Unaudited results for the year to 31 January 2014
27 March 2014
GRAPHITE ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE
YEAR ENDED 31 JANUARY 2014
Graphite Enterprise Trust PLC ('Graphite Enterprise' or 'the Company') presents its unaudited results for the year ended 31 January 2014.
Highlights of the Year
Graphite Enterprise made solid progress in the year to January 2014 with the net asset value per share increasing by 7%, despite the adverse effect of currency movements. The performance of the portfolio was strong, driven by continued growth in underlying profits and by a number of successful realisations.
We have been very active both in realising and in making investments, with
£118 million generated by the portfolio during the year, a record level, and more than £90 million re-invested. Our strong balance sheet leaves us very well placed to take advantage of further opportunities.
The Company has been one of the top performers in the listed private equity sector over recent years. Our flexible investment strategy and the strong performance of the largest investments position Graphite Enterprise very well for future growth.
|
+15.7% |
|
+7.2% |
|
Share price The share price materially outperformed the FTSE All-Share Index and has increased by 88% over three years |
|
Net asset value per share The NAV per share increased to 677p, outperforming the FTSE All-Share Index which increased by 6.4% in the year
|
|
+13.8% |
|
15.5p |
|
Underlying value of the portfolio in local currencies The portfolio grew strongly, driven by underlying earnings growth and realisations
|
|
Record dividend The dividend will increase to 15.5p of which 7.5p is a final dividend and 8.0p a special dividend. |
|
£118m |
|
£91m |
|
Realisation proceeds 28% of the opening portfolio was realised; in cash terms this was the highest ever
|
|
Investment in the portfolio The rate of investment was two thirds higher than in the previous year |
Chairman's statement
Summary
Graphite Enterprise made solid progress in the year to 31 January 2014, with the net asset value per share increasing by 7.2%. This continued the recent strong performance with the net asset value increasing by nearly 30% over three years and by well over 50% over five years1.
The share price performed strongly during the year, rising by 15.7% to 563.5p and materially outperforming the Company's benchmark, the FTSE All-Share Index, which rose by 6.4%. Over three years the share price had increased by 88.4%, compared with a rise of 27.7% in the FTSE All-Share Index1. Reflecting the rise in the share price, the discount to the net asset value per share narrowed from 22.9% to 16.8% during the year. The share price has continued to strengthen since the year end, reaching a new all-time high earlier this month. At today's date it is 6.5% ahead at 600p and the discount has narrowed to 11.4%, its lowest level since early 2008.
The growth in net asset value reflected a 13.8% increase in the value of the investment portfolio in local currencies. This was partially offset by a rise in sterling against the euro which reduced the sterling value of our euro-denominated investments and limited the overall portfolio rise in sterling terms to 11.0%. After adjusting for the effect of holding cash, costs and for the payment of the last year's dividend, the overall increase in the net asset value per share was 7.2%.
At 31 January, total assets had risen to £503 million of which 86% was invested in the portfolio. The balance was held in cash and liquid assets which rose to £68 million, driven by the high level of realisations. When the cash balance is added to the undrawn bank facility, the Company has over £150 million of liquidity. This allowed us to materially increase the level of commitments to funds, with over £200 million of new commitments made in the year. The largest of these, of £100 million, was to Graphite Capital's latest buy-out fund.
|
|
31 January 2014 |
31 January 2013 |
Change
|
|
Net asset value per share |
677.2p |
631.5p |
+7.2% |
|
Share price |
563.5p |
487.0p |
+15.7% |
|
FTSE All-Share Index |
3,497 |
3,287 |
+6.4% |
Economic environment
The Company's investment programme continues to be focused on the more mature private equity markets in Western Europe. At the year end, the largest exposures were to the UK, which accounted for 45% of the portfolio and to continental Europe which accounted for a further 40%.
The outlook for the UK has improved substantially over the past year, with the economic recovery appearing to gather strength in the second half. The performance of the major continental European economies has remained subdued. However, concerns over the stability of the euro seem to have abated and a consensus is emerging that the major economies are now more likely to move forward rather than backward, although progress may be relatively slow in certain cases.
The performance of the investment portfolio in recent years has demonstrated that the private equity model can survive and often prosper in times of low or negative growth. Indeed, economic uncertainty can often benefit the sector as new investments can be made at relatively attractive prices. A more favourable economic environment may make the sourcing of new investments more competitive but should prove to be very positive for the development of the current portfolio.
Performance
Overview
The investment portfolio performed strongly in the year, increasing in value by 13.8% in local currencies, having increased by 14.3% in the previous year. However, as the euro fell by 4.1% against sterling during the period, the increase in the sterling value of the portfolio was restricted to 11.0%. As the investment portfolio accounted for just under 90% of net assets at the start of the year, the rise in the portfolio increased the net asset value by 9.8%. After adjusting for costs, the increase in the net asset value per share was 8.0%. The dividend paid in the year represented 0.8% of net asset value and the net increase was therefore 7.2%.
Portfolio
Nearly 60% of the underlying growth in the portfolio was generated by full and partial realisations. It is pleasing that full realisations continued to be achieved at values significantly above their carrying amounts.
Increases in the valuations of the unrealised portfolio accounted for just over 40% of the growth. This was driven by continued earnings growth and by debt pay-down, rather than by an increase in valuation multiples.
As the largest 30 underlying companies accounted for 43% of the portfolio at 31 January, their performance will have a substantial impact on that of the Company. These investments performed strongly, with EBITDA2 increasing on average by 13.6% in the 12 months to December 2013. By comparison, the aggregate EBITDA of the FTSE 250 increased by 4.8% in the same period.
A more detailed analysis of the performance of the investment portfolio is given in the Manager's Review.
Discount
The share price rose strongly in the year, with the result that the discount to the net asset value per share narrowed from 22.9% at the start of the year to 16.8% at the end. Since the period end, the share price has risen by a further 6.5% to 600p, reducing the discount further to 11.4%. The discount is now at its lowest level since early 2008 and is in line with its long term average over the 15 years prior to the financial crisis of 10.2%.
The Board has consistently believed that the key to narrowing the discount is to generate demand for the shares though strong long term performance and clear communication of the Company's strategy. It has therefore been pleasing to see the discount narrow as the net asset value has continued to rise and as our active investor relations programme has continued to develop. We will continue to devote significant time to investor relations in 2014 and beyond.
Long term performance3
We have always measured performance against the benchmark of the FTSE All-Share Index as we believe that this is the most relevant index for most of our shareholders, over 60% of whom are private individuals. We aim to outperform this index over the medium to long term.
Over ten years, both the net asset value per share and the share price have outperformed the FTSE All-Share, with the net asset value increasing by 164% and the share price by 196%, compared with a rise of 125% in the Index. Similarly, over three years both the share price and the net asset value have outperformed the Index.
The five year relative performance figures are distorted by the timing and severity of the financial crisis with the result that the share price very substantially outperformed the Index and the net asset value underperformed. As our net asset value fell by far less than the share price or the Index in 2008, it has been recovering from a much higher base. As a result, although it has performed strongly, rising by 56.2%, this has been less than the 217.7% achieved by the share price and the 89.2% achieved by the Index.
The Company's performance against the listed private equity sector continues to be strong. Over each of three, five and ten years, both our share price and net asset value total return have substantially outperformed the peer group average.
|
Years to 31 January 2014 |
3 |
5 |
10 |
|
Net asset value per share |
+29.4% |
+56.2% |
+164.4% |
|
Share price |
+88.4% |
+217.7% |
+196.1% |
|
FTSE All-Share Index |
+27.7% |
+89.2% |
+124.5% |
|
Peer group average4 |
+20.3% |
+20.7% |
+126.6% |
Balance sheet and commitments
The Company had cash balances at January 2014 of £68 million, an increase of £13 million over the year, reflecting the high level of net cash inflows from the portfolio, particularly in the second half of the year. A record level of £118 million of cash was generated by the portfolio, of which £91 million was reinvested (see Manager's Review for further details).
Since the year end, the cash balance has fallen to £56 million as a result of strong new investment activity. When this cash balance is added to the undrawn bank facility of £98 million, this provides Graphite Enterprise with the capacity to fund substantial new investment over the coming years. Our medium term aim is to be broadly fully invested while ensuring that we have sufficient liquidity to be able to take advantage of any attractive investment opportunities that might arise.
In order to generate a core level of new investment in the medium term, we made substantial commitments to new funds in the year totalling £201 million. This included a commitment of £100 million to Graphite Capital's latest buy-out fund. The Board's decision to make this substantial commitment reflects both the strong performance of Graphite Capital's previous fund and our aim of maintaining the Company's exposure to Graphite Capital's buy-outs at between 20% and 25% of the portfolio.
We expect outstanding commitments to be drawn down at a rate of approximately £55-65 million per annum, depending on the speed at which funds make new investments.
While we are likely to make further commitments to new funds, a greater level of investment activity in the coming year is expected to be focused on the acquisition of secondary interests in funds and on co-investments alongside funds. By increasing secondary purchases and co-investments we aim to deploy our cash balance more quickly and enhance short term returns.
|
|
Investment portfolio £ million |
Investment portfolio % total assets |
Cash and other net assets £ million |
Cash and other net assets, % of total assets |
Commitments £ million |
|
31 January 2014 |
433.3 |
86.2% |
69.3 |
13.8% |
277.3 |
|
31 January 2013 |
415.2 |
88.1% |
56.3 |
11.9% |
126.5 |
|
31 January 2012 |
377.7 |
89.2% |
45.9 |
10.8% |
141.2 |
|
31 January 2011 |
356.6 |
89.2% |
42.9 |
10.8% |
173.7 |
|
31 December 2009 |
231.2 |
67.1% |
113.4 |
32.9% |
243.2 |
Revenue return and dividend
As we have highlighted in previous reports, most of our income is accounted for when underlying portfolio companies are sold and the accumulated interest on yield bearing instruments is paid. This makes the level of income in each year very difficult to predict.
The record level of realisations in the year to January 2014 generated an exceptionally high level of income, which at £19.0 million was more than three times that of the previous year. As a result, the net revenue after tax for the year was £13.9 million or 19.0p per share, compared with just £2.3 million or 3.1p per share in the prior year.
In order to maintain investment trust status, the Company can retain no more than 15% of its total income. As a result of the unusually high level of income noted above, the Board is recommending that the total dividend should be increased from 5.0p to 15.5p. This will take the form of a final dividend of 7.5p and a special dividend of 8.0p.
The final dividend of 7.5p represents an increase of 50% over last year and is based on the level of income likely to be generated by the portfolio over the next few years. The special dividend of 8.0p reflects the exceptional level of income received in the year to January 2014.
If approved by shareholders, the total dividend will represent a yield of 2.75% on the share price at 31 January and will result in a total payment to shareholders of £11.3 million. Both the final and special dividends will be paid on 18 June 2014.
Outlook
In recent years we have highlighted the sensitivity of discounts in the private equity sector to broader economic factors, observing that discounts were usually particularly wide when the markets were weak and narrow when the markets were strong. In March 2011, we commented that if history continued to be a guide to the future, discounts would narrow and private equity share prices would rise as the economy recovered. We have therefore been pleased to see that since then, the discount has narrowed to below its long term average and the share price has risen by more than 70%, recently reaching a record high. During the last three financial years, the portfolio has generated over 75% of its opening value in cash and the net asset value has risen sharply, demonstrating the underlying strength of our model.
As we have noted before, future performance is likely to be driven primarily by the level of realisations. The rate of realisations accelerated steadily last year and we see no reason why this level of disposals should not continue in the coming year. As realisations are almost invariably achieved at substantial uplifts to holding valuations, a continued flow of realisations would almost certainly have a positive impact on the future performance of the portfolio. The strong performance of the largest investments will ensure they are well placed for exit at the appropriate time.
The environment for new investment, while more challenging than that for realisations, is continuing to offer attractive opportunities for private equity managers who understand their markets and have a clearly defined investment strategy. Prices for new investments invariably rise when the economic outlook improves but as they did not fall as far as many had expected during the downturn, the rise may not be as great in the upturn. Private equity has historically achieved strong returns from investments made in the early stages of a recovery and there is no reason to believe that returns in this recovery will be any different.
Our investment strategy gives us the flexibility to adapt the mix of investments, cash and commitments to changing market conditions and to deploy our cash where we see the best relative value. The strength of our balance sheet leaves us well placed to take advantage of any opportunities which become available while the strong performance of the larger investments in our portfolio should continue to drive the net asset value performance.
Mark Fane
26 March 2014
1. Throughout the report, one year performance figures are stated on capital return basis; longer term performance figures are stated on a total return basis (i.e. including the effect of re-invested dividends).
2. Earnings before interest, tax, depreciation and amortisation.
3. Total return basis, including the effect of reinvested dividends. As the Company changed its year end in 2010, the five and ten year figures are for the 61 and 121 month periods to 31 January 2014.
4. Peer group comprises: Aberdeen Private Equity, F&C Private Equity, HarbourVest, JPMorgan Private Equity, Pantheon International Participations, Princess Private Equity, Private Equity Holding, Standard Life European Private Equity (funds-of-funds); 3i, Candover, Dunedin Enterprise, Electra, HgCapital, NB Private Equity Partners, SVG Capital (direct funds).
Market review
This section focuses on developments in the European buy-out market in which Graphite Enterprise invests almost exclusively.
Investment activity
The value of buy-outs completed in the European market rose marginally from €72 billion to €75 billion in 2013 while the volume of completed deals fell by 8% to 4591. The volume figures tend to be distorted by the relatively large number of smaller buy-outs completed each year, which typically account for approximately half of the volume but only a very small share of the value. Therefore, the fall in market volume was because the number under €50 million fell by 24% to 225. In contrast, the number of completed buy-outs of over €50 million increased by 15% to 234, while their value rose by 4% to €69 billion.
Graphite Enterprise's portfolio is focused primarily on larger buy-outs, with approximately 40% in the mid-market (€50-250 million) and almost 50% in the large buy-out (>€250 million) segments of the market. In both these markets, activity levels were higher in the year. In the mid-market the volume rose 12% to 160 completed deals with a value 5% higher at €18 billion. In the large buy-out market the volume of deals increased 21% to 74 representing a 4% rise in value to €51 billion.
We believe that the variation in activity levels between small, mid and large buy-outs reflects the continuing difficulty of raising financing for small businesses. In contrast, debt levels in the mid-market were slightly higher in 2013 than in 2012, while in the large buy-out market they were markedly higher2. It is worth noting, however, that in both segments debt levels, which were typically in the range of 4-5 times EBITDA, were significantly below those at the peak of the market in 2007 of 5-7 times EBITDA.
Industry data2 suggests that prices paid for new investments were mainly in the range of 8-9 times EBITDA. This is significantly below the reported levels in 2007, which were generally in the range of 9-10 times EBITDA. In general the market in 2013 seemed to be more favourable for sellers than for buyers and prices paid for high quality companies remained high. More relevant for the comparison with 2007 is that the prices in that year were paid immediately prior to a recession while those paid in 2013 were potentially in advance of a sustained economic upturn.
Fundraising
Fundraising for European buy-outs rose sharply in 2013 with 49 funds reaching final closings of over €51 billion. This was almost double the €27 billion raised for the 32 funds closed in 20123. The data, like that for new investments, is dominated by a small number of large funds and a high number of small funds. Funds of less than €250 million accounted for almost half the number of funds closed but only 5% of their value, while funds over €1 billion accounted for 80% of the value and only 24% by number.
Graphite Enterprise's portfolio is focused primarily on mid-sized and large funds, with over 90% invested in funds of more than €250 million. In the mid-sized range (€250 million to €1 billion) the number of funds raised rose by 25% to 15 with a combined value of €7 billion, while the rise in large funds (>€1 billion) was more pronounced, more than tripling in number to 12 and more than doubling in total value to €41 billion.
In value terms the fundraising market has returned to the peak levels of 2007 and 2008 when an average of €48 billion was raised for funds over €250 million. However, the number of funds remains more than 40% below the peak of 48 funds raised in 2007. A broadly similar amount of capital is therefore being concentrated on a far smaller number of managers and we are seeing many managers failing to reach their targets, while others are achieving theirs relatively quickly.
As an investor in funds, this bifurcation of the fundraising market presents certain opportunities for Graphite Enterprise. We are not afraid to back managers that do not reach their fundraising target where we see value in their more recent investments, whereas the market tends to focus more on longer term track records. Undersubscribed funds are more likely to generate co-investment and, potentially, secondary opportunities in which we are keen to invest. The failure of certain managers to raise funds could lower competition for underlying investments which would be favourable for pricing in the medium term.
Secondary market
The market for secondary interests in funds remained strong in 2013 with approximately $28 billion of transactions completed globally compared with $25 billion completed in 20124. The reported value of the secondary market tends to be dominated by a few very large portfolios that only a small number of dedicated secondary funds have the scale to acquire. These sales are expected to continue in the near future primarily because continuing regulatory pressure on financial institutions is likely to encourage banks and insurance companies to sell private equity assets.
We operate in a smaller part of the market characterised less by strategic shifts by financial institutions and more by specific portfolio management objectives of a wide range of investor types. In the last twelve months we have acquired fund interests from public pension funds in North America and the UK, a US bank and a US charitable foundation. We believe that selling investments in the secondary market is becoming an increasingly common way for investors to manage their overall portfolios. We therefore expect to continue to see a strong flow of opportunities to acquire single fund interests and small portfolios in 2014.
Secondary market pricing rose in the year for buy-out funds from an average of 89% of net asset value to an average of 92% of net asset value4. High quality funds continued to trade at around net asset value or, in some cases, even a premium.
Despite the high headline prices, we believe that secondaries continue to provide opportunities to buy in to maturing portfolios at reasonable valuations. We believe that the insights into portfolios that we gain from being a primary investor in funds enable us to identify and acquire those funds with significant long-term growth potential.
1. Unquote Data: all European buy-outs 2013
2. Standard & Poors: LCD European Leveraged Buy-out Review 4Q13.
3. Preqin private equity fundraising database.
4. Cogent Partners: Secondary Market Trends and Outlook, January 2014
Manager's review
Portfolio performance overview
The portfolio continued to perform well in the year to January 2014, with the underlying value in local currencies increasing by 13.8%. After adjusting for the depreciation of the euro, the sterling value of the portfolio increased by 11.0% in the year.
At the end of the year the portfolio was valued at £433.3 million, £18.1 million higher than at the start. Valuation gains of £57.3 million were partially offset by adverse currency movements of £11.5 million and a net cash inflow of £27.7 million. The net inflow masks a high level of underlying activity, with realisations of £118.3 million and new investment of £90.6 million.
|
|
£m |
|
Opening portfolio |
415.2 |
|
|
|
|
Additions |
90.6 |
|
Disposal proceeds |
(118.3) |
|
Net cash inflow |
(27.7) |
|
|
|
|
Gains on realisation activity |
32.8 |
|
Unrealised valuation gains |
24.5 |
|
Total underlying valuation gains |
57.3 |
|
Currency |
(11.5) |
|
Closing portfolio |
433.3 |
Gains generated by realisation activity accounted for 57% of the underlying valuation increase while uplifts in unrealised valuations accounted for the remainder. Valuation gains were primarily driven by strong earnings growth while multiples remained broadly stable.
Investment activity
Realisations
Proceeds generated by the portfolio in the year reached a record high of £118.3 million and were 54% higher than in the previous year. Over 28% of the value of the opening portfolio was converted into cash, the highest conversion rate for six years. The pace of inflows accelerated as the year progressed, almost doubling in the second half compared with the first. This reflected a steady improvement in market conditions for realisations over the course of the year.
Thirty-three investments were fully realised in the year, more than twice the number sold in the previous year. The proceeds of £78.8 million from these full realisations were almost 70% ahead of the previous year's figure. Realisations continue to generate substantial uplifts over the prior carrying values, averaging 36% in the year. The average multiple of original cost also remained reasonably strong at 2.1 times.
The most significant realisation was Graphite Capital Partners VII's sale of Alexander Mann Solutions ("AMS"), the leading global provider of recruitment process outsourcing services. This generated £14.4 million of cash and an uplift in value of £6.0 million, both of which were the highest achieved in the year. Over its six year holding period, the investment in AMS generated a return of 3.6 times cost.
AMS was one of five sales made from the Graphite Capital portfolio in the year. The others were Park Holidays, Dominion Gas, Willowbrook Healthcare and Optimum Care which together generated a further £30.8 million of proceeds. In total the Graphite Capital portfolio accounted for 41% of proceeds in the year. These sales bring the total number of disposals from the Graphite Capital portfolio to seven in fifteen months.
In the third party portfolio Doughty Hanson's sale of Vue Entertainment, the UK cinema chain, was the largest realisation, generating cash proceeds of £8.2 million. The investment was held through Doughty Hanson's fund and in a co-investment alongside it, and generated a return of 2.1 times cost and an IRR of over 30%.
Sales to trade buyers represented 16 of the 33 full realisations, with private equity buyers accounting for 11. The remainder were mezzanine repayments and the sale of a listed holding from an IPO in the prior year.
Most of the realisations were of investments made prior to the financial crisis, with those made in 2006 and 2007 representing 17 of the 33 realisations. As these were made immediately prior to the downturn, they were seen as the most vulnerable. It is therefore encouraging to see that they are now generating good returns.
Further details of the ten largest underlying realisations are set out in the Supplementary Information section later in this report.
The portfolio generated a further £39.5 million from partial realisations, most of which came from IPOs and refinancings. In a recovering IPO market, eight portfolio companies achieved flotations, the largest of which were HellermannTyton and Partnership. The Company received proceeds of £16.8 million from these IPOs and at the year-end continued to hold listed shares in these investments. Details of the Company's listed holdings are set out in the Supplementary Information section later in this report.
The refinancing market has also recovered, following an improvement in the availability of credit, with the result that a number of portfolio companies were successfully refinanced generating £11.9 million of cash.
New investments
The level of new investment increased by 68% to £90.6 million in the year, primarily because we substantially increased secondary purchases of fund interests ("secondaries") and made more co-investments. The combined investment in secondaries and co-investments rose from £5.2 million to £36.4 million.
We completed six secondaries in the year totalling £24.3 million. Five of the six were in funds managed by firms with whom the Company had already invested, of which three were in funds already in the portfolio. The sixth was a new relationship where we also committed to invest in the manager's new fund.
We invested a further £12.2 million in three direct co-investments alongside managers in our fund portfolio. These were in TDR's acquisition of David Lloyd Leisure, Kester Capital's acquisition of Frontier Medical and PAI Partners' acquisition of R&R Ice Cream.
Secondaries and co-investments are an increasingly important part of our overall strategy. Both are ways of quickly re-investing realisation proceeds and offer an attractive balance of risk versus reward. We believe we are well placed to execute these investments as we have many years of experience of making direct investments and of managing our own buy-out funds.
Drawdowns by the fund portfolio increased by 11% to £54.2 million, with a sharp rise in drawdowns by the Graphite Capital portfolio being partially offset by a small fall in drawdowns by third party funds.
Graphite Capital funds drew down £17.6 million in the year, an 84% increase on last year's figure. Most of this was to finance two new investments led by our buy-out team. These were in City & County Healthcare, the UK's fourth largest homecare provider, and in Hawksmoor, an operator of restaurants in London. The Company invested £14.2 million in the former and £1.7 million in the latter.
Third-party funds drew down £36.6 million in the year, marginally below the £39.1 million drawn down in the previous year. These drawdowns represented only 40% of total new investment in the year. The remaining 60% was either invested by our buy-out team or was in secondaries or co-investments. As we are able to analyse the underlying companies before deciding whether to invest in a secondary or a co-investment, and the buy-out team has full control over the Graphite Capital investments, we effectively had full discretion over the majority of new investments made in the year. This is in contrast to a conventional investor in private equity funds which will not be involved in the selection of any of the companies in its underlying portfolio.
Further details of the ten largest underlying new investments and of the secondaries are set out in the Supplementary Information section later in this report.
New commitments
We made twelve new fund commitments in the year totalling £201.1 million. The most significant of these by some margin was the £100.0 million committed to Graphite Capital Partners VIII which closed in September 2013 with total commitments of over £500 million. We are pleased that the Board chose to continue to support our buy-out team for the next four to five years with such a substantial commitment. Graphite Capital Partners VIII will continue the successful strategy of its predecessor of investing in UK management buy-outs valued primarily at between £40 million and £150 million.
Of the eleven commitments made to third-party managers, seven were to managers with whom we have longstanding relationships. The other four were to managers that are new to the portfolio. All of the new relationships are with well established firms investing their fourth or subsequent fund. Established firms are the main focus of the Company's investment strategy as we believe they are generally lower risk than firms with newer, less experienced, teams. Further details of each of these new funds are set out in the Supplementary Information section later in this report.
All of the new commitments are in line with our strategy of building long-term relationships with our preferred managers by investing in their new funds. By so doing we believe we put ourselves in the best possible position to acquire secondaries in their funds and to invest alongside them in co-investments. While many private equity fund investors have been rationalising manager relationships, we have chosen to broaden the number of active relationships in order to give us greater access to these follow-on investments. In the last three years we have added nine new managers to the portfolio, and at the year end had 32 active manager relationships.
We believe that this will prove to have been a good time in the cycle to have made commitments to new funds as they should be drawn down as the major European economies are emerging from recession.
Closing portfolio
At 31 January, the portfolio was valued at £433.3 million and was broadly diversified with investments in 387 underlying companies across a wide range of sectors, geographies and years of investment.
We believe our portfolio strikes an attractive balance between diversification and concentration. While the level of diversification within the portfolio reduces risk, many individual investments are large enough to have an impact on overall performance, as demonstrated this year by the sales of AMS, Dominion and Vue Entertainment.
The top ten underlying companies accounted for 24% of the value of the portfolio at the year end, while the top 30 accounted for 43%. The performance of these 30 investments is therefore likely to be a key driver of future performance. As outlined in the Chairman's Statement, their performance remained strong in the year to 31 December 2013 with revenues and EBITDA growing by an average of 7.4% and 13.6% respectively.
The top 30 underlying companies were valued on an average multiple of 9.2 times EBITDA at December 2013. We consider this to be reasonable for the level of growth being achieved and for the quality of the underlying earnings. In comparison, the FTSE 250 Index was valued at 9.3 times EBITDA at the year end, while the EBITDA of its component companies increased by only 4.8% in the year.
The leverage of the top thirty companies is generally modest, with net debt averaging 3.6 times EBITDA. This level of gearing should enhance future equity returns without posing undue financial risk.
Graphite Capital directly managed 21% of the portfolio including six of the top ten underlying investments and seven of the top 30. This gives us a high level of influence over the development of a significant part of the Company's portfolio. It also provides valuable insights which help us to make more informed strategic and short term decisions on the management of the portfolio as a whole.
The third-party portfolio accounted for 79% of value at the year end, of which 14% was in secondaries and 8% in co-investments.
In these accounts, 98% of the portfolio was valued using December 2013 valuations. The portfolio was valued at an average of 1.4 times original cost in local currency, of which 0.4 times cost had already been realised. At these levels we believe there to be potential for future growth as the portfolio matures. As almost 45% of the portfolio is in investments made more than five years ago, managers will be looking to realise many of these investments while market conditions remain favourable.
A detailed analysis of the portfolio is included in the Supplementary Information section later in this report.
Commitments and liquidity
At 31 January, the Company had outstanding commitments of £277.3 million and total liquidity of £165.9 million, of which £68.2 million was in cash and £97.7 million in the undrawn bank facility. Commitments therefore exceeded total liquidity by £111.4 million or by 22.6% of the net asset value.
As the vast majority of commitments are to funds raised in the last 12 months, relatively few are likely to be drawn down in the short term. Funds are typically drawn down over a period of three to five years and 10-20% of commitments are usually retained at the end of the investment period to fund follow-on investments and expenses. If outstanding commitments to each of the funds were to be drawn down at a constant rate over their remaining investment periods, approximately £55 million of commitments would be drawn down over the next 12 months.
The Company therefore should have sufficient resources in cash and undrawn facilities to fund drawdowns for more than three years, even if no realisations were achieved. In reality we would expect to receive substantial cash inflows from the portfolio during this period.
Currency
Foreign exchange exposure has an impact both on the net asset value and on the level of outstanding commitments. At the year end, 44% of the net asset value and 58% of outstanding commitments were denominated in foreign currencies, primarily in euros.
In the year to January 2014, foreign currency movements had a negative impact on performance, reducing the net asset value by 2.6%. In contrast, currency movements increased the net asset value by 1.6% in the previous year.
The Board regularly reviews foreign exchange exposure and to date has chosen not to hedge as the cost has been considered prohibitive. We continue to keep this under review. Further details of the foreign currency exposure are set out in the Supplementary Information section.
Events since the year end
In the first two months of the current financial year additions to the portfolio of £17.1 million have exceeded realisations of £6.1 million. The largest investment was made by our buy-out team which earlier this month completed the acquisition of ICR, a provider of maintenance services to the oil and gas industry in which the Company invested £10.9 million.
After taking account of the £12.3 million net cash outflow since the year end, the cash balance has fallen to £55.9 million while outstanding commitments have fallen to £260.2 million.
Prospects
After remaining subdued during the downturn, the realisation market started to recover in 2012 and this recovery accelerated in 2013. The environment for realisations is now as favourable as it has been for many years, with a range of exit options currently available. With the portfolio generating record levels of cash, our main challenge is to re-invest these proceeds and thereby maintain, or ideally increase, the level of investment.
When the realisation market picks up, the market for new buy-outs inevitably becomes more challenging as pricing tends to rise. To balance this, the flow of opportunities also increases, presenting our managers with a wider range of potential investments from which to choose. The more experienced managers are able to adapt to this environment and while recognising that prices may be higher than during the downturn are able to select investments which justify this premium. Perhaps more importantly, these investments will be made at a time when there is widespread agreement that the European economy is recovering and is unlikely to move backwards.
Many of our preferred managers have raised new funds over the last 18 months and we made substantial commitments to these in order to secure the core of the investment programme for the next few years. As fewer new funds are being raised that meet our criteria, this year we will focus more on acquiring secondary interests and on making co-investments. These should enable us to deploy cash resources more quickly alongside the core investment programme of primary funds.
The Company's current portfolio continues to mature and the profit growth of the larger investments remains strong. The valuations of these investments should therefore continue to rise even if multiples remain unchanged. In the current market, we would expect a number of them to be realised over the next twelve months and that such realisations would be achieved at significant uplifts to carrying values.
At this point in the cycle, the Company has the benefit of a strong balance sheet. With a flexible investment approach and long experience of investing both directly and through funds we should be well placed to take advantage of the opportunities which will doubtless arise as the economic recovery continues.
Graphite Capital Management LLP
March 2014
For further information please contact:
|
Tim Spence |
020 7825 5358 |
|
Emma Osborne |
020 7825 5357 |
SUPPLEMENTARY INFORMATION
The 30 largest FUND INVESTMENTS
The table below summarises the 30 largest funds by value at 31 January 2014.
|
|
Fund |
Outstanding commitment |
Year of commitment |
Country/ |
Value |
|
1 |
Graphite Capital Partners VII * / ** |
|
|
|
|
|
Mid-market buy-outs |
7.6 |
2007 |
UK |
37.5 |
|
|
2 |
Fourth Cinven Fund ** |
|
|
|
|
|
Large buy-outs |
4.1 |
2006 |
Europe |
28.1 |
|
|
3 |
Euromezzanine 5 |
|
|
|
|
|
Mezzanine loans to mid-market buy-outs |
1.8 |
2006 |
France |
21.2 |
|
|
4 |
CVC European Equity Partners V ** |
|
|
|
|
|
Large buy-outs |
6.0 |
2008 |
Global |
21.0 |
|
|
5 |
Thomas H Lee Parallel Fund VI |
|
|
|
|
|
Large buy-outs |
3.9 |
2007 |
USA |
19.6 |
|
|
6 |
Doughty Hanson & Co V ** |
|
|
|
|
|
Mid-market and large buy-outs |
6.2 |
2006 |
Europe |
18.2 |
|
|
7 |
ICG European Fund 2006 |
|
|
|
|
|
Mezzanine loans to buy-outs |
2.7 |
2007 |
Europe |
17.4 |
|
|
8 |
TDR Capital II |
|
|
|
|
|
Mid-market and large buy-outs |
0.8 |
2006 |
Europe |
17.4 |
|
|
9 |
Candover 2005 Fund ** |
|
|
|
|
|
Large buy-outs |
0.1 |
2005 |
Europe |
17.0 |
|
|
10 |
Graphite Capital Partners VI ** |
|
|
|
|
|
Mid-market buy-outs |
3.2 |
2003 |
UK |
16.3 |
|
|
11 |
Graphite Capital Partners VIII * |
|
|
|
|
|
Mid-market buy-outs |
84.1 |
2013 |
UK |
15.2 |
|
|
12 |
Apax Europe VII |
|
|
|
|
|
Large buy-outs |
0.2 |
2007 |
Global |
15.2 |
|
|
13 |
Activa Capital Fund II |
|
|
|
|
|
Mid-market buy-outs |
0.9 |
2007 |
France |
15.0 |
|
|
14 |
Deutsche Beteiligungs AG Fund V |
|
|
|
|
|
Mid-market buy-outs |
1.3 |
2006 |
Germany |
9.7 |
|
|
15 |
Doughty Hanson & Co IV |
|
|
|
|
|
Mid-market and large buy-outs |
0.4 |
2005 |
Europe |
9.3 |
|
|
16 |
Bowmark Capital Partners IV |
|
|
|
|
|
Mid-market buy-outs |
1.4 |
2007 |
UK |
8.6 |
|
|
17 |
PAI Europe V |
|
|
|
|
|
Large buy-outs |
0.4 |
2007 |
Europe |
6.4 |
|
|
18 |
CVC European Equity Partners Tandem |
|
|
|
|
|
Large buy-outs |
0.9 |
2006 |
Global |
5.1 |
|
|
19 |
Charterhouse Capital Partners IX ** |
|
|
|
|
|
Large buy-outs |
3.1 |
2008 |
Europe |
5.0 |
|
|
20 |
Advent Central and Eastern Europe IV |
|
|
|
|
|
Mid-market buy-outs |
1.3 |
2008 |
Europe |
4.7 |
|
|
21 |
CVC European Equity Partners IV ** |
|
|
|
|
|
Large buy-outs |
1.4 |
2005 |
Global |
4.3 |
|
|
22 |
Permira IV ** |
|
|
|
|
|
Large buy-outs |
0.3 |
2006 |
Europe |
4.2 |
|
|
23 |
BC European Capital IX |
|
|
|
|
|
Large buy-outs |
4.2 |
2011 |
Europe |
4.2 |
|
|
24 |
Fifth Cinven Fund |
|
|
|
|
|
Large buy-outs |
12.8 |
2012 |
Europe |
3.7 |
|
|
25 |
Charterhouse Capital Partners VIII ** |
|
|
|
|
|
Large buy-outs |
1.2 |
2006 |
Europe |
3.6 |
|
|
26 |
Piper Private Equity Fund IV |
|
|
|
|
|
Small buy-outs |
1.1 |
2006 |
UK |
3.2 |
|
|
27 |
Deutsche Beteiligungs AG Fund IV |
|
|
|
|
|
Mid-market buy-outs |
0.3 |
2002 |
Germany |
3.2 |
|
|
28 |
Segulah IV |
|
|
|
|
|
Mid-market buy-outs |
1.2 |
2008 |
Sweden |
3.2 |
|
|
29 |
Apax Europe VII Sidecar 2 |
|
|
|
|
|
Large buy-outs |
0.9 |
2007 |
Global |
3.2 |
|
|
30 |
CSP Secondary Opportunities Fund II |
|
|
|
|
|
Secondary portfolios |
- |
2008 |
Global |
3.2 |
|
|
|
|
|
|
|
|
|
Total of 30 largest underlying funds |
153.8 |
|
|
343.9 |
* Includes the associated top up funds
** All or part of interest acquired through a secondary fund purchase
The 30 largest UNDERLYING investments
The tables below present the 30 companies in which Graphite Enterprise had the largest investments by value at 31 January 2014. 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.
|
|
Company |
Manager |
Year of investment |
Country |
Value as % of investment portfolio |
|
1 |
Micheldever |
|
|
|
|
|
Distributor and retailer of tyres |
Graphite Capital |
2006 |
UK |
3.9% |
|
|
2 |
City & County Healthcare Group |
|
|
|
|
|
Provider of home care services |
Graphite Capital |
2013 |
UK |
3.3% |
|
|
3 |
CEVA |
|
|
|
|
|
Manufacturer and distributor of animal health products |
Euromezzanine |
2003 |
France |
3.2% |
|
|
4 |
National Fostering Agency |
|
|
|
|
|
Provider of foster care services |
Graphite Capital |
2012 |
UK |
2.7% |
|
|
5 |
Algeco Scotsman |
|
|
|
|
|
Supplier and operator of modular buildings |
TDR Capital |
2007 |
USA |
2.4% |
|
|
6 |
Education Personnel |
|
|
|
|
|
Provider of temporary staff for the education sector |
Graphite Capital |
2010 |
UK |
2.0% |
|
|
7 |
U-POL |
|
|
|
|
|
Manufacturer and distributor of automotive refinish products |
Graphite Capital |
2010 |
UK |
1.8% |
|
|
8 |
London Square |
|
|
|
|
|
Developer of residential housing |
Graphite Capital |
2010 |
UK |
1.5% |
|
|
9 |
David Lloyd Leisure |
|
|
|
|
|
Operator of premium health clubs |
TDR Capital |
2013 |
UK |
1.4% |
|
|
10 |
TMF |
|
|
|
|
|
Provider of management and accounting outsourcing services |
Doughty Hanson |
2008 |
Netherlands |
1.4% |
|
|
11 |
Quiron |
|
|
|
|
|
Operator of private hospitals |
Doughty Hanson |
2012 |
Spain |
1.3% |
|
|
12 |
CPA Global |
|
|
|
|
|
Provider of patent and legal services |
Cinven |
2012 |
UK |
1.2% |
|
|
13 |
Parques Reunidos |
|
|
|
|
|
Operator of attraction parks |
Arle |
2007 |
Spain |
1.1% |
|
|
14 |
Spire Healthcare |
|
|
|
|
|
Operator of hospitals |
Cinven |
2007 |
UK |
1.1% |
|
|
15 |
Frontier Medical |
|
|
|
|
|
Manufacturer of medical devices |
Kester Capital |
2013 |
UK |
1.1% |
|
|
16 |
Spheros |
|
|
|
|
|
Provider of bus climate control systems |
Deustche Beteiligungs |
2011 |
Germany |
1.0% |
|
|
17 |
Ceridian |
|
|
|
|
|
Provider of payment processing services |
Thomas H Lee Partners |
2007 |
North America |
1.0% |
|
|
18 |
Stonegate Pub Company |
|
|
|
|
|
Operator of pubs |
TDR Capital |
2010 |
UK |
1.0% |
|
|
19 |
Stork |
|
|
|
|
|
Provider of technical engineering services |
Arle |
2008 |
Netherlands |
1.0% |
|
|
20 |
Acromas |
|
|
|
|
|
Provider of financial, motoring, travel and healthcare services |
Charterhouse / CVC |
2007 |
UK |
1.0% |
|
|
21 |
Intermediate Capital Group* |
|
|
|
|
|
Provider of mezzanine finance |
ICG |
1989 |
UK |
1.0% |
|
|
22 |
Evonik Industries* |
|
|
|
|
|
Manufacturer of specialty chemicals |
CVC |
2008 |
Germany |
0.9% |
|
|
23 |
InnBrighton |
|
|
|
|
|
Operator of pubs and bars |
Graphite Capital |
2001 |
UK |
0.9% |
|
|
24 |
Partnership* |
|
|
|
|
|
Provider of retirement solutions |
Cinven |
2008 |
UK |
0.9% |
|
|
25 |
Gerflor |
|
|
|
|
|
Manufacturer of PVC flooring |
ICG |
2011 |
France |
0.9% |
|
|
26 |
Eurofiber |
|
|
|
|
|
Provider of fibre optic network |
Doughty Hanson |
2012 |
Netherlands |
0.8% |
|
|
27 |
Sebia |
|
|
|
|
|
Provider of protein testing equipment |
Cinven |
2010 |
France |
0.8% |
|
|
28 |
Guardian Financial Services |
|
|
|
|
|
Provider of insured life and pension products |
Cinven |
2011 |
UK |
0.8% |
|
|
29 |
Abertis* |
|
|
|
|
|
Provider of private transport and communications |
CVC |
2010 |
Spain |
0.8% |
|
|
30 |
Gondola |
|
|
|
|
|
Operator of casual dining restaurants |
Cinven |
2006 |
UK |
0.7% |
|
|
Total of 30 largest underlying investments |
|
|
43.1% |
||
* Quoted
|
30 largest investments* - revenue growth |
|
|
|
|
|
% growth |
% by value |
|
<0% |
9.0% |
|
0-10% |
61.7% |
|
10-20% |
16.5% |
|
20-30% |
0.0% |
|
>30% |
7.6% |
|
30 largest investments** - EBITDA growth |
|
|
|
|
|
% growth |
% by value |
|
<0% |
13.0% |
|
0-10% |
37.8% |
|
10-20% |
10.0% |
|
20-30% |
15.9% |
|
>30% |
17.2% |
|
|
|
|
30 largest investments*** - enterprise value as a multiple of EBITDA |
|
|
|
|
|
Multiple |
% by value |
|
<7.0x |
6.8% |
|
7.0-8.0x |
15.7% |
|
8.0-9.0x |
26.6% |
|
9.0-10.0x |
12.2% |
|
10.0-11.0x |
19.6% |
|
11.0-12.0x |
0.0% |
|
>12.0x |
12.8% |
|
30 largest investments***- net debt as a multiple of EBITDA |
|
|
|
|
|
Multiple |
% by value |
|
<2.0x |
13.1% |
|
2.0-3.0x |
27.7% |
|
3.0-4.0x |
19.4% |
|
4.0-5.0x |
14.4% |
|
5.0-6.0x |
8.3% |
|
6.0-7.0x |
8.4% |
|
>7.0x |
2.4% |
* Excludes London Square (immature) and Guardian Financial Services where revenue is not a meaningful measure of performance.
** Excludes London Square (immature) where EBITDA is not a meaningful measure of performance.
*** Excludes Intermediate Capital Group, Partnership and Guardian Financial Services where metrics are not relevant.
Portfolio analySIS
The following four tables analyse the companies in which Graphite Enterprise had investments at 31 January 2014.
Underlying companies - investment type
|
|
|
% of underlying companies |
|
Large buy-outs |
|
48.5% |
|
Mid-market buy-outs |
|
34.9% |
|
Mezzanine |
|
10.6% |
|
Small buy-outs |
|
5.1% |
|
Quoted |
|
0.9% |
|
Total |
|
100.0% |
Underlying companies - geographic distribution*
|
|
|
% of underlying companies |
|
UK |
|
45.1% |
|
France |
|
13.8% |
|
North America |
|
13.6% |
|
Germany |
|
8.5% |
|
Benelux |
|
5.3% |
|
Spain |
|
4.9% |
|
Scandinavia |
|
3.0% |
|
Greece, Ireland, Italy, Portugal |
|
2.7% |
|
Other Europe |
|
1.5% |
|
Rest of world |
|
1.6% |
|
Total |
|
100.0% |
|
|
|
|
* Location of headquarters of underlying companies in the portfolio. Does not necessarily reflect countries to which companies have economic exposure.
Underlying companies - year of investment and valuation as a multiple of original cost
|
|
Multiple of cost |
Primary portfolio |
Secondary portfolio |
Total portfolio |
|
2013 and onwards |
1.0x |
12.7% |
0.6% |
13.3% |
|
2012 |
1.3x |
11.4% |
1.6% |
13.0% |
|
2011 |
1.3x |
11.1% |
1.5% |
12.6% |
|
2010 |
1.6x |
13.4% |
1.4% |
14.8% |
|
2009 |
2.2x |
1.2% |
0.3% |
1.5% |
|
2008 |
1.1x |
8.0% |
2.0% |
10.0% |
|
2007 |
1.6x |
14.9% |
2.2% |
17.1% |
|
2006 |
1.3x |
9.0% |
2.4% |
11.4% |
|
2005 |
0.9x |
0.9% |
0.0% |
0.9% |
|
2004 and before |
1.5x |
5.2% |
0.2% |
5.4% |
|
Total |
1.4x |
87.7% |
12.3% |
100.0% |
Underlying companies - sector analysis
|
|
|
% of underlying companies |
|
Business services |
|
18.7% |
|
Healthcare & education |
|
18.6% |
|
Industrials |
|
14.4% |
|
Consumer goods and services |
|
12.6% |
|
Leisure |
|
9.7% |
|
Financials |
|
9.5% |
|
Automotive supplies |
|
6.2% |
|
Technology and telecommunications |
|
4.2% |
|
Media |
|
4.0% |
|
Chemicals |
|
2.1% |
|
Total |
|
100.0% |
The following table analyses the closing portfolio by value.
Portfolio - Graphite and third party investments
|
31 January 2014 £ million |
|
Third party investments |
Graphite investments |
Total |
|
Fund investments |
|
308.5 |
70.3 |
378.8 |
|
Direct investments |
|
34.3 |
20.3 |
54.6 |
|
Total portfolio |
|
342.8 |
90.6 |
433.4 |
|
Graphite investments |
|
|
|
20.9% |
|
Third party fund investments |
|
|
|
71.2% |
|
Third party co-investments |
|
|
|
7.9% |
Investment activity
Investments into the portfolio
|
|
Drawdowns |
Co-investments and secondary fund purchases |
Total new investments |
|
Financial period ending |
£m |
£m |
£m |
|
31 January 2014 |
54.2 |
36.4 |
90.6 |
|
31 January 2013 |
48.8 |
5.2 |
54.0 |
|
31 January 2012 |
51.3 |
29.9 |
81.2 |
|
31 January 2011 |
65.6 |
19.2 |
84.8 |
|
31 December 2009 |
21.5 |
2.5 |
24.0 |
|
31 December 2008 |
65.8 |
12.1 |
77.9 |
|
31 December 2007 |
95.2 |
7.9 |
103.1 |
|
31 December 2006 |
74.6 |
5.7 |
80.3 |
|
31 December 2005 |
41.6 |
3.9 |
45.5 |
|
31 December 2004 |
22.8 |
6.6 |
29.4 |
Largest new underlying investments in the year ended 31 January 2014
|
Investment |
Description |
Country |
£m |
|
City & County |
Provider of home care |
UK |
14.2 |
|
David Lloyd Leisure |
Operator of premium health clubs |
UK |
6.2 |
|
Frontier Medical |
Manufacturer of medical devices |
UK |
5.1 |
|
R&R Ice Cream |
Manufacturer and distributor of ice cream products |
UK |
3.0 |
|
Hawksmoor |
Operator of steak restaurants |
UK |
1.7 |
|
Formel D |
Provider of services to automobile manufacturers and suppliers |
Germany |
1.7 |
|
Ista* |
Provider of consumption-dependent billing of energy costs |
Germany |
1.6 |
|
AMco |
Distributor of niche generic pharmaceuticals |
UK |
1.2 |
|
Host Europe Group |
Provider of hosting and internet domain services |
UK |
1.1 |
|
Law Business Review |
Publisher of specialist information for the legal industry |
UK |
1.1 |
|
Total of 10 largest new investments |
|
36.9 |
|
* Acquired from a current fund investment of the Company and therefore also a disposal in the year.
Realisations from the portfolio *
|
Financial period ending |
£m |
% of opening portfolio |
|
31 January 2014 |
118.3 |
28.5% |
|
31 January 2013 |
74.2 |
19.7% |
|
31 January 2012 |
92.9 |
26.0% |
|
31 January 2011 |
19.8 |
8.5% |
|
31 December 2009 |
14.0 |
7.3% |
|
31 December 2008 |
25.8 |
12.9% |
|
31 December 2007 |
112.4 |
54.5% |
|
31 December 2006 |
92.9 |
53.3% |
|
31 December 2005 |
93.8 |
61.9% |
|
31 December 2004 |
116.7 |
60.4% |
*Excluding secondary sales of fund interests.
Largest underlying realisations in the year ended 31 January 2014
|
Investment |
Manager |
Buyer type |
Proceeds £m |
|
Alexander Mann Solutions |
Graphite Capital |
Private equity |
16.1 |
|
Park Holidays UK |
Graphite Capital/Direct |
Investment trust |
12.4 |
|
Vue Entertainment |
Doughty Hanson |
Private equity |
8.2 |
|
Dominion Technology Gases |
Graphite Capital |
Trade |
7.9 |
|
Willowbrook Healthcare |
Graphite Capital |
Trade |
6.8 |
|
HellermannTyton |
Doughty Hanson |
Public offering |
4.2 |
|
Optimum Care |
Graphite Capital |
Trade |
3.7 |
|
Ziggo |
Cinven |
Public offering |
3.7 |
|
Avanza Group |
Doughty Hanson |
Trade |
3.1 |
|
Ista* |
Charterhouse/CVC |
Private equity |
2.7 |
|
Total of 10 largest realisations |
|
|
68.8 |
*Sold to an existing fund investment of the Company and therefore also a new investment in the year.
|
Quoted equity holdings at 31 January 2014
|
|
|
|
|
Underlying investment |
Ticker |
£m |
% of investment portfolio |
|
Intermediate Capital Group |
ICP |
4.2 |
1.0% |
|
Evonik Industries |
EVK |
4.0 |
0.9% |
|
Partnership |
PA. |
4.0 |
0.8% |
|
Abertis |
ABE |
3.3 |
0.8% |
|
Aramark Corporation |
ARMK |
2.7 |
0.6% |
|
Homag Group |
HG1 |
2.6 |
0.6% |
|
Tumi |
TUMI |
2.0 |
0.5% |
|
HellermannTyton |
HTY |
1.9 |
0.4% |
|
MoneyGram International |
MGI |
1.7 |
0.4% |
|
West Corporation |
WSTC |
1.7 |
0.4% |
|
The Nielsen company |
NLSN |
1.5 |
0.4% |
|
Merlin |
MERL |
1.4 |
0.3% |
|
Bankrate |
RATE |
1.3 |
0.3% |
|
Sterling Financial Corporation |
STSA |
1.2 |
0.3% |
|
Hugo Boss |
BOSS |
1.0 |
0.2% |
|
Atos |
ATOS |
0.9 |
0.2% |
|
SouFun |
SFUN |
0.9 |
0.2% |
|
First BanCorp |
FBP |
0.5 |
0.1% |
|
Just Retirement |
JRG |
0.5 |
0.1% |
|
ProSiebenSat.1 |
PSM |
0.3 |
0.1% |
|
Freescale |
FSL |
0.2 |
0.1% |
|
Total |
|
37.8 |
8.7% |
Commitments analysis
|
Commitments at 31 January 2014 |
Original commitment1 £m |
Outstanding commitment £m |
Average drawdown percentage |
% of commitments |
|
Investment period not started |
22.3 |
22.3 |
- |
8.0% |
|
Funds in investment period |
354.8 |
215.6 |
39.2% |
77.8% |
|
Funds post investment period |
488.9 |
39.4 |
91.9% |
14.2% |
|
Total |
866.0 |
277.3 |
68.0% |
100.0% |
1 Original commitments are at 31 January 2014 exchange rates
|
Commitments at 31 January 2014 - remaining investment period |
% of commitments |
|
Investment period not started |
8.0% |
|
> 5 years |
8.7% |
|
4-5 years |
50.8% |
|
3-4 years |
4.6% |
|
2-3 years |
6.6% |
|
1-2 years |
0.8% |
|
<1 year |
6.3% |
|
Investment period complete |
14.2% |
|
Total |
100.0% |
|
Movement in commitments in the year ended 31 January 2014 |
£m |
|
Opening |
126.5 |
|
Drawdowns* |
(53.7) |
|
New primary commitments |
201.1 |
|
New commitments arising through secondary purchases |
9.5 |
|
New commitments arising through co-investments |
2.1 |
|
Currency |
(6.3) |
|
Other |
(1.9) |
|
Closing |
277.3 |
*Excludes legal fees in respect of new investments
New commitments during the year to 31 January 2014
|
Fund |
Strategy |
Geography |
£m |
|
Primary commitments |
|
|
|
|
Graphite Capital Partners VIII* |
Mid-market buy-out |
UK |
100.0 |
|
CVC European Equity Partners VI |
Large buy-out |
Europe |
17.1 |
|
Activa Capital Fund III |
Mid-market buy-out |
France |
12.6 |
|
PAI Europe VI |
Large buy-out |
Europe |
12.5 |
|
Bowmark Capital Partners V |
Mid-market buy-out |
UK |
10.0 |
|
Fifth Cinven Fund |
Large buy-out |
Europe |
8.7 |
|
IK VII |
Mid-market and large buy-out |
Europe |
8.7 |
|
Nordic Capital Partners VIII |
Mid-market and large buy-out |
Europe |
8.5 |
|
TDR Capital Fund III |
Mid-market and large buy-out |
Europe |
8.4 |
|
Permira V |
Large buy-out |
Global |
8.4 |
|
Towerbrook IV |
Upper mid-market buy-out |
USA/Europe |
3.2 |
|
Hollyport IV |
Secondary portfolios |
Global |
3.0 |
|
Total primary commitments |
|
|
201.1 |
|
|
|
|
|
|
Commitments arising from secondary purchases |
|
|
|
|
Charterhouse Capital Partners IX |
Large buy-out |
Europe |
3.3 |
|
CVC European Equity Partners V |
Large buy-out |
Global |
2.0 |
|
Doughty Hanson & Co V |
Mid-market and large buy-out |
Europe |
1.9 |
|
GCP Capital Partners Europe II |
Small buy-out |
UK |
1.8 |
|
Permira IV |
Large buy-out |
Global |
0.4 |
|
Graphite Capital Partners V |
Mid-market buy-out |
UK |
0.1 |
|
Total commitments arising from secondary purchases
|
|
9.5 |
|
|
Commitments arising from co-investments |
|
|
|
|
David Lloyd Leisure |
Large buy-out |
UK |
1.4 |
|
R&R Ice Cream |
Large buy-out |
UK |
0.6 |
|
Frontier Medical |
Small buy-out |
UK |
0.1 |
|
Total commitments arising from co-investments
|
|
2.1 |
|
|
Total new commitments |
|
|
212.7 |
*Includes Graphite Capital Partners VIII Top Up Fund
CURRENCY EXPOSURE
|
|
31 January 2014 £m |
31 January 2014 % |
|
Portfolio* |
|
|
|
- sterling |
213.8 |
49.3 |
|
- euro |
144.7 |
33.4 |
|
- other |
74.8 |
17.3 |
|
Total |
433.3 |
100.0 |
*Currency exposure is calculated by reference to the location of the underlying portfolio companies' headquarters.
|
|
31 January 2014 £m |
31 January 2014 % |
|
Outstanding commitments |
|
|
|
- sterling |
117.7 |
42.4 |
|
- euro |
151.4 |
54.6 |
|
- other |
8.2 |
3.0 |
|
Total |
277.3 |
100.0 |
UNAUDITED RESULTS
Consolidated Income Statement
|
|
|
|
Year ended 31 January 2014 |
|
|
|
|
|
Year ended 31 January 2013 |
|
|
|
|
|
|
(unaudited) |
|
|
|
|
|
|
|
|
|
|
Revenue return |
|
Capital return |
|
Total |
|
Revenue return |
|
Capital return |
|
Total |
|
|
£'000s |
|
£'000s |
|
£'000s |
|
£'000s |
|
£'000s |
|
£'000s |
|
Investment returns |
|
|
|
|
|
|
|
|
|
|
|
|
Gains and losses on investments held at fair value |
18,809 |
|
27,475 |
|
46,284 |
|
5,988 |
|
54,555 |
|
60,543 |
|
Income from cash and cash equivalents |
172 |
|
- |
|
172 |
|
39 |
|
- |
|
39 |
|
Return from current asset investments |
5 |
|
(342) |
|
(337) |
|
74 |
|
- |
|
74 |
|
Other income |
58 |
|
- |
|
58 |
|
4 |
|
(8) |
|
(4) |
|
Foreign exchange gains and losses |
- |
|
(371) |
|
(371) |
|
- |
|
418 |
|
418 |
|
|
19,044 |
|
26,762 |
|
45,806 |
|
6,105 |
|
54,965 |
|
61,070 |
|
Expenses |
|
|
|
|
|
|
|
|
|
|
|
|
Investment management charges |
(1,490) |
|
(4,470) |
|
(5,960) |
|
(1,337) |
|
(4,010) |
|
(5,347) |
|
Other expenses |
(1,723) |
|
(2,188) |
|
(3,911) |
|
(1,772) |
|
(1,607) |
|
(3,379) |
|
|
(3,213) |
|
(6,658) |
|
(9,871) |
|
(3,109) |
|
(5,617) |
|
(8,726) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit before tax |
15,831 |
|
20,104 |
|
35,935 |
|
2,996 |
|
49,348 |
|
52,344 |
|
Taxation |
(1,965) |
|
1,965 |
|
- |
|
(701) |
|
701 |
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Profit for the year |
13,866 |
|
22,069 |
|
35,935 |
|
2,295 |
|
50,049 |
|
52,344 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Attributable to: |
|
|
|
|
|
|
|
|
|
|
|
|
Equity shareholders |
13,866 |
|
23,127 |
|
36,993 |
|
2,295 |
|
46,597 |
|
48,892 |
|
Non-controlling interests |
- |
|
(1,058) |
|
(1,058) |
|
- |
|
3,452 |
|
3,452 |
|
Basic and diluted earnings per share |
|
|
|
|
50.74p |
|
|
|
|
|
67.1p |
The columns headed 'Total' represent the income statement for the relevant financial periods and the columns headed 'Revenue return' and 'Capital return' are supplementary information. There is no Other Comprehensive Income.
Consolidated Balance Sheet
|
|
As at |
|
As at |
|
|
31 January |
|
31 January |
|
|
2014 |
|
2013 |
|
|
£'000s |
|
£'000s |
|
Non-current assets |
|
|
|
|
Investments held at fair value |
|
|
|
|
- Unquoted investments |
429,187 |
|
411,606 |
|
- Quoted investments |
4,163 |
|
3,559 |
|
|
433,350 |
|
415,165 |
|
Current assets |
|
|
|
|
Cash and cash equivalents |
68,239 |
|
28,778 |
|
Current asset investments held at fair value |
- |
|
26,398 |
|
Receivables |
1,351 |
|
1,672 |
|
|
69,590 |
|
56,848 |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
Payables |
263 |
|
550 |
|
|
|
|
|
|
Net current assets |
69,327 |
|
56,298 |
|
|
|
|
|
|
Total assets less current liabilities |
502,677 |
|
471,463 |
|
|
|
|
|
|
Capital and reserves |
|
|
|
|
Called up share capital |
7,292 |
|
7,292 |
|
Capital redemption reserve |
2,112 |
|
2,112 |
|
Share premium |
12,936 |
|
12,936 |
|
Capital reserve |
448,537 |
|
425,410 |
|
Revenue reserve |
22,885 |
|
12,665 |
|
Equity attributable to equity holders |
493,762 |
|
460,415 |
|
|
|
|
|
|
Non-controlling interests |
8,915 |
|
11,048 |
|
|
|
|
|
|
Total equity |
502,677 |
|
471,463 |
|
|
|
|
|
|
Net asset value per share (basic and diluted) |
677.2p |
|
631.5p |
Consolidated Cash Flow Statement
|
|
|
Year ended 31 January 2014 |
|
Year ended 31 January 2013 |
|
|
|
|
||
|
|
|
|
||
|
|
|
£'000s |
|
£'000s |
|
Operating activities |
|
|
|
|
|
Sale of portfolio investments |
|
99,492 |
|
70,922 |
|
Purchase of portfolio investments |
|
(90,201) |
|
(54,017) |
|
Net sale of current asset investments held at fair value |
|
26,061 |
|
8,615 |
|
Interest income received from portfolio investments |
|
8,504 |
|
4,670 |
|
Dividend income received from portfolio investments |
|
10,357 |
|
1,276 |
|
Other income received |
|
230 |
|
43 |
|
Investment management charges paid |
|
(5,947) |
|
(5,407) |
|
Taxation received |
|
1 |
|
54 |
|
Other expenses paid |
|
(1,644) |
|
(815) |
|
Net cash inflow from operating activities |
|
46,853 |
|
25,341 |
|
|
|
|
|
|
|
Financing activities |
|
|
|
|
|
Investments by non-controlling interests |
|
309 |
|
432 |
|
Distributions to non-controlling interests |
|
(1,385) |
|
(1,724) |
|
Credit facility fee |
|
(2,301) |
|
(1,260) |
|
Equity dividends paid |
|
(3,646) |
|
(3,646) |
|
Net cash outflow from financing activities |
|
(7,023) |
|
(6,198) |
|
|
|
|
|
|
|
Net increase/(decrease) in cash and cash equivalents |
|
39,830 |
|
19,143 |
|
|
|
|
|
|
|
Cash and cash equivalents at beginning of period |
|
28,778 |
|
9,218 |
|
Net increase in cash and cash equivalents |
|
39,830 |
|
19,143 |
|
Effect of changes in foreign exchange rates |
|
(369) |
|
417 |
|
Cash and cash equivalents at end of period |
|
68,239 |
|
28,778 |
Consolidated Statement of Changes in Equity
|
|
Share |
Capital redemption reserve |
Share |
Capital reserve |
Revenue reserve |
Total shareholders' equity |
Non-controlling interests |
Total equity |
|
|
||||||||
|
|
||||||||
|
Company |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
|
Year ended 31 January 2014 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance at 1 February 2013 |
7,292 |
2,112 |
12,936 |
425,410 |
12,665 |
460,415 |
11,048 |
471,463 |
|
|
|
|
|
|
|
|
|
|
|
Profit attributable to equity shareholders |
- |
- |
- |
23,127 |
13,866 |
36,993 |
- |
36,993 |
|
Loss attributable to non-controlling interests |
- |
- |
- |
- |
- |
- |
(1,058) |
(1,058) |
|
Profit for the period and total comprehensive income |
- |
- |
- |
23,127 |
13,866 |
36,993 |
(1,058) |
35,935 |
|
|
|
|
|
|
|
|
|
|
|
Dividends to equity shareholders |
- |
- |
- |
- |
(3,646) |
(3,646) |
- |
(3,646) |
|
Contributions by non-controlling interests |
- |
- |
- |
- |
- |
- |
310 |
310 |
|
Distributions to non-controlling interests |
- |
- |
- |
- |
- |
- |
(1,385) |
(1,385) |
|
|
|
|
|
|
|
|
|
|
|
Closing balance at 31 January 2014 |
7,292 |
2,112 |
12,936 |
448,537 |
22,885 |
493,762 |
8,915 |
502,677 |
|
|
Share |
Capital redemption reserve |
Share |
Capital reserve |
Revenue reserve |
Total shareholders' equity |
Non-controlling interests |
Total equity |
|
|
||||||||
|
|
||||||||
|
Company |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
£'000s |
|
Year ended 31 January 2013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Opening balance at 1 February 2012 |
7,292 |
2,112 |
12,936 |
378,813 |
14,016 |
415,169 |
8,396 |
423,565 |
|
Profit attributable to equity shareholders |
- |
- |
- |
46,597 |
2,295 |
48,892 |
- |
48,892 |
|
Profit attributable to non-controlling interests |
- |
- |
- |
- |
- |
- |
3,452 |
3,452 |
|
Profit for the year and total comprehensive income |
- |
- |
- |
46,597 |
2,295 |
48,892 |
3,452 |
52,344 |
|
Transfer on disposal of investments |
|
|
|
- |
- |
- |
- |
- |
|
Dividends to equity shareholders |
- |
- |
- |
- |
(3,646) |
(3,646) |
- |
(3,646) |
|
Contributions by non-controlling interests |
- |
- |
- |
- |
- |
- |
418 |
418 |
|
Distributions to non-controlling interests |
- |
- |
- |
- |
- |
- |
(1,218) |
(1,218) |
|
Closing balance at 31 January 2013 |
7,292 |
2,112 |
12,936 |
425,410 |
12,665 |
460,415 |
11,048 |
471,463 |
Notes to the Accounts
1 GENERAL INFORMATION
This consolidated financial information relates to Graphite Enterprise Trust PLC ("the Parent Company") and its subsidiaries, Graphite Enterprise Trust Limited Partnership and Graphite Enterprise Trust (2) Limited Partnership (together "the Company"). The registered address and principal place of business of the Company is Berkeley Square House, Berkeley Square, London W1J 6BQ.
2 UNAUDITED RESULTS
The consolidated financial information is for the year to 31 January 2014 and does not comprise statutory accounts within the meaning of Section 434 of the Companies Act 2006 and has not been audited.
Statutory accounts for the year to 31 January 2013 were approved by the Board of Directors on 17 April 2013 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 of the Companies Act 2006.
Statutory accounts for the year to 31 January 2014 will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held at the Westbury Hotel, Bond Street, London, W1S 2YF at 3.30pm on 11 June 2014.
3 BASIS OF PREPARATION
The consolidated financial information for the year ended 31 January 2014 has been prepared in accordance with the Companies Act 2006 and International Financial Reporting Standards ("IFRS"). IFRS comprises standards and interpretations approved by the International Accounting Standards Board ("IASB") and the International Financial Reporting Interpretations Committee ("IFRIC") as adopted in the European Union as at 31 January 2014. 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.
|
4 DIVIDENDS
|
Year ended 31 January 2014 |
Year ended 31 January 2013 |
|
|
£'000s |
£'000s |
|
Final paid: 5.00p (2013: 5.00p) per share |
3,646 |
3,646 |
The Board has proposed a final dividend of 7.50p per share and a special dividend of 8.00p per share in respect of the period ended 31 January 2014 which, if approved by shareholders, will both be paid on 18 June 2014, to shareholders on the register of members at the close of business on 30 May 2014.
5 NON-CONTROLLING INTERESTS
Co-investment incentive arrangements are in place under which the executives of the Manager and a previous owner of the Manager (together, "the Co-investors") invest alongside the Company in return for a share of investment profits if certain performance hurdles are met. The non-controlling interests balance represents an estimate of the commercial value of the Co-investors' share of gains on investments at their year end valuations.
In the consolidated income statement, the loss attributable to non-controlling interests represents a decrease in the valuation of the Co-investors' interests in the period.
|
6 EARNINGS PER SHARE |
|
|
|
|||
|
Year ended 31 January 2014 |
Year ended 31 January 2013 |
|
||||
|
Revenue return per ordinary share |
19.02p |
3.15p |
|
|
||
|
Capital return per ordinary share |
31.72p |
63.91p |
|
|
||
|
Earnings per ordinary share (basic and diluted) |
50.74p |
67.06p |
|
|
||
7 INVESTMENT MANAGEMENT CHARGES
|
|
Year ended 31 January 2014 |
Year ended 31 January 2013 |
||||
|
|
Revenue |
Capital |
Total |
Revenue |
Capital |
Total |
|
|
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
£'000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment management fee |
1,478 |
4,433 |
5,911 |
1,319 |
3,957 |
5,276 |
|
Irrecoverable VAT |
12 |
37 |
49 |
18 |
53 |
71 |
|
|
|
|
|
|
|
|
|
|
1,490 |
4,470 |
5,960 |
1,337 |
4,010 |
5,347 |
The allocation of the total investment management charges was unchanged in the year to 31 January 2014 with 75% of the total allocated to capital and 25% allocated to revenue.
The Company has borne a management charge of £311,000 (2013: £513,000) in respect of Graphite Capital Partners VI, £581,000 (2013: £855,000) in respect of Graphite Capital Partners VII, Graphite Capital Partners Top Up Fund and Graphite Capital Partners Top Up Fund Plus, and £422,000 (2013: nil) in respect of Graphite Capital Partners VIII and Graphite Capital Partners Top Up Fund.
These charges are at the same level as those paid by third party investors. The Company does not pay any additional fees to the Manager on these investments. The total investment management charges payable by the Company to the Manager (excluding VAT), including the amounts set out in the table above, were therefore £7,267,000 (2013: £6,715,000).
Graphite Capital Management LLP was a related party of Graphite Enterprise Trust PLC during the period. The amounts payable during the period are set out above. There was an accrued amount outstanding of £76,000 as at 31 January 2014 (2013: £63,000).
8 FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
The Company is an investment company as defined by section 833 of the Companies Act 2006 and conducts its affairs so as to qualify as an investment trust under the provisions of section 1158 of the Corporation Tax Act 2010 ("Section 1158"). The Company's objective is to provide shareholders with long term capital growth through investment in unquoted companies, mostly through specialist funds but also directly.
Investments in funds have anticipated lives of approximately ten years. Direct investments are made with an anticipated holding period of between three and five years. Investment agreements will, however, usually provide that any loans advanced to investee companies are for a longer period than this. The agreements will usually provide for repayments to be made by instalments with provision for full repayment on sale or flotation.
Financial risk management
The Company's activities expose it to a variety of financial risks: market risk (comprising currency risk, interest rate risk and price risk), investment risk, credit risk and liquidity risk. The Company's overall risk management programme focuses on the unpredictability of financial markets and seeks to minimise potential adverse effects on the Company's financial performance. The Manager has overall responsibility for managing the risks and the framework for monitoring and coordinating these risks. This is monitored by the Board. The Company's financial risk management objectives and processes used to manage these risks have not changed from the previous period and the policies are set out below:
Market risk
(i) Currency risk
The Company's investments are principally in the UK and continental Europe and are primarily denominated in sterling and in euros. There are also smaller amounts in US dollars and in other European currencies. The Company is exposed to currency risk in that movements in the value of sterling against these foreign currencies will affect the net asset value and the cash required to fund undrawn commitments. The Board regularly reviews the level of foreign currency denominated assets and outstanding commitments in the context of current market conditions and may decide to buy or sell currency or put in place currency hedging arrangements.
(ii) Interest rate risk
The fair value of the Company's investments and cash balances are not directly affected by changes in interest rates.
(iii) Price risk
The risk that the value of a financial instrument will change as a result of changes to market prices is one that is fundamental to the Company's objective, which is to provide long term capital growth through investment in unquoted companies. The investment portfolio is continually monitored to ensure an appropriate balance of risk and reward in order to achieve the Company's objective. No hedging of this risk is undertaken.
The Company is exposed to the risk of change in value of its private equity investments. For all investments the market variable is deemed to be the price itself.
Investment and credit risk
(i) Investment risk
Investment risk is the risk that the financial performance of the companies in which Graphite Enterprise invests either improves or deteriorates, thereby affecting the value of that investment. Investments in unquoted companies whether indirectly or directly are by their nature subject to potential investment losses. The investment portfolio is highly diversified.
(ii) Credit risk
The Company's exposure to credit risk arises principally from its investment in gilts and its cash deposits. The Company aims to invest the majority of its liquid portfolio in assets which have low credit risk. The Company's policy is to limit exposure to any one investment to 15% of gross assets. This is regularly monitored by the Manager as a part of its cash management process.
Cash is held on deposit with three UK banks and totalled £68,239,000 (2013: £28,778,000). Of this amount £27,788,000 was deposited at The Royal Bank of Scotland ("RBS") and this represents the maximum exposure to credit risk at the balance sheet date. No collateral is held by the Company in respect of these amounts. None of the Company's cash deposits were past due or impaired at 31 January 2014 (2013: nil).
Liquidity risk
The Company has significant investments in unquoted companies which are inherently illiquid. The Company also has substantial undrawn commitments to funds, the great majority of which are likely to be called over the next five years. The Company aims to manage its affairs to ensure sufficient cash, other liquid assets and undrawn borrowing facilities will be available to meet contractual commitments when they are called and also seeks to have cash generally available to meet other short term financial needs. All cash and cash equivalents are available on demand. The Company's liquidity management policy involves projecting cash flows and considering the level of liquidity necessary to meet these.
The Company has access to committed bank facilities of £98 million, which are structured as parallel sterling and euro facilities of £50 million and €58.1 million. The facilities are provided jointly by RBS and Lloyds Bank Corporate Markets ("Lloyds"). Of the total facilities, £30 million and €34.5 million will expire in April 2015 if they are not renewed. The balance of £20 million and €23.6 million will expire in March 2017.
As at 31 January 2014 the Company's financial liabilities amounted to £263,000 of payables (2013: £550,000) which were due in less than one year.
Capital risk management
The Company's capital is represented by its net assets, which are managed to achieve the Company's investment objective. The Company currently has no debt.
The Board can manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy-back shares and it also determines dividend payments. The Company is subject to externally imposed capital requirements with respect to the obligation and ability to pay dividends by section 1159 Corporation Tax Act 2010 and by the Companies Act 2006, respectively.
Total equity at 31 January 2014, the composition of which is shown on the balance sheet was £502,677,000 (2013: £471,463,000).
9 OTHER RELATED PARTY TRANSACTIONS
Transactions between the Parent Company and its subsidiaries, which are related parties, have been eliminated on consolidation. Transactions between the Company and the Manager are disclosed in note 7.
Significant transactions between the Parent Company and its subsidiaries are shown below:
|
|
|
Year ended 31 January 2014 |
Year ended 31 January 2013 |
|
Subsidiary |
Nature of transaction |
£'000s |
£'000s |
|
Graphite Enterprise Trust Limited Partnership |
Decrease in loan balance |
(7,273) |
(864) |
|
|
Income allocated |
1,501 |
688 |
|
Graphite Enterprise Trust (2) Limited Partnership |
Increase in loan balance |
4,371 |
270 |
|
Income allocated |
820 |
343 |
|
|
Amounts owed by subsidiaries |
Amounts owed to subsidiaries |
||
|
31 January 2014 |
31 January 2013 |
31 January 2014 |
31 January 2013 |
|
|
Subsidiary |
£'000s |
£'000s |
£'000s |
£'000s |
|
Graphite Enterprise Trust Limited Partnership |
- |
3,006 |
4,267 |
- |
|
Graphite Enterprise Trust (2) Limited Partnership |
21,062 |
16,691 |
- |
- |
Amounts owed by subsidiaries represents funding provided by the Parent Company to its subsidiaries to allow them to make investments. The balances will be repaid out of proceeds from their portfolios.
END
This information is provided by RNS
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