HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2011 Earnings Presentation
32 slides from HGCapital Trust's earnings presentation, Jun 30, 2011
Slide 1: HgCapital Trust plc Interim Results 30 June 2011
HgCapital Trust plc Interim Results 30 June 2011 This document accompanies the Interim Report & Accounts for the six months ended 30 June 2011 and contains a summary of information set out in that document. Reference should be made to the full Report & Accounts rather than relying on this summary.
Slide 2: Contents
HgCapital Contents Trust plc PAGE Summary Highlights 3 The Manager 4 Trading Performance 6 NAV Performance 7 Investment Activity 11 Portfolio Review 13 Events since 30 June 2011 15 Conclusion 16 Appendices 19 © Copyright 2011 HgCapital 2
Slide 3: Summary Highlights
HgCapital Summary Highlights Trust plc The Trust continues to see long‐term capital appreciation For the six months ended NAV total return(1) +6.3% (basic) and +6.1% (diluted). NAV per share increased to 1,160.4p (basic) and 1,129.3p (diluted) 30 June 2011 from 1,118.8p (basic) and 1,090.7p (dilut
Slide 4: The Manager Investment Strategy
The Manager Investment Strategy “Investors” not “asset gatherers” STRATEGY Mid-Market (£50 million - £500 million EV) buyouts Mid-Market Sole / lead / control investors Seek multiple value levers Conservative capital structures Pan-Regional Primary coverage of northern Europe Secondary c
Slide 5: Thematic Sector Investing
The Manager Investment Strategy Thematic Sector Investing SUSTAINABLE Pick sustainable growth sectors GROWTH Invest in the highest quality, sustainable growth companies in these sub-sectors Deep sector Investment experience WELL Favourable ratio of staff to deals - team of over 85 understandin
Slide 6: Trading Performance of Top 20 Buyout Investments
Trading Trading Performance of Top 20 Buyout Investments Performance Robust performance well in excess of nominal GDP growth Last 12 months to 30 June SALES The top 20 buyout companies continued to perform and have seen sales grow by 17% in the last 12 2011 months (‘LTM’) Investing in HgCapital
Slide 7: NAV Breakdown
NAV NAV Breakdown Performance as at 30 June 2011 AT 30 JUNE 2011 AT 31 DEC 2010 £m % £m % Investments 277.9 75.3% 258.8 74.4% Liquid resources 94.3 25.6% 90.2 25.9% Other net liabilities (3.2) (0.9)% (1.0) (0.3%) Net assets 369.0 100.0% 348.0 100.0% Outstanding commitments 190.9 51.7% 212.0 60.9% Ne
Slide 8: Net Asset Value up £21m to £369m
NAV Net Asset Value up £21m to £369m Performance for the six months to 30 June 2011 © Copyright 2011 HgCapital 8
Slide 9: Analysis of unrealised movements in the portfolio
NAV Analysis of unrealised movements in the portfolio Performance (including accrued interest movement of £1.4 million) for the six months to 30 June 2011 © Copyright 2011 HgCapital 9
Slide 10: Realised and unrealised movements in the investment portfolio
NAV Realised and unrealised movements in the investment portfolio Performance (excluding accrued interest) for the six months to 30 June 2011 © Copyright 2011 HgCapital 10
Slide 11: New Investments
Investment New Investments Activity for the 6 months to 30 June 2011 In a more active 2 way market COMPANY SECTOR GEOGRAPHY ACTIVITY DEAL TYPE COST £’000 HgCapital has seen a quieter first half of 2011 with attention Mainio Vire Healthcare Nordic Region Provider of specialist disability care Buyout
Slide 12: Realisations
Investment Realisations Activity Full realisations at 1.7x carrying value at 31 December 2010 In 6 months to 30 June 2011 we CUMULATIVE CURRENT have exited two investments COST PROCEEDS(1) GAIN/(LOSS)(2) YEAR GAIN(3) and announced the intended COMPANY SECTOR EXIT ROUTE £'000 £'000 £'000 £'000 exit o
Slide 13: Buyout Investment Portfolio
Portfolio Buyout Investment Portfolio Review as at 30 June 2011 RESIDUAL TOTAL PORTFOLIO CUM. The top 10 buy-out investments YEAR OF COST VALUATION(1) VALUE VALUE represent c. 60% of the portfolio INVESTMENT INVESTMENT SECTOR LOCATION £’000 £’000 % % value 1 TeamSystem 2010 TMT Italy 24,432 26,491 9
Slide 14: Renewable Energy Fund Investments
Portfolio Renewable Energy Fund Investments Review as at 30 June 2011 The Trust holds an investment via limited partnership interests in the Manager’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) The Funds give investors an exposure to renewable power assets to deliver returns through
Slide 15: Events since end June 2011
Events Events since end June 2011 NAV per share at 31 July 2011 was 1,142.6p (basic) and 1,114.1p (diluted); movement from June mainly due to foreign exchange fluctuations. The Trust has finalised a £40 million three year standby facility with Lloyds TSB Bank plc, on an unsecured basis. A £15m
Slide 16: Conclusion Outlook & Prospects
Conclusion Outlook & Prospects as at 30 June 2011 Anticipating continued weakness in GDP. Uncertain financial environment offers opportunities to buy and grow “champions” . Continued focus on existing portfolio companies to strengthen management capabilities, market position, operational and f
Slide 17: Outperformed the FTSE All-Share Index by 2.7x over 10 years
HgCapital Trust has outperformed the FTSE All‐Share Index by Conclusion 2.7x over the last 10 years (on a net return basis) +11.7% p.a. share price 300% HgCapital Trust LPE Peer Index (1) FTSE All-Share 303% appreciation for HgCT vs. - 1.1% p.a. for the FTSE All- Share Index and 1.8% for LPE peers (
Slide 18: Outperforming its listed PE peers
Conclusion Outperforming its listed PE peers as at 30 June 2011 HgCapital Trust 300% outperformed key competitors by an average of HgCapital Trust Pantheon Electra 303% 2.5x over the last 10 years (on a net return basis) 250% SVG Graphite 3i Group Best performing peer Electra was outperformed by 1.5
Slide 19: Appendices
HgCapital Appendices Trust PAGE Performance – 10 Year Total Return 20 Performance – NAV & Share price Summary 21 Balance Sheet – Liquid Resources & Outstanding Commitments 22 Portfolio – Top 20 Buyouts Gearing 23 Portfolio – Top 20 Valuation Multiple 24 Portfolio – Split Analysis 25 Portfolio – By S
Slide 20: Total Return
Appendices Total Return(1) as at 30 June 2011 6 MONTHS 1 YEAR 3 YEARS 5 YEARS 7 YEARS 10 YEARS % % % P.A. % P.A. % P.A. % P.A. Consistent and significant Net asset value (basic) 6.3 26.7 6.7 13.5 18.5 13.5 outperformance of the FTSE All Share Index Net asset value (diluted) 6.1 23.1 5.8 12.9 18.0 13
Slide 21: NAV and Share Price Summary
Appendices NAV and Share Price Summary as at 30 June 2011 NAV has grown by 26% over AS AT % CHANGE % CHANGE the past 12 months and 6% 30 JUNE AS AT OVER LAST AS AT OVER LAST over the past 6 months 2011 31 DEC 2010 6 MONTHS 30 JUNE 2010 12 MONTHS Net assets (£’000) 369,018 347,993 6.0% 291,941 26.4%
Slide 22: Liquid Resources and Outstanding Commitments
Balance Sheet Liquid Resources and Outstanding Commitments Analysis as at 30 June 2011 AS AT 30 JUNE 2011 AS AT 31 DECEMBER 2010 £m % of NAV £m % of NAV Total liquid resources 94.3 25.6% 90.2 25.9% Outstanding commitments 190.9 51.7% 212.0 60.9% HgCapital 5 25.2 6.8% 22.3 6.4% (1) HgCapital 6 136.4
Slide 23: Gearing - Top 20 Buyout Investments
Appendices Gearing ‐ Top 20 Buyout Investments as at 30 June 2011 Average Net Debt/EBITDA of the Top 20 buyout investments was 3.3x NET DEBT/EBITDA EBITDA (CASH)/ NET DEBT PORTFOLIO VALUE BAND NUMBER £M £M £M (1.0) to 0x 1 9 (4) 11 0x to 2.0x 6 125 173 79 2.0x to 3.0x 3 49 134 31 3.0x to 4.0x 5 167
Slide 24: Valuation Multiple - Top 20 Buyout Investments
Appendices Valuation Multiple ‐ Top 20 Buyout Investments as at 30 June 2011 Average EV/EBITDA multiple used at 30 June 2011 was 9.3x for the Top 20 buyouts % OF TOP 20 BUYOUT PORTFOLIO VALUE EV/EBITDA BAND NUMBER PORTFOLIO £M <6.0x 2 9% 23 6.0x to 7.5x 4 14% 34 7.5x to 10.0x 6 27% 66 10.0x to 12.0x
Slide 25: HgCapital Trust plc Portfolio Analysis
Appendices HgCapital Trust plc Portfolio Analysis as at 30 June 2011 †Percentages are based on fixed assets (excluding hedges) and accrued interest and are shown by value ††Percentages are based on net assets © Copyright 2011 HgCapital 25
Slide 26: Portfolio by Sector
Appendices Portfolio by Sector as at 30 June 2011 RESIDUAL TOTAL PORTFOLIO YEAR OF VALUATION COST VALUATION(1) VALUE INVESTMENT INVESTMENT BASIS £'000 £'000 % TMT investments Teamsystem 2010 Cost 24,432 26,491 9.5% Visma 2006 Third party transaction 701 24,421 8.8% Lumesse (formerly Stepstone) 2010
Slide 27: Portfolio by Sector (continued)
Appendices Portfolio by Sector as at 30 June 2011 (continued) RESIDUAL TOTAL PORTFOLIO YEAR OF VALUATION COST VALUATION(1) VALUE INVESTMENT INVESTMENT BASIS £'000 £'000 % Services investments SHL 2006 Earnings 7,984 18,244 6.6% ATC 2011 Cost 9,913 10,731 3.9% JLA 2010 Written down 12,227 7,197 2.6%
Slide 28: Portfolio by Sector (continued)
Appendices Portfolio by Sector as at 30 June 2011 (continued) RESIDUAL TOTAL PORTFOLIO YEAR OF VALUATION COST VALUATION(1) VALUE INVESTMENT INVESTMENT BASIS £'000 £'000 % Renewable energy investments Hg RPP 1 2006 Net assets 14,831 14,655 5.3% Hg RPP 2 2010 Net assets 8,378 7,850 2.8% Total Renewabl
Slide 29: HgCapital at a glance
Appendices HgCapital at a glance A robust private equity platform OVERVIEW HgCapital spun out of Merrill Lynch in 2000 (formerly Mercury Private Equity) £3.6 billion client assets managed. Current funds are: − Mid-market, control buyouts in Northern Europe in 4 sectors (services, healthcare, ind
Slide 30: Investment Strategy: Thematic Sector Investing
Appendices Investment Strategy Thematic Sector Investing Top-down macro “themes” that will support many investments over many years plus proprietary “4Ps” toolkit to evaluate sustainable growth companies Processes for systematically innovating new macro-themes which will support multiple investmen
Slide 31: Disclaimer
HgCapital Disclaimer Trust plc This document accompanies the Interim Report and Accounts for the six months ended 30 June 2011 and contains a summary of the information set out in that document. Reference should be made to the full Report and Accounts rather than relying on this summary. It does not
Slide 32: Disclaimer
HgCapital Disclaimer Trust plc 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 u