ICG Enterprise Trust Plc: Unaudited Interim Results For the six months ended 31 July 2023
| ICG Enterprise Trust Plc | ||
| Unaudited Interim Results For the six months ended 31 July 2023 | ||
| 5 October 2023 | ||
Defensive growth with a disciplined approach | ||
Highlights
1 Based on Enlarged Perimeter covering 66.4% of the Portfolio. See page 7. 2 Up to and including 30 September 2023 *This is an Alternative Performance Measure. Please refer to the Glossary for the definition. |
| Oliver Gardey | ||||
| Head of Private Equity Fund Investments, ICG | ||||
| ICG Enterprise Trust's strategy of investing exclusively in buyouts of businesses that exhibit defensive growth characteristics - along with our capital allocation policy - is delivering attractive shareholder returns. In the last twelve months we have generated an NAV per Share Total Return of 4.1%, and over the last five years an annualised NAV Per Share Total Return of 15.2%. Although market-wide transaction activity was lower during the period, we and our Managers have continued to identify attractive opportunities for new investments and realisations. Total Realisations during the period generated proceeds of £94.1m, including 17 full exits at a weighted average Uplift to Carrying Value of 17.7%. Our investments of £64.1m during the period included two Direct investments. A challenging fundraising market for private equity managers continues to be a favourable environment for our perpetual capital structure, and we made nine new commitments during the period, including to two funds managed by ICG. Our Portfolio is performing in line with our expectations, and the Primary commitments made in recent quarters are enabling us to continue to build a diversified Portfolio through cycles. Our relationship with ICG is demonstrating economic and broader benefits to ICG Enterprise Trust, and we feel well positioned for the months ahead and for the longer term. | ||||
PERFORMANCE OVERVIEW
| Annualised | ||||||
| Performance to 31 July 2023 | 3 months | 6 months | 1 year | 3 years | 5 years | 10 years |
| Portfolio Return on a Local Currency Basis | 4.3% | 4.6% | 7.3% | 24.3% | 17.9% | 13.4% |
| NAV per Share Total Return | 1.9% | 0.8% | 4.1% | 21.1% | 15.2% | 13.0% |
| Share Price Total Return | 11.7% | 2.9% | 2.8% | 17.0% | 9.4% | 11.9% |
| FTSE All-Share Index Total Return | (1.2) % | 0.5% | 6.1% | 12.3% | 3.4% | 5.5% |
| Portfolio activity overview for H1 FY24 | Primary | Direct | Secondary | Total | ICG-managed |
| Local Currency return | 4.8% | 3.8% | 5.5% | 4.6% | 5.1% |
| Sterling return | 1.8% | 1.4% | 1.4% | 1.6% | 1.8% |
| New Investments | £39.2m | £18.4m | £6.5m | £64.1m | £9.9m |
| Total Proceeds | £46.6m | £35.3m | £12.2m | £94.1m | £15.8m |
| New Fund Commitments | £89.7m | - | £20.3m | £110.0m | £42.2m |
| Closing Portfolio value | £767.5m | £372.5m | £258.8m | £1,398.8m | £411.9m |
| % Total Portfolio | 54.9% | 26.6% | 18.5% | 100.0% | 29.4% |
| OUTLOOK |
| We are encouraged by the performance of our underlying investments, which have continued to generate robust revenue and EBITDA growth. In the current market, we opt to retain a disciplined approach to Direct investments, and our fund commitments are enabling us to continue to invest in our portfolio. We continue to see favourable dynamics in the Secondary market as other private equity investors seek routes to liquidity. Importantly, we remain confident in the quality of our Portfolio, of our managers, and of our team, to generate resilient long-term returns for our shareholders. |
COMPANY TIMETABLE
A presentation for investors and analysts will be held at 10:00 BST today. A link for the presentation can be found on the Results & Reports page of the Company website. A recording of the presentation will be made available on the Company website after the event.
| FY24 First Interim Dividend | FY24 Second Interim Dividend | |
| Ex-dividend date | 17 August 2023 | 16 November 2023 |
| Record date | 18 August 2023 | 17 November 2023 |
| Dividend payment date | 1 September 2023 | 1 December 2023 |
ENQUIRIES
Institutional investors and analysts:
Chris Hunt, Head of Shareholder Relations +44 (0) 20 3545 2000
Livia Bridgman Baker, Shareholder Relations
Media:
Clare Glynn, Corporate Communications +44 (0) 20 3545 1395
ABOUT ICG ENTERPRISE TRUST
ICG Enterprise Trust is a leading listed private equity investor focused on creating long-term growth by delivering consistently strong returns through selectively investing in profitable, cash-generative private companies, primarily in Europe and the US, while offering the added benefit to shareholders of daily liquidity.
We invest in companies directly as well as through funds managed by Intermediate Capital Group ('ICG') and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change.
NOTES
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 International Financial Reporting Standards (“IFRS”) measures, where appropriate.
In the 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
The information contained herein and on the pages that follow does not constitute an offer to sell, or the solicitation of an offer to acquire or subscribe for, any securities in any jurisdiction where such an offer or solicitation is unlawful or would impose any unfulfilled registration, qualification, publication or approval requirements on ICG Enterprise Trust PLC (the "Company") or its affiliates or agents. Equity securities in the Company have not been and will not be registered under the applicable securities laws of the United States, Australia, Canada, Japan or South Africa (each an “Excluded Jurisdiction”). The equity securities in the Company referred to herein and on the pages that follow may not be offered or sold within an Excluded Jurisdiction, or to any U.S. person ("U.S. Person") as defined in Regulation S under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"), or to any national, resident or citizen of an Excluded Jurisdiction.
The information on the pages that follow may contain forward looking statements. Any statement other than a statement of historical fact is a forward looking statement. Actual results may differ materially from those expressed or implied by any forward looking statement. The Company does not undertake any obligation to update or revise any forward looking statements. You should not place undue reliance on any forward looking statement, which speaks only as of the date of its issuance.
CHAIR’S FOREWORD
ICG Enterprise Trust aims to provide investors with exposure to private equity investments that can deliver resilient returns for our shareholders over the long term, with the added benefit of daily liquidity.
Your Company’s NAV per Share Total Return during the period was 0.8% and at 31 July 2023 the Company’s NAV stood at 1,904p per share. Over the longer-term, our track record is evidencing the success of our investment strategy: over the five years to 31 July 2023 we have generated an annualised NAV per Share Total Return of 15.2%, and over the three years to 31 July 2023 we have generated an annualised NAV per Share Total Return of 21.1%.
Despite this impressive track record and the resilient operational performance of our underlying investments, our discount has remained wide, in common with much of the listed private equity investment trust sector. In the face of this, the Board has taken a number of steps to optimise returns for our shareholders today, and to engage with the shareholders of tomorrow.
Costs remain a focus for the Board, and this period benefits from the management fee cap and cost sharing agreement we entered into with the Manager, effective from 1st February 2023. In aggregate we estimate shareholders have saved approximately £1m in this period as a result of these actions, including the management fees of £8.0m being approximately 8% lower than they would have been had the management fee cap not been in place.
Our buyback programme has been successfully and regularly implemented since its introduction almost a year ago today: we have repurchased just under 1 million shares at a weighted average discount to NAV of 40.6%. These buybacks represent £10.6m of capital returned to shareholders, equivalent to approximately one third of total cash returns during the period. Alongside this, we reiterate our commitment to the Company's progressive dividend policy.
Finally, your Board recognises the importance of transparent and open shareholder engagement, and I look forward to seeing a number of you in the coming months. I was delighted to represent the Board at ICG Enterprise Trust’s first Investor Day earlier this year. Then, as now, your Board remains confident that ICG Enterprise Trust is well positioned to navigate the current macroeconomic environment. The portfolio has performed well over the last year, reassuring us that it will be resilient and defensive through the cycle. Our underlying earnings continue to grow, which should provide long term returns for our shareholders.
Jane Tufnell
Chair
5 October 2023
MANAGER’S REVIEW
Alternative Performance Measures
The Board and the Manager monitor the financial performance of the Company on the basis of Alternative Performance Measures (APM), which are non-IFRS measures. The APM predominantly form the basis of the financial measures discussed in this review, which the Board believes assists shareholders in assessing their investment and the delivery of the investment strategy.
The Company holds certain investments in subsidiary entities. The substantive difference between APM and IFRS is the treatment of the assets and liabilities of these subsidiaries. The APM basis “looks through” these subsidiaries to the underlying assets and liabilities they hold, and it reports the investments as the Portfolio APM. Under IFRS, the Company and its subsidiaries are reported separately. The assets and liabilities of the subsidiaries are presented on the face of the IFRS balance sheet as a single carrying value. The same is true for the IFRS and APM basis of the Cash flow statement.
The following table sets out IFRS metrics and the APM equivalents:
| IFRS (£m) | 31 July 2023 | 31 July 2022 | APM (£m) | 31 July 2023 | 31 July 2022 |
| Investments | 1,342.7 | 1,298.1 | Portfolio | 1,398.8 | 1,353.7 |
| NAV | 1,290.3 | 1,268.8 | |||
| Cash flows from the sale of portfolio investments | 15.7 | 18.2 | Total Proceeds | 94.1 | 106.8 |
| Cash flows related to the purchase of portfolio investments | 15.5 | 29.6 | Total New Investment | 64.1 | 143.7 |
The Glossary includes definitions for all APM and, where appropriate, a reconciliation between APM and IFRS.
Our investment strategy
We focus on investing in buyouts of profitable, cash-generative businesses in developed markets that exhibit defensive growth characteristics which we believe support strong and resilient returns across economic cycles.
We take an active approach to portfolio construction, with a flexible mandate that enables us to deploy capital in Primary, Secondary and Direct investments. Geographically we focus on the developed markets of North America and Europe which have deep and mature private equity markets supported by a robust corporate governance ecosystem.
| Medium-term target | Five-year average | 31 July 2023 | |
| 1. Target Portfolio composition 1 | |||
| Investment category | |||
| Primary | ~50% | 61% | 55% |
| Direct | ~25% | 27% | 27% |
| Secondary | ~25% | 12% | 18% |
| Geography2 | |||
| North America | ~50% | 39% | 43% |
| Europe (inc. UK) | ~50% | 55% | 51% |
| Other | — | 6% | 6% |
| 2. Balance sheet | |||
| (Net cash)/debt3 | ~0% | (2)% | 4% |
| 1 As percentage of Portfolio; 2 (Net cash)/net debt as a percentage of NAV; 3 (Net cash)/debt as a percentage of NAV Note: five year average is the linear average of FY exposures for FY20 - FY23 and H1 FY24 | |||
ICG Enterprise Trust benefits from access to ICG-managed funds and Direct investments, which represented 29.4% of the Portfolio value at period end and generated a 5.1% return on a local currency basis.
Performance overview
At 31 July 2023, our Portfolio was valued at £1,398.8m, and the Portfolio Return on a Local Currency Basis for the first half of the financial year was 4.6% (H1 FY23: 7.3%).
All investment categories, Primary, Direct and Secondary, generated positive Portfolio returns during the period:
- Primary investments generated a local currency return of 4.8%. Returns were broad based, with notable outperformance from funds managed by ICG and Gridiron, among others
- Direct Investments generated a return of 3.8%, reflecting resilient operational performance, as well as a number of realisations agreed during the period
- Secondary investments generated a return of 5.5%
Over the last five years, our Portfolio has generated an annualised Portfolio Return on a Local Currency Basis of 17.9%.
Due to the geographic diversification of our Portfolio, the reported value is impacted by changes in foreign exchange rates. During the period, the Portfolio decreased by £42.5m (3.0%) due to FX movements, driven by Sterling appreciation versus both the Euro and US Dollar. In Sterling terms, Portfolio growth during the period was 1.6%.
ICG Enterprise Trust generated a NAV per Share Total Return of 0.8% during H1 FY24 (4.1% on an LTM basis), ending the period with a NAV per Share of 1,904p.
Over the last five years, ICG Enterprise Trust has generated an annualised NAV per Share Total Return of 15.2%.
| Movement in the Portfolio £m | Six months to 31 July 2023 | Six months to 31 July 2022 |
| Opening Portfolio1 | 1,406.4 | 1,172.2 |
| Total New Investments | 64.1 | 143.7 |
| Total Proceeds | (94.1) | (106.8) |
| Portfolio net cashflow | (30.0) | 36.9 |
| Valuation movement2 | 65.0 | 87.0 |
| Currency movement | (42.6) | 57.6 |
| Closing Portfolio | 1,398.8 | 1,353.7 |
| % Portfolio growth (local currency) | 4.6% | 7.4% |
| % currency movement | (3.0)% | 5.0% |
| % Portfolio growth (Sterling) | 1.6 % | 12.4% |
| Impact of (net cash)/net debt | 0.1 % | 0.2% |
| Expenses and other income | (1.0) % | (0.9) % |
| Co-investment Incentive Scheme Accrual | (0.2) % | (0.8) % |
| Impact of share buybacks and dividend reinvestment | 0.3 % | —% |
| NAV per Share Total Return | 0.8 % | 10.9% |
| 1 Refer to the Glossary 2 92.4% of the Portfolio is valued using 30 June 2023 (or later) valuations (2022: 99.6%) | ||
Portfolio company performance
Our Portfolio companies delivered robust financial performance during the period, generating double digit revenue and EBITDA growth over the last twelve months. As well as performance metrics for our Top 30 companies, we include data for our "Enlarged Perimeter", which represents the aggregate value of the Top 30 Companies and as many of the managers from within the Top 30 funds as practicable. At 31 July 2023, the Enlarged Perimeter represented 66.4% of the Portfolio by value.
Based on the Enlarged Perimeter, valuation metrics and leverage of the Portfolio remained broadly stable during the period: EV/EBITDA for the Enlarged Perimeter was 14.4x for the period (FY23: 14.0x); and Net Debt / EBITDA for the Enlarged Perimeter was 4.7x (FY23: 4.6x).
| Top 30 | Enlarged Perimeter | |
| Portfolio coverage | 36.8% | 66.4% |
| Last Twelve Months ('LTM') revenue growth | 14.9% | 15.6% |
| LTM EBITDA growth | 14.7% | 16.9% |
| Net Debt / EBITDA1 | 4.8x | 4.7x |
| Enterprise Value / EBITDA1 | 14.7x | 14.4x |
| Note: values are weighted averages for the respective portfolio segment; see Glossary for definition and calculation methodology 1 Weighted average metrics exclude PetSmart, for which EBITDA multiple is not an appropriate valuation metric | ||
Quoted company exposure
We do not actively invest in publicly quoted companies but gain listed investment exposure when IPOs are used as a route to exit an investment. In these cases, exit timing typically lies with the manager with whom we have invested.
At 31 July 2023, ICG Enterprise Trust’s exposure to quoted companies was valued at £97.1m, equivalent to 6.9% of the Portfolio value (FY23: 7.8%). Across the Portfolio, quoted positions resulted in a marginal decrease of £0.1m in Portfolio NAV during the period. The share price of our largest listed exposure, Chewy, decreased by 24% in local currency (USD) during the period.
At 31 July 2023 there was one quoted investment that individually accounted for 0.5% or more of the Portfolio value:
| Company | Ticker | 31 July 2023 % of Portfolio value | |
| Chewy (part of PetSmart)1 | CHWY-US | 2.7% | |
| Other companies | 4.2% | ||
| Total | 6.9% | ||
| 1 Value includes entire holding of PetSmart and Chewy. Majority of value is within Chewy | |||
During the period, BC Partners (the underlying manager of the PetSmart investment) announced a transaction between PetSmart/Chewy and Apollo, which is expected to close later this year. While we do not expect a meaningful near-term impact on our Portfolio valuation or realisation proceeds as a result of this transaction, we believe it provides some long-term flexibility around this investment for BC Partners.
Realisation activity
During the first half of FY24, the ICG Enterprise Trust Portfolio generated Total Realisation Proceeds of £94.1m.
Realisation activity during the period included 17 Full Exits. These were completed at a weighted average Uplift to Carrying Value of 17.7% and weighted average Multiple to Cost of 4.0x.
The 10 largest underlying realisations in the period, which represent 65.8% of Total Realisation Proceeds, are set out in the table below:
| Investment | Description | Manager | Country | Proceeds £m |
| Endeavor Schools | Provider of paid private schooling | Leeds Equity Partners | United States | 32.9 |
| Signify Health | Provider of technology enabled healthcare payor services | New Mountain Capital | United States | 8.3 |
| Breitling | Manufacturer of luxury watches | CVC Capital Partners | Switzerland | 3.9 |
| GoodLife Foods | Producer of frozen snacks | Egeria | Netherlands | 3.3 |
| SERB | Manufacturer of speciality pharmaceuticals | Charterhouse Capital Partners | Belgium | 2.9 |
| USCO | Manufacturer and supplier of components for earth-moving machines | One Equity Partners | Italy | 2.5 |
| Enhesa Group | Provider of Environmental, Health and Safety compliance support | ICG | Belgium | 2.4 |
| TMF | Provider of management and accounting outsourcing services | CVC Capital Partners | Netherlands | 2.1 |
| Ilionx | Provider of IT services and solutions | Egeria | Netherlands | 1.8 |
| group.ONE | Provider of web hosting and domain services | Cinven | Sweden | 1.7 |
| Total of 10 largest underlying realisations | 61.8 | |||
New investment activity
Total new investments of £64.1m during the period, of which 5.4% (£9.9m) were alongside ICG. New investment by category detailed in the table below:
| Investment Category | Cost (£m) | % of New Investments |
| Primary | 39.2 | 61.2% |
| Direct | 18.4 | 28.7% |
| Secondary | 6.5 | 10.1% |
| Total | 64.1 | 100.0% |
During the first half of the financial year we made two new Direct Investments for a combined value of £12.2m. The balance of Direct Investments is comprised of £6.2m of incremental drawdowns across existing Direct Investments.
The 10 largest underlying new investments in the period were as follows:
| Investment | Description | Manager | Country | Cost £m1 |
| Archer Technologies | Developer of governance, risk and compliance software intended for risk management | Cinven | United States | 9.5 |
| Atlas Technical Consultants | Provider of professional testing, inspection, engineering, environmental and consulting services | GI Partners | United States | 4.2 |
| Independence Products | Provider of prescribed infection prevention products | Graphite Capital | United Kingdom | 1.5 |
| NovaTaste | Supplier of flavourings and ingredients | PAI Partners | Austria | 1.3 |
| Maxar | Provider of geospatial intelligence and satellite manufacturing services | Advent International | United States | 1.2 |
| Envalior | Provider of engineering materials solutions | Advent International | Germany | 1.1 |
| Looping | Operator of theme parks | PAI Partners | United Kingdom | 1.0 |
| European Camping Group | Operator of premium campsites and holiday parks | PAI Partners | France | 1.0 |
| Coupa Software | Operator of a SaaS platform that provides enterprises with procurement, invoicing, and expense management modules | Thoma Bravo | United States | 1.0 |
| TalentNeuron | Provider of talent analytics and labour market data | Leeds Equity Partners | United States | 1.0 |
| Top 10 largest underlying new investments | 22.8 | |||
1 Represents ICG Enterprise Trust's indirect investment (share of fund cost) plus any direct investments in the period.
Commitments
The fundraising market continues to be favourable to ICG Enterprise Trust: in an environment where many investors are restricted in their ability to commit new capital, our perpetual capital structure and flexible investment mandate enables us to commit through the cycle, maintaining vintage diversification for our Portfolio and sowing the seeds for future growth.
During the period we made nine new fund Commitments totalling £110.0m, including to two funds managed by ICG plc, as detailed below:
| Fund | Manager | Type / Focus | Commitment during the period | |
| Local currency | £m | |||
| Audax Private Equity VII | Audax Group | Primary / mid-market buyouts | $10.0m | £8.0m |
| Cinven VIII | Cinven | Primary / large buyouts | €15.0m | £13.2m |
| Hellman Friedman XI | Hellman & Friedman | Primary / large buyouts | $10.0m | £8.0m |
| ICG Europe Mid-Market II | ICG | Primary / mid-market buyouts | €25.0m | £22.0m |
| Apax XI | Apax Partners | Primary / mid-market buyouts | €10.0m | £8.8m |
| Bregal Unternehmerkapital IV | Bregal | Primary / mid-market buyouts | €10.0m | £8.7m |
| CVC IX | CVC Capital Partners | Primary / large buyouts | €15.0m | £13.0m |
| Genstar Capital Partners XI | Genstar Capital Partners | Primary / large buyouts | $10.0m | £8.0m |
| ICG Strategic Equity V | ICG | Secondaries / GP-led | $25.0m | £20.3m |
At 31 July 2023, ICG Enterprise Trust had outstanding Undrawn Commitments of £548.7m.
| Movement in outstanding Commitments | 6 months to 31 July 2023 £m |
| Undrawn Commitments as at 1 February 2023 | 496.7 |
| New Fund Commitments | 110.0 |
| New Commitments relating to Co-investments | 12.5 |
| Drawdowns | (64.1) |
| Currency and other movements, including repayment of commitments which can be reinvested | (6.4) |
| Undrawn commitments as at 31 July 2023 | 548.7 |
Total Undrawn Commitments at 31 July 2023 represented £429.3m of Undrawn Commitments to funds within their Investment Period, while £119.4m was to funds outside their Investment Period.
| 31 July 2023 £m | 31 July 2022 £m | |
| Undrawn Commitments – funds in Investment Period | 429.3 | 367.0 |
| Undrawn Commitments – funds outside Investment Period | 119.4 | 129.7 |
| Total Undrawn Commitments | 548.7 | 496.7 |
| Total available liquidity (including facility) | (158.6) | (167.0) |
| Overcommitment net of total available liquidity | 390.1 | 329.7 |
| Overcommitment % of net asset value | 30.2% | 25.3% |
Commitments are made in the funds' underlying currencies. The currency split of the undrawn commitments at 31 July 2023 was as follows:
| 31 July 2023 | 31 July 2022 | |||
| Undrawn Commitments | £m | % | £m | % |
| US Dollar | 271.5 | 49.4% | 253.7 | 51.1% |
| Euro | 261.0 | 47.6% | 226.1 | 45.5% |
| Sterling | 16.2 | 3.0% | 16.9 | 3.4% |
| Total | 548.7 | 100.0% | 496.7 | 100.0% |
Liquidity
At 31 July 2023 ICG Enterprise Trust had a cash balance of £24.0m (31 January 2023: £20.7m) and total available liquidity of £158.6m (31 January 2023: £167.0m).
| £m | |
| Cash at 31 January 2023 | 20.7 |
| Realisation Proceeds | 94.1 |
| New investments | (64.1) |
| Debt drawn down | 5.4 |
| Shareholder returns | (17.3) |
| Management fees | (7.5) |
| FX and other expenses | (7.3) |
| Cash at 31 July 2023 | 24.0 |
| Available undrawn debt facilities | 134.6 |
| Total available liquidity | 158.6 |
At 31 July 2023, the drawn debt was £72.9m (31 January 2023: £65.4m), resulting in a net debt position of £48.9m. At 31 July 2023, the Portfolio represented 108.4% of net assets (31 January 2023: 108.1%).
| £m | % of net assets | |
| Portfolio | 1,398.8 | 108.4% |
| Cash | 24.0 | 1.9% |
| Drawn debt | (72.9) | (5.6%) |
| Co-investment Incentive Scheme Accrual | (57.0) | (4.4%) |
| Other net current liabilities | (2.6) | (0.3%) |
| Net assets | 1,290.3 | 100.0% |
Our objective is to be fully invested through the cycle, while ensuring that we have sufficient financial resources to be able to take advantage of attractive investment opportunities as they arise. Drawdowns of commitments are funded from Total Proceeds and, where appropriate, the debt facility.
Dividend and share buyback
Reflecting the Company's ongoing focus on optimising shareholder returns, ICG Enterprise Trust maintains a progressive dividend policy alongside an active share buyback programme to return capital to shareholders.
The Board has declared a dividend of 8p per share in respect of the second quarter, taking total dividends for the period to 16p (H1 FY23: 14p). It remains the Board's intention, in the absence of any unforeseen circumstances, to declare total dividends of at least 32p per share for the financial year, implying an increase of 6.7% on the previous financial year.
In October 2022 the Board announced the introduction of a long-term active share buyback programme, which may be executed at any discount to NAV. Details of share repurchases made under this programme are provided below:
| Buyback activity summary | H1 FY24 | Since 19 October 20221 |
| Number of shares purchased | 583,352 | 946,347 |
| Aggregate consideration | £6.5m | £10.6m |
| Weighted average discount to last reported NAV | 41.2% | 40.6% |
| 1 Being the date the long-term share buyback programme was announced, up to and including 30 September 2023 Note: aggregate consideration excludes commission, PTM and SDRT | ||
The Board believes the buyback programme demonstrates the Manager’s discipline around capital allocation; underlines the Board’s confidence in the long-term prospects of the Company, its cashflows and NAV; will enhance the NAV per share; and, over time, may positively influence the volatility of the Company’s discount and its trading liquidity.
The Board reviews the size, mandate and efficacy of the buyback programme on a quarterly basis, to ensure it is working in the long-term interests of shareholders and in line with the objectives outlined above.
The Board retains absolute discretion as to the execution, pricing and timing of any share buybacks, subject to the conditions set out in the authority to execute share buybacks approved at the Company's 2023 Annual General Meeting. Any shares repurchased by the Company will be held in treasury.
Activity since the period end
Notable activity between 1 August 2023 and 31 August 2023 has included:
- Realisation Proceeds of £8.4m
- New investments of £15.0m
Foreign exchange rates
The details of relevant FX rates applied in this report are provided in the table below:
| Average rate 6 months to | Period end rate | |||
| 31 July 2023 | 31 July 2022 | 31 July 2023 | 31 July 2022 | |
| GBP:EUR | 1.1465 | 1.1680 | 1.1671 | 1.1341 |
| GBP:USD | 1.2445 | 1.2257 | 1.2836 | 1.2320 |
| EUR:USD | 1.0854 | 1.0491 | 1.0997 | 1.0863 |
ICG Private Equity Fund Investments Team
5 October 2023
SUPPLEMENTARY INFORMATION
This section presents supplementary information regarding the Portfolio (see Manager’s Review and the Glossary for further details and definitions).
Portfolio composition
| Portfolio by calendar year of investment | % of value of underlying investments 31 July 2023 | % of value of underlying investments 31 July 2022 |
| 2023 | 2.3 % | — % |
| 2022 | 17.0% | 19.6% |
| 2021 | 27.4% | 25.1% |
| 2020 | 10.7% | 10.3% |
| 2019 | 12.7% | 12.0% |
| 2018 | 10.7% | 12.0% |
| 2017 | 6.2% | 6.7% |
| 2016 | 4.0% | 4.1% |
| 2015 | 3.3% | 4.1% |
| 2014 and older | 5.7% | 6.1% |
| Total | 100.0% | 100.0% |
| Portfolio by sector | % of value of underlying investments 31 July 2023 | % of value of underlying investments 31 July 2022 |
| TMT | 24.1% | 22.5% |
| Consumer goods and services | 20.9% | 20.9% |
| Healthcare | 13.2% | 13.3% |
| Business services | 12.9% | 12.6% |
| Industrials | 8.1% | 8.4% |
| Education | 5.4% | 7.0% |
| Financials | 6.0% | 5.0% |
| Leisure | 4.8% | 3.9% |
| Other | 4.6% | 6.4% |
| Total | 100.0% | 100.0% |
| Portfolio by fund currency1 | £m | 31 July 2023 % | 31 July 2022 £m | 31 July 2022 % |
| US Dollar | 671.3 | 48.0% | 508.7 | 43.4% |
| Euro | 612.0 | 43.8% | 558.5 | 47.6% |
| Sterling | 115.2 | 8.2% | 104.7 | 9.0% |
| Other | 0.3 | —% | 0.3 | —% |
| Total | 1,398.8 | 100.0% | 1,172.2 | 100.0% |
| 1 Currency exposure by reference to the reporting currency of each fund . | ||||
Portfolio Dashboard
The tables below provide disclosure on the composition and dispersion of financial and operational performance for the Top 30 and the Enlarged Perimeter. At 31 July 2023, the Top 30 Companies represented 36.8% of the Portfolio by value and the Enlarged Perimeter represented 66.4% of total Portfolio value. This information is prepared on a value-weighted basis, based on contribution to Portfolio value at 31 July 2023.
| % of value at 31 July 2023 | ||
| Sector exposure | Top 30 | Enlarged Perimeter |
| TMT | 26.6% | 22.2% |
| Consumer goods and services | 21.2% | 20.9% |
| Business services | 17.7% | 14.5% |
| Healthcare | 10.6% | 12.9% |
| Education | 7.7% | 5.9% |
| Leisure | 7.1% | 5.5% |
| Financials | 2.6% | 4.3% |
| Industrials | 6.5% | 9.5% |
| Other | - | 4.3% |
| Total | 100.0% | 100.0% |
| % of value at 31 July 2023 | ||
| Geographic exposure1 | Top 30 | Enlarged Perimeter |
| North America | 43.1% | 45.0% |
| Europe | 50.1% | 51.0% |
| Other | 6.8% | 4.0% |
| Total | 100.0% | 100.0% |
| 1 Geographic exposure is calculated by reference to the location of the headquarters of the underlying Portfolio companies | ||
| % of value at 31 July 2023 | |||
| LTM revenue growth | Top 30 | Enlarged Perimeter | |
| <0% | 12.6% | 13.0% | |
| 0-10% | 26.7% | 28.6% | |
| 10-20% | 31.7% | 27.7% | |
| 20-30% | 9.8% | 12.5% | |
| >30% | 12.0% | 13.0% | |
| n.a.1 | 7.2% | 5.2% | |
| Weighted average | 14.9% | 15.6% | |
| Note: for consistency, any excluded investments are excluded for all dispersion analysis. 1 n.a. within Top 30 represents PetSmart, for which EBITDA multiple is not an appropriate valuation metric. | |||
| % of value at 31 July 2023 | |||
| LTM EBITDA growth | Top 30 | Enlarged Perimeter | |
| <0% | 20.1% | 23.1% | |
| 0-10% | 20.2% | 18.9% | |
| 10-20% | 30.5% | 24.1% | |
| 20-30% | 4.6% | 7.7% | |
| >30% | 17.4% | 20.5% | |
| n.a1 | 7.2% | 5.7% | |
| Weighted average | 14.7% | 16.9% | |
| Note: for consistency, any excluded investments are excluded for all dispersion analysis. 1 n.a. within Top 30 represents PetSmart, for which EBITDA multiple is not an appropriate valuation metric. | |||
| % of value at 31 July 2023 | |||
| EV/EBITDA multiple | Top 30 | Enlarged Perimeter | |
| 0-10x | 8.8% | 14.1% | |
| 10-12x | 15.7% | 15.5% | |
| 12-13x | 15.2% | 13.7% | |
| 13-15x | 19.7% | 18.4% | |
| 15-17x | 15.8% | 13.0% | |
| 17-20x | 8.1% | 9.2% | |
| >20x | 9.5% | 10.1% | |
| n.a.1 | 7.2% | 6.0% | |
| Weighted average | 14.7x | 14.4x | |
| Note: for consistency, any excluded investments are excluded for all dispersion analysis. 1 n.a. within Top 30 represents PetSmart, for which EBITDA multiple is not an appropriate valuation metric. | |||
| % of value at 31 July 2023 | |||
| Net Debt / EBITDA | Top 30 | Enlarged Perimeter | |
| <2x | 21.0% | 15.9% | |
| 2-4x | 9.0% | 18.6% | |
| 4-5x | 19.0% | 15.8% | |
| 5-6x | 17.0% | 17.1% | |
| 6-7x | 7.0% | 9.7% | |
| >7x | 20.0% | 15.8% | |
| n.a.1 | 7.0% | 7.1% | |
| Weighted average | 4.8x | 4.7x | |
| Note: for consistency, any excluded investments are excluded for all dispersion analysis. 1 n.a. within Top 30 represents PetSmart, for which EBITDA multiple is not an appropriate valuation metric. | |||
Top 30 companies
The table below presents the 30 companies in which ICG Enterprise Trust had the largest investments by value at 31 July 2023. The valuations are gross of underlying managers fees and carried interest.
| Company | Manager | Year of investment | Country | Value as a % of Portfolio | |
| 1 | Minimax | ||||
| Supplier of fire protection systems and services | ICG | 2018 | Germany | 3.1% | |
| 2 | Petsmart / Chewy | ||||
| Retailer of pet products and services | BC Partners | 2015 | United States | 2.7% | |
| 3 | Froneri | ||||
| Manufacturer and distributor of ice cream products | PAI | 2013 / 2019 | United Kingdom | 2.2% | |
| 4 | Leaf Home Solutions | ||||
| Provider of home maintenance services | Gridiron | 2016 | United States | 1.7% | |
| 5 | European Camping Group | ||||
| Operator of premium campsites and holiday parks | PAI | 2021 / 2023 | France | 1.4% | |
| 6 | Yudo | ||||
| Designer and manufacturer of hot runner systems | ICG | 2017 / 2018 | South Korea | 1.4% | |
| 7 | Curium Pharma | ||||
| Supplier of nuclear medicine diagnostic pharmaceuticals | ICG | 2020 | United Kingdom | 1.4% | |
| 8 | AML RightSource | ||||
| Provider of compliance and regulatory services and solutions | Gridiron | 2020 | United States | 1.3% | |
| 9 | Circana (formerly known as IRI) | ||||
| Provider of mission-critical data and predictive analytics to consumer goods manufacturers | New Mountain | 2022 | United States | 1.3% | |
| 10 | Precisely | ||||
| Provider of enterprise software | Clearlake / ICG | 2021 / 2022 | United States | 1.3% | |
| 11 | Newton | ||||
| Provider of management consulting services | ICG | 2021 / 2022 | United Kingdom | 1.2% | |
| 12 | Ambassador Theatre Group | ||||
| Operator of theatres and ticketing platforms | ICG / Providence | 2021 | United Kingdom | 1.2% | |
| 13 | David Lloyd Leisure | ||||
| Operator of premium health clubs | TDR | 2013 / 2020 | United Kingdom | 1.2% | |
| 14 | Crucial Learning | ||||
| Provider of corporate training courses focused on communication skills and leadership development | Leeds Equity | 2019 | United States | 1.1% | |
| 15 | DomusVi | ||||
| Operator of retirement homes | ICG | 2017 / 2021 | France | 1.1% | |
| 16 | Visma | ||||
| Provider of business management software and outsourcing services | HgCapital / ICG | 2017 / 2020 | Norway | 1.1% | |
| 17 | PSB Academy | ||||
| Provider of private tertiary education | ICG | 2018 | Singapore | 1.1% | |
| 18 | Ivanti | ||||
| Provider of IT management solutions | Charlesbank / ICG | 2021 | United States | 1.1% | |
| 19 | Planet Payment | ||||
| Provider of integrated payments services focused on hospitality and luxury retail | Advent / Eurazeo | 2021 | Ireland | 1.0% | |
| 20 | DigiCert | ||||
| Provider of enterprise security solutions | ICG | 2021 | United States | 1.0% | |
| 21 | ECA Group | ||||
| Provider of autonomous systems for the aerospace and maritime sectors | ICG | 2022 | France | 1.0% | |
| 22 | Davies Group | ||||
| Provider of speciality business process outsourcing services | BC Partners | 2021 | United Kingdom | 1.0% | |
| 23 | KronosNet | ||||
| Provider of tech-enabled customer engagement and business solutions | ICG | 2022 | Spain | 0.9% | |
| 24 | Class Valuation | ||||
| Provider of residential mortgage appraisal management services | Gridiron | 2021 | United States | 0.9% | |
| 25 | Brooks Automation | ||||
| Provider of semiconductor manufacturing solutions | THL | 2021 / 2022 | United States | 0.8% | |
| 26 | WCT | ||||
| Provider of clinical research outsourcing services | The Jordan Company | 2021 | United States | 0.8% | |
| 27 | Archer Technologies | ||||
| Developer of governance, risk and compliance software intended for risk management | Cinven | 2023 | United States | 0.7% | |
| 28 | AMEOS Group | ||||
| Operator of private hospitals | ICG | 2021 | Switzerland | 0.6% | |
| 29 | RegEd | ||||
| Provider of SaaS-based governance, risk and compliance enterprise solutions | Gryphon | 2018 / 2019 | United States | 0.6% | |
| 30 | Vistage | ||||
| Provider of CEO leadership and coaching for small and mid-size businesses in the US | Gridiron | 2022 | United States | 0.6% | |
| Total of the 30 largest underlying investments | 36.8% |
The 30 largest fund investments
The table below presents the 30 largest fund investments by value at 31 July 2023. The valuations are net of underlying managers’ fees and carried interest.
| Fund | Year of commitment | Value £m | Outstanding commitment £m | |
| 1 | ICG Strategic Equity Fund III | |||
| GP-led secondary transactions | 2018 | 34.8 | 10.8 | |
| 2 | ICG Europe VII | |||
| Mezzanine and equity in mid-market buyouts | 2018 | 33.7 | 6.6 | |
| 3 | ICG LP Secondaries Fund I | |||
| LP-led secondary transactions | 2022 | 33.2 | 26.0 | |
| 4 | ICG Ludgate Hill I | |||
| Secondary portfolio | 2021 | 31.7 | 14.0 | |
| 5 | Gridiron Capital Fund III | |||
| Mid-market buyouts | 2016 | 30.2 | 4.0 | |
| 6 | CVC European Equity Partners VII | |||
| Large buyouts | 2017 | 30.0 | 1.7 | |
| 7 | PAI Strategic Partnerships | |||
| Mid-market and large buyouts | 2019 | 29.0 | 0.3 | |
| 8 | Graphite Capital Partners VIII | |||
| Mid-market buyouts | 2013 | 27.2 | 2.2 | |
| 9 | PAI Europe VII | |||
| Mid-market and large buyouts | 2017 | 26.5 | 1.5 | |
| 10 | Gridiron Capital Fund IV | |||
| Mid-market buyouts | 2019 | 23.7 | 1.0 | |
| 11 | ICG Strategic Equity Fund IV | |||
| GP-led secondary transactions | 2021 | 23.0 | 14.9 | |
| 12 | ICG Ludgate Hill III | |||
| Secondary portfolio | 2022 | 21.3 | 3.3 | |
| 13 | Resolute IV | |||
| Mid-market buyouts | 2018 | 20.5 | 1.5 | |
| 14 | Sixth Cinven Fund | |||
| Large buyouts | 2016 | 19.8 | 1.6 | |
| 15 | Resolute II | |||
| Secondary fund restructuring | 2018 | 18.9 | 1.1 | |
| 16 | Oak Hill V | |||
| Mid-market buyouts | 2019 | 18.9 | 1.0 | |
| 17 | CVC European Equity Partners VI | |||
| Large buyouts | 2013 | 18.0 | 1.9 | |
| 18 | Advent Global Private Equity IX | |||
| Large buyouts | 2019 | 17.1 | 0.8 | |
| 19 | Advent Global Private Equity VIII | |||
| Large buyouts | 2016 | 17.1 | 0.0 | |
| 20 | Seventh Cinven | |||
| Large buyouts | 2019 | 16.9 | 3.8 | |
| 21 | AEA VII | |||
| Mid-market buyouts | 2019 | 16.3 | 0.6 | |
| 22 | BC European Capital X | |||
| Large buyouts | 2016 | 16.0 | 1.4 | |
| 23 | Resolute V | |||
| Mid-market buy-outs | 2021 | 15.7 | 1.1 | |
| 24 | New Mountain Partners V | |||
| Mid-market buyouts | 2017 | 15.4 | 1.7 | |
| 25 | ICG Augusta Partners Co-Investor | |||
| Secondary fund restructurings | 2018 | 15.3 | 17.6 | |
| 26 | Thomas H Lee Equity Fund VIII | |||
| Mid-market and large buyouts | 2017 | 15.2 | 2.2 | |
| 27 | Gryphon V | |||
| Mid-market buyouts | 2019 | 14.9 | 1.7 | |
| 28 | Graphite Capital Partners IX | |||
| Mid-market buyouts | 2018 | 14.8 | 5.8 | |
| 29 | BC European Capital IX | |||
| Large buyouts | 2011 | 14.0 | 0.6 | |
| 30 | ICG Europe Mid-Market Fund | |||
| Mezzanine and equity in mid-market buyouts | 2019 | 13.1 | 7.6 | |
| Total of the largest 30 fund investments | 642.2 | 138.3 | ||
| Percentage of total investment Portfolio | 45.9% |
PRINCIPAL RISKS AND UNCERTAINTIES
The principal risks and uncertainties facing the Company 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 2023 which was approved by the Board on 10 May 2023.
The Company considers its principal risks (as well as several underlying risks comprising each principal risk) in four categories:
Investment risks: the risk to performance resulting from ineffective or inappropriate investment selection, execution or monitoring.
External risks: the risk of failing to deliver the Company’s investment objective and strategic goals due to external factors beyond the Company’s control.
Operational risks: the risk of loss resulting from inadequate or failed internal processes, people or systems and external event, including regulatory risk.
Financial risks: the risks of adverse impact on the Company due to having insufficient resources to meet its obligations or counterparty failure and the impact any material movement in foreign exchange rates may have on underlying valuations.
A comprehensive risk assessment process is undertaken regularly to re-evaluate the impact and probability of each risk materialising and the strategic, financial and operational impact of the risk. Where the residual risk is determined to be outside of appetite, appropriate action is taken.
In addition to these, emerging risks are regularly considered to assess any potential impact on the Company and to
determine whether any actions are required. The Board also regularly considers the evolution of requirements and standards
relating to ESG and responsible investing.
Related Party Transactions
There have been no material changes in the related party transactions described in the 31 January 2023 Annual Report.
Directors’ Responsibility Statement
The Directors are responsible for preparing the Interim Report, in accordance with applicable laws and regulations. The Directors confirm that, to the best of their knowledge:
- The condensed interim financial statements have been prepared in accordance with UK-adopted IAS 34 Interim condensed financial statements and gives a true and fair view of the assets, liabilities, financial position and profit or loss of the Company;
- The Chair’s Statement and Manager’s Review includes a fair review of the information required by DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events that have occurred during the first six months of the financial year and their impact on the condensed interim financial statements, and a description of the principal risks and uncertainties for the remaining six months of the year; and
- The interim financial statements include a fair review of the information required by DTR 4.28R of the Disclosure Guidance and Transparency Rules, being related party transactions that have taken place in the first six months of the financial year and that have materially affected the financial position or performance of the Company during that period, and any changes in the related party transactions described in the last Annual Report that could do so.
The Interim Report was approved by the Board and the above Directors’ Responsibility Statement was signed on its behalf by the Chair.
Jane Tufnell
Chair
5 October 2023
Unaudited Interim Financial Statements for the period ended 31 July 2023
INTERIM CONDENSED FINANCIAL STATEMENTS
Income statement
| Half year to 31 July 2023 (Unaudited) | Half year to 31 July 2022 (Unaudited) | ||||||
| Notes | Revenue return £’000 | Capital return £’000 | Total £’000 | Revenue return £’000 | Capital return £’000 | Total £’000 | |
| Income, gains and losses on investments | 481 | 19,267 | 19,748 | 1,489 | 135,029 | 136,518 | |
| Deposit interest | 324 | - | 324 | - | - | - | |
| Other income | 78 | - | 78 | - | - | - | |
| Foreign exchange gains and losses | - | 38 | 38 | - | 46 | 46 | |
| 883 | 19,305 | 20,188 | 1,489 | 135,075 | 136,564 | ||
| Expenses | |||||||
| Investment management charges | (802) | (7,219) | (8,021) | (814) | (7,323) | (8,137) | |
| Finance cost | (433) | (3,899) | (4,332) | (155) | (1,394) | (1,549) | |
| Other expenses | (887) | - | (887) | (960) | - | (960) | |
| (2,122) | (11,118) | (13,240) | (1,929) | (8,717) | (10,646) | ||
| (Loss)/profit before tax | (1,239) | 8,187 | 6,948 | (440) | 126,358 | 125,918 | |
| Taxation | 1,837 | (1,837) | - | 464 | (464) | - | |
| Profit for the period | 598 | 6,350 | 6,948 | 24 | 125,894 | 125,918 | |
Attributable to: | |||||||
| Equity shareholders | 598 | 6,350 | 6,948 | 24 | 125,894 | 125,918 | |
| Basic and diluted earnings per share | 10.21 | 183.78 | |||||
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 guidance published by the AIC. There is no Other Comprehensive Income.
All profits are from continuing operations.
The notes on pages 27 to 29 form an integral part of the interim financial statements.
Balance sheet
Notes | 31 July 2023 (unaudited) £’000 | 31 January 2023 (audited) £’000 | |
| Non-current assets | |||
| Investments held at fair value | 7 | 1,342,657 | 1,349,075 |
Current assets | |||
| Cash and cash equivalents | 23,504 | 20,694 | |
| Receivables | 2,618 | 2,416 | |
| 26,122 | 23,110 | ||
Current liabilities | |||
| Borrowings | (72,904) | (65,293) | |
| Payables | (5,615) | (6,274) | |
| (78,519) | (71,567) | ||
| Net current assets / (liabilities) | (52,397) | (48,457) | |
| Total assets less current liabilities | 1,290,260 | 1,300,618 | |
Capital and reserves | |||
| Share capital | 7,292 | 7,292 | |
| Capital redemption reserve | 2,112 | 2,112 | |
| Share Premium | 12,936 | 12,936 | |
| Capital reserve | 1,268,795 | 1,279,751 | |
| Revenue reserve | (875) | (1,473) | |
| Total equity | 1,290,260 | 1,300,618 | |
| Net Asset Value per Share (basic and diluted) | 6 | 1,904.1 | 1903.3p |
The notes on pages 27 to 29 form an integral part of the interim financial statements.
The financial statements on pages 27 to 29 were approved by the Board of Directors on 4 October 2023 and signed on its behalf by:
Jane Tufnell Alastair Bruce
Director Director
Cash flow statement
| Half year to 31 July 2023 (unaudited) £’000 | Half year to 31 July 2022 (unaudited) (restated) £’000 | |
| Operating activities | ||
| Sale of Portfolio investments | 15,737 | 18,183 |
| Purchase of Portfolio investments | (13,705) | (29,644) |
| Cash flow to subsidiaries' investments | (52,921) | (108,890) |
| Cash flow from subsidiaries' investments | 77,331 | 81,364 |
| Interest income received from Portfolio investments | 294 | 1,338 |
| Dividend income received from Portfolio investments | 296 | 151 |
| Other income received and Deposit Interest | 401 | - |
| Investment management charges paid | (7,488) | (11,114) |
| Other expenses paid | (2,892) | (1,723) |
| Net cash inflow/(outflow) from operating activities | 17,053 | (50,335) |
Financing activities | ||
| Bank facility fee | (1,628) | (2,018) |
| Interest paid | (2,903) | (332) |
| Purchase of own shares into treasury | (6,477) | - |
| Credit Facility utilised | 90,087 | 56,737 |
| Credit Facility repaid | (82,476) | (17,671) |
| Equity dividends paid to shareholders | (10,886) | (15,074) |
| Net cash (outflow)/inflow from financing activities | (14,282) | 21,642 |
| Net increase/(decrease) in cash and cash equivalents | 2,771 | (28,693) |
| Cash and cash equivalents at beginning of period | 20,694 | 41,328 |
| Net increase/(decrease) in cash and cash equivalents | 2,771 | (28,693) |
| Effect of changes in foreign exchange rates | 39 | 56 |
| Cash and cash equivalents at end of period | 23,504 | 12,691 |
1 In the prior period financial statements, 'Cash outflows to subsidiaries' and 'Cash inflows from subsidiaries' were netted within 'Net cash flows to subsidiary investments'. The netted items have been presented gross to display the individual inflows and outflows to provide better clarity for readers of the financial statements in line with IAS 7 with a nil impact on the overall Cash Flow Statement.
The notes on pages 27 to 29 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 2023 (Unaudited) | ||||||
| Opening balance at 1 February 2023 | 7,292 | 2,112 | 12,936 | 1,279,751 | (1,473) | 1,300,618 |
| Profit for the period and total comprehensive income | — | — | — | 6,350 | 598 | 6,948 |
| Dividends paid | — | — | — | (10,886) | — | (10,886) |
| Purchase of own shares into treasury | — | — | — | (6,420) | (6,420) | |
| Closing balance at 31 July 2023 | 7,292 | 2,112 | 12,936 | 1,268,795 | (875) | 1,290,260 |
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 2022 (Unaudited) | ||||||
| Opening balance at 1 February 2022 | 7,292 | 2,112 | 12,936 | 1,135,637 | — | 1,157,977 |
| Profit for the period and total comprehensive income | — | — | — | 125,896 | 24 | 125,920 |
| Dividends paid | — | — | — | (15,049) | (24) | (15,074) |
| Purchase of own shares into Treasury | — | — | — | — | — | — |
| Closing balance at 31 July 2022 | 7,292 | 2,112 | 12,936 | 1,246,484 | — | 1,268,823 |
The notes on pages 27 to 29 form an integral part of the financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 31 July 2023
1 GENERAL INFORMATION
These interim condensed financial statements relate to ICG Enterprise Trust Plc (‘the Company’). ICG Enterprise Trust Plc is registered in England and Wales and is incorporated in the United Kingdom. The Company is domiciled in the United Kingdom and its registered office is Procession House, 55 Ludgate Hill, London EC4M 7JW. The Company’s objective is to provide long-term growth by investing in private companies managed by leading private equity managers.
2 FINANCIAL INFORMATION
The interim condensed financial statements are unaudited and do not comprise statutory accounts within the meaning of
section 434 of the Companies Act 2006. Within the notes to the interim condensed financial statements, all current and
comparative data covering the period to (or as at) 31 July 2023 is unaudited. Data given in respect of the year to 31 January 2023
is audited. The statutory accounts for the year to 31 January 2023 have been reported on by Ernst & Young LLP and delivered to
the Registrar of Companies. The report of the auditors was (i) unqualified, (ii) did not contain an emphasis of matter paragraph,
and (iii) did not contain any statements under section 498(2) or (3) of the Companies Act 2006.
3 BASIS OF PREPARATION
The interim financial statements have been prepared in accordance with UK-adopted IAS 34 Interim financial Reporting (IAS 34) and on the basis of the accounting policies and methods of computation set out in the financial statements of the Company for the year to 31 January 2023.
The financial information for the year ended 31 January 2023 was prepared in accordance with UK-adopted International Accounting Standards (‘UK-IAS’) and the Statement of Recommended Practice ('SORP') for investment trusts issued by the Association of Investment Companies in July 2022.
The Company comprises one operating segment which is also a reporting segment.
Going concern
These financial statements have been prepared on a going concern basis and on the historical cost basis of accounting,
modified for the revaluation of certain assets at fair value. In making their going concern assessment, the Directors have
considered the potential impact of principal risks on the Company’s business activities; the Company’s net cash position; the
availability of the Company’s credit facility and compliance with its covenants; and the Company’s cash flow projections, in
particular those arising from committed but undrawn commitments.
The Directors have concluded based on the above assessment that the preparation of the interim condensed financial
statements on a going concern basis, to 31 October 2024, a period of more than 12 months from the signing of the interim
condensed financial statements, continues to be appropriate.
4 DIVIDENDS
| Half year to 31 July 2023 £’000 | Half year to 31 July 2022 £’000 | |
| Third Quarterly dividend in respect of year ended 31 January 2023 of 7.0p per share (2022: 6.0p) | 4,781 | 4,111 |
| Final dividend in respect of year ended 31 January 2023 of 9.0p per share (2022: 9.0p) | 6,105 | 6,167 |
| First quarterly dividend in respect of year ended 31 January 2024: 8.0p per share (2023: 7.0p) | — | 4,796 |
| Total | 10,886 | 15,074 |
The Board has approved an interim dividend for the quarter to 30 April 2023 of 8.0p per share (totalling £5.4m) which has
been paid on 1 September to shareholders on the register on 18 August 2023. The Board has proposed a second interim dividend of 8.0p per share in respect of the year ended 31 January 2024 which will be paid on 1 December 2023 to shareholders on the register at the close of business on 17 November 2023.
5 EARNINGS PER SHARE
| Earnings per share | Half year to 31 July 2023 | Half year to 31 July 2022 |
| Revenue return per ordinary share | 0.88p | 0.04p |
| Capital return per ordinary share | 9.33p | 183.74p |
| Earnings per ordinary share (basic and diluted) | 10.21p | 183.78p |
| Weighted average number of shares | 68,040,279 | 68,517,055 |
Revenue return per ordinary share is calculated by dividing the revenue return attributable to equity shareholders of £0.6m (2022: £0.0m) by the weighted average number of ordinary shares outstanding during the year.
Capital return per ordinary share is calculated by dividing the capital return attributable to equity shareholders of £6.4m (2022: £125.9m) by the weighted average number of ordinary shares outstanding during the year.
Basic and diluted earnings per ordinary share are calculated by dividing the earnings attributable to equity shareholders of £6.9m (2022: £125.9m) by the weighted average number of ordinary shares outstanding during the year.
The weighted average number of ordinary shares outstanding (excluding those held in treasury) during the year was 68,040,279 (2022: 68,517,055). There were no potentially dilutive shares, such as options or warrants, in either year.
6 NET ASSET VALUE PER SHARE
The net asset value per share is calculated on equity attributable to equity holders of £1,290.3m (31 January 2023: £1,300.6m) and on 67,762,825 (31 January 2023: 68,335,575) ordinary shares in issue at the period end. There were no potentially dilutive shares, such as options or warrants, at either year end. Calculated on both the basic and diluted basis the net asset value per share was 1,904.1p (31 January 2023: 1,903.3p).
7 FAIR VALUE ESTIMATION
IFRS 13 requires disclosure of fair value measurements of financial instruments categorised according to the following fair value measurement hierarchy:
- Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
- Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The valuation techniques applied to level 3 assets are described in note 1(c) of the annual financial statements. No investments were categorised as level 1 or level 2.
The Company’s policy is to recognise transfers into and transfers out of fair value hierarchy levels at the end of the reporting year when they are deemed to occur.
The following table presents the assets that are measured at fair value at 31 July 2023 and 31 January 2023:
| Level 1 | Level 2 | Level 3 | Total | ||||
| 31 July 2023 | £’000 | £’000 | £’000 | £’000 | |||
| Investments held at fair value | |||||||
| Unquoted investments | - | - | 269,553 | 269,553 | |||
| Quoted investments | - | - | - | - | |||
| Subsidiary undertakings | - | - | 1,073,104 | 1,073,104 | |||
| Total investments held at fair value | - | - | 1,342,657 | 1,342,657 |
| Level 1 | Level 2 | Level 3 | Total | ||||
| 31 January 2023 | £’000 | £’000 | £’000 | £’000 | |||
| Investments held at fair value | |||||||
| Unquoted investments | - | - | 269,178 | 269,178 | |||
| Quoted investments | - | - | - | ||||
| Subsidiary undertakings | - | - | 1,079,897 | 1,079,897 | |||
| Total investments held at fair value | - | - | 1,349,075 | 1,349,075 |
7 FAIR VALUE ESTIMATION (CONTINUED)
All unquoted and quoted investments are valued at fair value in accordance with IFRS 13. The Company has no quoted investments as at 31 July 2023; quoted investments held by subsidiary undertakings are reported within Level 3.
Investments in level 3 securities are in respect of private equity fund investments and co-investments. These are held at fair value and are calculated using valuations provided by the underlying manager of the investment, with adjustments made to the statements to take account of cash flow events occurring after the date of the manager’s valuation, such as realisations or liquidity adjustments.
The following tables present the changes in level 3 instruments for the period ended 31 July 2023 and 31 July 2022.
| Half year to 31 July 2023 £’000 | Half year to 31 July 2022 £’000 | |
| Opening Balance 1 February | 1,349,075 | 1,123,747 |
| Additions | 64,055 | 57,170 |
| Disposals | (86,090) | (18,183) |
| Gains recognised in profit or loss | 15,617 | 135,319 |
| Closing balance | 1,342,657 | 1,298,053 |
GLOSSARY
| Term | Short form | Definition |
| Alternative Performance Measures | APMs | Alternative Performance Measures 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. |
| Carried Interest | Carried interest is 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. | |
| Cash drag | Cash drag is the negative impact on performance arising as a result of the allocation of a portion of the entity’s assets to cash. | |
| Co-investment | Co-investment is a Direct Investments in a company alongside a private equity fund. | |
| Co-investment Incentive Scheme Accrual | Co-investment Incentive Scheme Accrual represents the estimated value of interests in the Co-investment Incentive Scheme operated by the subsidiary partnerships of the Company. | |
| Commitment | Commitment represents the amount of capital that each investor agrees to contribute to a fund or a specific investment. | |
| Deployment | Please see ‘Total new investment’. | |
| Direct Investments | An investment in a portfolio company held directly, not through a private equity fund. Direct Investments are typically co-investments with a private equity fund. | |
| Discount | Discount arises when the Company’s shares trade at a price below the Company’s NAV per Share. 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 | Drawdowns are amounts invested by the Company 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 performance measure in the private equity industry. | |
| Enlarged Perimeter | As well as performance metrics for our Top 30 companies, we include data for our "Enlarged Perimeter", which represents the aggregate value of the Top 30 Companies and as many of the managers from within the Top 30 funds as practicable. | |
| Enterprise Value | EV | Enterprise Value is the aggregate value of a company’s entire issued share capital and Net Debt. |
| Exclusion List | The Exclusion List defines the business activities which are excluded from investment. | |
| 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 Exits | Full Exits 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; this does not include Fund Disposals. See ‘Fund Disposals’. | |
| Fund Disposals | Fund Disposals are where the Company receives sales proceeds from the full or partial sale of a fund position within the secondary market. | |
| General Partner | GP | The General Partner is the entity managing a private equity fund. This is commonly referred to as the manager. |
| Hedging | Hedging is 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. | |
| Initial Public Offering | IPO | An Initial Public Offering is an 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 Return | IRR | Internal Rate of Return is a measure of the 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. |
| Investment Period | Investment Period is the period in which funds are able to make new investments under the terms of their fund agreements, typically up to five years after the initial Commitment. | |
| Last Twelve Months | LTM | Last Twelve Months refers to the timeframe of the immediately preceding 12 months in reference to financial metrics used to evaluate the Company’s performance. |
| Limited Partner | LP | The Limited Partner is an 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 | A Limited Partnership includes 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 share ahead of distributions to Limited Partners. | |
| Net Asset Value per Share | NAV per Share | Net Asset Value per Share is the value of the Company’s net 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. |
| Total Return | 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 | Net Debt is calculated as the total short-term and long-term debt in a business, less cash and cash equivalents. | |
| Ongoing Charges | Ongoing Charges are calculated in line with guidance issued by the Association of Investment Companies (‘AIC’) and capture management fees and expenses, excluding finance costs, incurred at the Company level only. The calculation does not include the expenses and management fees incurred by any underlying funds. | |
| Other Net Liabilities | Other Net Liabilities at the aggregated Company level represent net other liabilities per the Company’s balance sheet. Net other liabilities per the balance sheet of the subsidiaries include amounts payable under the Co-investment Incentive Scheme Accrual. | |
| Overcommitment | Overcommitment refers to 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 | Portfolio represents the aggregate of the investment Portfolios of the Company and of its subsidiary Limited Partnerships. This APM is consistent with the commentary in previous annual and interim reports. The Board and the Manager consider that disclosing our Portfolio assists shareholders in understanding the value and performance of the underlying investments selected by the Manager. It is shown before the Co-investment Incentive Scheme Accrual to avoid being distorted by certain funds and Direct Investments on which ICG Enterprise Trust Plc does not incur these costs (for example, on funds managed by ICG plc). Portfolio is related to the NAV, which is the value attributed to our shareholders, and which also incorporates the Co-investment Incentive Scheme Accrual as well as the value of cash and debt retained on our balance sheet. The value of the Portfolio at 31 July 2023 is £1,398.8m (31 January 2023: £1,406.4m). | |||||
| 31 July 2023 £m | IFRS Balance sheet fair value | Net assets of subsidiary limited partnerships | Co-investment Incentive Scheme Accrual | Total Company and subsidiary Limited Partnership | ||
| Investments1 | 1,342.7 | (0.9) | 57.0 | 1,398.8 | ||
| Cash | 23.5 | 23.5 | ||||
| Other Net Liabilities | (75.9) | 0.9 | (57.0) | (132.0) | ||
| Net assets | 1,290.3 | 1,290.3 | ||||
| 31 January 2023 £m | IFRS Balance sheet fair value | Balances receivable from subsidiary Limited Partnerships | Co-investment Incentive Scheme Accrual | Total Company and subsidiary Limited Partnership | ||
| Investments1 | 1,349.1 | (0.8) | 58.1 | 1,406.4 | ||
| Cash | 20.7 | 20.7 | ||||
| Other Net Liabilities | (69.2) | 0.8 | (58.1) | (126.5) | ||
| Net assets | 1,300.6 | 1,300.6 | ||||
| 1Investments as reported on the IFRS balance sheet at fair value comprise the total of assets held by the Company and the net asset value of the Company’s investments in the subsidiary Limited Partnerships. | ||||||
| Portfolio Return on a Local Currency Basis | Portfolio Return on a Local Currency Basis represents the change in the valuation of the Company’s Portfolio before the impact of currency movements and Co-investment Incentive Scheme Accrual. The Portfolio return of 4.6% is calculated as follows: | |||||
| £m | 31 July 2023 | 31 July 2022 | ||||
| Income, gains and losses on Investments | 19.7 | 136.5 | ||||
| Foreign exchange gains and losses included in gains and losses on investments | 43.4 | (60.6) | ||||
| Incentive accrual valuation movement | 1.9 | 11.1 | ||||
| Total gains on Portfolio investments excluding impact of foreign exchange | 65.0 | 87.0 | ||||
| Opening Portfolio valuation | 1,406.4 | 1,172.2 | ||||
| Portfolio Return on a Local Currency Basis | 4.6% | 7.4% | ||||
| Term | Short form | Definition | |||
| Portfolio Return on a Local Currency Basis (continued) | A reconciliation between the Portfolio Return on Local Currency Basis and NAV per Share Total Return is disclosed under ‘Total Return’. | ||||
| Portfolio Company | Portfolio Company refers to an individual company in an investment portfolio. | ||||
| Premium | Premium occurs when 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. | ||||
| Primary Investment | A Primary Investment is a Commitment to a private equity fund. | ||||
| Quoted Company | A Quoted Company is any company whose shares are listed or traded on a recognised stock exchange. | ||||
| Realisation Proceeds | Realisation Proceeds are amounts received in respect of underlying realisation activity from the Portfolio and exclude any inflows from the sale of fund positions via the secondary market. | ||||
| Realisations - Multiple to Cost | Realisations - Multiple to Cost is the average return from Full Exits from the Portfolio in the period on a primary investment basis, weighted by cost. | ||||
| £m | 31 July 2023 | 31 July 2022 | |||
| Realisation Proceeds from Full Exits in the year-to-date | 63.3 | 73.2 | |||
| Cost | 16.0 | 32.5 | |||
| Average return Multiple to Cost | 4.0x | 3.3x | |||
| Realisations – Uplift To Carrying Value | Realisations – Uplift To Carrying Value is the aggregate uplift on Full exits from the Portfolio in the period excluding publicly listed companies that were exited via sell downs of their shares. | ||||
| £m | 31 July 2023 | 31 July 2022 | |||
| Realisation Proceeds from Full Exits in the year-to-date | 63.3 | 97.2 | |||
| Prior Carrying Value (at previous quarterly valuation prior to exit) | 53.7 | 77.2 | |||
| Realisations – Uplift To Carrying Value | 17.7% | 25.8% | |||
| Secondary Investments | Secondary Investments occur when existing private equity fund interests and Commitments are purchased from an investor seeking liquidity. | ||||
| Share Price Total Return | 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 New Investment | Total New Investment is the total of direct Co-investment and fund investment Drawdowns in respect of the Portfolio. In accordance with IFRS 10, the Company’s subsidiaries are deemed to be investment entities and are included in subsidiary investments within the financial statements. Movements in the cash flow statement within the financial statements reconcile to the movement in the Portfolio as follows: | ||||
| £m | 31 July 2023 | 31 July 2022 | |||
| Purchase of Portfolio investments per cash flow statement | 15.5 | 29.6 | |||
| Purchase of Portfolio investments within subsidiary investments | 48.6 | 114.1 | |||
| Total New Investment | 64.1 | 143.7 | |||
| Term | Short form | Definition | ||||
| Total Proceeds | Total 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. In accordance with IFRS 10, the Company’s subsidiaries are deemed to be investment entities and are included in subsidiary investments within the financial statements. | |||||
| £m | 31 July 2023 | 31 July 2022 | ||||
| Sale of Portfolio investments per cash flow statement | 15.7 | 18.2 | ||||
| Sale of Portfolio investments, interest received, and dividends received within subsidiary investments | 77.3 | 87.1 | ||||
| Interest income per cash flow statement | 0.3 | 1.3 | ||||
| Dividend income per cash flow statement | 0.3 | 0.2 | ||||
| Other income per cash flow statement | 0.5 | — | ||||
| Total Proceeds | 94.1 | 106.8 | ||||
| Fund Disposals | — | 0.0 | ||||
| Realisation Proceeds | 94.1 | 106.8 | ||||
| Undrawn Commitments | Undrawn Commitments are Commitments that have not yet been drawn down (please see ‘Drawdowns’). | |||||
| Unquoted Company | An Unquoted Company is any company whose shares are not listed or traded on a recognised stock exchange. | |||||
| Valuation Date | The date of the valuation report issued by the underlying manager. | |||||
| Valuation Multiples | Valuation Multiples are earnings (EBITDA), or revenue multiples applied in determining the value of a business enterprise. | |||||
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