26 slides from Icg Enterprise Trust Plc Gbp's earnings presentation, Mar 27, 2014
Slide 1: Graphite Enterprise Trust PLC: Full year results presentation
Graphite Enterprise Trust PLC Investing in long term growth Full year results presentation 27 March 2014
Slide 2: Full year results presentation agenda
Graphite Enterprise Full year results presentation – March 2014 1. Introduction Tim Spence Senior Partner, Finance Director 2. Performance Emma Osborne Senior Partner, Head of Fund Investment 3. Balance sheet Kane Bayliss Partner, 4. Investment activity Fund investment 5. Portfolio Rod Richards Mana
Slide 3: Graphite Enterprise has a distinct offering in the listed private equity sector
1. Introduction Graphite Enterprise has a distinct offering in the listed private equity sector FOCUSED STRATEGY DISTINCTIVE INVESTMENT STYLE Backing high quality managers of European Focus on analysis of underlying companies buy-outs – mature, profitable companies and building long-term relationshi
Slide 4: Highlights of the year ended January 2014
1. Introduction Highlights of the year ended 31 January 2014 • Strong share price growth – 16% in the year, 23% since Jan-13 • Good underlying portfolio performance – 14%, in line with prior year • Solid NAV performance – 7%, held back by adverse currency • Record realisations in cash terms – £118m,
Slide 5: The share price and NAV both outperformed the FTSE All-Share Index
2. Performance The share price and NAV both outperformed the FTSE All-Share Index Jan Jan Change 2014 2013 12 months Net asset value per share 677.2p 631.5p +7.2% Share price 563.5p 487.0p +15.7% FTSE All-Share Index 3,497 3,287 +6.4% ● The share price has increased by a further 6.5% since 31 Januar
Slide 6: The portfolio performed well, increasing in local currencies
2. Performance The portfolio performed well, increasing by 13.8% in local currencies % of opening % of opening Year to Jan-14 £m portfolio NAV Underlying valuation gains 13.8% 12.4% 57.4 Currency (2.8)% (2.6)% (11.5) Total portfolio 11.0% 9.8% 45.9 Expenses and other (1.8)% (9.0) Total return before
Slide 7: Second half performance was affected by currency and lower underlying growth
2. Performance Second half performance was affected by currency and lower underlying growth Year to Jan 2014 % of Jan-13 NAV 1st half 2nd half Year Underlying valuation gains on portfolio 9.3% 4.5% 13.8% Currency 1.7% (4.5)% (2.8)% Portfolio gains after currency 11.0% 0.0% 11.0% Effect of holding ca
Slide 8: Graphite Enterprise has consistently outperformed the fund of funds peer group
2. Performance Graphite Enterprise has consistently outperformed the fund of funds peer group Years to Jan 20141 1 3 5 10 Total return Graphite Enterprise NAV growth 8.0% 29.4% 56.2% 164.4% Fund of funds2 average NAV growth 6.8% 19.8% 17.6% 143.0% ● This outperformance is despite taking lower balanc
Slide 9: Strong cash inflows left the Company 86% invested at year end
3. Balance sheet As a result of strong cash inflows, the Company was 86% invested at the year end Pro Pro Jan-14 Jan-14 forma5 forma £m % £m % Investments 433 86% 445 91% Net current assets 69 14% 46 9% Total assets less current liabilities 502 100% 491 100% Outstanding commitments 277 260 Undrawn b
Slide 10: The rate of realisation increased significantly; cash proceeds were a record high
4. Investment activity The rate of realisation increased significantly; cash proceeds were a record high Note Excludes proceeds from secondary sales in all periods Page 9
Slide 11: Realisations continue to generate significant uplifts over prior valuations
4. Investment activity Realisations continue to generate significant uplifts over prior valuations Year ended Jan-12 Jan-13 Jan-14 Valuation uplift1,2 51% 49% 36% Number of full realisations 18 14 33 Multiple of original cost 2.5x 2.7x 2.1x ● The multiple of original cost remained high, but holding
Slide 12: Secondaries and co-investments significantly increased the rate of new investment
4. Investment activity Secondaries and co-investments significantly increased the rate of new investment Page 11
Slide 13: Case study – City & County Healthcare
4. Investment activity Case study – City & County Healthcare (Graphite Capital buy-out) Background ● A leading provider of home care services in the UK ● 64 branches across England, Wales and Northern Ireland ● 5,725 employees providing care to c.16,000 individuals annually ● £110m secondary buy-out
Slide 14: Case study – ICR
4. Investment activity Case study – ICR (Graphite Capital buy-out) Background ● Provider of repair and maintenance service to the global energy industry ● Four niche businesses operating mainly in the UK and Middle East ● Pipe repair, corrosion monitoring and prevention, engineering solutions ● Tert
Slide 15: We have had a very active new investment programme
4. Investment activity We have had a very active new investment programme Secondary purchases Co-investments Primary commitments £201m £24m £12m Page 14
Slide 16: Graphite Capital directly manages 21% of the portfolio
5. Portfolio Graphite Capital directly manages 21% of the portfolio Graphite portfolio Third party portfolio Direct co- 21% Funds 71% (of which secondaries: 14%) invests 8% ● 43% of the portfolio is discretionary: ─ Graphite portfolio 21% ─ Secondaries 14% ─ Co-investments 8% Page 15
Slide 17: The portfolio is balanced and well diversified
5. Portfolio The portfolio is balanced and well diversified ● The portfolio strikes a good balance between diversification and concentration – Exposure to 387 underlying companies – The top 30 underlying companies represent 43% of the portfolio value Note Geography denotes where a company is headqua
Slide 18: The portfolio was valued at 1.4x cost; average maturity 4.6 years
5. Portfolio The portfolio was valued at 1.4x cost and its average maturity was 4.6 years Jan-13 Jan-14 ● The portfolio has considerable upside potential as it matures Note Multiples of cost include amounts realised by current portfolio companies of 0.4 times and Page 17 reflect managers’ gross valu
Slide 19: The Top 30 companies continue to perform strongly
5. Portfolio The Top 30 companies continue to perform strongly ● Revenues and EBITDA grew by an average of 7.4% and 13.6% respectively (LTM to Dec-13) ● By contrast, revenues and EBITDA of the FTSE 250 grew by 2.3% and 4.8% respectively Note: Revenue growth excludes London Square (development capita
Slide 20: The Top 30 were valued on average at 9.2x EBITDA
5. Portfolio The Top 30 were valued on average at 9.2x EBITDA and had 3.6x EBITDA net debt ● Compares with 9.3x EBITDA current valuation of FTSE 250 Note: Excludes three Top 30 companies (Intermediate Capital Group, Partnership and Guardian Financial Services). Page 19
Slide 21: Six of the top ten holdings are managed directly by Graphite Capital
5. Portfolio Six of the top ten holdings are managed directly by Graphite Capital Company Country Manager % of portfolio 1 Distributer and retailer of tyres UK Graphite 3.9% 2 Provider of home care services UK Graphite 3.3% 3 Manufacturer of animal health products France Euromezzanine 3.2% 4 Provide
Slide 22: The share price has outperformed the FTSE All-Share since 31-Jan-13
6. Share price and discount The share price has outperformed the FTSE All-Share by 15% since 31-Jan-13 ● The discount is currently 11.4% to the 31-Jan NAV Page 21 Note To the close on 26.03.14 (SP = 600.0p, FTAS = 3,557). Increases from 31 Jan 2013: SP +23.2%, Index +8.2%
Slide 23: The European buy-out market
7. Outlook The European buy-out market New investments ● Activity in the mid (€50-250m) and large (€250m+) buy-out markets increased in 2013 - +15% by number, +4% by value ● Pricing remains relatively high for good quality companies - Appears broadly stable relative to 2012 (8-9x EBITDA) - Remains s
Slide 24: Graphite Enterprise is very well positioned to grow further
7. Outlook Graphite Enterprise is very well positioned to grow further ● The environment for realisations remains favourable and managers will be seeking exits – 45% of the portfolio is more than 5 years old – Realisations continue to be achieved at substantial uplifts ● Market for new investment ma
Slide 25: Useful information
Useful information Structure: Company registered in England and Wales Ticker: GPE.LN Investment trust tax status ISIN: GB0003292009 Registered company number: 01571089 SEDOL: 0329200 Listing: Premium London listing Broker: J.P.Morgan Cazenove Angus Wilton (sales): + 44 (0) 20 7155 8122 Website: www.
Slide 26: Legal notice
Legal notice What this document is for This document has been prepared by Graphite Capital Management LLP (“Graphite Capital”) as manager of Graphite Enterprise Trust PLC (“Graphite Enterprise”). The information and any views contained in this document are provided for general information only. It i