Page 1

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016


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SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  SPICE PRIVATE EQUITY LTD

SHARE PRICE DEVELOPMENT

SPCE share price and NAV/share, USD NAV/share

share price 30

43

29

42

28

41

27

40

26

39

25

38

24

37

23

36

22

35

21

34 31 Dec 2014

30 Jun 2015

31 Dec 2015

30 Jun 2016

USD 

41.76

NAV PER SHARE 30 JUNE 2016

USD 

25.20 SHARE PRICE 30 JUNE 2016

COMPANY PROFILE

Spice Private Equity Ltd is a Swiss investment company focused on private equity related investments. Spice Private Equity Ltd has over a decade of operating history and is managed by GP Advisors part of the GP Investments Group. The company is listed on the SIX Swiss Exchange under the ticker symbol SPCE.

SPICE PRIVATE EQUITY PROVIDES INVESTORS WITH ACCESS TO ATTRACTIVE PRIVATE EQUITY OPPORTUNITIES GLOBALLY.


MANAGEMENT REPORT  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

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HALF YEAR HIGHLIGHTS

Skyline of Singapore

THE NET ASSET VALUE OF SPICE PRIVATE EQUITY LTD GREW SIGNIFICANTLY DURING THE FIRST HALF OF THE YEAR, REACHING USD 41.76 PER SHARE AS OF 30 JUNE 2016 (31 DECEMBER 2015: USD 39.11 PER SHARE, +6.8 %).

Two main factors have driven the Net Asset Value (“NAV”) increase through this half year.

(“GP”) of the shares held by the investment vehicle managed by Fortress Investment Group LLC.

First, there was the reversal of the “derivative financial liability” (USD 16.0 million as of 30 June 2016) resulting from the acquisition by GP Investments Ltd

Second, the investment performance of the current portfolio was positive USD 1.8 million or 2.7 % (as % of average invested capital for half year; not annu-

IRR AND TVPI, BY VINTAGE

FAIR VALUE BRIDGE, YTD

USD; in million

USD; in million 80 70

6.5

–0.7

1.8

73.4

60

60

50

50

40

40

30

30

20

20

10

10

0

14.2 %

32.3 %

1.20x

1.25x

65.8

Fair Value of Investment Portfolio as of 1 Jan 2016

Purchases & capital calls

Sales proceeds & distributions

Gross Portfolio Return

Fair Value of Investment Portfolio as of 30 June 2016

0

IRR

59.6 47.7 21.0

25.1

Paid-in*

Total value*

2014 Vintage

Paid-in*

TVPI

TVPI = Total Value to Paid In The ratio of the current value of remaining investments within a fund, plus the total value of all distributions to date, relative to the total amount of capital paid into the fund to date. * as of 30 June 2016

Total value*

2015 Vintage


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SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  MANAGEMENT REPORT

alized) which compensated part of the expenses incurred. The share price of the Company increased by 2.4 % compared to 31 December 2015. CHANGE IN SHAREHOLDER BASE On 5 May 2016, GP agreed to acquire the shares in Spice Private Equity Ltd which were held by investment vehicles managed by Fortress Investment Group LLC (“Fortress”) and Newbury Associates LLC (“Newbury”). GP acquired the new stake for USD 35.25 per share, representing a 15 % discount to the published economic NAV of 31 March 2016. Closing of the transaction took place right after the annual general meeting of shareholders of the Company, which was held on 28 June 2016. GP now indirectly holds 58.48 % of the shares of and voting rights in the Company. As mentioned before, with the acquisition of the Fortress stake by GP, the Company’s NAV was positively affected by the release of the “derivative financial liability” related to a put option (the “Put Option”) previously held by Fortress. The “derivative financial liability” was booked in line with IFRS requirements and was released due to the extinction of the Put Option as of

the closing of the transaction. The extinction of the Put Option also has the benefit of enabling activities such as a stock buy-back program that can lead to a better trading profile of the Company’s shares. NEW INVESTMENT OBJECTIVE AND GUIDELINES With the new shareholder base, and upon receipt of a motion from GP, the Board of Directors (“BoD”) proposed to amend Art. 2a of the Articles of Association, the Company’s Investment Objective. This change was then approved at the Annual General Meeting held on 28 June 2016. Art. 2a now reads as follows: “The investment objective of the company is to realize long term capital appreciation by creating a portfolio of fund investments and direct investments in the private equity sector. The company will invest in assets denominated in foreign currencies and may from time to time enter into transactions with the objective of hedging foreign currency exposure. Detailed investment guidelines shall beapproved by the board of directors and will be provided to the shareholders and potential investors by the company upon request.”

Following the change to the Investment Objective, the BoD approved an amendment to the Company’s Investment Guidelines. The changes were as follows: • Amendment to Art. 1 of the Investment Guidelines of the Company, the Introduction, which now reads as follows: “The investment objective of Spice Private Equity Ltd (the “Company”) and its subsidiary, Spice Private Equity (Bermuda) Ltd (the “Subsidiary”) (together the “Group”), is to achieve longterm capital growth for shareholders by investing directly in companies (“Direct Investments”) and in private equity specialized funds (“Fund Investments”). Direct Investments and Fund Investments may include investments in private equity and private equity related instruments and opportunistically in certain categories of credit products. Investments will typically be made through the Subsidiary. Net profits generated upon realizations will typically be re-invested. Within the limitations of the Company’s purpose and investment principles as stated in its Articles of Association the Board of Directors of the Company (“BoD”) may amend or supplement its investment guidelines.”

DIVERSIFICATION BY REGION

DIVERSIFICATION BY CURRENCY

Expressed as % of invested assets in underlying companies applying fair values

Expressed as % of total assets

INR 12.9 %

Other regions 0.3 % Sub-Saharan Africa 7.4 %

USD 72.4 %

BRL 9.5 % IDR 2.3 % CHF 0.1 %

Asia-Pacific 57.6 % Others 2.8 % Latin America 34.7 %


MANAGEMENT REPORT  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

• Amendment to Art. 2 of the Investment Guidelines of the Company, on Asset Allocation, which now reads as follows:

The new Articles of Association and Investment Guidelines can be found on the Company’s website (www.spice-private-equity.com).

NEW FOCUS “In keeping with the Company’s core investment strategy, the Group’s portfolio will primarily be invested in direct investments held alone or in conjunction with other private equity investors in privately held companies or in the acquisition of shares of publicly listed companies in transactions which will normally allow for the investor group to exercise significant influence over the management of the investees. The Group may also invest by way of primary or secondary transactions in funds managed by GP Investments Ltd (“GP”) and occasionally in funds managed by third-party managers.

OTHER BENEFITS OF THE CHANGE IN SHAREHOLDER BASE In addition to the benefits mentioned above and the extensive expertise of GP’s teams to globally source the best opportunities for the Company, other benefits were formalized by GP with the Company by means of a letter stating:

The Group expects to invest significant amounts of capital in each individual transaction and will therefore be expected to sustain a higher portfolio concentration than was evident in prior years. In the case of an investment in any blind pool fund or limited partnership of which GP or its affiliates is the General Partner, the Group’s investment shall not represent more than 10 % of such fund’s aggregate committed capital.

(i) that for as long as there remains in effect an investment management agreement between GP Advisors (Bermuda) Ltd and Spice Private Equity (Bermuda) Ltd, the Group shall not pay any additional management or performance fees to GP or affiliates of GP relating to any investment made by the Group in respect of primary fund commitments where GP or an affiliate thereof also acts as the general partner or manager. Customary fees may, however, be payable in respect of secondary limited partnership interests in funds managed by GP or affiliates of GP which have been or may in the future be acquired from third parties in arm’s-length transactions; and (ii) all investment opportunities that GP may identify to deploy its proprietary capital and that are suitable to the

Group in accordance with the Company’s Investment Guidelines and minimum cash, as approved by the Board of Directors of the Company, shall be primarily offered to the Group. Furthermore, after an internal discussion amongst the Company’s Independent Directors, the Company sent a letter to GP Advisors (Bermuda) Ltd asking it to consider eliminating the effect of the extinction of the Put Option when calculating the performance fees due to GP Advisors Ltd under the current Investment Management Agreement. In response, GP Advisors (Bermuda) Ltd exceptionally accepted the Independent Directors’ considerations and agreed that it will eliminate the effect of the extinction of the Put Option on the calculation of the performance fee. Finally, amongst other approvals, the Board of Directors has requested its advisors to analyze a public Share Repurchase Program for up to 7.2 % of the issued share capital for the purpose of cancellation of such shares. This is one more activity to benefit the trading profile of the Company’s shares. NEW BOARD OF DIRECTORS AND MANAGEMENT To support the new strategy and provide continuity to the business, a Board of

DIVERSIFICATION BY SECTOR

DIVERSIFICATION BY STAGE

Expressed as % of invested assets in underlying companies applying fair values

Expressed as % of invested assets in underlying companies applying fair values

Industrial 18.8 %

5

Consumer 9.8 % Venture 0.7 % Leisure 9.5 %

Services 23.6 %

Energy 7.0 % Buyout 27.9 % Technology 2.6 %

Medical & Health 23.8 %

Others 5.0 %

Growth 71.4 %


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SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  MANAGEMENT REPORT

Directors was elected with new members bringing a fresh perspective and complementary experience to re-elected members. The following persons were elected to the Board of Directors: • Mr. Stephan Müller, the new Chairman of the Board of Directors, is also currently a Director and Business Development consultant at Vistra (Hong Kong) Limited, a leading global provider of trust, corporate and fund administration services. • Mr. Christopher Wright, a new member of the Board of Directors, is a former Management Board member of Dresdner Kleinwort and headed its global private equity activities. He is a director of Merifin Capital Group, a private European investment firm and of other asset management firms. He serves as a director of Roper Technologies Inc (NYSE) and of Yatra Capital (Euronext). • Mr. Fersen Lamas Lambranho, reelected a member of the Board of Directors, is also the Chairman of GP Investments Ltd and member of the Investment Committee of GP Advisors (Bermuda) Ltd. More than 20 years of experience as a manager and board member in various companies in the financial, mining, real estate and retail industries.

• Mr. David Justinus Emery, re-elected a member of the Board of Directors, is also the founder and CEO of Reciprocus International PTE Ltd, a globally active M & A advisory boutique. Formerly on the management team of Dun & Bradstreet, with responsibility for the Asia Pacific region, business development, and mergers & acquisitions.

PORTFOLIO MARKET OVERVIEW Global markets have recovered from their 2009 levels after the financial crisis, lifted mainly by developed markets’ central bank policies of low interest rates. During the first half of 2016 the substantial recovery in asset prices, including equity, has shown signs of fatigue due to:

• Mr. Alvaro Lopes da Silva Neto, a former member of the Board of Directors, is also the Chief Financial and Investor Relations Officer of GP Investments. He also serves as a member of the board of directors of GP Investments, GP Advisors, BRZ Investimentos and Par Corretora.

(i) generally lower earnings prospects in developed markets;

The new Board of Directors and GP’s management team are highly capable, with extensive experience in global markets and extremely well prepared to manage and execute the new strategy. The Company was also informed that Mr. Meton Morais, who has been at GP Advisors Ltd as a Senior Portfolio Manager since its creation in 2013, assumed the positions of CEO of GP Advisors Ltd and Head of IR of the Company at the end of June 2016. Mr. Morais has more than 15 years of experience in investing worldwide.

DIVERSIFICATION BY MATURITY 1)

(ii) increased geopolitical risks such as Brexit; and (iii) interest rate hikes by the U.S. Federal Reserve Bank. This scenario has also led investors to shift their asset allocation to safer assets in developed markets, hence generating higher volatility in global equity investments and emerging markets. Lower commodity prices have also contributed to the increased risk profile of emerging market economies. This macroeconomic scenario looks set to continue in the coming months, meaning that having a selective investment pipeline is important to making successful new investments. In this scenario it is also very important to have a global investment strategy and to look

DIVERSIFICATION BY STRATEGY 2) Direct Co-Investments 33.2 %

100 %

Fund Investments 66.8 % Primaries 12.0 %

80 %

60 %

Directs 33.2 %

40 %

Secondaries 54.9 %

20 %

0%

0–1 year

1–2 years

2–3 years

3–4 years

Defined by timing of investment by Spice Private Equity

1)

4–5 years

Expressed as % of assets in investment structure

2)


MANAGEMENT REPORT  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

for the best opportunities regardless of geography. Our new investment guidelines offer just such flexibility. This global situation creates a unique opportunity to invest in interesting assets with attractive prices and growth prospects, and the Company should benefit from this. Spice Private Equity Ltd has a pipeline with situations at early and advanced stages. PORTFOLIO PERFORMANCE UPDATE As mentioned above, the portfolio had positive overall performance during 1H 2016. The current portfolio can bedivided into co-investments and fundinvestments. With respect to co-investments, the performance was positive. The valuations of Rede D’Or (a private hospital chain in Brazil, with The Carlyle Group) and Altico Capital (a non-bank finance company in India, with Clearwater Capital Partners) continue to benefit from positive business trends and positive currency developments. During 1H 2016, Altico Capital called the second investment tranche of the co-investment. Africa Oil Corporation (upstream oil exploration company in East Africa, with Helios Investment Partners) has made positive progress in its business, but the uncertainty of oil prices has created limited investor interest in the stock (Company is listed in Canada with a secondary listing in Sweden) and consequently its price has not changed much. Regarding fund investments, the funds that were originated on a primary basis are generally developing well with positive performance of the underlying companies, and with certain funds making new investments during 1H 2016. In terms of total investments, these funds currently have: Navis Asia Fund VII (total of 9 investments), Baring Asia VI (total

of 5 investments), Northstar IV (total of 6 investments), Helios Investors III (total of 5 investments) and Carlyle Sub Saharan Africa Fund (total of 4 investments). The funds that were invested through secondary transactions have had mixed performance in 1H 2016 given the difficulties of emerging markets and exchange rate depreciation. FINANCIALS Cash held at Group level increased to USD 76.5 million as of 30 June 2016, as a result of the USD 37.4 million 2nd deferred payment received from Strategic Partners a leading global investor in the secondary private equity market. Unfunded commitments amounted to USD 22.9 million. The liquidity situation remains solid. Capital calls of USD 6.5 million paid during the half year outweighed distributions of USD 0.7 million for the same period. During the half year now ended, Spice Private Equity Ltd generated income of USD 1.8 million (Q2 2015: income of USD 3.4 million (restated)) and expenses amounted to USD 3.8 million (Q2 2015: expenses of USD 4.4 million (restated)) resulting in a net loss of USD 1.9 million (Q2 2015: net loss of USD 1.0 million (restated)). Gross portfolio return was USD 1.8 million or 2.7 % (not annualized) of average invested capital for half year. The net portfolio return (after considering operating expenses) was USD –1.3 million or –2.0 % (not annualized) of average invested capital (not annualized). Total return of the Company for the half year now ended was USD –1.9 million or –0.9 % (not annualized) of shareholder’s equity as of 31 December 2015. These results are in line with expectations for Company’s current average invested capital.

7

OUTLOOK Global markets continue to show volatile returns due to geopolitical events (e. g. Brexit) and overall mixed economic indicators in both developed and emerging markets. It is expected that global markets will continue to present such short term volatility, creating interesting opportunities globally to invest in companies with appealing long term earnings power and growth prospects. Spice Private Equity has a pipeline with situations at early and advanced stages.


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SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  MANAGEMENT REPORT

TEN LARGEST UNDERLYING INVESTMENTS

Rank Company name

Fund/lead investor name

Stage

Country

Region

Sector 1)

Date of initial investment

1 Altico Capital

Clearwater Capital Partners

Buyout

India

Asia-Pacific

Services

Sep 2015

2 Rede D’Or

The Carlyle Group

Growth

Brazil

Latin America

Medical & Health

Oct 2015

GP Capital Partner IV, Magma Fund I & II

Growth

Brazil

Latin America

Industrial

Apr 2015

3 Magnesita

2)

4 Africa Oil Corporation 2)

Helios Investors

Growth

Kenya

Sub-Saharan Africa

Energy

Jun 2015

5 BHG

GP Capital Partners IV

Growth

Brazil

Latin America

Leisure

Apr 2015

6 SRL

NYLIM Jacob Ballas III

Growth

India

Asia-Pacific

Medical & Health

Sep 2015

7 Religare

NYLIM Jacob Ballas III

Growth

India

Asia-Pacific

Services

Sep 2015

8 Blitz Megaplex

Quvat Capital Partners II

Growth

Indonesia

Asia-Pacific

Leisure

Mar 2014

9 Centauro

GP Capital Partners V

Buyout

Brazil

Latin America

Consumer

Sep 2015

Quvat Capital Partners II

Growth

Indonesia

Asia-Pacific

Various

Mar 2014

10 Linq Asia Capital EVCA definition Listed

1)

2)

Aggregated fair value of ten largest underlying investments – as % of total investments – as % of total assets

USD 47.1 million 64.1 % 21.0 %


MANAGEMENT REPORT  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

WITH OUR NETWORK AND OUR EXPERTISE WE CAN FIND THE BEST INVESTMENT OPPORTUNITIES GLOBALLY.

9


FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD


12

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

SPICE PRIVATE EQUITY LTD INTERIM FINANCIAL STATEMENTS CONSOLIDATED BALANCE SHEET (UNAUDITED) IN TUSD Note

30.6.2016

31.12.2015 (restated)

30.6.2015 (restated)

76 510

49 645

38 718

Assets Current assets – Cash and cash equivalents – Receivables and prepayments Total current assets

37 127

37 593

74 664

113 637

87 238

113 382

Non-current assets – Receivables non-current

10

37 338

74 086

73 885

– Investments

14

73 408

65 824

34 742

110 746

139 910

108 627

224 383

227 148

222 010

Total non-current assets Total assets Liabilities and Shareholders’ Equity Current liabilities – Payables and accrued charges – Put option liability

12

– Provision

663

1 598

1 360

15 755

16 741

 283

 283

1 308

Total current liabilities

946

17 636

19 409

Total liabilities

946

17 636

19 409

Shareholders’ Equity – Share capital – Share premium – Treasury shares (at cost)

12

53 980

53 980

53 980

362 087

346 067

346 067

(329)

(157)

(200)

(190 851)

(196 721)

(196 721)

– Net profit /(loss) for the period

(1 922)

5 870

(998)

– Currency translation difference

 473

 473

 473

223 438

209 512

202 601

224 383

227 148

222 010

5 349 930

5 357 322

5 355 079

– Retained earnings /(accumulated deficit)

Total Shareholders’ Equity Total liabilities and Shareholders’ Equity Net Asset Value per share Number of shares outstanding at reporting date Net Asset Value per share attributable to shareholders

41.76 

39.11 

37.83 

The accompanying notes on pages 16 to 27 form an integral part of these consolidated condensed interim financial statements.


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FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME (UNAUDITED) IN TUSD Note

1.1.2015 – 30.6.2015 (restated)

1.4.2015 – 30.6.2015 (restated)

1.1.2016 – 30.6.2016

1.4.2016 – 30.6.2016

372

186

494

243

93

67

36

36

Income Interest income on deferred payments Net realized gain on investments

8

Net unrealized gain/(loss) of investments designated at fair value through profit or loss

8

Net gain/(loss) on foreign currency exchange Total income

1 693

2 670

3 325

3 706

(314)

211

(451)

(390)

1 844

3 133

3 404

3 596

(1 311)

Expenses Management fees

6

(2 517)

(1 287)

(2 759)

Administration fees

6

(50)

(26)

(50)

(26)

(557)

34

(1 442)

(1 154)

Other operating expenses Finance costs Total expenses Income tax expenses Net profit/(loss) for the period

9

(642)

(385)

(151)

(151)

(3 766)

(1 663)

(4 403)

(2 641)

(1 922)

1 470

(998)

955

Earnings per share Weighted average number of shares outstanding during the period

5 365 301

5 367 005

5 354 563

5 356 206

Net profit/(loss) per share – basic

(0.36)

0.27

(0.19)

0.18

Net profit/(loss) per share – diluted

(0.36)

0.27

(0.19)

0.18

Net other comprehensive income to be reclassified to profit or/ (loss) in subsequent periods

Other comprehensive income or/(loss) for the period

Total comprehensive income or/(loss) for the period

(1 922)

1 470

(998)

955

Net profit/(loss) attributable to shareholders

(1 922)

1 470

(998)

955

Other comprehensive income or/(loss) for the period Items to be reclassified to profit or/(loss) in subsequent periods: Currency translation differences

The accompanying notes on pages 16 to 27 form an integral part of these consolidated condensed interim financial statements.


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SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

CONSOLIDATED STATEMENT OF CASH FLOW (UNAUDITED) IN TUSD Note

30.6.2016

30.6.2015 (restated)

Cash flows from operating activities Proceeds from non-current assets Purchase of non-current assets Operating costs Total net cash generated from/(used) in operating activities

 684

 34

 (6 482)

 (14 647)

 (3 531)

 (8 037)

 (9 329)

 (22 651)

Cash flows from investing activities Deferred sale proceeds from sale of the subsidiaries Total net cash generated from/(used) in investing activities

10

37 372

 37 372

Cash flows from financing activities Finance costs paid

 (953)

 (191)

Treasury share purchases

 (646)

 (516)

Treasury share sales

 474

 498

 (1 125)

 (209)

 (53)

 568

Increase /(decrease) in cash and cash equivalents

 26 865

 (22 292)

Cash and cash equivalents as of 1 January

49 645

61 010

Cash and cash equivalents as of 30 June

76 510

38 718

Total net cash generated from/(used) in financing activities Foreign exchange effect on cash and cash equivalents

The accompanying notes on pages 16 to 27 form an integral part of these consolidated condensed interim financial statements.


15

FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED) IN TUSD

Share capital

Share premium

Less treasury shares (at cost)

53 980

346 067

(182)

473

(196 721)

203 617

Net profit/(loss)

(998)

(998)

Other comprehensive income

(998)

(998)

Shareholders’ Equity

Restated Balance as of 1 January 2015

Total comprehensive income Purchase and sale of treasury shares

Currency translation differences

Retained earnings/ (accumulated deficit)

Total

(18)

(18)

(18)

(998)

(1 016)

Total Equity as of 30 June 2015

53 980

346 067

(200)

473

(197 719)

202 601

Balance as of 1 January 2016

Total equity changes

53 980

346 067

(157)

473

(190 851)

209 512

Net profit/(loss)

(1 922)

(1 922)

Other comprehensive income

(1 922)

(1 922)

(172)

(172)

Total comprehensive income Purchase and sale of treasury shares Release contractual obligation to purchase own equity instruments Total equity changes Total Equity as of 30 June 2016

16 019

16 019

16 019

(172)

15 847

53 980

362 087

(329)

473

(192 772)

223 438

The accompanying notes on pages 16 to 27 form an integral part of these consolidated condensed interim financial statements.


16

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

NOTES TO THE UNAUDITED CONSOLIDATED CONDENSED INTERIM FINANCIAL STATEMENTS FOR THE PERIOD ENDED 30 JUNE 2016

NOTE 1

CORPORATE INFORMATION

Spice Private Equity Ltd (“the Company”) is a Swiss stock corporation established under the relevant provisions of the Swiss Code of Obligations and domiciled in Zug. The Company’s shares are listed on the SIX Swiss Exchange. The address of the registered office of the Company is Industriestrasse 13c, 6302 Zug, Switzerland. Spice Private Equity (Bermuda) Ltd (“the Subsidiary”) is a wholly owned subsidiary. The Company and the Subsidiary together constitute “the Group”. The Group’s structure as of 30 June 2016 is displayed on the next page. On 5 May 2016, GP Investments Ltd (“GP”) agreed to acquire the shares in Spice Private Equity Ltd (ticker symbol “SPCE”) which were held by investment vehicles managed by Fortress Investment Group LLC (“Fortress”) and Newbury Associates LLC (“Newbury”). GP acquired the new stake for USD 35.25 per share which represents a 15 % discount to the published economic NAV of 31 March 2016. Closing of the transaction took place right after the annual general meeting of shareholders on 28 June 2016. GP now indirectly holds 58.48 % of the shares and voting rights of the Group. Given the new shareholder base, upon motion of GP Swiss Ltd., a company controlled by GP Investments Ltd, the Board of Directors (“BoD”) proposed to amend Art. 2a of the Articles of Association, the Group’s Investment Objective, which was then approved at the Annual General Meeting held on 28 June 2016. The investment objective of the Group is to realize long-term capital appreciation by creating a portfolio of fund investments and direct investments in the private equity sector. The Group will invest in assets denominated in foreign currencies and may from time to time enter into transactions with the objective of hedging foreign currency exposure. The investment objective of Spice Private Equity Ltd and its subsidiary, Spice Private Equity (Bermuda) Ltd, is to achieve long-term capital growth for shareholders by investing directly in companies (“Direct Investments”) and in private equity specialized funds (“Fund Investments”). Direct Investments and Fund Investments may include investments in private equity and private equity related instruments and opportunistically in certain categories of credit products. Investments will typically be made through the Subsidiary. Net profits generated upon realizations will typically be re-invested.

The Group expects to invest significant amounts of capital in each individual transaction and will therefore be expected to sustain a higher portfolio concentration than was evident in prior years. In the case of an investment in any blind pool fund or limited partnership of which GP or its affiliates is the General Partner, the Group’s investment shall not represent more than 10% of such fund’s aggregate committed capital. Further, as long as there remains in effect an investment management agreement between GP Advisors (Bermuda) Ltd and Spice Private Equity (Bermuda) Ltd, the Group shall not pay any additional management or performance fees to GP or affiliates of GP related to any investment made by the Group in respect of primary fund commitments where GP or an affiliate thereof also acts as the general partner or manager. Customary fees may, however, be payable in respect of secondary limited partnership interests in funds managed by GP or affiliates of GP which have been or may in the future be acquired from third parties in arm’s length transactions. A new board of directors was elected with new members bringing new expertise and complimentary experience and maintaining some long standing members providing continuity. The following persons were elected to the Board of Directors: • Mr. Stephan Müller, new Chairman of the Board of Directors • Mr. Christopher Wright, new member of the Board of Directors • Mr. Fersen Lamas Lambranho, re-elected member of the Board of Directors • Mr. David Justinus Emery, re-elected member of the Board of Directors • Mr. Alvaro Lopes da Silva Neto, former member of the Board of Directors The consolidated condensed interim financial statements are presented in US Dollars (USD) and all values are rounded to the nearest thousand, except per share data or when otherwise indicated.


FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

Organizational Structure

GP INVESTMENTS

OTHER

(SHAREHOLDER)

SHAREHOLDERS

58.48 %

100 % GP ADVISORS LTD, ZURICH

1

SPICE PRIVATE EQUITY LTD, ZUG

BoD*

2

100 % GP ADVISORS, (BERMUDA) LTD

100 % SPICE PRIVATE EQUITY

IC**

(BERMUDA) LTD

3

1 2 3

Administration Agreement between GP Advisors Ltd, Zurich and Spice Private Equity Ltd Advisory Agreement between GP Advisors Ltd, Zurich and GP Advisors (Bermuda) Ltd Investment Management Agreement between GP Advisors (Bermuda) Ltd and Spice Private Equity (Bermuda) Ltd

* **

Board of Directors Investment Committee

NOTE 2 BASIS OF PRESENTATION The consolidated condensed interim financial statements per 30 June 2016 are prepared in accordance with IAS 34 Interim Financial Reporting and comply with Swiss Law and the accounting guidelines laid down in the SIX Swiss Exchange’s Directive on Financial Report (DFR) for in Investment Companies. These consolidated condensed interim financial statements do not include all the information and disclosures required in annual financial statements. This condensed consolidated interim financial report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual report for the year ended 31 December 2015. The accounting policies adopted are consistent with those of the previous financial year and corresponding interim reporting period, except for the adoption of new and amended standards as set out below.

The following new standards and amendments to standards are mandatory for the first time for the financial year beginning 1 January 2016 and have been adopted by the Group: • Investment Entities: Applying the Consolidation Exception (Amendments to IFRS 10, IFRS 12 and IAS 28) • Annual Improvements to IFRSs 2012–2014 Cycle – various standards • Disclosure Initiative (Amendments to IAS 1) Apart from the adoption of IFRS 10 (Investment Entities: Applying the Consolidation Exception), no adoption of other amendments had an impact on the financial position or performance of the Group. The implications of its adoption are described further below.

17


18

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

The following standards, amendments and interpretations to existing standards have been published but are not yet effective. The Group has yet to adopt those standards and plans to do so for the reporting period beginning on or after the effective date stated in the respective standard: Expected to be applied first in financial year

New IFRS pronouncement

Title

IAS 7

Disclosure Initiative

2017

IAS 12

Recognition of deferred Tax Asset for Unrealized Losses

2017

IFRS 15

Revenue from contracts with customers

2018

IFRS 9

Financial instruments

2018

The Group is currently evaluating the implication of the above new or amended standards.

NOTE 3 ADOPTION OF IFRS 10 (INVESTMENT ENTITIES: APPLYING THE CONSOLIDATION EXCEPTION) The IASB issued “Amendments to IFRS 10, IFRS 12 and IAS 28 – Investment entities: Applying the consolidation exception” on 18 December 2014 (effective date: 1 January 2016). IFRS 10 paragraph 32 was amended and states that “if an investment entity has a subsidiary that is not itself an investment entity and whose main purpose and activities are providing services that relate to the investment entity investment activities …, it shall consolidate that subsidiary …”. As of 1 January 2014, Spice Private Equity Ltd adopted the amendments to IFRS 10 Investment Entities (“the Amendment”). The adoption required the Company to fundamentally revise the presentation of its financial statements. Despite the fact that the Company had not changed its underlying business model, investment portfolio and financing arrangements, the Company elected, following the Board of Directors’ interpretation of IFRS, to discontinue consolidation its subsidiaries. From 1 January 2014, the Company carried its immediate subsidiaries at fair value through profit or loss.

3.1 Judgments and Assumptions In 2014 the Board of Directors assessed the definition of an investment entity and concluded that Spice Private Equity Ltd as well as Spice Private Equity (Bermuda) Ltd meet the three key characteristics of an investment entity, as the entities: • Obtain funds from one or more investors for the purpose of providing its investors with professional investment management services; • Commit to its investors that its business purpose is to invest funds solely for returns from capital appreciation, investment income or both; and • Measure and evaluate the performance of substantially all of its investments on a fair value basis. After further assessing the practices applied by peers in the industry as a whole, and applying judgment, the Board of Directors of Spice Private Equity made an assessment of whether Spice Private Equity (Bermuda) Ltd meets the definition of an investment entity to determine whether to consolidate that investment as of 30 June 2016 or not. The assessment of whether Spice Private Equity (Bermuda) Ltd meets the definition considered the characteristics of an investment entity outlined in IFRS 10 paragraph 28: a) It has more than one investment b) It has more than one investor c) It has investors that are not related parties of the entity d) It has ownership interests in the form of equity or similar interests The paragraph notes that “the absence of any of these typical characteristics does not necessarily disqualify an entity from being classified as an investment entity”. Spice Private Equity (Bermuda) Ltd does not have two of the typical characteristics (b) and (c) as of 1 January 2016. Spice Private Equity (Bermuda) Ltd holds a portfolio of investments on behalf of Spice Private Equity Ltd and also incurs associated costs. Because of its management agreement with GP Advisors (Bermuda) Ltd, Spice Private Equity (Bermuda) Ltd is considered to be providing investment management services and is in practical terms an operating subsidiary that acts as an extension of Spice Private Equity Ltd.


19

FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

Spice Private Equity’s BoD concludes based on the specific facts and circumstances that Spice Private Equity (Bermuda) Ltd does not meet the definition of an investment entity and is instead providing services and acting as an extension of Spice Private Equity Ltd. In this situation consolidation is appropriate. 3.2 Impact of the Consolidation As Spice Private Equity (Bermuda) Ltd does not qualify as an investment entity the following implications are reflected in the Group’s financial statements as of 30 June 2016:

OPENING BALANCE SHEET AS OF 1 JANUARY 2015 IN TUSD Presented

Restatement

Restated

46 651

14 359

61 010

Assets Current assets – Cash and cash equivalents –R  eceivables and prepayments

37 323

37 323

Total current assets

83 974

14 359

98 333

1 1 0 548

1 1 0 548

16 767

16 767

Non-current assets

• Spice Private Equity Ltd starts consolidating its subsidiary; • Spice Private Equity Ltd discontinues measuring its unconsolidated subsidiary at fair value through profit or loss; • The above amendments are applied retrospectively (refer Note 3.3).

– Receivables non-current – Investments – Unconsolidated subsidiaries at fair value through profit or loss

31 007

 (31 007)

141 555

 (14 240)

127 315

225 529

 119

225 648

– Payables and accrued charges

4 264

119

4 383

– Put option liability

15 736

15 736

Total non-current assets

The following subsidiary has therefore been consolidated by Spice Private Equity Ltd since 1 January 2016 when the Group applied the Consolidation Exception Amendment retrospectively:

Total assets Liabilities and Shareholders’ Equity Current liabilities

• Spice Private Equity (Bermuda) Ltd Hamilton, Bermuda – 100 % wholly owned by Spice Private Equity Ltd. 3.3 Restatement Retrospective application of the standard resulted in the following changes to the consolidated condensed interim financial statements.

1 912

1 912

Total current liabilities

– Provisions

21 913

 119

22 031

Total liabilities

21 913

 119

22 031

Shareholders’ Equity – Share capital – Share capital premium – Treasury shares (at cost) – Retained earnings / (accumulated deficit) – Currency translation differences Total Shareholders’ Equity Total liabilities and Shareholders’ Equity

53 980

53 980

346 067

346 067

 (182)

 (182)

 (196 721)

–  (196 721)

 473

 473

203 617

203 617

225 529

 119

225 648


20

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

BALANCE SHEET AS OF 30 JUNE 2015 IN TUSD

STATEMENT OF COMPREHENSIVE INCOME 1 JANUARY 2015 TO 30 JUNE 2015 IN TUSD Presented

Restatement

Restated

Assets Current assets – Cash and cash equivalents

Interest income 5 497

–R  eceivables and prepayments

74 664

Total current assets

80 161

33 221

38 718

Capital gain on investments

74 664

Net change in fair value of unconsolidated subsidiary

33 221

113 382

Non-current assets – Receivables non-current – Investments – Unconsolidated subsidiaries at fair value through profit or loss Total non-current assets

73 885

73 885

34 742

34 742

Net unrealized gain/(loss) of investments designated at fair value through profit or loss Net gain on foreign exchange Total income

Restatement

Restated

 494

 494

 36

 36

 924

 (924)

3 325

3 325

 (915)

 465

 (451)

 503

2 902

3 404

 (2 759)

Expenses 67 932

 (67 932)

141 817

 (33 189)

108 627

Management fee Administration fees Other operating expenses

Total assets

Presented

Income

221 978

 32

222 010

 (2 759)

 (50)

 ( 50)

 (1 299)

 (143)

 (1 442)

Finance costs

 (151)

Total expenses

 (1 501)

 (2 902)

 -   

 (4 403)

 (151)

 (998)

 (998)

Liabilities and Shareholders’ Equity Current liabilities – Payables and accrued charges

Income tax expenses 1 328

 32

1 360

– Put option liability

16 741

16 741

– Provisions

1 308

1 308

Total current liabilities

19 377

 32

19 409

Other comprehensive income

Total liabilities

19 377

 32

19 409

Other comprehensive income to be reclassified to profit /(loss) in subsequent periods

Other comprehensive income/ (loss) for the period

 (998)

 (998)

Shareholders’ Equity – Share capital – Share capital premium – Treasury shares (at cost) –R  etained earnings / (accumulated deficit) –N  et profit/(loss) for the period –C  urrency translation differences Total Shareholders’ Equity Total liabilities and Shareholders’ Equity

53 980

53 980

346 067

346 067

 (200)

 (200)

 (196 721)

–  (196 721)

 (998)

 (998)

 473

 473

202 601

202 601

221 978

32

222 010

Total net profit/(loss) for the period

Total comprehensive income/ (loss) for the period


21

FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

STATEMENT OF CASH FLOW 1 JANUARY 2015 TO 30 JUNE 2015 IN TUSD

BALANCE SHEET AS OF 31 DECEMBER 2015 IN TUSD Presented

Restatement

Restated

Cash flows from operating activities Proceeds from non-current assets Purchase of non-current assets Operating costs Total net cash generated from / (used) in operating activities

 34

 34

 37 718   37 593 

 –   

37 593

75 311

11 927

87 238

 (14 647)

 (14 647)

 (5 048)

 (2 989)

 (8 037)

Total current assets

 (5 048)

 (17 602)

 (22 651)

– Investments  (36 000)

36 000

 (36 000)

36 000

Cash flows from financing activities

–U  nconsolidated subsidiaries at fair value through profit or loss Total non-current assets Total assets

Finance cost paid

 (191)

 (191)

Treasury share purchases

 (516)

 (516)

 498

 498

 (209)

 (209)

Increase /(decrease) in cash and cash equivalents

 568

 (41 155)

18 862

 (22 292)

 74 086 

 –   

74 086

 –   

65 824

65 824

77 705

 (77 705)

 –   

151 791

 (11 881)

139 910

227 102

 47

227 148

Current liabilities – Payables and accrued charges – Provisions

 465

49 645

Liabilities and Shareholders’ Equity

– Put option liability  103

 11  927 

Non-current assets – Receivables non-current

Total net cash generated from / (used) in investing activities

Foreign exchange effect on cash and cash equivalents

Restated

– Cash and cash equivalents – Receivables and prepayments

Investment in unconsolidated subsidiary

Total net cash generated from / (used) in financing activities

Restatement

Current assets

Cash flows from investing activities

Treasury share sales

Presented

Assets

 1 552 

 47 

1 598

 15 755 

 –   

15 755

 283 

 –   

283

Total current liabilities

17 589

47

17 636

Total liabilities

17 589

47

17 636

Shareholders’ Equity Cash and cash equivalents as of 1 January Cash and cash equivalents as of 30 June

46 651

14 359

61 010

– Share capital – Share premium – Treasury shares (at cost)

5 497

33 221

38 718

– Retained earnings / (accumulated deficit) – Net profit/(loss) for the period –C  urrency translation differences Total Shareholders’ Equity Total liabilities and Shareholders’ Equity

53 980

 –   

53 980

346 067

 –   

346 067

 (157)

 –   

 (157)

 (196 721)

 –     (196 721)

5 870

 –   

 473

 –   

 473

209 512

 –   

209 512

227 102

 47

5 870

227 148


22

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

NOTE 4 FOREIGN EXCHANGE RATES The following exchange rates have been used for the preparation of these consolidated condensed interim financial statements: Unit

30 June 2016 USD

31 December 2015 USD

30 June 2015 USD

Foreign exchange rates: Swiss Franc 1 CHF Euro 1 EUR

1.02450 1.11060

1.00756 1.09060

1.07066 1.10940

Unit

1.1.2016– 30.6.2016 USD

1.1.2015– 31.12.2015 USD

1.1.2015– 30.6.2015 USD

1 CHF 1 EUR

1.01879 1.11666

1.03907 1.11040

1.05546 1 .1 1 7 0 6

Average rates: Swiss Franc Euro

NOTE 5 SHAREHOLDERS’ EQUITY The share capital of the Group as of 30 June 2016 amounts to TUSD 53 980 (31 December 2015 (restated): TUSD 53 980) consisting of 5 363 717 registered shares (31 December 2015 (restated): 5 363 717) with a par value of USD 10.1 (31 December 2015 (restated): USD 10.1) each. All issued shares are fully paid-in. Share capital is broken down as follows: Number of Shares

Outstanding shares at 1 January 2016 – Treasury shares sold – Treasury shares purchased Outstanding shares at 30 June 2016

5 357 322 19 173 (26 565) 5 349 930

The Group can trade in treasury shares in accordance with the relevant guidelines (the Company’s Articles of Association, Swiss com-pany law, listing rules of the SIX Swiss Exchange). Treasury shares are treated as a deduction from the consolidated Shareholders’ Equity of TUSD 329 (31 December 2015 (restated): TUSD 157). Currently, the Group does not intend to pay any dividends to shareholders.

NOTE 6 RELATED PARTY TRANSACTIONS Related Parties are individuals and companies where the individual or company has the ability, directly or indirectly, to control the other party or to exercise significant influence over the other party in making financial and operating decisions. Related Parties include: • Board of Directors of Spice Private Equity Ltd; • GP Investments Group consisting of GP Investments Ltd, GP Advisors (Bermuda) Ltd and GP Advisors Ltd, Zurich.

Material transactions Expense of TUSD 241 (30 June 2015: TUSD 446) were booked during the reporting period for Board of Directors compensation and travel expenses. Stock Appreciation Rights (SARs) revenue of TUSD 372 (costs as of 30 June 2015: TUSD 255) was booked during the reporting period. Board of Directors members did not receive any new SARs during 2016. Administration fee expenses and payments to GP Advisors Ltd, Zurich amounted to TUSD 50 (30 June 2015: TUSD 50) in the reporting period. In the reporting period the subsidiary paid a management fees of USD 2.5 million (30 June 2015: USD 2.8 million) to GP Advisors (Bermuda) Ltd. As of 30 June 2016 the Subsidiary holds investments in four funds managed by GP Investments Ltd. GP Advisors (Bermuda) Ltd is entitled to a performance fee of 10 % of the increase, if any, in the Company’s NAV after a 5 % hurdle and subject to customary catch-up and high-watermark clauses. The high-watermark was reset to the USD value of the Company’s NAV as of 31 December 2014 of USD 203.6 million to reflect the new structure and size of the Company after the sale of the “Legacy Portfolio”. No performance fees have been accrued or paid as of 30 June 2016 and 2015. GP Advisors (Bermuda) Ltd exceptionally accepted and agreed that it will eliminate the effect of the extinction of the Put Option to the calculation of the performance fee as of 30 June 2016 (refer Note 12). As long as there remains in effect an investment management agreement between GP Advisors (Bermuda) Ltd and Spice Private Equity (Bermuda) Ltd, the Group shall not pay any additional management or performance fees to GP or affiliates of GP related to any investment made by the Group in respect of primary fund commitments where GP or an affiliate thereof also acts as the general partner or manager. Customary fees may, however, be payable in respect of secondary limited partnership interests in funds managed by GP or affiliates of GP which have been or may in the future be acquired from third parties in arm’s length transactions.

NOTE 7 DETERMINATION OF FAIR VALUE The Group’s investments are primarily non-current financial assets and are measured at their fair value using the most appropriate valuation techniques as described in detail below. The responsibility for determining fair value lies with the Board of Directors. Due to inherent uncertainties, fair valuations may


FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

differ significantly from values that would have been used in actual market transactions.

• Reference to the valuation of other investors; • Reference to comparable companies.

The Group determines fair value as follows:

Based on a composite assessment of all appropriate and applicable indicators of fair value, the Board of Directors determines the fair values as of the valuation date.

7.1 Direct Investments Valuations for Direct Investments are provided by third party sources, such as General Partners of funds that are holding the same investment and that the Group is invested in or the lead investor of the relevant direct investment. The Group monitors investments by analyzing regular reports and through direct contact with General Partners and company management. The Group uses valuations and valuation input provided by the General Partner of the respective direct investment. Financial and market performance is compared with budget information, data obtained from competitors and subsequent rounds of financing. The Board of Directors reviews and discusses the valuations with the General Partner and may independently apply adjustments to determine the investments’ fair value. In determining the fair value of a direct investment, all appropriate and applicable factors relevant to their value, including, but not limited to, the following are considered in general: • Available market prices for quoted securities in active markets; • Reference to the valuation of the lead investor or other investors; • Transaction price paid for an identical or a similar instrument in an investment, including subsequent financing rounds; • Comparable company valuation multiples; • Discounted cash flow method. For venture capital investments, the following is also considered: A new financing round that is material in size for the Group and having new, sophisticated institutional investors making up a significant piece of the financing round. An inside round of financing does not qualify. For buyout/later stage investments for which subsequent rounds of finance are not anticipated the following is also considered: An analysis of the fair market value of such investment will be performed on an ongoing bases. This analysis will typically be based on one of the following methods (depending on what is appropriate for that particular company/industry): • Result of multiple analysis; • Result of discounted cash flow analysis; • Reference to transaction prices (including subsequent financing rounds);

7.2 Fund Investments The valuation of Fund Investments is generally based on the latest available Net Asset Value (“NAV”) of the fund reported by the corresponding fund manager provided that the NAV has been appropriately determined by using proper fair value principles as per generally accepted accounting standards. The Board of Directors reviews and approves the NAV provided by the fund’s General Partners unless the Board of Directors is aware of reasons that such a valuation may not be the best approximation of fair value. In general, NAV is adjusted by capital calls and distributions falling between the date of the latest NAV of the fund and the reporting date of the Group.Additionally, a mark to market adjustment is applied if funds are invested in listed quoted securities which are traded in active markets. Investment valuations are further generally based on previous quarter ended (compared to the reporting date) capital accounts. Adjustments to the valuation are considered when either of the following applies: • The Group becoming aware of subsequent changes in the fair values of underlying companies; • New/amended features of the fund agreement that might affect distributions; • Changes to market or other economic conditions impacting the value of the fund; • NAV reported by the fund has not been appropriately determined by applying the valuation principles as per generally accepted accounting standards. Further, when information is used based on data different from the reporting date, capital drawdowns and capital distribution activity of the remaining period until the reporting date is added to and subtracted from the valuation as appropriate. Where more recent reporting is not available, valuations are based on the latest capital accounts provided by portfolio funds, with capital drawdowns and capital distribution activity being added to and subtracted from the valuation. The Group monitors current market activity related to these funds and the overall market developments to determine implications on the valuations and apply appropriate adjustments if necessary. The Board of Directors reviews the valuations of these funds and discusses portfolio company performance with the relevant portfolio fund managers. The portfolio fund managers determine fair values of the underlying investments

23


24

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD

by using the same valuation techniques as noted above for Direct Investments. Investments in securities and other financial instruments Investments in securities and in other financial instruments traded on recognized exchanges (including bonds, equities, futures contracts, options, and funds), are valued at the last price which is most representative of fair value on the reporting date.

nificance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the investment.

7.3

7.4 Other financial assets Investments in securities and in other financial instruments traded in the over the counter market and listed securities for which no trade is reported on the valuation date are valued at the price within the bid-ask spread that is most representative of fair value in the circumstances. 7.5 Derivative financial instruments Fair values for derivative financial instruments are obtained from quoted market prices, discounted cash flow models, or option pricing models as appropriate.

NOTE 8 FAIR VALUE ESTIMATION The Group is required to disclose fair value measurements by level of the following fair value measurement hierarchy: Level 1 – inputs to the valuation methodology are quoted prices available in active markets for identical investments as of the reporting date. The type of investments listed under Level 1, include unrestricted securities listed in active markets. Level 2 – inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date. Investments which are included in this category include restricted securities listed in active markets, securities traded in other than active markets, derivatives, corporate bonds and loans. Level 3 – inputs to the valuation methodology are unobservable and significant to overall fair value measurement. The inputs into the determination of fair value require significant management judgment or estimation. Investments that are included in this category include investments in privately held entities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an investment’s level within the fair value hierarchy is based on the lowest level of input that is significant to the fair value measurement. The Board of Directors assessment of the sig-

The following table summarizes the Group’s investments measured at fair value on a recurring basis by the above fair value hierarchy levels: As of 30 June 2016 in TUSD

Level 1

Level 2

Level 3

Total

Financial assets at fair value through profit or loss

3 835

69 574

73 408

Total

3 835

69 574

73 408

Level 3

Total

As of 31 December 2015 in TUSD (restated)

Level 1

Level 2

Financial assets at fair value through profit or loss

3 805

62 019

65 824

Total

3 805

62 019

65 824

There were no changes in valuation techniques during the periods. Due to the nature of the business the Group is engaged there are no transfers between level 1, 2 and 3 assets. The following table discloses the changes to the fair value of level III financial assets: in TUSD

30 June 2016

31 December 2015 (restated)

62 019

16 767

Purchases and capital calls

Level 3 assets fair value at 1 January

6 482

9 647

Distributions

(684)

(34)

Unrealized gain/(loss) of Level 3 assets

1 664

3 325

Realized gain/(loss) of Level 3 assets Level 3 assets fair value at 30 June

93

36

69 574

29 742

NOTE 9 REVOLVING CREDIT FACILITY The Company obtained a USD 75 million loan facility from Falcon Private Bank Ltd., Zurich and VP Bank Ltd., Vaduz on 11 May 2015. Should attractive investment opportunities arise, the Company would be able to anticipate a portion of the outstanding cash receivables from its sale of the “Legacy Portfolio” at the end of 2014 and thus accelerate its investment pace. The credit facility, if and when drawn, is secured by a pledge on the Company’s outstanding receivables from Strategic Partners VI Acquisitions G, L.P. Final maturity date for the credit facility is 29 December 2017 and may be extended to 30 June 2018. The credit line reduces from the original amount of USD 75 million to USD 37.4 million on 31 March 2017 and to zero on final maturity.


25

FINANCIAL STATEMENTS (IFRS) – SPICE PRIVATE EQUITY LTD  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

The interest rate is LIBOR +3.0 % p.a and the commitment fee for the undrawn amount 1.25 % p. a. As a result of the change in strategy of the Group, the revolving credit facility was canceled by Falcon Private Bank Ltd. and VP Bank Ltd with effective date 28 June 2016 in line with the facility agreement clauses. Finance costs of TUSD 642 (30 June 2015; TUSD 151) were accrued as of 30 June 2016.

The geographical analysis of total income is determined by specifying from which region the investment profits are generated: in TUSD

30 June 2016

30 June 2015 (restated)

USA 1)

  372

 494

Switzerland

Asia-Pacific

1 139

 2 032

Latin America

2 100

1 750

Sub-Saharan Africa

(204)

(420)

Bermuda Other regions Total

NOTE 10 RECEIVABLES NON-CURRENT 30 June 2016

Receivables non-current

37 338

74 086

Total

37 338

74 086

Receivables non-current related to deferred payment resulting from the sale of the “Legacy Portfolio” as of 31 December 2014. In June 2016, the Company received the second cash installment (2nd deferred payment) of USD 37.4 million from its counterparty in line with the deferred payments schedule. The carrying amount of other receivables and prepayments approximate fair value due to their short-term maturities and that the effect of not discounting them is immaterial.

NOTE 11 SEGMENT REPORTING The sole operating segment of the Group is to invest in private equity. The investment manager works as a team for the entire portfolio, asset allocation is based on a single, integrated investment strategy and the Group’s performance is evaluated on an overall basis. Thus the results published in this report correspond to the sole operating segment of investing in private equity. The geographical analysis of total assets is determined by specifying in which region the investment was made: in TUSD

30 June 2016

31 December 2015 (restated)

USA 1)

 74 290

 111  291

Switzerland

73 210

38 106

Asia-Pacific

25 247

18 825

Latin America

18 970

16 637

Sub-Saharan Africa

5 793

5 513

Bermuda

3 475

11 927

Total

 23 399

24 850

224 383

227 148

Corresponding to receivable from the “Legacy Portfolio” sale.

1)

2 158

3 855

Corresponding to interest income on the receivable from the “Legacy Portfolio” sale.

1)

31 December 2015 (restated)

Other regions

(1 249)

NOTE 12 PUT OPTION LIABILITY (PUT/CALL ON SHARES OF SPICE PRIVATE EQUITY LTD) Pursuant to the subscription agreement dated 17 May 2013 between Drawbridge Special Opportunities Fund LP, New York, NY, USA (“Fortress-Drawbridge”) and the Company, Fortress-Drawbridge had the right to sell to the Group 717 266 shares acquired in connection with the implementation of the new corporate structure in 2013. As a result, the Group had recognized a financial liability in the amount of USD 15.8 million as of 31 December 2015 (30 June 2015 (restated): USD 16.7 million), which was equal with the present value of the redemption amount. As a result of the closing of the transaction between a company controlled by GP Investments Ltd and Fortress Investment Group LLC and Newbury Associates LLC, the contractual obligation to purchase own shares was cancelled. This resulted in a release of the put option liability of USD 16.0 million against share premium as of 30 June 2016.

NOTE 13 SUBSEQUENT EVENTS Since the balance sheet date of 30 June 2016, there have been no further material subsequent events that could impair the integrity of the information presented in the financial statements.


26

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  MANAGEMENT REPORT

NOTE 14 INVESTMENTS DESIGNATED AT FAIR VALUE THROUGH PROFIT OR LOSS SPICE PRIVATE EQUITY GROUP PORTFOLIO IN TUSD

Opening balance at cost 1.1.2016

Opening balance at fair value 1.1.2016

Cumulative gain/(loss) 1.1.2016

Investment 1

5 043

3 805

 (1 238)

 –

Investment 2

6 795

7 199

 404

2 750

Name of the investment

Paid in capital 1.1.2016–30.6.2016

Direct Co-Investments

Investment 3 Subtotal Direct Co-Investments

9 045

8 997

 (48)

 254

20 883

20 001

 (882)

3 004

As % of Total Spice Private Equity Group Investments

Fund Investments Global EM Funds Portfolio Fund 1 1)

1 654

Fund 2 1)

4 122

38

Fund 3 1)

4 201

Fund 4 1)

14 873

68

Subtotal Global EM Funds Portfolio

14 268

24 850

10 581

 106

 616

 515

 (100)

 345

1 500

1 267

 (233)

1 931  492

As % of Total Spice Private Equity Group Investments Asia-Pacific Funds Portfolio Baring Asia VI Navis Asia Fund VII Northstar Equity Partners IV

1 266

1 084

 (182)

Quvat Capital Partners II

5 144

8 760

3 616

 12

Subtotal Asia-Pacific Funds Portfolio

8 525

11 626

3 101

2 780

2 167

2 114

 (53)

 1

As % of Total Spice Private Equity Group Investments Latin American Funds Portfolio DLJ South America Partners Fund 5 1)

3 101

Fund 6 1)

2 115

– –

Fund 7 1)

311

Subtotal LatAm Portfolio I

5 196

5 526

331

Subtotal Latin American Funds Portfolio

7 363

7 640

278

 1

1 954

1 048

 (906)

 56

 951

 660

 (291)

 535

2 905

1 708

 (1 197)

 591

33 061

45 823

12 763

3 478

53 944

65 824

11 881

6 482

As % of Total Spice Private Equity Group Investments Sub-Saharan Africa Funds Portfolio Carlyle Sub-Saharan African Fund Helios Investors III Subtotal Sub-Saharan Africa Funds Portfolio As % of Total Spice Private Equity Group Investments Subtotal Fund Investments As % of Total Spice Private Equity Group Investments

Total Total of all Investments As % of Total Spice Private Equity Group Investments Cost is not disclosed as funds acquired are part of single secondary transaction

1)


MANAGEMENT REPORT  SEMI-ANNUAL REPORT AS OF 30 JUNE 2016

Fair value 30.6.2016

Cumulative gain/(loss) 30.6.2016

5 043

3 835

 (1 208)

 30

USD

2015

9 545

10 596

1 051

 647

 500

USD

2015

USD

2015

Returned capital 1.1.2016–30.6.2016

Cost 30.6.2016

– –

Unrealized gain/(loss) 30.6.2016

Realized gain/(loss) 30.6.2016

Outstanding commitments

9 299

10 584

1 285

1 333

1 733

23 887

25 014

1 128

2 010

2 233

Investment currency

Vintage year

34 %

1 830

USD

2015

3 656

3 885

USD

2015

4 129

47

USD

2015

260

13 785

2 191

USD

2015

 47

6 076

 260

14 114

23 399

9 285

 (1 296)

32 %

 961

 838

 (123)

 (22)

 5

2 060

USD

2014

 201

3 230

4 131

 902

1 135

 32

1 840

USD

2014

1 758

1 991

 233

 414

 10

3 299

USD

2015

5 156

7 691

2 535

 (1 081)

 5

USD

2014

 201

11 104

14 651

3 547

 446

 46

7 203

 (216)

 (162)

 –

 612

USD

2015 2015

20 %

 22

2 146

1 930

3 431

USD

2 641

USD

2015

385

USD

2015

5 196

6 456

1 260

929

 22

7 342

8 386

1 044

767

 –

 612

11 %

 63

1 946

 949

 (997)

 (92)

3 189

USD

2014

 44

1 442

1 009

 (433)

 (142)

3 591

USD

2014

 107

3 388

1 958

 (1 430)

 (234)

6 780

12 446

 (316)

 93

20 671

13 574

1 693

 93

22 904

3 %  591

35 949

48 394 66 %

 591

59 835

73 408 100 %

27


28 2

SEMI-ANNUAL REPORT AS OF 30 JUNE 2016  SPICE PRIVATE EQUITY LTD EMERGING MARKETS SPICE PRIVATE EQUITY

ADDRESSES AND CONTACTS ORGANIZATION

REGISTERED OFFICES

Board of Directors Stephan Müller, Chairman Fersen Lamas Lambranho, Vice-Chairman David Justinus Emery, Member Alvaro Lopes da Silva Neto, Member Christopher Wright, Member

Spice Private Equity Ltd Industriestrasse 13c CH-6302 Zug Phone +41 41 710 70 60 Fax +41 41 710 70 64 info@spice-private-equity.com

Investment Committee Antonio Bonchristiano Fersen Lamas Lambranho Alvaro Lopes da Silva Neto Meton Morais

Spice Private Equity (Bermuda) Ltd Clarendon House 2, Church Street Hamilton, HM 11 Bermuda

Auditors PricewaterhouseCoopers AG Birchstrasse 160 CH-8050 Zürich

www.spice-private-equity.com

INVESTOR RELATIONS

KEY INFORMATION Swiss Security Number: 915.331 ISIN: CH0009153310 Ticker symbol: SPCE Reuters: SPCE.BN Bloomberg: SPCE:SW

Meton Morais Investor & Media Relations GP Advisors Ltd Löwenstrasse 29 CH-8001 Zurich Phone +41 44 578 50 50 investor.relations@spice-private-equity.com


IMPRESSUM Publisher Spice Private Equity Ltd, Zug Copy and editorial management GP Advisors Ltd, Zurich and HDK Haus der Kommunikation AG, Zollikon Concept and design HDK Haus der Kommunikation AG, Zollikon Images Getty Images


EXCELLENCE IN GLOBAL PRIVATE EQUITY. www.spice-private-equity.com

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