REG - Graphite Enterprise - Half Yearly Report to 31 July 2014 <Origin Href="QuoteRef">GPE.L</Origin> - Part 1

ICG Enterprise TrustAnnouncement

29/10/2014 14:42

RNS Number : 6774S
Graphite Enterprise Trust PLC
26 September 2014
26 September 2014
GRAPHITE ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE SIX MONTHS
TO 31 JULY 2014
Highlights of the period
Graphite Enterprise continued its solid progress in the six months to July 2014 with the net asset value increasing by 2.9% before payment of the dividend. The portfolio performed well, driven by a number of successful realisations and by continued growth in the profits of underlying companies. The benefit of this was partially offset by adverse currency movements. The share price has been very strong over the last year, increasing by 22%.
We have been active both in realising and in making investments, with 82 million generated by the portfolio during the period and 53 million invested. 
The Company has been one of the stronger performers in the listed private equity sector in recent years. Our flexible investment strategy and the strong performance of the largest investments position Graphite Enterprise well for future growth. 
Mark Fane
Chairman
+5.7%

+2.9%
Share price total return
The share price outperformed the FTSE All-Share Index and has increased by 56% over three years 

Net asset value per share total return
The NAV per share increased to 681.2p after payment of a dividend of 15.5p per share in June 
+6.5%

11.3m
Underlying rise in the value of the portfolio in local currencies
The portfolio performed well, driven by underlying earnings growth and realisations 

Record dividend
The dividend paid in June was the highest in the Company's history
82m

53m
Realisation proceeds*
Proceeds from realisations were equivalent to 19% of the opening portfolio

Investment in the portfolio
New investment activity was strong and this has continued since the period end, with a further 30 million invested
* Excluding secondary sales of fund interests


Chairman's Statement
Summary
Graphite Enterprise made solid progress in the six months to 31July 2014, with the net asset value per share increasing by 2.9% before payment of the dividend. The net asset value has now increased by nearly a quarter over three years and by more than three-quarters over five years1. 
The share price performed well during the period, generating a total return of 5.7% after including the dividend paid in June. This was ahead of the Company's benchmark, the FTSE All-Share Index, which produced a total return of 4.5%. Over three years the share price has now increased by 56%, compared with a rise of 32% in the Index. 
Reflecting the rise in the share price, the discount to the net asset value per share narrowed from 16.8% to 14.7% during the period. It has since narrowed further to 13.0%.
The growth in the net asset value was driven by a 6.5% increase in the value of the investment portfolio in local currencies, continuing the steady growth seen in recent years. This was partially offset by a rise in sterling against the euro and other currencies which reduced the sterling value of our foreign currency-denominated investments and limited the overall portfolio rise in sterling terms to 4.4%. After adjusting for the effect of holding cash and for costs, the overall increase in the net asset value per share was 2.9% before the payment of the dividend.
At 31 July, the Company had total assets of 504 million of which 80% was invested in the portfolio. The balance was held in cash and liquid assets which rose to 102 million, as a result of the high level of realisations in the period and the secondary sale of three fund interests. The level of cash has fallen to 79 million since the period end as a number of planned new investments have recently been completed.

31 July 2014
31 January 2014
Total return
Change
Net asset value per share 
681.2p
677.2p
+2.9%
+0.6%
Share price
581.0p
563.5p
+5.7%
+3.1%
FTSE All-Share Index
3,586 
3,497
+4.5%
+2.5%
Economic environment
The Company's investment programme is focused on the more mature private equity markets in Western Europe. At 31 July, the largest exposures continued to be the UK, which accounted for 46% of the portfolio and to continental Europe which accounted for a further 41%.
The economic outlook for the UK remains positive, with the steady growth seen in the first half of 2014 expected to continue. By contrast, the performance of the major continental European economies has weakened again recently. The timing of any recovery in these countries is uncertain, with aggregate growth likely to remain subdued in the short to medium term.
Economic uncertainty can often benefit the sector as new investments can be made at relatively attractive prices. In a more favourable economic environment the sourcing of new investments may be more competitive but the performance of the existing portfolio should be stronger. 
Whether investments are made in a stronger or weaker economic environment, the role of the private equity manager is to identify companies with clear growth opportunities. The performance of the investment portfolio in recent years has demonstrated the ability of the managers in the Company's portfolio to do this successfully. 
Performance
Overview
The investment portfolio performed well in the six months, increasing in value by 6.5% in local currencies, equivalent to an annualised rate of 13.4%. This represented a continuation of the good performance seen over the last two years, during which growth in local currencies has averaged 14.0% per annum. 
Approximately 34% of the Company's portfolio is denominated in euros and 12% in US dollars. As the euro fell by 3.5% against the pound and the dollar fell by 2.7%, this reduced the sterling value of these assets and limited the reported increase in the portfolio to 4.4%. 
As the investment portfolio accounted for 86% of total assets at the start of the year, the rise in the portfolio increased the net asset value by 3.8%. After adjusting for costs, the increase in the net asset value per share was 2.9%. The dividends paid in the period represented 2.3% of net asset value, with the result that the closing net asset value was up by 0.6%.
Portfolio 
Over 60% of the underlying growth in the portfolio was generated by full realisations, which continued to be achieved at values above their previous carrying values. Increases in the valuation of the unrealised portfolio were driven principally by continued earnings growth. 
As the largest 30 underlying companies accounted for 44% of the portfolio at 31 July, their performance will have a substantial impact on that of the Company. These investments performed strongly in the 12 months to June 2014, with EBITDA2 increasing by 12.5% on average. By comparison, the aggregate EBITDA of the FTSE 250 increased by 8.4% in the same period. 
A more detailed analysis of the performance of the investment portfolio is given in the Manager's Review.
Discount 
The share price rose by more than the net asset value in the period, with the discount to the net asset value per share narrowing from 16.8% to 14.7%. Since the period end, the share price has risen from 581p to 593p and the discount has therefore narrowed further to 13.0%.
In the last year, the Company's discount has consistently been among the lowest in listed private equity fund of funds sector.
Long term performance3
We have always measured performance against the benchmark of the FTSE All-Share Index as we believe that this is the most relevant index for most of our shareholders, over 60% of whom are private individuals. We aim to outperform this index over the medium to long term. 
Over ten years, both the net asset value per share and the share price have outperformed the FTSE All-Share, with the net asset value increasing by 147% and the share price by 189%, compared with a rise of 128% in the Index. 
Over both three and five years, the share price has strongly outperformed the FTSE All-Share, rising by 56% and 121% respectively compared with rises of 32% and 96% in the Index. Despite the net asset value having increased by 22% and 79% respectively over these periods, the rise in the Index has been greater. This is because the Index fell more sharply than our net asset value during the financial crisis of 2008/9 and has therefore been recovering from a lower opening position over both periods.
The Company's performance continues to be one of the strongest of the listed private equity funds of funds. The net asset value and share price have both outperformed or matched the peer group average over three and ten years and the net asset value has also outperformed the average over five years. As the discounts of many of our peers were wider than the Company's in mid-2009, their share price performances over five years reflect recovery from those low levels.
Years to 31 July 2014
3
5
10
Net asset value per share
+22.0%
+78.6%
+146.6%
Share price
+55.5%
+121.4%
+189.2%
FTSE All-Share Index
+31.7%
+96.1%
+128.1%
Peer group average NAV growth4
+17.4%
+50.1%
+148.9%
Balance sheet and commitments
The Company had cash balances at 31 July of 101 million. This figure was artificially high as four discretionary purchases totalling 27 million were agreed but did not complete until after the period end. Taking these into account, together with other investment activity, cash had fallen to 79million5 at 25 September, equivalent to 16% of total assets.
The portfolio generated net cash of 29 million in the six months, with both realisations and new investment at high levels. A total of 82 million was received from the portfolio and 53 million was invested. After payment of the dividend of 11 million and allowing for other costs, the cash balance would have risen by 12 million, had we not sold two substantial fund interests in the secondary market. After adding the proceeds of 21 million received from these sales, the cash balance rose by 33 million. 
In addition to the 27 million of discretionary investments completed since 31 July, 3million was drawn down by funds and 9 million of further proceeds have been received. The Manager's Review contains further details of investment activity.
Last year we made very substantial commitments to new funds, totalling 201million. This was both because many of our preferred managers were raising new funds and because we wanted to secure a core level of new investment in the medium term. So far in the current year we have not made any further new commitments, but we expect to do so in the near future, again reflecting the timing of fundraisings by managers we are keen to back. 
As 37 million was drawn down for new investment and no new commitments were made, the level of outstanding commitments fell from 277 million to 241 million in the period. We expect outstanding commitments to be drawn down at a rate of approximately
55-65million in the next 12 months, depending on the speed at which funds identify appropriate opportunities. 
Together with the undrawn bank facility of 96 million, the cash balances provide significant capacity for further new investment over the coming years. Our medium term aim is to be broadly fully invested while ensuring that we have sufficient liquidity to be able to take advantage of any attractive investment opportunities that might arise. 

Investment portfolio 
 million
Investment portfolio % total assets
Cash and other net assets 
 million
Cash and other net assets, % of total assets
Commitments  million
25 September 2014
423.7
84.0%
80.4
16.0%
236.0
31 July 2014
402.2
79.8%
102.3
20.2%
240.7
31 January 2014
433.3
86.2%
69.3
13.8%
277.3
31 January 2013
415.2
88.1%
56.3
11.9%
126.5
31 January 2012
377.7
89.2%
45.9
10.8%
141.2
31 January 2011
356.6
89.2%
42.9
10.8%
173.7
Revenue return and dividend
As we have highlighted in previous reports, most of our income is accounted for when underlying portfolio companies are sold and the accumulated interest on yield-bearing instruments is paid. This makes the level of income in each year very difficult to predict. 
In the year to January 2014, the high level of realisations generated a very high level of income. In order to maintain its investment trust status, the Company can retain no more than 15% of its total income and this resulted in a record dividend. Shareholders approved a total dividend of 15.5p per share for the year to January 2014, taking the form of a final dividend of 7.5p and a special dividend of 8.0p, and this was paid in June. 
In the six months to July, the portfolio has generated income at a rate comparable with that of last year, again mainly as a result of realisations. Net revenue for the period was 10.8p per share. While there can be no guarantee that the same level of income will be received in the second half of the year, we anticipate that the final dividend will be maintained at 7.5p per share. We may also be required to pay another special dividend but this will not become clear until after the year end.
Outlook
As we anticipated, after a record level of realisations last year, the level of disposals has remained high in the first half of the current year. This has continued to have a positive effect on performance and we expect the exit environment to remain favourable in the second half. It is encouraging that the majority of the portfolio is now in investments made since the financial crisis and it is these that are likely to drive the Company's future performance.
The environment for new investment remains more challenging than that for realisations. However private equity managers who understand their markets and have a clearly defined investment strategy should be able to identify attractive opportunities. Private equity has historically achieved strong returns from investments made in the early stages of a recovery and there is no reason to believe that returns in this recovery will be any different.
Although cash balances at the end of the first half were relatively high, they have fallen since and we have identified opportunities to redeploy the more recent realisation proceeds. In doing so, we are committed to maintaining our investment discipline. While prices have increased in some parts of the market, our investment strategy gives us the flexibility to adapt the mix of investments, cash and commitments to changing market conditions and to deploy our cash where we see the best relative value.
Mark Fane
September 2014
1. Throughout the report, all performance figures are stated on a total return basis (i.e. including the effect of
re-invested dividends). 
2. Earnings before interest, tax, depreciation and amortisation.
3. As the Company changed its year end in 2010, the five and ten year figures are for the 61 and 121 month periods to 31 July 2014.
4. Peer group comprises: Aberdeen Private Equity, F&C Private Equity, HarbourVest Global Private Equity, JPMorgan Private Equity, Pantheon International Participations, Princess Private Equity, Private Equity Holding, Standard Life European Private Equity.
5. Includes the effect of other net cash outflows of 0.4 million.

Manager's Review
PORTFOLIO PERFORMANCE OVERVIEW
The portfolio continued to make steady progress in the first half of the year, rising in value by 6.5% in local currencies. After adjusting for the impact of the depreciation of foreign currencies on the value of our overseas investments, the sterling value of the portfolio rose by 4.4%. 
Movement in the portfolio 
m
m
Opening portfolio 

433.3
Additions 
53.3

Realisation proceeds 
(82.4)

Secondary sales of fund interests
(21.1)

Net cash inflow 

(50.2)
Gains on realisations 
17.2

Unrealised valuation gains 
 10.91

Total underlying valuation gains 

28.1
Currency 

 (9.0)
Closing portfolio 

 402.2



1 In these accounts 98% of the portfolio is valued using 30 June 2014 valuations
Despite the opening portfolio increasing in value by 28.1 million, the portfolio closed the period 31.1 million lower at 402.2 million. The fall reflected a cash inflow resulting from a number of large realisations, the secondary sale of some fund interests and a delay in completing some new investments.
Gains generated by realisations accounted for 61% of the underlying valuation increase. Unrealised valuation gains were primarily driven by earnings growth but there was also a slight increase in valuation multiples in the period.
Investment activity
Realisations
The portfolio generated total cash of 82.4million in the period of which over two-thirds came from full realisations. Most of the balance came from IPOs, the sale of quoted holdings or from refinancings of portfolio companies. An additional 21.1 million was received from the sale in the secondary market of interests in three funds. 
The total proceeds received, excluding the secondary sales, were equivalent to 19% of the opening value of the portfolio. Although this would imply that realisations are running at a materially higher rate than the 28% achieved in the last financial year, the figure is distorted by three large disposals. It therefore remains to be seen whether this rate will be maintained in the second half of the year.
Full realisations
Investments in 15 portfolio companies were fully realised in the period and these generated 55.2million of proceeds. Although the number of disposals was similar to that in the prior year, more of them were made from among the Company's largest holdings. 
The largest realised gains were generated by Graphite Capital Partners VII's disposals of Education Personnel, a provider of supply teachers and support staff to schools, and London Square, a developer of residential property in London. These generated proceeds of 14.9million and 9.8million respectively. As Education Personnel was acquired by Intermediate Capital Group ("ICG"), a manager we have successfully invested with for many years, we decided to re-invest part of the proceeds in their buy-out vehicle. The largest cash inflow was the 15.3million generated by CEVA, the leading animal health specialist, which was sold by Euromezzanine Fund 5. 
CEVA, Education Personnel and London Square were, respectively, the Company's third, sixth and eighth largest underlying investments at the start of the period and accounted for over 70% of proceeds from full realisations. Further details of the ten largest underlying realisations are set out in the Supplementary Information section. 
Full realisations continue to be completed at substantial uplifts to their previous holding values and for realisations in the six months these averaged 40%. The average return over the life of the investment also remained reasonably strong at 1.9 times the original cost. The vintage year in which realised investments were made was more evenly spread than last year, with investments made before and after the financial crisis each generating around half of the proceeds from full realisations. It is encouraging to see more recent investments starting to generate strong returns and that earlier vintages are continuing to perform. 
Partial realisations
A further 27.2million was received from the partial realisation of portfolio companies, the most significant component of which was refinancings. The recovery in credit markets enabled a number of portfolio companies to be successfully refinanced generating 10.7million of cash, which is almost as much as achieved from refinancings in the whole of last year. 
In a strong IPO market 14 companies achieved flotations, compared with ten over the last two years. The Company received proceeds of 5.7 million from IPOs and a further 3.6 million from sales of listed holdings. At the end of the period the portfolio included quoted shares valued at 40.0million in 28 investments, from flotations in the current and previous years. Details of these are set out in the Supplementary Information section.
New investments
A total of 53.3 million was invested in the first half of the year which is materially higher than the 30.1million invested in the same period last year.
Drawdowns of commitments to funds totalled 36.6 million, compared with 54.2million in the whole of the previous year. As we made a large number of commitments to new funds last year, the higher level of drawdowns reflects the greater number of funds investing this year. However, it also reflects the more rapid rate at which many of our managers are making new investments. The number of new underlying investments is broadly in line with the increase in the amount invested, with 39 investments made in the first half compared with 58 in the year to January 2014. 
The largest new underlying investment was the acquisition by our buy-out team of ICR, a provider of maintenance services to the oil and gas industry, in which the Company invested 10.9 million. Almost as large was the re-investment in Education Personnel discussed earlier. This totalled 9.7million of which 9.0million was a direct co-investment and 0.7 million was invested through ICG's latest fund. Further details of the ten largest underlying new investments are set out in the Supplementary Information section of this report.
Secondary fund purchases ("secondaries") of 1.8million were materially lower than planned. This reflects the timing of closings and market conditions. Two secondaries totalling 18.8 million completed after the period end (discussed in Events Since the Period End below). The market for secondary interests has become increasingly competitive over the last 12 months and sourcing appropriately priced opportunities has therefore become more challenging.
If investments made by our direct buy-out team are added to co-investments and secondaries, the proportion of new investment over which we, as Manager, had full discretion was 54%. This is likely to be materially higher than that of a conventional investor in private equity funds which will not have the same level of exposure to new direct investments. We believe this gives the Company a distinctive position in the fund of funds sector. 
New commitments
No new primary fund commitments were made in the first half of the year. This reflects the timing of fundraisings by our preferred managers. We currently have a number of new funds at an advanced stage of due diligence and expect to close some of these by the end of the year. However, as we indicated in the annual report, after making 12 new commitments totalling over 200million last year, new commitments this year will be materially lower. 
CLOSING PORTFOLIO
At 31 July, the portfolio was valued at 402.2 million and was broadly diversified with investments in 371 underlying companies across a wide range of sectors, geographies and years of investment. 
We believe the portfolio strikes an attractive balance between diversification and concentration. While the level of diversification within the portfolio reduces risk, many individual investments are large enough to have an impact on overall performance, as the recent sales of Education Personnel and London Square have demonstrated.
The top ten underlying companies accounted for 24% of the value of the portfolio at the year end, while the top 30 accounted for 44%. The performance of these 30 investments is therefore likely to be a key driver of future growth. As outlined in the Chairman's Statement, their performance remained strong with revenues and EBITDA growing by an average of 7.4% and 12.5% respectively in the 12 months to June 2014. 
These 30 companies were valued on an average multiple of 9.3 times EBITDA at June 2014. We consider this to be appropriate for the level of growth being achieved and for the quality of the underlying earnings. In comparison, the FTSE 250 Index was valued at 9.6 times EBITDA at the period end, while the EBITDA of its component companies increased by 8.4% in the last 12 months. 
The leverage of the top 30 companies remains relatively modest, with net debt averaging 3.6 times EBITDA. This level of gearing should enhance future equity returns without involving undue financial risk. 
We directly manage 21% of the portfolio including five of the top ten underlying investments. This gives us a high level of influence over the development of a large part of the portfolio. It also provides valuable insights which help us to make more informed strategic and short-term decisions on the management of the portfolio as a whole. While the third party portfolio represented 79% of value, 12% of this was acquired through secondary purchases and 11% through co-investments. A total of 44% of the portfolio is therefore in investments over which we had full discretion at the time of investment.
Less than 40% of the portfolio is in investments made prior to the financial crisis, which compares with almost two thirds only two years ago. This reflects a combination of a high level of realisations of earlier vintages and the value of new investments added to the portfolio in the last two years. Over 60% of the portfolio is therefore in investments which have been less impacted by the downturn and which should have been priced and structured to reflect the depressed economic environment of recent years.
At 31 July the portfolio was valued at an average of 140% of original cost in local currency, of which 40% of cost had already been returned. At these levels, and with a higher proportion of the portfolio in more recent investments, we believe there is potential for future growth as the portfolio matures. 
EVENTS SINCE THE PERIOD END AND PRO FORMA BALANCE SHEET
Since the period end, additions to the portfolio of 30.0 million have exceeded realisations of 8.5million. The new investments include a 4.0million co-investment, a 4.3 million acquisition of a portfolio of three smaller Graphite Capital investments and two secondaries: 10.3million in Graphite Capital Partners VI and 8.5million in PAI Europe V.
After taking account of the 21.5million net cash outflow, the cash balance has fallen to 79.2million1 while outstanding commitments have fallen to 236.0million. Overcommitment, after taking account of the undrawn bank facility, currently stands at approximately 12% of net assets.
We estimate that approximately 60 million of current commitments will be drawn down over the next 12 months if outstanding commitments are drawn down at a constant rate between now and the end of each fund's investment period. In the first half of the year our managers have invested at a faster rate than this. However, even if the recent strong investment pace continues, fund drawdowns are unlikely to be sufficient on their own to absorb the current cash balance. We therefore plan to make further co-investments and secondary fund purchases in the remainder of the year. A number of such investments are at an advanced stage and we are also likely to commit to several new funds in the second half.
PROSPECTS
With the portfolio generating high levels of cash, re-investing these proceeds while maintaining pricing discipline remains a key challenge. However, we have seen a pick-up in the rate of investment in first half and we expect this to continue. We are currently reviewing a large number of potential new direct investments and there is no reason to believe that the managers of the third party fund portfolio will not be experiencing a similar flow of new opportunities.
We have been pleased both with the quality of the new investments added in recent years and by the continued growth in earnings of the portfolio. In the last 12 months private equity managers have been able to realise investments at material uplifts to previous carrying values. There is no reason to believe that these trends will not continue and this should be positive for future growth in net asset value. 
Graphite Capital 
September 2014
1. Includes the effect of other net cash outflows of 0.4 million.
SUPPLEMENTARY INFORMATION
The 30 largest fund investments
The 30 largest funds by value at 31 July 2014 are set out below.

Fund
Outstanding commitment
 million
Year of commitment
Country/
region
Value
 million
1
Graphite Capital Partners VIII * 
72.3
2013
UK
26.1

Mid-market buy-outs
2
Fourth Cinven Fund **
4.0
2006
Europe
22.4

Large buy-outs
3
CVC European Equity Partners V **
3.6
2008
Global
21.7

Large buy-outs
4
Graphite Capital Partners VII * / **
7.6
2007
UK
19.3

Mid-market buy-outs 
5
Doughty Hanson & Co V **
6.0
2006
Europe
18.8

Mid-market and large buy-outs 
6
Thomas H Lee Parallel Fund VI
1.7
2007
USA
17.1

Large buy-outs
7
Candover 2005 Fund **
0.1
2005
Europe
17.1

Large buy-outs
8
Graphite Capital Partners VI ** /+
3.4
2003
UK
16.7

Mid-market buy-outs
9
TDR Capital II
0.8
2006
Europe
16.1

Mid-market and large buy-outs
10
Activa Capital Fund II
0.4
2007
France
14.9

Mid-market buy-outs
11
ICG European Fund 2006
2.6
2007
Europe
14.1

Mezzanine loans to buy-outs
12
Deutsche Beteiligungs AG Fund V 
1.8
2006
Germany
11.1

Mid-market buy-outs
13
Bowmark Capital Partners IV
-
2007
UK
10.5

Mid-market buy-outs
14
Doughty Hanson & Co IV
0.3
2005
Europe
 7.0

Mid-market and large buy-outs
15
PAI Europe V +
0.3
2007
Europe
6.5

Large buy-outs
16
Fifth Cinven Fund
9.6
2012
Europe
6.5

Large buy-outs
17
Charterhouse Capital Partners IX **
1.9
2008
Europe
6.1

Large buy-outs
18
Euromezzanine 5
1.7
2006
France
6.1

Mezzanine loans to mid-market buy-outs
19
ICG Europe V
2.3
2012
Europe
5.8

Mezzanine loans to buy-outs
20
Advent Central and Eastern Europe IV 
1.3
2008
Europe
4.7

Mid-market buy-outs
21
BC European Capital IX
3.8
2011
Europe
4.5

Large buy-outs
22
CVC European Equity Partners Tandem
0.9
2006
Global
3.8

Large buy-outs
23
TowerBrook III **
1.3
2007
Europe/ USA
3.8

Mid-market and large buy-outs
24
Deutsche Beteiligungs AG Fund IV
0.3
2002
Germany
3.5

Mid-market buy-outs
25
Segulah IV
1.4
2008
Nordic
3.5

Mid-market buy-outs
26
CVC European Equity Partners IV **
1.4
2005
Global
3.4

Large buy-outs
27
Permira IV **
0.3
2006
Europe
3.3

Large buy-outs
28
Piper Private Equity Fund IV
1.1
2006
UK
3.2

Small buy-outs
29
Charterhouse Capital Partners VIII **
1.1
2006
Europe
3.0

Large buy-outs
30
Trident Private Equity III
-
2009
UK
2.9

Small buy-outs







Total of the largest 30 fund investments
133.3


303.5

Percentage of total investment portfolio



75.5%
* Includes the associated Top Up funds
** All or part of interest acquired through a secondary purchase
+ Further interests in these funds have been acquired since the period end (Graphite Capital Partners VI: 10.3m, PAI Europe V: 8.5m).
The 30 largest underlying INVESTMENTS
The table below presents the 30 companies in which Graphite Enterprise had the largest investments by value at 31 July 2014. These investments may be held directly or through funds, or in some cases in both ways. The valuations are gross and are shown as a percentage of the total investment portfolio.

Company
Manager
Year of investment
Country
Value as a % of investment portfolio
1
Micheldever +






Distributor and retailer of tyres
Graphite Capital
2006
UK
4.5%
2
City & County Healthcare Group





Provider of home care
Graphite Capital
2013
UK
3.5%
3
ICR Group 





Provider of repair and maintenance services to the energy industry
Graphite Capital
2014
UK
2.7%
4
Education Personnel





Provider of temporary staff for the education sector 
ICG 
2014
UK
2.4%
5
Algeco Scotsman





Supplier and operator of modular buildings 
TDR Capital 
2007
USA 
2.2%
6
National Fostering Agency 





Provider of foster care services 
Graphite Capital
2012
UK
2.1%
7
Quiron #






Operator of private hospitals
Doughty Hanson
2012
Spain
1.6%
8
U-POL





Manufacturer and distributor of automotive refinish products
Graphite Capital
2010
UK
1.6%
9
David Lloyd Leisure





Operator of premium health and fitness clubs
TDR Capital
2013
UK
1.6%
10
TMF





Provider of management and accounting outsourcing services
Doughty Hanson
2008
Netherlands
1.5%
11
Spheros





Provider of bus climate control systems
Deutsche Beteiligungs 
2011
Germany
1.5%
12
CPA Global





Provider of patent and legal services
Cinven
2012
UK
1.4%
13
Parques Reunidos 





Operator of attraction parks 
Arle 
2007
Spain 
1.4%
14
The Laine Pub Company
(formerly InnBrighton)





Operator of pubs and bars
Graphite Capital
2014
UK
1.4%
15
Frontier Medical





Manufacturer of medical devices
Kester Capital
2013
UK
1.2%
16
Stork 





Provider of technical engineering services
Arle
2008
Netherlands
1.1%
17
Sebia





Provider of protein testing equipment
Cinven
2010
France
1.0%
18
Intermediate Capital Group *





Provider of mezzanine finance
ICG
1989
UK
1.0%
19
Eurofiber





Provider of fibre optic network
Doughty Hanson
2012
Netherlands
1.0%
20
R&R Ice Cream +





Manufacturer and distributor of ice cream products
PAI Partners
2013
UK
1.0%
21
Guardian Financial Services 





Provider of insured life and pension products
Cinven
2011
UK
0.9%
22
Gerflor





Manufacturer of PVC flooring
ICG
2011
France
0.9%
23
Abertis *





Provider of private transport and communications
CVC
2010
Spain
0.9%
24
Gondola





Operator of casual dining restaurants
Cinven
2006
UK
0.9%
25
Homag Group *





Manufacturer of machines for furniture-making
Deutsche Beteiligungs 
2007
Germany 
0.9%
26
SAFE





Manufacturer of industrial components
Euromezzanine
2006
France
0.8%
27
Acromas * 





Provider of financial, travel and healthcare services
Charterhouse / CVC
2007
UK
0.8%
28
Evonik Industries * 





Manufacturer of specialty chemicals
CVC 
2008
Germany 
0.8%
29
Spire Healthcare *





Operator of hospitals 
Cinven
2007
UK
0.8%
30
Expro International Group





Provider of oil field services
Arle
2008
UK
0.7%

Total of the 30 largest underlying investments



44.1%






+ The Company increased its holding in these companies through transactions completed since the period end. On a pro forma basis, Micheldever represents 5.5% of the portfolio and R&R Ice Cream represents 1.1% of the portfolio.
#Sale was announced in July but is not expected to complete until the end of the year.
*Quoted. Acromas represents the holdings in AA and Saga.
Portfolio analySIS
The following tables analyse the companies in which Graphite Enterprise had investments at 31 July 2014.
30 largest investments* - revenue growth
% growth
% by value
<0%
12.3%
0-10%
49.5%
10-20%
25.5%
20-30%
8.3%


30 largest investments- EBITDA growth
% growth
% by value
<0%
20.4%
0-10%
35.5%
10-20%
14.5%
20-30%
12.1%
>30%
17.5%


30 largest investments* - enterprise value as a multiple of EBITDA
Multiple
% by value
<7.0x
11.3%
7.0-8.0x
19.9%
8.0-9.0x
16.1%
9.0-10.0x
14.2%
10.0-11.0x
10.1%
11.0-12.0x
7.3%
>12.0x
16.6%
30 largest investments* - net debt as a multiple of EBITDA
Multiple
% by value
<2.0x
11.7%
2.0-3.0x
29.3%
3.0-4.0x
19.3%
4.0-5.0x
16.5%
5.0-6.0x
13.1%
6.0-7.0x
5.7%
*Excludes Intermediate Capital Group and Guardian Financial Services where these metrics are not meaningful.
Portfolio - Investment type


% of value of total portfolio
Large buy-outs

48.3%
Small and mid-market buy-outs

40.8%
Mezzanine

9.9%
Quoted

1.0%
Total

100.0%
Portfolio - Geographic distribution*


% of value of total portfolio
UK

46.2%
France

11.7%
North America

11.6%
Germany

10.0%
Benelux

6.0%
Spain

5.5%
Greece, Ireland, Italy, Portugal

3.5%
Scandinavia

3.1%
Other Europe

1.6%
Rest of world

0.8%
Total

100.0%
NB: Total Continental Europe

41.4%
* Location of headquarters of underlying companies in the portfolio. Does not necessarily reflect countries to which companies have economic exposure.
Portfolio - Year of investment 

Valuation as multiple of cost
% of value of total portfolio
2014 

1.0x
11.2%
2013

1.1x
14.3%
2012

1.4x
13.4%
2011

1.5x
12.2%
2010

1.5x
9.8%
2009

2.0x
1.5%
2008

1.1x
8.8%
2007

1.6x
12.0%
2006

1.4x
11.5%
2005 and before

1.8x
5.3%
Total

1.4x
100.0%
Portfolio - Sector analysis


% of value of total portfolio
Healthcare and education

19.1%
Industrials 

18.6%
Business services

15.8%
Consumer goods and services

12.4%
Leisure

9.9%
Financial services

8.5%
Automotive supplies

7.2%
Technology and telecommunications

3.3%
Media

3.1%
Chemicals

2.1%
Total

100.0%
Quoted equity holdings
All quoted holdings, other than Intermediate Capital Group, are held indirectly through third party funds and may have restrictions on their sale.
Underlying investment
Ticker
m
% of investment portfolio
Intermediate Capital Group 
ICP
 4.1 
1.0%
Homag Group
HG1
 3.4 
0.8%
Abertis
ABE
 3.5 
0.9%
Acromas *
SAGA / AA
 3.2 
0.8%
Evonik Industries
EVK
 3.2 
0.8%
Spire Healthcare
SPI
 3.2 
0.8%
Elior
ELIOR
 2.6 
0.6%
Tumi
TUMI
 2.1 
0.5%
Aramark Corporation
ARMK
 2.0 
0.5%
Partnership
PA
 1.6 
0.4%
West Corporation
WSTC
 1.5 
0.4%
Cerved
CERV
 1.2 
0.3%
Merlin
MERL
 0.9 
0.2%
Hugo Boss
BOSS
 0.9 
0.2%
Umpqua
UMPQ
 0.8 
0.2%
Atos
ATO
 0.8 
0.2%
ComHem
COMH
 0.7 
0.2%
Card Factory
CARD
 0.7 
0.2%
The Nielsen company
NLSN
 0.7 
0.2%
MoneyGram International
MGI
 0.7 
0.2%
GrubHub
GRUB
 0.5 
0.1%
First BanCorp
FBP
 0.5 
0.1%
Volution Group
FAN
 0.4 
0.1%
Just Retirement
JRG
 0.3 
0.1%
Freescale
FSL
 0.2 
0.1%
Braas Monier
BMSA
 0.2 
0.1%
OdigeO
EDR
 0.1 
0.0%
Total

 40.0 
10.0%
* Acromas represents AA and Saga.
Portfolio - Graphite and third party investments
 million

Value of third party investments
Value of Graphite investments
Total value
Fund investments

273.1
63.4
336.5
Direct investments

45.5
20.2
65.7
Total portfolio

318.6
83.6
402.2
Graphite investments



20.8%
Third party fund investments - primary



55.5%
Third party fund investments - secondary



12.4%
Third party co-investments



11.3%
Investment activity
New investments

Drawdowns
Co-investments and secondary fund purchases 
Total new investments
Financial period ending
 million
 million
 million
31 December 2005
41.6
3.9
 45.5 
31 December 2006
74.6
5.7
 80.3 
31 December 2007
95.2
7.9
 103.1 
31 December 2008
65.8
12.1
 77.9 
31 December 2009
21.5
2.5
 24.0 
31 January 2011
65.6
19.2
 84.8 
31 January 2012
51.3
29.9
 81.2 
31 January 2013
48.8
5.2
 54.0 
31 January 2014
54.2
36.4
90.6
Six months to 31 July 2014
36.6
16.7
53.3 
1 February 2014 to 25 September 2014
39.5
43.8
83.3
Largest new underlying investments
Investment
Description
Country
Cost
 million
ICR Group
Provider of repair and maintenance services to the energy industry
UK
10.9
Education Personnel*
Provider of temporary staff for the education sector
UK
10.2
The Laine Pub Company**
Operator of pubs and bars
UK
5.5
Autodata
Provider of technical information to the automotive aftermarket
UK
1.4 
Minimax
Supplier of fire protection systems and services
Germany
1.2
CeramTec
Manufacturer of high performance ceramics
Germany
1.2
iPrisim
E-wholesaler of insurance to brokers
UK
1.1
Parex
Provider of dry mix solutions for the construction industry
France
1.0 
JET Group
Provider of rooflight and ventilation and fire safety solutions for industrial, commercial and residential markets
UK
1.0
Advantage 
Provider of sales and marketing services
North America
0.9
Total of 10 largest new underlying investments

34.4
* Sold by Graphite Capital to ICG in the period. The Company re-invested alongside ICG.
** Formerly InnBrighton, which was realised in the period. The Company re-invested in the rebranded business, The Laine Pub Company.
Realisations - 10 year record*
Financial period ending
 million
% of opening portfolio
31 December 2005
93.8 
61.9%
31 December 2006
92.9 
53.3%
31 December 2007
112.4 
54.5%
31 December 2008
25.8 
12.9%
31 December 2009
14.0 
7.3%
31 January 2011
19.8 
8.5%
31 January 2012
92.9 
26.0%
31 January 2013
74.2
19.7%
31 January 2014
118.3
28.5%
6 months to 31 July 2014
82.4
19.0%
1 February 2014 to 25 September 2014
90.9
21.0%
* Excluding secondary sales of fund interests.
Largest underlying realisations
Investment
Manager
Realisation type
Proceeds
 million
CEVA
Euromezzanine
Secondary
15.3
Education Personnel*
Graphite Capital
Secondary
14.9
London Square
Graphite Capital
Secondary
9.8
National Fostering Agency
Graphite Capital
Refinancing
5.0 
Avio
Cinven
Trade
4.6
InnBrighton**
Graphite Capital
Secondary
3.5
Acromas***
Charterhouse 
Public offering
2.1
HellermannTyton
Doughty Hanson
Public offering
1.9
Applus
ICG
Public offering 
1.8
Evonik
CVC
Public offering
1.6
Total of 10 realisations

60.5 
* Sold by Graphite Capital to ICG in the period. The Company re-invested alongside ICG.
**The Company re-invested in the rebranded business, The Laine Pub Company.
*** Acromas represents AA and Saga, both of which listed in the period.
Commitments analysis
Commitments at 31 July 2014
Original commitment1
 million
Outstanding commitment
 million
Average drawdown percentage
% of commitments
Funds in investment period
302.6
199.6
34.0%
82.9%
Funds post investment period
528.5
41.1
92.2%
17.1%
Total
831.1
240.7
71.0%
100.0%
1 Original commitments are translated at 31 July 2014 exchange rates
Commitments at 31 July 2014 - remaining investment period
% of commitments
4-5 years
28.0%
3-4 years
40.0%
2-3 years
7.5%
1-2 years
2.9%
<1 year
4.5%
Investment period complete
17.1%
Total
100.0%
Movement in outstanding commitments
Six months to 
31 July 2014
 million
Opening outstanding commitments
277.3
Drawdowns
(36.9)
Secondaries and co-investments
5.5
Secondary disposals
(2.2)
Currency
(5.1)
Other
2.1
Closing outstanding commitments
240.7
CURRENCY EXPOSURE
31 July 
2014
 million
31 July 
2014
%
31 January 2014
 million
31 January 
2014
%
Portfolio*




- sterling
197.6
49.1%
203.2
46.9%
- euro
136.8
34.0%
144.7
33.4%
- other
67.8
16.9%
85.4
19.7%
Total
402.2
100.0%
433.3
100.0%
* Currency exposure is calculated using the location of the underlying portfolio companies' headquarters.

31 July 
2014
 million
31 July 
2014
%
31 January 2014
 million
31 January 
2014
%
Outstanding commitments




- sterling
102.3
42.5%
117.5
42.4%
- euro
131.4
54.6%
151.6
54.7%
- other
7.0
2.9%
8.2
2.9%
Total
240.7
100.0%
277.3
100.0%
UNAUDITED RESULTS FOR THE SIX MONTHS TO 31 JULY 2014
Consolidated Income Statement (unaudited)


Half 
year to 31 July 2014


Half year to 31 July 2013


Year to 31 January 2014


Revenue return
Capital return
Total
Revenue return
Capital return
Total
Revenue return
Capital return
Total
'000
'000
'000
'000
'000
'000
'000
'000
'000
Investment returns









Gains and losses on investments held at fair value
10,190
8,869
19,059
3,038
42,517
45,555
18,809
27,475
46,284
Income from cash and cash equivalents 
82
-
82
92
-
92
172
-
172
Return from current asset investments 
-
-
-
5
(220)
(215)
5
(342)
(337)
Other income
241
-
241
-
-
-
58
-
58
Foreign exchange gains and losses
-
(389)
(389)
-
145
145
-
(371)
(371)

10,513
8,480
18,993
3,135
42,442
45,577
19,044
26,762
45,806










Expenses









Investment management charges
(737)
(2,213)
(2,950)
(710)
(2,132)
(2,842)
(1,490)
(4,470)
(5,960)
Other expenses
(770)
(883)
(1,653)
(898)
(905)
(1,803)
(1,723)
(2,188)
(3,911)

(1,507)
(3,096)
(4,603)
(1,608)
(3,037)
(4,645)
(3,213)
(6,658)
(9,871)










Profit before tax
9,006
5,384
14,390
1,527
39,405
40,932
15,831
20,104
35,935
Taxation
(989)
989
-
(378)
378
-
(1,965)
1,965
-
Profit for the period
8,017
6,373
14,390
1,149
39,783
40,932
13,866
22,069
35,935
Attributable to:
Equity shareholders
8,017
6,227
14,244
1,149
39,594
40,743
13,866
23,127
36,993
Non-controlling interests
-
146
146
-
189
189
-
(1,058)
(1,058)
Basic and diluted earnings per share


19.6p


55.9p


50.7p
The columns headed 'Total' represent the income statement for the relevant financial periods and the columns headed 'Revenue return' and 'Capital return' are supplementary information. There is no Other Comprehensive Income.
Consolidated Balance Sheet (unaudited)

31 July
31 July
31 January
2014
2013
2014

'000
'000
'000
Non-current assets



Investments held at fair value



- Unquoted investments
398,158
446,246
429,186
- Quoted investments
4,055
4,895
4,163

402,213
451,141
433,349
Current assets



Cash and cash equivalents
101,123
35,481
68,239
Current asset investments held at fair value
-
19,774
-
Receivables
1,588
1,899
1,351

102,711
57,154
69,590
Current liabilities



Payables
385
505
262
Net current assets
102,326
56,649
69,328
Total assets less current liabilities
504,539
507,790
502,677




Capital and reserves



Called up share capital
7,292
7,292
7,292
Capital redemption reserve
2,112
2,112
2,112
Share premium
12,936
12,936
12,936
Capital reserve
454,764
465,004
448,537
Revenue reserve
19,600
10,168
22,885
Equity attributable to equity holders
496,704
497,512
493,762
Non-controlling interests
7,835
10,278
8,915
Total equity
504,539
507,790
502,677




Net asset value per share (basic and diluted)
681.2p
682.3p
677.2p
Consolidated Cash Flow Statement (unaudited)

Half year to
Half year to
Year to

31 July
31 July
31 January

2014
2013
2014

'000
'000
'000




Operating activities



Sale of portfolio investments
93,269
36,608
99,492
Purchase of portfolio investments
(53,315)
(30,066)
(90,201)
Net sale of current asset investments held at fair value
-
6,410
26,061
Interest income received from portfolio investments
6,438
1,464
8,504
Dividend income received from portfolio investments
3,412
1,677
10,357
Other income received
322
92
230
Investment management charges paid
(3,076)
(2,829)
(5,947)
Taxation (paid)/received
(22)
-
1
Other expenses paid
(480)
(697)
(1,644)
Net cash inflow from operating activities
46,548
12,659
46,853




Financing activities



Investments by non-controlling interests
118
94
309
Distributions to non-controlling interests
(1,344)
(1,053)
(1,385)
Bank facility fee
(747)
(1,494)
(2,301)
Equity dividends paid
(11,302)
(3,646)
(3,646)
Net cash outflow from financing activities
(13,275)
(6,099)
(7,023)




Net increase in cash and cash equivalents
33,273
6,560
39,830




Cash and cash equivalents at beginning of period
68,239
28,778
28,778
Net increase in cash and cash equivalents
33,273
6,560
39,830
Effect of changes in foreign exchange rates
(389)
143
(369)
Cash and cash equivalents at end of period
101,123
35,481
68,239
Consolidated Statement of Changes in Equity (unaudited)

Share
capital
Capital redemption reserve
Share
premium
Capital reserve
Revenue reserve
Total shareholders' equity
Non-controlling interests
Total equity

'000
'000
'000
'000
'000
'000
'000
'000
Six months to
31 July 2014








Opening balance at
1 February 2014
7,292
2,112
12,936
448,537
22,885
493,762
8,915
502,677
Profit attributable to equity shareholders
-
-
-
6,227
8,017
14,244
-
14,244
Profit attributable to non-controlling interests
-
-
-
-
-
-
146
146
Profit for the period and total comprehensive income
-
-
-
6,227
8,017
14,244
146
14,390
Dividends to equity shareholders
-
-
-
-
(11,302)
(11,302)
-
(11,302)
Contributions by non-controlling interests
-
-
-
-
-
-
118
118
Distributions to non-controlling interests
-
-
-
-
-
-
(1,344)
(1,344)









Closing balance
at 31 July 2014
7,292
2,112
12,936
454,764
19,600
496,704
7,835
504,539

Share
capital
Capital redemption reserve
Share
premium
Capital reserve
Revenue reserve
Total shareholders' equity
Non-controlling interests
Total equity

'000
'000
'000
'000
'000
'000
'000
'000
Six months to
31 July 2013








Opening balance at
1 February 2013
7,292
2,112
12,936
425,410
12,665
460,415
11,048
471,463
Profit attributable to equity shareholders
-
-
-
39,594
1,149
40,743
-
40,743
Profit attributable to non-controlling interests
-
-
-
-
-
-
189
189
Profit for the period and total comprehensive income
-
-
-
39,594
1,149
40,743
189
40,932
Dividends to equity shareholders
-
-
-
-
(3,646)
(3,646)
-
(3,646)
Contributions by non-controlling interests
-
-
-
-
-
-
94
94
Distributions to non-controlling interests
-
-
-
-
-
-
(1,053)
(1,053)









Closing balance
at 31 July 2013
7,292
2,112
12,936
465,004
10,168
497,512
10,278
507,790

Share
capital
Capital redemption reserve
Share
premium
Capital reserve
Revenue reserve
Total shareholders' equity
Non-controlling interests
Total equity

'000
'000
'000
'000
'000
'000
'000
'000
Year to
31 January 2014








Opening balance at
1 February 2013
7,292
2,112
12,936
425,410
12,665
460,415
11,048
471,463
Profit attributable to equity shareholders
-
-
-
23,127
13,866
36,993
-
36,993
Loss attributable to non-controlling interests
-
-
-
-
-
-
(1,058)
(1,058)
Profit for the year and total comprehensive income
-
-
-
23,127
13,866
36,993
(1,058)
35,935
Dividends to equity shareholders
-
-
-
-
(3,646)
(3,646)
-
(3,646)
Contributions by non-controlling interests
-
-
-
-
-
-
310
310
Distributions to non-controlling interests
-
-
-
-
-
-
(1,385)
(1,385)









Closing balance
at 31 January 2014
7,292
2,112
12,936
448,537
22,885
493,762
8,915
502,677
NOTES TO THE INTERIM REPORT (unaudited)

1 GENERAL INFORMATION
Graphite Enterprise Trust PLC (the "Parent Company") and its subsidiaries (together "Graphite Enterprise" or the "Company") are registered in England and Wales and domiciled in England. The registered office is Berkeley Square House, Berkeley Square, London W1J 6BQ. The Company's objective is to provide shareholders with long term capital growth through investment in unquoted companies, mostly through private equity funds but also directly. This report was approved for issue by the Board of Directors on 25 September 2014.
2 UNAUDITED INTERIM REPORT
This financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. Statutory accounts for the year to 31 January 2014 were approved by the Board of Directors on 16 April 2014 and delivered to the Registrar of Companies. The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statements under section 498(2) or (3) of the Companies Act 2006.
This financial report has not been audited.
3 BASIS OF PREPARATION
The financial report for the six months ended 31 July 2014 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. This financial report should be read in conjunction with the annual financial statements for the year to 31 January 2014, which have been prepared in accordance with IFRSs as adopted by the European Union.
The accounting policies applied are consistent with those of the annual financial statements for the year to 31 January 2014, as described in those annual financial statements. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.
4 RECEIVABLES
The Company has access to committed bank facilities, which are undrawn. The set up costs in relation to these were capitalised and are recognised over the lives of the facilities on a straight line basis. At 31 July 2014, 812,000 of bank facility costs are included within receivables. Of this, 489,000 is expected to be amortised in less than one year.
5 DIVIDENDS




Half year to
31 July 2014
'000
Half year to
31 July 2013
'000 
Year to
31 January 2014
'000
Half year to 31 July 2014: 15.5p per



share (Half year to 31 July 2013 and



year to 31 January 2014: 5.0p per share)
11,302
3,646
3,646
 
6 EARNINGS PER SHARE

Half year to
31 July 2014
Half year to
31 July 2013 
Year to
31 January 2014
Revenue return per ordinary share
11.0p 
1.6p 
19.0p 
Capital return per ordinary share
8.6p 
54.3p 
31.7p 
Earnings per ordinary share (basic and diluted)
19.6p 
55.9p 
50.7p 
Weighted average number of shares
 72,913,000 
 72,913,000 
 72,913,000 
The earnings per share figures are based on the weighted average numbers of shares set out above. 
7 FAIR VALUES ESTIMATION
IFRS 7 requires disclosure of fair value measurements of financial instruments categorised according to the following fair value measurement hierarchy:
 Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
 Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
 Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
All private equity and quoted investments are valued at fair value in accordance with IAS 39. The Company's unquoted investments are all classified as Level 3 investments. 
Fair value for unquoted investments is established by using various valuation techniques. Funds are valued at the underlying investment manager's valuation where this is consistent with the requirement to use fair value. Where this is not the case adjustments are made or alternative methods are used as appropriate. The most common reason for adjustments is to take account of events occurring after the date of the manager's valuation, such as realisations. 
The fair value of direct unquoted investments is calculated in accordance with the International Private Equity and Venture Capital Valuation ("IPEV") Guidelines issued in December 2012. The primary valuation methodology used is an earnings multiple methodology, with other methodologies used where they are more appropriate. 
The fair value of the Company's unlisted investments is sensitive to changes in the assumed earnings multiples. An increase in the earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the earnings multiple would lead to a decrease in the fair value.
The following table presents the changes in level 3 instruments for the six months to 31 July 2014.



Unquoted investments 
(indirect) at fair value through 
profit or loss

Unquoted investments
(direct) at fair value through profit or loss

Total
Group



'000

'000

'000
Opening balance
378,754

50,432

429,186
Additions
38,372

14,943

53,315
Disposals
(97,088)

(6,274)

(103,362)
Gains and losses recognised in profit or loss
16,393

2,626

19,019
Closing balance
336,431

61,727

398,158
Total gains for the period included in income statement for assets held at the end of the reporting period
16,393

2,626

19,019
The following tables present the assets that are measured at fair value. The Company did not have any financial liabilities measured at fair value at these dates.
31 July 2014
Level 1

Level 2

Level 3




'000

'000

'000
Investments held at fair value





Unquoted investments - indirect
-

-

336,431
Unquoted investments - direct
-

-

61,727
Quoted investments - direct
4,055

-

-
Total investments held at fair value
4,055

-

398,158
31 January 2014
Level 1

Level 2

Level 3




'000

'000

'000
Investments held at fair value





Unquoted investments - indirect
-

-

378,754
Unquoted investments - direct
-

-

50,432
Quoted investments - direct
4,163

-

-
Total investments held at fair value
4,163

-

429,186
8 INVESTMENT MANAGEMENT CHARGES
The investment management charges set out in the table below were payable to the Manager, Graphite Capital Management LLP, in the period. The Manager is a related party.





Half year to
31 July 2014

Half year to
31 July 2013

Year to
31 January 2014






'000

'000

'000
Investment management fee


2,939

2,817

5,912
Irrecoverable VAT


11

25

48






2,950

2,842

5,960
The allocation of the total investment management charges was unchanged in 2014 with 75% of the total allocated to capital and 25% allocated to income.
The management fee charged by the Manager is 1.5% of the value of invested assets and 0.5% of outstanding commitments, in both cases excluding funds managed by Graphite Capital. No fee is charged on cash or liquid asset balances. The amounts payable during the period are set out above.
At 31 July 2014 management fees of 50,000 were prepaid (31 July 2013: accrual of 77,000).
The Company has borne management charges in respect of its investments in funds managed by Graphite Capital as set out below:



Half year to 31 July 2014

Half year to 31 July 2013

Year to
31 January 2014




'000

'000

'000
Graphite Capital Partners VI
70

224

311
Graphite Capital Partners VII
225

226

581
Graphite Capital Partners VIII



696

-

422




991

450

1,314
REGULATORY DISCLOSURES
Statement of Directors' Responsibilities
The directors confirm that this half-yearly financial report has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:
- an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

- material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.
Principal Risks and Uncertainties
The principal risks and uncertainties facing the Company for the second half of the financial year are substantially the same as those disclosed in the Report and Accounts for the year ended 31 January 2014. 
Going Concern
The factors likely to affect the Company's ability to continue as a going concern were set out in the Report and Accounts for the year ended 31 January 2014. As at 31 July, there have been no significant changes to these factors. Having reviewed the Company's forecasts and other relevant evidence, the Directors have a reasonable expectation that the Parent Company and the Company have adequate resources to continue in operational existence for the foreseeable future. Accordingly, they continue to adopt the going concern basis in preparing the half-yearly condensed financial statements.
On behalf of the Board
Mark Fane, Chairman
25 September 2014
Copies of the Interim Report will be available on the Company's website (see below) and posted in early October 2014 to shareholders who have elected to receive a paper copy. Copies may be obtained during normal business hours from the Company's registered office thereafter.
For further information please contact:
Tim Spence / Emma Osborne
Graphite Capital
Tel: 020 7825 5300
www.graphite-enterprise.com 

This information is provided by RNS
The company news service from the London Stock Exchange
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IR SEMEEIFLSESU