Apax Global Alpha Regulatory News (APAX)

Apax Global Alpha Limited

Interim Report and Accounts 2018

Introduction

Who we are

Apax Global Alpha Limited ("AGA" or the "Company") is a closed-ended investment company listed on the Main Market of the London Stock Exchange with a Premium Listing. The Company is a constituent of the FTSE All Share and Small Cap Indices. Ticker: APAX

Why invest in AGA?

AGA offers investors exclusive exposure to both Apax Partners' Private Equity funds and a portfolio of debt and equity holdings derived from insight gained from their Private Equity investment process. The investment objective is to provide capital appreciation from the investment portfolio and regular dividends.

Highlights 1H18

Chairman's statement

Stronger performance during the last six months driven by substantial improvements in the Private Equity portfolio and favourable currency movements.

Overview

During the last six months Apax Global Alpha benefited from the strong performance of its Private Equity holdings. The underlying portfolio companies demonstrated good progress in operational metrics, and a maturing investment profile enabled more value to be crystallised through profitable realisations. In contrast, Derived Investments reported a small negative return during the period.

Performance

Total NAV Return during the first six months of 2018 was 6.0%, equivalent to 5.2% on a constant currency basis. Private Equity delivered a Total Return of 11.0%, whereas the Derived Investments were negative at (0.6%) with Derived Debt up 0.6% and Derived Equity down (2.3%), reflecting weakness in emerging markets. Adjusted NAV per share increased 3.3% to €1.92 due in part to the dividend payment made during the period. In sterling terms, Adjusted NAV grew to £1.70.

The Private Equity portfolio saw a significant improvement in performance, particularly in the second quarter. The strong fundamentals of the underlying companies have now started to come through in the reported numbers, as the return drag from underperforming investments in 2016 and 2017 ceased.

A full analysis of the performance of the portfolio can be found in the Investment Manager's report, as well as a commentary on the current state of investment markets.

Portfolio summary

AGA was 104% invested on 30 June 2018. €39.9m was drawn from the credit facility to bridge towards cash returns expected later in the year from realisations including Azelis and GlobalLogic. The portfolio's relative exposure remained unchanged, with 65% of the invested portfolio in Private Equity and 35% in Derived Investments. Whilst AGA strives to maintain a balance between Private Equity and Derived Investments in the long term, shareholders should continue to expect the share of investments in Private Equity and Derived Investments to fluctuate.

Investment activity

The pace of new investments in the Private Equity portfolio slowed, with the market continuing to be viewed as expensive. In total, five new investments were made in Private Equity, one by AIX, and four within the AMI and ADF. However exit activity was robust. Three full exits were signed, one of which completed, all from AVIII. The Gross IRR achieved on these realisations was 53.4% (49.8% on a constant currency basis).

In Derived Debt, six of the seven investments made in 1H18 were in US dollar loans. AGA exited five Derived Debt positions during the period with a Gross IRR of 12.6% (12.1% on a constant currency basis). Since the beginning of the year, eight new Derived Equity investments were made, with an emphasis on European stocks. There were six realisations with a Gross IRR of 7.7% (11.9% on a constant currency basis) in the Derived Equity portfolio.

In total, €143.7m of capital was deployed over the six months to 30 June 2018, €11.1m in Private Equity and €132.6m in Derived Investments. Realisations totalled €124.1m, with €22.3m from Private Equity and €101.8m from Derived Investments.

Market environment

Public market sentiment has been influenced by increased protectionism and the tariff "tit-for-tat" of major economies. Unsurprisingly this has manifested itself in jittery equity markets, in particular in those economies and sectors most exposed to exports. Volatility has also spilled over into bond markets where credit spreads have widened. Private Equity valuations however do not appear to have corrected yet and remain at high levels.

If relative valuations remain the same, the Investment Adviser expects transactions in the Apax sectors of Healthcare, Consumer and Services to figure more prominently in 2H18 and 2019.

Lock-up release

The Company had its third anniversary since its IPO in June 2015. Consequently, a further 7.5% of AGA's ordinary shares were released from lock-up. Previously a tender process was offered through the Company's broker to facilitate the sale of these shares. Due to negligible take-up in prior years, the Board decided not to renew this arrangement in 2018.

Dividend

The Board remains committed to distributing 5% of AGA's NAV per annum as a dividend to shareholders. The final dividend for the fiscal year 2017 of 4.17 pence per share was paid to shareholders on 4 April 2018. The Board has also approved the interim dividend in respect of the fiscal year 2018 of 4.33 pence per share. Using the closing exchange rate of 1.1122 on 9 August 2018, the dividend represents 2.5% of AGA's euro NAV at 30 June 2018, equivalent to 4.82c euro cents. The total dividend of €23.7m will be paid on 14 September 2018 to members on the register on 24 August 2018. The shares will be marked ex dividend on 23 August 2018.

Liquidity

AGA has exposure to six Apax Funds spanning vintages from 2005 to 2017 and has made total commitments of €816.2m to these funds, of which €590.8m has already been funded. Total unfunded commitments, taken together with recallable distributions received, now amount to €279.3m. AGA has a cash balance of €16.9m, a revolving credit facility with €100.1m remaining undrawn, and a portfolio of Derived Investments with a fair market value of €344.9m. As a result, AGA believes it has ample liquidity and resources to fund future capital calls from the Apax Funds.

AGM voting results

A discontinuation resolution was put forward to the annual general meeting for the first time this year (and similar resolutions will be put forward every three years in the future). The Directors were pleased that 99% of votes cast supported the continuation of the Company in its current form. All other resolutions also received a high level of support.

Board changes

Following Sarah Evans' retirement earlier this year, we are pleased to welcome Mike Bane as a Director of AGA. Mr Bane joined the Board and the Audit Committee on 3 July 2018. A qualified accountant with more than 35 years of audit and advisory experience in the investment management industry, he brings to the Board a wealth of knowledge in relation to asset management and private equity.

Outlook

In private equity, valuations remain high. Consequently the Investment Adviser will continue to focus on monetisation of existing investments. Credit markets may offer a better risk-reward profile than they have in the past couple of years, in light of higher rates and widening credit spreads. Investments in public equity will need to take into account greater market volatility arising from increased political and macroeconomic risks.

Tim Breedon CBE

Chairman

13 August 2018

"AGA's portfolio has strong fundamental characteristics that puts it in good stead to realise more value in the future."

Investment Manager's report | Market overview

The first half of 2018 saw the return of public market volatility. Private equity prices remain high, and finding the few precious palatable risk-reward combinations in a sea of over-priced transactions is key.

1H18 market review

After almost uninterrupted global asset price appreciation in the past five years, the last six months saw the return of downside volatility in public markets. Since the all-time high in the S&P 500 on 26 January 2018, indices around the world have fluctuated with some notable downward trends. Emerging markets in particular have seen volatility lately: while indices have not changed much between December 2017 and June 2018, intermediate swings were in the double-digit percent in China, India and Brazil. Western markets also saw major movements, for example the German DAX declined by 9% peak-to-trough. The key driver behind the sudden swings in sentiment is the fear of US trade wars with China and Europe. Consequently, export exposed markets and export driven sub-segments showed the largest declines.

Trade war concerns also influenced foreign exchange and credit pricing. Most currencies depreciated against the US dollar. Importantly for AGA, the euro seems to have reversed its prior trend of strength. While its decline of 2.7% in 1H18 appears moderate, the peak-to-trough decline of c.8% gives a better perspective on the magnitude of recent changes.

Credit markets have also shifted direction. High yield bond markets in the US saw increased volatility in spreads and yields during the first six months of this year - after more than two years of relatively steady declines. This shift was even more pronounced in Europe with spreads widening significantly since the beginning of the year. As Fig.1 shows, throughout most of 2018, high yield spreads in Europe were narrower than in the US, but have increased by almost 200bps since - a dramatic reversal which supports AGA's Derived Debt positioning in the US versus Europe.

Despite the re-emergence of volatility in public capital markets, private equity transactions have continued at pace in H1. As Fig.2 depicts in more detail, transaction volumes have increased compared to 2017. In addition, Fig.3 shows that pricing has remained elevated and in the case of Europe is at an all-time high.

2018 to 2019 outlook

At face value, the global macroeconomic picture looks very positive. Growth rates in most economies are up on previous years and unemployment is approaching multi-decade lows in several economies, including some of the largest. Consensus forecasts see the trends continuing in the mid-term, marking this as one of the largest post-war expansions. The forecasters' central scenario is still for global growth to be above long-term trends with economies testing capacity limits.

However, the return of protectionism has not only reintroduced volatility in the capital markets but could also have significant effects on the global growth outlook. In fact, some non-US metrics may already be starting to show the impact of this shift in expectations and sentiment. For example, the Eurozone manufacturing index PMI fell to an 18-month low of 54.9 in June, down from 55.5 in May. While this is still expansionary, it shows that industrial companies are feeling a change for the negative. The US ISM Manufacturing Index came in at 60.2 in June after May's 58.7. This was the second highest reading since 2004, reflecting the ongoing robustness of the US economy fuelled by a huge fiscal impulse. Nevertheless, trade disputes are likely to negatively affect the US eventually and in addition there will be an enormous US fiscal deficit to address at some point. The Chinese PMI is also not showing any slowdown but this appears to be more due to the mid-term momentum carrying over from 2017 rather than actual industrial strength. China and Germany are arguably the two countries with the most to lose if the tariff war escalates. In addition to the tariff row, there are lingering conflicts and political uncertainties, such as those concerning Iran, Korea and Brexit.

Regarding Brexit, the UK finally seems to have set course for a Norwegian-style future relationship with the EU. This in our view is a good decision for its economy, which if executed would provide a working model for continued trade flows and economic collaboration. Yet we believe there are still significant risks to the path taken. First, there is clearly resistance within parts of the British political establishment which could scupper the strategic direction. Second, the EU might not agree to the UK's proposal as it could be viewed as "cherry picking". Third, coordinating the UK's and the EU's positions and the need of approval in 28 legislative systems, creates enormous process risk in an already short timeline. A hard Brexit therefore still remains a possibility and indeed a default position if there is no deal agreed in time.

What does this mean for investments?

Making a call on the economic health for the next two years is harder than six months ago, as the outcome appears dependent on "man-made" factors rather than traditional economic drivers. That said, political risks affect different sectors and different asset classes with varying degrees of severity and picking the "right" investment areas in the coming quarters could become a particularly rewarding exercise.

To undertake this search for the best opportunities, it is helpful to remember that AGA is active in three different asset classes. Private Equity, Equities and Debt. The latter two are combined under Derived Investments using AGA's terminology. In Derived Debt, we would expect more attractive opportunities in the coming years than there have been recently. As mentioned, spreads have risen in H1 and US base rates have also increased, resulting in yields expanding in the Western markets. Consequently, we believe that risk-reward profiles in debt have improved and we expect the share of debt to increase within AGA's Derived Investments. Within the credit universe, we remain more positive on US dollar debt, but note euro debt's recent improved attractiveness as illustrated in Fig.1.

In Private Equity and Derived Equity, the Apax focus sectors of Tech & Telco, Healthcare, Consumer and Services as well as the Digital space have less exposure to the political risks than for example automotive, industrials or commodities. Fig.4 compares valuations of the Apax focus sectors to historical averages. Healthcare and Consumer look relatively attractive and they are also less cyclical than many other sectors. By value, most of AGA's look-through Private Equity Investments in 1H18 were made in Healthcare. If relative valuations remain the same, we would expect Healthcare and Consumer as well as Services transactions to figure more prominently in 2H18 and 2019. In addition, due to stock price declines in some markets and the increased risks ahead, we believe that so called "public-to-privates" or "PIPEs" could play a larger role in the next 18 months. The art will be in finding the few reasonably priced opportunities in a sea of highly-valued Private Equity opportunities.

Investment Manager's report | Portfolio overview

1H18 market review

Apax Partners' unique portfolio mix of Private Equity and Derived Investments positions AGA for sustainable long-term returns.

NAV development and portfolio performance

At the end of June 2018, Adjusted NAV was €943.9m, up from €912.4m at 31 December 2017 (Fig.1 and 2). A substantial part of this movement was due to Private Equity unrealised gains from both M&A and organic growth, representing a positive impact of €54.8m. €7.4m of FX gains also increased Adjusted NAV on the back of an appreciating dollar against the euro.

The second semi-annual dividend in relation to 2017 reduced Adjusted NAV by €22.9m. It was paid to shareholders in April, in line with AGA's objective to distribute 5% of NAV per annum. The first dividend for 2018 is expected to be paid on 14 September 2018.

Private Equity, which had been lagging in 2016 and 2017, was the driver of AGA's returns producing a contribution of 6.0% as the portfolio companies continue to grow organically and through acquisitions. Private Equity's Total Return on a constant currency basis was 10.1%, and reported return was 11.0%.

Derived Investments produced a Total Return of (0.6%), decreasing AGA's Total NAV Return by 0.1% (Fig.3).

Derived Debt was impacted in particular from a further write down in FullBeauty to €4.1m at the end of June, as a result there is limited further valuation downside going forward on this investment.

Derived Equity's Indian positions were caught up in the sell-off of Indian mid cap stocks which affected a small number of investments.

Portfolio overview

Portfolio split by asset type

Portfolio split by sector

Portfolio split by geography

In Private Equity, five new investments and one follow-on investment were made. One of these new investments was funded by AIX, which is the current global Apax buyout fund being invested. The follow-on was in AVIII, AGA's largest Apax Fund exposure. Two investments were made in mid-market buyouts in Israel through the AMI Opportunities Fund ("AMI"). The Apax Digital Fund ("ADF"), which closed in December 2017, made another two investments.

The Private Equity portfolio reported three full exits during the period. In addition to the high private equity sponsor interest, the Investment Adviser is also seeing strategic investors become increasingly acquisitive which is encouraging for future realisations. We also made 15 new investments in Derived Investments and divested nine positions.

Since the annual results, the sector split has shifted slightly from Tech & Telco to Services and the geographic exposure moved towards the UK and North America.

The overall portfolio mix between Private Equity and Derived Investments remained stable. At the end of the reporting period, AGA had exposure to 52 Private Equity portfolio companies and 37 Derived Investments. Ten investments in the Derived Investments portfolio overlapped with the Apax Funds' portfolio companies, either because AGA took a minority investment in the debt issued by these portfolio companies, or has also invested in listed companies in which the Apax Funds have a holding.

Fig.1: Adjusted NAV development (€m)

1. Expenses and other consists of: expenses and accruals of €4.8m; performance fee of €1.8m; and net FX losses of €2.0m

2. Total value movement calculated by taking unrealised and realised movements, FX and income earned during the period. Total value gains show the positive contributors and total value losses show the negative contributors

Fig.2: Adjusted NAV development (€m)

1. Included in investments, divestments and realised gains are movements related to the demerger of Strides Shasun. In April 2018, Strides Shasun demerged and AGA received shares in a new listed equity position Solara. AGA had a partial realisation of Strides Shasun, whereby the proceeds received equaled the value of the new investment Solara. No cash was exchanged as part of this transaction

2. FX on cash includes the revaluation of cash balances and net losses arising from the differences in exchange rates between transaction dates and settlement dates, and unrealised net losses arising from the translation into euro of assets and liabilities (other than investments) which are not denominated in euro

Investment Manager's report | Private Equity

The Private Equity portfolio delivered a strong performance during the first half of 2018 with a Total Return of 11.0% based on robust growth of the portfolio companies.

Portfolio split by sector

Portfolio split by geography

Portfolio split by currency

Highlights

The Total Return for the Private Equity portfolio was 11.0% with M&A and organic earnings growth being the main driver of value creation. Performance was particularly strong in the second quarter. On a constant currency basis, Total Return was 10.1%. There were more exits than investments so far this year, highlighting the focus on realising value in the portfolio.

NAV development

The Adjusted NAV of the Private Equity portfolio increased from €586.1m to €638.1m in the half-year. The main factors behind this increase were unrealised gains of €54.8m, together with capital calls of €11.1m. FX positively contributed to Private Equity Adjusted NAV by €5.0m (Fig.1).

Investment performance

The 2016 and 2017 annual report and accounts highlighted a small number of difficult situations in the AVIII portfolio which dragged down performance: Answers, Rue21, and FullBeauty. These three situations have now been largely worked through from a valuation perspective (combined NAV of these three Private Equity positions at 30 June 2018: €3.1m). The operational performance of the remainder of the portfolio is starting to show positively in the results.

While the overall portfolio has performed strongly, a number of portfolio companies stand out, notably Azelis, Idealista (both in AVIII) and Acelity (in AEVII). The largest increase in valuation related to Azelis which was AGA's largest Private Equity exposure at the end of 2017. A binding offer was made for the company in June 2018, driving a valuation uplift of 29% relative to the 31 December 2017 mark. While the transaction is expected to complete in 2018, due to the duration of anti-trust approval, the June 2018 valuation already reflects the agreed sale price.

Acelity's uplift in valuation was due to EBITDA growth and multiple expansion. The company has been investing in long-term growth initiatives such as sales force staffing, marketing, medical education and R&D which has led to a strong growth momentum recently. In addition, Acelity completed the acquisition of Crawford Healthcare in June 2018, a rapidly growing UK-based advanced wound care company. This further strengthened Acelity's position as the global leader in advanced wound healing.

The valuation of Idealista increased due to continued rapid EBITDA growth as the business continued to cement its position as the leading online real estate classified business in Spain. The company is also growing its presence in Italy, and has recently become the number two player in that market based on several metrics.

Meanwhile, Ideal Protein, EVRY and Shriram City Union Finance ("SCUF") experienced the largest negative valuation movements. Ideal Protein provides weight loss solutions and has seen a softening in customer acquisition and retention. The company is working on a number of initiatives to address this, including improving its marketing and sales force.

SCUF and EVRY are both publicly listed, and their valuation reflects share price declines.

Whilst the largest Private Equity valuation driver in 1H18 was AVIII, we expect AIX to become an important contributor to returns soon. This 2016 vintage fund is now 43% invested across 13 portfolio companies. Many investments have made remarkable progress in the past year and the Fund has largely moved out of the "J-curve" effect. It is now seeing not only an increase in valuation but also IRR. The Investment Adviser believes the portfolio has been constructed in a balanced manner, with c.70% of capital invested at attractive absolute values, and the remainder invested in high growth businesses at reasonable relative values. If market multiples remain stable, further improvements in valuations should follow in the periods ahead.

A note on valuation policies

The Apax Funds' valuations are updated on a quarterly basis. This has consequences on how realisations and value movements are reported.

1. In the Apax Funds, all gains in an investment up to the last quarter before a sale are reported as "unrealised". Only in the quarter, when a sale transaction is completed, will a "realised gain" occur. In practice that means that an overwhelming part of the value creation in a typical private equity hold period of four to seven years will be reported as "unrealised".

2. Some exit processes draw on for one or more quarters after a contract is signed (e.g. due to anti-trust approval processes in many countries). This may actually translate into no "realised gains" ever being reported for a private equity holding, despite a profitable disposal. As an example, in the case of Azelis, the fair market value of that investment at 30 June 2018 corresponds to the agreed exit value, and the increase is denoted as "unrealised".

Investment activity

The pace of investment for AGA (and the Apax Funds) Private Equity Investments in 1H18 has been slower than in the equivalent prior year period. On a look-through basis AGA committed €25.3m to signed and closed Apax Funds' investments in 1H18, compared to €39.7m in 1H17.

AGA also invested €11.1m in the Apax Funds' carried interest in the period, increasing its carried interest exposure to AEVII, and creating a new stake in AEVI.

Five new investments were made during the six months by the Apax Funds, as the overall portfolio structure continued to diversify. The majority of new investments are in sub-sectors the Investment Adviser knows well.

AIX acquired Healthium MedTech, a medical devices player in India and a global leader in suturing needles. The investment leverages Apax's significant experience in medical devices (current investments include Acelity, Vyaire Medical and Syneron Candela).

ADF made two additional investments: a minority growth investment in Wizeline, a high-growth outsourced product development and digital transformation consulting company; and a growth buyout investment in Solita, a leading Finnish digital transformation company. Both are IT Services transactions, a sub-sector in which Apax has a great deal of experience, having invested in and built a large number of leading businesses in this industry.

AMI made two further investments: Global-e, a leading provider of cross-border e-commerce solutions; and Ramet Trom, an Israeli producer and supplier of prefabricated elements used in construction.

AVIII purchased the remaining 50% stake in Vyaire Medical which reflected the Investment Adviser's confidence in the business. Vyaire continues to perform strongly and has recently undertaken a number of acquisitions as it executes on its plan to become a global leader in respiratory care.

As the Apax Funds operate credit facilities to bridge capital calls from investors on a short term basis, AGA expects capital calls of €22.7m, or c.2.4% of Adjusted NAV from these drawings in the coming months. Usually AIX, AVIII and ADF bridge individual capital calls for up to twelve months after each drawdown. AMI drawings of the bridge facility are generally repaid once a year.

While the high-priced environment has resulted in a slower investment pace, the converse is true for exits with €112.1m of expected proceeds from exits signed or closed in 1H18 for AGA compared to €48.2m in 1H17. There were three strong full exits during the first six months of the year. First, Genex was sold generating a 2.8x Gross MOIC for the Apax Funds and €5.5m in cash proceeds for AGA. Under the Apax Funds' ownership, the company had completed eight add-on acquisitions which significantly expanded its portfolio of solutions and resulted in an EBITDA increase outperforming the broader market.

Second, after the period end, the sale of GlobalLogic completed in August 2018 generating a 5.9x Gross MOIC for AVIII and c.€65.6m in total cash proceeds for AGA, including those from a partial exit of the position achieved in January 2017. Investment in sales and marketing, alongside strategic M&A, saw the business meaningfully deepen and expand its portfolio of software development capabilities. This resulted in an acceleration in the business with both revenue and EBITDA more than doubling in the Apax Funds' holding period.

Third, in June 2018 the sale of Azelis was announced with the completion scheduled for October 2018. On completion, the investment is expected to deliver a c.3.6x Gross MOIC to AVIII and approximately €72.3m in cash proceeds for AGA. Through M&A (nine acquisitions) alongside organic growth from product innovation and new mandate wins, the company saw revenues more than double and EBITDA triple under the Apax Funds' ownership, and the business transformed into a truly global speciality chemicals distributor.

During the period, a number of portfolio companies were refinanced (e.g. Boats Group and Exact) where there was an opportunity to optimise capital structures, lower the cost of debt, and/or fund dividends.

Fig.1: Private Equity Adjusted NAV development (€m)

1. Secondary purchases of €11.1m relate to the purchase of two carried interest holdings (add-on of €7.7m in AEVII and €3.4m into a new carried interest holding in AEVI)

2. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2018

3. Includes AGA's exposure to carried interest holdings in AEVII and AEVI which were respectively valued at €31.9m and €4.3m at 30 June 2018 

Fig.2: Private Equity performance (%)

1. Represents movement in all instruments senior to equity

2. Movement in the valuation multiples captures movement in the comparable companies valuation multiples. In accordance with International Private Equity and Venture Capital Valuation ("IPEV") guidelines, the Apax Funds use a multiples based approach where an appropriate valuation multiple (based on both public and private market valuation comparators) is applied to maintainable earnings, which is often but not necessarily represented by EBITDA to calculate Enterprise Value

3. Mainly dilutions from the management incentive plan as a result of growth in the portfolio's value

4. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2018

Operational metrics

The Private Equity portfolio continued its good operational momentum from both organic growth and M&A. Last Twelve Months ("LTM") revenue and EBITDA growth was 13.6% and 17.5% respectively. Excluding M&A, growth was 9.1% and 11.7%.

The weighted average valuation multiple of the portfolio increased from 13.8x to 14.8x LTM EBITDA, largely reflecting improving public market multiples within the sectors that the Apax Funds invest in, as well as uplifts particularly from the full exits of Azelis and GlobaLogic.

The weighted average leverage of the portfolio companies increased from 4.3x to 4.5x LTM EBITDA, mainly driven by debt funded M&A.

Market outlook

Public market volatility continues as resilient economic and earnings data contrast with ongoing geopolitical concerns. Despite this volatility in public markets, private equity transactions have continued at high volumes and prices.

The Investment Adviser believes discipline is vital when investing against this market backdrop. Apax's wide geographic reach and deep sector expertise identify attractive relative value on a country or sub-sector basis. The investment strategy remains focused on "quirky" opportunities which are off the beaten path (thereby reducing competition), and where Apax can generate a clear angle in the sourcing process or value creation opportunities, which are different from those the market is seeing.

We believe that the existing portfolio is in good shape and developing strongly which could lead to further good performance in the second half of 2018.

1. Includes AGA's exposure to AEVII as a limited partner, valued at €30.6m and through its carried interest holdings, valued at €31.9m. The carried interest holdings were acquired through a €10.5m investment in 2015 and €7.7m investment in April 2018

2. Includes AGA's exposure to AEVI as a limited partner, valued at €1.9m and through its carried interest holdings, valued at €4.3m. The carried interest holdings were acquired through a €3.4m investment in April 2018

Acquisitions

1. Wizeline closed in March 2018, Vyaire Medical closed in April 2018, Global-e closed in April 2018, Ramet Trom closed in May 2018, Solita closed in June 2018 and Healthium MedTech closed in June 2018

2. Cost is AGA's indirect exposure to the underlying portfolio companies held by the Apax Funds. Costs may change following final close of the deal

Gross IRR on full exits3/MOIC3

53.4%/4.2x

Divestments

3. Gross IRR and MOIC on full exits calculated based on the aggregate cash flows across all funds of the three deals realised (inclusive of GlobalLogic which closed in August 2018 and Azelis expected to close in 4Q18). Gross IRR represents concurrent Gross IRR.

4. Genex full exit closed in March 2018, GlobalLogic full exit signed in May 2018 and closed in August 2018 and Azelis full exit signed in June 2018

5. Performance as at 30 June 2018, including unrealised value and total realised proceeds. Gross MOICs and Gross IRRs represent return to the fund which invested the most across all the Apax Funds into the deal. AVIII and AIX performances represent the euro tranche returns

Top 30 Private Equity Investments

AGA's indirect exposure at 30 June 2018

* Denotes overlap with the Derived Investments portfolio

www.apaxglobalalpha.com/investment-portfolio/top-holdings/private-equity

Investment Manager's report | Derived Investments

The performance of the Derived Investments portfolio weakened during the period as the Derived Equity portfolio experienced pressure from its emerging market exposure.

Portfolio split by sector

Portfolio split by geography

Portfolio split by currency

Highlights

Total Return for Derived Investments was (0.6%) in 1H18, and (1.9%) on a constant currency basis. The Derived Debt portfolio produced a positive Total Return of 0.6% ((1.9%) on a constant currency basis). The returns from the Derived Equity portfolio were subdued with a Total Return of (2.3%), ((2.2%) on a constant currency basis), primarily due to pressure from our investments in emerging market stocks.

NAV development

The Adjusted NAV of the Derived Investments portfolio increased from €307.2m to €341.8m in the period. Growth came from new positions being added to the portfolio and a positive contribution of €4.4m from FX. AGA invested €132.6m and divested €101.8m in Derived Investments, generating net realised gains of €7.0m. Unrealised losses were (€17.8m) (Fig.1) and were the main reason for the weaker NAV and Total Return.

Investment performance

The Derived Investments portfolio generated a Total Return of (0.6%). FX had a positive effect of 1.3% as the US dollar appreciated against the euro (Fig.2); 61% of Derived Investments are denominated in US dollars, resulting in a (1.9%) Total Return on a constant currency basis. Derived Debt contributed 0.3% to the performance of Derived Investments, compared with Derived Equities with (0.9%).

The Derived Debt portfolio was particularly impacted by a further write down in the FullBeauty second lien investment (further details below). This one position represented 85% of total Derived Debt unrealised losses during the first six months. The remaining Debt positions held by AGA however are performing well.

Within Derived Equity, AGA's exposure to China and India caused a drag on performance. In particular, Indian mid-cap stocks were caught in a sell-off as evidenced by the MSCI India Mid Cap index declining by 10.9% in the first six months of the year.

The top three performers in the Derived Investments portfolio (Fig.3) were Greencore, Dignity and Sophos, three UK listed equities.

Greencore is currently the seventh largest Derived Investment with a NAV of €15.4m. The company produces convenience food for retailers and global brands in the UK and the US. AGA purchased this stock earlier this year as its price was over-penalised following a profit warning.

Dignity is the leading UK funeral services provider. AGA acquired a position in Dignity in 2018 as it was trading at a significant discount to its long-term valuation multiples, and not reflecting its market position and growth rates. This valuation gap closed sooner than expected, and AGA sold the position after a short hold, generating 1.4x Gross MOIC and 522% Gross IRR.

The share price of Sophos (an IT security and data protection company) has experienced some volatility during the first six months but improved considerably compared to the prior year end.

The positions with the greatest mark-downs were Strides Shasun (listed equity), FullBeauty (second lien loan) and OVS (listed equity).

Strides Shasun announced weak results. The business significantly lagged management guidance, largely on account of under-performance of its US business.

FullBeauty's debt valuation has decreased as operational trends continue to be weak and its NAV at June 2018 marked at €4.1m. There is therefore limited further valuation downside as a result of total write-downs already made with respect to this investment.

AGA's investment in OVS stock was driven by a read across from other structurally sound retailers experiencing weather- related weak trading during the winter months which later improved. Recent political events in Italy and the insolvency of an OVS affiliate in Switzerland impacted OVS's share price negatively in 1H18.

Investment activity

Derived Debt

The first half of 2018 saw a similar investment focus as 2017. In Derived Debt, the preference for US second lien notes continued as shown by the six of the seven debt investments made. Increased US base rates have resulted in improved bond yields in the US, and in Europe spreads have started to widen. In our view, this has generally improved risk-reward profiles for credit investments.

Of the seven new debt investments, two were in Apax Funds portfolio companies: Boats Group and Vyaire Medical. The overlap between AGA's Derived Debt portfolio with Private Equity exposures of Apax Funds was reduced to seven out of a total of 19 Derived Debt holdings at the end of the period. This represents a 36.8% overlap.

An example of the Investment Adviser's ability and insight to source a new Derived Debt opportunity was the investment in PowerSchool. PowerSchool is a software company catering to the US education industry. Initially, Apax performed due diligence on PowerSchool as a potential Private Equity opportunity, but did not proceed due to an unfavourable valuation bid-ask spread. Following the acquisition of PowerSchool by a consortium of Onex and Vista, AGA invested €12.8m in the second lien loan as we had a strong conviction towards the company's business fundamentals.

AGA exited five Derived Debt positions, generating €55.4m of proceeds in 1H18. The Gross IRR achieved on fully and partially exited positions was 12.6%, realising €1.6m (inclusive of income) of gains. As many of these debt investments were US dollar denominated, the constant currency Gross IRR achieved was 12.1%1.

Derived Equity

During the first half of this year, a total of eight new Derived Equity investments were completed, with an emphasis on Europe. The overlap of the Derived Equity portfolio with the AGA Private Equity exposures at 30 June 2018 was 16.7% with three positions out of a total of 18 investments overlapping.

AGA made six full exits from the Derived Equity portfolio. Four of these investments were purchased in the twelve months prior to the sale. The short holding periods reflect investment objectives having been achieved much earlier than originally anticipated. The Gross IRR on all exited positions was 7.7% with three positions returning negative or single-digit returns. Nonetheless, these exits realised €6.8m of gains, and the constant currency Gross IRR was 11.9%1.

1. Constant currency Gross IRR calculated based on the aggregate cash flows of each position sold, converted to euro using the FX rate at the first date of purchase for each respective position. The Gross IRR is then calculated on their aggregate cash flows

Fig.1: Derived Investments Adjusted NAV development (€m)

1. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2018

Fig.2: Derived Investments performance (%)

1. Performance fee adjustment accounting for the movement in the performance fee reserve at 30 June 2018

Operational metrics

Derived Debt

Operational performance in the Derived Debt portfolio measured by LTM EBITDA growth, improved from 6.2% to 15.4%, mainly due to the addition of a number of new positions (Boats Group, PowerSchool and Vyaire) with higher EBITDA growth.

The average yield of debt to maturity increased to 12.3% due to an increase in LIBOR rates which affected the floating rate debt AGA holds. 58% of Derived Debt positions were yielding 10% to maturity or higher.

Derived Equity

Average LTM earnings growth in the Derived Equity portfolio has increased from 12.0% to 16.1% due to a change in the portfolio mix compared to December 2017 with more faster growing positions added. There were eight additions and six positions sold in the period.

The average price-to-earnings multiple for the Derived Equity portfolio decreased to 23.5x. This was driven by the addition of faster growing positions whose share prices remained stable or decreased in some cases.

Market outlook

With the recent expansion of yields in Western markets, the risk-reward profile of credit opportunities seems more viable and we expect to see more debt investments in the Derived Investments portfolio going forward. Within the debt universe, we remain more positive on US dollar credit, but note euro investments have become more attractive in light of increasing spreads.

We expect new investment opportunities to arise in Derived Equity due to increasing volatility in public markets. We will however remain vigilant in relation to valuation risks, in particular from protectionist policies, tariff discussions, and regional/political conflicts.

Investment Manager's report | Derived Investments

Debt

Acquisitions

1. Represents the cost acquired during 2018

Gross IRR2/MOIC2

12.6%/1.2x

Divestments

2. Gross IRR and MOIC calculated based on the aggregate euro cash flows since inception for deals realised during the period (inclusive of two partial exits)

3. Calculated since the initial purchase date of the investment

Equity

Acquisitions

1. In April 2018, AGA's investment in Strides Shasun demerged and the Company received shares in a new investment Solara, that subsequently listed on the National Stock Exchange of India in June 2018. This resulted in a partial realisation of Strides Shasun and new investment in Solara. This investment in Solara was valued at €0.6m at 30 June 2018 and has been excluded from the above

2. Represents the cost acquired during 2018

3. Add-on position

Gross IRR4/MOIC4

7.7%/1.1x

Divestments

4. Gross IRR and MOIC calculated based on the aggregate euro cash flows since inception for deals realised during the period (inclusive of one partial exit)

5. Calculated since the initial purchase date of the investment

Investment Manager's report | Derived Investments

Top 30 Derived Investments

at 30 June 2018

* Denotes overlap with the Private Equity portfolio

www.apaxglobalalpha.com/investment-portfolio/top-holdings/derived-investments

Statement of Directors' responsibilities

Statement of principal risks and uncertainties

As an investment company with an investment portfolio comprising financial assets, the principal risks associated with the Company's business largely relate to financial risks, strategic and business risks, and operating risks.

A detailed analysis of the Company's principal risks and uncertainties are set out on pages 40 to 43 of the annual report and accounts 2017 and have not changed materially since the date of the report. The Company has not identified any new risks that will impact the remaining six months of the financial year.

Statement of Directors' responsibilities in respect of the Interim Report and Accounts

The Directors confirm that to the best of their knowledge:

· the condensed interim financial statements have been prepared in accordance with IAS 34 interim financial reporting as required by DTR4.2.4R;

· the Chairman's Statement and Investment Manager's report (together constituting the Interim Management Report), together with the statement of principal risks and uncertainties above, include a fair review of the information required by DTR4.2.7R, being an indication of important events that have occurred during the period and their impact on these interim financial statements; and a description of the principal risks and uncertainties for the remaining six months of the year; and

· the condensed interim financial statements provide a fair review of the information required by DTR4.2.8R, 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 that period, and any changes in the related party transactions described in the last annual report and accounts that could materially affect the financial position or performance of the Company during that period. Please refer to note 9 of the condensed interim financial statements.

Signed on behalf of the Board of Directors

Tim Breedon CBE

Chairman

13 August 2018

Signed on behalf of the Audit Committee

Susie Farnon

Chairman of the Audit Committee

13 August 2018

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in Guernsey governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Independent review report

to Apax Global Alpha Limited

Conclusion

We have been engaged by Apax Global Alpha Limited (the "Company") to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 which comprises the condensed statement of financial position, the condensed statement of profit or loss and other comprehensive income, the condensed statement of changes in equity, the condensed statement of cash flows and the related explanatory notes.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2018 is not prepared, in all material respects, in accordance with IAS 34 Interim Financial Reporting as adopted by the EU and the Disclosure Guidance and Transparency Rules ("the DTR") of the UK's Financial Conduct Authority ("the UK FCA").

Scope of review

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410 Review of Interim Financial Information Performed by the Independent Auditor of the Entity issued by the Auditing Practices Board for use in the UK. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. We read the other information contained in the half-yearly financial report and consider whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Directors' responsibilities

The half-yearly financial report is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the DTR of the UK FCA.

As disclosed in note 2, the annual financial statements of the Company are prepared in accordance with International Financial Reporting Standards as adopted by the EU. The directors are responsible for preparing the condensed set of financial statements included in the half-yearly financial report in accordance with IAS 34 as adopted by the EU.

Our responsibility

Our responsibility is to express to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report based on our review.

The purpose of our review work and to whom we owe our responsibilities

This report is made solely to the Company in accordance with the terms of our engagement to assist the Company in meeting the requirements of the DTR of the UK FCA. Our review has been undertaken so that we might state to the Company those matters we are required to state to it in this report and for no other purpose. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the Company for our review work, for this report, or for the conclusions we have reached.

Lee Clark

for and on behalf of

KPMG Channel Islands Limited

Chartered Accountants, Guernsey

13 August 2018

Condensed statement of financial position

At 30 June 2018 (Unaudited)

1. The sterling equivalent has been calculated based on the £/€ exchange rate at 30 June 2018 and 31 December 2017 respectively.

2. Adjusted NAV is the NAV net of the share-based payment performance fee reserve. Adjusted NAV per share is calculated by dividing the Adjusted NAV by the total number of shares.

The accompanying notes form an integral part of these condensed interim financial statements.

Condensed statement of profit or loss and other comprehensive income

Six months ended 30 June 2018 (Unaudited)

The accompanying notes form an integral part of these condensed interim financial statements.

1. Net unrealised foreign exchange gain on cash and cash equivalents of €0.1m offset by revaluation loss of €0.4m on the revolving credit facility drawn at 30 June 2018.

2. The Adjusted earnings per share has been calculated based on the profit attributable to ordinary shareholders adjusted for the total accrued performance fee at 30 June 2018 and 30 June 2017 respectively as per note 15 and the weighted average number of ordinary shares.

Condensed statement of changes in equity

Six months ended 30 June 2018 (Unaudited)

The accompanying notes form an integral part of these condensed interim financial statements.

Condensed statement of cash flows

Six months ended 30 June 2018 (Unaudited)

1. These cash flows relate to the purchase of two carried interest positions in Apax Europe VI (€3.4m) and Apax Europe VII (€7.7m) in the secondary market.

2. On 9 April 2018, the Company's equity investment in Strides Shasun limited demerged and the Company received shares in a new company Solara, that subsequently listed on the National Stock Exchange of India ("NSE") on 27 June 2018. This resulted in a partial realisation of Strides Shasun limited (€1.2m) and a new investment of €1.2m in Solara. As no cash was exchanged, this has been excluded from the cash flows from investing activities. In the prior period, the Company's first and second lien debt positions in Answers were restructured and the Company received equity of €6.9m, warrants of €0.2m and new second lien debt of €1.9m. As no cash was exchanged, these have been excluded from the comparative.

3. Dividend paid represents the cash amount paid to shareholders adjusted for foreign exchange movements. The difference between the amount included in the condensed interim statement of profit or loss and the cash flow statement represents the foreign exchange difference between the liability being booked and the final amount paid.

The accompanying notes form an integral part of these condensed interim financial statements.

Notes to the condensed interim financial statements

For the six months ended 30 June 2018

1 Reporting entity

Apax Global Alpha Limited (the "Company" or "AGA") is a limited liability Guernsey company that was incorporated on 2 March 2015. The address of the Company's registered office is PO Box 656, East Wing, Trafalgar Court, Les Banques, St Peter Port, Guernsey, GY1 3PP. The Company invests in Private Equity funds, listed and unlisted securities including debt instruments.

The Company's main corporate objectives are to provide shareholders with capital appreciation from its investment portfolio and regular dividends. The Company's operating activities are managed by its Board of Directors and its investment activities are managed by Apax Guernsey Managers Limited (the "Investment Manager") under a discretionary investment management agreement. The Investment Manager obtains investment advice from Apax Partners LLP (the "Investment Adviser").

2 Basis of preparation

Statement of compliance

These condensed interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting" as adopted by the European Union and should be read in conjunction with the Annual Report and Accounts 2017 which were prepared in accordance with International Financial Reporting Standards, as adopted by the European Union ("IFRS"). They do not include all the information required for a complete set of IFRS financial statements. However, the explanatory notes are included to explain events and transactions that are significant to an understanding of changes in the Company's financial position and performance since the last annual financial statements.

Going concern

The Directors consider that it is appropriate to adopt the going concern basis of accounting in preparing these condensed interim financial statements. In reaching this assessment, the Directors have considered a wide range of information relating to the present and future conditions, including the condensed statement of financial position, future projections, cash flows and the longer-term strategy of the Company. On review of the condensed statement of financial positon, it was noted that current liabilities were greater than net current assets at 30 June 2018, as the Company had drawn on its revolving credit facility (see note 11 for further details). The Company's future cash flow projections show that this is a temporary position and that the facility will be repaid in full in the short term.

Additionally, it was noted that the Company's facility is due to expire on 4 February 2019 but the Company has the option to extend for further twelve months (subject to final lender approval). The Directors considered the unlikely scenario of non-renewal of this facility and determined that it remains appropriate to adopt a going concern basis. Without the facility, the Company has sufficient liquidity within its Derived Investments portfolio to cover all outstanding liabilities inclusive of outstanding Private Equity commitments due within the next twelve months (see note 12 for further details on liquidity).

3 Accounting policies

There are no new standards or changes to standards since the Annual Report and Accounts 2017 which significantly impact these condensed interim financial statements. The accounting policies applied by the Company in these condensed interim financial statements are consistent with those set out on pages 73 to 77 of the Annual Report and Accounts 2017.

4 Critical accounting estimates and judgements

The significant judgements made by management in applying the Company's accounting policies and the key sources of estimation and uncertainty remain the same as those applied in the year ended 31 December 2017. In preparing these interim condensed financial statements, the Company makes judgements, estimates and assumptions that affect the reported amounts of assets, liabilities, income and expenses. Estimates and judgements are continually evaluated and are based on the experience of the Board of Directors and the Investment Manager and their expectations of future events. As these judgements involve estimates of the likelihood of future events, actual results could differ from those estimates which could affect the future reported amounts of assets and liabilities. Revisions to estimates are recognised prospectively.

(i) Judgements

The judgement that has the most significant effect on the amounts recognised in the Company's condensed interim financial statements relates to investment assets. These have been determined to be investments held at fair value through profit or loss and have been accounted for accordingly.

(ii) Estimates

The estimate that has the most significant effect on the amounts recognised in the Company's financial statements relates to investments held at FVTPL. The fair value of investments traded in an active market at FVTPL is determined by reference to their bid-market pricing at the reporting date otherwise the fair value is determined by using appropriate valuation techniques and methodologies.

The Investment Manager is responsible for the preparation of the Company's valuations and meets quarterly to approve and discuss the key valuation assumptions. The meetings are open to the Board of Directors, the Investment Adviser and the external auditors to enable them to challenge the valuation assumptions and the proposed valuation estimates. On a quarterly basis, the Board of Directors review and approve the final NAV calculation before it is announced to the market.

The Investment Manager also makes estimates and assumptions concerning the future and the resulting accounting estimates, will by definition, seldom equal the related actual results. The assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities are outlined in note 13.

5 Segmental analysis

The segmental analysis of the Company's results and financial position is set out below. There have been no changes to the reportable segments since those presented in the Annual Report and Accounts 2017.

Reportable segments

1. Central functions represents interest income earned on cash balances held and other general administration costs and financial costs.

2. Represents the movement in each respective portfolio's overall performance fee reserve (realised and unrealised). At 30 June 2018, the maximum performance fee payable on the unrealised portfolio would be €0.7m. In the Strategic Report, we have allocated the full €0.7m to Private Equity as the IMA requires that the Private Equity and Derived Investment reserves are calculated seperately and then netted, therefore the maximum payable on this reserve was allocated to Private Equity.

3. NCAs refers to net current assets of the Company.

6 Administration and other operating expenses

Increase of €0.2m in deal transaction, custody and research costs was mainly due to additional broker fees being incurred compared to the prior year. The Company has no employees and there were no pension or staff cost liabilities incurred during the period.

7 Taxation

The Company is exempt from taxation in Guernsey under the provisions of the Income Tax (Exempt Bodies) (Guernsey) Ordinance, 1989 and is charged an annual exemption fee of £1,200.

The Company, at times, may be required to pay tax in other jurisdictions as a result of specific trades in its investment portfolio. During the period ended 30 June 2018, the Company had a net tax expense of €0.1m (30 June 2017: €0.1m) mainly related to the sale of listed equities in India and tax incurred on debt interest income in the United Kingdom. No deferred income taxes were recorded as there are no timing differences.

8 Investments

(a) Unconsolidated subsidiaries

As at 30 June 2018, the Company does not have any subsidiaries. The Company liquidated the last two remaining subsidiaries; RDS Guernsey PCV GP Co Ltd and Twin Guernsey PCV GP Co Ltd, in the prior year on 16 March 2017. Both entities were special purpose vehicles incorporated in Guernsey.

(b) Investments held at FVTPL

1. Included in purchases is €11.1m related to Private Equity as two carried interest holdings were purchased on the secondary market during the period.

(c) Net changes in investments at FVTPL

(d) Involvement with unconsolidated structured entities

The Company's investments in Private Equity funds are considered to be unconsolidated structured entities. Their nature and purpose is to invest capital on behalf of their limited partners. The funds pursue sector focused strategies, investing in four key sectors; Tech & Telco, Services, Healthcare and Consumer. The Company commits to a fixed amount of capital, which may be drawn (and returned) over the life of the fund. The Company pays capital calls when due and receives distributions from the funds, once an asset has been sold. Note 12 summarises current outstanding commitments to the six underlying Private Equity Investments held. The fair value of these was €638.8m at 30 June 2018 (30 June 2017: €457.6m), whereas total value of the Private Equity funds was €14.5bn (30 June 2017: €13.3bn). During the period, the Company did not provide financial support and has no intention of providing financial or other support to these funds.

9 Related party transactions

The Investment Manager was appointed by the Board of Directors under a discretionary Investment Management Agreement ("IMA") dated 22 May 2015 and the amended IMA dated 22 August 2016, which sets out the basis for the allocation and payment of the management fee.

The management fee is calculated in arrears at a rate of 1.25% per annum on the fair value of Derived Investments and non-fee paying Private Equity Investments which do not already pay a management fee and/or an advisory fee to the Investment Manager or Investment Adviser. During the six months ended 30 June 2018, €2.2m (30 June 2017: €2.7m) of management fees were earned by the Investment Manager. The Investment Manager is also entitled to a performance fee on realised gains when they reach or exceed a benchmark performance, as explained in note 10.

The IMA has an initial term of six years and automatically continues for a further three additional years unless prior to the fifth anniversary of the start of the initial term or prior to the second anniversary of the start of any additional year thereafter either the Investment Manager or the Company (by a special resolution) serves a written notice electing to terminate the IMA at the expiry of the initial term of the commencement of the next additional year. The Company is required to pay the Investment Manager during the notice period all fees and expenses accrued and payable at the date of termination.

The Investment Adviser has been engaged by the Investment Manager to provide advice on the investment strategy of the Company. An Investment Advisory Agreement ("IAA"), dated 22 May 2015 and the amendment dated 22 August 2016, exists between the two parties. Though not legally related to the Company, the Investment Adviser has been determined to be a related party. The Company paid no fees and had no transactions with the Investment Adviser during the period (30 June 2017: €Nil).

The Company has an Administration Agreement with Aztec Financial Services (Guernsey) Limited ("Aztec") dated 22 May 2015. Under the terms of the agreement, Aztec has delegated certain accounting and bookkeeping services related to the Company to Apax Partners Fund Services Limited ("APFS"), a related party of the Investment Adviser, under a sub-administration agreement dated 22 May 2015. A fee of €0.2m (30 June 2017: €0.3m) was paid by the Company in respect of administration fees and expenses, of which €0.1m (30 June 2017: €0.1m) was paid to APFS.

At 30 June 2018, Tim Breedon held 70,000 shares (0.01%) ,Susie Farnon held 20,000 shares (0.004%) and Chris Ambler held 6,553 shares (0.001%). On 3 January 2018, Sarah Evans retired from the Board of Directors and the Audit Committee. On 3 July 2018, Mike Bane was appointed as a new Director. Please see note 17 for further details.

10 Performance fee

A performance fee is payable on an annual basis once realised gains on the Derived Investments and non-fee paying Private Equity Investments exceed the prescribed benchmark of 8% internal rate of return. Performance fees are only payable to the extent they do not dilute the returns below the 8% benchmark. They are calculated at 20% on total realised gains. Where there are overall net realised losses in a period these are carried forward and netted against future performance fees that may become payable.

The performance fee is payable to the Investment Manager by way of ordinary shares of the Company, unless as permitted by the IMA there are restrictions that prevent the Company purchasing shares, in which case the performance fee may be paid in cash. The mechanics of the payment of the performance fee are explained in the prospectus. In accordance with IFRS 2 "Share-based Payment", performance fee expenses are recognised in the statement of profit or loss and allocated to a share-based payment performance fee reserve in equity.

In the six months ended 30 June 2018 a performance fee of €15.4m (31 December 2017: €6.6m) was paid in cash to the Investment Manager in relation to performance on investments realised during the year ended 31 December 2017 because regulatory constraints prevented payment in shares. The intention of the Company remains that future awards should be payable in shares. The Company and the Investment Manager have been working to clear and resolve these limitations and expect to pay the fee in shares from 31 December 2018 onwards.

At 30 June 2018, management's best estimate of the expected performance fee was calculated on the eligible portfolio on a liquidation basis. Of this, €3.2m (30 June 2017: €7.7m) is related to realised gains earned during the period. The effect of the performance fee on NAV per share is disclosed in note 15.

11 Revolving credit facility and finance costs

The Company entered into a multi-currency revolving credit facility agreement on 22 May 2015 (the "Loan Agreement") with Lloyds Bank plc for general corporate purposes. The Company may borrow under the Loan Agreement; including letters of credit subject to a maximum borrowing limit set at €140.0m. The facility is due to expire on 4 February 2019, however the Company has an option to extend for a further twelve months (subject to final lender approval).

The interest rate charged is LIBOR or EURIBOR plus a margin of 210 bps. During the period €0.1m (30 June 2017 €12.9k) interest was paid on seven drawdowns made on the facility. In addition, a charge of €0.6m (30 June 2017: €0.7m) was included in the condensed interim statement of profit or loss related to a non-utilisation fee on the undrawn facility. Under the Loan Agreement, the Company is required to provide collateral for each utilisation. Collateral can be provided in the form of underlying investments. The loan to value ratio must not exceed 1:5 of the portfolio's NAV.

12 Financial risk management

The Company maintains positions in a variety of financial instruments in accordance with its Investment Management strategy. The Company's underlying investment portfolio comprises Private Equity Investments and Derived Investments. The Company's exposure to the portfolio is summarised in the table below: