HGCapital Trust PLC · LSE:HGT
HGCapital Trust — H1 2010 Earnings Presentation
46 slides from HGCapital Trust's earnings presentation, Jun 30, 2010
Slide 1: HgCapital Trust plc Interim Results 30 June 2010
HgCapital Trust plc Interim Results 30 June 2010
Slide 2: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Investment Activity Portfolio Review Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 2
Slide 3: Summary
HgCapital Summary Trust plc New Deals £63m invested in five buyouts and £5m invested in renewable energy assets. Realisations £5m realised at 2x book value from Hoseasons plus recap and dividend receipts of a further £5m. Portfolio Top 20 companies growing earnings strongly. Liquidity Cash balances
Slide 4: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Portfolio Review Investment Activity Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 4
Slide 5: Performance Financial Highlights
Performance Financial Highlights % CHANGE OVER ASSETS AT 30 JUNE 2010* AT 31 DEC 2009 6 MONTHS Net assets (£’000) 291,941 236,044 23.7% Net assets per share 938.6p 937.2p 0.1% Liquid resources per share 203.7p 348.0p (41.5%) Share price (ordinary shares at 798.5p 844.0p (5.4%)** mid-market) Discount
Slide 6: Performance Total Return
Performance Total Return 6 MTHS TO 1 YEAR TO 3 YEARS TO 5 YEARS TO 30 7 YEARS TO 10 YEARS TO 30 JUNE 2010 30 JUNE 2010 30 JUNE 2010 JUNE 2010 30 JUNE 2010 30 JUNE 2010 Net asset value 2.9% 9.8% 6.5% 13.2% 18.0% 11.3% Share price (2.6%) 4.6% 1.5% 11.0% 21.5% 13.2% FTSE All-Share (6.1%) 21.1% (5.7%) 3
Slide 7: Analysis of net asset value (NAV) movements
Performance Analysis of net asset value (NAV) movements for the six months ending 30 June 2010 © Copyright 2010 HgCapital 7
Slide 8: Analysis of unrealised movements in investment portfolio
Analysis of unrealised movements in investment portfolio Performance (including accrued interest movement of £1.0 million) for the six months ending 30 June 2010 © Copyright 2010 HgCapital 8 © Copyright 2010 HgCapital
Slide 9: Realised and unrealised movements in investment portfolio
Realised and unrealised movements in investment portfolio Performance (including accrued interest) during the six months ending 30 June 2010 © Copyright 2010 HgCapital 9
Slide 10: Significant unrealised portfolio movements
Performance Significant unrealised portfolio movements during the six months ending 30 June 2010 Acquisitions less Drivers of valuation changes Valuations as at Valuations as at 30 Valuation changes to realisations at value to 30 31 December 2009 June 2010 30 June 2010 June 2010 Company £m £m £m Ear
Slide 11: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Investment Activity Portfolio Review Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 11
Slide 12: NAV Analysis
Performance NAV Analysis AT 30 JUNE 2010 AT 31 DEC 2009 £m % £m % Investments 228.6 78.3% 147.8 62.6% Liquid Resources* 63.4 21.7% 87.7 37.2% Other net (liabilities)/assets (0.1) - 0.5 0.2 Net assets 291.9 100.0% 236.0 100.0% *Since the period end we have completed the acquisition of Teufel and Mr T
Slide 13: Liquid Resources and Outstanding Commitments
Balance Sheet Liquid Resources and Outstanding Commitments Analysis ESTIMATED POSITION AT 30 JUNE 10 POST TRANSACTIONS* £m % of NAV £m % of NAV Total liquid resources** 63.4 21.7 22.3 7.6 Outstanding Commitments 231.0 79.1 189.9 65.0 Hg5 Vintage 19.6 19.6 Hg6 Vintage 200.0 158.9 HgRPP1 1.8 1.8 HgRPP
Slide 14: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Investment Activity Portfolio Review Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 14
Slide 15: Investments in the six months to 30 June 2010
Investment Investments in the six months to 30 June 2010 Activity COST COMPANY SECTOR ACTIVITY £’000 New Investments Stepstone TMT Global provider of strategic HR software 15,805 JLA Services Provision of on-premise laundry services and commercial machine sales 13,398 Frosunda Healthcare Swedish pro
Slide 16: Realisations in the six months to 30 June 2010
Investment Realisations in the six months to 30 June 2010 Activity CURRENT YEAR Cost PROCEEDS* GAIN/(LOSS)** COMPANY SECTOR EXIT ROUTE £’000 £’000 £’000 Full Realisations Hoseasons Consumer & Leisure Trade sale 2,197 5,065 2,592 FTSA*** Industrials Liquidation 6,813 - - Total Full Realisations 9,010
Slide 17: Investment Environment and Prospects
Investment Investment Environment and Prospects Activity Our investment stance has changed little since we released results for 2009 in March. We retain a concern that there will be a second leg to the recession - accordingly we have little interest in cyclical stories; and - we are very focused on
Slide 18: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Investment Activity Portfolio Review Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 18
Slide 19: Portfolio as at 30 June 2010 (Top 10)
Portfolio Portfolio as at 30 June 2010 Review The top 10 buy-out investments represent two thirds of the portfolio value Year of Residual Cost Total valuation* Portfolio Cumulative Investment Investment Sector Location £’000 £’000 value % Value % Visma 2006 TMT Nordic Region 16,321 40,633 17.8% 17.8
Slide 20: Portfolio as at 30 June 2010 (Top 20)
Portfolio Portfolio as at 30 June 2010 Review The top 20 buy-out investments represent over 90% of the portfolio value Year of Residual Cost Total valuation* Portfolio Cumulative Investment Sector Location Investment £’000 £’000 value % Value % Voyage 2006 Healthcare UK 13,112 8,375 3.7% 70.6% Epyx
Slide 21: Renewable Energy Fund Investments
Portfolio Portfolio as at 30 June 2010 Review Renewable Energy Fund Investments The Trust holds an investment via a limited partnership interest in the Manager’s two Renewable Energy Funds, RPP1 and RPP2. Valuation Portfolio Value Investment Vintage The Fund’s give investors an exposure to renewable
Slide 22: Trading
Portfolio Trading Review The aggregate sales and EBITDA for the Top 20 buyout investments over the last 12 months was £2.0bn and £0.5bn respectively. The Top 20 investments have delivered year on year sales and EBITDA growth of 6% and 17% respectively. The Top 10 investments, which include five new
Slide 23: Gearing
Portfolio Gearing Review Average value weighted Debt/EBITDA of the Top 20 investments was 2.9x at 30th June 2010. Gearing Analysis for the top 20 investments Debt/EBITDA EBITDA Debt Portfolio Value Band Number £m £m £m 0-2 6 75 65 67.9 2-4 8 139 451 76.1 4-6 5 187 915 57.1 >6 1 35 240 8.4 20 436 1,6
Slide 24: Valuations
Portfolio Valuations Review Average Value weighted EV/EBITDA multiple used at 30th June was 9x for the Top 20 investments. Average proceeds over book value on exit has been 1.9x on 30 exits since mid 2005. Valuation Multiple bands for the Top 20 Investments Portfolio Value Band Number £m <7x 8 69.1
Slide 25: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Portfolio Review Investment Activity Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 25
Slide 26: Manager Update
Manager Update Hg6 had a final closing in May 2010, with aggregate commitments of £1.9bn, of which HgCapital Trust plc has committed £285 million. We are in the process of raising our second renewable energy fund with targeted commitments of €500m. The Trust has agreed to commit €40m to this fund on
Slide 27: Contents
HgCapital Contents Trust plc Summary Performance Balance Sheet Analysis Portfolio Review Investment Activity Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 27
Slide 28: Events since 30 June 2010
HgCapital Events since 30 June 2010 Trust plc Net asset value per share at 31 July 2010 was 941.7p. In July we completed the acquisition of Teufel, a leading designer and online retailer of loud speaker systems in Germany. HgCapital Trust plc invested £9.1m in this transaction. In August we announce
Slide 29: Contents
HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 29
Slide 30: Conclusion
HgCapital Conclusion Trust plc Seven new investments selected that fit our tight criteria during the buyer’s market phase of the M&A cycle. Moving into a two way market in M&A, owning 20 companies delivering 17% growth in ebitda will attract the attention of buyers. Best cadre of portfolio CEOs allo
Slide 31: Contents
HgCapital Contents Trust plc Summary Performance Portfolio Review Investment Activity Manager Update Events since 30 June 2010 Conclusion Appendices © Copyright 2010 HgCapital 31
Slide 32: HgCapital Trust has rewarded the patient investor
HgCapital Trust has rewarded the patient investor – Appendices outperforming the FTSE All-Share Index by 3x and listed PE peers by 2.4-8x over the last 10 years +10.2% p.a. share price appreciation for HgCT vs. -3.3% p.a. for LPE Peers, -1.7% p.a. for the FTSE All-Share Index 10 year total return of
Slide 33: HgCapital Trust – Outperforming its listed PE peers
Appendices HgCapital Trust – Outperforming its listed PE peers HgCapital Trust outperformed key competitors by an average of 3.7x over the last 10 years Best performing peer Electra was outperformed by 2.4x and worst performing 3i by >8x 300% HgCapital Trust Candover Electra SVG Graphite 3i Group 25
Slide 34: Analysis of Movement in NAV
Appendices Analysis of Movement in NAV £’000 Opening net asset value as at 1 January 2010 236,044 Net proceeds from share issue 48,855 Realised loss to book value at 31 December 2009 (excludes gross revenue including gilts (619) results) Net unrealised appreciation of investments (excluding accrued
Slide 35: Valuation Basis and Vintage
Portfolio Valuation Basis and Vintage Review As at 30 June 2010 by value VALUATION BASIS VINTAGE Year Year2009 2009 Pre Pre 2005 2005 Net assets 12%12% 15% 15% Written down 7% pre 2006 Year Year 2008 2008 7% 15% 12% 12% Year Year 2005 2005 2010 10% 10% 28% Year Year2007 2007 Earnings 23% 23% Year Ye
Slide 36: Sector coverage of investments
Portfolio Sector coverage of investments Review As at 30 June 2010 by value BY VALUE BY NUMBER Renewable Energy Fund Renewable Energy 6% 1% Services 3% Services 11% 7% TMT 27% Consumer & Leisure Fund 9% TMT 11% 40% Industrials Consumer & Leisure 13% 11% Healthcare 20% Industrials Healthcare 17% 24%
Slide 37: Geography and Stage
Portfolio Geography and Stage Review As at 30 June 2010 by value BY GEOGRAPHY BY STAGE North America 1% Benelux Renewable Energy Fund Rest of Europe 1% 6% 1% 7% Germany 13% UK 50% Nordic Region 28% Buyout 93% © Copyright 2010 HgCapital 37
Slide 38: Portfolio by Sector: 30 June 2010
Appendices Portfolio by Sector: 30 June 2010 Total Investment Year of investment Valuation basis Residual cost valuation* Portfolio value £'000 £'000 % TMT investments Visma 2006 Earnings 16,321 40,633 17.8% Stepstone 2010 Cost 15,805 14,883 6.5% Manx Telecom 2010 Cost 11,033 11,033 4.8% Epyx 2009 C
Slide 39: Portfolio by Sector: 30 June 2010 (continued)
Appendices Portfolio by Sector: 30 June 2010 (continued) Total Investment Year of investment Valuation basis Residual cost valuation* Portfolio value £'000 £'000 % Industrials investments Mondo 2007 Earnings 6,987 10,272 4.5% SimonsVoss 2010 Cost 10,065 9,898 4.3% SLV 2007 Earnings 5,999 9,098 4.0%
Slide 40: Portfolio by Sector: 30 June 2010 (continued)
Appendices Portfolio by Sector: 30 June 2010 (continued) Total Investment Year of investment Valuation basis Residual cost valuation* Portfolio value £'000 £'000 % Renewable energy investments HG RPP Fund 2006 Net assets 15,570 13,771 6.0% HG RPP2 Fund 2010 Net assets 1,428 1,364 0.6% Total Renewabl
Slide 41: HgCapital – Strategic relevance
Appendices HgCapital – Strategic relevance STRATEGY Mid-Market £50 million - £500 million EV buyouts/buy-ins: − Consistently strong deal-flow. − Multiple exit options. − Not overly dependent on capital markets (for returns, financing or exit). − Defensible market positions / proven records. − Abilit
Slide 42: HgCapital – Tactical advantage
Appendices HgCapital – Tactical advantage TACTICS Sector-focused 5 dedicated sector teams (developed over 12 years) covering c.70% of the market. Annual business planning process drives agenda for each team. Strategy superseding geography in investment targeting. Intensive post-transaction planning
Slide 43: Relationship between HgCapital, HgCapital Trust and the HgCapital 6 fund
Relationship between HgCapital (“the Manager”), HgCapital Appendices Trust and the HgCapital 6 fund £1.9bn Manages investment portfolio HgCapital Other investors The Manager Trust in HgCapital 6 £285m £1,615m Same terms (management fee, etc.) Sources, arranges and manages investment Investment Inves
Slide 44: HgCapital's strategy and tactics have been effective
HgCapital’s strategy and tactics have been effective and are well HgCapital suited to the next stage in the life of Private Equity Multiple value levers. MID-MARKET AND PAN REGIONAL Conservative capital structures. (UK, Germany, Northern Europe) Multiple exit options not overly dependent on capital
Slide 45: Disclaimer
HgCapital Disclaimer This document constitutes an advertisement and is not a prospectus. It does not constitute an offer to sell or a solicitation of an offer to buy any securities described herein in the United States or in any other jurisdiction, nor shall it, by the fact of its distribution, form
Slide 46: Disclaimer
HgCapital Disclaimer Forward-looking statements are not guarantees of future performance. A number of important factors could cause actual results or outcomes to differ materially from those expressed, projected or implied in any forward-looking statements. No one undertakes publicly to update or re