%. This underlines the release of value at exit and the
continued successful repositioning of the portfolio companies under
Oakley's ownership.
Cash and commitments
At year end, OCI had no leverage and held cash on the balance
sheet of GBP223 million, amounting to 31% of NAV. This cash level,
the result of realisations during the period, is significantly
higher than the Board's target, with the long-term average being
15-20% of NAV. However, the timing is helpful as we enter a period
of significant investment opportunity and it is notable that, on
average, fund vintages that follow a macroeconomic downturn
outperform.
The Board demonstrated its commitment to maximising OCI's
exposure to the Oakley Funds via its participation in the newly
launched Oakley Capital Origin Fund. The Company made a total
commitment of EUR129 million (GBP116 million), which included an
increase in commitment at its final close in January 2021. The
Origin Fund is a natural progression for Oakley as it looks to
continue its strong track record in lower mid-market investments,
where it has achieved gross returns of 3.6x MM and 63% IRR to
date.
This brings OCI's total outstanding commitments to the Oakley
Funds to GBP534 million, which we expect to be deployed over the
next five years.
Direct investments
In keeping with the Board's intention to realise direct
investments over the short to medium term, outstanding loan notes
with Time Out and Daisy were repaid, and a direct equity stake in
Inspired was realised. In addition, all adviser management and
performance fees have been removed from current direct investments
and the interest rate on the remaining debt position in North Sails
has been increased from a blended rate of 8% to 10%.
Share purchases and liquidity
In line with the Board's commitment to the Company it has
continued its share buy-back programme, acquiring and cancelling a
total of 18 million shares in the year at an average 230 pence per
share. This resulted in a NAV per share uplift of 12.6 pence. This
level of shareholder value creation endorses our approach to
capital management, with further buy-backs anticipated, as the
balance of cash and future drawdowns allow.
OCI Board members and Oakley partners continued to purchase OCI
shares throughout the year, with their combined holding reaching
10% of the shares in issue. This further reinforces the alignment
of interests between the Board, Oakley Capital and our
shareholders.
We are pleased to report that a combination of share buy-backs,
increased and improved disclosure and higher levels of investor
engagement have significantly improved OCI's share liquidity and
share register diversification. Since 2019, the top ten
shareholders' combined holding has fallen from 70% to 66% and the
average daily share volume had reached almost 500,000 in 2020. Most
encouraging is the increasing presence of private investors on the
register, with OCI providing liquid access to the superior returns
generated by private equity investment, which may otherwise be
inaccessible to them.
ESG
At OCI we believe that investing responsibly will protect and
create value, beyond the standard drivers of compliance and risk
management. As part of our commitment to responsible investing, we
are pleased to report that Oakley Capital has appointed a Head of
Sustainability who has been working closely with the Board to
assist with our ESG engagement and reporting. We have begun to
revise and further develop methods to better assess and integrate
ESG into the investment cycle, and will continue to launch new
policies and procedures over the coming months. As referenced in
the ESG report, we are proud of how Oakley and the portfolio
companies responded to COVID-19 and continue to support efforts
which will help ease the burden on employees and
local communities.
Discount
The share price volatility, driven by widespread uncertainty as
to the economic impact of the pandemic, resulted in OCI's share
price discount to NAV per share widening considerably in the
period. Some of this ground has been recovered, with a total
shareholder return of 9% during the year, but a material discount
persists. We expect that sustained strong performance across the
portfolio, alongside the continued work of the Board and its
advisers, as outlined above, will result in closing the discount
over time.
Board update
At the beginning of October, the Board welcomed Fiona Beck as an
independent Non-Executive Director. Fiona is a member of the
Chartered Accountants of Australia and New Zealand, and brings a
wealth of technology and public company board experience to OCI. In
strengthening the Board by adding independent members with diverse
perspectives and deep expertise, we believe we are well-positioned
to support OCI as it continues to grow.
During the period, Laurence Blackall retired from the Board
after over ten years' service and Craig Bodenstab also stepped
down. We thank them both for their significant contributions to OCI
and wish them all the very best for the future.
Dividend
In October, an interim dividend of 2.25 pence per share was paid
for the period ending 30 June 2020. We are pleased to announce that
a final dividend for 2020 of 2.25 pence per share will be paid in
April 2021.
Prospects
The outlook for the global economy and equity markets remains
uncertain as a consequence of the unknown impact of the COVID-19
pandemic. All businesses have been affected by the turbulence of
the past 12 months and we expect this disruption to continue to
impact the companies in the Oakley portfolio to varying
degrees.
However, we remain confident in the long-term performance of the
Oakley Funds and their ability to create sustainable and consistent
value for OCI shareholders. The existing portfolio of companies is
well-positioned to meet the changing needs of consumers and
businesses and, as detailed in the Investment Adviser's report,
Oakley is appraising a considerable number of attractive and
proprietary investment opportunities, which should ensure that the
performance of the Oakley Funds is sustainable for many years
to come.
Caroline Foulger
Chair
10 March 2021
INVESTMENT ADVISER'S REPORT
Oakley Capital reflects on the strength of its portfolio amidst
challenging circumstances in 2020 and discusses its strategic
positioning for the post-pandemic era
Strong portfolio performance
In a year upended by the emergence and spread of COVID-19,
companies everywhere have been on a tumultuous and demanding
journey. Business plans have been reimagined, priorities shifted,
and emerging trends propelled forward as the world adapts to new
ways of living and working.
A defining feature of 2020 was the acceleration of
digitalisation and the increased pace of adoption of new
technologies, a trend which helped drive the Oakley Capital
portfolio's strong performance during the year. Our portfolio has a
strong bias towards digital business models, with a focus on
software, tech-enabled services and online platforms, all of which
experienced enhanced growth during 2020, as people and businesses
further migrated online.
While all companies have faced some form of operational
challenges due to COVID-19, the financial impact has varied greatly
for different types of businesses.
The Oakley Capital portfolio can be divided into three distinct
COVID-19 impact categories:
-- Expectations met or exceeded - ten of our portfolio companies
grew EBITDA at or above pre-COVID expectations, as they benefited
from robust or expanding demand for Business Service Software, Web
Hosting, Online Consumer platforms and Education Technology
-- Modest impact - four companies in our portfolio experienced
some disruption to their expected financial performance, as new
business wins or enrolments were impeded by social restrictions
affecting certain areas of the Telecoms and Education sectors
-- Significant impact - three portfolio companies suffered
material disruption to their operations, as businesses with
physical footprints and direct-to-consumer models were impacted by
repeated Europe-wide lockdowns
With Oakley's selective approach and targeting of key themes
such as digitalisation and subscription-based revenue models,
overall the portfolio delivered positive and sustainable
performance, with continued growth in 2020.
Protecting stakeholders and implementing operational
excellence
Throughout the pandemic, Oakley has placed the safety and
welfare of its colleagues, investors, and all other stakeholders as
its highest priority.
As the crisis unfolded, we immediately took the necessary steps
to protect the health of our colleagues while ensuring business
continuity. The team was well prepared with secure remote access to
our systems already in place, allowing us to continue to work from
our homes safely and without disruption.
We also provided extensive support to help our portfolio
companies safeguard their employees, assets and manage the crisis.
Oakley has always been a highly engaged investor, which meant that
we were well placed to work closely with management teams to help
adapt their operations, navigate potential pitfalls, update their
strategies, and implement new ways of working. We further
strengthened our lines of communication with all of our portfolio
companies and undertook extensive monitoring to ensure that we
could anticipate and quickly respond to new developments.
Furthermore, we conducted detailed risk assessments on each of the
portfolio companies to identify potential weaknesses, opportunities
and address concerns.
Proactive engagement in a rapidly evolving market
COVID-19 had a marked impact on private equity dealmaking during
2020, with a reduction in the high levels of activity seen in
previous years. A number of factors combined to depress activity.
Plans for the acquisition or disposal of assets were paused as the
macro environment deteriorated and new social restrictions created
uncertainty; private equity firms' bandwidth was absorbed by a
focus on supporting existing portfolio companies; and credit
markets initially froze until market volatility began to stabilise.
As the pandemic took full effect in Q2, deal count and value across
that quarter dropped to their lowest levels since 2015, at 1,011
and $65 billion respectively. While this pause in dealmaking
contributed to a c.2% fall in market activity for the full year,
signs of recovery showed in the second half of 2020. [1] The
industry adapted to the new market environment and transaction
levels began to rebound, as fund managers adjusted to the "new
normal" and began capitalising on opportunities to deploy
capital.
1,402 deals were agreed in Q3, followed by a further increase in
activity in Q4, when 1,942 deals were announced with an aggregate
value of $158 billion.1
Oakley remained highly active throughout the year and despite
dedicating significant resource to supporting our portfolio, we
were able to remain vigilant and capitalise on opportunities
throughout the year to continue investing, divesting, refinancing
and fundraising. Oakley made two well-timed exits in Q1 and Q2, and
our network of entrepreneurs and managers continued to help us
source attractive new investments. Across 2020 we made three new
investments in well-established brands across the fitness,
healthcare and luxury sectors, with all three companies having
significant opportunities to increase sales, expand their product
verticals, and benefit from the growth in digital adoption.
Our pipeline of potential new investments in exciting businesses
that meet our rigorous criteria for investment and play into our
key strategic themes had also grown across 2020.
Despite the considerable uncertainty generated by the pandemic,
COVID-19 has become a catalyst, if not the direct cause, of more
high-quality companies seeking private equity backing. Many have
recognised during the pandemic that they lack the valuable support,
expertise and capital resources that we can offer, as well as the
security that being part of a bigger organisation can provide.
Given this, we are optimistic that there are considerable
opportunities for experienced investors, such as Oakley, to source
high-quality acquisitions at attractive valuations. Underpinning
that confidence is our ability to source deals through proprietary
means. We unashamedly disagree with the commonly-held view that
private equity sourcing relies on the analysis of a universe of
companies via algorithms and screening processes. Oakley continues
to source new deals predominantly via exclusive introductions,
often driven by our well-established network of entrepreneurs.
Within Oakley's portfolio, 75% of businesses have been sourced
outside of an auction process and it is this network that will
enable us to consistently secure advantageous investment
opportunities in the future.
Raising capital in a virtual world
Private equity fundraising continued in 2020, despite the impact
of COVID-19. However, the pandemic and subsequent lockdowns
accelerated a trend that saw fewer funds being raised but with a
significantly increased average fund size.(1) With face-to-face
meetings made impossible, investors have shied away from investing
with unfamiliar funds and have instead committed larger amounts to
proven managers with strong track records and with whom they
already have established relationships.
In this environment it was notable that Oakley successfully
raised its maiden Origin Fund, which closed in January 2021 with
expected final commitments of EUR455 million, well above its target
size of EUR350 million. The Origin Fund is part of a new fund
family and is Oakley's first dedicated vehicle for investing in
lower mid-market companies, building on the firm's long and
successful history in this segment. Thanks to strong investor
demand, the Origin Fund was raised in just over six months
throughout the pandemic, notably without face-to-face meetings with
investors.
The establishment of the Origin Fund series is a natural step
for Oakley. Despite our flagship funds having grown in size over
time (Fund IV closed at EUR1.46 billion in June 2019), and now
focusing on larger sized mid-market businesses, we still see many
attractive opportunities with smaller mid-market companies.
The new Origin Fund will allow us to continue our long
track-record of successful investment in the lower mid-market
segment. The Origin Fund, supported by a dedicated investment team,
has a strong pipeline of attractive deal opportunities and signed
its first investment in 7NXT, a leading online fitness and
nutrition platform in the German-speaking markets, in October
2020.
Retaining a cautiously optimistic outlook
In light of continued uncertainty about the speed of the global
vaccination roll-out and the efficacy of vaccines against new
mutations of COVID-19, Oakley is maintaining a cautious view on
society's return to normality. We anticipate that social, political
and economic shocks and aftershocks will continue to reverberate
globally throughout 2021, and beyond.
Nevertheless, aspects of the pandemic and indications about the
post-pandemic era provide us with optimism about the future. After
all, post-crisis vintage private equity funds have historically
proven to be some of the best performing. COVID-19 has necessitated
enormous change within the global economy and, thanks to Oakley's
strategic positioning, we have benefited
from a number of trends as life and consumer habits have
changed.
Technological adoption has accelerated, with corporate migration
to cloud services and digital infrastructure delivering recurring
revenues for vendors and creating new efficiencies for customers.
The move to mass digital consumption is empowering those businesses
who can best utilise data and analytics, creating value for
customers via tailored products and services and driving the
balance of power shift towards well-managed and established
consumer brands. These trends are at the heart of Oakley's
investment approach and expertise.
We will continue to identify and support ambitious entrepreneurs
and companies that benefit from these powerful dynamics and who
share our vision, working with them to capture greater market
share, enter new markets, and drive their businesses forward
OCI NAV OVERVIEW
OCI's NAV grew from GBP686 million to GBP728 million, an
increase of 6% since 31 December 2019 to 403 pence per share.
Proceeds [2]
Despite market disruption during 2020, there has been a
continued high level of activity within the Oakley Funds. During
the period, OCI's share of proceeds from exits and refinancings
amounted to GBP341 million, consisting of:
-- Realisations - GBP264 million - the exit of WebPros, Casa,
Inspired and the partial realisation of atHome generating an
average gross Money Multiple of 3.3x
-- Refinancings - GBP37 million - the refinancing of Career
Partner Group, Wishcard Technologies and Facile
-- Direct debt repayment - GBP40 million - the repayment of Time Out loans and fund facilities
Investments [3]
In the 12 months to 31 December 2020, the Investment Adviser
continued to originate opportunities for the Oakley Funds, within
its focus sectors. During the year, OCI made a total look-through
investment of GBP152 million, attributable to:
-- Platform investments - GBP90 million - the acquisitions of
WebPros, Globe-Trotter, 7NXT and WindStar Medical
-- Follow-on investments - GBP21 million - bolt-ons to Ocean
Technologies Group and Ekon, and further investments into North
Sails and Time Out
-- Direct investments - GBP41 million - including equity
participation in Time Out's refinancing and an increase in the debt
investment provided to North Sails
OUTSTANDING COMMITMENTS OF OCI
Outstanding commitments to the Oakley Funds of GBP512.4
million.
Outstanding commitments to the Oakley Funds as at 31 December
2020 were GBP512.4 million, of which GBP298.9 million was to Fund
IV and GBP91.1 million to the Origin Fund. These will be deployed
into new investments over a five-year period, whilst Funds I and II
are in the realisation phase and Fund III has reached the end of
its investment period.
OCI's total outstanding commitment to the Origin Fund was
EUR101.9 million (GBP91.1 million) at the year end and increased to
EUR126.2 million (GBP112.9 million) following the final close in
January 2021. This latest Oakley Fund will apply Oakley's proven
investment strategy to companies in the lower mid-market
segment.
OCI has no leverage and had cash on the balance sheet of GBP223
million at 31 December 2020, comprising 31% of NAV. This cash level
is significantly higher than the long-term average due to the
quantum of realisations in the year and anticipated investment
opportunities in Fund IV and the Origin Fund.
Outstanding Outstanding
at 31 Dec at 31 Dec
Total commitment 2020 2020
Fund Fund vintage (EURm) (EURm) (GBPm) % of NAV
Oakley Fund I 2007 202.4 2.8 2.5 0
------------- ---------------- ----------- ----------- --------
Oakley Fund II 2013 190.0 13.3 12.0 2
------------- ---------------- ----------- ----------- --------
Oakley Fund III 2016 325.8 120.5 107.9 15
------------- ---------------- ----------- ----------- --------
Oakley Fund IV 2019 400.0 334.0 298.9 41
------------- ---------------- ----------- ----------- --------
Origin Fund 2020 105.0 101.9 91.1 12
------------- ---------------- ----------- ----------- --------
Outstanding commitments 572.5 512.4 70
---------------- ----------- ----------- --------
Cash and cash equivalents 223.1 31
---------------- ----------- ----------- --------
Net outstanding commitments unfunded
by cash resources at the year end 289.3 39
----------- ----------- --------
OVERVIEW OF OCI'S UNDERLYING INVESTMENTS
OCI's NAV at 31 December 2020 was GBP728 million, a NAV per
share of 403 pence.
Residual
Investments Sector Region Year of investment cost Fair value
Fund I
Time Out Consumer Global 2010 GBP60.4m GBP19.4m
-------------- --------- ------------------------ ---------- ----------
OCI's proportionate allocation of Fund I investments (on a look-through GBP19.4m
basis)
----------
Other fund assets and liabilities (GBP3.3m)
----------
OCI's investment in Fund I GBP16.1m
----------
Fund II
North Sails Consumer Global 2014 GBP45.1m GBP35.2m
-------------- --------- ------------------------ ---------- ----------
Daisy Technology UK 2015 GBP12.2m GBP17.3m
-------------- --------- ------------------------ ---------- ----------
OCI's proportionate allocation of Fund II investments (on a look-through GBP52.5m
basis)
----------
Other fund assets and liabilities GBP0.7m
----------
OCI's investment in Fund II GBP53.2m
----------
Fund III
atHome Technology Luxembourg 2017 GBP0.0m GBP7.7m
-------------- -------------- ----- ----------- ----------
Schülerhilfe Education Germany 2017 GBP31.3m GBP47.5m
-------------- -------------- ----- ----------- ----------
TechInsights Technology Canada 2017 GBP0.4m GBP15.5m
-------------- -------------- ----- ----------- ----------
AMOS Education France 2017 GBP7.2m GBP18.8m
-------------- -------------- ----- ----------- ----------
Career Partner Group Education Germany 2018 GBP0.0m GBP100.5m
-------------- -------------- ----- ----------- ----------
Facile Technology Italy 2018 GBP20.8m GBP35.0m
-------------- -------------- ----- ----------- ----------
Ekon Technology Spain 2019 GBP22.5m GBP21.7m
-------------- -------------- ----- ----------- ----------
Iconic BrandCo Consumer Italy/UK 2019 GBP16.1m GBP16.1m
-------------- -------------- ----- ----------- ----------
OCI's proportionate allocation of Fund III investments (on a look-through GBP262.9m
basis)
----------
Other fund assets and liabilities (GBP45.0m)
----------
OCI's investment in Fund III GBP217.9m
----------
Fund IV
Ocean Technologies Education Norway/UK 2019 GBP21.9m GBP25.9m
Group
------------- ------------------- ---- --------- ----------
Wishcard Technologies Consumer Germany 2019 GBP17.3m GBP20.7m
Group
------------- ------------------- ---- --------- ----------
Contabo Technology Germany 2019 GBP5.0m GBP9.7m
------------- ------------------- ---- --------- ----------
WebPros Technology Switzerland/USA 2020 GBP45.3m GBP50.4m
------------- ------------------- ---- --------- ----------
WindStar Medical Consumer Germany 2020 GBP42.7m GBP42.7m
[4]
------------- ------------------- ---- --------- ----------
OCI's proportionate allocation of Fund IV investments (on a look-through GBP149.4m
basis)
----------
Other fund assets and liabilities (GBP83.0m)
----------
OCI's investment in Fund IV GBP66.4m
----------
Residual
Investments Sector Location Year of investment cost Fair value
Origin Fund
7NXT Technology Germany 2020 GBP10.3m GBP10.3m
----------- -------- ------------------- -------- ----------
OCI's proportionate allocation of Origin Fund investments (on a GBP10.3m
look-through basis)
----------
Other fund assets and liabilities (GBP9.2m)
----------
OCI's investment in Origin Fund GBP1.1m
----------
Direct investment:
Time Out Consumer Global 2010 GBP23.9m
----------- -------- ------------------- -------- ----------
Daisy Technology UK 2015 GBP17.3m
----------- -------- ------------------- -------- ----------
North Sails Consumer Global 2014 GBP102.6m
----------- -------- ------------------- -------- ----------
Fund facilities GBP6.6m
----------- -------- ------------------- -------- ----------
Total direct investments GBP150.4m
-------- ----------
Total OCI investments GBP505.1m
-------- ----------
Cash, other assets and liabilities GBP222.9m
-------- ----------
Total OCI NAV GBP728.0m
-------- ----------
Other fund assets and liabilities comprise OCI's share of,
primarily, cash, receivables and third-party fund debt
facilities.
Direct equity securities
In April 2020, Oakley completed the sale of its remaining
investment in Inspired, following partial realisations in 2017 and
2019. The net proceeds from the realisation of OCI's direct stake,
combined with the indirect stake via Fund II, represented a 25%
uplift to the 31 December 2019 carrying value. OCI's direct
investment returned proceeds of EUR107.4 million (GBP94.2
million).
Prior to the escalation of the COVID -- 19 pandemic in March
2020, Time Out was performing in line with expectations; growth in
digital advertising and the recently expanded Time Out Market
estate continued the trading momentum already established in
2019.
However, the outbreak of COVID -- 19 and subsequent
government-enforced lockdowns in 2020 severely impacted the leisure
and hospitality sectors, causing the temporary closure of all six
Time Out Markets and a sharp decline in advertising revenues for
Time Out Media, generated from marketing to clients in the travel
and leisure sectors.
In May 2020, Time Out completed an equity placing, raising
GBP47.1 million to support the working capital requirements of the
business and strengthen the balance sheet. OCI invested a total of
GBP21.4 million, of which GBP12.6 million was a direct investment,
as part of the placing.
Direct debt securities
The Company provides debt facilities to certain underlying
entities and portfolio companies. These are provided at competitive
market interest rates (ranging from 6.5% to 12%), allowing OCI to
earn higher returns than would be earned on cash reserves. During
2020, OCI earned GBP10.3 million of interest from the debt
facilities provided.
As part of the Time Out placing, a direct loan of GBP27.1
million, including interest, was repaid to OCI. At the year end,
loans to Daisy and North Sails were GBP119.8 million. The Company
also provides annual revolving credit facilities to two of the
Oakley Funds. As at 31 December 2020, the outstanding amounts were
GBP6.6 million, including accrued interest.
ENVIRONMENTAL, SOCIAL AND GOVERNANCE POLICY
Investing responsibly.
The Board has endorsed Oakley's policy to advise on the
investment of the Company's resources in a responsible manner.
The
Board is committed to monitoring investment activity and
progress on Environmental, Social and Governance ('ESG') topics,
with regular updates provided by Oakley's Head of Sustainability
and the Oakley team.
We believe that investing responsibly protects and creates
value, beyond the standard drivers of compliance and risk
management. We recognise that ESG factors impact our investments,
and better understanding and management of these factors helps to
create more successful, resilient, and sustainable businesses,
which in turn will generate enhanced value.
OCI recognises that the bulk of its ESG impact will be through
the portfolio companies as we have no direct employees or
operational premises. However OCI itself has continued its journey
of governance during the year with continued Board refreshment and
the introduction of other enhanced governance policies.
Case studies.
2020 was a year unlike any other, repeatedly testing
individuals, society and businesses. Throughout the year, Oakley's
portfolio companies demonstrated resilience and leadership,
supporting both employees and local communities.
Ocean Technologies Group - Human Capital Engagement.
Ocean is a leading maritime learning and technology provider. A
new Chief Human Resources Officer joined the business in 2020, and
quickly set the business on track to co-create new values and embed
them in "business as usual". A new shared culture was needed, as
Ocean comprises six companies which have recently come together
under one group. Since summer 2020, an Ocean intranet and MS Teams
channel were set up, creating a cohesive space for all employees.
Monthly town hall meetings were launched to share the Ocean
strategy, build a culture of #TeamOcean and create a platform for
employees to ask questions and provide feedback. Frequent pulse
surveys help provide an understanding of what employees are
concerned about and areas which may need additional attention. Much
has been achieved in the last year and more is expected during
2021.
Wishcard Technologies Group - Corporate Governance.
Since joining the Oakley portfolio in 2019, Wishcard, a
German-based consumer technology company providing gift vouchers to
consumers and businesses, has developed and strengthened its
corporate governance policies and procedures. Key developments in
2020 have included the development and adoption of a robust
anti-money laundering policy, implementation of an Advisory Board
to provide oversight and robust governance, and the recruitment of
a new CFO. Under Oakley's ownership, the business has been
transformed in its professionalism and the quality of its
governance regime. We are continuing to work closely with
management to drive forward change, and institute the highest
possible standards of governance. This is a central part of the
value-creation Oakley offers in partnering with founder-owned
businesses.
North Sails - Resource Use.
North Sails is the world leader in sail and marine-related
products, providing innovative and high-performance clothing and
equipment to sailors around the world. The company is acutely aware
of ocean pollution, especially plastic, and has committed to
#GoBeyondPlastic and support the UN Environment Programme
#CleanSeas pledge to reduce plastic usage. As part of this
initiative, North Sails has upcycled over 50 sails into bags and
other products in 2019 with none going to landfill. A new logo has
been introduced on products that are made from recycled, repurposed
or waste products. This stamp will also appear on any bag made by a
third party from sails provided by the company as the base
materials. The company continues to educate its workforce on waste
reduction and environmental best practice. Several partnerships
with universities have also begun to investigate how some of the
more resilient materials can be broken down and repurposed for
further use.
As COVID-19 spread across the world, individuals and businesses
reacted as best as they could to support each other. Oakley is
proud of the work our portfolio companies did to support not only
our employees, but also the local communities.
Supporting employees and local communities during COVID-19.
Career Partner Group
Many companies, like Career Partner Group, focused on
strengthening resilience, enabling virtual after-work
get-togethers, sending a strong C-Level message that crying babies
or children joining a meeting is OK and family matters may take
priority when working from home.
North Sails and TechInsights
Like many others, North Sails and TechInsights provided
additional health insurance or benefits, to ensure employees have
the security and access to resources needed to enable safe working
practices.
Alessi
Alessi donated over 40,000 masks to hospitals local to its
Italian manufacturing facility during the first peak of
infection.
TechInsights
TechInsights received a licence from the city of Ottawa to
produce, bottle and donate hand-sanitiser in support of front-line
workers; thousands of bottles have been donated to date.
Wishcard Technologies Grp
Wishcard has partnered with the local government of Bavaria to
operate a voucher scheme to support the restaurant industry as it
struggles through COVID-19 restrictions.
As the global pandemic continues, Oakley will continue to
support efforts which help ease the burden on employees and local
communities.
Directors' report
Regular contact between Directors and the Oakley Group continued
throughout the year.
The Company's registered office and principal place of business
is 3rd Floor, Mintflower Place, 8 Par-la-Ville Road, Hamilton HM08,
Bermuda.
The Board of Directors
The Board currently comprises the Chair and four other
Non-Executive Directors. Laurence Blackall retired from the Board
at the Annual General Meeting in May 2020. Craig Bodenstab stepped
down from the Board in June 2020, and was replaced by Fiona Beck in
September 2020.
All Directors, other than Peter Dubens and Stewart Porter, are
considered to be independent. Peter Dubens and David Till (as
alternate Director), with a team of investment professionals, are
together primarily responsible for performing investment advisory
obligations with respect to the Company and the Oakley Funds.
Stewart Porter was employed as the COO of the Investment Adviser
until mid-2018 and, consistent with UK Corporate Governance Code
guidelines, will be considered independent effective July 2021.
The Board met formally 11 times during 2020, including three of
four quarterly scheduled meetings being held physically in Bermuda.
This increased frequency was driven by enhanced portfolio
monitoring updates from the Investment Adviser amidst the COVID-19
pandemic.
Regular contact between Directors and the Oakley Group continued
throughout the year as required for the purpose of considering key
decisions of the Company.
The Directors are kept fully informed of investment performance
and other matters. The Board receives periodic reporting and ad-hoc
additional information as required by the Directors from the
Administrative Agent, Investment Adviser and other service
providers.
The Directors may seek independent professional advice at the
expense of the Company to aid their duties. During 2020, this
included a review of Oakley Capital Origin Fund documentation and
legal due diligence, and an independent third-party Directors'
remuneration review.
The rules governing the appointment of Directors to the Board is
contained in the Company's bye-laws, located at:
https://oakleycapitalinvestments.com/wp-
content/uploads/2020/04/Bye-laws-of-Oakley-
Capital-Investments-2020.pdf
The Company, during the year, adopted a Diversity Policy as it
relates to Board composition. This is available at
www.oakleycapitalinvestments.com.
Conflicts of interest
The Directors continue to declare on an ongoing basis all
conflicts and potential conflicts of interest to the Board, a
register of which is considered at Board and Committee meetings.
Declaration of Directors' interests is a standing Board agenda item
at the outset of each meeting. A conflicted Director is not allowed
to take part in the relevant discussion or decision and is not
counted when determining whether a meeting is quorate.
Peter Dubens is a shareholder and a Director of a number of the
Oakley Group entities and cannot vote on any Board decision
relating to these entities.
Each Director's shareholding is outlined as part of the
Directors' Remuneration Report, and is considered for fair dealing
purposes as a declared interest at the time of, for example, share
buybacks.
Investment management and administration
The Company is a self-managed Alternative Investment Fund
('AIF'), and the Board has the ultimate decision to invest (or take
any other action) in the Oakley Funds or in any other manner
consistent with its Investment Policy. In the ordinary course of
business, it makes decisions after reviewing the recommendations
provided by the Oakley Group (typically as presented by the
Investment Adviser on behalf of the Administrative Agent).
For the avoidance of doubt, the Directors do not make investment
decisions on behalf of the Oakley Funds, nor do they have any role
or involvement in selecting or implementing transactions by the
Oakley Funds or in the management of the Oakley Funds.
Oakley Capital Manager Limited ('OCML') serves as Administrative
Agent to the Company. It is incorporated in Bermuda and regulated
by the Bermuda Monetary Authority as a licensed Investment
Business. The Administrative Agent provides operational assistance
and corporate secretarial services to the Board with respect to the
Company's business. The Administrative Agent is managed by
experienced third-party administrative and operational Executive
Directors.
Oakley Capital Limited serves as the Investment Adviser to the
Administrative Agent with respect to the Company. It is
incorporated in the UK and is authorised and regulated by the
Financial Conduct Authority for the provision of investment advice
and arranging of investments. The Investment Adviser is primarily
responsible for making investment recommendations to the Company
along with structuring and negotiating deals for the Oakley
Funds.
The Directors of the Company continue to believe these
arrangements create the conditions to enhance long-term shareholder
value and, based on the Company's overall objective, to achieve a
high level of Company performance. Each year, including in 2020,
the three independent Directors formally review the performance of
Oakley and OCML.
The Company has appointed Mayflower Management Services
(Bermuda) Limited (the 'Administrator') to provide administration
services pursuant to an Administration Agreement. It receives an
annual administration fee at prevailing commercial rates. 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.
The Administrative Agent has been appointed pursuant to an
operational services agreement (the 'Operational Services
Agreement'). The Operational Services Agreement continues for
consecutive periods beginning on the date of the last Annual
General Meeting at which a continuation vote was put to
shareholders (a 'Continuation Meeting') and ending on the date of
the next Continuation Meeting.
Ongoing costs
For the period ended 31 December 2020, the Company's ongoing
charges were calculated as 2.46% (2019: 2.57%) of NAV.
The calculation is based on ongoing charges expressed as a
percentage of the average NAV for the year. Ongoing charges are
calculated in accordance with the guidelines issued by the
Association of Investment Companies ('AIC'). They comprise
recurring costs, including the operating expenses of the Company,
operational services' fees paid to the Administrative Agent, and
OCI's share of the management fees paid by the underlying Oakley
Funds. The calculation specifically excludes expenses, gains and
losses relating to the acquisition or disposal of investments,
performance-related fees, and financing charges.
Operational Service Fees
Included in investment related fees are operational and
performance fees paid to Oakley Capital Manager Limited. 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.
Debt and equity direct investments
During 2020 and 2019, 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.
Oakley Capital Fund I-III
2% on invested capital since the date of closure of the
investment period.
Oakley Capital Fund IV and Oakley Capital Origin Fund
2% on fund commitment during the investment period (ending after
the earlier of five years after the final closing date or 75% of
commitments having been invested), then 2% on invested capital,
stepping down to 1% on invested capital ten years after the final
closing date.
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
are payable by reference to the Company's current direct equity
investments.
Stewardship and delegation of responsibilities
Under the Operational Services Agreement, the Board has
delegated to the Administrative Agent substantial authority for
carrying out the day-to-day administrative functions of the
Company.
The Company exercises its own voting rights on direct equity
portfolio investments, which comprise only Time Out Group plc as at
the reporting date.
Oakley has a policy of active portfolio management and ensures
that significant time and resource is dedicated to every
investment, with Oakley executives typically being appointed to
portfolio company boards, in order to ensure the implementation and
continued application of active, results-orientated corporate
governance. OCI receives regular feedback on these activities.
Capital Markets Day
The Board holds an annual Capital Markets Day consisting of
presentations to shareholders and analysts by senior members of the
Oakley Group and management teams from a selection of Oakley Funds'
portfolio companies. The event was held digitally in 2020, with
presentations focused on the performance of the underlying Oakley
Funds' investment portfolio. Directors of the Board attend the
Capital Markets Day.
Public reporting
The Company's Annual Report and Accounts, along with the
half-year Financial Statements and other RNS releases, are prepared
in accordance with applicable regulatory requirements and published
on the Company's website.
Share capital and voting rights
As at the date of this report, the Company had:
-- 180,599,936 ordinary shares and voting rights in issue; and
-- issued share capital of 180,599,936.
The rights attaching to the shares are set out in the bye-laws
of the Company. There are no restrictions on the transfer of
ordinary shares other than those which may be imposed by law from
time to time. There are no special control rights in relation to
the Company's shares and the Company is not aware of any agreements
between holders of securities that may result in restrictions on
the transfer of securities or on voting rights. In accordance with
the Market Abuse Regulation and the Company's share dealing code,
Board members and certain employees of the Company's service
providers are required to seek approval to deal in the Company's
shares.
At a general meeting of the Company, every holder of shares who
is present in person or by proxy shall, on a poll, have one vote
for every share of which they are the holder. All the rights
attached to a treasury share shall be suspended and shall not be
exercised by the Company while it holds such treasury shares and,
where required by the Act, all treasury shares shall be excluded
from the calculation of any percentage or fraction of the share
capital or shares of the Company. As at 31 December 2020, the
Company did not hold any treasury shares.
Dividend policy and distributions
The Board has adopted a dividend policy which takes into account
the forecast profitability and underlying performance of the
Company in addition to capital requirements, cash flows and
distributable reserves. The Company has experienced strong NAV
growth in 2020 despite the challenges of the COVID-19 pandemic,
thanks to the resilient nature of the Oakley Funds' portfolio
companies' business models.
The Company declared a final dividend of 2.25 pence per share in
respect of the year ended 31 December 2019, which was paid in April
2020. An interim dividend of 2.25 pence per share was paid by the
Company in respect of the six months to 30 June 2020, in October
2020.
Share issuance and buy-backs
By a special resolution passed at the May 2020 AGM, the
Directors were authorised to issue shares and/or sell shares from
treasury for cash on a non-pre-emptive basis provided that such
authority shall be limited to the issue and/or sale of shares of up
to 5% of the issued share capital as at the date of that
meeting.
Unless specifically authorised by shareholders, no issuance of
ordinary shares on a non-pre- emptive basis will be made at a price
less than the prevailing NAV per ordinary share at the time of
issue. No such issuances are currently expected.
The Company conducts share buy-backs in the market with a view
to addressing any imbalance between the supply of and demand for
its shares, to increase the NAV per ordinary shares and/or to
assist in maintaining a narrow discount to net asset value per
ordinary share in relation to the price at which ordinary shares
may be trading. Such purchases of ordinary shares will only be made
for cash at prices below the prevailing NAV per ordinary share. Any
repurchased shares will be cancelled in full. Directors' powers of
share issuance and/or buy-back will only be exercised if thought to
be in the best interests of shareholders as a whole.
During 2020, the Company did not issue any shares. Five share
buy-backs were completed during the year, pursuant to which 18
million shares, or 9.1% of the total shares in issue as at the
beginning of 2020, were cancelled at a weighted average price of
230.0 pence, with a combined estimated positive impact on NAV per
share of 12.6 pence.
Buy-back price NAV per share
Number Buy-back price discount to NAV impact estimate
Execution date/status of shares (pence) (%) (pence)
18 March 2020 3,000,000 1.59 54 2.9
---------- -------------- ---------------- ----------------
18 June 2020 1,340,000 2.05 43 1.1
---------- -------------- ---------------- ----------------
29 July 2020 3,660,000 2.25 37 2.5
---------- -------------- ---------------- ----------------
2 October 2020 3,053,000 2.525 31 1.8
---------- -------------- ---------------- ----------------
3 December 2020 6,947,000 2.575 30 4.2
---------- -------------- ---------------- ----------------
Total weighted average to date 18,000,000 2.30 36 12.6
---------- -------------- ---------------- ----------------
Section 172 and stakeholder reporting
The Board is committed to understanding our stakeholders' views
and considering their interests in Board discussions and
decision-making. This includes having regard to the likely
consequences of any decision in the long term, the need to foster
the Company's business relationships with service providers, the
impact of the Company's operations on the community and
environment, and maintaining a reputation for high standards of
business conduct. Through this engagement, the Board is able to
understand better, their views and consider these views in their
discussions and decision-making.
Shareholder communications
The support of our shareholders is critical to the continued
success of the business and the achievement of our objectives. We
believe our shareholders are interested in the financial
performance of the Company, its ability to continue in operation
for the foreseeable future and the maintenance of high standards of
conduct and corporate governance.
The Board places a high degree of importance on engagement with
shareholders, endeavouring to communicate clearly and regularly
with existing and potential shareholders.
During the year the Board has engaged with shareholders in the
following ways:
-- Annual General Meeting: An AGM is held each year, where a
separate resolution is proposed on each substantially separate
issue along with the presentation of the Annual Report and
Accounts.
-- Capital Markets Day: Each year the Board holds an event
consisting of presentations to shareholders and analysts by senior
members of the Oakley Group.
-- Shareholder engagement: The Board maintains awareness of
shareholder views by means of regular updates from its Investor
Relations team and meetings with shareholders.
-- Website: The Company's Annual Report and Accounts, along with
the half-year Financial Statements and other RNS releases, are
prepared in accordance with applicable regulatory requirements and
published on the Company's website.
During the year, some of the topics discussed with shareholders
were: portfolio company performance including the impact of
COVID-19; investment strategy and response to COVID-19; future fund
investment opportunities; deal activity; and retail shareholder
access via trading platforms.
The Oakley Group also briefs the Board on a regular basis with
regard to feedback received from analysts and investors. Any
significant commentary raised by shareholders in relation to the
Company is communicated to the Board. The Company's Broker and
Financial Adviser ('Liberum Capital Limited') also regularly
reports to the Board at meetings. In addition, research reports
published by financial institutions on the Company are circulated
to the Board.
The Company reports formally to shareholders twice a year, with
an emphasis on net asset value performance and updates. In
addition, current information is provided to shareholders on an
ongoing basis through the Company's website.
Corporate and social responsibility
The Board considers the ongoing interests of shareholders and
has open and regular dialogue with the Investment Adviser on the
governance of the portfolio companies.
The Company adopted an ESG Policy in March 2020.
Service providers and significant agreements
The following agreements and service providers are considered
significant to the Company:
-- Oakley Capital Manager Limited ("Administrative Agent") under
the Operational Services Agreement.
-- Oakley Capital Limited ("Oakley") as Investment Adviser to
the Administrative Agent, under the terms of the Investment
Advisory Agreement.
-- Mayflower Management Services (Bermuda) Limited under the Administration Agreement.
-- KPMG Audit Limited as appointed external Auditor.
-- Liberum Capital Limited as Broker and Financial Adviser.
The Board maintains regular contact and dialogue with its key
service providers, through formal meetings and calls, as well as
informal communications throughout the year. The Management
Engagement Committee's role is to review on a regular basis the
appointment, remuneration and performance of the key service
providers to the Company, with a key focus on the Investment
Adviser and Administrative Agent.
As part of this role, the Committee encourages open dialogue and
engagement with the service providers.
Substantial shareholdings
As at 31 December 2020, the Company has received the following
notifications of interest of 3% or more in the voting rights
attached to the Company's ordinary shares:
% voting rights % voting rights
Shareholder 31 December 2020 31 December 2019
Asset Value Investors 13.7 14.0
----------------- -----------------
OCI Directors 10.2 9.2
----------------- -----------------
Sarasin and Partners 7.3 7.0
----------------- -----------------
City of London Investment Management Company 6.7 4.8
----------------- -----------------
Barwon Investment Partners 5.8 7.2
----------------- -----------------
FIL Investment International 5.4 4.6
----------------- -----------------
Lombard Odier Asset Management 5.4 5.1
----------------- -----------------
Jon Wood and Family 4.4 3.4
----------------- -----------------
Hargreaves Lansdown Stockbrokers 4.1 2.3
----------------- -----------------
Hawksmoor Investment Management 3.4 1.5
----------------- -----------------
Most notably, the aggregate voting rights of the top ten
shareholders have also fallen from 70% in 2019 to 66% in 2020.
Part of the Company's rationale for moving its listing to the
Specialist Fund Segment in August 2019 was the potential for deeper
trading from a broader range of shareholders. The following table
outlines the shift in full-year trading volumes and turnover on the
Company's shares:
Measure 2020 full year 2019 full year 2018 full year
Average daily trading volume 487,437 570,857 342,453
-------------- -------------- --------------
Total volume traded in the year 123,321,647 146,139,416 86,640,604
-------------- -------------- --------------
Turnover (as % of average
issued capital) 68.28 72.13 42.30
-------------- -------------- --------------
The Directors consider the continued elevated trading volume and
diversification of the shareholder base as encouraging signs for
unlocking future shareholder value in line with NAV growth.
Compensation for loss of office
There are no agreements between the Company and its Directors
providing for compensation for loss of office that occurs because
of a change of control.
Financial prospects and position
In compliance with Provision 36 of the AIC Code of Corporate
Governance (the 'AIC Code'), the Board has assessed the prospects
of the Company over a period in excess of the 12 months required
under the Going Concern assessment.
We have considered the sustainability and resilience of the
Company's business model over the long term, including
consideration of the impacts of COVID-19, and have based our
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.
Viability statement
Based upon this assessment, the Directors confirm they have a
reasonable expectation that the Company will continue in operation
and meet its liabilities as they fall due over the period of three
years from the date of this report.
Going concern
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.
In reaching this conclusion, the Directors have assessed the
nature of the Company's assets and cash flow forecasts and consider
that adverse investment performance should not have a material
impact on the Company's ability to meet its liabilities as they
fall due. Accordingly, they are satisfied that it is appropriate to
adopt a going concern basis in preparing these Consolidated
Financial Statements.
Disclosure of information to the auditor
Having made enquiries of fellow Directors and key service
providers, each of the Directors confirms that:
-- to the best of their knowledge and belief, there is no
relevant audit information of which the Company's auditor is
unaware; and
-- they have taken all the steps a Director might reasonably be
expected to have taken to be aware of relevant audit information
and to establish that the Company's auditor is aware of that
information.
Political donations and expenditure
The Company has made no political donations in the year and has
no expectation of doing so in the future.
Annual General Meeting ('AGM')
An AGM is held each year, where a separate resolution is
proposed on each substantially separate issue along with the
presentation of the Annual Report and Accounts. All proxy votes are
counted and, except where a poll is called, the level of proxies
lodged for each resolution is announced at the Meeting and is
published on the Company's website. The notice of AGM and related
papers are sent to shareholders at least 21 working days before the
Meeting.
The Chair and the Directors can be contacted through the Company
Secretary, Oakley Capital Manager Limited, 3rd Floor, Mintflower
Place,
8 Par-la-Ville Road, Hamilton HM08, Bermuda.
In compliance with the bye-laws of the Company, the AGM will be
conducted prior to 20 August 2021. Details of the AGM will be
notified to shareholders separately to this report.
Events after balance sheet date
Following the year-end, the following events have been noted
that impact the Company's look-through balance sheet:
Dividends - on 10 March 2021, the Board of Directors approved a
final dividend of 2.25 pence per share in respect of the financial
year ended 31 December 2020. This is due to be paid on 15 April
2021 to shareholders registered on or before 26 March 2021. The
ex-dividend date is 25 March 2021.
Partial sale - on 7 January 2021, the Oakley Fund II portfolio
company, Daisy Group, announced an agreement to sell its stake in
its Digital Wholesale Solutions division. OCI's share of proceeds
will be c.GBP22 million following this transaction, which includes
the full repayment of OCI's outstanding c.GBP17 million direct loan
to the Daisy Group. The transaction is subject to regulatory
approval.
Origin Fund - on 25 January 2021, Oakley announced that the
Origin Fund was closed to institutional investors, with an expected
final fund size of EUR455 million. OCI committed a further EUR24.3
million to the Fund following the year end, taking the total OCI
commitment to the Origin Fund to EUR129.3 million.
Acquisition - on 26 January 2021, Oakley Fund IV agreed to make
a minority investment in idealista, the leading online real estate
classifieds platform in Southern Europe. OCI's indirect
contribution via Fund IV was c.GBP43 million.
Acquisition - on 25 February, Oakley Fund IV completed its
investment in Dexters, one of London's leading independent
chartered surveyors and estate agents. OCI's indirect contribution
via Fund IV was c.GBP13 million.
Refinancing - on 1 March 2021, Oakley Fund III completed a
refinancing of its investment in Career Partner Group. OCI's share
of overall proceeds on a look-through basis was c.GBP28
million.
On behalf of the Board.
Caroline Foulger
Chair
10 March 2021
Investment policy
The Oakley Funds' investment strategy is to focus primarily on
private midmarket, Western European businesses.
The Company seeks to meet its investment objective by investing
primarily in the Oakley Funds, in successor funds managed by Oakley
Capital Manager Limited ('OCML') and/or the General Partners of the
Oakley Funds and/or advised by the Investment Adviser (or their
respective affiliates).
Cash resources held by the Company that are not called upon by
the Oakley Funds and their successor funds (or other investments)
will be invested under treasury guidelines set by the Board. Risk
appetite is typically limited to placing such funds in cash
deposits or near- cash deposits. The Company is authorised to hedge
the foreign exchange exposure of any non-GBP cash deposit or
investment.
In connection with certain direct investment opportunities made
available alongside the Oakley Funds and any successor funds
thereto, the Board has been advised by OCML that, from time to
time, OCML or (in the case of Luxembourg-based Funds) the
Luxembourg AIFM may invite one or more Limited Partners in the
Oakley Funds (and successor funds) including the Company to
directly invest alongside the Oakley Funds (and successor funds) on
substantially the same terms as such Limited Partnerships. In such
event, OCML or the Luxembourg AIFM (or, as applicable, the AIFM of
the successor fund) would make available to the Company copies of
the due diligence and analysis prepared by OCML or the Investment
Adviser and any other third parties in relation to such direct
investment opportunities. The Board would then determine whether or
not, and to what level, the Company should directly invest.
Investment strategy of the Oakley Funds
The Oakley Funds' investment strategy is to focus primarily on
private mid-market Western European businesses, with the objective
of delivering long-term capital appreciation within the Oakley
Funds. The life of each Oakley Fund is expected to be approximately
ten years, which includes a five-year investment period from the
date of final closing.
The Oakley Funds primarily focus on equity investments that
enable them to secure a controlling position in the target company.
The Oakley Funds typically invest in sectors that are growing or
where consolidation is taking place, investing both in performing
and under- performing companies, supporting buy-and-build
strategies, rapid growth, or businesses undergoing significant
operational or strategic change. The sectors targeted by the Oakley
Funds have included, in particular, technology, consumer and
education. However, the Oakley Funds' sector focus is considered
flexible through time in order to remain responsive to new or
emerging opportunities.
Reinvestment
On any realisation of investments, the Company may reinvest
funds in any of the following ways:
-- by way of commitment to successor funds, or new funds with
successor strategies such as the Origin Fund, in each case managed
by OCML, the Luxembourg AIFM and/or advised by the Investment
Adviser or their respective affiliates; or
-- to a lesser extent, in direct investment opportunities
alongside the Oakley Funds and/or successor funds provided by OCML
or (in the case of Luxembourg-based Funds) the Luxembourg AIFM, or
the AIFM of any successor fund; or
-- in cash deposits and cash equivalents.
Borrowing powers of the Company
The Company has the power to borrow money in any manner.
However, the Directors do not intend to borrow more than 25% of the
net asset value of the Company determined at the time of drawdown.
The Company may utilise leverage when deemed appropriate by the
Board. The Company may be required to use its investments as
security for any borrowings which it puts in place.
As at 31 December 2020, the Company had no outstanding
borrowings, nor encumbrance on any of its assets.
Changes to the investment policy
No material changes have been made to the Company's investment
policy during the year.
Risk management
The Board has developed a set of risk management policies,
procedures and controls, and has delegated the monitoring,
management and mitigation of these principal risks to the Risk
Committee. The Risk Committee provides feedback and oversight to
the Board on a regular basis. Refer to the Risk Committee Report to
the Board.
Statement of Directors' responsibilities
The Directors are responsible for preparing the Annual Report
and the Consolidated Financial Statements in accordance with
applicable law and regulations.
Bermuda company law requires the Directors to lay Financial
Statements for each financial year before the Members. The
Directors have prepared the Consolidated Financial Statements in
accordance with International Financial Reporting Standards
('IFRS'). Consistent with the common law requirements to exercise
their fiduciary duties consistent with their level of skills, the
Directors will not approve the Consolidated Financial Statements
unless they are satisfied that the Consolidated Financial
Statements present fairly, in all material respects, the state of
affairs of the Company and of the profit or loss of the Company for
the year. In preparing these Consolidated Financial Statements, the
Directors are required to:
-- select suitable accounting policies and then apply them consistently;
-- make judgments and estimates that are reasonable and prudent;
-- state whether applicable accounting standards have been
followed subject to any material departures disclosed and explained
in the Consolidated Financial Statements;
-- assess the Company's ability to continue as a going concern,
disclosing as applicable, matters related to going concern; and
-- use the going concern basis of accounting unless it is
inappropriate to presume that the Company will continue in
business.
The Company's Consolidated Financial Statements are published on
www.oakleycapitalinvestments.com.
The responsibility for the maintenance and integrity of the
website has been delegated to the Investment Adviser. The work
carried out by the Auditor does not involve consideration of the
maintenance and integrity of this website and, accordingly, the
Auditor accepts no responsibility for any changes that have
occurred to the Consolidated Financial Statements since they were
published on
the website.
The Directors are responsible for ensuring that (i) proper
accounting records are kept which are sufficient to show and
explain the Company's transactions and disclose with reasonable
accuracy at any time the financial position of the Company, and
(ii) that the Consolidated Financial Statements comply with the
Bermuda Companies Act 1981 (as amended). They are also responsible
for safeguarding the assets of the Company and hence for taking
reasonable steps for the prevention and detection of fraud and
other irregularities.
Responsibility statement of the Directors in respect of the
Annual Report
Each of the Directors, whose names and functions are listed in
the Board of Directors section of this report, confirms that, to
the best of his/her knowledge:
-- the Annual Report includes a fair review of the development
and performance of the business and the position of the Company,
together with a description of the principal risks and
uncertainties that the Company faces;
-- the Consolidated Financial Statements, prepared in accordance
with IFRS, present fairly, in all material respects, the assets,
liabilities, financial position and profit or loss of the Company
and, taken as a whole, are in compliance with the requirements set
out in the Bermuda Companies Act 1981(as amended);
-- the Annual Report includes a fair review of the development
and performance of the business and position of the Company and a
description of the principal risks and uncertainties the Company
faces;
-- the Investment Adviser's report, together with the Directors'
report and Chair's statement, include a fair review of the
information as required; and
-- the Annual Report and Consolidated Financial Statements,
taken as a whole, 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
10 March 2021
Corporate Governance report
The Board recognises the importance of sound corporate
governance.
Chair's introduction to Corporate Governance
Good corporate governance is a fundamental component of the
Company's activities.
The primary function of the Board is to provide leadership and
strategic direction and it is responsible for the overall
management and control of the Company.
It is through these functions that the Board delivers long-term
sustainable value and responsible growth for its shareholders.
The Company voluntarily applies the FCA Listing Rules where
appropriate. Listing Rule 9.8.4C requires the Company to include
certain information in a single identifiable section of this Annual
Report or a cross-reference table indicating where this information
is set out. The Directors confirm that there are no disclosures to
be made in this regard, save that: (i) Peter Dubens has waived his
right to receive a Director's fee; and (ii) the Company has entered
into an Operational Services Agreement with the Administrative
Agent, Oakley Capital Manager Limited, which is owned 100% by Peter
Dubens, a Director of the Company.
Statement of independence
The AIC Code recommends that the Chair should be independent in
character and judgement and free from relationships or
circumstances that may affect or could appear to affect his or her
judgement.
In addition to this provision, at least half the Board,
excluding the Chair, should be Non-Executive Directors whom the
Board considers to be independent of the Oakley Group.
Independence is determined by ensuring that, apart from
receiving their fees for acting as Directors or owning shares,
Non-Executive Directors do not have any other material
relationships with, nor derive additional remuneration from or as a
result of transactions with, the Company, its promoters, its
management or its partners, which in the judgement of the Board may
affect, or could appear to affect the independence of their
judgement.
The Board
Caroline Foulger, Fiona Beck and Richard Lightowler remain
independent, as they are free from any business or other
relationship that could materially interfere with their exercise of
judgement. Stewart Porter will be independent in July 2021 on the
third anniversary of his retirement from the Oakley Group.
Peter Dubens does not vote on matters in respect of which he is
deemed to have a conflict of interest.
It is the Board's responsibility to ensure that the Company has
a clear strategy and vision, and to oversee the overall management
and oversight of the Company, and for its growing success.
In particular, the Board is responsible for making investment
decisions into Oakley Funds and direct investments, monitoring
financial performance, setting and monitoring the Company's risk
appetite and ensuring that obligations to shareholders are
understood and met.
T he Directors believe that the Board has an appropriate balance
of skills and experience, independence and knowledge of the Company
to enable it to provide effective strategic leadership and proper
governance of the Company.
Directors' terms of appointment
The terms and conditions of appointment for Non-Executive
Directors are outlined in their letters of appointment and are
available for inspection at the Company's registered office during
normal business hours and at the AGM for 15 minutes prior to and
during the meeting.
In accordance with the Company's bye-laws and best practice,
Directors put themselves forward for annual re-election at every
AGM.
The Board's process for the appointment of new Directors and
proposed re-appointment of existing Directors is conducted in a
manner which is transparent, engaged and open. The Nomination
Committee oversees the nomination of Board members, as outlined in
the Committee's report.
Board meetings
Director Board attendance is summarised as part of the
Nomination Committee report.
The principal matters reviewed and considered by the Board
during 2020 included:
-- regular reports from the Investment Adviser on the Oakley Funds;
-- increased frequency of update calls with the Investment
Adviser relating to portfolio performance during the global
pandemic;
-- regular reports and updates from the Investment Adviser on
the direct investments and debt facilities held by the Company;
-- regular reports from Investor Relations and the Investment Broker;
-- direct investment opportunities;
-- reports and updates from the Administrative Agent;
-- consideration of the Company's share price and net asset value;
-- regular reports from the Board's Committees;
-- the Annual Report and Half-yearly Report;
-- report from external remuneration consultant to the Remuneration Committee;
-- report from the external auditor; and
-- corporate matters including dividend policy and share buy-backs.
Board training
New Directors are provided with an induction programme tailored
to the particular circumstances of the appointee and which includes
being briefed fully about the Company by the Chair and Senior
Executives of the Investment Adviser. The Board programme considers
the training and development needs of both the Board as a whole and
of individual Directors.
Information and support
The Board ensures it receives, in a timely manner, information
of an appropriate quality to enable it to adequately discharge its
responsibilities. Papers are provided to the Directors in advance
of the relevant Board or committee meeting to enable them to make
further enquiries about any matter prior to the meeting, should
they so wish. This also allows the Directors who are unable to
attend to submit views in advance of the meeting.
The Board of Directors has regular access to the Investment
Adviser and Administrator which supports open discussion at
Board meetings.
Reports from the Committees of the Board
The Board has delegated specified areas of responsibility to its
Committees. The terms of reference of all Committees are available
publicly on the Company's website.
In practice, all Board members are eligible to attend all
Committee meetings, unless specifically identified conflicts are
deemed
to require otherwise.
The Board primarily assesses each Committee's performance by
analysing output against its terms of reference and its members'
attendance at Committee meetings.
AIC Code
The Board recognises the importance of sound corporate
governance and has chosen to comply with the Association of
Investment Companies Code of Corporate Governance (the 'AIC Code'),
as is appropriate for the Company's size and listing.
The AIC represents closed-ended investment companies whose
shares are traded on public markets. The purpose of the AIC Code is
to provide a framework of best practice in respect of the
governance of investment companies.
The Board has considered the Principles and Provisions of the
AIC Code of Corporate Governance, as last updated in February 2019.
The AIC Code addresses the Principles and Provisions set out in the
2018 UK Corporate Governance Code (the 'UK Code'), as well as
setting out additional Principles on issues that are of specific
relevance to the Company.
The Board considers that reporting consistent with the
Principles of the AIC Code, which has been endorsed by the
Financial Reporting Council, will provide more relevant information
to shareholders.
A copy of the AIC Code is available on the AIC's website at
www.theaic.co.uk. It includes an explanation of how the AIC Code
adapts the Principles and Provisions set out in the UK Code to make
them relevant for investment companies.
The Company has complied with all the Principles and Provisions
of the AIC Code and the relevant provisions of the UK Code, except
as set out below:
-- the UK Code includes provisions relating to the need for an
internal audit function. The Board and Audit Committee continues to
consider the need for a dedicated internal audit or assurance
function as not required for the Company, given the robust,
independent ongoing work conducted by the Management Engagement
Committee in reviewing service providers' performance, internal
controls and quality.
In the context of the business of the Company, certain
recommendations of the AIC Code have not been deemed appropriate to
its governance framework, as explained below:
-- the UK Code includes provisions relating to the role of
senior executive remuneration. The Board continues to consider this
provision as not relevant to the Company as it does not have any
employees, with remuneration of service providers being actively
considered and reviewed for appropriateness by the Management
Engagement Committee. Risk management decisions are taken by the
Board and its Committees.
-- AIC Provision 24: The Board has chosen not to adopt a fixed
policy on tenure of the Chair. The tenure of the current Chair,
Caroline Foulger's appointment has been set to end and/or be
considered for renewal in September 2022. The Board recognises the
value of refreshing its membership regularly, and has established
fixed tenure for all three independent Directors. The Nomination
Committee of the Board
prefers to retain the flexibility to assess the balance of
skills and experience of the Board as a whole. Furthermore, given
the long-term nature of the Company's investments, the Directors
consider that maintaining a degree of continuity and a long-term
perspective at Board level can be of particular value.
The Company's compliance with the AIC Code principles is
summarised on the following pages.
The Corporate Governance Report has been approved by the Board
and is signed on its behalf by:
Caroline Foulger
Chair
10 March 2021
Board leadership and purpose
Principle Evidence of compliance
A Long-term sustainability of the financial prospects
A successful Company is led of the Company's business model is considered
by an effective Board, whose as part of ongoing strategy discussions by the
role is to promote the long-term Board.
sustainable success of the This is premised upon the repeatable success
Company, generating value of the Oakley Funds, and therefore due diligence
for shareholders and contributing of the Investment Adviser's processes and performance
to continues to be considered by the Management
wider society. Engagement Committee of the Board.
Risk appetite is monitored and maintained within
Board-approved limits, preserving value and
controlling for current and emerging risks.
The Company's investment policy and objective
is included as part of this Annual Report -
refer to the inside front cover of this report.
Also see the Company's business model and strategy.
----------------------------------------------------------
B The Board believes that its core strategy of
The Board should establish investing in the Oakley Funds provides access
the Company's purpose, values to Oakley's entrepreneurial values and willingness
and strategy, and satisfy to embrace complexity. The Oakley Funds provide
itself that these and its access to investment opportunities at attractive
culture are aligned. All entry multiples, consistent with the Company's
Directors must act with integrity, investment objectives.
lead by example and promote Oakley summarises its values as:
the desired culture. CONNECTED: An established network of European
entrepreneurs that identify opportunities and
drive growth.
CREATIVE: The ability and experience to tackle
complex transactions and unlock hidden pockets
of value.
COLLABORATIVE: A culture of humility and openness
and a commitment to long-term partnership.
The Board actively fosters and supports a culture
that is open to new ideas, and is able to leverage
the experience and expertise of its service
providers.
The Company has enhanced dedication to its environmental,
social and governance impacts on wider society
during the year. The Company is working closely
with the Investment Adviser's newly appointed
Head of Sustainability as the ESG process is
embedded throughout the investment cycle and
has added ESG process to its own portfolio monitoring
and governance framework.
The Nomination Committee performs an annual
effectiveness assessment of the Board, which
includes testing of alignment with strategy,
purpose and values. Refer to the report by the
Nomination Committee.
Oakley has the empathy to understand the challenges
faced by entrepreneurial founders and management
teams, and the experience to work closely with
them to provide solutions as they develop and
grow their business.
----------------------------------------------------------
C Through the work of its regular Committee and
The Board should ensure Board meetings, the Board ensures frequent measurement
that the necessary resources against the Company's objectives. The adequacy,
are in place for the Company effectiveness and appropriateness of resources
to meet its objectives and and controls are monitored and discussed regularly
measure performance against at Board meetings. The Directors' Report outlines
them. The Board should also the activities of the Board in more detail.
establish a framework of > The Management Engagement Committee assesses
prudent and effective controls, key service providers' performance including
which enable risk to be assessed expectations for effectiveness of its respective
and managed. control environments - refer to the Committee
Report.
> The Audit Committee oversees the internal
and financial control environment for adequacy
and effectiveness - refer to the Committee Report.
> The Risk Committee establishes the Company's
risk framework in conjunction with Board-approved
risk appetites. The risk framework is used to
monitor and measure established and emerging
risks.
> The Nomination Committee aims to balance skills,
experience and diversity of Board members and
conducts, at least annually, a Board effectiveness
assessment.
> The Governance, Regulatory and Compliance
Committee aims to assist the Board to fulfil
its corporate governance and oversight responsibilities
in relation to the relevant codes, laws, regulations
and policies impacting the Company.
The Company implements and strictly monitors
its Conflicts of Interest Policy. There were
no breaches of this policy in 2020.
----------------------------------------------------------
D The Board is committed to maintain the Company's
In order for the Company reputation for high standards of conduct and
to meet its responsibilities engagement with its shareholders and stakeholders
to shareholders and stakeholders, - refer to Section 172 reporting.
the Board should ensure effective The Board remains committed to transparent reporting
engagement with, and encourage in all communications including in Annual and
participation from, Half-year Reports, via the Company website,
these parties. and by means of annual shareholder meetings
and Capital Markets Days.
----------------------------------------------------------
Division of responsibilities
Principle Evidence of compliance
F Caroline Foulger, as Chair, leads the Board of
The Chair leads the Board Directors with an open culture of demonstrative
and is responsible for its challenge, openness and accountability. She was
overall effectiveness in directing independent at appointment, and is considered
the Company. They should demonstrate by the Board to remain so for all intents, constructions
objective judgement throughout and purposes, as assessed consistently with the
their tenure and promote a circumstances listed in AIC Provision 13.
culture of openness and debate. The responsibilities of the Board are set out
In addition, the Chair facilitates in the Company's bye-laws, which are published
constructive Board relations on its website. All Committees' terms of reference
and the effective contribution are furthermore also published on the Company's
of all Non-Executive Directors, website.
and ensures that Directors The number of meetings of the Board and its Committees,
receive accurate, timely and and the individual attendance by Directors are
clear information. reported on in the Nomination Committee's Report
to the Board, which is included in this Annual
Report.
-----------------------------------------------------------
G Three of five Directors are considered independent
The Board should consist (i.e. Caroline Foulger, Richard Lightowler and
of an appropriate combination Fiona Beck). Stewart Porter will be considered
of Directors (and, in particular, independent effective July 2021 following more
independent Non-Executive than three years from his retirement from Oakley.
Directors) such that no one After Craig Bodenstab stepped down from the Board,
individual or small group Richard Lightowler was appointed as Senior Independent
of individuals dominates the Director, securing an available path
Board's decision-making. of intermediation for shareholders and other
Directors, whilst also acting as trusted adviser
and sounding board to the Chair.
Peter Dubens is the Founder and Managing Partner
of the Oakley Group, and hence not considered
independent. The Company implements a strict
Conflicts of Interest Policy to mitigate any
potential interference with Directors' exercise
of judgement.
The culture of open and honest communication
and forthright discussion means no individual
or small group of Board members dominates decision-making.
-----------------------------------------------------------
H All Directors' other commitments are monitored,
Non-Executive Directors should reported, and publicly disclosed by RNS as appropriate.
have sufficient time to meet During 2020, demands on Directors' time was considered
their Board responsibilities. at all times prior to the approval of additional
They should provide constructive material mandates being approved by the Board.
challenge, strategic guidance, Directors have regular direct access to both
offer specialist advice and senior and junior level service provider staff.
hold third-party service providers The Management Engagement Committee enforces
to account. and supports continuous improvement both from
a tactical service delivery and high-level strategic
engagement perspective.
The Management Engagement Committee's Report
includes an assessment of the performance of
the Oakley Group and other service providers
for the year. For 2020, the performance of significant
service providers was deemed as strong. A review
of administration services is scheduled for the
first half of 2021.
-----------------------------------------------------------
I The Administrative Agent, Oakley Capital Manager
The Board, supported by the Limited, also acts as Company Secretary and is
Company Secretary, should based at the Company's registered address
ensure that it has the policies, in Bermuda.
processes, information, time Board members have readily available access to
and resources it needs in senior staff at the Administrative Agent and
order Investment Adviser, enhancing information flow
to function effectively and in support
efficiently. of effective decision-making.
Directors and Committees of the Board have access
to independent professional advice, at the Company's
expense, if deemed necessary and appropriate.
This is provided for in the terms of reference
of each relevant Committee, available on the
Company's website.
The ultimate decision to invest, or take other
investment decisions, sits with the Board. In
the ordinary course, this is done after reviewing
the recommendations of the Investment Adviser.
-----------------------------------------------------------
Composition, succession and evaluation
Provision Evidence of compliance
J The Nomination Committee completes a formal
Appointments to the Board due diligence process on all appointments. Promotion
should be subject to a formal, of inclusiveness, diversity of gender and professional
rigorous and transparent backgrounds, as well as personal strengths are
procedure, and an effective thoroughly incorporated in decision-making.
succession plan should be The Board has achieved a 40%/60% gender balance
maintained. Both appointments and aims to develop its ethnic diversity in
and succession plans should the future.
be based on merit and objective
criteria and, within this
context, should promote diversity
of gender, social and ethnic
backgrounds, cognitive and
personal strengths.
-------------------------------------------------------
K The Board considers the current level of diversity
The Board and its Committees of demographic, soft and hard skills, as well
should have a combination as balance of appropriate experience and tenure.
of skills, experience and Each of the Directors retire and are subject
knowledge. Consideration to re-election at each AGM. Nomination decisions
should be given to the length are taken by the Nomination Committee of the
of service of the Board as Board.
a whole and membership regularly Refer to the Directors' Report for the biography
refreshed. of each Director. Fiona Beck was appointed to
the Board in September 2020, bringing a depth
of experience in leadership roles and telecoms
industry expertise.
Caroline Foulger's position as Chair is currently
due to expire on 30 September 2022, approximately
six years after her first appointment to the
Board. Due to the long-term nature of the Company's
investments in the Oakley Funds, continuity
and succession planning are important considerations
that are considered and assessed by the Nomination
Committee of the Board.
-------------------------------------------------------
L Board and Committee effectiveness is formally
Annual evaluation of the assessed at least annually.
Board should consider its The objective of Board diversity and inclusion
composition, diversity and is taken into account during the Board nomination
how effectively members work and evaluation process.
together to achieve objectives. The assessment for 2020 assessed the Board as
Individual evaluation should a whole and each Director's performance as strong.
demonstrate whether each
Director continues to contribute
effectively.
-------------------------------------------------------
Audit, risk and internal control
Principle Evidence of compliance
M The Audit Committee, consisting of three independent
The Board should establish Directors considers the independence and effectiveness
formal and transparent policies of the external auditors at least annually.
and procedures to ensure Given the size and composition of the Company's
the independence and effectiveness Board, it has been deemed appropriate that the
of external audit functions Chair is a member of the Audit Committee in
and satisfy itself on the order to satisfy the requirement for the Committee
integrity of financial and to be made up of three independent Directors.
narrative statements. The Company rigorously follows policy and procedure
to ensure effectiveness of external audit and
integrity of Financial Statements and narrative
reporting. Refer to the Audit Committee Report.
-------------------------------------------------------
N The Company's financial position and prospects
The Board should present is reviewed on an ongoing basis; refer to the
a fair, balanced and understandable viability statement. This includes assessment
assessment of the Company's and monitoring of emerging and principal risks
position and prospects. relevant to the business model of the Company.
The Annual and Half-year Report provides fair,
balanced and understandable commentary on the
Company's position and prospects.
-------------------------------------------------------
O The Risk Committee of the Board monitors risk
The Board should establish against risk appetite, which is reassessed at
procedures to manage risk, least annually. The operational, financial and
oversee the internal control compliance control framework of the Company
framework, and determine is materially implemented by service providers.
the nature and extent of These are overseen by the Management Engagement
the principal risks the Company Committee. The Governance, Regulatory and Compliance
is willing to take in order Committee monitors and oversees implementation
to achieve its long-term of compliance controls and compliance with relevant
strategic objectives. laws and regulations. Refer to the respective
Committee Reports.
-------------------------------------------------------
Remuneration
Principle Evidence of compliance
P Directors of the Company, excluding Peter Dubens,
Remuneration policies and are paid a fixed Director's fee only. Peter
practices should Dubens does not receive a fee.
be designed to support strategy The Company has adopted a policy whereby independent
and promote Directors are required to hold shares in the
long-term sustainable success. Company to the value of one year's fees within
three years of appointment.
---------------------------------------------------------
Q The Remuneration Committee reviews market appropriateness
A formal and transparent and fairness of Director remuneration at least
procedure for developing annually. During 2020, the Board, by means of
remuneration policy should the Remuneration Committee, had an external
be established. No Director remuneration consultant review and provided
should be involved in deciding recommendations on Directors' fees appropriate
their own remuneration outcome. for the Company's circumstances. It was agreed
to increase Directors' fees as outlined.
---------------------------------------------------------
R Company performance, operating complexities,
Directors should exercise individual contribution and market circumstances
independent judgement and are all considered by the Remuneration Committee.
discretion when authorising
remuneration outcomes, taking
account of Company and individual
performance, and wider circumstances.
---------------------------------------------------------
Audit Committee report
The Board is supported by the Audit Committee , which comprises
Richard Lightowler as the Chair of the Committee, Fiona Beck and
Caroline Foulger .
Objectives for 2021
-- Continued oversight of the investment valuation process and
methodology to ensure that NAV is reported fairly.
-- Regular monitoring of impact of COVID-19 on portfolio companies and NAV.
-- Oversight and assessment of quality of external auditor.
-- Work through the transition plan for Audit Engagement Partner.
-- Continue to provide oversight of financial reporting, internal controls and audit process.
Achievements in 2020
-- Completion of a tender process for external audit services.
-- Concluded that the year-end valuations have been effectively
carried out, and that investments are fairly valued.
-- Active monitoring of impact of the COVID-19 pandemic on
portfolio companies and resultant effect on valuation process and
NAV estimates.
The principal role of the Audit Committee is to consider the
following matters and make appropriate recommendations to the
Board
to ensure that:
-- the integrity of financial reporting and the Annual Report,
taken as a whole, is fair, balanced and understandable and provides
the information necessary for shareholders to assess the Company's
performance, business model and strategy;
-- the independence, objectivity and effectiveness of the
appointed Auditor is monitored and reviewed. The Committee
additionally reviews the Auditor's performance in terms of quality,
control and value and considers whether shareholders would be
better served by a change of Auditor; and
-- the internal control systems of the Company are adequate and effective.
The Chair of the Audit Committee is appointed by the Board of
Directors. Richard Lightowler was appointed as Audit Committee
Chair following the retirement of Laurence Blackall at the May 2020
AGM. As at 8 March 2021, the Audit Committee comprised Richard
Lightowler (Chair), Caroline Foulger and Fiona Beck.
The Audit Committee met three times during the year under review
and has continued to support the Board in fulfilling its oversight
responsibilities. The Audit Committee formally reports to the Board
on its proceedings after each meeting on all matters within its
duties and responsibilities. Attendance is summarised as part of
the report by the Nomination Committee of the Board.
Financial reporting
One of the most significant risks in the Company's accounts is
the valuation of the Oakley Funds and of the Company's direct debt
and equity investments, specifically whether those investments are
fairly and consistently valued. This issue is considered carefully
when the Audit Committee reviews the Company's Annual Report.
A key area of focus of the Committee is the underlying business
performance of the Oakley Funds' portfolio companies and the
methodologies and estimates used in their valuation. This is also a
key area of focus of
the Auditor.
The Board met regularly during the year outside the normal Board
cycle to receive updates from the Investment Adviser on how the
pandemic was affecting portfolio companies, what actions were being
taken by those companies and the resultant impacts on financial
results, prospects and therefore, valuations.
Valuations are produced by the Investment Adviser and are
independently reviewed by a professional valuation firm who report
on their procedures and the conclusions of their work. The
Committee reviews and ensures continued independence of the
external valuation firm. The Investment Adviser provides detailed
explanations of the rationale for the valuation methodologies.
The Audit Committee concluded that the year-end valuation
process had been effectively carried out and that the investments
have been fairly valued. It is noted that both the valuation
process and accounting principles applied during the year were
materially consistent with previous years.
During the year, the Audit Committee reviewed and approved the
Company's Half-year Report and dividend declarations.
The Audit Committee approved the Annual Report, confirming to
the Board that financial and narrative reporting are fair, balanced
and understandable, in compliance with the AIC Code of Corporate
Governance.
Audit: independence and objectivity
The Committee is responsible for overseeing the relationship
with the external Auditor including (but not limited to): approval
of their remuneration; approval of their terms of engagement;
assessing annually their independence and objectivity;
monitoring
the Auditor's compliance with relevant ethical and professional
guidance on the rotation of audit partners and specialists; and
assessing annually their qualifications, expertise and resources
and the overall effectiveness of
the audit process.
KPMG Audit Limited ('KPMG' or the 'Auditor'), located in
Hamilton, Bermuda, has been the Company's Auditor since 2007. The
Audit Committee reviews their performance annually. The Audit
Committee considers a range of factors in determining the quality
of the audit firm including independence and objectivity, quality
of service, the Auditor's specialist expertise and the level of
audit fee. Based on the Company's policy, the Auditor is required
to rotate the audit partner every five years. The year ended 31
December 2020 is the fourth year of the current audit partner's
involvement leading the audit of the Company.
The Audit Committee undertook a tender process early in 2020 for
the 2021 external audit. Three firms (including KPMG) were invited
to participate. From the initial submissions received, the
Committee narrowed the candidates to two firms. This process
concluded in the retention of KPMG as external auditor. Key to this
decision was KPMG's effectiveness, strength of team and strong
controls in support of maintaining independence. As a former
partner of KPMG, Richard Lightowler was not involved in this tender
process and did not assume the role of Chair until the tender
process was complete.
Any non-audit work carried out by the Auditor must be approved
in advance by the Audit Committee. In deciding whether to engage
the Auditor for non-audit services the Committee considers the
impact on independence, potential conflicts of interest, the nature
of the work being performed, the ability of the team conducting the
work and its relationship to the audit team as well as the quantum
of fees in relation to the audit fee.
During the year, the Audit Committee approved the following
non-audit services provided by KPMG:
-- assistance with the preparation of Bermuda Economic Substance
Declaration ('ESD') filings; and
-- regulatory and tax updates to the Board of Directors.
-- The Committee is satisfied that these services do not impact
Auditor independence or otherwise impact the quality of the
external audit.
Internal control and risk management
The Audit Committee considers the potential need for an internal
audit function on an annual basis.
The Company engages service providers to carry out all
significant operating and financial reporting activities. The
Management Engagement Committee monitors the performance of all key
service providers, including a consideration of their internal
controls and compliance activities. The Company receives direct
reporting from the service providers (including from their
compliance functions) on internal controls, the identification of
any weaknesses or significant changes in process. This oversight by
the Management Engagement Committee is considered adequately robust
and independent given the nature of operations and obviates the
need for an internal
audit function.
No material control weaknesses or any suspicions of potential
fraud were identified by the Company. The Company and its key
service providers implement clear whistle-blowing and anti-bribery
and corruption policies.
On behalf of the Board.
Richard Lightowler
Chair of the Audit Committee
Risk Committee report
The Board is supported by the Risk Committee , which comprises
two Non-Executive Directors. Richard Lightowler is the Chair of the
Committee and Caroline Foulger also serves on the Committee.
Objectives for 2021
-- Ensuring the risk incident report remains clear of any material risk events for the year.
-- Enabling increased efficiency in policy and process review
and transparency through the use of technology.
-- Continuing to robustly and effectively challenge the
portfolio monitoring and reporting process.
Achievements in 2020
-- Risk incident report clear of any material risk events for the year.
-- Appointed new Non-Executive Director to chair the Risk Committee.
-- Improved the methodologies and processes used by the Company
for identifying, evaluating and monitoring risk.
-- Further quantified and expanded risk appetite agreed with the Board.
Effective identification, management and mitigation of risks is
central to the Company achieving its strategic objectives. The
Board develops and maintains the Company's risk management
strategy, and performs oversight of its implementation.
Responsibility for implementation of the risk management appetite,
strategy, monitoring and reporting is delegated to the Risk
Committee.
The Risk Committee has oversight of the Company's risk
management process including managing risk tolerances. The
Committee is responsible for ensuring the effective application of
risk management in the operations of the Company.
The Risk Committee acts separately from the function of
portfolio management and is comprised of Non-Executive Directors,
with support from resources independent of the Investment Adviser.
The Chair of the Risk Committee is appointed by the Board of
Directors. The role and responsibility of the Chair of the Risk
Committee is to set the agenda for meetings of the Risk Committee
and, in doing so, take responsibility for ensuring that the Risk
Committee fulfils its duties under its terms of reference.
As at 8 March 2021, the Risk Committee comprised Richard
Lightowler (Chair) and Caroline Foulger.
The Risk Committee met four times during the year under review
and has continued to support the Board in its oversight, monitoring
and mitigation of emerging and principal risks.
The principal risks and uncertainties faced by the Company are
described below. Note 5 to the Consolidated Financial Statements
provides detailed explanations of the risks associated with the
Company's investments.
On behalf of the Board.
Richard Lightowler
Chair of the Risk Committee
Principal Risks and Uncertainties
During the year 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 2020, 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 The main driver of the During the year, the Board
activities expose it Company's performance regularly considered the
to a variety of financial is the valuation of impact of COVID-19 on valuations.
risks that include credit, the underlying portfolio Specifically, this included
liquidity, interest companies held by the monitoring the impact on
rate, currency and valuation Oakley Funds as well operating and financial
risk. Further details as its direct investments. performance of portfolio
are disclosed in Note The Risk Committee monitors companies. This was achieved
5 to the Consolidated the movements in the through regular update calls,
Financial Statements. valuations of the underlying materials and discussions
portfolio on a quarterly with the Investment Adviser.
basis and challenges The credit risk of lending
movements which differ to the Oakley Funds or direct
from expectations. Material debt investments in portfolio
changes in valuations companies is considered
have a significant impact on a case-by-case and aggregate
on performance. basis by the Board and Risk
Committee. Direct credit
investments were substantially
reduced during 2020, as
part of a continued strategy
towards a clear focus on
Fund investments.
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.
----------------------------- -----------------------------------
Company performance
Risks and uncertainties Impact Mitigation
The Risk Committee monitors The Company considers Consistent with guidelines
and manages a Board-set the most impactful drivers and tolerances set by the
appetite on Company of its performance to Board, the Committee considers
performance with a clear be the pipeline of Fund potential corrective action
focus on stakeholder investments available within its control, in the
interests as measured for investment, relative event of tolerances being
by share price. Shareholder to liquid cash positions, exceeded.
return, NAV return, and underlying portfolio The availability of investment
share price discount Company performance pipeline, i.e. future Oakley
to NAV and dividend in the Fund investments. Fund investment opportunities,
yield are all actively Reputational risk, sustainability are considered in tandem
monitored and actions considerations and dividend with the opportunity cost
recommended for Board policy are also factored of potential cash drag relative
approval as deemed appropriate. into performance management. to liquidity risk. Dividend
policy and share buy-back
programmes are also considered
in tandem with liquidity
risk.
The Committee specifically
introduced dedicated monitoring
of ESG risks during 2020.
---------------------------------- --------------------------------
Operational risk
Risks and uncertainties Impact Mitigation
(i) Outsourcing (i) Outsourcing (i) Outsourcing
The Company relies Significant disruption Through the Management
heavily upon the services of service providers Engagement Committee, regular
provided by contracted could have adverse impacts reviews of the performance
third-party advisers. on timing and quality of service providers (including
The valuation of the of financial reporting the Administrative Agent
underlying portfolio and safeguarding of and Investment Adviser)
companies, cyber security, assets. are conducted. The performance
data management, accounting assessment considers cost,
records and maintenance efficiency, internal controls,
of regulatory and legal performance, key person
requirements, depend risk and compliance with
on the effective operation the terms of arrangements.
of key service providers. The results of these reviews
are shared with the Board
and monitored by the Risk
Committee as part of the
appetite.
COVID-19 had limited impact
on operational risk. All
service providers were able
to quickly and effectively
move
to remote working without
disruption to operations.
--------------------------- --------------------------------
(ii) Governance (ii) Governance (ii) Governance
The effective operation Strong governance is The Company has a clear
of the Board, including recognised as a key commitment to governance
its composition and performance measure with tone set by the Board.
skills mix, is key to and is embedded in all The Nomination Committee
the continued success activities of the Company. is responsible for selection
of the Company and is Good governance has of Directors and evaluation
monitored by the Risk a positive impact on of the Board and individual
Committee and overseen performance. Directors annually. The
by the Nomination Committee Company implements strict
of the Board. policies to track, monitor
and mitigate conflicts of
interest on both an individual
and transactional basis.
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 Impact Mitigation
Changes in legislation, Cost and resourcing implications The Governance, Regulatory
regulation and/or government of new and/or changing and Compliance Committee
policy could significantly regulation can result tracks and reports on emerging
impact the Company's in material impacts to regulatory, tax and legal
performance. the Company. developments potentially
Compliance failures can impacting the Company. These
further result in penalties, are monitored within the
censure or reputational Company's risk framework.
damage. The Committee receives regular
reporting and input from
the Company's legal counsel
(both UK and Bermuda), financial
adviser, and internal compliance
team.
-------------------------------- ---------------------------------
Liquidity risk
Risks and uncertainties Impact Mitigation
As the Company invests The ability to meet To manage this uncertainty,
in illiquid private ongoing operational the Company maintains a
equity closed-ended liquidity needs and level of liquidity to enable
funds and direct private capital calls related it, based on these estimates,
debt and equity investments, to Fund commitments to meet its capital commitments
forecasting cash flows is of the highest priority to the Oakley Funds as well
is a key component in for the Company. The as being able to participate
managing liquidity risk. level of new Fund commitment in any other potential investments
These cash flow forecasts is driven off longer-term made by Oakley throughout
include significant future Fund cash flow the investment and realisation
estimates as to timing projections, which are cycle. Cash flow models
and quantum of cash considered within a are reviewed at least quarterly
inflows and outflows. range of probabilities. to manage cash throughout
the investment cycle. This
enables the Company to fulfil
its commitments as they
fall due, manage longer-term
commitments and actively
manage liquid cash resources.
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.
----------------------------- -----------------------------------
Nomination Committee report
The Board is supported by the Nomination Committee, which
comprises three Non-Executive Directors. Caroline Foulger is the
Chair of the Committee, with Richard Lightowler and Fiona Beck also
serving.
Objectives for 2021
-- Continuing to oversee appointments and reappointments to the Board of Directors; and
-- Continuing to assess and oversee Board effectiveness.
Achievements in 2020
-- Appointed one new Bermuda-based Non-Executive Director to
join the Board, strengthening the balance of skills and providing
further succession planning options;
-- Enhanced the Board Effectiveness Review process; and
-- Continued effective Board management.
The purpose of the Committee is to provide effective operation
of the Board and to oversee appointments and reappointments to the
Board.
The Committee oversees the process of nomination and appointment
of new Directors. In summary, the process includes, but is not
limited to:
-- reviewing the succession plans and needs for the Chair of the Board and Directors;
-- seeking the best available candidates considering specific
criteria determined by the Board;
-- agreeing a short-list of candidates, considering the views of
the Company's professional advisers; and
-- conducting interviews both individually and inclusive of the Board as a whole.
Members of the Committee vote on the election of new candidates,
following which appointment is recommended to the full Board. The
Board considers diversity when making a new appointment and seeks
to get a unanimous vote on the appointment of the proposed
candidate.
As at 8 March 2021, the Nomination Committee comprised Caroline
Foulger (Chair), Fiona Beck and Richard Lightowler. Caroline, as
Chair of the Board, cannot vote on her own appointment. The Company
does not have a formal policy of tenure in place but assesses each
Director's role on an individual basis based on their performance.
In its review of the effectiveness of the Board, the Committee
monitors Board and Committee meeting attendance. See the
Governance, Regulatory and Compliance Committee Report for details
of the Diversity and Inclusion policy.
During 2020, Laurence Blackall retired and Craig Bodenstab
resigned from the Board in May and June respectively. Fiona Beck
was appointed as an independent Non-Executive Director in
September.
On behalf of the Board.
Caroline Foulger
Chair of the Nomination Committee
Number of meetings attended / eligible to attend:
Governance,
Management Regulatory
Board Audit Risk Engagement and Compliance Nomination Remuneration
Director Meetings Committee Committee Committee Committee Committee Committee
Caroline Foulger 10/10 3/3 4/4 2/2 4/4 1/1 3/3
--------- ---------- ---------- ----------- --------------- ---------- ------------
Craig Bodenstab (resigned
June 2020) 6/6 1/1 2/2 1/1 2/2 0/0 2/2
--------- ---------- ---------- ----------- --------------- ---------- ------------
Laurence Blackall (retired
May 2020) 4/4 1/1 1/1 0/0 1/1 0/0 1/1
--------- ---------- ---------- ----------- --------------- ---------- ------------
Stewart Porter 10/10 3/3 4/4 2/2 4/4 1/1 3/3
--------- ---------- ---------- ----------- --------------- ---------- ------------
Fiona Beck (appointed
September 2020) 2/2 1/1 1/1 1/1 1/1 0/0 1/1
--------- ---------- ---------- ----------- --------------- ---------- ------------
Peter Dubens (or David
Till as alternate) 10/10 3/3 4/4 2/2 4/4 1/1 3/3
--------- ---------- ---------- ----------- --------------- ---------- ------------
Richard Lightowler
(appointed in December
2019) 10/10 3/3 4/4 2/2 4/4 1/1 3/3
--------- ---------- ---------- ----------- --------------- ---------- ------------
Management engagement committee report
The Board is supported by the Management Engagement Committee,
which comprises two Non-Executive Directors. Caroline Foulger
chairs the Committee, and Richard Lightowler also serves on the
Committee.
Objectives for 2021
-- Continuing to monitor the remuneration, performance and
compliance with respective agreements of key service providers.
-- Continued enhancement of ongoing monitoring and reporting of
key service provider control environment and performance.
Achievements in 2020
-- Assessment of the remuneration, contractual arrangements and
performance of the Administrative Agent, Investment Adviser, Broker
and Financial Adviser.
-- Review of all fees and expenses related to key material service providers.
-- Renegotiated direct investment performance and operational service fees.
We are pleased to report on the matters which the Management
Engagement Committee has considered.
The purpose of the Committee is to review on a regular basis the
appointment, remuneration and performance of the key service
providers to the Company, with a key focus on the Investment
Adviser and Administrative Agent.
The Committee is focused on quality and value in the services
obtained, and monitors this by means of oversight of performance,
assessments of internal controls and exception reporting.
The Chair of the Management Engagement Committee is appointed by
the Board of Directors.
The Management Engagement Committee met three times during the
year. The Committee formally reports to the Board on its
proceedings on all matters within its duties and responsibilities.
Attendance is summarised as part of the report by the Nomination
Committee of the Board.
Investment Adviser and Administrative Agent
The Management Engagement Committee reviewed the performance and
compliance with agreements of both the Administrative Agent and
Investment Adviser in 2020.
Factors addressed by the Committee during the year include:
-- Marketing and investor relations performance - ongoing
oversight of investor relations. Noting enhanced shareholder
engagement during the year despite limited ability to engage in
person.
-- Remuneration: The Company renegotiated management and
performance fees on direct investments to better align with market
practice (see Directors' Report for further detail).
-- Compliance with contractual arrangements and duties,
including an assessment of the internal control environment.
-- ESG and diversity considerations were flagged to service
providers as high priorities of the Board in its review.
It is the opinion of the Directors that the continuing
appointment of the Administrative Agent and the Investment Adviser
on the terms agreed is in the interests of its shareholders as a
whole. Through the work of the Management Engagement Committee of
the Board, the proven strong performance delivery from these
service providers was noted, with no material deficiencies in
delivery against agreed terms.
Other key service providers
In most instances, relationships with key third-party service
providers are managed by employees of the Investment Adviser and
Administrative Agent on behalf of the Company. The Broker and
Financial Adviser were specifically assessed by the Committee
during 2020.
Both the Committee and Board reviewed vendor- specific expenses
during the year, and regularly had discussions regarding the
performance of providers of legal, financial advisory, brokerage,
communications and administration services.
On behalf of the Board.
Caroline Foulger
Chair of the Management
Engagement Committee
Governance, regulatory and compliance committee report
The Board is supported by the Governance, Regulatory and
Compliance Committee, which comprises two Non-Executive Directors.
During 2020, Stewart Porter chaired the Committee. From November
2020, Fiona Beck is the Chair of the Committee with Stewart Porter
remaining on the Committee.
Objectives for 2021
-- Continuing to develop and oversee the framework for Board training.
-- Continued regular updates on regulatory and compliance matters.
-- Ensuring the Board remains fully informed of upcoming changes
in regulation, governance and compliance requirements.
Achievements in 2020
-- Conducted bespoke training for Directors on relevant laws and regulations.
-- Detailed monitoring of ongoing obligations and Director responsibilities.
-- Solidified OCI's compliance with the new Bermuda Economic Substance Act.
The Board is pleased to report on the range of matters which the
Governance, Regulatory and Compliance Committee has considered
during 2020.
The purpose of the Committee is to assist the Board to fulfil
its corporate governance and oversight responsibilities in relation
to the relevant codes, laws, regulations and policies impacting the
Company.
Key responsibilities include:
-- Evaluate and monitor the Company's compliance with relevant
codes, laws, regulations and external policies.
-- Monitor new governance, legal, regulatory and compliance
standards and ensure that plans are put in place and implemented to
ensure the Company's readiness.
-- Oversee the framework for Board training.
The Chair of the Governance, Regulatory and Compliance Committee
is appointed by the Board of Directors.
The Governance, Regulatory and Compliance Committee met four
times during the year. The Committee formally reports to the Board
on all matters within its delegated responsibilities. Attendance is
encouraged for all Board members, as it serves as a forum for
regulatory awareness and training. Director attendance is
summarised as part of the report by the Nomination Committee of the
Board.
Governance
The Committee considered the 42 provisions and 18 principles of
the AIC Code of Corporate Governance, as updated in February
2019.
Compliance with and exceptions to the AIC Code were reported to
the Board, and are presented in summary as part of the Corporate
Governance Statement of this report.
Diversity and inclusion
The Company recognises the benefits that diversity can bring to
its Board, and places great importance on ensuring that Board
membership reflects this. The Board believes that a wide range of
experience, age, background, perspectives, skills and knowledge
allows Directors to share varying perspectives and insights,
helping to create an environment of effective decision-making.
The Board supports the Investment Adviser's endeavours in
relation to diversity and inclusion.
Additionally, the Board recognises the importance of leading by
example on and encouraging Board diversity as it relates not only
to Oakley, but also to the composition of Oakley portfolio company
boards and leadership teams.
Regulatory and compliance
2020 saw the first reporting cycle of new Economic Substance
regulations in Bermuda, with the Company compliant. In addition,
the Administrative Agent, Oakley Capital Manager Limited, underwent
a supervisory review as a regulated Investment Business in Bermuda
under the Bermuda Monetary Authority. This serves as testament to
the effectiveness of additional levels of oversight and robustness
in the compliance control environment of the Company's key service
providers.
Compliance with relevant London Stock Exchange and Bermuda law
continuing obligations is monitored on an ongoing basis.
On behalf of the Board.
Fiona Beck
Chair of the Governance, Regulatory
and Compliance Committee
Remuneration Committee report
The Board is supported by the Remuneration Committee, which
comprises three Non-Executive Directors. Craig Bodenstab served as
Committee Chair until his resignation in June 2020. Caroline
Foulger is the Chair of the Committee, with Fiona Beck and Richard
Lightowler also serving on the Committee.
Objectives for 2021
-- Continuing to assess and determine Directors' remuneration,
ensuring no single Director determines their own remuneration.
Achievements in 2020
-- External remuneration consultant review, benchmarking and revision of Directors' fees.
As the Company has no direct employees, the purpose of the
Committee is to determine or (as applicable) make recommendations
regarding the remuneration of Directors of the Company, whilst
ensuring no single Director determines their own remuneration.
The Committee commissioned an independent external remuneration
consultant, early in 2020, in order to assess, benchmark and
recommend appropriate levels of Director remuneration. The
consultant, Trust Associates Limited, has no connection with the
Company or individual Directors.
The active nature of the Board, and the way the Board works
collectively sharing responsibility, particular challenges of
attracting high-calibre Bermuda-based Directors, long-term
continuity in Board membership and the absence of additional
Committee Chair fees were all considered as part of the
remuneration assessment.
Based upon the recommendations and feedback from the consultant,
Director remuneration was increased from GBP50,000 to GBP90,000 per
annum for Non-Executive Directors and from GBP65,000 to GBP100,000
per annum for the Chair, applicable to 2020 and 2021. Peter Dubens
continues to serve without a fee.
The Chair of the Remuneration Committee is appointed by the
Board of Directors and in the current scenario where Caroline
Foulger chairs the Committee, she explicitly does not vote on or
determine her own remuneration.
On behalf of the Board.
Caroline Foulger
Chair of the Remuneration Committee
Directors' remuneration report
Directors are remunerated in the form of fixed fees.
Remuneration report
The Non-Executive Directors who served in the period from 1
January 2020 to 31 December 2020 received the fees detailed in the
table below. Directors are remunerated in the form of fixed fees,
payable twice annually in advance (typically in January and July of
each year), to the Director personally. No fees are paid for
attending meetings or chairing Board committees.
2019 Fees
Director 2020 Fees (GBP) (GBP)
Caroline Foulger 100,000 65,000
--------------- ---------
Peter Dubens(1) 0 0
--------------- ---------
Laurence Blackall(2) 27,500 50,000
--------------- ---------
Stewart Porter 90,000 50,000
--------------- ---------
Craig Bodenstab(3) 45,000 23,315
--------------- ---------
Richard Lightowler(4) 90,000 0
--------------- ---------
Fiona Beck(5) 22,500 0
--------------- ---------
The table above details the Director's fee paid to each Director
of the Company for the years ended 31 December 2019 and 31 December
2020.
There are no long-term incentive schemes provided by the Company
and no performance fees are paid to Directors.
No Director has a service contract with the Company and each
Director is appointed by a letter of appointment setting out the
terms of their appointment. Directors are elected by shareholders
at the AGM.
Directors' interests in shares of the Company
The Board has put in place a policy whereby each Director is
required to buy and hold sufficient publicly-traded stock in the
Company to represent a minimum of one year's remuneration. Any
newly appointed Director is required to purchase stock to that
level within a reasonable amount of time (less than three years)
from the date of appointment. All Directors are in compliance with
the policy. As at 8 March 2021, Directors who are beneficial owners
of shares in the Company are:
8 March 19 March
Director 2021 2020
Caroline Foulger 122,000 122,000
---------- ----------
Peter Dubens 18,083,631 17,595,827
---------- ----------
Stewart Porter 45,216 0
---------- ----------
Richard Lightowler 130,000 0
---------- ----------
Fiona Beck 22,000 0
---------- ----------
Save as disclosed above, none of the Directors nor any member of
their respective immediate families has any interest whether
beneficial or non-beneficial in the share capital of the
Company.
(1) Peter Dubens serves without a fee.
(2) Laurence Blackall retired in May 2020.
(3) Craig Bodenstab resigned in June 2020.
(4) Richard Lightowler was appointed in December 2019.
(5) Fiona Beck was appointed in September 2020.
alternative investment fund managers' directive
The Company maintains an adequate level of liquidity to ensure
it can meet its capital commitments.
Status and legal form
The Company is a self-managed non-UK Alternative Investment Fund
('AIF'). It is a closed-ended investment Company incorporated in
Bermuda and its ordinary shares are traded on the Specialist Fund
Segment ('SFS') of the London Stock Exchange's Main Market. The
Company's registered office is 3rd Floor, Mintflower Place, 8
Par-la-Ville Road, Hamilton HM08, Bermuda.
Investment policy
For details of the investment policy refer to the report.
Liquidity management
As the Company is a self-managed non-UK AIF, it is not required
to comply with Chapter 3.6 of the Investment Funds sourcebook of
the Financial Conduct Authority (FUND) in relation to liquidity
management.
The Company maintains an adequate level of liquidity to ensure
that it can meet its capital commitments to the Oakley Funds
throughout the investment-realisation cycle. Cash flow modelling is
performed regularly to enable the Company to manage its liquid
resources and to ensure it has the ability to pay commitments as
they fall due, whilst also endeavouring to manage any surplus
cash.
Fees, charges and expenses
For details of the fees payable by the Company, refer to Note 15
of the Notes to the Consolidated Financial Statements.
Fair treatment of shareholders and preferential treatment
The Company will treat all of the Company's investors fairly and
will not allow any investor to obtain preferential treatment,
unless such treatment is appropriately disclosed. No investor
currently obtains preferential treatment or the right to obtain
preferential treatment.
Remuneration disclosure
The total amount of remuneration paid by the Company to its
Directors during the year ended 31 December 2020 was GBP375,000.
This comprised solely of fixed remuneration; no variable
remuneration was paid. Fixed remuneration was composed of agreed
fixed fees. There were six beneficiaries of this remuneration,
including two Directors who retired/resigned from the Board during
2020.
Shareholder information
Investors wishing to purchase or sell shares in the Company may
do so through a stockbroker, financial adviser, bank or
share-dealing platforms.
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 year ended 31
December 2020 is 2.25 pence per share.
Ex-dividend date (date from which 25 March 2021
shares are transferred without dividend)
Record date (last date for registering 26 March 2021
transfers to
receive the dividend)
-------------
Dividend payment date 15 April 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. This
is available on the Company's website at:
https://oakleycapitalinvestments.com/wp-content/uploads/2020/12/2020-OCI-KID-Document.pdf
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 investment isn't solely about high-quality
private companies benefiting from access to capital, but also
accessing a private equity manager's sector and operational
experts.
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
2020 .(1) 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 ownership.(2)
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.
Oakley Capital Investments 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: Prequin.
(2) Source: Pitchbook.
Consolidated statement of comprehensive income
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
Income
----- --------- --------
Interest income 13 10,466 9,218
----- --------- --------
Net realised gains on investments at fair value
through profit and loss 6, 7 208,536 17,840
----- --------- --------
Net change in unrealised gains/(losses) on investments
at fair value through profit and loss 6, 7 (133,086) 127,741
----- --------- --------
Net foreign currency gains/(losses) 13,700 (2,715)
----- --------- --------
Other income 390 1,073
----- --------- --------
Total income 100,006 153,157
----- --------- --------
Expenses 14 (7,620) (17,888)
----- --------- --------
Profit attributable to equity shareholders/total
comprehensive income 92,386 135,269
----- --------- --------
Earnings per share
----- --------- --------
Basic and diluted earnings per share 18 GBP0.48 GBP0.66
----- --------- --------
CONSOLIDATED BALANCE SHEET
As at 31 December 2020
2020 2019
Notes GBP'000 GBP'000
Assets
----- -------- --------
Non-current assets
----- -------- --------
Investments 6, 8 505,124 660,966
----- -------- --------
505,124 660,966
----- -------- --------
Current assets
----- -------- --------
Trade and other receivables 11 33 40
----- -------- --------
Cash and cash equivalents 10 223,090 48,866
----- -------- --------
223,123 48,906
----- -------- --------
Total assets 728,247 709,872
----- -------- --------
Liabilities
----- -------- --------
Current liabilities
----- -------- --------
Trade and other payables 12 297 23,864
----- -------- --------
Total liabilities 297 23,864
----- -------- --------
Net assets attributable to shareholders 727,950 686,008
----- -------- --------
Equity
----- -------- --------
Share capital 20 1,806 1,986
----- -------- --------
Share premium 20 188,144 229,728
----- -------- --------
Retained earnings 538,000 454,294
----- -------- --------
Total shareholders' equity 727,950 686,008
----- -------- --------
Net asset per ordinary share
----- -------- --------
Basic and diluted net assets per share 19 GBP4.03 GBP3.45
----- -------- --------
Ordinary shares in issue at 31 December 2020 ('000) 20 180,600 198,600
----- -------- --------
The Consolidated Financial Statements of Oakley Capital
Investments Limited (registration number: 40324) on were approved
by the Board of Directors and authorised for issue on 10 March 2021
and were signed on their behalf by:
Caroline Foulger Richard Lightowler
Director Director
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
Total
Share Share Retained shareholders'
capital premium earnings equity
GBP'000 GBP'000 GBP'000 GBP'000
Balance at 1 January 2019 2,048 244,533 328,241 574,822
-------- -------- --------- --------------
Profit for the year/total comprehensive
income - - 135,269 135,269
-------- -------- --------- --------------
Ordinary shares repurchased and cancelled (62) (14,805) - (14,867)
-------- -------- --------- --------------
Dividends - - (9,216) (9,216)
-------- -------- --------- --------------
Total transactions with equity shareholders (62) (14,805) (9,216) (24,083)
-------- -------- --------- --------------
Balance at 31 December 2019 1,986 229,728 454,294 686,008
-------- -------- --------- --------------
Profit for the year/total comprehensive
income - - 92,386 92,386
-------- -------- --------- --------------
Ordinary shares repurchased and cancelled (180) (41,584) - (41,764)
-------- -------- --------- --------------
Dividends - - (8,680) (8,680)
-------- -------- --------- --------------
Total transactions with equity shareholders (180) (41,584) (8,680) (50,444)
-------- -------- --------- --------------
Balance at 31 December 2020 1,806 188,144 538,000 727,950
-------- -------- --------- --------------
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
2020 2019
Notes GBP'000 GBP'000
Cash flows from operating activities
----- --------- ----------
Purchases of investments (95,983) (127,265)
----- --------- ----------
Sales of investments 332,595 90,005
----- --------- ----------
Interest income received 5,146 842
----- --------- ----------
Expenses paid (21,050) (7,009)
----- --------- ----------
Other income received 390 1,073
----- --------- ----------
Net cash (used in)/provided by operating activities 221,098 (42,354)
----- --------- ----------
Cash flows from financing activities
----- --------- ----------
Purchase of ordinary shares 20 (51,894) (4,737)
----- --------- ----------
Dividends paid 21 (8,680) (9,216)
----- --------- ----------
Net cash (used in)/provided by financing activities (60,574) (13,953)
----- --------- ----------
Net (decrease)/increase in cash and cash equivalents 160,524 (56,307)
----- --------- ----------
Cash and cash equivalents at the beginning of
the year 48,866 107,888
----- --------- ----------
Effect of foreign exchange rate changes 13,700 (2,715)
----- --------- ----------
Cash and cash equivalents at the end of the year 10 223,090 48,866
----- --------- ----------
Notes to the consolidated financial statements
For the year ended 31 December 2020
1. Reporting entity
Oakley Capital Investments Limited (the 'Company') is a
closed-ended 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 SCSp(1)
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
SCSp(1)
Oakley Capital Private Equity Origin B
SCSp
Oakley Capital Private Equity Origin C
SCSp
------------------------ --------------------------------------------
OCPE Education Bermuda OCPE Education L.P.
OCPE Education (Feeder) L.P.(1)
------------------------ --------------------------------------------
(1) Denotes the limited partnership in which the Company has
made a direct investment.
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 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. During 2020, the
outbreak of COVID-19 and related global responses have caused
material disruptions to economies around the world. Global markets
have experienced significant volatility and divergence in
performance across business sectors. The full impact of COVID-19 on
economies and businesses remains uncertain.
The Board of Directors have assessed going concern and in doing
so have considered a wide range of information relating to the
present and future conditions and varying scenarios for the
emergence from COVID-19. This assessment includes updates from
Oakley Capital Limited (the 'Investment Adviser') on the impacts of
COVID-19 on 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 may
encounter difficulty in meeting obligations arising from its
financial liabilities that are settled by delivering cash or
another financial asset, or that such obligations would 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 31 December 2020, cash and cash equivalents of the
Company amounted to GBP223,090,000. The Company has total unfunded
capital and unquoted debt security commitments of GBP517,478,901
relating to the Funds which are expected to be called over the next
four to five years. Under the Company's bye-laws, the Company is
permitted to borrow up to 25% of total shareholders' equity which
would amount to approximately GBP181,987,500 for the year ending 31
December 2020. As at 31 December 2020, the Company has had no need
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 prior years, with the additional
focus as at 31 December 2020 being the impact of COVID-19 on the
Funds in which the Company invests. The Board of Directors held
regular meetings with the Investment Adviser to consider how
COVID-19 impacts were considered in the valuation process of the
Funds. 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
cash flow projections.
-- Assessed the operational resilience of the Company's critical
functions which includes monitoring the performance of the
Company's key
service providers.
The Board of Directors considers it appropriate to prepare the
Consolidated Financial Statements of the Company on the going
concern basis, having considered the impact of COVID-19 on its
operations and those of the portfolio companies of the Funds.
2.1 Basis for compliance
The Consolidated Financial Statements of the Company have been
prepared in accordance with International Financial Reporting
Standards ('IFRS').
2.2 Functional and presentation currency
The Consolidated Financial Statements are presented in British
Pounds ('Pounds'), which is the Company's functional currency.
3. Significant accounting policies
The principal accounting policies applied in the preparation of
these Consolidated Financial Statements are set out below. These
policies have been consistently applied to all periods presented,
unless otherwise stated.
3.1 Changes in accounting policies and disclosures
(a) New and amended standards adopted by the Company
Several amendments and interpretations apply for the first time
effective 1 January 2020 but do not have a material effect on the
Company's Consolidated Financial Statements and did not require
retrospective adjustments.
(b) New standards, amendments and interpretations that are not
yet effective but might be relevant for the Company
A number of new standards are effective for annual periods
beginning after 1 January 2020 and early application is admitted,
however, the Company has not adopted early the new or amended
standards in preparing these Consolidated Financial Statements.
The Company is currently in the process of analysing the impact
of these new standards, amendments to existing standards and annual
improvements to IFRS in detail but these are not expected to have a
material effect on the Consolidated Financial Statements of the
Company.
3.2 Basis for consolidation
Subsidiaries are entities controlled by the Company. The Company
controls an entity when it is exposed to, or has rights to,
variable returns from its involvement with the entity and has the
ability to affect those returns through its power over the entity.
While the Company may have a greater than 50% ownership interest in
a Fund, it is a limited partner and does not have the ability to
affect the decisions of the Fund's General Partner or the returns
of the Funds. The Consolidated Financial Statements have been
prepared using uniform accounting policies for like transactions
and other events in similar circumstances.
The Consolidated Financial Statements include the financial
statements of the Company and its wholly-owned subsidiary, after
the elimination
of all significant intercompany balances and transactions.
IFRS 10 exempts investment entities from consolidating
controlled investees. The Company meets the definition of an
investment entity,
as the following conditions are met:
-- The Company provides investment management services.
-- The business purpose of the Company is to invest into private
equity funds and to purchase, hold and dispose of investments
directly in portfolio companies with the goal of achieving returns
from capital appreciation and investment income.
-- The performance of these investments is measured and evaluated on a fair value basis.
-- The Company holds multiple investments.
The Company therefore measures its investments at fair value
through profit and loss in accordance with the investment entity
exemption.
The Company does not consolidate any of its investments in the
Funds.
As at 31 December 2020 the Company's Limited Partner ownership
in the Funds are:
-- Fund I ownership of 70.4% (2019: 70.4%)
-- Fund II ownership of 36.2% (2019: 36.2%)
-- Fund III ownership of 40.7% (2019: 40.7%)
-- Fund IV ownership of 27.4% (2019: 28.6%)
-- Origin Fund ownership of 27.0% (2019: 0%)
-- OCPE Education ownership of nil (2019: 99.18%)
3.3 Investments
(a) Classification
The Company classifies its investments based on both the
Company's business model for managing those financial assets and
the contractual cash flow characteristics, if any, of the financial
assets. The portfolio of financial assets is managed and
performance is evaluated on a fair value basis. The Company is
primarily focused on fair value information and uses that
information to assess the assets' performance and to make
decisions.
The Company has not taken the option to irrevocably designate
any equity securities as fair value through other comprehensive
income.
The contractual cash flows of the Company's debt securities are
solely principal and interest, however, these securities are
neither held for the purpose of collecting contractual cash flows
nor held both for collecting contractual cash flows and for sale.
The collection of contractual cash flows is only incidental to
achieving the Company's business model's objective. Consequently,
the Company classifies its investments in private equity funds,
direct equity investments and loans as financial assets held at
fair value through profit and loss at inception.
(b) Recognition and measurement
Financial assets held at fair value through profit and loss are
recognised initially on the trade date which is the date on which
the Company becomes a party to the contractual provisions of the
instrument. Financial assets held at fair value through profit and
loss are recognised initially at fair value, with transaction costs
recognised in profit or loss.
Net gains and losses from financial assets held at fair value
through profit and loss include all realised and unrealised fair
value changes and foreign exchange differences and are included in
the consolidated statement of comprehensive income in the period in
which they arise.
Quoted investments are subsequently carried at fair value. Fair
value is measured using the last reported sales price, where the
last reported sales price falls within the bid-ask spread. In
circumstances where the last reported sales price is not within the
bid-ask spread, the Board of Directors,
in consultation with the Investment Adviser, will determine the
point within the bid-ask spread that is most representative of fair
value.
Unquoted investments, including both equities and loans, are
subsequently carried in the consolidated balance sheet at fair
value. Fair value is determined in accordance with the Company's
investment valuation policy, which is compliant with the fair value
guidelines under IFRS 13 and
the International Private Equity and Venture Capital ('IPEV')
Valuation Guidelines.
(c) Derecognition
The Company derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or it transfers the
rights to receive the contractual cash flows in a transaction in
which substantially all the risks and rewards of ownership of the
financial asset are transferred, or in which the Company neither
transfers nor retains substantially all the risks and rewards of
ownership and does not retain control of the financial asset. Any
interest on such transferred financial assets that is created or
retained by the Company is recognised as a separate asset or
liability.
On derecognition of a financial asset, the difference between
the carrying amount of the asset (or the carrying amount allocated
to the portion of the asset derecognised), and consideration
received (including any new asset obtained less any new liability
assumed) is recognised in profit or loss.
3.4 Cash and cash equivalents
Cash and cash equivalents include deposits held on call with
banks and other short-term deposits. The Company considers all
short-term deposits with an original maturity of 90 days or less as
equivalent to cash.
3.5 Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost, less any allowance for
impairment, using the effective interest method.
3.6 Trade payables
Trade payables are obligations to pay for goods or services that
have been acquired or received in the ordinary course of business
from suppliers. Accounts payable are classified as current
liabilities if payment is due within one year or less (or in the
normal operating cycle of the business if longer). If not, they are
presented as non-current liabilities. Trade payables are recognised
initially at fair value and subsequently measured at amortised cost
using the effective interest method.
3.7 Interest income
Interest on unquoted debt securities held at fair value through
profit and loss is accrued on a time-proportionate basis, by
reference to the principal outstanding and the effective interest
rate applicable, which is the rate that discounts estimated future
cash receipts over the expected life of the debt security to its
net carrying amount on initial recognition. Interest income is
recognised gross of withholding tax, if any. Interest income on
unquoted debt securities is recognised as a separate line item in
the consolidated statement of comprehensive income and classified
within operating activities in the consolidated statement of cash
flows.
3.8 Expenses
Expenses are recognised on the accruals basis. Negative interest
income is included in expenses in the consolidated statement of
comprehensive income and classified within operating activities in
the consolidated statement of cash flows.
3.9 Foreign currency translation
The functional currency of the Company is Pounds. Transactions
in currencies other than Pounds are recorded at the rates of
exchange prevailing on the dates of the transactions.
At each reporting date, investments and other monetary assets
and liabilities that are denominated in foreign currencies are
translated at the rates prevailing on the reporting date. Capital
drawdowns and proceeds of distributions from the Funds and foreign
currencies and income and expense items denominated in foreign
currencies are translated into Pounds at the exchange rate on the
respective dates of such transactions.
Foreign exchange gains and losses on other monetary assets and
liabilities are recognised in net foreign currency gains and losses
in the consolidated statement of comprehensive income.
The Company does not isolate unrealised or realised foreign
exchange gains and losses arising from changes in the fair value of
investments. All such foreign exchange gains and losses are
included with the net realised and unrealised gains or losses on
investments in the consolidated statement of comprehensive
income.
3.10 Share capital
Ordinary shares issued by the Company are recognised based on
the proceeds or fair value received or receivable, with the excess
of the amount received over their nominal value being credited to
the share premium account. Direct issue costs are deducted from
equity.
3.11 Earnings per share
The Company presents basic and diluted earnings per share data
for its ordinary shares. Basic earnings per share are calculated by
dividing the profit or loss attributable to ordinary shareholders
of the Company by the weighted average number of ordinary shares
outstanding during the period. Diluted earnings per share are
determined by adjusting the profit or loss attributable to ordinary
shareholders and the weighted average number of ordinary shares
outstanding for the effects of all potentially dilutive ordinary
shares.
4. Critical accounting estimates, assumptions and judgements
The reported results of the Company are sensitive to the
accounting policies, assumptions and estimates that underly the
preparation of its Consolidated Financial Statements. IFRS require
the Board of Directors, in preparing the Company's Consolidated
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
affected.
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 the investments and
the assessment that the Company meets the definition of an
investment entity.
(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.
4. Critical accounting estimates, assumptions and judgements
continued
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 the estimated future cash flows and determining
appropriate discount rates.
There remain many unknown factors over the short, medium, and
long term including the impact of COVID-19 on the Company. In these
circumstances, the valuation of the Company's investments as at 31
December 2020 carried significantly more uncertainty than
previously. The Investment Adviser has considered the impact of
COVID-19 in determining inputs in the valuation models used for the
valuations of each of the Funds. Additionally the impact of
COVID-19 has been considered in the valuation of the unquoted debt
securities.
(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
5.1 Introduction and overview
The Board of Directors, the Company's 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 reviews 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.
5.2 Credit risk
The Company is subject to credit risk on its unquoted
investments and cash. The majority of the Company's cash balances
were held with Barclays and Butterfield Bank. Barclays are rated A1
and Butterfield Bank are rated at A3 by Moody's (2019: Barclays A1
and HSBC A2).
In accordance with the Company's policy, the Investment Adviser
monitors the Company's exposure to credit risk on cash on a
quarterly basis and the Risk Committee regularly reviews the
Company's exposure to credit risk. The credit quality of the
investments in the Funds and debt securities, which are held at
fair value and include debt and equity elements, are not rated. As
at 31 December 2020, no debt securities held were overdue or
impaired.
5.3 Liquidity risk
Liquidity risk is 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. The Company, with advice from the Investment Adviser,
manages liquidity through reviews of detailed cash flow projections
which estimate the timing and quantums of outflows, including
capital calls, and inflows from disposals of portfolio companies
which aim to avoid undue risk of illiquidity.
The 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 honour all capital calls by the
Funds.
As of 31 December 2020, cash and cash equivalents of the Company
amounted to GBP223,090,000 (2019: GBP48,866,356). The Company
had
total unfunded capital and loan commitments of GBP517,478,901
(2019: GBP462,781,291) relating to the Funds. The unfunded
commitments of the Company are listed in Note 22. The Company can
borrow up to 25% of total shareholders' equity. As at 31 December
2020, the Company has no borrowings (2019: nil).
The majority of the investments held by the Company are in Funds
which are unquoted and subject to specific restrictions on
transferability and disposal. Consequently, the risk exists that
the Company might not be able to readily dispose of its holdings at
the time of its choosing and also that the price attained on a
disposal may be below the amount at which such investments were
included in the Company's consolidated balance sheet.
The Company's consolidated financial liabilities are all
repayable within three months after the balance sheet date and are
carried at fair value. Financial liabilities exclude outstanding
capital commitments at the year end.
5.4 Market risk
Market risk is the risk that changes in market prices, such as
equity prices, foreign exchange rates and interest rates will
affect the Company's income or the value of its holdings of
financial instruments. The Company's sensitivity to these items is
set out below.
The Company's financial assets that are subject to currency and
interest rate risk are analysed below (presented in Pounds and
translated at the year-end foreign exchange rate):
2020 2019
Pound Euro Total Pound Euro Total
GBP'000 EUR'000 GBP'000 GBP'000 EUR'000 GBP'000
-------- -------- -------- -------- -------- --------
Fixed and floating rate debt
and cash 201,566 147,990 349,556 151,692 24,330 176,022
-------- -------- -------- -------- -------- --------
Non-interest-bearing Fund
and equity investments 23,940 354,718 378,658 38,510 495,300 533,810
-------- -------- -------- -------- -------- --------
Total 225,506 502,708 728,214 190,202 519,630 709,832
-------- -------- -------- -------- -------- --------
a) Interest rate risk
Interest rate risk arises principally from changes in interest
receivable on cash and deposits and unquoted debt securities at
fair value.
The Company's unquoted debt investments carry fixed rates of
interest ranging from 5% to 12%. These loans are subject to
interest rate risk
as increases and decreases in interest rates will have an impact
on their fair value. A 100 basis point increase in interest rates
would result in
a decrease in the fair value of those loans of GBP1,155,534 and
a corresponding decrease of 100 basis points in interest rates
would result in an increase in their fair value by the same amount
(2019: GBP2,860,355).
The impact of an increase in interest rates of 100 basis points
on cash and deposits, based on the closing consolidated balance
sheet position over a 12-month period, would have been GBP2,053,734
on the profit and loss in the consolidated statement of
comprehensive income (2019: GBP839,176). A decrease in interest
rates of 100 basis points on cash and deposits would have an equal
and opposite effect.
In addition, the Company has indirect exposure to interest rate
fluctuations through changes to the financial performance and
valuation in equity investments in the Funds as certain portfolio
companies have issued debt. Short-term receivables and payables are
excluded as, due to their short-term nature, the risks due to
fluctuation in the prevailing levels of market interest rates
associated with these instruments are not significant.
b) Currency risk
The Company holds significant assets and liabilities denominated
in currencies other than its functional currency, which expose the
Company to the risk that the exchange rates of those currencies
against the Pound will change in a manner which adversely impacts
the Company's net profit and net assets attributable to
shareholders. The following sensitivity analysis shows the
sensitivity of the Company's net assets to movements in foreign
currency exchange rates assuming a 10% increase in exchange rates
against the Pound. A 10% decrease in exchange rates against the
Pound would have an equal and opposite effect. The sensitivity
analysis below is representative of the year as a whole, since the
level of exposure changes as the Company's holdings change through
the purchase and realisation of investments (presented in Pounds
and translated at the year end foreign exchange rate).
5. Financial risk management continued
2020 2019
GBP'000 GBP'000
Assets:
-------- --------
Financial assets at fair value through
profit and loss 35,472 49,530
-------- --------
Cash and cash equivalents 14,799 2,433
-------- --------
Total assets 50,271 51,963
-------- --------
Impact on profit/(loss) 50,271 51,963
-------- --------
The Investment Adviser monitors the Company's currency position
on a regular basis and reports the impact of currency movements on
the performance of the investment portfolio to the Risk Committee
quarterly. In accordance with the Company's investment policy, all
direct investments in quoted equity securities and debt securities
are denominated in Pounds, placing currency risk on the
counterparty. The investments in the Funds are denominated in
Euros.
c) Price risk - market fluctuations
The Company's management of price risk, which arises primarily
from quoted and unquoted equity instruments, is through the
selection of financial assets within specified limits as advised by
the Investment Adviser and approved by the Risk Committee.
For quoted equity securities, the market risk variable is deemed
to be the market price itself. A 15% change in the price of those
investments would have a GBP3,590,988 (2019: GBP5,776,436) direct
impact on the profit and loss in the consolidated statement of
comprehensive income and the net assets attributable to
shareholders in the consolidated balance sheet. The impact on net
asset per ordinary share is GBP0.02 (2019: GBP0.03).
For the investment in the Funds, the market risk is deemed to be
the change in fair value. A 15% change in the fair value of those
investments would have a GBP53,207,700 (2019: GBP74,295,012) direct
impact on the profit and loss in the consolidated statement of
comprehensive income and the net assets attributable to
shareholders in the consolidated balance sheet. The impact on net
asset per ordinary share is GBP0.29 (2019: GBP0.37).
The Company is exposed to a variety of market risk factors which
may change significantly over time. As a result, measurement of
such exposure at any given point in time may be difficult given the
complexity and diversity of the investments held by the Funds.
Limitations of sensitivity analysis
The sensitivity information included in Notes 5 and 8
demonstrates the estimated impact of a change in a major input
assumption while other assumptions remain unchanged. In reality,
there are normally significant levels of correlation between the
assumptions and other factors.
It should also be noted that these sensitivities are non-linear
and larger or smaller impacts should not be interpolated or
extrapolated from these results. Furthermore, estimates of
sensitivity may become less reliable in unusual market conditions
such as instances when risk-free interest rates fall towards
zero.
5.5 Capital management
The Company's capital is represented by ordinary shares with
GBP0.01 par value and they carry one vote each. The shares are
entitled to dividends when declared. The Company has no additional
restrictions or specific capital requirements on the issuance and
repurchase of ordinary shares.
The movements of capital are shown in the consolidated statement
of changes in equity.
The Company's objectives when managing capital are to safeguard
the Company's assets to achieve positive returns. In order to
maintain or adjust the capital structure, the Company may issue
shares or may return capital to shareholders through the repurchase
of shares or by paying dividends. The effects of the issue, the
repurchase and resale of shares are described in Note 20.
6. Investments
Investments as at 31 December 2020:
Realised Net change
2019 Fair Purchases/Capital Total sales(1) gains/ Interest in unrealised 2020 Fair
value calls /Distributions (losses) and other gains/(losses) value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 - -
--------- ----------------- --------------- -------------- ---------- --------------- ---------
Fund III - - - - - - -
--------- ----------------- --------------- -------------- ---------- --------------- ---------
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 sales, loan repayments and
transfers.
Investments as at 31 December 2019:
Total sales(1) Net change
2018 Fair Purchases/Capital / Realised Interest in unrealised 2019 Fair
value calls Distributions gains/ (losses) and other gains/(losses) value
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Oakley Funds
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund I 18,159 1,788 - - - 13,411 33,358
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund II 71,794 7,386 (30,197) 19,067 - (10,868) 57,182
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund III 208,628 29,672 (9,712) (1,227) - 82,707 310,068
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund IV - 25,930 - - - (6,222) 19,708
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total Oakley
Funds 298,581 64,776 (39,909) 17,840 - 79,028 420,316
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Direct
investment
Funds
--------- ----------------- -------------- --------------- ---------- --------------- ---------
OCPE Education
(Feeder)
LP 41,789 672 - - - 32,523 74,984
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total direct
investment
Funds 41,789 672 - - - 32,523 74,984
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total Funds 340,370 65,448 (39,909) 17,840 - 111,551 495,300
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Quoted equity
securities
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Time Out Group
plc 22,320 - - - - 16,190 38,510
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total quoted
equity
securities 22,320 - - - - 16,190 38,510
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Unquoted debt
securities
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Ellisfield
(Bermuda)
Limited 14,889 - - - 907 - 15,796
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund I 7,035 9,880 (8,080) - 600 - 9,435
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund II 17,412 8,344 (21,846) - 488 - 4,398
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Fund III 4,033 13,291 (17,853) - 529 - -
--------- ----------------- -------------- --------------- ---------- --------------- ---------
NSG Apparel BV 26,569 2,319 - - 1,104 - 29,992
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Oakley Capital
III
Limited 2,169 - (1,518) - 80 - 731
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Oakley NS
(Bermuda)
LP 14,038 25,483 - - 3,969 - 43,490
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Time Out Group
plc 20,914 2,500 (2,607) - 2,507 - 23,314
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total unquoted
debt
securities 107,059 61,817 (51,904) - 10,184 - 127,156
--------- ----------------- -------------- --------------- ---------- --------------- ---------
Total
investments 469,749 127,265 (91,813) 17,840 10,184 127,741 660,966
--------- ----------------- -------------- --------------- ---------- --------------- ---------
(1) Total sales include sales, loan repayments and
transfers.
Quoted equity securities and unquoted debt securities are
additional direct investments in certain of the portfolio companies
in one of the Oakley Funds. The total sales on unquoted debt
securities distributions include accrued interest repaid of
GBP5,321,000 (2019: GBP1,808,000).
7. Net gains/(losses) from investments at fair value through
profit and loss
2020 2019
GBP'000 GBP'000
Net change in unrealised gains/(losses) on investments
at fair value through profit and loss:
--------- --------
Funds (105,891) 111,551
--------- --------
Quoted equity securities (27,195) 16,190
--------- --------
Total net change in unrealised gains/(losses) on investments
at fair value through profit and loss (133,086) 127,741
--------- --------
Net realised gains/(losses) on investments at fair value
through profit and loss:
--------- --------
Funds 208,536 17,840
--------- --------
Total net realised gains/(losses) on investments at
fair value through profit and loss 208,536 17,840
--------- --------
8. 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 31 December 2020 by the level in the fair value
hierarchy into which the fair value measurement is categorised:
Level I Level III Total
GBP'000 GBP'000 GBP'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 23,940 481,184 505,124
-------- --------- --------
The following table analyses the Company's investments measured
at fair value as of 31 December 2019 by the level in the fair value
hierarchy into which the fair value measurement is categorised:
Level I Level III Total
GBP'000 GBP'000 GBP'000
Funds - 495,300 495,300
-------- --------- --------
Quoted equity securities 38,510 - 38,510
-------- --------- --------
Unquoted debt securities - 127,156 127,156
-------- --------- --------
Total investments measured at fair value 38,510 622,456 660,966
-------- --------- --------
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 31
December 2020 or 2019.
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 IPEV Valuation Guidelines with reference
to the most appropriate information available at the time of
measurement.
The Consolidated Financial Statements as of 31 December 2020
include Level III investments in the amount of GBP481,183,852,
representing approximately 66.10% of shareholders' equity (2019:
GBP622,456,416; 90.74%).
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 comparable companies are correctly valued by the
market. A discount is sometimes applied to market-based multiples
to adjust for points of difference between the comparables and the
Company being valued.
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 Fund II Fund III Fund IV Origin Fund OCPE Education
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Investments 21,600 58,723 334,940 168,957 11,530 -
-------- -------- -------- -------- ----------- --------------
Loans (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
(EUR'000) 18,046 59,459 243,453 74,153 1,267 -
-------- -------- -------- -------- ----------- --------------
Total value of the Fund
attributable to the Company
(GBP'000) at year-end
exchange rate 16,149 53,210 217,866 66,360 1,133 -
-------- -------- -------- -------- ----------- --------------
As at 31 December 2019, 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:
Origin
Fund I Fund II Fund III Fund IV Fund OCPE Education
EUR'000 EUR'000 EUR'000 EUR'000 EUR'000 EUR'000
Investments 44,568 75,540 456,259 57,091 - 88,436
-------- -------- -------- -------- -------- --------------
Loans (7,845) (9,836) (41,206) (44,657) - -
-------- -------- -------- -------- -------- --------------
Estimated performance
fee payable - (3,130) (50,487) - - -
-------- -------- -------- -------- -------- --------------
Other net assets 2,698 5,002 1,858 10,856 - 177
-------- -------- -------- -------- -------- --------------
Total value of the Fund
attributable to the Company
(EUR'000) 39,421 67,576 366,424 23,290 - 88,613
-------- -------- -------- -------- -------- --------------
Total value of the Fund
attributable to the Company
(GBP'000) at year-end
exchange rate 33,358 57,182 310,068 19,708 - 74,984
-------- -------- -------- -------- -------- --------------
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 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, consistent with the
Company's accounting policy for quoted investments, 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
valuation at 31 December 2020.
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 year ending 31
December 2020, a 10% increase to the fair value of the unquoted
portfolio companies held by the Funds would result in a 6.1%
movement in net assets attributable to shareholders (2019: 7.6%). 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 5% and 12% 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 year ending 31 December 2020, a 1% increase to the discount
factor would result in a 0.2% movement in net assets attributable
to shareholders (2019: 0.4%). A 1% decrease to the discount factor
would have an equal and opposite effect. Refer to Note 5.4(a).
Transfers between levels
There were no transfers between the levels during the year ended
31 December 2020 (2019: none).
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 31 December 2020 and 2019, are as follows:
Level I investments: 2020 2019
Quoted equity securities GBP'000 GBP'000
Fair value at the beginning of the year 38,510 22,320
-------- --------
Purchases 12,625 -
-------- --------
Net change in unrealised gains/(losses) on investments (27,195) 16,190
-------- --------
Fair value of Level I investments at the end of the
year 23,940 38,510
-------- --------
Unquoted debt
Funds securities Total
Level III investments: GBP'000 GBP'000 GBP'000
2020
--------- ------------- ---------
Fair value at the beginning of the 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 the end of the year 354,718 126,466 481,184
--------- ------------- ---------
Unquoted debt
Funds securities Total
GBP'000 GBP'000 GBP'000
2019
-------- ------------- --------
Fair value at the beginning of the year 340,370 107,059 447,429
-------- ------------- --------
Purchases 65,448 61,817 127,265
-------- ------------- --------
Proceeds on disposals (including interest) (39,909) (51,904) (91,813)
-------- ------------- --------
Realised gain on sale 17,840 - 17,840
-------- ------------- --------
Interest income and other fee income - 10,184 10,184
-------- ------------- --------
Net change in unrealised gains/(losses)
on investments 111,551 - 111,551
-------- ------------- --------
Fair value at the end of the year 495,300 127,156 622,456
-------- ------------- --------
Other financial instruments
Financial instruments, other than financial instruments at fair
value through profit and loss, where carrying values are equal to
fair values:
2020 2019
GBP'000 GBP'000
Cash and cash equivalents 223,090 48,866
-------- --------
Trade and other receivables 33 40
-------- --------
Trade and other payables 297 23,864
-------- --------
9. 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
"Corporate"
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 financial year 2020 (2019: none).
The segment information for the year ended 31 December 2020 is
as follows:
Total
Direct investments operating
Fund investments and loans segments Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'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 year ended 31 December 2019 is
as follows:
Total
Direct investments operating
Fund investments and loans segments Corporate Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net realised gains on financial
assets at fair value through
profit and loss 17,840 - 17,840 - 17,840
---------------- ------------------ ---------- --------- --------
Net change in unrealised gains/(losses)
on financial assets at fair value
through profit and loss 111,551 16,190 127,741 - 127,741
---------------- ------------------ ---------- --------- --------
Interest income - 9,111 9,111 107 9,218
---------------- ------------------ ---------- --------- --------
Net foreign currency gains/(losses) - - - (2,715) (2,715)
---------------- ------------------ ---------- --------- --------
Other income - 1,073 1,073 - 1,073
---------------- ------------------ ---------- --------- --------
Expenses (12,615) (2,409) (15,024) (2,864) (17,888)
---------------- ------------------ ---------- --------- --------
Profit/(loss) for the year 116,776 23,965 140,741 (5,472) 135,269
---------------- ------------------ ---------- --------- --------
Total assets 495,300 165,666 660,966 48,906 709,872
---------------- ------------------ ---------- --------- --------
Total liabilities (10,130) - (10,130) (13,734) (23,864)
---------------- ------------------ ---------- --------- --------
Net assets 485,170 165,666 650,836 35,172 686,008
---------------- ------------------ ---------- --------- --------
Total assets include:
---------------- ------------------ ---------- --------- --------
Financial assets at fair value
through profit and loss 495,300 165,666 660,966 - 660,966
---------------- ------------------ ---------- --------- --------
Cash and others - - - 48,906 48,906
---------------- ------------------ ---------- --------- --------
10. Cash and cash equivalents
2020 2019
GBP'000 GBP'000
Cash and demand balances at banks 172,892 28,759
-------- --------
Short-term deposits 50,198 20,107
-------- --------
223,090 48,866
-------- --------
11. Trade and other receivables
2020 2019
GBP'000 GBP'000
Prepayments 33 40
-------- --------
33 40
-------- --------
12. Trade and other payables
2020 2019
GBP'000 GBP'000
Trade payables 87 93
-------- --------
Amounts due to related parties 150 13,641
-------- --------
Other payables 60 10,130
-------- --------
297 23,864
-------- --------
On 20 December 2019, the Company purchased for cancellation
4,000,000 of its own ordinary shares at the market price on that
date for a total of GBP10,100,250. As at 31 December 2019, the
amount payable for the share buy-back remained outstanding (refer
to Note 20) and was included in "Other payables".
13. Interest income
2020 2019
GBP'000 GBP'000
Interest income on investments carried at amortised cost:
-------- --------
Cash and cash equivalents 215 107
-------- --------
Interest income on investments designated as at fair value
through profit and loss:
-------- --------
Debt securities 10,251 9,111
-------- --------
10,466 9,218
-------- --------
14. Expenses
2020 2019
Notes GBP'000 GBP'000
Investment-related fees 15 4,266 14,574
----- -------- --------
Operating expenses 16 3,354 3,314
----- -------- --------
7,620 17,888
----- -------- --------
15. 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
During 2020 and 2019, 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 year ended 31 December 2020
totalled GBP620,874 (2019: GBP3,928,313). There are no amounts
outstanding
as at 31 December 2020 (2019: GBP1,109,199).
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
are payable by reference to the Company's current direct equity
investments.
Performance fees for the year ended 31 December 2020 totalled
GBP3,644,444 (2019: GBP10,646,241). There are no amounts
outstanding
as at 31 December 2020 (2019: GBP12,447,622).
16. Operating expenses
The following expenses are included in operating expenses:
a) Administration fees
The Company has appointed Mayflower Management Services
(Bermuda) Limited (the 'Administrator') to provide administration
services
at an annual fee at prevailing commercial rates. Administration
fees for the year ended 31 December 2020 totalled GBP344,584 (2019:
GBP352,040).
There were no amounts payable to the Administrator as at 31
December 2020 (2019: GBPnil).
b) Directors' fees
For the year ended 31 December 2020, the Company paid Directors'
fees of GBP100,000 (2019: GBP65,000) to the Chair of the Board and
GBP275,000 (2019: GBP175,000) to other Board members. No fees were
payable as at 31 December 2020 (2019: GBPnil).
The members of the Board of Directors are considered to be Key
Management Personnel. No pension contributions were made in respect
of
any of the Directors and none of the Directors receive any
pension from any portfolio company held by the Funds. During the
year one of the Directors waived remuneration (2019: one). No other
fees were paid to the Directors (2019: GBPnil).
For the years ended 31 December 2020 and 2019 members of the
Board of Directors held shares in the Company and were entitled to
dividends as detailed below:
2020 2019
'000 '000
Shares at the beginning of the year 18,018 9,736
------ ------
Shares acquired during the year 745 8,342
------ ------
Shares held by a Director who resigned during the year (400) (60)
------ ------
Shares at the end of the year 18,363 18,018
------ ------
Dividends paid to Directors (GBP'000) 818 561
------ ------
c) Auditor's remuneration
The Company's auditor is KPMG. During the year ending 31
December 2020, the Company paid KPMG audit fees of GBP144,009
(2019: GBP142,549) and other advisory services fees of GBP6,666
(2019: GBP5,000).
d) Other expenses
The Company is recharged by the Administrative Agent for certain
services such as compliance, accounting and investor relations
provided by the Administrative Agent's contracted advisers, (which
include the Investment Adviser) on behalf of the Company. Such
recharges are specifically agreed on an annual basis.
For the year ended 31 December 2020, the Administrative Agent
recharged GBP947,000 (2019: GBP719,034). The amount outstanding as
at 31 December 2020 was GBP90,000 (2019: GBP70,000) and is included
in "Trade and other payables" in the consolidated balance
sheet.
17. Withholding tax
Under current Bermuda law the Company is not required to pay tax
in Bermuda on either income or capital gains. The Company has
received an undertaking from the Minister of Finance in Bermuda
that in the event of such taxes being imposed, the Company is
exempt from such taxation until at least 31 March 2035.
The Company may, however, be subject to foreign withholding
taxes in respect of income derived from its investments in other
jurisdictions.
For the year ended 31 December 2020, the Company was not
subjected to foreign withholding taxes (2019: nil).
18. Earnings per share
The earnings per share calculation uses the weighted average
number of shares in issue during the year.
2020 2019
Basic and diluted earnings per share GBP0.48 GBP0.66
--------- ----------
Profit for the year ('000) GBP92,386 GBP135,269
--------- ----------
Weighted average number of shares in issue ('000) 192,707 204,113
--------- ----------
The Company's diluted earnings per share equals the basic
earnings per share.
19. Net asset value per share
The net asset value per share calculation uses the number of
shares in issue at the end of the year.
2020 2019
Basic and diluted net asset value per share GBP4.03 GBP3.45
---------- ----------
Net assets attributable to shareholders ('000) GBP727,950 GBP686,008
---------- ----------
Number of shares in issue at the year end ('000) 180,600 198,600
---------- ----------
20. Share capital
a) Authorised and issued capital
The authorised share capital of the Company is 280,000,000
ordinary shares at a par value of GBP0.01 each. Ordinary shares are
listed and traded on the SFS of the LSE Main Market. Each share
confers the right to one vote and shareholders have the right to
receive dividends.
During the year ending 31 December 2020, the Company purchased
the following ordinary shares:
Number of Purchase
ordinary price
shares (GBP'000)
18 March 2020 3,000,000 4,818
--------- ----------
18 June 2020 1,340,000 2,775
--------- ----------
29 July 2020 3,660,000 8,318
--------- ----------
2 October 2020 3,053,000 7,786
--------- ----------
3 December 2020 6,947,000 18,068
--------- ----------
During the year ending 31 December 2019, the Company purchased
the following ordinary shares:
Number of Purchase
ordinary price
shares (GBP'000)
15 March 2019 404,100 767
--------- ----------
14 November 2019 1,800,000 4,000
--------- ----------
20 December 2019 4,000,000 10,100
--------- ----------
The ordinary shares purchased by the Company have been
cancelled. The Company's authorised share capital is not reduced by
this cancellation.
As at 31 December 2020, the Company's issued and fully paid
share capital was 180,599,936 ordinary shares (2019:
198,599,936).
2020 2019
'000 '000
Ordinary shares outstanding at the beginning of the year 198,600 204,804
-------- -------
Ordinary shares purchased (18,000) (6,204)
-------- -------
Ordinary shares outstanding at the end of the year 180,600 198,600
-------- -------
b) Share premium
Share premium represents the amount received in excess of the
nominal value of ordinary shares.
21. Dividends
On 11 March 2020, the Board of Directors declared a final
dividend for 2019 of 2.25 pence per ordinary share resulting in a
dividend of GBP4,391,999 paid on 23 April 2020 (2019: On 13 March
2019, the Board declared and approved a final dividend for 2018 of
2.25 pence per ordinary share which resulted in a dividend payment
of GBP4,608,091 paid on 25 April 2019).
On 10 September 2020, the Board of Directors declared an interim
dividend of 2.25 pence per ordinary share resulting in a dividend
of GBP4,288,499 (2019: On 10 September 2019, the Board declared an
interim dividend of 2.25 pence per ordinary share which resulted in
a dividend of GBP4,608,091).
22. Commitments
The Company had the following outstanding capital commitments in
Euros as at year end:
Original
commitment 2020 2019
GBP'000 GBP'000 GBP'000
Fund I 202,398 2,834 2,834
----------- -------- --------
Fund II 190,000 13,300 13,300
----------- -------- --------
Fund III 325,780 120,539 120,539
----------- -------- --------
Fund IV 400,000 334,000 370,000
----------- -------- --------
Origin Fund(1) 105,000 101,850 -
----------- -------- --------
Total outstanding commitments (EUR'000) 1,223,178 572,523 506,673
----------- -------- --------
Total outstanding commitments (GBP'000) 1,094,622 512,351 428,746
----------- -------- --------
(1) The Company made the commitment to the Origin Fund during
the year ending 31 December 2020.
The Company had the following outstanding unquoted debt security
commitments at year end:
Original
commitment 2020 2019
GBP'000 GBP'000 GBP'000
Fund I 5,000 5,000 4,000
----------- -------- --------
Fund II(1) 20,000 - 15,700
----------- -------- --------
Oakley NS (Bermuda) LP(2) 54,710 128 14,334
----------- -------- --------
Total outstanding commitments (GBP'000) 79,710 5,128 34,034
----------- -------- --------
(1) The unquoted debt security commitment to Fund II was
terminated on 17 October 2020.
(2) As at 31 December 2019, the original commitment to Oakley NS
(Bermuda) LP was GBP53,850,000.
23. Related parties
Related parties transactions not disclosed elsewhere in the
Consolidated Financial Statements are as follows:
One Director of the Company, Peter Dubens, is also a Director 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. The
agreements between the Company
and these service providers are based on normal commercial terms
and are disclosed in Note 15.
24. Events after balance sheet date
The Board of Directors has evaluated subsequent events from the
year end through 10 March 2021, which is the date the Consolidated
Financial Statements were available for issue. The following events
have been identified for disclosure:
On 21 January 2021, the Company increased its commitment in the
Origin Fund by EUR24,300,000. The Company's total commitment is
EUR129,300,000 and its holding changed from 27.0% to 29.72%.
On 26 February 2021, the Company received a distribution of
EUR25,377,986 (GBP21,992,563) from Fund III arising from the
refinancing of Career Partner Group.
On 10 March 2021, the Board of Directors declared a final
dividend for the year ended 31 December 2020 of 2.25 pence per
ordinary share resulting in a dividend of GBP4,063,499 payable on
15 April 2021.
[1] Source: Pitchbook
[2] Proceeds and investments are included on a look-through
basis.
[3] Proceeds and investments are included on a look-through
basis.
[4] Following the year end, a proportion of the original
investment cost of WindStar Medical was syndicated to co-investors,
reducing the fair value of OCI's look-through investment. This was
offset by an increase in other fund assets and liabilities. This
had no impact on the NAV of OCI's total investment in Oakley Fund
IV.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
RNS may use your IP address to confirm compliance with the terms
and conditions, to analyse how you engage with the information
contained in this communication, and to share such analysis on an
anonymised basis with others as part of our commercial services.
For further information about how RNS and the London Stock Exchange
use the personal data you provide us, please see our Privacy
Policy.
END
FR GPUMUWUPGPPU
(END) Dow Jones Newswires
March 11, 2021 02:00 ET (07:00 GMT)
Oakley Capital Investments (LSE:OCI)
Historical Stock Chart
From Mar 2024 to Apr 2024
Oakley Capital Investments (LSE:OCI)
Historical Stock Chart
From Apr 2023 to Apr 2024
