HGCapital Trust PLC · LSE:HGT

HGCapital Trust — FY2009 Earnings Presentation

42 slides from HGCapital Trust's earnings presentation, March 2010

  1. Slide 1: Full year results for the year ending 31st December 2009

    HgCapital Trust plc Full year results for the year ending 31st December 2009

  2. Slide 2: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 2

  3. Slide 3: Summary

    HgCapital Summary Trust plc ƒ The portfolio is compact, appropriately valued with significant potential. ƒ A conservative balance sheet with no debt and cash to invest. ƒ We anticipate a positive new deployment environment and a subdued exit environment. ƒ Replenishing of the transaction pipeline is

  4. Slide 4: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 4

  5. Slide 5: Performance Financial Highlights

    Performance Financial Highlights % CHANGE ASSETS AT 28 FEB 2010 AT 31 DEC 2009 AT 30 JUNE 2009 AT 31 DEC 2008 OVER YEAR Net assets (£’000) 233,373* 236,044 221,163 234,094 0.8% Net assets per share 926.6p 937.2p 878.1p 929.4p 0.8% Liquid resources per share 364.5p 348.0p 399.7p 515.6p (32.5%) Share

  6. Slide 6: Performance NAV Analysis

    Performance NAV Analysis AT 28 FEB 2010 AT 31 DEC 2009 AT 30 JUNE 2009 AT 31 DEC 2008 £m % £m % £m % £m % Unlisted Investments 139.9 59.9% 147.7 62.6% 121.4 55.0% 108.9 46.5% Listed Investments 0.1 - 0.1 - 0.1 - - - Liquid resources 91.8 39.3% 87.7 37.2% 100.7 45.5% 130.0 55.5% Other net assets/(lia

  7. Slide 7: Performance Total Return

    Performance Total Return 1 YEAR TO 3 YEARS TO 5 YEARS TO 7 YEARS TO 10 YEARS TO 31 DEC 2009 31 DEC 2009 31 DEC 2009 31 DEC 09 31 DEC 09 Share price 30.2% 7.7% 15.8% 24.4% 14.4% Net asset value 3.6% 10.6% 16.5% 18.2% 12.8% FTSE All-Share Index 30.1% (1.3%) 6.5% 9.3% 1.6% *Figures are annualised © Cop

  8. Slide 8: Analysis of net asset value (NAV) movements

    Performance Analysis of net asset value (NAV) movements for the year ending 31 December 2009 © Copyright 2010 HgCapital 8

  9. Slide 9: Analysis of unrealised movements in investment portfolio

    Analysis of unrealised movements in investment portfolio Performance (including accrued interest movement of £2.9 million) for the year ending 31 December 2009 © Copyright 2010 HgCapital 9

  10. Slide 10: Realised and unrealised movements in investment portfolio

    Realised and unrealised movements in investment portfolio Performance (including accrued interest) during the year ending 31 December 2009 © Copyright 2010 HgCapital 10

  11. Slide 11: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 11

  12. Slide 12: Portfolio Review: Top investments

    Portfolio Portfolio Review Top 10 buy‐out investments and the RPP fund investment represent over 85% of value *Value at *Value at % of invested Investment Cumulative Investment Sector 31/12/08 31/12/2009 portfolio Principal Reason for Change Date value % £m £m 31/12/09 Visma 2006 TMT 14.4 27.7 18.8%

  13. Slide 13: Valuation Basis and Vintage

    Portfolio Valuation Basis and Vintage Review As at 31 Dec 2009 by value VALUATION BASIS VINTAGE Year Net assetsYear2009 2009 Pre Pre 2005 2005 12% 12% 15% 15% 2009 9% pre 2005 12% Year Year2008 2008 Year Year2005 2005 20% 12% 12% Cost 10% 10% 2008 15% 6% Year Year2007 2007 23% 23% Year Year2006 2006

  14. Slide 14: Sector coverage of investments

    Portfolio Sector coverage of investments Review As at 31 Dec 2009 by value BY VALUE BY NUMBER Services Fund Renewable Energy Renewable Energy Services 2% 1% 3% 8% 10% Industrials 22% TMT Industrials 31% Fund 12% 10% Consumer & Consumer & Leisure TMT Leisure 14% 21% 17% Healthcare Healthcare 29% 21%

  15. Slide 15: Geography and Stage

    Portfolio Geography and Stage Review As at 31 Dec 2009 by value BY GEOGRAPHY BY STAGE North Benelux America Expansion Fund Europe 1% 3% 1% Renewable Energy 1% 8% 8% Germany 12% UK 50% Nordic Region 26% Buyout 90% © Copyright 2010 HgCapital 15

  16. Slide 16: Portfolio

    Portfolio Portfolio Review ƒ Top 10 buyout investments circa. 78% of value continue to out-perform, year on year sales growth and EBITDA growth of circa. 7% and 18% respectively. ƒ Next 10 investments have been harder hit but this is reflected in the current values. ƒ Overall trading has stabilised

  17. Slide 17: Top10 HgCapital Trust buyouts continue to out-perform

    Portfolio Top10 HgCapital Trust buyouts continue to out‐perform Review PERFORMANCE SUMMARY OF TOP10 INVESTMENTS COMMENTS ƒ Top10 HgCapital Trust buyouts outperformed UK GDP growth by ~4x in 2008 ƒ Crisis slowed down sales growth in 2009, but did not stop companies from adding sales © Copyright 2010

  18. Slide 18: Top10 HgCapital Trust buyouts continue to out-perform

    Portfolio Top10 HgCapital Trust buyouts continue to out‐perform Review PERFORMANCE SUMMARY OF TOP10 INVESTMENTS COMMENTS ƒ EBITDA has grown at rates of ~1.5-2x sales growth ƒ Restructuring during 2009 positioned portfolio well to take full advantage of improving economic climate (current degree of o

  19. Slide 19: Existing portfolio valuations may be seen as a store of value

    Portfolio Existing portfolio valuations may be seen as a store of value Review ƒ Valuations conform with IPEV guidelines. Consistent Application of Valuation Policies ƒ Historic earnings when earnings are rising, forecast earnings when they are falling. ƒ Average uplift over book value on exit has b

  20. Slide 20: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 20

  21. Slide 21: Investments

    Investment Investments Activity COST COMPANY SECTOR ACTIVITY DEAL TYPE £’000 New Investments Goldshield Healthcare Markets pharmaceuticals and nutraceuticals in the UK Buyout 11,275 * Epyx TMT A private car fleet services electronic marketplace Buyout 5,942** Total new Investments 17,217 Further Inv

  22. Slide 22: 2009 Realisations

    Investment 2009 Realisations Activity RESIDUAL COST BOOK VALUE AT PROCEEDS CUMULATIVE CURRENT YEAR COMPANY SECTOR EXIT ROUTE 31 DEC 2009 GAIN/(LOSS)** GAIN/(LOSS)*** £’000 £’000 £’000 £’000 £’000 Loan stock Pulse staffing Healthcare redemption, interest - 3,141 5,757 5,757 2,616 and dividend Hirschm

  23. Slide 23: Investment Environment and Prospects

    Investment Investment Environment and Prospects Activity ƒ Our investment stance has been influenced by our concern that there will be a second leg to the recession. - Accordingly we have little interest in cyclical stories. - We are very focused on buying growth companies at valuations below long r

  24. Slide 24: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 24

  25. Slide 25: Relationship between HgCapital, HgCapital Trust and HgCapital 6 fund

    Manager Relationship between HgCapital (“the Manager”), HgCapital Update Trust and the HgCapital 6 fund £1.9bn Manages investment portfolio HgCapital Other investors The Manager Trust in HgCapital 6 £280m £1,620m Same terms (management fee, etc.) Sources, arranges and manages investment Investment I

  26. Slide 26: HgCapital's strategy and tactics have been effective

    Manager HgCapital’s strategy and tactics have been effective and are well Update suited to the next stage in the life of Private Equity ƒ Multiple value levers. MID-MARKET AND PAN REGIONAL ƒ Conservative capital structures. (UK, Germany, Northern Europe) ƒ Multiple exit options not overly dependent

  27. Slide 27: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 27

  28. Slide 28: Events since the year end

    HgCapital Events since the year end Trust plc ƒ Hoseasons sold in February for a multiple of 2.3x original cost. This represents a 105% uplift to the carrying value at 31st December 2009. This equates to 10.3p per share. ƒ Net asset value per share for January 2010 and February 2010 was 932.5p and 9

  29. Slide 29: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 29

  30. Slide 30: Conclusion

    HgCapital Conclusion Trust plc ƒ Sound portfolio with significant potential. ƒ A strong belief that we are entering a buyer’s market because economic conditions will continue to be tough and equity is in short supply. ƒ We anticipate a subdued exit environment. ƒ HgCapital Trust well positioned to c

  31. Slide 31: Contents

    HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since the year end Conclusion Appendices © Copyright 2010 HgCapital 31

  32. Slide 32: HgCapital Trust has rewarded the patient investor

    HgCapital Trust has rewarded the patient investor – Appendices outperforming the FTSE All‐Share Index by 3x and listed PE peers by 2.5‐7x over the last 10 years +11.6% p.a. share price appreciation for HgCT vs. (3.5)% p.a. for LPE Peers, (0.6)% p.a. for the FTSE All-Share Index 10 year total return

  33. Slide 33: Outperforming its listed PE peers

    Appendices HgCapital Trust – Outperforming its listed PE peers HgCapital Trust outperformed key competitors by an average of 4.5x over the last 10 years Best performing peer Electra was outperformed by 2.5x and worst performing SVG by >7x 350% HgCapital Trust Candover Electra SVG Graphite 3i Group 3

  34. Slide 34: Analysis of Movement in NAV

    Appendices Analysis of Movement in NAV £’000 Opening net asset value as at 1 January 2009 234,094 Realised proceeds in excess of book value at 31 December 2008 (excludes gross revenue) 493 Net unrealised depreciation of investments (excluding accrued interest) 5,780 Gross revenue 9,682 Priority prof

  35. Slide 35: Portfolio by Sector: 31 December 2009

    Appendices Portfolio by Sector: 31 December 2009 Investment Year of Residual cost Total valuation* Valuation basis Portfolio value % Investment £’000 £’000 TMT Investments Visma 2006 Earnings 14,609 27,729 18.8% Epyx 2009 Cost 5,942 5,942 4.0% Achilles 2008 Cost 5,226 5,226 3.5% Elite 2005 Written d

  36. Slide 36: Portfolio by Sector: 31 December 2009

    Appendices Portfolio by Sector: 31 December 2009 Investment Year of Residual cost Total valuation* Valuation basis Portfolio value % Investment £’000 £’000 Consumer & Leisure Investments Sporting Index 2005 Earnings 7,186 8,021 5.4% Schleich 2006 Earnings 4,634 7,994 5.4% Americana 2007 Earnings 4,6

  37. Slide 37: Portfolio by Sector: 31 December 2009

    Appendices Portfolio by Sector: 31 December 2009 Investment Year of Residual cost Total valuation* Valuation basis Portfolio value % Investment £’000 £’000 Renewable Energy Investments HgRPP LP 2006 Net assets 11,987 11,620 7,9% Total Renewable Energy 11,987 11,620 7.9% Services Investments SHL 2006

  38. Slide 38: Realisation history since mid-2005 at 2x book value

    Appendices Realisation history since mid‐2005 at 2x book value Holding Value Multiple (1) 7.5x Orbis- 7.0x com 6.5x Classic 6.0x Copyright 5.5x 5.0x 4.5x 4.0x 3.5x Blue Minerva 3.0x World- Doc-M Hofmann mark 2.5x Menu Castlebeck CSG Schenck Average Holding Value Multiple: 2x (2) 2.0x Clin- Phone Tun

  39. Slide 39: HgCapital – Strategic relevance

    Appendices HgCapital – Strategic relevance STRATEGY Mid-Market. ƒ £50 million - £500 million EV buyouts/buy-ins: − Consistently strong deal-flow. − Multiple exit options. − Not overly dependent on capital markets (for returns, financing or exit). − Defensible market positions / proven records. − Abi

  40. Slide 40: HgCapital – Tactical advantage

    Appendices HgCapital – Tactical advantage TACTICS Sector-focused. ƒ 5 dedicated sector teams (developed over 12 years) covering c.70% of the market. ƒ Annual business planning process drives agenda for each team. ƒ Strategy superseding geography in investment targeting. Intensive post-transaction pl

  41. Slide 41: Disclaimer

    HgCapital Disclaimer This document constitutes an advertisement and is not a prospectus. It does not constitute an offer to sell or a solicitation of an offer to buy any securities described herein in the United States or in any other jurisdiction, nor shall it, by the fact of its distribution, form

  42. Slide 42: Disclaimer

    HgCapital Disclaimer Forward-looking statements are not guarantees of future performance. A number of important factors could cause actual results or outcomes to differ materially from those expressed, projected or implied in any forward-looking statements. No one undertakes publicly to update or re

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