ICG Enterprise Trust Regulatory News (ICGT)

4 December 2013

GRAPHITE ENTERPRISE TRUST PLC

INTERIM MANAGEMENT STATEMENT

QUARTER ENDED 31 OCTOBER 2013

Graphite Enterprise Trust PLC ('Graphite Enterprise' or 'the Company') presents its Interim Management Statement for the quarter ended 31 October 2013.

Performance summary

In the three months to 31 October 2013 the unaudited net asset value per share fell by 0.4% from 682.3p to 679.7p. In a quarter when little new valuation information is usually received, the rise in the valuation of the portfolio in local currency was offset by adverse currency movements. The net asset value per share has increased by 7.6% in the first nine months of the financial year and by 14.7% in the last 12 months.

The continued rise in the underlying value of the investment portfolio in local currencies generated a 2.2% increase in net asset value in the period. As the adverse currency movements were of a similar amount, expenses and other items accounted for the marginal fall in the net asset value.

The share price strongly outperformed the FTSE All-Share Index in the quarter, rising by 13.5% to 555.0p while the Index rose by 2.1%. Over the twelve months to October, the share price increased by 32.6% against a rise of 18.5% in the Index.

Reflecting this strong share price performance, the discount has narrowed from 22.9% at the start of the year to 18.3% at 31 October.

Investment portfolio

Investment performance

The underlying value of the portfolio in local currencies rose by £11.1 million in the third quarter, increasing the net asset value by 2.2%. In the year to date, the portfolio has generated net asset value growth of 10.6%.

After positively affecting performance in the first half of the year, currency movements reduced the net asset value by 2.2% in the third quarter. Over nine months the net effect of currency movements has been to reduce the net asset value per share by 0.7%.

We had received September valuations for only 43% of the portfolio by the cut-off date. As many of those managers who did report do not prepare full portfolio revaluations at September, the great majority of the portfolio effectively remains at its reported June valuation.

The largest gains in the period were generated by Graphite Capital's disposals of the investments in Alexander Mann Solutions ("AMS") and Park Holidays. Together these increased the net asset value by 1.3% in the quarter. Although neither transaction completed before the quarter end, the October net asset value reflects the prices agreed for both companies.

AMS was the Company's sixth largest underlying investment at 31 July. The exit was agreed in October and is expected to complete in December. The price achieved represents a multiple of 3.5 times original cost and an uplift of 48% to the gross carrying value of the investment at 31 July.

Park Holidays was the Company's fifth largest underlying investment at 31 July. The exit was completed in November. The price represents a multiple of 2.3 times original cost and an uplift of 18% to the gross carrying value of the investment at 31 July.

Proceeds

The portfolio generated £38.6 million of cash proceeds in the quarter. The largest cash receipts were of £7.9 million for Vue Entertainment and of £6.8 million for Willowbrook Healthcare. The valuation uplifts on both these exits were recognised in the previous quarter.

The proceeds from the AMS and Park Holidays disposals, which are likely to total approximately £26 million, should be received in the next few weeks.

In the first nine months of the financial year, the portfolio has generated proceeds totalling £78.2 million, equivalent to 18.8% of its opening value. Together with the expected proceeds from AMS and Park Holidays discussed above, proceeds for the full year will exceed £100 million for the first time since 2007.

A total of 28 full exits have been completed in the nine months to 31 October. Including the AMS and Park Holidays exits, the average uplift to the previous carrying value in the year to date is 39% at an average multiple of 2.1 times original cost.

Additions

A total of £21.6 million was invested in the quarter. Of this amount, drawdowns from funds accounted for £10.3 million and the secondary purchase of interests in two funds, managed by CVC and Charterhouse, accounted for a further £11.3 million.

In the nine months to October, £51.7 million has been invested in the portfolio, of which £28.8 million was through drawdowns from funds and £22.9 million was through secondary purchases of fund interests and co-investments.

A total of 40 new underlying investments were made in the nine months to 31 October. The largest made in the quarter was Graphite Capital's acquisition of Hawksmoor, the operator of a chain of a London-based steak restaurants. The Company's share of this investment was £1.7 million.

Since the period end the Company has agreed to invest £5.6 million alongside TDR Capital in the buy-out of David Lloyd Leisure, which will become one of the Company's ten largest underlying investments. We are reviewing a number of other co-investment opportunities and are also aware of significant potential investment activity by funds in our portfolio. If the more advanced of these transactions were to complete, the level of new investment in the final quarter would be materially higher than in any of the first three quarters.

Cash and liquid assets

In the three months to 31 October 2013, the portfolio generated a net cash inflow of £17.0 million. After taking account of other net outflows and currency movements, cash and liquid assets increased by £14.2 million to £69.5 million:

Balance sheet and commitments

The summary balance sheet and commitment position as at 31 October 2013 is set out below. The Company was 86% invested at that date.

1. £50.0 million and €58.1 million translated into sterling at period end

2. Cash and liquid assets plus undrawn borrowing facilities

3. Outstanding commitments less total liquidity

Total liquidity increased from £156.2 million to £168.7 million in the quarter, principally as a result of the high level of cash received from the portfolio.

Outstanding commitments increased by £106.1 million to a total of £260.3 million in the quarter, primarily because £100 million was committed to Graphite Capital's latest UK mid-market buy-out fund, Graphite Capital Partners VIII.

In addition, we made three new primary commitments totalling £19.9 million of which two were to new relationships with Nordic Capital and Permira and the third was to an existing manager, Hollyport. The secondary purchase of funds noted above added a further £5.3 million.

These increases were offset by drawdowns of £10.1 million, reductions due to currency movements of £4.2 million and other movements (principally the cancellation of commitments) of £4.8 million.

In the nine months to October, we have made commitments totalling £166.7 million: £157.7 million to nine new funds and £9.0 million acquired in four secondary purchases. We continue to review a number of primary and secondary opportunities and since the period end have committed £8.5 million to the latest fund raised by an existing manager in our portfolio, TDR Capital.

Events since the quarter end

Other than as discussed above, the Directors are not aware of any events or transactions which have taken place between 31 October 2013 and the date of publication of this statement which have had a material effect on the financial position of the company.

Not audited or reviewed

This information has not been audited or reviewed by the Company's auditors.

For further information please contact:

SUPPLEMENTARY INFORMATION

The 30 largest fund investments

The 30 largest funds by value at 31 October 2013 are set out below:

* Includes Graphite Capital Partners VII Top Up Fund and Top Up Fund Plus

** All or part of interest acquired through a secondary fund purchase

The 30 largest underlying INVESTMENTS

The table below presents the 30 companies in which Graphite Enterprise had the largest investments by value at 31 October 2013. These investments may be held directly or through funds, or in some cases in both ways. The valuations are gross and are shown as a percentage of the total investment portfolio.

* Sale agreed after the period end, completion subject to EU Competition Commission approval

** Sold after the period end

*** Quoted

Portfolio analySIS

The following five tables analyse the companies in which Graphite Enterprise had investments at 31 October 2013.

Portfolio - Investment type

Portfolio - Geographic distribution*

* Location of headquarters of underlying companies in the portfolio. Does not necessarily reflect countries to which companies have economic exposure.

Portfolio - Sector analysis

Portfolio - Graphite and third party investments

Investment activity

The following two tables analyse the investment activity of Graphite Enterprise in the three months to 31 October 2013.

Largest new underlying investments

Largest underlying realisations

Commitments analysis

The following three tables analyse Graphite Enterprise's commitments at 31 October 2013.

1 Original commitments are translated at 31 October 2013 exchange rates

New commitments in the three months to 31 October 2013

*Includes Graphite Capital Partners VIII Top Up Fund

NOTES

Graphite Enterprise Trust PLC

Graphite Enterprise Trust PLC ("Graphite Enterprise" or "the Company") aims to provide shareholders with long term capital growth through investment in unquoted companies. To achieve this, the Company invests in private equity funds and also directly in private companies.

The Company was listed in 1981 and has invested exclusively in private equity and has had the same manager throughout its life.

Graphite Enterprise provides access to a diverse portfolio of buy-outs of mature, profitable companies in established European private equity markets. The Company invests in UK-based mid-market companies through funds managed directly by Graphite Capital. Typically these will make up 20-25% of the portfolio. Investments in other UK companies and in overseas markets are made through funds managed by third parties. The Company does not invest in start ups or early stage businesses. Direct investments in companies may be made alongside both Graphite Capital and third party funds.

Shareholders of Graphite Enterprise gain exposure to a diverse portfolio of buy-outs of mature, profitable companies in established European private equity markets, with over 350 underlying companies. Graphite Capital directly manages many of the largest companies in the portfolio.

Since inception, the Company has increased the amount of capital raised almost 28 times

www.graphite-enterprise.com 

Graphite Capital

Graphite Capital is one of the UK's leading mid-market private equity firms with over £1.6 billion of funds under management. It has raised and managed funds for 32 years. The senior management team has worked together for 16 years.

Graphite Capital manages both direct investments in portfolio companies and private equity fund investments.

Direct investments are predominantly made through limited life funds which have a global institutional investor base. The focus of direct investments is on UK mid-market buy-outs of companies valued at between £40 million and £150 million across a range of industry sectors.

Fund investments are made exclusively by Graphite Enterprise. Fund investments focus mainly on European buy-out funds, but there is also some exposure to the USA and to mezzanine funds. The investment strategy is to back private equity managers with strong track records operating in mature markets, with the aim of building long term relationships.

As it has a long experience both of managing its own funds and of investing in third party funds, Graphite Capital has an unusually broad perspective when assessing fund and co-investment opportunities. Graphite Enterprise benefits from both the expertise of a dedicated fund investment team as well as the insights of Graphite Capital's direct investment team.

www.graphitecapital.com