HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2006 Earnings Presentation
28 slides from HGCapital Trust's earnings presentation, March 2007
Slide 1: Full Year Results to 31 December 2006
Full Year Results to HgCapital Trust plc 31 December 2006
Slide 2: Introduction
Introduction • A record year for realisations • A record year for investments Strong growth in net assets and good prospects. • Increased weighting to Continental Europe • Portfolio growing well 2
Slide 3: Financial highlights
Financial highlights At 31 December 2006 At 31 December 2005 % change Assets Net assets (£'000) 187,135 156,487 19.6% Net assets per share 743.0p 621.3p 19.6% Share price (mid-market) 731.0p 583.5p 25.3% Discount (%) 1.6% 6.1% 73.5% Year ended Year ended % change 31 December 2006 31 December 2005 Re
Slide 4: Performance – total return
Performance – total return Consistent long-term performance 1 year to 3 years to 5 years to 7 years to 10 years to 31-December-06 31-December-06 31-December-06 31-December-06 31-December-06 Share price 27.2% 39.3% 23.2% 17.4% 18.3% Net asset value 21.4% 25.8% 16.3% 13.7% 14.5% FTSE All-Share 16.8% 1
Slide 5: Attribution Analysis of Movement in NAV
Attribution Analysis of Movement in NAV Strong growth in earnings, cash flow and realisations from the portfolio have driven value £’000 Opening net asset value as at 1 January 2006 156,487 Gross revenue 7,769 Expenditure (3,557) Taxation (1,227) Dividend paid (2,519) Realised proceeds in excess of
Slide 6: Principal realised and unrealised movements in NAV
Principal realised and unrealised movements in NAV The portfolio continues to perform strongly Castlebeck 18.1 Hirschmann 6.0 The Sanctuary 5.2 Elite 3.4 Xtx 3.0 Blue Minerva 2.4 W orldmark 2.2 Clinphone 1.31.0 (0.5) Raymarine 0.9 Other (1.5) 0.2 Eagle Rock (0.9) Match Holdings (1.9) Classsic Copyri
Slide 7: Investments
Investments £45 million selectively deployed in businesses with low cyclicality Cost Total Acquisition Company Sector Activity Deal type Geography £m Value 'm New Visma TMT Accounting and business software Buy-out Norway 13.3 £382 Paragon Healthcare Care homes Buy-out UK 10.8 £322 Surrey (t/a SHL) S
Slide 8: Realisations
Realisations A record year for realisations Cost Proceeds (1) 2006 return (1) Total Return Multiple of Company Sector Exit route £m £m £m IRR Original Cost Castlebeck Healthcare Trade sale 0.9 28.2 27.3 78% 8.6 Travelsphere Consumer and Leisure Financial 3.9 7.9 4.0 27% 2.5 Raymarine Consumer and Le
Slide 9: Events since the end of the Year
Events since the end of the Year A busy start to 2007 • New investment by the Consumer & Leisure team in a £186 million buy out of Americana, the owner of the clothing brands Bench and Hooch. HGT invested £4.7 million. • Sold Bertrams, Worldmark, Luxfer and South Wharf with proceeds of £6.5 million
Slide 10: NAV Analysis
NAV Analysis 80% invested, with cash resources available to exploit new opportunities At 31 December 2006 At 31 December 2005 £m % £m % Unlisted investments 134.3 71.8 109.5 70.0 Listed investments 14.3 7.6 18.7 11.9 Cash/Government securities 36.5 19.5 25.4 16.2 Other net assets/(liabilities) 2.0 1
Slide 11: Portfolio – Top 20 represent over 90% by value
Portfolio – Top 20 represent over 90% by value Strong earnings growth continues with aggregate profits up 20% year on year. % of invested Holding value Holding value portfolio Cumulative Investment Sector at 31/12/2006 at 31/12/2005 31/12/2006 value % Reason for Change £m £m 1 VISMA TMT 12.3 - 8.2%
Slide 12: Vintage Year: Valuation Basis and Vintage
Vintage Year: Valuation Basis and Vintage A relatively young portfolio following an active 12 months Net assets Quoted Written down Pre 2001* 2% 9% 2001 10% 11% 2% Other 2006 2002 2% 30% 2% Earnings 2003 28% 13% 2004 Cost 17% 49% 2005 25% st As at 31 December 2006 12
Slide 13: Sector Coverage of Investments
Sector Coverage of Investments A well diversified portfolio PE Renewable Fund Renewable PE energy energy 1% Fund Services 1% 1 5% 4 Consumer & TMT Leisure Services 12 13% TMT 5 40% Healthcare 11% Consumer & Leisure 5 Industrials Healthcare 8 Industrials 7 29% By value By number st As at 31 December
Slide 14: Geography / Stage
Geography / Stage Increasing exposure to Continental Europe and a focus on buy-outs Funds Ireland Europe 1% Renewable 1% other Expansion energy North 10% 7% 1% America Venture 5% 1% Benelux UK 7% 46% Germany 31% Buy-out 90% By geography By stage Note: Analysis by value st As at 31 December 2006 14
Slide 15: HgCapital Strategy and Tactics
HgCapital Strategy and Tactics • Mid-market • Pan-regional Strategy • Broad market coverage • Sector-focused • Intensive portfolio company planning Tactics • Heavily resourced relative to funds under management 15
Slide 16: Investment Prospects
Investment Prospects Performing in competitive environments • Competition is strong and asset valuations in line with quoted markets. • Focus on quality or complexity. • Stay attuned to global economic capital market prospects. • Direct sourcing and sector research to get ahead of the game. • Priori
Slide 17: Portfolio Outlook
Portfolio Outlook In good shape and growing • Delivering strong year on year earnings growth and cash flow with clarity of strategy. Tail reduced. • Strong involvement with management. • Further realisations are planned over next year, trade sales or IPO’s and recapitalisations, all subject to marke
Slide 18: HgCapital Update
HgCapital Update Growth and change • HGT have committed €21 million to HgCapital’s new Renewable Power Partners fund. The fund closed in December 2006 at €300 million. • Merged Media and Technology sector teams to form the TMT team. • Merged Consumer and Leisure sector teams. • Launched the Services
Slide 19: Conclusion
Conclusion • 2006 continued historic out performance. • Portfolio in good shape and producing Well set for future strong growth in profit and cash flow. value growth • Clear strategy and tactics for a market that remains competitive. 19
Slide 20: Appendices
Appendices 20
Slide 21: Performance Index
Ten Year Total Return Performance 580 550 520 490 460 430 400 Performance Index 370 340 310 280 250 220 190 160 130 100 70 Dec-96 Dec-97 Dec-98 Dec-99 Dec-00 Dec-01 Dec-02 Dec-03 Dec-04 Dec-05 Dec-06 NAV FTSE ALL SHARE PRICE FTSE Small CAP 21
Slide 22: Portfolio: 31 December 2006
Portfolio: 31 December 2006 Year of Residual cost Valuation Portfolio Cum. Investment investment Sector Location £000 £000 value % Value % 1 VISMA Holdings 2006 TMT Norway 13,268 12,251 8.2 8.2 2 Schenck Process SA 2005 Industrials Germany 11,698 11,537 7.8 16.0 3 Paragon Ltd 2006 Healthcare UK 10,7
Slide 23: Portfolio: 31 December 2006
Portfolio: 31 December 2006 Year of Residual cost Valuation Portfolio Cum. Investment investment Sector Location £000 £000 value % Value % 26 Bertram Group Holdings Ltd 1999 Consumer & Leisure UK 2,848 1,482 1.0 97.0 27 W eston Presidio Capital III, LP 1998 Fund North America 1,867 1,201 0.8 97.8 28
Slide 24: Portfolio by Sector: 31 December 2006
Portfolio by Sector: 31 December 2006 Residual Cost Valuation TMT Investments Year Stage Geography Valuation Basis £'000 £'000 Portfolio % VISMA Holdings 2006 Buy-out Norway Cost 13,268 12,251 8.2% Xtx Ltd (t/a Xyratex) 2003 Buy-out UK Quoted 3,172 9,717 6.5% Elite Holding SA 2005 Buy-out Benelux Ea
Slide 25: Portfolio by Sector: 31 December 2006
Portfolio by Sector: 31 December 2006 Residual Cost Valuation Industria ls Investments Yea r Stage Geography Valuation Basis £'000 £'000 Portfolio % Schenck Process SA 2005 Buy-out Germany Cost 11,698 11,537 7.8% Hirschmann Electronics Holdings SA 2004 Buy-out Germany Earnings 2,669 10,078 6.8% W .E
Slide 26: Portfolio by Sector: 31 December 2006
Portfolio by Sector: 31 December 2006 Residual cost Valuation Services Year Stage Geography Valuation Basis £'000 £'000 Portfolio % Surrey 1 Ltd (t/a SHL) 2006 Buy-out UK Cost 7,534 7,534 5.1% PARC Group Ltd 1995 Buy-out Ireland Other 46 166 0.0% Orbis PLC 1997 Buy-out UK Quoted 3,378 15 0.0% SGI (H
Slide 27: Principal realised and unrealised movements in NAV during the year
Principal realised and unrealised movements in NAV during the year ended 31 December 2006 Realised proceeds vs book value Unrealised appreciation Total £'m £'m £'m Classsic Copyright (4.5) (4.5) Match Holdings (1.9) (1.9) Eagle Rock (0.9) (0.9) Other 0.2 (1.5) (1.3) Raymarine 0.9 0.9 Clinphone 1.3 1
Slide 28: 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