ATP PEP II Annual Report 2014

Transcription

1 ATP PEP II Annual Report 2014 ATP Private Equity Partners II K/S CVR-no Annual Report for the period: 1 January December 2014 (10 th financial year) The annual report has been presented and reviewed by the Company s general assembly Copenhagen / 2015 ATP PEP II Annual Report 2014 Chairman 1

2 Company Details ATP Private Equity Partners II K/S Sjæleboderne 2, 1 st floor DK-1122 Copenhagen K Telephone: Fax: Website: info@atp-pep.com CVR-no.: Date of establishment: 1 April 2005 Registered office: Copenhagen Financial year: 1 January 31 December 10 th financial year Board of Directors Henrik Gade Jepsen (Chairman of the Board) Fredrik Martinsson Auditors Deloitte Statsautoriseret Revisionspartnerselskab Weidekampsgade 6 DK-2300 Copenhagen S Ownership ATP owns more than 50 % of the capital. Annual general meeting The annual general meeting takes place on 4 February ATP PEP II Annual Report

3 Contents CONTENTS 3 MANAGEMENT S STATEMENT 4 AUDITORS REPORTS 5 FINANCIAL HIGHLIGHTS 7 MANAGEMENT S REVIEW 8 ACCOUNTING POLICIES 11 INCOME STATEMENT 13 BALANCE SHEET AS OF 31 DECEMBER 14 STATEMENT OF CHANGES IN EQUITY 15 CASH FLOW STATEMENT 16 NOTES 17 PORTFOLIO 19 ATP PEP II Annual Report

4 Management s Statement Statement by Management on the annual report The Board of Directors and the Management have today considered and approved the annual report for the financial year 1 January to 31 December The annual report is presented in accordance with the Danish Financial Statements Act. In our opinion, the financial statements give a true and fair view of the Company s financial position at 31 December 2014 and of its financial performance for the financial year 1 January to 31 December We believe that the management commentary contains a fair review of the affairs and conditions referred to therein. We recommend the annual report for adoption at the Annual General Meeting. Copenhagen, 27 January 2015 Private Equity Advisors ApS Torben Vangstrup Klaus Rühne Board of Directors: Henrik Gade Jepsen Chairman of the Board Fredrik Martinsson ATP PEP II Annual Report

5 Auditors Reports Internal Auditors Report To the investors of ATP Private Equity Partners II K/S We have audited the financial statements for ATP Private Equity Partners II K/S for the financial year The financial statements have been prepared in accordance with the Danish Financial Statements Act. Basis of opinion We conducted our audit in accordance with the Danish Financial Supervisory Authority's Executive Order on Auditing of the Danish Labour Market Supplementary Pension Scheme (ATP), the Labour Market Occupational Diseases Fund (AES) and the Employee's Capital Pension Fund (LD) and in accordance with the international Auditing Standards. Those standards require that we plan and perform our audit to obtain reasonable assurance that the financial statements are free from material misstatement. The audit was performed in accordance with the division of responsibilities agreed with the external auditors and included an assessment of procedures and internal controls established, including the risk management organized by Management relevant to the reporting processes and material business risks. Based on materiality and risk we examined, on a test basis, the basis of amounts and other disclosures in the financial statements. Furthermore, the audit included evaluating the appropriateness of the accounting policies applied by Management and the reasonableness of the accounting estimates made by Management, as well as evaluating the overall presentation of the financial statements. We participated in the audit of risk and other material areas, and we believe the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit did not result in any qualification. Opinion In our opinion, the procedures and internal controls established, including the risk management organized by Management relevant to the reporting processes and material business risks, are working satisfactorily. Furthermore, in our opinion, the financial statements give a true and fair view of the Company's assets, liabilities and financial position at 31 December 2014 and of its financial performance and cash flows for the financial year 2014 in accordance with the Danish Financial Statements Act. Statement on the management s review Pursuant to Executive Order on Financial Reporting by the Danish Labour Market Supplementary Pension Scheme and the Supplementary Labour Market Pension Scheme for Disability Pensioners (available in Danish only), we have read the management s review. We have not performed any further procedures in addition to the audit of the financial statements. Hillerød, 27 January 2015 Peter Jochimsen Internal auditor ATP PEP II Annual Report

6 Independent Auditor s Report To the investors of ATP Private Equity Partners II K/S We have audited the financial statements of ATP Private Equity Partners II K/S for the financial year 1 January to 31 December 2014, which comprise the accounting policies, income statement, balance sheet, statement of changes in equity, cash flow statement and notes. The financial statements have been prepared in accordance with the Danish Financial Statements Act. Management's responsibility for the financial statements and the management report Management is responsible for the preparation of financial statements that give a true and fair view in accordance with the Danish Financial Statements Act and for such internal control as Management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor's responsibility and basis of opinion Our responsibility is to express an opinion on the financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor's judgement, including the assessment of the risks of material misstatements of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity's preparation of financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the financial statements give a true and fair view of the Company s financial position at 31 December 2014 and of the results of its operations and cash flows for the financial year 1 January - 31 December 2014 in accordance with the Danish Financial Statements Act. Statement on the management s review Pursuant to the Danish Financial Statements Act, we have read the management commentary. We have not performed any further procedures in addition to the audit of the financial statements. On this basis, it is our opinion that the information provided in the management commentary is consistent with the financial statements. Copenhagen, 27 January 2015 Deloitte Statsautoriseret Revisionspartnerselskab Kasper Bruhn Udam State Authorised Public Accountant Bill Haudal Pedersen State Authorised Public Accountant ATP PEP II Annual Report

7 Financial Highlights 10.9% 1.58x 1.03x Internal rate of return since 2005 Total value to total amount of capital paid Distributed to total amount of capital paid 13,2% KKm 2,669 Annual return in 2014 Funds and co-investments Net distributed to Profit amounted to DKKm 840 with a total value of DKKm 5,966 investors in 2014 Financial Highlights DKK' Income statement: Profit (loss) from investment activities 901,440 1,169,612 1,474, ,640 2,490,350 Operating profit (loss) 893,598 1,162,165 1,467, ,270 2,481,826 Profit from financial items (83) (11) Profit (loss) for the year 839,869 1,154,903 1,448, ,385 2,489,915 Balance sheet: Total assets 6,066,124 7,700,155 8,952,310 8,224,808 8,622,531 Equity 5,853,690 7,682,524 8,948,372 7,987,260 8,418,268 Cash flows: Operating activities 2,714,628 2,041, ,979 1,174,988 (165,911) Financing activities (2,668,703) (2,420,751) (487,587) (1,217,393) 100,734 Financial ratios: Total Value to paid In 1.58x 1.51x 1.40x 1.28x 1.22x Distributed to paid In 1.03x 0.77x 0.54x 0.44x 0.24x IRR 10.9% 10.7% 10.1% 8.6% 8.2% For terms and definitions please refer to the accounting policies ATP PEP II Annual Report

8 Management s Review Main Activity ATP PEP II is a fund-of-funds with an investment portfolio comprising of private equity funds in Europe and North America, as well as co-investments with portfolio funds. Investment via a fund-of-funds, entails a long term strategy. The period from ATP PEP II s first commitment to a portfolio fund until the sale of the last investment, may take years. ATP PEP II is in the 10 th year of this process. No further investment commitments will be given, as the investment period for ATP PEP II has ceased. Overview of capital structure See an overview of ATP PEP II s capital structure below. DKKm 18,000 16,000 14,000 12,000 Portfolio - development and composition ATP PEP II has committed DKKm 10,753 to a well-diversified portfolio of 34 private equity funds and 10 co-investments. The geographic exposure of the portfolio is 52 % in the US and 48 % in Europe. The chart below, illustrates the composition of commitment to the portfolio at 31 December 2014 as well as the average historical return per segment. DKKm 5,000 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1, x Segment - allocation and return 1.33x 1.53x 2.05x 1.10x 1.51x 1.53x TVPI 2.50x 2.25x 2.00x 1.75x 1.50x 1.25x 1.00x 0.75x 0.50x 0.25x 0.00x 10,000 8,000 6,000 4,000 2,000 0 Commitment and paid in Fair value and distributed Fair value Distributed Remaining commitment Paid in Total commitment TVPI The return for 2014 is illustrated per segment in the chart below. Return in % Return % ( m): return in DKKm Market Development The US realized a continued high and rising investment and exit activity again in 2014, measured in number of transactions. In Europe, the level from 2013 was maintained. Growth in earnings in the underlying portfolio companies has supported the positive development in particular in the US. Additionally, the financial sector in both the US and Europe has been providing favorable debt packages. Market conditions for private equity in Europe are expected to be challenged by low market growth, but high investment and exit activity, aggressive financing opportunities and continued growth in earnings in the underlying portfolio companies, are expected to generate a positive return in Prospects for growth in the US are even better and thereby the ability to deliver higher returns. Fundraising activity has been high, which is attributable to a high exit activity resulting in high cash returns to investors. Furthermore investors have turned to the private equity industry in search for returns. The imbalance between committed, drawn, realized and raised capital has certain parallels to the market situation in From a risk perspective though, the underlying portfolio companies have been through a financial crisis and should therefore be better prepared today if a significant deterioration of market conditions occur. 30% 20% 10% 0% -10% 0% (1m) 16% (261m) 10% (197m) 20% (289m) 9% (83m) -1% (-2m) 20% (46m) Total 13% The return for 2014 of 13 % is as expected. The return is affected by the positive development in quoted prices for comparable listed companies, as well as growth earnings and an increase in debt repayments in the portfolio companies. The internal administrative expenses amounted to DKKm 8 in 2014, corresponding to 7 basis points of total capital commitment from investors. In comparison to similar fund-of-funds, the administrative expenses are low. In 2014, ATP PEP II experienced an exchange gain on portfolio funds in foreign currency (primarily USD), however an equivalent exchange loss was realized on forward exchange contracts. The net exchange loss for ATP PEP II in 2014 amounted to DKKm 34. ATP PEP II Annual Report

9 Balance sheet At the end of 2014, net assets of the Company amounted to DKKm 5,854. Net assets are expected to decrease in the years to come, as the portfolio funds exits the underlying portfolio companies. The portfolio funds are only to a limited extend making new investments. Cash flow A total of DKKm 336 was paid in by investors to ATP PEP II, to finance portfolio funds investments as well as to settle differences in forward exchange contracts. Throughout the year, investors of ATP PEP II received distributions of DKKm 3,005. The J-curve below illustrates ATP PEP II s accumulated net cash flow since inception. As expected, the Company had negative cash flows in the initial years. Challenging market conditions for exits in 2008 and 2009 affected the level of repayments negatively. Due to the maturity of the portfolio and a high exit pace, the net cash flows have been positive since Drawdowns in 2015 and 2016 will be limited to follow-up investments and administrative expenses. Distributions are expected to continue at a high level. DKKm Accumulated net cash flow 3,000 2,000 1,000 0 Q2 05-1,000 Q4 06 Q2 08 Q4 09 Q2 11 Q4 12 Q2 14-2,000-3,000-4,000-5,000-6,000-7,000-8,000 Portfolio value Accumulated net cash flow By the end of 2014 the value of the portfolio amounted to DKKm 5,966 compared to DKKm 7,482 at the end of The reduction in fair value is primarily attributable to distributions of net DKKm 2,931 from the portfolio in 2014, including realized gains. The valuation of investments in non-listed companies is associated with special risks. The funds fair value valuations are normally used if the funds report in accordance with the International Private Equity and Venture Capital Valuation Guidelines, IFRS or US GAAP. With regard to investments made by venture funds, the valuation is based on reporting from the funds. Venture funds typically value companies in accordance with the pricing in recent funding rounds. The chart below illustrates fair value of investments per segment as of 31 December DKKm 2,000 1,800 1,600 1,400 1,200 1, Segment - exposure Fair value ATP PEP II ongoingly monitors the changes in valuation of underlying portfolio investments in order to have a clear picture of fair value of the portfolio. Monitoring is done through regular communication with the funds and by participation on advisory boards. ATP PEP II is represented on advisory boards in 26 out of 34 portfolio funds. Risks Investment risks Diversification of ATP PEP II s portfolio is conducted through a strategy of making commitments within a fixed range of amounts to a wide range of funds. For high risk funds such as venture funds, investment commitments are made in the amount of DKKm , whereas commitments to buyout funds, which are associated with lower risks, typically range from DKKm Currency risks The Company s currency risks are related to investments executed in a number of currencies. As fluctuations in currency may affect profit/loss, cash flows and equity, it is Company policy to hedge financial risks in currencies other than EUR. Currency hedging comprises forward exchange contracts. On an ongoing basis, hedging is made on fair value of investments as a basis, while risks on unused commitments to portfolio funds are not. The table below shows how the value of the portfolio at 31 December 2014 would be affected by fluctuation in exchange rates, if currency hedging did not take place. Effect in DKK'000 of: Remaining investments Remaining commitment 1% increase in USD/DKK 37,977 5,834 1% increase in GBP/DKK 3, % increase in SEK/DKK 3, % increase in NOK/DKK % increase in EUR/DKK 13,269 2,773 1% increase in CAD/DKK ATP PEP II Annual Report

10 Interest rate risks Apart from trade balances with suppliers, payables to related parties and forward contracts, ATP PEP II has no liabilities. Debt is often raised in the funds portfolio investments, and consequently an indirect interest rate risk exists, which could affect future investment results. Credit risks The Company s credit risks partly relate to primary financial assets and partly to derivative financial instruments with a positive market value. The Company is not subject to any material risks in respect of customers or business partners. Liquidity risks The largest limited partner ATP is an acknowledged financial institutional investor who is under the supervision of the Danish Financial Supervisory Authority. For this reason the liquidity risk is assessed as being extremely low. Corporate social responsibility As part of the ATP Group, ATP PEP II has corporate social responsibility. This means that any measures implemented should contribute to the realization of ATP s overall objective: to provide basic financial security for current and future pensioners. Investing in the general partnership ATP wishes to align the interests of the employees of the management company with those of ATP, especially in the long term. For this reason an investment program has been established for employees via the general partnership. The partners in the management company are required to invest in the general partnership, whereas the other employees are offered shares. Shares in the general partnership are acquired by cash payment. As a general partner the company has unlimited liability for the limited partnership s liabilities. The general partnership s acquisition of shares in the limited partnership is made at a premium. The general partnership will receive proportionately larger distributions than the limited partner when the limited partner has received a minimum return of 8 % p.a. This carried interest and its scope is disclosed in note 8. Expectations for 2015 The profit for 2015 is expected to be at level with the profit of Events after 31 December 2014 No significant events have taken place after the year end. As a business, it is important for ATP PEP II to have a stable and well-educated workforce and a good physical and mental working environment, including flexibility. Reference is made to the ATP Group s Annual Report for 2014, where social responsibility is described in the Management s Review and in a separate article. Organization and corporate governance In May 2014, the company's senior management was changed as ATP s former CFO resigned from the Board of Directors due to retirement. Pursuant to the Company s articles of association, the Company's Board of Directors has formed a quorum with only 2 board members since 6 May The Board of Directors is expected to be increased to a minimum of 3 members at the Company s annual general meeting on 4 February Social responsibility guidelines The investments of ATP PEP II are mainly made through private equity funds in Europe and North America. Social responsibility is often a prerequisite for lasting, sound earnings and maintaining the value of investments. In order to ensure compliance with ATP s social responsibility guidelines and the portfolio fund s investments, a separate agreement on this policy is made with the funds. The agreement among others requires compliance with laws and rules laid down by national authorities in the markets in which portfolio funds operate or international organizations endorsed or ratified by Denmark. In addition, investments are not to be made in countries that are subject to a trade embargo enforced by the UN or the EU and acceded by Denmark. 10 ATP PEP II Annual Report 2014

11 Accounting Policies Miscellaneous The annual report for 1 January 31 December 2014 for ATP Private Equity Partners II K/S has been prepared in accordance with the provisions applying to medium-sized reporting class C enterprises under the Danish Financial Statements Act. The accounting policies used in the preparation of the financial statements are apart from the below, consistent with those of last year. Presentation of the income statement has been changed to display all income relating to investments as Income from other securities and investments". Presentation of the Cash flow statement is compacted. Distinction between transactions with portfolio funds and transactions with co-investments has been removed. Transactions are presented net as "Contributions to investment portfolio" and "Distributions from investment portfolio". Notes 1 and 2 are changed so that realized and unrealized gains and losses are presented net. Presentation of notes 4 and 5 is amended to reflect the change in book value from beginning to year end, by presenting the actual cash flows with the investment portfolio and revaluation adjustments. Presentation of Limited partners capital in the balance sheet and in Statement of changes in Equity is changed to display capital paid in and distributed amounts gross as "Limited partners capital" and "Distributions to limited partner and general partner". All changes have led to an adjustment of the comparative figures. The adjustments have no impact on profit or equity. Recognition and measurement Assets are recognized in the balance sheet when it is probable that future economic benefits will flow to the Company and the value of the asset can be reliably measured. Liabilities are recognized in the balance sheet when an outflow of economic benefits is probable and when the liability can be reliably measured. On initial recognition, assets and liabilities are measured at cost. Subsequently, assets and liabilities are measured as described below for each individual item. In recognizing and measuring assets and liabilities, any gains, losses and risks occurring prior to the presentation of the annual report that evidence conditions existing at the balance sheet date are taken into account. Income is recognized in the income statement as earned, including value adjustments of financial assets and liabilities measured at fair value or amortized cost. Equally, costs incurred to generate the year's earnings are recognized, including impairment losses. Foreign currency translation Transactions denominated in foreign currencies are translated into DKK at the exchange rates at the transaction date. Investments, receivables and payables denominated in foreign currencies are translated into DKK at the exchange rates at the balance sheet date. Realized and unrealized foreign exchanges gains and losses are recognized in the income statement. Derivative financial instruments Derivative financial instruments are initially recognized in the balance sheet at cost and subsequently measured at fair value. Positive and negative fair values of derivative financial instruments are included in other receivables and payables, respectively, and set-off of positive and negative values is only made when the Company has the right and the intention to settle several financial instruments net.for derivative financial instruments that do not qualify for hedge accounting, changes in fair value are recognized in the income statement as capital gains and losses Income statement Income from other securities and investments Income from other securities and investments comprise realized value adjustments as well as appreciations of previous impairment losses and depreciations of previous appreciations. Included are also unrealized value adjustments on investment portfolio, interest income and dividends from investment portfolio and foreign exchange gains and losses on transactions in foreign currencies. Administrative expenses Administrative expenses comprise costs incurred during the year on the Company s investment activities. Administrative expenses comprise fee to ATP in respect of the administrative work performed by ATP on behalf of the Company. Financial income and expenses Financial income and expenses comprise interest income and expenses on cash and cash equivalents. Foreign tax The Company is not independently taxable, as the profit/loss of the Company is taxed through the limited partner and general partner s taxable income. Tax in the income statement is dividend taxes from foreign portfolio companies. ATP PEP II Annual Report

12 Balance sheet Investments in other securities and investments Investments in other securities and investments comprise investments in portfolio funds and portfolio companies and are measured at fair value at the balance sheet date. Value adjustments are recognized in the income statement on a current basis. Management fees paid to portfolio companies are capitalized together with the investment in the individual portfolio company. Management fees are amortized over the period to which they relate. Public companies are valued at quoted prices at the balance sheet date. Investments in portfolio companies that do not have a quoted market price are measured based on the latest trading price either in the form of a capital increase or a partial sale based on the value of comparable companies and using traditional valuation methods. Financial Ratios The financial ratios stated in the survey of financial highlights have been calculated as follows: Total Value to Paid in: Value of distributions to investors + value of remaining portfolio / paid in capital from investors. Distributed to Paid in: Value of distributions to investors / paid in capital from investors. IRR : Calculated on the basis of realized cash flows between ATP PEP II and the investors, the associated transaction date and value of equity at year end. If the fair value cannot be determined reliably, cost is used, which comprises acquisition costs. Receivables Receivables are measured at amortized cost. Write-downs are made for bad debt losses based on individual assessments of receivables. Liabilities Liabilities are measured at net realizable value. Cash flow statement The cash flow statement shows the cash flows from operating and financing activities for the year, the year's changes in cash and cash equivalents as well as the Company's cash and cash equivalents at the beginning and end of the year. Cash flow from operating activities Cash flows from operating activities comprise administrative expenses adjusted for changes in working capital, including cash flows between the Company and funds that are invested in and direct investments. As the Company s primary activity is investment activity, investment activities are not disclosed separately. Cash flow from financing activities Cash flows from financing activities comprise paid-in capital and distributions to the limited partners and the general partner of the limited partnership. Cash and cash equivalents comprise cash and short-term marketable securities which are subject to an insignificant risk of changes in value. 12 ATP PEP II Annual Report 2014

13 Income Statement ATP PEP II DKK'000 Note Investment activities Income from other securities and investments 1 901,440 1,169,612 Profit from investment activities 901,440 1,169,612 Administrative expenses 2 (7,842) (7,447) Operating profit 893,598 1,162,165 Financial items Financial expenses (83) (11) Total financial items (83) (11) Profit (loss) before tax 893,515 1,162,154 Foreign tax (53,646) (7,251) Profit (loss) for the year 839,869 1,154,903 Proposed profit (loss) allocation: Profit (loss) for the year 839,869 1,154, ,869 1,154,903 ATP PEP II Annual Report

14 Balance sheet at 31 December ATP PEP II DKK'000 Note Assets Non-current assets Investments Other securities and investments 3 5,965,823 7,482,349 Total investments 5,965,823 7,482,349 Total non-current assets 5,965,823 7,482,349 Current assets Receivables Receivables from related parties 28, ,785 Other receivables 4 1,509 1,603 Total receivables 29, ,388 Cash and cash equivalents 70,343 24,418 Total current assets 100, ,806 Total assets 6,066,124 7,700,155 Equity and liabilities Equity Limited partners' capital Retained earnings Distributions to limited partner and general partner 10,653,037 10,317,001 6,135,225 5,295,356 (10,934,572) (7,929,833) Total equity 5,853,690 7,682,524 Current liabilities Trade payables Payables to related parties 207,061 10,679 Other payables 5 5,322 6,902 Total current liabilities 212,434 17,631 Total liabilities 212,434 17,631 Total equity and liabilities 6,066,124 7,700,155 Contingent liabilities 6 Related party disclosures 7 Allocation of shares in the general partner 8 14 ATP PEP II Annual Report 2014

15 Statement of changes in Equity ATP PEP II DKK'000 Limited Partners' capital Retained earnings Distributions to Limited Partner and General Partner Total Balance at 1 January ( ) Contributions, Limited Partners' capital Distributions to Limited Partner and General Partner - - ( ) ( ) Retained earnings for the period Balance at 31 December ( ) Balance at 1 January ( ) Contributions, Limited Partners' capital (81.905) - - (81.905) Distributions to Limited Partner and General Partner - - ( ) ( ) Retained earnings for the period Balance at 31 December ( ) In accordance w ith the limited partnership agreement, the investors have agreed to pay up to DKK'000 11,250,700 as capital requirements arises in the Company. At 31 December 2014 the investors' remaining commitments totaled DKK'000: ATP PEP II Annual Report

16 Cash flow statement ATP PEP II DKK' Contributions to investment portfolio (209,811) (162,477) Distributions from investment portfolio 3,140,901 2,035,192 Interest income, cash and cash equivalents (83) (11) Exchange gains and losses, cash and cash equivalents 1,657 (3,559) Administrative expenses (7,842) (7,447) Changes in w orking capital (210,194) 179,962 Cash flow from operating activities 2,714,628 2,041,660 Contributions from investors 336,035 (81,905) Distributions to investors (3,004,738) (2,338,846) Cash flow from financing activities (2,668,703) (2,420,751) Changes in cash and cash equivalents 45,925 (379,091) Cash and cash equivalents at 1 January 24, ,509 Cash and cash equivalents at 31 December 70,343 24, ATP PEP II Annual Report 2014

17 Notes DKK' Income from other securities and investments Value adjustments, investment portfolio Exchange gains and losses, investment portfolio ( ) Exchange gains and losses, investment forw ard exchange contracts ( ) Exchange gains and losses, investment cash or cash equivalents (3.559) Total income from other securities and investments Administrative expenses There are no employees in the Company. No remuneration has been paid to the Board of Directors. 3 Other securities and investments Balance at 1 January Contributions to investment portfolio Distributions from investment portfolio ( ) ( ) Value and currency exchange adjustments Balance at 31 December Other receivables Receivable foreign tax, dividends Other payables Payables, investment commitments Contingent liabilities Commitments, investments Apart from the above, there are no guarantees or pledges of the Company. 7 Related party disclosures ATP Private Equity Partners II K/S' related parties include the follow ing: Controlling interest ATP, Kongens Vænge 8, DK-3400 Hillerød Ownership The follow ing shareholders ow n at least 5% of the voting rights or as a minimum 5% of the share capital: ATP, Kongens Vænge 8, DK-3400 Hillerød ATP PEP II Annual Report

18 8 Allocation of shares in the general partner ATP PEP II GP K/S Ow ners Date of establishment of programme Price of acquired shares (acquisition price) Number of shares Acquisition price Executive management ,5 Executive employees ,5 Other employees ,5 ATP ,5 Parameters for carried interest Vesting Hurdle rate 8% p.a. Vesting of 85% in 4.25 year Carried interest cap (as % of commitment to fund) 0,33% Right to remaining 15%, requires employment at the time of payment Carried interest 0,66% Scenarios for carried interest Return in ATP PEP II K/S as % p.a. DKKm (2005 prices) % of investment commitment , , , , ,33 Comments ATP PEP II GP K/S has a share capital comprising 200,000 shares of DKK 1 each. The general partner ATP PEP II GP K/S w ill receive a carried interest on returns in the general partnership above 8 % p.a. A cap has been established on the value of the carried interest programme, corresponding to 0.33 % of the capital commitment to ATP Private Equity Partners II K/S or DKKm 37, calculated in 2005 prices. The carried interest w ill be paid to ATP PEP II GP K/S by 0.66 % until the cap is reached. Share offers are conditional on employment in Private Equity Advisors ApS. The calculation assumes a commitment from ATP of DKKm 11,250. Since 2005, ATP Private Equity Partners II K/S has generated an internal rate of return of 10.9%. Per 31 December 2014 the total value of the incentive program is valued at DKKm 14, equivalent to 0.23% of accumulated earnings since The carried interest pool is unrealised at 31 December In the calculation, it is provided that the remaining assets can be realized and paid at 31 December 2014 at the reported values - equivalent to equity, and that no further capital contributions to ATP Private Equity Partners II K/S is made. No carried interest has been paid out to the investors. 18 ATP PEP II Annual Report 2014

19 Portfolio Fund Jurisdiction Segment Current: Abingworth Bioventures V Great Britain Venture Apollo VI Cayman Islands Distressed Arbor II Delaware Small buyout Arsenal II Delaware Small buyout Avio Investments S.p.A (co-investment with Cinven IV) Luxembourg Co-investment Axcel III Denmark Small buyout BC VIII Great Britain Large buyout Brazos II Delaware Small buyout Bridgepoint III Great Britain Mid buyout Brock Group (co-investment with Lindsay Goldberg II) Delaware Co-investment Chemicals Holdings Sarl (co-investment with InvestIndustrial III) Luxembourg Co-investment CHL Medical III Delaware Venture Cinven IV Guernsey Large buyout Coller V Cayman Islands Secondary Core II Delaware Venture Deutsche Beteiligungs V Germany Small buyout Diaverum (co-investment with Bridgepoint III) Luxembourg Co-investment EQT V Guernsey Large buyout Fieldbrook (co-investment with Arbor II) Delaware Co-investment First Reserve XI Delaware Large buyout Gresham IV Great Britain Small buyout Housatonic IV Delaware Small buyout Invest Industrial III Great Britain Mid buyout Invest Industrial III - Build-Up Fund Great Britain Mid buyout JK&B V Delaware Venture Lindsay Goldberg II Delaware Mid buyout LS Power Delaware Large buyout Nordic Capital VI Jersey Mid buyout Novak Biddle V Delaware Venture Providence VI Delaware Large buyout Quad-C Advisors VII Delaware Small buyout Quad-C Partners VII Co-Investment Fund Delaware Small buyout Atkins LLC (co-investment with Roark II) Georgia Co-investment Roark II Delaware Small buyout Screenvision (co-investment with Shamrock II) California Co-investment Shamrock II Delaware Small buyout Silver Lake III Delaware Large buyout W Capital II Delaware Secondary Waterland II Netherlands Secondary Waterland III Luxembourg Small buyout Realized: Bradshaw (co-investment with Arbor II) Delaware Co-investment Goldman Sachs PEP III Cayman Islands Secondary KMD (co-investment with EQT V) Denmark Co-investment Realogy Corporation (co-investment with Apollo VI) Delaware Co-investment For further information please visit our website ATP PEP II Annual Report

20 ATP PEP Sjæleboderne 2, 1 st floor DK-1122 Copenhagen K Telephone Fax info@atp-pep.com 20 ATP PEP II Annual Report 2014