ICG Enterprise Trust Regulatory News (ICGT)

11 June 2015

GRAPHITE ENTERPRISE TRUST PLC

INTERIM MANAGEMENT STATEMENT

QUARTER ENDED 30 APRIL 2015

Graphite Enterprise Trust PLC ("Graphite Enterprise" or "the Company") presents its Interim Management Statement for the quarter ended 30 April 2015.

Performance summary1

In the three months to 30 April, the net asset value per share increased by 0.4% to 697.9p and the share price by 0.5% to 578.0p. Over the same period, the FTSE All-Share Index rose by 5.1%.

In a quarter when little new valuation information is usually received, the rise in the valuation of the portfolio in local currencies generated a 2.3% increase in the net asset value. This was partially offset by the impact of adverse currency movements which reduced the NAV by 1.5% and by other costs which reduced it by a further 0.4%.

Over the five years to 30 April, the NAV and share price have both outperformed the Index, rising by 57.3% and 92.1% respectively, while the Index has increased by 53.8%.

At the quarter end, the discount of the share price to the net asset value was 17.2%, which was almost unchanged from the level of 17.3% at 31 January.

1. All performance figures are on a total return basis, including the effect of re-invested dividends.

Investment portfolio

Investment performance

In the quarter to April, the value of the portfolio in local currencies increased by £11.9 million or by 2.8%. Graphite Capital's sale of National Fostering Agency generated the largest gain, accounting for a 0.6% increase in value of the portfolio. As few of the managers of our fund portfolio revalue their investments at March, the great majority of the portfolio effectively remains at its reported December valuation.

The Company was 84% invested at the start of the year with the result that the 2.8% increase in the portfolio generated a 2.3% increase in the net asset value. As noted above, the adverse effect of currency movements and costs reduced the NAV by a total of 1.9%. The share buy-backs completed in the period had a small positive impact, bringing the net increase to 0.4%.

Proceeds

The portfolio generated £28.8 million of cash proceeds in the three months to 30 April. Nine full realisations were completed in the quarter at an average uplift to the manager's previous carrying value of 33% and at an average total return of 1.9 times original cost.

The sale of National Fostering Agency has been the most significant disposal achieved this year. It generated £2.2 million of proceeds in the quarter and a further £9.7 million in early May. Including these further proceeds, the total of £38.5 million received represents 8.9% of the opening portfolio which is broadly in line with the rate of realisations seen last year.

Additions 

A total of £18.4 million was invested in the quarter. £10.4 million or 57% of this was in two discretionary investments, both with the same manager. In February, we acquired a further position in BC Partners IX in the secondary market for £7.2 million and in the same month we made a £3.2 million co-investment alongside that fund in PetSmart, the leading retailer of pet products and services in North America.

Almost all of the balance was drawn down by funds. The total of £8.0 million was lower than the rate of drawdown experienced last year. This was primarily because Graphite Capital Partners VIII did not make any drawdowns in the period.

A total of ten new underlying investments were made in the quarter, the largest of which was PetSmart where the total invested (including the amount through the fund) was £4.7 million.

Cash

The portfolio generated a net £4.3 million* of cash in the three months to 30 April. After taking account of other net outflows, cash fell by £1.4 million to £88.7 million.

At 10 June the cash balance had increased by £7.2 million to £95.9 million. The £9.7 million of further proceeds received from National Fostering Agency and other net cash inflows of £0.1 million were partially offset by share buy-backs of £2.6 million (see below). On a pro forma basis, cash falls to £84.7 million if the dividend of £11.2 million to be paid in June (see below) is deducted.

Balance sheet and commitments

The Chairman's Statement in the recent annual report advised shareholders that "We may use share buy-backs as a means of reducing the cash balance." The portfolio has continued to generate net cash in the first four months of the financial year and markets for new investments have remained challenging. As a result the cash balance has remained high. The Company has therefore started to buy back its shares. The first purchases were made at the end of April with 150,000 shares being acquired by the quarter end for consideration of £0.9 million. A further 450,000 shares have been bought back since then for £2.6 million. The average price paid to date has been 572.6p and the average discount to the estimated daily NAV per share was more than 15%.

The summary balance sheet and commitment position at 30 April 2015 is set out below. The Company was 83% invested at that date.

1. £50.0 million and €61.7 million translated into sterling at period end

2. Cash and liquid assets plus undrawn borrowing facilities

3. Outstanding commitments less total liquidity

No new primary commitments were made in the period, although a commitment of £4.9 million was acquired with the secondary purchase of the interest in BC Partners IX discussed above and there were other increases of £1.5 million. As £8.0 million of commitments were drawn down and currency movements reduced commitments by £4.6 million, the level of outstanding commitments fell by £6.2 million to £227.8 million in the quarter. We expect to complete a number of new fund commitments in the coming months.

Dividend

If approved by shareholders at the forthcoming AGM, the Company will pay a final dividend of 10.0p per share and a special dividend of 5.5p per share on 18 June. The total distributed to shareholders will be £11.2 million.

The shares have been trading without rights to the dividends since 28 May. In isolation this reduced the net asset value per share by 15.5p.

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 30 April 2015 and the date of publication of this statement which have had a material effect on the financial position of the company.

Not audited or reviewed

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

For further information please contact:

SUPPLEMENTARY INFORMATION

The 30 largest fund investments

The table below summarises the 30 largest funds by value at 30 April 2015.

* Includes the associated Top Up Fund(s)

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

The 30 largest underlying INVESTMENTS

The table below presents the 30 companies in which Graphite Enterprise had the largest investments by value at 30 April 2015. These investments may be held directly or through funds, or in some cases in both ways. The valuations are gross and are shown as a percentage of the total investment portfolio.

+ All or part of this investment is held directly as a co-investment or other direct investment.

* Quoted

** We are not permitted to disclose the details of this co-investment under the terms of a confidentiality agreement.

Portfolio analySIS

The following five tables analyse the companies in which Graphite Enterprise had investments at 30 April 2015.

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

Quoted equity holdings at 30 April 2015

All quoted holdings, other than Intermediate Capital Group, are held indirectly through third party funds and may have restrictions on their sale. The timing of any disposal of these interests is determined by the managers of those funds.

The following table analyses the closing portfolio by value.

Graphite and third party investments at 30 April 2015

Investment activity

The following two tables analyse the investment activity of Graphite Enterprise in the three months to 30 April 2015.

Largest new underlying investments

Largest underlying realisations

* Proceeds from disposal of co-investment only. A further £9.7m of proceeds from Graphite Capital Partners VII was received in May 2015.

Commitments analysis

The following four tables analyse Graphite Enterprise's commitments at 30 April 2015.

1 Original commitments are translated at 30 April 2015 exchange rates

CURRENCY EXPOSURE

* Currency exposure is calculated by reference to the location of the underlying portfolio companies' headquarters.

NOTES

Graphite Enterprise Trust PLC

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

The Company has been listed on the London Stock Exchange since 1981 and has invested exclusively in private equity and has had the same manager throughout its life.

Graphite Enterprise provides access to a diverse portfolio of buy-outs of mature, profitable companies in established 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 generated a return of over 28 times the amount subscribed.

www.graphite-enterprise.com 

Graphite Capital

Graphite Capital is one of the UK's leading mid-market private equity firms with over £1.4 billion of funds under management. It has raised and managed funds for 34 years. The senior management team has worked together for 18 years.

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

Direct investments are predominantly made through institutional funds with a global investor base. The focus of direct investments is on UK mid-market buy-outs of companies valued at between £25 million and £200 million across a range of industry sectors.

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

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

www.graphitecapital.com