CT Private Equity Trust PLC

LEI: 2138009FW98WZFCGRN66

Unaudited results for the half year ended 30 June 2022

Financial Highlights

·    NAV of 656.75p per Ordinary Share as at 30 June 2022 reflecting a total return for the six-month period of 4.3%.

·    Total quarterly dividends of 12.36p per Ordinary Share year to date.

·    Quarterly dividend of 6.05p paid on 29 July 2022

·    Quarterly dividend of 6.31p to be paid on 31 October 2022

·      Dividend yield of 5.3% based on the period end share price (1).

·    1,096,491 shares bought back during the period at an average discount of 28% to NAV.

·    As at 30 June 2022 net debt was £14.6 million equivalent to a gearing level of 3.0%.

(1)      Calculated as dividends of 5.27p paid on 28 January 2022, 5.65p paid on 29 April 2022, 6.05p paid on 29 July 2022 and 6.31p payable on 31 October 2022, divided by the Company's share price of 438.00p as at 30 June 2022.

Chairman's Statement

Introduction

This report is for the six-month period ended 30 June 2022. At the period end the Net Asset Value ("NAV") of CT Private Equity Trust PLC ("the Company") was £478.4 million giving a NAV per share of 656.75p. Taking account of dividends paid the NAV total return for the six-month period was 4.3%. With the share price discount having increased from 23.6% at 31 December 2021 to 33.3% at 30 June 2022, the share price total return for the period was -8.4%. These compare to a return of -4.6% for the FTSE All-Share Index for the same period.

After a very strong period for the portfolio in 2021 this year started with considerable momentum in the private equity market internationally. This reflected the resilience demonstrated by the asset class during the pandemic and the resulting ongoing strong appetite for private equity by international investors. The private equity business model involving strong alignment of interest and the constructive involvement of skilled investors in the affairs of investee companies was tested profoundly and proved robust. The recovery from the pandemic has created new challenges with shifts in consumer behaviour, supply chain constraints and labour shortages foremost amongst these. In February a fresh set of serious challenges arose through Russia's invasion of Ukraine. Extremely high energy prices and inflation in food prices have seriously compounded the problems and higher interest rates are an obvious consequence. The risks involved in all sorts of business activity have been elevated and the private equity sector is by no means immune. The very strong flow of realisations seen in 2021 has moderated somewhat but it remains at very healthy levels and dealflow in the year so far has remained very good. Against this background, it is therefore with cautious optimism that we note that your Company has made further gains for shareholders in the first half. Much of this is down to the focused endeavours of our investment partners and the management teams of the underlying companies. 

Dividends

In accordance with the Company's stated dividend policy, the Board declares a quarterly dividend of 6.31p per ordinary share, payable on 31 October 2022 to Shareholders on the register on 7 October 2022 with an ex-dividend date of 6 October 2022. Together with the last three dividends paid this represents a dividend yield of 5.3 per cent based on the period end share price.

Financing

The Company has a £95 million multi-currency revolving credit facility and a term loan of €25 million. At 30 June 2022 exchange rates, these borrowing facilities, which will mature in June 2024, result in a total borrowing capacity of approximately £116.5 million.

As at 30 June 2022, the Company had cash of £22.4 million. With borrowings of £37.0 million from the facilities, net debt was £14.6 million, equivalent to a gearing level of 3.0% (31 December 2021: 0.7%). The total of outstanding undrawn commitments at 30 June 2022 was £179 million and, of this, approximately £33.6 million is to funds where the investment period has expired.

Share Buybacks

At the Annual General Meeting held on 26 May 2022, the Board sought and received from shareholders a renewal of the authority to buyback up to 14.99% of the Company's share capital. Buybacks can only be made at a cost which is below the prevailing net asset value and, in the opinion of Directors, would be in the interests of shareholders as a whole.

During June the Company bought back 1,096,491 of its ordinary shares to be held in treasury. The average discount at which these shares were bought back was 28%.

These shares are held in treasury to allow the Company to re-issue them quickly and cost effectively. The Company can only re-issue treasury shares or issue new shares at a price which would not dilute the NAV of existing shareholders.

Investment Manager and Name Change

On 8 November 2021, BMO sold its asset management business in Europe, the Middle East and Africa, ("BMO GAM EMEA") to Columbia Threadneedle Investments. Since November 2021, Columbia Threadneedle Investments has been working to integrate both organisations. The combined business has more than 2,500 staff, including over 650 investment professionals based in North America, Europe and Asia. At 30 June 2022 it managed £492 billion of client assets.

On 4 July 2022, the entire BMO GAM EMEA business was rebranded as Columbia Threadneedle Investments. As part of this process, the Company's investment manager, BMO Investment Business Limited, was renamed Columbia Threadneedle Investment Business Limited.

As many of the Company's shareholders invest through the Columbia Threadneedle Investments savings plans the Board resolved that continuing to align with the brand of the investment manager would avoid unnecessary confusion and ensure that the Company maximised the benefits of the broader Columbia Threadneedle Investments brand.

On 30 June 2022 the Company therefore announced that it had changed its name from BMO Private Equity Trust PLC to CT Private Equity Trust PLC.  The Company's website address was also amended from 4 July 2022 to become ctprivateequitytrust.com and its trading instrument display mnemonic ("TIDM" or "ticker") changed to CTPE.

Throughout the change of ownership of the investment manager, the Board has sought and received confirmation from senior management at Columbia Threadneedle Investments of the importance of maintaining stability and continuity of the teams which support the Company. The Board welcomes these assurances and will ensure that shareholders are kept informed of developments as this new relationship develops.

Change in Directorate

My appointment as Chairman of the Company in May 2022 was part of a process of succession planning undertaken by the Board which has resulted, progressively, in a number of changes to its membership.

My predecessor as Chairman of the Company, Mark Tennant, retired at the conclusion of the AGM held on 26 May 2022. Mark joined the Board in February 2009 and had served as Chairman from May 2010. His contribution to the long-term success of the Company throughout his tenure has been invaluable. On behalf of all shareholders, I extend our thanks to him for such outstanding leadership.

As a further part of the Board succession plan and as previously announced, it is anticipated that David Shaw will retire from Board at the conclusion of the 2023 AGM.

Outlook

The Company's portfolio is diversified across geographies and sectors and represents established long-term partnerships with a broad range of private equity managers.  As we enter the second half of the year, I have confidence that this combination will prove resilient in the face of the severe macroeconomic challenges and continues to provide opportunities for growth.

Richard Gray

Chairman

Manager's Review

Introduction

The portfolio is deliberately well diversified with substantial exposure to all the active private equity markets in Europe and a very useful complementary presence in North America. Diversification is the only reliable way of managing the innately high risk in private equity bringing it down to moderate levels. The range of companies which are receiving private equity as a means of financing their growth is broad with many emerging industries and sectors represented. A fair proportion of these are tech enabled and often they are experiencing secular growth which gives them a degree of protection in the current environment which is putting pressure on consumers and corporates alike. The first half has seen a fairly buoyant market with realisations exceeding new investments by a reasonable margin. Whilst not the sellers' market of the previous year our investment partners have been successful in achieving multiple good exits across all geographies.

New Investments

Seven new commitments to funds were made during the first half.

$14.0 million was committed to Corsair VI, the mid-market buyout fund with a focus on financial services in North America and Europe. This is a firm we have known for a number of years, mainly through our co-investment in insurance company software business RGI.

€7.0 million was committed to MED Platform II, the ArchiMed managed mid-market buyout fund with a focus on healthcare in North America and Europe.

We have made three new commitments to funds based in the Nordic region. €10.0 million was committed to Procuritas VII, the fourth fund we have backed in a series of highly successful mid-market buyout funds from this Stockholm based manager. €8.0 million was committed to Verdane Edda III (technology based growth investments in the upper mid-market of Northern Europe) and €7.0 million to Verdane Capital XI (mid-sized and smaller growth investments in Northern Europe including secondary portfolios as well as single assets). We are already invested in the previous Verdane Edda fund.

£5.0 million has been committed to Northern Gritstone, an innovative new fund investing in University spinouts from the Universities of Manchester, Leeds and Sheffield. The fund also has the flexibility to invest in other growth equity opportunities in the North of England.

$10.0 million was committed to Hg Saturn 3, the Hg managed upper mid-market buyout fund focussed on software and services platforms in Europe and by exception in North America.

Five new co-investments have been added during the first half. The co-investment portfolio now accounts for 43.3% of the overall portfolio.

$10.0 million (£7.6 million) was invested in Aurora Payment Solutions, a digital payments solutions provider for over 20,000 US merchants in multiple sectors including hospitality and transport. Headquartered in Texas, this investment is led by Corsair Capital, who as noted above are financial services specialists.

£3.9 million was invested in Perfect Image, a Newcastle based IT services group. The company's client base are SMEs often undertaking migrations to the Cloud or bolstering their cybersecurity. The deal is led by Chiltern Capital, a lower mid-market manager with whom we have co-invested on a number of occasions.

€3.3 million (£2.8 million) was invested in Bomaki, a 'sushi samba' style restaurant chain based in the Milan region of Northern Italy. The restaurants offer a fusion cuisine combining influences from Japan and Brazil. The chain starts with nine restaurants and the plan is to build out to 24 within three years. The deal is led by Augens Capital who are well known to us from the San Siro investment (funeral homes). There is also a co-lead investor, Buono Ventures, who have specific expertise in the restaurant sector.

£3.0 million has been committed to Rephine, a UK headquartered outsourced services provider of audit and regulatory consulting services to the global pharmaceutical supply chain primarily through the provision of Good Manufacturing Practice ('GMP') audits. Rephine's addressable market is worth c.£420 million and is growing strongly driven by increasing regulatory requirements, outsourcing of non-core activities by pharmaceuticals companies, new types of drugs, more generic drugs and complex pharma supply chains. The deal is led by Kester Capital with whom we have invested both through co-investments and in their funds. £1.0 million of the commitment has been drawn so far.

€9.0 million has been committed to Leader 96, a Bulgaria headquartered electric bike assembler. The company has successfully transitioned from conventional bikes towards e-bikes which now make up more than 90% of sales. The market for e-bikes is well established in various European markets such as Germany, The Netherlands and France and is growing rapidly in other markets with lower penetration such as Spain and the UK. The investment is led by The Rohatyn Group with whom we have co-invested on a number of occasions. £8.5 million of the commitment has been invested to date.

In June the Company acquired all the limited partnership interests in F&C European Capital Partners LP, the 2007 vintage mid-market buyout fund of funds which shares the same management team as the Company. This secondary transaction provided sought after liquidity to the fund's investors and an attractive medium-term investment for our shareholders. £4.4 million was invested which represented a discount to the prevailing NAV of approximately 50%. The portfolio contains a limited number of older holdings which should deliver a good return as they are gradually realised over the next few years.

The funds in the portfolio drew capital for several new investments in the period.

In the UK there were a number of new deals. FPE III have called £0.6 million for Egress, a provider of migration and managed services enabling mainly NHS and local authority customers to move to the cloud. Kester Capital called £0.3 million for Optibrium a software company focusing on drug discovery for the pharmaceuticals sector. August Equity V called £0.8 million for two companies; Medivet (veterinary care) and AAB (professional services). Piper Private Equity VI called £0.8 million for premium pet accessories brand Omlet where we are a co-investor.

In the Nordic region Procuritas was active with £0.7 million called for Werksta (automotive repair shops) by its funds VI and VII. This investment was acquired from Procuritas V. Procuritas remain in the lead on the deal but have brought in external investors for this second stage of the investment's growth. In Finland Vaaka III called £0.4 million for Medbase a provider of decision support databases for professionals and organisations covering for example drug interactions with other drugs and potential adverse effects. Vaaka IV have called £0.7 million for Bolt Works (staffing services with a digital platform).

In Central and Eastern Europe ARX CEE IV called £0.8 million mainly for Czech Republic based Brebeck (carbon fibre components for the motorsports industry) and Klient (Hungarian outsourced accounting firm). Avallon III called £0.4 million for Globema (provider and integrator of geospatial location based software). In Germany DBAG VII invested £0.6 million in Itelyum (specialist in hazardous waste recycling). In the USA Graycliff IV called £0.4 million for Landmark (designer, fabricator and installer of elevated water towers).

Over the first six months the total of co-investments and drawdowns from funds was £37.3 million.

Realisations

There has been a healthy flow of realisations from across the portfolio.

The largest realisation of £18.1 million was from STAXS the cleanroom consumables company based in The Netherlands. This Silverfleet led investment performed exceptionally well aided to some extent by COVID-19. It has been sold to a family-owned company with a diversified portfolio of investments. £15.7 million of the proceeds came from our coinvestment and a further £2.4 million was from the Silverfleet European Development Fund. The overall return was an impressive 6.2x cost and an IRR of c.80%.

£2.6 million was received as the second and final instalment of the realisation proceeds from Calucem, the Croatia based calcium aluminate cement manufacturer in which we coinvested with Ambienta. The overall return was 1.9x and an IRR of 11%.

In the UK August Equity IV returned £2.9 million from energy procurement company Zenergi (5.3x cost, 50% IRR). August Equity IV also exited Dental Partners returning £2.5 million (1.8x cost, 15% IRR).

Inflexion continues its impressive run of exits. £2.7 million was returned from compliance risk management company Alcumus (5.9x cost, 37% IRR). £1.3 million came in from the sale of building products company Marley which has been sold to the publicly listed company Marshalls (3.5x cost, 58% IRR). Inflexion also exited Goals, the football centres chain, returning £0.5 million (4.3x cost, 55% IRR).

Primary Capital IV had two exits; railway equipment and services provider Readypower returned £1.4 million (4.6x cost, 39% IRR) and the accredited online courses company ICS Learn £1.1 million (4.4x cost, 49% IRR).

There were several good European exits. Astorg VI exited the Switzerland based Autoform which provides software for use in sheet metal forming in a sale to Carlyle which returned £2.4 million (4.1x cost, 30% IRR). Astorg VI also returned £1.6 million from the sale of healthcare products company HRA (2.3x cost, 17% IRR). ArchiMed II sold Austrian medical and veterinary diagnostics company Eurolyser returning £1.0 million (6.0x cost, 79% IRR). In Spain Corpfin IV finished the exit of Preving returning £0.4 million (6.3x cost, 49% IRR). In the Nordics, as noted above, Procuritas V sold automotive repair shops chain Werksta to its later funds and external investors returning £1.7 million (5.6x cost, 35% IRR). Verdane Edda exited Scanmarket (cloud-based e-sourcing software) returning £0.5 million (2.5x cost, 30% IRR). Finland based Vaaka II exited the leading physiotherapy company in that country, Fysios, returning £0.5 million (3.3x cost, 21% IRR).

In the USA Blue Point Capital exited Kendall Vegetation Services, which manages vegetation for utilities and municipalities across the south-eastern and central USA, returning £0.7 million (3.5x cost, 46% IRR).

Over the first half the total of realisations from co-investments and funds was £47.8 million.

Valuation Changes

As is usual there is a time lag with valuations.  Approximately 77% of the valuation is based on March 2022 valuations. The remainder is valued at June 2022 valuations.

The largest change in valuation was an uplift of £5.9 million for our Silverfleet led co-investment in cleanroom consumables company STAXS, which as noted above has now been sold.

A number of the co-investments have been uplifted. Drill cuttings processor TWMA is up by £1.7 million as trading improves notably in the Gulf area. San Siro the Italian Funeral homes chain is up by £1.1 million and internet of things infrastructure provider JT IoT is up by £0.9 million. Other uplifts include for US based Mexican themed restaurant chain Rosa Mexicano (£1.0 million) where normality is returning to trading.

There are a number of notable upgrades amongst the funds portfolio led by Volpi (£2.4 million), the combined Inflexion Funds (£2.3 million), Agilitas 2015 (£1.2 million), ArchiMed II (£1.1 million), Apiary (£1.0 million) and Chequers XVII (£1.0 million).

There have been some notable downgrades. Weird Fish, the clothing company, is down by £4.7 million reflecting weaker trading. Ambio is down by £3.0 million as its planned listing appears to be postponed. DMC Canotec the managed print services company is down by £1.6 million as volumes remain some 20-25% below pre COVID-19 levels.  These companies have all made good progress overall.

Financing

The Company remains in a strong financial position with realisations in the first half coming in some £10 million ahead of drawdowns. During the quarter the Company bought in £5 million of its own shares at an average price of 452p. This represented a discount to NAV at the time of nearly 30% and therefore enhances NAV by approximately £1.5 million. The Company will keep share buy-backs as an option to be used occasionally and judiciously for the benefit of shareholders.

At the end of June the Company had net debt of £14.6 million. Although this has increased slightly to around £18 million currently, this leaves more than three quarters of the Company's borrowing facilities available.

Outlook

After the midpoint of the year the Company's portfolio appears to be resilient with gains in valuation through improved trading and realisations. The very strong flow of realisations seen during 2021 has lessened in 2022, as expected, but the number and pricing of exits in the first half is very respectable with the total proceeds exceeding that achieved in the whole of 2019.

The external environment is replete with challenges. Inflation in energy and food prices, rising interest rates, supply chain issues and labour shortages provide the backdrop. Most of these relate to the Russian invasion of Ukraine or the aftermath of the COVID-19 pandemic. At the level of individual companies the impact of these varies considerably and many of these factors will take time to feed through into trading and eventually profits. For selected companies, for example those linked to the energy industry, these could prove beneficial. Adjusting for supply chain constraints is taking up a considerable amount of management time.

At the investor level there remains strong appetite internationally for private equity and fund raising continues albeit at somewhat reduced levels. The accumulated commitments to private equity funds will provide capital for many new deals for several years to come. Dealflow has barely slowed during 2022 but there are signs that investors are being more cautious. In certain sectors such as tech enabled companies vendors are helpfully adjusting valuation expectations in the light of significantly reduced valuations in the public markets. The valuations of private companies are continually being tested as mature holdings are realised and these continue to be at significant premia to the most recent valuations. Given the circumstances and progress to date there is every prospect of further gains in the remainder of the year.

Hamish Mair

Investment Manager

Columbia Threadneedle Investment Business Limited

Portfolio Summary

 Portfolio Holdings

CT Private Equity Trust PLC

Statement of Comprehensive Income for the

half year ended 30 June 2022

The total column is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

CT Private Equity Trust PLC

Statement of Comprehensive Income for the

half year ended 30 June 2021

The total column is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

CT Private Equity Trust PLC

Statement of Comprehensive Income for the

year ended 31 December 2021

The total column is the profit and loss account of the Company.

All revenue and capital items in the above statement derive from continuing operations.

CT Private Equity Trust PLC

Amounts Recognised as Dividends

CT Private Equity Trust PLC

Balance Sheet

CT Private Equity Trust PLC

Statement of Changes in Equity

CT Private Equity Trust PLC

Cash Flow Statement

Directors' Statement of Principal Risks and Uncertainties

The principal risks identified in the Annual Report and Accounts for the year ended 31 December 2021 were:

• Economic, macro and political;

• Liquidity and capital structure;

• Regulatory;

• Personnel issues;

• Fraud and cyber;

• Market;

• ESG; and

• Operational.

These risks are described in more detail under the heading "Principal Risks" within the Strategic Report in the Company's Annual Report and Accounts for the year ended 31 December 2021.

At present the global economy continues to suffer considerable disruption due to the effects of the COVID-19 pandemic, inflationary concerns and the war in Ukraine. The Directors continue to review the key risk matrix for the Company which identifies the risks that the Company is exposed to, the controls in place and the actions being taken to mitigate them.

It is also noted that:

·   An analysis of the performance of the Company since 1 January 2022 is included within the Chairman's Statement and the Investment Manager's Review.

·   The Company's five-year borrowing facility is composed of a €25 million term loan and a £95 million multi-currency revolving credit facility. As at 30 June 2022 borrowings were £37.0 million. The interest rate payable is variable.

·    Note 8 details the Board's consideration for the continued applicability of the principle of Going Concern when preparing this report.

On behalf of the Board

Richard Gray

Chairman

Statement of Directors' Responsibilities in Respect of the Half Yearly Financial Report

We confirm that to the best of our knowledge:

•    the condensed set of financial statements have been prepared in accordance with applicable UK-adopted International Accounting Standards on a going concern basis and give a true and fair view of the assets, liabilities, financial position and return of the Company;

•    the Chairman's Statement, Investment Manager's Review and the Directors' Statement of Principal Risks and Uncertainties (together constituting the Interim Management Report) include a fair review of the information required by the Disclosure Guidance and Transparency Rule ('DTR') 4.2.7R, being an indication of important events that have occurred during the first six months of the financial year and their impact on the financial statements;

•    the Directors' Statement of Principal Risks and Uncertainties is a fair review of the principal risks and uncertainties for the remainder of the financial year; and

•    he half-yearly report includes a fair review of the information required by DTR 4.2.8R, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Company during the period, and any changes in the related party transactions described in the last Annual Report that could do so.

On behalf of the Board

Richard Gray

Chairman

Notes (unaudited)

1.   The condensed company financial statements have been prepared on a going concern basis in accordance with International Financial Reporting Standard ('IFRS') IAS 34 'Interim Financial Reporting' and the accounting policies set out in the statutory accounts for the year ended 31 December 2021. The condensed financial statements do not include all of the information and disclosures required for a complete set of IFRS financial statements and should be read in conjunction with the financial statements for the year ended 31 December 2021, which were prepared in accordance with the Companies Act 2006 and UK adopted international accounting standards.

2.    Earnings for the six months to 30 June 2022 should not be taken as a guide to the results for the year to 31 December 2022.

3.    Investment management fee:

4.     Finance costs:

5.    The return per Ordinary Share is based on a net profit on ordinary activities after taxation of £18,048,000 (30 June 2021 - £55,040,000; 31 December 2021 - £126,733,000) and on 73,847,912 (30 June 2021-73,941,429; 31 December 2021 -73,941,429) shares, being the weighted average number of Ordinary Shares in issue during the period.   During June 2022 the Company bought back 1,096,491 of its ordinary shares at an average price of 452 pence per share to be held in treasury.

6.    The net asset value per Ordinary Share is based on net assets at the period end of £478,407,000 (30 June 2021 - £408,496,000; 31 December 2021 - £473,447,000) and on 72,844,938 (30 June 2021 - 73,941,429; 31 December 2021 - 73,941,429) shares, being the number of Ordinary Shares in issue at the period end.

7.  The fair value measurements for financial assets and liabilities are categorised into different levels in the fair value hierarchy based on inputs to valuation techniques used.  The different levels are defined as follows:

Level 1 reflects financial instruments quoted in an active market.

Level 2 reflects financial instruments whose fair value is evidenced by comparison with other observable current market transactions in the same instrument or based on a valuation technique whose variables includes only data from observable markets.

Level 3 reflects financial instruments whose fair value is determined in whole or in part using a valuation technique based on assumptions that are not supported by prices from observable market transactions in the same instrument and not based on available observable market data.

There were no transfers between levels in the fair value hierarchy in the period ended 30 June 2022. Transfers between levels of the fair value hierarchy are deemed to have occurred at the date of the event that caused the transfer.

Valuation techniques

Quoted fixed asset investments held are valued at bid prices which equate to their fair values. When fair values of publicly traded equities are based on quoted market prices in an active market without any adjustments, the investments are included within Level 1 of the hierarchy.  The Company invests primarily in private equity funds and co-investments via limited partnerships or similar fund structures.  Such vehicles are mostly unquoted and in turn invest in unquoted securities.  The fair value of a holding is based on the Company's share of the total net asset value of the fund or share of the valuation of the co-investment calculated by the lead private equity manager on a quarterly basis. The lead private equity manager derives the net asset value of a fund from the fair value of underlying investments. The fair value of these underlying investments and the Company's co-investments is calculated using methodology which is consistent with the International Private Equity and Venture Capital Valuation Guidelines ('IPEG'). In accordance with IPEG these investments are generally valued using an appropriate multiple of maintainable earnings, which has been derived from comparable multiples of quoted companies or recent transactions. The Columbia Threadneedle private equity team has access to the underlying valuations used by the lead private equity managers including multiples and any adjustments. The Columbia Threadneedle private equity team generally values the Company's holdings in line with the lead managers but may make adjustments where they do not believe the underlying managers' valuations represent fair value. On a quarterly basis, the Columbia Threadneedle private equity team present the valuations to the Board. This includes a discussion of the major assumptions used in the valuations, which focuses on significant investments and significant changes in the fair value of investments. If considered appropriate, the Board will approve the valuations.

The interest-bearing bank loans are recognised in the Balance Sheet at amortised cost in accordance with IFRS.  The fair value of the term loan is based on a marked to market basis. The fair value is calculated using a discounted cash flow technique based on relevant interest rates.  The fair value of the multi-currency revolving credit facility is not materially different to the carrying value. The fair values of all of the Company's other financial assets and liabilities are not materially different from their carrying values in the balance sheet.

Significant unobservable inputs for Level 3 valuations

The Company's unlisted investments are all classified as Level 3 investments. The fair values of the unlisted investments have been determined principally by reference to earnings multiples, with adjustments made as appropriate to reflect matters such as the sizes of the holdings and liquidity. The weighted average earnings multiple for the portfolio as at 30 June 2022 was 12.2 times EBITDA (Earnings Before Interest, Tax, Depreciation and Amortisation) (30 June 2021: 9.9 times EBITDA; 31 December 2021: 12.2 times EBITDA).

The significant unobservable input used in the fair value measurement categorised within Level 3 of the fair value hierarchy together with a quantitative sensitivity analysis are shown below:

* The sensitivity analysis refers to an amount added or deducted from the input and the effect this has on the fair value.

The fair value of the Company's unlisted investments is sensitive to changes in the assumed earnings multiples. The managers of the underlying funds assume an earnings multiple for each holding. An increase in the weighted average earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the multiple would lead to a decrease in the fair value.

The following table shows a reconciliation of all movements in the fair value of financial instruments categorised within Level 3 between the beginning and the end of the period:

8.    In assessing the going concern basis of accounting the Directors have had regard to the guidance issued by the Financial Reporting Council.  They have considered the current cash position of the Company, the availability of the Company's loan facility and compliance with its banking covenants. They have also considered forecast cashflows, the operational resilience of the Company and its service providers and the annual dividend. 

As at 30 June 2022, the Company had outstanding undrawn commitments of £178.8 million. Of this amount, approximately £33.6 million is to funds where the investment period has expired and the Manager would expect very little of this to be drawn. Of the outstanding undrawn commitments remaining within their investment periods, the Manager would expect that a significant amount will not be drawn before these periods expire. The Company has a committed borrowing facility comprising a term loan of €25 million and a revolving credit facility of £95 million. This facility is due to expire on 19 June 2024 when its five-year term concludes.

At 30 June 2022 the Company had fully drawn the term loan of €25 million and had drawn £16.1 million of the revolving credit facility, leaving £78.9 million of the revolving credit facility available. This available proportion of the facility can be used to fund any shortfall between the proceeds received from realisations and drawdowns made from funds in the Company's portfolio or funds required for co-investments. Under normal circumstances this amount of 'headroom' in the facility would be more than adequate to meet any such shortfall.

During the six-month period ended 30 June 2022 realisations from co-investments and funds of £47.8 million exceeded drawdowns of £37.3 million.

At present the global economy continues to suffer disruption due to the effects of the COVID-19 pandemic, inflationary concerns and the war in Ukraine and the Directors have given serious consideration to the consequences of these for the private equity market in general and for the cashflows and asset values of the Company specifically over the next twelve months. The Company has a number of loan covenants and at present the Company's financial situation does not suggest that any of these covenants are close to being breached.

Furthermore, the Directors have considered in detail a number of remedial measures that are open to the Company which it may take if such a covenant breach appears possible. These include reducing commitments and raising cash through engaging with the private equity secondaries market. The Managers have considerable experience in the private equity secondaries market through the activities of the Company and through the management of other private equity funds. The Directors have considered other actions which the Company may take in the event that a covenant breach was imminent including taking measures to increase the Company's asset base through an issuance of equity either for cash or pursuant to the acquisition of other private equity assets. The Directors have also considered the likelihood of the Company making alternative banking arrangements with its current lender or another lender. Having considered the likelihood of the events which could cause a covenant breach and the remedies available to the Company, the Directors are of the view that Company is well placed to manage such an eventuality satisfactorily.

The Company operates within a robust regulatory environment. The Directors have noted that home working arrangements have been implemented at the Manager and many of the Company's key suppliers without any impact upon service delivery and operations.

Based on this information the Directors believe that the Company has the ability to meet its financial obligations as they fall due for a period of at least twelve months from the date of approval of these financial statements. Accordingly, these financial statements have been prepared on a going concern basis.

9.   These are not statutory accounts in terms of Section 434 of the Companies Act 2006 and have not been audited or reviewed by the Company's auditors. The information for the year ended 31 December 2021 has been extracted from the latest published financial statements which received an unqualified audit report and have been filed with the Registrar of Companies. No statutory accounts in respect of any period after 31 December 2021 have been reported on by the Company's auditors or delivered to the Registrar of Companies. The Half-Year Report will be available shortly at the Company's website address, www.ctprivateequitytrust.com.

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