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ICG Enterprise Trust Plc: Preliminary Results for the twelve months ended 31 January 2022
ICG Enterprise Trust plc
12 May 2022
Preliminary Results for the twelve months ended 31 January 2022
Defensive growth; long-term value
Highlights
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PERFORMANCE OVERVIEW
Annualised | |||||||||||||
Performance to 31 January 2022 | 3 months | 6 months | 1 year | 3 years | 5 years | 10 years | |||||||
NAV per Share Total Return | 4.4% | 12.0% | 24.4% | 19.2% | 16.4% | 13.6% | |||||||
Share Price Total Return | (3.4)% | 11.8% | 27.1% | 16.3% | 14.3% | 15.6% | |||||||
FTSE All-Share Index Total Return | 2.0% | 5.6% | 18.9% | 6.7% | 5.4% | 7.4% | |||||||
Three months to: | Six months to: | 12 months to: | |||||||||||
31 Jan. 2022 | 31 Jan. 2021 | 31 Jan. 2022 | 31 Jan. 2021 | 31 Jan. 2022 | 31 Jan. 2021 | ||||||||
Portfolio Return on a Local Currency Basis | 4.9% | 17.1% | 13.5% | 7.9% | 29.4% | 24.9% | |||||||
NAV per Share Total Return | 4.4% | 11.8% | 12.0% | 9.6% | 24.4% | 22.5% | |||||||
Realisation Proceeds | £68.3m | £43.0m | £158.3m | £98.3m | £333.5m | £137.4m | |||||||
Total New Investment | £95.2m | £57.2m | £170.3m | £86.8m | £303.7m | £139.2m | |||||||
ENQUIRIES
Investor / Analyst enquiries:
Oliver Gardey, Head of Private Equity Fund Investments, ICG +44 (0) 20 3545 2000
Colm Walsh, Managing Director, Private Equity Fund Investments, ICG
Chris Hunt, Head of Shareholder Relations, ICG
Media enquiries:
Clare Glynn, Corporate Communications, ICG +44 (0) 20 3545 1395
Website:
www.icg-enterprise.co.uk
Company timetable
Annual General Meeting: 28 June 2022
Q1 trading update: 28 June 2022
Ex-dividend date: 7 July 2022
Record date: 8 July 2022
Payment of dividend: 22 July 2022
ABOUT ICG ENTERPRISE TRUST
ICG Enterprise Trust is a leading listed private equity investor focused on creating long-term growth by delivering consistently strong returns through selectively investing in profitable private companies, primarily in Europe and the US.
As a listed private equity investor, our purpose is to provide shareholders with access to the attractive long-term returns generated by investing in private companies, with the added benefit of daily liquidity.
We invest in companies directly via Co-investments and through funds managed by ICG and other leading private equity managers who focus on creating long-term value and building sustainable growth through active management and strategic change.
We have a long track record of delivering strong returns through a flexible mandate and highly selective approach that strikes the right balance between concentration and diversification, risk and reward.
NOTES
Included in this document are Alternative Performance Measures (“APM”). APM have been used if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company, and for comparing the performance of the Company to its peers and its previously reported results. The Glossary includes further details of APMs and reconciliations to International Financial Reporting Standards (“IFRS”) measures, where appropriate.
In the Chair’s Foreword, Manager’s Review and Supplementary Information, all performance figures are stated on a Total Return basis (i.e., including the effect of re-invested dividends). ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.
DISCLAIMER
This report may contain forward looking statements. These statements have been made by the directors in good faith based on the information available to them up to the time of their approval of this report and should be treated with caution due to the inherent uncertainties, including both economic and business risk factors, underlying such forward-looking information. These written materials are not an offer of securities for sale in the United States. Securities may not be offered or sold in the United States absent registration under the US Securities Act of 1933, as amended, or an exemption therefrom. The issuer has not and does not intend to register any securities under the US Securities Act of 1933, as amended, and does not intend to offer any securities to the public in the United States. No money, securities or other consideration from any person inside the United States is being solicited and, if sent in response to the information contained in these written materials, will not be accepted.
CHAIR’S FOREWORD
I am pleased to report that your Company has performed strongly during the year, continuing to build on its track record of delivering strong risk-adjusted returns for its shareholders.
ICG Enterprise Trust’s NAV at 31 January 2022 was £1.2bn, equating to 1,690p NAV per Share. The Company has delivered 24.4% NAV per Share Total Return during the financial year. On a five-year annualised basis, NAV per Share Total Return is 16.4%. This performance is net of all fees.
The performance underlines the benefits of our strategy, with our more focussed High Conviction Portfolio enhancing the returns of our more diversified Third Party Investments over the long term. In line with this approach, ICG Enterprise Trust has continued to deploy capital into a number of High Conviction Investments. I have been particularly pleased to see four new Co-investments alongside our Manager, ICG, and the significant progress we have made during the year on developing our portfolio of Secondary Investments. We were able to make these investments given the strong Realisation activity we experienced: during the year we received Total Proceeds of £342.9m and deployed £303.7m into new investments, generating net proceeds of £39.2m. At 31 January 2022 we had £208.4m of available liquidity.
Following the tragic events in Ukraine this calendar year, we are mindful of the heightened levels of volatility and geopolitical uncertainty. While we have no material direct exposure to Russia or Ukraine, we remain conscious of the potential indirect impact of macroeconomic risks such as increasing energy prices, disrupted supply chains, and a squeeze on consumer spending. In this environment, we feel our focus on businesses with defensive growth characteristics positions us well to navigate these dynamic market conditions. We remain alert to the changing situation and potential risks. More detail on our risk management can be found on page 20.
Delivering on our strategic goals
During the financial year we made further progress against our strategic goals: our new investment activity was heavily weighted towards High Conviction Investments (61.1% of Total New Investments in FY22) and we maintained our North American exposure in line with our target range of 40 - 50%. During the year, the Board determined that we should develop our Secondaries programme more systematically and that we should target allocating 15 - 25% of the Portfolio to Secondary Investments. In line with this, we made a number of investments during the year which meaningfully increased our exposure, bringing it within this target range (31 January 2022: 17.9%; 31 January 2021: 11.8%).
High Conviction Investments represented 48.9% of the Portfolio at 31 January 2022 and have generated an annualised local currency return of 23.9% over the last five years. We expect these investments to continue to enhance the strong returns generated from our Third Party Funds, which have returned an annualised local currency return of 17.8% over the last five years.
Since appointing ICG as the Manager six years ago, we have become more fully invested, reducing the impact of cash drag on performance. At 31 January 2022 the Portfolio represented 101.2% of Net Assets (31 January 2016: 82.1%).
Providing public access to private equity
There is an increasing recognition that private equity can play a valuable role for both individual and institutional investors with a long-term perspective. However, it can be challenging for certain investors to gain exposure to private equity assets. ICG Enterprise Trust helps to solve this problem: by investing in ICG Enterprise Trust, shareholders gain access to a mature and actively managed portfolio of private equity investments, with the added benefit of daily liquidity.
Despite the Company’s strong and consistent track record, ICG Enterprise Trust’s shares continue to trade at a Discount to NAV (26.3% on 31 January 2022 against last published NAV of 1,628p at 31 October 2021). The Board considers that the Company’s performance, and the value of its Manager’s expertise and network, are not appropriately recognised in its share price.
During the year we have worked closely with the investment community, including professional, institutional, and private wealth managers, stock market analysts, and the media to increase ICG Enterprise Trust’s profile and improve investors’ understanding of the sector and our role within it.
Importance of investing responsibly
Responsible investing remains a focus for our investment team, who are able to utilise the Manager’s considerable resources in this area to support their own investment analysis to ensure that our investment programme is compatible with our wider ESG framework. The Board believes that the long-term success of the Company requires the effective management of both financial and non-financial measures, and fully endorses the increasing emphasis on this important topic.
Board evolution
Sandra Pajarola is retiring from the Board on 28 June 2022, having served as a non-executive director for nine years. During her tenure, Sandra has been an invaluable member of the Board, bringing a wealth of experience and expertise to our discussions, in particular around private equity investing. On behalf of the Board and the shareholders of ICG Enterprise Trust, I would like to extend my sincere thanks to Sandra for her dedication and many contributions, and to wish her all the very best for her future endeavours. In line with our focus on appropriate Board composition and succession planning, the Board is undertaking a search for new non-executive directors and will update shareholders in due course.
Dividend and share buyback
The Board continues to view the dividend as an important component of shareholder return and remains committed to a progressive dividend policy. The Board is proposing a final dividend of 9p per share. Together with the three interim dividends of 6p per share each, this will take total dividends for the year to 27p per share, representing a 12.5% increase on the prior year dividend. This marks the sixth consecutive year of dividend increases. During the year the Board also purchased 250,000 shares at an average price of 1,070p each. In aggregate the Board therefore allocated £21.2m1 to cash returns to shareholders during FY22.
Annual General Meeting
The Annual General Meeting will be held on 28 June 2022. The Board will be formally communicating with shareholders outlining the format of the meeting separately in the Notice of Meeting. This will include details of how shareholders may register their interest in attending the Annual General Meeting, either in person or via videoconference.
Well-placed to continue to generate value for our shareholders
ICG Enterprise Trust is in good health, with a strong balance sheet and a diversified Portfolio that remains well-positioned to withstand the increased volatility that has affected the global markets so far in 2022. We are encouraged by the performance of our Portfolio, which is a testament to our strategy and our focus on investments with defensive growth characteristics. We believe we offer an attractive investment vehicle for public market investors to access high-quality, privately-owned businesses.
The structure of the Portfolio enables the Company to benefit from diversification whilst retaining more concentrated exposure to High Conviction Investments with defensive growth characteristics. This approach has successfully generated double-digit NAV per Share Total Return to our shareholders not only in the last year but over the long term.
We are confident that your Company has the expertise, network and financial resources to successfully execute on its strategy, and we believe that we have a promising future.
Jane Tufnell
Chair
12 May 2022
MANAGER’S REVIEW
Alternative Performance Measures
The Board and the Manager monitor the financial performance of the Company on the basis of Alternative Performance Measures (APM), which are non-IFRS measures. The APM predominantly form the basis of the financial measures discussed in this review, which the Board believes assists shareholders in assessing their investment and the delivery of the investment strategy.
The Company holds certain investments in subsidiary entities. The substantive difference between APM and IFRS is the treatment of the assets and liabilities of these subsidiaries. The APM basis “looks through” these subsidiaries to the underlying assets and liabilities they hold, and it reports the investments, less the Co-investment scheme liability, as the Portfolio APM. Under IFRS, the Company and its subsidiaries are reported separately. The assets and liabilities of the subsidiaries are presented on the face of the IFRS balance sheet as a single carrying value. Then same is true for the IFRS and APM basis of the Cash flow statement.
The Company’s Investments (IFRS) were £1,124.0m (2021: £907.5m), an increase of 23.8% on the prior year; Net Asset Value (NAV) (IFRS) was £1,158.0m (2021: £952.0m), an increase of 21.6% on the prior year; and Portfolio (APM) was £1,172.2m (2021: 949.2m), an increase of 23.5% on the prior year.
Cash flows from the sale of portfolio investments (IFRS) were £101.0m (2021: £147.5m) while Total Proceeds (APM) were £342.9m (2021: £209.2m) including Realisation Proceeds (APM) of £333.5m (2021: £137.3m). Cash flows related to the purchase of Portfolio investments (IFRS) were £75.1m (2021: £86.1m), while Total New Investment (APM) was £303.7m (2021: £139.2m).
The Glossary on page 38 include definitions for all APM and, where appropriate, a reconciliation between APM and IFRS.
Our investment strategy
We aim to deliver attractive risk-adjusted returns by executing our focused and differentiated investment strategy. We focus on investing in buyouts of businesses that are profitable, cash generative and have defensive growth characteristics that we believe will deliver strong and resilient returns across all economic cycles. Geographically we focus on the developed markets of North America, Europe and the UK, which have deep and mature private equity markets.
We find these characteristics in a range of companies, reflected in the diversified sectors in which our Portfolio is invested. There are a number of themes that contribute to a business having, in our view, defensive growth characteristics. These include (among others) attractive market positioning, providing mission-critical services to their clients and customers, ability to pass on price increases, and structurally high margins.
We invest in businesses directly, through ICG-managed funds, and through third-party private equity managers. When combined, we believe this results in a unique and balanced portfolio with attractive growth characteristics. Our Portfolio composition is shown below:
Investment category | 31 January 2022 | 31 January 2022 | 31 January 2021 |
ICG-managed investments | 315 | 27% | 23% |
Third Party Direct Investments | 190 | 16% | 21% |
Third Party Secondary Investments | 68 | 6% | 7% |
High Conviction Investments | 573 | 49% | 51% |
Third Party Funds | 599 | 51% | 49% |
Portfolio | 1,172 | 100% | 100% |
Performance overview
Continuing our track record of growth
Despite businesses worldwide facing ongoing challenges due to sustained impact from the COVID-19 pandemic, rising inflation, and concerns around potential interest rate rises, we continued to deliver strong NAV growth, generating NAV per Share Total Return of 24.4% and ending the year with a NAV per Share of 1,690p.
At 31 January 2022, our Portfolio was valued at £1,172.2m, reflecting a 29.4% Portfolio Return on a Local Currency Basis (FY21: 24.9%). Our Portfolio growth represents strong performance across all areas of our investment strategy.
Our growth this year extends the track record of strong performance that we have delivered for our shareholders. Over the last five years, our Portfolio has generated an annualised Portfolio Return on a Local Currency Basis of 20.4% and FY22 is the 13th consecutive year that we have delivered a double-digit Portfolio Return on a Local Currency Basis.
Movement in the Portfolio | Year ended | Year ended |
Opening Portfolio* | 949.2 | 806.4 |
Total New Investments | 303.7 | 139.2 |
Total Proceeds | (342.9) | (209.2) |
Net (proceeds)/investments | (39.2) | (70.0) |
Valuation Movement** | 279.4 | 200.6 |
Currency movement | (17.2) | 12.2 |
Closing Portfolio* | 1,172.2 | 949.2 |
% Portfolio growth (local currency) | 29.4% | 24.9% |
% currency movement | (1.8)% | 1.5% |
% Portfolio growth (Sterling) | 27.6% | 26.4% |
Effect of cash drag | (0.1)% | 0.4% |
Expenses and other income | (1.5)% | (1.9)% |
Co-investment Incentive Scheme Accrual | (1.8)% | (2.8%) |
Impact of share buybacks and dividend reinvestment | 0.2% | 0.4% |
NAV per Share Total Return | 24.4% | 22.5% |
* Refer to the Glossary for reconciliation to the Portfolio balance | ||
Broad-based growth across High Conviction Investments and Third Party Funds
The benefits of our approach to portfolio construction are demonstrated by our long-term track record. Over the last five years, our High Conviction Investments have generated an annualised Portfolio Return on a Local Currency Basis of 23.9% p.a. and our Third Party Fund investments have generated an annualised Portfolio Return on a Local Currency Basis of 17.8% p.a.
High Conviction Investments represented 48.9% of the Portfolio value at 31 January 2022 (31 January 2021: 50.7%). We anticipate that High Conviction Investments will continue to represent 50% - 60% of the Portfolio in the medium term.
During the year High Conviction Investments generated a 23.1% Portfolio Return on a Local Currency Basis. Key contributors to the performance included IRI (a provider of mission-critical data and predictive analytics to consumer goods manufacturers) and Visma (a provider of business management software and outsourcing services). The Secondary Investments made during the year have already shown positive returns, benefitting from the performance of a mature portfolio of invested assets.
Third Party Funds generated a 36.0% Portfolio Return on a Local Currency Basis for the year (FY21: 22.4%) and represented 51.1% of the Portfolio value at 31 January 2022 (31 January 2021: 49.3%). These returns were driven by the strong performance of a number of funds that we invest in, including those managed by Advent, Gridiron, CVC and Thomas H. Lee, as well as the realisation of U-POL.
Top 30 companies report another period of double-digit revenue and earnings growth
Our largest 30 underlying companies (“Top 30 companies”) represented 39.0% of the Portfolio by value at 31 January 2022 (31 January 2021: 51.8%). There were 13 new entrants to our Top 30 companies within the period. Three of these were existing holdings in the Portfolio, whilst 10 were new investments made during the period.
The geographic exposure of the Top 30 companies reflects our broader focus on developed private markets: 50.1% of the Top 30 by Portfolio value is invested in the US, 24.0% in Europe, with the remainder in the UK and the rest of the world.
The Top 30 companies delivered impressive operational performance during the year, generating LTM revenue growth of 27.1% and LTM EBITDA growth of 29.6%.2,3
Of the Top 30 companies, EBITDA is a relevant valuation metric for 274, which in aggregate represent 33.0% of the Portfolio by value. At 31 January 2022, based on the valuation information provided by the underlying managers, the average Enterprise Value / EBITDA of these companies was 14.6x (31 January 2021: 14.0x). The Net Debt / EBITDA ratio of the same companies was 4.3x (31 January 2021: 4.3x).
Realisation activity
Strong realisation activity reflects high demand for quality assets
FY22 represented a strong year of Realisation activity for ICG Enterprise Trust, with Total Proceeds for the period of £342.9m, comprised of £333.5m of realisations from individual companies (either held directly or through funds) and £9.4m of proceeds from Fund Disposals.
This was the highest level of Realisation Proceeds in the last 5 years and represents 35.1% of FY21 closing Portfolio value (as at 31 January 2021).
There were 54 Full Exits of Portfolio holdings during the period, generating proceeds of £210.5m.Full Exits were completed at an average Multiple to Cost of 2.6x, and an average Uplift To Carrying Value of 36.3% Partial exits generated Realisation Proceeds of £123.0m.
Four of our Top 30 companies at the beginning of the financial year were fully realised during the period. The largest exit was Telos, the 2nd largest investment at the start of the financial year, which we fully realised early in the period. This holding was exited through a sale of shares in the quoted business, following Telos’ IPO in 2020. The exit was completed at a slight uplift to the 31 January 2021 carrying value and generated a 33.0x return on invested capital. In September 2021, Graphite Capital completed the trade sale of U-POL (previously ranked third in our Top 30 holdings), to US-listed Axalta Coating Systems. This transaction generated proceeds of £22.9m, representing a 4.5x return on invested capital. Other notable Realisations included the exit of Supporting Education Group, an ICG investment, which was the 10th largest underlying Portfolio Company at the start of the year, and Cognito, an investment alongside Graphite Capital.
New investment activity
Executing on an attractive investment pipeline
During the period we were able to successfully execute on a number of attractive investments in our pipeline. In total during the year, we invested £303.7m, of which £185.6m (61.1%) was in High Conviction Investments and £118.1m were primary Drawdowns from Third Party Funds.
Investment Category | New investment FY22 | % of New investments |
High Conviction Investments | 186 | 61% |
Drawdowns from Third Party Funds | 118 | 39% |
Total | 304 | 100% |
Within the £185.6m of High Conviction Investments, £108.7m was invested alongside ICG and £76.9m was deployed through third-party managers. Fund investments represented £100.5m of High Conviction Investments, with £85.1m invested across 21 individually-selected Co-investments. 10 of these Co-investments represent new investments for ICG Enterprise Trust, and 11 were follow-on investments (totalling £5.1m) to companies already held in our Portfolio. Of the 10 new investments, four were alongside ICG and six were alongside third-party managers. The ten new Co-investments are listed overleaf.
Company | Manager | Company sector / description | ICG Enterprise Trust investment during the period |
Ambassador Theatre Group | ICG | Operator of theatres and ticketing platforms | £11.4m |
DomusVi | ICG | Operator of retirement homes | £11.2m |
Planet Payment | Eurazeo / Advent | Provider of integrated payments services focused on hospitality and luxury retail | £9.6m |
Ivanti | Charlesbank | Provider of enterprise IT software | £8.8m |
Davies Group | BC Partners | Provider of business process outsourcing services to the insurance sector | £8.7m |
Brooks Automation | Thomas H. Lee | Provider of semiconductor manufacturing solutions | £7.7m |
Class Valuation | Gridiron | Provider of residential mortgage appraisal management services | £6.9m |
European Camping Group | PAI | Operator of premium campsites and holiday parks | £6.9m |
DigiCert | ICG | Provider of enterprise internet security solutions | £6.7m |
AMEOS Group | ICG | Operator of private hospitals | £4.2m |
New Commitments
During the year we made a total of £189.9m of new Commitments to funds, of which £117.3m was to ICG-managed funds and £72.6m were to Third Party Funds.
ICG-managed funds
During the period we committed £117.3m to four ICG-managed funds, including to three funds that focus on Secondary transactions. The breakdown of Commitments made to ICG-managed funds was as follows:
Fund | Focus | ICG Enterprise Trust Commitment during the period |
ICG Ludgate Hill I | Secondary portfolio of mid-market and large buyouts | €45.0m (£38.7m) |
ICG Europe Fund VIII | Mezzanine and equity in mid-market buyouts | €40m (£34.8m) |
ICG Strategic Equity Fund IV | Secondary fund restructurings | $40m (£28.8m) |
ICG Ludgate Hill II | Secondary portfolio of mid-market and large buyouts | $20m (£15.0m) |
Third Party Funds
During the year we committed £72.6m to Third Party Funds including Commitments made to new funds and Commitments inherited as part of fund positions acquired in the secondary market. We sought to identify leading managers who complement our long-term strategic objectives, are committed to values aligned to our Responsible Investing framework and have an investment approach that suits our defensive growth focus. In the period we made combined Commitments of £69.3m into seven new Third Party Funds, four of which were to managers with whom we have not invested before, demonstrating our continued ability to originate and execute new opportunities to work with leading managers.
The breakdown of Commitments made to new Third Party Funds was as follows:
Fund | Focus | ICG Enterprise Trust Commitment during the period |
Thomas H. Lee IX | North American mid-market and large buyouts | $20m (£14.1m) |
BC Partners XI | European and North American mid-market buyouts | €15m (£12.8m) |
Resolute V | North American mid-market buyouts | $15m (£10.9m) |
Bregal Unternehmerkapital III* | European mid-market buyouts | €10m (£8.6m) |
GHO Capital III* | European and North American mid-market buyouts | €10m (£8.6m) |
GI Partners VI* | North American mid-market buyouts | $10m (£7.2m) |
Hellman and Friedman X* | North American mid-market and large buyouts | $10m (£7.1m) |
* New manager relationship during the period | ||
Portfolio analysis
Portfolio composition overview
The Portfolio is actively managed and structured to strike a balance between both concentration - so that Direct Investments can meaningfully impact performance - and diversification, so that we are not overly exposed to the risks of individual portfolio companies or sectors. We also seek to ensure appropriate diversification by sector and by geography in the Portfolio. The Top 30 underlying investments in the Portfolio represented 39.0% of the Portfolio value at 31 January 2022. Within the Top 30 holdings, 27 were High Conviction Investments.
Focus on developed markets
The Portfolio is focused on developed private equity markets, invested across the US (41.4%), continental Europe (32.1%) and the UK (18.6%).
Focus on sectors with defensive growth characteristics
The Portfolio is well diversified and weighted towards sectors with defensive growth characteristics. Technology (24.1%), Healthcare (16.6%), Business Services (11.0%) and Education (5.1%) make up 56.8% of the Portfolio. We feel these are particularly attractive sectors, benefitting from structural growth trends. Within our exposure to the Consumer and Industrial sectors (20.8% and 8.3% respectively), we have a bias to companies with more defensive business models, non-cyclical growth drivers and high recurring revenue streams. We have relatively low exposure to the Financials and Leisure sectors (5.5% and 3.9% respectively).
Quoted Companies
We do not actively invest in publicly-quoted companies, but gain listed investment exposure when IPOs are used as a route to exit an investment. In these cases, exit timing typically lies with the third-party manager alongside whom we have invested.
During the financial year, 17 portfolio companies were publicly listed. The listings generated a combined gross valuation uplift for the Company of £17.1m compared to their valuation at 31 January 2021.
At 31 January 2022, we had 45 underlying investments in quoted companies, representing 10.3% of the Portfolio value (31 January 2021: 20.4%). The reduction in listed exposure was largely driven by the Full Exit of Telos during February (4.6% of our Portfolio value at 31 January 2021) and the 53.2% decline in Chewy’s share price during the financial year. Despite Chewy’s share price performance this year, ICG Enterprise Trust’s investment in PetSmart (which includes Chewy) has delivered a strong return on investment for our shareholders.
At 31 January 2022 there were two quoted investments that individually accounted for 0.5% or more of the Portfolio value:
Company | Ticker | % value of Portfolio | |
1 | Chewy (part of PetSmart)1 | CHWY-US | 4.6% |
2 | Olaplex* | OLPX-US | 0.6% |
Other | 5.1% | ||
Total | 10.3% | ||
1 % value of Portfolio includes entire holding of PetSmart and Chewy. Majority of value is within Chewy | |||
Exposure to Russia and Ukraine
Our Portfolio has no material exposure to Russia or Ukraine. We continue to monitor the situation closely and remain alert to potential direct or indirect implications.
Balance sheet and financing
At 31 January 2022 we had a cash balance of £41.3m (31 January 2021: £45.1m) and total available liquidity of £208.4m.
£m | |
Cash at 31 January 2021 | 45 |
Realisation Proceeds | 334 |
Fund Disposals | 9 |
Third Party Fund Drawdowns | (118) |
High Conviction Investments | (186) |
Shareholder returns | (21) |
FX and other | (23) |
Cash at 31 January 2022 | 41 |
Available undrawn debt facilities | 167 |
Cash and undrawn debt facilities (total available liquidity) | 208 |
At 31 January 2022 the Portfolio represented 101.2% of net assets (31 January 2021: 100%).
31 January 2022 | 31 January 2021 | |
Portfolio* | 1,172 | 949 |
Cash | 41 | 45 |
Co-investment Incentive Scheme Accrual^ | (49) | (42) |
Other Net Liabilities*^ | (7) | (0) |
Net assets | 1,158 | 952 |
* Refer to the Glossary for reconciliation from the Investments at fair value presented on the balance sheet to the Portfolio balance and calculation of Other Net Liabilities
^ 31 January 2021 value impacted by rounding (Co-investment Incentive Scheme Accrual: £(41.8)m; Other Net Liabilities £(0.7)m)
At 31 January 2022, we had Undrawn Commitments of £418.6m (31 January 2021: £418.5m) of which 22.9% (£95.8m) were to funds outside of their Investment Period.
31 January 2022 | 31 January 2021 | |
Undrawn Commitments – funds in Investment Period | 323 | 341 |
Undrawn Commitments – funds outside Investment Period | 96 | 77 |
Total Undrawn Commitments | 419 | 418 |
Total available liquidity (including facility) | (208) | (201) |
Overcommitment (including facility) | 211 | 217 |
Overcommitment % of net asset value | 18% | 23% |
Our objective is to be fully invested through the cycle, while ensuring that we have sufficient liquidity to be able to take advantage of attractive investment opportunities as they arise. We do not intend to be geared other than for short-term working capital purposes.
Activity since the period end
Activity between 1 February 2022 and 31 March 2022 has included:
Realisation Proceeds of £92m
New Investments of £70m (52%% into High Conviction Investments)
Three new Fund Commitments totalling £79m
Effective as at 3rd May 2022, we have increased the size of our Revolving Credit Facility (“RCF”) to €240m (from €200m previously), in keeping with the Company’s higher net asset value. We have also extended the maturity by one year to February 2026. The other key terms remain unchanged. The RCF is available for general corporate purposes, including short-term financing of investments such as the Drawdown on Commitments to funds.
Outlook
We believe that the private equity model of active ownership is well positioned to generate long-term value and to withstand market volatility and economic uncertainty.
Calendar year 2022 is expected to see a large number of experienced private equity managers raising capital for new funds. This is creating attractive opportunities for ICG Enterprise Trust, with favourable supply/demand dynamics enabling us to selectively commit to funds managed by top-tier managers.
We remain focused on disciplined Deployment into attractive Co-investment opportunities, and to further growing our secondaries programme.
In line with our investment strategy, our Portfolio is invested into companies exhibiting characteristics of defensive growth, including strong cash flow generation, high margins, market leading positions in sectors with high barriers to entry, and strong ability to pass on cost increases. We believe that these attributes are likely to make them resilient investments, even in an inflationary and rising interest rate environment. We believe that this positions us well to continue to deliver attractive returns and to create value for our shareholders through FY23 and beyond.
ICG Private Equity Fund Investments Team
12 May 2022
SUPPLEMENTARY INFORMATION (UNAUDITED)
This section presents supplementary information regarding the Portfolio (see Manager’s Review and the Glossary for further details and definitions).
Top 30 companies
The table below presents the 30 companies in which ICG Enterprise Trust had the largest investments by value at 31 January 2022.
The valuations are gross of underlying managers fees and Carried interest.
Company | Manager | Year of investment | Country | Value as a % of Portfolio | |
1 | PetSmart/Chewy+ | ||||
Retailer of pet products and services | BC Partners | 2015 | United States | 4.6% | |
2 | Minimax+ | ||||
Supplier of fire protection systems and services | ICG | 2018 | Germany | 2.7% | |
3 | IRI+ | ||||
Provider of mission-critical data and predictive analytics to consumer goods manufacturers | New Mountain | 2018 | United States | 2.7% | |
4 | Yudo+ | ||||
Designer and manufacturer of hot runner systems | ICG | 2017 | South Korea | 2.2% | |
5 | Leaf Home Solutions | ||||
Provider of home maintenance services | Gridiron | 2016 | United States | 2.0% | |
6 | DOC Generici+ | ||||
Manufacturer of generic pharmaceutical products | ICG | 2019 | Italy | 1.7% | |
7 | Endeavor Schools+ | ||||
Provider of private schooling | Leeds Equity | 2018 | United States | 1.7% | |
8 | Froneri+ | ||||
Manufacturer and distributor of ice cream products | PAI | 2019 | United Kingdom | 1.6% | |
9 | Visma+ | ||||
Provider of business management software and outsourcing services | Hg Capital / ICG | 2017 / 2020 | Norway | 1.4% | |
10 | David Lloyd Leisure+ | ||||
Operator of premium health clubs | TDR | 2013 / 2020 | United Kingdom | 1.3% | |
11 | DomusVi+ | ||||
Operator of retirement homes | ICG | 2021 | France | 1.3% | |
12 | DigiCert+ | ||||
Provider of enterprise internet security solutions | ICG | 2021 | United States | 1.3% | |
13 | AML RightSource+ | ||||
Provider of compliance and regulatory services and solutions | Gridiron | 2020 | United States | 1.2% | |
14 | Ivanti+ | ||||
Provider of IT management solutions | Charlesbank / ICG | 2021 | United States | 1.1% | |
15 | PSB Academy+ | ||||
Provider of private tertiary education | ICG | 2018 | Singapore | 1.1% | |
16 | Curium Pharma+ | ||||
Supplier of nuclear medicine diagnostic pharmaceuticals | CapVest / ICG | 2020 | United Kingdom | 1.0% | |
17 | Precisely | ||||
Provider of enterprise software | ICG | 2021 | United States | 0.9% | |
18 | Planet Payment+ | ||||
Provider of integrated payments services focused on hospitality and luxury retail | Eurazeo / Advent | 2021 | Ireland | 0.9% | |
19 | Ambassador Theatre Group+ | ||||
Operator of theatres and ticketing platforms | ICG | 2021 | United Kingdom | 0.8% | |
20 | Davies Group+ | ||||
Provider of business process outsourcing services to the insurance sector | BC Partners | 2021 | United Kingdom | 0.8% | |
21 | Class Valuation+ | ||||
Provider of residential mortgage appraisal management services | Gridiron | 2021 | United States | 0.7% | |
22 | RegEd+ | ||||
Provider of SaaS-based governance, risk and compliance enterprise software solutions | Gryphon | 2018 | United States | 0.7% | |
23 | Crucial Learning+ | ||||
Provider of corporate training courses focused on communication skills and leadership development | Leeds Equity | 2019 | United States | 0.7% | |
24 | MoMo Online Mobile Services | ||||
Operator of remittance and payment services via mobile e-wallet | ICG | 2019 | Vietnam | 0.7% | |
25 | European Camping Group+ | ||||
Operator of premium campsites and holiday parks | PAI | 2021 | France | 0.7% | |
26 | Brooks Automation+ | ||||
Provider of semiconductor manufacturing solutions | Thomas H. Lee | 2022 | United States | 0.7% | |
27 | Olaplex | ||||
Provider of hair care products | Advent | 2020 | United States | 0.6% | |
28 | AMEOS Group+ | ||||
Operator of private hospitals | ICG | 2021 | Switzerland | 0.6% | |
29 | nGAGE | ||||
Provider of recruitment services | Graphite | 2014 | United Kingdom | 0.6% | |
30 | WCT | ||||
Provider of clinical research outsourcing services | The Jordan Company | 2021 | United States | 0.6% | |
Total of the 30 largest underlying investments | 39.0% |
+ All or part of this investment is held directly as a Co-investment or other Direct Investment
The 30 largest fund investments
The table below presents the 30 largest funds by value at 31 January 2022. The valuations are net of underlying managers fees and Carried interest.
Fund | Year of Commitment | Country/ region | Value £m | Outstanding Commitment £m | ||||
1 | ICG Ludgate Hill I | |||||||
Secondary portfolio of mid-market and large buyouts | 2021 | Europe/ | 42.6 | 13.7 | ||||
2 | ICG Europe Fund VII | |||||||
Mezzanine and equity in mid-market buyouts | 2018 | Europe | 36.1 | 10.3 | ||||
3 | ICG Strategic Equity Fund III | |||||||
Secondary fund restructurings | 2018 | Global | 35.0 | 10.3 | ||||
4 | Graphite Capital Partners VIII | |||||||
Mid-market buyouts | 2013 | UK | 32.0 | 4.4 | ||||
5 | BC European Capital IX | |||||||
Large buyouts | 2011 | Europe/ | 30.6 | 1.7 | ||||
6 | Gridiron Capital Fund III | |||||||
Mid-market buyouts | 2016 | North America | 27.5 | 4.1 | ||||
7 | CVC European Equity Partners VII | |||||||
Large buyouts | 2017 | Europe/ | 26.9 | 3.2 | ||||
8 | CVC European Equity Partners VI | |||||||
Large buyouts | 2013 | Europe/ | 24.5 | 2.1 | ||||
9 | Cinven VI | |||||||
Large buyouts | 2016 | Europe/ | 23.0 | 1.6 | ||||
10 | Thomas H. Lee Equity Fund VIII | |||||||
Mid-market and large buyouts | 2017 | North America | 20.0 | 3.7 | ||||
11 | Permira V | |||||||
Large buyouts | 2013 | Europe/ | 19.4 | 0.5 | ||||
12 | PAI Strategic Partnerships | |||||||
Mid-market and large buyouts | 2019 | Europe | 19.3 | 0.6 | ||||
13 | BC European Capital X | |||||||
Large buyouts | 2016 | Europe | 18.3 | 0.6 | ||||
14 | PAI Europe VI | |||||||
Mid-market and large buyouts | 2013 | Europe | 17.8 | 1.4 | ||||
15 | Advent IX | |||||||
Large buyouts | 2019 | Europe/ | 17.2 | 5.5 | ||||
16 | Advent Global Private Equity VIII | |||||||
Large buyouts | 2016 | Europe/ | 16.2 | 0.6 | ||||
17 | TDR Capital III | |||||||
Mid-market and large buyouts | 2013 | Europe | 15.6 | 1.5 | ||||
18 | ICG Strategic Equity Fund IV | |||||||
Secondary fund restructurings | 2021 | Global | 15.2 | 17.4 | ||||
19 | New Mountain Partners V | |||||||
Mid-market buyouts | 2017 | North America | 15.2 | 1.2 | ||||
20 | PAI Europe VII | |||||||
Mid-market and large buyouts | 2017 | Europe | 15.0 | 10.2 | ||||
21 | Gryphon V | |||||||
Mid-market buyouts | 2019 | North America | 15.0 | 1.8 | ||||
22 | Resolute IV | |||||||
Mid-market buyouts | 2018 | North America | 14.9 | 1.6 | ||||
23 | ICG Europe Fund VI | |||||||
Mezzanine and equity in mid-market buyouts | 2015 | Europe | 14.3 | 4.2 | ||||
24 | Oak Hill V | |||||||
Mid-market buyouts | 2019 | North America | 13.9 | 1.9 | ||||
25 | Gridiron Capital Fund IV | |||||||
Mid-market buyouts | 2019 | North America | 13.7 | 4.3 | ||||
26 | ICG Augusta Partners Co-Investor | |||||||
Secondary fund restructurings | 2018 | Global | 12.9 | 17.6 | ||||
27 | ICG Ludgate Hill II | |||||||
Secondary portfolio of mid-market and large buyouts | 2022 | North America | 12.0 | 5.2 | ||||
28 | Resolute II Continuation Fund | |||||||
Mid-market buyouts | 2021 | North America | 11.7 | 2.1 | ||||
29 | Leeds Equity Partners VI | |||||||
Mid-market buyouts | 2017 | North America | 11.4 | 0.6 | ||||
30 | Permira VI | |||||||
Large buyouts | 2016 | Europe / | 11.2 | 1.9 | ||||
Total of the largest 30 fund investments | 598.3 | 135.7 | ||||||
Percentage of total investment Portfolio | 51.0% | |||||||
Portfolio analysis
Portfolio by calendar year of investment | % of value of underlying investments | % of value of underlying investments | |
2022 | 0.1% | - | |
2021 | 25.1% | 0.4% | |
2020 | 12.3% | 10.1% | |
2019 | 15.4% | 18.3% | |
2018 | 17.9% | 18.4% | |
2017 | 9.6% | 17.1% | |
2016 | 5.9% | 9.6% | |
2015 | 6.6% | 11.2% | |
2014 and older | 7.1% | 8.9% | |
Total | 100.0% | 100.0% | |
Portfolio by sector | % of value of underlying investments | % of value of underlying investments | |
TMT | 24.1% | 19.2% | |
Consumer goods and services | 20.8% | 25.4% | |
Healthcare | 16.6% | 17.8% | |
Business services | 11.0% | 12.5% | |
Industrials | 8.3% | 6.9% | |
Financials | 5.5% | 4.7% | |
Education | 5.1% | 6.4% | |
Leisure | 3.9% | 4.5% | |
Other | 4.7% | 2.6% | |
Total | 100.0% | 100.0% | |
Portfolio by geographic distribution based on location of company headquarters | % of value of underlying | % of value of underlying | |
North America | 41.4% | 42.0% | |
Europe | 32.1% | 31.8% | |
UK and Other | 26.5% | 26.2% | |
Total | 100.0% | 100.0% | |
Commitments analysis
The following tables reflect Commitments at 31 January 2022. Original foreign currency Commitments are translated at 31 January 2022 exchange rates.
Total Undrawn Commitments
Original | Outstanding | Average | % of | |
Funds in Investment Period | 587.9 | 308.9 | 47.4% | 73.8% |
Funds post Investment Period | 714.4 | 109.7 | 84.6% | 26.2% |
Total | 1,302.3 | 418.6 | 67.8% | 100.0% |
Movement in outstanding Commitments in period ended 31 January 2022 | £m |
As at 1 February 2021 | 419 |
New Fund Commitments | 190 |
New Commitments relating to Co-investments | 78 |
Drawdowns | (303) |
Commitments released from Fund Disposals | (10) |
Currency and other movements | 45 |
As at 31 January 2022 | 418 |
New Commitments during the 12 months ended 31 January 2022
Fund | Strategy | Geography | £m |
ICG Ludgate Hill I | Secondary portfolio of mid-market and large buyouts | Europe/North America | 38.7 |
ICG Europe Fund VIII | Mezzanine and equity in mid-market buyouts | Europe | 34.8 |
ICG Strategic Equity Fund IV | Secondary fund restructurings | Global | 28.8 |
ICG Ludgate Hill II | Secondary portfolio of mid-market and large buyouts | North America | 15.0 |
Thomas H. Lee IX | Mid-market and large buyouts | North America | 14.1 |
BC Partners XI | Mid-market buyouts | Europe/North America | 12.8 |
Resolute V | Mid-market buyouts | North America | 10.9 |
GHO Capital III | Mid-market buyouts | Europe/North America | 8.6 |
Bregal Unternehmerkapital III | Mid-market buyouts | Europe | 8.6 |
GI Partners VI | Mid-market buyouts | North America | 7.2 |
Hellman and Friedman X | Mid-market and large buyouts | North America | 7.1 |
Other | Secondary fundholding acquisitions | Global | 3.2 |
Total Fund Commitments | 189.8 | ||
Co-investment Commitments | 78.4 | ||
Total New Commitments | 268.2 | ||
Currency exposure
Portfolio1 | 31 January | 31 January | 31 January | 31 January |
Sterling | 290.6 | 24.8% | 197.4 | 20.8% |
Euro | 219.9 | 18.8% | 208.3 | 21.9% |
US Dollar | 450.6 | 38.4% | 380.5 | 40.1% |
Other European | 95.7 | 8.2% | 73.9 | 7.8% |
Other | 115.4 | 9.8% | 89.1 | 9.4% |
Total | 1,172.2 | 100.0% | 949.2 | 100.0% |
1 Currency exposure is calculated by reference to the location of the underlying Portfolio companies’ headquarters. | ||||
Outstanding Commitments | 31 January | 31 January | 31 January | 31 January |
– Sterling | 28.7 | 6.8% | 43.7 | 10.4 |
– Euro | 200.4 | 47.9% | 195.9 | 46.8 |
– US Dollar | 189.5 | 45.3% | 178.2 | 42.6 |
– Other European | - | - | 0.7 | 0.2 |
Total | 418.6 | 100.0 | 418.5 | 100.0 |
Realisation activity
Investment | Manager | Year of investment | Exit | Proceeds £m | |||
Telos | Directly held | 1998 | Full | 44.5 | |||
Domus | ICG | 2017 | Full | 36.3 | |||
U-POL | Graphite | 2002 | Full | 23.9 | |||
Berlin Packaging | Oak Hill Capital | 2014 | Partial | 19.9 | |||
Supporting Education Group | ICG | 2014 | Full | 14.7 | |||
System One | Thomas H. Lee | 2016 | Full | 11.9 | |||
Cognito | Graphite | 2002 | Full | 10.9 | |||
Visma | Hg Capital / ICG | 2014 | Partial | 10.0 | |||
Everlight | ICG | 2016 | Full | 5.5 | |||
Rough Country | Gridiron | 2017 | Partial | 4.8 | |||
Total of 10 largest underlying realisations | 182.4 | ||||||
Other Realisation Proceeds | 151.2 | ||||||
Fund Disposals | 9.4 | ||||||
Total Proceeds | 342.9 | ||||||
Investment activity
Investment | Description | Manager | Country | Cost1 |
Domus | Operator of retirement homes | ICG | France | 14.2 |
DigiCert | Provider of enterprise internet security solutions | ICG | United States | 13.8 |
Ambassador Theatre Group | Operator of theatres and ticketing platforms | Providence | United Kingdom | 13.1 |
Planet Payment | Provider of integrated payments services focused on hospitality and luxury retail | Advent | Ireland | 12.5 |
Ivanti | Provider of IT management solutions | Charlesbank | United States | 11.8 |
Davies Group | Provider of specialised business process outsourcing services | ICG | United Kingdom | 9.3 |
Class Valuation | Provider of residential mortgage appraisal management services | ICG | United States | 8.5 |
Brooks Automation | Provider of semiconductor manufacturing solutions | Thomas H. Lee | United States | 7.8 |
European Camping Group | Operator of premium campsites and holiday parks | PAI | France | 7.7 |
AMEOS Group | Operator of private hospitals | ICG | Switzerland | 6.9 |
Total of 10 largest underlying new investments | 105.6 | |||
Total New Investment | 303.7 | |||
1 Represents ICG Enterprise Trust's indirect exposure (share of fund cost) plus any amounts paid for Co-investments in the period. | ||||
PRINCIPAL RISKS AND UNCERTAINTIES
Risk management
The execution of the Company’s investment strategy is subject to a variety of risks and uncertainties, and the Board and Manager have identified several principal risks to the Company’s business. As part of this process, the Board has put in place an ongoing process to identify, assess and monitor the principal and emerging risks facing the Company, including those that would threaten its business model, future performance, solvency or liquidity.
Principal risks and uncertainties
The Company considers its principal risks (as well as several underlying risks comprising each principal risk) in four categories:
Investment risks: the risk to performance resulting from ineffective or inappropriate investment selection, execution or monitoring.
External risks: the risk of failing to deliver the Company’s investment objective and strategic goals due to external factors beyond the Company’s control.
Operational risks: the risk of loss resulting from inadequate or failed internal processes, people or systems and external event, including regulatory risk.
Financial risks: the risks of adverse impact on the Company due to having insufficient resources to meet its obligations or counterparty failure and the impact any material movement in foreign exchange rates may have on underlying valuations.
A comprehensive risk assessment process is undertaken regularly to re-evaluate the impact and probability of each risk materialising and the strategic, financial and operational impact of the risk. Where the residual risk is determined to be outside of appetite, appropriate action is taken. Further information on risk factors is set out within the financial statements.
Principal risks
The Company’s principal risks are individual risks, or a combination of risks, that could threaten the Company’s business model, future performance, solvency or liquidity.
During the year the Company included climate change as a principal risk (see page 23).
Details of the Company’s principal risks, potential impact, controls and mitigating factors are set out on pages 22 to 26.
Other risks
Other risks, including reputational risk, are potential outcomes of the principal risks materialising. These risks are actively managed and mitigated as part of the wider risk management framework of the Company and the Manager.
Emerging risks
Emerging risks are considered by the Board as they come into view and are regularly assessed to identify any potential impact on the Company and to determine whether any actions are required. Emerging risks often include those related to regulatory/legislative change and macro-economic and political change.
The Company depends upon the experience, skill and reputation of the employees of the Manager. The Manager’s ability to retain the service of these individuals, who are not obligated to remain employed by the Manager, and recruit successfully, is a significant factor in the success of the Company.
The Company’s risk exposure as a result of the impacts from the Russia-Ukraine conflict and the sanctions imposed on Russia after the reporting date have been reviewed and the Company has minimal direct exposure. The political and economic situation is being monitored.
COVID-19
The continuation of the COVID-19 pandemic has given rise to challenges for businesses across the globe and during the year the Board maintained its focus on the impact of the crisis on the performance of the Company. The crisis management and business continuity protocols of the Manager remained effectively invoked and have provided a robust framework to support continuity.
Risk appetite and tolerance
The Board acknowledges and recognises that in the normal course of business, the Company is exposed to risk and that it is willing to accept a certain level of risk in managing the business to achieve its targeted returns. The Board’s risk appetite framework provides a basis for the ongoing monitoring of risks and enables dialogue with respect to the Company’s current and evolving risk profile, allowing strategic and financial decisions to be made on an informed basis.
The Board considers several factors to determine its acceptance for each principal risk and categorises acceptance for each risk as low, moderate and high. Where a risk is approaching or is outside the tolerance set, the Board will consider the appropriateness of actions being taken to manage the risk. In particular, the Board has a lower tolerance for financing risk with the aim to ensure that even under a stress scenario, the Company is likely to meet its funding requirements and financial obligations. Similarly, the Board has a low risk tolerance concerning operational risks including legal, tax, and regulatory compliance and business process and continuity risk.
Risk management framework
The Board is responsible for risk management and determining the Company’s overall risk appetite. The Audit Committee assesses and monitors the risk management framework and specifically reviews the controls and assurance programmes in place.
How we manage and mitigate our key risks
RISK | IMPACT | MITIGATION | CHANGE IN THE YEAR | |
Investment Risks | ||||
Investment performance |
|
| ↔Stable | |
Valuation |
|
| ↔Stable | |
External | ||||
Political and macro-economic uncertainty |
|
| ↑Increasing | |
Climate change |
|
| ↑Increasing | |
Private equity sector |
|
| ↔Stable | |
Foreign exchange |
|
| ↔Stable | |
Operational Risks | ||||
Regulatory, legislative |
|
| ↔ Stable | |
People |
|
| ↔ Stable | |
Information security |
|
| ↔Stable | |
The manager and third-party providers (including business processes and continuity) The Company is dependent on third parties for the provision of services and systems, especially those of the Manager, the Administrator and the Depositary. |
|
| ↔Stable | |
Financial Risks | ||||
Financing |
|
| ↔Stable | |
FINANCIAL STATEMENTS
Income statement
|
| |||||
Notes | Revenue | Capital return | Revenue | Capital return | ||
Total | Total | |||||
Investment returns | ||||||
Income, gains and losses on investments | 5,501 | 240,030 | 245,531 | 6,523 | 184,071 | 190,594 |
Deposit interest | 2 | – | 2 | 26 | – | 26 |
Other income | – | – | – | 45 | – | 45 |
Foreign exchange gains and losses | – | (980) | (980) | – | (799) | (799) |
5,501 | 239,050 | 244,553 | 6,594 | 183,272 | 189,866 | |
| ||||||
Investment management charges | (1,342) | (12,075) | (13,417) | (2,682) | (8,046) | (10,728) |
Other expenses | (2,383) | (2,263) | (4,646) | (2,129) | (1,941) | (4,070) |
(3,725) | (14,338) | (18,063) | (4,811) | (9,987) | (14,798) | |
Profit/(loss) before tax | 1,778 | 224,712 | 226,490 | 1,783 | 173,285 | 175,068 |
Taxation | - | - | - | - | - | – |
Profit/(loss) for the period | 1,778 | 224,712 | 226,490 | 1,783 | 173,285 | 175,068 |
| ||||||
Equity shareholders | 1,778 | 224,712 | 226,490 | 1,783 | 173,285 | 175,068 |
Basic and diluted earnings per share | 329.97p | 254.53p | ||||
The columns headed ‘Total’ represent the income statement for the relevant financial years and the columns headed ‘Revenue return’ and ‘Capital return’ are supplementary information, in line with the Statement of Recommended Practice for Financial Statements of Investment Trust Companies and Venture Capital Trusts issued by the Association of Investment Companies. There is no Other Comprehensive Income.
The notes on pages 31 to 36 are an integral part of the condensed financial statements.
Balance sheet
|
|
| |
Non-current assets | |||
Investments held at fair value | 7 | 1,123,747 | 907,562 |
| |||
Cash and cash equivalents | 41,328 | 45,143 | |
Receivables | 2,205 | 162 | |
43,533 | 45,305 | ||
| |||
Payables | 9,303 | 851 | |
Net current assets | 34,230 | 44,454 | |
Total assets less current liabilities | 1,157,977 | 952,016 | |
| |||
Share capital | 7,292 | 7,292 | |
Capital redemption reserve | 2,112 | 2,112 | |
Share Premium | 12,936 | 12,936 | |
Capital reserve | 1,135,637 | 929,676 | |
Revenue reserve | – | – | |
Total equity | 1,157,977 | 952,016 | |
|
| 1,690.1p |
|
The notes on pages 31 to 36 are an integral part of the condensed financial statements.
Cash flow statement
|
| |
Operating activities | ||
Sale of Portfolio investments | 100,982 | 147,545 |
Purchase of Portfolio investments | (75,125) | (86,134) |
Net cash flows to subsidiary investments | (2,524) | (6,486) |
Interest income received from Portfolio investments | 3,647 | 1,231 |
Dividend income received from Portfolio investments | 1,854 | 5,445 |
Other income received | 2 | 71 |
Investment management charges paid | (6,207) | (10,334) |
Other expenses paid | (1,570) | (1,419) |
Net cash inflow/(outflow) from operating activities | 21,059 | 49,919 |
| ||
Bank facility fee | (3,318) | (1,410) |
Interest paid | (50) | (440) |
Purchase of own shares into treasury | (2,679) | (775) |
Credit Facility utilised | - | 40,000 |
Credit Facility repaid | - | (40,000) |
Equity dividends paid to shareholders | (17,849) | (15,822) |
Net cash outflow from financing activities | (23,896) | (18,447) |
Net increase/(decrease) in cash and cash equivalents | (2,837) | 31,472 |
Cash and cash equivalents at beginning of period | 45,143 | 14,470 |
Net increase/(decrease) in cash and cash equivalents | (2,837) | 31,472 |
Effect of changes in foreign exchange rates | (978) | (799) |
Cash and cash equivalents at end of period | 41,328 | 45,143 |
The notes on pages 31 to 36 are an integral part of the condensed financial statements.
Statement of changes in equity
| Capital redemption |
|
|
| Total | |
Full year to | ||||||
Opening balance at 1 February 2021 | 7,292 | 2,112 | 12,936 | 929,676 | - | 952,016 |
Profit for the period and total | – | – | – | 224,712 | 1,778 | 226,490 |
Dividends paid | – | – | – | (16,071) | (1,778) | (17,849) |
Purchase of own shares into | – | – | – | (2,679) | – | (2,679) |
Closing balance | 7,292 | 2,112 | 12,936 | 1,135,637 | – | 1,157,977 |
| Capital redemption |
|
|
| Total | |
Full year to | ||||||
Opening balance at 1 February 2020 | 7,292 | 2,112 | 12,936 | 771,205 | – | 793,545 |
Profit for the period and total |
|
|
| 173,285 | 1,783 | 175,068 |
Dividends paid | – | – | – | (14,039) | (1,783) | (15,822) |
Purchase of own shares into | – | – | – | (775) | – | (775) |
Closing balance | 7,292 | 2,112 | 12,936 | 929,676 | – | 952,016 |
The notes on pages 31 to 36 are an integral part of the condensed financial statements.
NOTES TO THE FINANCIAL STATEMENTS
For the period ended 31 January 2022
1. General information
These financial statements relate to ICG Enterprise Trust Plc (‘the Company’). ICG Enterprise Trust Plc is registered in England and Wales and is incorporated in the United Kingdom. The Company is domiciled in the United Kingdom and its registered office is Procession House, 55 Ludgate Hill, London EC4M 7JW. The Company’s objective is to provide long-term growth by investing in private companies managed by leading private equity managers.
2. Financial information
The financial information for the year ended 31 January 2022 has been extracted from the statutory accounts for that year and do not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006. 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. Statutory accounts for that year will be delivered to the Registrar of Companies following the Company's Annual General Meeting which will be held on 28 June 2022.
The financial information for the year ended 31 January 2021 has been extracted from the statutory accounts for that year which were approved by the Board on 27 April 2021 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.
3. Basis of preparation
The financial information for the year ended 31 January 2022 has been prepared in accordance with International Accounting Standards (‘IAS’) in conformity with the requirements of the Companies Act 2006 and the Statement of Recommended Practice (‘SORP’) for investment trusts issued by the Association of Investment Companies in October 2019.
IAS comprises standards and interpretations approved by the International Accounting Standards Board (‘IASB’) and the IFRS Interpretations Committee.
These financial statements have been prepared on a going concern basis and on the historical cost basis of accounting, modified for the revaluation of certain assets at fair value. The directors have concluded that the preparation of the financial statements on a going concern basis continues to be appropriate; the directors’ assessment is further detailed in the Report of the Directors.
Climate change
In preparing the financial statements, the Directors have considered the impact of climate change, particularly in the context of the climate change risks identified in the principal risks section of the Strategic Report and the impact of climate-change risk on the valuation of investments.
These considerations did not have a material impact on the financial reporting judgements and estimates in the current year, nor were they expected to have a significant impact on the Group’s going concern or viability.
Accounting policies
The principal accounting policies adopted are set out below. These policies have been applied consistently throughout the current and prior year. In order to reflect the activities of an investment trust company, supplementary information which analyses the income statement between items of revenue and capital nature has been presented alongside the income statement. In analysing total income between capital and revenue returns, the directors have followed the guidance contained in the SORP as follows:
Capital gains and losses on investments sold and on investments held arising on the revaluation or disposal of investments classified as held at fair value through profit or loss should be shown in the capital column of the income statement.
Returns on any share or debt security for a fixed amount (whether in respect of dividends, interest or otherwise) should be shown in the revenue column of the income statement.
The Board should determine whether the indirect costs of generating capital gains should also be shown in the capital column of the income statement. If the Board decides that this should be so, the management fee should be allocated between revenue and capital in accordance with the Board’s expected long-term split of returns, and other expenses should be charged to capital only to the extent that a clear connection with the maintenance or enhancement of the value of investments can be demonstrated.
The accounting policy regarding the allocation of expenses is set out in note 1(i).
In accordance with IFRS 10 (amended), the Company is deemed to be an investment entity on the basis that:
(a) it obtains funds from one or more investors for the purpose of providing investors with investment management services;
(b) it commits to its investors that its business purpose is to invest funds for both returns from capital appreciation and investment income; and
(c) it measures and evaluates the performance of substantially all of its investments on a fair value basis.
As a result, the Company’s controlled structured entities (‘subsidiaries’) are deemed to be investment entities and are included in subsidiary investments classified as held at fair value through profit and loss.
The Financial Conduct Authority and the Bank of England have imposed significant interest rate benchmarking reform with LIBOR publication ceasing on 31 December 2021. The Company has applied the practical expedient as permitted under the transition rules. The impact of this application was immaterial to the Company.
Investments
All investments are classified upon initial recognition as held at fair value through profit or loss (described in these financial statements as investments held at fair value) and are measured at subsequent reporting dates at fair value. Changes in the value of all investments held at fair value, which include returns on those investments such as dividends and interest, are recognised in the income statement and are allocated to the revenue column or the capital column in accordance with the SORP (see note 1(a)). More detail on certain categories of investment is set out below. Given that the subsidiaries and associates are held at fair value and are exposed to materially similar risks as the Company, we do not expect the risks to materially differ from those disclosed in the Annual Report.
Unquoted investments
Fund investments and Co-investments (collectively ‘unquoted investments’) are fair valued using the net asset value of those unquoted investments as determined by the investment manager of those funds. The investment manager of the funds performs periodic valuations of its underlying investments (typically using earnings multiple or discounted cash flow methodologies to determine Enterprise Value in line with International Private Equity Valuation Guidelines) in line with fair value measurements. In the absence of contrary information, these valuation methodologies are deemed to be appropriate. A robust assessment is performed by the Manager’s experienced Investment Committee to determine the capability and track record of the investment manager. All investment managers are scrutinised by the Investment Committee and an approval process is recorded before any new investment manager is approved and an investment made. This level of scrutiny provides reasonable comfort that the investment manager’s valuation will be consistent with the requirement to use fair value.
Adjustments may be made to the net asset values provided or an alternative method may be deemed to be more appropriate. The most common reason for adjustments is to take account of events occurring after the date of the manager’s valuation, and better information becoming available, such as a realisation or a significant macro-economic event.
Quoted investments
Quoted investments are held at the last traded bid price on the balance sheet date. When a purchase or sale is made under contract, the terms of which require delivery within the timeframe of the relevant market, the contract is reflected on the trade date.
Subsidiary undertakings
The investments in the controlled structured entities (‘subsidiaries’) are recognised at fair value through profit and loss.
The valuation of the subsidiaries takes into account an accrual for the estimated value of interests in the Co-investment Incentive Scheme. Under these arrangements, ICG and certain of its executives and, in respect of certain historic investments, the executives and connected parties of Graphite Capital Management LLP (the 'Former Manager') (together 'the Co-investors'), are required to co-invest alongside the Company, for which they are entitled to a share of investment profits if certain performance hurdles are met. These arrangements are discussed further in the Report of the Directors. At 31 January 2022, the accrual was estimated as the theoretical value of the interests if the Portfolio had been sold at the carrying value at that date.
Associates
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.
The Company holds an interest (including indirectly through its subsidiaries) of more than 20% in a small number of investments that may normally be classified as subsidiaries or associates. These investments are not considered subsidiaries or associates as the Company does not exert control or significant influence over the activities of these companies/partnerships as they are managed by other third parties.
NOTES TO THE FINANCIAL STATEMENTS
4. Dividends
Year ended | Year ended | |
Third quarterly dividend in respect of prior year 5p per share (2021: 5.0p per share) | 3,438 | 3,444 |
Final dividend in respect of year ended 31 January 2021: 9p per share (2021: 8.0p) | 6,189 | 5,502 |
First quarterly dividend in respect of year ended 31 January 2022: 6.0p per share (2021: 5.0p) | 4,111 | 3,438 |
Second quarterly dividend in respect of year ended 31 January 2022: 6.0p per share (2021: 5.0p) | 4,111 | 3,438 |
17,849 | 15,822 | |
The Company paid a third quarterly dividend of 6.0p per share in March 2022. The Board has proposed a final dividend of 9p per share in respect of the year ended 31 January 2022 which, if approved by shareholders, will be paid on 22 July 2022 to shareholders and on the register of members at the close of business on 8 July 2022.
5. Earnings per share
Earnings per share | Year ended | Year ended |
Revenue return per ordinary share | 2.59p | 2.59p |
Capital return per ordinary share | 327.38p | 251.93p |
Earnings per ordinary share (basic and diluted) | 329.97p | 254.53p |
Weighted average number of shares | 68,638,288 | 68,781,700 |
The earnings per share figures are based on the weighted average numbers of shares set out above.
During the year, 250,000 shares were bought back in the market and held in treasury (31 January 2021: 110,000 shares). At 31 January 2022, the Company held 4,395,945 shares in treasury (31 January 2021: 4,145,945) leaving 68,517,055 (31 January 2021: 68,767,055) shares outstanding, all of which have equal voting rights.
6. Net Asset Value per Share
The Net Asset Value per Share is calculated as the net assets attributable to shareholders of £1,158.0m (31 January 2021: £952.0m) and 68,517,055 (31 January 2021: 68,767,055) ordinary shares in issue at the period end. There were no potentially dilutive ordinary shares, such as options or warrants, at either year end. Calculated on both the basic and diluted basis, the Net Asset Value per Share was 1,690.1p (31 January 2021: 1,384.4p).
NOTES TO THE FINANCIAL STATEMENTS
7. Fair Value estimation
IFRS 13 requires disclosure of fair value measurements of financial instruments categorised according to the following fair value measurement hierarchy:
Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2).
Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The valuation techniques applied to level 1 and level 3 assets are described in note 1 of the annual financial statements. No investments were categorised as level 1 or level 2.
The following tables present the assets that are measured at fair value at 31 January 2022 and 31 January 2021. The Company had no financial liabilities measured at fair value at those dates.
Level 1 | Level 2 | Level 3 | Total | ||||
31 January 2022 | £’000 | £’000 | £’000 | £’000 | |||
Investments held at fair value | |||||||
Unquoted investments1 | – | – | 140,060 | 140,060 | |||
Quoted investments | – | – | 61,949 | 61,949 | |||
Subsidiary undertakings1 | – | – | 921,738 | 921,738 | |||
Total investments held at fair value | – | – | 1,123,747 | 1,123,747 |
Level 1 | Level 2 | Level 3 | Total | ||||
31 January 2021 | £’000 | £’000 | £’000 | £’000 | |||
Investments held at fair value | |||||||
Unquoted investments | – | – | 604,306 | 604,306 | |||
Quoted investments | 35,702 | – | – | 35,702 | |||
Subsidiary undertakings | – | – | 267,554 | 267,554 | |||
Total investments held at fair value | 35,702 | – | 871,860 | 907,562 |
1 On 26 February 2021, the Company finalised a new bank facility of €200m (£177m, translated at the rate prevailing on the day the facility became available for use) with Credit Suisse. The facility was agreed to strengthen the Company’s financial position and replace the previous facility that was in place at the year end. The new facility requires at least £500m of investments be held in a single entity in order to provide security for the facility. To meet this criteria, a new subsidiary of the Company, ET Holdings LP, was incorporated on 15 December 2020. During February and March 2021, the Company completed a number of transfers of its investments, as well as transfers of investments from the Company’s subsidiary ICG Enterprise Trust Co-investment LP, to ET Holdings LP. In addition, during the year to 31 January 2022, ET Holdings LP entered into a number of new investments in its own right. The fair value of investments held in ET Holdings LP as at 31 January 2022 is £750.5m.
All quoted and unquoted investments are measured in accordance with IFRS 9.
NOTES TO THE FINANCIAL STATEMENTS
7. Fair Value estimation (continued)
Investments in level 3 securities are in respect of Third Party Funds and Direct Investments. These are held at fair value and are calculated using valuations provided by the underlying manager of the investment and reviewed by ICG, with adjustments made to the statements to take account of cash flow events occurring after the date of the manager’s valuation, such as realisations or liquidity adjustments. The valuations of unquoted investments provided by underlying managers are calculated in accordance with the 2018 IPEV Guidelines, which primarily use earnings multiple methodology. A 30% increase/(decrease) in the value of these assets (including those assets held within subsidiary undertakings) would result in a rise and fall in NAV of £319.4m and £331.0 or 27.6% and 28.6% respectively (31 January 2021: rise and fall in NAV of £252.0m and £254.8m respectively or 26.5% and 26.8%).
The following tables present the changes in level 3 instruments for the periods to 31 January 2022 and 31 January 2021.
Year ended | Year ended | |
Opening Balance 1 February | 871,860 | 777,185 |
Additions | 77,649 | 92,620 |
Disposals | (65,280) | (146,288) |
Gains and losses recognised in profit or loss | 239,517 | 148,383 |
Closing balance | 1,123,747 | 871,860 |
STATEMENT OF DIRECTORS’ RESPONSIBILITIES
The directors are responsible for preparing the Annual Report, the Directors’ Remuneration Report and the financial statements in accordance with applicable law and regulations.
Company law requires the directors to prepare financial statements for each financial year. Accordingly, the directors have prepared the financial statements in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006. Company law also requires that the directors do not approve the financial statements unless they are satisfied that they give a true and fair view of the state of affairs of the Company and of the profit or loss of the Company for the relevant period. In preparing these financial statements, the directors are required to:
select suitable accounting policies and then apply them consistently;
make judgements and accounting estimates that are reasonable and prudent;
state whether International Accounting Standards in conformity with the requirements of the Companies Act 2006, have been followed, subject to any material departures disclosed and explained in the financial statements; and
prepare the financial statements on a going concern basis unless it is inappropriate to presume that the Company will continue in business.
The directors are responsible for keeping adequate accounting records that are sufficient to show and explain the Company’s transactions and disclose with reasonable accuracy at any time the financial position of the Company and enable them to ensure that the financial statements and the Directors’ remuneration report comply with the Companies Act 2006 and, as regards the Company’s financial statements, International Accounting Standards in conformity with the requirements of the Companies Act 2006 and the Statement of Recommended Practice (‘SORP’) for investment trusts issued by the Association of Investment Companies in October 2019. The directors are also responsible for safeguarding the assets of the Company and for taking reasonable steps for the prevention and detection of fraud and other irregularities.
The directors are responsible for the maintenance and integrity of the Company’s website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.
Having taken advice from the Audit Committee, the directors consider that the Annual Report, taken as a whole, is fair, balanced and understandable and provides the information necessary for shareholders to assess the Company’s position and performance, business model and strategy.
Each of the directors confirm that, to the best of their knowledge:
the financial statements, which have been prepared in accordance with International Accounting Standards in conformity with the requirements of the Companies Act 2006, give a true and fair view of the assets, liabilities, financial position and profit of the Company; and
the Strategic Report includes a fair review of the development and performance of the business and the position of the Company, together with a description of the principal risks and uncertainties that it faces.
On behalf of the Board
Jane Tufnell
Chair
12 May 2022
GLOSSARY (UNAUDITED)
Term
Short form
Definition
Alternative Performance Measures
APMs
Alternative Performance Measures are a term defined by the European Securities and Markets Authority as “financial measures of historical or future performance, financial position, or cash flows, other than a financial measure defined or specified in the applicable financial reporting framework”.
APMs are used in this report if considered by the Board and the Manager to be the most relevant basis for shareholders in assessing the overall performance of the Company and for comparing the performance of the Company to its peers, taking into account industry practice.
Definitions and reconciliations to IFRS measures are provided in the main body of the report or in this Glossary, where appropriate.
Carried interest
Carried interest is equivalent to a performance fee. This represents a share of the profits that will accrue to the underlying private equity managers, after achievement of an agreed Preferred Return.
Co-investment
Co-investment is a Direct Investment in a company alongside a private equity fund.
Co-investment Incentive Scheme Accrual
Co-investment Incentive Scheme Accrual represents the estimated value of interests in the Co-investment Incentive Scheme operated by the subsidiary partnerships of the Company.
Commitment
Commitment represents the amount of capital that each Limited Partner agrees to contribute to the fund, which can be drawn at the discretion of the General Partner.
Deployment
Please see ‘Total new investment’.
Direct Investments
Please see ‘Co-investment’.
Discount
Discount arises when the Company’s shares trade at a price below the Company’s NAV per Share. In this circumstance, the price that an investor pays or receives for a share would be less than the value attributable to it by reference to the underlying assets. The Discount is the difference between the share price and the NAV, expressed as a percentage of the NAV. For example, if the NAV was 100p and the share price was 90p, the Discount would be 10%.
Drawdowns
Drawdowns are amounts invested by the Company into funds when called by underlying managers in respect of an existing Commitment.
EBITDA
Stands for earnings before interest, tax, depreciation and amortisation, which is a widely used performance measure in the private equity industry.
Enterprise Value
EV
Enterprise Value is the aggregate value of a company’s entire issued share capital and Net Debt.
Exclusion List
The Exclusion List defines the business activities which are excluded from investment.
FTSE All-Share Index Total Return
The change in the level of the FTSE All-Share Index, assuming that dividends are re- invested on the day that they are paid.
Full Exits
Full Exits are exit events (e.g., trade sale, sale by public offering, or sale to a financial buyer) following which the residual exposure to an underlying company is zero or immaterial; this does not include Fund Disposals. See ‘Fund Disposals’.
Fund Disposals
Fund Disposals are where the Company receives sales proceeds from the full or partial sale of a fund position within the secondary market.
General Partner
GP
The General Partner is the entity managing a private equity fund. This is commonly referred to as the manager.
Hedging
Hedging is an investment technique designed to offset a potential loss on one investment by purchasing a second investment that is expected to perform in the opposite way.
High Conviction Investments
High Conviction Investments comprise Direct Investments, as well as investments in ICG-managed funds and Secondary Investments.
Initial Public Offering
IPO
An Initial Public Offering is an offering by a company of its share capital to the public with a view to seeking an admission of its shares to a recognised stock exchange.
Internal Rate of
Return
IRR
Internal Rate of Return is a measure of the rate of return received by an investor in a fund. It is calculated from cash drawn from and returned to the investor, together with the residual value of the investment.
Investment Period
Investment Period is the period in which funds are able to make new investments under the terms of their fund agreements, typically up to five years after the initial Commitment.
Last Twelve Months
LTM
Last Twelve Months refers to the time frame of the immediately preceding 12 months in reference to a financial metricised to evaluate the Company’s performance.
Limited Partner
LP
The Limited Partner is an institution or individual who commits capital to a private equity fund established as a Limited Partnership. These funds are generally protected from legal actions and any losses beyond the original investment.
Limited Partnership
A Limited Partnership includes one or more General Partners, who have responsibility for managing the business of the partnership and have unlimited liability, and one or more Limited Partners, who do not participate in the operation of the partnership and whose liability is ordinarily capped at their capital and loan contribution to the partnership. In typical fund structures, the General Partner receives a priority share ahead of distributions to Limited Partners.
Net Asset Value
per Share
NAV per Share
Net Asset Value per Share is the value of the Company’s net assets attributable to one Ordinary share. It is calculated by dividing ‘shareholders’ funds’ by the total number of ordinary shares in issue. Shareholders’ funds are calculated by deducting current and long-term liabilities, and any provision for liabilities and charges, from the Company’s total assets.
Net Asset Value
per Share Total
Return
Net Asset Value per Share Total Return is the change in the Company’s Net Asset Value per Share, assuming that dividends are re- invested at the end of the quarter in which the dividend was paid.
Net Debt
Net Debt is calculated as the total short-term and long-term debt in a business, less cash and cash equivalents.
Ongoing Charges
Ongoing Charges are calculated in line with guidance issued by the Association of Investment Companies (‘AIC’) and capture management fees and expenses, excluding finance costs, incurred at the Company level only. The calculation does not include the expenses and management fees incurred by any underlying funds.
FY22 | Total per income statement £,000 | Amount | Included |
Management fees | 13,417 | – | 13,417 |
General expenses | 2,082 | 491 | 1,591 |
Finance costs | 2,565 | 2,565 | - |
Total | 18,064 | 3,056 | 15,008 |
Total Ongoing Charges | 15,008 | ||
Average NAV | 1,070,494 | ||
Ongoing Charges as % of NAV | 1.4% |
The amount of general expenses excluded from AIC ongoing charges includes £234,000 of legal and professional costs incurred in connection with the bank facility, as finalised with Credit Suisse during February 2021.
FY21 | Total per income statement | Amount | Included |
Management fees | 10,728 | - | 10,728 |
General expenses | 1,447 | 8 | 1,439 |
Finance costs | 2,623 | 2,623 | - |
Total | 14,798 | 2,631 | 12,167 |
Total Ongoing Charges | 12,167 | ||
Average NAV | 834,566 | ||
Ongoing Charges as % of NAV | 1.5% |
Other Net Liabilities
Other Net Liabilities at the aggregated Company level represent net other liabilities per the Company’s balance sheet. Net other liabilities per the balance sheet of the subsidiaries are amounts payable under the Co-investment Incentive Scheme Accrual.
Overcommitment
Overcommitment refers to where private equity fund investors make Commitments exceeding the amount of cash immediately available for investment. When determining the appropriate level of Overcommitment, careful consideration needs to be given to the rate at which Commitments might be drawn down, and the rate at which realisations will generate cash from the existing Portfolio to fund new investment.
Portfolio
Portfolio represents the aggregate of the investment Portfolios of the Company and of its subsidiary Limited Partnerships. This APM is consistent with the commentary in previous annual and interim reports. The Board and the Manager consider that disclosing our Portfolio assists shareholders in understanding the value and performance of the underlying investments selected by the Manager. It is shown before the Co-investment Incentive Scheme Accrual to avoid being distorted by certain funds and Direct Investments on which ICG Enterprise Trust Plc does not incur these costs (for example, on funds managed by ICG plc). Portfolio is related to the NAV, which is the value attributed to our shareholders, and which also incorporates the Co-investment Incentive Scheme Accrual as well as the value of cash retained on our balance sheet.
The value of the Portfolio at 31 January 2022is£1,172.2m (2021: £949.2m).
Portfolio (continued)
The closest equivalent amount reported on the balance sheet is ‘investments at fair value’. A reconciliation of these two measures along with other figures aggregated for the Company and its subsidiary Limited Partnerships is presented below:
31 January 2022 £m | IFRS Balance sheet fair value | Net assets | Co-investment Incentive Scheme Accrual | Total Company and subsidiary Limited Partnerships |
Investments1 | 1,123.7 | (0.6) | 49.1 | 1,172.2 |
Cash | 41.3 | - | - | 41.3 |
Other Net Liabilities | (7.1) | 0.6 | (49.1) | (55.6) |
Net assets | 1,157.9 | - | - | 1,157.9 |
31 January 2021 £m | IFRS Balance sheet fair value | Balances receivable from subsidiary Limited Partnerships | Co-investment Incentive Scheme Accrual | Total Company and subsidiary Limited Partnerships |
Investments1 | 907.6 | (0.2) | 41.8 | 949.2 |
Cash | 45.2 | - | - | 45.2 |
Other Net Liabilities | (0.7) | 0.2 | (41.8) | (42.3) |
Net assets | 952.1 | - | - | 952.1 |
1Investments as reported on the IFRS balance sheet at fair value comprise the total of assets held by the Company and the net asset value of the Company’s investments in the subsidiary Limited Partnerships.
Portfolio Return on a Local Currency Basis
Portfolio Return on a Local Currency Basis represents the change in the valuation of the Company’s Portfolio before the impact of currency movements and Co-investment Incentive Scheme Accrual. The Portfolio return of 29.4% is calculated as follows:
£m | FY22 | FY21 |
Income, gains and losses on Investments | 245.5 | 190.6 |
Foreign exchange gains and losses included in gains and losses on investments | 17.2 | (12.2) |
Incentive accrual valuation movement | 16.7 | 22.2 |
Total gains on Portfolio investments excluding impact of foreign exchange | 279.4 | 200.6 |
Opening Portfolio valuation | 949.2 | 806.4 |
Portfolio Return on a Local Currency Basis | 29.4% | 24.9% |
Term
Short form
Definition
Portfolio Return on a Local Currency Basis
(continued)
A reconciliation between the Portfolio Return on Local Currency Basis and NAV per Share Total Return is disclosed under ‘Total Return’.
Portfolio Company
Portfolio Company refers to an individual company in an investment portfolio.
Preferred Return
Preferred Return is the preferential rate of return on an individual investment or a portfolio of investments, which is typically 8% per annum.
Premium
Premium occurs when the share price is higher than the NAV and investors would therefore be paying more than the value attributable to the shares by reference to the underlying assets.
Quoted Company
A Quoted Company is any company whose shares are listed or traded on a recognised stock exchange.
Realisation Proceeds
Realisation Proceeds are amounts received in respect of underlying realisation activity from the Portfolio and exclude any inflows from the sale of fund positions via the secondary market.
Realisations - Multiple to Cost
Realisations - Multiple to Cost is the average return from Full Exits from the Portfolio in the period on a primary investment basis, weighted by cost.
£m | FY22 | FY21 |
Cumulative Realisation Proceeds from Full Exits in the year | 211.5 | 85.7 |
Cost | 108.1 | 35.6 |
Average return Multiple to Cost | 2.6x | 2.4x |
Realisations – Uplift To Carrying Value
Realisations – Uplift To Carrying Value is the aggregate uplift on Full exits from the Portfolio in the period excluding publicly listed companies that were exited via sell downs of their shares.
£m | FY22 | FY21 |
Realisation Proceeds from Full Exits in the year | 210.5 | 78.0 |
Prior Carrying Value (at previous quarterly valuation prior to exit) | 154.4 | 59.7 |
Realisations – Uplift To Carrying Value | 36% | 31% |
Secondary Investments
Secondary Investments occur when existing private equity fund interests and Commitments are purchased from an investor seeking liquidity.
Share Price Total Return
Share Price Total Return is the change in the Company’s share price, assuming that dividends are re-invested on the day that they are paid.
Total New Investment
Total New Investment is the total of direct Co-investment and fund investment Drawdowns in respect of the Portfolio. In accordance with IFRS 10, the Company’s subsidiaries are deemed to be investment entities and are included in subsidiary investments within the financial statements.
Movements in the cash flow statement within the financial statements reconcile to the movement in the Portfolio as follows:
£m | FY22 | FY21 |
Purchase of Portfolio investments per cash flow statement | 75.1 | 86.1 |
Purchase of Portfolio investments within subsidiary investments | 228.8 | 53.1 |
Total New Investment | 303.7 | 139.2 |
Total Proceeds
Total Proceeds are amounts received by the Company in respect of the Portfolio, which may be in the form of capital proceeds or income such as interest or dividends. In accordance with IFRS 10, the Company’s subsidiaries are deemed to be investment entities and are included in subsidiary investments within the financial statements.
£m | FY22 | FY21 |
Sale of Portfolio investments per cash flow statement | 101.0 | 147.5 |
Sale of Portfolio investments, interest received, and dividends received within subsidiary investments | 236.4 | 55.1 |
Interest income per cash flow statement | 2.0 | 1.2 |
Dividend income per cash flow statement | 1.6 | 5.4 |
Total Proceeds | 342.9 | 209.2 |
Fund Disposals | 9.4 | 71.9 |
Realisation Proceeds | 333.5 | 137.3 |
Total Return
Total Return is a performance measure that assumes the notional re-investment of dividends. This is a measure commonly used by the listed private equity sector and listed companies in general.
The table below sets out the share price and the Net Asset Value per Share growth figures for periods of one, three, five and ten years to the balance sheet date on a Total Return basis:
Total Return performance in years to 31 January 2022 | 1 year | 3 years | 5 years | 10 years |
Net Asset Value per Share | +24.4% | +69.3% | +114.2% | +257.5% |
Share price | +27.1% | +57.5% | +94.9% | +325.5% |
FTSE All-Share Index | +18.9% | +21.7% | +30.2% | +104.4% |
The table below shows the breakdown of the one-year Net Asset Value per Share Total Return for the period:
Change in NAV (% of opening NAV) | FY22 | FY21 |
Portfolio Return on a Local Currency Basis | 29.4% | 24.9% |
Currency movements on the Portfolio | (1.8%) | 1.5% |
Portfolio return in sterling | 27.6% | 26.4% |
Effect of cash drag | (0.1%) | 0.4% |
Impact of net portfolio movement on net asset value | 27.5% | 26.8% |
Expenses and other income | (1.5%) | (1.9%) |
Incentive accrual valuation movement | (1.8%) | (2.8%) |
Increase in Net Asset Value per Share before buy backs | 24.2% | 22.1% |
Impact of share buy backs & dividend reinvestment | 0.2% | 0.4% |
Net Asset Value per Share Total Return | 24.4% | 22.5% |
Undrawn Commitments
Undrawn Commitments are Commitments that have not yet been drawn down (please see ‘Drawdowns’).
Unquoted Company
An Unquoted Company is any company whose shares are not listed or traded on a recognised stock exchange.
Valuation Multiples
Valuation Multiples are earnings (EBITDA), or revenue multiples applied in determining the value of a business enterprise.
Venture Capital
Financing provided to a company in the earlier stages of its lifecycle, either at the concept, start-up, or early stage of that company’s development.
1 Being the sum of all ordinary dividends declared during FY22, including the proposed final dividend, and the value of all shares bought back during the year
2 Weighted averages, based on contribution to Portfolio value at 31 January 2022
3 EBITDA growth rate excludes Ambassador Theatre Group (#19) and European Camping Group (#25), for which prior year EBITDA was negative (due to COVID-19 impacts)
4 PetSmart/Chewy, Olaplex and MoMo were excluded from this analysis as EBITDA growth is not a relevant metric for these companies in the period
