ICG Enterprise Trust Plc: Unaudited Interim Results for the six months ended 31 July 2018


4 October 2018

ICG ENTERPRISE TRUST PLC
UNAUDITED INTERIM RESULTS
FOR THE SIX MONTHS ENDED 31 JULY 2018

PROFIT GROWTH AND EXIT ACTIVITY CONTINUES TO DRIVE STRONG PERFORMANCE

  • NAV per share of 1,026p - total return of 8.1% in the six months
    • Well ahead of the FTSE-All Share, which returned 5.0%
  • Strong underlying profit growth and realisations at significant uplifts
    • 7.9% constant currency return on the investment Portfolio; 10.4% return in Sterling
    • 14% aggregate LTM1 earnings growth from largest 30 Companies; 47% of the portfolio
    • Realisations at 31% uplift; 2.3x multiple of cost
    • Highly cash generative Portfolio - £85m of proceeds received
  • Continued focus on deploying capital into highly defensive businesses  
    • £76m of new investments made; 61% of capital deployed into high conviction assets of ICG funds, co-investments and secondary fund investments
    • Four co-investments and one secondary investment completed
    • High conviction investments now 44% of the Portfolio; weighted towards largest 30 Companies
  • Six new primary commitments
    • £102m of new commitments to six funds
    • Two new US relationships - The Jordan Company and Tailwind Capital
  • Strategic benefits of the scale and resources of ICG’s global platform continue to add significant value
    • £20m of co-investment alongside ICG; ICG managed investments represent 22% of the Portfolio
    • Proprietary opportunities sourced through the ICG network are proving to be particularly attractive
    • Portfolio more geographically diverse; US exposure 24% of the Portfolio
  • Portfolio well-positioned to continue to generate significant shareholder value
    • High quality Portfolio with strong underlying profit growth
    • Weighted towards companies that primarily have non-cyclical growth drivers
    • Attractive and well-balanced maturity; balancing near term realisation prospects and medium-longer term growth
  • Quarterly dividend of 5p per share
    • Total dividends for Q1 and Q2 of 10p per share
  • Continued short, medium and long-term outperformance of public markets
Performance to 31 July 2018 6 months1 year3 year5 year102 year
Net asset value per share (total return) +8.1%+11.9%+55.4%+66.8%+126.4%
Share price (total return) +5.5%+17.3%+55.4%+97.3%+142.2%
FTSE All-Share Index (total return) +5.0%+9.2%+30.2%+44.9%+113.9%

Emma Osborne, ICG, commented:

“The Portfolio continues to deliver, with underlying profit growth and realisation activity driving strong returns. As our managers continue to take advantage of the favourable environment to sell companies, we remain disciplined and selective when deploying capital, focusing on defensive companies in sectors with non-cyclical growth drivers, such as education and healthcare.
             
“We have a high quality Portfolio, a strong pipeline of opportunities and we believe the Portfolio is well-positioned to continue to generate significant shareholder value.”

Enquiries

Analyst / Investor enquiries:

Emma Osborne, Portfolio Manager, ICG                                                             +44 (0) 20 3201 7700
Ian Stanlake, Head of Finance and Investor Relations, ICG                                  +44 (0) 20 3201 7700

Media
Alicia Wyllie, Co-Head of Corporate Communications, ICG                                  +44 (0) 20 3201 7917
Vikki Kosmalska, Associate Partner, Maitland AMO                                            +44 (0) 20 7379 5151

Financials

 Six months to/as at

31 July 2018
12 months to/as at

31 January 2018
NAV per share1,026p959p
NAV total return 8.1%12.5%
Sterling return on investment Portfolio10.4%15.3%
Constant currency return on investment Portfolio 7.9%16.4%
Realisations £85m£227m
Cash proceeds as a % of opening portfolio value14%37%
Realisations – uplift to carrying value31%40%
Realisations – multiple of cost2.3x2.7x
Capital deployed£76m£142m
% of Capital deployed into high conviction companies61%42%
High conviction investments as a % of the Portfolio44%42%
New primary fund commitments£102m£110m
Dividend10p21p

Notes

We assess performance using a variety of measures that are not specifically defined under IFRS and are therefore termed as 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 Portfolio is an APM and is defined as the aggregate of the investment portfolios of the Company and of its subsidiary limited partnerships. The Glossary includes further details of APMs and reconciliations to IFRS measures, where appropriate. The rationale for the APMs is discussed in detail in the Manager’s Review.

In the Chairman’s Foreword, 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).

ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.

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 Foreword3

I am delighted to report another period of strong performance, with net assets increasing from £664m to £711m or 1,026p per share, a total return of 8.1% over the six months4, well ahead of the FTSE All-Share, which returned 5.0%. 

Our high-quality Portfolio continues to deliver strong underlying profit growth and realisations at significant uplifts. The Portfolio remains highly cash generative, with £85m of proceeds received in the six months. In an environment of increasing geopolitical uncertainty and where pricing for new investments is high, the investment team remain cautious in deploying capital, focusing on high quality defensive businesses. New investments totalled £76m with 61% of capital deployed into high conviction companies, taking advantage of third party co-investment opportunities and the proprietary deal flow from ICG.

We know that a reliable source of income is an important consideration for shareholders so last year we committed to a progressive annual dividend policy and quarterly payments. In line with this policy, a quarterly dividend of 5p was paid on 7 September 2018 and a further quarterly dividend of 5p will be paid on 7 December 2018.

We continue to make progress against our strategic goals, benefitting from the scale and resources of ICG’s global platform. Our differentiated portfolio and highly selective investment approach have created significant shareholder value over multiple cycles. Both the share price and NAV growth continue to outperform the FTSE All-share over the short, medium and long term and we believe your Company is well positioned to continue to deliver strong returns for shareholders. 

Jeremy Tigue
Chairman


3 October 2018

Manager’s Review

Strategy overview

Our strategy balances high conviction investments with a diversified portfolio of third party funds

We focus on the buyout segment of the private equity market, in which target companies are almost invariably established, profitable and cash generative, which we believe will generate the most consistently strong returns.

We invest in companies managed by ICG and other leading private equity managers, in both cases through specialist funds as well as directly. This approach allows us to proactively increase exposure to companies that we have a high conviction will outperform, enabling us to strike the right balance between concentration and diversification. While diversification at both the manager and company level reduces risk, concentration in our high conviction investments enhances returns and allows individual winners to make a difference to performance.

Portfolio of leading private equity funds provides a base of strong diversified returns
Our third-party funds portfolio makes up 56% of the Portfolio and underpins our strategy providing a base of strong diversified returns and deal flow for the third-party direct co-investments and secondary investments in our high conviction portfolio.

The underlying funds have a bias to mid-market and large-cap European and US private equity managers and over the last five years this portfolio has generated a constant currency return of 13% p.a.

High conviction portfolio of actively sourced investments enhance returns
Our high conviction portfolio includes investments managed directly by the four ICG investment teams that we partner with as well as our third party co-investments and secondary funds.  The common theme in our high conviction portfolio is that we have selected the underlying companies and this approach is in contrast to a conventional fund of funds in which the third party managers make all the underlying investment decisions. 

Our high conviction portfolio is weighted towards investments in our 30 largest underlying companies and has generated a constant currency return of 18% p.a. over the last five years. We have a strategic goal of increasing the weighting to these investments to 50% - 60% of the Portfolio.

Portfolio overview

The Portfolio has investments in 84 funds, managed by 38 leading private equity managers and at 31 July 2018, was valued at £654m (31 Jan 18: £601m), of which third party funds were valued at £367m of the Portfolio (31 Jan 18: £349m), with high conviction investments valued at £287m (31 Jan 18: £252m).

  31 July
2018
31 January 2018
Investment category % of portfolio% of portfolio
High conviction investments
ICG managed investments
  

22
 

18
Third party co-investments 1717
Third party secondary investments 57
Total High conviction investments 4442
Third party funds’ portfolio
Graphite Capital primary funds 
  

14
 

15
Third party primary funds
Total diversified fund investments
 42
56
43
58
Total 100100

Performance overview


Operating performance and realisation activity continue to drive strong returns

Strong operating performance and realisations at significant uplifts to carrying value have generated a constant currency return of 7.9% during the six months, or 10.4% in Sterling, further extending the average 14.8% p.a. constant currency growth that the Portfolio has generated over the last five years. Almost a quarter of the underlying Portfolio gain in the six months came from exit activity.

  Six monthsYear ended
Movement in the portfolio to 31 July31 January
£m 2018 2018 
Opening Portfolio* 600.7   594.4 
  Third-party funds portfolio drawdowns 29.8   82.3 
  High conviction investments – ICG funds, secondary
  investments and co-investments
   46.7   59.6 
Total new investment   76.5   141.9 
Realisation Proceeds   (84.9)  (226.6)
Net cash (inflow)/outflow   (8.4)  (84.7)
Underlying Valuation Movement** 47.5   97.7 
Currency movement 14.7   (6.7)
Closing Portfolio* 654.5    600.7  
% underlying Portfolio growth (local currency) 7.9%16.4%
% currency movement 2.5%(1.1%)
% underlying Portfolio growth (Sterling) 10.4%15.3%
     
* Refer to the Glossary for reconciliation to the portfolio balance presented in the unaudited results.  
** 94% of the Portfolio is valued using 30 June 2018 (or later) valuations (31 Jan 18: 94%). 

High quality portfolio with top 30 companies reporting double digit earnings and revenue growth

Our largest 30 underlying companies, which represent 47% of the Portfolio by value (31 Jan 18: 47%) and are dominated by our high conviction companies, continue to perform well, reporting aggregate LTM earnings growth of 14% and revenue growth of 13%. It is particularly encouraging that around a third of these companies are generating LTM earnings growth in excess of 20%, driven by both organic growth and M&A activity. Over the six months, valuation multiples increased marginally to 10.8x from 10.6x, a reflection of the change of mix and weightings in the largest 30 underlying companies rather than an increase in aggregate multiples overall. The net debt/EBITDA ratio has fallen marginally from 4.2x to 4.0x. As we look across the Portfolio, the growth and valuation trends are similar.

Realisation activity5

Continued strong realisation activity at significant uplifts to carrying value and cost

The Portfolio remains highly cash generative. After record realisations in the year to 31 January 2018, our underlying managers continued to take advantage of the favourable exit environment generating proceeds of £85m, or 14% of the opening Portfolio value, in the six months to 31 July 2018.

The sales of 34 companies were completed at an average uplift of 31%6 to the previous carrying value, which is broadly in line with the average uplift over the preceding five years.  The average return multiple of 2.3x cost was in-line with the average of 2.2x7 over the last five financial years, reflecting a number of highly successful investments realised in the period with almost half by number being sold for more than 2.5x cost.

Four of the largest 30 underlying companies were realised:  The Laine Pub Company and Swiss Education Group, high conviction co-investments managed by Graphite Capital and Invision Capital respectively, as well as CeramTec and TMF from our third party funds portfolio, including a secondary investment in the latter company.

New investment activity

Selective investment into high conviction opportunities

We continue to be selective in our investment approach and, with a focus on the highest quality defensive businesses, we completed four co-investments and one small secondary in the six months.  These, together with investments made by ICG funds, drove high conviction investments to 61% of the £76m of capital deployed, up from 42% in the year to January 2018.  This increase in high conviction investments was primarily driven by an increase in investments sourced through the ICG network which accounted for 46% of new investment, as the strategic benefits of the move to ICG in 2016 continue to add value. The larger investments made in the period were:

  • Minimax (a global provider of fire protection systems and services), alongside ICG Europe, in which we invested £12m.  ICG has a 12 year history with this business and is the sole institutional equity provider in the most recent management buyout transaction.
  • PSB Academy (one of the largest tertiary education institutions in Asia) alongside ICG Asia Pacific, in which we co-invested £7m, increasing our total investment in this company to £8m.
  • Endeavor Schools (a US schools operator) alongside education investment specialist Leeds Private Equity, in which we invested £8m.
  • Abode Healthcare (a provider of hospice and home health services in the US), £5m investment alongside US mid-market manager Tailwind Capital.

All of these businesses have highly defensive business models, with demonstrated resilience to economic cycles and high cash flow conversion, as well as strong growth drivers and clear value creation plans. Additionally, the two ICG co-investments feature a combination of subordinated debt and equity investments giving an element of structural downside protection.  On a blended basis these investments are targeting returns in line with our usual equity investments, but the subordinated debt element significantly reduces the overall risk.  This is a feature of the vast majority of our investments with both the ICG Europe and ICG Asia Pacific strategies. 

Six new commitments to both existing and new manager relationships

We completed four new third party fund commitments and committed to two ICG managed funds resulting in a total of £102m8 of new primary fund commitments in the six months. Of the four new third party fund commitments, two are to European managers we have invested with for many years (Graphite Capital (£30m) and Bain Capital Europe (€8m)), and two new US managers were added to the Portfolio (The Jordan Company and Tailwind Capital).

The commitment to Graphite IX continues our strong relationship with our former manager, Graphite Capital. The fund builds on Graphite’s more than 30 year successful track record of investing in mid-market buyouts in the UK, and held a final close at £470m which was in line with both its target and the predecessor fund.

ICG’s latest European fund, ICG Europe VII, closed €3.7bn of commitments in May 2018. This strategy invests in subordinated debt and equity in European buyouts, usually with ICG as the sole institutional investor. The fund targets gross annualised returns of 15%-20% with low downside risk and its first investment, Minimax, was also a co-investment in the six months.  We have invested successfully in this strategy for almost 30 years and our €40m commitment to ICG Europe VII takes the total exposure to this strategy to £143m (including undrawn commitments).   

We also committed $10m to the latest ICG US mezzanine fund, North American Private Debt II, which raised $1.35bn. This fund invests in subordinated debt and equity of US private equity-backed mid-market companies, targeting gross annualised returns of 13%-17% with low downside risk. The commitment is consistent with two of our strategic objectives of increasing exposure to the US market and to in-house strategies that fit our investment criteria. We also expect it to broaden and deepen our US middle market third-party manager relationships.

Commitments to The Jordan Company and Tailwind Capital, of $15m each, further increase our focus on the US mid-market.  Both of these managers have long track records of investing and adding value through cycles.  Tailwind has already generated an attractive co-investment in Abode Healthcare and we expect both funds will generate additional high conviction investments. 


Portfolio analysis9

Focus on mid-market and large companies

The Portfolio is biased towards the mid-market (48%) and large deals (44%), which we view as more defensive than smaller deals, benefiting from experienced management teams and often leading market positions.

Portfolio becoming more geographically diverse

The Portfolio is focused on developed private equity markets: primarily continental Europe (40%), the UK (32%) and the US (24%), with almost no emerging markets exposure. In line with one of our strategic objectives, our weighting to the US has increased from 14% at the time of the move to ICG in 2016 and we have a target to increase the US focus to 30% – 40% of the Portfolio. Over the same period, the UK bias has reduced from 45%. 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.

Sector bias towards sectors with non-cyclical growth drivers

The Portfolio is weighted towards sectors that primarily have non-cyclical growth drivers, such as demographics, with 24% of the Portfolio invested in healthcare and education and 15% in business services. The remainder of the portfolio is broadly spread across the industrial (19%), consumer goods and services (15%), leisure (10%) and TMT (10%) sectors.
Attractive and well-balanced vintage year exposure

The Portfolio’s maturity profile 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 37% of the Portfolio. Against this, 63% of value is in investments made in 2015 or later, providing the Portfolio with medium to longer term growth potential as value created within these businesses translates into gains.

Balance sheet and financing

Strong balance sheet and positive financing outlook

With the portfolio generating a net cash inflow of £8m, and after allowing for dividends and expenses, cash fell marginally from £78m to £72m in the half year.

Undrawn commitments of £394m provide the Company with a robust medium-term investment pipeline. With total liquidity of £177m, including the undrawn bank facility, commitments therefore exceeded liquidity by 30% of net asset value.

£m31 July 201831 Jan 2018
Portfolio*654 601 
Cash72 78 
Net obligations*(15)(15)
Net assets 711 664 
* Refer to the Glossary for reconciliation to the portfolio balance presented in the unaudited results and definition of net obligations.
   
Outstanding commitments394 321 
Total available liquidity (including facility)(177)(182)
Overcommitment (including facility)217 139 
Overcommitment % of net asset value30%21%

Commitments are typically drawn down over a period of four to five years with approximately 10%–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 £90m would be called over the next 12 months. This leaves significant available capital for high conviction investments over and above those that will be made by our underlying funds.

In managing the Company’s balance sheet 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 and a strong pipeline of new opportunities

Since the period end, the Portfolio has continued to benefit from the favourable exit environment, with £19m of proceeds received in the two months to 30 September 2018. Against this, we have paid £16m of capital calls and completed a £12m secondary in Jordan Resolute Fund II. We have a strong pipeline of further opportunities for the remainder of the year, both new funds and high conviction investments.

Portfolio well positioned to generate significant shareholder value

We have a high quality Portfolio with strong underlying profit growth and realisation activity continuing to drive performance. Against the current backdrop of high valuations for new investments and continuing geopolitical uncertainties, we remain cautious in re-deploying cash generated by the Portfolio. Our flexible mandate allows us to adapt the mix of new investment to evolving market conditions and where we see the best relative value. The proprietary opportunities sourced through the ICG network are proving to be particularly attractive and these are becoming a more significant part of the portfolio. We believe the Portfolio is well positioned to continue to generate shareholder value.

ICG Private Equity Funds Investment Team

Principal risks and uncertainties

The principal risks and uncertainties associated with the Company’s business can be divided into the following areas:

  • Investment performance;
  • Valuation;
  • Political and macroeconomic uncertainty;
  • Private equity sector;
  • Regulatory, legislative and taxation compliance;
  • People;
  • The Manager and other third party advisers;
  • Information security;
  • Foreign exchange; and
  • Financing.

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 Strategic Report and in the notes to the Financial Statements in the Company’s latest Annual Report for the year ended 31 January 2018.

Supplementary information

This section presents unaudited supplementary information regarding the Portfolio (see Manager’s Review and the Glossary for further details and definitions).

The 30 largest underlying companies
The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 July 2018. 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.

 CompanyManagerYear of investmentCountryValue as a % of Portfolio
1DomusVi+    
 Operator of retirement homesICG2017France3.2%
2City & County Healthcare Group    
 Provider of home care servicesGraphite Capital2013UK3.2%
3Visma+    
 Provider of accounting software and accounting outsourcing servicesCinven & ICG2014 & 2017Europe2.6%
4Minimax+^    
 Supplier of fire protection systems and servicesICG2018Germany2.5%
5David Lloyd Leisure+    
 Operator of premium health clubsTDR Capital2013UK2.3%
6Roompot+    
 Operator and developer of holiday parksPAI Partners2016Netherlands2.0%
7Froneri+^    
 Manufacturer and distributor of ice cream productsPAI Partners2013UK1.9%
8nGAGE    
 Provider of recruitment servicesGraphite Capital2014UK1.9%
9Ceridian+    
 Provider of payment processing servicesThomas H Lee Partners2007USA1.8%
10Education Personnel+^    
 Provider of temporary staff for the education sectorICG2014UK1.8%
11Gerflor^    
 Manufacturer of vinyl flooringICG2011France1.8%
12Yudo+    
 Designer and manufacturer of hot runner systemsICG2018South Korea1.6%
13ICR Group    
 Provider of repair and maintenance services to the energy industryGraphite Capital2014UK1.6%
14PetSmart+    
 Retailer of pet products and servicesBC Partners2015USA1.6%
15Cambium^    
 Provider of educational solutions and servicesICG2016USA1.6%
16System One+    
 Provider of specialty workforce solutionsThomas H Lee Partners2016USA1.5%
17Frontier Medical+    
 Manufacturer of medical devicesKester Capital2013UK1.5%
18Beck & Pollitzer    
 Provider of industrial machinery installation and relocationGraphite Capital2016UK1.5%
19Skillsoft+    
 Provider of off the shelf e-learning contentCharterhouse2014USA1.4%
20PSB Academy+    
 Provider of private tertiary educationICG2018Singapore1.3%
21Endeavor Schools+    
 Operator of schoolsLeeds Equity Partners2018USA1.2%
22YSC    
 Provider of leadership consulting and management assessment servicesGraphite Capital2017UK1.0%
23New World Trading Company    
 Operator of distinctive pub restaurantsGraphite Capital2016UK1.0%
24U-POL^    
 Manufacturer and distributor of automotive refinishing productsGraphite Capital2010UK0.9%
25Cognito+    
 Supplier of communications equipment, software & servicesGraphite Capital2002UK0.9%
26Compass Community    
 Provider of fostering services and children residential careGraphite Capital2017UK0.8%
27Abode Healthcare+    
 Provider of hospice and healthcareTailwind Capital2018USA0.8%
28Random42    
 Provider of medical animation and digital media servicesGraphite Capital2017UK0.8%
29Odgers+    
 Provider of recruitment servicesGraphite Capital2009UK0.6%
30Syneos Health    
 Provider of commercial solutions for healthcare companiesAdvent/Thomas H Lee Partners2016USA0.6%
 Total of the 30 largest underlying investments   47.2%
      
 ⁺ 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.  

The 30 largest fund investments
The table below presents the 30 largest funds by value at 31 July 2018. The valuations are net of any carried interest provision.

 FundYear of commitmentCountry/ regionValue £mOutstanding commitment £m
1Graphite Capital Partners VIII *   
 Mid-market buyouts2013UK78.7 26.6
2ICG Europe VI **    
 Mezzanine and equity in mid-market buyouts2015Europe24.7 2.3
3BC European Capital IX **    
 Large buyouts2011Europe/USA19.7 0.7
4CVC European Equity Partners VI   
 Large buyouts2013Europe/USA15.2 2.3
5One Equity Partners VI    
 Mid-market buyouts2016USA/Europe13.6 0.6
6CVC European Equity Partners V **   
 Large buyouts2008Europe/USA13.4 0.5
7ICG Strategic Secondaries Fund II   
 Secondary fund recapitalisations2016USA/Europe13.2 12.8
8PAI Europe VI    
 Mid-market and large buyouts2013Europe13.1 3.4
9Graphite Capital Partners VII * / **   
 Mid-market buyouts2007UK12.5 4.7
10Activa Capital Fund III    
 Mid-market buyouts2013France11.5 3.9
11Fifth Cinven Fund    
 Large buyouts2012Europe11.3 1.2
12ICG Velocity Partners Co-Investor **   
 Mid-market buyouts2016USA11.0 0.9
13Thomas H Lee Equity Fund VII    
 Mid-market and large buyouts2015USA10.3 5.2
14Permira V    
 Large buyouts2013Europe/USA10.2 1.4
15Nordic Capital Partners VIII    
 Mid-market and large buyouts2013Europe9.9 1.6
16IK VII    
 Mid-market buyouts2013Europe8.8 0.4
17ICG Asia Pacific Fund III    
 Mezzanine and equity in mid-market buyouts2016Asia Pacific8.4 4.5
18ICG Europe V **    
 Mezzanine and equity in mid-market buyouts2012Europe8.4 0.9
19Hollyport Secondary Opportunities V   
 Tail-end secondary portfolios2015Global8.2 2.3
20Bowmark Capital Partners V    
 Mid-market buyouts2013UK8.0 1.9
21Thomas H Lee Parallel Fund VI   
 Mid and large buyouts2007USA7.9 1.0
22Deutsche Beteiligungs Fund VI   
 Mid-market buyouts2012Germany7.9 1.0
23TDR Capital III    
 Mid-market and large buyouts2013Europe7.8 3.1
24Gridiron Capital Fund III    
 Mid-market buyouts2016 USA7.4 5.7
25Egeria Private Equity Fund IV    
 Mid-market buyouts2012Netherlands7.3 0.5
26Bowmark Capital Partners IV    
 Mid-market buyouts2007UK7.1 0.0
27Advent Global Private Equity VIII   
 Large buyouts2016Europe/USA6.9 6.8
28ICG European Fund 2006 B **    
 Mezzanine and equity in mid-market buyouts2014Europe6.3 2.2
29Bain Capital Europe IV    
 Mid-market buyouts2014Europe5.7 2.8
30Silverfleet II    
 Mid-market buyouts2014Europe5.6 6.9
 Total of the largest 30 fund investments 380.0 108.1
 Percentage of total investment Portfolio  58.1% 
 * Includes the associated Top Up funds.   
 ** All or part of an interest acquired through a secondary fund purchase. 

Portfolio analysis

Closing Portfolio by value at 31 July 2018                                                                      

Portfolio by investment type 31 July
2018
% of value of
underlying
investments
31 January
2018
% of value of
underlying
investments
Mid-market buyouts 48.4%48.1%
Large buyouts 43.8%42.4%
Small buyouts 4.7%8.2%
Other 3.1%1.3%
Total 100.0%100.0%


Portfolio by calendar year of investment  31 July
2018
% of value of underlying investments
31 January
2018
% of value of underlying investments
2018  11.8%2.1%
2017  20.1%19.3%
2016  19.6%20.9%
2015  11.3%12.9%
2014  14.2%17.8%
2013  11.4%12.4%
2012  2.9%3.3%
2011  2.0%2.4%
2010  2.0%2.2%
2009  1.1%1.2%
2008  0.4%2.1%
2007  2.0%1.3%
2006 and before  1.2%2.1%
Total  100.0%100.0%


Portfolio by sector 31 July
2018
% of value of underlying investments
31 January
2018
% of value of underlying investments
Healthcare and education 23.5%22.4%
Industrials 19.4%17.4%
Business services 14.8%15.6%
Consumer goods and services 14.8%14.7%
Leisure 10.4%12.1%
TMT 9.6%10.2%
Financials 4.9%4.9%
Other 2.6%2.7%
Total 100.0%100.0%


Portfolio by geographic distribution based on location of company headquarters31 July
2018
% of value of
underlying
investments
31 January
2018
% of value of
underlying
investments
Europe39.7%40.0%
UK32.0%35.2%
North America24.0%21.8%
Rest of world4.3%3.0%
Total100.0%100.0%

Commitments analysis
The following tables analyse commitments at 31 July 2018. Original commitments are translated at 31 July 2018 exchange rates.

Total undrawn commitments

 Original
commitment
£’000
Outstanding
commitment
£’000
Average
drawdown
percentage
% of
commitments
Investment period not commenced30,00030,0000.0%7.6%
Funds in investment period545,165307,26943.6%78.0%
Funds post investment period732,66756,71992.3%14.4%
Total1,307,832393,98869.9%100.0%


Movement in outstanding commitments in 6 months ended 31 July 2018£m
As at 1 February 2018 321.2 
New primary commitments 101.7 
New commitments relating to co-investments and secondary purchases 1.6  
Drawdowns(42.7)
Currency and other movements 12.2 
As at 31 July 2018 394.0 

New commitments during the six months to 31 July 2018

FundStrategyGeography£m
Primary commitments   
Bain VMid-market buyoutsEurope  7.0
Graphite IXMid-market buyoutsUK  30.0
ICG Europe Fund VIIMid-market buyoutsEurope  34.6
ICG North American Private Debt Fund IISubordinated debt and mezzanineNorth America  7.4
Resolute IVMid-market buyoutsUSA  11.4
Tailwind IIIMid-market buyoutsUSA  11.3
Total primary commitments  101.7 
Commitments relating to co-investments and secondary investments   1.6
Total new commitments  103.3



Outstanding commitments
31 July
2018
£m
31 July
2018
%
31 January
2018
£m
31 January
2018
%
– Sterling89.522.7 63.219.7
– Euro194.049.2 170.052.9
– US Dollar 108.627.6 86.126.8
– Other European 1.90.5 1.90.6
Total394.0100.0 321.2100.0

Currency exposure

Portfolio131 July
2018
£m
31 July
2018
%
31 January
2018
£m
31 January
2018
%
 
Sterling237.736.4235.839.3 
Euro185.528.3174.329.0 
US Dollar150.823.0119.619.9 
Other European48.47.449.88.3 
Other32.14.921.23.5 
Total654.5 100.0600.7 100.0 
1 Currency exposure is calculated by reference to the location of the underlying Portfolio companies’ headquarters.

Realisation and new investment activity

Largest underlying realisations in the six months to 31 July 2018
Investment ManagerYear of investmentRealisation typeProceeds £m 
The Laine Pub CompanyGraphite Capital2014Trade10.7 
TMFDoughty Hanson2008Financial buyer8.3 
Swiss EducationInvision Capital2015Financial buyer6.5 
Corporate Risk HoldingsICG2017Trade4.0 
CeramTecCinven2013Financial buyer3.8 
Sky Betting and GamingCVC2015Trade3.7 
UfinetCinven2014Financial buyer3.2 
Royal SandersEgeria2015Financial buyer2.8 
InterviasTDR Capital2014Financial buyer2.7 
Infobase PublishingICG2016Financial buyer2.3 
Total of 10 largest underlying realisations48.0
Total realisations84.9


Largest underlying new investments in the six months to 31 July 2018
Investment DescriptionManagerCountryCost*  £m 
MinimaxProvider of fire protection systems and servicesICGGermany12.2 
Endeavour SchoolsOperator of schoolsLeeds EquityUSA8.1 
PSB Academy**Operator of tertiary education institutionsICGSingapore**6.8 
Abode HealthcareProvider of hospice careTailwind CapitalUSA5.2 
GFLProvider of waste collection and environmental servicesBC PartnersCanada1.5 
NaturgyDistributor of gas and electricityCVCSpain1.4 
RefrescoProvider of drinks bottling servicesPAI PartnersNetherlands1.4 
RSEAProvider of personal protective and road safety equipmentICGAustralia1.3 
Active AssurancesProvider of car insurance broking servicesActivaFrance1.2 
Ask4Provider of internet services to student accommodationBowmarkUK1.1 
Total of 10 largest underlying new investments  40.2
Total new investment   76.5
* Represents ICG's indirect exposure (share of fund cost) plus any amounts paid for co-investments in the period.
** Represents a new co-investment during the period. PSB Academy was already in the portfolio as at 31 January 2018 via a primary holding in ICG Asia Pacific III.

Interim financial statements
Income statement

   Half year to 31 July 2018
(unaudited)
Half year to 31 July 2017
(unaudited)
Year to 31 January 2018
(audited)
  NotesRevenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Total
£’000
 Investment returns          
 Income, gains and losses on investments 5,746 52,121 57,867 16,536 38,588 55,124 22,257 60,124 82,381 
 Deposit interest 65 - 65 22 - 22 59  59 
 Other income 2 - 2 - - - 70  70 
 Foreign exchange gains and losses - 1,364 1,364 - 1,194 1,194  826 826 
   5,813 53,485 59,298 16,558 39,782 56,340 22,386 60,950 83,336 
            
 Expenses          
 Investment management charges8(958)(2,872)(3,830)(899)(2,697)(3,596)(1,791)(5,374)(7,165)
 Other expenses (1,051)(516)(1,567)(1,042)(541)(1,583)(1,659)(1,075)(2,734)
   (2,009)(3,388)(5,397)(1,941)(3,238)(5,179)(3,450)(6,449)(9,899)
            
 Profit before tax 3,804 50,097 53,901 14,617 36,544 51,161 18,936 54,501 73,437 
 Taxation (341)341 - (2,086)2,086 - (2,435)2,294 (141)
 Profit for the period 3,463 50,438 53,901 12,531 38,630 51,161 16,501 56,795 73,296 
            
 Attributable to:          
 Equity shareholders 3,463 50,438 53,901 12,531 38,630 51,161 16,501 56,795 73,296 
            

Basic and diluted earnings per share                                  77.82p                             73.52p                             105.56p

The columns headed ‘Total’ represent the income statement for the relevant financial years and the columns headed ‘Revenue return’ and ‘Capital return’ are supplementary information, in line with the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies. There is no Other Comprehensive Income.

The notes on pages 22 to 26 form an integral part of the interim financial statements.

Balance sheet

 Notes31 July
2018
(unaudited)
£’000
31 July
2017
(unaudited)
£’000
31 January
2018
(audited)
£’000
Non-current assets    
Investments held at fair value    
Unquoted investments7504,685482,442478,362
Quoted investments71,7192,4751,733
Subsidiary investments7124,94191,88996,392
  631,345576,806576,487
Current assets    
Cash and cash equivalents 72,11673,60978,389
Receivables 7,9853,27610,410
  80,10176,88588,799
     
Current liabilities    
Payables 8413,031963
     
Net current assets 79,26073,85487,836
Total assets less current liabilities 710,605650,660664,323
     
Capital and reserves    
Share capital57,2927,2927,292
Capital redemption reserve 2,1122,1122,112
Share premium 12,93612,93612,936
Capital reserve 681,176614,109630,738
Revenue reserve 7,08914,21111,245
Total equity 710,605650,660664,323
     
Net asset value per share (basic and diluted) 1,026.0p936.7p959.1p

The interim financial statements on pages 18 to 26 were approved by the Board of Directors on 3 October 2018 and signed on its behalf by:

Jeremy Tigue                          

Director                                                                                               

           

3 October 2018                        

The notes on pages 22 to 26 form an integral part of the interim financial statements.

Cash flow statement

 Half year to
31 July
2018
(unaudited)
£’000
Half year to
31 July
2017
(unaudited)
£’000
Year to
31 January
2018
(audited)
£’000
 Operating activities   
 Sale of portfolio investments48,700 77,077 147,888 
 Purchase of portfolio investments(49,547)(42,242)(99,601)
 Interest income received from portfolio investments3,752 12,329 15,967 
 Dividend income received from portfolio investments2,023 4,185 6,230 
 Other income received67 22 129 
 Investment management charges paid(3,673)(3,630)(7,090)
 Other expenses paid(847)(805)(1,456)
 Net cash inflow from operating activities475 46,936 62,067 
     
 Financing activities   
 Bank facility fee(381)(876)(1,320)
 Purchase of shares into treasury (5,207)(7,810)
 Equity dividends paid(7,619)(6,960)(13,896)
 Net cash outflow from financing activities(8,000)(13,043)(23,026)
 Net (decrease)/ increase in cash and cash equivalents(7,525)33,893 39,041 
     
 Cash and cash equivalents at beginning of period78,389 38,522 38,522 
 Net (decrease) / increase in cash and cash equivalents(7,525)33,893 39,041 
 Effect of changes in foreign exchange rates1,252 1,194 826 
 Cash and cash equivalents at end of period72,116 73,609 78,389 

The notes on pages 22 to 26 form an integral part of the interim financial statements.

Statement of changes in equity

 Share capital
£000
 Capital
redemption reserve
£000
 Share premium
£000
 Capital reserve
£000
 Revenue reserve
£000
 Total
shareholders’ equity
£000
Half year to 31 July 2018 (unaudited)          
Opening balance at 1 February 20187,292 2,112 12,936 630,738 11,245  664,323 
Profit for the period and total
comprehensive income
   50,438 3,463  53,901 
Dividends paid or approved    (7,619) (7,619)
Closing balance at 31 July 20187,292 2,112 12,936 681,176 7,089  710,605 
            
 Share capital
£000
 Capital
redemption reserve
£000
 Share premium
£000
 Capital reserve
£000
 Revenue reserve
£000
 Total
shareholders’ equity
£000
Half year to 31 July 2017 (unaudited)          
Opening balance at 1 February 20177,292 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 20177,292 2,112 12,936 614,109  14,211  650,660 
            
 Share capital
£000
 Capital
redemption reserve
£000
 Share premium
£000
 Capital reserve
£000
 Revenue reserve
£000
 Total
shareholders’ equity
£000
 
Year to 31 January 2018 (audited)           
Opening balance at 1 February 20177,292 2,112 12,936 581,753  8,640  612,733  
Profit for the year and total
comprehensive income
   56,795  16,501  73,296  
Dividends paid or approved     (13,896) (13,896) 
Purchase of shares into treasury   (7,810)   (7,810) 
Closing balance at 31 January 20187,292 2,112 12,936 630,738  11,245  664,323  

The notes on pages 22 to 26 form an integral part of the interim financial statements.

Notes to the financial statements (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 report

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 2018 were approved by the Board of Directors on 25 April 2018 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 Company applies International Financial Reporting Standards (“IFRSs”) as adopted by the European Union and the Association of Investment Companies Statement of Recommended Practice (issued in November 2014 and updated in February 2018 with consequential amendments) in preparing its annual financial statements for the year to 31 January 2018.  The interim financial report, comprising the interim financial statements has therefore been prepared in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the Financial Conduct Authority and with IAS 34 Interim Financial Reporting, as adopted by the European Union.  These interim financial statements do 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 2018.

The accounting policies applied are consistent with those as described in the annual financial statements. The Company has adopted both “IFRS 9 - Financial Instruments” and “IFRS 15 - Revenue from Contracts with Customers” from 1 February 2018 and as detailed in the annual financial statements there is no impact on the interim financial statements following the adoption of these standards. There were no new key judgments required by the directors in applying IFRS 9 and IFRS 15.  The Company has considered other new and forthcoming standards (including IFRS 16 Leases which will become applicable for periods beginning on or after 1 January 2019) and determined there will be no impact on the Company. There is only one reportable segment under IFRS 8.

4)     Dividends

 Half year to
31 July
2018
£’000
Half year to
31 July
2017
£’000
Year ended
31 January
2018
£’000
Interim in respect of year ended 31 January: 5.0p (PY: 10.0p) per share3,463-6,936
Final in respect of year ended 31 January: 6.0p (PY: 10.0p) per share4,1566,9606,960
Total7,6196,96013,896

The Company paid an interim dividend of 5p per share (totalling £3.463m) in September 2018 in respect of the quarter to 30 April 2018. The Board has approved a further interim dividend for the quarter to 31 July 2018 of 5p per share (totalling £3.463m) which will be paid on 7 December 2018 to shareholders on the register on 16 November 2018.

5)     Share capital

At 31 July 2018, 72,913,000 shares had been allocated, called up and fully paid. Of this total, the Company held 3,650,945 shares in treasury (31 July 2017: 3,450,945 and 31 January 2018: 3,650,945) leaving 69,262,055 (31 July 2017: 69,462,055 and 31 January 2018: 69,262,055) shares outstanding, all of which have equal voting rights.

Notes to the financial statements (unaudited)

6)     Earnings per share

  Half year to Half year to Year ended
  31 July
2018
 31 July
2017
 31 January 2018
Revenue return per ordinary share 5.00p 18.01p 23.76p
Capital return per ordinary share 72.82p 55.51p 81.80p
Earnings per ordinary share (basic and diluted) 77.82p 73.52p 105.56p
Weighted average number of shares 69,262,055 69,585,722 69,435,737

The earnings per share figures are based on the weighted average numbers of shares set out above.

7)     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 1 of the annual financial statements. No investments were categorised as level 2.

The following tables present the assets that are measured at fair value. The Company had no financial liabilities measured at fair value at these dates.

 Level 1  Level 2  Level 3  Total  
31 July 2018£’000 £’000 £’000 £’000 
Investments held at fair value        
Unquoted investments – indirect  393,539 393,539 
Unquoted investments – direct  111,146 111,146 
Quoted investments – direct1,719   1,719 
Subsidiary undertakings  124,941 124,941 
Total investments held at fair value1,719  629,626 631,345 


 Level 1  Level 2  Level 3  Total
31 July 2017£’000 £’000 £’000 £’000
Investments held at fair value       
Unquoted investments – indirect  370,079 370,079
Unquoted investments – direct  112,363 112,363
Quoted investments – direct2,475   2,475
Subsidiary undertakings  91,889 91,889
Total investments held at fair value2,475  574,331 576,806

Notes to the financial statements (unaudited)

7)     Fair Values estimation (continued)

 Level 1  Level 2  Level 3  Total
31 January 2018£’000 £’000 £’000 £’000
Investments held at fair value       
Unquoted investments – indirect  379,921 379,921
Unquoted investments – direct  98,441 98,441
Quoted investments – direct1,733   1,733
Subsidiary undertakings  96,392 96,392
Total investments held at fair value1,733  574,754 576,487

All unquoted and quoted investments are valued at fair value in accordance with IFRS 13. The following tables present the changes in level 3 instruments.

 Unquoted investments (indirect) at fair value through profit or loss Unquoted investments (direct) at fair value through profit or loss Subsidiary undertakings Total
Six months to 31 July 2018 (unaudited)£’000 £’000 £’000 £’000
Opening balance at 1 February 2018379,921  98,441  96,392 574,754 
Additions33,474  15,715  19,066 68,255 
Disposals(52,886) (12,631)  (65,517)
Gains and losses recognised in profit or loss33,030  9,621  9,483 52,134 
Closing balance at 31 July 2018393,539  111,146  124,941 629,626 
Total gains included in income statement for assets held at the end of the period13,659  7,353  9,483 30,495 


 Unquoted investments (indirect) at fair value through profit or loss Unquoted investments (direct) at fair value through profit or loss Subsidiary undertakings Total
Six months to 31 July 2017 (unaudited)£’000 £’000 £’000 £’000
Opening balance at 1 February 2017383,068  108,031  80,718 571,817 
Additions32,149  9,617  6,161 47,927 
Disposals(73,884) (9,989)  (83,873)
Gains and losses recognised in profit or loss28,746  4,704  5,010 38,460 
Closing balance at 31 July 2017370,079  112,363  91,889 574,331 
Total (losses)/ gains included in income statement for assets held at the end of the period(1,087) 7,356  5,010 11,279 

Notes to the financial statements (unaudited)

7)     Fair Values estimation (continued)

 Unquoted investments (indirect) at fair value through profit or loss Unquoted investments (direct) at fair value through profit or loss Subsidiary undertakings Total
Year to 31 January 2018 (audited)£’000 £’000 £’000 £’000
Opening balance at 1 February 2017383,068  108,031  80,718 571,817 
Additions81,122  16,853  11,029 109,004 
Disposals(128,941) (36,933)  (165,874)
Transfer of instrument to level 1  (469)  (469)
Gains and losses recognised in profit or loss44,672  10,959  4,645 60,276 
Closing balance at 31 January 2018379,921  98,441  96,392 574,754 
Total (losses)/ gains for the year included in income statement for assets held at the end of the reporting period(53,072) (7,277) 4,645 (55,704)
  1. Related party transactions

The investment management charges of £3.8m (31 July 2017: £3.6m; 31 January 2018: £7.2m) were paid to ICG Alternative Investment Limited (the “Manager”). The Manager is a related party.

Management fees amounted to 1.11% (31 July 2017: 1.14%; 31 January 2018 1.12%) of the average net assets in the period. The management fee charged by the Manager is unchanged, at 1.4% of the fair 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 Management LLP and ICG. This arrangement ensures management fees are not borne twice in respect of its investments in funds managed by the Manager. No fee is charged on cash or liquid asset balances.

The table below sets out the management charges that the Company has borne in respect of its investments in funds managed by the Manager on an arms-length basis.

  Half year to Half year to Year ended
  31 July
2018
 31 July
2017
 31 January
 2018
  £’000 £’000 £’000
ICG Europe Fund V 44 55 100
ICG Europe Fund VI 122 161 234
ICG Europe Fund 2006B 23 26 54
ICG Strategic Secondaries Fund II 155 341 469
ICG Velocity Partners Co-Investor 76 81 143
ICG Asia Pacific III 29 97 272
ICG Recovery Fund 2008B 32 25 59
ICG Cross Border 12  
ICG Europe Fund VII 103  
  596 786 1,331

Notes to the financial statements (unaudited)

  1. Related party transactions (continued)

Further transactions between the Company and its subsidiaries are shown below:

  Half year toHalf year toYear ended 
  31 July
2018
31 July
2017
31 January
2018
 
SubsidiaryNature of transaction£’000£’000£’000 
ICG Enterprise Trust Limited
Partnership
(Decrease)/ increase in amounts owed to subsidiaries(269)6,3837,623 
 Income allocated167 1,1401,205 
      
ICG Enterprise Trust (2) Limited
Partnership
Increase in amounts owed
to subsidiaries
3,505 2,30311,192 
 Income allocated841 1,0211,719 
      
ICG Enterprise Trust Co - Investment Limited PartnershipIncrease in amounts owed by
subsidiaries
23,831 15,44630,441 
 Income allocated88 8426 
 

 
Amounts owed by subsidiariesAmounts owed to subsidiaries
 31 July
2018
31 July
2017
31 January 201831 July
2018
31 July
2017
31 January
2018
Subsidiary£’000£’000£’000£’000£’000£’000
ICG Enterprise Trust Limited Partnership36,06335,09236,332
ICG Enterprise Trust (2) Limited Partnership39,73636,93936,93920,4385,24714,136
ICG Enterprise Trust Co - Investment Limited Partnership69,26330,43745,432

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 the subsidiaries 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 Graphite Capital, the former manager) in the co-investment incentive scheme. As at 31 July 2018, £24.4m was accrued (31 July 2017:£21.6m; 31 January 2018: £22.5m), an increase of £1.8m in the period. During the half year, co-investors invested £0.3m (period to 31 July 2017: £0.2m; year to 31 January 2018: £0.6m). Payments received by co-investors amounted to £2.5m or 2.9% of £84.9m of proceeds received in the half year (period to 31 July 2017: £3m or 2.5% of £117.1m proceeds received; year to 31 January 2018: £6.5m or 2.9% of £220.6m proceeds received).

On 1 August 2018, ICG Europe Fund V exited its investment in Minimax. Concurrently, ICG Europe Fund VI and ICG Europe Fund VII acquired a holding in Minimax of €150m and €562.5m respectively. The transaction was conducted on an arm’s length basis.

Statement of Directors’ Responsibilities

Statement of Directors’ Responsibilities

The directors confirm that the interim financial statements have been prepared in accordance with IAS 34 ‘Interim Financial Reporting’ 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.

The directors of ICG Enterprise Trust plc are listed in the ICG Enterprise Trust plc Annual Report & Accounts for the year ended 31 January 2018, with the exception of Peter Dicks who stepped down from the Board at the AGM on 18 June 2018, and Alastair Bruce who was appointed as a Director, following his election at the AGM on 18 June 2018:  A list of current directors is maintained on the ICG Enterprise Trust plc website: http://www.icg-enterprise.co.uk/about-us/the-board.

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 2018. As at 31 July 2018, 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 interim financial statements.

On behalf of the Board

Jeremy Tigue, Chairman

3 October 2018

Independent review report to ICG Enterprise Trust plc

Report on the interim results

Our conclusion

We have reviewed ICG Enterprise Trust plc's interim results (the "interim financial statements") in the half-yearly financial report of ICG Enterprise Trust plc for the 6 month period ended 31 July 2018. Based on our review, nothing has come to our attention that causes us to believe that the interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

What we have reviewed

The interim financial statements comprise:

  • the Balance Sheet as at 31 July 2018;
  • the Income Statement for the period then ended;
  • the Cash Flow Statement for the period then ended;
  • the Statement of Changes in Equity for the period then ended; and
  • the explanatory notes to the interim financial statements.

The interim financial statements included in the half-yearly financial report have been prepared in accordance with International Accounting Standard 34, ‘Interim Financial Reporting’, as adopted by the European Union and the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

As disclosed in note 3 to the interim financial statements, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the Company is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

Responsibilities for the interim financial statements and the review

Our responsibilities and those of the directors

The half-yearly financial report, including the interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority.

Our responsibility is to express a conclusion on the interim financial statements in the half-yearly financial report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure Guidance and Transparency Rules sourcebook of the United Kingdom’s Financial Conduct Authority and for no other purpose.  We do not, in giving this conclusion, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing.

What a review of interim financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, ‘Review of Interim Financial Information Performed by the Independent Auditor of the Entity’ issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the half-yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the interim financial statements.

PricewaterhouseCoopers LLP
Chartered Accountants
London

3 October 2018

Glossary

TermShort formDefinition
Alternative Performance MeasuresAPMsAPMs 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.
Buyout funds Funds that acquire controlling interests in companies with a view towards later selling those companies or taking them public.
Compound Annual Growth RateCAGRRepresents the annual growth rate of an investment over a specified period of time longer than one year.
Carried interest Equivalent to a performance fee, this represents a share of the profits that will accrue to the underlying private equity managers, after achievement of an agreed preferred return.
Co-investment Investments in a single underlying company alongside a private equity fund.
Co-investment incentive scheme accrual The estimated value of interests in the co-investment incentive scheme operated by the Company. At both 31 July 2018 and 31 January 2018, the accrual was estimated as the theoretical value of the interests if the Portfolio had been sold at its carrying value at those dates.
Commitment The amount of capital that each limited partner agrees to contribute to the fund which can be drawn at the discretion of the general partner.
Direct investment Investments in a single underlying company.
Discount Arises when the Investment trust shares trade at a discount to NAV. In this circumstance, the price that an investor pays or receives for a share would be less than the value attributable to it by reference to the underlying assets. The discount is the difference between the share price and the NAV, expressed as a percentage of the NAV. For example, if the NAV was 100p and the share price was 90p, the discount would be 10%.
Drawdowns Amounts invested by the Company into funds when called by underlying managers in respect of an existing commitment.
Earnings before interest, tax, depreciation and amortisationEBITDAStands for earnings before interest, tax, depreciation and amortisation, which is a widely used performance measure in the private equity industry.
Enterprise valueEVThe aggregate value of a company’s entire issued share capital and net debt.
FTSE All-Share Index Total return 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 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 which are able to make new platform investments under the terms of their fund agreements, usually up to five years after the initial commitment.
General PartnerGPThe entity managing a private equity fund that has been established as a limited partnership. This is commonly referred to as the Manager.
Hedging An investment technique designed to offset a potential loss on one investment by purchasing a second investment that is expected to perform in the opposite way.
High conviction Co-investments, ICG managed funds and secondary fund investments. 
Indirect investments Investments held in a private equity fund structure.
Initial Public OfferingIPOAn offering by a company of its share capital to the public with a view to seeking an admission of its shares to a recognised stock exchange.
Internal Rate of ReturnIRRThe annualised rate of return received by an investor in a fund. It is calculated from cash drawn from and returned to the investor together with the residual value of the investment.
Last Twelve MonthsLTMThe time frame of the immediately preceding 12 months in reference to a financial metric used to evaluate the company’s performance.
Limited PartnerLPAn institution or individual who commits capital to a private equity fund established as a limited partnership. These funds are generally protected from legal actions and any losses beyond the original investment.
Limited Partnership One or more general partners, who have responsibility for managing the business of the partnership and have unlimited liability, and one or more limited partners, who do not participate in the operation of the partnership and whose liability is ordinarily capped at their capital and loan contribution to the partnership. In typical fund structures, the general partner receives a priority profit share ahead of distributions to limited partners.
Management BuyinMBIA change of ownership, where an incoming management team raises financial backing, normally a mix of equity and debt, to acquire a business.
Management BuyoutMBOA change of ownership, where the incumbent management team raises financial backing, normally a mix of equity and debt, to acquire a business it manages.
Net asset value per shareNAV per shareThe value of the Company’s assets attributable to one Ordinary share. It is calculated by dividing ‘shareholders’ funds’ by the total number of Ordinary shares in issue. Shareholders’ funds are calculated by deducting current and long-term liabilities, and any provision for liabilities and charges, from the Company’s total assets.
Net asset value per share Total Return 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 The total short term and long-term debt in a business, less cash and cash equivalents.
Net obligations The net amount due; comprised of receivables, assets due from subsidiaries and co-investment incentive scheme accrual.
Overcommitment Where private equity fund investors make commitments exceeding the amount of cash immediately available for investment. 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 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 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.


£mInvestments
per balance sheet
Cash held by subsidiariesReceivables
from
subsidiaries
Co-investment incentive scheme
accrual
Portfolio 
31 July 2018631.3(0.2)(1.0)24.4654.5 
31 Jan 2018576.5 1.7 22.5600.7 


Post-crisis investments Investments completed in 2009 or later.
Pre-crisis investments Investments 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.
Preferred return The preferential rate of return on an individual investment or a portfolio of investments, which is typically 8% per annum.
Premium The share price is higher than the NAV and investors would therefore be paying more than the value attributable to the shares by reference to the underlying assets.
Public to privateP2PThe purchase of all of a listed company’s shares using a special-purpose vehicle funded with a mixture of debt and unquoted equity.
Quoted company Any company whose shares are listed or traded on a recognised stock exchange.
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.
Secondary investments These occur when a Company purchases existing private equity fund interests and commitments from an investor seeking liquidity.
Share price Total Return The change in the Company’s share price, assuming that dividends are re-invested on the day that they are paid.
Total Return 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.

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 20181 year3 year5 year10 year*
Net asset value per share+9.5%+46.5%+50.4%+97.1%
Share price+14.4%+44.4%+74.2%+102.9%
FTSE All-Share Index+5.1%+16.4%+21.2%+48.9%
     
Total return performance in years to 31 July 20181 year3 year5 year10 year*
Net asset value per share+11.9%+55.4%+66.8%+126.4%
Share price+17.3%+55.4%+97.3%+142.2%
FTSE All-Share Index+9.2%+30.2%+44.9%+113.9%
 

* As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 July 2018.

 


Underlying valuation movement The change in the valuation of the Company’s Portfolio, before the effect of currency movements.
Undrawn commitments Commitments that have not yet been drawn down (see definition of drawdowns).
Unquoted company Any company whose shares are not listed or traded on a recognised stock exchange.
Uplift on exit 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 valuation gains in the reporting period in certain instances due to timing differences.
Valuation multiples Earnings or revenue multiples applied in valuing a business enterprise.
Venture capital Investing in companies at a point in that company’s life cycle that is either at the concept, start-up or early stage of development.





1 Last 12 months.

2 As the Company changed its year end in 2010, the ten-year figures are for the 121-month period to 31 July 2018.

3 Refer to Financials section on highlights page for comparative information.

4 Including reinvested dividends paid in March 2018 and July 2018 totalling 11p. Please refer to the Glossary for definition of Total Return.

5 Refer to Financials section on highlights page for comparative information.

6 Uplift figure excludes publically listed companies that were exited via sell downs of their shares.

7 Average return from full exits on a primary investment basis, weighted by cost.

8 Refer to supplementary information at the end of this review for breakdown of new commitments during the six months to 31 July 2018.

9 Refer to supplementary information at the end of this review for comparative information.