REG - Graphite Enterprise - Interim results <Origin Href="QuoteRef">GPE.L</Origin> - Part 1

ICG Enterprise TrustAnnouncement

28/09/2015 07:01

RNS Number : 3119A
Graphite Enterprise Trust PLC
28 September 2015
28 September 2015
GRAPHITE ENTERPRISE TRUST PLC
UNAUDITED RESULTS FOR THE
SIX MONTHS ENDED 31 JULY 2015
Graphite Enterprise Trust PLC ('Graphite Enterprise' or 'the Company') presents its unaudited results for the six months ended 31 July 2015.
Summary of the Period
Graphite Enterprise continued to make good progress in the six months to July 2015, with the net asset value per share, after taking account of the dividend, rising by 3%. The portfolio performed well, rising by 8%, driven by the continued strong profit growth of the underlying companies. The increase in the net asset value would have been higher had the fall in the euro not reduced the value of our euro-denominated investments. 
Realisations remained very strong with the portfolio generating 73million of cash, with the result that cash balances closed 11 million higher at 101 million. We began a programme of share buy-backs to return cash to shareholders and will pay an interim dividend in October. 
The strong underlying performance of the portfolio, our investment discipline and our balance sheet strength position Graphite Enterprise well for future growth in an uncertain environment. 
+3.0%

+5.4%
Net asset value per share
The NAV per share increased to 700p, extending its period of growth to six years. Net assets were 506 million.

Share price
The share price increased to 590p in the period and has increased by 130% over 5 years, more than double the growth of the FTSE All-Share Index over that period.
+7.8%

15m 
Underlying value of the portfolio in local currencies
The portfolio grew strongly, driven by valuation increases and realisations.

Dividends
The total dividend paid in June was maintained at the record level of 15.5p per share, or 11.2 million. An interim dividend of 5.0p per share, or 3.6 million, will be paid in October.
73m

33m
Realisation proceeds
Proceeds remained at the very high level of the prior year with 17% of the opening portfolio being realised in the six months.

Investment in the portfolio
New investments were made selectively in competitive markets.
Chairman's statement
Summary
Graphite Enterprise continued to make progress in the six months to 31July 2015 with both the net asset value per share and the share price outperforming the FTSE All-Share Index1. 
The portfolio once more performed well, increasing in value by nearly 8% in local currencies. However the weakness of the euro again affected performance, reducing the sterling value of our euro-denominated investments. After taking account of this and of other factors, the net asset value per share, inclusive of the dividend, rose by 3.0% to 700p. This extended its period of continued growth to six years, over which time the net asset value has increased by almost 90%.
The share price, inclusive of the dividend, rose by 5.4% in the period, closing at 590p. This compares with a rise of 2.8% in the FTSE All-Share Index. As the increase in the share price was slightly more than that of the net asset value, the discount narrowed from 17.3% to 15.8%. 
Quoted markets have fallen sharply since 31 July, with the result that the FTSE All-Share has now decreased by 6.8% since 31 January2. The Company's share price has proved more resilient and has increased by 0.5% since January. Based on these latest figures both the share price and net asset value have outperformed the Index over one, three, five and ten years.
The portfolio continued its strong performance of recent years increasing at an annualised rate of 16.2% in local currencies. Indeed this rate of growth was slightly higher than the average of 13.1% achieved over the last four years. In sterling terms, the growth in the portfolio was 4.7% in the period under review. The effect of holding cash and of operating costs reduced the overall increase in the net asset value to 3.0%. 
At 31 July, the Company had total assets of 515 million. 80% of this, or 412 million, was invested in the portfolio. This was 20 million less than at 31 January, as cash inflows from continued high levels of realisations more than offset new investment and the growth in value of the opening portfolio. In response to this we have started a programme of share buy-backs. The first buy-backs, together with the payment of the dividend of 11 million in June, returned 15million of cash to shareholders in the period. In addition the Company will for the first time pay an interim dividend, of 5.0p per share or 4 million, in October.

31 July 
2015
31 January 2015
Total
return
Net asset value per share 
700.3p
695.2p
+3.0%
Share price
590.0p
575.0p
+5.4%
FTSE All-Share Index
3,653
3,622
+2.8%
Economic and market environment
The Company's investment programme continues to be focused on the more mature private equity markets in Western Europe. At the half year, the largest exposures were to the UK, which accounted for 48% of the portfolio and to continental Europe which accounted for 37%. Over three-quarters of our continental European exposure was to France, Germany, Benelux and Scandinavia. Most of the exposure outside Europe was to the US.
The UK's economic performance remains relatively strong, with the economy forecast to grow by 2.5% in 2015 and at a similar rate over the next two to three years. The UK is the largest and most developed of the European private equity markets and, although always highly competitive, it has continued to perform well, driven by a highly favourable environment for realisations.
The performance of the major continental European economies remains weaker than that of the UK, although most are expected to grow by 1-2% this year. The stimulus programme announced earlier this year by the European Central Bank does not yet appear to have had a significant effect on growth rates, but has contributed to the fall in the sterling value of our euro-denominated portfolio. The timing of any sustained recovery is still uncertain, with aggregate growth expected to remain subdued for some time. 
High quality private equity managers should be able to generate returns throughout the economic cycle. As commitments to funds are typically drawn down over three to five years, managers are able to adjust their rate of investment to the underlying conditions in the markets in which they operate. For this reason it is particularly important that the selection of fund investments is based more on the quality of the manager than on the macro-economic environment in which they operate. The performance of the investment portfolio in recent years, both in the UK and in continental Europe, has demonstrated the ability of the managers we have backed to identify attractive opportunities across all stages of the economic cycle. 
Performance
Overview 
The investment portfolio continued to perform well in the six months to July, increasing in value by 7.8% in local currencies. As discussed earlier, adverse currency movements limited the increase in the sterling value of the portfolio to 4.7%. As 37% of our opening portfolio was in continental Europe, the 5.9% fall in the value of the Euro against sterling had much the greatest impact during the period. The 3.8% fall in the US dollar also impacted the sterling value of the US portfolio.
As the investment portfolio accounted for just under 85% of net assets at the start of the period, the rise in the portfolio of 4.7% after currency movements increased the net asset value by 4.0%. After deducting running costs and adding the small positive effect of share buy-backs, the net asset value per share increased by 3.0%. Payment of the dividend of 15.5p per share accounted for 2.2% of this.
Portfolio 
Increases in the valuation of the unrealised portfolio accounted for two thirds of the growth in the portfolio. It is encouraging that this was driven principally by continued strong earnings growth, with a small increase in valuation multiples. 
As the largest 30 underlying companies accounted for 47% of the portfolio at 31 January, their performance will have a substantial impact on that of the Company. These investments performed strongly, with EBITDA3 growing on average by 8% in the 12months to June 2015, and were valued at an average of nine times EBITDA. By comparison, the aggregate EBITDA of the FTSE All-Share fell 8% in the same period and it was valued at an average of 11 times EBITDA. The Company's portfolio is therefore continuing to perform substantially better, and is valued more conservatively, than quoted companies.
Valuation uplifts achieved on realisations accounted for the remainder of the growth. The great majority of this was generated by full disposals of companies, which were achieved at an average uplift of 23% over their previous valuations. The remainder of the growth from realisations was generated by companies being taken public.
A more detailed analysis of the performance of the investment portfolio is given in the Manager's Review.
Long term performance4
We measure performance against the benchmark of the FTSE All-Share Index and aim to outperform over the medium to long term. Performance against the Index has been strong as set out below:
Years to 31 July 2015
3
5
10
Net asset value per share
+27.7%
+59.0%
+122.4%
Share price
+63.0%
+129.7%
+125.6%




Peer group average NAV growth4
+21.0%
+49.7%
+109.4%
Peer group average share price growth4
+42.3%
+91.3%
+100.5%




FTSE All-Share Index
+38.3%
+59.6%
+102.4%
As discussed earlier, based on the current2 share price and level of the Index the Company's net asset value and share price have both outperformed the FTSE All-Share over each of three, five and ten years.
The Company's performance against the listed private equity sector also continues to be strong. The net asset value and share price total return have both outperformed the average of the peer group5 over 3, 5 and 10 years.
Balance sheet, cash flows and commitments 
Cash balances increased by 11 million in the six months, closing at 101million. This was driven by a substantial net cash inflow from the portfolio which was partly offset by other items, the largest of which was distributions to shareholders. After adding other net current assets of 3million, the total of 104 million represented 20% of total assets. 
The portfolio generated net proceeds of 40 million in the period, which compares with net proceeds of 17 million for the whole of last year. Realisation proceeds of 73 million were received, which represented 17% of the opening value of the portfolio. This was in line with the extremely high level of last year, but materially above the five year average. New investment, which was also at a high level last year, fell back to 33 million in the six months. While this represented just over half of last year's rate, it was not materially out of line with the average of the past five years. This decline reflected a general slowdown in activity, with both Graphite Capital and our third party private equity managers slowing their pace of investment in response to high prices for private companies and for secondary interests in funds. The Manager's Review gives further details of investment activity in the period. 
In last year's report we indicated that we would consider buying back shares to return cash to shareholders. The first purchases were made in April and to date we have bought back 4 million of shares. As the buy-backs were completed at a discount to net asset value, they had a small positive impact on the net asset value per share. After adding the dividend of 11 million (15.5p per share) paid in June, cash distributed increased to 15 million.
The level of new commitments made to funds was higher than the total for the whole of last year, as more of our preferred managers were raising new funds. We committed 35million to four new funds and after deducting drawdowns of 19 million and other net movements, outstanding commitments rose by 15 million to 249 million. We estimate that 50-70million of these commitments will be drawn down over the next twelve months. 
Co-investments and secondary purchases of fund interests can be important tools in managing the balance sheet, as they generate additional investment above that resulting from drawdowns of commitments. As most of the cost of these investments is drawn down immediately, in contrast to fund commitments which are typically drawn down over three to five years, they can generate large short term outflows. In the first six months of the year, the level of such discretionary investments was at around half the rate of recent years. However, the supply of attractive opportunities is by its nature unpredictable and it is possible that the amount invested in the second half will be higher than that in the first.
Outlook
Since January 2013, the portfolio has generated cash proceeds of 335 million, equivalent to over 80% of its value at that date. Despite this very high level of realisations, a combination of new investments and growth in the value of the opening portfolio has been sufficient to ensure that the size of the portfolio has remained virtually unchanged over this period. However, the cash balance has risen to over 100 million, which is higher than we had anticipated. 
In response to this, we have made the first of the share buy-backs discussed in last year's statement. The level of purchases made to date has been relatively low, but we would expect to make more between now and the end of the year provided that shares are available at appropriate prices. 
Last year the Company paid a total dividend of 15.5p per share. As income in the first six months of the current year has remained high, the level of dividend for the full year is likely to be at least maintained. In order to give shareholders the benefit of an earlier distribution we have decided to pay for the first time an interim dividend, of 5.0p per share, in October. 
We have been pleased with the performance of the portfolio in the first six months of the year. Realisations have continued at very strong levels and the profits of underlying companies have continued to grow more rapidly than those of listed companies. It is also important to note that investments made after the financial crisis now represent over 70% of the total portfolio. As the performance of these companies has been stronger than that of the earlier vintages and the uplifts achieved on realisation have been higher, we would expect that they will continue to drive strong performance.
Mark Fane
25 September 2015
1. Throughout the report, all performance figures are stated on a total return basis (i.e. including the effect of re-invested dividends). 
2. To the close of business on 24 September 2015.
3. EBITDA is earnings before interest, tax, depreciation and amortisation.
4. On a total return basis, including the effect of reinvested dividends. As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 July 2015.
5. The peer group comprises: Aberdeen Private Equity, F&C Private Equity, HarbourVest Global Private Equity, JPMorgan Private Equity, Pantheon International Participations, Private Equity Holding, Standard Life European Private Equity (funds-of-funds); Better Capital 2009 and 2012, Candover Investments, Dunedin Enterprise, Electra Private Equity, HgCapital Trust, NB Private Equity Partners, Princess Private Equity, SVG Capital (direct funds). 
Manager's Review of the Portfolio
Portfolio performance overview
The portfolio made good progress in the first half of the year, rising in value by 7.8% in local currencies. After adjusting for the impact of foreign currency movements on the value of our overseas investments, the sterling value of the portfolio grew by 4.7%.
Movement in the portfolio
m
Opening portfolio
431.9


Additions
32.8
Realisation proceeds
(73.5)
Net cash inflow
(40.7)


Valuation movement*
33.8


Currency
(13.5)
Closing portfolio
411.5
* In this interim report 96% of the portfolio is valued using 30 June 2015 valuations.
At 31 July the portfolio was valued at 411.5 million. This was 20.4 million lower than at the start of the period primarily because continued high realisations exceeded new investment. Net realisations of 40.7million therefore more than offset the relatively strong valuation gains. 
Unrealised valuation gains accounted for 67% of the underlying valuation increase. These were primarily driven by earnings growth but valuation multiples also increased marginally. Gains from realisations and IPOs accounted for the remaining gains. 
Realisations
The portfolio generated proceeds of 73.5 million in the period, equivalent to 17% of the opening portfolio. This represents a very high rate of cash conversion which, on an annualised basis, was broadly in line with the 33% generated in the previous financial year but considerably higher than the average of 25% in the three years prior to that. 
Full realisations
Investments in 19 portfolio companies were fully realised in the period and these generated 44.1million of proceeds. 
Full realisations continued to be completed at significant uplifts to the previous holding values, although the 23% achieved in the six months was lower than the historical average. Last year we observed that the uplifts on investments made prior to the financial crisis had started to decline and this trend has continued. Pre-crisis investments realised a valuation uplift of 17% while investments made since the financial crisis generated uplifts of 27%. 
The pre-crisis investments were realised for an average return multiple of 1.2 times original cost, reflecting the relative underperformance of the remaining investments from these vintages, whereas post-crisis investments achieved a strong multiple of cost of 2.4. It is, however, worth noting that the pre-crisis investments overall have performed better than many investors expected with, for example, those made in 2007 generating returns of approximately 1.9 times cost. 
The largest realised gain in the first half was generated by Graphite Capital Partners VII's disposal of National Fostering Agency ("NFA"), a provider of foster carers to local authorities, from which the Company received proceeds of 11.9million. NFA was a 2012 investment which grew strongly both organically and by acquisition prior to its sale in April this year. The sale achieved a return of just over two times cost and the uplift added 0.5% to the net asset value in the period. Further details of the ten largest underlying realisations are set out in the Supplementary Information section.
Partial realisations
A further 29.4million was received from partial realisations of portfolio companies. The most significant element of this was the 13.5million of proceeds received from sales of listed holdings. Most of these were of companies taken public in previous periods. Only three companies achieved flotations in the first half, compared with 15 in the last financial year. At the end of the period the portfolio included holdings in 29 quoted companies representing 8.4% of total value. Details of the underlying quoted holdings, almost all of which were held through third party funds, are set out in the Supplementary Information section. The remaining partial realisations comprised a high number of small transactions.
New investments
New investment of 32.8 million in the six months was substantially lower than the exceptionally high level of 125.4million invested in the last full financial year but broadly in line with the average levels achieved in the three years prior to that. This largely reflects the challenges we, and the managers in the portfolio, are experiencing in identifying sufficient sensibly priced opportunities in the current market. 
The rate of fund drawdowns was significantly below that of the previous year with 19.2million being drawn down in the six months compared with 68.0million in the last financial year. We would have expected drawdowns of approximately 35 million in the six months if outstanding commitments to funds had been drawn down evenly to the end of their investment periods. The lower figure was partly because no new investments were completed by the Graphite buy-out team, although third-party drawdowns were also slower. As many funds, including Graphite Capital Partners VIII, completed a high level of new investments last year, the overall investment pace for most funds is in line with expectations. It remains to be seen whether the slowdown will be sustained in the second half.
Discretionary investment, which includes both secondary fund purchases and direct co-investments, was also significantly lower than last year with 13.6million invested in the six months compared with 57.4million in the year to January 2015. We highlighted in the annual report that pricing in the market for secondary fund interests had become more competitive and this continued in the first half. One secondary acquisition, of an interest in BC Partners IX, was completed for 7.1million. Co-investment opportunities tend to be unpredictable and are linked to underlying investment activity within the fund portfolio. As this was relatively subdued in the first half, fewer co-investment opportunities were available although two were completed for a total of 6.5million. 
A total of 30 new underlying companies were added to the portfolio in the year compared with 74 in the year to January 2015. The largest new investment was in PetSmart, the leading retailer of pet products and services in North America which was acquired by BC Partners in March. The Company invested a total of 4.7million in PetSmart both through BC European Capital IX and in a co-investment alongside the fund. Further details of the ten largest underlying new investments are set out in the Supplementary Information section of this report.
New investments in the first half were acquired at an average of approximately nine times EBITDA, which is broadly in line with prices paid last year. Therefore, while the level of new investment was lower than expected, it is reassuring that our managers appear to be maintaining pricing discipline in the current environment. 
New commitments
New commitments of 34.6million to four funds in the first half were significantly higher than the 22.0million committed to three new funds last year. More of our preferred managers are fundraising in the current year and we expect to make further commitments in the second half.
Three of the new funds, ICG Europe VI, Harwood IV and Hollyport V, were raised by managers we have been investing with for many years, while the manager of the fourth, Alcuin IV, is new to the portfolio. Alcuin focuses on small buy-outs in the UK, a part of the market that has generated strong performance for the Company in the past, both directly and through funds.
Further details of new fund commitments are set out in the Supplementary Information section.
Closing portfolio
At 31 July, the portfolio was valued at 411.5million and was broadly diversified with investments in almost 400 underlying companies across a wide range of sectors and geographies. 
We believe the portfolio strikes a good balance between diversification and concentration. While the level of diversification within the portfolio reduces risk, many individual investments are large enough to have an impact on overall performance, as demonstrated in the first half by the sale of National Fostering Agency.
The top ten underlying companies accounted for 26% of the value of the portfolio at the period end, while the top 30 accounted for 48%. The performance of these 30 investments is therefore likely to be a key driver of future growth. In the year to June 2015, the revenues and EBITDA of these companies increased by an average of 6.1% and 7.7% respectively. By contrast, the FTSE All-Share Index reported a fall in revenue of 7.4% and a fall in EBITDA of 8.5% over the same period. 
The top 30 companies were valued on an average multiple of 9.1 times EBITDA at June 2015 which reflects the growth being achieved. In comparison, the FTSE All-Share Index was valued at 11 times EBITDA at the period end despite the lack of profit growth noted above. 
The leverage of the top 30 companies averaged 3.7 times EBITDA. While this has increased slightly since the start of the year, it remains relatively modest. This should enhance future equity returns without involving undue financial risk, particularly given the relatively flexible terms of many of the underlying loans. 
The share of the portfolio represented by investments made prior to the financial crisis has continued to fall. At 31 July, pre-crisis investments represented 28% of underlying investments compared with almost 40% a year earlier. This reflects a combination of high levels of realisations from these earlier vintages, the value of new investments which have been added to the portfolio in the last twelve months, and strong increases in the valuations of post-crisis investments. We expect post-crisis investments to continue to generate the most significant future uplifts and it is therefore encouraging that the portfolio is now concentrated in these vintages.
We directly manage 24% of the portfolio including six of the top ten underlying investments and nine of the top 30. 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 76% of value, 14% of this was acquired through secondary purchases and 16% through co-investments. When added to the 24% managed directly, more than half the portfolio is therefore in companies which we evaluated in detail prior to investment. This proportion has been increasing gradually over time, from approximately a third immediately prior to the financial crisis, and gives us greater control over the portfolio than a typical fund of funds investor.
At 31 July the portfolio was valued at an average of 146% of original cost in local currencies, of which 44% of cost had already been returned. At these levels, and with a higher proportion of the portfolio in more recent investments, there is potential for considerable growth as the portfolio further matures. 
Events since 31 July
Since the period end, the portfolio has continued to generate a net cash inflow with realisations of 9.6 million exceeding new investment of 4.8 million. One new co-investment and one new fund commitment are at advanced stages of legal documentation and should complete in the near future. 
Prospects
With the portfolio continuing to generate strong realisations and the investment pace slowing in the first half, cash is higher than we had anticipated. In the current environment re-investing cash at reasonable valuations is challenging both for us and for the underlying managers in the portfolio. However we are encouraged that our managers appear to be exercising discipline and are not being drawn to pay excessive prices for new investments. 
The environment for realisations remains favourable despite the slowdown in flotations and the fall in quoted equity markets since July. This primarily reflects the high levels of equity and debt available to both financial and trade buyers. We therefore expect the portfolio to generate additional cash in the remainder of the financial year. This should drive further growth in net asset value given the valuation uplifts generally achieved on sale. 
Our investment strategy gives us the flexibility to adapt the mix of investments, cash and commitments to changing market conditions and to deploy cash where we see the best relative value. At this point in the cycle, the Company has the benefit of a strong balance sheet and a portfolio which continues to perform well.
Graphite Capital 
September 2015

SUPPLEMENTARY INFORMATION
The 30 largest fund investments
The 30 largest funds by value at 31 July 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
35.5
2
Graphite Capital Partners VI **





Mid-market buy-outs
5.4
2003
UK
23.7
3
CVC European Equity Partners V **





Large buy-outs
1.5
2008
Global
20.9
4
Candover 2005 Fund **





Large buy-outs
0.1
2005
Europe
14.6
5
Thomas H Lee Parallel Fund VI





Large buy-outs
1.7
2007
US
14.1
6
BC European Capital IX **





Large buy-outs
5.7
2011
Europe
13.1
7
Graphite Capital Partners VII */**





Mid-market buy-outs
7.6
2007
UK
13.1
8
Deutsche Beteiligungs AG Fund V





Mid-market buy-outs
0.4
2006
Germany
12.9
9
TDR Capital II





Mid-market and large buy-outs
0.7
2006
Europe
12.8
10
PAI Europe V **





Large buy-outs
1.1
2007
Europe
12.0
11
Fourth Cinven Fund **





Large buy-outs
3.4
2006
Europe
10.8
12
Activa Capital Fund II





Mid-market buy-outs
0.8
2007
France
10.5
13
Bowmark Capital Partners IV





Mid-market buy-outs
0.6
2007
UK
10.2
14
Fifth Cinven Fund





Large buy-outs
6.1
2012
Europe
9.7
15
Doughty Hanson & Co V **





Mid-market and large buy-outs
5.3
2006
Europe
7.9
16
Landmark Acquisition Fund VIII **





Mezzanine
10.2
2014
Europe
7.2
17
ICG Europe V





Mezzanine
0.5
2012
Europe
6.9
18
Doughty Hanson & Co IV





Mid-market and large buy-outs
0.3
2005
Europe
4.7
19
Charterhouse Capital Partners IX **





Large buy-outs
1.0
2008
Europe
4.4
20
Permira V





Large buy-outs
2.9
2013
Europe
4.3
21
Deutsche Beteiligungs AG Fund VI





Mid-market buy-outs
2.9
2012
Germany
4.0
22
IK VII





Mid-market buy-outs
3.1
2013
Europe
3.8
23
Hollyport Secondary Opportunities IV





Secondary portfolio
0.8
2013
UK
3.7
24
Piper Private Equity Fund IV





Small buy-outs
2.3
2010
UK
3.6
25
Segulah IV





Mid-market buy-outs
1.24
2008
Nordic
3.4
26
Nordic Capital Partners VIII





Mid-market and large buy-outs
3.8
2013
Nordic
3.4
27
GCP Capital Partners Europe II **





Small buy-outs
1.6
2013
UK
3.2
28
TowerBrook III **





Mid-market and large buy-outs
1.3
2007
Europe/ USA
3.2
29
Advent Central and Eastern Europe IV





Mid-market buy-outs
1.1
2006
Eastern Europe
3.1
30
TDR Capital III





Mid-market and large buy-outs
4.5
2013
Europe
2.8

Total of the largest 30 fund investments
139.1


283.5

Percentage of total investment portfolio



68.9%
* Includes the associated Top Up funds.
** All or part of interest acquired through a secondary purchase.
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 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 % of investment portfolio
1
Micheldever +






Distributor and retailer of tyres
Graphite Capital
2006
UK
5.6%
2
City & County Healthcare Group





Provider of home care services
Graphite Capital
2013
UK
3.4%
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
2.7%
5
Human Capital Investment Group 





Provider of recruitment services
Graphite Capital
2014
UK
2.1%
6
Skillsoft +





Provider of off-the-shelf e-learning content
Charterhouse
2014
USA
2.1%
7
Spheros +






Provider of bus climate control systems
Deutsche Beteiligungs 
2011
Germany
1.9%
8
Standard Brands +






Manufacturer of fire lighting products
Graphite Capital
2001
UK
1.7%
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
CPA Global +






Provider of patent and legal services
Cinven
2012
UK
1.5%
12
Frontier Medical +






Manufacturer of medical devices
Kester Capital
2013
UK
1.5%
13
TMF





Provider of management and accounting outsourcing services
Doughty Hanson
2008
Netherlands
1.5%
14
Parques Reunidos 





Operator of attraction parks 
Arle 
2007
Spain 
1.4%
15
Algeco Scotsman





Supplier and operator of modular buildings 
TDR Capital 
2007
USA 
1.4%
16
Guardian Financial Services 





Provider of insured life and pension products
Cinven
2011
UK
1.4%
17
The Laine Pub Company +






Operator of pubs and bars
Graphite Capital
2014
UK
1.3%
18
R&R Ice Cream +





Manufacturer and distributor of ice cream products
PAI Partners
2013
UK
1.2%
19
TMP





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





Retailer of pet products and services
BC Partners
2015
USA
1.1%
21
Co-investment +/ **





Provider of business services
Large buy-out manager
2014
Europe
1.1%
22
Stork 





Provider of technical engineering services
Arle
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

2009
UK
0.9%
25
Suddenlink





Operator of cable networks
BC Partners
2012
USA
0.8%
26
Formel D





Provider of quality control for automotive services
Deutsche Beteiligungs 
2013
Germany
0.8%
27
Swissport





Provider of airport ground and cargo handling services
PAI Partners
2011
Switzerland
0.8%
28
VWR International +/ *





Distributor of laboratory supplies
Madison Dearborn
2007
USA
0.8%
29
Technogym





Manufacturer of premium fitness equipment and wellness products
Arle
2006
Italy
0.7%
30
The Groucho Club





Operator of members' club
Alcuin Partners
2015
UK
0.7%

Total of the 30 largest underlying investments


47.9%
+ 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.
Portfolio analySIS
The following tables analyse the companies in which Graphite Enterprise had investments at 31 July 2015.
30 largest investments* - revenue growth
% growth
% by number
<0%
23.3%
0-10%
46.7%
10-20%
23.3%
20-30%
3.3%


30 largest investments**- EBITDA growth
% growth
% by number
<0%
23.3%
0-10%
40.0%
10-20%
16.7%
20-30%
6.7%
>30%
10.0%
30 largest investments*** - enterprise value as a multiple of EBITDA
Multiple
% by number
<7.0x
16.7%
7.0-8.0x
16.7%
8.0-9.0x
10.0%
9.0-10.0x
13.3%
10.0-11.0x
13.3%
11.0-12.0x
10.0%
>12.0x
13.3%
30 largest investments* - net debt as a multiple of EBITDA
Multiple
% by number
<2.0x
23.3%
2.0-3.0x
16.7%
3.0-4.0x
10.0%
4.0-5.0x
10.0%
5.0-6.0x
16.7%
6.0-7.0x
10.0%
>7.0x
10.0%
*Excludes Guardian Financial Services where this metric is not meaningful.
**Excludes Cognito where this metric is not meaningful.
***Excludes Cognito and Guardian Financial Services where this metric is not meaningful.
Portfolio - Investment type


% of underlying companies
Large buy-outs

47.2%
Mid-market buy-outs

39.3%
Mezzanine 

8.0%
Small buy-outs

4.2%
Quoted

1.3%
Total

100.0%
Portfolio - Geographic distribution*


% of underlying companies 
UK

47.9%
North America

14.5%
Germany

10.6%
France

8.7%
Benelux

4.9%
Scandinavia

5.0%
Spain

3.2%
Italy

2.5%
Other Europe

2.4%
Rest of world

0.3%
Total

100.0%
NB: Continental Europe

37.3%
* 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 underlying companies
2015

1.0x
5.1%
2014 

1.2x
21.6%
2013

1.4x
16.6%
2012

1.6x
9.5%
2011

1.7x
10.2%
2010

1.6x
7.4%
2009

2.4x
1.8%
2008

1.2x
7.2%
2007

1.8x
7.4%
2006

1.6x
9.6%
2005 and before

1.7x
3.6%
Total

1.5x
100.0%
Portfolio - Sector analysis
 

% of underlying companies
Business services

21.2%
Industrials

18.4%
Healthcare and education

14.2%
Consumer goods and services

13.5%
Leisure

9.1%
Financials

8.6%
Automotive supplies

8.1%
Technology and telecommunications

3.5%
Media

2.2%
Chemicals

1.2%
Total

100.0%
Quoted equity holdings at 31 July 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
m
% of investment portfolio
VWR International
VWR
3.2
0.8%
Saga
SAGA
2.5
0.6%
Intermediate Capital Group
ICP
2.5
0.6%
Avolon Aerospace
AVOL
2.5
0.6%
Partnership
PA
2.5
0.6%
Party City
PRTY
2.4
0.6%
Elior
ELIOR
2.2
0.5%
FleetCor
FLT
2.0
0.5%
Abertis
ABE
1.6
0.4%
ComHem
COMH
1.6
0.4%
Black Knight
BKFS
1.5
0.4%
Fogo do Chao
FOGO
1.0
0.2%
Evonik
EVK
1.0
0.2%
Tumi
TUMI
0.9
0.2%
Univar
UNVR
0.9
0.2%
West Corporation
WSTC
0.9
0.2%
Sunrise Communications
SRCG
0.8
0.2%
Aramark Corporation
ARMK
0.6
0.2%
Others

4.2
1.0%
Total

34.8
8.4%
The following tables analyses the closing portfolio by value.
Graphite and third party investments at 31 July 2015
Portfolio
Third party
m
Graphite Capital
m
Total
m
% of investment portfolio
Primary investments in funds
187.5
60.0
247.5
60.2%
Secondary investments in funds
59.5
12.2
71.7
17.4%
Direct and co-investments
66.8
25.5
92.3
22.4%
Total portfolio
313.8
97.7
411.5
100.0%
Discretionary investments*
126.3
97.7
224.0
54.4%
*Includes Graphite Capital funds, all secondary fund interests and all direct investments
Investment activity
New investments

Drawdowns
Co-investments and secondary fund purchases
Total new investments
Financial period ending
 million
 million
 million
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
31 January 2015
68.0
57.4
125.4 
Six months to 31 July 2015
19.2
13.6
32.8
Largest new underlying investments
Investment
Description
Country
Cost
 million
PetSmart
Retailer of pet products and services
USA
4.7
The Groucho Club *
Operator of members' club
UK
3.0
Informatica
Provider of enterprise data integration and data quality software
USA
0.8
Premium Credit
Provider of specialty finance
UK
0.8 
Cerelia
Manufacturer of ready-to-bake dough
France
0.7
Cleanpart
Provider of engineering services to semi-conductor industries
Germany
0.7
Loparex
Manufacturer of silicon release liners 
Netherlands
0.7
Hurtigruten
Operator of passenger shipping
Norway
0.7 
Gutenberg
Manufacturer of paper products and labels
France
0.7
Mirion 
Manufacturer of radiation detection products
USA
0.6
Total of 10 largest new underlying investments

13.4
* Sold by Graphite Capital in the period. The Company re-invested alongside Alcuin Partners.
Realisations* 
Financial period ending
 million
% of opening portfolio
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%
31 January 2015
142.2
32.8%
6 months to 31 July 2015
73.5
17.0%
* Excluding secondary sales of fund interests.
Largest underlying realisations
Investment
Manager
Year of investment
Realisation type
Proceeds
 million
National Fostering Agency
Graphite Capital
2012
Secondary
11.9
Eurofiber
Doughty Hanson
2012
Trade
4.2
Intermediate Capital Group PLC

1989
Public offering
3.4
SAFE
Euromezzanine
2006
Secondary
3.3
Spire Healthcare
Cinven
2007
Public offering
3.1
The Groucho Club *
Graphite Capital
2006
Secondary
3.1
Celsis
Harwood
2009
Trade
2.7
Healthcare Homes
Bowmark
2008
Trade
2.1
Evonik Industries
CVC
2008
Public offering
1.7
Atos
PAI Partners
2008
Public offering
1.6
Total of 10 realisations


37.1 
* Sold by Graphite Capital in the period. The Company re-invested alongside Alcuin Partners.
Commitments analysis
Commitments at 31 July 2015
Original commitment1
 million
Outstanding commitment
 million
Average drawdown percentage
% of commitments
Funds in investment period
299.0
198.2
33.7%
79.7%
Funds post investment period
520.0
50.5
90.3%
20.3%
Total
819.0
248.7
69.6%
100.0%
1 Original commitments are translated at 31 July 2015 exchange rates
Commitments at 31 July 2015 - remaining investment period
% of commitments
4-5 years
16.7%
3-4 years
50.1%
2-3 years
5.4%
1-2 years
5.1%
<1 year
2.4%
Investment period complete
20.3%
Total
100.0%
Movement in outstanding commitments in the six months to 31 July 2015
 million
Opening
234.0
Drawdowns
(19.0)
New primary commitments
34.6
New commitments arising through secondary purchases
4.9
Currency
(8.5)
Other
2.7
Closing
248.7
New commitments during the six months to 31 July 2015
Fund
Strategy
Geography
m
Primary commitments



ICG Europe Fund VI
Mezzanine
Europe
10.6
Fourth Alcuin Fund
Small buy-outs
UK
9.0
Harwood Private Equity IV
Small buy-outs
UK
7.5
Hollyport Secondary Opportunities V
Secondary portfolio
Global
7.5
Total primary commitments


34.6




Commitments arising from secondary purchases


BC European Capital IX
Large buy-outs 
Europe
4.9




Total new commitments


39.5
CURRENCY EXPOSURE
31 July 
2015
 million
31 July 
2015
%
31 January 2015
 million
31 January 
2015
%
Portfolio*




- Sterling
213.2
51.8%
230.1
53.3%
- Euro
109.3
26.6%
119.7
27.7%
- US dollar
59.1
14.4%
54.9
12.7%
- Other European
28.2
6.8%
25.1
5.8%
- Other
1.7
0.4%
2.1
0.5%
Total
411.5
100.0%
431.9
100.0%
* Currency exposure is calculated using the location of the underlying portfolio companies' headquarters.

31 July 
2015
 million
31 July 
2015
%
31 January 2015
 million
31 January 
2015
%
Outstanding commitments




- Sterling
112.8
45.4%
91.8
39.2%
- Euro
128.8
51.8%
135.0
57.7%
- US dollar
5.9
2.4%
6.1
2.6%
- Other European
1.2
0.4%
1.1
0.5%
Total
248.7
100.0%
234.0
100.0%
UNAUDITED RESULTS FOR THE SIX MONTHS TO 31 JULY 2015
Consolidated Income Statement (unaudited)


Half 
year to 31 July 2015


Half year to 31 July 2014


Year to 31 January 2015


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









Income, gains and losses on investments
7,720
12,577
20,297
10,190
8,869
19,059
13,896
22.614
36,510
Deposit interest 
145
-
145
82
-
82
228
-
228
Other income
-
-
-
241
-
241
417
-
417
Foreign exchange gains and losses
-
(663)
(663)
-
(389)
(389)
-
(1,024)
(1,024)

7,865
11,914
19,779
10,513
8,480
18,993
14,541
21,590
36,131










Expenses









Investment management charges
(751)
(2,251)
(3,002)
(737)
(2,213)
(2,950)
(1,452)
(4,357)
(5,809)
Other expenses
(754)
(569)
(1,323)
(770)
(883)
(1,653)
(1,593)
(1,835)
(3,428)

(1,505)
(2,820)
(4,325)
(1,507)
(3,096)
(4,603)
(3,045)
(6,192)
(9,237)










Profit before taxation
6,360
9,094
15,454
9,006
5,384
14,390
11,496
15,398
26,894
Taxation
(562)
562
-
(989)
989
-
(2,044)
(2,044)
-
Profit for the period
5,798
9,656
15,454
8,017
6,373
14,390
9,452
17,442
26,894
Attributable to:
Equity shareholders
5,798
8,286
14,084
8,017
6,227
14,244
9,452
14,952
24,404
Non-controlling interests
-
1,370
1,370
-
146
146
-
2,490
2,490
Basic and diluted earnings per share


19.4p


19.6p


33.5p
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
2015
2014
2015

'000
'000
'000
Non-current assets



Investments held at fair value



- Unquoted investments
408,946
398,158
426,943
- Quoted investments
2,517
4,055
4,962

411,463
402,213
431,905
Current assets



Cash and cash equivalents
100,994
101,123
90,137
Receivables
3,275
1,588
2,246

104,269
102,711
92,383
Current liabilities



Payables
586
385
7,694
Net current assets
103,683
102,326
84,689
Total assets less current liabilities
515,146
504,539
516,594




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
467,705
454,764
463,489
Revenue reserve
15,624
19,600
21,035
Equity attributable to equity holders
505,669
496,704
506,864
Non-controlling interests
9,477
7,835
9,730
Total equity
515,146
504,539
516,594




Net asset value per share (basic and diluted)
700.3p
681.2p
695.2p
Consolidated Cash Flow Statement (unaudited)

Half year to
Half year to
Year to

31 July
31 July
31 January

2015
2014
2015

'000
'000
'000




Operating activities



Sale of portfolio investments
65,723
93,269
149,413
Purchase of portfolio investments
(38,878)
(53,315)
(119,180)
Short term loan to portfolio investments
(1,138)
-
-
Interest income received from portfolio investments
5,399
6,438
8,324
Dividend income received from portfolio investments
2,180
3,412
5,141
Other income received
145
322
644
Investment management charges paid
(2,975)
(3,076)
(5,815)
Taxation paid
-
(22)
-
Other expenses paid
(604)
(480)
(977)
Net cash inflow from operating activities
29,852
46,548
37,550




Financing activities



Investments by non-controlling interests
-
118
357
Distributions to non-controlling interests
(1,623)
(1,344)
(2,032)
Credit facility fee
(1,431)
(747)
(1,651)
Purchase of treasury shares
(4,070)
-
-
Equity dividends paid
(11,209)
(11,302)
(11,302)
Net cash outflow from financing activities
(18,333)
(13,275)
(14,628)




Net increase in cash and cash equivalents
11,519
33,273
22,922




Cash and cash equivalents at beginning of period
90,137
68,239
68,239
Net increase in cash and cash equivalents
11,519
33,273
22,922
Effect of changes in foreign exchange rates
(662)
(389)
(1,024)
Cash and cash equivalents at end of period
100,994
101,123
90,137
Consolidated Statement of Changes in Equity (unaudited)

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

'000
'000
'000
'000
'000
'000
'000
'000
'000
Six months to
31 July 2015









Opening balance at
1 February 2015
7,292
2,112
12,936
369,565
93,924
21,035
506,864
9,730
516,594
Profit attributable to equity shareholders
-
-
-
(331)
8,617
5,798
14,084
-
14,084
Profit attributable to non-controlling interests
-
-
-
-
-
-
-
1,370
1,370
Profit for the period and total comprehensive income
-
-
-
(331)
8,617
5,798
14,084
1,370
15,454
Transfer on disposal of investments
-
-
-
18,932
(18,932)
-
-
-
-
Dividends to equity shareholders
-
-
-
-
-
(11,209)
(11,209)
-
(11,209)
Purchase of treasury shares
-
-
-
(4,070)
-
-
(4,070)
-
(4,070)
Distributions to non-controlling interests
-
-
-
-
-
-
-
(1,623)
(1,623)
Closing balance
at 31 July 2015
7,292
2,112
12,936
384,096
83,609
15,624
505,669
9,477
515,146

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

'000
'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
351,415
97,122
22,885
493,762
8,915
502,677
Profit attributable to equity shareholders
-
-
-
1,409
4,818
8,017
14,244
-
14,244
Profit attributable to non-controlling interests
-
-
-
-
-
-
-
146
146
Profit for the period and total comprehensive income
-
-
-
1,409
4,818
8,017
14,244
146
14,390
Transfer on disposal of investments
-
-
-
12,477
(12,477)
-
-
-
-
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
365,301
89,463
19,600
496,704
7,835
504,539










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

'000
'000
'000
'000
'000
'000
'000
'000
'000
Year to
31 January 2015









Opening balance at
1 February 2014
7,292
2,112
12,936
351,415
97,122
22,885
493,762
8,915
502,677
Profit attributable to equity shareholders
-
-
-
2,913
12,039
9,452
24,404
-
24,404
Profit
attributable to non-controlling interests
-
-
-
-
-
-
-
2,490
2,490
Profit for the year and total comprehensive income
-
-
-
2,913
12,039
9,452
24,404
2,490
26,894
Transfer on disposal of investments
-
-
-
15,237
(15,237)
-
-
-
-
Dividends to equity shareholders
-
-
-
-
-
(11,302)
(11,302)
-
(11,302)
Contributions by non-controlling interests
-
-
-
-
-
-
-
357
357
Distributions to non-controlling interests
-
-
-
-
-
-
-
(2,032)
(2,032)
Closing balance
at 31 January 2015
7,292
2,112
12,936
369,565
93,924
21,035
506,864
9,730
516,594
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 2015.
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 2015 were approved by the Board of Directors on 24 April 2015 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 2015, comprising the Condensed Consolidated Interim Financial Statement, 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 2015, 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 2015, 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.
INVESTMENTS
All investments are designated 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. 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 Statement of Recommended Practice for investment trusts issued by the Association of Investment Companies in November 2014.
UNQUOTED INVESTMENTS
Fair value for unquoted investments is established by using various valuation techniques.
Funds and co-investments 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. The primary valuation methodology used is an earnings multiple methodology, with other methodologies used where they are more appropriate.
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.
CURRENT ASSET INVESTMENTS HELD AT FAIR VALUE
Current asset investments may include investments in fixed income funds or instruments. These are valued based on the redemption price as at the balance sheet date, which is based on the value of the underlying investments.
ASSOCIATES
Investments which fall within the definition of an associate under IAS 28 (Investments in associates) are accounted for as investments held at fair value through profit or loss, as permitted by that standard.
IAS 28 requires certain disclosures to be made about associates, including summary historical financial information, even where these associates have been accounted for in accordance with IAS 39 and held at fair value. Graphite Enterprise has a small number of investments which fall within the definition of an associate, all of which are held at fair value.
The disclosures required by IAS 28 have not been made. It is considered that, in the context of the investment portfolio, such information would not be useful to users of the accounts. Information is considered useful if it helps users assess the net asset value of the Company or the future growth therein. Many factors are taken into account in determining the fair value of individual investments, of which historical financial information is only one. Taken alone, this information would not be useful in making such an assessment and would be misleading in some instances.
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 2015, 1,192,800 of bank facility costs are included within receivables. Of this, 430,850 is expected to be amortised in less than one year.
5 DIVIDENDS

Half year to
31 July 2015
'000
Half year to
31 July 2014
'000 
Year to
31 January 2015
'000
Half year to 31 July 2015: 15.5p per



share (Half year to 31 July 2014 and



year to 31 January 2015: 15.5p per share)
11,209
11,302
11,302
6 CALLED UP SHARE CAPTIAL
At 31 July 2015, 72,913,000 shares had been allocated, called up and fully paid. Of this total, the Company held 705,833 shares in treasury (31 July 2014 and 31 January 2015: nil) leaving 72,207,167 in issue. 
 
7 EARNINGS PER SHARE

Half year to
31 July 2015
Half year to
31 July 2014 
Year to
31 January 2015
Revenue return per ordinary share
8.0p 
11.0p 
13.0p 
Capital return per ordinary share
11.4p 
8.6p 
20.5p 
Earnings per ordinary share (basic and diluted)
19.4p 
19.6p 
33.5p 
Weighted average number of shares
 72,602,027
 72,913,000 
 72,913,000 
The earnings per share figures are based on the weighted average numbers of shares set out above.
8 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 realised and unrealised gains and losses have been recognised in Income, gains and losses on investments in the Consolidated Income Statement.
The following table presents the changes in level 3 instruments for the six months to 31 July 2015.



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
341,520

85,423

426,943
Additions
26,252

6,481

32,733
Disposals
(62,648)

(7,438)

(70,086)
Gains and losses recognised in profit or loss
14,104

5,252

19,356
Closing balance
319,228

89,718

408,946
Total gains for the period included in income statement for assets held at the end of the reporting period
14,104

5,252

19,356
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 2015
Level 1

Level 2

Level 3




'000

'000

'000
Investments held at fair value





Unquoted investments - indirect
-

-

319,228
Unquoted investments - direct
-

-

89,718
Quoted investments - direct
2,517

-

-
Total investments held at fair value
2,517

-

408,946
31 January 2015
Level 1

Level 2

Level 3




'000

'000

'000
Investments held at fair value





Unquoted investments - indirect
-

-

341,520
Unquoted investments - direct
-

-

85,423
Quoted investments - direct
4,962

-

-
Total investments held at fair value
4,962

-

426,943
There have been no significant transfers between levels 1, 2 and 3 for the period ended 31 July 2015 (31 January 2015: nil).
9 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 2015

Half year to
31 July 2014

Year to
31 January 2015






'000

'000

'000
Investment management fee


2,976

2,939

5,756
Irrecoverable VAT


26

11

53






3,002

2,950

5,809
The allocation of the total investment management charges was unchanged in 2015 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 2015 management fees of 97,000 were accrued (31 July 2014: prepayment of 50,000).
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 2015

Half year to 31 July 2014

Year to
31 January 2015




'000

'000

'000
Graphite Capital Partners VI
(99)

70

150
Graphite Capital Partners VII
1

225

392
Graphite Capital Partners VIII



812

696

1,376




714

991

1,918
INTERIM MANAGEMENT REPORT AND STATEMENT OF THE DIRECTORS' RESPONSIBILITIES
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 2015. 
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 2015. 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.
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 business review 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.
On behalf of the Board
Mark Fane, Chairman
25 September 2015
Copies of the Interim Report will be available on the Company's website (see below) and posted in October 2015 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
  END
IR LLFITARIEFIE