Preliminary Results for the twelve months ended 31 January 2023
11/05/2023 07:00
For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20230511:nGNE50fF44&default-theme=true
ICG Enterprise Trust plc Preliminary Results for the twelve months ended 31 January 2023 11 May 2023
Delivering defensive growth
Highlights * NAV per Share of 1,903p at 31 January 2023 (31 January 2022: 1,690p)
* FY23 NAV per Share Total Return of 14.5% (5 year annualised: 16.9%)
* 14 (th)consecutive year of double-digit Portfolio growth: Portfolio Return on a Local Currency Basis of 10.5% (Sterling return 17.0%)
* Strong year for primary commitments, building pipeline for future years' investment programme
* Investment and realisation activity in line with historical averages
* 54 Full Exits during the year, realised at a weighted average Uplift To Carrying Value of 23.9% and a weighted average Multiple to Cost of 2.7x
* Final dividend of 9p brings FY23 total dividend per share to 30p (+11.1% YoY); progressive policy maintained
* £5.2m of shares bought back at weighted average discount to last reported NAV of 41.2% since programme initiated in October 2022 (1); buyback programme continuing
* Updated Management Fee Agreement and improved cost-sharing with the Manager, effective from 1 February 2023
(1)Up to and including 2 May 2023
Oliver Gardey
Head of Private Equity Fund Investments, ICG
The defensive growth characteristics of our actively managed Portfolio are increasingly apparent in our financial results. As a listed private equity investment trust focused exclusively on buyouts in North America and Europe, we offer investors access to a differentiated Portfolio that has delivered high levels of revenue and earnings growth over the last twelve months and which has increased in value by 17.0% in Sterling terms. We have not invested in more speculative parts of private markets such as venture capital or growth equity. Our Portfolio is delivering growth over the long-term: FY23 marks the 14 (th)consecutive year of double-digit portfolio returns on a local currency basis, and our annualised NAV per Share Total Return over the last five years has been 16.9%. Portfolio activity continued through the year. Investments and realisations as a proportion of our opening Portfolio value were broadly in
line with historical averages, and the Full Exits being executed at a 23.9% Uplift to Carrying Value helps support our confidence in our valuations. We made new fund commitments totalling £203.2m, which we expect to be invested over the coming three to four years. These commitments have sown the seeds of our primary and direct investment program in the coming years, in what could be a very attractive vintage for private equity. The current market is creating some attractive conditions for investing our shareholders’ capital, and our strong capitalisation and dedicated team with experience of investing through market cycles enable us to capture these opportunities. We continue to believe that ICG Enterprise Trust is well-positioned to execute on its strategy and to generate resilient returns.
PERFORMANCE OVERVIEW
Annualised
Performance to 31 January 2023 3 months 6 months 1 year 3 years 5 years 10 years
Portfolio Return on a Local Currency Basis 2.3 % 2.6 % 10.5 % 21.3 % 19.1 % 17.0 %
NAV per Share Total Return (0.3) % 3.3 % 14.5 % 20.4 % 16.9 % 13.8 %
Share Price Total Return 15.3 % (0.7) % (2.3) % 8.5 % 9.7 % 11.6 %
FTSE All-Share Index Total Return 10.4 % 5.3 % 5.2 % 5.0 % 4.2 % 6.3 %
Portfolio activity overview for FY23 Primary Direct Secondary Total ICG-managed
Local currency return 8.0% 15.5% 11.5% 10.5% 11.8%
Sterling return 14.0% 22.5% 19.0% 17.0% 18.8%
New Investments £138.6m £70.1m £78.5m £287.2m £137.3m
Total Proceeds £137.3m £47.8m £66.9m £252.0m £101.3m
New Fund Commitments £137.3m – £65.9m £203.2m £65.9m
Closing Portfolio value £761.7m £383.9m £260.9m £1,406.4m £410.3m
% Total Portfolio 54.1 % 27.3 % 18.6 % 100.0 % 29.2 %
ENQUIRIES
Institutional investors and analysts:
Oliver Gardey, Head of Private Equity Fund Investments, ICG: +44 (0) 20 3545
2000
Colm Walsh, Managing Director, Private Equity Fund Investments, ICG
Chris Hunt, Head of Shareholder Relations, ICG
Livia Bridgman Baker, Shareholder Relations, ICG
Media:
Clare Glynn, Corporate Communications, ICG: +44 (0) 20 3545 1395
Website:
www.icg-enterprise.co.uk
EVENTS AND COMPANY TIMETABLE
A presentation for investors and analysts will be held at 14:30 BST today. A
link for the presentation can be found on the Results & Reports page
(https://www.globenewswire.com/Tracker?data=N2W-7mRPTfJRPJ_kVhmM64hPDLwBP_aev2mskQnsnQ3_j84bKwqZInv7dyCLbIj1lgC_u6KbPNn5SziO2s6YGh62ZrgJo3831llJwe3IN-dEcr9IdBWfs4CnWmgSyWm6SgZjApp8K4BQiGdDOzoQCqyA6XqQFCkViq4VTtLKwIc=)
of the Company website. A recording of the presentation will be made available
on the Company website after the event.
Annual General Meeting: 27 June 2023
Q1 trading update: 27 June 2023
Ex-dividend date: 06 July 2023
Record date: 07 July 2023
Dividend payment date: 21 July 2023
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.
We have a long track record of delivering strong returns through a flexible
mandate and selective approach that strikes the right balance between
concentration and diversification, risk and reward.
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 Chair’s Foreword, Manager’s Review and Supplementary Information,
all performance figures are stated on a Total Return basis (i.e., including
the effect of re-invested dividends). ICG Alternative Investment Limited, a
regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of
the Company.
DISCLAIMER
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 STATEMENT
I am pleased to report that your Company has continued to grow and invest for
the future during the last financial year. In a period characterised by
geopolitical and macro-economic uncertainty, ICG Enterprise Trust’s
performance reinforces the Board’s confidence in the resilience of the
Portfolio and the benefits through economic cycles of our strategic focus on
‘defensive growth’.
ICG Enterprise Trust’s NAV at 31 January 2023 was £1.3bn, equating to
1,903p NAV per Share. The Company has delivered 14.5% NAV per Share Total
Return for the financial year, and 16.9% on a five-year annualised basis, net
of all fees. Further details on the composition and performance of the
Portfolio and NAV can be found in the Manager’s review.
In public markets the macroeconomic uncertainty in 2022 was reflected in
amplified volatility, downward pressure on earnings estimates and lower
valuations placed on earnings. Understandably there have been questions about
the seemingly less volatile nature of private valuations compared to public
valuations. The Portfolio of ICG Enterprise Trust is notably different from
that of frequently-cited public indices and is not weighted towards consumer,
financials and energy companies (in the case of the FTSE 100) or towards a
narrow group of technology companies (in the case of the S&P500). In addition,
private market valuations have not typically seen the same levels of
exuberance as public markets during periods when valuations have expanded
dramatically.
When reviewing the valuation of the Portfolio, there are a number of factors
to consider; but the ultimate validation is how an investment is realised, and
whether at exit a buyer is willing to pay the value that we had it marked at.
During FY23 the Portfolio experienced 54 Full Exits, generating £133.2m of
cash proceeds (representing 11.4% of the opening Portfolio value for the
year). These were executed at a weighted average Uplift to Carrying Value of
23.9% - slightly lower than recent years, but still a significant uplift. I
believe our track record of Full Exits being at an Uplift to Carrying Value
should give shareholders comfort that the valuations in our Portfolio are
generally robust, and this is an area the Board continues to discuss in detail
with the Manager.
Despite this consistent and strong track record, our share price has been
impacted by widening discounts across the listed private equity investment
trust sector. During this financial year our shareholders endured a negative
Share Price Total Return of (2.3)% and on 31 January 2023 our shares traded at
a 40.1% discount to the last published NAV of 1,918p (as at 31 October 2022).
The Board considers that the Company’s performance and the value of its
Portfolio and strategy are not appropriately recognised in its share price,
and has implemented several additional measures this year to optimise
shareholder returns. These include a long-term buyback program, running
alongside our existing progressive dividend policy, and an improved management
fee agreement that introduces a cap on the fee rate payable to our Manager and
the Manager assuming a greater proportion of the Company’s ongoing costs.
ACCESS TO PRIVATE EQUITY
Private equity can play a valuable role in generating differentiated returns
for investors with a long-term perspective. It is, however, a fundamentally
illiquid asset class. The closed-end nature of investment trusts solves the
potential liquidity mismatch for investors by creating traded shares that can
be bought and sold on a stock exchange. As a result, the portfolio can be
managed for long-term value creation without the risk of having to sell assets
to fund redemptions. By investing in vehicles such as ICG Enterprise Trust,
shareholders gain access to a mature and actively managed portfolio of private
equity investments, with the added benefit of daily liquidity.
A consequence of the investment trust structure, however, is that shares can
trade at discounts to the published NAVs, and currently the sector as a whole
– including ICG Enterprise Trust – is trading at quite notable discounts.
As discussed elsewhere, your Board continues to work with the Manager to make
shares in ICG Enterprise Trust more attractive to a wider range of investors.
I continue to believe that investment trusts such as ICG Enterprise Trust
serve a useful purpose in helping provide access to private equity to a more
diverse range of investors who are seeking to commit capital to this asset
class.
HOW ICG ENTERPRISE TRUST IS MANAGED - UPDATING OUR OBJECTIVES
Six years ago, ICG Enterprise Trust outlined three objectives. We are pleased
to have delivered against each of these since they were introduced:
Former objectives Medium-term target FY16 FY23
Portfolio / net assets 100% 82.1% 108.1%
North America as percentage of Portfolio 40-50% 14.1% 46.6%
High Conviction Investments as percentage of deployment 50% 33.0% 57.6%
The Company has evolved since these objectives were introduced, and to reflect
this the Board has revised these objectives to the following, which focus on
1) Target Portfolio composition and 2) Balance sheet:
New objectives Medium-term target Five-year average FY23
1. Target Portfolio composition (1)
Investment category
Primary ~50% 59.2% 54.1%
Direct ~25% 27.3% 27.3%
Secondary ~25% 13.5% 18.6%
Geography (2)
North America ~50% 37.2% 46.6%
Europe (inc. UK) ~50% 62.8% 47%
2. Balance sheet
(Net cash)/debt (3) ~0% (3.0)% 3.4%
1 As percentage of Portfolio; 2 FY23 excludes 6.3% Other geographical exposure; 3 (Net cash)/debt as a percentage of NAV
Importantly this does not indicate a change in the composition of the
Portfolio; it merely more completely reflects how the Portfolio and our
balance sheet are being managed, and how they are expected to be constructed
over the medium term.
I believe that today we have a very high quality investment team through our
Manager, and that these objectives will enable us to maximise the value they
generate for our shareholders.
DIVIDEND AND SHARE BUYBACK
During the financial year, the Board gave careful consideration to the level,
form and mechanism of shareholder returns.
The nature of private equity investments means that compounding capital
appreciation is likely to be the largest single component of shareholder
returns over the long term.
The progressive dividend is an important component of shareholder returns, and
the Board remains committed to this policy. In line with this, the Board is
proposing a final dividend of 9p per share. Together with the three interim
dividends of 7p per share each, this will result in total dividends for the
year of 30p per share, representing an 11.1% increase on the prior year
dividend and the seventh consecutive year of dividend increases.
In October 2022, the Board introduced a long-term share buyback programme. The
Board believes this programme demonstrates the Manager’s discipline around
capital allocation; underlines the Board’s confidence in the long-term
prospects of the Company, its cash flows and NAV; will enhance the NAV per
Share; and over time may reduce the volatility of the Company’s discount and
increase its trading liquidity. At 2 May 2023 the Company has repurchased
472,178 shares since this programme was initiated, at an estimated weighted
average discount to the last reported NAV of 41.2%. In aggregate these
buybacks represent a capital return of £5.2m.
IMPROVED MANAGEMENT FEE AND COST SHARING WITH THE MANAGER
During the year we negotiated a revised fee agreement with the Manager,
effective from 1 February 2023. This agreement caps the maximum fee rate
payable to the Manager, and allows our shareholders to benefit from economies
of scale as our NAV grows. Had the revised agreement been in place during
FY23, the management fee paid would have been reduced by approximately 6.5%
(£1.1m).
It was also agreed that the Manager will absorb a number of ongoing costs
previously paid for by ICG Enterprise Trust. The Board estimates that these
are equivalent to approximately 25-30% of the general expenses (which exclude
management fees and finance costs) that would have been paid by ICG Enterprise
Trust prior to this agreement being reached.
I am grateful to ICG for their co-operation during these negotiations and am
pleased with the outcome.
BOARD EVOLUTION
Following the retirement of Sandra Parajola in June 2022, we were delighted to
strengthen our Board with the appointment of two new non-executive directors,
Adiba Ighodaro and Janine Nicholls. Adiba and Janine each bring a depth and
breadth of knowledge which is complementary to the Board’s existing
skillset.
ANNUAL GENERAL MEETING
The Annual General Meeting will be held on 27 June 2023. The Board will be
formally communicating with shareholders outlining the format of the meeting
separately in the Notice of Meeting. This will include details of how
shareholders may register their interest in attending the Annual General
Meeting, either in person or via video conference.
I am confident that our Company is well-positioned to successfully execute on
its strategy. We have historically generated significant value over the long
term, and I believe we will continue to do so. Our ability to continue to
commit, deploy and realise capital through uncertain economic times means that
our Portfolio is not exposed to particular vintage risk.
We have a distinctive strategy, a Portfolio managed by an experienced and
well-networked team, and our Board has demonstrated its disciplined approach
to capital allocation. Taken as a whole I believe this results in a
differentiated and attractive offering to shareholders.
Finally, I want to thank you for the continued trust and support you give to
ICG Enterprise Trust.
Jane Tufnell
Chair
10 May 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 January 2023 31 January 2022 APM (£m) 31 January 2023 31 January 2022
Investments 1,349.1 1,123.7 Portfolio 1,406.4 1,172.2
NAV 1,300.6 1,158.0
Cash flows from the sale of portfolio investments 32.1 101.0 Total Proceeds 252.0 333.5
Cash flows related to the purchase of Portfolio investments 62.2 75.1 Total New Investment 287.2 303.7
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 might
support strong and resilient returns across economic cycles. There are a
number of themes that contribute to a business having, in our view, such
characteristics. These include (among others) attractive market positioning,
providing mission-critical services to their clients and customers, ability to
pass on price increases, and structurally high margins.
We take an active approach to portfolio construction, with a flexible mandate
that enables us to deploy capital in Primary, Secondary and Direct
investments. We believe our investment strategy results in a differentiated
Portfolio with attractive growth characteristics. Our Portfolio composition is
shown below:
Investment category 31 January 2023 £m 31 January 2023 % of Portfolio
Primary 761.7 54.1%
Direct 383.8 27.3%
Secondary 260.9 18.6%
Total 1,406.4 100.0 %
Investments managed by ICG accounted for 29.2% of the Portfolio.
Geographically we focus on the developed markets of North America and Europe,
including the UK, which have deep and mature private equity markets supported
by a robust corporate governance framework. The geographic profile of the
Portfolio is shown below:
Geography (1) 31 January 2023 % of Portfolio
North America 46.6 %
Europe (inc. UK) 47.1 %
Other 6.3 %
Total 100.0 %
1 Calculated by reference to the location of the headquarters of the underlying Portfolio companies on a value-weighted basis
Implementing our investment strategy during the year
In a year of elevated macroeconomic and geopolitical volatility, we remained
consistent in our investment approach, seeking to identify attractive
investments that align to our focus on defensive growth. Our flexible
investment mandate enabled us to react efficiently to changing market dynamics
in order to capitalise on opportunities across Primary, Secondary and Direct
investments.
During the year we were able to take advantage of favourable market conditions
to make 14 new fund commitments to a range of leading managers. These
commitments, which we expect to be invested over the next 3-4 years, ensure
that we will remain appropriately invested through the cycle.
Our dedicated investment team has concentrated on identifying investment
opportunities where they believe they have good visibility on the likely
performance of the underlying assets and on transactions with potentially
lower volatility of returns than the broader market. Reflecting this, Direct
Investment activity during the period included three Direct investments
alongside our Manager, benefiting from their expertise in structured
transactions. We also made a number of follow-on investments into existing
portfolio holdings where we have greater visibility of, and confidence in, the
performance of the underlying company.
Performance overview
At 31 January 2023, our Portfolio was valued at £1,406.4m, and the Portfolio
Return on a Local Currency Basis for the financial year was 10.5% (FY22:
29.4%). This performance extends our track record of generating double-digit
Portfolio returns on a Local Currency basis to 14 consecutive years.
The Portfolio returns during FY23 were seen across Primary, Direct and
Secondary investments:
* Primary investments generated a local currency return of 8.0%. Valuation
increases are primarily driven by operational performance. There was notably
strong performance from a number of funds including those managed by PAI,
Graphite, and Gridiron
* Direct Investments generated a return of 15.5%, reflecting resilient
operational performance, as well as a number of meaningful realisations agreed
during the year, including Endeavor Schools (exit agreed during FY23 and
completed post period end), and IRI (which completed its merger with NPD on 1
August 2022)
* Secondary investments generated a return of 11.5%, driven by strong
performance from underlying investments within ICG LP Secondaries and ICG
Strategic Equity
Over the last five years, our Portfolio has generated an annualised Portfolio
Return on a Local Currency Basis of 19.1%.
Due to the geographic diversification of our Portfolio, the reported value is
impacted by changes in foreign exchange rates. During the period, the
Portfolio increased by £76.4m (+6.5%) due to FX movements, driven primarily
by the US Dollar strengthening against Sterling. Portfolio growth during the
period was 17.0% in Sterling terms.
The net result was that ICG Enterprise Trust generated a NAV per Share Total
Return of 14.5% during FY23, ending the period with a NAV per Share of 1,903p.
The NAV per Share Total Return during Q4 was (0.3%), driven predominantly by
negative FX movements more than offsetting a positive underlying return at the
Portfolio level.
Over the last five years, ICG Enterprise Trust has generated an annualised NAV
per Share Total Return of 16.9%.
Movement in the Portfolio £m Twelve months to 31 January 2023 Twelve months to 31 January 2022
Opening Portfolio1 1,172.2 949.2
Total New Investments 287.2 303.7
Total Proceeds (252.0) (342.9)
Net (proceeds)/investments 35.2 (39.2)
Valuation movement2 122.6 279.4
Currency movement 76.4 (17.2)
Closing Portfolio 1,406.4 1,172.2
% Portfolio growth (local currency) 10.5 % 29.4 %
% currency movement 6.5 % (1.8) %
% Portfolio growth (Sterling) 17.0 % 27.6 %
Impact of (net cash)/net debt 0.2 % (0.1) %
Expenses and other income (1.8) % (1.5) %
Co-investment Incentive Scheme Accrual (1.2) % (1.8) %
Impact of share buybacks and dividend reinvestment 0.3 % 0.2 %
NAV per Share Total Return 14.5 % 24.4 %
1. Refer to the Glossary
2. 93% of the Portfolio is valued using 31 December 2022 (or later) valuations
(2022: 98%)
Performance of Portfolio companies
Our largest 30 underlying companies (“Top 30 companies”) represented 38.3%
of the Portfolio by value at 31 January 2023 (31 January 2022: 39.0%). There
were four new entrants to our Top 30 companies within the period: Newton
(#15); ECA Group (#23), KronosNet (#24) and Vistage (#30).
The Top 30 companies delivered impressive operational performance during the
year, generating LTM revenue growth of 21.9%. The weighted-average valuation
of the Top 30 companies, as measured by EV/EBITDA multiple, reduced from 14.6x
to 14.3x. Over the same period, Net Debt / EBITDA increased from 4.3x to 4.8x,
which is largely due to differences in the composition of the Top 30 companies
between the two dates and re-financings undertaken during the period.
Top 30 companies performance overview 31 January 2023 31 January 2022
LTM revenue growth¹ 21.9 % 27.1 %
LTM EBITDA growth¹ 21.5 % 29.6 %
LTM EBITDA margin (2) 25.8 % 26.6 %
Net Debt / EBITDA (3) 4.7x 4.3x
Enterprise Value / EBITDA (3) 14.3x 14.6x
Total % of Portfolio 38.3 % 39.0 %
1 Growth rates exclude PetSmart; Ambassador Theatre Group; MoMo Online Mobile Services (#1; #14; #28 /30 respectively), for which prior year comparators are not meaningful 2 Excludes MoMo Online Mobile Services (#28/30), for which EBITDA is not a relevant metric 3 Excludes PetSmart and MoMo Online Mobile Services (#1 and #28 /30 respectively) 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 January 2023, ICG Enterprise Trust’s exposure to quoted companies was
valued at £109.4m, equivalent to 7.8% of the Portfolio value (FY22: 10.3%).
The share price of our largest listed exposure, Chewy, increased 4.5% in local
currency (USD) during the year. ICG Enterprise Trust’s investment in
PetSmart (which includes Chewy) has delivered a strong return on investment
for our shareholders and remains our largest underlying exposure. Across the
Portfolio, local currency losses from declines in public market valuations
were largely offset in Sterling terms by positive FX gains.
At 31 January 2023 there was one quoted investment that individually accounted
for 0.5% or more of the Portfolio value:
Company Ticker 31 January 2023 % of Portfolio value
Chewy (part of PetSmart) (1) CHWY-US 3.6 %
Other companies 4.2 %
Total 7.8 %
1 Value includes entire holding of PetSmart and Chewy. Majority of value is within Chewy
Realisation activity
Realisation Proceeds during the year amounted to £252.0m, equivalent to 21.5%
of our opening Portfolio value (five year average: 23.9%).
There were 54 Full Exits of Portfolio holdings during the period, generating
proceeds of £133.2m. These were completed at a weighted average Uplift to
Carrying Value of 23.9% and weighted average Multiple to Cost of 2.7x. We
believe that the ability to continue to sell assets at an uplift to NAV
reflects the sustained demand for high-quality assets and underpins our
confidence in the valuation of our Portfolio.
The 10 largest underlying realisations in the period, which represent 33.9% of
Total Realisation Proceeds, are set out in the table below:
Investment Description Manager Country Proceeds £m
DOC Generici Manufacturer of generic pharmaceutical products ICG Italy 24.3
IRI Provider of mission-critical data and predictive analytics to consumer goods manufacturers New Mountain Capital United States 22.8
Random42 Provider of medical animation and digital media services Graphite Capital United Kingdom 5.6
proALPHA Provider of application software services ICG Germany 5.1
YSC Consulting Provider of leadership consultancy and assessment services Graphite Capital United Kingdom 4.9
Park Holidays UK Operator of UK campsites and holiday parks ICG United Kingdom 4.9
Konecta Provider of business process outsourcing ICG Spain 4.8
The Groucho Club Operator of members' club Graphite Capital United Kingdom 4.4
Romans Provider of residential sales & letting services Bowmark United Kingdom 4.3
Pirum Systems Provider of financial services technology Bowmark United Kingdom 4.2
Total of 10 largest underlying realisations 85.4
New investment activity
Total new investment of £287.2m for the financial year, with new investment
by category detailed in the table below. Within our Primary investments during
the period, £131.5m was to Third Party managers and the remainder (£7.1m)
was to ICG-managed funds.
Investment Category 31 January 2023 Cost £m 31 January 2023 % of new investments
Primary 138.6 48.3 %
Direct 70.1 24.4 %
Secondary 78.5 27.3 %
Total 287.2 100.0 %
During the year we made nine new Direct Investments for a combined value of
£68.3m: The balance of Direct Investments is comprised of £1.8m of
incremental drawdowns across existing Direct Investments.
In total, 47.8% (£137.3m) of our new investments were alongside ICG.
The 10 largest underlying new investments in the period were as follows:
Investment Description Manager Country Cost £m (1)
Precisely Provider of enterprise software Clearlake Capital United States 15.5
ECA Group Provider of autonomous systems for the aerospace and maritime sectors ICG France 13.0
KronosNet Provider of tech-enabled customer engagement and business solutions ICG Spain 12.5
Newton Provider of management consulting services ICG United Kingdom 12.4
Vistage Provider of CEO leadership and coaching for small and midsize businesses in the US ICG United States 8.6
Access Provider of business management software to mid-market companies HgCapital United Kingdom 6.4
Zips Car Wash Provider of car washing services ICG United States 4.2
Gateway Services Provider of pet aftercare and cremation services ICG Canada 3.9
Partou Operator of kindergartens in the Netherlands ICG Netherlands 3.2
Pro Alpha II Provider of application software services ICG Germany 2.9
Top 10 largest underlying new investments 82.4
1 Represents ICG Enterprise Trust's indirect investment (share of fund cost)
plus any direct investments in the period.
Commitments
During the year, we made new fund Commitments of £203.2m, including £65.9m
to funds managed by ICG.
We maintained our diligence in identifying leading managers who complement our
long-term strategic objectives, are committed to values aligned to our
Responsible Investing framework, and have an investment approach that suits
our defensive growth focus. A number of commitments were made to managers with
whom we have longstanding relationships and who have a strong track record of
offering us attractive co-investment opportunities, such as PAI and Gridiron.
At the same time, we continued to originate new manager relationships, making
commitments to three new managers during the financial year, Leonard Green &
Partners, Thoma Bravo and Integrum.
The breakdown of new Commitments to funds was as follows:
Fund Manager Focus Commitment during the period
Local currency £m
ICG LP Secondaries Fund I ICG LP-led secondary transactions $60.0m £45.5m
ICG Ludgate Hill III ICG Secondary portfolio $25.0m £20.4m
PAI Europe VIII PAI Mid-market and large buyouts €25.0m £20.9m
Green Equity Investors Side IX Leonard Green & Partners Large buyouts $20.0m £17.2m
Advent X Advent Large buyouts €20.0m £16.8m
Gridiron V Gridiron Mid-market buyouts $20.0m £15.0m
CDR XII Clayton, Dubilier & Rice Mid-market and large buyouts $15.0m £13.4m
Permira VIII Permira Large buyouts €15.0m £12.6m
Bain Capital Europe VI Bain Capital Mid-market and large buyouts €15.0m £12.6m
Integrum I Integrum Mid-market buyouts $10.0m £8.5m
Thoma Bravo XV Thoma Bravo Mid-market and large buyouts $10.0m £8.0m
Hg Genesis X Hg Capital Mid-market buyouts €5.0m £4.2m
Bain Tech Opportunities II Bain Capital Mid-market buyouts $5.0m £4.1m
Hg Saturn III Hg Capital Mid-market and large buyouts $5.0m £4.0m
At 31 January 2023 we had Total Undrawn Commitments of £496.7m, of which
£367.0m were to funds within their investment period:
£m 31 January 2023 £m 31 January 2022 £m
Undrawn Commitments – funds in Investment Period 367.0 323.0
Undrawn Commitments – funds outside Investment Period 129.7 96.0
Total Undrawn Commitments 496.7 419.0
Total available liquidity (including facility) (167.0) (208.0)
Overcommitment net of total available liquidity 329.7 211.0
Overcommitment % of net asset value 25.3 % 18.0 %
The increase in Total Undrawn Commitments during the year was due to the large
number of funds seeking investors during the year, which ICG Enterprise Trust
had anticipated and which allowed us to make a number of attractive Primary
commitments. These commitments help lay the foundations of our investment
program for the coming years.
Our commitments are made in the funds' underlying currencies, and the currency
split of the outstanding commitments at 31 January 2023 was as follows:
Outstanding Commitments 31 January 2023 £m 31 January 2023 % 31 January 2022 £m 31 January 2022 %
– Sterling 16.9 3.4 % 28.7 6.8 %
– Euro 226.1 45.5 % 200.4 47.9 %
– US Dollar 253.7 51.1 % 189.5 45.3 %
Total 496.7 100.0 % 418.6 100.0 %
Liquidity
At 31 January 2023 we had a cash balance of £20.7m (31 January 2022: £41.3m)
and total available liquidity of £167.0m. At 31 January 2023, the drawn debt
was £65.4m (31 January 2022: nil). As a result we had a net debt position of
£44.7m.
£m
Cash at 31 January 2022 41.3
Realisation Proceeds 252.0
New investments (287.2)
Debt drawn down 65.4
Shareholder returns (21.9)
Management fees (21.2)
FX and other expenses (7.7)
Cash at 31 January 2023 20.7
Available undrawn debt facilities 146.3
Cash and undrawn debt facilities (total available liquidity) 167.0
At 31 January 2023 the Portfolio represented 108.1% of net assets (31 January
2022: 101.2%).
£m % of net assets
Portfolio 1,406.4 108.1 %
Cash 20.7 1.6 %
Drawn debt (65.4) (5.0) %
Co-investment Incentive Scheme Accrual (58.1) (4.5) %
Other net current liabilities (3.0) (0.2) %
Net assets 1,300.6 100.0 %
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
In line with ICG Enterprise Trust’s progressive dividend policy, the Board
has declared a final dividend of 9p per share, taking total dividends for the
period to 30p (FY22: 27p), which represents an increase of 11.1% on the
previous financial year.
As part of its ongoing focus on optimising the returns the Company delivers
for its shareholders, in October the Board announced the introduction of a
long-term program of share buybacks, which may be executed at any discount to
NAV. Details of share repurchases made under this programme up to 31 January
2023 are provided below:
FY23
Number of shares purchased 191,480
Aggregate consideration £2.1m
Weighted average discount to last reported NAV 40.0 %
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 2022 Annual General Meeting.
Any shares repurchased by the Company will be held in treasury.
Both the progressive dividend policy and the buyback programme are being
maintained.
Changes to management fees and costs
As announced at our Q3 FY23 trading update, the ICG Enterprise Trust Board and
the Manager have agreed a revised management fee rate, effective from 1
February 2023. While the management fee arrangement will remain unchanged, a
tiered cap as a proportion of NAV has been introduced at the following
thresholds:
ICG Enterprise Trust NAV Management Fee Cap
< £1.5bn 1.25 %
≥ £1.5bn ≤ £2.0bn 1.10 %
> £2.0bn 1.00 %
The Board believes that this arrangement fairly compensates the Manager, while
ensuring that ICG Enterprise Trust shareholders benefit from the economies of
scale generated from growth in the Company’s NAV.
In FY23, management fees were equivalent to 1.34% of NAV. As an illustration,
had the revised agreement been in place during this period, management fees
would have been capped at 1.25%. This would have reduced the management fee by
approximately 6.5% (approximately £1.1m).
The Manager has also agreed to absorb a number of ongoing costs previously
paid for by ICG Enterprise Trust, in particular a material share of Sales and
Marketing costs. The Board estimates that these are equivalent to
approximately 25-30% of the General Expenses (which exclude management fees
and finance costs) that would have been paid by ICG Enterprise Trust prior to
this agreement being reached.
Foreign exchange rates
The details of relevant FX rates applied in this report are provided in the
table below:
Average rate for FY23 Average rate for FY22 31 January 2023 year end 31 January 2022 year end
GBP:EUR 1.1680 1.1696 1.1341 1.1971
GBP:USD 1.2257 1.3749 1.2320 1.3447
EUR:USD 1.0491 1.1758 1.0863 1.1229
Activity since the period end
Notable activity between 1 February 2023 and 31 March 2023 has included:
* Realisation Proceeds of £49.4m, including initial proceeds from the sale of
Endeavor Schools, announced on 2 February 2023
* New investments of £19.8m, which included one follow-on Direct Investment
of £0.5m
* 3 new Fund Commitments for a combined value of £55.6m
* £3.1m shares bought back at a weighted average discount to NAV of 42.0%(1)
Outlook
We remain alert to continued macroeconomic headwinds such as increased input
costs, rising rates, and capital constraints in the wider financial markets.
These factors continue to have the potential to impact the performance of our
Portfolio companies, the valuation of our Portfolio and the rate of
deployments and realisations our Portfolio experiences. We are continuing to
monitor the environment closely and are in regular dialogue with our Managers.
As outlined in our updated objectives, we are targeting a long-term Portfolio
composition of approximately 50% Primary, 25% Direct and 25% Secondary
investments, and evenly split between North America and Europe.
We are encouraged by the continued momentum of transaction activity within our
portfolio throughout FY23. Our financial and operational ability to capitalise
on the very attractive market for primary commitments has sown the seeds for
our future primary and direct investment programme in the coming years, in
what could be an attractive vintage for private equity investments.
As we reflect on a year characterised by uncertainty, we remain confident in
our defensive growth strategy and are encouraged by the robust operating
performance of our Portfolio.
ICG Private Equity Fund Investments Team
10 May 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
We have a flexible mandate that enables us to deploy capital in primary,
secondary and Direct Investments. Investments managed by ICG account for 29.2%
of the Portfolio.
Portfolio by calendar year of investment % of value of underlying investments 31 January 2023 % of value of underlying investments 31 January 2022
2022 19.6 % 0.1 %
2021 25.1 % 25.1 %
2020 10.3 % 12.3 %
2019 12.0 % 15.4 %
2018 12.0 % 17.9 %
2017 6.7 % 9.6 %
2016 4.1 % 5.9 %
2015 4.1 % 6.6 %
2014 and older 6.1 % 7.1 %
Total 100.0 % 100.0 %
Portfolio by sector % of value of underlying investments 31 January 2023 % of value of underlying investments 31 January 2022
TMT 22.5 % 24.1 %
Consumer goods and services 20.9 % 20.8 %
Healthcare 13.3 % 16.6 %
Business services 12.6 % 11.0 %
Industrials 8.4 % 8.3 %
Education 7.0 % 5.1 %
Financials 5.0 % 5.5 %
Leisure 3.9 % 3.9 %
Other 6.4 % 4.7 %
Total 100.0 % 100.0 %
Portfolio by fund currency (1) 31 January 2023 £m 31 January 2023 % 31 January 2022 £m 31 January 2022 %
US Dollar 690.1 49.1 % 508.7 43.4 %
Euro 602.9 42.9 % 558.5 47.6 %
Sterling 113.0 8.0 % 104.7 9.0 %
Other 0.4 — % 0.3 — %
Total 1,406.4 100.0 % 1,172.2 100.0 %
(1)Currency exposure by reference to the reporting currency of each fund .
Top 30 companies Portfolio Dashboard
The Top 30 companies represented 41.8% of the Portfolio value at 31 January
2023. The tables below provide enhanced disclosure on the dispersion of
financial and operational performance among the Top 30 on a value-weighted
basis.
Sector exposure % of value of Top 30 31 January 2023
TMT 26.8 %
Consumer goods and services 19.2 %
Business services 14.6 %
Healthcare 8.0 %
Education 10.8 %
Industrials 14.1 %
Leisure 6.5 %
Total 100.0 %
Geographic exposure (1) % of value of Top 30 31 January 2023
North America 45.7 %
Europe 45.9 %
Other 8.4 %
Total 100.0 %
1 Geographic exposure is calculated by reference to the location of the headquarters of the underlying Portfolio companies
LTM revenue growth % of value of Top 30 31 January 2023
<0% 12.8 %
0-10% 12.1 %
10-20% 26.1 %
20-30% 14.8 %
>30% 20.3 %
n.a. (1) 13.9 %
Total 100.0 %
1 Reflects Petsmart (#1/30), Ambassador Theatre Group (#14/30) and MoMo Online Mobile Services (#28/30), for which EBITDA multiple or YoY comp is not relevant. For consistency, any excluded investments are excluded for all dispersion analysis
Top 30 average LTM revenue growth: 21.9% (weighted average, based on
contribution to Portfolio value at 31 January 2023; any exclusions from
average calculation are detailed in the footnotes to the table).
LTM EBITDA growth % of value of Top 30 31 January 2023
<0% 17.1 %
0-10% 28.1 %
10-20% 21.2 %
20-30% 5.4 %
>30% 14.3 %
n.a (1) 13.9 %
Total 100.0 %
1 n.a reflects Petsmart (#1/30), Ambassador Theatre Group (#14/30) and MoMo Online Mobile Services (#28/30), for which EBITDA multiple or YoY comp is not relevant. For consistency, any excluded investments are excluded for all dispersion analysis
Top 30 average LTM EBITDA growth: 21.6% (weighted average, based on
contribution to Portfolio value at 31 January 2023; any exclusions from
average calculation are detailed in the footnotes to the table).
LTM EBITDA margin % of value of Top 30 31 January 2023
<10% — %
10-20% 27.8 %
20-30% 21.4 %
30-40% 22.8 %
>40% 14.1 %
n.a. (1) 13.9 %
Total 100.0 %
1 n.a reflects Petsmart (#1/30), Ambassador Theatre Group (#14/30) and MoMo Online Mobile Services (#28/30), for which EBITDA multiple or YoY comp is not relevant. For consistency, any excluded investments are excluded for all dispersion analysis
Top 30 average LTM EBITDA margin: 27.7% (weighted average, based on
contribution to Portfolio value at 31 January 2023; any exclusions from
average calculation are detailed in the footnotes to the table).
EV/EBITDA multiple % of value of Top 30 31 January 2023
0-10x 8.0 %
10-12x 10.3 %
12-13x 22.6 %
13-15x 19.2 %
15-17x 12.0 %
17-20x 6.4 %
>20x 7.5 %
n.a. (1) 13.9 %
Total 100.0 %
1 n.a reflects Petsmart (#1/30), Ambassador Theatre Group (#14/30) and MoMo Online Mobile Services (#28/30), for which EBITDA multiple or YoY comp is not relevant. For consistency, any excluded investments are excluded for all dispersion analysis
Top 30 average EV/EBITDA multiple: 14.3x (weighted average, based on
contribution to Portfolio value at 31 January 2023; any exclusions from
average calculation are detailed in the footnotes to the table).
Net Debt / EBITDA % of value of Top 30 31 January 2023
<2x 9.8 %
2-4x 12.7 %
4-5x 19.2 %
5-6x 18.2 %
6-7x 14.3 %
>7x 11.9 %
n.a. (1) 13.9 %
Total 100.0 %
1 n.a reflects Petsmart (#1/30), Ambassador Theatre Group (#14/30) and MoMo Online Mobile Services (#28/30), for which EBITDA multiple or YoY comp is not relevant. For consistency, any excluded investments are excluded for all dispersion analysis
Top 30 average Net Debt/EBITDA multiple: 4.7x (weighted average, based on
contribution to Portfolio value at 31 January 2023; any exclusions from
average calculation are detailed in the footnotes to the table).
Top 30 companies
The table below presents the 30 companies in which ICG Enterprise Trust had
the largest investments by value at 31 January 2023. The valuations are gross
of underlying managers fees and carried interest.
Company Manager Year of investment Country Value as a % of Portfolio
1 PetSmart / Chewy
Retailer of pet products and services BC Partners 2015 United States 3.6 %
2 Minimax
Supplier of fire protection systems and services ICG 2018 Germany 2.8 %
3 Endeavor Schools
Provider of paid private schooling Leeds Equity 2018 United States 2.2 %
4 Froneri
Manufacturer and distributor of ice cream products PAI 2013 / 2019 United Kingdom 2.0 %
5 Leaf Home Solutions
Provider of home maintenance services Gridiron 2016 United States 1.8 %
6 Yudo
Designer and manufacturer of hot runner systems ICG 2017 / 2018 South Korea 1.6 %
7 Precisely
Provider of enterprise software Clearlake 2021 / 2022 United States 1.4 %
8 AML RightSource
Provider of compliance and regulatory services and solutions Gridiron 2020 United States 1.3 %
9 European Camping Group
Operator of premium campsites and holiday parks PAI 2021 France 1.3 %
10 Curium Pharma
Supplier of nuclear medicine diagnostic pharmaceuticals ICG 2020 United Kingdom 1.2 %
11 DomusVi
Operator of retirement homes ICG 2017 / 2021 France 1.2 %
12 DigiCert
Provider of enterprise security solutions ICG 2021 United States 1.2 %
13 David Lloyd Leisure
Operator of premium health clubs TDR 2013 / 2020 United Kingdom 1.2 %
14 Ambassador Theatre Group
Operator of theatres and ticketing platforms ICG / Providence 2021 United Kingdom 1.2 %
15 Newton
Provider of management consulting services ICG 2021 / 2022 United Kingdom 1.1 %
16 IRI/NPD
Provider of mission-critical data and predictive analytics to consumer goods manufacturers New Mountain 2022 United States 1.1 %
17 Visma
Provider of business management software and outsourcing services HgCapital / ICG 2017 / 2020 Norway 1.1 %
18 Planet Payment
Provider of integrated payments services focused on hospitality and luxury retail Advent / Eurazeo 2021 Ireland 1.1 %
19 Ivanti
Provider of IT management solutions Charlesbank / ICG 2021 United States 1.1 %
20 PSB Academy
Provider of private tertiary education ICG 2018 Singapore 1.0 %
21 Crucial Learning
Provider of corporate training courses focused on communication skills and leadership development Leeds Equity 2019 United States 0.9 %
22 Brooks Automation
Provider of semiconductor manufacturing solutions THL 2021 / 2022 United States 0.9 %
23 ECA Group
Provider of autonomous systems for the aerospace and maritime sectors ICG 2022 France 0.9 %
24 KronosNet
Provider of tech-enabled customer engagement and business solutions ICG 2022 Spain 0.9 %
25 Davies Group
Provider of speciality business process outsourcing services BC Partners 2021 United Kingdom 0.9 %
26 Class Valuation
Provider of residential mortgage appraisal management services Gridiron 2021 United States 0.8 %
27 AMEOS Group
Operator of private hospitals ICG 2021 Switzerland 0.7 %
28 MoMo Online Mobile Services
Operator of remittance and payment services via mobile e-wallet ICG 2019 Vietnam 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 38.3 %
The 30 largest fund investments
The table below presents the 30 largest funds by value at 31 January 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 35.6 11.3
2 ICG Ludgate Hill I
Secondary portfolio 2021 34.4 14.4
3 ICG Europe VII
Mezzanine and equity in mid-market buyouts 2018 33.4 6.8
4 CVC European Equity Partners VII
Large buyouts 2017 32.2 1.8
5 Gridiron Capital Fund III
Mid-market buyouts 2016 31.2 4.4
6 ICG LP Secondaries Fund I
LP-led secondary transactions 2022 30.8 27.4
7 PAI Strategic Partnerships
Mid-market and large buyouts 2019 27.0 0.5
8 Graphite Capital Partners VIII
Mid-market buyouts 2013 26.0 2.2
9 Gridiron Capital Fund IV
Mid-market buyouts 2019 24.3 1.4
10 CVC European Equity Partners VI
Large buyouts 2013 23.8 1.9
11 ICG Ludgate Hill III
Secondary portfolio 2022 23.4 1.8
12 PAI Europe VII
Mid-market and large buyouts 2017 23.0 4.5
13 ICG Strategic Equity Fund IV
GP-led secondary transactions 2021 22.1 15.9
14 Sixth Cinven Fund
Large buyouts 2016 21.4 1.4
15 New Mountain Partners V
Mid-market buyouts 2017 20.6 1.1
16 BC European Capital IX
Large buyouts 2011 19.3 0.7
17 Oak Hill V
Mid-market buyouts 2019 18.7 1.0
18 Resolute IV
Mid-market buyouts 2018 18.3 1.5
19 Advent Global Private Equity VIII
Large buyouts 2016 17.3 0.0
20 Advent Global Private Equity IX
Large buyouts 2019 17.2 1.7
21 BC European Capital X
Large buyouts 2016 16.6 1.4
22 Thomas H Lee Equity Fund VIII
Mid-market and large buyouts 2017 15.6 2.4
23 ICG Augusta Partners Co-Investor
Secondary fund restructurings 2018 15.4 18.9
24 Resolute V
Mid-market buy-outs 2021 15.0 2.3
25 Gryphon V
Mid-market buyouts 2019 14.2 2.6
26 AEA VII
Mid-market buyouts 2019 13.9 3.0
27 Graphite Capital Partners IX
Mid-market buyouts 2018 13.9 5.8
28 TDR Capital III
Mid-market and large buyouts 2013 13.8 1.5
29 Seventh Cinven Fund
Large buyouts 2019 13.8 6.4
30 PAI Europe VI
Mid-market and large buyouts 2013 12.9 1.1
Total of the largest 30 fund investments 645.1 147.0
Percentage of total investment Portfolio 45.9 %
PRINCIPAL RISKS AND UNCERTAINTIES
Risk management
The execution of the Company’s investment strategy is subject to a variety
of risks and uncertainties, and the Board and Manager have identified several
principal risks to the Company’s business. As part of this process, the
Board has put in place an ongoing process to identify, assess and monitor the
principal and emerging risks facing the Company, including those that would
threaten its business model, future performance, solvency or liquidity.
Risk management framework
The Board is responsible for risk management and determining the Company’s
overall risk appetite. The Audit Committee assesses and monitors the risk
management framework and specifically reviews the controls and assurance
programmes in place.
Principal risks
The Company’s principal risks are individual risks, or a combination of
risks, that could threaten the Company’s business model, future performance,
solvency or liquidity.
Details of the Company’s principal risks, potential impact, controls and
mitigating factors are set out on pages 24 to 28.
Other risks
Other risks, including reputational risk, are potential outcomes of the
principal risks materialising. These risks are actively managed and mitigated
as part of the wider risk management framework of the Company and the Manager.
Emerging Risks
Emerging risks are considered by the Board as they come into view and are
regularly assessed to identify any potential impact on the Company and to
determine whether any actions are required.
Emerging risks often include those related to regulatory/legislative change
and macro-economic and political change.
The Company depends upon the experience, skill and reputation of the employees
of the Manager. The Manager’s ability to retain the service of these
individuals, who are not obligated to remain employed by the Manager, and
recruit successfully, is a significant factor in the success of the Company.
Principal risks and uncertainties
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. Further
information on risk factors is set out within the financial statements.
Risk appetite and tolerance
The Board acknowledges and recognises that in the normal course of business,
the Company is exposed to risk and that it is willing to accept a certain
level of risk in managing the business to achieve its targeted returns. The
Board’s risk appetite framework provides a basis for the ongoing monitoring
of risks and enables dialogue with respect to the Company’s current and
evolving risk profile, allowing strategic and financial decisions to be made
on an informed basis.
The Board considers several factors to determine its acceptance for each
principal risk and categorises acceptance for each risk as low, moderate and
high. Where a risk is approaching or is outside the tolerance set, the Board
will consider the appropriateness of actions being taken to manage the risk.
In particular, the Board has a lower tolerance for financing
risk with the aim to ensure that even under a stress scenario, the Company is
likely to meet its funding requirements and financial obligations. Similarly,
the Board has a low risk tolerance concerning operational risks including
legal, tax and regulatory compliance and business process and continuity risk.
How we manage and mitigate our key risks
RISK IMPACT MITIGATION CHANGE IN THE YEAR
Investment Risks
Investment performance The Manager selects the fund investments and Direct Investments for the Company’s Portfolio. The underlying managers of those funds in turn select individual investee companies. The origination, investment selection and management capabilities of both the Manager and the third-party managers are key to the performance of the Company. Poor origination, investment selection and monitoring by the Manager and/or third-party managers which may have a negative impact on Portfolio performance. The Manager has a strong track record of investing in private equity through multiple economic cycles. The Manager has a highly selective investment approach and disciplined process, which is overseen by ICG Enterprise Trust’s Investment Committee within the Manager, which comprises a balance of skills and perspectives. Further, the Company’s Portfolio is diversified, reducing the likelihood of a single investment decision impacting Portfolio performance. ↔Stable The Board is responsible for ensuring that the investment policy is met. The day-to-day
management of the Company’s assets is delegated to the Manager under investment guidelines determined
by the Board. The Board regularly reviews these guidelines to ensure they remain appropriate and
monitors compliance with the guidelines through regular reports from the Manager, including
performance reporting. The Board also reviews the investment strategy at least annually. Following
this assessment and other considerations, the Board concluded that performance risk has remained
stable during the year.
Valuation In valuing its investments in private equity funds and unquoted companies and publishing its NAV, the Company relies to a significant extent on the accuracy of financial and other information provided by the underlying managers to the Manager. There is the potential for inconsistency in the valuation methods adopted by the managers of these funds and companies and for valuations to be misstated. Incorrect valuations being provided would lead to an incorrect overall NAV. The Manager carries out a formal valuation process involving a quarterly review of third-party valuations. This includes a comparison of unaudited valuations to latest audited reports, as well as a review of any potential adjustments that are required to ensure the valuation of the underlying investments are in accordance with the fair market value principles required under International Financial Reporting Standards (‘IFRS’). ↔Stable The Board regularly reviews and discusses the valuation process in detail with the Manager,
including the sources of valuation information and methodologies used. Following this assessment and
other considerations, the Board concluded that there was no material change in valuation risk during
the year.
External risks
Political and macro-economic uncertainty Political and macro-economic uncertainty and other global events, such as pandemics, that are outside of the Company’s control could adversely impact the environment in which the Company and its investment portfolio companies operate. Changes in the political or macro-economic environment could significantly affect the performance of existing investments (and valuations) and prospects for realisations. In addition, they could impact the number of credible investment opportunities the Company can originate. The Manager uses a range of complementary approaches to inform strategic planning and risk mitigation, including active investment management, profitability and balance sheet scenario planning and stress testing to ensure resilience across a range of outcomes. The process is supported by a dedicated in-house economist and professional advisers where appropriate. ↑Increasing The Board monitors and reviews the potential impact on the Company from political and
economic developments on an ongoing basis, including input and discussions with the Manager.
Incorporating these views and other considerations, the Board concluded that there was an increase in
political and macroeconomic uncertainty risk as a result of the economic uncertainty.
Climate change The underlying managers of the fund investments and Direct Investments in the Company’s Portfolio fail to ensure that their portfolio companies respond to the emerging threats from climate change. Climate-related transition risks, driven in particular by abrupt shifts in the political and technological landscape, impact the value of the Company’s Portfolio. The Manager has a well-defined, firm-wide Responsible Investing Policy and ESG framework in place. A tailored ESG framework applies across all stages of the Company’s investment process. This includes ongoing monitoring of the underlying manager’s ESG reporting. ↔Stable The Board monitors and reviews the potential impact to the Company from failures by underlying
managers to mitigate the impact of climate change on portfolio company valuation. During the year
the Board received reports on the implementation of the Manager’s Responsible Investing Policy.
Listed private equity sector The listed private equity sector could fall out of favour with investors leading to a reduction in demand for the Company’s shares. A change in sentiment to the sector has the potential to damage the Company’s reputation and impact the performance of the Company’s share price and widen the discount the shares trade at relative to NAV per Share, causing shareholder dissatisfaction. Private equity continues to outperform public markets over the long term and has proved to be an attractive asset class through various cycles. The Manager is active in marketing the Company’s shares to a wide variety of investors to ensure the market is informed about the Company’s performance and investment proposition. The Board monitors the discount to NAV and considers appropriate solutions to address any ongoing or substantial discount to NAV, including share buybacks. ↔Stable The Board receives regular updates from the Company’s broker and is kept informed of all
material discussions with investors and analysts.
Foreign exchange The Company has continued to expand its geographic diversity by making investments in different countries. Accordingly, several investments are denominated in US dollars, euros and currencies other than sterling. At present, the Company does not hedge its foreign exchange exposure. Therefore, movements in exchange rates between these currencies may have a material effect on the underlying valuations of the investments and performance of the Company. The Board regularly reviews the Company’s exposure to currency risk and reconsiders possible hedging strategies on at least an annual basis. Furthermore, the Company’s multicurrency bank facility permits the borrowings to be drawn in euros and US dollars, if required. ↔Stable The Board reviewed the Company’s exposure to currency risk and possible hedging strategies and
concluded that there was no material change in foreign exchange risk during the year and that it
remains appropriate for the Company not to hedge its foreign exchange exposure.
Operational Risks
Regulatory, legislative and taxation compliance Failure by the Manager to comply with relevant regulation and legislation could have an adverse impact on the Company. Additionally, adherence to changes in the legal, regulatory and tax framework applicable to the Manager could become onerous, lessening competitive or market opportunities. The failure of the Manager and the Company to comply with the rules of professional conduct and relevant laws and regulations could expose the Company to regulatory sanction and penalties as well as significant damage to its reputation. The Board is responsible for ensuring the Company’s compliance with all applicable regulatory, legal and tax requirements. Monitoring of this compliance has been delegated to the Manager, of which the in-house Legal, Compliance and Risk functions provide regular updates to the Board covering relevant changes to regulation and legislation. The Board and the Manager continually monitor regulatory, legislative and tax developments to ensure early engagement in any areas of potential change. ↔ Stable The Company remains responsive to a wide range of developing regulatory areas; and will
continue to enhance its processes and controls in order to remain compliant with current and expected
legislation.
Key professionals Loss of key professionals at the Manager could impair the Company’s ability to deliver its investment strategy and meet its external obligations if replacements are not found in a timely manner. If the Manager’s team is not able to deliver its objectives, investment opportunities could be missed or misevaluated, while existing investment performance may suffer. The Manager regularly updates the Board on team developments and succession planning. The Manager places significant focus on: • Developing key individuals to ensure that there is a pipeline of potential succession candidates internally. External appointments are considered if that best satisfies the business needs. • A team-based approach to investment decision making i.e. no one investment professional has sole responsibility for an investment or fund manager relationship. • Sharing insights and knowledge widely across the investment team, including discussing all potential new investments and the overall performance of the Portfolio. • Designing and implementing a compensation policy that helps to minimise turnover of key people. ↔ Stable The Board reviewed the Company’s exposure to people risk and concluded that the Manager
continues to operate sustainable succession, competitive remuneration and retention plans. The Board
believes that the risk in respect of people remains stable.
Information security The Company is dependent on effective information technology systems at both the Manager and Administrator. These systems support key business functions and are an important means of securing data and sensitive information. The failure of the Manager and Administrator to deliver an appropriate information security platform for critical technology systems could result in unauthorised access by malicious third parties, breaching the confidentiality, integrity and availability of Company data, negatively impacting the Company’s reputation. Application of the Manager’s and Administrator’s information security policies is supported by a governance structure and a risk framework that allow for the identification, control and mitigation of technology risks. The effectiveness of the framework is periodically assessed. Additionally, the Manager’s and Administrator’s technology environments are continually maintained and subject to regular testing, such as penetration testing, vulnerability scans and patch management. ↑Increasing In order to gain a more comprehensive understanding of the Manager’s internal controls and
risk management systems the Board carries out a formal annual assessment (supported by the Manager’s
internal audit function). Following this review and other considerations, the Board concluded that
there was an increase in information security risk during the year.
The Manager and third-party providers (including business processes and continuity) The Company is dependent on third parties for the provision of services and systems, especially those of the Manager, the Administrator and the Depositary. Failure by a third-party provider to deliver services in accordance with its contractual obligations could disrupt or compromise the functioning of the Company. A material loss of service could result in, among other things, an inability to perform business critical functions, financial loss, legal liability, regulatory censure and reputational damage. The performance of the Manager, the Administrator, the Depositary and other third-party providers is subject to regular review and reported to the Board. The Manager, the Administrator and the Depositary produce internal control reports to provide assurance regarding the effective operation of internal controls. These reports are provided to the Audit Committee for review. The Committee would seek further representations from service providers if not satisfied with the effectiveness of their control environment. The Audit Committee formally assesses the internal controls of the Manager, the Administrator and Depositary on an annual basis to ensure adequate controls are in place. The assessment in respect of the current year is discussed in the Report of the Audit Committee within the Annual Report. The Management Agreement and agreements with other third-party service providers are subject to notice periods that are designed to provide the Board with adequate time to put in place alternative arrangements. ↔Stable In order to gain a more comprehensive understanding of the Manager’s internal controls and
risk management systems the Board carries out a formal annual assessment (supported by the Manager’s
internal audit function). The Board also received regular reporting from the Manager and other third
parties. Following this review and other considerations, the Board concluded that there was no
material change in the Manager and other third-party advisers’ risk during the year.
Financial Risks
Financing The Company has outstanding commitments that may be drawn down at any time in excess of total liquidity to private equity funds. The ability to fund this difference is dependent on receiving cash proceeds from investments (the timing of which are unpredictable) and the availability of financing facilities. If the Company encountered difficulties in meeting its outstanding commitments, there would be significant reputational damage as well as risk of damages being claimed from managers and other counterparties. The Manager monitors the Company’s liquidity, overcommitment ratio and covenants on a frequent basis, and undertakes cash flow monitoring, and provides regular updates on these activities to the Board. ↑Increasing A reduction in the number of potential lenders to the Company has increased the risk that
the existing financing facility cannot be extended or replaced at its maturity date of February 2026
on the same terms. This is an area of focus for the Board and the Manager.
Audited Financial Statements for the year ended 31 January 2023
Income statement
Year to 31 January 2023 Year to 31 January 2022
Notes Revenue return £’000 Capital return £’000 Total £’000 Revenue return £’000 Capital return £’000 Total £’000
Investment returns
Income, gains and losses on investments 2, 10 2,224 185,201 187,425 5,501 240,030 245,531
Deposit interest 2 1 – 1 2 – 2
Other income 2 46 – 46 – – –
Foreign exchange gains and losses – 337 337 – (980) (980)
2,271 185,538 187,809 5,503 239,050 244,553
Expenses
Investment management charges 3 (1,701) (15,312) (17,013) (1,342) (12,075) (13,417)
Other expenses including finance costs 4 (2,387) (3,884) (6,271) (2,383) (2,263) (4,646)
(4,088) (19,196) (23,284) (3,725) (14,338) (18,063)
Profit/(loss) before tax (1,817) 166,342 164,525 1,778 224,712 226,490
Taxation 6 345 (345) – – – –
Profit/(loss) for the period (1,472) 165,997 164,525 1,778 224,712 226,490
Attributable to:
Equity shareholders (1,472) 165,997 164,525 1,778 224,712 226,490
Basic and diluted earnings per share 7 240.19p 329.97p
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 34 to 50 form an integral part of the financial statements.
Balance sheet
Notes 31 January 2023 £’000 31 January 2022 £’000
Non-current assets
Investments held at fair value 9, 10, 17 1,349,075 1,123,747
Current assets
Cash and cash equivalents 11 20,694 41,328
Receivables 12 2,416 2,205
23,110 43,533
Current liabilities
Borrowings (65,293) –
Payables 13 (6,274) (9,303)
Net current assets/(liabilities) (48,457) 34,230
Total assets less current liabilities 1,300,619 1,157,977
Capital and reserves
Share capital 14 7,292 7,292
Capital redemption reserve 2,112 2,112
Share premium 12,936 12,936
Capital reserve 1,279,751 1,135,637
Revenue reserve (1,472) –
Total equity 1,300,619 1,157,977
Net Asset Value per Share (basic and diluted) 15 1,903.3p 1,690.1p
The notes on pages 34 to 50 form an integral part of the financial statements.
The financial statements on pages 30 to 50 were approved by the Board of
Directors on 10 May 2023 and signed on its behalf by:
Jane Tufnell Alastair Bruce
Director Director
Cash flow statement
Notes Year to 31 January 2023 £’000 Year to 31 January 2022 (restated) £’000
Operating activities
Sale of portfolio investments 32,143 100,982
Purchase of portfolio investments (62,245) (75,125)
Cash flow to subsidiaries' investments (1) (238,692) (247,035)
Cash flow from subsidiaries' investments (1) 228,530 244,511
Interest income received from portfolio investments 1,829 3,647
Dividend income received from portfolio investments 394 1,854
Other income received 46 2
Investment management charges paid (2) (21,218) (6,207)
Other expenses paid (1,567) (1,570)
Net cash (outflow)/inflow from operating activities (60,780) 21,059
Financing activities
Bank facility fee (1,728) (3,318)
Interest paid (1,963) (50)
Credit facility utilised 86,659 –
Credit facility repaid (21,367) –
Purchase of shares into treasury (2,016) (2,679)
Equity dividends paid 8 (19,866) (17,849)
Net cash inflow/(outflow) from financing activities 39,719 (23,896)
Net increase/(decrease) in cash and cash equivalents (21,061) (2,837)
Cash and cash equivalents at beginning of year 11 41,328 45,143
Net (decrease) in cash and cash equivalents (21,058) (2,837)
Effect of changes in foreign exchange rates 424 (978)
Cash and cash equivalents at end of year 11 20,694 41,328
(1) In the prior year 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.
(2) Includes settlement of unbilled management fees relating to the prior year
(see note 13).
The notes on pages 34 to 50 form an integral part of the financial statements.
Statement of changes in equity
Share capital £’000 Capital redemption reserve £’000 Share premium £’000 Realised capital reserve (1) £’000 Unrealised capital reserve £’000 Revenue reserve £’000 Total shareholders’ equity £’000
Year to 31 January 2023
Opening balance at 1 February 2022 7,292 2,112 12,936 482,867 652,770 – 1,157,977
Profit for the year and total comprehensive income – – – (10,431) 176,428 (1,473) 164,524
Capital distribution by subsidiary (1) – – – 17,500 (17,500) – –
Dividends paid or approved – – – (19,866) – – (19,866)
Purchase of shares into treasury – – – (2,016) – – (2,016)
Closing balance at 31 January 2023 7,292 2,112 12,936 468,053 811,698 (1,473) 1,300,618
Share capital £’000 Capital redemption reserve £’000 Share premium £’000 Realised capital reserve (1) £’000 Unrealised capital reserve £’000 Revenue reserve £’000 Total shareholders’ equity £’000
Year to 31 January 2022
Opening balance at 1 February 2021 7,292 2,112 12,936 442,063 487,613 – 952,016
Profit for the year and total comprehensive income – – – 59,554 165,158 1,778 226,490
Dividends paid or approved – – – (16,071) – (1,778) (17,849)
Purchase of shares into treasury – – – (2,679) – – (2,679)
Closing balance at 31 January 2022 7,292 2,112 12,936 482,867 652,770 – 1,157,977
(1) Distributable reserves.
(2) During the reporting period ICG Enterprise Trust Limited Partnership made
a distribution of realised profits totalling £17.5m to the Company.
The notes on pages 34 to 50 form an integral part of the financial statements.
Notes to the financial statements
1 ACCOUNTING POLICIES
General information
These 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.
(a) Basis of preparation
The financial information for the year ended 31 January 2023 has been 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.
UK-IAS comprises standards and interpretations approved by the International
Accounting Standards Board (‘IASB’) and the IFRS Interpretations
Committee.
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. The directors have concluded that the
preparation of the financial statements on a going concern basis continues to
be appropriate.
Going concern
In assessing the appropriateness of continuing to adopt the going concern
basis of accounting, the Board has assessed the financial position and
prospects of the Company. The Company’s business activities, together with
factors likely to affect its future development, performance, position and
cash flows, are set out in the Chair’s statement on pages 4 to 6, and the
Manager’s review on pages 7 to 16.
As part of this review, the Board assessed the potential impact of principal
risks and the COVID-19 pandemic on the Company’s business activities, the
Company’s cash position, the availability of the Company’s credit facility
and compliance with its covenants, and the Company’s cash flow projections.
Based on this assessment, the Board expects that the Company will be able to
continue in operation and meet its liabilities as they fall due until, at
least, 31 May 2024, a period of more than 12 months from the signing of the
financial statements. Therefore it is appropriate to continue to adopt the
going concern basis of preparation of the Company’s financial statements.
Climate change
In preparing the financial statements, the directors have considered the
impact of climate change, particularly in the context of the climate change
risks identified in the Principal risks and uncertainties section of the
Strategic Report, and the impact of climate change risk on the valuation of
investments.
These considerations did not have a material impact on the financial reporting
judgements and estimates in the current year, nor were they expected to have a
significant impact on the Group’s going concern or viability.
Accounting policies
The principal accounting policies adopted are set out below. These policies
have been applied consistently throughout the current and prior year. In order
to reflect the activities of an investment trust company, supplementary
information which analyses the income statement between items of revenue and
capital nature has been presented alongside the income statement. In analysing
total income between capital and revenue returns, the directors have followed
the guidance contained in the SORP as follows:
* Capital gains and losses on investments sold and on investments held arising
on the revaluation or disposal of investments classified as held at fair value
through profit or loss should be shown in the capital column of the income
statement.
* Returns on any share or debt security for a fixed amount (whether in respect
of dividends, interest or otherwise) should be shown in the revenue column of
the income statement.
* The Board should determine whether the indirect costs of generating capital
gains should also be shown in the capital column of the income statement. If
the Board decides that this should be so, the management fee should be
allocated between revenue and capital in accordance with the Board’s
expected long-term split of returns, and other expenses should be charged to
capital only to the extent that a clear connection with the maintenance or
enhancement of the value of investments can be demonstrated.
The accounting policy regarding the allocation of expenses is set out in note
1(i).
In accordance with IFRS 10 (amended), the Company is deemed to be an
investment entity on the basis that:
(a) it obtains funds from one or more investors for the purpose of providing
investors with investment management services;
(b) it commits to its investors that its business purpose is to invest funds
for both returns from capital appreciation and investment income; and
(c) it measures and evaluates the performance of substantially all of its
investments on a fair value basis.
As a result, the Company’s controlled structured entities
(‘subsidiaries’) are deemed to be investment entities and are included in
subsidiary investments classified as held at fair value through profit and
loss.
(b) Financial assets
The Company classifies its financial assets in the following categories: at
fair value through profit or loss; and at amortised cost. The classification
depends on the purpose for which the financial assets were acquired. The
classification of financial assets is determined at initial recognition.
Financial assets at fair value through profit or loss
The Company classifies its quoted and unquoted investments as financial assets
at fair value through profit or loss. These assets are measured at subsequent
reporting dates at fair value and further details of the accounting policy are
disclosed in note 1(c).
Financial assets at amortised cost
Financial assets at amortised cost are non-derivative financial assets which
pass the contractual cash flow test and are held to receive contractual cash
flows. These are classified as current assets and measured at amortised cost
using the effective interest rate method. The Company’s financial assets at
amortised cost comprise cash and cash equivalents and trade and other
receivables in the balance sheet.
(c) Investments
Investments comprise fund investments and portfolio company investments held
by the Company directly, together with the fair value of the Company's
interest in controlled structured entities (see note 9) which themselves
invest in fund investments and portfolio company investments. All investments
are classified upon initial recognition as held at fair value through profit
or loss (described in these financial statements as investments held at fair
value) and are measured at subsequent reporting dates at fair value. All
investments are fair valued in line with IFRS 13 ‘Fair Value Measurement’,
using industry standard valuation guidelines such as the International Private
Equity and Venture Capital (‘IPEV’) valuation guidelines. Changes in the
value of all investments held at fair value, which include returns on those
investments such as dividends and interest, are recognised in the income
statement and are allocated to the revenue column or the capital column in
accordance with the SORP (see note 1(a)). More detail on certain categories of
investment is set out below. Given that the subsidiaries and associates are
held at fair value and are exposed to materially similar risks as the Company,
we do not expect the risks to materially differ from those disclosed in note
17.
Unquoted investments
Fund investments and Co-investments (collectively ‘unquoted investments’)
are fair valued using the net asset value of those unquoted investments as
determined by the third-party investment manager of those funds. The
third-party investment manager performs periodic valuations of the underlying
investments in their funds, typically using earnings multiple or discounted
cash flow methodologies to determine enterprise value in line with IPEV
Guidelines. In the absence of contrary information, these net asset valuations
received from the third-party investment managers are deemed to be appropriate
by the Manager, for the purposes of the Manager’s determination of the fair
values of the unquoted investments. A robust assessment is performed by the
Manager’s experienced Investment Committee to determine the capability and
track record of the investment manager. All investment managers are
scrutinised by the Investment Committee and an approval process is recorded
before any new investment manager is approved and an investment made. This
level of scrutiny provides reasonable comfort that the investment manager’s
valuation will be consistent with the requirement to use fair value.
Adjustments may be made to the net asset values provided or an alternative
valuation method may be adopted if deemed to be more appropriate. The most
common reason for adjustments to the value provided by an underlying manager
is to take account of events occurring between the date of the manager’s
valuation and the reporting date, for example, subsequent cash flows or
notification of an agreed sale.
Quoted investments
Quoted investments are held at the last traded bid price on the balance sheet
date. When a purchase or sale is made under contract, the terms of which
require delivery within the timeframe of the relevant market, the contract is
reflected on the trade date.
Subsidiary undertakings
The investments in the controlled structured entities (‘subsidiaries’) are
recognised at fair value through profit and loss.
The valuation of the subsidiaries takes into account an accrual for the
estimated value of interests in the Co-investment Incentive Scheme. Under
these arrangements, ICG (the ‘Manager’) and certain of its executives and,
in respect of certain historic investments, the executives and connected
parties of Graphite Capital Management LLP (the ‘Former Manager’)
(together ‘the Co-investors’), are required to co-invest alongside the
Company, for which they are entitled to a share of investment profits if
certain performance hurdles are met. At 31 January 2023, the accrual was
estimated as the theoretical value of the interests if the Portfolio had been
sold at the carrying value at that date.
Associates
The Company holds an interest (including indirectly through its subsidiaries)
of more than 20% in a small number of investments that may normally be
classified as subsidiaries or associates. These investments are not considered
subsidiaries or associates as the Company does not exert control or
significant influence over the activities of these companies/structured
entities as they are managed by other third parties.
(d) Receivables
Receivables include unamortised fees which were incurred directly in relation
to the agreement of a financing facility. These fees will be amortised over
the life of the facility on a straight-line basis.
(e) Payables
Other payables are non-interest bearing and are stated at their amortised
cost, which is not materially different from fair value.
(f) Cash and cash equivalents
Cash and cash equivalents comprise cash and short-term bank deposits with an
original maturity of three months or less.
(g) Dividend distributions
Dividend distributions to shareholders are recognised in the period in which
they are paid.
(h) Income
When it is probable that economic benefits will flow to the Company and the
amount can be measured reliably, interest is recognised on a time
apportionment basis.
Dividends receivable on quoted equity shares are brought into account on the
ex-dividend date. Dividends receivable on equity shares where no ex-dividend
date is applicable are brought into account when the Company’s right to
receive payment is established.
UK dividend income is recorded at the amount receivable. Overseas dividend
income is shown net of withholding tax. Income distributions from funds are
recognised when the right to distributions is established.
(i) Expenses
All expenses are accounted for on an accruals basis. Expenses are allocated to
the revenue column in the income statement, consistent with the SORP, with the
following exceptions:
* Expenses which are incidental to the acquisition or disposal of investments
(transaction costs) are allocated to the capital column.
* The Board expects the majority of long-term returns from the Portfolio to be
generated from capital gains. Expenses are allocated 90% to the capital column
and 10% to the revenue column, reflecting the Company’s current and future
return profile. Other expenses are allocated to the capital column where a
clear connection with the maintenance or enhancement of the value of
investments can be demonstrated.
* All expenses allocated to the capital column are treated as realised capital
losses (see note 1(l)).
(j) Taxation
Investment trusts which have approval as such under Section 1158 of the
Corporation Tax Act 2010 are not liable for taxation on capital gains.
Tax recognised in the income statement represents the sum of current tax and
deferred tax charged or credited in the year. The tax effect of different
items of expenditure is allocated between capital and revenue on the same
basis as the particular item to which it relates.
Deferred tax is the tax expected to be payable or recoverable on the
difference between the carrying amounts of assets and liabilities in the
financial statements and the corresponding tax bases used in the computation
of taxable profit, and is accounted for using the balance sheet liability
method.
Deferred tax liabilities are recognised for all taxable temporary differences
and deferred tax assets are recognised to the extent that it is probable that
taxable profits will be available against which deductible temporary
differences can be utilised. Deferred tax assets are not recognised in respect
of tax losses carried forward to future periods.
Deferred tax is calculated at the tax rates that are expected to apply in the
period when the liability is settled or the assets are realised. Deferred tax
is charged or credited in the income statement, except when it relates to
items charged or credited directly to equity, in which case the deferred tax
is also dealt with in equity.
(k) Foreign currency translation
The functional and presentation currency of the Company is sterling,
reflecting the primary economic environment in which the Company operates.
Transactions in currencies other than sterling are recorded at the rates of
exchange prevailing on the dates of the transactions. At each balance sheet
date, financial assets and liabilities denominated in foreign currencies are
translated at the rates prevailing on the balance sheet date.
Gains and losses arising on the translation of investments held at fair value
are included within gains and losses on investments held at fair value in the
income statement. Gains and losses arising on the translation of other
financial assets and liabilities are included within foreign exchange gains
and losses in the income statement.
(l) Revenue and capital reserves
The revenue return component of total income is taken to the revenue reserve
within the statement of changes in equity. The capital return component of
total income is taken to the capital reserve within the statement of changes
in equity.
Gains and losses on the realisation of investments including realised exchange
gains and losses and expenses of a capital nature are taken to the realised
capital reserve (see note 1(i)). Changes in the valuations of investments
which are held at the year end and unrealised exchange differences are
accounted for in the unrealised capital reserve.
Net gains on the realisation of investments in the controlled structured
entities (see note 9) are transferred to the Company by way of profit
distributions.
The revenue reserve is distributable by way of dividends to shareholders. The
realised capital reserve is distributable by way of dividends and share
buybacks. The capital redemption reserve is not distributable and represents
the nominal value of shares bought back for cancellation.
(m) Treasury shares
Shares that have been repurchased into treasury remain included in the share
capital balance, unless they are cancelled.
(n) Critical estimates and assumptions
Estimates and judgements used in preparing the financial information are
continually evaluated and are based on historic experience and other factors,
including expectations of future events that are believed to be reasonable.
The resulting estimates will, by definition, seldom equal the related actual
results.
In preparing the financial statements, the directors have considered the
impact of climate change on the key estimates within the
financial statements.
The only estimates and assumptions that have a significant risk of causing a
material adjustment to the carrying values of assets and liabilities in the
next financial year relate to the valuation of unquoted investments. Unquoted
investments are primarily the Company’s investments in unlisted funds,
managed by third-party investment fund managers and ICG. As such there is
significant estimation in the valuation of the unlisted fund at a point in
time. Note 1(c) sets out the accounting policy for unquoted investments. The
carrying amount of unquoted investments at the year end is disclosed within
note 10.
(o) Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision maker. The chief operating
decision maker who is responsible for allocating resources and assessing
performance of the segments has been identified as the Board. It is considered
that the Company’s operations comprise a single operating segment.
(p) Company Restatement
The Company has restated its cash flow statement in the prior year to include
the following presentational changes:
* The adjusting item in respect of ‘Net cashflows to subsidiary
investments’ has been replaced with two separate line items representing
gross cashflows to and from subsidiaries
* In order to maintain consistency, the Company has also amended the
description used in Note 10 to describe investment transactions with
subsidiary undertakings
2 INVESTMENT RETURNS
Year ended 31 January 2023 £’000 Year ended 31 January 2022 £’000
Income from investments
UK investment income – –
Overseas interest and dividends 2,224 5,501
2,224 5,501
Deposit interest on cash 1 2
Other 46 –
47 2
Total income 2,271 5,503
Analysis of income from investments
Quoted overseas – –
Unquoted 2,224 5,501
2,224 5,501
3 INVESTMENT MANAGEMENT CHARGES
Management fees paid to ICG for managing the Enterprise Trust amounted to
1.34% (2022: 1.25%) of the average net assets in the year. This movement is
due to an increase in the relative value of fee-bearing assets and commitments
compared to non-fee bearing assets and commitments. The management fee charged
for managing the Company remains at 1.4% (2022: 1.4%) of the fair value of
invested assets and 0.5% (2022: 0.5%) of outstanding commitments, in both
cases excluding funds managed by Graphite Capital (the Former Manager) and
ICG. From 1 February 2023 the management fee is subject to a cap of 1.25% of
net asset value. No fee is charged on cash or liquid asset balances.
The amounts charged during the year are set out below.
Year ended 31 January 2023 Year ended 31 January 2022
Revenue £’000 Capital £’000 Total £’000 Revenue £’000 Capital £’000 Total £’000
Investment management charge 1,701 15,312 17,013 1,342 12,075 13,417
The Company and its subsidiaries also incur management fees in respect of its
investment in funds managed by members of ICG on an arms-length basis.
Year ended 31 January 2023 £’000 Year ended 31 January 2022 £’000
ICG Strategic Equity IV 999 389
ICG Strategic Secondaries II 80 –
ICG Strategic Equity III 284 320
ICG Europe VII 126 318
ICG Europe Mid-Market 111 84
ICG Europe VIII 568 266
ICG Europe VI 43 71
ICG Recover Fund 2008B 32 31
ICG North American Private Debt II 26 –
ICG Asia Pacific III 25 38
ICG Europe V 8 20
ICG Recovery Fund 2006B – –
Total 2,302 1,537
4 OTHER EXPENSES
The Company did not employ any staff in the year to 31 January 2023 (2022:
none).
Year ended 31 January 2023 Year ended 31 January 2022
£’000 £’000 £’000 £’000
Directors’ fees (see note 5) 288 262
Fees payable to the Company’s auditors for the audit of the Company’s annual accounts 156 156
Fees payable to the Company’s auditors and its associates for other services:
– Audit of the accounts of the subsidiaries 135 122
– Audit-related assurance services 55 39
Total auditors’ remuneration (1) 346 317
Administrative expenses 1,322 1,503
1,956 2,082
Bank facility costs allocated to revenue 235 252
Interest expense allocated to revenue 196 50
Expenses allocated to revenue 2,387 2,383
Bank facility costs allocated to capital 3,884 2,263
Total other expenses 6,271 4,646
(1)The auditors of the Company have additionally provided £14k (2022: £13k)
of non-audit related services permitted under the Financial Reporting
Council’s (‘FRC’) Revised Ethical Standards. The service related to
agreed upon procedures over the Company’s carried interest scheme. These
expenses have been charged to the Manager of the Company.
Included within Total other expenses above are £4.3m (2022: £2.6m) of costs
related to financing and £0.1m (2022: £0.3m) of other expenses which are
non-recurring and are excluded from the Ongoing Charges as detailed in the
Glossary on page 54.
Professional fees of £0.2m (2022: £0.1m) incidental to the acquisition or
disposal of investments are included within gains/(losses) on investments held
at fair value.
5 DIRECTORS’ REMUNERATION AND INTERESTS
The fees paid by the Company to the directors and the directors’ interests
in the share capital of the Company are shown in the Directors’ Remuneration
Report in the Annual Report. No income was received or receivable by the
directors from any other subsidiary of the Company.
6 TAXATION
In both the current and prior years the tax charge was lower than the standard
rate of corporation tax of 19%, principally due to the Company’s status as
an investment trust, which means that capital gains are not subject to
corporation tax. The effect of this and other items affecting the tax charge
are shown in note 6(b) below.
The UK Government has announced an increase to the standard rate of
corporation tax from 19% to 25% with effect from 1 April 2023. This is not
expected to have a material impact on the Company.
Year ended 31 January 2023 £’000 Year ended 31 January 2022 £’000
a) Analysis of charge in the year
Tax charge on items allocated to revenue (345) –
Tax credit on items allocated to capital 345 –
Corporation tax – –
b) Factors affecting tax charge for the year
Profit on ordinary activities before tax 164,524 226,490
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 19% (2022: 19%) 31,260 43,033
Effect of:
– Net investment returns not subject to corporation tax (35,252) (45,419)
– Dividends not subject to corporation tax (75) (295)
– Current year management expenses not utilised/(utilised) 4067 655
– Other movements in respect of subsidiary investments – 2,026
Total tax charge – –
The Company has £29.5m excess management expenses carried forward (2022:
£28.7m). No deferred tax assets or liabilities (2022: nil) have been
recognised in respect of the carried forward management expenses due to the
uncertainty that future taxable profit will be generated that these losses can
be offset against. For all investments the tax base is equal to the carrying
amount. There was no deferred tax expense relating to the origination and
reversal of timing differences in the year (2022: nil).
7 EARNINGS PER SHARE
Year ended 31 January 2023 Year ended 31 January 2022
Revenue return per ordinary share (2.15) 2.59p
Capital return per ordinary share 242.34p 327.38p
Earnings per ordinary share (basic and diluted) 240.19p 329.97p
Revenue return per ordinary share is calculated by dividing the revenue return
attributable to equity shareholders of £(1.5)m (2022: £1.8m) 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 £166.0m (2022: £224.7m) 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 £164.5m (2022: £226.5m) 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 68,496,802 (2022: 66,638,288). There
were no potentially dilutive shares, such as options or warrants, in either
year.
8 DIVIDENDS
Year ended 31 January 2023 £’000 Year ended 31 January 2022 £’000
Third quarterly dividend in respect of year ended 31 January 2022: 6p per share (2021: 5.0p) 4,111 3,438
Final dividend in respect of year ended 31 January 2022: 9p per share (2021: 9.0p) 6,167 6,189
First quarterly dividend in respect of year ended 31 January 2023: 7p per share (2022: 6.0p) 4,796 4,111
Second quarterly dividend in respect of year ended 31 January 2023: 7p per share (2022: 6.0p) 4,792 4,111
Total 19,866 17,849
The Company paid a third quarterly dividend of 7.0p per share in March 2022.
The Board has proposed a final dividend of 9p per share in respect of the year
ended 31 January 2023 which, if approved by shareholders, will be paid on 21
July 2023 to shareholders on the Register of Members at the close of business
on 6 July 2023.
9 SUBSIDIARY UNDERTAKINGS AND UNCONSOLIDATED STRUCTURED ENTITIES
Subsidiary undertakings (controlled structured entities)
Subsidiaries of the Company as at 31 January 2023 comprise the following
controlled structured entities, which are registered in England and Wales.
Subsidiaries of the Company’s direct subsidiaries are reported as indirect
subsidiaries.
Direct subsidiaries Ownership interest 2023 Ownership interest 2022
ICG Enterprise Trust Limited Partnership 97.5% 97.5%
ICG Enterprise Trust (2) Limited Partnership 97.5% 97.5%
ICG Enterprise Trust Co-investment Limited Partnership 99.0% 99.0%
Indirect subsidiaries Ownership interest 2023 Ownership interest 2022
ET Holdings LP 99.5% 99.5%
ICG Morse Partnership LP 99.5% 99.5%
ICG Lewis Partnership LP 99.5% 99.5%
In accordance with IFRS 10 (amended), the subsidiaries are not consolidated
and are instead included in unquoted investments at fair value.
The value of the subsidiaries is shown net of an accrual for the interests of
the Co-investors (ICG and certain of its executives, and, in respect of
certain historical investments, the executives and connected parties of
Graphite Capital, the Former Manager) in the Co-investment Incentive Scheme.
As at 31 January 2023, a total of £58.1m (2022: £49.2m) was accrued in
respect of these interests. During the year the Co-investors invested £1.8
(2022: £0.2m) into ICG Enterprise Trust Co-investment Limited Partnership.
Payments received by the Co-investors amounted to £8.2m or 3.3% of £252.0m
Total Proceeds received in the year (2022: £9.2m or 0.3% of £342.9m proceeds
received).
Unconsolidated structured entities
The Company’s principal activity is investing in private equity funds and
directly into private companies. Such investments may be made and held via a
subsidiary. The majority of these investments are unconsolidated structured
entities as defined in IFRS 12.
The Company holds interests in closed-ended limited partnerships which invest
in underlying companies for the purposes of capital appreciation. The Company
and the other limited partners make commitments to finance the investment
programme of the relevant manager, who will typically draw down the amount
committed by the limited partners over a period of four to six years (see note
16).
The table below disaggregates the Company’s interests in unconsolidated
structured entities. The table presents for each category the related balances
and the maximum exposure to loss.
Total investments Unquoted investments £’000 Co-investment Incentive Scheme Accrual £’000 Maximum loss exposure £’000
As at 31 January 2023 1,404,293 (58,098) 1,346,195
As at 31 January 2022 1,171,302 (49,157) 1,122,145
The Company also holds investments of £2.9m (2022: £1.6m) that are not
unconsolidated structured entities. Further details of the Company’s
investment Portfolio are included in the Supplementary information section on
page 17.
10 INVESTMENTS
The tables below analyse the movement in the carrying value of the Company’s
investment assets in the year. In accordance with accounting standards,
subsidiary undertakings of the Company are reported at fair value rather than
on a ‘look-through’ basis.
An investee fund is considered to generate realised gains or losses if it is
more than 85% drawn and has returned at least the amount invested by the
Company. All gains and losses arising from the underlying investments of such
funds are presented as realised. All gains and losses in respect of fund
investments that have not satisfied the above criteria are presented as
unrealised.
Direct Investments are considered to generate realised gains or losses when
they are sold.
Investments are held by both the Company and through its subsidiaries. An
analysis of gains and losses on an underlying investment look-through basis is
presented on page xx within the Other information section.
Quoted £’000 Unquoted £’000 Subsidiary undertakings £’000 Total £’000
Cost at 1 February 2022 – 164,996 368,264 533,260
Net unrealised appreciation at 1 February 2022 – 37,013 553,474 590,487
Valuation at 1 February 2022 – 202,009 921,738 1,123,747
Movements in the year:
– Purchases – 62,245 62,245
– Net movement of investments with subsidiary undertakings (2) 10,162 10,162
– Sales
– Capital proceeds – (32,137) (32,137)
– Realised gains/(losses) based on carrying value at previous balance sheet date – 9,311 9,311
– Movement in unrealised appreciation 27,750 147,997 175,747
Valuation at 31 January 2023 – 269,178 1,079,897 1,349,075
Cost at 31 January 2023 – 195,104 378,426 573,531
Net unrealised appreciation for the year to 31 January 2023 – 74,074 701,471 775,544
Valuation at 31 January 2023 – 269,178 1,079,897 1,349,075
Quoted £’000 Unquoted £’000 Subsidiary undertakings (restated) £’000 Total £’000
Cost at 1 February 2021 1,410 394,393 136,393 532,196
Net unrealised appreciation at 1 February 2021 34,292 200,116 140,958 375,366
Valuation at 1 February 2021 35,702 594,509 277,351 907,562
Movements in the year:
– Transfer to subsidiary undertakings – Cost (1) – (232,126) 232,126 –
– Transfer to subsidiary undertakings – Unrealised appreciation (1) – (210,875) 210,875 –
– Purchases – 75,125 75,125
– Net movement of investments with subsidiary undertakings (2) 2,524 2,524
– Sales
– Capital proceeds (35,702) (65,280) – (100,982)
– Realised gains/(losses) based on carrying value at previous balance sheet date – 1,968 – 1,968
– Movement in unrealised appreciation – 38,687 198,862 237,550
Valuation at 31 January 2022 – 202,009 921,738 1,123,747
Cost at 31 January 2022 – 164,996 368,264 533,260
Net unrealised appreciation for the year to 31 January 2022 – 37,013 553,474 590,487
Valuation at 31 January 2022 – 202,009 921,738 1,123,747
( 1)On 26 February 2021, the Company finalised a new bank facility of €200m
(£177m, translated at the rate prevailing on the day the facility became
available for use) with Credit Suisse. The facility was agreed to strengthen
the Company’s financial position and replace the previous facility that was
in place at the year end. The new facility requires at least £500m of
investments be held in a single entity in order to provide security for the
facility. To meet this criteria, a new subsidiary of the Company, ET Holdings
LP, was incorporated on 15 December 2020. During February and March 2021 the
Company completed a number of transfers of its investments, as well as
transfers of investments from the Company’s subsidiary ICG Enterprise Trust
Co-investment LP, to ET Holdings LP. In addition, during the year to 31
January 2023, ET Holdings LP entered into a number of new investments in its
own right. The fair value of investments held in ET Holdings LP as at 31
January 2023 is £837.8m.
(2)In the prior year financial statements, net investment movements with
subsidiary undertakings were presented as 'Purchases'. The presentation has
been updated in the prior year to 'Net movement of investments with subsidiary
undertakings'
31 January 2023 £’000 31 January 2022 £’000
Realised gains based on cost 9,311 79,908
Amounts recognised as unrealised in previous years – (77,940)
Realised gains based on carrying values at previous balance sheet date 9,311 1,968
Increase in unrealised appreciation 175,747 237,550
Gains on investments 185,058 239,518
‘Realised gains based on cost’ represents the total increase in value,
compared to cost, of those funds which meet the criteria set out in page X.
These gains are adjusted for amounts previously reported as unrealised (and
included within the fair value at the previous balance sheet date) to
determine the ‘Realised gains based on carrying values at previous balance
sheet date’.
Gains on investments includes the ‘Realised gains based on carrying values
at previous balance sheet date’ together with the net fair value movement on
the balance of the investee funds.
Related undertakings
At 31 January 2023, the Company held direct and indirect interests in six
limited partnership subsidiaries. These interests, net of the incentive
accrual as described in note 9, were:
Investment 31 January 2023 31 January 20022
ICG Enterprise Trust Limited Partnership 99.9% 99.9%
ICG Enterprise Trust (2) Limited Partnership 66.5% 66.5%
ICG Enterprise Trust Co-investment Limited Partnership 66.0% 66.0%
ICG Enterprise Holdings LP 99.5% 99.5%
ICG Morse Partnership LP 99.5% 99.5%
ICG Lewis Partnership LP 99.5% 99.5%
The registered address and principal place of business of the subsidiary
partnerships is Procession House, 55 Ludgate Hill, London EC4M 7JW.
In addition the Company held an interest (including indirectly through its
subsidiaries) of more than 20% in the following entities. These investments
are not considered subsidiaries or associates as the Company does not exert
control or have significant influence over the activities of these
companies/partnerships.
As at 31 January 2023
Investment Instrument % interest (1)
Graphite Capital Partners VII Top Up Plus (3) Limited partnership interests 20.0%
Graphite Capital Partners VIII Top Up (3) Limited partnership interests 41.1%
ICG LP Secondaries Fund (4) Limited partnership interests 33.0%
As at 31 January 2022
Investment Instrument % interest (1)
Cognito IQ Limited (2) Preference shares 44.0%
Cognito IQ Limited (2) Ordinary shares 34.5%
Graphite Capital Partners VII Top Up Plus (3) Limited partnership interests 20.0%
Graphite Capital Partners VIII Top Up (3) Limited partnership interests 41.1%
1. The percentage shown for limited partnership interests represents the
proportion of total commitments to the relevant fund. The percentage shown for
shares represents the proportion of total shares in issue.
2. Address of principal place of business is Rivergate House, Newbury Business
Park, London Road, Newbury RG14 2PZ.
3. Address of principal place of business is 7 Air Street, Soho, London W1B
5AD.
4. Address of principal place of business is Procession House, 55 Ludgate
Hill, London, EC4M 7JW
11 CASH AND CASH EQUIVALENTS
31 January 2023 £’000 31 January 2022 £’000
Cash at bank and in hand 20,694 41,328
12 RECEIVABLES
31 January 2023 £’000 31 January 2022 £’000
Prepayments and accrued income 2,416 2,205
As at 31 January 2023, prepayments and accrued income included £2.3m (2022:
£2.2m) of unamortised costs in relation to the bank facility. Of this amount
£0.5m (2022: £0.7m) is expected to be amortised in less than one year.
13 PAYABLES – CURRENT
31 January 2023 £’000 31 January 2022 £’000
Accruals 6,274 9,303
Bank facility drawn 65,293 –
Payables – current 71,567 9,303
Accruals in the prior year included unbilled management fees in respect of
that year which were settled in the current year.
14 SHARE CAPITAL
Equity share capital Authorised Issued and fully paid
Number Nominal £’000 Number Nominal £’000
Balance at 31 January 2023 and 31 January 2022 120,000,000 12,000 72,913,000 7,292
All ordinary shares have a nominal value of 10.0p. At 31 January 2023 and 31
January 2022, 72,913,000 shares had been allocated, called up and fully paid.
During the year 191,480 shares were bought back in the market and held in
treasury (2022: 250,000 shares). At 31 January 2023, the Company held
4,577,425 shares in treasury (2022: 4,395,945) and had 68,335,575 (2022:
68,517,055) shares outstanding, all of which have equal voting rights.
15 NET ASSET VALUE PER SHARE
The net asset value per share is calculated on equity attributable to equity
holders of £1,300.6m (2022: £1,158.0m) and on 68,335,575 (2022: 68,517,055)
ordinary shares in issue at the year 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 1,903.3p (2022:
1,690.1p).
16 CAPITAL COMMITMENTS AND CONTINGENCIES
The Company and its subsidiaries had uncalled commitments in relation to the
following Portfolio investments:
31 January 2023 £’000 31 January 2022 £’000
ICG Asia Pacific Fund III (2) 3,159 2,895
ICG Europe VI (1) 4,459 4,214
ICG Europe VII (1) 6,765 10,348
ICG Europe VIII (1) 28,551 30,590
ICG Europe Mid-Market Fund (1) 8,536 9,909
ICG North American Private Debt Fund II (2) 3,232 4,234
ICG Strategic Secondaries Fund II (2) 17,041 15,613
ICG Strategic Equity Fund III (2) 11,269 10,325
ICG Strategic Equity IV (2) 15,943 17,369
ICG LP Secondaries Fund I LP 27,443 –
ICG Ludgate Hill (Feeder B) SCSp (1) 14,393 13,724
ICG Ludgate Hill (Feeder) II Boston SCSp (2) 8,077 5,161
ICG Ludgate Hill (Feeder) IIIA Porsche SCSp (2) 1,467 –
ICG Augusta Partners Co-Investor (2) 18,895 17,636
ICG Dallas Co-Investment (2) 1,400 1,282
ICG Colombe Co-investment (1) 1,750 2,355
Commitments of less than £1,000,000 at 31 January 2023 7,178 4,809
Total ICG funds 179,558 150,464
Graphite Capital Partners IX 5,805 8,882
Graphite Capital Partners VIII (2) 2,194 4,408
Graphite Capital Partners VII (1,2) 907 1,554
Total Graphite funds 8,906 14,844
1. Includes interest acquired through a secondary fund purchase.
2. Includes the associated Top Up funds.
31 January 2023 £’000 31 January 2022 £’000
PAI Europe VIII 22,045 –
Advent International X 16,313 –
Green Equity Investors Side IX 16,234 –
Gridiron V 13,881 –
Bain VI 13,227 –
Permira VIII 13,227 –
CDR XII 12,175 –
Thomas H Lee Equity Fund IX 11,266 14,318
Integrum I 8,117 –
BC XI 8,050 8,626
Seventh Cinven Fund 6,421 7,566
PAI Mid-Market Fund 5,811 6,788
Bain XIII 5,743 –
CVC European Equity Partners VIII 5,589 10,078
Investindustrial VII 5,021 8,283
Leeds VII 4,770 7,033
Charlesbank X 4,711 5,733
New Mountain VI 4,517 7,272
PAI VII 4,501 10,182
European Camping Group II 4,409 –
Gridiron Capital Fund III 4,401 4,066
Hg Genesis X 4,371 –
Carlyle Europe Partners V 4,351 4,394
Bowmark Capital Partners VI 4,279 7,230
FSN VI 4,236 6,126
GI Partners VI 4,119 5,246
Thoma Bravo XV 4,109 –
Hg Saturn III 4,028 –
GHO Capital III 3,722 6,672
Bain Tech Opportunities II 3,409 –
Bregal Unternehmerkapital III 3,360 7,200
CDR XI 3,151 –
AEA VII 3,010 5,867
Ivanti 2,997 2,746
Gryphon V 2,564 –
Tailwind III 2,471 –
Thomas H Lee Equity Fund VIII 2,398 3,719
Apax X 2,351 4,390
Resolute V 2,307 7,787
Hellman Friedman X 2,275 3,382
Ambassador Theatre Group 2,196 2,087
Commitments of less than £2,000,000 at 31 January 2023 52,130 43,026
Total third party 308,262 253,303
Total commitments 496,726 418,611
The Company and its subsidiaries had no other unfunded commitments to
investment funds. Commitments made by the Company and its subsidiaries are
irrevocable.
As at 31 January 2023, the Company (excluding its subsidiaries) had uncalled
commitments in relation to the above Portfolio of £55.0m (2022: £76.0m). The
Company did not have any contingent liabilities at 31 January 2023 (2022:
None).
The Company’s subsidiaries, which are not consolidated, had the balance of
uncalled commitments in relation to the above Portfolio of £441.7m (2022:
£342.6m). The Company is responsible for financing its pro-rata share of
those uncalled commitments (see note 9).
17 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 long-term growth
by investing in private companies managed by leading private equity managers.
Investments in funds have anticipated lives of approximately 10 years. Direct
Investments are made with an anticipated holding period of between three and
five years.
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 Board has overall responsibility for managing the risks and the framework
for monitoring and coordinating these risks. The Audit Committee regularly
reviews, identifies and evaluates the risks taken by the Company to allow them
to be appropriately managed. All of the Company’s management functions are
delegated to the Manager which has its own internal control and risk
monitoring arrangements. The Committee makes a regular assessment of these
arrangements, with reference to the Company’s risk matrix. 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 continental Europe, the US and
the UK, and are primarily denominated in euro, US dollars and sterling. There
are also smaller amounts in other European currencies. The Company’s
investments in controlled structured entities are reported in Sterling. 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. No hedging arrangements were in place
during the financial year.
The composition of the net assets of the Company by reporting currency at the
year end is set out below:
31 January 2023 Sterling £’000 Euro £’000 US dollar £’000 Other £’000 Total £’000
Investments 1,112,572 89,120 147,165 218 1,349,075
Cash and cash equivalents and other net current assets (65,250) 14,817 1,721 255 (48,457)
1,047,323 103,937 148,886 473 1,300,618
31 January 2022 Sterling £’000 Euro £’000 US dollar £’000 Other £’000 Total £’000
Investments 950,837 62,743 109,985 182 1,123,747
Cash and cash equivalents and other net current assets 14,413 12,648 6,906 263 34,230
965,250 75,391 116,891 445 1,157,977
The effect of a 25% increase or decrease in the sterling value of the euro
would be a fall of £28.6m and a rise of £106.0m in the value of
shareholders’ equity and on profit after tax at 31 January 2023 respectively
(2022: a fall of £66.1m and a rise of £46.7m based on 25% increase or
decrease).
The effect of a 25% increase or decrease in the sterling value of the US
dollar would be a fall of £113.7m and a rise of £191.0m in the value of
shareholders’ equity and on profit after tax at 31 January 2023 respectively
(2022: a fall of £112.8m and a rise of £92.6m based on 25% movement).
These sensitivity figures are based on the currency of the location of the
underlying portfolio companies’ headquarters. The percentages applied are
based on market volatility in exchange rates observed in prior periods.
(ii) Interest rate risk
The Company’s assets primarily comprise non-interest bearing investments in
funds and non-interest bearing investments in portfolio companies. The fair
values of these investments are not significantly directly affected by changes
in interest rates. The Company’s net debt balance is exposed to interest
rate risk; the financial impact of this risk is currently immaterial.
The Company is indirectly exposed to interest rate risk through the impact of
interest rates on the performance of investments in funds and portfolio
companies as a result of interest rate changes impacting the underlying
manager valuation. This performance impact as a result of interest rate risk
is recognised through the valuation of those investments, which will be
affected by the impact of any change in interest rates on the financial
performance of the underlying portfolio companies and also on any valuation of
those investments for sale. The Company is not able to quantify how a change
in interest rates would impact valuations.
(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.
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. The table below shows the impact of a 30% increase or decrease in the
valuation of the investment Portfolio. The percentages applied are reasonable
based on the Manager’s view of the potential for volatility in the Portfolio
valuations under stressed conditions.
31 January 2023 31 January 2022
30% movement in the price of investments Increase in variable £’000 Decrease in variable £’000 Increase in variable £’000 Decrease in variable £’000
Impact on profit after tax 388,422 (349,350) 319,449 (330,909)
Impact as a percentage of profit after tax 236.1% (239.7)% 141.0% (146.1)%
Impact as a percentage of shareholders’ equity 29.9% (30.3)% 27.6% (28.6)%
A reasonably possible percentage change in relation to the earnings estimates
or Enterprise Value/EBITDA multiples used by the underlying managers to value
the private equity fund investments and co-investments may result in a
significant change in fair value of unquoted investments.
Investment and credit risk
(i) Investment risk
Investment risk is the risk that the financial performance of the companies in
which the Company 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 in order to mitigate
this risk.
(ii) Credit risk
The Company’s exposure to credit risk arises principally from its investment
in 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 Royal Bank of Scotland (‘RBS’) and totalled
£20.7m (2022: £41.3m).RBS currently has a credit rating of A1 from
Moody’s. This represented 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 or money market fund balances were past
due or impaired at 31 January 2023 (2022: nil) and as a result of this, no ECL
provision has been recorded.
Liquidity risk
The Company makes commitments to private equity funds in advance of that
capital being invested, typically in illiquid, unquoted companies. These
commitments are in excess of the Company’s total liquidity, therefore
resulting in an overcommitment. When determining the appropriate level of
overcommitment, the Board considers the rate at which commitments might be
drawn down, typically over four to six years, versus the rate at which
existing investments are sold and cash realised. The Company has an
established liquidity management policy, which involves active monitoring and
assessment of the Company’s liquidity position and its overcommitment risk.
This is regularly reviewed by the Board and incorporated into the Board’s
assessment of the viability of the Company. This process incorporates balance
sheet and cash flow projections, including scenarios with varying levels of
Portfolio gains and losses, fund drawdowns and realisations, availability of
the credit facility, exchange rates, and possible remedial action that the
Company could undertake if required in the event of significant Portfolio
declines.
At the year end, the Company had cash and cash equivalents totalling £20.7m
and had access to committed bank facilities of £167.0m maturing in February
2026, which is a multi-currency revolving credit facility provided by Credit
Suisse. The key terms of the facility are:
* Upfront cost: 100bps.
* Non-utilisation fees: 114bps per annum.
* Margin on drawn amounts: 300bps per annum.
As at 31 January 2023 the Company’s total financial liabilities amounted to
£71.6m (2022: £9.3m) of payables which were due in less than one year, which
includes accrued balances payable in respect of the credit facility above.
Capital risk management
The Company’s capital is represented by its net assets, which are managed to
achieve the Company’s investment objective. As at the year end, the Company
had net debt of £44.6m (2022: £nil).
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 of the Corporation Tax Act 2010 and by the Companies
Act 2006, respectively. Total equity at 31 January 2023, the composition of
which is shown on the balance sheet, was £1,300.6m (2022: £1,158.0m).
Fair values estimation
IFRS 13 requires disclosure of fair value measurements of financial
instruments categorised according to the following fair value measurement
hierarchy:
* Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
* Inputs other than quoted prices included within level 1 that are observable
for the asset or liability, either directly (that is, as prices) or indirectly
(that is, derived from prices) (level 2).
* Inputs for the asset or liability that are not based on observable market
data (that is, unobservable inputs) (level 3).
The valuation techniques applied to level 3 assets are described in note 1(c)
of the financial statements. No investments were categorised as 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 sensitivity of the Company’s investments to a change in value is
discussed on pages 46.
The following table presents the assets that are measured at fair value at 31
January 2023 and 31 January 2022:
As at 31 January 2023 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Investments held at fair value
Unquoted investments – indirect – – 158,896 158,896
Unquoted investments – direct – – 110,282 110,282
Quoted investments – direct – – – –
Subsidiary undertakings – – 1,079,897 1,079,897
Total investments held at fair value – – 1,349,075 1,349,075
As at 31 January 2022 Level 1 £’000 Level 2 £’000 Level 3 £’000 Total £’000
Investments held at fair value
Unquoted investments – indirect – – 140,060 140,060
Unquoted investments – direct – – 61,949 61,949
Quoted investments – direct – – – –
Subsidiary undertakings – – 921,738 921,738
Total investments held at fair value – – 1,123,747 1,123,747
All unquoted and quoted investments are valued at fair value in accordance
with IFRS 13. The Company has no quoted investments as at 31 January 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 year
to 31 January 2023 and 31 January 2022.
31 January 2023 Unquoted investments (indirect) at fair value through profit or loss £’000 Unquoted investments (direct) at fair value through profit or loss £’000 Subsidiary undertakings £’000 Total £’000
Opening balances 123,319 78,689 921,738 1,123,747
Additions 20,894 34,151 10,162 72,407
Disposals (27,475) (4,661) – (32,136)
Gains and losses recognised in profit or loss 34,958 2,103 147,997 185,057
Closing balance 158,896 110,282 1,079,897 1,349,075
Total gains for the year included in income statement for assets held at the end of the reporting period 9,816 17,934 147,997 175,747
31 January 2022 Unquoted investments (indirect) at fair value through profit or loss £’000 Unquoted investments (direct) at fair value through profit or loss £’000 Subsidiary undertakings £’000 Total £’000
Opening balances 442,696 151,813 277,351 871,860
Additions 33,479 41,647 2,524 77,649
Transfer to Subsidiary undertakings (349,295) (93,706) 443,001 –
Disposals (34,115) (31,165) – (65,280)
Gains and losses recognised in profit or loss 30,555 10,100 198,862 239,517
Closing balance 123,319 78,689 921,738 1,123,747
Total gains for the year included in income statement for assets held at the end of the reporting period 28,587 10,100 198,862 237,549
18 RELATED PARTY TRANSACTIONS
Significant transactions between the Company and its subsidiaries are shown
below:
Subsidiary Nature of transaction Year ended 31 January 2023 £’000 Year ended 31 January 2022 £’000
ICG Enterprise Trust Limited Partnership Increase in amounts owed to subsidiaries – 5,884
(Decrease) in amounts owed by subsidiaries (17,470) –
Income allocated 10 –
ICG Enterprise Trust (2) Limited Partnership Increase in amounts owed to subsidiaries 5,776 11,318
(Decrease) in amounts owed by subsidiaries – –
Income allocated 403 740
ICG Enterprise Trust Co-investment LP Increase in amounts owed by subsidiaries 43,949 52,773
Income allocated 2,605 6,687
ICG Enterprise Holdings LP Increase in amounts owed to subsidiaries 22,904 22,820
Decrease in amounts owed by subsidiaries – –
Income allocated 6,603 9,824
ICG Morse Partnership LP Increase in amounts owed by subsidiaries 5,107 3,282
Decrease in amounts owed to subsidiaries –
Income allocated – –
ICG Lewis Partnership LP Increase in amounts owed by subsidiaries 2,344 71
Decrease in amounts owed by subsidiaries – –
Income allocated – –
For the purpose of IAS 24 Related Party Disclosures, key management personnel
comprised the Board of Directors. Details of remuneration are disclosed below
and in further detail in the Directors’ Remuneration Report.
Remuneration in the year (audited) Fees Expenses Total
Name 2023 £’000 2022 £’000 2023 £’000 2022 £’000 2023 £’000 2022 £’000
Jane Tufnell 67 65 – – 67 65
Alastair Bruce 54 52 – – 54 52
Gerhard Fusenig 44 42 4 2 48 44
Adiba Ighodaro 26 – – – 26 –
Janine Nicholls 26 – – – 26 –
Sandra Pajarola 19 42 2 2 23 44
Lucinda Riches – 17 – – – 17
David Warnock 44 42 – – 44 42
Total 280 260 6 4 288 264
Amounts owed by/to subsidiaries represent the Company’s loan account
balances with those entities, to which the Company’s share of drawdowns and
distributions in respect of those entities are credited and debited
respectively.
Amounts owed by subsidiaries Amounts owed to subsidiaries
Subsidiary 31 January 2023 £’000 31 January 2022 £’000 31 January 2023 £’000 31 January 2022 £’000
ICG Enterprise Trust Limited Partnership – – 8,299 25,769
ICG Enterprise Trust (2) Limited Partnership – – 22,908 17,132
ICG Enterprise Trust Co-investment LP 250,742 206,792 – –
ICG Enterprise Holdings LP – – 45,725 22,820
ICG Morse Partnership LP 14,513 9,405 – –
ICG Lewis Partnership LP 6,062 3,718 – –
The Company and its subsidiaries’ total shares in funds and co-investments
managed by the Company’s Manager are:
Year ended 31 January 2023 Year ended 31 January 2022
Fund/Co-investment Original commitment £’000 Remaining commitment £’000 Fair value investment £’000 Original commitment £’000 Remaining commitment £’000 Fair value investment £’000
ICG Asia Pacific Fund III (2) 12,175 3,159 8,454 11,155 2,895 8,814
ICG Europe V (1) 13,359 730 603 12,845 767 1,569
ICG Europe VI (1) 22,044 4,459 6,030 20,884 4,214 14,262
ICG Europe VII (1) 35,270 6,765 33,425 33,414 10,348 36,073
ICG Europe VIII (1) 35,270 28,551 7,227 66,828 30,590 2,712
ICG Europe Mid-Market Fund (1) 17,635 8,536 11,888 16,707 9,909 7,899
ICG North American Private Debt Fund II (2) 8,117 3,232 5,053 7,437 4,234 3,389
ICG Strategic Secondaries Fund II (2) 28,409 17,041 10,913 26,028 15,613 8,829
ICG Strategic Equity Fund III (2) 32,468 11,269 35,610 29,746 10,325 35,022
ICG Strategic Equity IV (2) 32,468 15,943 22,133 59,493 17,369 15,177
ICG European Fund 2006 B (1) 7,515 506 49 7,119 479 57
ICG Recovery Fund 2008 B (1) 5,108 892 4,500 10,024 845 4,752
ICG LP Secondaries Fund I LP 48,701 27,443 30,817 – – –
ICG Ludgate Hill (Feeder B) SCSp (1) 39,679 14,393 34,428 37,591 13,724 –
ICG Ludgate Hill (Feeder) II Boston SCSp (2) 16,234 8,077 11,227 7,437 5,161 12,003
ICG Ludgate Hill (Feeder) IIIA Porsche SCSp (2) 20,292 1,467 23,376 – – –
ICG Augusta Partners Co-Investor (2) 20,292 18,895 15,419 18,592 17,636 12,886
ICG Cross Border (2) 4,058 223 3,941 3,718 290 3,477
ICG Velocity Partners Co-Investor (2) 12,175 654 99 11,155 599 159
ICG Sunrise Co-Investment (1) 4,409 90 5,425 2,088 91 4,209
ICG Cheetah Co-Investment (1) 6,172 714 9,990 5,847 680 8,086
ICG Dallas Co-Investment (2) 8,929 1400 8583 4,090 1,282 7,102
ICG Diocle Co-Investment (1) 9,623 153 109 9,117 145 14,798
ICG Colombe Co-investment (1) 13,226 1750 12,922 20,756 2,355 12,051
ICG MXV Co-Investment (1) 12,345 225 27,547 11,695 213 22,086
ICG Progress Co-Investment (2) 8,123 594 11,721 7,437 544 9,916
ICG Trio Co-Investment (1) 16,980 38 7,016 7,521 36 6,873
ICG Match Co-Investment (2) 10,557 132 18,608 7,437 121 20,137
ICG Vanadium Co-Investment 13,226 259 12,968 – – –
ICG Crown Co-Investment 4,058 176 3,882 – – –
CX VIII Co-Investment 8,818 176 8,642 – – –
ICG Newton Co-Investment 12,812 393 14,175 – – –
ICG EOS Loan Fund I Ltd 1,771 – 6 – – –
ICG Topvita Co-Investment 16,165 724 3 – – –
ICG Holiday Co-Investor I 2,336 296 2,040 – – –
ICG Holiday Co-Investor II 1,723 205 1,517 – – –
Total 562,542 179,560 410,346 456,161 150,465 272,338
1. Euro denominated positions translated to sterling at spot rate on 31
January 2023 and 31 January 2022.
2. US dollar denominated positions translated to sterling at spot rate on 31
January 2023 and 31 January 2022.
At the balance sheet date the Company has fully funded its share of capital
calls due to ICG-managed funds in which it is invested.
19 POST BALANCE SHEET EVENTS
There have been no material events since the balance sheet date.
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.
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.
Net Asset Value per Share Total Return Net Asset Value per Share Total Return is the change in the Company’s Net Asset Value per Share, assuming that dividends are re- invested at the end of the quarter in which the dividend was paid.
Net cash/debt Net cash/debt is calculated as net debt / (cash) divided by the NAV. It is a measure of financial leverage. A negative percentage indicates the Company has a net cash position.
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.
31 January 2023 Total per income statement £'000 Amount excluded from AIC Ongoing Charges £'000 Included Ongoing Charges £000
Management fees 17,030 — 17,030
General expenses 1,955 98 1,857
Finance costs 4,316 4,316 —
Total 23,300 4,414 18,887
Total Ongoing Charges 18,887
Average NAV 1,272,342
Ongoing Charges as % of NAV 1.48 %
31 January 2022 Total per income statement £'000 Amount excluded from AIC Ongoing Charges £'000 Included Ongoing Charges £000
Management fees 13,417 — 13,417
General expenses 2,082 491 1,591
Finance costs 2,565 2,565 —
Total 18,064 3,056 15,008
Total Ongoing Charges 15,008
Average NAV 1,070,494
Ongoing Charges as % of NAV 1.40 %
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 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 January 2023 is £1,406.4m (31 January 2022: £1,172.2m).
31 January 2023 £m IFRS Balance sheet fair value Net assets of subsidiary limited partnerships Co-investment Incentive Scheme Accrual Total Company and subsidiary Limited Partnership
Investments (1) 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
31 January 2022 £m IFRS Balance sheet fair value Balances receivable from subsidiary Limited Partnerships Co-investment Incentive Scheme Accrual Total Company and subsidiary Limited Partnership
Investments (1) 1,123.7 (0.6) 49.1 1,172.2
Cash 41.3 41.3
Other Net Liabilities (7.1) 0.6 (49.1) (55.6)
Net assets 1,157.9 1,157.9
(1)Investments 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 10.5% is calculated as follows:
£m January 31, 2023 January 31, 2022
Income, gains and losses on Investments 190.0 245.5
Foreign exchange gains and losses included in gains and losses on investments (76.4) 17.2
Incentive accrual valuation movement 9.0 16.7
Total gains on Portfolio investments excluding impact of foreign exchange 122.6 279.4
Opening Portfolio valuation 1,172.2 949.2
Portfolio Return on a Local Currency Basis 10.5 % 29.4 %
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.
Preferred Return Preferred Return is the preferential rate of return on an individual investment or a portfolio of investments, which is typically 8% per annum.
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.
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 January 2023 31 January 2022
Realisation Proceeds from Full Exits in the year-to-date 133.2 211.5
Cost 50.1 108.1
Average return Multiple to Cost 2.7x 2.6x
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 January 2023 31 January 2022
Realisation Proceeds from Full Exits in the year-to-date 133.2 210.5
Prior Carrying Value (at previous quarterly valuation prior to exit) 107.5 154.4
Realisations – Uplift To Carrying Value 23.9% 36.3%
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 January 2023 31 January 2022
Purchase of Portfolio investments per cash flow statement 62.2 75.1
Purchase of Portfolio investments within subsidiary investments 225.0 228.8
Total New Investment 287.2 303.7
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 January 2023 31 January 2022
Sale of Portfolio investments per cash flow statement 32.1 101.0
Sale of Portfolio investments, interest received, and dividends received within subsidiary investments 217.7 236.4
Interest income per cash flow statement 1.8 2.0
Dividend income per cash flow statement 0.4 1.6
Total Proceeds 252.0 342.9
Fund Disposals — 9.4
Realisation Proceeds 252.0 333.5
Total Return Total Return is a performance measure that assumes the notional re-investment of dividends. This is a measure commonly used by the listed private equity sector and listed companies in general.
The table below sets out the share price and the Net Asset Value per Share growth figures for periods of one, three, five and ten years to the balance sheet date on an annualised Total Return basis:
Total Return performance in years to 31 July 2022 (annualised) 1 year 3 years 5 years 10 years
Net Asset Value per Share 14.4 % 20.3 % 16.8 % 13.8 %
Share price (2.3) % 8.5 % 9.7 % 11.6 %
FTSE All-Share Index 5.2 % 5.0 % 4.2 % 6.3 %
The table below shows the breakdown of the one-year Net Asset Value per Share Total Return for the period:
Change in NAV (% of opening NAV) 31 January 2023 31 January 2022
Portfolio Return on a Local Currency Basis 10.5 % 29.4 %
Currency movements on the Portfolio 6.5 % (1.8) %
Portfolio return in sterling 17.0 % 27.6 %
Impact of (net cash)/net debt 0.2 % (0.1) %
Impact of net portfolio movement on net asset value 17.2 % 27.5 %
Expenses and other income (1.8) % (1.5) %
Incentive accrual valuation movement (1.2) % (1.8) %
Increase in Net Asset Value per Share before buy backs 14.2 % 24.2 %
Impact of share buy backs & dividend reinvestment 0.3 % 0.2 %
Net Asset Value per Share Total Return 14.5 % 24.4 %
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.
(1) From 1 February 2023 up to and including 2 May 2023