HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2004 Earnings Presentation
29 slides from HGCapital Trust's earnings presentation, Mar 9, 2005
Slide 1: HgCapital Trust plc Full Year Results to 31 December 2004
HgCapital Trust plc Full Year Results to 31 December 2004 Analyst Briefing – 9 March 2004
Slide 2: Introduction
Introduction • Solid net asset value growth. • Slow down in the pace of deployment after a strong 2003 – down circa 25% on prior year, principally due to pricing. • Good flow of realisations during the year with a good pipeline of prospects. • Narrowing of the discount, as sector and stock re-rated.
Slide 3: Financial Highlights
Financial Highlights At 31 December At 31 December 2004 2003 % change Assets Net assets (£'000) 120,025 96,965 23.8% Net assets per share 476.5p 385.0p 23.8% Share price (mid-market) 451.5p 289.5p 56.0% Discount (%) 5.2 24.9 79.0% Revenue (1) Net revenue (£'000) 2,649 3,969 (33.3%) Earnings per shar
Slide 4: Performance – Total Return
Performance – Total Return 10 years to 7 years to 5 years to 3 years to 1 year to 31-December-04 31-December-04 31-December-04 31-December-04 31-December-04 Share price 16.1% 16.3% 13.0% 19.3% 62.0% Net assets per share 14.8% 11.7% 9.2% 10.4% 25.8% FTSE All-Share 8.1% 2.8% (3.0%) 1.8% 12.8% FTSE Sma
Slide 5: Attribution analysis of current year movement in NAV
Attribution analysis of current year movement in NAV £’000 Opening net asset value as at 1 January 2004 96,965 Gross revenue 4,905 Expenditure (3,339) Taxation (514) Dividend payable (2,015) Realised proceeds in excess of book value at 31 December 2003 (excludes gross revenue) 12,132 Unrealised move
Slide 6: Principal realised and unrealised movements in NAV
Principal realised and unrealised movements in NAV PBR (4.0) Realised proceeds in excess of Acuid (3.3) book value at 31 Decem ber 2003 (excludes gross revenue) Match (2.5) Unrealised m ovem ents on Burns e-Com m erce (0.9) investm ents Profiad (0.7) WatchMark-Com nitel (0.7) Paddy Pow er 0.4 Other
Slide 7: Investments
Investments Total Deal Cost Size Company Name Business Description Sector Geography £m (1) £m New Blue Minerva (Iris) Accounting and business software Technology UK 6.6 £103 Clarion Events Exhibition organiser Media UK 4.3 £49 Hirschmann Electronics Electronics equipment and components Industrial Ge
Slide 8: Realisations
Realisations Total Return Proceeds (1) Cost in period Com pany Nam e Status Type £m £m £m Raymarine Partial IPO 18.4 5.8 12.6 FTE Automative Partial Re-capitalisation 11.7 6.8 4.9 Patientline Full Quoted 3.7 0.4 3.3 Tunstall Partial Re-capitalisation 3.3 - 3.3 Rolfe & Nolan Partial Re-capitalisation
Slide 9: Investment Activity
Investment Activity 60 50 Sellers Sellers 40 Buyers Cautious 30 20 10 0 1998 1999 2000 2001 2002 2003 2004 Investments Realisations HgCapital Trust plc
Slide 10: NAV Analysis
NAV Analysis At 31 December 2004 At 30 June 2004 At 31 December 2003 £m % £m % £m % Unlisted investments 85.6 71.3 90.7 87.2 89.2 92.0 Listed investments 17.6 14.7 15.4 14.8 6.1 6.3 Cash/Government securities 13.1 10.9 0.6 0.6 0.6 0.6 Other asstes/liabilities 3.7 3.1 -2.7 -2.6 1.1 1.1 Net Assets 120
Slide 11: Portfolio – Top 15 represent 81% by value
Portfolio – Top 15 represent 81% by value % of invested Holding value at Holding value at portfolio Investment Sector 31/12/2004 31/12/2003 31/12/2004 Reason for Change £m £m Tunstall Holdings Ltd Healthcare 11.0 6.9 10.6 Earnings Xtx Ltd t/a Xyratex Technology 10.4 8.0 10.1 IPO W.E.T. Automotive Sy
Slide 12: Valuation Basis
Valuation Basis Third party transaction Written down 2% 8% Net assets Cost 6% 30% Mid-market price (with discounts where appropriate) 17% Earnings 37% HgCapital Trust plc
Slide 13: Sector Coverage of investments
Sector Coverage of investments By value By number Renewable Other Energy Other/funds 5 Healthcare 1% 3% 11 Leisure Healthcare Funds 8% 27% 6 Industrials Renewable 17% Energy Media 1 3 Leisure 3 Consumer Industrials 6% Media 5 Technology 14% Consumer 10 2 Technology 24% A diversified portfolio along
Slide 14: Geography / Stage
Geography / Stage By geography By stage Funds Continental Expansion 2% Europe 6% 23% Venture 6% United States 2% UK & Ireland 75% Buy out 86% Increasing exposure to Continental Europe Focus on Buy-outs Note: Analysis by value HgCapital Trust plc
Slide 15: Vintage Year: Volume and Value
Vintage Year: Volume and Value 10 By number By value (£m) 9 9 8 7 7 35 6 6 30 29 5 5 5 5 25 4 20 17 3 15 15 14 3 12 10 8 2 5 4 1 0 0 Pre 1999 2000 2001 2002 2003 2004 Pre 1999 1999 2000 2001 2002 2003 2004 1999 The charts above exclude 6 fund investments made pre 99 valued in aggregate at £3.7m. HgC
Slide 16: Market Outlook
Market Outlook • Global challenges around shifting exchange rates; slowing growth, low pricing power, economic imbalances and increasing energy costs. • UK market attracting an increasing number of investors, and increasing fragmentation. Less so in Germany and Benelux, but still competitive. • High
Slide 17: HgCapital Manager Outlook
HgCapital Manager Outlook • Continuous adaptation to stay ahead. • Remain committed to mid-market strategy (£25m-£250m EV). • Focus on buy-outs. • Ongoing measured shift of resources to Germany and Benelux. • Continue to deepen sector based strategy which is serving us well. • Continue to deepen por
Slide 18: Investment and Portfolio Outlook
Investment and Portfolio Outlook • Realisations increased as expected and more to go, subject to market conditions. • New investment activity slowed in 2004 from 2003 despite more opportunities seen. Expect increased investment rate with focus on buy-outs. • Portfolio well under control with value g
Slide 19: Events Since the Year End
Events Since the Year End • Net asset value at 28 February 2005 was 480.3p. • Second tranche of proceeds from the Rolfe & Nolan recapitalisation of £0.8m. • We have today announced the sale of FTE to PAI Partners a French PE house. The deal is subject to merger clearance (estimated end of April). Pr
Slide 20: Conclusion
Conclusion • Strong growth in net assets expected to continue. • Next 12 months should see a number of realisations. • Expect to see better opportunities to deploy capital in 2005/6. • Overall the portfolio is in good shape with good earnings growth and cash flow. HgCapital Trust plc
Slide 21: Appendices
Appendices HgCapital Trust plc
Slide 22: Ten year total return performance
Ten year total return performance 490 460 430 400 370 340 310 Share price 280 250 FTSE All-Share 220 FTSE SmallCap 190 NAV 160 130 100 70 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- 94 95 96 97 98 99 00 01 02 03 04 HgCapital Trust plc
Slide 23: Portfolio: 31 December 2004
Portfolio: 31 December 2004 Residual cost Valuation Investment Year £000 £000 % of portfolio Tunstall Holdings Ltd 1999 6,998 10,950 10.6% Xtx Ltd t/a Xyratex ** 2003 6,995 10,386 10.1% W.E.T. Automotive Systems A.G. 2003 7,623 7,816 7.6% FTE Automotive GmbH 2002 0 7,132 6.9% Blue Minerva Limited t/
Slide 24: Portfolio: 31 December 2004
Portfolio: 31 December 2004 Residual cost Valuation Investment Year £000 £000 % of portfolio Orbiscom Ltd 2001 3,063 681 0.7% Bertram Group Holdings Ltd 1999 2,848 548 0.5% Acuid Ltd 2001 4,448 539 0.5% Euroknights III L.P. 1996 1,457 525 0.5% PARC Group Ltd 1995 48 361 0.4% Wand Equity Portfolio II
Slide 25: Portfolio by Sector: 31 December 2004
Portfolio by Sector: 31 December 2004 Residual Valuation Technology Inve stments Year Stage Geography Valuation Basis cost £'000 £'000 Portfolio % Xtx Ltd 2003 Buy-out UK and Ireland Quoted 6,995 10,386 10.0% Blue Minerva Ltd 2004 Buy-out UK and Ireland Cost 6,626 6,626 6.0% Rolfe & Nolan Holdings P
Slide 26: Portfolio by Sector: 31 December 2004
Portfolio by Sector: 31 December 2004 Residual Valuation Industrial Investments Year Stage Geography Valuation Basis Cost £'000 £'000 Portfolio % W.E.T. Automotive Systems A.G. 2003 P2P Continental Europe Cost 7,623 7,816 8.0% FTE Automotive GmbH 2002 Buy-out Continental Europe Earnings - 7,132 7.0%
Slide 27: Portfolio by Sector: 31 December 2004
Portfolio by Sector: 31 December 2004 Residual cost Valuation Renewable Energy Year Stage Geography Valuation Basis £'000 £'000 Portfolio % Hg Renewable UK Holdings I Ltd 2004 Expansion UK and Ireland Cost 1,015 1,015 1.0% 1,015 1,015 1.0% Fund / Other Investments Weston Presidio Capital III, L.P. 1
Slide 28: Principal realised and unrealised movements in NAV during 2004
Principal realised and unrealised movements in NAV during 2004 Realised gain/(loss) Unrealised gain/(loss) Total £'m £'m £'m Raymarine plc 8.0 3.7 11.7 FTE Automative GmbH 3.3 6.9 10.2 Xtx Ltd 0.6 3.4 4.0 Tunstall Holdings Ltd 3.3 3.3 Rolfe & Nolan Holdings Plc 2.2 2.2 Castlebeck Group Ltd 1.6 1.6 H
Slide 29: 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