HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2018 Earnings Presentation
30 slides from HGCapital Trust's earnings presentation, March 2019
Slide 1: Get connected: 2018 Annual Results
Get connected To a universe of technology and service businesses 2018 Annual Results This document accompanies the Annual Report & Accounts for the year ended 31 December 2018 and contains a summary of information set out in that document. Reference should be made to the full Report & Accounts rathe
Slide 2: Contents
Contents About the Manager 03 About the Company 10 Year in review 12 Key financial highlights 13 Portfolio activity 18 Outlook 21 Appendix 22 Note: References in this presentation to HgCapital Trust plc have been abbreviated to ‘HgCapital Trust’ or ‘the Company’. Hg refers to the trading name of Hg
Slide 3: About the Manager
About Building businesses that change how we all do business > £4.5 billion raised in last 2 years Most active global technology PE investor in 2018 170 people and >20 nationalities Source: Pitchbook, Hg © Copyright Hg 2019 3
Slide 4: About (continued)
About (continued) ▪ Founded in 1990; independent since 2001 in a sustainably owned partnership EXPERTISE IN TECHNOLOGY ▪ 65 platform investments in software and services businesses, with 36 realisations AND SERVICES ▪ Realised returns of 2.6x / 34% gross IRR generated on >£6.5bn of proceed ▪ Team of
Slide 5: Large and well-resourced investment machine
Large and well-resourced investment “machine” DEAL EXECUTION Directors & Associates & Partners Principals Analysts Total 5 4 7 16 9 10 15 34 3 4 7 14 Total: 64 OPERATIONS GROUP 35 professionals TRANSACTION SUPPORT EXECUTIVES Client Services - 8 Finance - 4 Legal - 3 Marketing & HR - 2 ~40 further st
Slide 6: Targeting Hg sweet-spot business models
Targeting Hg “sweet-spot” business models Focused on specific characteristics across technology and service businesses HG BUSINESS MODEL ATTRIBUTES DEEP SECTOR KNOWLEDGE Business critical need delivered as software, Tax & Accounting service or component ERP & Payroll Technology Legal & Compliance Su
Slide 7: Focused on eight distinct end-market clusters
…focused on eight distinct end-market ‘clusters’ End-market specialisation helps us to build deep know-how GROSS TOTAL CLUSTER CURRENT PORTFOLIO REALISED PROCEEDS RETURNS TAX & ACCOUNTING £1,810m 3.1x / 36% 15 years ERP & PAYROLL £1,603m 3.0x / 34% 15 years LEGAL & REGULATORY COMPLIANCE £291m 2.1x /
Slide 8: Hg Software Inc
‘Hg Software Inc’ If ‘Hg Software Inc’ were listed as a single group, it would be the third largest and fastest growing technology company in Europe In aggregate, our current tech investments have over SCALE: LARGEST EUROPEAN TECHNOLOGY £3.7billion revenues COMPANIES WITH FOCUS ON SOFTWARE AND TECH-
Slide 9: Operations group driving value
Operations group driving value In 2018, 14 events enabled > 700 people from our portfolio companies to ‘harness the power of the Hg community’ Growth capabilities Platform PROPOSITION DIGITAL DATA ORGANISATION & & PRICING DEMAND ANALYTICS TALENT SALES CUSTOMER TECHNOLOGY & RESPONSIBLE EXCELLENCE SUC
Slide 10: About the Company: Listed access to unquoted technology and services
About the Company Listed access to unquoted technology and services A long-term investment delivering consistent, compounding growth continuing to outperform the FTSE All-Share Index 30 years old in 2019, 25 years managed by Hg Entry into FTSE 250 October 2018 One of the top 10 performing investment
Slide 11: HgCapital Trust plc is Hg's largest single investor
About the Company HgCapital Trust plc is Hg’s largest single investor Assets Under Management 49% Leading HgCT NAV Global Institutional c. £10bn 8% £1.1bn LPs Portfolio value, cash & Invested capital and commitments to Hg undrawn commitments Undrawn Commitments to commitments Hg funds less cash to H
Slide 12: Year in review: Portfolio activity 2018
Year in review Portfolio activity 2018 11 New and further Investments c. £187 million 12 realisations c. £247 million 6 refinancings c. £25 million Investments Realisations and refinancings Note: All figures relate to HgCapital Trust plc returns and investments and are provided gross of carried inte
Slide 13: Key financial highlights: Full year to December 2018
Key financial highlights Full year to 31 December 2018 Strong trading and exits above book value continue to drive positive performance NAV per share +14% ➔ £805 million net assets Share price +4% ➔ £666 million market cap. FY Dividend 46p ➔ 2.6% yield NAV per share outperformed the FTSE All-Share i
Slide 14: Key financial highlights 2019 YTD
Key financial highlights Key financial highlights 2019 YTD Share price reached record high in Q1 2019 Share price +12% ➔ £746 million market cap. £36 million returned to the Company £63 million invested on behalf of the Company Note: As at 28 February 2019, figures refer to share price performance o
Slide 15: The balance sheet as at February 2019
Key financial highlights The balance sheet as at 28 February 2019 Levers have been put in place to manage liquid resources and outstanding commitments Liquid resources £116 million (15% of NAV) Undrawn bank facility of £80 million Outstanding commitments £411 million (52% of NAV) Opt-out facility ac
Slide 16: The top 20 trading performance
Key financial highlights The top 20 trading performance Top 20 currently represents 89% of the portfolio by value LTM sales growth +25% (17% 2017) Aggregate sales of £3.0 billion LTM EBITDA growth +27% (15% 2017) Aggregate EBITDA of £832 million ➔ EV to EBITDA multiple 17.3x (15.9x 2017) Margins of
Slide 17: The top 20 trading performance continued
Key financial highlights The top 20* trading performance continued >80% seeing double-digit revenue growth with >75% of the top 20 delivering double-digit EBITDA growth LTM Sales 2,000 TOP 5 (51% OF PORTFOLIO BY VALUE) 1,800 LARGEST POSITIONS 1,600 ARE PERFORMING WELL 1,400 £million 1,200 1,000 800
Slide 18: Historic realisation and investment activity
Portfolio activity Historic realisation and investment activity Continued strong realisation and investment activity, net seller environment 2006 – 2008 2009 – 2015 2016 – 2018 NET SELLERS NET BUYERS NET SELLERS £272m 55% £224m £187m £135m £111m £106m £104m £92m £87m £87m £83m £82m £80m £80m £73m £6
Slide 19: Significant realisations over 2018
Portfolio activity Significant realisations over 2018 Gross £272m returned to the Company over the year (£217 million net) 27% 47% 18% 56% 29% 22% 31% 66% 43% 37% 4.9x 4.7x 4.3x 4.2x 3.6x 3.6x 3.0x 3.0x 2.6x 2.1x 1.7x 1.4x 1.3x 0.9x 1.0x 0.9x 0.9x 1.0x 0.6x 0.5x £24m proceeds £20m proceeds £18m proc
Slide 20: Hg continues to selectively invest
Portfolio activity Hg continues to selectively invest Investing with a cautious and disciplined strategy into strategies we know well Making repeatable investments in Hg Saturn and Transition Capital the types of companies and ‘clusters’ £m Hg8 and Mercury 2 that we have invested in before £73m 9% 1
Slide 21: Outlook
Outlook Strong trading, combined with capital returns from exits above book value, will continue to drive value for our investors ▪ It has been another strong year of performance for the Company with a record number of realisations ▪ Hg has selectively invested in “sweet-spot” businesses in clusters
Slide 22: Appendix
Appendix The top 20 portfolio 23 Asper renewable energy 25 Hg resources 26 Hg funds snapshot 27 Investment Trust ISA ranking 28 Contact 29 Disclaimers 30 © Copyright Hg 2019 22
Slide 23: The top portfolio at December 2018
Appendix The top 20 portfolio at 31 December 2018 The top 10 buy-out investments represent 69% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2018 1 Visma1 2014 Technology Scandinavi
Slide 24: The top portfolio at December 2018 (continued)
Appendix The top 20 portfolio at 31 December 2018 (continued) The top 20 buy-out investments represent 89% of the total value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2018 11 Foundry* 2015 Techno
Slide 25: Asper renewable energy
Appendix Asper renewable energy High quality European renewable energy projects managed by Asper Investment Management currently representing 3.2% of the portfolio value (£22 million) ▪ The Company invested via LP interests in Asper’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) ▪ Exposur
Slide 26: Hg funds snapshot
Appendix funds snapshot All funds first or second quartile; improving as we have specialised Gross Fund % in Tech & Services Realised Total Saturn I (2017) 100% - 1.2x / 50% £1.5 billion Mercury 2 (2017) 100% - 1.4x / 138% £575 million (Genesis)Hg8 (2017) 100% - 1.0x / 13% £2.5 billion (Genesis)Hg7
Slide 27: One of the top performing ISA eligible investment companies
Appendix One of the top 10 performing ISA eligible investment companies over the last 20 years The AIC’s research shows that if an investor had invested each year’s maximum ISA limit from 1999 to 2018 – an investment of £206,560 in total – HgCapital Trust would have turned it into £873,222. Company
Slide 28: Contact
Appendix Contact For further information on HgCapital Trust plc, please visit our website: www.hgcapitaltrust.com Or contact Laura Dixon +44 (0)20 7089 7888 investorrelations@hgcapitaltrust.com © Copyright Hg 2019 28
Slide 29: Disclaimer
Appendix Disclaimer NOT FOR RELEASE, PUBLICATION OR DISTRIBUTION, DIRECTLY OR INDIRECTLY, IN WHOLE OR IN PART, INTO OR WITHIN THE UNITED STATES OR TO “US PERSONS” (AS DEFINED IN REGULATION S UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE “SECURITIES ACT”) OR INTO OR WITHIN AUSTRALIA
Slide 30: Disclaimer
Appendix Disclaimer These materials include statements that are, or may be deemed to be, "forward-looking statements" which are based on current expectations and projections about future events. In some cases, these forward-looking statements may be identified by the use of forward-looking terminolo