ICG Enterprise Trust Regulatory News (ICGT)

28 September 2016

ICG ENTERPRISE TRUST PLC

UNAUDITED RESULTS FOR THE

SIX MONTHS ENDED 31 JULY 2016

ICG Enterprise Trust plc ("ICG Enterprise" or "the Company") presents its unaudited results for the six months ended 31 July 2016.

Chairman's Statement

Interim review

"The portfolio continues to generate strong growth over the short, medium and long term."

On behalf of the Company, I am able to report a successful set of results for the first six months under the management of ICG1. The net asset value as at 31 July 2016 is £566 million or 798 pence per share (31 January 2016: 731p), a 10.0% Total Return2 for the period. The share price also recovered to 592 pence at 31 July 2016 (31 January 2016: 545p), delivering a Total Return of 9.8% in the six months (year ended 31 January 2016: 8.2%).

We are pleased to announce an interim ordinary dividend of 10.0 pence per share, a 100% increase on the 5.0 pence per share interim dividend declared in 2015. This will be paid on 21 October 20163.

*As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 July 2016.

Profit for the period was £51 million, equivalent to 72 pence per share, driven both by strong growth in the Portfolio2,4 (+7.4%) and favourable movements in the foreign exchange rate (+5.3%). The integration of the investment team into ICG has gone smoothly and they have begun to take advantage of being part of a much larger alternative asset management business. In particular the Company has benefited from ICG's broader insight into and access of private market investment opportunities to inform certain investment decisions and make new investments. Since the start of the financial year the Company has made two primary fund commitments and two secondary investments in opportunities all originated through ICG, as well as four third-party primary fund commitments.

Portfolio

The Portfolio now stands at £470 million with the Company having received Realisation Proceeds2 of £45 million and invested £30 million in the period. Primary fund investments account for £287 million (61%) and secondary and co-investments £183 million (39%). ICG originated investments represent £40 million (8%). 44% of the Portfolio is invested in the UK, 38% in continental Europe and 18% in North America.

Post-crisis Investments2 now comprise 80% of the Portfolio with the 30 largest investments accounting for 48% of the Portfolio. The valuation of the top 30 investments at 9.7 times EBITDA2 is at a substantial discount to the valuation of FTSE All-Share Index at 14.0 times EBITDA.

Balance sheet

Commitments of £54 million were added in the period such that Undrawn Commitments2 now stand at £297 million. The Company holds cash of £110 million and undrawn debt facilities of £102 million providing total available liquidity of £212 million. Commitments therefore exceed total liquidity by £84 million or 15% of the period end net asset value; a level that remains consistent with our cautious approach to managing the balance sheet.

Distributions

In the period the Company paid a final dividend of £4.3 million for the year to 31 January 2016, equivalent to 6.0 pence per share. In order to provide shareholders with greater clarity of the income they can expect from the Company, the Board anticipates paying a minimum dividend each year of 20.0 pence per share. We intend to maintain the practice of paying an interim dividend and we are pleased to declare an interim ordinary dividend of 10.0 pence per share to be paid on 21 October 20163.

We repurchased 458,426 shares at an average price of 574p for total consideration of £2.6 million. This improved the net asset value per share by 0.2%. So long as the shares are valued at a significant discount to the net asset value the Board believes that the shares offer good value and will continue to repurchase shares on an opportunistic basis.

Outlook

We are encouraged to see the Portfolio maintaining its positive growth momentum of the last 7 years, delivering double digit EBITDA growth in the last 12 months and yet it is still valued at a material discount to the FTSE All Share Index. Our focus on partnering with only the most experienced managers, with strong track records of investing and managing companies through economic cycles provides us with reassurance that the Portfolio is well positioned to adapt to changing market conditions. Whilst the stock market's response to the recent Brexit decision has been positive, we acknowledge that the negotiations with the EU may present some medium term uncertainty for the UK. We remain confident that the risk profile of the underlying investments is low, the diversity of investments is high and the liquidity position of the balance sheet is strong. In fact, the Company is well positioned to take advantage of future investment opportunities that invariably arise at times of market instability. Finally, the change of Manager to ICG is already delivering material benefits to shareholders which should only increase in both the short and long term.

Mark Fane

27 September

1. ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.

2. Constitutes an Alternative Performance Measure ("APM"). APMs are used throughout 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 and its previously reported results. The Glossary, which is located after the notes to the financial statements, includes further details of APMs and reconciliations to IFRS measures, where appropriate.

3. Shares will trade without rights to the interim dividend from 6 October 2016 ("ex-dividend date"). The last date for registering transfers to receive the dividend is 7 October 2016 ("record date").

4. In the Chairman's Statement, Manager's Review and Supplementary Information, reference is made to the "Portfolio". This is an APM (see footnote 2). The Portfolio is defined as the aggregate of the investment portfolios of the Company and of its subsidiary limited partnerships. The rationale for this APM is discussed in detail in the Manager's Review. The Glossary, which is located after the notes to the financial statements, includes a reconciliation of the Portfolio to the most relevant IFRS measure.

Manager's Review

Change of Manager

This is our first half year report since the appointment of ICG as Manager of the Company and the transfer of the investment team from Graphite Capital Management LLP ("Graphite Capital"). At the time of the appointment, a number of potential benefits to investors were identified, including:

· Access to a wider range of investment opportunities through ICG's global office network and local private equity manager relationships;

· Insights and market intelligence from ICG's direct investment teams;

· Support from ICG's infrastructure and expertise in areas such as treasury, investor relations and information technology; and

· Lower costs through a reduction in the headline management fee and no fees on ICG funds (in addition to no fees on Graphite Capital funds).

In the relatively short time since moving to ICG we are encouraged by the progress we have made towards realising all of these benefits. Most notably, commitments have been made to two in-house funds: ICG Strategic Secondaries Fund II ("ICGSS") and ICG Asia Pacific Fund III (the latter completing since the half year end). We believe these funds are highly complementary to our strategy and will generate attractive returns as well as enabling the Company to access co-investments from these strategies. Both funds broaden the geographic scope and increase the proportion of investments on which shareholders do not pay a management fee. Further details of these funds are given in the Supplementary Information section.

We have also completed an £8.3 million co-investment alongside ICGSS in a US fund restructuring transaction and a £4.1 million secondary purchase of an interest in ICG Europe V, a fund in which the Company first invested in 2011, (the latter completed since the period end).

In addition to completing these in-house investment opportunities, we are benefitting greatly from ICG's insights into private equity managers and portfolio companies in Europe, US and Asia in our investment analysis and decision-making for both funds and co-investments. We have a number of investment opportunities currently under review with third-party managers who have been introduced to us through the ICG network.

Finally, we are working with a range of specialist functions within ICG to provide support and enhance the management of the Company.

These benefits are being achieved while maintaining the strong historical relationship with Graphite Capital, which, at almost a quarter of the Portfolio, continues to be the Company's most significant underlying manager.

Strategy

Our strategy is fundamentally unchanged since the move to ICG, continuing our focus on buyouts led by established managers in developed private equity markets. We believe this segment of the market offers investors the best balance of risk and reward.

Our approach to sourcing investments is also unchanged. We continue to access private equity backed companies by developing relationships with our selected managers through commitments to their new funds ("primary fund commitments") and sourcing follow-on investments through both acquiring existing funds in the secondary market ("secondary fund purchases" or "secondaries") and investing directly in companies alongside our funds ("co-investments"). This approach gives us greater discretion over the investments as well as more flexibility to adapt the mix of investments to changing market conditions and Portfolio developments.

While the strategy is essentially the same, the emphasis is evolving in order to maximise the benefits of the change of Manager from a UK focused buyout house to an alternative investment firm with global reach. We are broadening the geographic scope of the Portfolio by increasing our focus on US managers with the benefit of insights and relationships from ICG's US investment teams. We are also starting to consider developed Asian markets through ICG's Asia Pacific mezzanine team. These developments are likely to have a gradual impact on the Portfolio rather than a radical shift from the 18% in US and less than 1% in Asia at 31 July 2016.

Interim results

In this Interim Report, references to the "Portfolio" include the investment portfolios of both the Company and its subsidiary partnerships. In the financial statements, in accordance with IFRS 10 'Consolidated Financial Statements', "Investments at fair value" are stated net of balances receivable from subsidiary partnerships and the accrual for the co-investment incentive scheme. Both the Manager and the Board consider that the Portfolio as presented below is the most relevant basis for shareholders in assessing the overall performance of the Company as it is consistent with industry practice and therefore enables comparison with peers as well as with the Company's previously reported results. A reconciliation of the Portfolio to the financial statements is set out in the Glossary.

Comparatives, unless otherwise stated, represent the equivalent figures for the full year to 31 January 2016. This is considered more meaningful to shareholders than the comparables for the half year to 31 July 2015.

Portfolio performance overview

* In this interim report 99.7% of the Portfolio is valued using 30 June 2016 or 31 July valuations.

In the first half of the year the Portfolio made strong progress, rising in value by 13.2%. After adjusting for the impact of foreign currency movements on the value of our overseas investments, the Portfolio generated a valuation gain of 7.4% in local currencies.

At 31 July 2016 the Portfolio was valued at £469.7 million. This was £41.5 million higher than at the start of the period as valuation and currency gains more than offset net realisations.

Realisations

The Portfolio generated Realisation Proceeds of £45.5 million in the period, equivalent to 11% of its opening value. This implies a slight fall in realisations relative to last year when the cash conversion rate was 28% for the full year. However, the total of 23 Full Realisations was slightly higher than last year's rate. The lower level of proceeds therefore reflects a smaller average size of disposals rather than a general slowdown in realisation activity.

Full Realisations accounted for £25.4 million of proceeds received and these continued to be completed at Uplifts to the previous holding values, averaging 21% in the period. This was similar to the level achieved last year of 22%.

Investments made since the financial crisis generated valuation Uplifts of 26% whereas Pre-crisis Investments1 realised Uplifts of 11%, continuing the divergence we have noted over the last few years. Post-crisis Investments1 also achieved a strong multiple of original cost of 2.5 times whereas the pre-crisis investments were realised for an average return multiple of 1.0 times cost, reflecting the relative underperformance of the remaining investments from these vintages.

The largest realisation in the first half was the disposal by Deutsche Beteiligungs AG ("DBAG") of Spheros, the manufacturer of climate systems for buses, which generated proceeds of £8.2 million including from a co-investment made alongside DBAG's fund in 2011. Further details of the ten largest underlying realisations are set out in the Supplementary Information section.

New investments

New investment of £30.3 million in the period was slightly lower than the rate of investment last year as market conditions continued to be challenging.

Drawdowns1 of fund commitments of £21.6 million were below expectations. This was mainly because our largest fund commitment, Graphite Capital Partners VIII, made no drawdowns in the period, although this fund has completed two new investments since the period end. Across the fund portfolio generally, drawdowns were also relatively slow.

Secondary investment of £8.3 million reflects the co-investment alongside ICGSS noted above as no fund secondaries were completed in the period. Volumes in the market for secondary fund interests were down by between 17% and 23%, depending on the data source2, and pricing remained relatively high. We therefore chose to remain highly selective despite reviewing a wide range of opportunities. However, we continue to focus on the secondary market and believe that our approach to sourcing opportunities, primarily in funds either that we are already invested in or where we have an informational edge through our manager relationships, will secure attractive investments going forward.

A total of 26 new buyouts were completed in the period compared with 64 in the year to January 2016. These were acquired at a weighted average of slightly less than nine times EBITDA1 which is marginally lower than the prices paid last year. Therefore, while the level of new investment was lower than expected, it is reassuring that our managers appear to be maintaining pricing discipline.

New fund commitments

Primary commitments of £51.2 million to five funds in the first half were relatively high for a six month period as many of our preferred managers have raised, or are raising, funds this year. Our pipeline therefore remains strong for the second half.

All five funds completed were raised by managers the Company has been investing with for many years. Established firms are the focus of our investment strategy as we believe they tend to be lower risk than firms with newer, less experienced, teams.

Further details of new fund commitments are set out in the Supplementary Information section.

Closing Portfolio

At 31 July 2016, the Portfolio was valued at £469.7 million with investments in more than 400 underlying companies managed by 34 private equity firms through 64 funds and 26 co-investments. Investments are well diversified across a wide range of sectors, geographies and vintages.

Co-investments and secondaries accounted for 38.9% of the Portfolio at the period end. This proportion has increased from approximately 18% immediately prior to the financial crisis as our strategy has evolved to give us greater discretion over investments into the Portfolio than is the case for a typical fund investor. Graphite Capital and ICG manage 23.8% and 8.5% of the Portfolio respectively including co-investments and secondaries. Third-party primary funds represent 45.9% of the Portfolio.

Whilst this well-diversified Portfolio reduces risk, we aim to strike a balance between diversification and concentration such that many underlying companies are large enough to have a meaningful impact on overall performance. The top 30 underlying companies accounted for 48% of the Portfolio at the period end therefore the performance of these investments is likely to be a key driver of future growth. In the year to June 2016 the revenues and EBITDA of these companies increased by an average of 7% and 10% respectively (in underlying currencies). By contrast, the FTSE All-Share Index reported revenue growth of 2% and a fall in EBITDA of 14% over the same period.

The top 30 companies were valued on an average multiple of 9.7 times last twelve months EBITDA at June 2016. While this has increased marginally since the start of the year we continue to believe it is reasonable for the strong growth being achieved. By comparison, the FTSE All-Share Index is currently valued at 14 times June 2016 EBITDA despite the lack of profit growth noted above. It is interesting to note that over the last 5 years, the EBITDA valuation multiple of the Company's top 30 companies has been relatively stable (although its constituents have changed almost entirely over that period) while the EBITDA multiple of the FTSE All-Share Index has increased from less than 7 in 2011 to its current level of 14.

The Net Debt1 of the top 30 companies averaged 3.8 times EBITDA which has increased slightly relative to the top 30 at the start of the year. At this level the gearing should enhance future equity returns without involving undue financial risk, particularly given the relatively flexible terms on which many of the companies have been able to borrow over the last few years.

The share of the Portfolio represented by post-crisis investments has continued to increase and at 31 July 2016 represented 80.2% of underlying investments. We expect these to continue to generate the most significant future value growth and it is therefore encouraging that the Portfolio is now heavily concentrated in these vintages.

Commitments and liquidity

At 31 July 2016, the Company had outstanding commitments of £296.8 million and total liquidity of £212.5 million, of which £110.4 million was in cash3 (31 January 2016: £103.8 million) and £102.1 million of undrawn bank facilities (31 January 2016: £97.1 million). Commitments therefore exceeded available liquidity by £84.3 million or 14.9% of the net asset value. This continues to represent a conservative level of Overcommitment1 despite a modest increase from the 10.1% at the start of the year.

Funds in Investment Period1 represented £221.0 million of the undrawn commitments. These are typically drawn down over a period of four to five years from the start of a fund with 10-20% of commitments usually retained at the end of the investment period to fund follow-on investments and expenses and for contingencies. If outstanding commitments to each of the funds were to be drawn down at a constant rate over their remaining investment periods, approximately £70-75 million of commitments would be drawn down over the next 12 months.

The Company therefore has adequate resources in cash and undrawn facilities to fund drawdowns for more than two years even if no realisations were to be achieved. As we expect the Portfolio to continue to generate cash over this period, the current liquidity gives us the ability to take advantage of a range of potential investment opportunities.

Outlook

The environment for realisations continues to be positive despite volatility in markets and geopolitical concerns. This reflects the high levels of equity and debt funding available to both financial and trade buyers. We therefore expect the Portfolio to generate further realisations in the second half which should underpin growth in value given the uplifts that tend to be achieved on sale. Also, with the Portfolio continuing to demonstrate strong profit growth and valuation multiples remaining significantly below the Index, the prospects for further growth in unrealised valuations remain positive.

At times when markets are favourable for exits, it can be more challenging to invest at reasonable valuations. We believe this dynamic is reflected in the relatively low level of new investment in the first half but we are reassured that our managers are continuing to exercise price discipline.

Our investment strategy, which is fundamentally unchanged following the move to ICG, gives us the flexibility to adapt the mix of primary funds, secondaries and co-investments to changing market conditions and to deploy cash where we see the best relative value. The Company has the benefit of a strong balance sheet and it is encouraging that in the short space of time since joining ICG we are seeing dealflow, both in-house and alongside our third-party managers, which should enable us to deploy the Company's cash balances in attractive investments.

ICG Private Equity Fund Investment Team

September 2016

1. See Glossary for definitions. The Glossary is located after the notes to the financial statements.

2. Includes reports from Greenhill Cogent, Evercore, Setter Capital and NYPPX

3. This compares with cash shown on the balance sheet of £110.3m. The difference of £0.1m represents cash held by the Company's subsidiary limited partnerships.

SUPPLEMENTARY INFORMATION

This section presents supplementary information regarding the Portfolio (see Manager's Review and the Glossary for further details and definitions).

The 30 largest underlying INVESTMENTS

The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 July 2016. These investments may be held directly or through funds, or in some cases in both ways. The valuations are shown as a percentage of the Portfolio.

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

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

** Quoted investment.

The 30 largest fund investments

The 30 largest funds by value at 31 July 2016 are set out below:

* Includes the associated Top Up funds.

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

ANALYSIS OF THE 30 LARGEST UNDERLYING INVESTMENTS

The tables below analyse the 30 companies in which ICG Enterprise had the largest investments by value at 31 July 2016. These investments may be held directly or through funds or, in some cases, in both ways.

* Excludes NWTC and Aero Technics where this metric is not meaningful

** Excludes NWTC, Aero Technics and Cognito where this metric is not meaningful

*** Excludes Cognito where this metric is not meaningful

Portfolio analySIS

The following six tables analyse the Portfolio by value at 31 July 2016.

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

Quoted equity holdings at 31 July 2016

All quoted holdings 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.

Third party, Graphite Capital and ICG investments at 31 July 2016

Investment activity

Largest new underlying investments in the six months ended 31 July 2016

Largest underlying realisations in the six months ended 31 July 2016

Commitments analysis

The following four tables analyse ICG Enterprise's commitments at 31 July 2016.

* Original commitments are translated at 31 July 2016 exchange rates.

New commitments during the six months to 31 July 2016

CURRENCY EXPOSURE

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

Dividend HISTORY and Shareholder Analysis

* As discussed in the Chairman's Statement, an interim dividend of 10.0p per share will be paid on 21 October.

UNAUDITED RESULTS FOR THE SIX MONTHS TO 31 JULY 2016

Income Statement (unaudited)

The columns headed 'Total' represent the income statement for the relevant financial periods and the columns headed 'Revenue' and 'Capital' are supplementary information, in line with the Statement of Recommended Practice for investment trusts issued by the Association of Investment Companies in November 2014. There is no Other Comprehensive Income.

Balance Sheet (unaudited)

Cash Flow Statement (unaudited)

Statement of Changes in Equity (unaudited)

* 458,426 10p ordinary shares with an aggregate nominal value of £45,843 were purchased during the period and are held in treasury. Distributable reserves have been reduced by £2.6 million, being the consideration paid for these shares.

* 705,833 10p ordinary shares with an aggregate nominal value of £70,583 were purchased during the period and are held in treasury. Distributable reserves have been reduced by £4.1 million, being the consideration paid for these shares.

* 1,586,163 10p ordinary shares with an aggregate nominal value of £158,616 were purchased during the period and are held in treasury. Distributable reserves have been reduced by £9.1 million, being the consideration paid for these shares.