HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2003 Earnings Presentation
27 slides from HGCapital Trust's earnings presentation, Mar 11, 2004
Slide 1: HgCapital Trust plc Full Year Results to 31 December 2003
HgCapital Trust plc Full Year Results to 31 December 2003 Analyst Briefing – 11 March 2004
Slide 2: Introduction
Introduction • Solid net asset value growth. • Significant net capital deployed in the year. • New valuation guidelines introduced with no material impact on the net asset value. • Exceptional dividend due to release of loan stock interest provision. HgCapital Trust plc
Slide 3: Financial Highlights
Financial Highlights At 31 December At 31 December 2003 2002 % change Assets Net assets (£'000) 96,965 83,837 15.7% Net assets per share 385.0p 332.9p 15.7% Share price (mid-market) 289.5p 219.5p 31.9% Discount (%) 24.9 34.1 36.9% Revenue Net revenue (£'000) 3,969 2,148 84.8% Earnings per share 15.7
Slide 4: Performance – Total Return
Performance – Total Return 7 Years to 31 5 years to 31 3 years to 31 1 year to 31 Dec 2003 Dec 2003 Dec 2003 Dec 2003 Net assets per share 11.6% 8.5% 0.3% 19.3% FTSE All-Share 4.2% -1.1% -6.8% 20.9% FTSE SmallCap 4.6% 6.4% -5.6% 39.7% Share price 7.4% 6.8% -6.7% 31.9% Figures are annualised and are
Slide 5: Investments
Investments Company Name Business Description Sector Geography Cost £m Deal Size m Xtx Ltd t/a Xyratex Data storage and network Technology UK 8.0 £108 technology W.E.T. Automotive Systems AG Car seat-heating Industrial Germany 7.6 € 169 Classic Copyright (Holdings) Classical music publisher Media UK
Slide 6: Realisations
Realisations Carrying(1) Proceeds(2) Investment Company Name Type Cost £m Value £m £m IRR Alizyme plc Quoted sale 2.3 2.8 9.4 37% Pll Group Ltd Partial release of escrow - - 1.4 44% Partial realisations 1.6 3.3 3.9 - Other (6) 2.4 0.7 0.4 - 6.3 6.8 15.1 (1) As at 31/12/02 (2) Includes yield HgCapita
Slide 7: Investment Activity
Investment Activity 45 40 35 30 £m 25 Deployment 20 Realisations 15 10 5 0 1997 1998 1999 2000 2001 2002 2003 HgCapital Trust plc
Slide 8: NAV Analysis
NAV Analysis At 31 December 2003 At 30 June 2003 At 31 December 2002 £m % £m % £m % Unlisted investments 89.2 92.0 67.0 76.8 62.6 74.7 Listed investments 6.1 6.3 9.5 10.9 5.1 6.1 Cash/Government securities 0.6 0.6 7.2 8.2 14.9 17.8 Other asstes/liabilities 1.1 1.1 3.6 4.1 1.3 1.4 Net Assets 97.0 100
Slide 9: Portfolio
Portfolio Top 15 investments by value: % of invested Holding value at Holding value at portfolio Investment Sector 31/12/2003 31/12/2002 31/12/2003 £m £m Raymarine Group Ltd Consumer 10.0 11.6 10.4 Xtx Ltd t/a Xyratex Technology 8.0 - 8.4 W.E.T. Automotive Systems AG Industrials 7.8 - 8.2 FTE Automo
Slide 10: Valuation Basis
Valuation Basis Third Party Written down Transaction Net Assets 7% 1% 3% Mid-market price 6% Cost 51% Earnings 32% HgCapital Trust plc
Slide 11: Sector Coverage
Sector Coverage By value By number of investments Other Leisure 4% Other 9% Healthcare Healthcare 10 12 30% Industrials 16% Leisure 4 Media 2 Consumer Media 11% 10% Industrials 6 Technology Technology Consumer 10 20% 2 HgCapital Trust plc
Slide 12: Geography / Stage
Geography / Stage By geography By stage Funds Continental 3% Europe Expansion 23% 19% United States 3% UK & Ireland 74% Buy out 78% Note: Analysis by value HgCapital Trust plc
Slide 13: Vintage Year: Volume and Value
Vintage Year: Volume and Value 20 By number By value 18 16 14 30 12 25 10 20 8 15 6 10 4 2 5 0 0 Pre 1999 1999 2000 2001 2002 2003 Pre 1999 2000 2001 2002 2003 1999 The majority of pre-1999 investments are residual investments in funds and largely realised. Based on 31 December 2003 valuations. HgCa
Slide 14: Investment Environment
Investment Environment Value of buy-outs in the range of £25m-£250m – UK and Continental Europe. UK 80 Continental Europe 73.2 70 64.0 59.8 60 54.5 55.8 Value (£bn) Value (£m) 47.4 48.5 50 45.5 40.8 39.6 40.2 38.0 40 30 20 10 0 1998 1999 2000 2001 2002 2003 Source: Initiative Europe HgCapital Trust
Slide 15: Market Outlook
Market Outlook • Economic environment likely to improve, although some risks remain. • M&A activity expected to increase. • Debt availability increasing. • Competition remains strong – need to differentiate. HgCapital Trust plc
Slide 16: HgCapital Outlook
HgCapital Outlook • HgCapital’s strategy – built on sector expertise and active management – is serving us well. • Management changes and business initiatives continue to yield positive results. Overall, portfolio companies are making good progress. • 2003 investment vintage is looking good and we e
Slide 17: Events Since the Year End
Events Since the Year End • Net asset value at 28 February 2004 up from 385p to 388p (post 12p dividend). • Exchanged contracts for €115m buy-out of Hirschmann Electronics GmbH & Co. KG. The Trust’s investment will be £2.6m. • The board appointed Close Brothers Securities - February 2004. HgCapital
Slide 18: HgCapital Differentiated Strategy
HgCapital Differentiated Strategy • Independent Private Equity Fund Manager - Consistent mid-market focus (£25m-£250m). • Significant investment in resources - 50 people today (27 professionals and 23 support), for €1.1 billion of funds under management. - Directors average 15 years’ experience. Off
Slide 19: Conclusion
Conclusion • Growth in net assets expected to continue. • Diversified portfolio along sector lines. • Continue to see good opportunity to deploy capital. • Next 12 months could see increased realisations. HgCapital Trust plc
Slide 20: Appendices
Appendices HgCapital Trust plc
Slide 21: Performance
Performance NAV Performance since December 1994 370.00 340.00 310.00 280.00 250.00 NAV (Total Return) 220.00 FTSE ALL SHARE TOTAL RETURN INDEX FTSE SMALL CAP TOTAL RETURN INDEX 190.00 160.00 130.00 100.00 70.00 Dec-94 Dec-95 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 HgCapital Trust plc
Slide 22: Portfolio: 31 December 2003
Portfolio: 31 December 2003 Raymarine Group Ltd 2001 6,015 9,957 10.4 Xtx Ltd t/a Xyratex 2003 7,977 7,977 8.4 W.E.T. Automotive Systems AG 2003 7,623 7,779 8.2 FTE Automotive GmbH 2002 6,805 7,468 7.8 Tunstall Holdings Ltd 1999 6,295 6,946 7.3 Classic C'right t/a Boosey & Haw kes 2003 6,033 6,033 6
Slide 23: Portfolio: 31 December 2003
Portfolio: 31 December 2003 Profiad Ltd 1999 1,653 711 0.7 Euroknights III L.P. 1996 1,490 657 0.7 Axiom Holdings Ltd 2001 1,721 614 0.6 Weston Presidio II, L.P. 1995 - 514 0.5 Wand Equity Portfolio II L.P. 1998 672 410 0.4 Parc Group Ltd 1995 50 314 0.3 Mednova Ltd 1998 85 267 0.3 Worldmark Interna
Slide 24: Portfolio by Sector: December 2003
Portfolio by Sector: 31 December 2003 Residual Valuation Technology Investments Year Stage Geography Valuation Basis cost £'000 £'000 Portfolio % Xtx Ltd (Xyratex) 2003 = Buy-out UK and Ireland Cost 7,977 7,977 8.4% Acuid Ltd 2001 Expansion UK and Ireland Cost 3,701 3,086: 3.2% Rolfe & Nolan Holding
Slide 25: Portfolio by Sector: 31 December 2003
Portfolio by Sector: 31 December 2003 Residual Valuation Industrial Investments Year Stage Geography Valuation Basis Cost £'000 £'000 Portfolio % W.E.T Automotive Systems AG 2003 P2P Continental Europe Cost 7,623 7,779 8.2% FTE Automotive GmbH 2002 Buy-out Continental Europe Cost 6,805 7,468 7.8% Wo
Slide 26: Portfolio by Sector: 31 December 2003
Portfolio by Sector: 31 December 2003 Residual cost Valuation Other Investments Year Stage Geography Valuation Basis £'000 £'000 Portfolio % Weston Presidio Capital III, L.P. 1998 Fund United States Net Assets 2,209 1,537 1.60% Euroknights III L.P. 1996 Fund Continental Europe Net Assets 1,490 657 0
Slide 27: Disclaimer
Disclaimer HgCapital’s communications are only directed at market counterparties and intermediate customers. HgCapital acts for its investors and for no one else in relation to its business. It will not advise, provide services to or be responsible for providing customer protections to any other per