TIDMICGT
28 April 2021
ICG Enterprise Trust plc
Preliminary Results for the year ended 31 January 2021
Excellent performance demonstrating
strength of strategy and Portfolio
Highlights
-- NAV per Share of 1,384p, NAV per Share Total Return of 22.5%1 during the
year and 11.8% during the quarter
-- Excellent Portfolio performance, 12th consecutive year of double-digit
Portfolio Return on a Local Currency Basis
-- Portfolio Return on a Local Currency Basis of 24.9%1
-- High Conviction Investments (51% of the Portfolio) experienced
local currency returns of +48.0%
-- Ongoing Third Party Funds generated a local currency return of
+22.4% (+9.0% including Fund Disposals that were undertaken to
redeploy capital into more attractive opportunities)
-- Top 30 companies driving performance
-- Top 30 companies represent 52% of Portfolio value (31 January
2020: 46%)
-- Reported aggregated LTM revenue growth of 15%, demonstrating the
strength of our focus on companies with defensive growth
characteristics
-- Realisations at significant Uplifts to Carrying Value
-- Total Proceeds during the year of GBP209m
-- Realisation Proceeds of GBP137m, of which GBP86m was generated
from 32 Full Exits that were executed at an average of 31%1 Uplift
to Carrying Value and a 2.4x1 Multiple to Cost
-- Fund Disposals generated GBP72m proceeds and released GBP42m of
Undrawn Commitments
-- Maintained investment activity throughout the year
-- GBP139m of Total New Investment made; 36% into High Conviction
Investments
-- GBP95m committed to 13 Third Party Funds, including three new
relationships
-- Robust balance sheet
-- GBP201m available liquidity (GBP45m of cash and GBP156m undrawn
revolving credit facility at 31 January 2021)
-- Annual dividend of 24p
-- Final dividend of 9p, bringing total dividends for the year to 24p
(an increase of 4.3% compared to FY20)
-- Momentum continues, outlook remains positive
-- In early February we fully realised our holding in Telos, which at
31 January 2021 was our second largest holding. The investment was
realised at a circa 33x Multiple to Cost in line with the carrying
value at 31 January 2021
-- Effective from 26 February 2021, we agreed a new four-year EUR200m
revolving credit facility, replacing our GBP156m facility
-- Strong pipeline in both High Conviction Investments and Third
Party Funds
Oliver Gardey, Head of Private Equity Fund Investments, ICG, commented:
"This has been an excellent year for ICG Enterprise Trust, despite the
disruption caused by the COVID-19 pandemic. We have extended our record
of double-digit Portfolio Return on a Local Currency Basis to 12
consecutive years. Our Portfolio performed extremely well, underlining
the strength of our focused investment strategy and our differentiated
approach to actively constructing and managing our Portfolio. In
particular, we saw strong performance from a number of our technology
and tech-enabled businesses.
"While there was a slowdown in investment activity at the onset of the
COVID-19 pandemic, we continued to see strong deal flow by virtue of the
access we have to ICG and other leading private equity managers. The
resurgence in activity during the second half of the year also resulted
in a healthy number of realisations, which occurred at significant
uplifts to their carrying values.
"Our Portfolio is focused on defensive growth companies, well
diversified by sector and geography, and is well positioned to capture
the growth of a dynamic market environment. The strong momentum we
observed in the fourth quarter of the financial year has been maintained,
and I am confident that we will continue to source attractive investment
opportunities."
Comparison to prior periods
1 year 3 years 5 years 10 years
---------------------------------- ------ ------- ------- --------
NAV per Share Total Return +22.5% +53.1% +109.3% +207.7%
Share Price Total Return +2.8% +27.6% +101.8% +290.3%
FTSE All-Share Index Total Return -7.5% -1.6% +31.5% +71.4%
Year ended Year ended Quarter ended Quarter ended
31 January 2021 31 January 2020 31 January 2021 31 October 2020
Portfolio
Return on a
Local
Currency
Basis 24.9% 16.6% 17.1% 12.1%
NAV per
Share 1,384.4p 1,152.1p 1,384.4p 1,243.0p
NAV per
Share Total
Return 22.5% 11.2% 11.8% 10.7%
Realisation GBP137m GBP141m GBP43m GBP55m
Proceeds
Total New GBP139m GBP159m GBP57m GBP30m
Investment
Enquiries
Analyst / Investor enquiries: +44 (0) 20 3545 2000
Oliver Gardey, Head of Private Equity Fund Investments, ICG
Colm Walsh, Managing Director, Private Equity Fund Investments, ICG
James Caddy, Investor Relations, ICG
Media:
Fiona Laffan, Global Head of Corporate Affairs, ICG: +44 (0) 20 3545
1510
Ed Gascoigne Pees, Camarco: +44 (0) 20 3757 4993
Website:
www.icg-enterprise.co.uk
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 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 ("APMs").
APMs have been used if considered by the Board and the Manager to be the
most relevant basis for shareholders in assessing the overall
performance of the Company, and for comparing the performance of the
Company to its peers and its previously reported results. The Glossary
includes further details of APMs and reconciliations to IFRS measures,
where appropriate.
In the Chair's Statement, 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 STATEMENT
In my first year as Chair of ICG Enterprise Trust, I am pleased to
report that your Company's Portfolio has remained resilient,
demonstrating strong performance despite a period of immense challenge
and volatility. ICG Enterprise Trust's Portfolio recorded its best
performance in a decade with Portfolio Return on a Local Currency Basis
of +24.9%. Performance was particularly strong within our High
Conviction Investments, driven by a number of Direct Investments in
technology and tech-enabled businesses, as well as several realisations
at significant Uplifts to Carrying Value. This resulted in NAV per Share
Total Return of 22.5%, with NAV per Share of 1,384p as at 31 January
2021. I am very aware that the Share Price Total Return of 2.8% for the
year does not reflect this performance.
Delivering on our strategic goals
We made further progress towards our strategic goals, increasing our
weighting towards High Conviction Investments and increasing our
exposure to the US.
Since appointing ICG as the Manager five years ago, we have reduced the
impact of cash drag on performance by becoming more fully invested
without compromising the quality of the Portfolio(2) and at 31 January
2021 the Portfolio represented 100% of Net Assets (31 Jan 2016: 82%).
Our High Conviction Investments represented 51% of the Portfolio at 31
January 2021 (31 Jan 2020: 41%) and have generated a local currency
return of 25% p.a. over the last five years. We expect these investments
to continue to enhance the strong returns generated from our Third Party
Funds, which have generated a local currency return of 15% p.a. over the
last five years.
We have made progress in increasing our exposure to US investments,
which now represent 42% of the Portfolio (31 January 2020: 30%). The US
is the largest private equity market in the world, with a deep pool of
leading private equity managers who have long track records of
outperformance.
The importance of investing responsibly
Responsible investing remains a key focus for our investment team which
is able to leverage ICG's considerable resources in this area 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 responsible
investment.
Board evolution
Following an external review we decided that the Board's level of
investment trust experience should be reinforced in the ongoing
succession plan. Having conducted an interview process we were delighted
that David Warnock agreed to join the Board. David brings extensive
private equity, investment trust and listed company experience. The
Board currently comprises six independent non-executive directors, with
a diverse range of skills and expertise, and an equal number of men and
women.
Lucinda Riches will be retiring from the Board on 21 June 2021 having
served for ten years, and I would like to thank Lucinda for her
contributions to ICG Enterprise Trust.
Dividend
The Board is proposing a final dividend of 9p per share. Together with
the three interim dividends of 5p per share each, this will take total
dividends for the year to 24p per share, representing a 4.3% increase on
the prior year dividend of 23p per share and a 2.5% yield on the
year-end share price. This marks the fifth consecutive year of dividend
increases.
Annual General Meeting
The Annual General Meeting will be held on 21 June 2021. The Board is
mindful of the ongoing travel and social gathering restrictions arising
from the COVID-19 pandemic and is considering the most appropriate
arrangements in the light of these. We currently envisage that the
meeting will be held as a hybrid meeting with at least some shareholders
able to attend in person and others by videoconference, but the
arrangements (and in particular the possibility of physical attendance)
remain subject to prevailing public health regulations. 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 AGM if
this is permitted as intended.
Well placed to continue to generate value for our shareholders
ICG Enterprise Trust enters its 40th year in good health. We are
encouraged by the strong performance of our Portfolio, which is a
testament to our strategy and our focus on investments with defensive
growth characteristics. As the world navigates its recovery from the
COVID-19 pandemic, we are confident that we remain well placed to
execute on our purpose of providing shareholders with access to the
attractive long-term returns generated by investing in private companies,
with the added benefit of daily liquidity.
Jane Tufnell
27 April 2021
MANAGER'S REVIEW
PERFORMANCE OVERVIEW
Consistently strong Portfolio performance
This has been an extraordinary year, with the COVID-19 pandemic
impacting all of our lives and generating significant volatility across
global economies. Against this backdrop, the strength of our business
model and highly focused investment strategy has been evident. Over the
year the Portfolio generated a +24.9% Portfolio Return on a Local
Currency Basis. This represents the 12(th) consecutive year of
double-digit portfolio growth.
We aim to deliver attractive risk-adjusted returns by executing
consistently on our focused and differentiated investment strategy. We
focus on buyouts in developed markets, targeting mid-market and larger
deals. We look for businesses that are profitable, cash generative and
with strong defensive growth characteristics. We find these
characteristics in a range of sectors and invest in these businesses
directly, through ICG managed funds and through third party private
equity managers. When combined, we believe this results in a
well-balanced portfolio that will generate consistently strong growth.
High Conviction Investments are those where ICG has actively selected
the underlying companies. High Conviction Investments experienced
particularly strong local currency returns of +48.0% for the year and
represented GBP481m (51%) of the Portfolio value at 31 January 2021. Key
contributors to the strength of performance were from technology and
tech-enabled businesses, including Chewy whose share price increased by
284% during the year (which we hold through our investment in PetSmart
and our Commitment to BC Partners IX) and Telos (a global provider of
cyber, cloud and enterprise security services). Telos listed in November
at $17 per share, with the share price increasing by 108% by 31 January
2021.
Our ongoing Third Party Funds delivered local currency returns of +22.4%
and represented GBP468m (49%) of Portfolio value at 31 January 2021.
Within our Third Party Funds, we also executed a number of Fund
Disposals, including some at discounts to their carrying value, in order
to rebalance the Portfolio, release Commitments and expand investment
capacity for Deployment into more attractive opportunities in line with
our ongoing strategy. Including Fund Disposals, our Third Party Funds
delivered local currency returns of +9.0%. Key contributors to the
performance of our Third Party Funds include Leaf Home Solutions and
Allegro. Leaf Home Solutions is a branded direct-to-consumer company in
the US that provides guttering protection and other home safety
solutions. Allegro, an online marketplace, listed on the Warsaw stock
exchange during the financial year.
Our Third Party Funds also play an important strategic role by providing
direct investment opportunities. New Direct Investments made during the
financial year that were sourced through our Third Party Fund
relationships were Visma (alongside Hg Capital) and AML RightSource
(alongside Gridiron Capital).
Realisation activity has continued to support Portfolio performance
during the year, with an average Uplift to Carrying Value on realisation
of 31%.
Year ended Year ended
Movement in the Portfolio 31 Jan 31 Jan
GBPm 2021 2020
--------------------------------------------- ---------- ------------- ----------
Opening Portfolio* 806.4 694.8
Total New Investments 139.2 158.6
Total Proceeds (209.2) (148.8)
------------- ----------
Net cash (inflow)/outflow (70.0) 9.8
Underlying Valuation Movement** 200.6 115.4
Currency movement 12.2 (13.6)
Closing Portfolio* 949.2 806.4
------------- ----------
% underlying Portfolio growth (local
currency) 24.9% 16.6%
% currency movement 1.5% (2.0%)
------------- ----------
% underlying Portfolio growth (Sterling) 26.4% 14.6%
------------- ----------
* Refer to the Glossary for reconciliation to the
Portfolio balance presented in the unaudited results.
** 95% of the Portfolio is valued using 31 December
2020 (or later) valuations (31 Jan 20: 95%).
Portfolio overview
High Conviction Investments underpinned by investments in leading Third
Party Funds
Our strategy is focused on investing in mid-cap and larger companies
that have leading market positions, strong management teams and
attractive defensive growth characteristics. We believe they will
generate the most consistently strong returns through the cycle. Our
Portfolio combines investments managed by ICG and those managed by third
parties, in both cases directly and through funds.
High Conviction Investments represented 51% of the Portfolio value (31
Jan 2020: 41%) and we anticipate these investments will represent 50% -
60% of the Portfolio in the medium term.
Our High Conviction Investments, which include 23 of our Top 30
companies, allow us to proactively increase exposure to companies that
benefit from long-term structural trends and therefore have the ability
to grow even in less benign economic environments. We are able to
enhance returns and increase visibility on underlying performance
drivers, and we mitigate the more concentrated risk through a highly
selective approach and a focus on defensive growth companies. Over the
last five years, this element of the Portfolio has generated a local
currency return of 25% p.a.
Third Party Funds represent 49% of total Portfolio value and were valued
at GBP468m (31 Jan 2020: GBP477m). This element of the Portfolio
provides a base of strong diversified returns as well as deal flow for
direct and secondary investments. The underlying funds are focused on
mid-market and large-cap European and US private equity managers. Over
the last five years this element of the Portfolio has generated a local
currency return of 15% p.a.
31 January 31 January 31 January
2021 2021 2020
Investment category GBPm % of Portfolio % of Portfolio
------------------------------- ---------- -------------- --------------
ICG managed investments 221 23 22
Third party Direct
Investments 197 21 14
Third party Secondary
Investments 63 7 5
High Conviction Investments 481 51 41
Third Party Funds 468 49 59
-------------------------------- ---------- -------------- --------------
Total 949 100 100
-------------------------------- ---------- -------------- --------------
Top 30 companies report another period of double-digit revenue and
earnings growth
Our largest 30 underlying companies ("Top 30 companies") represent 52%
of the Portfolio by value. They performed well, underpinned by strong
operational performance, and reported LTM revenue growth of 15%.
Of the Top 30 companies, EBITDA is a relevant metric for 26(3) , which
in aggregate represent 35% of the Portfolio by value. These companies
reported LTM revenue and EBITDA growth of 12% and 14% respectively.
Their Enterprise Value / EBITDA multiples were 14.0x and the Net
Debt/EBITDA ratio was 4.3x. Our Top 30 companies are heavily weighted
towards developed private equity markets. 48% of the Top 30 by Portfolio
value is invested in the US, 25% in Europe and 21% in the UK. The Top 30
is diversified by sector, with a bias towards companies with strong
defensive growth characteristics.
Within our Top 30 companies, three companies listed during the financial
year (Telos, Allegro, and Dr. Martens). All three enjoyed strong
performance during the financial year. In addition, we have exposure to
Chewy (which is also quoted) through our investment in PetSmart, whose
share price also performed very strongly during the financial year. The
carrying value of these companies increased significantly during the
financial year and combined they contributed GBP125m to the growth of
the Portfolio, gross of underlying managers' fees and Carried Interest.
REALISATION ACTIVITY
Realisations at significant Uplifts to Carrying Value and cost
Despite the slowdown in realisation activity during the first half of
the financial year, Total Proceeds for the full year amounted to
GBP209m. This was comprised of GBP137m generated from the realisation of
individual companies (either held directly or through funds) and GBP72m
of proceeds from Fund Disposals.
32 Full Exits completed in the year and realised GBP86m of proceeds.
These realisations were completed at an average of 31% Uplift to
Carrying Value and an average Multiple to Cost of 2.4x. This is
consistent with our recent historical performance: over the last five
years Full Exits have averaged 35% Uplift to Carrying Value and a
Multiple to Cost of 2.4x. A further GBP51m of proceeds were received
from partial exits.
Four of our Top 30 companies at the beginning of the financial year were
fully realised during the financial year. The largest exit was Roompot,
which was sold by PAI Partners to funds advised by KKR. Roompot operates
and develops holiday parks in Northern Europe. It was sold at a
significant Uplift to Carrying Value of the Company's holding in the
business. The success of the realisation, agreed at a time of extreme
economic uncertainty, highlights the benefit of investing in companies
with strong defensive growth characteristics and market leading
positions. Our second largest underlying company at the start of the
year, City & County Healthcare Group, was fully realised by Graphite
Capital. Other notable realisations included the exit of the French
vinyl floor manufacturer Gerflor (12(th) largest underlying company at
the start of the year), and sales by the underlying managers of the
listed investments in Ceridian and TeamViewer.
We also demonstrated our active approach to managing the Portfolio by
executing a number of Fund Disposals, generating GBP72m of proceeds and
releasing GBP42m of Undrawn Commitments. A number of these were
undertaken strategically at discounts to their carrying value in order
to rebalance the Portfolio, release Commitments and expand investment
capacity for Deployment into more attractive opportunities in line with
our ongoing strategy. We worked alongside the previous Manager of the
Company (Graphite Capital) to facilitate the most significant fund
disposal in the period, being the partial disposal of our sizeable
holding in Graphite VIII, a fund focused on small to mid-sized UK
buyouts.
NEW INVESTMENT ACTIVITY
Healthy investment activity despite disrupted first half
Whilst there was a slowdown in investment activity in the first half of
the year at the onset of the COVID-19 pandemic, we continued to source
attractive investment opportunities and maintained a healthy level of
investment activity for the year, deploying capital into both High
Conviction Investments and Third Party Funds. In total we invested
GBP139m, of which GBP90m was in Third Party Funds and GBP49m (36%) was
in High Conviction Investments.
Our Third Party Funds generated over 20 direct investment opportunities.
Of these 20, we completed three new Direct Investments in the year for a
total of GBP16m. These new investments were made in:
Company Manager Company sector / description ICG
Enterprise
Trust
investment
during the
year
----------- --------- -------------------------------------------------------- ----------
Visma Hg Provider of business management software and outsourcing GBP4m
services
----------- --------- -------------------------------------------------------- ----------
AML Gridiron Provider of compliance and regulatory services and GBP6m
RightSource solutions
----------- --------- -------------------------------------------------------- ----------
Curium ICG Supplier of nuclear medicine diagnostic pharmaceuticals GBP6m
Pharma Strategic
Equity
----------- --------- -------------------------------------------------------- ----------
The remaining GBP33m of High Conviction Investments made in the year
were through ICG funds (GBP22m), Secondary Investments (GBP9m) and
add-on investments for existing Direct Investments (GBP2m).
13 new fund Commitments to both existing and new manager relationships
We continued to commit selectively to top-tier managers who are aligned
with our long-term strategic objectives and have an investment approach
that complements our defensive growth focus. We completed 13 new Third
Party Fund Commitments in the year totalling GBP95m. Three of these
Commitments were to managers with whom we have not invested before,
demonstrating our ability to source and execute new opportunities to
work with top tier managers. The managers we back tend to raise funds
which are often oversubscribed and therefore difficult to access for new
investors.
We made the following Commitments to funds with investment mandates:
Fund Focus ICG Enterprise Trust
Commitment during the year
------------- ------------------------------------------------------ ------------------------------
Apax X Global buyouts in the technology & telecoms, services, EUR10m (GBP9m)
healthcare, and consumer sectors
------------- ------------------------------------------------------ ------------------------------
Bain Capital Mid-market buyouts and late stage growth capital in $5m (GBP4m)
Tech technology and technology-enabled businesses in North
Opportunities America
------------- ------------------------------------------------------ ------------------------------
Bain XIII Large buyouts in North America $10m (GBP8m)
------------- ------------------------------------------------------ ------------------------------
Charlesbank X Mid-market buyouts in North America $10m (GBP7m)
------------- ------------------------------------------------------ ------------------------------
Clayton, Mid-market and large buyouts in North America $10m (GBP7m)
Dubilier &
Rice XI
------------- ------------------------------------------------------ ------------------------------
CVC VIII Large buyouts in Europe EUR15m (GBP14m)
------------- ------------------------------------------------------ ------------------------------
FSN Capital Mid-market buyouts in Northern Europe EUR10m (GBP9m)
VI
------------- ------------------------------------------------------ ------------------------------
Gridiron IV Mid-market buyouts in the US $3m (GBP2m)
Top-up to existing Commitment
------------- ------------------------------------------------------ ------------------------------
Hg Genesis 9 Northern European software and services GBP9m
and Hg Saturn
2
------------- ------------------------------------------------------ ------------------------------
Leeds VII Mid-market buyouts in North America $10m (GBP7m)
------------- ------------------------------------------------------ ------------------------------
New Mountain Mid-market buyouts in North America $14m (GBP10m)
VI
------------- ------------------------------------------------------ ------------------------------
PAI Lower mid-market buyouts in Europe EUR10m (GBP9m)
Mid-market
------------- ------------------------------------------------------ ------------------------------
PORTFOLIO ANALYSIS AT 31 JANUARY 2021
We have exposure to over 600 underlying companies, of which the Top 30
contribute 52% of the Portfolio value and 198 companies represent 90% of
the Portfolio value. The Portfolio is broadly diversified by sector and
geography. This strikes an appropriate balance between 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.
Focus on mid-market and large companies
The Portfolio is weighted towards the mid-market (34%) and large deals
(56%), which we view as more defensive than smaller deal sizes,
benefiting from stronger management teams and often market leading
positions.
Focus on developed markets
The Portfolio is focused on developed private equity markets, invested
across the US (42%), continental Europe (32%) and the UK (19%). In line
with one of our strategic objectives, our weighting to the US has
increased from 14% at the time of moving to ICG in 2016. Over the same
period, the UK weighting has reduced from 45%.
Focus on sectors with defensive growth characteristics
The Portfolio is well diversified and weighted towards sectors with
defensive growth characteristics. Technology (19%), Healthcare (18%),
Business Services (13%) and Education (6%) make up 56% of the Portfolio
and are particularly attractive sectors. Within our exposure to the
Consumer and Industrial sectors (25% and 7% respectively), we have a
bias to companies with more defensive business models, non-cyclical
growth drivers and high recurring revenue streams. We have low exposure
to the Leisure (5%) and Financials (5%) sectors.
Quoted Companies
We do not invest in publicly quoted companies but gain listed investment
exposure when IPOs are used to exit an investment. In these cases, exit
timing typically lies with the third party manager we have invested
alongside. We therefore have exposure to listed businesses within our
Portfolio.
At 31 January 2021, we had 45 investments in quoted companies,
representing 20.4% of the Portfolio value compared to 5.4% at 31 January
2020. The increase is due to the significant appreciation of Chewy's
share price during the year and the IPO of a number of sizeable
portfolio companies.
At 31 January 2021, quoted companies accounted for 20.4% of our
Portfolio, and there were five investments that each accounted for 0.5%
or more of the Portfolio value:
Company Ticker % value of Portfolio
------- -------------------------- -------- --------------------
1 * Chewy (part of PetSmart) CHWY-US 9.6%
------- -------------------------- -------- --------------------
2 ** Telos TLS-US 4.6%
------- -------------------------- -------- --------------------
3 ** Allegro ALE-PL 1.4%
------- -------------------------- -------- --------------------
4 ** Dr. Martens DOCS-GB 0.6%
------- -------------------------- -------- --------------------
5 ** Integer INPST-NL 0.5%
------- -------------------------- -------- --------------------
Other 3.7%
------- -------------------------- -------- --------------------
Total 20.4%
------- -------------------------- -------- --------------------
* % value of Portfolio includes entire holding of
PetSmart and Chewy. Majority of value is within Chewy
** Company listed during the financial year
-----------------------------------------------------------------
Since 31 January 2021, we have realised our entire holding in Telos in
line with the carrying value at 31 January 2021. As at 31 March 2021,
Chewy's share price had declined by 17% since 31 January 2021; Allegro's
share price had declined by 24%; and Dr. Martens' had increased by 3%.
Balance sheet and financing
Our liquidity position is robust, with the Portfolio having generated a
net cash inflow of GBP70m during the year and a year-end cash balance of
GBP45m (31 January 2020: GBP14m). We had total available liquidity of
GBP201m, comprising GBP45m cash and GBP156m undrawn revolving credit
facility. In March 2020, we drew down GBP40m from our bank facility as a
precautionary measure at the onset of the COVID-19 pandemic. This was
repaid in full in the first half of the year.
At 31 January 2021 the Portfolio represented 100% of net assets (31
January 2020: 102%).
GBPm 31 Jan 2021 31 Jan 2020
------------------------------ -------------- --------------
Portfolio* 949 806
Cash 45 14
Other Net Liabilities* (42) (26)
------------------------------ -------------- --------------
Net assets 952 794
------------------------------ -------------- --------------
* Refer to the Glossary for reconciliation to the
Portfolio balance presented in the preliminary results
and definition and calculation of Other Net Liabilities.
At 31 January 2021, we had Undrawn Commitments of GBP418m (31 January
2020: GBP459m) of which 19% (GBP77m) were to funds outside of their
Investment Period.
31 Jan 31 Jan
GBPm 2021 2020
------------------------------------------------------ ---------- ----------
Outstanding Commitments -- funds in Investment
Period 341 377
Outstanding Commitments -- funds outside Investment
Period 77 82
---------- ----------
Total outstanding Commitments 418 459
Total available liquidity (including facility) (201) (162)
---------- ----------
Overcommitment (including facility) 217 297
------------------------------------------------------ ---------- ----------
Overcommitment % of net asset value 23% 37%
------------------------------------------------------ ---------- ----------
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.
Outstanding Commitments tend to be drawn down over a four to six-year
period with approximately 10%--15% retained at the end of the Investment
Period to fund follow-on investments and expenses. If outstanding
Commitments were to follow a linear drawdown rate to the end of their
respective remaining Investment Periods, approximately GBP84m would be
called over the next 12 months.
ACTIVITY SINCE THE YEAR (FOR THE PERIOD TO 31 MARCH 2021)
-- Total Proceeds of GBP97m
-- Realisation Proceeds of GBP88m
-- In early February we fully realised our holding in Telos, which at
31 January 2021 was our second largest holding. The investment was
realised at a circa 33x Multiple to Cost, generating net cash
proceeds of circa GBP40m. The realisation was executed in line
with the carrying value at 31 January 2021
-- Other notable realisations since the year end included Thomas H
Lee's realisation of System One and Graphite Capital's sale of
Cognito
-- Fund Disposals of GBP9m
-- Deployment
-- Invested GBP20m, all Drawdowns of existing third party fund
Commitments
-- New fund Commitments totalling GBP49m, including GBP20m to Third Party
Funds
-- ICG Strategic Equity IV, focused on global sponsor-led liquidity
transactions with established private equity managers: $40m
(GBP29m)
-- Resolute V, focused on mid-market buyouts in the US: $15m (GBP11m)
-- Bregal III, focused on mid-market buyouts in the DACH region:
EUR10m (GBP9m)
-- Bank facility
-- Entered into a new EUR200m (GBP177m) four-year revolving credit
facility to replace our existing EUR176m (GBP156m) facility
OUTLOOK
We are pleased with the performance of our Portfolio during this
turbulent financial year which we believe further demonstrates the
benefits of our approach to active portfolio construction and
management. ICG Enterprise Trust has a well-diversified Portfolio,
investing in companies with strong defensive growth characteristics and
weighted towards more resilient sectors. By investing with leading
managers in the US and Europe that focus on mid-market and larger
buyouts, we are well positioned to continue to generate attractive risk
adjusted returns.
We believe the private equity model is especially well suited to deliver
long-term value creation. Our differentiated approach, combining High
Conviction Investments with Third Party Funds, provides a unique
exposure to private companies. We have continued to see strong momentum
across our business since the year end. The Portfolio continues to
generate strong realisations and we have continued our programme of
committing to some of the world's best private equity managers. Our
partnership with these managers is cultivating a constantly evolving
pipeline of exciting direct investment opportunities. We are confident
that we are well placed to take advantage of attractive opportunities as
they arise and to continue to generate long-term shareholder value.
ICG Private Equity Funds Investment Team
27 April 2021
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 had
the largest investments by value at 31 January 2021. These investments
may be held directly or through funds, or in some cases through both
routes. The valuations are gross of underlying managers fees and Carried
Interest and are shown as a percentage of the total investment
Portfolio.
Value as
Year of a % of
Company Manager investment Country Portfolio
----------------------------------------------------------- ------------- ----------- -------- ---------
1 PetSmart+^
United
Retailer of pet products and services BC Partners 2015 States 9.6%
2 Telos+
Direct United
Provider of information technology and cybersecurity shareholding 1998 States 4.6%
3 DomusVi+
Operator of retirement homes ICG 2017 France 3.9%
4 Minimax+
Supplier of fire protection systems and services ICG 2018 Germany 2.9%
5 Leaf Home Solutions
Gridiron United
Provider of gutter protection solutions Capital 2016 States 2.6%
6 Visma+
Provider of business management software and outsourcing ICG /
services HgCapital 2017 / 2020 Norway 2.2%
7 DOC Generici+
Manufacturer of generic pharmaceutical products ICG 2019 Italy 2.1%
8 Yudo+
Manufacturer of components for injection moulding ICG 2017 Hong Kong 1.9%
9 IRI+
Provider of mission-critical data and predictive analytics New Mountain United
to consumer goods manufacturers Capital 2018 States 1.8%
10 Supporting Education Group+^
United
Provider of temporary staff for the education sector ICG 2014 Kingdom 1.7%
11 Froneri+^
United
Manufacturer and distributor of ice cream products PAI Partners 2019 Kingdom 1.7%
12 Berlin Packaging+
Oak Hill United
Provider of global packaging services and supplies Capital 2018 States 1.5%
13 Allegro
Cinven /
Operator of an online marketplace and price comparison Permira
website Advisers 2017 Poland 1.4%
14 Endeavor Schools+
Leeds Equity United
Provider of paid private schooling Partners 2018 States 1.4%
15 System One+
Thomas H. Lee United
Provider of specialty workforce solutions Partners 2016 States 1.3%
Value as
Year of a % of
Company Manager investment Country Portfolio
------------------------------------------------------------ ---------- ----------- ---------- ---------
16 U-POL^
Manufacturer and distributor of automotive refinishing Graphite
products Capital 2010 United Kingdom 1.2%
17 Cognito+^
Supplier of communications equipment, software and Graphite
services Capital 2002 / 2014 United Kingdom 1.1%
18 PSB Academy+
Provider of private tertiary education ICG 2018 Singapore 1.1%
19 Curium Pharma+
Supplier of nuclear medicine diagnostic pharmaceuticals ICG 2020 United Kingdom 0.9%
20 VitalSmarts+
Leeds
Provider of corporate training courses focused on Equity
communication skills and leadership development Partners 2019 United States 0.8%
21 David Lloyd Leisure+
TDR
Operator of premium health clubs Capital 2013 United Kingdom 0.8%
22 AML RightSource+
Provider of compliance and regulatory services and Gridiron
solutions Capital 2020 United States 0.7%
23 Compass Community
Provider of fostering services and children residential Graphite
care Capital 2017 United Kingdom 0.7%
24 EG Group
TDR
Operator of petrol station forecourts Capital 2014 United Kingdom 0.6%
25 Dr. Martens
Permira
Global footwear brand Advisers 2014 United Kingdom 0.6%
26 RegEd+
Provider of SaaS-based governance, risk and compliance Gryphon
enterprise software solutions Investors 2018 United States 0.6%
27 nGAGE
Graphite
Provider of recruitment services Capital 2014 United Kingdom 0.6%
28 IRIS Accountancy Solutions
Provider of business critical software and services
for the accountancy and payroll sectors ICG 2018 United Kingdom 0.5%
29 Springer^
BC
Publisher of professional and academic media Partners 2013 Germany 0.5%
30 YSC Consulting
Provider of leadership consulting and management assessment Graphite
services Capital 2017 United Kingdom 0.5%
------------------------------------------------------------ ---------- -------------- ---------
Total of the 30 largest underlying investments 51.8%
------------------------------------------------------------------------------------------------- ---------
All or part of this investment is held directly as
a Co-investment or other direct investment.
^ All or part of this investment was acquired as part
of a secondary purchase.
The 30 largest fund investments
The table below presents the 30 largest funds by value at 31 January
2021. The valuations are net of underlying managers fees and Carried
Interest.
Outstanding
Value Commitment
Fund Year of Commitment Country/ region GBPm GBPm
----------------------- --------------------- --------------------- ------ -----------
BC European Capital IX
1 ** Europe/North
Large buyouts 2011 America 45.2 2.1
Graphite Capital
2 Partners VIII *
Mid-market buyouts 2013 UK 30.9 5.4
Gridiron Capital Fund
3 III
Mid-market buyouts 2016 North America 29.5 4.0
4 Sixth Cinven Fund
Large buyouts 2016 Europe 25.2 2.1
5 ICG Europe VII
Mezzanine & equity in
mid-market buyouts 2018 Europe 25.2 15.8
Advent Global Private
6 Equity VIII Europe/North
Large buyouts 2016 America 22.9 0.6
CVC European Equity
7 Partners VI Europe/North
Large buyouts 2013 America 20.5 2.6
8 ICG Europe VI **
Mezzanine & equity in
mid-market buyouts 2015 Europe 20.3 4.6
CVC European Equity
9 Partners VII Europe/North
Large buyouts 2017 America 16.2 7.6
PAI Strategic
10 Partnerships **
Mid-market and large
buyouts 2019 Europe 16.0 0.6
11 PAI Europe VI
Mid-market and large
buyouts 2013 Europe 15.8 1.3
12 BC European Capital X
Large buyouts 2016 Europe 15.5 1.6
Graphite Capital
13 Partners VII * / **
Mid-market buyouts 2007 UK 15.1 2.8
14 One Equity Partners VI Europe/North
Mid-market buyouts 2016 America 14.1 0.6
15 Permira V Europe/North
Large buyouts 2013 America 13.9 0.5
16 Permira VI
Large buyouts 2016 Europe 12.3 2.0
Thomas H Lee Equity
17 Fund VII
Mid-market and large
buyouts 2015 North America 12.1 1.6
18 Resolute IV
Mid-market buyouts 2018 North America 12.0 3.6
ICG Strategic Equities
19 Fund III
Secondary fund
restructurings 2018 Global 12.0 19.3
20 New Mountain Partners V
Mid-market buyouts 2017 North America 11.9 2.0
Outstanding
Value Commitment
Fund Year of Commitment Country/ region GBPm GBPm
----------------------- --------------------- --------------------- ------ -----------
ICG Asia Pacific Fund
21 III
Mezzanine & equity in
midmarket buyouts 2016 Asia Pacific 11.3 2.8
22 Gryphon V
Mid-market buyouts 2019 North America 11.2 1.4
ICG Strategic
23 Secondaries Fund II Europe/North
Secondary fund
restructurings 2016 America 11.1 16.5
Charterhouse Capital
24 Partners X
Large buyouts 2015 Europe 10.6 4.5
25 PAI Europe VII
Mid-market and large
buyouts 2017 Europe 10.3 12.3
26 TDR Capital III
Mid-market and large
buyouts 2013 Europe 10.2 1.6
Thomas H Lee Equity
27 Fund VIII
Mid-market and large
buyouts 2017 North America 10.1 8.2
28 Resolute II **
Mid-market buyouts 2018 North America 9.8 1.6
Leeds Equity Partners
29 VI
Mid-market buyouts 2017 North America 9.3 0.7
Egeria Private Equity
30 Fund IV
Mid-market buyouts 2012 Netherlands 8.3 1.0
Total of the largest 30
fund investments 489.1 131.5
Percentage of total
investment Portfolio 51.5%
----------------------- --------------------- --------------------- ------ -----------
* Includes the
associated Top Up
funds.
** All or part of an interest acquired through a secondary
fund purchase.
Portfolio analysis
Closing Portfolio by value
% of value of % of value of
underlying underlying
investments investments
Portfolio by investment type 31 January 2021 31 January 2020
----------------------------- ---------------- ----------------
Large buyouts 56.3% 46.4%
Mid-market buyouts 33.5% 42.2%
Small buyouts 10.2% 8.7%
Total 100.0% 100.0%
----------------------------- ---------------- ----------------
Portfolio by
calendar
year of % of value of underlying investments % of value of underlying investments
investment 31 January 2021 31 January 2020
------------ ------------------------------------ ------------------------------------
2021 0.4% 0.0%
2020 10.1% 0.1%
2019 18.3% 17.2%
2018 18.4% 19.7%
2017 17.1% 19.2%
2016 9.6% 16.2%
2015 11.2% 7.7%
2014 6.0% 8.5%
2013 1.6% 5.5%
2012 0.9% 1.4%
2011 0.0% 0.9%
2010 1.4% 1.3%
2009 0.2% 0.6%
2008 0.0% 0.1%
2007 0.5% 1.3%
2006 and
before 4.3% 0.3%
------------ ------------------------------------ ------------------------------------
Total 100.0% 100.0%
------------ ------------------------------------ ------------------------------------
Portfolio by % of value of underlying investments % of value of underlying investments
sector 31 January 2021 31 January 2020
------------ ------------------------------------ ------------------------------------
Consumer
goods and
services 25.4% 15.1%
TMT 19.2% 13.6%
Healthcare 17.8% 17.3%
Business
services 12.5% 15.4%
Industrials 6.9% 15.5%
Education 6.4% 5.9%
Financials 4.7% 5.3%
Leisure 4.5% 7.7%
Other 2.6% 4.2%
------------ ------------------------------------ ------------------------------------
Total 100.0% 100.0%
------------ ------------------------------------ ------------------------------------
% of value of % of value of
underlying underlying
Portfolio by geographic distribution based on location investments investments
of company headquarters 31 January 2021 31 January 2020
Europe 31.8% 36.7%
UK 18.9% 27.1%
North America 42.0% 29.9%
Rest of world 7.3% 6.3%
------------------------------------------------------- ---------------- ----------------
Total 100.0% 100.0%
------------------------------------------------------- ---------------- ----------------
Commitments analysis
The following tables analyse Commitments at 31 January 2021. Original
Commitments are translated at 31 January 2021 exchange rates.
Total Undrawn Commitments
Original Outstanding Average
Commitment Commitment drawdown % of
GBP'000 GBP'000 percentage Commitments
------------------------- ----------- ----------- ----------- ------------
Investment period not
commenced 20,585 20,585 0.0% 4.9%
Funds in investment
period 517,207 320,455 38.0% 76.6%
Funds post investment
period 670,288 77,439 88.4% 18.5%
------------------------- ----------- ----------- ----------- ------------
Total 1,208,080 418,479 65.4% 100.0%
------------------------- ----------- ----------- ----------- ------------
Movement in outstanding Commitments in year ended
31 January 2021 GBPm
--------------------------------------------------------- ---------------
As at 1 February 2020 458.6
New primary Commitments 94.8
New Commitments relating to Co-investments and secondary
purchases 7.1
Drawdowns (120.6)
Commitments released from Fund Disposals (41.9)
Currency and other movements 20.5
--------------------------------------------------------- ---------------
As at 31 January 2021 418.5
--------------------------------------------------------- ---------------
New Commitments during the year to 31 January 2021
Fund Strategy Geography GBPm
------------------- ------------------- ------------------ ----------------
Primary Commitments
Europe/North
CVC VIII Large buyouts America 13.5
Apax X Mid-market buyouts Global 8.7
Bain XIII Large buyouts North America 7.7
Clayton, Dubilier & Mid-market and
Rice XI large buyouts North America 7.5
Hg Genesis 9 Mid-market buyouts Europe 4.5
Mid-market and
Hg Saturn 2 large buyouts Europe 4.2
Bain Tech
Opportunities Mid-market buyouts North America 4.0
Charlesbank Equity
Fund X Mid-market buyouts North America 7.3
FSN Capital VI Mid-market buyouts Europe 8.9
Leeds Equity
Partners VII Mid-market buyouts North America 7.4
New Mountain
Capital Fund VI Mid-market buyouts North America 10.3
Lower Mid-market
PAI Mid-Market Fund buyouts Europe 8.9
Gridiron IV Mid-market buyouts North America 1.9
Total primary
Commitments 94.8
Commitments relating to Co-investments and Secondary
Investments 7.1
------------------------------------------------------------ ----------------
Total new
Commitments 101.9
------------------- -------------------------------------- ----------------
Currency exposure
31 January 31 January 31 January 31 January
2021 2021 2020 2020
Portfolio(1) GBPm % GBPm %
--------------- ---------- ---------- ---------- ----------
Sterling 197.4 20.8% 246.0 30.5
Euro 208.3 21.9% 226.6 28.1
US Dollar 380.5 40.1% 224.2 27.8
Other European 73.9 7.8% 59.6 6.2
Other 89.1 9.4% 50.0 7.4
--------------- ---------- ---------- ---------- ----------
Total 949.2 100.0% 806.4 100.0
--------------- ---------- ---------- ---------- ----------
(1) Currency exposure is calculated by reference to
the location of the underlying Portfolio companies'
headquarters.
31 January 31 January 31 January 31 January
2021 2021 2020 2020
Outstanding Commitments GBPm % GBPm %
------------------------ ---------- ---------- ---------- ----------
-- Sterling 43.7 10.4 65.3 14.2
-- Euro 195.9 46.8 213.0 46.5
-- US Dollar 178.2 42.6 178.5 38.9
-- Other European 0.7 0.2 1.8 0.4
------------------------ ---------- ---------- ---------- ----------
Total 418.5 100.0 458.6 100.0
------------------------ ---------- ---------- ---------- ----------
Realisation activity
Year of Proceeds
Investment Manager investment Realisation type GBPm
------------- ------------- ------------- ----------------- ------------
Secondary
Roompot PAI Partners 2016 disposal 28.3
City & County Graphite
Healthcare Capital 2013 Financial buyer 17.2
Leaf Home Gridiron
Solutions Capital 2016 Recapitalisation 7.7
Visma ICG 2017 Financial buyer 7.2
Thomas H. Lee Public sell down
Ceridian Partners 2007 post IPO 6.9
Gerflor ICG 2011 Financial buyer 6.2
Permira Public sell down
TeamViewer Advisers 2014 post IPO 3.4
Oak Hill
EPIC Capital 2017 Financial buyer 2.8
VetCor
Professional Oak Hill
Practices Capital 2018 Financial buyer 2.4
Thomas H. Lee
Alfresco Partners 2018 Trade 2.2
------------- ------------- ------------- ----------------- ------------
Total of 10 largest
underlying realisations 84.3
---------------------------- ------------------------------- ------------
Realisation Proceeds 137.3
Fund Disposals 71.9
---------------------------- ------------------------------- ------------
Total Proceeds 209.2
-------------- ------------------------------------------------------------
Investment activity
Cost(1)
Investment Description Manager Country GBPm
------------- --------------------------------------------------------- -------------------------------------------------------- -------- -------
Curium Pharma Supplier of nuclear medicine diagnostic pharmaceuticals ICG UK 8.8
AML Provider of compliance and regulatory services and
RightSource solutions Gridiron Capital USA 7.1
Provider of business management software and outsourcing
Visma services Hg Capital Norway 4.8
Provider of learning analytics software and assistive Five Arrows Principal Investments / Five Arrows Capital
Texthelp technology solutions Partners UK 3.7
HSE24 Home shopping network in Germany ICG Germany 2.8
Babble Cloud Provider of communications & IT services Graphite Capital UK 2.7
David Lloyd
Leisure Operator of premium health clubs TDR Capital UK 2.5
Five Arrows Principal Investments / Five Arrows Capital
Juvare Provider of emergency management solutions and software Partners USA 2.4
Biogroup Operator of medical diagnostic laboratories ICG France 2.2
Thyssenkrupp Manufacturer of elevators and escalators and related
Elevator services Advent International / Cinven Germany 2.1
------------- --------------------------------------------------------- -------------------------------------------------------- -------- -------
Total of 10 largest underlying new investments 39.1
-------------------------------------------------------------------------------------------------------------------------------------------- -------
Total New Investment 139.2
-------------------------------------------------------------------------------------------------------------------------------------------- -------
(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 Board is responsible for risk management and determining the
Company's overall risk appetite. The Audit Committee assesses and
monitors the risk management framework and specifically reviews the
controls and assurance programmes in place.
Principal risks and uncertainties
The execution of the Company's investment strategy is subject to risk
and uncertainty and the Board and Manager have identified a number of
principal risks to the Company's business. As part of this process, the
Board has carried out a robust assessment of the principal risks facing
the entity, including those that would threaten its business model,
future performance, solvency or liquidity. The Company considers its
principal risks (as well as a number of underlying risks comprising each
principal risk) in four categories:
Investment Risks -- the risk to performance resulting from ineffective
or inappropriate investment selection, execution, monitoring.
External Risks -- the risk of failing to deliver the Company's strategic
objectives due to external factors beyond the Company's control.
Operational Risks -- the risk of loss or missed opportunity resulting
from a regulatory failure or the failure of people, processes or
systems.
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.
Emerging risks are regularly considered to assess 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. During the year, the
impact of Brexit on the Company's Portfolio was kept under review. The
Board also regularly considered the evolution of requirements and
standards relating to ESG and responsible investing, with the ability to
keep up with these standards being treated as a matter of emerging
reputational risk.
During the year, the impact of the COVID-19 pandemic on the Company's
business operations and performance was a key focus of the Board from a
number of perspectives, including risk management, and took appropriate
mitigation steps through the year.
The impact of the pandemic on each of our principal risks is set out in
more detail below; the current view of the Board is that, although the
impact of the pandemic is significant and may prove to have long-term
effects on the markets in which the Company operates, it does not change
our longer-term view of our principal risks.
Other risks, including reputational risk, are seen as potential outcomes
of the core principal risks materialising. These risks are managed as
part of the overall risk management of the Company.
A comprehensive risk assessment process is undertaken regularly to
re-evaluate the impact and probability of each risk materialising and
the nancial or strategic 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.
How we manage and mitigate our key risks
As identified in the Annual Report for the year ended 31 January 2020,
the risk levels of certain of the principal risks outlined below were
slightly or somewhat heightened at various points in the year due to the
effects of the Covid-19 pandemic. However, these effects were mitigated
by the risk management measures put in place by the Company, including
the defensive portfolio construction, the wide variety of sectors and
managers that the Company invests in, the geographic spread of the
investment portfolio and the renewal of the balance sheet facility after
year end. As such, the Board remains of the view that its assessment of
these risks in the long term is not affected inherently or
systematically by the pandemic, although it will continue to monitor
this.
RISK IMPACT MITIGATION CHANGE IN
THE YEAR
Investment Risks
-----------------------------------------------------------
Investment performance Poor origination, investment selection and monitoring The Manager has a strong track record of investing Stable
The Manager selects the fund investments and direct by the Manager and/or third party managers could significantly in private equity through multiple economic cycles. The Board reviews the activities and performance of
Co-investments for the Company's Portfolio. The underlying affect the performance of the Portfolio. The Manager has a highly selective investment approach the Manager on an ongoing basis and reviews the investment
managers of those funds in turn select individual and disciplined process, which is overseen by ICG strategy annually. Following this assessment and other
investee companies. Enterprise's Investment Committee within the Manager, considerations, the Board concluded that there was
The origination, investment selection and management which comprises a balance of skills and perspectives. no material change in investment performance risk
capabilities of both the Manager and the third party Further, the Company's Portfolio is diversified reducing during the year.
managers are key to the performance of the Company. the likelihood of a single investment decision impacting
Portfolio performance.
Valuation Incorrect valuations being provided would lead to The Manager carries out a formal valuation process Stable
In valuing its investments in private equity funds an incorrect overall NAV. involving a quarterly review of third party valuations, The Board discussed the valuation process in detail
and Unquoted Companies and publishing its NAV, the verification of the latest audited reports, as well with the Manager, including the sources of valuation
Company relies to a significant extent on the accuracy as a review of any potential adjustments that are information and methodologies used. Following this
of financial and other information provided by the required to ensure the valuation of the underlying assessment and other considerations, the Board concluded
underlying managers to the Manager. There is the potential investments are in accordance with the fair market that there was no material change in valuation risk
for inconsistency in the valuation methods adopted value principles required under International Financial during the year.
by the managers of these funds and companies and for Reporting Standards ('IFRS').
valuations to be misstated.
External
Political and macroeconomic uncertainty Changes in the macro-economic The Manager actively monitors these developments, Stable
Political and macro-economic uncertainty, including or political environment could significantly affect with the support of a dedicated in-house economist The Board monitors and reviews the potential impact
impacts from Covid-19 development, the UK's departure the performance of existing investments (and valuations) and professional advisers where appropriate, to ensure on the Company from political and economic developments
from the EU, or similar scenarios, could impact the and prospects for realisations. In addition, it could it is prepared for any potential impacts (to the extent on an ongoing basis, including input and discussions
environment in which the Company and its investment impact the number of credible investment opportunities possible). with the Manager. Incorporating these views and other
portfolio companies operate. the Company can originate. considerations (including the end of the Brexit transition
period in January 2021), the Board concluded that
there was no material change in political and macro-economic
uncertainty risk following its previous assessment
in April 2020.
Private equity sector A change in sentiment to the sector has the potential Private equity has outperformed public markets over Stable
The private equity sector could fall out of favour to damage the Company's reputation and impact the the long term and it has proved to be an attractive The Board receives regular updates from the Company's
with investors leading to a reduction in demand for performance of the Company's share price and widen asset class through various cycles. broker and is kept informed of all material discussions
the Company's shares. the Discount the shares trade at relative to NAV per The Manager is active in marketing the Company's shares with investors and analysts. Incorporating these updates
Share, causing shareholder dissatisfaction. to a wide variety of investors to ensure the market and other considerations, the Board concluded that
is informed about the Company's performance and investment there was no material change in private equity sector
proposition. sentiment risk during the year.
The Board monitors the Discount to NAV and considers
appropriate solutions to address any ongoing or substantial
Discount to NAV, including share buybacks.
Foreign exchange At present, the Company does not hedge its foreign The Board regularly reviews the Company's exposure Stable
The Company has continued to expand its geographic exchange exposure. Therefore, movements in exchange to currency risk and reconsiders possible Hedging The Board reviewed the Company's exposure to currency
diversity by making investments in a number of countries. rates between these currencies may have a material strategies on an annual basis. Furthermore, the Company's risk and possible Hedging strategies and concluded
Accordingly, a number of investments are denominated effect on the underlying valuations of the investments multicurrency bank facility permits the borrowings that there was no material change in foreign exchange
in US dollars, euros and currencies other than sterling. and performance of the Company. to be drawn in euros and US dollars, if required. risk during the year and that it remained appropriate
for the Company not to hedge its foreign exchange
exposure.
Operational Risks
-----------------------------------------------------------
Regulatory, legislative If applicable law and regulations are not complied The Board is responsible for ensuring the Company's Stable
and taxation compliance with, the Company could face regulatory sanction and compliance with all applicable regulations. Monitoring This risk was deemed to be increased in the previous
Failure by the Manager to comply with relevant regulation penalties as well as significant damage to its reputation. of this compliance, and regular reporting to the Board year following the company entering
and legislation could have an adverse impact on the thereon, has been delegated to the Manager. The Manager's the FTSE 250 index during the
Company, or adherence to such could become onerous. in-house legal counsel, supported by the Compliance year, as well as other regulatory
This includes the Corporate Governance Code, Corporation and Risk functions, provides regular updates to the and corporate governance developments. Both the Board
Tax Act 2010, the Companies Act 2006, the Companies Board covering relevant changes to legislation and and the Manager's risk function have continued to
(Miscellaneous Reporting) Regulations 2018, regulation. The Manager and the Board ensure compliance closely monitor and evaluate the risks resulting from
the Alternative Investment Fund Managers Directive, with applicable regulation and legislation occurs these developments, and the Company has continued
accounting standards, investment trust regulations in an effective manner. to enhance its processes and controls in order to
and the Listing Rules and Disclosure Guidance and remain compliant with current
Transparency Rules. and expected legislation.
People If the Manager's investment team were not able to The Manager regularly updates the Board on team developments Stable
Loss of key investment professionals at the Manager deliver, investment opportunities could be missed and succession planning. Oliver Gardey was appointed as head of the Company's
could impair the Company's ability to deliver its or misevaluated, while existing investment performance The Manager places significant focus on developing investment team in the previous year and people risk
investment strategy if replacements are not found may suffer. key individuals to ensure that there is a pipeline was reduced accordingly. Following this transition,
in a timely manner. of potential succession candidates internally. External the Board believes that the risk in respect of people
appointments are also considered if that best satisfies remains stable.
the business needs at the appropriate time.
The Company's investment team within the Manager has
always taken a team-based approach to decision-making
which helps to mitigate against key person risk. In
addition, no one investment professional has sole
responsibility for an investment or fund manager relationship
and, to ensure that insights and knowledge are widely
spread across the investment team, the team meets
weekly to discuss all potential new investments and
the overall performance of the Portfolio.
The Manager's compensation policy is designed to minimise
turnover of key people. In addition, the senior investment
professionals are required to co-invest alongside
the Company for which they are entitled to a share
of investment profits if performance hurdles are met,
which aids retention.
Information security A significant disruption to these IT systems, including Application of the Manager's and Administrator's information Stable
The Company is dependent on effective information breaches of data confidentiality or cybersecurity, security policies is supported by a governance structure The Board carries out a formal assessment of the Manager's
technology systems at both the Manager and Administrator. could result in, among other things, financial losses, and a risk framework that allows for the identification, internal controls and risk management systems every
These systems support key business functions and are an inability to perform business critical functions, control and mitigation of technology risks. year. Following this review and other considerations,
an important means of safeguarding sensitive information. regulatory censure, legal liability and reputational The adequacy of the systems and controls the Manager the Board concluded that there was no material change
damage. and Administrator have in place to mitigate the technology in information security risk during the year.
risks is continuously monitored and subject to regular
testing. The effectiveness of the framework is periodically
assessed.
The Manager and other A significant failure of or disruption to the Manager, The Audit Committee formally assesses the internal Stable
third party advisers, including business processes Administrator or Depositary's processes could controls of the Manager, the Administrator and Depositary The Board carries out a formal assessment of the Manager's
and continuity result in, among other things, financial losses, an on an annual basis to ensure adequate controls are internal controls and risk management systems every
The Company is dependent on third parties for the inability to perform business critical functions, in place. year (supported by the Manager's internal audit function).
provision of all systems and services. regulatory censure, legal liability The assessment in respect of the current year is discussed Following this review and other considerations, the
In particular, the Company is dependent on the business and reputational damage. in the Report of the Audit Committee Within the Annual Board concluded that there was no material change
processes of the Manager, Administrator and Depositary Report. in the manager and other third party advisers risk
operating effectively. These systems support key business The Management Agreement and agreements with other during the year.
functions. key service providers are subject to notice periods
Control failures and gaps in these systems and services that are designed to provide the Board with adequate
could result in a loss or damage to the Company. time to put in place alternative arrangements.
Financial Risks
-----------------------------------------------------------
Financing If the Company encountered difficulties in meeting The Manager monitors the Company's liquidity and covenants Reduced
The Company has outstanding Commitments that may be its outstanding Commitments, there would be significant on a frequent basis, and undertakes cash flow monitoring, The Company's previous credit facility was due to
drawn down at any time in excess of total liquidity reputational damage as well as risk of damages being and provides regular updates on these activities mature in expire
to private equity funds. The ability to fund this claimed from managers and other counterparties. to the Board. in Apr-2021 and Apr-2022.
difference is dependent on receiving cash proceeds It is also possible that the Company might need to Commitments are expected to be mostly deployed over Following the signing of the Company's new credit
from investments (the timing of which are unpredictable) raise new equity to fund its outstanding Commitments. a four-year period. If necessary the Company can reduce facility that matures in February 2025 this risk has
and the availability of financing facilities. the level of Co-investments and Secondary Investments, significantly reduced.
which are discretionary, to preserve liquidity for
funding its Commitments. The Company could also dispose
of assets.
The Company signed a new facility in January 2021
for EUR200m (GBP177m) that matures in January 2025.
The previous facility was a EUR176m (GBP156m) multi-currency
bank facility agreed on 2 April 2019, which was due
to mature in two equal tranches in April 2021 and
April 2022.
The total available liquidity as at 31 January 2021
stood at GBP201m, comprising GBP45m in cash balances
and GBP156m in undrawn bank facilities As a result,
the available financing along with the Portfolio exceeded
the outstanding Commitments by a factor of 2.8 times
as at 31 January 2021.
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
27 April 2021
INCOME STATEMENT
Year to 31 January 2021 Year to 31 January 2020
Revenue Capital Revenue Capital
return return Total return return Total
Notes GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
------------- ------ -------- -------- -------- -------- -------- --------
Investment
returns
Income, gains and
losses on
investments 6,523 184,071 190,594 7,060 85,660 92,720
Deposit interest 26 -- 26 300 -- 300
Other income 45 -- 45 81 -- 81
Foreign exchange
gains and losses -- (799) (799) -- 208 208
-------- -------- -------- -------- -------- --------
6,594 183,272 189,866 7,441 85,868 93,309
-------- -------- -------- -------- -------- --------
Expenses
Investment management
charges (2,682) (8,046) (10,728) (2,393) (7,179) (9,572)
Other expenses (2,129) (1,941) (4,070) (1,738) (1,494) (3,232)
-------- -------- -------- -------- -------- --------
(4,811) (9,987) (14,798) (4,131) (8,673) (12,804)
-------- -------- -------- -------- -------- --------
Profit before tax 1,783 173,285 175,068 3,310 77,195 80,505
-------- -------- -------- -------- -------- --------
Taxation -- -- -- (538) 538 --
-------- -------- -------- -------- -------- --------
Profit for the year 1,783 173,285 175,068 2,772 77,733 80,505
-------- -------- -------- -------- -------- --------
Attributable
to:
-------- -------- -------- -------- -------- --------
Equity shareholders 1,783 173,285 175,068 2,772 77,733 80,505
-------- -------- -------- -------- -------- --------
Basic and 4 254.53p 116.63p
diluted
earnings per
share
The columns headed 'Total' represent the income statement for the
relevant financial years and the columns headed 'Revenue return' and
'Capital return' are supplementary information in line with guidance
published by the AIC. There is no Other Comprehensive Income.
BALANCE SHEET
31 January 31 January
2021 2020
Notes GBP'000 GBP'000
---------------------------------------------- ------ ---------- ----------
Non-current assets
Investments held at fair value 907,562 778,416
---------- ----------
Current assets
Cash and cash equivalents 45,143 14,470
Receivables 162 1,142
---------- ----------
45,305 15,612
---------- ----------
Current liabilities
Payables 851 483
---------- ----------
Net current assets 44,454 15,129
---------- ----------
Total assets less current liabilities 952,016 793,545
---------- ----------
Capital and reserves
Share capital 7,292 7,292
Capital redemption reserve 2,112 2,112
Share premium 12,936 12,936
Capital reserve 929,676 771,205
Revenue reserve -- --
---------- ----------
Total equity 952,016 793,545
---------- ----------
Net asset value per share (basic and diluted) 6 1,384.4p 1,152.1p
CASH FLOW STATEMENT
Year to Year to
31 January 31 January
2021 2020
Notes GBP'000 GBP'000
--------------------------------------------- ----- ----------- -----------
Operating activities
Sale of portfolio investments 147,545 107,179
Purchase of portfolio investments (86,134) (95,417)
Net cash flows to subsidiary investments (6,486) (34,446)
Interest income received from portfolio
investments 1,231 5,832
Dividend income received from portfolio
investments 5,445 1,290
Other income received 71 381
Investment management charges paid (10,334) (9,499)
Other expenses paid (1,419) (1,227)
----------- -----------
Net cash inflow/(outflow) from operating
activities 49,919 (25,907)
----------- -----------
Financing activities
Bank facility fee (1,410) (2,576)
Interest paid (440) (61)
Credit facility utilised 40,000 --
Credit facility repaid (40,000) --
Purchase of shares into treasury (775) (2,628)
Equity dividends paid 5 (15,822) (15,192)
----------- -----------
Net cash outflow from financing activities (18,447) (20,457)
----------- -----------
Net increase/(decrease) in cash and cash
equivalents 31,472 (46,364)
----------- -----------
Cash and cash equivalents at beginning of
year 14,470 60,626
Net increase/(decrease) in cash and cash
equivalents 31,472 (46,364)
Effect of changes in foreign exchange rates (799) 208
----------- -----------
Cash and cash equivalents at end of year 45,143 14,470
----------- -----------
STATEMENT OF CHANGES IN EQUITY
Realised Total
Capital capital Unrealised Revenue shareholders'
Share capital redemption reserve Share premium reserve capital reserve reserve equity
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- ------------------- ------------- -------- ---------------- -------- --------------
Year to 31
January 2021
Opening
balance at 1
February
2020 7,292 2,112 12,936 356,393 414,812 -- 793,545
Profit for the
year and
total
comprehensive
income -- -- -- 100,484 72,801 1,783 175,068
Dividends paid
or approved -- -- -- (14,039) -- (1,783) (15,822)
Purchase of
shares into
treasury -- -- -- (775) -- -- (775)
------------- ------------------- ------------- -------- ---------------- -------- --------------
Closing
balance at 31
January 2021 7,292 2,112 12,936 442,063 487,613 -- 952,016
------------- ------------------- ------------- -------- ---------------- -------- --------------
Realised Total
Capital capital Unrealised Revenue shareholders'
Share capital redemption reserve Share premium reserve capital reserve reserve equity
Company GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
-------------- ------------- ------------------- ------------- -------- ---------------- -------- --------------
Year to 31
January 2020
Opening
balance at 1
February
2019 7,292 2,112 12,936 348,632 359,888 -- 730,860
Profit for the
year and
total
comprehensive
income -- -- -- 22,809 54,924 2,772 80,505
Dividends paid
or approved -- -- -- (12,420) -- (2,772) (15,192)
Purchase of
shares into
treasury -- -- -- (2,628) -- -- (2,628)
------------- ------------------- ------------- -------- ---------------- -------- --------------
Closing
balance at 31
January 2020 7,292 2,112 12,936 356,393 414,812 -- 793,545
------------- ------------------- ------------- -------- ---------------- -------- --------------
NOTES TO THE FINANCIAL STATEMENTS
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 2021 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 21 June 2021.
The financial information for the year ended 31 January 2020 has been
extracted from the statutory accounts for that year which were approved
by the Board of directors on 27 April 2020 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.
The financial information for the year ended 31 January 2021 has been
prepared in accordance with the Companies Act 2006 as applicable to
companies using International Financial Reporting Standards ('IFRS') and
the Statement of Recommended Practice ('SORP') for investment trusts
issued by the Association of Investment Companies in October 2019.
3) Basis of preparation
The financial information for the year ended 31 January 2021 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.
IFRS 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
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 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. As a result, there will
be the imminent cessation of LIBOR. LIBOR publication is expected to
cease by 31 December 2021. The Company will apply the practical
expedient as permitted under the transition rules. The impact of this
application will be 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
Fair value for unquoted investments is established by using various
valuation techniques.
Funds and Co-investments (collectively 'unquoted investments') are
typically fair valued using the net asset value those unquoted
investments as determined by the investment manager of those funds. The
investment manager performs periodic valuations of its underlying
investments in line with fair value measurements. In the absence of
contrary information, the valuation methodologies are deemed to be
appropriate. A robust assessment is performed the Company's experienced
Investment Committee to determine the sophistication 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 and these are the
valuations recorded up to the measurement date.
The fair value measurement adopted by investment managers of unquoted
investments is calculated in accordance with the 2018 IPEV guidelines.
The primary valuation methodology used is an earnings multiple
methodology, with other methodologies used where they are more
appropriate.
Adjustments may be made to the net asset values provided or an
alternative method maybe 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 macroeconomic 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 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 2020, 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.
4) Earnings per share
Year ended Year ended
31 January 31 January
2021 2020
----------------------------------------------- ----------- -----------
Revenue return per ordinary share 2.59p 4.02p
Capital return per ordinary share 251.94p 112.61p
Earnings per ordinary share (basic and diluted) 254.53p 116.63p
Revenue return per ordinary share is calculated by dividing the revenue
return attributable to equity shareholders of GBP1.8m
(2020: GBP2.8m) by the weighted average number of ordinary shares
outstanding during the year.
Capital return per ordinary share is calculated by dividing the capital
return attributable to equity shareholders of GBP173.3m
(2020: GBP77.7m) by the weighted average number of ordinary shares
outstanding during the year.
Basic and diluted earnings per ordinary share are calculated by dividing
the earnings attributable to equity shareholders of GBP175.1m (2020:
GBP80.5m) by the weighted average number of ordinary shares outstanding
during the year.
The weighted average number of ordinary shares outstanding (excluding
those held in treasury) during the year was 68,781,700 (2020:
69,027,192). There were no potentially dilutive shares, such as options
or warrants, in either year.
5) Dividends
Year ended Year ended
31 January 31 January
2021 2020
GBP'000 GBP'000
--------------------------------------------------- ----------- -----------
Third quarterly dividend in respect of year ended
31 January 2020: 5.0p per share (2020: 5.0p) 3,444 3,459
Final dividend in respect of year ended 31 January
2020: 8.0p per share (2020: 7.0p) 5,502 4,839
First quarterly dividend in respect of year ended
31 January 2021: 5.0p per share (2020: 5.0p) 3,438 3,450
Second quarterly dividend in respect of year ended
31 January 2021: 5.0p per share (2020: 5.0p) 3,438 3,444
Total 15,822 15,192
----------- -----------
The Company paid a third quarterly dividend of 5.0p per share in March
2021. The Board has proposed a final dividend of 9.0p per share in
respect of the year ended 31 January 2021 which, if approved by
shareholders, will be paid on 23 July 2021 to shareholders and on the
register of members at the close of business on 2 July 2021.
6) Net asset value per share
The net asset value per share is calculated as the net assets
attributable to shareholders of GBP952.0m (2020: GBP793.5m) and on
68,767,055 (2020: 68,877,055) ordinary shares in issue at the year end.
There were no potentially dilutive shares, such as options or warrants,
at either year end. Calculated on both the basic and diluted basis the
net asset value per share was 1,384.4p (2020: 1,152.1p).
7) Post balance sheet events
Following the year-end, on 26 February 2021, the Company finalised a new
bank facility of EUR200m (GBP177m, 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 GBP500m 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 and will hold at least GBP500m of the
Company's investments. Post year-end, the Company has completed the
transfer of GBP440 of its investments, as well as a transfer of GBP163
investments from the Company's subsidiary ICG Enterprise Trust
Co-investment LP, to ET Holdings LP. The transfer of investments is a
non adjusting post balance sheet event. To date GBPnil has been drawn
from the facility.
GLOSSARY (UNAUDITED)
Alternative Performance Measures ('APMs') 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.
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 is a direct investment in a company alongside a private
equity fund.
Co-investment Incentive Scheme Accrual represents the estimated value of
interests in the Co-investment Incentive Scheme operated by the Company.
At both 31 January 2021 and 31 January 2020, the accrual was estimated
as the theoretical value of the interests if the Portfolio had been sold
at its carrying value at those dates.
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 arises when the Company's shares trade at a discount to NAV. 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 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 is the aggregate value of a company's entire issued
share capital and Net Debt.
FTSE All-Share Index Total Return is 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 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 are where the Company receives sales proceeds from the
full or partial sale of a fund position within the secondary market.
General Partner ('GP' or the 'manager') is the entity managing a private
equity fund. This is commonly referred to as the Manager.
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 comprises Direct Investments, ICG managed
funds and Secondary Investments.
Initial Public Offering ('IPO') 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.
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.
Internal Rate of Return ('IRR') 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.
Last Twelve Months ('LTM') refers to the time frame of the immediately
preceding 12 months in reference to a financial metric used to evaluate
the Company's performance.
Limited Partner ('LP') is an institution or individual who commits
capital to a private equity fund established as a Limited Partnership.
These investors are generally protected from legal actions and any
losses beyond the original investment.
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 will not
receive a profit share until cost has been returned and an agreed
Preferred Return has been achieved.
Net Asset Value ('NAV') 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 ('NAV') 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 is calculated as the total short-term and long-term debt in a
business, less cash and cash equivalents.
Ongoing Charges are calculated in line with guidance issued by the
Association of Investment Companies ('AIC') and captures 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.
Amount
Total per excluded from Included
Income AIC Ongoing Ongoing
Statement Charges Charges
2021 GBP'000 GBP'000 GBP'000
------------------------------------------------------ ---------- -------------- ---------
Management fees 10,728 -- 10,728
General expenses 1,447 8 1,439
Finance costs 2,623 2,623 --
------------------------------------------------------- ---------- -------------- ---------
Total gains on Portfolio investments excluding impact
of foreign exchange 14,798 2,631 12,167
------------------------------------------------------- ---------- -------------- ---------
Total Ongoing Charges 12,167
------------------------------------------------------- ---------- -------------- ---------
Average NAV 834,566
------------------------------------------------------- ---------- -------------- ---------
Ongoing Charges as % of NAV 1.5%
------------------------------------------------------- ---------- -------------- ---------
Amount
Total per excluded from Included
Income AIC Ongoing Ongoing
Statement Charges Charges
2020 GBP'000 GBP'000 GBP'000
------------------------------------------------------ ---------- -------------- ---------
Management fees 9,572 -- 9,572
General expenses 1,179 12 1,167
Finance costs 2,053 2,053 --
------------------------------------------------------- ---------- -------------- ---------
Total gains on Portfolio investments excluding impact
of foreign exchange 12,804 2,065 10,739
------------------------------------------------------- ---------- -------------- ---------
Total Ongoing Charges 10,739
------------------------------------------------------- ---------- -------------- ---------
Average NAV 782,437
------------------------------------------------------- ---------- -------------- ---------
Ongoing Charges as % of NAV 1.4%
------------------------------------------------------- ---------- -------------- ---------
Other Net Liabilities at the aggregated Company and subsidiary Limited
Partnership level represent net other liabilities per the Company's
balance sheet, net other liabilities per the balance sheets of the
subsidiaries and amounts payable under the co-incentive scheme accrual.
Overcommitment refers to where private equity fund investors make
Commitments exceeding available liquidity 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,
and therefore liquidity, from the existing portfolio to fund new
investment.
Portfolio represents the aggregate of the investment Portfolios of the
Company and of its subsidiary Limited Partnerships. This is consistent
with the commentary in previous annual and interim reports. The Board
and the Manager consider that this is the most relevant basis for
shareholders to assess the overall performance of the Company and
comparison with its peers.
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 2021:
Balances
Fair receivable Aggregated
value Cash held by from Co-investment Company and
per subsidiary subsidiary incentive subsidiary
balance Limited Limited scheme Limited
GBPm sheet Partnerships Partnerships accrual Partnerships
------------- ------- ------------ ------------ ------------- ------------
Investments* 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
31 January 2020:
Balances
Fair receivable Aggregated
value Cash held by from Co-investment Company and
per subsidiary subsidiary incentive subsidiary
balance Limited Limited scheme Limited
GBPm sheet Partnerships Partnerships accrual Partnerships
------------- ------- ------------ ------------ ------------- ------------
Investments* 778.4 - - 28.0 806.4
Cash 14.5 - - - 14.5
Other Net
Liabilities 0.7 - - (28.0) (27.3)
------------- ------- ------------ ------------ ------------- ------------
Net assets 793.6 - - - 793.6
* Investments at fair value per Company balance sheet or the Portfolio
for aggregated Company and subsidiary Limited Partnerships
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 scheme accrual. The Portfolio Return of
24.9% is calculated as follows:
GBPm 2021 2020
------------------------------------------------------ ------ -----
Income, gains and losses on investments 190.6 92.7
Foreign exchange gains and losses included in gains
and losses on investments (12.2) 13.8
Incentive accrual valuation movement 22.2 8.9
------------------------------------------------------- ------ -----
Total gains on Portfolio investments excluding impact
of foreign exchange 200.6 115.4
------------------------------------------------------- ------ -----
Opening Portfolio valuation 806.4 694.8
Portfolio Return on a Local Currency Basis 24.9% 16.6%
------------------------------------------------------- ------ -----
Portfolio Company refers to an individual company in an investment
portfolio.
Preferred Return is the preferential rate of return on an individual
investment or a portfolio of investments, which is typically 8% per
annum.
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 is any company whose shares are listed or traded on a
recognised stock exchange.
Realisation Proceeds are amounts received in respect of underlying
realisation activity from the Portfolio and excludes any inflows from
the sale of fund positions via the secondary market.
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.
GBPm 2021 2020
--------------------------------------------------- ---- ----
Cumulative Realisation Proceeds from Full Exits in
the year 85.7 99.2
Cost 35.6 41.9
Average return Multiple to Cost 2.4x 2.4x
--------------------------------------------------- ---- ----
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.
GBPm 2021 2020
------------------------------------- ---- ----
Realisation Proceeds 78.0 73.5
Carrying value prior to exit 59.7 53.7
Realisation Uplift to Carrying Value 31% 37%
------------------------------------- ---- ----
Secondary Investments occur when existing private equity fund interests
and Commitments are purchased from an investor seeking liquidity.
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 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:
GBPm 2021 2020
---------------------------------------------------- ----- -----
Per Cash flow statement
Purchase of Portfolio investments 86.1 95.4
Purchase of Portfolio investments within subsidiary
investments 53.1 63.2
Total New Investment 139.2 158.6
---------------------------------------------------- ----- -----
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. Movements in the
cash flow statement within the financial statements reconcile to the
movement in the Portfolio as follows:
GBPm 2021 2020
------------------------------------------------------ ----- -----
Per Cash flow statement
Sale of portfolio investments 147.5 107.2
Sale of portfolio investments, interest received
and dividends received within subsidiary investments 55.1 34.5
Interest income 1.2 5.8
Dividend income 5.4 1.3
------------------------------------------------------ ----- -----
Total Proceeds 209.2 148.8
------------------------------------------------------ ----- -----
Fund Disposals 71.9 8.2
------------------------------------------------------ ----- -----
Realisation Proceeds 137.3 140.6
------------------------------------------------------ ----- -----
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 2021 1 year 3 year 5 year 10 year
-------------------------------------------- ------ ------ ------- -------
Net Asset Value per Share +22.5% +53.1% +109.3% +207.7%
Share Price +2.8% +27.6% +101.8% +290.3%
FTSE All-Share Index -7.5% -1.6% +31.5% +71.4%
-------------------------------------------- ------ ------ ------- -------
The table below shows the breakdown of the 1 year Net Asset Value per
Share Total Return:
Change in NAV (% of opening NAV) 2021 2020
------------------------------------------------------- ------ ------
Portfolio Return on a Local Currency Basis 24.9% 16.6%
Currency movements on the Portfolio 1.5% (2.0%)
------------------------------------------------------- ------ ------
Portfolio return in sterling 26.4% 14.6%
Effect of cash drag 0.4% (0.7%)
------------------------------------------------------- ------ ------
Impact of net portfolio movement on net asset value 26.8% 13.9%
Expenses and other income (1.9%) (1.7%)
Incentive accrual valuation movement (2.8%) (1.2%)
------------------------------------------------------- ------ ------
Increase in net asset value per share before buy backs 22.1% 11.0%
Impact of share buy backs & dividend reinvestment 0.4% 0.2%
------------------------------------------------------- ------ ------
Net Asset Value per Share Total Return 22.5% 11.2%
Undrawn Commitments are Commitments that have not yet been drawn down
Unquoted Company is any company whose shares are not listed or traded on
a recognised stock exchange.
Valuation Multiples are earnings (EBITDA) or revenue multiples applied
in valuing a business enterprise
Venture Capital refers to investing in companies at a point in that
company's life cycle that is either at the concept, start-up or early
stage of development.
(1) Alternative Performance Measure
(2) In the Chair's Statement, Manager's Review and Supplementary
Information, reference is made to the "Portfolio". This is an APM.
(3) PetSmart/Chewy, Telos, Allegro and Cognito were excluded from this
analysis.
Attachment
-- 210428_ICG Enterprise Trust - Full year results RNS 31 January 2021_FINAL
https://ml-eu.globenewswire.com/Resource/Download/9007d219-8316-47a4-b15d-cac4c43b5a3f
(END) Dow Jones Newswires
April 28, 2021 02:00 ET (06:00 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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