HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2013 Earnings Presentation
35 slides from HGCapital Trust's earnings presentation, March 2014
Slide 1: Full Year Results Presentation December 2013
Full Year Results Presentation December 2013 This document accompanies the Annual Report & Accounts for the year ended 31 December 2013 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. The read
Slide 2: Contents
HgCapital Contents Trust plc PAGE Overview 3 Financial highlights 4 2013 portfolio review 7 Investment activity 10 The portfolio – overview 16 The portfolio – top 20 mid-market buyouts 17 The portfolio – Mercury TMT Fund 19 The portfolio – Renewables 20 Conclusion 18 Appendices 21 Sector expert inve
Slide 3: Overview 2013: HgCapital Trust plc
Overview 2013: HgCapital Trust plc Significant deployment, consistent realisations and improved trading figures Short-term performance has been frustrating but recent investment activity and improved portfolio trading leading to increased confidence in the future Cash balances awaiting deploymen
Slide 4: 2013: Financial Highlights
Financial 2013: Financial Highlights Highlights Year ended December 2013 PERFORMANCE 2013 share price +1.4.% to £10.10 on a total return basis; market capitalisation of £377m NAV per share (total return) -1.6% to £11.80; net assets of £441m NAV per share as at 28 February 2014 was £11.81 Div
Slide 5: 2013: Performance
Financial 2013: Performance Highlights Short-term performance hampered by high liquidity, relative portfolio immaturity, adverse currency movements and a small number of company specific issues c. 25% of NAV has been held in cash, generating a negligible return £71 million deployed over the peri
Slide 6: 2013: Investments and Realisations
Financial 2013: Investments and Realisations Highlights Active investment and consistent realisations over the year continued into 2014 SIGNIFICANT INVESTMENT £80M A strong pipeline of potential opportunities converted into investments in H2 2013 and Q1 2014 Five new buyout acquisitions completed
Slide 7: Key drivers of valuation change in the unrealised portfolio
Portfolio 2013: Key drivers of valuation change in the unrealised portfolio Review Twelve months to 31 December 2013 Valuation change in year to Company Principal driver of change in valuation 31 December 2013 Largest increases IRIS +£7.3m Strong organic growth year-on-year Visma +£3.5m Continued st
Slide 8: Trading performance of Top 20 mid-market buyout investments
Portfolio Trading performance of Top 20 mid-market buyout investments Review 87% of the Trust’s portfolio value at 31 December 2013 Pre-Hg6 (Pre-2009) Hg6 (2009) Hg7 (Nov 2013) >1 YEAR <1 YEAR STRONG PERFORMANCE 50% BY VALUE, £151m STABLE, LOWER GROWTH 22% BY VALUE, £67m INVESTING FOR GROWTH 14%, BY
Slide 9: Write-downs
Portfolio Write-downs Review Lumesse and NetNames were written down in 2013 , reducing the valuation of the Trust’s holding by £12.1million A leading SaaS provider of strategic HR software in Europe. High levels of recurring revenue with organic sales growth and the ability to improve market sha
Slide 10: Similar business model characteristics across different sectors
Investment Similar business model characteristics across different sectors Activity A deep sector focus helps us find companies attractive to future buyers RECURRING SALES INTELLECTUAL PROPERTY PROTECTION Sector focus …investments helps us FRAGMENTED CUSTOMER BASE attractive to find… future buyers B
Slide 11: 2013 Investments: Services
Investment 2013 Investments: Services Activity Opportunities for growth potential in fragmented markets A UK headquartered company providing tailored solutions for fast growing companies looking to expand into international markets but do not have the technical or administrative expertise to do so
Slide 12: 2013 Investments: TMT
Investment 2013 Investments: TMT Activity Leading mid-market growth companies in the European SME software sector A leading European SaaS accounting solution provider for SMEs based in Denmark and serving customers in eight other European countries. e-conomic’s products enable its customers to d
Slide 13: Realisations
Investment Realisations Activity Consistent sales and liquidity events over 2013, returning £66m to the Trust Uplift to book value (Dec 2012) Investment Trust proceeds £m % multiple Gross IRR Sold to Advanced Computer Software Plc, a trade buyer, at an enterprise £7.3 million £1.7 million 29% 1.5x 3
Slide 14: Mid-Market Buyout Portfolio (Top 10)
The Portfolio Mid-Market Buyout Portfolio The top 10 buy-out investments represent 60% of the portfolio value Residual Total Portfolio Cumulative Change in Cost valuation value value value over Investment Year of investment Sector Location £’000 £’000 % % 12 months 1 2011 TMT UK 25,598 32,927 9.5% 9
Slide 15: Mid-Market Buyout Portfolio (Top 20)
The Portfolio Mid-Market Buyout Portfolio The top 20 buy-out investments represent 87% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 12 months 11 2013 TMT Nordic Region 11,496 1
Slide 16: The Mercury Fund
The Portfolio The Mercury Fund Lower mid-market TMT investments primarily focused on Northern Europe In 2011 the Trust made a £60 million commitment to HgCapital’s Mercury TMT Fund which specialises in TMT buyouts primarily in Northern Europe, with an EV of between £20 million and £80 million. S
Slide 17: Renewable Energy Fund Investments
Renewable Energy Fund Investments The Portfolio High quality European renewable energy projects with minimal GDP and technology risk currently representing 4% of NAV The Trust is invested via limited partnership interests in HgCapital’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) Exp
Slide 18: Events since the end of December 2013
Conclusion Events since the end of December 2013 ACQUISITIONS Trust’s share of investment £m % of NAV Zenith is one of the UK’s largest independent leasing, fleet management and vehicle outsourcing businesses. At the beginning of March 2014, Zenith and Leasedrive (acquired £24.0 million* 5.4% in Dec
Slide 19: Outlook & Prospects
Conclusion Outlook & Prospects A strong portfolio of companies to deliver superior long-term returns to our investors We have made a number of new investments over the last nine months and would expect to see some further deployment of capital in the next six months On the existing portfolio: -
Slide 20: The Trust has delivered long term growth
Conclusion The Trust has delivered long term growth Outperforming the FTSE by 1.9x over the last 10 years on a total return basis 16.0% Ten year compound annual growth rate of the share price* 13.9% Ten year compound annual growth rate of the diluted NAV per share 7.2% Ten year historic outperforman
Slide 21: Appendices Contents
Appendices Contents PAGE Performance 22 Trading performance of the top 20 mid-market buyouts 23 Valuation and gearing of the top 20 mid-market buyouts 24 Portfolio analysis 25 Balance sheet 27 Realised and unrealised movements in the portfolio 28 Analysis of NAV movements 29 Investment and realisati
Slide 22: Total Return
Appendix Total Return As at 31 December 2013 £1,000 invested 10 years ago in HgCapital Trust would now be worth £4,394 on a total return basis One year Three years Five years Seven years Ten years % % p.a. % p.a. % p.a. % p.a. Share price 1.4 2.0 11.1 7.2 16.0 NAV per share (diluted) (1.6) 4.5 7.1 9
Slide 23: Trading Performance of Top 20 Mid-Market Buyout Investments
Appendix Trading Performance of Top 20 Mid-Market Buyout Investments Robust and improved trading in the unrealised portfolio will help to drive NAV growth TOP 20 LTM REVENUE GROWTH +9% Aggregate sales of £2.2 billion Strong year-on-year revenue growth, consistent with 2012 Top 10 (60%) sales g
Slide 24: Valuation and Gearing - Top 20 Buyout Investments
Appendix Valuation and Gearing - Top 20 Buyout Investments As at 31 December 2013 TOP 20 EV/EBITDA MULIPLE 11.6x Valuation multiple increased from 10.8x (Dec 2012) to 11.6x Multiple reflects: - Investment strategy focusing on high growth niches - Increase in ratings of market comps TOP 20 NET DE
Slide 25: HgCapital Trust plc Portfolio Analysis
Appendix HgCapital Trust plc Portfolio Analysis As at 31 December 2013 Sector expert investors supporting management to grow industry champions © Copyright 2013 HgCapital 25
Slide 26: 2013: Liquid resources and outstanding commitments
Appendix 2013: Liquid resources and outstanding commitments High cash balances, pending deployment, held back NAV growth during the period AS AT AS AT AS AT 28 FEB 2014 31 DEC 2013 31 DEC 2012 £m % of NAV £m % of NAV £m % of NAV ACTIVELY INVESTING FUNDS HgCapital 71 174.8 39.7% 182.5 41.4% - - HgCap
Slide 27: Realised and unrealised movements in investment portfolio
Appendix Realised and unrealised movements in investment portfolio For the year ended 31 December 2013 Sector expert investors supporting management to grow industry champions © Copyright 2014 HgCapital 27
Slide 28: Analysis of NAV movements
Appendix Analysis of NAV movements For the year ended 31 December 2013 Sector expert investors supporting management to grow industry champions © Copyright 2014 HgCapital 28
Slide 29: Attribution analysis of unrealised movements in the portfolio
Appendix Attribution analysis of unrealised movements in the portfolio For the year ended 31 December 2013 Sector expert investors supporting management to grow industry champions © Copyright 2014 HgCapital 29
Slide 30: Investments made during the year
Appendix Investments made during the year £80m invested by the Trust in 2013, primarily into five new buyouts Cost1 Sector Geography Activity £’000 P&I2 TMT Germany Developer and vendor of HR software 19,771 Nair & Co. Services UK Business solutions for international expansion 19,499 Leasedrive Serv
Slide 31: Realisations made during the year
Appendix Realisations1 made during the year £66m returned to the Trust from the portfolio in 2013 Cumulative Current year Cost1 Proceeds2 gain/(loss)3 gain/(loss)4 Sector Exit Route £’000 £’000 £’000 £’000 ATC Services Trade sale 9,913 21,930 12,017 3,378 Epyx TMT Trade sale 6,388 16,136 9,748 2,483
Slide 32: HgCapital – The Manager
Appendix HgCapital – The Manager Delivering sustainable long-term growth Mid-market private equity firm with £5.2 billion AUM, primarily focused on Northern Europe Deep sector focus across TMT, services, industrials, healthcare and renewable energy - Mid-market, control buyouts across TMT, servi
Slide 33: 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 For more information on Listed Private Equity, please visit the LPEQ website www.lpeq.com Sector expert in
Slide 34: Disclaimer
HgCapital Disclaimer Trust plc 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 WITHI
Slide 35: Disclaimer
HgCapital Disclaimer Trust plc 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-lookin