REG - Graphite Enterprise - Interim Management Statement <Origin Href="QuoteRef">GPE.L</Origin>

ICG Enterprise TrustAnnouncement

08/12/2015 07:10

RNS Number : 2782I
Graphite Enterprise Trust PLC
08 December 2015
8 December 2015
GRAPHITE ENTERPRISE TRUST PLC
INTERIM MANAGEMENT STATEMENT
PERIOD ENDED 31 OCTOBER 2015
Graphite Enterprise Trust PLC ("Graphite Enterprise" or "the Company") presents its Interim Management Statement for the period ended 31 October 2015. 
Performance overview1
In the nine months to 31 October, the net asset value per share increased by 2.9% to 694.9p. In the same period the FTSE All-Share Index fell by 0.9%.
The share price performed strongly in the nine months, increasing by 10.5%. An interim dividend of 5.0p per share was paid to shareholders on 20 October.
In the nine months, the value of the portfolio in local currencies increased by 7.6%. As the Company was 84% invested at the start of the year, this generated a 6.5% increase in the net asset value. The impact of currency movements on euro-denominated investments and cash balances reduced the net asset value by 2.3%, with expenses and other items reducing it by a further 1.3%. Overall, the net asset value increased by 2.9%.
The long term performance of the Company remains strong, with both the net asset value and the share price comfortably outperforming the Index over five and ten years.
In the most recent quarter, the three months to 31 October, the net asset value decreased slightly by 0.1%. As few of the managers of our fund portfolio revalue their investments at September, the great majority of the portfolio effectively remains at its reported June valuation. Further details about performance and activity in the quarter are presented below.
1. All performance figures are on a total return basis, including the effect of re-invested dividends.
Performance and activity in the quarter
Net asset value
A small decrease in the underlying valuation of the portfolio was more than offset by positive currency movements, with the result that the total valuation of the portfolio increased the net asset value by 0.3%. The impact of expenses and other items reduced the net asset value by 0.4%. Overall, the net asset value decreased slightly by 0.1%.
Proceeds
The portfolio generated 14.7 million of cash proceeds in the three months to 31 October. Eight full realisations were completed and these accounted for 68% of the proceeds received. 
The amounts received in the quarter brought total proceeds received from the portfolio in the year to date to 88.2 million, or 20% of the opening portfolio. The full realisations brought the number completed in the year to 27 and these accounted for 55.6 million or 63% of the total proceeds received. The average uplift to the previous carrying value was 24% and the average return over the life of the investments was 1.8times original cost. The remaining 32.6 million or 37% of total proceeds was generated by a combination of refinancings, IPOs, sell-downs of listed holdings by third party managers and other partial realisations.
Additions and new commitments
The slowdown in new investment activity, which we highlighted in the interim report, has continued, with 4.6 million invested in the quarter. This brings the total invested in the nine months to 37.5 million.
A total of 10 new underlying investments were made in the quarter. This brought the total for the year to date to 40.
In addition to the cash invested, we committed 3.9 million to a co-investment in Swiss Education Group, a provider of hospitality training in Switzerland, alongside Invision Private Equity, which completed shortly after the period end.
The Company made two new commitments to buy-out funds in the quarter. Both are existing manager relationships for Graphite Enterprise. The first was of 15 million to Charterhouse Capital Partners X and the second was of $20 million to TH Lee Equity Fund VII. The latter was our first commitment to a US focused buy-out manager since 2007. 
Cash and liquid assets
The portfolio generated a net 10.1 million of cash in the three months to 31 October. Non-investment cash flows and adverse currency movements reduced cash by 2.8 million. The interim dividend of 5.0p per share returned 3.6 million to shareholders, and the Company bought back 0.4 million of shares. Overall, cash and liquid assets increased by 3.3million to 104.4 million.
Movement in liquid assets
3 months to
9 months to
m
31 October 2015
31 October 2015
Additions 
(4.6)
(43.6)
Proceeds generated by the portfolio*
14.7
88.0
Net cash generated by the investment portfolio
10.1
44.4
Non-investment cash flows
(2.7)
(10.3)
Effect of changes in foreign exchange rates
(0.1)
(0.6)
Cash inflow before shareholder distributions
7.3
33.5
Dividends
(3.6)
(14.8)
Share buy-backs
(0.4)
(4.4)
Net cash movement
3.3
14.3
Opening cash and liquid assets
101.1
90.1
Closing cash and liquid assets
104.4
104.4
*Including income


Since the quarter end the cash balance has decreased to 95.8 million at 7 December, mainly due to net investment into the portfolio of 6.7 million and share buy-backs of 1.9 million.
Balance sheet and commitments
The summary balance sheet and commitment position at 31 October 2015 is set out below. The Company was 79% invested at that date.

31 October 2015
m
% of total assets
31 January 2015
m
% of total assets
Total portfolio
402.9
78.9%
431.9
83.6%
Cash and liquid assets
104.4
20.4%
90.1
17.4%
Other net current assets
3.6
0.7%
(5.4)
(1.0%)
Total assets
510.9
100.0%
516.6
100.0%
Equity shareholders' funds
501.3

506.9

Undrawn bank facility 1
94.1

96.4

Total liquidity 2
198.5

186.5

Outstanding commitments
272.8

234.0

Overcommitment 3
74.3

47.5

Overcommitment as % of shareholders' funds
14.8%

9.4%

1. 50.0 million and 58.1 million translated into sterling at period end
2. Cash and liquid assets plus undrawn borrowing facilities
3. Outstanding commitments less total liquidity
Outstanding commitments increased by 24.1 million to 272.8 million in the quarter, primarily due to new primary commitments of 24.0 million (as discussed above).
Events since the quarter end
Other than as discussed above, the Directors are not aware of any events or transactions which have taken place between 31 October 2015 and the date of publication of this statement which have had a material effect on the financial position of the company. 
Not audited or reviewed
This information has not been audited or reviewed by the Company's auditors.
For further information please contact:
Tim Spence
020 7825 5358
Emma Osborne
020 7825 5357
SUPPLEMENTARY INFORMATION
The 30 largest underlying INVESTMENTS
The table below presents the 30 companies in which Graphite Enterprise had the largest investments by value at 31 October 2015. 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
5.8%
2
City & County Healthcare Group





Provider of home care services
Graphite Capital
2013
UK
3.6%
3
ICR Group 





Provider of repair and maintenance services to the energy industry
Graphite Capital
2014
UK
3.2%
4
Education Personnel +






Provider of temporary staff for the education sector 
ICG 
2014
UK
2.8%
5
Spheros +






Provider of bus climate control systems
Deutsche Beteiligungs 
2011
Germany
2.2%
6
nGAGE (previously Human Capital Investment Group) 





Provider of recruitment services
Graphite Capital
2014
UK
2.2%
7
Skillsoft +






Provider of off-the-shelf e-learning content
Charterhouse
2014
USA
2.1%
8
Standard Brands +






Manufacturer of fire lighting products
Graphite Capital
2001
UK
1.8%
9
David Lloyd Leisure +






Operator of premium health and fitness clubs
TDR Capital
2013
UK
1.7%
10
U-POL





Manufacturer and distributor of automotive refinishing products
Graphite Capital
2010
UK
1.6%
11
R&R Ice Cream +






Manufacturer and distributor of ice cream products
PAI Partners
2013
UK
1.6%
12
CPA Global +






Provider of patent and legal services
Cinven
2012
UK
1.5%
13
TMF





Provider of management and accounting outsourcing services
Doughty Hanson
2008
Netherlands
1.5%
14
Frontier Medical +






Manufacturer of medical devices
Kester Capital
2013
UK
1.5%
15
Parques Reunidos 





Operator of attraction parks 
Arle Capital 
2007
Spain 
1.5%
16
Algeco Scotsman





Supplier and operator of modular buildings 
TDR Capital 
2007
USA 
1.5%
17
Guardian Financial Services 





Provider of insured life and pension products
Cinven
2011
UK
1.4%
18
The Laine Pub Company +






Operator of pubs and bars
Graphite Capital
2014
UK
1.3%
19
TMP





Provider of recruitment services
Graphite Capital
2006
UK
1.2%
20
PetSmart +






Retailer of pet products and services
BC Partners
2015
USA
1.2%
21
Co-investment +/ **






Provider of business services
Large buy-out manager
2014
Europe
1.2%
22
Stork 





Provider of technical engineering services
Arle Capital
2008
Netherlands
0.9%
23
Cognito +






Supplier of communications equipment, software and services
Graphite Capital
2002
UK
0.9%
24
Odgers +






Provider of recruitment services
Graphite Capital
2009
UK
0.9%
25
Suddenlink





Operator of cable networks
BC Partners
2012
USA
0.8%
26
Swissport





Provider of airport ground and cargo handling services
PAI Partners
2011
Switzerland
0.8%
27
VWR International +/ *






Distributor of laboratory supplies
Madison Dearborn
2007
USA
0.8%
28
Technogym





Manufacturer of premium fitness equipment and wellness products
Arle Capital
2006
Italy
0.8%
29
Gerflor





Manufacturer of vinyl flooring
ICG
2011
France
0.8%
30
Ceridian +






Provider of payment processing services
Thomas H Lee Partners
2007
USA
0.7%

Total of the 30 largest underlying investments


49.8%
+ All or part of this investment is held directly as a co-investment or other direct investment.
* Quoted investment.
** We are not permitted to disclose the details of this co-investment under the terms of a confidentiality agreement.
The 30 largest fund investments
The 30 largest funds by value at 31 October 2015 are set out below:

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





Mid-market buy-outs
61.2
2013
UK
35.0
2
Graphite Capital Partners VI **





Mid-market buy-outs
5.4
2003
UK
23.9
3
CVC European Equity Partners V **





Large buy-outs
1.3
2008
Europe/ USA
18.6
4
Candover 2005 Fund **





Large buy-outs
0.1
2005
Europe
14.7
5
BC European Capital IX **





Large buy-outs
5.1
2011
Europe
13.8
6
Thomas H Lee Parallel Fund VI





Large buy-outs
1.7
2007
USA
13.1
7
Graphite Capital Partners VII */**





Mid-market buy-outs
7.6
2007
UK
13.0
8
PAI Europe V **





Mid-market and large buy-outs
1.1
2007
Europe
12.1
9
Deutsche Beteiligungs Fund V





Mid-market buy-outs
0.3
2006
Germany
11.4
10
Fourth Cinven Fund **





Large buy-outs
3.5
2006
Europe
10.9
11
TDR Capital II





Mid-market and large buy-outs
0.7
2006
Europe
10.4
12
Fifth Cinven Fund





Large buy-outs
5.7
2012
Europe
10.3
13
Bowmark Capital Partners IV





Mid-market buy-outs
0.5
2007
UK
10.3
14
Activa Capital Fund II





Mid-market buy-outs
0.8
2007
France
10.0
15
Doughty Hanson & Co V **





Mid-market and large buy-outs
5.4
2006
Europe
8.0
16
Landmark Acquisition Fund VIII **





Mezzanine
10.3
2014
Europe
7.3
17
ICG Europe V





Mezzanine
0.5
2012
Europe
7.1
18
Permira V





Large buy-outs
2.7
2013
Europe
4.6
19
Deutsche Beteiligungs Fund VI





Mid-market buy-outs
2.8
2012
Germany
4.2
20
IK VII





Mid-market buy-outs
2.8
2013
Europe
4.1
21
Charterhouse Capital Partners IX **





Large buy-outs
0.8
2008
Europe
4.0
22
Piper Private Equity Fund V





Small buy-outs
2.0
2010
UK
3.7
23
Hollyport Secondary Opportunities IV





Tail-end secondary portfolios
0.8
2013
Global
3.7
24
Segulah IV





Mid-market buy-outs
1.2
2008
Nordic
3.6
25
Nordic Capital Partners VIII





Mid-market and large buy-outs
3.7
2013
Nordic
3.6
26
TowerBrook III **





Mid-market and large buy-outs
1.3
2007
Europe/ USA
3.2
27
Doughty Hanson & Co IV





Mid-market and large buy-outs
0.3
2005
Europe
3.0
28
TDR Capital III





Mid-market and large buy-outs
4.5
2013
Europe
2.9
29
Piper Private Equity Fund IV





Small buy-outs
1.1
2006
UK
2.7
30
Permira IV **





Large buy-outs
0.2
2006
Europe
2.6

Total of the largest 30 fund investments
135.4


275.8

Percentage of total investment portfolio



68.9%
* Includes the associated Top Up fund(s)
** All or part of interest acquired through a secondary fund purchase
Portfolio analySIS
The following five tables analyse the companies in which Graphite Enterprise had investments at 31 October 2015.
Portfolio - Investment type


% of value of underlying investments
Large buy-outs

46.6%
Mid-market buy-outs

39.5%
Mezzanine

8.3%
Small buy-outs

4.3%
Quoted

1.3%
Total

100.0%
Portfolio - Geographic distribution*


% of value of underlying investments
UK

47.8%
North America

13.9%
Germany

10.6%
France

9.3%
Scandinavia

5.0%
Benelux

4.5%
Spain

3.3%
Italy

2.4%
Other Europe

2.9%
Rest of world

0.3%
Total

100.0%
NB: Total Continental Europe

38.0%
* 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 underlying investments
2015

1.0x
6.9%
2014

1.2x
22.0%
2013

1.4x
16.7%
2012

1.6x
9.3%
2011

1.6x
9.5%
2010

1.6x
7.7%
2009

2.7x
1.8%
2008

1.1x
7.0%
2007

1.7x
6.8%
2006

1.6x
9.5%
2005 and before

1.8x
2.8%
Total

1.4x
100.0%
Portfolio - Sector analysis


% of value of
underlying 
investments
Business services

20.3%
Industrials

19.2%
Healthcare and education

15.0%
Consumer goods and services

13.1%
Leisure

9.5%
Automotive supplies

8.0%
Financials

7.9%
Technology and telecommunications

3.7%
Media

2.1%
Chemicals

1.2%
Total

100.0%
Quoted equity holdings at 31 October 2015
All quoted holdings, other than Intermediate Capital Group, are held indirectly through third party funds and may have restrictions on their sale. The timing of any disposal of these interests is determined by the managers of those funds.
Underlying investment
Ticker
 million
% of investment portfolio
VWR International
VWR
3.2
0.8%
Avolon Aerospace
AVOL
2.8
0.7%
Intermediate Capital
ICP
2.4
0.6%
Saga
SAGA
2.4
0.6%
Party City
PRTY
1.9
0.5%
Partnership
PA
1.7
0.4%
Black Knight
BKFS
1.7
0.4%
Abertis
ABE
1.6
0.4%
ComHem
COMH
1.6
0.4%
Elior
ELIOR
1.5
0.4%
Tumi
TUMI
0.8
0.2%
Evonik
EVK
0.8
0.2%
Fogo do Chao
FOGO
0.8
0.2%
West Corporation
WSTC
0.8
0.2%
FleetCor (Comdata)
FLT
0.7
0.2%
Univar N.V
UNVR
0.7
0.2%
Others

4.0
1.0%
Total

29.4
7.4%
The following table analyses the closing portfolio by value.
Graphite and third party investments at 31 October 2015
Portfolio
Third party
 million
Graphite Capital
 million
Total
 million
% of investment portfolio
Primary investments in funds
180.4
59.6
240.0
59.6%
Secondary investments in funds
57.3
12.3
69.6
17.3%
Direct and co-investments
67.8
25.5
93.3
23.1%
Total portfolio
305.5
97.4
402.9
100.0%
Discretionary investments*
125.1
97.4
222.5
55.2%
*Includes Graphite Capital funds, all secondary fund interests and all direct investments
Investment activity
The following two tables analyse the investment activity of Graphite Enterprise in the three months to 31 October 2015.
Largest new underlying investments
Investment
Description
Country
Cost
 million
Pharmathen
Manufacturer of pharmaceutical products
Greece
0.7
PKP Energetyka
Provider of electricity and maintenance to the rail sector
Poland
0.5
Imtech T&I
Provider of electronic systems for traffic and infrastructure
Netherlands
0.5
Tractel
Provider of working-at-height equipment
France
0.4
Linxens
Designer and manufacturer of smart card connectors
France
0.3
Total of 5 largest new underlying investments

2.4 
Largest underlying realisations 
Investment
Manager
Realisation type
Proceeds
 million
Lowell Group
TDR Capital
Secondary
2.7
Balta
Doughty Hanson
Secondary
1.6
Skrill
CVC Partners
Trade
1.3
Briefing Media
Kester Capital
Secondary
1.2
Formel D
Deutsche Beteiligungs
Refinancing
1.2
Total of 5 largest underlying realisations

8.0
Commitments analysis
The following four tables analyse Graphite Enterprise's commitments at 31 October 2015.
Commitments 
Original commitment1
 million
Outstanding commitment
 million
Average drawdown percentage
% of commitments
Funds not yet in investment period
18.2
18.1
0.4%
6.7%
Funds in investment period
310.0
204.5
34.0%
74.9%
Funds post investment period
522.2
50.2
90.4%
18.4%
Total
850.4
272.8
67.9%
100.0%
1 Original commitments are translated at 31 October 2015 exchange rates
Commitments - remaining investment period
% of commitments
Investment period not commenced
6.7%
4-5 years
25.5%
3-4 years
11.2%
2-3 years
30.8%
1-2 years
5.0%
<1 year
2.4%
Investment period complete
18.4%
Total
100.0%
Movement in outstanding commitments in the three months to 31 October 2015
 million
Opening
248.6
Drawdowns
(4.7)
New primary commitments
24.0
New commitments relating to co-investments*
3.9
Currency
1.1
Other
(0.1)
Closing
272.8
*This commitment was in respect of the co-investment in Swiss Education Group, which completed in November.
New commitments in the three months to 31 October 2015
Fund
Strategy
Geography
 million
Primary commitments


Charterhouse Capital Partners X
Large buy-outs
Europe
11.0
Thomas H. Lee Equity Fund VII
Large buy-outs
USA
13.0
Total primary commitments

24.0



Commitments relating to co-investments


Swiss Education Group
Provider of hospitality training
Europe
3.9




Total new commitments


27.9
CURRENCY EXPOSURE

31 October
2015
 million
31 October
2015
% 
Portfolio*


- Sterling
210.5
52.3
- Euro
105.3
26.1
- US dollar
56.7
14.1
- Other European
28.7
7.1
- Other
1.7
0.4
Total
402.9
100.0
*Currency exposure is calculated by reference to the location of the underlying portfolio companies' headquarters.

31 October
2015
 million
31 October
2015
%
Outstanding commitments


- Sterling
112.3
41.2
- Euro
136.8
50.1
- US dollar
18.6
6.8
- Other European
5.1
1.9
Total
272.8
100.0
NOTES
Graphite Enterprise Trust PLC
Graphite Enterprise Trust PLC ("Graphite Enterprise" or "the Company") aims to provide shareholders with long term capital growth through investment in unquoted companies. To achieve this, the Company invests in private equity funds and also directly in private companies.
The Company has been listed on the London Stock Exchange since 1981 and has invested exclusively in private equity and has had the same manager throughout its life.
Graphite Enterprise provides access to a diverse portfolio of buy-outs of mature, profitable companies in established private equity markets, principally in Europe. The Company invests in UK-based mid-market companies through funds managed directly by Graphite Capital. Typically these will make up 20-25% of the portfolio. Investments in other UK companies and in overseas markets are made through funds managed by third parties. The Company does not invest in start ups or early stage businesses. Direct investments in companies may be made alongside both Graphite Capital and third party funds.
Shareholders of Graphite Enterprise gain exposure to a diverse portfolio of buy-outs of mature, profitable companies in established private equity markets, with nearly 400 underlying companies. Graphite Capital directly manages many of the largest companies in the portfolio.
Since inception, the Company has generated a return of over 29 times the amount subscribed. 
www.graphite-enterprise.com
The Manager - Graphite Capital
Graphite Capital is one of the UK's leading mid-market private equity firms with over 1.3billion of funds under management. It has raised and managed funds for 34 years. The senior management team has worked together for 18 years.
Graphite Capital manages both direct investments in portfolio companies and private equity fund investments.
Direct investments are predominantly made through institutional funds with a global investor base. The focus of direct investments is on UK mid-market buy-outs of companies valued at between 25 million and 200 million across a range of industry sectors.
Fund investments are made exclusively by Graphite Enterprise. Fund investments focus principally on European buy-out funds. The investment strategy is to back private equity managers with strong track records operating in mature markets, with the aim of building long term relationships.
As Graphite Capital has a long experience both of managing its own funds and of investing in third party funds, it has an unusually broad perspective when assessing fund and co-investment opportunities. Graphite Enterprise benefits from both the expertise of a dedicated fund investment team as well as the insights of Graphite Capital's direct investment team.
www.graphitecapital.com

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