HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2014 Earnings Presentation
32 slides from HGCapital Trust's earnings presentation, December 2014
Slide 1: Full Year Results Presentation December 2014
Full Year Results Presentation December 2014 This document accompanies the Annual Report & Accounts for the twelve months ended 31 December 2014 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 Overview 3 2014 Financial highlights 4 HgCapital underlying fund status 7 Portfolio review 9 Conclusion 17 Appendix 19 Sector expert investors supporting management to grow industry champions © Copyright 2015 HgCapital 2
Slide 3: HgCapital Trust Overview
HgCAPITAL OVERVIEW TRUST PLC The Trust gives investors access to a diversified portfolio of HgCapital managed private equity investments Established in 1989, HgCapital Trust has been managed by HgCapital for over 20 years 13% p.a. NAV per share HgCapital is a leading European mid-market investor
Slide 4: 2014 Financial Highlights: Performance
2014 FINANCIAL PERFORMANCE HIGHLIGHTS Strong trading results from the majority of the portfolio has driven positive performance in the year Year-end NAV per share of £12.78, net assets of £477 million +13% Positive gains from the unrealised portfolio (+£74m) and realisations above book value (+£
Slide 5: 2014 Financial Highlights: Portfolio Activity
2014 FINANCIAL PORTFOLIO ACTIVITY HIGHLIGHTS £87 million deployed on behalf of the Trust and £83m returned to the Trust over the year £63m 4 new buyout acquisitions: Ullink, Allocate, Sequel and Relay; £40 million re-invested into Visma Estimated further £15.3 million deployed post-2014 year end
Slide 6: 2014 Financial Highlights: Cash and Commitments
2014 FINANCIAL CASH AND COMMITMENTS HIGHLIGHTS £63m Representing 13% of NAV, significant reduction in cash since 2013, primarily due to dividend payments to shareholders Liquid resources available for investment Pro-forma cash as at 28 February of £46m (10% of NAV)* £207m Representing 43% of N
Slide 7: The Investment Manager: Underlying Fund Status
HgCAPITAL THE INVESTMENT MANAGER: UNDERLYING FUND STATUS as at 31 December 2014 31% invested across 4 buyouts(1), remaining commitment expected to be invested over the next 3 years Hg7 HgCapital Trust has a £200m (10%) commitment to the Fund with the ability to co-invest £2.0 billion fund 2013
Slide 8: Portfolio Review: Portfolio Trading
PORTFOLIO TOP 20 BUYOUTS (89%): PORTFOLIO TRADING REVIEW Aggregate sales of £1.9 billion and profits of £410 million, average margins of 22% Strong revenue growth over the year, up from 9% in 2013 +11% We have continued to see consistent robust double-digit performance in many of our larger comp
Slide 9: Key Drivers of NAV Change Over the Period
PORTFOLIO KEY DRIVERS OF NAV CHANGE OVER THE PERIOD REVIEW Primarily reflecting strong trading performance and realisations over book value The majority of the unrealised portfolio has seen an increase in value Main drivers are: +£74m - Robust profit growth; Unrealised gains - Value accretive bo
Slide 10: Trading Performance Overview of Top 20 Buyout Investments
PORTFOLIO TRADING PERFORMANCE OVERVIEW OF TOP 20 BUYOUT INVESTMENTS (89%) REVIEW Aggregate sales of £1.9 billion and profits of £410 million, average margins of 22% Year of Investment Pre-2010 2010 - 2011 2012 - 2013 2014 STRONG PERFORMANCE 47% BY VALUE £175m IMPROVED TRADING IN 2014 20%, BY VALUE,
Slide 11: Consistent Strong Performers
PORTFOLIO CONSISTENT STRONG PERFORMERS REVIEW Predictability, growth and outstanding management teams Sector: TMT Continues to perform very well and invest significantly in new product development and into its Location: UK Cloud Division Provider of business software to the UK Trust Value: £44.7m
Slide 12: 2014 Portfolio M&A
PORTFOLIO 2014 PORTFOLIO M&A REVIEW Value accretive acquisitions with emphasis now on integration and delivering material synergies Sector: TMT A focus on M&A has led to 11 bolt-ons to date, most recently the acquisitions of ACG and Il Sole Software, significantly increasing the business’ presence
Slide 13: 2014 Portfolio M&A continued
PORTFOLIO 2014 PORTFOLIO M&A continued REVIEW Value accretive acquisitions with emphasis now on integration and delivering material synergies Sector: Services Established by merging Nair & Co with High Street Partners in April 2014 Provider of tailored solutions The integration is progressing as
Slide 14: Improved Trading
PORTFOLIO IMPROVED TRADING REVIEW A number of companies in the portfolio have seen improved trading in 2014 Sector: TMT NetNames saw strong double-digit EBITDA growth in the 2014 financial year (to June 2014). Location: UK Provider of online brand protection solutions and In the period June – De
Slide 15: Investments Behind Plan
PORTFOLIO INVESTMENTS BEHIND PLAN REVIEW Working hard to grow value back The operating performance in 2014 was below the previous year and has been characterised by Sector: TMT the impact of the changes the business is undergoing Location: UK Provider of strategic HR Key recurring revenues produ
Slide 16: 2014 Mercury Investments
PORTFOLIO 2014 MERCURY INVESTMENTS REVIEW Increased pace of deployment with promising pipeline Sector: TMT Strong revenue and EBITDA growth, primarily driven by robust performance in the first half of the Location: UK year within the Consultancy division Software and service provider Trust Value:
Slide 17: Outlook & Prospects
OUTLOOK & PROSPECTS CONCLUSION Confidence in a strong portfolio and investment strategy that will create long-term value for our investors Investing in the current market environment remains challenging and we have maintained a cautious and disciplined approach in selecting and investing in compan
Slide 18: Total Return Performance
TOTAL RETURN PERFORMANCE CONCLUSION The Trust continues to deliver long term growth 12.7% Ten year CAGR of the NAV per share 11.5% Ten year CAGR of the share price One year Three years Five years Seven years Ten years % % p.a. % p.a. % p.a. % p.a. NAV per share 12.8 7.9 9.0 7.0 12.7 Share price 9.6
Slide 19: Appendix Contents
APPENDIX CONTENTS PAGE Top 20 mid-market buyout companies 20 Renewable energy investments 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 The Investment Manager 26 Contact 30 Sector expert investors supporting
Slide 20: Mid-Market Buyout Portfolio (Top 10)
MID-MARKET BUYOUT PORTFOLIO APPENDIX The top 10 buy-out investments represent 66% 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 1 IRIS 2011 TMT UK 25,598 44,669 10.8%
Slide 21: Mid-Market Buyout Portfolio (11-20)
MID-MARKET BUYOUT PORTFOLIO APPENDIX The top 20 buy-out investments represent 89% 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 NetNames 2011 TMT UK 14,249 14,376 3
Slide 22: Renewable Energy Fund Investments
RENEWABLE ENERGY FUND INVESTMENTS APPENDIX High quality European renewable energy projects currently representing 3% of NAV The Trust is invested via limited partnership interests in HgCapital’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) Exposure to renewable power assets anticipate
Slide 23: Trading Performance of Top 20 Mid-Market Buyout Investments
TRADING PERFORMANCE OF TOP 20 MID-MARKET BUYOUT INVESTMENTS APPENDIX 11% sales and 9% EBITDA growth over 2014 +11% Average growth in sales +9% Average growth in EBITDA All figures are for the twelve months to 31 December 2014 Sector expert investors supporting management to grow industry champions ©
Slide 24: Valuation and Gearing of Top 20 Buyout Investments
APPENDIX VALUATION AND GEARING - TOP 20 BUYOUT INVESTMENTS 13.2x average valuation multiple / 4.5x average debt multiple 13.2x Average ratings multiple 4.5x UPDATE Average debt to EBITDA multiple *Excluding two investments valued on a basis other than earnings Sector expert investors supporting mana
Slide 25: HgCapital Trust plc Portfolio Analysis
HgCAPITAL TRUST PLC PORTFOLIO ANALYSIS APPENDIX As at 31 December 2014 Sector expert investors supporting management to grow industry champions © Copyright 2015 HgCapital 25
Slide 26: The Investment Manager
APPENDIX THE INVESTMENT MANAGER Delivering sustainable growth Mid-market private equity firm with £5.2 billion AUM, primarily focused on Northern Europe Deep sector focus across TMT, services, industrials and renewable energy - Mid-market, control buyouts across TMT, services and industrials (EV
Slide 27: The Investment Manager: Sector Focus and Resources
APPENDIX THE INVESTMENT MANAGER Sector expert investors supporting management to grow industry leaders SECTOR FOCUS PORTFOLIO MANAGEMENT RESOURCES Broad market coverage through 3 dedicated Dedicated Portfolio Management team to c. 110 employees (incl. more than 60 sector teams, developed since
Slide 28: Similar Business Models Across Different Sectors
SIMILAR BUSINESS MODELS ACROSS DIFFERENT SECTORS APPENDIX 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 BUSINESS CRITICAL, LOW SPEN
Slide 29: Software as a Service (SaaS) Investment
APPENDIX SOFTWARE AS A SERVICE (‘SAAS’) INVESTMENT An increasing focus in the TMT sector Software as a Service (“SaaS”) is a way of delivering applications over the internet; instead of installing software locally, you simply access it from the web Harnessing the power of the internet to transfo
Slide 30: 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 31: 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 32: 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