Half Yearly Report to 31 July 2013

RNS Number : 8161O
Graphite Enterprise Trust PLC
25 September 2013
 



25 September 2013

GRAPHITE ENTERPRISE TRUST PLC

 

UNAUDITED RESULTS FOR THE SIX MONTHS

TO 31 JULY 2013

 

Summary of the period

 

 

Graphite Enterprise made good progress in the six months to 31 July 2013 with the net asset value per share increasing by 8%.  The performance of the portfolio was strong, driven by continued growth in underlying profits and by a number of successful realisations.

 

We are seeing many opportunities to invest in new funds and to acquire interests in existing funds and have doubled outstanding commitments since the year end.  Our strong balance sheet leaves us very well placed to take advantage of further opportunities.

 

Over both the short and long term, the Company's net asset value has been one of the top performers in the listed private equity sector.  The maturity of our portfolio and its strong recent performance make Graphite Enterprise very well positioned for future growth.

 

Mark Fane

Chairman

 

+8.1%


+9.3%

Net asset value per share

The NAV per share increased to 682.3p, outperforming the FTSE All-Share Index which increased by 6.8% in the period

 


Underlying value of the portfolio in local currencies

The portfolio grew strongly, driven by underlying earnings growth and realisations

 

£39.6m


£30.1m

Realisation proceeds

9.5% of the opening portfolio was realised in cash

 


Investment in the portfolio

The rate of investment was 27% higher than in the previous six months

£100m


£498m

Commitment to Graphite VIII

After the period end, a commitment was made to Graphite Capital's latest buy-out fund


Net assets

The Company's net assets were at an all time high

 

 

Chairman's Statement

 

 

Summary

 

Graphite Enterprise performed well in the six months to 31 July 2013, with the net asset value per share increasing by 8.1%. By comparison, the Company's benchmark, the FTSE All-Share Index, rose by 6.8%. Performance has been consistently strong in recent years with the net asset value increasing by 18% over one year and by nearly 50% over three years, closing the period at an all-time high of 682.3p. The net asset value is now 28% above its peak prior to the financial crisis. 

The growth in net asset value reflected a 9.3% increase in the value of the investment portfolio in local currencies. This was driven by a combination of growth in the underlying profits of unrealised investments and gains achieved on a number of successful realisations.   

The share price increased only marginally over the period, rising by 0.4% to 489p, but this followed a very sharp increase in the previous six months.  Over the 12 months to July the share price increased by 27.1% and over three years by 80.8%1. These figures compare with rises of 19.9% and 43.4% in the FTSE All-Share Index over the same periods. As the rise in the share price was lower than that of the net asset value, the discount widened to 28.3%. The share price has since risen to 512p reducing the discount to 25.0%.    

At 31 July, total assets had risen to £508 million of which 89% was invested in the portfolio. The balance was held in cash and liquid assets and when this is added to the undrawn bank facility of £100 million, the Company has a high level of liquidity at more than £150 million. This has allowed us to materially increase the level of commitments to funds. Over £40 million of commitments were made in the six months to July and since then we have committed £100 million to Graphite Capital's latest fund. The commitment to Graphite, which was outlined in the year end accounts, brought total outstanding commitments to over £250 million. We expect to make further new commitments in the coming months.

 


31 Jul 2013

31 Jan 2013

Change

 

Net asset value per share

682.3p

631.5p

+8.1%

Share price

489.0p

487.0p

+0.4%

FTSE All-Share Index

3,506

3,287

+6.8%

 

1 On a total return basis, including the effect of re-invested dividends.

 

 

Economic environment

 

The Company's investment programme continues to be focused on the more mature private equity markets, primarily in Western Europe.  At 31 July, the largest exposure was to the UK, which accounted for 47% of the portfolio, with a further 41% in continental Europe.

 

The outlook for the UK is now looking more positive, with improved growth rates and a range of economic indicators pointing towards a continuation of economic expansion. The performance of major continental European economies has also improved and confidence in economic growth prospects currently outweighs concerns over the high levels of debt of some of the countries. While sentiment has undoubtedly improved, we continue to expect the recovery of many European economies to be relatively slow.

 

The resilience of the investment portfolio during the economic downturn demonstrated that the private equity model can survive and indeed prosper in difficult times. As the improved performance in the past six months suggests, a more favourable economic environment should prove to be very positive for the development of the portfolio. 

 

Performance

 

Overview

The investment portfolio increased in value by 9.3% in local currencies over the six months to July having increased by 14.3% in the previous year. The increase in the sterling value of the portfolio was slightly higher at 11.0% as the euro strengthened against sterling during the period. As the investment portfolio accounted for just under 90% of net assets, this increased the net asset value by 9.9%. After costs and the payment of the dividend, the overall increase in the net asset value per share was 8.1%.

 

Portfolio 

Nearly two thirds of the underlying growth in the portfolio came from increases in the valuations of the unrealised portfolio. This was driven by continued earnings growth and by debt pay-down, rather than by an increase in valuation multiples. 

 

Gains on the realisation of portfolio companies accounted for just over a third of the growth during the period. It was pleasing that these realisations continued to be achieved at well above their carrying values.

 

As the largest 30 underlying companies accounted for 43% of the portfolio at 31 July, their performance will, to a large extent, determine the future performance of the Company.  These investments performed well, with EBITDA2 increasing on average by 11% in the 12 months to June.  By comparison, the aggregate EBITDA of the FTSE 250 fell by 2.7% in the same period.

 

2Earnings before interest, tax, depreciation and amortisation.

 

A more detailed analysis of the performance of the investment portfolio is given in the Manager's Review.

 

Discount

The share price rose substantially in the year to January 2013 while the discount narrowed materially, closing the year at 22.9%. Since then the share price has remained stable while the net asset value has increased, with the result that the discount has widened. The closing discount of 28.3% is narrower than the average over the downturn but wider than the longer term average.  Since the period end, the share price has risen to 512p, reducing the discount to 25.0%.

 

The Board continues to believe that the key to narrowing the discount is to generate demand for the Company's shares through communication of the Company's strategy and of its consistently strong long term performance.  To this end, we will continue to devote significant time to our investor relations programme for the remainder of this year and beyond. 

 

Long term performance3

We have always measured performance against the benchmark of the FTSE All-Share Index and aim to outperform in the medium to long term.  We continue to believe that this Index is the most relevant for most of our shareholders, over 60% of whom are private individuals.  

Over ten years, both the net asset value and the share price have outperformed the FTSE All-Share. The net asset value grew by 183% and the share price by 156%, while the Index returned 152% over the same period.  Similarly, over three years the Company has outperformed the Index on both measures.  

Five year relative performance figures, which take their starting point as June 2008, are distorted by the timing and severity of the financial crisis. While the stock market fell sharply in the first half of 2008, the share price did not fall until the second half.  The net asset value did not fall by as much as either the index or the share price and therefore did not recover as sharply. Comparative financial information is therefore both extremely time sensitive and difficult to interpret.  For example, the share price underperformed the Index by 25% from June 2008 to July 2013, while in the period from December 2008 to July 2013 it outperformed by 99%. 

The Company's performance against the listed private equity sector continues to be very strong.  Over five years, our net asset value total return is the best in our peer group4 and over both one and three years, it is the best of the funds-of-funds. 

 

3Total return basis, including the effect of reinvested dividends.  As the Company changed its year end in 2010, the five and ten year figures are for the 61 and 121 month periods to 31 July 2013.
4Peer group is: Aberdeen Private Equity, F&C Private Equity, HarbourVest, JPMorgan Private Equity, NB Private Equity, Pantheon International Participations, Princess Private Equity, Standard Life European Private Equity (funds-of-funds), 3i, Candover, Dunedin Enterprise, Electra, HgCapital, SVG Capital (direct funds).

 

 

Years to 31 July

3

5

10

Net asset value per share

+48.3%

+35.7%

+183.0%

Share price

+80.8%

+22.8%

+156.1%

FTSE All-Share Index

+43.4%

+47.6%

+152.4%

 

 

Balance sheet and commitments

As reported in the year end accounts, we negotiated an increase in the bank facility from £60 million to £100 million in March. When added to cash balances of over £50 million, this provides us with the capacity to make substantial new long-term commitments to funds. Our medium term aim is to be broadly fully invested while ensuring that we have sufficient liquidity to be able to take advantage of any attractive investment opportunities that might arise.

 

Reflecting this objective, we have made substantial commitments to new funds since January with the result that the level of outstanding commitments has more than doubled. In the six months to July, £42 million of commitments were made to third party funds, which was more than 50% higher than in the whole of the previous financial year.  In September the Company made a commitment of £100 million to Graphite VIII, Graphite Capital's most recent buy-out fund.  This commitment, which is greater than the £70 million committed to the predecessor fund in 2007, reflects both the strong performance of the 2007 fund and our aim of maintaining Graphite-managed assets at between 20% and 25% of the portfolio.   

The cash balance remained almost unchanged, with realisation proceeds offsetting new investment and other cash outflows.  The level of investment increased slightly from 88% to 89% of the balance sheet total.   

In the coming months we expect to make further commitments to new funds and aim to make further purchases of secondary fund interests and co-investments.

 


Investment portfolio

£ million

Investment portfolio % total  assets

Cash and liquid assets

£ million

Cash and liquid assets % of total assets

 

Commitments £ million

31 July 2013

451.1

88.8%

56.7

11.2%

251.5*

31 January 2013

415.2

88.1%

56.3

11.9%

126.5

31 January 2012

377.7

89.2%

45.9

10.8%

141.2

31 January 2011

356.6

89.2%

42.9

10.8%

173.7

31 December 2009

231.2

67.1%

113.4

32.9%

243.2

 

* Pro forma figure as at 30 September 2013.

 

Outlook

 

The improvement in investor confidence reflected by the rises in stock markets over the last twelve months now appears to be more solidly grounded, with the UK and the other main economies in which we are invested reporting stronger economic growth. 

 

Over the 12 months to July, the strong underlying performance of the portfolio, combined with the uplifts achieved on £87 million of realisations, were the drivers of an 18% increase in the net asset value. The net asset value is now 28% above its peak prior to the financial crisis.

 

We do not believe, however, that the impact of rising equity markets has yet been fully reflected in our portfolio, with valuation multiples remaining broadly unchanged. If this positive market backdrop persists, we expect good underlying company trading to drive stronger realisations and this in turn will drive the Company's net asset value performance.

 

Graphite Enterprise remains very well placed to take advantage of current investment opportunities, with significant net cash and the undrawn bank facility.  We will continue to review the full range of fund and co-investment opportunities and we expect the second half of the year to be an active one for new investment.

 

Our portfolio performed well through the downturn and the performance over the last six months suggests that the Company is in a very good position to benefit from a period of economic growth.

 

 

 

Mark Fane

September 2013

 

 

 

 

MANAGERS REVIEW

SIX MONTHS ENDED 31 July 2013

 

PORTFOLIO PERFORMANCE

The portfolio performed strongly in the first half of the year rising in value by 9.3% in local currencies.  Favourable currency movements raised the valuation increase in sterling to 11.0%.

The portfolio ended the period at its highest ever level of £451.1 million having risen by £35.9 million since 31 January.  This was driven primarily by £38.4 million of valuation gains, with currency adding a further £7.0 million. These gains were partially offset by net realisations of £9.5 million.


£m

Opening portfolio

415.2



Additions

30.1

Disposal proceeds

(39.6)

Net cash inflow

(9.5)



Gains on disposals

13.9

Unrealised valuation gains

24.5

Total underlying valuation gains

38.4

Currency

7.0

Closing portfolio

451.1

 

Uplifts in unrealised valuations accounted for almost two thirds of the underlying valuation increase, while gains on disposals accounted for the remainder.  Valuation gains were primarily driven by strong earnings growth while multiples remained broadly stable.  

 

Investment activity

The portfolio generated a net cash inflow of £9.5 million, with realisations of £39.6 million offsetting new investment of £30.1 million.

Realisations

We are encouraged by the steady flow of proceeds generated by the portfolio in the first half of the year.  Full realisations generated £20.7 million of proceeds while partial sales and refinancings generated a further £18.9 million.

The largest realised gains in the period were generated by our sale of Dominion Gas and Doughty Hanson's disposal of Vue Entertainment.  The £7.9 million received from the sale of Dominion represented the largest cash inflow in the period while the £8.2 million generated by Vue was not received until after the period end.  Dominion and Vue were, respectively, the 11th and 21st largest underlying investments at the start of the period.  Further details of the ten largest underlying realisations are set out in the Supplementary Information section later in this announcement.

The improved environment for realisations is reflected in the number of full realisations of 16 in the first six months compared with 9 in the previous six months and 14 in the whole of last year.  Realisations continue to generate very substantial uplifts over the prior carrying values and in the first half this averaged 53%.

Full realisations from within our primary fund portfolio generated an average multiple of original cost of 2.1 and had been in the portfolio on average for 5.3 years.  We generated 2.3 times cost from the sale of companies acquired through secondary fund purchases over a much shorter average holding period of 1.6 years.

The split between trade and private equity buyers was even at 44% of proceeds each, while public markets accounted for the remainder.  It is also interesting to note that most of the realisations were of investments made prior to the financial crisis, with 2006 and 2007 vintage investments representing 12 of the 16 realisations.

Partial realisations included proceeds from the IPOs5 of HellermannTyton, Partnership and bPost.  There were also several refinancings, the largest of which were AMS and Education Personnel, both of which we manage directly.

Total proceeds received were equivalent to 10% of the opening portfolio.  This is in line with the rate of realisation achieved in the prior financial year of 20% per annum, but remains below the long term average rate of more than 30% per annum.

 

New investments

New investments of £30.1 million were 27% higher than in the previous six months.  Drawdowns by funds of £18.4 million were broadly in line with our expectations and slightly higher than the previous six months.  We increased new investments by a further £11.7 million through two secondary fund purchases, GCP Capital Partners Europe and Doughty Hanson V, and one direct co-investment, R&R Ice Cream.

The managers of our fund portfolio made 25 new investments in underlying companies in the six months which is consistent with the number in the second half of last year.  The largest new underlying investment was R&R Ice Cream, alongside PAI Partners, in which we invested a total of £3.0 million including the direct co-investment noted above.

Further details of the two secondary fund purchases together with the ten largest underlying new investments, are set out in the Supplementary Information section later in this announcement.

 

New commitments

We made four new fund commitments in the period totalling £37.8 million.  Two were to managers with whom we have a longstanding relationship, Cinven and CVC Capital Partners, and two were to new relationships, Towerbrook and IK Investment Partners.  Further details of each of these new funds are set out in the Supplementary Information section later in this announcement.

All of these commitments are in line with our strategy of building long-term relationships with top performing managers and of subsequently partnering with them in selective co-investments and secondaries.  While many investors have been rationalising manager relationships, in part due to continuing capital constraints, our strategy is to broaden the number of active relationships.  In the last two years we have added seven new managers to the portfolio, and we plan to continue with this strategy in the second half of this year and into next year.

In addition to new primary fund commitments we added £4.3 million of new commitments alongside the secondary fund purchases and co-investment described above.

 

5Initial public offering.

 

CLOSING PORTFOLIO

At the period end, the portfolio was valued at £451.1 million and was broadly diversified with investments in 355 underlying companies across a wide range of sectors and geographies. 

Achieving a balance between diversification and concentration remains an important element of our strategy.  While the level of diversification within the portfolio reduces risk, many individual investments are still large enough to have an impact on overall performance, as demonstrated by the sales of Dominion and Vue. 

The top ten underlying companies accounted for 23% of the value of the portfolio while the top 30 accounted for 43%.  The performance of these 30 investments is therefore likely to be the main driver of the future performance of the Company.  As outlined in the Chairman's Statement, their performance remained strong in the 12 months to 30 June 2013 with revenue growing by an average of 6% and EBITDA by an average of 11%.

The top 30 underlying companies were valued on an average multiple of 9.5 times EBITDA at July 2013.  We consider this to be reasonable for the level of growth being achieved and for the quality of the underlying earnings.  The leverage of these companies is generally modest, with net debt averaging 3.3 times EBITDA.  This level of gearing should enhance future equity returns without posing undue financial risk.

Graphite Capital directly manages 22% of the portfolio by value including six of the top ten and nine of the top 30 underlying investments.  This gives us a high level of influence over the development of a significant part of the Company's portfolio.  It also provides valuable insights which help us to make more informed strategic and short term decisions on the management of the portfolio.

At 31 July, 99% of the portfolio was valued using June valuations.  The portfolio was valued at an average of 1.4 times original cost in local currency, of which 0.4x times cost had already been realised.  At these levels we believe there to be considerable potential for future growth as the portfolio matures.  As almost 60% of the portfolio is in investments made in 2008 or before, managers will be looking to realise these investments when market conditions allow.

A detailed analysis of the portfolio is included in the Supplementary Information section later in this announcement. 

 

 

EVENTS SINCE THE PERIOD END AND PRO FORMA BALANCE SHEET

Since the period end realisations have continued to be strong with proceeds of £25.6 million6 exceeding additions to the portfolio of £15.6 million.  New investments include an £11.3 million secondary purchase of two funds: CVC Capital Partners V and Charterhouse Capital Partners IX.  The former is a fund in which the Company already had a primary investment and the latter is new to the portfolio, although our relationship with the manager stretches back more than 20 years.

We are pleased that the Board has chosen to continue to support our direct investment team for the next five years with a commitment of £100 million to our new buy-out fund, Graphite Capital Partners VIII.

After taking account of the net cash inflow and new commitments since the period end, cash has increased to £65 million while commitments have increased to £252 million.  Overcommitment, after taking account of the undrawn bank facility, currently stands at approximately 17% of net assets.

 

We estimate that approximately £50 million of current commitments will be drawn down over the next 12 months if the rate of investment is constant to the end of each fund's investment period.  As this rate is unlikely to be sufficient to keep the Company close to full investment, we plan to continue making co-investments and secondary fund purchases in the remainder of the financial year, as well as further fund commitments.  This is expected to have the effect of increasing the Company's overcommitment position further at the year end.  As in the past, we will manage this prudently and will ensure that sufficient long term resources are available to fund these commitments.

 

6Including £8,2 million from Vue Entertainment, as reported above.

 

PROSPECTS

The outlook for realisations appears to be steadily improving and we expect this to continue in the remainder of the year.

The environment for new investment, while more challenging than that for realisations, is continuing to offer attractive opportunities for private equity managers who are prepared to be patient and selective.  This applies both to the managers of our funds as they look to make direct investments, as well as to our own acquisitions of secondary fund interests.

The pipeline of funds being raised by high quality managers continues to be strong and we believe it is important for the long term performance of the Company to support our preferred managers by making primary commitments to their funds. We believe that this is a good time in the cycle to be making commitments to new funds as these should be drawn down as the major European economies continue to emerge from recession. 

Our investment strategy gives us the flexibility to adapt the mix of investments, cash and commitments to changing market conditions and to deploy our cash where we see the best relative value. The strength of our balance sheet leaves us well placed to capitalise on the opportunities available in the near future while the strength of our portfolio should continue to drive the net asset value performance. 

 

Graphite Capital

September 2013

 

 

 

 

SUPPLEMENTARY INFORMATION

 

The 30 largest fund investments

The 30 largest funds by value at 31 July 2013 are set out below.

 


Fund

Outstanding commitment

£ million

Year of commitment

Country/
region

Value
£ million

1

Graphite Capital Partners VII * / **

15.9

2007

UK

49.5


Mid-market buy-outs

 

2

Fourth Cinven Fund **

2.6

2006

Europe

32.3


Large buy-outs

 

3

ICG European Fund 2006 **

2.6

2007

   Europe

 

25.4

 


Mezzanine loans to buy-outs

 

4

Doughty Hanson & Co V **

6.6

2006

Europe

23.8


Mid-market and large buy-outs

 

5

Euromezzanine 5

1.9

2006

France

22.8


Mezzanine loans to mid-market buy-outs

 

6

Thomas H Lee Parallel Fund VI

4.2

2007

USA

22.0


Large buy-outs

 

7

Graphite Capital Partners VI **

5.1

2003

UK

21.2


Mid-market buy-outs

 

8

TDR Capital II

1.9

2006

Europe

19.2


Mid-market and large buy-outs

 

9

Candover 2005 Fund **

0.6

2005

Europe

17.1


Large buy-outs

 

10

CVC European Equity Partners V

5.8

2008

Global

16.8


Large buy-outs

 

11

Activa Capital Fund II

2.7

2007

France

14.5


Mid-market buy-outs

 

12

Apax Europe VII

0.7

2007

   Global

 

14.0

 


Large buy-outs

 

13

Doughty Hanson & Co IV

1.1

2005

Europe

    10.8


Mid-market and large buy-outs

 

14

Deutsche Beteiligungs AG Fund V

0.1

2006

Germany

8.9


Mid-market buy-outs

 

15

Bowmark Capital Partners IV

2.3

2007

UK

8.1


Mid-market buy-outs

 

16

PAI Europe V

0.5

2007

Europe

7.2


Large buy-outs

 

17

CVC European Equity Partners Tandem

1.0

2006

Global

6.5


Large buy-outs

 

18

Charterhouse Capital Partners VIII **

1.3

2006

Europe

6.2


Large buy-outs

 

19

CVC European Equity Partners IV **

1.6

2008

Global

5.7


Large buy-outs

 

20

Advent Central and Eastern Europe IV

2.7

2008

Europe

5.1


Mid-market buy-outs

 

21

GCP Capital Partners Europe II **

1.7

2013

UK

4.3


Small buy-outs

 

22

BC European Capital  IX

4.8

2012

Europe

3.9


Large buy-outs

 

23

Deutsche Beteiligungs AG Fund IV

-

2002

Germany

3.7


Mid-market buy-outs

 

24

Apax Europe VII Sidecar 2

0.9

2007

Global

3.6


Large buy-outs

 

25

Vision Capital Partners VII

0.7

2007

   Global

3.6


Secondary portfolios

 

26

Charterhouse Capital Partners VII **

1.5

2002

Europe

3.2


Large buy-outs

 

27

Bowmark Capital Partners III

-

2004

UK

3.0


Small buy-outs

 

28

Piper Private Equity Fund IV

1.1

2006

UK

3.0


Small buy-outs

 

29

Segulah IV

1.6

2008

  Sweden

2.8


Mid-market buy-outs

 

30

Vision Capital Partners VI

0.5

2006

Europe

2.8


Secondary direct portfolios

 








Total of the largest 30 fund investments

74.0



371.0


Percentage of total investment portfolio




82.2%

 

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

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

 

 

The 30 largest underlying INVESTMENTS

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

 


Company

Manager

Year of investment

Country

Value as a % of investment portfolio

1

Micheldever






Distributor and retailer of tyres

Graphite Capital

2006

UK

3.7%

2

Algeco Scotsman






Supplier and operator of modular buildings

TDR Capital

2007

USA

3.2%

3

CEVA






Manufacturer and distributor of animal health products

Euromezzanine

2007

France

3.0%

4

National Fostering Agency






Provider of foster care services

Graphite Capital

2012

UK

2.6%

5

Park Holidays UK






Operator of caravan parks

Graphite Capital

2006

UK

2.4%

6

Alexander Mann Solutions






Provider of recruitment process outsourcing solutions

Graphite Capital

2007

UK

2.3%

7

Education Personnel






Provider of temporary staff for the education sector

Graphite Capital

2010

UK

1.6%

8

U-POL






Manufacturer and distributor of automotive refinishing products

Graphite Capital

2010

UK

1.6%

9

Partnership *






Provider of retirement annuities

Cinven

2008

UK

1.4%

10

Avio






Manufacturer of aerospace and engine components

Cinven

2007

Italy

1.4%

11

CPA Global






Provider of patent renewal services

Cinven

2012

            UK

1.4%

12

TMF






Provider of management and accounting outsourcing services

Doughty Hanson

2008

 Netherlands

1.3%

13

Parques Reunidos






Operator of attraction parks

Candover

2007

Spain

1.2%

14

Stork






Provider of technical engineering services

Candover

2008

Netherlands

1.2%

15

Spire Healthcare






Operator of hospitals

Cinven

2007

UK

1.1%

16

London Square






Developer of residential housing

Graphite Capital

2010

UK

1.1%

17

Intermediate Capital Group *






Provider of mezzanine finance

ICG

1989

UK

1.1%

18

Quiron






Operator of private hospitals

Doughty Hanson

2012

Spain

1.1%

19

Ceridian






Provider of payment processing services

Thomas H Lee Partners

2007

         USA

1.1%

20

Acromas






Provider of financial, motoring, travel and healthcare services

CVC / Charterhouse

2007

UK

0.9%

21

Spheros






Provider of bus climate control systems

Deutsche Beteiligungs

2011

Germany

0.9%

22

Evonik Industries *






Manufacturer of specialty chemicals

CVC

2008

Germany

0.9%

23

Stonegate Pub Company






Operator of pubs

TDR Capital

2010

UK

0.8%

24

Sebia






Provider of innovative laboratory instruments

Cinven

2010

 France

0.8%

25

Guardian Financial Services






Provider of insured life and pension products

Cinven

2011

 UK

0.8%

26

Standard Brands






Manufacturer of fire lighting products

Graphite Capital

2001

 UK

0.8%

27

SAFE






Manufacturer of industrial components

Euromezzanine

2006

France

0.7%

28

Eurofiber






Provider of fibre optic network

Doughty Hanson

2012

 Netherlands

0.7%

29

InnBrighton






Operator of pubs and bars

Graphite Capital

2001

UK

0.7%

30

HellermannTyton *

Manufacturer of cable management systems and solutions

 

Doughty Hanson

 

2006

 

UK

 

0.7%


Total of the 30 largest underlying investments




42.5%







* Quoted

 

 

 

Portfolio analySIS

 

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

 

 

30 largest investments* - revenue growth


% growth

% by value


<0%

19.8%


0-10%

57.9%


10-20%

14.4%


20-30%

3.3%





30 largest investments* - EBITDA growth


% growth

% by value


<0%

18.8%


0-10%

32.3%


10-20%

18.5%


20-30%

11.3%


>30%

14.5%





 

* Excludes London Square and Guardian Financial Services where EBITDA is not a meaningful measure of performance.

 

 

30 largest investments# - enterprise value as a multiple of EBITDA


Multiple

% by value


<7.0x

7.3%


7.0-8.0x

13.7%


8.0-9.0x

23.4%


9.0-10.0x

28.1%


10.0-11.0x

7.3%


11.0-12.0x

3.0%


>12.0x

12.8%


 

30 largest investments# - net debt as a multiple of EBITDA


Multiple

% by value


<2.0x

14.9%


2.0-3.0x

35.7%


3.0-4.0x

11.1%


4.0-5.0x

20.8%


5.0-6.0x

5.7%


6.0-7.0x

4.9%


>7.0x

2.5%


 

# Excludes Intermediate Capital Group and Guardian Financial Services where these metrics are not meaningful.

 

 

 

 

Portfolio - Investment type



% of value of total portfolio

Large buy-outs


47.3%

Small and mid-market buy-outs


39.4%

Mezzanine


12.2%

Quoted


1.1%

Total


100.0%

 

 

 

Portfolio - Geographic distribution*



% of value of total portfolio

UK


46.9%

France


14.9%

North America


11.1%

Germany


7.1%

Benelux


5.5%

Spain


4.9%

Greece, Ireland, Italy, Portugal


3.9%

Scandinavia


2.9%

Other Europe


1.6%

Rest of world


1.2%

Total


100.0%




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

 

 

 

Portfolio - Year of investment


 

 

Valuation as multiple of cost

 

 

% of value of total portfolio

2013


1.0x

4.4%

2012


1.2x

12.1%

2011


1.3x

11.4%

2010


1.4x

14.9%

2009


2.1x

1.8%

2008


1.1x

10.9%

2007


1.7x

22.4%

2006


1.3x

15.1%

2005


0.8x

0.9%

2004 and before


1.6x

6.1%

Total


1.4x

100.0%

 

 

 

Portfolio - Sector analysis



% of value of total portfolio

Business services


21.4%

Industrials


14.4%

Healthcare and education


13.8%

Consumer goods and services


12.6%

Leisure


12.0%

Financial services


9.8%

Automotive supplies


5.9%

Media


4.1%

Technology and telecommunications


4.0%

Chemicals


2.0%

Total


100.0%

 

 

 

Portfolio - Graphite and third party investments

 

£ million


Value of third party investments

Value of Graphite investments

 

Total value

Fund investments


322.5

71.8

394.3

Direct investments


30.6

26.2

56.8

Total portfolio


353.1

98.0

451.1

Graphite investments




21.7%

Third party fund investments




71.5%

Third party co-investments




6.8%

  

 

Investment activity

 

New investments


 

 

Drawdowns

Co-investments and secondary fund purchases

 

Total new investments

Financial period ending

£ million

£ million

£ million

31 December 2004

22.8

6.6

         29.4

31 December 2005

41.6

3.9

         45.5

31 December 2006

74.6

5.7

         80.3

31 December 2007

95.2

7.9

         103.1

31 December 2008

65.8

12.1

         77.9

31 December 2009

21.5

2.5

         24.0

31 January 2011

65.6

19.2

         84.8

31 January 2012

51.3

29.9

         81.2

31 January 2013

48.8

5.2

         54.0

Six months to 31 July 2013

18.3

11.8

         30.1

 

 

 

Largest new underlying investments

 

Investment

Description

Country

Cost

£ million

R&R Ice Cream

 

Manufacturer and distributor of ice cream products

UK

3.0

Formal D

 

Provider of services to automobile manufacturers and suppliers

Germany

1.7

ista*

 

Provider of consumption-dependent billing of energy costs

Germany

1.6

AMCo

Distributor of niche generic pharmaceuticals

UK

1.2

Law Business Review

Publisher of specialist information for the legal industry

 

UK

1.1

CompuCom

Provider of IT outsourcing

North America

0.9

Cerved

Provider of credit and business information

Italy

0.7

Ampelmann

 

Supplier of gangway systems to the offshore energy sector

Netherlands

             0.7

Drake and Morgan

Operator of contemporary bars in London

UK

0.7

Springer

Publisher of professional and academic media

Germany

0.7

Total of 10 largest new underlying investments


        12.3

 

* ista was both sold and acquired by funds in the Company's portfolio in the period.

 

 

Realisations - 10 year record*

 

Financial period ending

£ million

% of opening portfolio

31 December 2004

116.7

60.4%

31 December 2005

93.8

61.9%

31 December 2006

92.9

53.3%

31 December 2007

112.4

54.5%

31 December 2008

25.8

12.9%

31 December 2009

14.0

7.3%

31 January 2011

19.8

8.5%

31 January 2012

92.9

26.0%

31 January 2013

74.2

19.7%

6 months to 31 July 2013

39.6

9.5%

* Excluding secondary sales of fund interests.

 

 

 

Largest underlying realisations

 

Investment

Manager

Realisation type

Proceeds

£ million

Dominion Gas

Graphite Capital

Trade

7.9

Optimum Care

Graphite Capital

Trade

                3.7

Ziggo

Cinven

Public offering

                  3.7

HellermanTyton

Doughty Hanson

Public offering

                2.6

Alexander Mann Solutions

Graphite Capital

Refinancing

1.7

Education Personnel

Graphite Capital

Refinancing

1.7

Partnership

Cinven

Public offering

1.7

ista

Charterhouse/CVC

Private equity

1.6

Tumi

Doughty Hanson

Public offering

1.6

TeamSystem

ICG

Repayment of loan

1.3

Total of 10 realisations


                27.5

 

* ista was both sold and acquired by funds in the Company's portfolio in the period.

 

 

 

Commitments analysis

 

Commitments at 31 July 2013

 

 

Original commitment1

£ million

 

Outstanding commitment

£ million

 

Average drawdown percentage

 

 

% of commitments

Funds not yet in investment period

12.1

12.1

-

7.8%

Funds in investment period

265.9

106.7

58.4%

69.3%

Funds post investment period

462.2

35.4

92.3%

22.9%

Total

731.2

154.2

78.9%

100.0%

 

1 Original commitments are translated at 31 July 2013 exchange rates

 

 

Commitments at 31 July 2013 - remaining investment period

 

% of commitments

Investment period not commenced

7.8%

> 5 years

11.4%

4-5 years

12.1%

3-4 years

16.8%

2-3 years

5.3%

1-2 years

2.2%

<1 year

21.5%

Investment period complete

22.9%

Total

100.0%

 

 

Movement in outstanding commitments

Six months to

31 July 2013

£ million

Opening outstanding commitments

126.5

Drawdowns

(18.3)

Primary commitments

37.8

Secondaries and co-investments

4.3

Currency

2.6

Other

1.3

Closing outstanding commitments

154.2

 

 

 

FUND COMMITMENTS IN THE PERIOD

 

Primary commitments

 

CVC European Equity Partners VI

In July 2013 we committed €20 million to CVC VI, a €10.5 billion fund raised by CVC Capital Partners ("CVC").

 

As with its predecessor funds, CVC VI will focus on large buy-outs with a target minimum equity investment of over €100 million. CVC invests in a cross-section of global industrial and service businesses.

 

CVC was founded in 1981 and is one of the most highly regarded firms in Europe. We have invested with CVC since 2005 in three prior funds and have acquired secondary interests in two funds.

 

Fifth Cinven Fund

In March we committed 10 million a €5.3 billion fund raised by Cinven.  We had already committed €10 million to the first closing in December 2011 and took the opportunity to increase our commitment in the final closing of the fund. 

 

Cinven was founded in 1977 and is one of the leading European buy-out managers.  We have a longstanding relationship with the firm dating back to 1994.  More recently we invested in the predecessor fund, Fourth Cinven Fund, in 2006 and subsequently acquired a secondary interest in that fund as well as co-investing alongside it in CPA Global.

 

The latest fund will focus on large buy-outs in which it can invest more than 100 million of equity.  Cinven focuses on six sectors across Europe: Business Services; Consumer; Financial Services; Healthcare; Industrials; and TMT.

 

IK VII

In March 2013 we committed €10 million to IK VII, a €1.3 billion fund raised by IK Investment Partners ("IK").  This is the first time we have committed to a fund managed by IK which was founded in 1989. IK invests in five core markets: Benelux, Denmark & Norway, France, Germany & CEE and Sweden & Finland.

 

The Fund will invest in mid-sized companies with strong cash flow and profit improvement potential, operating in mature industries with fundamental underlying growth. This strategy is consistent with the firm's prior funds. The majority of IK's investments to date have been made in the manufacturing and service industries.

 

Towerbrook IV

In February we committed $5 million to Towerbrook IV, a $3.5 billion upper mid-market US and European fund raised by Towerbrook.  This is the first time we have invested with the group but we have followed its progress for a number of years.

 

Towerbrook was initially established in 2001 as part of Soros private equity.  The Fund will seek to invest in situations characterised by high complexity and to partner with strong management teams to drive returns and in some cases, an investment's turnaround.

 

Secondary purchases

 

GCP Capital Partners Europe Fund II

In March 2013 we invested £3.5 million in an £87 million fund managed by GCP Capital Partners Europe ("GCP").  The fund is focused on the UK lower mid-market and was set up to acquire a portfolio of seven companies from exiting investors of the predecessor fund. 

 

We invested £3.5 million in the portfolio with a further £1.75 million undrawn commitment. This is the first time we have invested with GCP.

 

Doughty Hanson & Co V

In June 2013 we acquired a secondary interest in Doughty Hanson Fund V for £5.5 million.  Doughty Hanson Fund V is a €3 billion fund to which we made a €25 million commitment when it was raised in 2007.  We also held a co-investment in one of fund's portfolio companies, Vue Entertainment.   We first invested with Doughty Hanson in its fourth fund, raised in 2005.

 

Since acquiring this secondary interest Vue Entertainment has been realised.  This generated a substantial uplift and ensures the secondary investment is off to a good start.  The realisation of Vue, together with the sale of Avanza, has returned 39% of the cost of the portfolio of seven companies within two months.

 

 

CURRENCY EXPOSURE

 

 

 

 

31 July

2013

£ million

 

 

31 July

2013

%

 

 

31 January 2013

£ million

 

 

31 January

2013

%

Total assets*





 - sterling

274.7

54.1%

256.7

54.5%

 - euro

157.1

30.9%

144.7

30.6%

 - other

76.0

15.0%

70.1

14.9%

Total

507.8

100.0%

471.5

100.0%

 

* Currency exposure is calculated using the location of the underlying portfolio companies' headquarters.

 

 

 

 

 

31 July

2013

£ million

 

 

31 July

2013

%

 

 

31 January 2013

£ million

 

 

31 January

2013

%

Outstanding commitments





 - sterling

31.4

20.4%

32.9

26.0%

 - euro

113.6

73.7%

87.0

68.8%

 - other

9.2

5.9%

6.6

5.2%

Total

154.2

100.0%

126.5

100.0%

 

 

 

UNAUDITED RESULTS FOR THE SIX MONTHS TO 31 JULY 2013

Consolidated Income Statement

 



Half

year to 31 July 2013



Half year to 31 July 2012



Year to 31 January 2013



Revenue return

Capital return

Total

Revenue return

Capital return

Total

Revenue return

Capital return

Total

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Investment returns










Gains and losses on investments held at fair value

3,038

42,517

45,555

3,320

11,235

14,555

5,988

54,555

60,543

Income from cash and cash equivalents

92

-

92

15

-

15

39

-

39

Return from current asset investments

5

(220)

(215)

45

-

45

74

-

74

Other income

-

-

-

26

8

34

4

(8)

(4)

Foreign exchange gains and losses

-

145

145

-

(222)

(222)

-

418

418


3,135

42,442

45,577

3,406

11,021

14,427

6,105

54,965

61,070











Expenses










Investment management charges

(710)

(2,132)

(2,842)

(645)

(1,934)

(2,579)

(1,337)

(4,010)

(5,347)

Other expenses

(898)

(905)

(1,803)

(912)

(822)

(1,734)

(1,772)

(1,607)

(3,379)


(1,608)

(3,037)

(4,645)

(1,557)

(2,756)

(4,313)

(3,109)

(5,617)

(8,726)











Profit before tax

1,527

39,405

40,932

1,849

8,265

10,114

2,996

49,348

52,344

Taxation

(378)

378

-

(463)

463

-

(701)

701

-

1,149

39,783

40,932

1,386

8,728

10,114

2,295

50,049

52,344

 

Attributable to:

Equity shareholders

 

1,149

 

39,594

 

40,743

 

1,386

 

8,062

 

9,448

 

2,295

 

46,597

 

48,892

Non-controlling interests

 

-

 

189

 

189

 

-

 

666

 

666

 

-

 

3,452

 

3,452

 

Basic and diluted earnings per share



55.88p



12.96p



67.06p

 

 

The columns headed 'Total' represent the income statement for the relevant financial periods and the columns headed 'Revenue return' and 'Capital return' are supplementary information.  There is no Other Comprehensive Income.

 

 

Consolidated Balance Sheet

 


31 July

31 July

31 January

2013

2012

2013


£'000

£'000

£'000

Non-current assets




Investments held at fair value




- Unquoted investments

446,246

390,022

411,606

- Quoted investments

4,895

2,616

3,559


451,141

392,638

415,165

Current assets




Cash and cash equivalents

35,481

7,323

28,778

Current asset investments held at fair value

19,774

26,966

26,398

Receivables

1,899

2,687

1,672


57,154

36,976

56,848

Current liabilities




Payables

505

430

550

Net current assets

56,649

36,546

56,298

Total assets less current liabilities

507,790

429,184

471,463





Capital and reserves




Called up share capital

7,292

7,292

7,292

Capital redemption reserve

2,112

2,112

2,112

Share premium

12,936

12,936

12,936

Capital reserve

465,004

386,875

425,410

Revenue reserve

10,168

11,756

12,665

Equity attributable to equity holders

497,512

420,971

460,415

Non-controlling interest

10,278

8,213

11,048

Total equity

507,790

429,184

471,463





Net asset value per share (basic and diluted)

682.3p

577.4p

631.5p

 

 

Consolidated Cash Flow Statement


Half year to

Half year to

Year to


31 July

31 July

31 January


2013

2012

2013


£'000

£'000

£'000





Operating activities




Sale of portfolio investments

36,608

26,016

70,922

Purchase of portfolio investments

(30,066)

(30,367)

(54,017)

Net sale of current asset investments held at fair value

6,410

8,033

8,615

Interest income received from portfolio investments

1,464

2,863

4,670

Dividend income received from portfolio investments

1,677

314

1,276

Other income received

92

95

97

Investment management charges paid

(2,829)

(2,625)

(5,407)

Other expenses paid

(697)

(306)

(815)

Net cash inflow from operating activities

12,659

4,023

25,341









Financing activities




Investments by non-controlling interests

94

213

432

Distributions to non-controlling interests

(1,053)

(1,624)

(1,724)

Banking facility fee

(1,494)

(639)

(1,260)

Equity dividends paid

(3,646)

(3,646)

(3,646)

Net cash outflow from financing activities

(6,099)

(5,696)

(6,198)





Net increase/(decrease) in cash and cash equivalents

6,560

(1,673)

19,143





Cash and cash equivalents at beginning of period

28,779

9,218

9,218

Net increase/(decrease) in cash and cash equivalents

6,560

(1,673)

19,143

Effect of changes in foreign exchange rates

142

(222)

419

Cash and cash equivalents at end of period

35,481

7,323

28,778

 

 

 

Consolidated Statement of Changes in Equity

 

Group

Share capital

Capital redemption reserve

Share premium

Capital Reserve

Revenue reserve

Total

shareholder equity

Non- controlling interest

Total equity


 £'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Six months to

31 July 2013









Opening balance at
1 February 2013

7,292

2,112

12,936

425,410

12,665

460,415

11,048

471,463

Profit attributable to equity shareholders

-

-

-

39,594

1,149

40,743

-

40,743

Profit attributable to non-controlling interests

-

-

-

-

-

-

189

189

Profit for the period and total comprehensive income

-

-

-

39,594

1,149

40,743

189

40,932

Dividends to equity shareholders

-

-

-

-

(3,646)

(3,646)

-

(3,646)

Contributions by non-controlling interests

-

-

-

-

-

-

94

94

Distributions to non-controlling interest

-

-

-

-

-

-

(1,053)

(1,053)










Closing balance

at 31 July 2013

 

7,292

2,112

12,936

465,004

10,168

497,512

10,278

507,790

 

 

 

 

 

Group

Share capital

Capital redemption reserve

Share premium

Capital Reserve

Revenue reserve

Total

shareholder equity

Non- controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Six months to

31 July 2012









Opening balance at
1 February 2012

7,292

2,112

12,936

378,813

14,016

415,169

8,396

423,565

Profit attributable to equity shareholders

-

-

-

8,062

1,386

9,448

-

9,448

Profit attributable to non-controlling interests

-

-

-

-

-

-

666

666

Profit for the period and total comprehensive income

-

-

-

8,062

1,386

9,448

666

10,114

Dividends to equity

shareholders

-

-

-

-

(3,646)

(3,646)

-

(3,646)

Contributions by non-controlling interests

-

-

-

-

-

-

-

-

Distributions to non-controlling interest

-

-

-

-

-

-

(849)

(849)










Closing balance

at 31 July 2012

 

7,292

2,112

12,936

386,875

11,756

420,971

8,213

429,184

 

 

 

 

 

Group

Share capital

Capital redemption reserve

Share premium

Capital Reserve

Revenue reserve

Total

shareholder equity

Non- controlling interest

Total equity


£'000

£'000

£'000

£'000

£'000

£'000

£'000

£'000

Year to

31 January 2013









Opening balance at
1 February 2013

7,292

2,112

12,936

378,813

14,016

415,169

8,396

423,565

Profit attributable to equity shareholders

-

-

-

46,597

2,295

48,892

-

48,892

Profit attributable to non-controlling interests

-

-

-

-

-

-

3,452

3,452

Profit for the year and total comprehensive income

-

-

-

46,597

2,295

48,892

3,452

52,344

Dividends to equity shareholders

-

-

-

-

(3,646)

(3,646)

-

(3,646)

Contributions by non-controlling interests

-

-

-

-

-

-

418

418

Distributions to non-controlling interest

-

-

-

-

-

-

(1,218)

(1,218)










Closing balance

at 31 January 2013

7,292

2,112

12,936

425,410

12,665

460,415

11,048

471,463

 

 

 

 

NOTES TO THE INTERIM REPORT


 

1   GENERAL INFORMATION

 

Graphite Enterprise Trust PLC (the "Company") and its subsidiaries (together "Graphite Enterprise" or the "Group") are registered in England and Wales and domiciled in England. The registered office is Berkeley Square House, Berkeley Square, London W1J 6BQ.  The Company's objective is to provide shareholders with long term capital growth through investment in unquoted companies, mostly through private equity funds but also directly. The half-yearly financial report was approved for issue by the Board of Directors on 24 September 2013.

 

2   UNAUDITED INTERIM REPORT

 

This financial report does not comprise statutory accounts within the meaning of section 434 of the Companies Act 2006.  Statutory accounts for the year to 31 January 2013 were approved by the Board of Directors on 17 April 2013 and delivered to the Registrar of Companies.  The report of the auditors on those accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain any statements under section 498 of the Companies Act 2006.

 

This financial report has not been audited.

 

3   BASIS OF PREPARATION

 

The financial report for the six months ended 31 July 2013 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. This financial report should be read in conjunction with the annual financial statements for the year to 31 January 2013, which have been prepared in accordance with IFRSs as adopted by the European Union.

 

The accounting policies applied are consistent with those of the annual financial statements for the year to 31 January 2013, as described in those annual financial statements. Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual earnings.

 

The directors have, at the time of approving the report, a reasonable expectation that the Company and the Group have adequate resources to continue in operational existence for the forseeable future.

 

4   RECEIVABLES

 

The Company has access to bank facilities. The set up costs in relation to these were capitalised and are recognised over the lives of the facilities on a straight line basis. At 31 July 2013, £1,644,000 of bank facility costs are included within receivables. Of this £698,000 is expected to be amortised in less than one year.

 

 

5   DIVIDENDS





Half year to

31 July 2013

£'000

Half year to

31 July 2012

£'000

Year to

31 January 2013

£'000

Half year to 31 July 2013: 5.0p per




share (Half year to 31 July 2012 and




year to 31 January 2013: 5.0p per share)

3,646

3,646

3,646

 

           

6  EARNINGS PER SHARE


Half year to

31 July 2013

Half year to

31 July 2012

Year to

31 January 2013

Revenue return per ordinary share

1.58p

1.90p

3.15p

Capital return per ordinary share

54.30p

11.06p

63.91p

Earnings per ordinary share (basic and diluted)

55.88p

12.96p

67.06p

Weighted average number of shares

               72,913,000

               72,913,000

               72,913,000

 

The earnings per share figures are based on the weighted average numbers of shares set out above.                             

 

 

7   FAIR VALUES 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).

 

All private equity and quoted investments are valued at fair value in accordance with IAS 39.   The Company's unquoted investments are all classified as Level 3 investments.

 

Fair value for unquoted investments is established by using various valuation techniques.  Funds 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 International Private Equity and Venture Capital Valuation ("IPEV") Guidelines issued in October 2006 and updated in September 2009. The primary valuation methodology used is an earnings multiple methodology, with other methodologies used where they are more appropriate.

 

The fair value of the Company's unlisted investments is sensitive to changes in the assumed earnings multiples. An increase in the earnings multiple would lead to an increase in the fair value of the investment portfolio and a decrease in the earnings multiple would lead to a decrease in the fair value.

 

The following tables present the changes in level 3 instruments for the period to 31 July 2013.

 

 

 

 

 




Unquoted investments

(indirect) at fair value through

profit or loss


Unquoted investments

(direct) at fair value through profit or loss


Total 2013

Group




£'000


£'000


£'000

Opening balance

367,764


43,842


411,606

Additions

27,319


2,747


30,066

Disposals

(38,326)


(1,319)


(39,645)

Gains and losses recognised in profit or loss

37,609


6,610


44,219

Closing balance

394,366


51,880


446,246

Total gains for the period included in income statement for assets held at the end of the reporting period

37,609


6,610


44,219

 

 

The following tables present the assets that are measured at fair value. The Group did not have any financial liabilities measured at fair value at these dates.

 

 

31 July 2013

Level 1


Level 2


Level 3

Group




£'000


£'000


£'000

Investments held at fair value






Unquoted investments - indirect

-


-


394,366

Unquoted investments - direct

-


-


51,880

Quoted investments - direct

4,895


-


-

Current asset investment

19,774


-


-

Total investments held at fair value

24,669


-


446,246

 

 

31 January 2013

Level 1


Level 2


Level 3

Group




£'000


£'000


£'000

Investments held at fair value






Unquoted investments - indirect

-


-


367,764

Unquoted investments - direct

-


-


43,842

Quoted investments - direct

3,559


-


-

Current asset investment

26,398


-


-

Total investments held at fair value

29,957


-


411,606

 

 

8 INVESTMENT MANAGEMENT CHARGES

 

The investment management charges set out in the table below were payable to the Manager, Graphite Capital Management LLP, in the period. The Manager is a related party.

 

 

 

 






Half year to

31 July 2013


Half year to

31 July 2012


Year to

31 January 2013







£'000


£'000


£'000

Investment management fee



2,817


2,579


5,276

Irrecoverable VAT



25


-


71







2,842


2,579


5,347

 

The allocation of the total investment management charges was unchanged in 2013 with 75% of the total allocated to capital and 25% allocated to income.

 

The management fee charged by the Manager is 1.5% of the value of invested assets and 0.5% of outstanding commitments, in both cases excluding funds managed by Graphite Capital. No fee is charged on cash or liquid asset balances.  The amounts payable during the period are set out above.

 

At 31 July 2013 management fees of £77,000 (31 July 2012: £88,000) were accrued on the balance sheet.

 

The Company has borne management charges in respect of its investments in funds managed by Graphite Capital as set out below:

 

 

 






Half year to

31 July 2013


Half year to

31 July 2012


Year to

31 January 2013







£'000


£'000


£'000

Graphite Capital Partners VI



224


246


513

Graphite Capital Partners VII



226


349


855







450


595


1,368

 

 

9 INCREASE IN BANK FACILITIES

 

On 27 March 2013, the Group entered into an agreement with The Royal Bank of Scotland ("RBS") and Lloyds Bank Corporate Markets ("Lloyds") to increase its bank facilities by £40 million to £100 million.  The increase has a term of four years and expires in March 2017, two years after the current £60 million facility which expires in April 2015. Like the existing facility, the increase is structured as parallel sterling and euro facilities of £20 million and €23.6 million respectively.  RBS and Lloyds continue to participate equally in the facilities.

 

The terms of the increase are a substantial improvement on those of the original facility.  The arrangement fee is 1.75% and the non-utilisation fee is 1.05% per annum.  The interest margin over LIBOR/EURIBOR on drawn amounts is 3.00% subject to certain covenants. As part of this agreement, the terms of the original £60 million facility have also been improved. The non-utilisation fee has been reduced from 2.00% to 1.90% and the interest margin over LIBOR/EURIBOR has been reduced from 3.50% to 3.00% subject to certain covenants.

 

 

 

STATEMENT OF DIRECTORS' RESPONSIBILITIES

 

The directors confirm that this half-yearly financial report has been prepared in accordance with IAS 34 as adopted by the European Union and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

 

-     an indication of important events that have occurred during the first six months and their impact on the condensed set of financial statements, and a description of the principal risks and uncertainties for the remaining six months of the financial year; and

-     material related-party transactions in the first six months and any material changes in the related-party transactions described in the last annual report.

 

 

 

 

By the order of the Board

 

Mark Fane, Chairman

 

24 September 2013

 

 

 

Copies of the Interim Report will be available on the Company's website (see below) and posted to shareholders who have elected to receive a paper copy in early October 2013. Copies may be obtained during normal business hours from the Company's registered office thereafter.

 

For further information please contact:

 

Tim Spence / Emma Osborne

Graphite Capital

Tel: 020 7825 5300

 

www.graphite-enterprise.com

 

 

 

 

 

 

 


This information is provided by RNS
The company news service from the London Stock Exchange
 
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