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| Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
|---|---|---|---|---|---|
| Icg Enterprise Trust Plc | LSE:ICGT | London | Ordinary Share | GB0003292009 | ORD 10P |
| Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|---|---|
| 4.00 | 0.33% | 1,218.00 | 1,212.00 | 1,216.00 | 1,218.00 | 1,216.00 | 1,216.00 | 27,124 | 11:52:18 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 187.81M | 164.53M | 2.4421 | 4.99 | 820.56M |
From Apr 2019 to Apr 2024
TIDMICGT
RNS Number : 0113L
ICG Enterprise Trust PLC
28 September 2016
28 September 2016
ICG ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE
SIX MONTHSED 31 JULY 2016
ICG Enterprise Trust plc ("ICG Enterprise" or "the Company") presents its unaudited results for the six months ended 31 July 2016.
Chairman's Statement
Interim review
"The portfolio continues to generate strong growth over the short, medium and long term."
On behalf of the Company, I am able to report a successful set of results for the first six months under the management of ICG(1) . The net asset value as at 31 July 2016 is GBP566 million or 798 pence per share (31 January 2016: 731p), a 10.0% Total Return(2) for the period. The share price also recovered to 592 pence at 31 July 2016 (31 January 2016: 545p), delivering a Total Return of 9.8% in the six months (year ended 31 January 2016: 8.2%).
We are pleased to announce an interim ordinary dividend of 10.0 pence per share, a 100% increase on the 5.0 pence per share interim dividend declared in 2015. This will be paid on 21 October 2016(3) .
Performance in years to 31 July 2016 1 3 5 10* ================================== ===== ===== ===== ====== Net asset value per share Total Return 15.6% 24.1% 48.3% 115.6% Share price Total Return 2.3% 29.9% 65.9% 89.3% FTSE All-Share Index Total Return 3.8% 15.5% 44.1% 75.6%
*As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 July 2016.
Profit for the period was GBP51 million, equivalent to 72 pence per share, driven both by strong growth in the Portfolio(2,4) (+7.4%) and favourable movements in the foreign exchange rate (+5.3%). The integration of the investment team into ICG has gone smoothly and they have begun to take advantage of being part of a much larger alternative asset management business. In particular the Company has benefited from ICG's broader insight into and access of private market investment opportunities to inform certain investment decisions and make new investments. Since the start of the financial year the Company has made two primary fund commitments and two secondary investments in opportunities all originated through ICG, as well as four third-party primary fund commitments.
Portfolio
The Portfolio now stands at GBP470 million with the Company having received Realisation Proceeds(2) of GBP45 million and invested GBP30 million in the period. Primary fund investments account for GBP287 million (61%) and secondary and co-investments GBP183 million (39%). ICG originated investments represent GBP40 million (8%). 44% of the Portfolio is invested in the UK, 38% in continental Europe and 18% in North America.
Post-crisis Investments(2) now comprise 80% of the Portfolio with the 30 largest investments accounting for 48% of the Portfolio. The valuation of the top 30 investments at 9.7 times EBITDA(2) is at a substantial discount to the valuation of FTSE All-Share Index at 14.0 times EBITDA.
Balance sheet
Commitments of GBP54 million were added in the period such that Undrawn Commitments(2) now stand at GBP297 million. The Company holds cash of GBP110 million and undrawn debt facilities of GBP102 million providing total available liquidity of GBP212 million. Commitments therefore exceed total liquidity by GBP84 million or 15% of the period end net asset value; a level that remains consistent with our cautious approach to managing the balance sheet.
Distributions
In the period the Company paid a final dividend of GBP4.3 million for the year to 31 January 2016, equivalent to 6.0 pence per share. In order to provide shareholders with greater clarity of the income they can expect from the Company, the Board anticipates paying a minimum dividend each year of 20.0 pence per share. We intend to maintain the practice of paying an interim dividend and we are pleased to declare an interim ordinary dividend of 10.0 pence per share to be paid on 21 October 2016(3) .
We repurchased 458,426 shares at an average price of 574p for total consideration of GBP2.6 million. This improved the net asset value per share by 0.2%. So long as the shares are valued at a significant discount to the net asset value the Board believes that the shares offer good value and will continue to repurchase shares on an opportunistic basis.
Outlook
We are encouraged to see the Portfolio maintaining its positive growth momentum of the last 7 years, delivering double digit EBITDA growth in the last 12 months and yet it is still valued at a material discount to the FTSE All Share Index. Our focus on partnering with only the most experienced managers, with strong track records of investing and managing companies through economic cycles provides us with reassurance that the Portfolio is well positioned to adapt to changing market conditions. Whilst the stock market's response to the recent Brexit decision has been positive, we acknowledge that the negotiations with the EU may present some medium term uncertainty for the UK. We remain confident that the risk profile of the underlying investments is low, the diversity of investments is high and the liquidity position of the balance sheet is strong. In fact, the Company is well positioned to take advantage of future investment opportunities that invariably arise at times of market instability. Finally, the change of Manager to ICG is already delivering material benefits to shareholders which should only increase in both the short and long term.
Mark Fane
27 September
1. ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.
2. Constitutes an Alternative Performance Measure ("APM"). APMs are used throughout this report if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company, and for comparing the performance of the Company to its peers and its previously reported results. The Glossary, which is located after the notes to the financial statements, includes further details of APMs and reconciliations to IFRS measures, where appropriate.
3. Shares will trade without rights to the interim dividend from 6 October 2016 ("ex-dividend date"). The last date for registering transfers to receive the dividend is 7 October 2016 ("record date").
4. In the Chairman's Statement, Manager's Review and Supplementary Information, reference is made to the "Portfolio". This is an APM (see footnote 2). The Portfolio is defined as the aggregate of the investment portfolios of the Company and of its subsidiary limited partnerships. The rationale for this APM is discussed in detail in the Manager's Review. The Glossary, which is located after the notes to the financial statements, includes a reconciliation of the Portfolio to the most relevant IFRS measure.
Manager's Review
Change of Manager
This is our first half year report since the appointment of ICG as Manager of the Company and the transfer of the investment team from Graphite Capital Management LLP ("Graphite Capital"). At the time of the appointment, a number of potential benefits to investors were identified, including:
-- Access to a wider range of investment opportunities through ICG's global office network and local private equity manager relationships;
-- Insights and market intelligence from ICG's direct investment teams;
-- Support from ICG's infrastructure and expertise in areas such as treasury, investor relations and information technology; and
-- Lower costs through a reduction in the headline management fee and no fees on ICG funds (in addition to no fees on Graphite Capital funds).
In the relatively short time since moving to ICG we are encouraged by the progress we have made towards realising all of these benefits. Most notably, commitments have been made to two in-house funds: ICG Strategic Secondaries Fund II ("ICGSS") and ICG Asia Pacific Fund III (the latter completing since the half year end). We believe these funds are highly complementary to our strategy and will generate attractive returns as well as enabling the Company to access co-investments from these strategies. Both funds broaden the geographic scope and increase the proportion of investments on which shareholders do not pay a management fee. Further details of these funds are given in the Supplementary Information section.
We have also completed an GBP8.3 million co-investment alongside ICGSS in a US fund restructuring transaction and a GBP4.1 million secondary purchase of an interest in ICG Europe V, a fund in which the Company first invested in 2011, (the latter completed since the period end).
In addition to completing these in-house investment opportunities, we are benefitting greatly from ICG's insights into private equity managers and portfolio companies in Europe, US and Asia in our investment analysis and decision-making for both funds and co-investments. We have a number of investment opportunities currently under review with third-party managers who have been introduced to us through the ICG network.
Finally, we are working with a range of specialist functions within ICG to provide support and enhance the management of the Company.
These benefits are being achieved while maintaining the strong historical relationship with Graphite Capital, which, at almost a quarter of the Portfolio, continues to be the Company's most significant underlying manager.
Strategy
Our strategy is fundamentally unchanged since the move to ICG, continuing our focus on buyouts led by established managers in developed private equity markets. We believe this segment of the market offers investors the best balance of risk and reward.
Our approach to sourcing investments is also unchanged. We continue to access private equity backed companies by developing relationships with our selected managers through commitments to their new funds ("primary fund commitments") and sourcing follow-on investments through both acquiring existing funds in the secondary market ("secondary fund purchases" or "secondaries") and investing directly in companies alongside our funds ("co-investments"). This approach gives us greater discretion over the investments as well as more flexibility to adapt the mix of investments to changing market conditions and Portfolio developments.
While the strategy is essentially the same, the emphasis is evolving in order to maximise the benefits of the change of Manager from a UK focused buyout house to an alternative investment firm with global reach. We are broadening the geographic scope of the Portfolio by increasing our focus on US managers with the benefit of insights and relationships from ICG's US investment teams. We are also starting to consider developed Asian markets through ICG's Asia Pacific mezzanine team. These developments are likely to have a gradual impact on the Portfolio rather than a radical shift from the 18% in US and less than 1% in Asia at 31 July 2016.
Interim results
In this Interim Report, references to the "Portfolio" include the investment portfolios of both the Company and its subsidiary partnerships. In the financial statements, in accordance with IFRS 10 'Consolidated Financial Statements', "Investments at fair value" are stated net of balances receivable from subsidiary partnerships and the accrual for the co-investment incentive scheme. Both the Manager and the Board consider that the Portfolio as presented below is the most relevant basis for shareholders in assessing the overall performance of the Company as it is consistent with industry practice and therefore enables comparison with peers as well as with the Company's previously reported results. A reconciliation of the Portfolio to the financial statements is set out in the Glossary.
Comparatives, unless otherwise stated, represent the equivalent figures for the full year to 31 January 2016. This is considered more meaningful to shareholders than the comparables for the half year to 31 July 2015.
Portfolio performance overview
Hot Features
Premium
GBP million Six months Year ended
ended 31 January
31 July 2016 2016
====================================== ============= ===========
Movement in the Portfolio
Opening Portfolio 428.2 431.9
Additions 30.3 64.3
Realisation Proceeds(1) (45.5) (120.3)
======================================== ============= ===========
Net cash inflow (15.2) (56.0)
Underlying Valuation Movement*(,) (1) 31.8 48.0
% underlying Portfolio growth +7.4% +11.1%
Currency movement 24.9 4.3
% currency movement +5.8% +1.0%
======================================== ============= ===========
Closing Portfolio 469.7 428.2
---------------------------------------- ------------- -----------
+13.2% +12.1%
-------------------------------------- ------------- -----------
Other Key Portfolio Metrics
-------------------------------------- ------------- -----------
Proceeds as % of opening Portfolio 11% 28%
Number of Full Realisations 23 41
Uplift on exit(1) 21% 22%
New primary fund commitments 51.2 58.6
Outstanding commitments 296.8 253.8
* In this interim report 99.7% of the Portfolio is valued using 30 June 2016 or 31 July valuations.
In the first half of the year the Portfolio made strong progress, rising in value by 13.2%. After adjusting for the impact of foreign currency movements on the value of our overseas investments, the Portfolio generated a valuation gain of 7.4% in local currencies.
At 31 July 2016 the Portfolio was valued at GBP469.7 million. This was GBP41.5 million higher than at the start of the period as valuation and currency gains more than offset net realisations.
Realisations
The Portfolio generated Realisation Proceeds of GBP45.5 million in the period, equivalent to 11% of its opening value. This implies a slight fall in realisations relative to last year when the cash conversion rate was 28% for the full year. However, the total of 23 Full Realisations was slightly higher than last year's rate. The lower level of proceeds therefore reflects a smaller average size of disposals rather than a general slowdown in realisation activity.
Full Realisations accounted for GBP25.4 million of proceeds received and these continued to be completed at Uplifts to the previous holding values, averaging 21% in the period. This was similar to the level achieved last year of 22%.
Investments made since the financial crisis generated valuation Uplifts of 26% whereas Pre-crisis Investments(1) realised Uplifts of 11%, continuing the divergence we have noted over the last few years. Post-crisis Investments(1) also achieved a strong multiple of original cost of 2.5 times whereas the pre-crisis investments were realised for an average return multiple of 1.0 times cost, reflecting the relative underperformance of the remaining investments from these vintages.
The largest realisation in the first half was the disposal by Deutsche Beteiligungs AG ("DBAG") of Spheros, the manufacturer of climate systems for buses, which generated proceeds of GBP8.2 million including from a co-investment made alongside DBAG's fund in 2011. Further details of the ten largest underlying realisations are set out in the Supplementary Information section.
New investments
New investment of GBP30.3 million in the period was slightly lower than the rate of investment last year as market conditions continued to be challenging.
Drawdowns(1) of fund commitments of GBP21.6 million were below expectations. This was mainly because our largest fund commitment, Graphite Capital Partners VIII, made no drawdowns in the period, although this fund has completed two new investments since the period end. Across the fund portfolio generally, drawdowns were also relatively slow.
Secondary investment of GBP8.3 million reflects the co-investment alongside ICGSS noted above as no fund secondaries were completed in the period. Volumes in the market for secondary fund interests were down by between 17% and 23%, depending on the data source(2) , and pricing remained relatively high. We therefore chose to remain highly selective despite reviewing a wide range of opportunities. However, we continue to focus on the secondary market and believe that our approach to sourcing opportunities, primarily in funds either that we are already invested in or where we have an informational edge through our manager relationships, will secure attractive investments going forward.
A total of 26 new buyouts were completed in the period compared with 64 in the year to January 2016. These were acquired at a weighted average of slightly less than nine times EBITDA(1) which is marginally lower than the prices paid last year. Therefore, while the level of new investment was lower than expected, it is reassuring that our managers appear to be maintaining pricing discipline.
New fund commitments
Primary commitments of GBP51.2 million to five funds in the first half were relatively high for a six month period as many of our preferred managers have raised, or are raising, funds this year. Our pipeline therefore remains strong for the second half.
All five funds completed were raised by managers the Company has been investing with for many years. Established firms are the focus of our investment strategy as we believe they tend to be lower risk than firms with newer, less experienced, teams.
Further details of new fund commitments are set out in the Supplementary Information section.
Closing Portfolio
At 31 July 2016, the Portfolio was valued at GBP469.7 million with investments in more than 400 underlying companies managed by 34 private equity firms through 64 funds and 26 co-investments. Investments are well diversified across a wide range of sectors, geographies and vintages.
Co-investments and secondaries accounted for 38.9% of the Portfolio at the period end. This proportion has increased from approximately 18% immediately prior to the financial crisis as our strategy has evolved to give us greater discretion over investments into the Portfolio than is the case for a typical fund investor. Graphite Capital and ICG manage 23.8% and 8.5% of the Portfolio respectively including co-investments and secondaries. Third-party primary funds represent 45.9% of the Portfolio.
Whilst this well-diversified Portfolio reduces risk, we aim to strike a balance between diversification and concentration such that many underlying companies are large enough to have a meaningful impact on overall performance. The top 30 underlying companies accounted for 48% of the Portfolio at the period end therefore the performance of these investments is likely to be a key driver of future growth. In the year to June 2016 the revenues and EBITDA of these companies increased by an average of 7% and 10% respectively (in underlying currencies). By contrast, the FTSE All-Share Index reported revenue growth of 2% and a fall in EBITDA of 14% over the same period.
The top 30 companies were valued on an average multiple of 9.7 times last twelve months EBITDA at June 2016. While this has increased marginally since the start of the year we continue to believe it is reasonable for the strong growth being achieved. By comparison, the FTSE All-Share Index is currently valued at 14 times June 2016 EBITDA despite the lack of profit growth noted above. It is interesting to note that over the last 5 years, the EBITDA valuation multiple of the Company's top 30 companies has been relatively stable (although its constituents have changed almost entirely over that period) while the EBITDA multiple of the FTSE All-Share Index has increased from less than 7 in 2011 to its current level of 14.
The Net Debt(1) of the top 30 companies averaged 3.8 times EBITDA which has increased slightly relative to the top 30 at the start of the year. At this level the gearing should enhance future equity returns without involving undue financial risk, particularly given the relatively flexible terms on which many of the companies have been able to borrow over the last few years.
The share of the Portfolio represented by post-crisis investments has continued to increase and at 31 July 2016 represented 80.2% of underlying investments. We expect these to continue to generate the most significant future value growth and it is therefore encouraging that the Portfolio is now heavily concentrated in these vintages.
Commitments and liquidity
At 31 July 2016, the Company had outstanding commitments of GBP296.8 million and total liquidity of GBP212.5 million, of which GBP110.4 million was in cash(3) (31 January 2016: GBP103.8 million) and GBP102.1 million of undrawn bank facilities (31 January 2016: GBP97.1 million). Commitments therefore exceeded available liquidity by GBP84.3 million or 14.9% of the net asset value. This continues to represent a conservative level of Overcommitment(1) despite a modest increase from the 10.1% at the start of the year.
Funds in Investment Period(1) represented GBP221.0 million of the undrawn commitments. These are typically drawn down over a period of four to five years from the start of a fund with 10-20% of commitments usually retained at the end of the investment period to fund follow-on investments and expenses and for contingencies. If outstanding commitments to each of the funds were to be drawn down at a constant rate over their remaining investment periods, approximately GBP70-75 million of commitments would be drawn down over the next 12 months.
The Company therefore has adequate resources in cash and undrawn facilities to fund drawdowns for more than two years even if no realisations were to be achieved. As we expect the Portfolio to continue to generate cash over this period, the current liquidity gives us the ability to take advantage of a range of potential investment opportunities.
Outlook
The environment for realisations continues to be positive despite volatility in markets and geopolitical concerns. This reflects the high levels of equity and debt funding available to both financial and trade buyers. We therefore expect the Portfolio to generate further realisations in the second half which should underpin growth in value given the uplifts that tend to be achieved on sale. Also, with the Portfolio continuing to demonstrate strong profit growth and valuation multiples remaining significantly below the Index, the prospects for further growth in unrealised valuations remain positive.
At times when markets are favourable for exits, it can be more challenging to invest at reasonable valuations. We believe this dynamic is reflected in the relatively low level of new investment in the first half but we are reassured that our managers are continuing to exercise price discipline.
Our investment strategy, which is fundamentally unchanged following the move to ICG, gives us the flexibility to adapt the mix of primary funds, secondaries and co-investments to changing market conditions and to deploy cash where we see the best relative value. The Company has the benefit of a strong balance sheet and it is encouraging that in the short space of time since joining ICG we are seeing dealflow, both in-house and alongside our third-party managers, which should enable us to deploy the Company's cash balances in attractive investments.
ICG Private Equity Fund Investment Team
September 2016
1. See Glossary for definitions. The Glossary is located after the notes to the financial statements.
2. Includes reports from Greenhill Cogent, Evercore, Setter Capital and NYPPX
3. This compares with cash shown on the balance sheet of GBP110.3m. The difference of GBP0.1m represents cash held by the Company's subsidiary limited partnerships.
SUPPLEMENTARY INFORMATION
This section presents supplementary information regarding the Portfolio (see Manager's Review and the Glossary for further details and definitions).
The 30 largest underlying INVESTMENTS
The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 July 2016. These investments may be held directly or through funds, or in some cases in both ways. The valuations are shown as a percentage of the Portfolio.
Company Manager Year of Country Value as
investment % of Portfolio
---- -------------------------------- ----------------------- ------------- -------------- ----------------
1 Micheldever (+)
Distributor and retailer
of tyres Graphite Capital 2006 UK 5.7%
2 City & County Healthcare
Group
Provider of home care
services Graphite Capital 2013 UK 3.4%
3 nGAGE
Provider of recruitment
services Graphite Capital 2014 UK 2.6%
4 Education Personnel (+)
Provider of temporary
staff for the education
sector ICG 2014 UK 2.5%
5 R&R Ice Cream (+)
Manufacturer and distributor
of ice cream products PAI Partners 2013 UK 2.3%
6 Standard Brands (+)
Manufacturer of fire
lighting products Graphite Capital 2001 UK 2.1%
7 Skillsoft (+)
Provider of off-the-shelf
e-learning content Charterhouse 2014 USA 2.1%
8 PetSmart (+)
Retailer of pet products
and services BC Partners 2015 USA 1.8%
9 David Lloyd Leisure (+)
Operator of premium health
and fitness clubs TDR Capital 2013 UK 1.8%
10 Frontier Medical (+)
Manufacturer of medical
devices Kester Capital 2013 UK 1.7%
11 U-POL
Manufacturer and distributor
of automotive refinishing
products Graphite Capital 2010 UK 1.7%
12 TMF
Provider of management
and accounting outsourcing
services Doughty Hanson 2008 Netherlands 1.7%
13 Co-investment (+) / *
Provider of business Large buy-out
services manager 2014 Europe 1.6%
14 The Laine Pub Company
(+)
Operator of pubs and
bars Graphite Capital 2014 UK 1.5%
15 Algeco Scotsman
Supplier and operator
of modular buildings TDR Capital 2007 USA 1.5%
16 CPA Global (+)
Provider of patent and
legal services Cinven 2012 UK 1.4%
17 NWTC
Operator of distinctive
pub restaurants Graphite Capital 2016 UK 1.4%
18 Formel D
Provider of out-sourced
services to the automotive
industry Deutsche Beteiligungs 2013 Germany 1.1%
19 Cognito (+)
Supplier of communications
equipment, software and
services Graphite Capital 2002 UK 1.0%
20 Swiss Education(+)
Provider of hospitality
training Invision Capital 2015 Switzerland 0.9%
21 Ceridian(+)
Provider of payment processing Thomas H. Lee
services Partners 2007 USA 0.9%
22 Quironsalud
Provider of private healthcare
services CVC 2011 Spain 0.9%
23 Parques Reunidos**
Operator of attraction
parks Arle Capital 2007 Spain 0.9%
24 Cambium
Provider of educational
solutions and services ICG 2016 USA 0.9%
25 Aero Technics Group
Provider of civil aircraft
maintenance Graphite Capital 2015 UK 0.9%
26 ICR Group
Provider of repair and
maintenance services
to the energy industry Graphite Capital 2014 UK 0.8%
27 InVentiv Health
Provider of commercial solutions for healthcare Thomas H Lee companies Partners 2010 USA 0.8% 28 Gerflor Manufacturer of vinyl flooring ICG 2011 France 0.8% 29 Property Services Holdings Provider of residential property sales and letting services Bowmark 2010 UK 0.8% 30 TMP Provider of recruitment services Graphite Capital 2006 UK 0.8% Total of the 30 largest underlying investments 48.3% --------------------------------------------------------- --------------------------------- ----------------
(+) All or part of this investment is held directly as a co-investment or other direct investment.
* We are not permitted to disclose the details of this co-investment under the terms of a confidentiality agreement
** Quoted investment.
The 30 largest fund investments
The 30 largest funds by value at 31 July 2016 are set out below:
Outstanding
commitment Year of Country/ Value
Fund GBP million commitment region GBP million
------------------------------------- ------------- ------------ ----------- -------------
1 Graphite Capital Partners
VIII *
Mid-market buy-outs 56.0 2013 UK 35.6
2 Graphite Capital Partners
VI **
Mid-market buy-outs 2.1 2003 UK 24.6
3 CVC European Equity Partners
V **
Large buy-outs 1.2 2008 Europe/USA 20.3
4 BC European Capital IX **
Large buy-outs 4.0 2011 Europe 17.2
5 Thomas H. Lee Parallel Fund
VI
Large buy-outs 1.0 2007 USA 16.7
6 Graphite Capital Partners
VII ***
Mid-market buy-outs 7.6 2007 UK 14.5
7 Deutsche Beteiligungs Fund
V
Mid-market buy-outs 0.3 2006 Germany 14.2
8 Activa Capital Fund II
Mid-market buy-outs 0.7 2007 France 13.0
9 TDR Capital II
Mid-market and large buy-outs 0.8 2006 Europe 12.6
10 Fifth Cinven Fund
Large buy-outs 3.4 2012 Europe 12.3
11 Bowmark Capital Partners
IV
Mid-market buy-outs - 2007 UK 11.1
12 ICG Velocity Partners Co-Investor**
VSS IV fund restructuring 2.4 2016 USA 10.5
13 PAI Europe V **
Mid-market and large buy-outs 1.0 2007 Europe 10.2
14 Doughty Hanson & Co V **
Mid-market and large buy-outs 6.4 2006 Europe 9.6
15 ICG European Fund 2006 B
**
Mezzanine 2.0 2014 Europe 8.5
16 IK VII
Mid-market buy-outs 0.5 2013 Europe 8.4
17 ICG Europe V
Mezzanine 0.8 2012 Europe 7.5
18 Permira V
Large buy-outs 2.1 2013 Europe 6.9
19 CVC Capital Partners VI
Large buy-outs 10.1 2013 Global 6.3
20 Candover 2005 Fund **
Large buy-outs 0.1 2005 Europe 5.7
21 Piper Private Equity Fund
V
Small buy-outs 0.9 2010 UK 5.4
22 Deutsche Beteiligungs Fund
VI
Mid-market buy-outs 3.1 2012 Germany 5.4
23 PAI Europe VI
Mid-market and large buy-outs 11.8 2013 Europe 5.0
24 Nordic Capital Partners VIII
Mid-market and large buy-outs 4.0 2013 Nordic 4.7
25 TDR Capital III
Mid-market and large buy-outs 4.6 2013 Europe 4.6
26 Activa Capital Fund III
Mid-market buy-outs 7.5 2013 France 4.5
27 Egeria Private Equity Fund
IV
Mid-market buy-outs 4.3 2012 Europe 4.3
28 Hollyport Secondary Opportunities
V
Tail-end secondary portfolios 4.9 2015 Global 4.1
29 Hollyport Secondary Opportunities
IV
Tail-end secondary portfolios 0.8 2013 UK 4.0
30 Steadfast Capital III
Mid-market buy-outs 0.9 2011 Europe 3.8
Total of the largest 30 fund
investments 145.3 311.5
Percentage of Portfolio 66.3%
---------------------------------------- ------ ----- -------- ------
* Includes the associated Top Up funds.
** All or part of interest acquired through a secondary fund purchase.
ANALYSIS OF THE 30 LARGEST UNDERLYING INVESTMENTS
The tables below analyse the 30 companies in which ICG Enterprise had the largest investments by value at 31 July 2016. These investments may be held directly or through funds or, in some cases, in both ways.
30 largest investments* - revenue growth % growth % by number ------------------------ -------------------------- <0% 20.0% 0-10% 46.7% 10-20% 10.0% 20-30% 16.7% 30 largest investments** - EBITDA growth % growth % by number ------------------------ -------------------------- <0% 26.7% 0-10% 20.0% 10-20% 23.3% 20-30% 6.7% >30% 13.3% 30 largest investments*** - enterprise value as a multiple of EBITDA Multiple % by number ------------------------ -------------------------- <7.0x 10.0% 7.0-8.0x 13.3% 8.0-9.0x 23.3% 9.0-10.0x 13.3% 10.0-11.0x 10.0% 11.0-12.0x 10.0% >12.0x 16.7% 30 largest investments - net debt as a multiple of EBITDA Multiple % by number ------------------------ -------------------------- <2.0x 26.6% 2.0-3.0x 16.7% 3.0-4.0x 13.3% 4.0-5.0x 16.7% 5.0-6.0x 6.7% 6.0-7.0x 10.0% >7.0x 10.0%
* Excludes NWTC and Aero Technics where this metric is not meaningful
** Excludes NWTC, Aero Technics and Cognito where this metric is not meaningful
*** Excludes Cognito where this metric is not meaningful
Portfolio analySIS
The following six tables analyse the Portfolio by value at 31 July 2016.
Portfolio - Investment % of value
type of underlying
investments
------------------------ ---------------
Large buy-outs 44.6%
Mid-market buy-outs 43.9%
Mezzanine 7.8%
Small buy-outs 3.7%
Total 100.0%
------------------------- ---------------
Portfolio - Geographic % of value
distribution* of underlying
investments
UK 43.9%
North America 17.9%
Germany 10.6%
France 10.4%
Scandinavia 5.7%
Benelux 4.7%
Spain 2.3%
Italy 2.3%
Other Europe 2.0%
Rest of world 0.2%
------------------------- ---------------
Total 100.0%
------------------------- ---------------
NB: Total Continental
Europe 38.0%
* Location of headquarters of underlying companies in the Portfolio. Does not necessarily reflect countries to which companies have economic exposure.
Portfolio - Year of Valuation % of value
investment as multiple of underlying
of cost investments
--------------------- ------------- ---------------
2016 1.1x 8.7%
2015 1.3x 12.2%
2014 1.2x 21.2%
2013 1.8x 17.2%
2012 1.7x 7.4%
2011 1.4x 5.6%
2010 1.7x 6.4%
2009 2.8x 1.5%
2008 0.9x 4.4%
2007 1.5x 5.1%
2006 and prior 1.3x 10.3%
---------------------- ------------- ---------------
Total 1.4x 100.0%
---------------------- ------------- ---------------
Portfolio - Sector analysis % of value of
underlying
investments
----------------------------------- --------------
Business services 20.6%
Healthcare and education 17.4%
Consumer goods and services 16.2%
Industrials 13.3%
Leisure 11.1%
Automotive supplies 8.3%
Financials 5.2%
Technology and telecommunications 3.7%
Media 2.8%
Chemicals 1.4%
------------------------------------ --------------
Total 100.0%
------------------------------------ --------------
Quoted equity holdings at 31 July 2016
All quoted holdings are held indirectly through third party funds and may have restrictions on their sale. The timing of any disposal of these interests is determined by the managers of those funds.
Underlying investment Ticker GBP million % of Portfolio
-------------------------- -------- ------------ ---------------
Parques Reunidos PQR 4.2 0.9%
VWR International VWR 2.6 0.6%
Party City PRTY 2.2 0.5%
Black Knight BKFS 2.1 0.4%
ComHem COMH 1.7 0.4%
Tumi TUMI 1.6 0.3%
JRP JRP 1.4 0.3%
Technogym TGYM 1.0 0.2%
Fogo de Chao FOGO 0.8 0.2%
West Corporation WSTC 0.8 0.2%
Univar N.V UNVR 0.7 0.1%
FleetCor FLT 0.5 0.1%
First BanCorp FBP 0.5 0.1%
Lululemon Athletica LULU 0.5 0.1%
Others (less than GBP0.5
million) 1.1 0.1%
------------ ---------------
Total 21.7 4.5%
------------ ---------------
Third party, Graphite Capital and ICG investments at 31 July 2016
Portfolio
Graphite
Third party Capital ICG Total
GBP million GBP million GBP million GBP million % of Portfolio
--------------------------- -------------- -------------- -------------- -------------- -----------------
Primary investments
in funds 215.8 62.0 9.1 286.9 61.1%
Secondary investments
in funds 40.8 12.7 19.0 72.5 15.4%
Direct and co-investments 61.4 37.3 11.6 110.3 23.5%
--------------------------- -------------- -------------- -------------- -------------- -----------------
Total Portfolio 318.0 112.0 39.7 469.7 100.0%
--------------------------- -------------- -------------- -------------- -------------- -----------------
% of Portfolio 67.7% 23.8% 8.5% 100.0%
--------------------------- -------------- -------------- -------------- -------------- -----------------
Investment activity
Largest new underlying investments in the six months ended 31 July 2016
Cost
Investment Description Manager Country GBP million
--------------------- ------------------------- ---------------- ------------- -------------
Retailer of outdoor
Atlas for Men clothing Activa France 1.3
Manufacturer of
LOOK Cycle bicycle equipment Activa France 1.1
Provider of contract
research organisation
Factory-CRO to medical industry Kester Capital Netherlands 1.0
Operator of cable
Cablevision TV BC Partners USA 0.9
Provider of recruitment
TEG and payroll services Egeria Netherlands 0.7
Wholesaler and
The Masai Clothing retailer of women's
Company clothing Silverfleet Denmark 0.7
Manufacturer of
high precision
Jessen electrical sheet Steadfast Germany 0.7
Provider of digital
and analogue computer
Guntermann & Drunck signal management Steadfast Germany 0.7
Provider of physical
telecom, broadband
and electrical IK Investment
NeTel Group networks Partners Sweden 0.6
Kurt Geiger Retailer of footwear Cinven UK 0.5
Total of 10 largest new underlying
investments 8.2
------------------------------------------------ ------------------------------ -------------
Largest underlying realisations in the six months ended 31 July 2016
Year of Realisation Proceeds
Investment Manager investment type GBP million
--------------------- ----------------------- -------------- ------------------- --------------
Spheros Deutsche Beteiligungs 2011 Trade 8.2
David Lloyd Leisure TDR Capital 2013 Recapitalisation 3.7
Swissport PAI Partners 2011 Trade 3.4
Stork Arle Capital 2008 Trade 2.0
PetSmart BC Partners 2015 Return of capital 2.0
Technogym Arle Capital 2008 IPO 1.9
Frontier Medical Kester Capital 2013 Recapitalisation 1.8
Hunkemoller PAI Partners 2011 Secondary 1.6
Education Personnel ICG 2014 Recapitalisation 1.4
Public sell down
Elior Charterhouse 2006 post IPO 1.4
Total of 10 largest underlying
realisations 27.4
---------------------------------------------- -------------------- -------------
Commitments analysis
The following four tables analyse ICG Enterprise's commitments at 31 July 2016.
Commitments at 31 July Original Outstanding Average
2016 commitment* commitment drawdown % of commitments
GBP million GBP million percentage
------------------------ ------------- ------------- ------------ -------------------
Investment period not
commenced 34.5 34.5 n/a 11.6%
Funds in investment
period 374.6 221.0 41.0% 74.5%
Funds post investment
period 542.4 41.3 92.4% 13.9%
------------------------ ------------- ------------- ------------ -------------------
Total 951.5 296.8 68.8% 100.0%
------------------------ ------------- ------------- ------------ -------------------
(*) Original commitments are translated at 31 July 2016 exchange rates.
Commitments - remaining investment period, % of commitments at 31 July 2016 -------------------------------------------- ----------------- Investment period not commenced 11.6% 4-5 years 11.9% 3-4 years 25.0% 2-3 years 29.1% 1-2 years 4.4% <1 year 4.1% Investment period complete 13.9% -------------------------------------------- ----------------- Total 100.0% -------------------------------------------- ----------------- Movement in outstanding commitments in six months ended 31 July 2016 GBP million -------------------------------------------- -------------- Opening 253.8 New primary commitments 51.2 New commitments arising through secondary purchase of fund interests 2.3 Drawdowns (21.7) Currency and other movements 11.2 Closing 296.8 -------------------------------------------- --------------
New commitments during the six months to 31 July 2016
Fund Strategy Geography GBP million
--------------------------- ----------------- ------------ ------------
Primary commitments
Sixth Cinven Fund Large buy-outs Europe 15.5
Advent Global Private
Equity VIII Large buy-outs Europe/USA 11.7
ICG Strategic Secondaries GP led fund
Fund II restructurings USA/Europe 10.6
Mid-market
IK VIII buyouts Europe 8.4
Piper Private Equity
Fund VI Small buy-outs UK 5.0
--------------------------- ----------------- ------------ ------------
Total primary commitments 51.2
Commitments arising
from secondary purchases
ICG Velocity Partners VSS IV fund
Co-Investor restructuring USA 2.3
--------------------------- ----------------- ------------ ------------
Total new commitments 53.5
------------------------------------------------------------ ------------
CURRENCY EXPOSURE
31 July 31 July 31 January 31 January
2016 2016 2016 2016
GBP million % GBP million %
------------------- ------------- -------- ------------- -----------
Portfolio*
- Sterling 225.4 48.0% 209.1 48.8%
- Euro 121.2 25.8% 122.8 28.7%
- US dollar 84.7 18.1% 60.9 14.2%
- Other European 36.2 7.7% 33.5 7.8%
- Other 2.2 0.4% 1.9 0.5%
------------------- ------------- -------- ------------- -----------
Total 469.7 100.0% 428.2 100.0%
------------------- ------------- -------- ------------- -----------
* Currency exposure is calculated by reference to the location of the underlying portfolio companies' headquarters.
31 July 31 July 31 January 31 January
2016 2016 2016 2016
GBP million % GBP million %
------------------------- ------------- -------- ------------- -----------
Outstanding commitments
- Sterling 104.2 35.1% 102.3 40.3%
- Euro 158.2 53.3% 131.2 51.7%
- US dollar 32.4 10.9% 18.4 7.2%
- Other European 2.0 0.7% 1.9 0.8%
------------------------- ------------- -------- ------------- -----------
Total 296.8 100.0% 253.8 100.0%
------------------------- ------------- -------- ------------- -----------
Dividend HISTORY and Shareholder Analysis
Dividend History
----------------- ---------- ---------- ---------------- ---------- ---------- ------------
Revenue Ordinary Total Net asset Closing
return dividend Special dividend dividend value mid-market
per share per share per share per share per share share price
Period ended p p p p p p
----------------- ---------- ---------- ---------------- ---------- ---------- ------------
31 July 2016* 4.0 10.0 - 10.0 798.0 592.0
31 January 2016 11.1 11.0 - 11.0 730.9 545.0
31 January 2015 13.0 10.0 5.5 15.5 695.2 575.0
31 January 2014 19.0 7.5 8.0 15.5 677.2 563.5
31 January 2013 3.2 5.0 - 5.0 631.5 487.0
31 January 2012 6.3 5.0 - 5.0 569.4 357.0
31 January 2011 1.5 2.25 - 2.25 534.0 308.0
31 December
2009 -0.1 2.25 - 2.25 464.1 305.0
31 December
2008 5.1 4.5 - 4.5 449.0 187.0
31 December
2007 8.9 8.0 - 8.0 519.4 474.0
31 December
2006 7.4 6.5 - 6.5 454.6 386.0
----------------- ---------- ---------- ---------------- ---------- ---------- ------------
* As discussed in the Chairman's Statement, an interim dividend of 10.0p per share will be paid on 21 October.
Shareholder Analysis
-------------------------- ------------------------------- -------------------------------
31 July 2016 31 January 2016
Number of
Number
of Percentage shares held(+) Percentage
shares
held(**)
('000) of total ('000) of total
-------------------------- --- ---------- ---------- --------------- ----------
Individuals 40,362 57.0% 40,443 56.7%
Investment funds 18,298 25.8% 19,402 27.2%
Private client wealth
managers 5,262 7.4% 5,246 7.4%
Pensions and endowments 3,441 4.9% 3,535 5.0%
Specialist private equity
investors 1,579 2.2% 1,125 1.6%
Banks 1,290 1.8% 807 1.1%
Insurance companies 268 0.4% 268 0.4%
Other 368 0.5% 501 0.7%
------------------------------- ---------- ---------- --------------- ----------
Total 70,868 100% 71,327 100.0%
------------------------------- ---------- ---------- --------------- ----------
(**) Excludes 2,044,589 shares held in treasury.
(+) Excludes 1,586,613 shares held in treasury.
UNAUDITED RESULTS FOR THE SIX MONTHS TO 31 JULY 2016
Income Statement (unaudited)
Half Half
year year Year
to 31 to 31 ended
July July 31 January
2016 2015 2016
----------------- -------- -------- -------- -------- -------- -------- -------- ------------- --------
Revenue Capital Total Revenue Capital Total Revenue Capital Total
-----------------
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------- -------- -------- -------- -------- -------- -------- -------- ------------- --------
Investment
returns
Income,
gains and
losses
on investments 4,560 48,436 52,996 7,720 11,118 18,838 12,100 33,761 45,861
Deposit
interest 163 - 163 145 - 145 309 - 309
Other income - - - - - - 115 - 115
Foreign
exchange
gains and
losses - 1,924 1,924 - (572) (572) - 747 747
-------- -------- -------- -------- -------- -------- -------- ------------- --------
4,723 50,360 55,083 7,865 10,546 18,411 12,524 34,508 47,032
-------- -------- -------- -------- -------- -------- -------- ------------- --------
Expenses
Investment
management
charges (736) (2,061) (2,797) (751) (2,251) (3,002) (1,509) (4,260) (5,769)
Other expenses (588) (567) (1,155) (754) (571) (1,325) (1,722) (1,123) (2,845)
-------- -------- -------- -------- -------- -------- -------- ------------- --------
(1,324) (2,628) (3,952) (1,505) (2,822) (4,327) (3,231) (5,383) (8,614)
-------- -------- -------- -------- -------- -------- -------- ------------- --------
Profit
before
taxation 3,399 47,732 51,131 6,360 7,724 14,084 9,293 29,125 38,418
Taxation (526) 526 - (562) 562 - (1,292) 1,292 -
-------- -------- -------- -------- -------- -------- -------- ------------- --------
Profit
for the
period 2,873 48,258 51,131 5,798 8,286 14,084 8,001 30,417 38,418
-------- -------- -------- -------- -------- -------- -------- ------------- --------
Attributable
to:
Equity
shareholders 2,873 48,258 51,131 5,798 8,286 14,084 8,001 30,417 38,418
Basic and
diluted
earnings
per share 71.7p 19.4p 53.1p
The columns headed 'Total' represent the income statement for the relevant financial periods and the columns headed 'Revenue' and 'Capital' are supplementary information, in line with the Statement of Recommended Practice for investment trusts issued by the Association of Investment Companies in November 2014. There is no Other Comprehensive Income.
Balance Sheet (unaudited)
31 July 2016 31 July 2015 31 January
2016
GBP'000 GBP'000 GBP'000
---------------------------- ------------- ------------- -----------
Non-current assets
Investments held at fair
value
- Unquoted investments 392,496 341,296 356,939
- Quoted investments - 2,517 -
- Subsidiary investments 60,823 56,937 57,168
------------- ------------- -----------
453,319 400,750 414,107
Current assets
Cash and cash equivalents 110,314 100,994 103,831
Receivables 2,763 4,511 4,038
------------- ------------- -----------
113,077 105,505 107,869
Current liabilities
Payables 851 586 634
------------- ------------- -----------
Net current assets 112,226 104,919 107,235
-----------
Total assets less current
liabilities 565,545 505,669 521,342
------------- ------------- -----------
Capital and reserves
Share capital 7,292 7,292 7,292
Capital redemption reserve 2,112 2,112 2,112
Share premium 12,936 12,936 12,936
Capital reserve 530,392 467,705 484,782
Revenue reserve 12,813 15,624 14,220
------------- ------------- -----------
Total equity 565,545 505,669 521,342
Net asset value per share
(basic and diluted) 798.0p 700.3p 730.9p
Cash Flow Statement (unaudited)
Half year Half year
to to Year to
31 July 31 July 31 January
2016 2015 2016
GBP'000 GBP'000 GBP'000
Operating activities
Sale of portfolio investments 37,518 51,554 89,941
Purchase of portfolio investments (26,192) (28,261) (56,213)
Interest income received from portfolio
investments 3,134 5,630 8,951
Dividend income received from portfolio
investments 513 2,635 2,882
Other income received 163 156 384
Investment management charges paid (2,726) (2,975) (5,840)
Other expenses paid (622) (571) (1,269)
---------- ---------- -----------
Net cash inflow from operating activities 11,788 28,168 38,836
Financing activities
Bank facility fee (518) (1,431) (1,963)
Purchase of shares into treasury (2,412) (4,070) (9,110)
Equity dividends paid (4,280) (11,209) (14,816)
---------- ---------- -----------
Net cash outflow from financing activities (7,210) (16,710) (25,889)
Net increase in cash and cash equivalents 4,578 11,458 12,947
---------- ---------- -----------
Cash and cash equivalents at beginning
of period 103,831 90,137 90,137
Net increase in cash and cash equivalents 4,578 11,458 12,947
Effect of changes in foreign exchange
rates 1,905 (601) 747
Cash and cash equivalents at end of
period 110,314 100,994 103,831
---------- ---------- -----------
Statement of Changes in Equity (unaudited)
Share Capital Share Capital Revenue Total shareholders'
capital redemption premium reserve reserve equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ------------ --------- ---------- --------- --------------------
Six months
to
31 July 2016
Opening balance
at
1 February
2016 7,292 2,112 12,936 484,782 14,220 521,342
Profit for
the period
and total
comprehensive
income - - - 48,258 2,873 51,131
Dividends
paid or approved - - - - (4,280) (4,280)
Purchase
of shares
into treasury* - - - (2,648) - (2,648)
Closing balance
at 31 July
2016 7,292 2,112 12,936 530,392 12,813 565,545
------------------- --------- ------------ --------- ---------- --------- --------------------
* 458,426 10p ordinary shares with an aggregate nominal value of GBP45,843 were purchased during the period and are held in treasury. Distributable reserves have been reduced by GBP2.6 million, being the consideration paid for these shares.
Share Capital Share Capital Revenue Total shareholders'
capital redemption premium reserve reserve equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ------------ --------- ---------- --------- --------------------
Six months
to
31 July 2015
Opening
balance at
1 February
2015 7,292 2,112 12,936 463,489 21,035 506,864
Profit for
the period
and total
comprehensive
income - - - 8,286 5,798 14,084
Dividends
paid or approved - - - - (11,209) (11,209)
Purchase
of shares
into treasury* - - - (4,070) - (4,070)
Closing balance
at 31 July
2015 7,292 2,112 12,936 467,705 15,624 505,669
------------------- --------- ------------ --------- ---------- --------- --------------------
* 705,833 10p ordinary shares with an aggregate nominal value of GBP70,583 were purchased during the period and are held in treasury. Distributable reserves have been reduced by GBP4.1 million, being the consideration paid for these shares.
Share Capital Share Capital Revenue Total shareholders'
capital redemption premium reserve reserve equity
reserve
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------------- --------- ------------ --------- ---------- --------- --------------------
Year to
31 January
2016
Opening balance
at
1 February
2015 7,292 2,112 12,936 463,489 21,035 506,864
Profit for
the year
and total
comprehensive
income - - - 30,417 8,001 38,418
Dividends
paid or approved - - - - (14,816) (14,816)
Purchase
of shares
into treasury - - - (9,124) - (9,124)
Closing balance
at 31 January
2016 7,292 2,112 12,936 484,782 14,220 521,342
------------------- --------- ------------ --------- ---------- --------- --------------------
* 1,586,163 10p ordinary shares with an aggregate nominal value of GBP158,616 were purchased during the period and are held in treasury. Distributable reserves have been reduced by GBP9.1 million, being the consideration paid for these shares.
Notes to the interim report (unaudited)
1 GENERAL INFORMATION
ICG Enterprise Trust plc ("the Company") is registered in England
and Wales and domiciled in England. The registered office is Juxon
House, 100 St Paul's Churchyard, London EC4M 8BU. The Company's
objective is to provide shareholders with long term capital growth
through investment in unquoted companies, mostly through private
equity funds but also directly. This report was approved for issue
by the Board of Directors on 27 September 2016.
2 UNAUDITED INTERIM REPORT
This financial report does not comprise statutory accounts within
the meaning of section 434 of the Companies Act 2006. Statutory
accounts for the year to 31 January 2016 were approved by the
Board of Directors on 26 April 2016 and delivered to the Registrar
of Companies. The report of the auditors on those accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain any statements under section 498(2) or (3) of
the Companies Act 2006.
This financial report has not been audited.
3 BASIS OF PREPARATION
The financial report for the six months ended 31 July 2016, comprising
the interim financial statements, has been prepared in accordance
with the Disclosure Rules and Transparency Rules of the Financial
Conduct Authority and with IAS 34, 'Interim financial reporting'
as adopted by the European Union. This financial report should
be read in conjunction with the annual financial statements for
the year to 31 January 2016, which have been prepared in accordance
with IFRSs as adopted by the European Union.
The accounting policies applied are consistent with those of the
annual financial statements for the year to 31 January 2016, as
described in those annual financial statements. Taxes on income
in the interim periods are accrued using the tax rate that would
be applicable to expected total annual earnings.
In order to reflect the activities of an investment trust company,
supplementary information which analyses the income statement
between items of a revenue and capital nature has been presented
alongside the income statement. In analysing total income between
capital and revenue returns, the directors have followed the guidance
contained in the Statement of Recommended Practice for investment
trusts issued by the Association of Investment Companies in November
2014.
INVESTMENTS
All investments are designated upon initial recognition as held
at fair value through profit or loss (described in these financial
statements as investments held at fair value) and are measured
at subsequent reporting dates at fair value. Changes in the value
of all investments held at fair value, which include returns on
those investments such as dividends and interest, are recognised
in the income statement and are allocated to the revenue column
or the capital column in accordance with the Statement of Recommended
Practice for investment trusts issued by the Association of Investment
Companies in November 2014.
UNQUOTED INVESTMENTS
Fair value for unquoted investments is established by using various
valuation techniques.
Funds and co-investments are valued at the underlying investment
manager's valuation where this is consistent with the requirement
to use fair value. Where this is not the case adjustments are
made or alternative methods are used as appropriate. The most
common reason for adjustments is to take account of events occurring
after the date of the manager's valuation, such as realisations.
The fair value of direct unquoted investments is calculated in
accordance with the 2015 International Private Equity and Venture
Capital Valuation Guidelines. The primary valuation methodology
used is an earnings multiple methodology, with other methodologies
used where they are more appropriate.
QUOTED INVESTMENTS
Quoted investments are held at the last traded bid price on the
balance sheet date. When a purchase or sale is made under contract,
the terms of which require delivery within the timeframe of the
relevant market, the contract is reflected on the trade date.
SUBSIDIARY INVESTMENTS
Subsidiary investments represents the fair value of the Company's
interests in its limited partnership subsidiaries: ICG Enterprise
Trust Limited Partnership, ICG Enterprise Trust (2) Limited Partnership
and ICG Enterprise Trust Co-investment LP.
CURRENT ASSET INVESTMENTS HELD AT FAIR VALUE
Current asset investments may include investments in fixed income
funds or instruments. These are valued based on the redemption
price as at the balance sheet date, which is based on the value
of the underlying investments.
ASSOCIATES
Investments which fall within the definition of an associate under
IAS 28 (Investments in associates) are accounted for as investments
held at fair value through profit or loss, as permitted by that
standard.
4 RECEIVABLES
The Company has access to committed bank facilities, which are
undrawn. The set up costs in relation to these were capitalised
and are recognised over the lives of the facilities on a straight
line basis. At 31 July 2016, GBP668,900 of bank facility costs
are included within receivables. Of this, GBP368,364 is expected
to be amortised in less than one year.
5 DIVIDS Half year
to Half year Year to
31 July to 31 January
2016 31 July 2015 2016
GBP'000 GBP'000 GBP'000
---------------------------------- ---------- -------------- ------------
Final in respect of the year - 5,468 -
ended 31 January 2014: 7.5p per
share
Special in respect of the year - 5,834 -
ended 31 January 2014: 8.0p per
share
Final in respect of the year
ended 31 January 2015: 10.0p
per share - - 7,232
Special in respect of the year
ended 31 January 2015: 5.5p per
share - - 3,977
Final in respect of the year 4,280 - -
ended 31 January 2016: 6.0p per
share
4,280 11,302 11,209
---------- -------------- ------------
An interim dividend for the year ended 31 January 2017 of 10.0p
per share will be paid on 21 October 2016.
6 CALLED UP SHARE CAPTIAL
At 31 July 2016, 72,913,000 shares had been allocated, called
up and fully paid. Of this total, the Company held 2,044,589 shares
in treasury (31 July 2015: 705,833 and 31 January 2016: 1,586,163)
leaving 70,868,411 outstanding, all of which have equal voting
rights.
7 EARNINGS PER SHARE Half year Half year
to to Year to
31 July 31 July 31 January
2016 2015 2016
------------------------------------ ----------- ----------- ------------
Revenue return per ordinary share 4.0p 8.0p 11.1p
Capital return per ordinary share 67.7p 11.4p 42.1p
Earnings per ordinary share (basic
and diluted) 71.7p 19.4p 53.1p
Weighted average number of shares 71,290,770 72,602,027 72,310,909
The earnings per share figures are based on the weighted average
numbers of shares set out above.
8 FAIR VALUES ESTIMATION
IFRS 13 requires disclosure of fair value measurements of financial
instruments categorised according to the following fair value
measurement hierarchy:
-- Quoted prices (unadjusted) in active markets for identical
assets or liabilities (level 1).
-- Inputs other than quoted prices included within level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (level
2).
-- Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
All private equity and quoted investments are valued at fair value
in accordance with IFRS 13. The Company's unquoted investments
are all classified as Level 3 investments.
Fair value for unquoted investments is established by using various
valuation techniques. Funds ("indirect investments") are valued
at the underlying investment manager's valuation where this is
consistent with the requirement to use fair value. Where this
is not the case adjustments are made or alternative methods are
used as appropriate. The most common reason for adjustments is
to take account of events occurring after the date of the manager's
valuation, such as realisations.
The fair value of direct unquoted investments is calculated in
accordance with the International Private Equity and Venture Capital
Valuation ("IPEV") Guidelines issued in 2015. The primary valuation
methodology used is an earnings multiple methodology, with other
methodologies used where they are more appropriate.
The fair value of the Company's unquoted investments is sensitive
to changes in the assumed earnings multiples. An increase in the
earnings multiple would lead to an increase in the fair value
of the investment portfolio and a decrease in the earnings multiple
would lead to a decrease in the fair value.
The realised and unrealised gains and losses have been recognised
in Income, gains and losses on investments in the Income Statement.
The following table presents the changes in level 3 instruments
for the six months to 31 July 2016.
Unquoted Unquoted
investments investments
(indirect) (direct)
at fair at fair
value through value through Subsidiary
profit or profit or investments
loss loss Total
GBP'000 GBP'000 GBP'000 GBP'000
---------------- --------------- ---------------- -------------- ----------
Opening balance 272,495 84,444 57,168 414,107
Additions 25,899 293 - 26,192
Disposals (22,976) (9,983) (2,457) (35,416)
Gains and losses
recognised
in profit or loss 28,770 13,554 6,112 48,436
------------------- --------------- ---------------- -------------- ----------
Closing balance 304,188 88,308 60,823 453,319
------------------- --------------- ---------------- -------------- ----------
Total gains for
the period
included in
income statement
for assets held
at the
end of the
reporting
period 18,278 6,291 6,112 30,681
------------------- --------------- ---------------- -------------- ----------
The following tables present the assets that are measured at fair
value. The Company did not have any financial liabilities measured
at fair value at these dates. There were no level 1 or level 2
instruments at 31 July 2016 (31 January 2016: none)
9 INVESTMENT MANAGEMENT CHARGES
The investment management charges for the periods ended 31 July 2015 and 31 January 2016 set out in the table below were payable to the Former Manager, Graphite Capital Management LLP. The Former Manager was a related party in those periods. The investment management charges for the half year to 31 July 2016 were payable to the Manager, ICG Alternative Investment Limited. The Manager was a related party in that period.
Half year to Half year to Year to
31 July 2016 31 July 2015 31 January 2016
GBP'000 GBP'000 GBP'000
---------------------------- --------------- --------------- ------------------
Investment management fee 2,797 2,976 5,659
Irrecoverable VAT - 26 110
--------------- --------------- ------------------
2,797 3,002 5,769
--------------- --------------- ------------------
The management fee charged by the Manager is 1.4% of the value of invested assets and 0.5% of outstanding commitments to funds in their investment period, in both cases excluding funds managed by Graphite Capital and funds managed by ICG. No fee is charged on cash or liquid asset balances.
In the periods ended 31 July 2015 and 31 January 2016, the Former Manager charged a management fee of 1.5% of the value of invested assets and 0.50% of outstanding commitments to funds in their investment period, in both cases excluding funds managed by Graphite Capital. No fee was charged on cash and liquid asset balances.
The allocation of the total investment management charges was unchanged in 2016 with 75% of the total allocated to capital and 25% allocated to income.
At 31 July 2016 management fees of GBP70,847 were accrued (31 July 2015: GBP97,000).
The table below sets out the management charges that the Company has borne in respect of its investments in funds managed by the Former Manager in periods when the Former Manager was a related party, and those borne in respect of its investments in funds managed by the Manager in periods when the Manager was a related party.
Half year Half year
to 31 July to 31 Year to
2016 July 2015 31 January 2016
GBP'000 GBP'000 GBP'000
------------------------------------ ------------ ----------- -----------------
ICG Europe Fund V 40 * *
ICG Europe Fund VI 37 * *
ICG Europe Fund 2006B - * *
ICG Strategic Secondaries II 51 * *
ICG Velocity Partners Co-Investor - * *
Graphite Capital Partners VI * (99) (120)
Graphite Capital Partners VII * 1 86
Graphite Capital Partners VIII * 812 1,561
------------ ----------- -----------------
128 714 1,527
------------ ----------- -----------------
*not applicable as the manager of this fund was not a related party in the period
10 RELATED PARTY TRANSACTIONS
Significant transactions between the Company and its subsidiaries are shown below:
Half year
to Year to
31 July 31 January
Subsidiary Nature of transaction 2016 2016
------------------------------------ ----------------------- ---------- ------------
ICG Enterprise Trust Limited (Decrease)/Increase
Partnership in loan to Company (11) 3,549
Income allocated 175 875
ICG Enterprise Trust (2) Decrease/(increase)
Limited Partnership in loan from Company 2,445 (2,325)
Income allocated 738 1,284
ICG Enterprise Trust Co-investment Increase in loan (1) -
LP from Company
Income allocated - -
Amounts owed by subsidiaries Amounts owed to subsidiaries
31 July 31 January 31 July 31 January
Subsidiary 2016 2016 2016 2016
------------------------------------ ------------- ---------------- ------------- ----------------
ICG Enterprise Trust Limited
Partnership - - 25,360 25,371
ICG Enterprise Trust (2)
Limited Partnership 33,233 35,678 - -
ICG Enterprise Trust Co-investment -
LP 1 - -
Amounts owed by subsidiaries represent funding provided by the Company to its subsidiaries to allow them to make investments. The balances will be repaid out of proceeds from their portfolios.
The value of subsidiary investments is shown net of an accrual for the interests of the Co-investors in the co-investment incentive scheme. As at 31 July 2016, GBP15,579,000 (31 January 2016: GBP11,939,000) was accrued in respect of these interests. During the six months to 31 July 2016, the Co-investors invested GBP63,000 and received payments of GBP882,000.
INTERIM MANAGEMENT REPORT AND STATEMENT OF THE DIRECTORS' RESPONSIBILITIES
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company for the second half of the financial year are substantially the same as those disclosed in the Report and Accounts for the year ended 31 January 2016.
Going Concern
The factors likely to affect the Company's ability to continue as a going concern were set out in the Report and Accounts for the year ended 31 January 2016. As at 31 July 2016, there have been no significant changes to these factors. Having reviewed the Company's forecasts and other relevant evidence, the Directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly financial statements.
Statement of Directors' Responsibilities
The directors confirm that the interim financial statements have been prepared in accordance with IAS 34 as adopted by the European Union and that the business review includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during the first six months of the financial year and their impact on the interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
- material related-party transactions in the first six months of the financial year and any material changes in the related-party transactions described in the last annual report.
On behalf of the Board
Mark Fane, Chairman
27 September 2016
Glossary
Alternative Performance Measure ("APM")
APMs are a term defined by the European Securities and Markets Authority as "financial measures of historical or future performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework".
APMs are used in this report if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company and for comparing the performance of the Company to its peers, taking into account industry practice. Definitions and reconciliations to IFRS measures are provided in the main body of the report or in this Glossary, where appropriate.
Co-investment incentive scheme accrual
The co-investment incentive scheme accrual represents the estimated value of interests in the co-investment incentive scheme operated by the Company. At both 31 July 2016 and 31 January 2016, the accrual was estimated as the theoretical value of the interests if the Portfolio had been sold at its carrying value at those dates. The annual report for the year ended 31 January 2016 includes further details regarding the operation of the co-investment incentive scheme.
Drawdowns
Amounts invested by the Company into funds when called by underlying managers in respect of an existing commitment.
EBITDA
EBITDA stands for earnings before interest, tax, depreciation and amortisation, which is a widely used valuation measure in the private equity industry.
Enterprise value
The aggregate value of a company's entire issued share capital and net debt.
Full realisations
Exit events (e.g. trade sale, sale by public offering, or sale to a financial buyer) following which the residual exposure to an underlying company is zero or immaterial.
Funds in investment period
Funds in investment period are those funds which are able to make new investments under the terms of their fund agreements, usually up to five years after the initial commitment.
Net debt
Net debt is calculated as the total short term and long term debt in a business, less cash and cash equivalents.
Overcommitment
In order to achieve full or near full investment, it is usual for fund-of-funds to make commitments exceeding the amount of cash immediately available for investment. This is described as "overcommitment". When determining the appropriate level of overcommitment, careful consideration needs to be given to the rate at which commitments might be drawn down, and the rate at which realisations will generate cash from the existing portfolio to fund new investment.
Portfolio
Throughout the Chairman's Statement, Manager's Review and Supplementary Information, reference is made to the "Portfolio", which represents the aggregate of the investment portfolios of the Company and of its subsidiary limited partnerships. This is consistent with the commentary in previous annual and interim reports. The Board and the Manager consider that this is the most relevant basis for shareholders in assessing the overall performance of the Company and for comparison with its peers.
The closest equivalent amount reported on the balance sheet is "investments at fair value". A reconciliation of these two measures at 31 July 2016 and at 31 January 2016 is presented below.
GBP000 Investments Cash held Balances receivable Co-investment Portfolio
at fair value by subsidiary from subsidiary incentive
as per balance limited partnerships limited partnerships scheme accrual
sheet
------------- --------------- --------------------- --------------------- --------------- ---------
31 July 2016 453,319 -86 +907 +15,579 469,720
31 January
2016 414,107 - +2,127 +11,939 428,173
Post-crisis investments
Post-crisis investments are defined as those completed in 2009 or later.
Pre-crisis investments
Pre-crisis investments are defined as those completed in 2008 or before, based on the date the original deal was completed, which may differ from when the Company invested if acquired through a secondary.
Realisation proceeds
Amounts received by the Company in respect of the Portfolio, which may be in the form of capital proceeds or income such as interest or dividends.
Total return
Total Return is a performance measure that assumes the notional re-investment of dividends. This is a measure commonly used by the listed private equity sector and listed companies in general. In this report:
- net asset value per share Total Return is calculated as the change in the Company's net asset value per share, assuming that dividends are re-invested at the end of the quarter in which the dividend was paid;
- share price Total Return is calculated as the change in the Company's share price, assuming that dividends are re-invested on the day that they are paid; and
- FTSE All-Share Index Total return is calculated as the change in the level of the Index, assuming that dividends are re-invested on the day that they are paid.
The tables below set out the share price and the net asset value per share growth figures for periods of 1, 3, 5 and 10 years to the balance sheet date, on both an unadjusted basis (i.e. without dividends re-invested) and on a Total Return basis.
Unadjusted performance in years to 31 July 2016 1 3 5 10* ================================== ===== ===== ===== ====== Net asset value per share 14.0% 17.0% 37.6 90.6% Share price 0.3% 21.1% 51.0% 61.6% FTSE All-Share Index 0.0% 4.1% 20.7% 23.1% ---------------------------------- ----- ----- ----- ------ Total Return performance in years to 31 July 2016 1 3 5 10* ================================== ===== ===== ===== ====== Net asset value per share 15.6% 24.1% 48.3% 115.6% Share price 2.3% 29.9% 65.9% 89.3% FTSE All-Share Index 3.8% 15.5% 44.1% 75.6% ---------------------------------- ----- ----- ----- ------
*As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 July 2016.
Underlying valuation movement
The change in the valuation of the Company's Portfolio, before the effect of currency movements.
Undrawn commitments
Undrawn commitments are commitments that have not yet been drawn down (see definition of drawdowns).
Uplift on exit
Uplift on exit represents the increase in gross value relative to the underlying manager's most recent valuation prior to the announcement of the disposal. Excludes a small number of investments that were public throughout the life of the investment. May differ from uplift in the reporting period in certain instances.
Copies of the Interim Report will be available on the Company's website (www.icg-enterprise.co.uk) in October and posted to shareholders who have elected to receive a paper copy. Copies may be obtained during normal business hours from the Company's registered office thereafter.
For further information please contact:
Head of Private Equity Fund
Emma Osborne Investments 020 3201 1302
Mark Crowther Investor Relations 020 3201 7842
Michael Pote Finance 020 3201 1307
The company news service from the London Stock Exchange
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September 28, 2016 02:01 ET (06:01 GMT)
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