ENTERPRISE TRUST
Annual report
& accounts 2017
ICG Enterprise Trust plc
Investing in long term growth
I
i
C
G
E
n
t
e
r
p
r
s
e
T
r
u
s
t
p
l
c
a
n
n
u
a
l
r
e
p
o
r
t
&
a
c
c
o
u
n
t
s
2
0
1
7
www.icg-enterprise.co.uk
In this report
Highlights of the Year
Overview
Chairman’s Statement
About ICG Enterprise
Strategic Report
MANAGER’S Review
Portfolio Review
Market Review
ICG Enterprise Team
Intermediate Capital Group plc
Case Study – Micheldever Tyre Services
Supplementary Information
The 30 Largest Underlying Investments
Analysis of the 30 Largest Underlying Investments
The 30 Largest Fund Investments
Portfolio Analysis
Investment Activity
Realisation Activity
Commitments Analysis
Currency Exposure
Dividend Analysis
Case Study – Spheros
1
3
6
8
11
15
17
18
19
21
23
24
26
28
29
30
31
32
33
Financial Information
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
Statement of Directors’ Responsibilities
Independent Auditors’ Report
Governance
The Board
Report of the Directors
Directors’ Remuneration
Report of the Audit Committee
Additional disclosures required by the
Alternative Investment Fund Managers Directive
Investment Policy
The Annual General Meeting
Notice of Meeting
Notice of Meeting: Explanatory Notes
General Information
Understanding Private Equity
How to Invest in ICG Enterprise
Useful Information
Glossary
36
37
38
39
40
58
59
68
70
76
80
82
84
85
86
88
92
94
95
96
ICG Enterprise Trust Annual Report & Accounts 2017
ICG Enterprise Trust Annual Report & Accounts 2017 HIGHLIGHTS of the year
These annual results
mark the first
anniversary of the
change of manager
to ICG
The results for the year ended
31 January 2017 have been
excellent and there has been
faster than expected progress
against key objectives set at the
time of the change of manager
to ICG1. The integration of the
investment team to ICG has gone
smoothly.
The Portfolio performance has
been strong against a backdrop
of a volatile market.
The Board is encouraged by the
performance of the Portfolio
with the top 30 underlying
companies continuing to
generate strong profits. As a
whole, the portfolio is
considered to be sensibly
valued.
Mark Fane
Chairman
Financial highlights
+23.4%
Net asset value growth2
+31.6%
Share price growth2
FTSE All Share Index: +20.1%
FTSE All Share Index: +20.1%
£613m
Net asset value
31 January 2016: £521m
20.0p
Total dividend per share for
the year
31 January 2016: 11.0p
£594m
Portfolio value
31 January 2016: £428m
+21.8%
Underlying growth in value of the
Portfolio in local currencies
31 January 2016: 11.1%
£86m
Proceeds received from
the Portfolio
31 January 2016: £120m
£128m
New investments in the Portfolio
31 January 2016: £64m
1
ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the manager of the Company.
2 Throughout the report, all performance figures are stated on a total return basis (i.e. including the effect of re-invested dividends).
OVERVIEW1 Overview
Chairman’s Statement
About ICG Enterprise
Strategic Report
3
6
8
ICG Enterprise Trust Annual Report & Accounts 2017
Chairman’s Statement
The Company has
delivered excellent
results in its first year
under ICG management
Mark fane
Chairman
These annual results mark the first
anniversary of the change of manager to
ICG1. I am pleased to report an excellent
set of results for the year to 31 January
2017 as well as faster than expected
progress against key objectives set at the
time of the change of manager. The
Company’s core strategy remains
unchanged following the move, namely to
focus on investments in established,
profitable private companies in
developed markets. In approving the
management transition the Board
expected the Company to benefit in four
main areas:
• 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 finance,
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
funds managed by Graphite Capital, the
former manager).
As the portfolio manager’s report details,
each of these factors have contributed to
the strong performance in the year and
the integration of the investment team to
ICG has gone smoothly. Considerable
progress has been made against a
number of key objectives, in particular to:
• Become more fully invested;
• Increase the proportion of the
Portfolio2, 3 managed directly by ICG;
and
• Increase US exposure.
The Company continues to outperform its
benchmark, the FTSE All-Share Index,
over the short, medium and long term.
Both the net asset value per share and
share price have outperformed the
benchmark on a Total Return basis over
one, three, five and ten years. Indeed, an
investment in the Company on any
financial year end date in the last twenty
years would have outperformed the
benchmark.
Portfolio
Through a period of economic
uncertainty, particularly in the UK, the
Board is encouraged by the performance
of the Portfolio with the top 30 underlying
companies continuing to generate strong
profits, an unbroken trend since 2008.
As a whole, the portfolio is considered to
be sensibly valued relative to the public
markets. This belief in the value of the
portfolio is reinforced by the continued
uplifts on realised investments. Further
information is provided in the portfolio
manager’s report and supplementary
information.
Balance sheet
Net assets at 31 January 2017 stood at
£613m (2016: £521m) with year end cash
of £39m (2016: £104m) representing 6%
of total assets, down from 20% at the
Performance in years to 31 January 20174
1 year
3 year
5 year
10* year
Net asset value per share
23.4%
38.1%
66.9%
119.4%
Share price
FTSE All-Share Index
31.6%
35.1%
118.3%
115.2%
20.1%
22.6%
57.0%
71.2%
* As the Company changed its year end in 2010, the ten year figures are for the 121 month period
to 31 January 2017.
1
ICG Alternative Investment Limited, a regulated subsidiary of Intermediate Capital Group plc, acts as the Manager of the Company.
2 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 on page 96 includes further details of APMs and reconciliations to IFRS measures, where
appropriate. The rationale for the APMs is discussed in detail in the Manager’s Review. The Glossary on page 96 includes a reconciliation of the
Portfolio to the most relevant IFRS measure.
3 In the Chairman’s Statement, Manager’s Review and Supplementary Information, reference is made to the “Portfolio”. This is an APM. 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 on page 96 includes a reconciliation of the Portfolio to the most relevant IFRS measure.
4 In the Chairman’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).
32
OVERVIEW1/ Chairman’s Statement
continued
Top 30 underlying
companies continuing to
generate strong profits
start of the year. This reflects the
achievement of a key objective set as part
of the change in Manager, namely to
become more fully invested and to
manage the balance sheet more
efficiently. It is not the intention of the
Board for the Company to be geared,
other than for short term working
capital purposes. Furthermore, the
over-commitment percentage of 26% of
net assets (2016: 10%) remains within
conservative parameters.
Distributions
As stated in the interim report, in order to
provide shareholders with greater clarity
of the income they can expect from the
Company, the Board anticipates paying a
minimum dividend of 20.0p per share
each year, subject to always having
sufficient revenue and capital reserves.
In line with this policy, having paid an
interim dividend of 10.0 pence per share,
the Board is pleased to propose a final
dividend of 10.0p per share. The
proposed total dividend represents an
increase of 81.8% compared with the
prior year dividend and a yield on the year
end share price of 2.9% (2016: 2.0%). If
approved by shareholders at the AGM,
the final dividend of 10.0p per share will
be paid on 20 June 20175.
During the year the Company
repurchased 982,345 shares at an
average price of 627.0p for a total
consideration of £6.2m. This improved
the net asset value per share by 2.5%. The
Board believes that the shares offer good
value and will continue to repurchase
shares on an opportunistic basis.
F&C savings plans
Since 1984, investors in the F&C savings
plans have been able to acquire shares in
ICG Enterprise. Following the change of
manager to ICG in 2016, from 1 January
2017, only existing F&C savings plan
investors are able to acquire shares in the
Company through these plans. BMO
Global Asset Management6 continues to
allow existing savings plans to hold shares
in the Company and is committed to the
ongoing servicing of the existing F&C
savings plans.
board changes
In line with the ongoing succession plans
being implemented by the Board, it is my
intention to step down at the AGM on
13 June 2017 after seventeen years as a
non-executive director, including eight
years as Chairman.
The Board is proposing that Jeremy
Tigue is appointed Chairman subject to
Ten Year Performance*
Fig: 1.1
Net asset value per
share and share price
have outperformed
the benchmark on a
Total Return basis
over one, three, five
and ten years
250
200
150
100
50
0
Dec
06
Dec
07
Dec
08
Dec
09
Jan
11**
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
ICG Enterprise net asset value per share
ICG Enterprise share price
FTSE All-Share Index
*All amounts rebased to 100 at 31 December 2006. Performance to 31 January 2017.
**Year end changed from 31 December to 31 January.
ICG Enterprise Trust Annual Report & Accounts 2017 £20.3m of cash returned
to shareholders via an
increased dividend
of 20.0p and share
buy backs
The Company is well
positioned to continue
its excellent long term
performance
his re-election at the AGM. Jeremy was
appointed to the Board in 2008 and has
made an invaluable contribution to the
governance of the Company during his
tenure. He has a wealth of experience in
the investment trust sector having
managed the Foreign & Colonial
Investment Trust (“FCIT”) from 1997 to
2014 and sits on a number of other
investment trust boards. The FCIT
portfolio included a material allocation
to private equity and he therefore brings
this especially relevant experience to
the Company.
It is also proposed that Peter Dicks steps
down as Chairman of the Audit Committee
to be replaced by Andrew Pomfret,
subject to his re-election at the AGM.
Outlook
Markets continue to be buoyant despite
the uncertainty surrounding Brexit and
other geopolitical risks, but we expect
volatility to rise. Historically, periods of
instability have created some of the most
attractive investment opportunities for
private equity. We believe the asset class
will continue to outperform public
markets over the medium to long term
because of private equity’s patient and
active approach to creating value.
The Company is particularly well placed
to adapt to changing market conditions
with its flexible investment strategy and
because the Portfolio continues to deliver
strong growth in earnings. The
Manager’s focus on partnering with only
the most experienced private equity
firms, with strong track records of
investing and managing companies
through economic cycles, provides the
Board with further confidence. Finally, the
change of Manager to ICG is already
delivering material benefits to
shareholders and this is expected to have
an even greater impact in the future.
A personal note
After seventeen years of involvement in
the listed private equity sector, I have
experienced numerous ups and downs of
market sentiment and observed both new
entrants to and departures from the
sector. Since the financial crisis, the sector
has endured particular turbulence,
culminating in both Electra and SVG
leaving the sector, with some
commentators predicting its demise.
Throughout these cycles ICG Enterprise,
and many of its peers, have delivered
superior returns as a result of the
fundamental value created through private
equity’s active ownership model and the
alignment of interests with portfolio
company management. I firmly believe that
listed private equity is an ideal way for
private individuals and institutions to
access the private equity market with the
added advantages of daily liquidity and
simplified administration.
An investment in the Company on any year
end date in the last twenty years would
have outperformed the benchmark. £100
invested twenty years ago would have
generated £810 at 31 January 2017
compared with £366 for the same amount
invested in the FTSE All-Share Index. This
performance has been achieved by
investing in funds and companies that give
us superior returns over the long term.
Combined with a conservative approach
to managing our balance sheet during
both good and bad times, the Company
has offered access to a diversified
portfolio of private companies while at
the same time improving yield. With
strong underlying profit growth within
the portfolio companies combined with
the current discount to net asset value,
I believe that the opportunity for
continued growth looks compelling.
Mark Fane
4 May 2017
5 Shares will trade without rights to the final dividend from 1 June 2017 (“ex-dividend date”). The last date for registering transfers to receive the
dividend is 2 June 2017 (“record date”).
6 In 2014, F&C became part of BMO Global Asset Management, and ultimately the BMO Financial Group.
54
OVERVIEW1/ about icg enterprise
A private equity investment company
focused on buyouts in
developed markets
>
>
>
>
Our aim is to generate consistently high returns while protecting the investment
downside
We seek to achieve this by investing in companies managed by ICG directly as well as by
selected top-tier private equity managers
The local access and insights of ICG’s direct investment teams give us a competitive
edge in our market
We are confident our flexible approach will continue to outperform public markets over
the long term:
•
•
An investment in the Company on the year end date in 20 out of the last 20 years
would have outperformed the FTSE All-Share Index if held today1
£100 invested in the Company 20 years ago would be worth £810 today1 compared
with £366 for an equivalent investment in the FTSE All-Share Index
About ICG Enterprise
Fig: 1.2
ICG Enterprise (“the Company”)
invests in
Third party
private equity funds
Direct
co-investment
alongside fund managers
Private equity funds and
direct co-investments
managed by ICG
ICG
(“the Manager”)
manages
Underlying companies
1 Share price including dividends as at 31 January 2017
ICG Enterprise Trust Annual Report & Accounts 2017 INVESTMENT STRATEGY
Highly selective approach balancing risks and Returns
Profitable
companies
Developed
markets
Experienced
managers
Mid to large
companies
High
conviction
>
>
>
>
>
>
>
>
>
>
Buyouts of profitable, cash generative companies with tangible performance and valuation metrics
Not start-ups, development capital, turnaround, distressed or other higher risk PE strategies
Targeting geographies with established PE infrastructure: primarily Europe and the US
Not emerging markets
Backing established PE managers with experience of investing and adding value through cycles
Not emerging managers or first time funds
Targets tend to be more defensive with market leading positions and strong management
Not small companies which tend to be less able to weather economic cycles
Increase exposure to the most attractive companies through direct co-investments and secondaries
Exposure to ICG directly managed companies not available elsewhere in the listed PE sector
Portfolio overview
Balancing high conviction and diversification
Fig: 1.3
10.1%
Third party
co-investments
21.8%
Secondary
investments
Graphite
primary funds
10.3%
13.5%
n
o
i
t
c
i
v
n
o
c
h
g
H
i
42%
High conviction portfolio
enhances returns
Diversified portfolio mitigates risk
Third-party
primary funds
44.3%
o
i
l
o
f
t
r
o
p
d
e
i
f
i
s
r
e
v
i
D
35 managers and over 400 portfolio companies
76
OVERVIEW1/
Investment trust status
The Company operates as an investment
trust in accordance with Sections 1158
and 1159 of the Corporation Tax Act
2010. This status exempts the Company
from corporation tax on capital gains
realised from the sale of its investments.
HM Revenue & Customs has accepted the
Company as an investment trust for the
accounting period to 31 January 2016.
The Company will retain its investment
trust status with effect from 1 February
2016 provided it continues to satisfy the
conditions of Section 1158 of the
Corporation Tax Act 2010.
The Company has directed its affairs with
the objective of retaining such approval.
The loss of investment trust status,
however, would significantly impact the
Company. The Manager monitors
adherence to the conditions required to
maintain this status. The Manager also
uses forecasts to identify risks of
breaches in future periods. The results
are reported to the Board at each
meeting.
Operational risk
All of the Company’s management
functions are delegated to the Manager.
Therefore the Company is exposed to
operational risks at the Manager. The
Audit Committee formally assesses the
internal controls of the Manager every
year. The assessment in respect of the
current year is discussed in the Report of
the Audit Committee on page 80.
STRATEGIC REPORT
Investment risks
The Company’s strategy is to invest in
established US and European private
equity markets, both through private
equity funds and directly. This gives rise
to the following risks:
• The Company’s underlying investments
are exposed primarily to the UK, the US
and other European economies. The
Company is not globally diversified and
its performance could therefore be
severely affected by a prolonged
economic downturn in the major
European economies. The Company
seeks to mitigate the risk of
underperformance through effective
investment allocation and the selection
of high quality managers with strong
track records.
• The main foreign currency exposure is
to the euro. The net asset value and the
level of commitments could rise or fall
due to currency movements. The Board
regularly reviews the Company’s
exposure to currency risk and
considers possible hedging strategies.
At present the Company does not
hedge its currency exposures.
• Private equity transactions are to some
extent dependent on the availability of
debt financing. If the funds and
companies in which the Company
invests find it hard to obtain debt
financing, the Company’s performance
may suffer. The Company seeks to
mitigate this risk through effective
investment allocation and the selection
of high quality managers with strong
track records, who are more likely to be
able to access debt financing even in
adverse economic conditions.
• We have considered the impact of
Brexit to the Company by performing
sensitivity analysis, a detailed bottom
up portfolio review and taking advice
from the ICG in-house economist. We
continue to monitor the uncertainties
arising from negotiations with the EU.
BUSINESS MODEL
ICG Enterprise 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.
Further details of the Company’s business
model and strategy are set out in About
ICG Enterprise on page 6.
PERFORMANCE AND OUTLOOK
A review of the Company’s short and long
term net asset value and share price
performance, investment activity and
outlook, and the private equity markets, in
which the Company operates, is set out in
the Chairman’s Statement, Portfolio Review
and Market Review on pages 3 to 16.
The key performance indicators used by
the Board and Manager are the net asset
value per share total returns over the
short and long term. These are detailed
on page 3.
RISK MANAGEMENT
The risks and uncertainties facing the
Company are regularly reviewed by the
Board, the Audit Committee and the
Manager. The Board believes that the
Company’s principal business risks are:
Overcommitment risk
The Company has commitments to funds
which may exceed its liquid resources.
There is a risk that the Company may not
be able to fulfil its commitments when
they are drawn down (“overcommitment
risk”).
The Company is conservative in its
approach to overcommitment. The
Company uses a range of forecast
scenarios to determine the likely rate of
drawdowns and the likely rate at which
realisations will generate cash from the
portfolio. The Manager monitors the
Company’s liquidity on a frequent basis
and provides regular updates to the
Board. If necessary the Company can
reduce the level of secondary purchases
and co-investments, which are
discretionary, to preserve liquidity to
fund its commitments. The Company also
has access to committed stand-by bank
facilities totalling £103m.
ICG Enterprise Trust Annual Report & Accounts 2017 VIABILITY STATEMENT
In accordance with the UK Corporate
Governance Code, the Board has
assessed the financial position and
prospects of the Company over a longer
period than the twelve months required
by the “going concern’’ basis of
accounting.
The Board has assessed the viability of
the Company over a three year period
from the balance sheet date, as the Board
expects the majority of the Company’s
current commitments to funds to be
drawn down in cash over the next three
years.
The Board has carried out a robust
assessment of the principal risks and their
mitigants noted on the previous page. In
particular, the Board has assessed the
Company’s ability to manage the
overcommitment risk through the review
of balance sheet and cash flow
projections provided by the Manager,
which included scenarios with differing
levels of underlying valuation growth,
fund drawdowns and realisations, and
different sterling/euro exchange rates.
Based on its review, the Board has a
reasonable expectation that the Company
will be able to continue in operation and
meet its liabilities as they fall due over a
three year period.
CORPORATE SOCIAL
RESPONSIBILITY
In carrying out its activities and in
relationships with suppliers and the
community, the Company aims to conduct
itself responsibly, ethically and fairly.
The Company also considers its
corporate social responsibilities during
its investment decision making process.
Stewardship
The Company seeks to make investments
in funds and companies which are well
managed with high standards of
corporate governance. The directors
believe this creates the proper conditions
to enhance long term shareholder value.
The exercise of voting rights attached to
the Company’s portfolio has been
delegated to the Manager. However, the
Board will be informed of any sensitive
voting issues involving the Company’s
investments.
Board diversity
There are currently two female and four
male directors on the Board. As
discussed in the Report of the Directors
on page 70, the Board’s tenure and
succession policy seeks to ensure that the
Board is well balanced by the
appointment of directors with a range of
skills and experience. The Company has
no other employees.
The Strategic Report was approved by
the Board of Directors on 4 May 2017 and
signed on its behalf by:
Mark Fane
4 May 2017
98
OVERVIEW1/ manager’s review
Portfolio review
Market review
ICG Enterprise Team
Intermediate Capital Group plc
Case Study – Micheldever Tyre Services
11
15
17
18
19
ICG Enterprise Trust Annual Report & Accounts 2017
Portfolio review
£124m
Increase in underlying value of
the portfolio
The Company is
benefitting greatly from
ICG’s insights into
private equity managers
and portfolio companies
in Europe, US and Asia
1
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 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 on page 96.
2 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 on page 96 includes
further details of APMs and reconciliations to
IFRS measures, where appropriate. The
rationale for the APMs is discussed in detail in
the Manager’s Review. The Glossary on page
96 includes a reconciliation of the Portfolio to
the most relevant IFRS measure.
Change of Manager
This is our first annual 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”).
We have made faster than expected
progress towards realising the benefits
of the change within the first year of
moving to ICG.
Notably, new commitments have been
made to two ICG managed funds: ICG
Strategic Secondaries Fund II (“ICGSS”)
and ICG Asia Pacific Fund III. 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
in-house strategies. Both funds broaden
the Company’s geographic scope and
increase the proportion of investments
on which shareholders do not incur a
management fee.
The move to ICG is also helping to
generate secondaries and
co-investments. The Company invested
in a US fund restructuring transaction
alongside ICGSS and completed
secondary purchases in ICG Europe V
and ICG Europe VI, which supplement
existing investments. These opportunities
were available to the Company as a result
of the change in manager.
As well as access to ICG managed
investment opportunities, the Company is
benefitting greatly from ICG’s insights
into private equity managers and
portfolio companies in Europe, the US
and Asia in our investment analysis and
decision-making for both new funds and
direct co-investments. We are also
working with a range of specialist
functions within ICG to provide
non-investment related support and
enhancements to the ongoing
management of the Company.
Portfolio performance
overview
The Portfolio1 has delivered very strong
performance during the year, rising in
value by 28.9% (2016: 12.1%). The
Portfolio generated a valuation gain of
21.8% in local currencies, with currency
movements adding a further 7.1%. This is
against a backdrop of challenging market
conditions, including volatility resulting
from the UK’s vote to leave the European
Movement in the portfolio
£m
Opening portfolio**
Additions
Realisation proceeds2
Net cash outflow / (inflow)
Underlying valuation movement*,2
% underlying Portfolio growth
Currency movement
% currency movement
Closing portfolio**
Other Key Portfolio Metrics
Proceeds as % of opening Portfolio
Number of Full Realisations
Uplift on exit2
New primary fund commitments
Outstanding commitments
Year ended
31 January
2017
Year ended
31 January
2016
428.2
127.8
431.9
64.3
(85.5)
(120.3)
42.3
93.5
21.8%
30.3
7.1%
(56.0)
48.0
11.1%
4.3
1.0%
594.3
428.2
20%
40
24%
117.6
28%
41
22%
58.6
300.3
253.8
* In this report 94% of the Portfolio is valued using 31 December 2016 (or later) valuations.
** Refer to the Glossary on page 96 for reconciliation to the portfolio balance presented in the
financial statements.
10
11
/MANAGER’S REVIEW2 PORTFOLIO REVIEW
continued
24%
Average uplifts on full
realisations in the year
Union, the US election result and various
upcoming elections across Europe.
equivalent to the £35.9m of proceeds
which were received in February 2017.
At 31 January 2017 the Portfolio was
valued at £594.3m. The increase of
£166.1m during the year was primarily due
to strong valuation gains, as well as new
investment exceeding realisations for the
first time in six years.
The exposure to ICG managed
investments increased during the year,
and further increases are expected over
time as the benefits of the change in
manager continue to materialise. One of
the features that makes ICG Enterprise
distinctive in the listed private equity
sector is the combination of an in-house
directly controlled portfolio combined
with a diversified multi-manager
approach, which we believe both reduces
risk and enhances returns.
Realisations
The Portfolio generated proceeds of
£85.5m which was significantly lower than
the £120.3m received in the previous year.
However, as the number of full
realisations of 40 was in line with last
year, the lower level of proceeds
reflected a smaller average size of
disposals rather than a general slowdown
in realisation activity.
Full realisations accounted for £45.3m of
proceeds received and these continued
to be completed at uplifts to the prior
quarter holding values, averaging 24% in
the year. Over the last few years, despite
an increase in valuation multiples across
the Portfolio, exits have consistently
achieved significant uplifts.
The largest realisation in the year was the
disposal by Deutsche Beteiligungs AG
(“DBAG”) of Spheros, a manufacturer of
climate systems for buses. This generated
proceeds of £8.9m both from the
investment in DBAG’s fund and the direct
co-investment made alongside this fund
in 2011. The business grew strongly both
organically and by acquisition prior to its
sale in March 2016 generating a return of
2.5 times original cost.
The sale of Micheldever, the distributor
and retailer of tyres, was announced in
January 2017 for a return of 3.7 times
cost, but did not complete until February
2017. It therefore remained as the
Company’s largest underlying investment
at the year end, with a carrying value
A further £40.2m was received from
partial realisations. The most significant
element of this was the £16.6m of
proceeds received from recapitalisations
during the year.
Further details of the ten largest
underlying realisations are set out in the
Supplementary Information section.
New investments
A record amount of new investments were
completed in the year, with the total of
£127.8m almost double the amount
invested in the previous year. Increasing
the rate of investment was one of the key
objectives of the change of manager to
ICG and it is encouraging that the move
has had such a significant impact within
the first year post transition. Investments
managed directly by ICG accounted for a
quarter of the total at £31.5m.
All categories of new investment
increased although fund drawdowns
showed the steepest increase, more than
doubling to £94.3m after the sharp drop
of the previous year. The rise partly
reflected the addition of ten new funds in
the year which drew down £24.0m. The
vast majority of this came from four new
funds which had already made a number
of investments that were analysed in
detail prior to committing to the funds.
These so-called “late primary” situations
suit our style of investing in funds by
applying our bottom-up, underlying
company focused due diligence style and
we will continue to target such
opportunities as well as traditional new
primary fund investments. Funds in the
portfolio at the start of the year drew
down £70.3m, which was broadly in line
with expectations and consistent with a
steady pace to the end of funds’ five to six
year investment periods.
Two direct co-investments and three
secondary fund purchases were
completed in the year, increasing the
amount invested in these categories to
£33.5m from £17.9m in the previous year.
The secondaries included ICG Europe V
and ICG Europe VI as well as a US fund
restructuring alongside ICGSS.
The two largest underlying company
investments were the two direct
co-investments: System One (£8.9m), a
ICG Enterprise Trust Annual Report & Accounts 2017 39%
Percentage of new investments
in ICG managed, direct
co-investments and secondaries
14%
EBITDA growth in Top 30
underlying companies
provider of temporary staff in the US
acquired by Thomas H. Lee Partners, and
Roompot (£7.1m), an operator of holiday
parks in the Netherlands acquired by PAI
Partners. Both companies operate in
sectors that we have had experience of
investing in successfully in the past.
In total, ICG managed investments, direct
co-investments and secondaries
accounted for 39% of total investments in
the year, a figure expected to increase
over time. If the late primaries noted above
are also included, a total of 56% of new
investments were in funds or companies
where we were able to analyse the
underlying companies prior to investment.
This is in contrast to a typical fund of
funds where third party managers make
most of the underlying investment
decisions.
Further details of the ten largest
underlying new investments are set out in
the Supplementary Information section.
New fund commitments
New primary commitments of £117.6m to
ten funds were significantly higher than
the £58.6m committed to six new funds
last year.
Two of the new funds, representing 26%
of new commitments, are managed
directly by ICG. A further six funds,
totaling 53% of new commitments, were
raised by managers that the Company has
invested with successfully for many years,
primarily focusing on European buyouts.
The remaining two new funds feature
managers which are new to the Portfolio,
both of which are focused on the US
market. One of these, Gridiron Capital III,
was introduced to us through ICG’s New
York office which provides the fund
investment team with invaluable insights
into the US manager landscape to
supplement our own research and
analysis.
Further details of new fund commitments
are set out in the Supplementary
Information section.
Closing Portfolio
At 31 January 2017, the Portfolio was
valued at £594.3m (£2016: £428.2m) of
which ICG directly managed 10.1% while
Graphite Capital investments accounted
for 23.7%. Direct co-investments and
secondaries accounted for 38.3% of the
closing value, a figure which has
increased significantly over the last few
years from approximately 18% immediately
prior to the financial crisis. This gives us
greater control over investments into the
Portfolio than a typical fund investor.
Mid-market and large buyouts accounted
for 55.4% and 36.1% respectively
reflecting our focus on these segments
which we believe offer the most attractive
balance of return potential and downside
protection. Targets in these segments
tend to be more defensive, with market
leading positions and strong management
and are therefore better able to weather
economic cycles than smaller companies.
By geography, the Portfolio is almost
exclusively focused on developed private
equity markets, principally the UK,
continental Europe and the US. The UK
accounted for 40.4% of value, down from
45.1% at the start of the year. US exposure
has increased from 14.1% to 21.1% in line
with one of our objectives at the time of
the change in manager. We expect both of
these trends to continue as the benefits
of being part of a global asset manager
are further realised.
While the Portfolio is broadly diversified
which reduces risk, we aim to ensure that
many individual investments are large
enough to have an impact on overall
performance. The top 30 underlying
companies accounted for 45.9% of the
Portfolio and the performance of these
investments is therefore likely to be a key
driver of future growth. The vast majority
of companies in the top 30 are those to
which we have selected to increase our
exposure through direct co-investments
and secondary fund purchases, and that
we have a high conviction will outperform.
In the year to December 2016 the
revenues and EBITDA of the top 30
companies increased by an average of
8.5% and 14.0% respectively. They were
valued on an average multiple of 9.7 times
last twelve months EBITDA at December
2016, which, while slightly higher than the
9.4 times at the previous year end, is not
unreasonable for the strong growth
being achieved and the generally high
quality of earnings.
12
13
/MANAGER’S REVIEW2 PORTFOLIO REVIEW
continued
With the Portfolio
continuing to
demonstrate strong
profit growth, as well
as de-gearing, the
prospects for further
valuation growth
remain positive
This approach served the Company well
in the last downturn, with our 2007
investments generating a return of
1.8 times cost and the Portfolio
consistently generating strong profit
growth even in the aftermath of the
financial crisis. It is also worth noting that
over the last five years, the EBITDA
valuation multiple of the Company’s top
30 companies has increased from 9 to just
under 10 while the EBITDA multiple of the
FTSE All-Share Index has increased from
6.4 to its current level of 12.1. We believe
that this valuation differential would
provide a significant cushion in the event
of any future public market correction.
With the portfolio continuing to
demonstrate strong profit growth, as well
as de-gearing, the prospects for further
valuation growth remain positive.
ICG Private Equity Fund Investment
Team
4 May 2017
Events since the year end
Since the year end the Company has made
the following new investments:
• €12m commitment to ICG Recovery
Fund 2008B, a secondary fund
restructuring;
• £5.5m commitment to Hg Capital 8; and
• A “late primary” fund investment in
Oak Hill Capital IV as well as acquiring
interests in Oak Hill Capital II and III,
representing a total commitment of
$22.5m to this established US manager.
As noted earlier, in February 2017 the
Company received £35.9m from the
completion of the Micheldever sale
announced in January 2017.
Outlook
The environment for realisations remains
favourable despite some macro
uncertainties. This should underpin future
growth in value given the uplifts that tend
to be achieved on sale. Against this
backdrop, investing at reasonable
valuations is more challenging, but our
strategy gives us the flexibility to adapt
the mix of investments according to where
we see the best relative value and the
move to ICG is providing access to a
broader range of opportunities from
which to select.
Much recent market commentary has
focused on whether it is approaching a
peak. While we do not claim to have the
ability to predict the timing of the next
potential downturn, we seek to ensure
that the Portfolio is well positioned to
withstand one. This is achieved by
focusing on relatively more defensive
companies managed by some of the most
experienced private equity firms and by
avoiding emerging markets, new
managers and more risky strategies such
as venture capital.
ICG Enterprise Trust Annual Report & Accounts 2017 market review
As almost 80% of the investment portfolio
is in Europe we have focused our market
review on the European buyout market.
Fundraising
European buyout funds raised a record
€57 billion in 2016, up €17 billion (42%)
on the prior year. This was attributable to
a number of large buyout funds greater
than €1 billion in size being raised in the
year (up €13 billion) and a 57% increase in
the number of mid-market funds of
between €500 million and €1 billion
raising capital in the year (up €3 billion).
The amount of capital committed to
European buyout funds but not yet
invested (“dry powder”) increased 23%
(€31 billion) in the year to €168 billion as
capital continues to be reinvested into the
sector following high levels of
realisations.
PRIMARY MARKET
In 2016, the value of European buyouts
transacted in the year was €5 billion lower
than 2015 at €128 billion, with an €8
billion (8%) increase in continental
European buyout activity offset by a €12
billion (38%) decline in activity seen in the
UK. However, the number of buyouts
executed in both continental Europe and
the UK increased and in aggregate the
number of European transactions was at
the highest level since 2008.
In continental Europe, the most significant
increase in activity was evidenced in the
mid-market, particularly in relation to
buyouts of between €50 million and €250
million in value, where 40 (23%) more
transactions were completed, adding €5
billion in transaction volume against the
prior year.
In the UK, there were just seven buyouts
larger than €500 million in 2016 versus 17
in 2015, resulting in a 60% (€11 billion)
reduction in total deal volumes at this size
range. Conversely, the UK mid-market
bounced back after a decline in deal
volumes in 2015 with the number of
transactions completed below €500
million in size increasing 12% in the year to
155. However, the overall value of buyouts
in this segment was €1 billion (7%) lower.
European Buyout: Fundraising
Fig: 2.1
€ billions
60
Number
100
60
100
50
40
30
20
10
0
0
57
48
57
51
40
35
28
21
18
13
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Value (LHS)
Number of funds (RHS)
Source: Prequin Fund Manager Profiles and Performance Analyst
European Buyout: New Investments
Fig: 2.2
€ billions
250
80
60
40
20
0
0
Number
1,200
250000
1200
200
150
100
50
0
0
231
1,000
800
132
128
600
91
78
83
79
101
90
36
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Value of buyouts (LHS)
Number of buyouts (RHS)
Source: Unquote
400
200
0
0
14
15
/MANAGER’S REVIEW2 market review
continued
Given the growing levels of dry powder
available for new investments this made
for a more competitive environment for
buyers of businesses, particularly in the
UK, which is consistent with the reported
experience of the Company’s portfolio
managers.
SECONDARY MARKET
The number of transactions in the
secondary market for interests in private
equity funds increased in 2015, but the
smaller average transaction value resulted
in global market volumes in 2016 being
$3 billion lower than the prior year at
$37 billion.
Buyout fund pricing in the market has
remained close to the prior year average
at 95% of net asset value (94% in 2015)
with high levels of dry powder chasing a
falling supply of transaction volumes,
particularly at the large end of the deal
spectrum. There were only five
transactions greater than $1 billion in size
in 2016 compared to eight in 2015 and
twelve in 2014. These trends place
continuing pressure on buyers’
underwriting rates of return and the
greater use of leverage to achieve target
outcomes. In such an environment we
continue to be selective whilst focusing
on the smaller end of the deal spectrum
where there is less competition for assets.
+42%
European buyout fundraising
+23%
European buyout dry powder
European Buyout: Outstanding Dry Powder
Fig: 2.3
€ billions
250
250
200
150
100
50
0
0
168
165
146
137
123
121
130
143
137
168
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
Source: Preqin Fund Manager Profiles and Performance Analyst
Dry powder
Amount invested in the year
ICG Enterprise Trust Annual Report & Accounts 2017 ICG Enterprise TEam
2
R
E
V
I
E
W
M
A
N
A
G
E
R
Christophe Evain
Executive Director and
Chief Executive Officer
BenoIt Durteste
Executive Director and
Head of European
Investments
Philip Keller
Executive Director and
Chief Financial Officer
ANDREW HAWKINS
Head of Secondaries
’
S
Emma Osborne*
Head of Private Equity
Fund Investments ("PEFI")
Kane Bayliss*
Managing Director, PEFI
Colm Walsh*
Principal, PEFI
Fiona Bell*
Principal, PEFI
Kelly Tyne*
Associate, PEFI
Amalia Formoso
Associate, PEFI
Mark Crowther
Managing Director,
Investor Relations
NICOLA EDGAR
Associate Director,
Finance
Andrew Lewis
General Counsel
Stuart Griffiths
Group Compliance Officer
* Transferred from Graphite Capital to ICG following change of manager on 1 February 2016.
17/16
Intermediate Capital Group plc (The Manager)
ICG is a specialist asset manager
28
Year track record
€22.6bn1
Assets under management
>270
Employees
13
Countries
26
83
15
Investment professionals
Investment professionals
Investment professionals
New York
Tokyo
Hong Kong
Singapore
Sydney
London
Paris
Madrid
Amsterdam
Stockholm
Frankfurt
Luxembourg2
Warsaw2
ABOUT ICG
• ICG’s objective is to generate income
and consistently high returns whilst
protecting against investment downside.
ICG and ICG Enterprise Trust
In becoming manager of ICG Enterprise,
ICG committed to:
• Increasing the rate of investment
• Providing access to a broader range of
investment opportunities
• Sharing its insights in helping to make
more informed investment decisions
• Lowering costs
• ICG seeks to achieve this through its
expertise in investing across the capital
structure.
• ICG combines flexible capital solutions,
local access and insight with an
entrepreneurial approach which
provides competitive edge in the
markets.
• ICG is committed to innovation and
pioneering new strategies that delivers
value to investors.
• ICG is listed on the London Stock
Exchange (ticker symbol: ICP), and
regulated in the UK by the Financial
Conduct Authority.
1 Data is as at 31 December 2016.
2 These locations currently have no investment professionals.
An institutional operating platform
ICG has built an operating infrastructure
to support the management of ICG
Enterprise, employing dedicated teams
to address:
• Risk management, regulation and
compliance
• Human resources
• Fund administration
• Treasury and finance
• Information technology
• Investor relations
ICG Enterprise Trust Annual Report & Accounts 2017
2
R
E
V
I
E
W
M
A
N
A
G
E
R
Micheldever, the UK’s
leading distributor of car,
4x4 and motorcycle tyres,
was sold by Graphite
Capital in February 2017
generating proceeds for
ICG Enterprise of
£35.9 million
3.7x
Multiple of original cost of investment achieved on
disposal
41%
Uplift to the previous valuation
£35.9m
Generated proceeds for ICG Enterprise
CASE STUDY:
MICHELDEVER TYRE SERVICES
ICG Enterprise invested in Micheldever Tyre Services
(“Micheldever”) both directly and through its
commitment to Graphite Capital Partners VI. The
company was the largest underlying investment at 31
January 2017.
Graphite had targeted the UK automotive aftermarket
for several years, given its characteristics as a large and
established market with significant consolidation
opportunities in a number of sub-sectors. With the
benefit of its strong relationships in the Southeast,
Graphite was able to gain a competitive advantage over
other potential acquirers, and completed the investment
in 2006.
At the time of the £85 million buy-out, the company was
the largest distributor of tyres to independent retailers
in the UK with its six warehouses serving 2,500
customers. A separate retail business operated from a
relatively small chain of 16 sites, including the UK’s
largest tyre retail site at Micheldever Station.
Over the period of Graphite’s ownership, Micheldever’s
management team was significantly strengthened and
investment in systems and processes contributed to
market share gains and improved working capital
efficiency. With the benefit of eight new warehouse sites
completing national distribution coverage, the number
of wholesale business customers increased to 6,000.
Additionally, the retail business was expanded to 99
sites, which successfully established Micheldever as the
third largest specialty tyre retailer in the UK by volume.
In February 2017 Graphite Capital sold Micheldever to
Sumitomo Rubber Industries, a Japanese tyre
manufacturer and distributor, for £215 million. The sale
generated a return equivalent to 3.7 times the original
investment cost and cash proceeds to ICG Enterprise of
£35.9 million at an uplift of approximately 41% to the
previous valuation.
’
S
19/18
supplementary information
The 30 Largest Underlying Investments
Analysis of the 30 Largest Underlying Investments
The 30 Largest Fund Investments
Portfolio Analysis
Investment Activity
Realisation Activity
Commitments Analysis
Currency Exposure
Dividend Analysis
Case Study: Spheros
21
23
24
26
28
29
30
31
32
33
ICG Enterprise Trust Annual Report & Accounts 2017
The 30 largest
underlying investments
The table below presents the 30 companies in which ICG Enterprise had the largest investments by value at 31 January 2017. 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.
Year of
investment
Country
Value
as a % of
Portfolio
1-15
Company
1 Micheldever+^*
Distributor and retailer of tyres
2 City & County Healthcare Group
Provider of home care services
3 Froneri+^
Manager
Graphite
Capital
Graphite
Capital
2006
2013
Manufacturer and distributor of ice cream products
PAI Partners
2013
4 Education Personnel+^
Provider of temporary staff for the education sector
ICG
2014
5 nGAGE
Provider of recruitment services
6 PetSmart+
Graphite
Capital
2014
UK
UK
UK
UK
UK
6.3%
2.7%
2.1%
2.1%
2.1%
Retailer of pet products and services
BC Partners
2015
USA
2.0%
7 Standard Brands+
Manufacturer of fire lighting products
8 Skillsoft+
Graphite
Capital
2001
UK
2.0%
Provider of off-the-shelf e-learning content
Charterhouse
2014
USA
1.7%
9 Frontier Medical+
Manufacturer of medical devices
10 David Lloyd Leisure+
Kester Capital
2013
Operator of premium health and fitness clubs
TDR Capital
2013
UK
UK
1.6%
1.6%
11 Visma
Provider of business service
12 TMF^
Provider of management and accounting outsourcing services
13 The Laine Pub Company+
Operator of pubs and bars
14 System One+
Provider of temporary staff and other associated services
15 Roompot+
Cinven
2014
Norway
1.4%
Doughty
Hanson
Graphite
Capital
Thomas H.
Lee Partners
2008
Netherlands
1.4%
2014
UK
1.3%
2016
USA
1.3%
Operator and developer of holiday parks
PAI Partners
2016 Netherlands
1.3%
Total of the 15 largest underlying investments
+ 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 Company received proceeds of £35.9m from the sale of this investment in February 2017.
#Sale completed in February 2017.
30.9%
20
21
/SUPPLEMENTARY INFORMATION3
The 30 largest
underlying investments
continued
16-30
Company
16 Beck & Politzer
Manager
Year of
investment
Country
Value
as a % of
Portfolio
Provider of industrial machinery installation and relocation
Graphite Capital
2016
17 CPA Global+
Provider of patent and legal services
18 Algeco Scotsman
Cinven
2012
UK
UK
1.2%
1.2%
Supplier and operator of modular buildings
TDR Capital
2007
USA
1.2%
19 Cambium
Provider of educational solutions and services
ICG
2016
USA
1.2%
20 Quironsalud^#
Provider of private healthcare services
CVC Capital
2011
Spain
1.2%
21 New World Trading Company
Operator of distinctive pub restaurants
22 U-POL^
Graphite Capital
2016
Manufacturer and distributor of automotive refinishing products
Graphite Capital
2010
UK
UK
1.1%
1.0%
23 Formel D
Provider of quality control for automotive services
Deutsche
Beteiligungs
2013
Germany
1.0%
24 Swiss Education+
Provider of hospitality training
Invision Capital
2015 Switzerland
1.0%
25 ProXES
Manufacturer of food processing machinery
Deutsche
Beteiligungs
2013
Germany
0.9%
26 Gerflor^
Manufacturer of vinyl flooring
27 Parques Reunidos^
Operator of attraction parks
28 Cognito+
ICG
2011
France
0.8%
Arle Capital
2007
Spain
0.8%
Supplier of communications equipment, software and services
Graphite Capital
2002
UK
0.8%
29 Ceridian+
Provider of payment processing services
30 InVentiv Health
Provider of healthcare and pharmaceutical consulting
Total of the 30 largest underlying investments
Thomas H. Lee
Partners
Thomas H. Lee
Partners/Advent
2007
USA
0.8%
2010
USA
0.8%
45.9%
+ 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 Company received proceeds of £35.9m from the sale of this investment in February 2017.
#Sale completed in February 2017.
ICG Enterprise Trust Annual Report & Accounts 2017 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 January 2017.
These investments may be held directly or through funds or, in some cases, in both ways.
Revenue Growth*
Fig: 3.1
% growth
>30%
20-30%
10%
10-20%
0-10%
<0%
Not
meaningful
4%
8.5%
Average
EBITDA Growth**
Fig: 3.2
14.0%
Average
24%
24%
38%
% growth
>30%
20-30%
10-20%
0-10%
<0%
Not
meaningful
10%
10%
10%
20%
20%
30%
3
I
N
F
O
R
M
A
T
I
O
N
S
U
P
P
L
E
M
E
N
T
A
R
Y
0%
5%
10%
20% 25% 30% 35% 40%
15%
% by number
0%
5%
10%
15%
% by number
20%
25%
30% 35%
Enterprise value as a multiple of EBITDA***
Fig: 3.3
9.7x
Average
Net debt as a multiple of EBITDA****
Fig: 3.4
<7.0x
7%
7.0-8.0x
3%
8.0-9.0x
9.0-10.0x
10.0-11.0x
11.0-12.0x
>12.0x
Not
meaningful
7%
7%
13%
17%
23%
23%
13%
17%
17%
<2.0x
2.0-3.0x
3.0-4.0x
4.0-5.0x
7%
5.0-6.0x
6.0-7.0x
10%
>7.0x
3%
Not
meaningful
6%
3.6x
Average
27%
0%
5%
10%
% by number
15%
20%
25%
0%
5%
10%
15%
% by number
20%
25%
30%
Excludes one company where comparatives are not available
Excludes one company where comparatives are not available as well as two companies where the EBITDA is not meaningful
Excludes two companies where the EBITDA is not meaningful
*
**
***
**** Excludes two companies where this metric is not meaningful
23/22
the 30 largest
FUND investments
The 30 largest funds by value at 31 January 2017 are:
1-15
Fund
1 Graphite Capital Partners VIII *
Mid-market buyouts
2 Graphite Capital Partners VI **
Mid-market buyouts
3 CVC European Equity Partners V **
Large buyouts
4 BC European Capital IX **
Large buyouts
5 Fifth Cinven Fund
Large buyouts
6 Thomas H. Lee Parallel Fund VI
Large buyouts
7 Deutsche Beteiligungs Fund V
Mid-market buyouts
8 Graphite Capital Partners VII */**
Mid-market buyouts
9 PAI Europe V **
Mid-market and large buyouts
10 Activa Capital Fund II
Mid-market buyouts
11 ICG Velocity Partners Co-Investor **
Mid-market buyouts
12 ICG Europe V **
Year of
commitment
Country/
region
Value
£m
2013
2003
2008
UK
UK
Europe/
USA
51.6
30.7
24.5
2011
Europe
22.1
2012
Europe
17.1
2007
USA
14.4
2006
Germany
14.2
2007
UK
13.6
2007
Europe
12.3
2007
France
11.3
2016
USA
11.0
Mezzanine and equity in mid-market buyouts
2012
Europe
10.8
13 CVC Capital Partners VI
Large buyouts
14 TDR Capital II
Mid-market and large buyouts
15 Doughty Hanson & Co V **
Mid-market and large buyouts
2013
Global
10.7
2006
Europe
10.2
2006
Europe
10.1
Total of the largest 15 fund investments
264.6
Outstanding
commitment
£m
39.8
2.1
1.3
2.2
2.7
1.1
0.3
4.7
1.1
1.8
2.3
1.2
7.6
0.8
6.5
75.5
ICG Enterprise Trust Annual Report & Accounts 2017 16-30
Fund
16 ICG Europe VI **
Year of
commitment
Country/
region
Value
£m
Outstanding
commitment
£m
Mezzanine and equity in mid-market buyouts
2015
Europe
17 Bowmark Capital Partners IV
Mid-market buyouts
18 IK VII
Mid-market buyouts
19 TDR Capital III
Mid-market and large buyouts
20 Permira V
Large buyouts
21 One Equity Partners VI
Mid-market buyouts
22 Deutsche Beteiligungs Fund VI
Mid-market buyouts
23 Hollyport Secondary Opportunities V
Tail-end secondary portfolios
24 ICG European Fund 2006 B **
Mid-market buyouts
25 PAI Europe VI
Mid-market and large buyouts
26 ICG Strategic Secondaries Fund II
Secondary fund restructurings
27 Nordic Capital Partners VIII
Mid-market and large buyouts
28 Egeria Private Equity Fund IV
Mid-market buyouts
29 Bowmark Capital Partners V
Mid-market buyouts
30 Candover 2005 Fund **
Large buyouts
Total of the largest 30 fund investments
Percentage of total investment Portfolio
* Includes the associated Top Up funds.
** All or part of interest acquired through a secondary fund purchase.
2007
UK
2013
Europe
2013
Europe
2013
Europe
2016
USA/
Europe
2012
Germany
2015
Global
2014
Europe
2013
Europe
2016
USA
2013
Nordic
2012 Netherlands
2013
UK
2005
Europe
9.7
9.3
9.3
9.1
8.7
8.5
8.1
8.1
7.2
6.9
6.9
6.3
5.7
5.4
5.3
379.1
63.8%
12.1
–
0.5
3.0
0.8
3.4
1.0
2.3
2.1
10.4
14.0
3.6
3.2
5.8
0.1
137.8
24
25
/SUPPLEMENTARY INFORMATION3 portfolio analysis
Closing Portfolio by value at 31 January 2017
Primary investments in funds
Secondary investments in funds
Direct and co-investments
Total Portfolio
% of Portfolio
Undrawn commitments
Total exposure
% exposure
ICG
£m
22.9
25.8
11.6
60.3
10.1%
41.1
101.4
11.3%
Third party
£m
Graphite Capital
£m
263.3
45.3
84.5
393.1
66.2%
212.5
605.6
67.7%
80.1
15.8
45.0
140.9
23.7%
46.7
187.6
21.0%
Total
£m
366.3
86.9
141.1
594.3
100%
300.3
894.6
100.0%
% of investment
Portfolio
61.7%
14.6%
23.7%
100%
The following tables analyse the companies in which ICG Enterprise had investments at 31 January 2017.
Sector breakdown
Fig: 4.1
Investment type
Fig: 4.2
19.1%
Business services
16.1%
consumer goods &
Services
11.5%
Leisure
5.3%
Financials
3.1%
Media
17.7%
Healthcare &
Education
14.1%
Industrials
8.5%
Automotive supplies
3.5%
Technology &
Telecommunications
1.1%
Chemicals
3
1
2
1. Large buy-outs
2. Mid-market buy-outs
3. Small buy-outs
Total
36.1%
55.4%
8.5%
100.0%
ICG Enterprise Trust Annual Report & Accounts 2017
Year of investment
Fig: 4.3
%
25
20
15
10
5
0
l
e
u
a
v
o
i
l
i
o
f
t
r
o
p
g
n
y
l
r
e
d
n
u
f
o
%
9.7
2006
and
before
Geographic distribution
Fig: 4.4
19.3
18.6
16.2
12.9
3.5
3.4
1.3
4.6
5.2
5.1
0.2
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Vintage Year
UK
North America
Germany
France
Benelux
40.4%
21.1%
Scandinavia
Spain
10.8%
Other Europe
9.0%
Italy
5.6%
Rest of World
5.4%
2.8%
2.0%
1.5%
1.4%
26
27
/SUPPLEMENTARY INFORMATION3
investment activity
New investments
INVESTMENTS INTO THE PORTFOLIO
Drawdowns
Co-investments and
secondary fund purchases
£ million
130
120
110
100
90
80
70
60
50
40
30
20
10
0
130
0
57.4
33.5
94.3
19.2
65.6
29.9
51.3
5.2
48.8
36.4
54.2
68.0
17.9
46.4
7.9
95.2
12.1
65.8
2.5
21.5
Dec
07
Dec
08
Dec
09
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
Year of investment
Largest new underlying investments
Investment
Description
Manager
Country
Cost*
£m
Provider of temporary staff and other associated services
Operator and developer of holiday parks
Provider of industrial machinery installation and relocation
System One
Roompot
Beck & Pollitzer
New World Trading Operator of distinctive pub restaurants
ITN Networks
Cambium
Southern Theatres Operator of multiplex stadium seating movie theatres
Infobase Publishing Provider of educational solutions
Time Education
inVentiv Health
Provider of specialist education tutoring
Provider of outsourced services to the healthcare industry
Operator of television advertising networks
Provider of educational solutions and services
Thomas H Lee Partners
USA
PAI Partners Netherlands
UK
Graphite Capital
UK
Graphite Capital
USA
ICG
USA
ICG
USA
ICG
ICG
USA
ICG South Korea
USA
Advent
Total of 10 largest new underlying investments
*Cost of investment is calculated as the Company’s share of the fund’s cost of investment plus any co-investment amounts paid.
8.9
7.7
7.4
6.5
4.8
4.2
3.7
3.1
2.1
2.0
50.4
ICG Enterprise Trust Annual Report & Accounts 2017
realisation activity
REALISATIONS
REALISATION FROM THE PORTFOLIO*
Proceeds
Proceeds as a percentage of
opening portfolio
£ million
160
160
140
120
100
112.4
142.3
118.3
120.3
92.9
74.2
85.5
%
70
60
50
40
30
20
10
0
70
0
80
60
40
20
0
0
25.8
Dec
07
Dec
08
14.0
Dec
09
19.8
Jan
11
Jan
12
Jan
13
Jan
14
Jan
15
Jan
16
Jan
17
* Excluding secondary sales of fund interests
Year of sale
Largest underlying realisations
Investment
Spheros
David Lloyd Leisure
Swissport
U-POL
La Maison Bleue
Broetje-Automation
Technogym
Loungers
inVentiv Health
Stork
Manager
Year of
investment
Deutsche Beteiligungs
TDR Capital
PAI Partners
Graphite Capital
Activa
Deustche Beteiligungs
Arle Capital
Piper
Thomas H Lee Partners
Arle Capital
2011
2013
2011
2010
2012
2012
2008
2012
2010
2008
Realisation type
Trade
Recapitalisation
Trade
Recapitalisation
Secondary
Trade
IPO
Secondary
Partial sale
Trade
Total of 10 largest underlying realisations
Proceeds
£m
8.9
5.0
3.4
3.1
3.1
3.1
3.0
2.9
2.5
2.0
37.0
28
29
/SUPPLEMENTARY INFORMATION3
commitments analysis
The following tables analyse commitments at 31 January 2017. Original commitments are translated at 31 January 2017 exchange rates.
Original
commitment
£m
Outstanding
commitment
£m
Average
drawdown
percentage
% of
Outstanding
commitments
4.3%
81.3%
14.4%
100%
£m
253.8
117.6
8.3
(94.3)
14.9
300.3
Investment period not commenced
Funds in investment period
Funds post investment period
12.9
457.0
574.3
1,044.2
12.9
244.2
43.2
300.3
0.0%
46.6%
92.5%
71.2%
Movement in outstanding commitments in the year
As at 1 February 2016
New primary commitments
New commitments relating to co-investments and secondary purchases
Drawdowns
Currency and other movements
As at 31 January 2017
Commitments at 31 January 2017 –
remaining investment period
%
25
20
15
10
5
0
25
0
s
t
n
e
m
t
i
m
m
o
c
f
o
%
22.4
19.5
16.0
14.4
13.9
6.9
4.3
2.6
Investment
period
complete
<1 year
1-2 years 2-3 years 3-4 years 4-5 years >5 years Investment
period
not commenced
Remaining investment period
ICG Enterprise Trust Annual Report & Accounts 2017
New commitments in the year to 31 January 2017
Fund
Primary commitments
ICG Strategic Secondaries II
Sixth Cinven Fund
BC European Capital X
ICG Asia Pacific Fund III
Gridiron Capital III
One Equity Partners VI
Advent Global Private Equity VIII
Permira VI
IK VIII
Piper Private Equity Fund VI
Total primary commitments
Strategy
Geography
Secondary fund restructurings
Large buyouts
Large buyouts
Mid-market buyouts
Mid-market buyouts
Mid-market buyouts
Large buyouts
Large buyouts
Mid-market buyouts
Small buyouts
USA
Europe
Europe/USA
Asia
USA
Europe/USA
Europe/USA
Europe
Europe
UK
Commitments relating to co-investments and secondary purchases
Total new commitments
currency EXPOSURE
£m
18.6
15.5
12.9
12.3
12.2
12.0
11.7
9.0
8.4
5.0
117.6
8.3
125.9
Portfolio*
– Sterling
– Euro
– US dollar
– Other European
– Other
Total
31 January
2017
£m
31 January
2017
%
31 January
2016
£m
31 January
2016
%
269.1
156.5
115.4
41.5
11.8
594.3
45.3%
26.3%
19.4%
7.0%
2.0%
100%
209.1
122.8
60.9
33.5
1.9
428.2
48.8%
28.7%
14.2%
7.8%
0.5%
100%
*Currency exposure is calculated by reference to the location of the underlying Portfolio companies’ headquarters.
Outstanding commitments
– Sterling
– Euro
– US dollar
– Other European
Total
31 January
2017
£m
31 January
2017
%
31 January
2016
£m
31 January
2016
%
77.5
166.2
54.5
2.1
300.3
25.8%
55.4%
18.1%
0.7%
100%
102.3
131.2
18.4
1.9
253.8
40.3%
51.7%
7.2%
0.8%
100%
30
31
/SUPPLEMENTARY INFORMATION3
Dividend Analysis
Historical record
Financial year ended
31 January 2017
31 January 2016
31 January 2015
31 January 2014
31 January 2013
31 January 2012
31 January 2011
31 December 2009
31 December 2008
31 December 2007
31 December 2006
Revenue
return
per share
p
Ordinary
dividend
per share
p
Special
dividend
per share
p
Total
dividend
per share
p
Net
asset value
per share
p
Closing
mid-market
share price
p
8.13
11.07
12.96
19.02
3.15
6.33
1.51
-0.11
5.12
8.86
7.44
20.0
11.0
10.0
7.5
5.0
5.0
2.25
2.25
4.5
8.0
6.5
–
–
5.5
8.0
–
–
–
–
–
–
–
20.0
11.0
15.5
15.5
5.0
5.0
2.25
2.25
4.5
8.0
6.5
871.0
730.9
695.2
677.2
631.5
569.4
534.0
464.1
449.0
519.4
454.6
698.5
545.0
575.0
563.5
487.0
357.0
308.0
305.0
187.0
474.0
386.0
ICG Enterprise Trust Annual Report & Accounts 2017 3
I
N
F
O
R
M
A
T
I
O
N
S
U
P
P
L
E
M
E
N
T
A
R
Y
Deutsche Beteiligungs
sold Spheros, the bus
climate systems
manufacturer, to a trade
buyer after a four year
holding period
2.5x
Multiple of original cost of investment
achieved on disposal
CASE STUDY: spheros
ICG Enterprise invested in Spheros Group (“Spheros”)
in December 2011 both through its commitment to
Deutsche Beteiligungs AG Fund V (“the Fund”) as well
as in a co-investment alongside the Fund. ICG Enterprise
was one of only two co-investors in the deal.
Spheros is a global market leader in the development
and manufacture of air conditioning and heating systems
for buses. Headquartered in Germany, the company has
six production sites on three continents serving both
mature Western markets as well as emerging economies
where strong growth is underpinned by population
growth and the trend towards urbanisation.
Deutsche Beteiligungs (“DBAG”) has a long and
successful track record of investing in automotive
supply businesses, including Preh in which ICG
Enterprise also co-invested in 2004.
At the time of acquisition, in a secondary buyout,
Spheros employed 700 people and generated revenues
of €185 million. Over the four years of ownership by
Deutsche Beteiligungs the number of employees
increased to 1,045 and revenues grew to €245 million.
This was achieved by investing in the company’s
capabilities in electronics and by acquiring a similar
company in the US.
In December 2015 DBAG agreed to sell Spheros to
Valeo, a listed automotive supplier in France achieving a
return of 2.5 times original cost, equivalent to an
annualised return of 26%. ICG Enterprise received the
majority of the sales proceeds of £8.9m in April 2016.
32
33
/
ICG Enterprise Trust Annual Report & Accounts 2017
Financial Information
Income Statement
Balance Sheet
Cash Flow Statement
Statement of Changes in Equity
Notes to the Financial Statements
Statement of Directors’ Responsibilities
Independent Auditors’ Report
36
37
38
39
40
58
59
35/34
Income Statement
Investment returns
Income, gains and losses on
investments
Deposit interest
Other income
Foreign exchange gains and losses
Expenses
Investment management charges
Other expenses
Profit before tax
Taxation
Profit for the year
Attributable to:
Equity shareholders
Year to 31 January 2017
Year to 31 January 2016
Revenue
return
£’000
Capital
return
£’000
Total
£’000
Revenue
return
£’000
Capital
return
£’000
Notes
Total
£’000
2,10
9,892
105,194
115,086
12,100
33,761
45,861
2
2
3
4
242
17
–
–
–
2,993
242
17
2,993
309
115
–
–
–
747
309
115
747
10,151
108,187
118,338
12,524
34,508
47,032
(1,552)
(1,638)
(4,657)
(1,145)
(6,209)
(2,783)
(1,509)
(1,722)
(4,260)
(1,123)
(5,769)
(2,845)
(3,190)
(5,802)
(8,992)
(3,231)
(5,383)
(8,614)
6,961
102,385
109,346
9,293
29,125
38,418
6
(1,184)
787
(397)
(1,292)
1,292
–
5,777
103,172
108,949
8,001
30,417
38,418
5,777
103,172
108,949
8,001
30,417
38,418
Basic and diluted earnings per share
153.43p
53.13p
The columns headed ‘Total’ represent the income statement for the relevant financial years and the columns headed ‘Revenue return’ and ‘Capital
return’ are supplementary information, in line with the Statement of Recommended practice for investment trusts issued by the Association of
Investment Companies in November 2014. There is no Other Comprehensive Income.
ICG Enterprise Trust Annual Report & Accounts 2017
Balance Sheet
Non-current assets
Investments held at fair value
– Unquoted investments
– Quoted investments
– Subsidiary investments
Current assets
Cash and cash equivalents
Receivables
Current liabilities
Payables
Net current assets
Total assets less current liabilities
Capital and reserves
Share capital
Capital redemption reserve
Share premium
Capital reserve
Revenue reserve
Total equity
Notes
10,17
10,17
10,17
11
12
31 January
2017
£’000
31 January
2016
£’000
491,099
364
80,718
572,181
38,522
2,384
40,906
356,939
–
57,168
414,107
103,831
4,038
107,869
13
354
634
40,552
612,733
107,235
521,342
14
7,292
2,112
12,936
581,753
8,640
612,733
7,292
2,112
12,936
484,782
14,220
521,342
Net asset value per share (basic and diluted)
15
871.0p
730.9p
The financial statements on pages 36 to 57 were approved by the Board of directors on 4 May 2017 and signed on its behalf by:
Directors
Mark Fane
Jeremy Tigue
36
37
/FINANCIAL INFORMATION4
Cash Flow Statement
Operating activities
Sale of portfolio investments
Purchase of portfolio investments
Interest income received from portfolio investments
Dividend income received from portfolio investments
Other income received
Investment management charges paid
Other expenses paid
Net cash (outflow)/inflow from operating activities
Financing activities
Bank facility fee
Purchase of shares into treasury
Equity dividends paid
Net cash outflow from financing activities
Net (decrease)/increase in cash and cash equivalents
Cash and cash equivalents at beginning of year
Net (decrease)/increase in cash and cash equivalents
Effect of changes in foreign exchange rates
Year to
31 January
2017
£’000
Year to
31 January
2016
£’000
Notes
50,338
(102,621)
7,263
2,629
259
(6,143)
(1,380)
89,941
(56,213)
8,951
2,882
384
(5,840)
(1,269)
(49,655)
38,836
(1,089)
(6,201)
(11,357)
(1,963)
(9,110)
(14,816)
(18,647)
(25,889)
(68,302)
12,947
103,831
(68,302)
2,993
90,137
12,947
747
8
11
Cash and cash equivalents at end of year
11
38,522
103,831
The notes on pages 40 to 57 form an integral part of the financial statements.
ICG Enterprise Trust Annual Report & Accounts 2017
Statement of Changes in Equity
Company
Year to 31 January 2017
Opening balance at
1 February 2016
Profit for the year and total
comprehensive income
Transfer on disposal of
investments
Dividends paid or approved
Purchase of shares into treasury
Closing balance
at 31 January 2017
Company
Year to 31 January 2016
Opening balance at
1 February 2015
Profit for the year and total
comprehensive income
Transfer on disposal of
investments
Dividends paid or approved
Purchase of shares into treasury
Closing balance at
31 January 2016
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Realised
capital
reserve
£’000
Unrealised
capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
equity
£’000
7,292
2,112
12,936
363,325
121,457
14,220
521,342
–
–
–
–
–
–
–
–
–
–
–
–
(1,178)
104,350
5,777
108,949
–
–
(6,201)
–
–
–
–
–
(11,357)
–
(11,357)
(6,201)
7,292
2,112
12,936
355,946
225,807
8,640
612,733
Share
capital
£’000
Capital
redemption
reserve
£’000
Share
premium
£’000
Realised
capital
reserve
£’000
Unrealised
capital
reserve
£’000
Revenue
reserve
£’000
Total
shareholders’
equity
£’000
7,292
2,112
12,936
348,412
115,077
21,035
506,864
–
–
–
–
–
–
–
–
–
–
–
–
2,200
28,217
8,001
38,418
21,837
(21,837)
–
–
–
(9,124)
–
–
(14,816)
–
(14,816)
(9,124)
7,292
2,112
12,936
363,325
121,457
14,220
521,342
The notes on pages 40 to 57 form an integral part of the financial statements.
38
39
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
NOTES TO THE FINANCIAL STATEMENTS
Subsidiary undertakings and unconsolidated structured entities
1. Accounting policies
Investment returns
2.
3.
Investment management charges
4. Other expenses
5. Directors’ remuneration and interests
6. Taxation
7. Earnings per share
8. Dividends
9.
10. Investments
11. Cash and cash equivalents
12. Receivables – current
13. Payables – current
14. Share capital
15. Net asset value per share
16. Capital commitments and contingencies
17. Financial instruments and risk management
18. Related party transactions
41
44
45
45
45
46
46
47
47
48
51
51
51
51
51
52
53
56
ICG Enterprise Trust Annual Report & Accounts 2017
ICG Enterprise Trust Annual Report & Accounts 2017 1 Accounting policies
These financial statements relate to ICG
Enterprise Trust plc (“the Company”,
formerly Graphite Enterprise Trust PLC).
The registered address and principal
place of business of the Company is Juxon
House, 100 St Paul’s Churchyard, London
EC4M 8BU.
(a) Basis of preparation
The financial information for the year
ended 31 January 2017 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 (the “SORP”)
provisions currently in effect issued by
the Association of Investment Companies
in November 2014.
IFRS comprises standards and
interpretations approved by the
International Accounting Standards
Board and the IFRS Interpretations
Committee as adopted in the European
Union as at 31 January 2017.
These financial statements have been
prepared on a going concern basis and
on the historical cost basis of accounting,
modified for the valuation of certain
assets at fair value.
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
Statement of Recommended Practice for
investment trusts issued by the
Association of Investment Companies in
November 2014. The following
requirements of the SORP have
been followed:
• 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.
• The income statement shows a revenue
column and a capital column prepared
in accordance with the guidance per
the SORP.
• 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(h).
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 included in unquoted investments at
fair value as the subsidiaries are also
deemed to be investment entities.
Future changes to accounting policies
The following standards have been
published and will be mandatory for the
Company in the future.
IFRS 9 – Financial instruments (mandatory
for the Company from the year to
31 January 2019)
IFRS 15 – Revenue from Contracts with
Customers (year to 31 January 2018).
These are not currently expected to have
a significant effect on the financial
statements.
(b) Financial assets
The Company classifies its financial assets
in the following categories: at fair value
through profit or loss; and loans and
receivables. The classification depends
on the purpose for which the financial
40
41
/FINANCIAL INFORMATION4 NOTES TO THE FINANCIAL STATEMENTS
continued
assets were acquired. The classification
of financial assets is determined at initial
recognition.
Financial assets at fair value through
profit or loss
The Company classifies its quoted and
unquoted investments as financial assets
at fair value through profit or loss. These
assets are measured at subsequent
reporting dates at fair value and further
details of the accounting policy are
disclosed in note 1(c).
Loans and receivables
Loans and receivables are non-derivative
financial assets with fixed or determinable
payments that are not quoted in an active
market. These are classified as current
assets and measured at amortised cost
using the effective interest method.
The Company’s loans and receivables
comprise cash and cash equivalents and
trade and other receivables in the balance
sheet.
(c) Investments
All investments are designated 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 note 17.
Unquoted investments
Fair value for unquoted investments is
established by using various valuation
techniques.
Funds and co-investments are valued at
the underlying investment manager’s
valuation where this is consistent with the
requirement to use fair value.
Where this is not the case, adjustments
are made or alternative methods are used
as appropriate. The most common reason
for adjustments is to take account of
events occurring after the date of the
manager’s valuation, such as realisations.
The fair value of direct unquoted
investments is calculated in accordance
with the 2015 International Private Equity
and Venture Capital Valuation Guidelines.
The primary valuation methodology used
is an earnings multiple methodology, with
other methodologies used where they are
more appropriate.
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 is shown
net of 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 on
page 70. At 31 January 2017, 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.
(d) Receivables
Receivables include unamortised fees
which were incurred directly in relation to
the agreement of a financing facility.
These fees will be amortised over the life
of the facility on a straight line basis.
(e) Cash and cash equivalents
Cash and cash equivalents comprise cash
and short term bank deposits with an
original maturity of three months or less.
(f) Dividend distributions
Dividend distributions to shareholders
are recognised in the period in which they
are paid or approved.
(g) Income
When it is probable that economic
benefits will flow to the Company and the
amount can be measured reliably, interest
is recognised using the effective interest
method.
Dividends receivable on quoted equity
shares are brought into account on the
ex-dividend date. Dividends receivable
on equity shares where no ex-dividend
date is applicable are brought into
account when the Company’s right to
receive payment is established.
Income distributions from funds are
recognised when the right to
distributions is established.
(h) Expenses
All expenses are accounted for on an
accruals basis. Expenses are allocated to
the revenue column in the income
statement, consistent with the SORP, with
the following exceptions:
• Expenses which are incidental to the
acquisition of investments (transaction
costs) are allocated to the capital
column.
• Expenses which are incidental to the
disposal of investments are deducted
from the disposal proceeds of
investments and therefore also
effectively allocated to the capital
column.
• The Board expects the substantial
majority of long term returns from the
portfolio to be generated from capital
gains. The investment management and
ICG Enterprise Trust Annual Report & Accounts 2017 bank facility charges have been
allocated 75% to the capital column and
25% to the revenue column in line with
this expectation.
• Other expenses are allocated to the
capital column where a clear
connection with the maintenance or
enhancement of the value of
investments can be demonstrated.
All expenses allocated to the capital
column are treated as realised capital
losses (see note 1(k)).
(i) Taxation
Investment trusts which have approval as
such under Section 1158 of the
Corporation Tax Act 2010 are not liable
for taxation on capital gains.
Tax recognised in the income statement
represents the sum of current tax and
deferred tax charged or credited in the
year. The tax effect of different items of
expenditure is allocated between capital
and revenue on the same basis as the
particular item to which it relates.
Deferred tax is the tax expected to be
payable or recoverable on the difference
between the carrying amounts of assets
and liabilities in the financial statements
and the corresponding tax bases used in
the computation of taxable profit, and is
accounted for using the balance sheet
liability method.
Deferred tax liabilities are recognised for
all taxable temporary differences and
deferred tax assets are recognised to the
extent that it is probable that taxable
profits will be available against which
deductible temporary differences can be
utilised. Deferred tax assets are not
recognised in respect of tax losses
carried forward to future periods.
Deferred tax is calculated at the tax rates
that are expected to apply in the period
when the liability is settled or the assets
are realised. Deferred tax is charged or
credited in the income statement, except
when it relates to items charged or
credited directly to equity, in which case
the deferred tax is also dealt with
in equity.
(j) Foreign currency translation
The functional currency of the Company
is sterling since that is the currency of the
primary economic environment in which
the Company operates. The presentation
currency for the Company is also sterling.
Transactions in currencies other than
sterling are recorded at the rates of
exchange prevailing on the dates of the
transactions. At each balance sheet date,
financial assets and liabilities
denominated in foreign currencies are
translated at the rates prevailing on the
balance sheet date.
Gains and losses arising on the translation
of investments held at fair value are
included within gains and losses on
investments held at fair value in the
income statement. Gains and losses
arising on the translation of other financial
assets and liabilities are included within
foreign exchange gains and losses in the
income statement.
(k) Revenue and capital reserves
The revenue return component of total
income is taken to the revenue reserve
within the Statement of Changes in Equity.
The capital return component of total
income is taken to the capital reserve
within the Statement of Changes in Equity.
Gains and losses on the realisation of
investments including realised exchange
gains and losses and expenses of a capital
nature are taken to the realised capital
reserve (see note 1(h)). Changes in the
valuations of investments which are held
at the year end and unrealised exchange
differences are accounted for in the
unrealised capital reserve.
The revenue reserve is distributable by
way of dividends to shareholders. The
realised capital reserve is distributable by
way of share buy backs.
(l) Treasury Shares
Shares that have been repurchased into
treasury remain included in the share
capital balance, unless they are cancelled.
(m) Critical estimates and
assumptions
Estimates and judgements used in
preparing the financial information are
continually evaluated and are based on
historic experience and other factors,
including expectations of future events
that are believed to be reasonable. The
resulting estimates will, by definition,
seldom equal the related actual results.
The only estimates and assumptions that
have a significant risk of causing a material
adjustment to the carrying amounts of
assets and liabilities relate to the valuation
of unquoted investments. Note 1(c) sets
out the accounting policy for unquoted
investments.
Judgement is required in order to
determine appropriate valuation
methodologies and subsequently in
determining the inputs into the valuation
models used.
Judgment is also required when
determining whether the underlying
investment managers’ valuations are
consistent with the requirements to use
fair value.
(n) Segmental reporting
Operating segments are reported in a
manner consistent with the internal
reporting provided to the chief operating
decision maker. The chief operating
decision maker who is responsible for
allocating resources and assessing
performance of the segments has been
identified as the Board. It is considered
that the Company’s operations comprise
a single operating segment.
42
43
/FINANCIAL INFORMATION4 NOTES TO THE FINANCIAL STATEMENTS
continued
2 INVESTMENT RETURNS
Income from investments
Dividends from UK companies
UK investment income
Overseas interest and dividends
Other income
Deposit interest on cash
Other
Total income
Analysis of income from investments
Quoted in the United Kingdom
Unquoted
Year ended
31 January
2017
£’000
Year ended
31 January
2016
£’000
91
3,902
5,899
9,892
242
17
259
658
2,752
8,690
12,100
309
115
424
10,151
12,524
91
9,801
9,892
658
11,442
12,100
3 Investment management charges
Investment management charge
Irrecoverable VAT
Year ended 31 January 2017
Year ended 31 January 2016
Revenue
£’000
1,552
–
1,552
Capital
£’000
4,657
–
4,657
Total
£’000
6,209
–
6,209
Revenue
£’000
1,415
94
1,509
Capital
£’000
4,244
16
4,260
Total
£’000
5,659
110
5,769
Following the appointment of ICG as manager on 1 February 2016, the management fee charged for managing the Company was
reduced to 1.4% (from 1.5%) of the value of invested assets and 0.5% of outstanding commitments, in both cases excluding funds
managed by Graphite Capital Management LLP and ICG. No fee is charged on cash or liquid asset balances. The amounts payable
during the year are set out above.
Management charges for 2016 set out in the table above were payable to Graphite Capital Management LLP, the Former Manager, for
managing the Company. The Former Manager is a related party for the purposes of the year ended 31 January 2016.
The allocation of the total investment management charges was unchanged in 2017 with 75% of the total allocated to capital and 25%
allocated to revenue.
ICG Enterprise Trust Annual Report & Accounts 2017
3 Investment management charges (continued)
The table below sets out the management charges that the Company has borne in respect of its investments in funds managed by the
Former Manager in periods when the Former Manager was a related party, and those borne in respect of its investments in funds
managed by the Manager in periods when the Manager was a related party.
ICG Europe Fund VI
ICG Europe Fund V
ICG European Fund 2006B
ICG Strategic Secondaries Fund II
ICG Velocity Partners Co-Investor
ICG Asia Pacific III
Graphite Capital Partners VI**
Graphite Capital Partners VII
Graphite Capital Partners VIII
Year ended
31 January
2017
£’000
Year ended
31 January
2016
£’000
299
320
94
185
115
124
*
*
*
1,137
*
*
*
*
*
*
(120)
86
1,561
1,527
*Not applicable as the manager of this fund was not a related party in the year.
**In the year to 31 January 2016, Graphite Capital Partners VI credited the Company with £120,000 of management charges.
4 Other expenses
The Company did not employ any staff in the year to 31 January 2017 (2016: none).
Directors’ fees (see note 5)
Fees payable to the Company’s auditor for the audit of the
Company’s annual accounts
Fees payable to the Company’s auditor and its associates for
other services:
Audit of the accounts of the subsidiaries
Audit-related assurance services
Other services not covered above
Total auditors’ remuneration
Administrative expenses
Bank facility costs allocated to revenue
Expenses allocated to revenue
Bank facility costs allocated to capital
Transaction costs allocated to capital
Expenses allocated to capital
Total other expenses
Year ended
31 January 2017
Year ended
31 January 2016
£’000
£’000
252
£’000
£’000
252
85
53
20
6
61
35
20
6
164
840
1,256
382
1,638
1,145
–
1,145
2,783
122
987
1361
361
1,722
1,084
39
1,123
2,845
5 Directors’ remuneration and interests
The fees paid by the Company to the directors are shown in the Directors’ Remuneration section on page 76. No income was
received or receivable by the directors from any other entity in the Company. The directors’ interests in the share capital of the
Company are shown in the Report of the Directors on page 79.
44
45
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
6 Taxation
In both the current and prior years the tax charge was lower than the standard rate of corporation tax, principally due to the
Company’s status as an investment trust, which means that capital gains are not subject to corporation tax. The standard rate of
corporation tax in the UK changed from 21% to 20% with effect from 1 April 2015. Accordingly the Company’s profits for the year
ended 31 January 2017 are taxed at an effective rate of 20% (2016: 20.17%). The effect of this and other items affecting the tax charge
is shown in note 6(b) below.
a) Analysis of charge in the year
Tax charge on items allocated to revenue
Tax charge on items relating to prior years
Total tax charge allocated to revenue
Tax credit on items allocated to capital
Corporation tax
b) Factors affecting tax charge for the year
Profit on ordinary activities before tax
Profit on ordinary activities multiplied by standard rate of corporation tax in the UK of 20%
(2016: 20.17%)
Effect of:
– net investment returns not subject to corporation tax
– dividends not subject to corporation tax
– expenses not deductible for tax purposes
– current year management expenses not utilised/(utilised)
– other deductions
– overseas tax suffered
Total tax charge
Year ended
31 January
2017
£’000
Year ended
31 January
2016
£’000
787
397
1,184
(787)
397
1,292
–
1,292
(1,292)
–
109,346
38,418
21,869
7,749
(21,637)
(526)
–
294
–
397
397
(6,960)
(133)
20
(206)
(470)
–
–
The Company has no carried forward excess management expenses (2016: nil). There are no carried forward deferred tax assets or
liabilities (2016: nil). Due to the Company’s status as an investment trust, and the intention to continue meeting the conditions
required to obtain approval in the foreseeable future, the Company has not provided deferred tax on any capital gains and losses
arising on the revaluation or disposal of investments. For all investments the tax base is equal to the carrying amount.
The total tax charge for the year relates to the write off of irrecoverable Italian withholding tax previously recognised on the balance sheet.
7 Earnings per share
Revenue return per ordinary share
Capital return per ordinary share
Earnings per ordinary share (basic and diluted)
Year ended
31 January
2017
Year ended
31 January
2016
8.13p
145.30p
153.43p
11.07p
42.06p
53.13p
Revenue return per ordinary share is calculated by dividing the revenue return attributable to equity shareholders of £5.8m
(2016: £8.0m) 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 £103.2m
(2016: £30.4m) 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 £108.9m,
(2016: £38.4m) 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 71,010,218
(2016: 72,310,909). There were no potentially dilutive shares, such as options or warrants, in either year.
ICG Enterprise Trust Annual Report & Accounts 2017
8 Dividends
Final in respect of year ended 31 January 2016: 6.0p (PY: 10.0p) per share
Special in respect of year ended 31 January 2016: 0p (PY: 5.5p) per share
Interim in respect of year ended 31 January 2017: 10.0p (PY: 5.0p) per share
Total
Year ended
31 January
2017
£’000
Year ended
31 January
2016
£’000
4,280
–
7,077
7,232
3,977
3,607
11,357
14,816
The Board has proposed a final dividend of 10.0p per share in respect of the year ended 31 January 2017 which, if approved by
shareholders, will be paid on 20 June 2017, to shareholders on the register of members at the close of business on 2 June 2017.
9 Subsidiary undertakings and unconsolidated structured entities
Subsidiary undertakings
ICG Enterprise Trust Limited Partnership (97.5% owned), ICG Enterprise Trust Co-investment Limited Partnership (99.0% owned)
and ICG Enterprise Trust (2) Limited Partnership (97.5% owned) (“the Partnerships”), which are registered in England, are
subsidiary undertakings at 31 January 2017.
In accordance with IFRS10 (amended), the Partnerships are not consolidated and are instead included in unquoted investments at
fair value.
The value of the subsidiaries is shown net of an accrual for the interests of the Co-investors in the co-investment incentive scheme.
As at 31 January 2017, £20.8m (2016: £11.9m) was accrued in respect of these interests at the year end. During the year, the
Co-investors invested £0.2m and received payments of £1.4m. More than 90% of payments related to investments made in 2008 or
before, reflecting the very long term nature of the incentive scheme. See page 72 for further details of the operation of the scheme.
Unconsolidated structured entities
The Company’s principal activity is investing in private equity funds and directly into private companies. Such investments may be
made and held via a subsidiary. The majority of these investments are unconsolidated structured entities as defined in IFRS 12.
The Company holds interests in closed ended limited partnerships which invest in underlying companies for the purposes of capital
appreciation. The Company and the other limited partners make commitments to finance the investment programme of the relevant
manager, who will typically draw down the amount committed by the limited partners over a period of four to six years.
The table below classifies the Company’s interests in unconsolidated structured entities by manager (Graphite Capital, the former
Manager; ICG, the Manager; or other third party managers) and by type of investment (fund, giving exposure to a portfolio of
companies, or co-investment, giving exposure to a single company in each case). The table presents for each category the related
balances and the maximum exposure to loss.
As at 31 January 2017
Graphite Capital fund investments
Graphite Capital co-investments
ICG fund investments
ICG co-investments
Third party fund investments
Third party co-investments
Co-investment
incentive
scheme
accrual
£’000
Unquoted
investments
£’000
95,979
39,521
48,660
11,625
308,678
83,464
587,927
–
(1,779)
(719)
(457)
(13,061)
(4,288)
Total
£’000
95,979
37,742
47,941
11,168
295,617
79,176
(20,304)
567,623
Maximum
loss
exposure
£’000
95,979
37,742
47,941
11,168
295,617
79,176
567,623
46
47
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
9 Subsidiary undertakings and unconsolidated structured entities (continued)
As at 31 January 2016
Graphite Capital fund investments
Graphite Capital co-investments
ICG fund investments
ICG co-investments
Third party fund investments
Third party co-investments
Co–investment
incentive
scheme
accrual
£’000
Unquoted
investments
£’000
73,519
32,381
15,859
11,979
233,240
56,007
422,985
–
(929)
(341)
(332)
(7,948)
(1,919)
Maximum
loss
exposure
£’000
73,519
31,452
15,518
11,647
225,292
54,088
Total
£’000
73,519
31,452
15,518
11,647
225,292
54,088
(11,469)
411,516
411,516
The Company also holds investments of £4.1m (2016:£2.6m) that are not unconsolidated structured entities. In addition the Company
also holds quoted stock investments of £0.4m (2016:nil). Further details of the Company’s investment portfolio are included in the
Supplementary Information section on pages 21 to 33.
10 Investments
The tables below analyse the movement in the carrying value of the investment portfolio in the year. In accordance with accounting
standards, this note has been prepared on a fund-level basis rather than an underlying investment basis.
A fund is considered to generate realised gains if it is more than 85% drawn and has returned at least the amount invested by the
Company. All gains and losses arising from the underlying investments of such funds are presented as realised. All gains and losses in
respect of other funds are presented as unrealised.
Direct investments are considered realised when they are sold.
Investments are held by both the Company and through the underlying subsidiary Partnerships. An analysis of gains and losses on a
looking –through legal structure on an underlying investment basis is presented on page 11 of the Portfolio Review.
Cost at 1 February 2016
Unrealised appreciation at 1 February 2016
Valuation at 1 February 2016
Movements in the year:
Purchases at cost
Sales
– capital proceeds
– realised gains and losses based on carrying value at previous
balance sheet date
Movement in unrealised appreciation
Valuation at 31 January 2017
Cost at 31 January 2017
Unrealised appreciation at 31 January 2017
Valuation at 31 January 2017
Quoted
£’000
Unquoted
£’000
Subsidiary
Undertakings
£’000
–
–
–
264,466
92,473
356,939
28,184
28,984
57,168
460
102,161
12,097
(29)
(61,809)
–
–
(67)
364
432
(68)
364
844
92,964
491,099
333,579
157,520
491,099
–
11,453
80,718
40,281
40,437
80,718
Total
£’000
292,650
121,457
414,107
114,718
–
(61,838)
844
104,350
572,181
374,292
197,889
572,181
ICG Enterprise Trust Annual Report & Accounts 2017
10 Investments (continued)
Cost at 1 February 2015
Unrealised appreciation at 1 February 2015
Valuation at 1 February 2015
Movements in the year:
Purchases at cost
Sales
– capital proceeds
– realised gains and losses based on carrying value at previous
balance sheet date
Movement in unrealised appreciation
Valuation at 31 January 2016
Cost at 31 January 2016
Unrealised appreciation at 31 January 2016
Valuation at 31 January 2016
Quoted
£’000
Unquoted
£’000
1,890
3,072
4,962
272,632
85,198
357,830
Subsidiary
Undertakings
£’000
29,410
26,807
56,217
Total
£’000
303,932
115,077
419,009
–
52,500
(1,222)
51,278
(5,291)
(84,650)
–
(89,941)
–
329
–
–
–
–
5,544
25,715
356,939
264,466
92,473
356,939
–
2,173
57,168
28,184
28,984
57,168
5,544
28,217
414,107
292,650
121,457
414,107
Realised gains based on cost
Amounts recognised as unrealised in previous years
Realised gains based on carrying values at previous balance sheet date
Increase in unrealised appreciation
Gains on investments
31 January
2017
£’000
31 January
2016
£’000
28,762
(27,918)
844
104,350
105,194
27,381
(21,837)
5,544
28,217
33,761
48
49
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
10 Investments (continued)
Related undertakings
At 31 January 2017, the Company held interests in three limited partnership subsidiaries, ICG Enterprise Trust Limited Partnership,
ICG Enterprise Trust (2) Limited Partnership, and ICG Enterprise Trust Co-investment Limited Partnership. The value of these
interests represented 89%, 70% and 100% (2016: 73%, 86% and 0%) respectively of the net assets of each partnership at the balance
sheet date. The registered address and principal place of business of the partnerships is Juxon House, 100 St Paul’s Churchyard,
London EC4M 8BU.
In addition the Company held an interest (including indirectly through its subsidiaries) of 20% or more in the following entities:
As at 31 January 2017
Investment
Cognito IQ Limited^
Cognito IQ Limited^
CSP Secondary Opportunities II Unit Trust**
Graphite Capital Partners VI+
Graphite Capital Partners VII Top Up Plus+
Graphite Capital Partners VIII Top Up+
Standard Brands (UK) Limited#
The Groucho Club Limited***
The Laine Pub Company Limited****
The Laine Pub Company Limited****
As at 31 January 2016
Investment
Cognito IQ Limited^
Cognito IQ Limited^
CSP Secondary Opportunities II Unit Trust**
Graphite Capital Partners VI+
Graphite Capital Partners VII Top Up Plus+
Graphite Capital Partners VIII Top Up+
Standard Brands (UK) Limited#
The Groucho Club Limited***
The Laine Pub Company Limited****
The Laine Pub Company Limited****
Instrument
% interest*
Preference shares
Ordinary shares
Limited partnership interests
Limited partnership interests
Limited partnership interests
Limited partnership interests
Ordinary shares
Ordinary shares
Preference shares
Ordinary shares
43.7%
34.1%
59.7%
20.8%
20.0%
41.1%
65.8%
21.6%
42.6%
32.4%
Instrument
% interest*
Preference shares
Ordinary shares
Limited partnership interests
Limited partnership interests
Limited partnership interests
Limited partnership interests
Ordinary shares
Ordinary shares
Preference shares
Ordinary shares
43.3%
32.5%
59.7%
20.8%
20.0%
41.1%
63.0%
21.6%
42.6%
30.0%
* The percentage shown for limited partnership interests represents the proportion of total commitments to the relevant fund. The percentage shown
for shares represents the proportion of total shares in issue.
^ Address of principal place of business is Rivergate House, Newbury Business Park, London Road, Newbury, England, RG14 2PZ
** Address of principal place of business is No 1 Seaton Place, St Helier, Jersey JE4 8YJ
+ Address of principal place of business is Berkeley Square House, Berkeley Square, London, England, W1J 6BQ
# Address of principal place of business is Cleeve Court, Cleeve Rd, Leatherhead, England, KT22 7SD
***Address of principal place of business is 45 Dean Street, London, England, W1D 4QB
**** Address of principal place of business is Park House Crawley Business Quarter, Manor Royal, Crawley, West Sussex, England, RH10 9AD
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.
ICG Enterprise Trust Annual Report & Accounts 2017
11 Cash and cash equivalents
Cash at bank and in hand
12 Receivables – current
Prepayments and accrued income
Subsidiary undertakings
31 January
2017
£’000
31 January
2016
£’000
38,522
103,831
31 January
2017
£’000
31 January
2016
£’000
939
1,445
2,384
1,912
2,126
4,038
As at 31 January 2017, prepayments and accrued income included £0.5m (2016: £1.0m) of unamortised costs in relation to the bank
facility. Of this amount £0.3m (2016: £0.5m) is expected to be amortised in less than one year.
13 Payables – current
Accruals
Other creditors
14 Share capital
Equity share capital
31 January
2017
£’000
31 January
2016
£’000
354
–
354
537
97
634
Authorised
Nominal
£’000
Number
Number
Issued and
fully paid
Nominal
£’000
Balance at 31 January 2016 and 31 January 2017
120,000,000
12,000
72,913,000
7,292
All ordinary shares have a nominal value of 10.0p. At 31 January 2017, 72,913,000 shares had been allocated, called up and fully paid.
Of this total, the Company held 2,568,508 shares in treasury (2016: 1,586,163) leaving 70,344,492 (2016: 71,326,837) shares not
held in treasury, all of which have equal voting rights. The market value of the Company’s ordinary shares at 31 March 1982 was 16p.
15 Net asset value per share
The net asset value per share is calculated on equity attributable to equity holders of £612.7m (2016: £521.3m) and on 70,344,492
(2016: 71,326,837) ordinary shares in issue at the year end. There were no potentially dilutive ordinary shares, such as options or
warrants, at either year end. Calculated on both the basic and diluted basis the net asset value per share was 871.0p (2016: 730.9p).
50
51
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
16 Capital commitments and contingencies
The Company and its subsidiaries had uncalled commitments in relation to the following portfolio investments.
31 January
2017
£’000
31 January
2016
£’000
Graphite Capital Partners VIII *
Graphite Capital Partners VII * / **
Graphite Capital Partners VI **
Total Graphite funds
ICG Strategic Secondaries Fund II
ICG Europe VI **
ICG Asia Pacific Fund III
ICG Velocity Partners Co-Investor **
ICG European Fund 2006 B **
ICG Europe V **
Total ICG funds
Sixth Cinven Fund
BC European Capital X
Advent Global Private Equity VIII
Thomas H Lee Equity Fund VII
Charterhouse Capital Partners X
Silverfleet II
PAI Europe VI
Gridiron Capital Fund III
Permira VI
Activa Capital Fund III
CVC European Equity Partners VI
IK VIII
Doughty Hanson & Co V **
The Fourth Alcuin Fund
Bowmark Capital Partners V
Bain Capital Europe IV
Piper Private Equity Fund VI
Harwood Private Equity IV
Nordic Capital Partners VIII
One Equity Partners VI
Egeria Private Equity Fund IV
TDR Capital III
GCP Capital Partners Europe II **
TowerBrook IV
Fifth Cinven Fund
Hollyport Secondary Opportunities V
BC European Capital IX **
Commitments of less than £2,000,000 at 31 January 2017
Total third party
Total commitments
* Includes the associated Top Up Funds.
** Includes interest acquired through a secondary fund purchase.
39,827
4,745
2,084
46,656
14,005
12,101
9,510
2,270
2,065
1,191
41,142
17,166
12,874
12,604
11,609
10,803
10,388
10,386
8,223
8,197
7,673
7,616
7,072
6,534
6,471
5,760
5,539
4,925
4,447
3,572
3,413
3,164
3,004
2,901
2,832
2,658
2,250
2,158
28,262
56,019
7,644
2,084
65,747
–
11,327
–
–
8,937
514
20,778
–
4,567
–
12,449
11,442
11,442
10,624
–
–
9,218
9,724
–
5,807
8,541
7,091
4,745
–
6,600
3,913
–
4,771
4,119
1,526
2,843
4,945
6,975
4,567
31,338
212,501
300,299
167,247
253,772
As at 31 January 2017, the Company (excluding its subsidiaries) had uncalled commitments in relation to the above portfolio of
£232.9m (2016: £216.1m).
ICG Enterprise Trust Annual Report & Accounts 2017
17 Financial instruments and risk management
The Company is an investment company as defined by section 833 of the Companies Act 2006 and conducts its affairs so as to
qualify as an investment trust under the provisions of section 1158 of the Corporation Tax Act 2010 (“Section 1158”). The Company’s
objective is to provide shareholders with long term capital growth through investment in unquoted companies, mostly through
specialist funds but also directly.
Investments in funds have anticipated lives of approximately ten years. Direct investments are made with an anticipated holding
period of between three and five years. Investment agreements will, however, usually provide that any loans advanced to investee
companies are for a longer period than this. The agreements will usually provide for repayments to be made by instalments with
provision for full repayment on sale or flotation.
Financial risk management
The Company’s activities expose it to a variety of financial risks: market risk (comprising currency risk, interest rate risk and price
risk), investment risk, credit risk and liquidity risk. The Company’s overall risk management programme focuses on the
unpredictability of financial markets and seeks to minimise potential adverse effects on the Company’s financial performance.
The Manager has overall responsibility for managing the risks and the framework for monitoring and coordinating these risks.
This is monitored by the Board. The Company’s financial risk management objectives and processes used to manage these risks
have not changed from the previous period and the policies are set out below:
Market risk
(i) Currency risk
The Company’s investments are principally in the UK and continental Europe and are primarily denominated in sterling and in euros.
There are also smaller amounts in US dollars and in other European currencies. The Company is exposed to currency risk in that
movements in the value of sterling against these foreign currencies will affect the net asset value and the cash required to fund
undrawn commitments. The Board regularly reviews the level of foreign currency denominated assets and outstanding commitments
in the context of current market conditions and may decide to buy or sell currency or put in place currency hedging arrangements.
The composition of the net assets of the Company by currency at the year end is set out below:
31 January 2017
Investments
Cash and cash equivalents and other net current assets
31 January 2016
Investments
Cash and cash equivalents and other net current assets
Sterling
£’000
274,454
33,447
307,901
Sterling
£’000
203,837
87,093
290,930
Euro
£’000
223,854
2,611
226,465
Euro
£’000
115,851
12,359
128,210
Other
£’000
73,873
4,494
78,367
Other
£’000
94,419
7,783
102,202
Total
£’000
572,181
40,552
612,733
Total
£’000
414,107
107,235
521,342
These figures are based on the currency of the location of the underlying portfolio companies’ headquarters.
The effect of a 25% increase or decrease in the sterling value of the euro would be a fall and a rise of £36.5m and £36.3m in the value
of shareholders’ equity at 31 January 2017 respectively (2016: £28.9m and £27.9m based on 25% increase or decrease). The effect of
a 25% increase or decrease in the sterling value of the euro on profit after tax would be a fall and a rise of £18.9m and £60.6m (2016:
£30.6m and £30.6m based on 25% increase or decrease). The percentages applied are based on market volatility in exchange rates
over recent periods.
(ii) Interest rate risk
The fair value of the Company’s investments and cash balances are not directly affected by changes in interest rates.
52
53
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
17 Financial instruments and risk management (CONTINUED)
(iii) Price risk
The risk that the value of a financial instrument will change as a result of changes to market prices is one that is fundamental to the
Company’s objective, which is to provide long term capital growth through investment in unquoted companies. The investment
portfolio is continually monitored to ensure an appropriate balance of risk and reward in order to achieve the Company’s objective.
No hedging of this risk is undertaken.
The Company is exposed to the risk of change in value of its private equity investments. For all investments the market variable is
deemed to be the price itself. The table below shows the impact of a 30% increase or decrease in the valuation of the investment
portfolio. The percentages applied are reasonable based on the managers’ expectation of potential changes in portfolio valuation in
light of volatility in the market.
30% (2016: 30%) movement in the price of investments
Impact on profit after tax
Impact as a percentage of profit after tax
Impact on shareholders’ equity
Impact as a percentage of shareholders’ equity
31 January 2017
31 January 2016
Increase in
variable
£’000
Decrease in
variable
£’000
Increase in
variable
£’000
Decrease in
variable
£’000
199,156
182.8%
165,350
27.0%
(157,465)
(144.5%)
(168,413)
(27.5%)
128,053
285.8%
118,036
22.6%
(128,133)
(286.0%)
(121,208)
(23.2%)
Investment and credit risk
(i) Investment risk
Investment risk is the risk that the financial performance of the companies in which ICG Enterprise invests either improves or
deteriorates, thereby affecting the value of that investment. Investments in unquoted companies whether indirectly or directly are by
their nature subject to potential investment losses. The investment portfolio is highly diversified.
(ii) Credit risk
The Company’s exposure to credit risk arises principally from its investment in cash deposits. The Company aims to invest the
majority of its liquid portfolio in assets which have low credit risk. The Company’s policy is to limit exposure to any one investment to
15% of gross assets. This is regularly monitored by the Manager as a part of its cash management process.
Cash is held on deposit with three UK banks and totalled £38.5m (2016: £103.8m). Of this amount £25.1m was deposited at Lloyds
Bank (“Lloyds”), which currently has a credit rating of BAA1 from Moody’s, and this represents the maximum exposure to credit risk
at the balance sheet date. No collateral is held by the Company in respect of these amounts. None of the Company’s cash deposits
were past due or impaired at 31 January 2017 (2016: nil).
Liquidity risk
The Company has significant investments in unquoted companies and funds which are inherently illiquid. The Company also has
substantial undrawn commitments to funds, the great majority of which are likely to be called over the next five years. The Company
aims to manage its affairs to ensure sufficient cash, other liquid assets and undrawn borrowing facilities will be available to meet
contractual commitments when they are called and also seeks to have cash generally available to meet other short term financial
needs. All cash and cash equivalents are available on demand. The Company’s liquidity management policy involves projecting cash
flows and considering the level of liquidity necessary to meet these.
The Company has access to committed bank facilities of a headline £103.0m, which are structured as parallel sterling and euro
facilities of £50.0m and €61.7m (£53.0m). The facilities are provided jointly by Lloyds and The Royal Bank of Scotland (“RBS”).
Of the total facilities, £20.0m and €23.6m will expire in March 2020 after being renewed in March 2017 on the following basis:
• Upfront Cost: 90bps
• Non-utilisation fees: 90bps
• Margin: 300bps
The remaining balance of £30.0m and €38.1m will expire in April 2019.
As at 31 January 2017 the Company’s financial liabilities amounted to £0.3m of payables (2016: £0.6m) which were due in less than
one year.
ICG Enterprise Trust Annual Report & Accounts 2017
17 Financial instruments and risk management (CONTINUED)
Capital risk management
The Company’s capital is represented by its net assets, which are managed to achieve the Company’s investment objective.
The Company currently has no debt.
The Board can manage the capital structure directly since it has taken the powers, which it is seeking to renew, to issue and buy-back
shares and it also determines dividend payments. The Company is subject to externally imposed capital requirements with respect to
the obligation and ability to pay dividends by section 1159 Corporation Tax Act 2010 and by the Companies Act 2006, respectively.
Total equity at 31 January 2017, the composition of which is shown on the balance sheet was £612.7m (2016: £521.3m).
Fair value estimation
IFRS 7 requires disclosure of fair value measurements of financial instruments categorised according to the following fair value
measurement hierarchy:
• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as
prices) or indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).
The valuation techniques applied to level 1 and level 3 assets are described in note 1(c).
The sensitivity of the Company’s investments to a change in value is discussed on pages 53 and 54.
The following table presents the assets that are measured at fair value at 31 January 2017. The Company had no financial liabilities
measured at fair value at that date.
Investments held at fair value
Unquoted investments – indirect
Unquoted investments – direct
Quoted investments – direct
Subsidiary undertakings
Total investments held at fair value
Level 1
£’000
Level 2
£’000
Level 3
£’000
–
–
364
–
364
–
–
–
–
–
383,068
108,031
–
80,718
571,817
The following table presents the assets that are measured at fair value at 31 January 2016. The Company had no financial liabilities
measured at fair value at that date.
Investments held at fair value
Unquoted investments – indirect
Unquoted investments – direct
Quoted investments – direct
Subsidiary undertakings
Total investments held at fair value
All unquoted and quoted investments are valued at fair value in accordance with IFRS 13.
Level 1
£’000
Level 2
£’000
Level 3
£’000
–
–
–
–
–
–
–
–
–
–
272,495
84,444
–
57,168
414,107
54
55
/FINANCIAL INFORMATION4
NOTES TO THE FINANCIAL STATEMENTS
continued
17 Financial instruments and risk management (CONTINUED)
The following tables present the changes in level 3 instruments for the year to 31 January 2017.
31 January 2017
Opening balances
Additions
Disposals
Gains and losses recognised in profit or loss
Closing balance
Unquoted
investments
(indirect)
at fair value
through profit
or loss
£’000
Unquoted
investments
(direct) at fair
value through
profit or loss
£’000
Subsidiary
undertakings
£’000
272,495
94,116
(49,920)
66,377
84,444
8,365
(11,889)
27,111
383,068
108,031
57,168
12,097
–
11,453
80,718
Total
£’000
414,107
114,578
(61,809)
104,941
571,817
Total gains for the year included in income statement for assets
held at the end of the reporting period
45,734
19,838
11,453
77,025
The following tables present the changes in level 3 instruments for the year to 31 January 2016.
Opening balances
Additions
Disposals
Gains and losses recognised in profit or loss
Closing balance
Unquoted
investments
(indirect)
at fair value
through profit
or loss
£’000
Unquoted
investments
(direct) at fair
value through
profit or loss
£’000
289,491
43,857
(77,790)
16,937
272,495
68,339
8,643
(6,860)
14,322
84,444
Subsidiary
undertakings
£’000
56,217
(1,226)
–
2,177
Total
£’000
414,047
51,274
(84,650)
33,436
57,168
414,107
Total gains for the year included in income statement for assets
held at the end of the reporting period
16,937
14,322
2,177
33,436
18 RELATED PARTY TRANSACTIONS
Transactions between the Company and the Former Manager are disclosed in note 3. Significant transactions between the Company
and its subsidiaries are shown below:
Subsidiary
Nature of transaction
Year ended
31 January
2017
£’000
Year ended
31 January
2016
£’000
ICG Enterprise Trust Limited Partnership
Increase in amounts owed to subsidiaries
Income allocated
3,338
248
3,549
875
ICG Enterprise Trust (2) Limited Partnership
Increase/(decrease) in amounts owed to
subsidiaries
Income allocated
1,683
(2,325)
1080
1284
ICG Enterprise Trust Co – Investment Limited
Partnership
Increase in amounts owed by subsidiaries
Income allocated
14,991
204
–
–
ICG Enterprise Trust Annual Report & Accounts 2017
Amounts owed by subsidiaries represent funding provided by the Company to its subsidiaries to allow them to make investments.
The balances will be repaid out of proceeds from their portfolios.
Subsidiary
Amounts owed by subsidiaries Amounts owed to subsidiaries
31 January
2017
£’000
31 January
2016
£’000
31 January
2017
£’000
31 January
2016
£’000
ICG Enterprise Trust Limited Partnership
ICG Enterprise Trust (2) Limited Partnership
ICG Enterprise Trust Co – Investment Limited Partnership
–
36,939
14,991
–
35,678
–
28,709
2,944
–
25,371
–
–
Transactions between the Company and its related undertakings:
During the 2016 financial year the Company made a £1.1m follow-on investment in Cognito IQ Limited, paid £0.1m of fees in respect of
its investment in Standard Brands (UK) Limited and made an investment of £3.0m in The Groucho Club Limited. These entities are
related undertakings of the Company as disclosed in Note 10.
A full list of related undertakings is presented in note 10.
Funds managed by the Company’s current and Former Manager:
Fund
ICG Europe Fund VI*
ICG Europe Fund V*
ICG Europe Fund 2006B*
ICG Strategic Secondaires Fund II**
ICG Velocity Partners Co-Investor**
ICG Asia Pacific III**
Total
Year ended 31 January 2017
Year ended 31 January 2016
Original
commitment
£’000
Remaining
commitment
£’000
Fair
value
£’000
Original
commitment
£’000
Remaining
commitment
£’000
21,457
13,198
19,312
19,879
11,927
11,927
97,700
12,101
1,191
2,065
14,005
2,270
9,510
41,142
9,683
10,828
7,163
6,873
10,994
3,119
48,660
10,763
7,176
16,145
–
–
–
34,084
11,327
514
8,937
–
–
–
20,778
Fair
value
£’000
48
7,797
8,013
–
–
–
15,858
* Euro denominated positions translated to sterling at spot rate on 31 January 2016 and 31 January 2017.
** US dollar denominated positions translated to sterling at spot rate on 31 January 2016 and 31 January 2017.
At the balance sheet date the Company has fully funded its proportionate share of all commitments invested due to all ICG managed
funds in which it is invested, including ICG Strategic Secondaries Fund II and ICG Europe Fund VI.
Year ended 31 January 2016
Fund
Graphite Capital Partners VIII
Graphite Capital Partners VIII Top Up Fund
Graphite Capital Partners VII
Graphite Capital Partners VII Top Up Fund
Graphite Capital Partners VII Top Up Fund Plus
Graphite Capital Partners VI
Graphite Capital Partners V
Total
Original
commitment
£’000
Remaining
commitment
£’000
80,000
20,000
42,800
10,000
6,000
78,188
15,000
251,988
45,009
11,010
5,279
1,322
1,042
2,084
–
65,746
The funds managed by the Former Manager are not considered a related party from 1 February 2016.
Fair
value
£’000
29,778
6,547
10,162
1,679
1,508
23,845
–
73,519
56
57
/FINANCIAL INFORMATION4
Statement of Directors’
Responsibilities
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, whose names and
functions are listed on pages 68 and 69,
confirm that, to the best of their
knowledge:
• the financial statements, which have
been prepared in accordance with
IFRSs as adopted by the EU, 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
Mark Fane
4 May 2017
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. Under that law the
directors have prepared the financial
statements in accordance with
International Financial Reporting
Standards (IFRSs) as adopted by the
European Union. Under company law the
directors must 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 that 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 applicable IFRSs as
adopted by the European Union have
been followed, subject to any material
departures disclosed and explained in
the financial statements;
and
• prepare the financial statements on the
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 the
group and enable them to ensure that the
financial statements and the Directors’
Remuneration Report comply with the
Companies Act 2006 and, as regards the
group financial statements, Article 4 of
the IAS Regulation. They are also
responsible for safeguarding the assets
of the company and the group and hence
for taking reasonable steps for the
prevention and detection of fraud and
other irregularities.
ICG Enterprise Trust Annual Report & Accounts 2017 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ICG ENTERPRISE TRUST PLC
Report on the financial statements
Our opinion
In our opinion, ICG Enterprise Trust plc’s financial statements (the “financial statements”):
• give a true and fair view of the state of the company’s affairs as at 31 January 2017 and of its profit and cash flows for the year then
ended;
• have been properly prepared in accordance with International Financial Reporting Standards (“IFRSs”) as adopted by the
European Union; and
• have been prepared in accordance with the requirements of the Companies Act 2006.
What we have audited
The financial statements, included within the Annual Report and Accounts (the “Annual Report”), comprise:
• the Balance Sheet as at 31 January 2017;
• the Income Statement for the year then ended;
• the Cash Flow Statement for the year then ended;
• the Statement of Changes in Equity for the year then ended; and
• the notes to the financial statements, which include a summary of significant accounting policies and other explanatory information.
Certain required disclosures have been presented elsewhere in the Annual Report, rather than in the notes to the financial
statements. These are cross-referenced from the financial statements and are identified as audited.
The financial reporting framework that has been applied in the preparation of the financial statements is IFRSs as adopted by the
European Union, and applicable law.
Our audit approach
Context
On 1 February 2016, ICG Alternative Investment Limited (a subsidiary of Intermediate Capital Group plc) became the Manager of ICG
Enterprise Trust plc (formerly Graphite Enterprise Trust PLC) (the “Company”) with Intermediate Capital Group plc acquiring the
private equity fund investment business of Graphite Capital Management LLP (the “former Manager”). A number of investment
professionals also transferred to Intermediate Capital Group plc at that time as part of the change of Manager.
Overview
• Overall materiality: £6.1 million which represents 1% of net assets.
• The Company is an investment company which has three subsidiaries, also investment companies,
managing a widely diversified portfolio. The Company financial statements hold the subsidiaries
as investments at fair value in accordance with IFRS 10; each subsidiary is a Limited Partnership.
• We audited the complete financial information of the Company and the three subsidiaries which
accounted for all of the Company’s income, its profit before tax, and net assets.
• We tailored the scope of our audit taking into account the types of investments within the Company,
the accounting processes and controls, and the industry in which the Company operates.
• Valuation of unquoted investments.
• Recognition of investment income and gains / losses from investments.
58
59
/FINANCIAL INFORMATION4 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ICG ENTERPRISE TRUST PLC
continued
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards on Auditing (UK and Ireland) (“ISAs (UK & Ireland)”).
We designed our audit by determining materiality and assessing the risks of material misstatement in the financial statements. In
particular, we looked at where the directors made subjective judgements, for example in respect of significant accounting estimates
that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits we also
addressed the risk of management override of internal controls, including evaluating whether there was evidence of bias by the
directors that represented a risk of material misstatement due to fraud.
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are
identified as “areas of focus” in the table below. We have also set out how we tailored our audit to address these specific areas in
order to provide an opinion on the financial statements as a whole, and any comments we make on the results of our procedures
should be read in this context. This is not a complete list of all risks identified by our audit.
Area of focus
How our audit addressed the area of focus
Valuation of unquoted investments
Refer to page 80 (Report of the Audit
Committee), page 41 (Accounting
Policies) and pages 47 to 49 (notes).
The majority of investments which are in private equity direct co-investments and
private equity funds were valued by the Manager based on third party manager reports.
We tested the process that the Manager used to value these investments. In particular,
for funds and co-investments, we:
The investment portfolio at 31 January
2017 comprised direct co-investments
and fund investments.
• Checked a sample of the funds’ and co-investments’ most recent audited financial
statements or latest investor capital statements to substantiate the valuations
applied;
We focused on the valuation of
investments as investments represented a
material balance in the financial
statements (£572.2m) and the valuation
assumptions used to derive fair value
generally do not have observable inputs
that reflect quoted prices in active
markets and are therefore, more
subjective.
The valuation of investments is shown net
of the incentive scheme accrual which
represents amounts accruing to
executives of the Manager’s and former
Manager’s co-investment incentive
scheme at the year end. The calculation is
relatively complex and is dependent upon
the valuations of the unquoted
investments.
• Understood the accounting policies of the underlying fund managers to assess
whether they are in accordance with International Financial Reporting Standards and
the International Private Equity and Venture Capital Valuation (‘IPEV’) guidelines;
• Assessed the validity of any adjustments made by the Manager to reflect cash or
quoted stock movements (for quoted investments in the underlying funds) between
the reporting dates of the fund managers and 31 January 2017;
• Checked the accuracy of a sample of prior year valuations based on estimated and
unaudited reports, to their respective audited financial statements to assess the
historical accuracy of the underlying fund managers’ estimates;
• Independently confirmed a sample of the valuations and percentage ownership with
the underlying fund managers; and,
• Recalculated the amounts due to executives of the former Manager and Manager
under the incentive scheme accrual based on the methodology outlined in the
subsidiary limited partnership agreements. Where applicable, we verified inputs to
the calculation back to supporting documentation.
No misstatements were identified in our testing of co-investments and investments in
private equity funds which required reporting to those charged with governance.
ICG Enterprise Trust Annual Report & Accounts 2017 Area of focus
How our audit addressed the area of focus
We tested investment income receipts to supporting documentation by performing the
following procedures:
• Agreed amounts to bank statements;
• Re-calculated distributions and dividends based on the terms of the agreements;
• Agreed amounts to distribution notices received from the underlying fund manager
of the fund investments and co-investments. We also assessed the appropriateness
of the allocation of investment income and net gains between income and capital
based on the requirements of the Association of Investment Companies Statement of
Recommended Practice;
• We recalculated unrealised gains and losses on investments based on the valuation
movement in investments over the year. The calculation of these gains was supported
by evidence obtained from the work we performed over investment valuations; and
• We recalculated the realised gains and losses on investments based on distribution
notices and dividends received.
No misstatements were identified by our testing which required reporting to those
charged with governance.
Recognition of investment income
and gains / losses from
investments
Refer to page 80 (Audit Committee
Report), page 41 (Accounting Policies)
and pages 44 and 48 to 49 (notes).
Investment income comprises mainly
dividends and distributions received from
direct co-investments and fund
investments.
The majority of gains and losses on
investments represent fair value changes
in the value of investments over the
financial year and gains and losses made
on the disposal of investments.
Unrealised fair value movements are
based on the change in investment
valuations which in themselves are
subjective as noted above.
Investment income and gains and losses
on investments are measures used to
calculate returns being achieved by the
Company and so there is a potential
incentive for the Manager to overstate
this figure in order to enhance results.
This, combined with the size of the
balance, made this an area of focus.
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed enough work to be able to give an opinion on the financial statements
as a whole, taking into account the geographic structure of the company, the accounting processes and controls, and the industry in
which the company operates.
The Company is an investment company which has three subsidiaries, also investment companies, managing a widely diversified
portfolio. The Company financial statements hold the subsidiaries as investments at fair value in accordance with IFRS 10; each
subsidiaries is a Limited Partnership. The Company and the subsidiaries are managed by ICG Alternative Investment Limited, part of
Intermediate Capital Group plc (the "Manager").
We audited the complete financial information of the Company which included the financial information of the subsidiaries at fair value
within the ‘investments held at fair value’ line of the Balance Sheet. This also included the incentive scheme accrual.
We tailored the scope of our audit taking into account the types of investments within the Company, the accounting processes and
controls, and the industry in which the Company operates.
60
61
/FINANCIAL INFORMATION4 INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ICG ENTERPRISE TRUST PLC
continued
Materiality
The scope of our audit was influenced by our application of materiality. We set certain quantitative thresholds for materiality. These,
together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit
procedures on the individual financial statement line items and disclosures and in evaluating the effect of misstatements, both
individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Overall materiality
How we determined it
Rationale for benchmark applied
£6.1 million (2016: £5.2 million).
1% of net assets.
We believed that net assets was the most appropriate benchmark because this is the
key metric against which the performance of the Company is measured. It is also a
generally accepted measure used for companies in this industry.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £306,000 (2016:
£260,000) as well as misstatements below that amount that, in our view, warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the directors’ statement, set out on page 74, in relation to going concern. We have
nothing to report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to
the directors’ statement about whether they considered it appropriate to adopt the going concern basis in preparing the financial
statements. We have nothing material to add or to draw attention to.
As noted in the directors’ statement, the directors have concluded that it is appropriate to adopt the going concern basis in
preparing the financial statements. The going concern basis presumes that the company has adequate resources to remain in
operation, and that the directors intend it to do so, for at least one year from the date the financial statements were signed. As part of
our audit we have concluded that the directors’ use of the going concern basis is appropriate. However, because not all future events
or conditions can be predicted, these statements are not a guarantee as to the company’s ability to continue as a going concern.
Other required reporting
Consistency of other information and compliance with applicable requirements
Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
• the information given in the Strategic Report and the Report of the Directors for the financial year for which the financial
statements are prepared is consistent with the financial statements; and
• the Strategic Report and the Report of the Directors have been prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the company and its environment obtained in the course of the audit,
we are required to report if we have identified any material misstatements in the Strategic Report and the Report of the Directors.
We have nothing to report in this respect.
ICG Enterprise Trust Annual Report & Accounts 2017 ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
• information in the Annual Report is:
We have no exceptions to report.
- materially inconsistent with the information in the audited financial statements;
or
-
-
apparently materially incorrect based on, or materially inconsistent with, our
knowledge of the company acquired in the course of performing our audit; or
otherwise misleading.
• the statement given by the directors on page 58, in accordance with provision C.1.1
of the UK Corporate Governance Code (the “Code”), that they consider the Annual
Report taken as a whole to be fair, balanced and understandable and provides the
information necessary for members to assess the company’s position and
performance, business model and strategy is materially inconsistent with our
knowledge of the company acquired in the course of performing our audit.
• the section of the Annual Report on pages 80 to 81, as required by provision C.3.8
of the Code, describing the work of the Audit Committee does not appropriately
address matters communicated by us to the Audit Committee.
We have no exceptions to report.
We have no exceptions to report.
The directors’ assessment of the prospects of the company and of the principal risks that would threaten the
solvency or liquidity of the company
Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
• the directors’ confirmation on page 9 of the Annual Report, in accordance with
provision C.2.1 of the Code, that they have carried out a robust assessment of the
principal risks facing the company, including those that would threaten its business
model, future performance, solvency or liquidity.
• the disclosures in the Annual Report that describe those risks and explain how they
are being managed or mitigated.
• the directors’ explanation on page 9 of the Annual Report, in accordance with
provision C.2.2 of the Code, as to how they have assessed the prospects of the
company, over what period they have done so and why they consider that period to
be appropriate, and their statement as to whether they have a reasonable
expectation that the company will be able to continue in operation and meet its
liabilities as they fall due over the period of their assessment, including any related
disclosures drawing attention to any necessary qualifications or assumptions.
We have nothing material to add or to draw
attention to.
We have nothing material to add or to draw
attention to.
We have nothing material to add or to draw
attention to.
Under the Listing Rules we are required to review the directors’ statement that they have carried out a robust assessment of the
principal risks facing the company and the directors’ statement in relation to the longer-term viability of the company. Our review was
substantially less in scope than an audit and only consisted of making inquiries and considering the directors’ process supporting
their statements; checking that the statements are in alignment with the relevant provisions of the Code; and considering whether the
statements are consistent with the knowledge acquired by us in the course of performing our audit. We have nothing to report having
performed our review.
62
63
/FINANCIAL INFORMATION4
INDEPENDENT AUDITORS’ REPORT
TO THE MEMBERS OF ICG ENTERPRISE TRUST PLC
continued
Adequacy of accounting records and information and explanations received
Under the Companies Act 2006 we are required to report to you if, in our opinion:
• we have not received all the information and explanations we require for our audit; or
• adequate accounting records have not been kept, or returns adequate for our audit have not been received from branches not
visited by us; or
• the financial statements and the part of the Directors’ Remuneration Report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Directors’ remuneration report - Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion, certain disclosures of directors’ remuneration
specified by law are not made. We have no exceptions to report arising from this responsibility.
Corporate governance statement
Under the Listing Rules we are required to review the part of the Corporate Governance Statement relating to ten further provisions
of the Code. We have nothing to report having performed our review.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the directors
As explained more fully in the Statement of Directors’ Responsibilities, the directors are responsible for the preparation of the
financial statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial statements in accordance with applicable law and ISAs (UK &
Ireland). Those standards require us to comply with the Auditing Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only for the company’s members as a body in accordance with
Chapter 3 of Part 16 of the Companies Act 2006 and for no other purpose. We do not, in giving these opinions, accept or assume
responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where
expressly agreed by our prior consent in writing.
ICG Enterprise Trust Annual Report & Accounts 2017 What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material misstatement, whether caused by fraud or error. This includes an
assessment of:
• whether the accounting policies are appropriate to the company’s circumstances and have been consistently applied and
adequately disclosed;
• the reasonableness of significant accounting estimates made by the directors; and
• the overall presentation of the financial statements.
We primarily focus our work in these areas by assessing the directors’ judgements against available evidence, forming our own
judgements, and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing techniques, to the extent we consider necessary to provide a
reasonable basis for us to draw conclusions. We obtain audit evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial information in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the audit. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report. With respect to the Strategic Report and Report of the Directors, we
consider whether those reports include the disclosures required by applicable legal requirements.
Alex Bertolotti (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
4 May 2017
• The maintenance and integrity of the ICG Enterprise Trust plc website is the responsibility of the directors; the work carried out by the auditors does
not involve consideration of these matters and, accordingly, the auditors accept no responsibility for any changes that may have occurred to the
financial statements since they were initially presented on the website.
• Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other
jurisdictions.
64
65
/FINANCIAL INFORMATION4 ICG Enterprise Trust Annual Report & Accounts 2017
governance
The Board
Report of the Directors
Directors’ Remuneration
Report of the Audit Committee
Additional disclosures required by the
Alternative Investment Fund Managers Directive
Investment Policy
The Annual General Meeting
Notice of Meeting
Notice of Meeting: Explanatory Notes
68
70
76
80
82
84
85
86
88
67/66
The board
Each of the members of the Board
is an independent non-executive director
Mark Fane
Chairman
Peter Dicks
Chairman of Audit Committee
Senior Independant Director
Jeremy Tigue
Member of Audit Committee
Mark Fane was appointed to the Board in
2000 and became Chairman of the Board
in 2009. He was a non-executive director
of Ottakar’s from 1992 until its takeover
by HMV in July 2006. He is Chairman and
Chief Executive of Crocus.co.uk, an
internet-based gardening retailer
established in 1999. He is a non-executive
director of the Royal Horticultural Society
and Chairman of the RHS Investment
Committee. He is also a non-executive
director of Chatsworth House Trust and
Chairman of the Garden Museum. He will
retire from the Board following the 2017
Annual General Meeting.
Peter Dicks was appointed to the Board in
1998. He was co-founder of Abingworth
PLC, a venture capital investment
company, where he worked from 1973 to
1991. Since then he has been
non-executive director or chairman of a
number of companies. He is currently a
non-executive director of Interactive
Investor plc, Mears Group PLC and Miton
UK MicroCap Trust plc.
Jeremy Tigue was appointed to the Board
in 2008. He joined F&C Management in
1981 and was the fund manager of
Foreign & Colonial Investment Trust from
1997 to 2014. He is Chairman of Syncona
Limited and a non-executive director of
The Mercantile Investment Trust plc, The
Monks Investment Trust PLC and
Standard Life Equity Income Trust PLC.
Assuming he is re-elected at the 2017
Annual General Meeting, he will become
Chairman of the Board from the end of the
2017 Annual General Meeting.
ICG Enterprise Trust Annual Report & Accounts 2017
ANDREW Pomfret
Member of Audit Committee
Lucinda Riches
Member of Audit Committee
Sandra Pajarola
Member of Audit Committee
Andrew Pomfret was appointed to the
Board in March 2011. He joined Rathbone
Brothers Plc as finance director in 1999,
and served as chief executive from 2004
until February 2014. He is currently a
director of the Wealth Management
Association, a member of the Prudential
Regulation Authority’s Practitioner Panel,
non-executive chairman of Miton UK
MicroCap Trust plc and a non-executive
director of Aberdeen New Thai
Investment Trust PLC, Interactive Investor
plc and Sanne Group Plc.
Lucinda Riches was appointed to the
Board in July 2011. She worked at UBS
and its predecessor firms for 21 years
until 2007 where she was a managing
director, global head of Equity Capital
Markets and a member of the board of the
investment bank. She is a non-executive
director of UK Financial Investments
Limited, The Diverse Income Trust plc,
The British Standards Institution, Ashtead
Group plc and CRH plc. She is also a
trustee of Sue Ryder.
Sandra Pajarola was appointed to the
Board in March 2013. She worked for
13 years at Partners Group, a very large
global investor in private equity and other
private assets, until 2012. She was a
member of the Global Investment
Committee which was responsible for
commitments to more than 500 private
equity funds.
5
G
O
V
E
R
N
A
N
C
E
69/68
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 JANUARY 2017
The directors present
their report and the
audited financial
statements for the year
ended 31 January 2017
Directors
All of the directors listed on pages 68 and
69 held office throughout the year and up
to the date of signing the financial
statements.
Ms Pajarola is resident in Switzerland. All
of the other directors of the Company are
resident in the UK. The directors’
biographical details demonstrate the
wide range of skills and experience that
they bring to the Board. In addition to the
requirement of the Articles of Association
that one third of the Board is subject to
retirement each year, all directors are
required to submit themselves for
re-election at least every three years.
However, in accordance with corporate
governance principles, the Board has
decided that all directors will submit
themselves for re-election every year.
Mr Fane is retiring from the Board and so
will not stand for re-election. If re-elected
by shareholders, Mr Tigue will become
Chairman of the Board from the end of the
2017 Annual General Meeting.
Mr Dicks will be stepping down as
Chairman of the Audit Committee from
the end of the 2017 Annual General
Meeting and will be replaced by Mr Pomfret
if re-elected by shareholders.
Directors’ remuneration
The Company has no employees or
executive directors and consequently
does not have a remuneration committee
as recommended by the UK Corporate
Governance Code.
The Directors’ Remuneration Report,
which shareholders will be asked to
approve at the Annual General Meeting,
can be found on pages 76 to 79.
The Directors’ Report should be read in
conjunction with the Chairman’s
Statement, Strategic Report, Portfolio
Review and Market Review (pages 3 to
16) and the Directors’ Remuneration
section (pages 76 to 79).
Status of the Company
ICG Enterprise Trust plc (“the
Company”) is an investment company as
defined by section 833 of the Companies
Act 2006 and is registered and domiciled
in England (number 1571089). During the
year under review the Company carried
on the business of an investment trust.
The last accounting period for which the
Company has been approved by HM
Revenue & Customs in accordance with
the provisions of Section 1158 of the
Corporation Tax Act 2010 is the year
ended 31 January 2016. The Company will
retain its investment trust status with
effect from 1 February 2016 provided it
continues to satisfy the conditions of
Section 1158 of the Corporation Tax
Act 2010. The Company has subsequently
directed its affairs with the objective of
retaining such approval.
The Company’s shares are eligible for
tax-efficient wrappers such as Individual
Savings Accounts (ISAs), Junior ISAs, and
Self Invested Personal Pensions (SIPPs).
Reporting period
This Annual Report has been prepared
for the year to 31 January 2017.
Investment policy
The Company’s investment policy is set
out on page 84. There have been no
material changes to it since last year.
No material change will be made to the
investment policy without prior
shareholder approval.
Dividend
An interim dividend in respect of the year
ended 31 January 2017 of 10.0p was paid
on 21 October 2016. A final dividend of
10.0p per share will, if approved, be paid
on 20 June 2017 to holders of ordinary
shares on the register at the close of
business on 2 June 2017. This would bring
the total dividend for the year to 20.0p
per share.
ICG Enterprise Trust Annual Report & Accounts 2017 Manager
On 1 February 2016, ICG Alternative
Investment Limited (“ICG” or “the
Manager”) was appointed manager of the
Company. ICG is authorised as an
Alternative Investment Fund Manager and
is regulated by the Financial Conduct
Authority. The Manager was appointed in
succession to Graphite Capital
Management LLP (“Graphite Capital” or
“the Former Manager”) which acted as
manager of the Company during the
period prior to 31 January 2016.
The Manager provides investment
management, company secretarial and
general administrative services to the
Company under a management
agreement. This agreement can be
terminated by either party giving not less
than one year’s notice.
The investment management fee payable
under this new agreement is calculated as
1.4% of the investment portfolio (reduced
from 1.5%) and 0.5% of outstanding
commitments to funds in their investment
periods, in both cases excluding the funds
managed directly by Graphite Capital
(see Figure 5.1) and now also excluding
the funds managed directly by ICG
(see Figure 5.2).
Certain Graphite Capital Funds are
subject to separate arrangements which
are set out below:
• For Graphite Capital Partners VIII, the
annual management charge was 2.0%
of original commitments.
• For the Top Up Funds, the annual
management charge was 1.0% of the
amounts drawn down and invested.
• For the remaining funds, the annual
management charge was between
0.75% and 2.0% of the cost of
unrealised investments
• These charges were at the same levels
as those paid by third party investors in
Graphite Capital funds.
• The incentive arrangements within
these funds are comparable to those
that are in place in the Company’s
co-investment incentive scheme (see
next page).
The Board reviews the activities and
performance of the Manager on an
ongoing basis, and reviews the
investment strategy annually.
The Board reviews the Company’s
investment record over short and long
term periods, taking into account factors
including the net asset value per share
and the share price as well as the general
competence of the Manager.
The Board also considers the
performance of the Manager in carrying
out its company secretarial and general
administrative functions.
In addition, the Audit Committee carries
out a formal assessment of the Manager’s
internal controls and risk management
systems every year.
Graphite Capital Funds
Fig: 5.1
Fund
31 January 2017
31 January 2016
Original
commitment
£’000
Remaining
commitment
£’000
Fair
value
£’000
Original
commitment
£’000
Remaining
commitment
£’000
Graphite Capital Partners VIII
Graphite Capital Partners VIII Top Up Fund
Graphite Capital Partners VII
Graphite Capital Partners VII Top Up Fund
Graphite Capital Partners VII Top Up Fund Plus
Graphite Capital Partners VI
Graphite Capital Partners V
Total
80,000
20,000
42,800
10,000
6,000
78,188
15,000
251,988
28,963
10,864
3,474
671
600
2,084
–
46,656
45,014
6,607
10,653
1,569
1,398
30,738
–
80,000
20,000
42,800
10,000
6,000
78,188
15,000
95,979
251,988
45,009
11,010
5,279
1,322
1,042
2,084
–
65,746
Fair
value
£’000
29,778
6,547
10,162
1,679
1,508
23,845
–
73,519
70
71
/GOVERNANCE5
REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 JANUARY 2017
continued
Based on the above, it is the Board’s
opinion that the continuing appointment
of ICG as manager of the Company on the
agreed terms is in the best interests of
shareholders as a whole.
Co-investment incentive scheme
ICG and certain of its executives and, in
respect of certain historic investments,
the executives and connected parties of
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, as set out below.
The Co-investors are required to
contribute 0.5% of the cost of every new
fund investment (excluding those by
Graphite Capital funds, which have
separate comparable arrangements, and
any ICG fund investments made after
1 February 2016) and direct investment
made by the Company.
If such an investment has generated at
least an 8% per annum compound return
in cash to the Company (the
“Threshold”), the Co-investors are
entitled to receive 10% of the Company’s
total gains from that investment, out of
future cash receipts from the investment
or, very rarely, in specie on the flotation of
underlying portfolio companies.
For investments made before 24 May
2007, if the Threshold is not achieved the
Co-investors do not recover their
contribution. For investments made after
24 May 2007, the Co-investors recover
their contribution at the same rate as the
Company recovers the cost of its
investment.
Further details of these arrangements can
be found in notes 1 and 9 to the financial
statements.
Capital
As at 31 January 2017, 72,913,000
ordinary shares of 10.0p each were in
issue and fully paid, including 2,568,508
shares which were bought back into
treasury. 3,308,508 Treasury Shares,
representing 4.5% of the Company’s
share capital, were held as at 3 May 2017,
being the latest practical date before
publication of this document.
Resolutions will be proposed at the
forthcoming AGM to:
• allot up to a maximum of 22,969,482
ordinary shares of 10p each,
representing 33% of the Company’s
issued share capital (excluding shares
held as Treasury Shares) (resolution 11
on page 86) as at 3 May 2017; and
ICG Funds
Fig: 5.2
Fund
ICG Europe Fund VI*
ICG Europe Fund V*
ICG European Fund 2006B*
ICG Strategic Secondaries Fund II**
ICG Velocity Partners Co-Investor**
ICG Asia Pacific III**
31 January 2017
31 January 2016
Original
commitment
£’000
Remaining
commitment
£’000
Fair
value
£’000
Original
commitment
£’000
Remaining
commitment
£’000
21,457
13,198
19,312
19,879
11,927
11,927
97,700
12,101
1,191
2,065
14,005
2,270
9,510
41,142
9,683
10,828
7,163
6,873
10,994
3,119
48,660
10,763
7,176
16,145
–
–
–
34,084
11,327
514
8,937
–
–
–
20,778
Fair
value
£’000
48
7,797
8,013
–
–
–
15,858
* Euro denominated positions translated to sterling at spot rate on 31 January 2016 and 31 January 2017.
** US dollar denominated positions translated to sterling at spot rate on 31 January 2016 and 31 January 2017.
ICG Enterprise Trust Annual Report & Accounts 2017
• disapply pre-emption rights on up to 10%
of the issued share capital (excluding
shares held as Treasury Shares) to enable
the Board to re-issue any ordinary shares
held in treasury without having first to
offer them to all existing shareholders
(resolution 12 on page 86); and to renew
the directors’ authority to buy back up to
10,433,713 ordinary shares (being
14.99% of the issued share capital
(excluding shares held as Treasury
Shares as at 3 May 2017)) subject to the
constraints set out in the resolution
(resolution 13 on page 87). The authority
will be used where the directors consider
it to be in the best interest of
shareholders. It is the current intention of
the Board that any shares thus purchased
would be held as Treasury Shares.
Substantial share interests
At 3 May 2017, the Company had received
no notifications of disclosable interests in
its issued share capital.
Greenhouse gas emissions
The Company has no greenhouse gas
emissions to report, nor does it have
responsibility for any other emissions
producing sources under the Companies
Act 2006 (Strategic Report and
Directors’ Reports) Regulations 2013.
Transfer of shares and
voting rights
All ordinary shares have equal voting
rights. There are no restrictions
concerning the transfer of securities in
the Company, no special rights with
regard to control attached to securities,
no agreements between holders of
securities regarding their transfer known
to the Company, and no agreement to
which the Company is party that affects
its control following a takeover bid.
Corporate governance
The Company is committed to
appropriate standards of corporate
governance. The Board applied the
principles set out in the UK Corporate
Governance Code issued by the Financial
Reporting Council in 2014 (the
“Governance Code”) during the year
ended 31 January 2017. A copy of the
Governance Code can be obtained from
the website of the Financial Reporting
Council (www.frc.org.uk).
The Board is currently comprised of six
non-executive directors. There is no
Chief Executive position within the
Company as day-to-day management of
the Company’s affairs has been delegated
to the Manager. The Board regularly
reviews the independence of its members
and, having due regard to the definitions
and current guidelines on independence
under the Governance Code, considers all
directors to be independent. There are
no relationships or circumstances relating
to the Company that are likely to affect
their judgement. Mr Dicks is the Senior
Independent Director.
Number of meetings attended/
eligible to attend in the year ended
31 January 2017
Fig: 5.3
Board Nominations Audit
Mark Fane
Peter Dicks
Sandra Pajarola
Andy Pomfret
Lucinda Riches
Jeremy Tigue
4/4
4/4
4/4
4/4
4/4
4/4
2/2
2/2
2/2
2/2
2/2
2/2
–
3/3
3/3
3/3
3/3
3/3
It is the responsibility of the Board to
ensure that there is effective stewardship
of the Company’s affairs. Strategic issues
are determined by the Board and a formal
schedule of operational matters reserved
for the Board has been adopted. In order
to enable them to discharge their
responsibilities, directors have full and
timely access to relevant information.
The Board, which meets at least four
times each year, reviews the Company’s
investment portfolio and investment
performance and considers financial
reports. There is also contact with the
directors between meetings where this is
necessary for the Company’s business.
There is an agreed procedure under
which directors, wishing to do so in the
furtherance of their duties, may take
independent professional advice at the
Company’s expense. The directors also
have access to the advice and services of
the company secretary, which is a
subsidiary of the Manager.
72
73
/GOVERNANCE5 REPORT OF THE DIRECTORS
FOR THE YEAR ENDED 31 JANUARY 2017
continued
The quorum for any Board meeting is two
directors but attendance by all directors
at each meeting is strongly encouraged.
During the year under review, four regular
meetings were held and attended by all
directors. A number of additional
telephone meetings regarding routine
matters were also held. In the cases
where directors were unable to attend
Board meetings, the relevant directors
were contacted by the Chairman before
and/or after the meeting to ensure that
they were aware of the issues being
discussed and to obtain their input.
During the year under review, the Board
has maintained appropriate insurance
cover in respect of legal action against
the directors. The policy does not cover
dishonest or fraudulent actions by
the directors.
The Board has contractually delegated
responsibility for management of the
investment portfolio and the provision of
accounting and company secretarial
services to the Manager.
Custody of unquoted securities has been
contractually delegated to an FCA
regulated third party custodian, Aztec
Financial Services (UK) Limited
(“Aztec”).
Aztec has also been appointed the
Company’s depositary, in accordance
with the Alternative Investment Fund
Managers Directive.
Custody of quoted securities has been
contractually delegated to an FCA
regulated third party custodian, Charles
Stanley & Co Limited, although Aztec
retains liability for safeguarding in
respect of these assets.
Performance evaluation
The Board has a formal process for the
annual evaluation of its own performance
and that of the Chairman. This process is
based on an open discussion and
assessment of the Board and its
committees, with the Chairman making
recommendations to improve
performance where necessary.
Nominations Committee
All of the directors serve on the
Nominations Committee which meets
when necessary to select and propose
suitable candidates for appointment or
reappointment to the Board. The
Committee is chaired by Mr Fane. When
making an appointment, the Board
considers the existing composition of the
Board to determine areas which require
strengthening. Independent external
consultants are used to help identify a
shortlist of candidates. The Board’s
approach to diversity is discussed on
page 9.
The Board’s tenure and succession policy
seeks to ensure that the Board is well
balanced by the appointment of directors
with a range of skills and experience.
Candidates for the Board are assessed as
to the appropriateness of their skills and
experience prior to their appointment.
New directors are given a detailed
briefing on the workings of the Company
by the Chairman and by executives of the
Manager.
There were two meetings of the
Committee during the year (2016: zero).
Both related to the retirement of the
Chairman and the proposal of the new
Chairman, as well as a discussion of
longer term succession planning. The
new Chairman was appointed after a
process led by the Senior Independent
Director - no wider search was held due
to the quality of the internal candidates
available on the Board. As a further result
of these discussions, Mr Dicks will step
down as Chairman of the Audit Committee
from this year’s Annual General Meeting,
to be replaced by Mr Pomfret, and the
Committee has also adopted a Board
Succession Plan to ensure that succession
matters are appropriately considered in
the coming years.
Going concern
Having reviewed the balance sheet and
current activities of the Company, the
directors believe that it is appropriate to
continue to adopt the going concern
basis of preparation of the Company’s
financial statements. The Company’s
business activities, together with factors
likely to affect its future development,
performance, position and cash flows are
set out in the Chairman’s Statement,
Strategic Report, Portfolio Review and
Market Review on pages 3 to 16.
Investor relations
Both the Company’s Annual Report and
Accounts, containing a detailed review of
performance and of changes to the
ICG Enterprise Trust Annual Report & Accounts 2017 Independent auditors
The auditors, PricewaterhouseCoopers
LLP, have indicated their willingness to
continue in office and a resolution
re-appointing them and authorising the
directors to determine their remuneration
will be submitted at the AGM.
Annual General Meeting
The Annual General Meeting of the
Company will be held at Stationers’ Hall,
Ave Maria Lane, London EC4M 7DD on
13 June 2017 at 2.00p.m. The resolutions
are set out in the Notice of Meeting on
page 86.
By order of the Board,
Company Secretary
ICG Nominees 2015 Limited
4 May 2017
investment portfolio, and Interim Report,
containing updated information in a more
abbreviated form, are made available to
investors either by post or through the
Company’s website. A copy of the latest
analyst presentation is available on the
Company’s website. At the AGM,
investors are given an opportunity to
question the Chairman, the other
directors and the Manager. The Manager
holds regular discussions with
shareholders and values the feedback
obtained in this manner. The Board is kept
informed of all material discussions with
investors. In addition, the directors and in
particular the Senior Independent
Director, are available to enter into
dialogue with shareholders on any
relevant matter; they can be contacted via
the registered office of the Company (see
Useful Information section).
Disclosure of information to
auditors
Each of the persons who are a director at
the date of approval of this report
confirms that:
(1) so far as the director is aware, there is
no relevant audit information of which
the Company’s auditors are unaware;
and
(2) each director has taken all the steps
that he or she ought to have taken as a
director in order to become aware of
any relevant audit information and to
establish that the Company’s auditors
are aware of that information. The
confirmation is given and should be
interpreted in accordance with the
provisions of section 418 of the
Companies Act 2006.
74
75
/GOVERNANCE5 Directors’ Remuneration
Remuneration Committee
As the Board is comprised solely of non-executive directors, the Company does not
have a Remuneration Committee. The determination of the directors’ fees is dealt with
by the whole Board.
Statement by Chairman of the Board
In accordance with the Large and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013, the Company presents its Remuneration
Policy and Remuneration Report separately.
The remuneration policy sets out how the Company proposes to pay the directors,
including each element of remuneration that the directors are entitled to and how this
supports the Company’s long term strategy and performance. All provisions of this
policy are expected to remain in effect until the Annual General Meeting in 2017 when
the Company is next required to submit its policy on the remuneration of its directors to
the members. At the Annual General Meeting, the Remuneration Policy as set out below
will be resubmitted to a vote of shareholders. No changes are proposed to the
Remuneration Policy save for a proposal to increase the aggregate amount of directors
fees.
The remuneration report sets out how the remuneration policy has been implemented
in the year.
In accordance with the remuneration policy set out below, the Board performed an
annual review of directors’ fees. The fees payable to the directors were adjusted to
reflect the growth of the Company and the remuneration levels of other comparable
investment trusts.
Components of remuneration package
Basic director’s fee
Additional fee for chairman
Additional fee for chairman of the
Audit Committee
Additional fee for other members of the
Audit Committee
Year ended
31 January 2017
£
Year ended
31 January 2016
£
34,300
20,100
5,500
3,600
33,600
19,700
5,400
3,500
Remuneration Policy
It is the Company’s policy to determine the level of directors’ fees having regard to the
level of fees payable to non-executive directors in the industry generally, the role that
individual directors fulfil, the time committed to the Company’s affairs and the limits
stated by the Company’s Articles of Association. It is not the Company’s policy to
include an element of performance related pay. The remuneration policy is unchanged
from the prior year.
The Company’s performance is measured against the FTSE All-Share Index as this is
considered to be the most appropriate benchmark.
The level of fees for directors is reviewed annually, in arrears, by the Board and any
adjustment back-dated to the start of the financial year. For example, the level of fees
for the year ending 31 January 2018 will be determined towards the end of that
financial year.
ICG Enterprise Trust Annual Report & Accounts 2017 Share price performance*
Fig: 6.1
450
400
350
300
250
200
150
100
50
Dec 08
Dec 09
Jan 11
Jan 12
Jan 13
Jan 14
Jan 15
Jan 16
Jan 17
ICG Enterprise share price
FTSE All-Share Index
* On a total return basis (i.e. including the effect of re-invested dividends)
Until the review is completed, the directors will be remunerated at levels for the year to
31 January 2017 set out above.
The Articles of Association currently limit the aggregate fees payable to the directors
to a total of £300,000 per annum. The Board considers that this may no longer provide
sufficient flexibility in the medium term given the need to hire new incremental directors
for succession purposes and proposes to increase this limit to a total of £350,000 per
annum.
The Board considers the remuneration policy as described above to be effective in
supporting the short and long term strategic objectives of the Company by ensuring
that the Company continues to be able to recruit and retain non- executive directors
who are suitably qualified and experienced to supervise the Company’s affairs.
76
77
/GOVERNANCE5 Directors’ Remuneration
continued
Service contracts
It is not the Company’s policy to enter into service contracts with its directors. No
director has a service contract with the Company. The directors each serve under a
letter of appointment.
Notice period and loss of office payment policy
The directors are subject to a notice period of one month unless removed by a
resolution at a General Meeting or pursuant to any provision of the Articles of
Association. It is not the Company’s policy to enter into arrangements that entitle any of
the directors to compensation for loss of office. No director is entitled to any such
compensation.
Statement of consideration of conditions elsewhere in the Company
The Company has no employees. Therefore the Company cannot take into account the
pay and employment conditions of its employees when setting and implementing the
remuneration policy.
Statement of consideration of shareholder views
The Company places great importance on communication with its shareholders. The
Company has had regular dialogue with shareholders throughout the year to 31 January
2017 and confirms that no negative views were expressed in relation to its remuneration
policy.
Directors’ Remuneration Report
The law requires the Company’s auditors to audit certain of the disclosures provided.
Where disclosures have been audited, this is indicated below.
Remuneration in the year (audited)
Year ended 31 January 2017
Year ended 31 January 2016
Taxable
benefits
£’000
Fees
£’000
Total
£’000
Fees
£’000
Taxable
benefits
£’000
Total
£’000
54
40
38
38
38
38
246
–
–
6
–
–
–
6
54
40
44
38
38
38
53
39
37
37
37
37
252
240
–
–
12
–
–
–
12
53
39
49
37
37
37
252
Name
Mark Fane
Peter Dicks
Sandra Pajarola*
Andy Pomfret
Lucinda Riches
Jeremy Tigue
Total
* Ms Pajarola is resident in Switzerland and the Company has agreed to reimburse her for the costs
of travel to London (including appropriate accommodation) to attend meetings of the Board.
These costs are presented gross of tax as taxable benefits. The fees were paid to Lake Valley
Consulting AG for making her available to serve as director of the Company.
The directors were not entitled to any loss of office payments, pension benefits, share
options or other incentives in the year ended 31 January 2017 (2016: £nil).
Relative importance of spend on pay
The following table compares the remuneration paid to the directors with aggregate
distributions to shareholders in the year to 31 January 2017 and the prior year. This
disclosure is a statutory requirement. However the directors consider that this
comparison is not meaningful as its objective is to provide shareholders with long term
capital growth and share buy-backs and the dividend form only a small part of
shareholders’ returns.
ICG Enterprise Trust Annual Report & Accounts 2017
Components of remuneration package
Directors’ remuneration
Shareholder distributions in the year
Year ended
31 January 2017
£’000
Year ended
31 January 2016
£’000
252
14,719
252
23,880
Directors’ shareholdings and share interests (audited)
The beneficial interests of the directors in the shares of the Company are shown below.
There is no requirement for the directors to own securities of the Company. Save as
disclosed below, no director had any notifiable interest in the securities of the
Company.
Name
Mark Fane
Peter Dicks
Sandra Pajarola
Andy Pomfret
Lucinda Riches
Jeremy Tigue
Total
31 January 2017
Number of shares
31 January 2016
Number of shares
143,910
7,000
6,000
20,000
20,000
94,260
291,170
143,910
7,000
6,000
20,000
20,000
94,260
291,170
There has been no change in the number of shares held since the year end.
Statement of shareholder voting
The remuneration policy was last approved at the Annual General Meeting on 11 June
2014, with the following votes cast:
Votes
For
Against
Withheld
Number
22,498,547
788,789
249,983
%
96.6%
3.4%
At the Annual General Meeting held on 16 June 2016, a resolution to approve the
directors’ remuneration report for the year ended 31 January 2016 was passed on a poll
with the following votes cast:
Votes
For
Against
Withheld
Number
19,913,903
650,699
241,422
%
96.9%
3.1%
The Board does not consider the numbers of votes against these resolutions to be
significant.
Resolution to approve directors’ remuneration report
A resolution to approve the remuneration report for the year ended 31 January 2017 will
be put to the members at the forthcoming Annual General Meeting (see resolution 9 on
page 85).
On behalf of the Board
Mark Fane
Chairman
4 May 2017
78
79
/GOVERNANCE5
Report of the
Audit Committee
Audit Committee
The Audit Committee is comprised of
five non-executive directors: Mr Dicks
(Chairman of the Committee),
Ms Pajarola, Mr Pomfret, Ms Riches and
Mr Tigue. As set out on pages 68 to 69
the members of the Committee have a
range of recent and relevant financial
experience.
The Committee operates within written
terms of reference clearly setting out its
authority and duties. The primary role of
the Committee is to review the interim and
annual financial statements, the
effectiveness and scope of the external
audit, the risks to which the Company is
exposed and mitigating controls,
compliance with regulatory and financial
reporting requirements. The Committee
also provides advice to the Board on
whether the annual report and accounts,
taken as a whole, are fair, balanced and
understandable.
The Committee meets at least three times
a year. A quorum is any two of the
members of the Committee but
attendance at each meeting is strongly
encouraged.
Three meetings were held in the financial
year, and were quorate. The Company’s
auditors, PricewaterhouseCoopers LLP,
attended all three meetings. The
Committee also has direct access to the
auditors as necessary at other times and
the opportunity to meet the auditors
without the Manager being present.
The main matters discussed at these
meetings were the review of the
Company’s internal controls, the annual
plan of the auditors, the report of the
auditors following their audit, the
effectiveness of the audit process and the
independence of the auditor, and the
annual and interim financial statements.
Significant issues in
relation to the financial
statements
In its review of the financial statements,
the Committee considers in particular
whether the investment portfolio is fairly
valued. Before the year end, the
Committee discussed the valuation
process in detail with the Manager and
reviewed the plan of the external auditors
to ensure that it was appropriately
designed to provide assurance over the
valuation of the portfolio. After the year
end, the Manager reported the results of
the valuation process, including the
sources of valuation information and the
methodologies used. The auditors
separately reported the results of their
audit work to the Committee. The
Committee concluded that the valuation
process had been properly carried out
and that the investment portfolio has
been fairly valued.
Auditing standards require the auditors
to consider the risks of fraud in revenue
recognition and of management override
of internal controls. The auditors also
focus on the calculation of the
co-investment incentive accrual as it is
relatively complex. The principal area of
potential material impact from these risks
is the valuation of the investment
portfolio, which is discussed above.
Following a thorough review, and
discussion with the Manager and the
auditors, the Committee has advised the
Board that the annual report and
accounts for the year ended 31 January
2017, taken as a whole, are fair, balanced
and understandable and provide the
information necessary for shareholders to
assess the Company’s position and
performance, business model and
strategy.
ICG Enterprise Trust Annual Report & Accounts 2017 The Committee remains satisfied with
the performance of the auditors and
recommends that they be reappointed
auditor for the year ending
31 January 2018.
Peter Dicks
Chairman of the Audit Committee
4 May 2017
Internal controls and
need for an internal audit
function
The Board has overall responsibility for
the Company’s systems of internal
controls and for reviewing their
effectiveness. The purpose of the
controls is to ensure that the assets of the
Company are safeguarded, proper
accounting records are maintained and
the financial information used within the
business and for publication is reliable.
All of the Company’s management
functions are delegated to the Manager
which has its own internal control and risk
monitoring arrangements. The Committee
has made an assessment of these
arrangements, with reference to the
Company’s risk matrix. The results were
satisfactory.
The Audit Committee assessed the
Manager’s arrangements, with reference
to the Company’s risk matrix. The
Committee also reviewed a Statement of
Internal Controls for the year to 31
January 2017 which sets out the key
internal controls over the administration
of the Company’s investments. As in
previous years the auditors were
engaged to carry out agreed upon
procedures to test these controls, and the
results were satisfactory.
In accordance with the Alternative
Investment Fund Managers Directive
(“the Directive”), the Company has
appointed Aztec Financial Services (UK)
Limited (“the Depositary”) as depositary.
The Depositary’s responsibilities include
the monitoring of the cash flows of the
Company, the safe keeping of the
Company’s assets, and the general
oversight of the Company including its
compliance with its investment policy. The
Audit Committee has reviewed the
Depositary’s reports for the period from
1 February 2016 to 31 January 2017, that
set out the testing and procedures
carried out by the Depositary to satisfy
itself that it is fulfilling its obligations, and
that the Company was operating in
accordance with the Directive. The report
did not identify any issues.
The Committee considers, therefore, that
an internal audit function specific to the
Company is unnecessary.
Audit independence and
effectiveness
The Audit Committee has reviewed the
provision of non-audit services and
believes them to be cost-effective and not
an impediment to the auditors’ objectivity
and independence. In the year ended
31 January 2017, £6,550 (2016: £5,000)
was payable by the Company for the
provision of training for the directors. In
addition, £54,920 (2016: £53,900 was
payable by the Former Manager) was
payable by the Manager to the auditors
for agreed upon procedures testing
designed to provide assurance on the
controls of the manager to the Audit
Committee. It has been agreed that all
non-audit work to be carried out by the
external auditors must be pre-approved
by the Audit Committee. Any special
projects would be approved by the Audit
Committee in advance.
The Committee reviews the performance
of the auditors each year. The Committee
considers a range of factors including the
quality of service, their expertise and the
level of audit fee.
PricewaterhouseCoopers LLP (including
its predecessor firms) has acted as
auditors to the Company since 1981. For
the year ended 31 January 2015, the
Committee conducted a formal tender
process that led to the reappointment of
PricewaterhouseCoopers LLP as auditors.
The Company is aware that, as a result of
the EU Audit Directive and Regulation,
companies where the auditor was
appointed on or before 16th June 1994
cannot renew or enter into an audit
engagement with the auditor that extends
beyond 2020.
The Committee will carry out a tender
process in respect of external audit
services during 2018 to ensure compliance
with legislation, taking into consideration
FRC guidance on best practice in particular
ensuring independence in respect of
potential audit firms. The existing external
audit firm will not be invited to re-tender
given the duration of its tenure to date. The
new external audit firm is expected to be
appointed in respect of the year ending
31 January 2020.
80
81
/GOVERNANCE5 Additional disclosures required
by the Alternative Investment
Fund Managers Directive
The management of the Company was
transferred from Graphite Capital
Management LLP (“the Former
Manager’’) to ICG (“the Manager”) on
1 February 2016. The Manager became
authorised as an AIFM on 10 April 2014.
The Directive requires certain disclosures
to be made in the annual report of the
Company. Many of these disclosures are
included in other sections of the annual
report, principally Strategic Report
(pages 8 and 9), Manager’s Review
(pages 11 to 19), Financial Information
(pages 36 to 65) and Governance
(pages 68 to 89). This section completes
the disclosures required by the Directive.
Assets subject to special
arrangements
The Company holds no assets subject to
special arrangements arising from their
illiquid nature.
Leverage
The Company has no borrowings and
therefore is not currently leveraged. The
Company will not employ leverage in
excess of 30% of its gross asset value.
Professional liability of
the Manager
In accordance with the requirements of
the Directive, the Manager holds
additional capital to cover potential
professional liability risks. In addition the
Manager holds professional indemnity
insurance.
Redemption rights
The shares of the Company are listed on
the London Stock Exchange.
Shareholders may buy and sell shares on
that market. As the Company is closed
ended, shareholders do not have the right
to redeem their investment.
Fair treatment of
shareholders
The Manager is governed by a board
consisting of both non-executive and
executive directors which oversees and
manages the ICG group of which the
Manager is part. ICG has a number of
committees that assists in this regard,
together with a risk function that through
a risk framework assists in the
identification, control and mitigation of
the ICG group’s risks. This includes, but is
not limited to, the fair treatment of the
ICG group’s regulatory clients, fund
investors and corporate investors. Details
of the ICG’s governance and risk
framework can be found in ICG’s annual
report which is available on request or at
www.icgam.com
Risk profile and risk
management
The risks and uncertainties facing the
Company are regularly reviewed by the
Board, the Audit Committee and the
Manager. The principal risks faced by the
Company and the approach to managing
those risks are set out in the Strategic
Report (pages 8 and 9).
The sensitivity of the Company to market,
credit and investment, and capital risk is
discussed in note 17 of the financial
statements (page 53). The risk limits
currently in place in respect of the
diversification of the portfolio and credit
risk are set out in the Investment Policy
(page 84).
Material Changes
There have been no material changes in
relation to the matters described in
Article 23 of the Directive.
Remuneration
Under the Alternative Investment Fund
Managers Directive (“AIFMD”), we are
required to make disclosures relating to
remuneration of certain staff working for
the Manager, which acted as manager of
the Company throughout the year ended
31 January 2017.
Amount of remuneration paid
The Manager paid the following
remuneration to staff in respect of the
financial year ending on 31 January 2017
in relation to work on the Company:
Fixed remuneration
Variable remuneration
Total remuneration
£’000
1,211
169
1,380
Number of beneficiaries
9
The above disclosures reflect those staff
of the Manager involved in the
management of the Company, and only to
the extent that their remuneration is
attributable to the activities of the
Manager in respect of the Company. It is
not possible to attribute remuneration
paid to individual staff directly to income
received from any fund and hence the
above figures represent a notional
approximation only. Variable
remuneration includes carried interest
received.
ICG Enterprise Trust Annual Report & Accounts 2017
The carried interest arrangements are
intended to closely align the interests of
investors and the firm – under these
arrangements, payments may only be
made when investment profits have been
realised in cash. The operation of these
arrangements is set out in the Report of
the Directors on page 72.
The Manager has a remuneration
committee which takes remuneration
decisions. The committee takes into
account the short and long term
performance of the firm, of the funds
managed by the firm, and of individuals.
Given the change of manager from
1 February 2016, the amounts paid to
senior management of the Manager are
spread across a significantly wider set of
alternative investment funds (“AIFs”).
As a result the amounts paid to senior
management of the Manager who also
performed functions that had a material
impact on the risk profile of the Company
are not material and have not been
disclosed.
Co-investment incentive scheme
The incentive paid by the Company during
the year ended 31 January 2017 is
disclosed in note 9 to the financial
statements.
Remuneration and incentivisation
policies and practices
The overriding principle governing the
Manager’s remuneration decisions is that
awards, in particular of variable
remuneration, do not encourage risk
taking which is inconsistent with the
investment objectives (and therefore risk
profiles) of the funds managed by the
firm. Remuneration consists of salary,
bonus, profit share and carried interest.
82
83
/GOVERNANCE5 cash
The Company holds cash on deposit with
UK banks or invests it in debt instruments
or funds which themselves invest in such
instruments. These investments are
typically very liquid, with high credit
quality, low capital risk and low maturity.
The Company will invest cash only in low
risk assets and will limit exposure to any
one bank, fund or issuer to 15% of gross
assets.
Benchmark
The Company’s benchmark is the FTSE
All-Share Index, which measures the share
price performance of quoted companies
of all sizes in the UK. The Board considers
that this provides the most appropriate
comparator for the Company’s
shareholders.
Currency risk
The Company holds investments in
currencies other than sterling and is
exposed to the risk of movements in the
exchange rate of these currencies. From
time to time the Company may put in place
hedging arrangements in order to
manage currency risk.
Investment Policy
The objective of ICG Enterprise is to
provide shareholders with long term
capital growth through investment in
unquoted companies, mainly through
specialist funds but also directly. Both the
objective and the policy remain
unchanged subsequent to the
appointment of ICG as Manager on
1 February 2016.
Asset allocation
ICG Enterprise invests principally in
unquoted companies either indirectly
through a fund or directly in a company.
Where investments are made through a
fund, that fund may itself be either
unquoted or quoted. Unquoted
companies in which ICG Enterprise has an
interest may from time to time obtain a
quotation and the Company may continue
to hold its interest in quoted form.
Investments in unquoted companies and
quoted companies held post-flotation will
typically comprise between 50% and
100% of the Company’s gross assets.
The Company makes a significant majority
of its investments through funds. It also
invests directly, mainly in the form of
co-investments alongside funds.
The Company expects the largest part of
its investment portfolio to be in well
established companies. The Company
may also invest in infrastructure projects,
early stage companies and other
unquoted investments.
Underlying investments will mostly be in
equity or equivalent risk instruments. A
minority of investments may also be in
lower risk instruments such as mezzanine
debt.
The Company may from time to time make
investments which provide exposure to
other asset classes or which provide
exposure to unquoted companies in other
forms. These investments (including the
market exposure provided by them) may
comprise up to 40% of the Company’s
gross assets.
Risk diversification
ICG Enterprise’s policy is to maintain an
investment portfolio which provides
exposure to unquoted companies across
a broad range of sizes, with the greatest
emphasis on medium sized and large
companies.
The aim is for the portfolio to be
diversified by geography, industry sector
and year of investment.
The Company will ensure that its interest
in any one portfolio company, taking into
account direct and indirect holdings, will
not exceed 15% of the Company’s total
investments at the time of initial
acquisition or subsequent addition. It is
the Company’s policy to invest no more
than 10% of its gross assets in other listed
investment companies.
Borrowings
The companies in which ICG Enterprise
invests often use borrowings to enhance
the returns to equity investors. The funds
through which the Company invests may
also use borrowings.
The Company does not expect to take on
long term borrowings but may have long
term facilities. Short to medium term
borrowings may be required from time
to time.
Overcommitment
Overcommitment is the practice of
making commitments to funds which
exceed the cash available for immediate
investment. The Company may be
overcommitted in order to ensure that it is
more fully invested in the future. The level
of over commitment is monitored
regularly by the Board and the Manager,
taking into account uninvested cash, the
availability of bank facilities, the projected
timing of cash flows to and from the
portfolio, and market conditions.
ICG Enterprise Trust Annual Report & Accounts 2017 The Annual General Meeting
The notice convening the Annual General
Meeting (pages 86 and 87) sets out in full
the resolutions to be voted on at the
Meeting. The effect of each proposed
resolution, if passed by the shareholders,
is summarised below:
Resolution 1
Approve the audited financial statements
for the year ended 31 January 2017
(pages 36 to 58) together with the
Independent Auditors’ Report (pages 59
to 65) and the Report of the Directors
(pages 70 to 75).
Resolution 2
Approve the recommended final dividend
of 10.0p per ordinary share for the year
ended 31 January 2017.
Resolutions 3 TO 7
Approve the re-election of Mr Dicks,
Mr Tigue, Mr Pomfret, Ms Riches and
Ms Pajarola. Mr Dicks has served on the
Board for more than nine years and
therefore, as recommended by the UK
Corporate Governance Code, retires
annually and offers himself for
re-election. All other directors are
offering themselves for re-election
annually in accordance with corporate
governance principles.
Resolution 8
Re-appoints the auditors,
PricewaterhouseCoopers LLP, who has
indicated their willingness to continue in
office. This is recommended by the Audit
Committee (see page 81).
Resolution 9
Approve the remuneration report as set
out in the Directors’ Remuneration
section for the year ended
31 January 2017.
Resolution 13
Renews the authority of the Company to
make market purchases of up to 14.99% of
the issued ordinary shares (the
“Buy-back Authority”).
The price paid for a share under the
Buy-back Authority will be at least 10p
(the nominal value of a share) and no
more than the highest of (a) 5% above the
average share price over the five business
days preceding the date of the market
purchase, (b) the price of the last
independent trade in the Company’s
shares and (c) the highest amount bid.
These limits are in accordance with
company law and the Listing Rules.
The Buy-back Authority will expire at the
conclusion of the Annual General Meeting
of the Company to be held in 2018, or if
earlier, 31 July 2018.
Resolution 14
Allows the calling of a general meeting
(unless it is an Annual General Meeting)
on not less than 14 days’ notice.
RESOLUTION 15
Amends the limit for the total amount
payable to directors to £350,000 to allow
for Board rotation/expansion
Resolution 10
Approve the remuneration policy as set
out in the Directors’ Remuneration
section for the year ended
31 January 2017.
Resolutions 11 and 12
Renew the authority of the Board to
increase the share capital of the Company
by issuing shares subject to certain
conditions (the “Share Issue
Authorities”).
Resolution 11 gives the Board the ability
to issue shares equivalent to 33% of
current share capital. In such
circumstances, the Companies Act
requires that existing shareholders are
given the opportunity to participate
before new shareholders (“pre-
emption”). Resolution 12 gives the Board
the ability to issue shares equivalent to
10% of current share capital without
pre-emption applying.
The Listing Rules do not permit the
Company to issue shares at a discount to
NAV per share unless they are offered to
existing shareholders first. This would be
unchanged by these resolutions.
The Share Issue Authorities will expire at
the conclusion of the Annual General
Meeting of the Company to be held in
2018 or if earlier, 31 July 2018.
84
85
/GOVERNANCE5 Notice of Meeting
Notice is hereby given that the thirty-sixth
Annual General Meeting of ICG
Enterprise Trust plc will be held at
Stationers’ Hall, Ave Maria Lane, London,
EC4M 7DD on 13 June 2017 at 2.00p.m.
for the following purposes.
Resolutions 12 to 15 inclusive will be
proposed as special resolutions,
requiring 75% of votes cast to be in favour
in order to be passed. All other
resolutions will be proposed as ordinary
resolutions, requiring more than 50% of
votes cast to be in favour.
Ordinary business
1.
To receive and adopt the reports of
the directors and auditors and the
Company’s financial statements for
the year ended 31 January 2017.
2.
To declare a final dividend of 10.0p
on the ordinary shares of the
Company.
3.
To re-elect P. Dicks as a director.
4. To re-elect J. Tigue as a director.
5. To re-elect S. Pajarola as a director.
6. To re-elect L. Riches as a director.
7. To re-elect A. Pomfret as a director.
8.
To re-appoint
PricewaterhouseCoopers LLP as
auditors to the Company to hold
office until the conclusion of the next
general meeting at which financial
statements are laid before the
Company, and to authorise the
directors to fix the remuneration of
the auditors.
9.
To consider, and if thought fit, to
approve the remuneration report set
out in the Directors’ Remuneration
section of the Annual Report for the
year ended 31 January 2017.
10. To consider, and if thought fit, to
approve the remuneration policy as
set out in the Directors’ Remuneration
section of the Annual Report for the
year ended 31 January 2017.
Authority to allot shares
11.
THAT:
a.
the directors be generally and
unconditionally authorised, in
accordance with section 551 of
the Companies Act 2006 (the
“Act”), to exercise all the powers
of the Company to allot shares in
the Company or to grant rights to
subscribe for or to convert any
security into shares in the
Company up to an aggregate
nominal amount of
£2,296,948.24 (representing
22,969,482 ordinary shares of
10p each as at 3 May 2017, such
amount being equivalent to 33%
of the issued ordinary share
capital excluding shares held as
Treasury Shares) during the
period commencing on the date
of the passing of this resolution
and expiring at the conclusion of
the Annual General Meeting of
the Company in 2018, or, if earlier,
on 31 July 2018; and
b.
all authorities and powers
previously conferred under
section 551 of the Act are hereby
revoked, provided that such
revocation shall not have
retrospective effect.
Special business
Disapplication of pre-emption
rights (see note 1)
12. THAT:
a.
subject to the passing of
resolution 11 above the directors
be empowered to allot equity
securities as defined in section
560(1) or section 560(3) of the
Act wholly for cash during the
period commencing on the date
of the passing of this resolution
and expiring at the conclusion of
the Annual General Meeting of
the Company in 2017, or, if earlier,
on 31 July 2018. In connection
with an allotment of shares
pursuant to the authority referred
to in resolution 11 above or the
sale of treasury shares, up to an
aggregate nominal amount of
£696,044.92 (representing
6,960,449 ordinary shares of
10p each as at 3 May 2017, such
amount being equivalent to 10%
of the issued ordinary share
capital (excluding shares held as
Treasury Shares)) as if section
561 of the Act did not apply to
any such allotment or sale; and
ICG Enterprise Trust Annual Report & Accounts 2017
b.
by such power the directors may
make offers or agreements which
would or might require equity
securities to be allotted after the
expiry of such period.
Authority to purchase
shares
13. THAT:
the Company be and is hereby
unconditionally and generally
authorised for the purpose of section
701 of the Act to make market
purchases (as defined in section 693
of that Act) of ordinary shares of 10p
each in the capital of the Company on
such terms and in such manner as the
directors may determine, provided
that:
or partly after such expiry) unless
such authority is varied, revoked
or renewed prior to such time.
General Meeting on a
minimum 14 days’ notice
14. THAT:
a general meeting other than an
Annual General Meeting may be
called on not less than 14 days’
notice.
DIRECTOR SERIVCE FEES
15. THAT:
The maximum aggregate amount
payable to directors of the Company
for their services be increased from
£300,000 to £350,000.
a.
b.
c.
d.
the maximum number of shares
which may be purchased is
10,433,713 (being approximately
14.99% of the issued ordinary
share capital as at 3 May 2017
(excluding shares held as
Treasury Shares));
the minimum price which may be
paid for each ordinary share
is 10p;
the maximum price which may be
paid for a share is an amount
equal to the highest of (a) 105%
of the average of the closing
price of the Company’s ordinary
shares as derived from the
London Stock Exchange Daily
Official List for the five business
days immediately preceding the
day on which such share is
contracted to be purchased,
and (b) the price of the last
independent trade or (c) the
highest current bid, as stipulated
by Commission-adopted
Regulatory Technical Standards
pursuant to article 5(6) of the
Market Abuse Regulation; and
this authority shall expire at the
conclusion of the Annual General
Meeting of the Company held in
2018 or, if earlier, on 31 July 2018
(except in relation to the
purchase of shares the contract
for which was concluded before
the expiry of such authority and
which might be executed wholly
By order of the Board
Company Secretary
ICG Nominee 2015 Limited
4 May 2017
Registered office:
Juxon House, 100 St Paul’s Churchyard,
London, EC4M 8BU
86
87
/GOVERNANCE5
Notice of Meeting:
Explanatory Notes
Note 1: In accordance with Listing Rule
15.4.11, unless authorised by shareholders,
the Company may not issue shares at a
discount to net asset value unless they are
first offered to existing shareholders
pro-rata to their existing holdings.
Note 2: A member entitled to attend and
vote at this meeting may appoint one or
more persons as his/her proxy to attend,
speak and vote on his/her behalf at the
meeting. A proxy need not be a member of
the Company. If multiple proxies are
appointed they must not be appointed in
respect of the same shares. To be
effective, the enclosed form of proxy,
together with any power of attorney or
other authority under which it is signed or
a certified copy thereof, should be lodged
at the office of the Company’s Registrar,
Computershare Investor Services PLC, the
Pavilions, Bridgwater Road, Bristol BS99
6ZY not later than 2.00pm on Friday 9
June 2017. In view of this requirement,
investors holding shares in the Company
through the F&C Private Investor, Personal
Equity or Pension Savings Plans, an F&C
Child Trust Fund, an F&C Junior ISA or in a
F&C Individual Savings Accounts should
ensure that forms of direction are returned
to Computershare Investor Services PLC
not later than 2.00pm on Tuesday 6 June
2017. The appointment of a proxy will not
prevent a member from attending the
meeting and voting in person if he/she so
wishes. A member present in person or by
proxy shall have one vote on a show of
hands and on a poll every member present
in person or by proxy shall have one vote
for every ordinary share of which he is the
holder. Holders of Subscription shares are
not entitled to attend and vote at this
meeting.
To appoint more than one proxy,
members will need to complete a separate
proxy specifying clearly on each proxy
form how many shares the proxy is
appointed in relation to. A failure to
specify the number of shares each proxy
appointment relates to or specifying an
aggregate number of shares in excess of
those held by the member will result in the
proxy appointment being invalid. Please
indicate if the proxy instruction is one of
multiple instructions being given. All
proxy forms must be signed and should
be returned together in the same
envelope.
Note 3: A person to whom this notice is
sent who is a person nominated under
section 146 of the Companies Act 2006
to enjoy information rights (a “Nominated
Person”) may, under an agreement
between him/her and the shareholder by
whom he/she was nominated, have a right
to be appointed (or to have someone else
appointed) as a proxy for the Annual
General Meeting. If a Nominated Person
has no such proxy appointment right or
does not wish to exercise it, he/she may,
under any such agreement, have a right to
give instructions to the shareholder as to
the exercise of voting rights. The
statements of the rights of members in
relation to the appointment of proxies in
Notes 1 and 2 above do not apply to a
Nominated Person. The rights described
in those Notes can only be exercised by
registered members of the Company.
Note 4: As at 3 May 2017 (being the last
business day prior to the publication of
this notice) the Company’s issued share
capital amounted to 69,604,492 ordinary
shares carrying one vote each and
3,308,508 non-voting Treasury Shares
which represents approximately 4.5% of
the total number of the ordinary share
capital of the Company. Total issued share
capital, including Treasury Shares, was
72,913,000.
Note 5: Pursuant to Regulation 41 of the
Uncertificated Securities Regulations
2001, the Company specifies that only
those shareholders registered on the
Register of Members of the Company as
at 6.00p.m. on the day which is two days
before the day of the meeting (or, in the
event of any adjournment, as at 6.00p.m.
on the day which is two days prior to the
adjourned meeting) shall be entitled to
attend in person or by proxy and vote at
the Annual General Meeting in respect of
the number of shares registered in their
name at that time. Changes to entries on
the Register of Members after that time
shall be disregarded in determining the
rights of any person to attend or vote at
the meeting.
Note 6: CREST members who wish to
appoint a proxy or proxies through the
CREST electronic proxy appointment
service may do so for this meeting and
any adjournment(s) thereof by using the
procedures described in the CREST
Manual, which is available to download
ICG Enterprise Trust Annual Report & Accounts 2017 from the Euroclear website (www.
euroclear.com/CREST). CREST Personal
Members or other CREST sponsored
members, and those CREST members
who have appointed a voting service
provider(s), should refer to their CREST
sponsor or voting service provider(s),
who will be able to take the appropriate
action on their behalf.
In order for a proxy appointment or
instruction made using the CREST service
to be valid, the appropriate CREST
message (a “CREST Proxy Instruction”)
must be properly authenticated in
accordance with Euroclear’s
specifications and must contain the
information required for such
instructions, as described in the CREST
Manual.
The message, regardless of whether it
constitutes the appointment of a proxy or
an amendment to the instruction given to
a previously appointed proxy must, in
order to be valid, be transmitted so as to
be received by the issuer’s agent (ID
3RA50) by the latest time(s) for receipt of
proxy appointments specified in the
notice of meeting and determined by the
timestamp applied to the message by the
CREST Applications Host) from which the
issuer’s agent is able to retrieve the
message by enquiry to CREST in the
manner prescribed by CREST. After this
time any change of instructions to proxies
appointed through CREST should be
communicated to the appointee through
other means.
CREST members and, where applicable,
their CREST sponsors or voting service
providers should note that Euroclear
does not make available special
procedures in CREST for any particular
messages. Normal system timings and
limitations will therefore apply in relation
to the input of CREST Proxy Instructions.
It is the responsibility of the CREST
member concerned to take (or, if the
CREST member is a CREST personal
member or sponsored member or has
appointed a voting service provider(s), to
procure that his/her CREST sponsor or
voting service provider(s) take(s)) such
action as shall be necessary to ensure that
a message is transmitted by means of the
CREST system by any particular time. In
this connection, CREST members and,
where applicable, their CREST sponsors
or voting service providers are referred,
in particular, to those sections of the
CREST Manual concerning practical
limitations of the CREST system and
timings.
The Company may treat as invalid a
CREST Proxy Instruction in the
circumstances set out in Regulation 35(5)
(a) of the Uncertificated Securities
Regulations 2001.
Note 7: In accordance with section 319A
of the Companies Act 2006, the Company
must cause any question relating to the
business being dealt with at the AGM put
by a shareholder attending the meeting to
be answered. No such answer need be
given if:
a.
to do so would:
i.
ii.
interfere unduly with the
preparation for the AGM, or
involve the disclosure of
confidential information;
b.
c.
the answer has already been given on
a website in the form of an answer to
a question; or
it is undesirable in the interests of the
Company or the good order of the
meeting that the question be
answered.
Note 8: Shareholders should note that it
is possible that, pursuant to requests
made by shareholders of the Company
under section 527 of the Companies Act
2006, the Company may be required to
publish on a website a statement setting
out any matter relating to:
a.
the audit of the Company’s financial
statements (including the Auditor’s
Report and the conduct of the audit)
that are to be laid before the AGM; or
(ii) any circumstance connected with
an auditor of the Company ceasing to
hold office since the previous
meeting at which annual financial
statements and reports were laid in
accordance with section 437 of the
Companies Act 2006. The Company
may not require the shareholders
requesting any such website
publication to pay its expenses in
complying with sections 527 or 528 of
the Companies Act 2006. Where the
Company is required to place a
statement on a website under section
527 of the Companies Act 2006, it
must forward the statement to the
Company’s auditor not later than the
time when it makes the statement
available on the website. The
business which may be dealt with at
the AGM includes any statement that
the Company has been required
under section 527 of the Companies
Act 2006 to publish on a website.
Note 9: A copy of this Notice of Annual
General Meeting is incorporated in the
Annual Report for the year ended 31
January 2017 available on the Company’s
website: www.icg-enterprise.co.uk
Note 10: The following documents will be
available for inspection at the registered
office of the Company during usual
business hours on any weekday (except
Saturdays, Sundays and public holidays)
until the date of the AGM and at the place
of the AGM for a period of fifteen minutes
prior to and during the meeting: (a) the
terms and conditions of appointment of
non-executive directors; and (b) a copy
of the Current Articles of Association.
None of the directors has a contract of
service with the Company.
If you are in any doubt as to the content or
action you should take, you should
consult immediately your stockbroker,
bank manager, solicitor, accountant or
other independent financial advisor
authorised under the Financial Services
and Markets Act 2000.
If you have sold or otherwise transferred
all of your shares in the Company, please
send this document, together with the
accompanying Form of Proxy and
Attendance Card, to the purchaser or
transferee or to the stockbroker, bank or
other agent through whom the sale or
transfer was affected for transmission to
the purchaser or transferee.
88
89
/GOVERNANCE5
ICG Enterprise Trust Annual Report & Accounts 2017
ICG Enterprise Trust Annual Report & Accounts 2017 General Information
Understanding Private Equity
How to Invest in ICG Enterprise
Useful Information
Glossary
92
94
95
96
91/90
91
90
/ Understanding
Private Equity
Listed private equity
provides access to an
asset class with an
attractive operating
model for the price of
a share
What is private equity?
Private equity is a term used to describe investment in private, unquoted
companies; it is an alternative ownership model to a public market listing. One
of its principal features is a stronger alignment of interests between investors
in companies and their managers. The private equity model has many
attractions and these can generate higher returns.
Private equity covers a wide spectrum of investments, from start-up
companies capitalised at less than £1m to acquisitions of large established
companies of all sizes. The main sub-sectors of the private equity market are
buy-outs, which include management buy-outs (MBOs) and buy-ins (MBIs),
and venture capital, which covers early stage investing. ICG Enterprise focuses
on buy-out investments.
A buy-out generally involves the purchase of a majority or a significant
minority of the equity of a well-established, profitable company by one or
more private equity funds, which invest alongside the existing management
team (an MBO) or a new management team (an MBI). The sellers may be the
founders or other individuals, or larger companies seeking to divest
subsidiaries or sell an investment on the secondary market. Quoted companies
may also be acquired by private equity investors in public to private
transactions.
Private equity managers provide focused strategic and operational guidance
to the companies in their portfolio, which contrasts with public ownership
where a company may have to deal with the competing demands of a diverse
range of shareholders. There is also less short term performance pressure on
private equity owned companies than in the public markets, making it possible
to adopt a longer term approach.
When companies are ready for disposal, they may be sold to a trade buyer (a
company in the same sector), or to a financial buyer (including other private
equity funds – known as a secondary buy-out). Alternatively they may be
floated on a stock market in an initial public offering (IPO).
ICG Enterprise Trust Annual Report & Accounts 2017 Investor access to private equity
Traditional private equity funds are
difficult for most private investors to
access, as minimum commitment sizes are
typically at least £5m. It can also be
difficult for existing investors in private
equity funds to sell their interests, as
secondary market liquidity can be limited.
Investors take on a long term obligation to
fund a manager’s investment programme,
which requires careful management of
cash resources in order to ensure that all
commitments can be met. Private equity
managers only report their fund’s
valuation to investors at most once a
quarter.
Benefits of listed private equity
Investing in listed private equity removes
many of these barriers to investment.
Investors can gain exposure to a
diversified private equity portfolio for the
price of a share, there is daily liquidity in
those shares and the value of the
shareholding is known at any point in
time. There is no obligation to fund future
commitments. In addition, the manager of
a listed private equity fund deals with the
complex legal structuring that is common
to private equity transactions. For these
reasons, listed private equity is an
attractive way to gain access to the asset
class for many types of investor, but
particularly for private shareholders and
small institutions.
Alignment of interest
Both company management teams and
private equity managers are incentivised
to maximise returns for the ultimate
investors in the private equity funds.
Careful use of leverage
As the ownership model increases the
confidence of lenders, buy-out
investments may use higher levels of debt
than similar quoted companies to increase
equity returns. This normally includes
bank debt (referred to as senior debt)
and sometimes mezzanine debt.
Mezzanine debt is junior debt with a
higher return than senior debt to
compensate for the greater risk.
How a private equity fund works
The most common model for a private
equity fund is for institutional investors to
make commitments to a private equity
manager to fund an investment
programme.
Once these commitments are in place, the
private equity manager then identifies
and makes investments in companies over
a period of years, drawing down
investors’ cash only when an investment
has been completed.
The manager then works to develop
those companies and seeks to achieve
their profitable disposal. When
investments are sold, cash is returned to
investors.
Private equity funds are generally
structured with a life of ten years. Most of
the cash is typically drawn down over a
period of four to six years and may begin
to be returned in the fourth or fifth year,
reflecting the underlying buying and
selling of companies in the fund. As a
result, the maximum net amount drawn
down by an individual fund is often
considerably less than the total amount
committed to it.
Fund investing
A private equity fund-of-funds invests
primarily in funds managed by private
equity managers. The task of the
fund-of-funds manager is to select high
quality managers, gain access to their
funds and construct a diversified,
balanced portfolio for investors.
Overcommitment
In order to achieve full or near full
investment, it is usual for fund-of-funds to
make commitments exceeding the amount
of cash immediately available for
investment. This is described as
overcommitment. When determining an
appropriate level of overcommitment,
careful consideration needs to be given
to the rate at which commitments might
be drawn down, and the rate at which
realisations will generate cash from the
existing portfolio to fund new investment.
Primary and secondary fund investments
A commitment to a private equity fund at
the beginning of its life is called a primary
commitment. It may also be possible to
acquire an interest in a fund which is part
way through its life, from an existing
investor, and this is called a secondary
investment. The price of a secondary
investment depends primarily on the
quality of the portfolio and its future
prospects, and may represent a premium
or a discount to the most recent reported
net asset value of the portfolio.
Co-investments
When a private equity manager has an
investment opportunity that is too large
for its fund to make alone (for example,
because of diversification limits), they
may invite their fund investors to
participate alongside that fund. An
investment of this kind is called a
co-investment. Typically no additional
fees are paid to the private equity
manager in respect of a co-investment.
Co-investments can increase the overall
returns from a fund investment
programme.
92
93
/GENERAL INFORMATION6 How to Invest in
ICG Enterprise
As with any investment into a company
listed on the stock market, you should
remember that:
• the value of your investment and the
income you get from it can fall as well as
rise, so you may not get back the
amount you invested; and
• past performance is no guarantee of
future performance.
This is a medium to long term investment
so you should be prepared to invest your
money for at least five years.
If you are uncertain about any aspect of
your decision to invest, you should
consider seeking independent financial
advice.
Details of the Company’s website and
contact information for potential and
existing shareholders can be found in the
Useful Information section on the
next page.
ICG Enterprise is listed on the London
Stock Exchange and its shares can be
bought and sold just as those of any other
listed company.
A straightforward way for individuals to
purchase and hold shares in the Company
is to contact a stockbroker, savings plan
provider or online investment platform.
You may be able to find a stockbroker
using the website of the independent
Wealth Management Association (WMA)
at www.thewma.co.uk
You may also be able to purchase shares
via your bank account provider.
For a small fee, your chosen intermediary
can purchase shares in the Company on
your behalf.
The Company’s shares are eligible for
tax-efficient wrappers such as Individual
Savings Accounts (“ISAs”), Junior ISAs,
and Self Invested Personal Pensions
(“SIPPs”).
Information about ISAs and SIPPs, as well
as general advice on saving and investing,
can be found on the government’s free
and independent service at
www.moneyadviceservice.org.uk
ICG Enterprise Trust Annual Report & Accounts 2017 Useful Information
Address
ICG Enterprise Trust plc
Juxon House
100 St Paul’s Churchyard
London EC4M 8BU
020 3201 7700
Manager
ICG Alternative Investment Limited
Juxon House
100 St Paul’s Churchyard
London EC4M 8BU
020 3201 7700
Registered number: 01571089
Place of registration: England
Authorised and regulated by the Financial
Conduct Authority (FRN: 606186).
Website
www.icg-enterprise.co.uk
Registrar
Computershare Investor Services PLC
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ
www-uk.computershare.com/investor
0370 889 4091
F&C savings schemes
Investors through F&C savings schemes
can contact the Investor Services team on:
Telephone: 0345 600 3030
E-mail investor.enquiries@fandc.com
Financial calendar
The announcement and publication of the
Company’s results may normally be
expected in the months shown below:
Broker
Numis Securities Limited
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT
Dividend – 2017
An interim dividend of 10.0p was paid on
21 October 2016.
A final dividend of 10.0p is proposed in
respect of the year ended
31 January 2017, payable as follows:
Ex-dividend date
(shares trade without rights to the
dividend)
1 June 2017
Record date
(last date for registering transfers to
receive the dividend)
2 June 2017
Dividend payment date
20 June 2017
March/April
June
September
Final results for year
announced, Annual
Report and financial
statements
published
Annual General
Meeting and First
quarter’s results
Interim figures
announced and
half-yearly report
published
December
Third quarter’s result
All announcements may be viewed on the
Company’s website (see above).
Payment of dividends
Cash dividends will be sent by cheque to
the first-named shareholder at their
registered address, to arrive on the
payment date.
Alternatively, dividends may be paid
direct into a shareholder’s bank account
via Bankers’ Automated Clearing Service
(“BACS”). This may be arranged by
contacting the Company’s registrar,
Computershare Investor Services PLC
(see contact details above).
Share price
The Company’s mid-market ordinary
share price is published daily in the
Financial Times and Daily Telegraph
under the section ‘Investment
Companies’. In the Financial Times the
ordinary share price and the subscription
share price are listed in the sub-section
‘Conventional-Private Equity’.
ISIN/SEDOL numbers
The ISIN/SEDOL numbers and code for
the Trust’s ordinary shares are:
ISIN
SEDOL
Reuters
GB0003292009
0329200
ICGT.L
AIC
The Company is a member of the
Association of Investment Companies.
www.theaic.co.uk
94
95
/GENERAL INFORMATION6
GLOSSARY
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,
where appropriate.
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 2017 and 31 January 2016, the accrual was estimated as the theoretical value of the interests if
the Portfolio had been sold at its carrying value at those dates.
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 valuation 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 realisations 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.
Funds in investment period are those funds which are able to make new investments under the terms of their fund agreements,
usually up to five years after the initial commitment.
Net asset value per share Total Return is the change in the Company’s net asset value per share, assuming that dividends are
re-invested at the end of the quarter in which the dividend was paid.
Net debt is calculated as the total short term and long term debt in a business, less cash and cash equivalents.
Overcommitment
In order to achieve full or near full investment, it is usual for private equity fund investors to make commitments exceeding the amount
of cash immediately available for investment. This is described as “overcommitment”. When determining the appropriate level of
overcommitment, careful consideration needs to be given to the rate at which commitments might be drawn down, and the rate at
which realisations will generate cash from the existing portfolio to fund new investment.
Portfolio
Throughout, reference is made to the “Portfolio”, which 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 is
presented below.
£m
31 January 2017
31 January 2016
Investments
at fair value as
per balance
sheet
Cash held by
subsidiary
limited
partnerships
Balances
receivable
from
subsidiary
limited
partnerships
Co-investment
incentive
scheme
accrual
572.2
414.1
–
–
1.4
2.2
20.7
11.9
Portfolio
594.3
428.2
ICG Enterprise Trust Annual Report & Accounts 2017 Post-crisis investments are defined as those completed in 2009 or later.
Pre-crisis investments are defined as those completed in 2008 or before, based on the date the original deal was completed, which
may differ from when the Company invested if acquired through a secondary.
Realisation 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.
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 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 tables below set 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 both an unadjusted basis (i.e. without dividends re-invested) and on a Total Return basis.
Unadjusted performance in years to 31 January 2017
Net asset value per share
Share price
FTSE All-Share Index
Total Return performance in years to 31 January 2017
Net asset value per share
Share price
FTSE All-Share Index
1 year
19.2%
28.2%
15.7%
1 year
23.4%
31.6%
20.1%
3 year
28.6%
24.0%
10.3%
3 year
38.1%
35.1%
22.6%
5 year
53.0%
95.7%
31.6%
5 year
66.9%
118.3%
57.0%
10 year*
91.6%
81.0%
19.8%
10 year*
119.4%
115.2%
71.2%
* As the Company changed its year end in 2010, the ten year figures are for the 121 month period to 31 January 2017.
Underlying valuation movement is the change in the valuation of the Company’s Portfolio, before the effect of currency movements.
Undrawn commitments are commitments that have not yet been drawn down (see definition of drawdowns).
Uplift on exit represents the increase in gross value relative to the underlying manager’s most recent valuation prior to the
announcement of the disposal. Excludes a small number of investments that were public throughout the life of the investment. May
differ from uplift in the reporting period in certain instances.
This report is printed using papers which are derived from sustainable sources and are approved as
FSC® mixed sources products. The inks used are vegetable based. The printer is registered as an FSC®
supplier accredited with ISO 9000:2000 Quality Management system and ISO 14001:2004 Environmental
Management System and is also certified as a CarbonNeutral® printing company.
96
97
/ ENTERPRISE TRUST
Annual report
& accounts 2017
ICG Enterprise Trust plc
Investing in long term growth
I
i
C
G
E
n
t
e
r
p
r
s
e
T
r
u
s
t
p
l
c
a
n
n
u
a
l
r
e
p
o
r
t
&
a
c
c
o
u
n
t
s
2
0
1
7
www.icg-enterprise.co.uk