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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 | |
|---|---|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 1,214.00 | 1,200.00 | 1,216.00 | 2,149 | 08:20:28 |
| Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
|---|---|---|---|---|---|
| Trust,ex Ed,religious,charty | 187.81M | 164.53M | 2.4421 | 4.97 | 817.87M |
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TIDMICGT
9 October 2017
ICG ENTERPRISE TRUST PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHSED 31 JULY 2017
ICG Enterprise Trust plc ('ICG Enterprise' or the 'Company') presents
its unaudited interim results for the six months ended 31 July 2017.
STRONG PERFORMANCE AND EXCELLENT PROGRESS AGAINST STRATEGIC GOALS
-- NAV per share of 937p - total return of 8.7% in the six months
-- Continued strong operating performance and realisation activity
across the portfolio
-- Largest 30 underlying companies generating earnings growth of 15%
-- Highly cash generative portfolio - record period of proceeds
-- GBP117m received in the period; 20% of the opening portfolio value
-- Realisations at 36% uplift to carrying value; 3.1x multiple to
cost
-- Selective investment into compelling opportunities
-- GBP65m invested in the six months
-- Capital deployed into high conviction investments gaining
momentum; 54% of new investment in H1
-- Flexibility to adapt investment mix according to where we see the
best relative value
-- Strategic benefits of move to ICG continue to add significant value
-- GBP16m co-investment in Domus Vi alongside ICG Europe VI
-- GBP8m co-investment in Visma alongside ICG Europe VI completed in
September 2017
-- GBP24m of commitments to two US based managers
-- GBP10m secondary investment in restructuring of ICG Recovery Fund
2008B
-- Continued excellent short, medium and long-term outperformance
Performance to 31 July 2017* 6 months 1 year 3 year 5 year 10** year
Net asset value per share
(total return) +8.7% +20.1% +45.9% +77.4% +120.7%
Share price (total return) +8.1% +29.5% +38.2% +116.0% +102.2%
FTSE All-Share Index (total
return) +7.1% +14.9% +25.7% +65.0% +70.4%
* All figures are on a Total Return basis
** As the Company changed its year end in 2010, the
ten year figures are for the 121 month period to 31
July 2017.
Jeremy Tigue, Chairman, commented:
"These results continue your Company's excellent long-term performance,
with both the net asset value and share price outperforming the FTSE
All-Share Index over one, three, five and ten years.
"I have been a Board member of the Company for almost a decade and have
observed first-hand the evolution of the investment portfolio and the
significant shareholder value created by the team's excellent long-term
track record and highly selective investment approach.
"The team's move to ICG early in 2016 has allowed ICG Enterprise Trust
to further build on its flexible mandate. I am delighted with the
excellent progress we have made against a number of strategic goals and
believe that the strategic benefits of the team's move to ICG will
continue to add significant shareholder value and drive outperformance
of the wider market."
Emma Osborne, Head of Private Equity Fund Investments, ICG, commented:
"The portfolio is well positioned with strong underlying profit growth
and realisation activity continuing to drive performance.
"Whilst reinvesting capital in the current market is challenging, our
flexible strategy enables us to adapt the mix of investments to where we
see best relative value. In the half year our focus has been on high
quality, defensive direct co-investments and secondary investments. We
believe the portfolio is well positioned to continue to generate
significant shareholder value."
Enquiries
Analyst / Investor enquiries:
Emma Osborne, Head of Private Equity Fund Investments, ICG: +44 (0) 20
3201 7700
Nikki Edgar, Finance and investor relations, ICG: +44 (0) 20 3201 7700
Media
Susan Tether, Acting Head of Corporate Communications, ICG: +44 (0) 20
3201 7917
Tom Eckersley, Associate Partner, Maitland: +44 (0) 20 7379 5151
Important notes:
1. Included in this document are Alternative Performance Measures ("APMs").
APMs have been used 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 includes further
details of APMs and reconciliations to IFRS measures, where appropriate.
2. In the Chairman's Statement, Manager's Review and Supplementary
Information, reference is made to the "Portfolio". This is an APM. 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 glossary.
3. ICG Alternative Investment Limited, a regulated subsidiary of
Intermediate Capital Group plc, acts as the Manager of the Company.
4. In the Chairman's Statement, Manager's Review and Supplementary
Information, all performance figures are stated on a total return basis
(i.e. including the effect of re-invested dividends), which is defined in
the glossary.
5. Shares will trade without rights to the final dividend from 19 October
2017 ("ex-dividend date"). The last date for registering transfers to
receive the dividend is 20 October 2017 ("record date").
Disclaimer
This report may contain forward looking statements. These statements
have been made by the Directors in good faith based on the information
available to them up to the time of their approval of this report and
should be treated with caution due to the inherent uncertainties,
including both economic and business risk factors, underlying such
forward looking information.
These written materials are not an offer of securities for sale in the
United States. Securities may not be offered or sold in the United
States absent registration under the US Securities Act of 1933, as
amended, or an exemption therefrom. The issuer has not and does not
intend to register any securities under the US Securities Act of 1933,
as amended, and does not intend to offer any securities to the public in
the United States. No money, securities or other consideration from any
person inside the United States is being solicited and, if sent in
response to the information contained in these written materials, will
not be accepted. This report contains information which, prior to this
announcement, was inside information.
CHAIRMAN'S STATEMENT
Strong performance and excellent progress against strategic goals
In my first interim report as Chairman, I am pleased to report that your
Company has continued to build on its strong long-term performance and
has made excellent progress against a number of strategic goals.
Continued outperformance
The growth in net asset value and share price has again outperformed the
FTSE All-Share Index, with the net asset value per share increasing to
937p, a total return of 8.7%([1] #_ftn1) and the share price generating
a total return of 8.1%(1) .
This performance was driven by both our high conviction portfolio of
co-investments, secondary investments and ICG managed funds, as well as
our third-party private equity funds, with the investment portfolio as a
whole reporting a total return of 9.8%, including 1.1% of favourable
currency movements. Unsurprisingly, given the strong exit environment,
it was a record period for distributions, with the portfolio benefiting
from 28 full realisations at an aggregate uplift of 36% to carrying
value and a multiple of 3.1x cost.
These results continue your Company's strong long-term performance, with
the growth in both the net asset value and share price outperforming the
FTSE All-Share Index over one, three, five and ten years.
Strategic benefits of the move to ICG continue to add significant value
I have been a Board member of the Company for almost a decade and have
observed first-hand the evolution of the investment portfolio and the
significant shareholder value created by the team's excellent long-term
track record and highly selective investment approach.
Our flexible mandate allows the team to enhance returns through
proactively adjusting the portfolio's weighting to specific investment
opportunities, dependent on market conditions. These high conviction
investments are underpinned by a portfolio of leading private equity
funds, which not only provide a diversified base of strong returns, but
also insights and deal-flow for the high conviction portfolio.
With the team's move to ICG early in 2016, your Company now has access
to a significantly deeper investment opportunity set. Since joining ICG
over GBP260m has been committed to new funds and co-investments of which
more than 40% has been directly sourced from the wider ICG network. I
expect this trend to continue. The team also now benefit from insights
gained from interacting with the wider team at ICG, who are transacting
with private equity managers or their portfolio companies worldwide on a
regular basis through various strategies. These insights inform the
management of the portfolio and give the team a competitive advantage
when making new investments.
I am delighted with the progress we have made against a number of the
strategic goals, including becoming more fully invested, broadening the
geographic diversification and increasing the proportion of the
portfolio directly managed by ICG.
I believe that the strategic benefits of the team's move to ICG will
continue to add significant shareholder value and drive outperformance
of the wider market.
Strong balance sheet
The record level of distributions in the first half has resulted in cash
balances increasing to GBP75m, or 11% of net assets. Our long-term
objective remains to be broadly fully invested through the cycle, but,
as always, investment discipline is key and the team continues to be
highly selective in adding new investments to the portfolio.
The Company made five new commitments in the first half and uncalled
commitments stood at GBP346m at July 2017. We expect these commitments
to be drawn down over the coming three to five years. We have a strong
balance sheet and a highly cash generative portfolio and are well
positioned to fund our uncalled commitments and investment pipeline.
Accretive share buybacks
The Company bought back 882,437 shares at an average discount of 17.5%,
adding 0.3% to the net asset value per share. The Board believe the
Company has a high-quality portfolio with strong growth prospects and
will continue to purchase shares on an opportunistic basis.
Interim dividend in line with guidance
The Board recognise that a reliable source of income is an important
consideration for shareholders. Accordingly, an interim dividend of
10.0p per share will be paid on 3 November 2017. This is in line with
the previously announced policy of paying a minimum dividend of 20.0p
per share each year([2] #_ftn2) .
Well positioned to adapt to changing markets and capitalise on
investment opportunities
Financial markets remain buoyant, notwithstanding macroeconomic and
geopolitical uncertainties, with asset prices across many markets
trading at record highs. As highlighted by the significant cash
generation from our portfolio over recent years, private equity managers
have taken advantage of these markets to realise assets and crystallise
value. Whilst the current environment provides a fertile exit
environment, maintaining investment discipline is key and our flexible
investment mandate allows us to actively adapt to the market environment
and focus on attractive investment opportunities across strategies and
capital structures.
We have a portfolio of high quality assets, a disciplined and selective
investment process, and an excellent track record of strong performance
and conservative balance sheet management through multiple cycles. We
are confident that we are well positioned to adapt to changing market
conditions and capitalise on investment opportunities as they arise.
Jeremy Tigue
9 October 2017
MANAGER'S REVIEW
Performance overview
Strong growth across the portfolio
The portfolio has continued to deliver strong performance, rising in
value by 9.8% in sterling, or 8.7% on an underlying local currency basis
in the six months. These returns build on the average 15% p.a.([3]
#_ftn3) growth the portfolio has generated over the last five years and
have been driven by both operating performance and realisation activity.
Our underlying portfolio companies are performing well. Strategic change
and operational improvements remain a key driver of earnings growth,
which combined with a modest increase in valuation multiples, have
translated into strong write-ups across the portfolio. In particular,
our largest 30 investments, which represent 45% of the portfolio,
continue to report strong earnings growth of 15%([4] #_ftn4) and as we
look across the entire portfolio, the growth and valuation trends are
similar, reflecting the high quality of the portfolio overall.
This strong growth has been augmented by our managers continuing to take
advantage of the benign exit environment to crystallise value. Almost a
third of portfolio write-ups in the six months were driven by
realisation activity and sales completed in the period were at an
aggregate uplift to carrying value of 36% and a multiple of 3.1x cost.
Six months ended
31 July 2017
GBPm
Opening Portfolio** 594.3
Third-party funds portfolio drawdowns 29.9
High conviction investments - ICG funds, secondary
investments and co-investments 34.9
Total new investment 64.8
Realisation Proceeds (117.1)
Net cash inflow (52.3)
Underlying Valuation Movement*(,) 51.7
% underlying Portfolio growth 8.7%
Currency movement 6.7
% currency movement 1.1%
Closing Portfolio** 600.4
* In this interim report 91% of the Portfolio is valued using 30 June
2017 (or later) valuations.
** Refer to the Glossary for reconciliation to the portfolio balance
presented in the unaudited results.
Portfolio overview
High conviction assets underpinned by portfolio of leading private
equity funds
ICG Enterprise's portfolio is unique in the listed private equity sector
in combining in-house directly controlled investments with those managed
by third-parties, in each case both directly and through funds.
Our flexible mandate allows us to enhance returns through proactively
taking overweight positions in attractive investment opportunities in
our high conviction portfolio of ICG directly controlled investments,
third party co-investments and secondary investments. The common theme
in our high conviction portfolio is that we, or the wider ICG team, have
made the decision to invest in the underlying company, unlike in a pure
fund of funds model where the third-party managers make the underlying
investment decisions. This is underpinned by a portfolio of leading
private equity funds, providing a diversified base of strong returns and
a valuable source of deal flow for our high conviction portfolio.
We believe that our strategy leads to a portfolio which strikes the
right balance between concentration and diversification. While
diversification at both the manager and company level reduces risk,
concentration in our high conviction portfolio ensures that individual
winners can make a difference to performance. The portfolio has exposure
to more than 450 underlying companies, of which the largest 30 represent
45% of the portfolio value. The balance of the investments provides
valuable insights, which in turn inform the management of the portfolio.
Investment category % of portfolio
High conviction portfolio
ICG 14.1
Third party co-investments 21.3
Third party secondary investments 8.0
Total High Conviction investments 43.4
Third party funds' portfolio
Graphite Capital primary funds 12.4
Third party primary funds 44.2
Total diversified fund investments 56.6
Total 100.0%
High conviction portfolio of actively sourced investments
The high conviction portfolio accounted for 43% of value at the half
year and our three to five-year target is to increase this weighting to
around 50% to 60% of the portfolio. Almost a third of the portfolio is
weighted towards third-party co-investments and secondary investments,
which account for 21% and 8% respectively. These investments enhance
returns through selectively investing in attractive investment
opportunities, on an opportunistic basis.
The exposure to ICG managed investments increased to 14% in the first
six months from less than 7% at the time ICG became Manager of the
Company. Within the ICG weighting, we are invested in three of ICG's
strategies with a focus on funds that have a bias to equity returns,
targeting gross IRRs of at least 15% to 20% p.a. We would expect our
exposure to ICG investments to increase to 20% to 30% over time as
recent commitments are drawn and further funds added.
Portfolio of leading private equity funds
Our portfolio of private equity funds is made up of 38 leading private
equity managers. As mentioned above, this portfolio provides a base of
strong diversified returns and is a source of co-investment and
secondary investment deal flow for the high conviction portfolio. The
funds portfolio has a bias to mid-market and large cap European private
equity managers, with the remainder focused on the US private equity
market, and the latter is likely to increase in the short to medium
term.
Investment activity
Record period for realisations at significant uplifts to carrying value
and cost
Our managers took advantage of current market conditions to successfully
realise 28 portfolio companies in the six months, generating proceeds of
GBP117m, or 20% of the opening portfolio value. Distributions were at a
36% uplift to carrying value, and a multiple of 3.1x cost. These
significant uplifts are consistent with the portfolio's track record;
over the last five years, realisations from the portfolio have generated
average uplifts of 32% and a multiple of 2.1x cost.
The largest realisation in the six months was the sale of Micheldever,
the UK tyre distributor, which completed in February 2017 generating
GBP36m of proceeds. Three other companies from the 30 largest
underlying companies were also sold in the period: Quironsalud, Formel D
and Proxes. In addition the disposal of Standard Brands, the
manufacturer of domestic fire lighting products, was announced in July
2017 but did not complete until September.
Largest realisations in the six months to 31 July
2017
Year of Realisation Proceeds
Investment Manager investment Type GBPm
Graphite
Micheldever Capital 2006 Trade 36.0
Deutsche
Formel D Beteiligungs 2013 Financial buyer 7.1
Deutsche
Proxes Beteiligungs 2013 Financial buyer 6.4
Quironsalud CVC 2011 Trade 5.9
Public sell
Parques Reunidos Arle Capital 2007 down post IPO 3.8
Xella PAI Partners 2008 Financial buyer 3.5
Cerba PAI Partners 2010 Financial buyer 3.5
Findis Activa 2011 Financial buyer 3.3
Autodata Bowmark 2014 Trade 2.9
Host Europe
Group Cinven 2013 Trade 2.5
Total of 10 largest underlying
realisations 74.9
Total realisations 117.1
Selective investment into compelling opportunities
As highlighted by the level of distributions from our portfolio, high
pricing and intense competition for good quality assets has meant that
the market for new investments is undoubtedly challenging. Our
investment strategy allows us to be nimble. This gives us greater
control over the portfolio, enabling us to increase exposure to
companies we believe will outperform through the cycle, and the
flexibility to adapt to market conditions and invest where we see the
best relative value. We favour more defensive businesses; companies
that are relatively uncorrelated to economic cycles and highly cash
generative.
As always, it is important to maintain discipline and despite this
challenging market we have been able to identify a number of attractive
investment opportunities, investing a total of GBP65m in the first half
compared with GBP128m in the year to January 2017. Of the capital
invested, 54% was invested in high conviction investments, up from 39%
in the year to January 2017 and we are encouraged by the broader range
of deal flow we have been able to access since joining ICG, including
from in-house strategies, namely:
-- ICG Europe (10% of the portfolio): mid-market buyout investments across
the capital structure aiming for private equity returns with subordinated
debt risk profile. Investments made in this strategy included a GBP16m
co-investment in the acquisition of Domus Vi, and a GBP10m secondary
investment in ICG Recovery Fund 2008B.
Domus is our largest co-investment to date and is the third largest
nursing home operator in Europe with leading market positions in France
and Spain. The business and the management team were well known to ICG,
which originally invested in the company in 2003. The business has
delivered strong financial performance, with further organic growth
underpinned by positive demographic and economic trends. The company has
also demonstrated its ability to successfully execute significant
acquisitions, creating a solid platform for further expansion across the
fragmented European market.
-- ICG Strategic Secondaries (3% of the portfolio): mature vintage fund
recapitalisations led by a specialist team whose innovative, direct
investment style approach to this part of the market has resulted in the
fund acquiring portfolios for highly attractive valuations of
approximately 6x to 7x EBITDA across six transactions to date.
-- ICG Asia Pacific (1% of portfolio): mid-market buyout investments in
subordinated debt and equity focused on the developed markets in the
region.
As further outlined below, in addition to the investments in ICG
strategies, we also completed GBP5m of third-party secondary investment
in Oak Hill Funds II and III.
Largest underlying new investments in the six months
to 31 July 2017
Cost
Investment Description Manager Country GBPm
Operator of
Domus retirement homes ICG France 17.5
Manufacturer of vinyl
Gerflor * flooring ICG France 7.1
Operator of data
Cyxtera centres BC Partners USA 2.3
Operator of online
Allegro marketplace Cinven / Permira Poland 2.2
Manufacturer of
generic prescription
Stada drugs Cinven Germany 2.0
Operator of caravan
Park Holidays parks ICG UK 1.9
Provider of off-road
Rough Country suspension Gridiron USA 1.5
Provider of auto
collision software
CCC and service Advent / Oak Hill USA 1.4
Provider of
Material Handling e-commerce/logistics
Systems infrastructure Thomas H Lee USA 1.1
Operator of
quick-service
Checkers restaurants Oak Hill USA 1.1
Total of 10 largest underlying new
investments 38.1
Total new investment 64.8
* Represents a secondary position via ICG Recovery Fund 2008B; Gerflor
was already in the portfolio at 31 January.
Selective commitments to both ICG and third-party funds
We completed five new third-party fund commitments totalling GBP58m and
increased the ICG Strategic Secondaries Fund commitment, resulting in a
total of GBP66m of primary fund commitments. Two of the new third-party
funds were raised by managers we have backed successfully for many years
(CVC Capital Partners and Hollyport) while three are new to the
portfolio (New Mountain, Oak Hill Capital Partners and Hg Capital).
All new commitments are to established managers with track records of
investing and adding value through cycles. In the case of New Mountain
and Oak Hill, these are both US mid to upper mid-market managers and the
addition of these funds to the portfolio is consistent with our strategy
of gaining more exposure to this part of the market. The Oak Hill IV
commitment had two pre-existing portfolio companies and, in addition, we
were able to secure a secondary position in the manager's two
predecessor funds which was completed concurrently with the new fund
commitment. Situations such as this suit our style of investment by
applying our bottom-up, underlying company focused due diligence style
and targeting opportunities with short term capital deployment
opportunities alongside primary fund commitments. Since joining ICG, we
have completed 15 new fund commitments of which five were late primary
investments.
New commitments during the six months to 31 July 2017
Fund Strategy Geography GBPm
Primary commitments
CVC VII Large buyouts Europe/USA 20.9
Oak Hill IV Mid-market buyouts USA 12.0
New Mountain V Mid-market buyouts USA 11.5
ICG Strategic Secondaries Secondary fund
II* recapitalisations USA/Europe 8.0
Hollyport VI Mature secondary portfolios Global 7.6
Hg Capital 8 Mid-market buyouts Europe 5.5
Total primary commitments 65.5
Commitments relating to co-investments and secondary
investments 8.7
Total new commitments 74.2
*The new commitment to ICG Strategic Secondaries II increased the
existing exposure to this fund to take the total commitment to GBP27m at
the end of the period.
Portfolio analysis
Modest increase in valuation multiples
Within the largest 30 companies, the valuation multiple has increased to
10.6x, up from 9.7x at the year end. This increase has been driven by a
combination of a change in the mix and overall weightings of the largest
underlying companies and a modest increase in aggregate multiples
overall. Looking across the wider portfolio, the aggregate valuation
multiples are in-line with our largest 30 companies.
The net debt/EBITDA ratio of the largest 30 companies increased to 4.1x
from 3.6x, a result of the change of mix and weightings of the
underlying companies.
Focus on mid-market companies
Our strategy is focused exclusively on the buyout segment of the private
equity market, in which target companies are almost invariably
established, profitable and cash generative. The portfolio is biased
towards the mid-market (48%) and large deals (40%) which we view as more
defensive, benefitting from experienced management teams and often
leading market positions. The portfolio has no venture capital exposure.
Exposure to US increasing
The portfolio is focused on developed private equity markets: primarily
continental Europe (39%), the UK and the US, with almost no emerging
markets exposure. In line with one of our strategic objectives, our
weighting to the US increased to 23% from 14% at the time of the move to
ICG 18 months ago while the UK bias has reduced to 37% from 45% over the
same period.
We expect both of these trends to gather pace as the benefits of being
part of ICG's global alternative asset manager platform are further
realised. We have a three to five-year target to increase the US focus
to 30% to 40% of the portfolio. The US is the largest and most developed
private equity market in the world, and we believe will provide the
portfolio with attractive returns and further geographic
diversification.
Sector bias towards structural growth
The portfolio is weighted towards structural growth, with 22% of the
portfolio invested in the healthcare and education sectors and 17% in
business services. The remainder of the portfolio is broadly split
across the industrial (16%), consumer goods and services (16%) and
leisure (12%) sectors with smaller weightings to the TMT and financials
sectors.
Attractive and well balanced vintage year exposure
The portfolio has an attractive maturity profile which balances near
term realisation prospects with a strong pipeline of medium to longer
term growth.
Investments completed in 2014 or earlier, which are more likely to
generate gains from realisations in the shorter-term, represent 57% of
the portfolio. Against this, 43% of value is in investments made between
2015 and 2017, providing the portfolio with medium to longer term growth
as value created within these businesses translates into gains.
Within the more mature holdings relatively little value remains in
companies acquired prior to the financial crisis. At the half year only
9% fell within this category and the recently announced sale of Standard
Brands, will reduce this weighting further.
Balance sheet and financing
Strong balance sheet and positive financing outlook
The exceptionally high level of distributions of GBP117m far outweighed
capital deployed of GBP65m, resulting in an increase in cash balances to
GBP75m from GBP39m.
Undrawn commitments of GBP346m compares with total liquidity of GBP180m,
including the undrawn bank facility of GBP105m. Commitments therefore
exceeded liquidity by GBP166m, or 25% of net asset value, which remains
within the Company's historical conservative parameters.
Of the total undrawn commitments, funds in their investment period
represented GBP254m, providing the Company with a good medium-term
investment pipeline. Commitments are typically drawn down over a period
of four to five years with approximately 10% to 15% retained at the end
of the investment period to fund follow-on investments and expenses. If
outstanding commitments were to follow a linear investment pace to the
end of their respective remaining investment periods, we estimate that
approximately GBP80m to GBP90m of commitments would be called over the
next 12 months.
Our objective is to be broadly fully invested through the cycle while
ensuring that we have sufficient liquidity to be able to take advantage
of attractive investment opportunities as they arise. We do not intend
to be geared other than, potentially, for short term working capital
purposes.
Outlook
Continued investment activity since the period end
Since July 2017, the portfolio has continued to generate a net cash
inflow with realisations of GBP40m exceeding new investment of GBP26m.
The sale of Standard Brands completed in September and the sales of CPA
Global and ista were recently announced. The latter two realisations are
expected to complete before the year end.
On the investment front, we completed a GBP8m co-investment alongside
ICG Europe VI in Visma, the provider of accounting software and business
process outsourcing services. This new investment takes the proforma
value of our holding in Visma to GBP17m. The transaction completed in
September.
Portfolio well positioned to continue to generate significant
shareholder value
The market outlook continues to favour realisations despite a number of
continuing macro uncertainties. Against this backdrop it is more
challenging to redeploy the high levels of cash generated by the
portfolio without diluting quality. Our strategy gives us the
flexibility to adapt the mix of investment types according to where we
see the best relative value. In the current market conditions, we remain
focused on identifying new investment opportunities that we have a high
conviction will generate superior returns through the cycle.
We have a high-quality portfolio, generating strong revenue and profit
growth and we believe it is well positioned to generate significant
shareholder value through the cycle.
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 2017. These investments may
be held directly or through funds, or in some cases in both ways. The
valuations are gross and are shown as a percentage of the total
investment Portfolio.
Value as
Year of a % of
Company Manager investment Country Portfolio
1 City & County Healthcare Group
Graphite
Provider of home care services Capital 2013 UK 3.2%
2 DomusVi+^
Operator of retirement homes ICG 2017 France 3.0%
3 Standard Brands+-
Graphite
Manufacturer of fire lighting products Capital 2001 UK 2.7%
4 Froneri+^
Manufacturer and distributor of ice cream products PAI Partners 2013 UK 2.2%
5 Gerflor^
Manufacturer of vinyl flooring ICG 2017 France 2.1%
6 Education Personnel+^
Provider of temporary staff for the education sector ICG 2014 UK 2.1%
7 nGAGE
Graphite
Provider of recruitment services Capital 2014 UK 2.0%
8 PetSmart+
Retailer of pet products and services BC Partners 2015 USA 2.0%
9 David Lloyd Leisure+
Operator of premium health clubs TDR Capital 2013 UK 1.8%
10 Frontier Medical+
Kester
Manufacturer of medical devices Capital 2013 UK 1.7%
11 Skillsoft+
Provider of off the shelf e-learning content Charterhouse 2014 USA 1.6%
12 The Laine Pub Company+
Graphite
Operator of pubs and bars Capital 2014 UK 1.6%
13 TMF^
Provider of management and accounting outsourcing Doughty
services Hanson 2008 Netherlands 1.5%
14 CPA Global+
Provider of patent and legal services Cinven 2012 UK 1.4%
15 Roompot+
Operator and developer of holiday parks PAI Partners 2016 Netherlands 1.4%
16 System One+
Thomas H Lee
Provider of specialty workforce solutions Partners 2016 USA 1.4%
17 Visma+
Provider of accounting software and business outsourcing
services Cinven 2014 Norway 1.3%
18 ICR Group
Provider of repair and maintenance services to the Graphite
energy industry Capital 2014 UK 1.3%
19 Beck & Pollitzer
Provider of industrial machinery installation and Graphite
relocation Capital 2016 UK 1.2%
20 Swiss Education+
Invision
Provider of hospitality training Capital 2015 Switzerland 1.2%
21 New World Trading Company
Graphite
Operator of distinctive pub restaurants Capital 2016 UK 1.1%
22 Cambium
Provider of educational solutions and services ICG 2016 USA 1.1%
23 U-POL^
Manufacturer and distributor of automotive refinishing Graphite
products Capital 2010 UK 1.0%
24 Cognito+
Graphite
Supplier of communications equipment, software & services Capital 2002 UK 1.0%
25 Ceridian+
Thomas H Lee
Provider of payment processing services Partners 2007 USA 0.9%
26 Algeco Scotsman
Supplier and operator of modular buildings TDR Capital 2007 USA 0.8%
27 inVentiv Health
Provider of commercial solutions for healthcare companies Advent 2016 USA 0.7%
28 ista^
Provider of heat and water submetering services CVC 2013 Germany 0.7%
29 AVS Group
Fynamore
Manufacturer of traffic safety products Advisers 2013 Germany 0.7%
30 Sky Betting and Gaming
Operator of digital Betting and Gaming websites CVC 2015 UK 0.7%
Total of the 30 largest underlying investments 45.4%
+ All or part of this investment is held directly
as a co-investment or other direct investment.
^ All or part of this investment was acquired as part
of a secondary purchase.
- Sale completed in September 2017
The 30 largest fund investments
The 30 largest funds by value at 31 July 2017 are:
Outstanding
Country/ Value commitment
Fund Year of commitment region GBPm GBPm
Graphite Capital Partners
1 VIII *
Mid-market buyouts 2013 UK 56.8 39.8
2 BC European Capital IX **
Large buyouts 2011 Europe 22.8 0.1
3 CVC European Equity Partners V **
Large buyouts 2008 Europe/USA 17.5 0.5
4 ICG Europe VI **
Mezzanine and equity in
mid-market buyouts 2015 Europe 16.4 7.7
5 Fifth Cinven Fund
Large buyouts 2012 Europe 14.8 1.7
Graphite Capital Partners
6 VII * / **
Mid-market buyouts 2007 UK 14.4 4.7
Thomas H Lee Parallel Fund
7 VI
Large buyouts 2007 USA 13.8 1
CVC European Equity
8 Partners VI
Large buyouts 2013 Global 11.7 8
9 PAI Europe VI
Mid-market and large
buyouts 2013 Europe 11.6 8.1
10 ICG Velocity Partners Co-Investor **
Mid-market buyouts 2016 USA 10.8 2.2
Bowmark Capital Partners
11 IV
Mid-market buyouts 2007 UK 9.9 -
Deutsche Beteiligungs Fund
12 VI
Mid-market buyouts 2012 Germany 9.8 1
13 Permira V
Large buyouts 2013 Europe 9.8 0.9
14 IK VII
Mid-market buyouts 2013 Europe 9.6 0.4
15 TDR Capital III
Mid-market and large
buyouts 2013 Europe 9.5 3.1
Thomas H Lee Equity Fund
16 VII
Mid-market and large
buyouts 2015 USA 8.9 9.3
17 Doughty Hanson & Co V **
Mid-market and large
buyouts 2006 Europe 8.9 6.8
18 TDR Capital II
Mid-market and large
buyouts 2006 Europe 8.8 0.9
ICG Strategic Secondaries
19 Fund II
Secondary fund
recapitalisations 2016 Europe/USA 8.7 19.3
Nordic Capital Partners
20 VIII
21 Hollyport Secondary Opportunities V
Mature secondary
portfolios 2015 Global 8.6 2.3
22 ICG Europe V **
Mezzanine and equity in
mid-market buyouts 2012 Europe 8.6 1.2
Graphite Capital Partners
23 VI **
Mid-market buyouts 2003 UK 8.2 2.1
24 ICG European Fund 2006 B
Mezzanine and equity in
mid-market buyouts 2014 Europe 7.9 2.2
25 One Equity Partners VI
Mid-market buyouts 2016 USA/Europe 7.7 4.4
26 PAI Europe V **
Mid-market and large
buyouts 2007 Europe 7.5 1.1
27 Steadfast Capital III
Mid-market buyouts 2011 Europe 7 0.2
Egeria Private Equity Fund
28 IV
Mid-market buyouts 2012 Europe 6.7 2.9
29 Activa Capital Fund III
Mid-market buyouts 2013 France 6.5 7
30 Gridiron Capital Fund III
Mid-market buyouts 2016 USA 5.9 5.9
Total of the largest 30 fund investments 357.8 148.0
Percentage of total investment Portfolio 59.6%
* Includes the associated Top Up funds.
** All or part of an interest acquired through a secondary
fund purchase.
Portfolio analysis
Closing Portfolio by type
Portfolio by investment type % of value of underlying investments
Large buyouts 40.4%
Mid-market buyouts 47.9%
Small buyouts 7.5%
Other 4.2%
Total 100.0%
% of value of underlying
Portfolio by calendar year of investment investments
2017 9.8%
2016 19.7%
2015 13.9%
2014 20.3%
2013 15.4%
2012 5.3%
2011 2.6%
2010 3.2%
2009 1.2%
2008 2.4%
2007 2.5%
2006 and before 3.7%
Total 100.0%
Portfolio by sector % of value of underlying investments
Healthcare and education 21.8%
Business services 17.1%
Consumer goods and services 16.5%
Industrials 16.1%
Leisure 12.1%
TMT 8.8%
Financials 4.9%
Other 2.7%
Total 100.0%
% of value of
Portfolio by geographic distribution based on location underlying
of Company headquarters investments
UK 37.4%
North America 22.6%
Europe 38.7%
Rest of world 1.3%
Total 100.0%
Commitments analysis
The following tables analyse commitments at 31 July 2017. Original
commitments are translated at 31 July 2017 exchange rates.
Original Outstanding Average
commitment commitment drawdown
GBPm GBPm percentage % of total outstanding commitments
Investment
period not
commenced 34.6 34.6 0.0% 10.0%
Funds in
investment
period 478.6 253.8 47.0% 73.4%
Funds post
investment
period 691.3 57.3 91.7% 16.6%
1,204.5 345.7 71.3% 100.0%
Movement in outstanding commitments in six months
ended 31 July 2017 GBPm
As at 1 February 2017 300.3
New primary commitments 65.5
New commitments relating to co-investments and secondary
purchases 8.7
Drawdowns (36.7)
Currency and other movements 7.9
As at 31 July 2017 345.7
Currency Exposure
31 July 31 July 31 January 31 January
2017 2017 2017 2017
GBPm % GBPm %
Portfolio*
- Sterling 249.6 41.6% 269.1 45.3%
- Euro 164.9 27.5% 156.5 26.3%
- US dollar 127.0 21.1% 115.4 19.4%
- Other European 47.0 7.8% 41.5 7.0%
- Other 11.9 2.0% 11.8 2.0%
Total 600.4 100.0% 594.3 100.0%
*Currency exposure is calculated by reference to the
location of the underlying Portfolio companies' headquarters.
31 July 31 July 31 January 31 January
2017 2017 2017 2017
GBPm % GBPm %
Outstanding commitments
- Sterling 81.0 23.4% 77.5 25.8%
- Euro 178.1 51.5% 166.2 55.4%
- US dollar 84.6 24.5% 54.5 18.1%
- Other European 2.0 0.6% 2.1 0.7%
Total 345.7 100.0% 300.3 100.0%
Unaudited Results for the Six Months to 31 July 2017
Income Statement
Half year to 31 July 2017 Half year to 31 July 2016 Year to 31 January 2017
(audited)
Revenue Capital Revenue Capital Revenue Capital
return return Total return return Total return return 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 16,536 38,588 55,124 4,560 48,436 52,996 9,892 105,194 115,086
Deposit interest 22 - 22 163 - 163 242 - 242
Other income - - - - - - 17 - 17
Foreign exchange
gains and losses - 1,194 1,194 - 1,924 1,924 - 2,993 2,993
16,558 39,782 56,340 4,723 50,360 55,083 10,151 108,187 118,338
Expenses
Investment
management charges (899) (2,697) (3,596) (736) (2,061) (2,797) (1,552) (4,657) (6,209)
Other expenses (1,042) (541) (1,583) (588) (567) (1,155) (1,638) (1,145) (2,783)
(1,941) (3,238) (5,179) (1,324) (2,628) (3,952) (3,190) (5,802) (8,992)
Profit before tax 14,617 36,544 51,161 3,399 47,732 51,131 6,961 102,385 109,346
Taxation (2,086) 2,086 - (526) 526 - (1,184) 787 (397)
Profit for the
period 12,531 38,630 51,161 2,873 48,258 51,131 5,777 103,172 108,949
Attributable to:
Equity shareholders 12,531 38,630 51,161 2,873 48,258 51,131 5,777 103,172 108,949
Basic and diluted 73.52p 71.7p 153.43p
earnings per share
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
31 July 31 July
2017 2016 31 January 2017
(audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Investments held at fair value
- Unquoted investments 482,442 392,496 491,099
- Quoted investments 2,475 - 364
- Subsidiary investments 91,889 60,823 80,718
576,806 453,319 572,181
Current assets
Cash and cash equivalents 73,609 110,314 38,522
Receivables 3,276 2,763 2,384
76,885 113,077 40,906
Current liabilities
Payables 3,031 851 354
Net current assets 73,854 112,226 40,552
Total assets less current liabilities 650,660 565,545 612,733
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 614,109 530,392 581,753
Revenue reserve 14,211 12,813 8,640
Total equity 650,660 565,545 612,733
Net asset value per share (basic and 936.7p 798.0p 871.0p
diluted)
Cash Flow Statement
Year
Half year to Half year to to
31 July 31 July 31 January
2017 2016 2017
(audited)
GBP'000 GBP'000 GBP'000
Operating activities
Sale of portfolio investments 77,077 37,518 50,338
Purchase of portfolio investments (42,242) (26,192) (102,621)
Interest income received from
portfolio investments 12,329 3,134 7,263
Dividend income received from
portfolio investments 4,185 513 2,629
Other income received 22 163 259
Investment management charges paid (3,630) (2,726) (6,143)
Other expenses paid (805) (622) (1,380)
Net cash inflow/ (outflow) from
operating activities 46,936 11,788 (49,655)
Financing activities
Bank facility fee (876) (518) (1,089)
Purchase of shares into treasury (5,207) (2,412) (6,201)
Equity dividends paid (6,960) (4,280) (11,357)
Net cash outflow from financing
activities (13,043) (7,210) (18,647)
Net increase/ (decrease) in cash
and cash equivalents 33,893 4,578 (68,302)
Cash and cash equivalents at
beginning of period 38,522 103,831 103,831
Net increase/ (decrease) in cash
and cash equivalents 33,893 4,578 (68,302)
Effect of changes in foreign
exchange rates 1,194 1,905 2,993
Cash and cash equivalents at end
of period 73,609 110,314 38,522
Statement of Changes in Equity
Capital
Share redemption Share Capital Revenue Total
capital reserve premium reserve reserve shareholders' equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Six months to 31 July 2017
Opening balance at 1 February
2017 7,292 2,112 12,936 581,753 8,640 612,733
Profit for the period and total
comprehensive income - - - 38,630 12,531 51,161
Dividends paid or approved - - - - (6,960) (6,960)
Purchase of shares into
treasury* - - - (6,274) - (6,274)
Closing balance at 31 July 2017 7,292 2,112 12,936 614,109 14,211 650,660
* 882,437 10p ordinary shares with an aggregate nominal value of
GBP88,244 were purchased during the period and are held in treasury.
Distributable reserves have been reduced by GBP6.3 million, being the
consideration paid for these shares.
Capital
Share redemption Share Capital Revenue Total
capital reserve premium reserve reserve shareholders' equity
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.
Capital
Share redemption Share Capital Revenue Total
capital reserve premium reserve reserve shareholders' equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Year to 31 January 2017
(audited)
Opening balance at 1 February
2016 7,292 2,112 12,936 484,782 14,220 521,342
Profit for the year and total
comprehensive income - - - 103,172 5,777 108,949
Dividends paid or approved - - - - (11,357) (11,357)
Purchase of shares into
treasury* - - - (6,201) - (6,201)
Closing balance at 31 January
2017 7,292 2,112 12,936 581,753 8,640 612,733
* 982,345 10p ordinary shares with an aggregate nominal value of GBP
98,235 were purchased during the period and are held in treasury.
Distributable reserves have been reduced by GBP6.2 million, being the
consideration paid for these shares.
Notes to the Interim financial 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.
2 UNAUDITED INTERIM FINANCIAL STATEMENTS
This interim 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 2017 were approved by the Board of
Directors on 4 May 2017 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 interim financial report has not been audited.
3 BASIS OF PREPARATION
The interim financial report for the six months ended 31 July 2017,
comprising the interim financial statements, has been prepared in
accordance with the Disclosure Guidance and Transparency Rules of the
Financial Conduct Authority and with IAS 34, 'Interim financial
reporting' as adopted by the European Union.
The interim financial report does not include all the information and
disclosures required in the annual financial statements, and should be
read in conjunction with the annual financial statements for the year to
31 January 2017, which have been prepared in accordance with
International Financial Reporting Standards ('IFRS') 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 2017, as described in
those annual financial statements. 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 (referred to as the 'SORP').
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 2017, GBP721,561 of bank facility costs are included within
receivables. Of this, GBP360,367 is expected to be amortised in less
than one year.
5 DIVIDS
Half
year Half year
to to Year to
31
31 July 31 July January
2017 2016 2017
GBP'000 GBP'000 GBP'000
Final in respect of year ended 31 January 2016: 6.0p - 4,280 4,280
Interim in respect of year ended 31 January 2017:
10.0p (PY: 5.0p) per share - - 7,077
Final in respect of year ended 31 January 2017: 10.0p
(PY: 6.0p) per share 6,960 - -
6,960 4,280 11,357
An interim dividend for the year ended 31 January 2018 of 10 p per share
will be paid on 3 November 2017.
6 SHARE CAPITAL
At 31 July 2017, 72,913,000 shares had been allocated, called up and
fully paid. Of this total, the Company held 3,450,945 shares in treasury
(31 July 2016: 2,044,589 and 31 January 2017: 2,568,508) leaving
69,462,055 shares not held in treasury, all of which have equal voting
rights.
7 EARNINGS PER SHARE
Half year to Half year to Year to
31 July 31 July
2017 2016 31 January 2017
Revenue return per
ordinary share 18.01p 4.0p 8.13p
Capital return per
ordinary share 55.51p 67.7p 145.30p
Earnings per ordinary
share (basic and
diluted) 73.52p 71.7p 153.43p
Weighted average number of
shares 69,585,722 71,290,770 71,010,218
The earnings per share figures are based on the weighted average numbers
of shares set out above.
8 FAIR VALUES ESTIMATION
IFRS 7 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).
The valuation techniques applied to level 1 and level 3 assets are
described in note 3 of the annual financial statements. No investments
were categorised as level 2.
The following table presents the assets that are measured at fair value
at 31 July 2017. The Company had no financial liabilities measured at
fair value at that date.
Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000
Investments held at fair value
Unquoted investments - indirect - - 370,079
Unquoted investments - direct - - 112,363
Quoted investments - direct 2,475 - -
Subsidiary undertakings - - 91,889
Total investments held at fair value 2,475 - 574,331
The following table presents the assets that are measured at fair value
at 31 January 2017. The Company had no financial liabilities measured at
fair value at that date.
Level 1 Level 2 Level 3
GBP'000 GBP'000 GBP'000
Investments held at fair value
Unquoted investments - indirect - - 383,068
Unquoted investments - direct - - 108,031
Quoted investments - direct 364 - -
Subsidiary undertakings - - 80,718
Total investments held at fair value 364 - 571,817
All unquoted and quoted investments are valued at fair value in
accordance with IFRS 13.
The following table presents the changes in level 3 instruments for the
six months to 31 July 2017.
Unquoted Unquoted
investments (indirect) at fair value through profit investments (direct) at fair value through profit Subsidiary
or loss or loss undertakings Total
Six months to 31 July 2017 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Opening balance at 1 February 2017 383,068 108,031 80,718 571,817
Additions 32,149 9,617 6,161 47,927
Disposals (73,884) (9,989) - (83,873)
Gains and losses recognised in profit or loss 28,746 4,704 5,010 38,460
Closing balance at 31 July 2017 370,079 112,363 91,889 574,331
Total (losses)/ gains for the period included in income
statement for assets held at the end of the reporting
period (1,087) 7,356 5,010 11,279
The following table presents the changes in level 3 instruments for the
six months to 31 July 2016.
Unquoted Unquoted
investments (indirect) at fair value through profit investments (direct) at fair value through profit Subsidiary
or loss or loss undertakings Total
Six months to 31 July 2016 (unaudited) GBP'000 GBP'000 GBP'000 GBP'000
Opening balance at 1 February 2016 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 at 31 July 2016 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 changes in level 3 instruments for the
year to 31 January 2017.
Unquoted
investments (indirect) at fair value through profit Unquoted investments (direct) at fair value through Subsidiary
or loss profit or loss undertakings Total
Year to 31 January 2017 (audited) GBP'000 GBP'000 GBP'000 GBP'000
Opening balance at 1 February 2016 272,495 84,444 57,168 414,107
Additions 94,116 8,365 12,097 114,578
Disposals (49,920) (11,889) - (61,809)
Gains and losses recognised in profit or loss 66,377 27,111 11,453 104,941
Closing balance at 31 January 2017 383,068 108,031 80,718 571,817
Total gains for the year included in Income Statement
for assets held at the end of the reporting period 45,734 19,838 11,453 77,025
9 INVESTMENT MANAGEMENT CHARGES
The investment management charges for the periods ended 31 July 2017, 31
January 2017 and 31 July 2016 set out in the table below were payable to
ICG Alternative Investment Limited. The Manager was a related party in
those periods.
Half year to Half year to Year to
31 July 2017 31 July 2016 31 January 2017
Total Total Total
GBP'000 GBP'000 GBP'000
Investment management charges 3,596 2,797 6,209
Irrecoverable VAT - - -
3,596 2,797 6,209
Management fees amounted to 1.14% of the average net assets in the
period. 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 (the 'Former Manager') and funds managed by ICG. No fee is
charged on cash or liquid asset balances.
The allocation of the total investment management charges was unchanged
in 2017 with 75% of the total allocated to capital and 25% allocated to
income.
At 31 July 2017 management fees of GBP30,055 were accrued (31 July 2016:
GBP70,847).
The table below sets out the management charges that the Company has
borne in respect of its investments in funds managed by the Manager in
periods when the Manager was a related party.
Half year to 31 July Half year to Year to
2017 31 July 2016 31 January 2017
GBP'000 GBP'000 GBP'000
ICG Europe Fund V 55 40 320
ICG Europe Fund VI 161 37 299
ICG Europe Fund 2006B 26 - 94
ICG Strategic
Secondaries Fund II 341 51 185
ICG Velocity Partners
Co-Investor 81 - 115
ICG Asia Pacific III 97 - 124
ICG Recovery Fund
2008B 25 - -
786 128 1,137
10 RELATED PARTY TRANSACTIONS
Significant transactions between the Company and its subsidiaries are
shown below:
Half Half
year year Year
to to to
31 July 31 July 31 January
2017 2016 2017
Subsidiary Nature of transaction GBP'000 GBP'000 GBP'000
ICG
Enterprise
Trust
Limited Increase / (decrease) in
Partnership amounts owed to subsidiaries 6,383 (11) 3,338
Income allocated 1,140 175 248
ICG
Enterprise
Trust (2)
Limited Increase / (decrease) in
Partnership amounts owed to subsidiaries 2,303 (2,445) 1,683
Income allocated 1,021 738 1,080
ICG
Enterprise
Trust Co -
Investment
Limited Increase in amounts owed by
Partnership subsidiaries 15,446 1 14,991
Income allocated 8 - 204
Amounts owed by subsidiaries Amounts owed to subsidiaries
31 July 31 July 31 January 31 July 31 July 31 January
2017 2016 2017 2017 2016 2017
Subsidiary GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
ICG
Enterprise
Trust
Limited
Partnership - - - 35,092 25,360 28,709
ICG
Enterprise
Trust (2)
Limited
Partnership 36,939 33,233 36,939 5,247 - 2,944
ICG
Enterprise
Trust Co -
Investment
Limited
Partnership 30,437 1 14,991 - - -
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 (ICG and certain of its executives, and,
in respect of certain historic investments, the executives and connected
parties of the Former Manager) in the co-investment incentive scheme. At
31 July 2017, GBP21.6m was accrued, an increase of GBP800,000 over the
six months. During the six months, Co-investors invested GBP200,000 (six
months to 31 July 2016: GBP63,000). Payments received by Co-investors
amounted to GBP2,975,000, or 2.5% of GBP117.1m of proceeds received in
the six months (six months to 31 July 2016: GBP882,000 or 1.9% of
GBP45.5m proceeds received).
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 2017.
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 2017. As at 31 July 2017, 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
Jeremy Tigue, Chairman
9 October 2017
GLOSSARY
Alternative Performance Measures ("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 represents the estimated value of
interests in the co-investment incentive scheme operated by the Company.
At both 31 July 2017 and 31 January 2017, the accrual was estimated as
the theoretical value of the interests if the Portfolio had been sold at
its carrying value at those dates.
Drawdowns are amounts invested by the Company into funds when called by
underlying managers in respect of an existing commitment.
EBITDA stands for earnings before interest, tax, depreciation and
amortisation, which is a widely used valuation measure in the private
equity industry.
Enterprise value is the aggregate value of a company's entire issued
share capital and net debt.
FTSE All-Share Index Total return is the change in the level of the FTSE
All-Share Index, assuming that dividends are re-invested on the day that
they are paid.
Full realisations are 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 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.
ICG is ICG Alternative Investment Limited, a regulated subsidiary of
Intermediate Capital Group plc and the Manager of the Company
Net asset value per share Total Return is 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.
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
private equity fund investors 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
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.
In 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 an APM. This presentation 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 to assess the overall performance of the Company and
comparison with its peers.
The closest equivalent amount reported on the balance sheet is
"investments at fair value". A reconciliation of these two measures is
presented below.
Balances
Investments receivable
at fair Cash held by from Co-investment
value as subsidiary subsidiary incentive
per balance limited limited scheme
GBPm sheet partnerships partnerships accrual Portfolio
31 July
2017 576.8 (1.2) 3.2 21.6 600.4
31 January
2017 572.2 - 1.4 20.7 594.3
Post-crisis investments are defined as those completed in 2009 or later.
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 are 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.
Share price Total Return is the change in the Company's share price,
assuming that dividends are re-invested on the day that they are paid.
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 the
Chairman's Statement, Manager's Review and Supplementary Information,
all performance figures are stated on a total return basis
The tables below set out the share price and the net asset value per
share growth figures for periods of one, three, five and ten 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
2017 1 year 3 year 5 year 10 year*
Net asset value per share 17.4% 37.5% 62.2% 93.4%
Share price 25.8% 28.2% 93.6% 70.4%
FTSE All-Share Index 10.7% 12.8% 38.2% 18.9%
Total Return performance in years to 31 July
2017 1 year 3 year 5 year 10 year*
Net asset value per share 20.1% 45.9% 77.4% 120.7%
Share price 29.5% 38.2% 116.0% 102.2%
FTSE All-Share Index 14.9% 25.7% 65.0% 70.4%
* As the Company changed its year end in 2010, the ten year figures are
for the 121 month period to 31 July 2017.
Underlying valuation movement is the change in the valuation of the
Company's Portfolio, before the effect of currency movements.
Undrawn commitments are commitments that have not yet been drawn down
(see definition of drawdowns).
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.
([1] #_ftnref1) Including dividend of 10p paid in June 2017
([2] #_ftnref2) Subject to always having sufficient revenue and capital
reserves
([3] #_ftnref3) In local currency
([4] #_ftnref4) Last 12 months to 30 June 2017
This announcement is distributed by Nasdaq Corporate Solutions on behalf
of Nasdaq Corporate Solutions clients.
The issuer of this announcement warrants that they are solely
responsible for the content, accuracy and originality of the information
contained therein.
Source: ICG Enterprise Trust Plc via Globenewswire
http://www.icg-enterprise.co.uk/
(END) Dow Jones Newswires
October 09, 2017 02:00 ET (06:00 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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