HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2005 Earnings Presentation
27 slides from HGCapital Trust's earnings presentation, March 2006
Slide 1: HgCapital Trust plc – Full Year Results to 31 December 2005
HgCapital Trust plc – Full Year Results to 31 December 2005
Slide 2: Introduction
Introduction • Strong growth in net assets. • A record year for realisations. • Increasing exposure to under-valued Continental European companies. • Portfolio trading very well. HgCapital Trust plc
Slide 3: Financial Highlights
Financial Highlights At 31 December 2005 At 31 December 2004 % change (Restated for dividend) Assets Net assets (£'000) 156,487 122,040 28.2% Net assets per share 621.3p 484.5p 28.2% Share price (mid-market) 583.5p 451.5p 29.2% Discount (%) 6.0 6.8 11.8% Year ended Year ended 31 December 2005 31 Dec
Slide 4: Performance – Total Return
Performance – Total Return Consistent long-term performance and outperformance of both the index and quoted peers 1 year to 3 years to 5 years to 7 years to 10 years to 31-December-05 31-December-05 31-December-05 31-December-05 31-December-05 Share price 31.3% 42.8% 13.8% 19.3% 18.6% Net asset valu
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 2005 (restated for dividend) 122,040 Gross revenue 4,963 Expenditure (2,846) Taxation (385) 2004 final dividend (2,015) Rea
Slide 6: Principal realised and unrealised movements in NAV
Principal realised and unrealised movements in NAV The portfolio continues to perform strongly C astlebeck 7 .6 F TE 6 .4 Raym arine 1 .7 3 .0 Tunstall 4 .6 Xtx (Xyratex ) 4 .4 Travelsphere 3 .1 C linphone 2 .8 Blue M inerva 2 .3 PBR 1 .9 Trados 1 .4 Hirschm ann 1 .3 Other 0 .6 0 .3 Verigen (1 .3 )
Slide 7: Investments
Investments £35 million deployed with an emphasis on Continental Europe Cost Total (1) Company Sector Activity Deal type Geography £m Deal Value New Schenck Industrials Industrial measuring and weighing systems Buy-out Germany 9.3 €205m Addison Technology Accountancy and business software Buy-out Ge
Slide 8: Realisations
Realisations A record year - £52m realised Co st Pr o ce e ds (1) 2005 r e tur n (1) Co mp a ny Se cto r Ex i t r o ute £m £m £m Tunstall Healthcare Financial 7.0 16.2 9.2 FTE Automotive Industrials Financial - 13.5 13.5 Trados Technology Trade Sale 2.5 2.3 (0.2) Bottomline Technologies Technology Q
Slide 9: NAV Analysis
NAV Analysis 80% invested, with cash resources available to exploit new opportunities At 31 December 2005 At 31 December 2004 £m % £m % Unlisted investments 109.5 70.0 85.6 70.2 Listed investments 18.7 11.9 17.6 14.4 Cash/Government securities 25.4 16.2 13.1 10.7 Other net assets/(liabilities) 2.9 1
Slide 10: Portfolio – Top 20 represent nearly 90% by value
Portfolio – Top 20 represent nearly 90% by value Aggregate profits up 20% year on year Holding value Holding value % of invested at at portfolio Investment Sector 31/12/2005 31/12/2004 31/12/2005 Reason for Change £m £m Xtx Ltd (Xyratex) Technology 14.8 10.4 11.5% Quoted share price Castlebeck Group
Slide 11: Vintage Year: Valuation Basis and Vintage
Vintage Year: Valuation Basis and Vintage 37% of the portfolio is at cost, reflecting the new investment activity in the last two years Third Party Transaction Pre 2000 4% 13% * 2005 Written down 25% 15% 2000 Cost 7% Net Assets 37% 2% 2001 6% Bid-market price 2002 2004 15% 10% 14% Earnings 2003 27%
Slide 12: Sector Coverage of Investments
Sector Coverage of Investments A well diversified portfolio to mitigate risks Renew able F und Renew able Other energy C onsum er 2 % 1% energy 4 Technology 4% 2 9 M edia Technology 10% 30% F und 5 Leisure 15% C onsum er Industrials 2 7 M edia 3 Leisure Healthcare Industrials 4 Healthcare 18% 20% 8
Slide 13: Geography / Stage
Geography / Stage Increasing exposure to Continental Europe and a focus on buy-outs United States Funds Ireland 2% Expansion 2% Benelux 1% 10% 7% Venture 2% Germany 26% UK 64% Buy out 86% By geography By stage Note: Analysis by value As at 31st December 2005 HgCapital Trust plc
Slide 14: HgCapital Strategy and Tactics
HgCapital Strategy and Tactics Strategy: •Mid-market Focus on buy-outs •Pan-regional Increasing focus on Continental Europe •Broad market coverage Circa 80% of European economic activity Tactics: •Sector-focused Six dedicated sector teams •Intensive portfolio company planning Dedicated resource and
Slide 15: Investment and Portfolio Outlook
Investment and Portfolio Outlook • Investment environment is now very challenging. Competition is intense and we continue to focus our efforts where we believe we have the best chances of conversion, at levels of pricing we are comfortable with. • Further realisations are expected over the next year
Slide 16: HgCapital Update
HgCapital Update • Closed HgCapital 5 LP fund with commitments of £830m. • HGT will co-invest up to £120m alongside the fund. • HGT have committed €20 million to HgCapital’s new fund Renewable Power Partners fund. Target fund size €200 million. • Amsterdam office opened in 2005. • Increased headcoun
Slide 17: Events since the end of the Year
Events since the end of the Year • Net asset value at 28 February 2006 was 646p. • New investment in Renewable Energy, £0.7m invested in Wind Direct to acquire a portfolio of small wind farms at industrial sites in the UK both in development and operation. • Sold 20% of holding in Xyratex, proceeds
Slide 18: Conclusion
Conclusion • Continuation of historic out performance. • Portfolio trading well and producing good growth in profit and cashflow. • Market for new deals is expensive, but patience and discipline will be rewarded as always. HgCapital Trust plc
Slide 19: Appendices
Appendices HgCapital Trust plc
Slide 20: Performance Index
Ten Year Total Return Performance 610 580 550 520 490 460 Performance Index 430 400 370 340 Share Price 310 FTSE All-Share 280 250 FTSE Small Cap 220 190 NAV 160 130 100 70 Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- Dec- 95 96 97 98 99 00 01 02 03 04 05 HgCapital Trust plc
Slide 21: Portfolio: 31 December 2005
Portfolio: 31 December 2005 Year of Residual cost Valuation Portfolio Cum. Investment investment Sector Location £000 £000 value % Value % Xtx Ltd (Xyratex) 2003 Technology UK 6,995 14,775 11.5 11.5 Castlebeck Group Ltd 2002 Healthcare UK 861 10,113 7.9 19.4 Schenck MPT SA 2005 Industrials Germany 9
Slide 22: Portfolio: 31 December 2005
Portfolio: 31 December 2005 Year of Residual cost Valuation Portfolio Cum. Investment investment Sector Location £000 £000 value % Value % Worldmark International Ltd 2000 Industrials UK 2,389 1,001 0.8 97.5 Orbiscom Ltd 2001 Technology Ireland 3,063 661 0.6 98.1 South Wharf plc 1992 Industrials Ire
Slide 23: Portfolio by Sector: 31 December 2005
Portfolio by Sector: 31 December 2005 Valuation Residual C ost Valuation Portfoli o Technology Investm ents Y ear Stage Geography Basis £ '0 00 £ '0 00 % Xtx Ltd (Xyratex) 2003 Buy-out UK Quoted 6,995 14,775 11.5% Addison Luxembourg SA * 2005 Buy-out Germany Cost 6,499 6,637 5.2% Elite Holding SA *
Slide 24: Portfolio by Sector: 31 December 2005
Portfolio by Sector: 31 December 2005 Residual C ost Valuation Industrial Investm ents Y ear Stage Geography Valuation Basis £ '0 0 0 £ '0 0 0 Portfolio % Schenck MPT SA * 2005 Buy-out Germany Cost 9,326 9,390 7.3% W.E.T. Holding (Luxembourg) SA 2003 Buy-out Germany Written down 7,590 6,757 5.3% Hof
Slide 25: Portfolio by Sector: 31 December 2005
Portfolio by Sector: 31 December 2005 Residual cost Valuation Renew able Energy Y ear Stage Geography Valuation Basis £'0 0 0 £ '0 00 Portfolio % UK Wind Holdings Ltd 2004 Expansion UK Cost 1,375 1,375 1.1% Donegal Wind Ltd (Sorne) + 2005 Fund UK Cost 0 0 0.0% 1 ,3 7 5 1 ,3 75 1 .1 % Other PARC Grou
Slide 26: Principal realised and unrealised movements in NAV during 2005
Principal realised and unrealised movements in NAV during the year ended 31st December 2005 Realised proceeds vs book value Unrealised appreciation Total £'m £'m £'m Castlebeck Group Ltd - 7.6 7.6 FTE Automotive GmbH 6.4 - 6.4 Raymarine plc 3.0 1.7 4.7 Tunstall Holdings Ltd 4.6 - 4.6 Xtx Ltd (Xyrate
Slide 27: 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