HGCapital Trust PLC · LSE:HGT
HGCapital Trust — FY2016 Earnings Presentation
23 slides from HGCapital Trust's earnings presentation, March 2017
Slide 1: 2016 Full Year Results Presentation
2016 Full Year Results Presentation March 2017 This document accompanies the Annual Report & Accounts for the year ended 31 December 2016 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 re
Slide 2: Contents
HgCAPITAL CONTENTS TRUST PLC PAGE Overview of the Company 3 Key financial highlights: - Performance 4 - Balance sheet 5 - Portfolio metrics 6 - Portfolio activity 8 Investment Strategy 9 Case Studies - An exit: P&I 12 - A new acquisition: CogitalGroup 13 Portfolio review 14 Conclusion and Outlook 15
Slide 3: Listed access to a fast-growing portfolio of unquoted businesses
HgCAPITAL LISTED ACCESS TO A FAST-GROWING PORTFOLIO OF UNQUOTED BUSINESSES TRUST PLC The Company offers exposure to a portfolio of more than 30 unquoted businesses with consistent strong growth in sales and EBITDA and high cash generation 15% p.a. HgCapital has been managing the Company for over
Slide 4: Performance: strong trading continued to drive positive performance
KEY FINANCIAL STRONG TRADING HAS CONTINUED TO DRIVE POSITIVE PERFORMANCE FROM HIGHLIGHTS THE UNREALISED PORTFOLIO OVER 2016 +19% Year-end NAV per share of £16.50, net assets of £616 million Driven by strong trading across the unrealised portfolio, exits above book value and positive currency mov
Slide 5: Balance sheet: liquid resources and outstanding commitments
KEY FINANCIAL LIQUID RESOURCES AND OUTSTANDING COMMITMENTS HIGHLIGHTS Multiple levers in place to manage the balance sheet Representing 16% of pro-forma NAV £99m Up from £46 million at the year end to include estimated cash proceeds from the sale of Zenith Pro-forma liquid resources £80 millio
Slide 6: Portfolio metrics: top buyouts (83%)
KEY FINANCIAL TOP 20 BUYOUTS (83%) HIGHLIGHTS Aggregate sales of £2.7 billion and profits of £650 million, average margins of 24% +11% Consistent double-digit performance in many of our larger companies including Visma, IRIS, Zenith, Sovos Compliance and QUNDIS (45% of the total portfolio by value
Slide 7: Portfolio metrics: ratings and cash generation
KEY FINANCIAL TOP 20 BUYOUTS (83%) HIGHLIGHTS Broadly consistent ratings year-on-year with high cash generation across the portfolio Ratings broadly consistent over 2016 14.2x There remains a continued shift in the mix of the portfolio to higher growth businesses, in particular in technology and
Slide 8: Portfolio activity: significant realisation and investment activity in 2016
KEY FINANCIAL SIGNIFICANT REALISATION AND INVESTMENT ACTIVITY IN 2016 HIGHLIGHTS Net divestors over the year, taking advantage of a buoyant environment for realising value at good prices £136m ¡ £1.1 billion realised on behalf of HgCapital clients ¡ 7 realisations (5 to trade buyers) Returned to POR
Slide 9: The HgCapital 'sweet spot'
THE HgCAPITAL ‘SWEET SPOT’ INVESTMENT Focus on investing in companies with specific business characteristics in tech and tech-enabled services that STRATEGY we believe have the ability to grow across market cycles… and are attractive to future buyers Sector expert investors supporting management to
Slide 10: Adding the HgCapital angle to origination and execution
INVESTMENT ADDING THE HgCAPITAL ANGLE TO ORIGINATION AND EXECUTION STRATEGY Sector expert investors supporting management to grow industry champions © Copyright 2017 HgCapital 10
Slide 11: Once invested: how we add value to drive consistent returns
INVESTMENT ONCE INVESTED – HOW DO WE ADD VALUE TO DRIVE CONSISTENT AND STRATEGY REPLICABLE RETURNS? PILLARS OF VALUE CREATION VALUE CREATION - CURRENT SECTOR REALISED DEALS1 1 Buying an established book of customers BUILDING A 3.0x SUSTAINABLE Keeping customers happy = lower customer churn BOOK
Slide 12: Case study: exit P&I
CASE STUDY: P&I EXIT 2.3x investment multiple and c. 37% gross IRR over a 3 year investment period HgCapital partnered with P&I, a leading supplier of payroll and HR-related software to SMEs primarily in Germany, Austria and Switzerland, in 2013. The regulatory driven software space was first id
Slide 13: Case study: new investment CogitalGroup
CASE STUDY: NEW COGITALGROUP Pan-European provider of regulatory driven services to SMEs INVESTMENT Core services include accountancy, payroll and taxation to SMEs and enterpreneurs. Formed from three investments completed during 2016: (i) Visma BPO, active throughout the Nordics (now renamed Az
Slide 14: Portfolio review: trading performance of top 20 buyout investments
PORTFOLIO TRADING PERFORMANCE OVERVIEW OF TOP 20 BUYOUT INVESTMENTS (83%) REVIEW Aggregate sales of £2.7 billion and profits of £650 million, average margins of 24% Year of Investment Pre-2010 2010 - 2012 2013 - 2015 2016 STRONG PERFORMANCE 79% BY VALUE £416m LOWER GROWTH 8% BY VALUE, £41m INVESTING
Slide 15: Conclusion: outlook and prospects
OUTLOOK & PROSPECTS CONCLUSION Confidence in a portfolio with strong earnings and cash generation driving further NAV value A good start to 2017 with the sale of Zenith at a 2.9x investment multiple and 46% gross IRR, we would estimate this to provide cash proceeds to the Company of £59 million, s
Slide 16: Appendix contents
APPENDIX CONTENTS PAGE Top 20 buyout companies 17 Renewable energy investments 19 HgCapital funds snapshot 20 Contact 21 Sector expert investors supporting management to grow industry champions © Copyright 2017 HgCapital 16
Slide 17: Buyout portfolio: top 10 investments
BUYOUT PORTFOLIO APPENDIX The top 10 buy-out investments represent 63% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2016 1 Visma1 2014 TMT Nordic Region 52,940 94,065 15.0% 15.
Slide 18: Buyout portfolio: top 20 investments
BUYOUT PORTFOLIO APPENDIX The top 20 buy-out investments represent 83% of the portfolio value Residual Total Portfolio Cumulative Change in Year of Cost valuation value value value over Investment investment Sector Location £’000 £’000 % % 2016 11 Ullink 2014 TMT France 10,034 19,166 3.0% 66.4% 12
Slide 19: Renewable energy fund investments
RENEWABLE ENERGY FUND INVESTMENTS APPENDIX High quality European renewable energy projects currently representing 3% of NAV The Company is invested via limited partnership interests in HgCapital’s two Renewable Energy Funds, RPP1 (2006) and RPP2 (2010) Exposure to renewable power assets anticipa
Slide 20: HgCapital funds snapshot
HgCAPITAL FUNDS SNAPSHOT APPENDIX Targeting consistent 2x net performance across market cycles Realised Returns Overall Returns % Invested Returned in (gross) (gross) Cash Phase: Realisation HgCapital 5 £958 million 11 out of 12 investments realised 2.1x / 17% 2.2x / 16% 195% 2006 £1.4 billion
Slide 21: 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 22: 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 23: 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