Crown Asia-Pacific Private Equity II plc

Transcription

1 Annual report and audited financial statements For the year ended 31 December 2016 Registered number: Crown Asia-Pacific Private Equity II plc

2 This document is for information only and is not an offer to sell or an invitation to invest. In particular, it does not constitute an offer or solicitation in any jurisdiction where it is unlawful or where the person making the offer or solicitation is not qualified to do so or the recipient may not lawfully receive any such offer or solicitation. It is the responsibility of any person in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of relevant jurisdictions. The information and any opinions contained herein have been obtained from or are based on sources, which are believed to be reliable, but their accuracy cannot be guaranteed. No responsibility can be accepted for any consequential loss from this information. Performance numbers shown are records of past performance and as such do not guarantee future performance.

3 Table of contents Governance and service providers 4 Background to the Company 5 Investment Advisor s report 6 Directors report 9 Depositary s report 13 Independent Auditors report 14 Statement of comprehensive income 16 Balance sheet 17 Statement of changes in net assets attributable to shareholders 19 Cash flow statement 20 Notes to the financial statements 21 Portfolio of investments 39 Table of contents Annual report 2016 Crown Asia-Pacific Private Equity II plc 3

4 Governance and service providers Board of Directors Urs Gaehwiler (Swiss) Paul Garvey (Irish) Robert Schlachter (Swiss) Tycho Sneyers (Belgian) Desmond Tobin (Irish) Depositary BNP Paribas Securities Services, Dublin Branch Trinity Point Leinster Street South Dublin 2 Ireland Independent Director Konrad Baechinger (Swiss) Investment Advisor and Sub-Distributor LGT Capital Partners Limited Schuetzenstrasse Pfaeffikon Switzerland Main contacts: Tycho Sneyers Robert Schlachter Alternative Investment Fund Manager and Distributor LGT Capital Partners (Ireland) Limited Third Floor 30 Herbert Street Dublin 2 Ireland Main contact: Brian Goonan Administrator/Transfer Agent LGT Fund Managers (Ireland) Limited Third Floor 30 Herbert Street Dublin 2 Ireland Main contact: Paul Garvey Secretary and Registered Office LGT Fund Managers (Ireland) Limited Third Floor 30 Herbert Street Dublin 2 Ireland Main contact: Kathryn O Driscoll Independent Auditors PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm One Spencer Dock North Wall Quay Dublin 1 Ireland Legal Advisor and Listing Sponsor Maples and Calder Solicitors 75 St. Stephen s Green Dublin 2 Ireland Irish Paying Agent LGT Bank AG, Dublin Branch 1 Third Floor 30 Herbert Street Dublin 2 Ireland 1 On 31 October 2016 all assets and liabilities of LGT Bank (Ireland) Limited were transferred to LGT Bank AG, Dublin Branch, a branch of LGT Bank AG, Liechtenstein, via a ministerial order under the Central Bank Act The transfer was the result of a strategic decision to continue the LGT banking operations in Ireland under a branch structure 4 Crown Asia-Pacific Private Equity II plc Annual report 2016 Governance and service providers

5 Background to the Company The following information is derived from and should be read in conjunction with the full text and definitions section of Crown Asia-Pacific Private Equity II plc s ( Crown Asia-Pacific Private Equity II, CAPE II or the Company ) prospectus (the Pro spectus ). Summary Fund size million Date of incorporation 26 July 2010 Initial closing date 15 April 2011 Final closing date 12 April 2013 Vintage year 2011 Commitment period: Start date End date 15 April April 2015 Fund expiry date 15 April 2023 Extension periods up to three one-year extensions Investment focus The objective of the Company is to provide shareholders with attractive long-term capital appreciation from a diversified portfolio of private equity investments. The Company s portfolio shall comprise substantially of Asia-Pacific growth capital and buyout funds. The target is to allocate 80% of the subscribed capital to leading growth capital and buyout private equity funds. CAPE II s portfolio may comprise up to 25% in secondary private equity fund investments and up to 10% in co-investments. The Company is a closed-ended investment company with variable capital, incorporated on 26 July 2010 with limited liability under the laws of Ireland. The Company was authorized by the Central Bank of Ireland on 20 September 2010 pursuant to the provisions of Part XIII of the Companies Act, 1990 and had a first closing on 15 April The Prospectus was issued on 20 September 2010 with further supplements issued on 14 October 2010, 1 July 2011 and 8 May The supplements were issued in respect of class L and class M shares. The Class L Shares and Class M shares of the Company were successfully admitted to the Official List of the Irish Stock Exchange on 20 September and 14 October 2010 respectively. The Prospectus was re-issued on 12 February 2016 to provide for the appointment of BNP Paribas Securities Services, Dublin Branch as Depositary to the Company. On 3 June 2014, the Company was approved as an alternative investment fund ( AIF ) under EU Directive 2011/61/EU on Alternative Investment Fund Managers ( AIFMD ). The principal aim of AIFMD is to establish minimum standards and common requirements across the EU member states for the authorization and supervision of the managers of alternative investment funds ( AIFMs ). Background to the Company Annual report 2016 Crown Asia-Pacific Private Equity II plc 5

6 Investment Advisor s report NAV summary CAPE II s net asset value ( NAV ) as of 31 December 2016 amounted to million, an increase of 38.5 million as compared to the year ended 31 December Portfolio structure Portfolio structure as of 31 December 2016 Investors Fund of funds Private equity funds Participations in companies CAPE II 23 primary investments 35 investors 1,035 1 companies 10 secondary transactions (22 private equity funds) 4 co-investments Portfolio review at partnership level Commitments CAPE II has committed million (75.5 % of total commitments) to 23 primary private equity funds, 84.0 million (20.1% of total commitments) to ten secondary transactions comprising 22 private equity funds and 18.1 million (4.4% of total commitments) to four co-investments. The total commitments of million amount to 99.4% of the investors total subscribed capital of million. 1 Based on the latest available financial statements from the underlying private equity funds and co-investments, i.e primarily 30 September Crown Asia-Pacific Private Equity II plc Annual report 2016 Investment Advisor s report

7 Commitments structure 1 Investment type Co-investments 4% Fund sizes (in millions) <250 12% Secondary transactions 20% % 250 to <500 30% Primary investments 76% 500 to <750 24% Vintage years Geography % % 2% 1% % % % % Japan 1% Other Australia/New Zealand 1% 1% South-East Asia 4% South Korea 8% Indonesia 9% China 38% % % Pan-Asian 10% 2009 <0.5% % India 28% 1 Based on CAPE II s commitments in private equity funds and co-investments 2 Based on the stated geographical investment focus of the private equity funds and co-investments Investment Advisor s report Annual report 2016 Crown Asia-Pacific Private Equity II plc 7

8 Portfolio review at company level 1 CAPE II has indirectly invested in 1,035 companies of which 874 are still active and 161 have been fully realized. Investment activity On 15 April 2015, the commitment period for CAPE II ended. CAPE II has a specific geographical focus on the Asia-Pacific region but no industrial target allocation. It seeks broad diversification across this dimension. LGT Capital Partners Limited Pfaeffikon, Switzerland Diversification by geography 2 (FMV) 3 Singapore 4% Indonesia 5% US 6% Other 6% China 36% Tycho Sneyers Robert Schlachter 20 February 2017 South Korea 10% India 33% Diversification by industry (FMV) 3 Healthcare Other Life sciences 2% 2% 6% Media 6% IT 20% Telecom 7% Industrial services 9% Financials 14% Consumer services 10% Industrial products 11% Consumer products 13% 1 Based on the latest available financial statements from the underlying private equity funds, i.e. primarily 30 September Geography refers to the location of the company s head office 3 Fair market value ( FMV ) refers to the valuations ascribed to the various portfolio companies of the underlying private equity funds 8 Crown Asia-Pacific Private Equity II plc Annual report 2016 Investment Advisor s report

9 Directors report The Directors submit their report together with the audited financial statements which comprise the statement of comprehensive income, balance sheet, statement of changes in net assets attributable to shareholders, the cash flow statement, the portfolio of investments and the related notes for the year ended 31 December 2016 which may be available on the website of LGT Capital Partners Limited and/ or any regulatory website as may be required by law and/or regulations. In addition the EU Directive 2011/61/EU on Alternative Investment Fund Managers ( AIFMD ) disclosure provisions of Article 13 of the Directive 2011/61/EC (in particular Annex II) and European Securities and Markets Authority s ( ESMA ) Guidelines on sound remuneration policies under AIFMD have been applied at the level of the Management Company and disclosures regarding remuneration policy will be available on the website of LGT Capital Partners Limited. Statement of Directors responsibilities The Directors are responsible for preparing the Directors report and the financial statements in accordance with Irish law. Irish law requires the Directors to prepare financial statements for each financial year that give a true and fair view of the Company s assets, liabilities and financial position as at the end of the financial year and of the profit or loss of the Company for the financial year. Under that law the Directors have prepared the financial statements in accordance with International Financial Reporting Standards ( IFRS ), as adopted by the European Union. Under Irish law, the Directors shall not approve the financial statements unless they are satisfied that they give a true and fair view of the Company s assets, liabilities and financial position as at the end of the financial year and the profit or loss of the Company for the financial year. In preparing these financial statements, the Directors are required to: select suitable accounting policies and then apply them consistently; make judgments and estimates that are reasonable and prudent; state whether the financial statements have been prepared in accordance with applicable accounting standards and identify the standards in question, subject to any material departures from those standards being disclosed and explained in the notes to the financial statements; and prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Company will continue in business. The Directors are responsible for keeping adequate accounting records that are sufficient to: correctly record and explain the transactions of the Company; enable, at any time, the assets, liabilities, financial position and profit or loss of the Company to be determined with reasonable accuracy; and enable the Directors to ensure that the financial statements comply with the Companies Act 2014 and enable those financial statements to be audited. Under the Central Bank of Ireland s Alternative Investment Fund ( AIF ) Rulebook the AIF shall entrust its assets to a depositary for safe keeping. The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company s website. Legislation in Ireland governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions. Notwithstanding anything else contained in this report, the Directors are not responsible for the maintenance and integrity of the annual report and audited financial statements for the year ended 31 December 2016 which may be included on any regulatory authority website as may be required by law and/or regulations. Furthermore, if users of this annual report and audited financial statements are concerned with the inherent risks arising from electronic data communications, they are advised to refer to the hard copy of the annual report and audited financial statements to confirm the information included in the annual report and audited financial statements presented on either the website of LGT Capital Partners Limited and/ or any regulatory authority. The Company s audited financial statements will be submitted to the Central Bank of Ireland and the Companies Announcements Services of the Irish Stock Exchange (the ISE ). Any updated version of the Prospectus (to include all audited annual accounts of the Company) may be published in accordance with Part 8 of the Prospectus (Directive 2003/71/EC) Regulations 2005 on the website of the Central Bank of Ireland and be deemed available to the public accordingly. Responsibility statement In accordance with the Transparency (Directive 2004/109/EC) Regulations 2007 each of the Directors, in their role as directors, and whose names appear on page four confirm that, to the best of their knowledge and belief: the Company s annual report and audited financial statements is prepared in accordance with IFRS as adopted by the EU, as applied in accordance with the Companies Act 2014, and gives a true and fair view of the assets, liabilities and financial position of the Company as at 31 December 2016 and its profit for the year then ended; and the Directors report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces. The Board of Directors is satisfied there is no relevant audit information of which the Company s statutory auditors are unaware. Furthermore, the Board of Directors confirm they have taken all appropriate steps in order to make themselves aware of any relevant audit information and to establish that the Company s statutory auditors are aware of that information. Directors report Annual report 2016 Crown Asia-Pacific Private Equity II plc 9

10 Corporate governance statement The following corporate governance statement is sourced from Irish Funds ( IF ) and is in compliance with European Communities (Directive 2006/46/EC) Regulations (S.I. 450 of 2009 and S.I. 83 of 2010). On 15 February 2011, the Board of Directors formally adopted the above-mentioned corporate governance statement which was applied by the Company throughout On 29 March 2012, the Board formally adopted a Voluntary Corporate Governance Code for Collective Investment Schemes & Management Companies (the Voluntary Code ) issued on 14 December 2011 by Irish Funds ( IF ). As required by the Voluntary Code, Konrad Baechinger was formally appointed as Independent Director on 1 June Although there is no specific statutory corporate gover nance statement applicable to Irish collective investment schemes whose shares are admitted to trading on the ISE, the Company is subject to corporate governance practices imposed by: (i) the Companies Act 2014; (ii) the Memorandum and Articles of Association of the Company (the Articles of Association ); (iii) the Central Bank of Ireland in their AIF Rulebook and Guidance Notes; and (iv) the ISE through the ISE Code of Listing Requirements and Procedures. The information referred to in points (i) to (iv) is available for inspection at the registered office of the Company at Third Floor, 30 Herbert Street, Dublin 2, Ireland. The Company is responsible for establishing and maintaining adequate internal control and risk management systems of the Company in relation to the financial reporting process. Such systems are designed to manage rather than eliminate the risk of error or fraud in achieving the Company s financial reporting objectives and can only provide reasonable and not absolute assurance against material misstatement or loss. The Company has procedures and internal controls in place to ensure proper execution, reporting and maintenance of transaction data using data capture and design-specific financial software and risk based review processes to ensure all relevant accounting records are properly maintained and are readily available, including production of annual and semi-annual financial statements. The annual and semi-annual financial statements of the Company are required to be approved by the Board of Directors of the Company and filed with the Central Bank of Ireland and the ISE. The statutory financial statements are required to be audited by independent auditors who report annually to the Board on their findings. There is no requirement for the semi-annual financial statements to be audited. The Board evaluates and discusses significant accounting and reporting issues as the need arises. The convening and conduct of shareholders meetings are governed by the Articles of Association and the Companies Act Although the Directors may convene an extraordinary general meeting of the Company at any time, the Directors are required to convene an annual general meeting of the Company within 18 months of incorporation and 15 months of the date of the previous annual general meeting thereafter. Not less than twenty one days notice of every annual general meeting and any meeting convened for the passing of a special resolution must be given to shareholders. Three shareholders present either in person or by proxy constitute a quorum at a general meeting. On a show of hands, every participating shareholder who is present in person or by proxy shall have one vote and all management shareholders who are present in person or by proxy shall have one vote in respect of all the management shares. On a poll every shareholder present in person or by proxy shall be entitled to one vote in respect of each participating share held by him and one vote in respect of all of the management shares held by him. The chairman of a general meeting of the Company or at least five shareholders present or any shareholder or shareholders present representing at least one tenth of the shares in issue having the right to vote at such meeting may demand a poll. An ordinary resolution of the Company (or of the shareholders of a particular sub-fund or class of participating shares) requires a simple majority of the votes cast by the shareholders voting in person or by proxy at the meeting at which the resolution is proposed. A special resolution of the Company (or of the shareholders of a sub-fund or a particular class of participating shares) requires a majority of not less than 75% of the total number of votes cast in general meeting in order to pass a special resolution including a resolution to amend the Articles of Asso ciation. Unless otherwise determined by an ordinary resolution of the Company in general meeting, the number of Directors may not be less than two nor more than twelve. Currently, the Board of Directors of the Company is composed of six Directors, being those listed in these financial statements. The Directors shall have power at any time and from time to time to appoint any person to be a Director, either to fill a casual vacancy or as an addition to the existing Directors. Any Director so appointed shall hold office only until the following annual general meeting and shall then be eligible for re-election. The Company at any general meeting at which a Director retires or is removed shall fill the vacated office by electing a Director unless the Company shall determine to reduce the number of Directors. Directors are not required to retire by rotation. Any Director may appoint any person (including another Director) to be his alternate Director and may in like manner at any time terminate such appointment. Save as otherwise provided in the Articles of Association, an alternate Director shall be deemed for all purposes to be a Director, shall alone be responsible for his own acts and defaults and shall not be deemed to be the agent of the Director appointing him. 10 Crown Asia-Pacific Private Equity II plc Annual report 2016 Directors report

11 The business of the Company is managed by the Directors insofar as the Companies Act 2014 or Articles of Association do not require its approval at a general meeting of the Company. The Directors are generally and unconditionally authorized to exercise all powers of the Company to allot relevant securities up to an amount equal to the authorized but as yet unissued share capital of the Company. The Directors have the discretion to make distributions in the form of share buy-back or dividends, provided that such method of distribution shall apply uniformly to shareholders. A Director may, and the Secretary on the request of a Director will, at any time summon a meeting of the Directors. Questions arising at any meeting of the Directors are determined by a majority of votes. In the case of an equality of votes, the Chairman has a second or casting vote. The quorum necessary for the transaction of business of the Directors may be fixed by the Directors, and unless so fixed at any other number shall be two. Investment focus The objective of the Company is to provide shareholders with attractive long-term capital appreciation from a diversified portfolio of private equity investments. Connected parties The Board of Directors is satisfied that there are arrangements (evidenced by written procedures) in place, to ensure that the obligations under AIFMD and the Companies Act 2014 are applied to all transactions with connected parties; and the Board of Directors is satisfied that transactions with connected parties entered into during the year complied with the obligations set out in this paragraph. Company structure The Company has in issue five participating share classes ( A, B, C, L and O ) with equal rights and each class is subject to different management fees and/or performance fees as described in the Prospectus. In respect of the voting rights of the Company, every participating shareholder or holder of management shares who is present in person or by proxy shall have one vote on a show of hands and, on a poll, every participating shareholder present in person or by proxy shall be entitled to one vote in respect of each share held by him, while holders of management shares shall have one vote only in respect of all management shares held. As of 31 December 2016, the percentage of total shares in issue is 33.6%, 14.2%, 0.2%, 9.3% and 42.7% for the A, B, C, L and O class of shares, respectively. The details of any significant investors in the Company are disclosed in note 11 to the financial statements. A transfer of shares will not be recognized if the transferee is not a Qualifying Investor. In addition, at the discretion of the Directors, a transfer of shares may not be recognized or registered if such transfer would result in the occurrence of certain events as disclosed in the Prospectus. An amendment to the Company s Articles of Association, including the variation of the rights attached to any class of shares, can only be approved by means of a special resolution of the shareholders and with the prior consent of the Central Bank of Ireland. Accounting records The measures taken by the Directors to secure compliance with the Company s obligation to keep adequate accounting records are the use of appropriate systems and procedures which are carefully implemented by the Administrator. The accounting records are kept at the registered office of the Company. Review of business and future developments The Crown Asia-Pacific Private Equity II plc fund started committing on 15 April As of 31 December 2016, the Company has committed a total of 396,965,236 million to both primary and secondary private equity investments and 18,051,702 million to co-investments. An overview of the commitments made to date is contained in the Investment Advisor s report. The Company s investment objective is to provide shareholders with attractive long-term capital appreciation from a diversified portfolio of private equity investments. The Company seeks to outperform public equity benchmarks by 500 basis points per annum as well as to achieve the top quartile performance benchmark for equivalent investments. The holding of investments, investing activities and associated financing undertaken pursuant to this objective involves certain inherent risks. During the financial year to 31 December 2016, the Company generated a profit of 35,982,816 which, in addition to the net capital contributed in the year, resulted in net assets of the Company of 405,377,852 compared to 366,889,046 for the previous year ended 31 December The Company called 24,224,570 during the year bringing investors contributed capital to 76.6% of their total subscriptions. Distributions received from investments during 2016 allowed the Company to distribute 21,718,580 million to investors (or 5.2% of subscribed capital) compared to 30.9 million (or 7.4% of subscribed capital) in This brings investors total distributions to date to 14.6% of their subscribed capital. At 31 December 2016 the total return for CAPE II amounts to 9.8% 1. The Company has a credit facility with LGT Bank AG, Dublin Branch, further details of which are provided in note 12. The credit facility is used to fund short-term investment commitments that are subsequently covered by calls received from the Company s investors. The Directors do not propose to change the current strategy or investment focus of the Company for the foreseeable future. 1 The total return percentage represents the current year s movement, excluding movements in net contributed capital, in the net asset value Directors report Annual report 2016 Crown Asia-Pacific Private Equity II plc 11

12 Risk management objectives and policies The Company is exposed to a variety of financial risks including: market, currency, interest rate, credit and liquidity risks and attributes great importance to professional risk management. The Company has investment guidelines that set out its overall business strategies, its tolerance for risk and its general risk management philosophy and has established processes to monitor and control the economic impact of these risks. The Alternative Investment Fund Manager makes investment decisions on behalf of the Company that are consistent with the Company s objectives. The nature of the Company s risks and the actions taken to manage these risks are analyzed in more detail in note 14 to these financial statements. Results and distributions The results for the year are set out in the statement of comprehensive income. Distributions of 2,505,990, 2,505,990, 5,220,812, 7,309,138 and 4,176,650 were made on 16 March 2016, 27 May 2016, 12 July 2016, 26 August 2016 and 19 September 2016 respectively, by way of a share repurchase. ERISA declaration The Company does not constitute plan assets as defined under the Employee Retirement Income Security Act ( ERISA ) as less than 25% of the Company is owned by benefit plan investors. Events since the year end Events since the year end are disclosed in note 17 to the financial statements. Directors The Directors have the power to appoint any person to be a Director. Any Director so appointed shall hold office until the next annual general meeting and shall then be eligible for re-election. Directors are not required to retire by rotation. A Director must, however, be a person approved for that purpose by the Central Bank of Ireland. The Company is an investment company with variable capital incorporated under the Companies Act 2014 and is authorized by the Central Bank of Ireland as a designated investment company. The Directors may take all measures necessary to the extent permitted by the Memorandum and Articles of Association, the Prospectus and the Notices issued by the Central Bank of Ireland to carry out the Company s objectives. At the discretion of the Directors, distributions may be made in the form of share repurchases or dividends, provided that such method of distribution shall apply uniformly to all shareholders. Directors and Secretary s interests The Directors and Secretary and their families had direct and indirect interests in the shares of the Company during year ended Certain Directors have indirect interests in the shares of the Company by way of their participation in co-investment agreements with LGT Capital Invest (SC2) Limited. The direct interests of current Directors in the Company relate to the ownership of class O shares as follows: 2016 Number of shares 2015 Number of shares Konrad Baechinger 9, , Urs Gaehwiler Tycho Sneyers 1, , Desmond Tobin Certain current Directors of the Company are directors of LGT Capital Partners (Ireland) Limited and LGT Fund Managers (Ireland) Limited at year end as follows: LGT Capital Partners (Ireland) Limited X LGT Fund Managers (Ireland) Limited Paul Garvey Robert Schlachter X Desmond Tobin X X No Director had at any time during the year a material interest in any contract of significance, subsisting during or at the end of the year, in relation to the business of the Company. All Directors are non-executive directors as the managerial functions have been delegated to other entities. Konrad Baechinger became an Independent Director from 1 June Independent Auditors PricewaterhouseCoopers have expressed their willingness to continue in office in accordance with section 383 of the Companies Act On behalf of the Board Desmond Tobin Paul Garvey 20 February 2017 The names of the persons who were Directors at any time during the year ended 31 December 2016 are set out under Governance and service providers on page four. All Directors served for the entire year, unless otherwise stated, and their fees and expenses are disclosed in note Crown Asia-Pacific Private Equity II plc Annual report 2016 Directors report

13 Depositary s report to the shareholders of Crown Asia-Pacific Private Equity II plc We have enquired into the conduct of Crown Asia-Pacific Private Equity II plc (the Company ), for the year to 31 December 2016, in our capacity as Depositary to the Company. This report including the opinion has been prepared for and solely for the shareholders of the Company as a body, in accordance with the AIFM Regulations European Union (Alternative Investment Fund Managers) Regulations 2013 (SI No 257 of 2013) which implemented Directive 2011/61/EU into Irish Law: Chapter 4, Commission Delegated Regulation (EU) No 231/2013: Articles and Chapter 6: AIF Depositary Requirements: AIF Rulebook (hereinafter the Depositary s Regulatory Obligations ) and for no other purpose. We do not, in giving this opinion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown. Responsibilities of the Depositary One of the Depositary s Regulatory Obligations is to enquire into the conduct of the AIFM and the Company in each annual accounting period and report thereon to the shareholders. Opinion In our opinion, the Company has been managed during the period, in all material respects: in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document and by the Central Bank under the powers granted to the Central Bank by the investment fund legislation; and otherwise in accordance with the provisions of the constitutional document and the investment fund legislation. BNP Paribas Securities Services, Dublin Branch Dublin 20 February 2017 Our report shall state whether, in our opinion, the Company has been managed in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document and by the Central Bank under the powers granted to the Central Bank by the investment fund legislation; and otherwise in accordance with the provisions of the constitutional document and the investment fund legislation based on information they have obtained through the proper discharge of the Depositary s Regulatory Obligations. The AIFM has responsibility to comply with obligations outlined in various pieces of legislation including but limited to AIFM Regulations (SU No 257 of 2013), Commission Delegated Regulation (EU) No 231/2013 and the AIF Rulebook. The Depositary has no regulatory obligation to make enquiries as to an AIFM s compliance with provisions of such legislation which do not fall within the scope of the Depositary s Regulatory Obligations. Basis of Depositary Opinion The Depositary conducts such reviews as it, in its reasonable opinion, considers necessary in order to comply with the Depositary s Regulatory Obligations and to ensure that, in all material respects, the Company has been managed: (a) in accordance with the limitations imposed on the investment and borrowing powers of the Company by the constitutional document and by the Central Bank under the powers granted to the Central Bank by the investment fund legislation; and (b) otherwise in accordance with the provisions of the constitutional document and the investment fund legislation. Depositary s report Annual report 2016 Crown Asia-Pacific Private Equity II plc 13

14 Independent Auditors report to the members of Crown Asia-Pacific Private Equity II plc Report on the financial statements Our opinion In our opinion, Crown Asia-Pacific Private Equity II plc s financial statements (the financial statements ): give a true and fair view of the Company s assets, liabilities and financial position as at 31 December 2016 and of its results and cash flows for the year then ended; have been properly prepared in accordance with International Financial Reporting Standards ( IFRS ) as adopted by the European Union; and have been properly prepared in accordance with the requirements of the Companies Act What we have audited The financial statements, included within the annual report, comprise: the balance sheet as at 31 December 2016; the statement of comprehensive income for the year then ended; the cash flow statement for the year then ended; the statement of changes in net assets attributable to shareholders for the year then ended; the portfolio of investments as at 31 December 2016; and the notes to the financial statements which include a summary of significant accounting policies and other explanatory information. The financial reporting framework that has been applied in the preparation of the financial statements is Irish law and IFRSs as adopted by the European Union. In applying the financial reporting framework, the Directors have made a number of subjective judgments, for example in respect of significant accounting estimates. In making such estimates, they have made assumptions and considered future events. Matters on which we are required to report by the Companies Act 2014 We have obtained all the information and explanations which we consider necessary for the purposes of our audit. In our opinion the accounting records of the Company were sufficient to permit the financial statements to be readily and properly audited. The financial statements are in agreement with the accounting records. In our opinion the information given in the Directors report is consistent with the financial statements. In our opinion, based on the work undertaken in the course of our audit of the financial statements: The description of the main features of the internal control and risk management systems in relation to the financial reporting process; and The information required by section 1373(2)(d) of the Companies Act 2014; included in the Corporate Governance Statement, is consistent with the financial statements and has been prepared in accordance with section 1373(2) of the Companies Act Based on our knowledge and understanding of the Company and its environment obtained in the course of our audit of the financial statements, we have not identified material misstatements in the description of the main features of the internal control and risk management systems in relation to the financial reporting process and the information required by section 1373(2)(d) of the Companies Act 2014 included in the Corporate Governance Statement. In our opinion, based on the work undertaken during the course of our audit of the financial statements, the information required by section 1373 (2)(a),(b),(e) and (f) is contained in the Corporate Governance Statement. 14 Crown Asia-Pacific Private Equity II plc Annual report 2016 Independent Auditors report

15 Independent Auditors report to the members of Crown Asia-Pacific Private Equity II plc Matter on which we are required to report by exception Directors remuneration and transactions Under the Companies Act 2014 we are required to report to you if, in our opinion, the disclosures of Directors remuneration and transactions specified by sections 305 to 312 of that Act have not been made. We have no exceptions to report arising from this responsibility. Responsibilities for the financial statements and the audit Our responsibilities and those of the directors As explained more fully in the statement of Directors responsibilities set out on page nine the Directors are responsible for the preparation of the financial statements and for being satisfied that they give a true and fair view. Our responsibility is to audit and express an opinion on the financial statements in accordance with Irish law and International Standards on Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices Board s Ethical Standards for Auditors. This report, including the opinions, has been prepared for and only for the Company s members as a body in accordance with section 391 of the Companies Act 2014 and for no other purpose. We do not, in giving these opinions, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. We primarily focus our work in these areas by assessing the Directors judgments against available evidence, forming our own judgments, and evaluating the disclosures in the financial statements. We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive procedures or a combination of both. In addition, we read all the financial and non-financial information in the annual report to identify material inconsistencies with the audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements or inconsistencies we consider the implications for our report. Joanne Kelly for and on behalf of PricewaterhouseCoopers Chartered Accountants and Statutory Audit Firm Dublin 20 February 2017 What an audit of financial statements involves We conducted our audit in accordance with International Standards on Auditing (UK and Ireland). An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an assessment of: whether the accounting policies are appropriate to the Company s circumstances and have been consistently applied and adequately disclosed; the reasonableness of significant accounting estimates made by the Directors; and the overall presentation of the financial statements. Independent Auditors report Annual report 2016 Crown Asia-Pacific Private Equity II plc 15

16 Statement of comprehensive income For the year ended 31 December 2016 Amounts are reported in Note Operating income Interest income 11,706 7,492 Dividend income 1,443, ,510 (Losses)/gains on foreign exchange, net (4,283) 846 Net gain on investments at fair value through profit or loss 3 43,627,760 73,077,154 Total net income 45,078,694 73,705,002 Operating expenses Investment management fee 5 (1,543,861) (1,895,250) Performance fee 5 (954,199) (2,609,586) Administration fee 5 (237,098) (194,591) Depositary fees 5 (146,525) (130,872) Audit fee 5 (29,247) (30,256) Fund expenses 4 (5,180,060) (4,512,622) Other operating expenses (242,688) (193,521) Total operating expenses (8,333,678) (9,566,698) Operating profit 36,745,016 64,138,304 Finance costs (338,722) (271,930) Profit before taxation 36,406,294 63,866,374 Withholding tax (423,478) Profit for the year 35,982,816 63,866,374 Total comprehensive profit for the year 35,982,816 63,866,374 The accompanying notes are an integral part of the financial statements. All amounts arose solely from continuing operations. There are no gains and losses other than those dealt with in the statement of comprehensive income. 16 Crown Asia-Pacific Private Equity II plc Annual report 2016 Statement of comprehensive income

17 Balance sheet As of 31 December 2016 Amounts are reported in Note Assets Current assets Cash and cash equivalents 6 1,426,346 2,781,317 Accrued income and other receivables 7 25, ,372 Total current assets 1,451,411 3,403,689 Non-current assets Investments at fair value through profit or loss 8 421,123, ,831,145 Total non-current assets 421,123, ,831,145 Total assets 422,575, ,234,834 Capital and reserves attributable to shareholders Share capital ,952, ,446,310 Retained earnings 146,425, ,442,736 Net assets attributable to shareholders 405,377, ,889,046 Liabilities Current liabilities Accrued expenses and other payables 9 553, ,509 Due to banks 10 11,500,000 12,000,000 Total current liabilities 12,053,907 12,156,509 Non-current liabilities Accrued expenses and other payables 9 5,143,478 4,189,279 Total non-current liabilities 5,143,478 4,189,279 Total liabilities 422,575, ,234,834 The accompanying notes are an integral part of the financial statements. Balance sheet Annual report 2016 Crown Asia-Pacific Private Equity II plc 17

18 Net asset value by share class ( NAV ) 1 Shares issued Total NAV (in ) As of 31 December 2016 As of 31 December 2015 Number of shares in issue NAV per share (in ) Total NAV (in ) Number of shares in issue NAV per share (in ) A 129,416, , ,376, , B 53,101, , ,187, , C 725,451 5, ,778 5, L 35,879, , ,541, , O 186,255,862 1,054, ,124,254 1,046, Total 405,377,852 2,471, ,889,046 2,450, Shares issued Total NAV (in ) As of 31 December 2014 Number of shares in issue NAV per share (in ) A 79,818, , B 32,704, , C 445,133 4, L 22,132, , O 114,043, , Total 249,143,887 2,012, On behalf of the Board Desmond Tobin Paul Garvey 20 February The NAV per share in the table above may be different to individual investors NAV per share as disclosed in their capital account statements. This is because the NAV per share in the table above is based on average figures for all investors in each individual share class 18 Crown Asia-Pacific Private Equity II plc Annual report 2016 Balance sheet

19 Statement of changes in net assets attributable to shareholders For the year ended 31 December 2016 Amounts are reported in Share capital Retained earnings Total At 1 January ,567,525 46,576, ,143,887 Total comprehensive profit for the year 63,866,374 63,866,374 Issue of shares 84,785,995 84,785,995 Repurchase of own shares (30,907,210) (30,907,210) Net increase for the year 53,878,785 63,866, ,745,159 At 31 December ,446, ,442, ,889,046 At 1 January ,446, ,442, ,889,046 Total comprehensive profit for the year 35,982,816 35,982,816 Issue of shares 24,224,570 24,224,570 Repurchase of own shares (21,718,580) (21,718,580) Net increase for the year 2,505,990 35,982,816 38,488,806 At 31 December ,952, ,425, ,377,852 The accompanying notes are an integral part of the financial statements. Statement of changes in net assets attributable to shareholders Annual report 2016 Crown Asia-Pacific Private Equity II plc 19

20 Cash flow statement For the year ended 31 December 2016 Amounts are reported in Cash flows from/(used in) operating activities Purchase of investments 1,2 (34,044,672) (87,078,947) Proceeds from return of capital in investments 1,2 23,162,695 32,002,104 Proceeds from realized gains on investments 1 11,421,305 7,728,314 Dividend income 1 1,439, ,087 Withholding tax (423,478) Interest received 11,706 7,492 Operating expenses paid 3 (4,564,837) (6,227,282) Net cash flows used in operating activities (2,997,818) (53,020,232) Cash flows from/(used in) financing activities Interest paid (326,860) (270,364) Proceeds from bank loans 23,000,000 50,400,000 Repayments of bank loans (23,500,000) (48,900,000) Proceeds from issue of shares 4 15,451,605 69,750,055 Payments for repurchase of own shares 4 (12,977,615) (15,841,270) Net cash flows from financing activities 1,647,130 55,138,421 Net (decrease)/increase in cash and cash equivalents (1,350,688) 2,118,189 Cash and cash equivalents at beginning of year 2,781, ,282 Exchange (losses)/gains on cash and cash equivalents (4,283) 846 Cash and cash equivalents at end of year 1,426,346 2,781,317 The accompanying notes are an integral part of the financial statements. 1 During the year ended 31 December 2016, purchase of investments, proceeds from return of capital in investments, proceeds from realized gains on investments and dividend income include non cash movements of 973,859, 2,351,574, 1,021,256 and 4,048 respectively (2015: 1,119,641, 2,787,992, 303,792 and nil) 2 During the year ended 31 December 2016, purchase of investments and proceeds from return of capital in investments include reclassifications of 5,006,456 ( ,146,728 ), for cash flows that had been netted against each respective operating activity 3 During the year ended 31 December 2016, operating expenses had non cash movements of 2,403,019 (2015: 1,364,558) 4 Cash flows arising from the share issues and repurchases disclosed in the statement of changes in net assets attributable to shareholders reflect the netting of capital calls and distributions that have been made on the same value date 20 Crown Asia-Pacific Private Equity II plc Annual report 2016 Cash flow statement

21 Notes to the financial statements 1. Summary of significant accounting policies The principal accounting policies applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the years presented, unless otherwise stated. (a) Basis of preparation The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards ( IFRS ) and IFRS Interpretations Committee ( IFRIC ) interpretations as adopted by the European Union and those parts of the Companies Act 2014 applicable to companies reporting under IFRS. The financial statements have been prepared under the historical cost convention, as modified by the revaluation of financial assets and liabilities held at fair value through profit or loss. The preparation of financial statements in conformity with IFRS as adopted by the EU requires the use of accounting estimates. It also requires the Board of Directors to exercise its judgment in the process of applying the Company s accounting policies. The areas involving a higher degree of judgment or complexity, or where assumptions and estimates are significant to the financial statements are disclosed in note 1(b) and note 2. Standards and amendments to published standards that are mandatory for the financial year beginning on or after 1 January 2016 There are no IFRS or IFRIC interpretations that are effective for the first time for the financial year beginning on or after 1 January 2016 that would be expected to have a material impact on the Company. New standards, amendments and interpretations effective after 1 January 2017 and have not been early adopted A number of new standards, amendments to standards and interpretations are effective for annual periods beginning after 1 January 2017, and have not been applied in preparing these financial statements. Those standards, amendments and interpretations considered included: IFRS 2, Share Based Payments (1 January 2018); IFRS 4, Insurance Contracts (1 January 2018); IFRS 9, Financial Instruments (1 January 2018); IFRS 15, Revenue from Contracts with Customers (1 January 2018); IAS 7, Statement of Cash Flows (1 January 2017); and IAS 12, Income Taxes (1 January 2017); The Company has yet to assess the full impact of these standards and has not yet decided when to adopt them. The Directors have also considered a number of other new standards issued but not yet effective during the preparation of the annual report that have been considered by the Directors to not have a material impact on the Company. (b) Use of estimates The preparation of financial statements in conformity with IFRS requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting year. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results could differ from these estimates (see note 2 also). (c) Foreign currency translation (i) Functional and presentation currency Items included in the Company s financial statements are measured using the currency of the primary economic environment in which it operates (the Functional Currency ). This is the US Dollar, which reflects the Company s primary activity of investing in assets whose base currency is predominantly the US Dollar. The Company has adopted the US Dollar as its presentation currency. Foreign currency assets and liabilities are translated into US Dollar at the exchange rates ruling at the balance sheet date. (ii) Transactions and balances Foreign currency transactions are translated into US Dollar using the exchange rates prevailing at the dates of the transactions. Foreign exchange gains and losses resulting from the settlement of such transactions and from the translation at year-end exchange rates of monetary assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income. Translation differences on non-monetary items, such as financial investments held at fair value through profit or loss, are reported as part of the fair value gain or loss. (d) Cash and cash equivalents Cash and cash equivalents comprise demand, call and term deposits with a maturity of three months or less. For the purpose of the cash flow statement, cash and cash equivalents comprise all cash, shortterm deposits and other money market instruments, net of short-term overdrafts, with a maturity of three months or less. Cash and cash equivalents are recorded at nominal value. Bank overdrafts, if any, are shown as current liabilities in the balance sheet. (e) Due from and due to brokers Amounts due from and to brokers represent receivables for securities sold and payables for securities purchased that have been contracted for but not yet settled or delivered on the balance sheet date, respectively. Amounts due from and to brokers are recorded initially at fair value and subsequently measured at amortized cost using the effective interest method. (f) Due to banks Borrowings are recognized initially at fair value, net of transaction costs incurred. Borrowings are subsequently stated at amortized cost; any difference between the proceeds and the redemption value is recognized in the statement of comprehensive income over the period Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 21

22 of the borrowing using the effective interest method. Borrowings are shown as current liabilities unless the Company has the unconditional right to defer settlement for at least 12 months after the balance sheet date or the due date is greater than 12 months. Interest expense is recognized on the basis of the effective interest method and is included in finance costs. (g) Financial assets and liabilities at fair value through profit or loss The Company, in accordance with IAS 39, classifies its investments as financial assets and liabilities at fair value through profit or loss category. The category of financial assets and liabilities at fair value through profit or loss comprises: financial instruments held for trading. These include futures, forward contracts, options and swaps; and financial instruments designated at fair value through profit or loss upon initial recognition. These include financial assets that are not held for trading purposes and which may be sold. Financial assets that are classified as loans and receivables include balances due from brokers and accounts receivable. Financial liabilities that are not at fair value through profit or loss include balances due to brokers and accounts payable. (i) Recognition and derecognition The Company recognizes financial assets and financial liabilities on the date it becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the rights to receive cash flows from the investments have expired or the Company has transferred substantially all risks and rewards of ownership. Financial liabilities are derecognized when they are extinguished, that is, when the obligation specified in the contract is discharged, cancelled or expires. Regular-way purchases and sales of investments are recognized on the trade date. From this date, any gains and losses arising from changes in fair value of the financial assets or financial liabilities are recorded. (ii) Measurement Financial instruments are measured initially at fair value. Transaction costs on financial assets and financial liabilities at fair value through profit or loss are expensed immediately. Subsequent to initial recognition, all instruments classified at fair value through profit or loss are measured at fair value with changes in their fair value recognized in the statement of comprehensive income. The fair value of financial assets and liabilities that are not traded in an active market (for example, over-the-counter derivatives) is determined using valuation techniques. The value of the option is markedto-market on a monthly basis using the Garman-Kohlhagen currency option pricing model by LGT Bank Limited. The Alternative Investment Fund Manager monitors this valuation on a monthly basis. The Garman-Kohlhagen model values the option by subtracting the present value of the continuous cash flow from the price of the underlying instrument. Assumptions under which the formula was derived include: the option can only be exercised on the expiry date (European style); there are no taxes, margins or transaction costs; the risk free interest rates (domestic and foreign) are constant; the price volatility of the underlying instrument is constant; and the price movements of the underlying instrument follow a lognormal distribution. (iii) Fair value measurement principles Options The Company enters into options for use as an economic hedge against certain equity positions held in the Company s investment portfolio. When the Company writes or purchases put or call options, an amount equal to the premium received or paid is recorded as a liability or an asset and is subsequently marked-to-market in the balance sheet. Premiums received or paid from writing or purchasing put or call options which have expired or were unexercised are recognized on their expiry date as realized gains or losses in the statement of comprehensive income. If an option is exercised, the premium received or paid is included with the proceeds or the cost of the transaction to determine whether the Company has realized a gain or loss on the related investment transaction on the statement of comprehensive income. When the Company enters into a closing transaction, it will realize a gain or loss in its statement of comprehensive income depending upon whether the amount from the closing transaction is greater or less than the premium received or paid. The options are valued at close of business on the dealing day at the settlement price as provided by the counterparty LGT Bank Limited. Listed securities The fair value of financial assets and liabilities traded in active markets (such as publicly traded derivatives and trading securities) is based on quoted market prices at the close of trading on the year end date. The Board of Directors considers markets to be active when transactions are occurring frequently enough on an ongoing basis to obtain reliable pricing information. If observed transactions are no longer regularly occurring, or the only observed transactions are distressed/ forced sales, the market would no longer be considered active. In cases where it is judged that there is no longer an active market, any transactions that occur may nevertheless provide evidence of current market conditions which will be considered in estimating a fair value using the valuation technique as described. Financial instruments are assessed separately when determining if there is an active market. As of 31 December 2016 the Company held marketable securities of nil (2015: 18,520). 22 Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

23 Primary fund investments The fair value of financial instruments that are not traded in an active market are determined by using valuation techniques. Private equity investments for which market quotations are not readily available are valued at their fair values by the Board of Directors. Private equity valuations are usually generated by the managers of the underlying portfolio of investments on a quarterly basis and are actually received with a delay of at least one-to-two months after the quarter end date. As a result, the year-end net asset value predominantly consists of portfolio valuations provided by the investment managers of the underlying funds as of 30 September 2016, adjusted for subsequent capital calls and distributions. If the Board of Directors comes to the conclusion upon recommendation of the Alternative Investment Fund Manager after applying the above-mentioned valuation methods, that the most recent valuation reported by the manager/administrator of a fund investment is materially misstated, it will make the necessary adjustments using the results of its own review and analysis. The valuation adjustments relate to events subse quent to the last capital account valuation statement received but based upon information provided by the investment manager and all other available unobservable inputs. In estimating the fair value of fund investments, the Alternative Investment Fund Manager in its valuation recommendation to the Board of Directors considers all appropriate and applicable factors (including a sensitivity to non-observable market factors) relevant to their value, including but not limited to the following: reference to the fund investment s reporting information including consideration of any time lags between the date of the latest available reporting and the balance sheet date of the Company in those situations where no December valuation of the underlying fund is available. This includes a detailed analysis of exits (trade sales, initial public offerings, etc.) which the fund investments have had in the period between the latest available reporting and the balance sheet date of the Company, as well as other relevant valuation information. This information is a result of continuous contact with the investment managers and, specifically, by monitoring calls made to the investment managers, distribution notices received from the investment managers in the period between the latest available report and the balance sheet date of the Company, as well as the monitoring of other financial information sources and the assessment thereof; reference to recent transaction prices; result of operational and environmental assessments: periodic valuation reviews are made of the valuations of the underlying investments as reported by the investment managers to determine if the values are reasonable, accurate and reliable. These reviews include a fair value estimation using widely recognized valuation methods such as multiples analysis and discounted cash flow analysis; review of management information provided by the managers/ administrators of the fund investments on a regular basis; and mark-to-market valuations for quoted investments held by the fund investments which make up a significant portion of the Company s net asset value. All fair valuations may differ significantly from values that would have been used had ready markets existed, and the differences could be material. The valuation of the investments is performed on a regular basis, but at least quarterly. Secondary fund investments The fair value measurement principles applied to secondary investments are the same as those applied to primary investments with the exception that commitments to secondary fund investments are recognized in the Company s accounts when the sale and purchase agreement is signed but cost and fair value are not recognized until such time as the investment managers consent has been received and any rights of first refusals have expired. Where an investment manager valuation specific to the Company is not available, a comparable valuation pertaining to a similar commitment may be used as a representative of the fair value of the Company s investment. Co-investments The fair value measurement principles applied to co-investments are the same as those applied to primary investments as outlined above. The fair value of financial instruments that are not traded in an active market are determined by using valuation techniques. Private equity investments for which market quotations are not readily available are valued at their fair values by the Board of Directors. The AIFM prepares quarterly valuations for all co-investments which are then approved by a member of the Board of Directors. The predominant methodology adopted by the AIFM is a market approach which takes market multiples using a specified financial measure (e.g. EBIDTA), recent public market and private transactions and other available measures for valuing comparable companies and all other available unobservable inputs. As noted in note 8, Investments at fair value through profit and loss, the vast majority of the portfolio commitments are funded on the initial call date. Where this is the case, the variance between the FMV and commitment amount, represents the adjustment made based on the recommendation of the AIFM using the above valuation techniques. As a result, the year-end net asset value predominantly consists of portfolio valuations provided by the AIFM as of 30 September 2016, adjusted for subsequent capital calls and distributions. To the best of the Directors knowledge at the time of signing the financial statements, there are no reasonable possible alternative assumptions which would change significantly the fair value of the Company s investments. (h) Financial assets and liabilities at amortized cost Financial assets classified as loans and receivables are carried at amortized cost using the effective interest rate method, less impairment losses, if any. Financial liabilities, other than those at fair value through profit or loss, are measured at amortized cost using the effective interest rate method. Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 23

24 (i) Allocation of proceeds from investments Distributions from primary investments are typically applied to return of capital and realized gains on the basis of the allocation provided by the investment manager. In the absence of this allocation the distribution is applied as a return of capital until all contributed capital has been returned and thereafter applied to realized gains. Distributions from secondary investments are typically applied as a return of capital until such time as the contributed capital has been recovered in full and thereafter applied to realized gains. Any portion of the distribution which is identified as re-callable is included in the unfunded commitment of the relevant investment. (j) Dividends and interest income Dividend income from financial assets at fair value through profit or loss is recognized in the statement of comprehensive income within dividend income when the Company s right to receive payments is established. Interest from bank, investors and underlying debt securities at fair value through profit or loss is recognized in the statement of comprehensive income within interest income based on the effective interest rate. (k) Withholding tax The Company currently incurs withholding taxes imposed by certain countries on investment income and capital gains. Such income or gains are recorded gross of withholding taxes in the statement of comprehensive income. Withholding tax is shown as a separate item in the statement of comprehensive income. (n) Segment reporting Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker, who is responsible for allocating resources and assessing performance of the operating segments, has been identified as the Alternative Investment Fund Manager. The sole reportable operating segment of the Company is investing in private equity investments. Asset allocation is based on a single, integrated investment strategy and the Company s performance is evaluated on an overall basis. There were no changes in the reportable segments during 2016 or Critical accounting estimates and judgments The Company makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal the related actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets within the next financial year are: Functional currency estimate The Board of Directors considers the US Dollar to be the currency that most faithfully represents the economic effect of the underlying transactions, events and conditions. The US Dollar is the currency in which management measures its performance and reports its results for the Company. (l) Payables and accrued expenses Payables and accrued expenses are recognized initially at fair value and subsequently stated at amortized cost. Expenses are recognized in the statement of comprehensive income on an accruals basis. (m) Share issues and repurchases Shares are classified as financial liabilities under IAS 32. Only the Company can instruct the issuance or repurchase of its shares. The Company issues shares in lieu of capital calls requested from investors up to the maximum of their subscribed capital amount. The Company has the option to purchase shares from its investors by way of a share repurchase and the share capital is reduced on the distribution date accordingly. Share repurchases can be instructed by the Company by way of distributing proceeds received from its investments, once all outstanding obligations and expenses of the Company have been provided for, in accordance with the Company s distribution policy. The Company shall not unreasonably delay the distribution of liquidity available from the realization proceeds from portfolio investments to shareholders. 24 Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

25 Fair value of non-quoted investments The Board of Directors uses its judgment to select a variety of methods and makes assumptions that are not always supported by observable market prices or rates. The majority of the Company s investments use either U.S. GAAP, IFRS and/or International Private Equity and Venture Capital Valuation Guidelines ( IPEVC Guidelines ) to value their underlying investments. The predominant methodology adopted by the investment managers for the buyout investments in CAPE II is a market approach which takes market multiples using a specified financial measure (e.g. EBIDTA), recent public market and private transactions and other available measures for valuing comparable companies. The use of valuation techniques requires them to make estimates. Changes in assumptions could affect the reported fair value of these investments. The valuation adjustments relate to events subsequent to the last capital account valuation statement received but based upon information provided by the investment manager. 3. Net gain on investments at fair value through profit or loss Net realized gain 12,391,027 7,424,522 Gain on foreign currency exchange 51,534 Net movement in unrealized gain 31,185,199 65,652,632 Net gain on investments at fair value through profit or loss 43,627,760 73,077, Fund expenses Management fees 4,676,305 4,147,033 Other fund expenses 503, ,589 5,180,060 4,512,622 The Company will generally invest in funds. The managers of these funds usually charge a fee and costs related to the investment selection, monitoring and administrative processes, among others. These indirect fees may typically vary between 1% and 2.5% of either net asset value or commitments of such funds. 5. Other expenses The Administrator is paid a fee, which includes administration and transfer agency services, quarterly in advance at the annual rate of 0.06% of the Company s net asset value but subject to a minimum fee of EUR 5,000 or equivalent month. The Administrator is also entitled to be reimbursed its reasonable out-of-pocket costs and expenses, incurred for the benefit of the Company. The Company will pay to the Depositary: trustee fees of up to 0.02% per annum of the net asset value; and custody fees equal to 0.02% per annum of the net asset value subject to a capped fee of 60,000 per annum. Both fees are accrued and paid monthly in arrears. The Depositary is also entitled to an annual fee of 7,500 for cash flow monitoring services with effect from 9 July The Alternative Investment Fund Manager is paid an annual fee calculated as a percentage of the subscribed capital or net asset value of the Company: class A, class B, class C and class L shares are charged 0.75%, 1.00%, 1.50% and 0.75% per annum of subscribed capital from years one to five; each year thereafter, class A, class B, class C and class L shares are charged 0.60%, 0.75%, 1.00% and 0.60% per annum of net asset value respectively; and for class O shares, no management fee shall be payable. The Alternative Investment Fund Manager is also entitled to a performance fee that is accrued based on a percentage of the gain in the Company s value over the year, but only if it exceeds net contributed capital plus an 8% compounded rate of return (the Hurdle ). No performance fee is payable for class O shares. The performance fee depends on the type of investment, 5.0% (in the case of primary fund investments) and 10.0% (in the case of secondary fund investments and co-investments), on which the gain has arisen and will only be payable when the contributed capital and the Hurdle have been distributed back to the investors. As of 31 December 2016 there was a performance fee accrual of 5,143,478 (31 December 2015: 4,189,279). Audit fees disclosed in the financial statements do not relate wholly to the Company s statutory audit. Auditors remuneration Statutory audit 26,154 20,879 Other assurance services 3,093 9,377 Tax advisory services The other assurance services relate to Company audit fees in respect of the Total Expense Ratio, carried out by PricewaterhouseCoopers, Zurich for the years ended 31 December 2016 and 31 December Cash and cash equivalents Cash at bank 1,426,346 2,781,317 1,426,346 2,781,317 The cash at bank balances were held with BNP Paribas Securities Services, Dublin Branch and LGT Bank Limited, Vaduz. Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 25

26 7. Accrued income and other receivables Distributions receivable 603,221 Other receivables and prepaid expenses 25,065 19,151 All amounts included above fall due within one year. 8. Investments at fair value through profit or loss 25, ,372 Over-the-counter financial derivative instruments An over-the-counter financial derivative instrument ( FDI ) is a financial instrument which displays the following characteristics: it s value changes in response to a specified variable (interest rate, price of underlying investment, etc.); it is not quoted in an active market; and it is settled at a future date. The Company entered into an agreement on 6 December 2011 to acquire a JPY/ currency put option with LGT Bank Limited. The value of the option is marked-to-market on a monthly basis and the value is checked by the Alternative Investment Fund Manager. Further details of this currency put option are included in the portfolio of investments. Private equity underlying investments As of 31 December 2016, Crown Asia-Pacific Private Equity II plc had subscribed interests in 45 private equity funds and four co-investments. The total committed capital amounted to 415,016,938 (2015: 415,245,821) of which 337,779,105 (2015: 304,605,172) has been contributed to date. The details of these funds are shown in the portfolio of investments together with an outline of the Company s commitments to the funds. The commitments to these private equity funds will be funded by contributions from the Company s investors. IFRS 7 Financial Instruments: Disclosures requires the Company to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the fair value measurements. The hierarchy has the following levels: Level 1 quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 inputs other than quoted prices included with - in Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices); and Level 3 inputs for the asset or liability that are not based on observable market data (unobservable inputs). The level in the fair value hierarchy within which the fair value measurement is categorized in its entirety is determined on the basis of the lowest level input that is significant to the fair value measurement in its entirety. For this purpose, the significance of an input is assessed against the fair value measurement in its entirety. If a fair value measurement uses observable inputs that require significant adjustment based on unobservable inputs, that measurement is a Level 3 measurement. Assessing the significance of a particular input to the fair value measurement in its entirety requires judgment, con sidering factors specific to the asset or liability. The determination of what constitutes observable requires significant judgment by the Board of Directors. The Board of Directors considers observable data to be that market data that is readily available, regularly distributed or updated, reliable and verifiable, not proprietary, and provided by independent sources that are actively involved in the relevant market. Investments whose values are based on quoted market prices in active markets, and therefore classified within Level 1, include active listed equities. The Company does not adjust the quoted price for these instruments. As of 31 December 2016 the Company holds level 1 investments of nil (2015: 18,520). Financial instruments that trade in markets that are not considered to be active but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. As of 31 December 2016 the Company does not hold any level 2 instruments (2015: one). Instruments classified within Level 3 have significant unobservable inputs, as they trade infrequently. Level 3 instruments include private equity investments for which observable prices are not available. The Company values these investments as described in note 1(g) of the financial statements. Prior to making a commitment to primary investments, direct investments or purchasing secondary investments the Company s Alter native Investment Fund Manager carries out a comprehensive due diligence review of the proposed investment. This due diligence review encompasses: (i) prior investment performance; (ii) legal terms and conditions; (iii) investment team review; and (iv) reference calls with associated parties. Based on the outcome of the due diligence review, the Alternative Investment Fund Manager then makes investment decisions on behalf of the Company. The Alternative Investment Fund Manager continuously reviews all investments to determine if fair values are being provided by the investment manager. If it is determined that the values provided are not fair values under IFRS then the Alter native Investment Fund Manager revalues the investment using the techniques described in note 2 Critical accounting estimates and judgments and proposes a valuation adjustment to the Board of Directors. During the years ended 31 December 2016 and 31 December 2015, there were no transfers between the three levels of financials assets. The following tables analyze within the fair value hierarchy the Company s financial assets and liabilities (by class) measured at fair value at 31 December 2016 and Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

27 Asset Level 1 Level 2 Level 3 Total Underlying private equity investments 421,123, ,123,826 Derivative financial instrument Marketable securities Valuation at 31 December ,123, ,123,826 Asset Level 1 Level 2 Level 3 Total Underlying private equity investments 379,100, ,100,726 Derivative financial instrument 711, ,899 Marketable securities 18,520 18,520 Valuation at 31 December , , ,100, ,831,145 The carrying value of the assets and liabilities included in the above tables is a reasonable approximation of fair value. The following table represents the roll forward valuation of level 3 instruments at 31 December 2016 and 31 December 2015: Investments at fair value through profit or loss Valuation at 1 January 379,100, ,145,520 Additions 30,141,409 78,131,514 Disposals (31,950,597) (32,206,071) Realized gains 13,048,700 7,265,407 Realized losses (984,176) (305,925) Unrealized gains 47,841,961 81,312,605 Unrealized losses (16,074,197) (15,242,324) Valuation at 31 December 421,123, ,100,726 Change in unrealized gains or losses for Level 3 assets held at year end and included in other net changes in fair value on financial assets and financial liabilities at fair value through profit or loss 31,185,199 66,070,281 Investments at fair value through profit or loss includes the valuation of the deferred JPY/ put option (the Option ) purchased for the co-investment D1. The Option matured during 2016 and as of 31 December 2016, the Option was valued at nil (2015: 711,899). The following tables present a breakdown of both the geographic and industrial focus of the underlying private equity funds based on the latest available financial information (primarily 30 September 2016 and 2015) % 2015 % Diversification by geography (FMV 1 ) China India South Korea US Indonesia Singapore Other Total % 2015 % Diversification by industry (FMV 1 ) Consumer discretionary Information technology Financials Industrials Health care Consumer staples Telecommunication services Materials Utilities 3.8 Other Total Factors influencing the fair value of investments are discussed in note Accrued expenses and other payables Due within one year Investment management fee 358,744 Administration fee 60,284 55,405 Depositary fees 24,944 23,058 Audit fee 31,476 13,427 Commitment fee 14,727 15,333 Trade creditors and accruals 48,740 46,156 Interest payable on bank loan 14,992 3, , ,509 Due after one year Performance fee 5,143,478 4,189,279 5,143,478 4,189,279 A performance fee provision of 5,143,478 (31 December 2015: 4,189,279) was accrued at the year end as the net assets exceeded the net capital contributed by investors to date, together with an 8% compound annual rate of return on their net contributed capital. The performance fee will not be paid to the Alternative Investment Fund Manager until such time as each investor has received an amount equal to its contributed capital plus the compounded 8% rate of return on such net contributed capital. 1 Fair market value ( FMV ) refers to the valuations ascribed to the various portfolio companies of the underlying private equity funds and co-investments Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 27

28 10. Due to banks Short-term bank loan 11,500,000 12,000,000 11,500,000 12,000,000 The short-term bank loan of 11,500,000 was held with LGT Bank AG, Dublin Branch for the 15 day period to 3 January 2017 at a rate of 3.61%. In 2015, the short-term bank loan of 12,000,000 was held with LGT Bank AG, Dublin Branch for the ten day period to 8 January 2016 at a rate of 3.13% Further details regarding the Company s loan facility can be found in note Share capital Authorized The authorized share capital of the Company is divided into three management shares of 1 each and 500,000,000 participating shares of no par value. Management shares Management shares issued by the Company amount to 3, being three management shares of 1 each, fully paid. The management shares do not form part of the net asset value of the Company and are thus disclosed in the financial statements by way of this note only. In the opinion of the Board of Directors, this disclosure reflects the nature of the Company s business as an investment fund. Participating shares The issued participating share capital is at all times equal to the net asset value of the Company. Shares capital movements Shares are issued and redeemed in lieu of capital calls and distributions made by the Company which in turn are limited by investors total subscribed capital and the Company s distribution policy, respectively. The voting rights of the participating shareholders are as outlined in the Directors report and all share classes are equal in respect of their voting rights. The issue and redemption of shares in the Company are determined by the capital calls and distributions as declared by the Company in accordance with the provisions of the Prospectus. As this is a closed ended fund the investors cannot request a issuance or redemption of shares. The Company has not issued any shares or other instruments that are considered to have a dilutive potential. The Company has the option to purchase shares from investors by way of a share repurchase as part of its distribution policy. Significant investors Two investors held ten per cent or more of the share capital of the Company at the year end (2015: two). Significant investors 31 December 2016 Shares held % of issued share capital Investor reference CAPE , Investor reference CAPE , Significant investors 31 December 2015 Shares held % of issued share capital Investor reference CAPE , Investor reference CAPE , Related party disclosures Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party in making financial or operating decisions. In the opinion of the Board of Directors, the parties referred to in the schedule accompanying this note are related parties under IAS 24 Related Party Disclosures. Share class as of 31 December 2016 A B C L O At beginning of year 822, , , , ,046, Issued 55, , , , Redeemed (47,922.26) (20,574.66) (309.22) (13,269.21) (57,143.69) At end of year 830, , , , ,054, Share class as of 31 December 2015 A B C L O At beginning of year 672, , , , , Issued 227, , , , , Redeemed (77,184.96) (33,123.75) (497.45) (21,371.31) (92,776.12) At end of year 822, , , , ,046, Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

29 Schedule of related party transactions Related party/ Relationship/ Agreement(s)/ Direct/indirect Terms and conditions Transaction type LGT Capital Partners (Ireland) Limited/ Note 5 Investment management fee 1,543,861 1,895,250 Common directorships/ Note 5/9 Investment management fee payable 358,744 Investment management fee agreement/ Note 5 Investment performance fee 954,199 2,609,586 Direct Note 5/9 Investment performance fee - accrual 5,143,478 4,189,279 LGT Fund Managers (Ireland) Limited/ Note 5 Administration fee 237, ,591 Common directorships/ Note 5/9 Administration fee payable 60,284 55,405 Administration agreement/ Direct LGT Bank AG, Dublin Branch/ Note 6 Cash at bank 569,761 63,482 Group/ Note 10 Due to banks 11,500,000 12,000,000 Loan and paying agency agreement/ Note 12 Finance costs interest charges 338, ,930 Direct Note 9 Interest payable 14,992 3,130 Note 12 Other operating expenses commitment fees 61,000 60,833 Note 12 Other operating expenses commitment fees payable 14,727 15, The management shares referenced in note 11 are held by LGT Capital Partners (Ireland) Limited, LGT Bank AG, Dublin Branch and LGT Fund Managers (Ireland) Limited respectively. Directors fees of 3,165 are charged in respect of Konrad Baechinger s services for 2016 (2015: 1,140). Legal fees are centralized through an LGT entity which is then reimbursed for costs incurred which amounted to 29,796 for the year end 31 December 2016 (2015: 6,814). Directors of this Company along with their dependants, may also be directors of or connected with shareholders invested in the Company. These shareholders have transacted on an equal basis as all other shareholders within a similar class and they represent 21.9% of the shareholdings in the Company (2015: 21.9%). Two (2015: two) of these shareholdings totaling 18.4% (2015: 18.5%) exceeds a 5% shareholding in the Company. Konrad Baechinger is considered an Independent Director from 1 June Konrad Baechinger directly held 0.40% of the issued share capital of the Company as of 31 December 2016 (2015: 0.39%). The Company currently has a credit facility with LGT Bank AG, Dublin Branch for the lower of 15,000,000 or 25% of total unfunded subscriptions, maturing on 29 December 2017 (the Final Maturity Date ). The loan is secured against the Company s bank accounts and from shareholders unfunded commitments. The margin is 2.25% (or 3.0% margin in the event of non-repayment of loan on the specified date) and the commitment fee is 40 basis points. The facility was used for 366 days during the year. The average usage over these days was 11,516,352 million with an average borrowing rate of 2.89%. The facility was used for 365 days during The average usage over these days was 5.6 million with an average borrowing rate of 2.63%. The Company entered into an agreement on 6 December 2011 to acquire a JPY/ currency put option with LGT Bank Limited. Further information can be found in note 8 and in the portfolio of investments. The Directors of this Company are also Directors of one investment, Expedition SEC II Limited ( ExPEP II or S10-1 ), made by the Company and this represents 0.6% of the Company s total net assets attributable to shareholders. The Company s investments in ExPEP II (Series 1 (A) Note) represent 1.1% of their total commitment amounts of which 43.6% have been contributed as at the year end. The Company invests on the same terms as other investors in their noteholder classes and further information is available in the portfolio of investments. 13. Exchange rates The financial statements are prepared in US Dollar. The following exchange rates have been used to translate assets and liabilities in other currencies to US Dollar: At 31 December 2016 At 31 December 2015 AUD CHF EUR JPY Financial risk management The Company s investment objective is to maximize the long-term returns to shareholders by investing in a diversified private equity portfolio consisting of growth capital funds, buyout funds and venture capital funds mainly focussed on the Asia-Pacific region. The holding of investments, investing activities and associated financing undertaken pursuant to this objective involves certain inherent risks. The inherent risks can also be affected by the concentration of elements within the Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 29

30 different risk categories. Where significant concentration risks exist they will be separately identified within the specific risk categories outlined in this note. The charts outlined in the Investment Advisor s report show geographical and industry-based concentration levels. Below is a description of the principal risks inherent in the Company s activities along with the actions it has taken to manage these risks. The Company s assets and liabilities comprise financial instruments which include: private equity investments: these are held in accordance with the Company s investment objective and policies; cash, liquid resources and short-term debtors and creditors that arise directly from its investment activities; and an option held for hedging currency exposure on an investment. The main risks arising from the Company s financial instruments are market price (including other price risks), foreign currency, interest rate, credit and liquidity risks. Other price risk relates to the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market prices (other than those arising from interest rate risk or currency risk). The Board of Directors reviews and agrees policies for managing each of these risks and they are summarized below: (a) Market price risk The investments held in the portfolio may be realized only after several years and their fair values may change significantly over time. The Alternative Investment Fund Manager makes investment decisions that are consistent with the Company s objectives. The investment objective is to provide shareholders with attractive long-term capital appreciation from a diversified portfolio of private equity investments. The Company s portfolio shall comprise substantially of Asia-Pacific growth capital and buyout funds. These funds and their respective investment managers are selected on qualitative research criteria including: (i) past performance in relation to investment style, expected returns, benchmarks and degree of risk; (ii) business structure and team organization of the investment manager; (iii) fit of the investment manager/investment vehicle into the overall portfolio; (iv) amount under management and commitment of the principals of the investment manager; and (v) cost structure. At 31 December 2016, the Company s market risk is affected by four main components: (i) changes in actual market prices; (ii) interest rate risk; (iii) foreign currency movements and; (iv) other price risks. Foreign currency risk and liquidity risk are covered in notes 14(b) and 14(e), respectively. If the value of the investments (based on year-end values) had increased or decreased by 5% with all other variables held constant, the impact on the statement of comprehensive income would have been 21,056,191 (2015: 18,991,557). The Directors have deemed the 5% as a reasonable representation of a variable differential in the value of investments. The Company is generally exposed to a variety of market risk factors, which may vary significantly over time and measurement of such exposure at any given point in time may be difficult given the flexibility, complexity and limited transparency of the underlying investments. Therefore, a sensitivity analysis is deemed of limited explanatory value or may be misleading. (b) Foreign currency risk A portion of the net assets of the Company are denominated in currencies other than the US Dollar (which is the Company s Functional Currency), with the effect that the balance sheet and total return can be affected by currency movements. Table 1 sets out the Company s direct exposure to foreign currency risk, none of which was hedged by the Company at the end of the year. The Company has entered into a /JPY currency put option to hedge an investment s ( D1 ) estimated exposure to Japanese Yen. There is a risk that the estimated exposure or the timing of the return on this investment will be over or understated. In accordance with the Company s policy, the Alternative Investment Fund Manager monitors the Company s currency position on a monthly basis and the Board of Directors reviews it on a regular basis. For the purpose of determining risk disclosures, in accordance with IFRS 7, currency risk is not considered to arise from financial instruments that are non-monetary items (e.g. equity investments). If the exchange rates (based on year-end values) had increased or decreased by an equivalent percentage movement as occurred in 2016 then with all other variables held constant, the impact on the statement of com prehensive income would have been 24,302 (2015: 470,990). (c) Interest rate risk The Company invests in the desired currencies at both fixed and floating rates of interest. The interest rate risk is that the fair value of cash and cash equivalents and loans payable will fluctuate with the changes in the market rates. The influence of changes in the market rates of interest is not expected to be significant. The Company s financial assets and liabilities, which are set out in table 2 are, with the exception of cash and cash equivalents and loans, primarily non-interest bearing and are therefore not subject to significant amounts of risk due to fluctuations in the interest rates. (d) Credit risk The Company takes on exposure to credit risk, which is the risk that a counterparty will be unable to pay amounts in full when due. This risk applies to the assets of the Company all of which are unsecured. The counterparty risk exposure is equivalent to the total value of the Company s assets. Impairment provisions are 30 Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

31 provided for losses that have been incurred by the balance sheet date, if any. There were no impairment provisions in the current year. The Company s main credit risk concentration is from amounts held at counterparty banks and from the private equity investments in which the Company is invested. The Company seeks to mitigate its exposure to credit risk by conducting its contractual transactions with institutions which are reputable and well established. In accordance with the Company s policy, the Alternative Investment Fund Manager monitors the Company s credit position on a monthly basis and the Board of Directors reviews it on a regular basis. The cash at bank balance is unsecured and is held with BNP Paribas Securities Services and LGT Bank Limited, Dublin Branch, the only rated counterparty credit risk (A/A-1). The credit rating of the counterparties as at 31 December 2016 was A/A-1 and A+/A-1 respectively (2015: A/A-1 and A+/A-1) (Source: Standard & Poor s). (e) Liquidity risk The Company may have an inability to raise additional funds or to use credit lines, if any, to satisfy the commitments to the various private equity investments. In a Private equity fund investment, a commitment is typically given to a newly established Private equity fund. In the ensuing three to six years, the fund draws down the available funds as and when attractive investment opportunities become available. As a general rule, the fund already begins to realize shareholding interests before all the capital has been invested. This means that the funds made available by the investors are not expected to be 100% invested in the Private equity fund. Historically, the average exposure ranges from 60% to 70%. In the event of liquidity shortfall, the Company has access to credit facilities and uncalled commitments which have default provisions, if needed, provided for in the Prospectus. The Company can hold back making distributions to ensure its ability to meet current and future obligations. The liquidity position owing to shareholders at the balance sheet date is represented by the assets minus liabilities of the Company. As mentioned in the Directors report, the Company has access to a credit facility, the lower of 15,000,000 and 25% of total unfunded subscriptions, with LGT Bank AG, Dublin Branch. The Company also has a cash and cash equivalents position at 31 December 2016 of 1,426,346 (31 December 2015: 2,781,317). The amounts outstanding on the total committed capital of the investments as at 31 December 2016 are 77,010,292 (31 December 2015: 110,555,986), which are callable at any time. These amounts are off balance sheet and may be called up over the life of the investments. All of the investments which the Company makes are unquoted and subject to specific restrictions on transferability and disposal. Consequently, risks exist that the Company might not be able to readily dispose of its holdings in such markets or investments when it chooses and also that the price attained on a disposal is below the amount at which such investments are included in the Company s balance sheet. The Company uses leverage which increases the Company s interest costs. The Company currently uses its credit facility mainly for short-term periods at which time it expects to be in a position to repay its borrowings and will not require refinancing. Its exposure to liquidity risk is as follows: Unfunded commitments of the Company (77,010,292) (110,555,986) Financial liabilities (17,197,385) (16,345,788) Financial assets 422,575, ,234,834 Undrawn credit facility 3,500,000 3,000,000 Unfunded commitments to the Company 97,733, ,958, ,601, ,291,240 Table 3 analyzes the Company s financial assets and liabilities based on the remaining period at the balance sheet date to the contractual maturity date. The amounts in table 3 are the contractual undiscounted cash flows. Balances due within twelve months equal their carrying balances, as the impact of discounting is not significant. In accordance with the Company s policy, the Alternative Investment Fund Manager monitors the Company s liquidity position on a weekly basis and the Board of Directors reviews it on a regular basis. (f) Capital risk management The capital of the Company is represented by the net assets attributable to the holders of participating shares. The Company s objective when managing the capital is to safeguard the ability to continue as a going concern in order to provide returns for holders of participating shares and benefits for other stakeholders and to maintain a strong capital base to support the development of the investment activities of the Company. The Alternative Investment Fund Manager and administrator monitor capital on the basis of the value of net assets attributable to holders of participating shares and the position is reviewed by the Board periodically. The capital management of the Company is controlled by the Alternative Investment Fund Manager with the main risk relating to an investor default. The main provisions for dealing with a default allow the Company to conditionally take ownership of a defaulting investor s holding with a view to sourcing a buyer and the imposition of a 50% penalty on the sales proceeds. Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 31

32 Table 1: currency exposure At 31 December 2016 Amounts are reported in EUR CHF AUD JPY Total Assets Current assets Cash and cash equivalents 1,423,181 3,165 1,426,346 Accrued income and other receivables 1,999 23,066 25,065 Total current assets 1,425,180 26,231 1,451,411 Non-current assets Investments at fair value through profit or loss 416,856,242 4,266,393 1, ,123,826 Total non-current assets 416,856,242 4,266,393 1, ,123,826 Total assets 418,281,422 26,231 4,266,393 1, ,575,237 Capital and reserves attributable to shareholders Share capital 258,952, ,952,300 Retained earnings 146,425, ,425,552 Net assets attributable to shareholders 405,377, ,377,852 Liabilities Current liabilities Accrued expenses and other payables 416,946 97,204 39, ,907 Due to banks 11,500,000 11,500,000 Total current liabilities 11,916,946 97,204 39,757 12,053,907 Non-current liabilities Accrued expenses and other payables 5,143,478 5,143,478 Total non-current liabilities 5,143,478 5,143,478 Total liabilities 422,438,276 97,204 39, ,575, Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

33 Table 1: currency exposure (continued) At 31 December 2015 Amounts are reported in EUR CHF AUD JPY Total Assets Current assets Cash and cash equivalents 2,781,317 2,781,317 Accrued income and other receivables 603,221 19, ,372 Total current assets 3,384,538 19,151 3,403,689 Non-current assets Investments at fair value through profit or loss 374,760,093 3,848,635 1,222, ,831,145 Total non-current assets 374,760,093 3,848,635 1,222, ,831,145 Total assets 378,144,631 19,151 3,848,635 1,222, ,234,834 Capital and reserves attributable to shareholders Share capital 256,446, ,446,310 Retained earnings 110,442, ,442,736 Net assets attributable to shareholders 366,889, ,889,046 Liabilities Current liabilities Accrued expenses and other payables 75,059 75,281 6, ,509 Due to banks 12,000,000 12,000,000 Total current liabilities 12,075,059 75,281 6,169 12,156,509 Non-current liabilities Accrued expenses and other payables 4,189,279 4,189,279 Total non-current liabilities 4,189,279 4,189,279 Total liabilities 383,153,384 75,281 6, ,234,834 Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 33

34 Table 2: interest rate exposure At 31 December 2016 Amounts are reported in Less than 1 month Non-interest bearing Total Assets Current assets Cash and cash equivalents 1,426,346 1,426,346 Accrued income and other receivables 25,065 25,065 Total current assets 1,426,346 25,065 1,451,411 Non-current assets Investments at fair value through profit or loss 421,123, ,123,826 Total non-current assets 421,123, ,123,826 Total assets 1,426, ,148, ,575,237 Capital and reserves attributable to shareholders Share capital 258,952, ,952,300 Retained earnings 146,425, ,425,552 Net assets attributable to shareholders 405,377, ,377,852 Liabilities Current liabilities Accrued expenses and other payables 553, ,907 Due to banks 11,500,000 11,500,000 Total current liabilities 11,500, ,907 12,053,907 Non-current liabilities Accrued expenses and other payables 5,143,478 5,143,478 Total non-current liabilities 5,143,478 5,143,478 Total liabilities 11,500, ,075, ,575, Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

35 Table 2: interest rate exposure (continued) At 31 December 2015 Amounts are reported in Less than 1 month Non-interest bearing Total Assets Current assets Cash and cash equivalents 2,781,317 2,781,317 Accrued income and other receivables 622, ,372 Total current assets 2,781, ,372 3,403,689 Non-current assets Investments at fair value through profit or loss 379,831, ,831,145 Total non-current assets 379,831, ,831,145 Total assets 2,781, ,453, ,234,834 Capital and reserves attributable to shareholders Share capital 256,446, ,446,310 Retained earnings 110,442, ,442,736 Net assets attributable to shareholders 366,889, ,889,046 Liabilities Current liabilities Accrued expenses and other payables 156, ,509 Due to banks 12,000,000 12,000,000 Total current liabilities 12,000, ,509 12,156,509 Non-current liabilities Accrued expenses and other payables 4,189,279 4,189,279 Total non-current liabilities 4,189,279 4,189,279 Total liabilities 12,000, ,234, ,234,834 Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 35

36 Table 3: liquidity exposure At 31 December 2016 Amounts are reported in Less than 1 month No stated maturity Total Assets Current assets Cash and cash equivalents 1,426,346 1,426,346 Accrued income and other receivables 25,065 25,065 Total current assets 1,451,411 1,451,411 Non-current assets Investments at fair value through profit or loss 421,123, ,123,826 Total non-current assets 421,123, ,123,826 Total assets 1,451, ,123, ,575,237 Capital and reserves attributable to shareholders Share capital 258,952, ,952,300 Retained earnings 146,425, ,425,552 Net assets attributable to shareholders 405,377, ,377,852 Liabilities Current liabilities Accrued expenses and other payables 553, ,907 Due to banks 11,500,000 11,500,000 Total current liabilities 12,053,907 12,053,907 Non-current liabilities Accrued expenses and other payables 5,143,478 5,143,478 Total non-current liabilities 5,143,478 5,143,478 Total liabilities 12,053, ,521, ,575, Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

37 Table 3: liquidity exposure (continued) At 31 December 2015 Amounts are reported in Less than 1 month > 6 months No stated maturity Total Assets Current assets Cash and cash equivalents 2,781,317 2,781,317 Accrued income and other receivables 622, ,372 Total current assets 3,403,689 3,403,689 Non-current assets Investments at fair value through profit or loss 711, ,119, ,831,145 Total non-current assets 711, ,119, ,831,145 Total assets 3,403, , ,119, ,234,834 Capital and reserves attributable to shareholders Share capital 256,446, ,446,310 Retained earnings 110,442, ,442,736 Net assets attributable to shareholders 366,889, ,889,046 Liabilities Current liabilities Accrued expenses and other payables 156, ,509 Due to banks 12,000,000 12,000,000 Total current liabilities 12,156,509 12,156,509 Non-current liabilities Accrued expenses and other payables 4,189,279 4,189,279 Total non-current liabilities 4,189,279 4,189,279 Total liabilities 12,156, ,078, ,234,834 Notes to the financial statements Annual report 2016 Crown Asia-Pacific Private Equity II plc 37

38 15. Taxation Under current law and practice the Company qualifies as an investment undertaking as defined in Section 739B of the Taxes Consolidation Act, 1997, as amended. On that basis, it is not chargeable to Irish tax on its income or gains. However, Irish tax may arise on the happening of a chargeable event. A chargeable event includes any distribution payments to shareholders or any encashment, redemption, cancellation or transfer of shares. No Irish tax will arise on the Company in respect of chargeable events in respect of: a shareholder who is neither Irish resident nor ordinarily resident in Ireland for tax purposes, at the time of the chargeable event, provided appropriate valid declarations in accordance with the provisions of the Taxes Consolidation Act, 1997, as amended, are held by the Company; or the Company has been authorized by the Irish Revenue to make gross payments in the absence of appropriate declarations; and certain exempted Irish tax resident shareholders who have provided the Company with the necessary signed statutory declarations. Any transaction (which might otherwise be a chargeable event) in relation to shares held in a recognized clearing system as designated by order of the Irish Revenue Commissioners will not constitute a chargeable event. It is the current intention of the Directors that all the shares in the Company will be held in a recognized clearing system. Dividends, interest and capital gains (if any) received on investments made by the Company may be subject to withholding taxes imposed by the country from which the investment income/gains are received and such taxes may not be recoverable by the Company or its shareholders. 16. Soft commission arrangements There were no soft commission arrangements affecting the Company during the years ended 31 December 2016 and 31 December Events since the year end As of 20 February 2017, the Company has contributed 1.7 million to existing private equity investments. 18. Approval of financial statements The Directors approved the audited financial statements on 20 February Crown Asia-Pacific Private Equity II plc Annual report 2016 Notes to the financial statements

39 Portfolio of investments For the year ended 31 December ,2,3 Fund currency Capital commitments: fund currency Capital commitments () 2016 Fair value () 2016 Percentage of total net assets attributable to shareholders (%) 2015 Fair value () 2015 Percentage of total net assets attributable to shareholders (%) Co-investments Vintage year 2011 D1 4,000,000 4,000,000 2,492, ,764, Vintage year 2013 D2 5,010,000 5,010,000 17,892, ,133, D3 5,003,562 5,003,562 5,204, ,596, Vintage year 2015 D4 AUD 5,577,542 4,038,140 4,266, ,848, Sub-total co-investments 18,051,702 29,856, ,342, Primary investments Vintage year 2010 P1 20,000,000 20,000,000 22,614, ,576, P2 10,000,000 10,000,000 13,358, ,895, Vintage year 2011 P3 20,000,000 20,000,000 49,202, ,085, P4 25,000,000 25,000,000 20,619, ,451, P5 10,000,000 10,000,000 11,227, ,758, P6 25,000,000 25,000,000 34,535, ,433, P7 10,000,000 10,000,000 9,235, ,472, Vintage year 2012 P8 10,000,000 10,000,000 11,858, ,197, P9 10,000,000 10,000,000 11,211, ,333, P10 25,000,000 25,000,000 26,843, ,248, P11 15,000,000 15,000,000 24,504, ,861, Vintage year 2013 P12 20,000,000 20,000,000 12,862, ,154, P13 20,000,000 20,000,000 6,524, ,890, P14 15,000,000 15,000,000 10,930, ,141, Vintage year 2014 P15 8,000,000 8,000,000 12,663, ,548, P16 8,000,000 8,000,000 9,300, ,281, P17 10,000,000 10,000,000 13,839, ,366, P18 8,000,000 8,000,000 10,300, ,973, P19 10,000,000 10,000,000 3,869, ,256, P20 4,000,000 4,000,000 4,986, ,864, P21 10,000,000 10,000,000 6,344, ,195, Vintage year 2015 P22 10,000,000 10,000,000 1,367, , P23 10,000,000 10,000,000 3,947, ,788, Sub-total primary investments 313,000, ,146, ,386, Investments have been assigned an alphanumeric code for reasons of confidentiality 2 A complete statement of portfolio changes is available to shareholders from the registered office of the Company free of charge 3 The notes to the accounts are an integral part of the financial statements Portfolio of investments Annual report 2016 Crown Asia-Pacific Private Equity II plc 39

40 For the year ended 31 December ,2,3 (continued) Fund currency Capital commitments: fund currency Capital commitments () 2016 Fair value () 2016 Percentage of total net assets attributable to shareholders (%) 2015 Fair value () 2015 Percentage of total net assets attributable to shareholders (%) Secondary transactions Closing year 2012 Transaction No. 1 S1-1 2,863,924 2,863,924 2,246, ,694, Transaction No. 2 S2-1 3,612,932 3,612, , ,176, Transaction No. 3 S3-1 3,531,863 3,531,863 1,730, ,906, S3-2 2,557,604 2,557,604 3,315, ,448, Closing year 2013 Transaction No. 4 S4-1 9,590,577 9,590,577 8,845, ,779, S4-2 5,700,000 5,700,000 4,150, ,742, Transaction No. 5 S5-1 20,000,000 20,000,000 15,703, ,355, Transaction No. 6 S6-1 2,259,790 2,259,790 2,702, ,216, Closing year 2014 Transaction No. 7 S7-1 1,661,267 1,661,267 1,026, ,367, S7-2 JPY 122,679,508 1,052,001 1, ,222, Closing year 2015 Transaction No. 8 S8-1 7,042,622 7,042,622 1,636, ,085, S8-2 3,091,237 3,091,237 2,337, ,101, S8-3 5,000,000 5,000,000 2,740, ,694, Transaction No. 9 S9-1 1,868,722 1,868,722 1,135, ,612, S9-2 2,567,163 2,567,163 1,688, ,033, S , , S , , , , S9-5 3,347,160 3,347,160 3,543, ,804, S , , , , S , , , , S9-8 2,062,890 2,062,890 1,291, ,291, Transaction No. 10 S10-1 4,460,510 4,460,510 2,597, ,358, Sub-total secondary transactions 83,965,236 59,121, ,390, Investments have been assigned an alphanumeric code for reasons of confidentiality 2 A complete statement of portfolio changes is available to shareholders from the registered office of the Company free of charge 3 The notes to the accounts are an integral part of the financial statements 40 Crown Asia-Pacific Private Equity II plc Annual report 2016 Portfolio of investments

41 For the year ended 31 December ,2,3 (continued) Currency Buy JPY Sell 2016 Fair value () 2016 Percentage of total net assets attributable to shareholders (%) 2015 Fair value () 2015 Percentage of total net assets attributable to shareholders (%) Derivative financial instruments FX OTC Put Option /JPY 332,975,000 3,505, , Strike price: JPY Maturity: 2 December 2016 Sub-total derivative financial instruments 711, Counterparty: LGT Bank Limited Investments at fair value through profit or loss 415,016, ,123, ,831, Other net assets and liabilities (15,745,974) (3.9) (12,942,099) (3.5) Total net assets attributable to shareholders 405,377, ,889, Investments have been assigned an alphanumeric code for reasons of confidentiality 2 A complete statement of portfolio changes is available to shareholders from the registered office of the Company free of charge 3 The notes to the accounts are an integral part of the financial statements Portfolio of investments Annual report 2016 Crown Asia-Pacific Private Equity II plc 41

42 LGT Capital Partners Limited Schuetzenstrasse Pfaeffikon Switzerland Phone Fax lgt.cp@lgt.com