HgCapital Trust plc Regulatory News (HGT)

20 Mar 2009 08:15



HgCapital Trust plc

Annual Financial Report for the year ended 31 December 2008

London, 20 March 2009: HgCapital Trust plc (or "the Trust"), the Private Equity Investment Trust managed by HgCapital, the European sector-focused private equity investor, today announces its Annual Financial Report for the year ended 31 December 2008.

Financial highlights of 2008

Total return (NAV plus dividend) increased by 0.5%.

12% fall in share price compared with a 30% decrease in the FTSE All Share Index and a 44% fall in the FTSE Small Cap Index.

55% of net assets available in liquid instruments to deploy in attractive opportunities, equating to £5.16 per share.

Average annual operating profit growth of 14% for the Trust's top 10 investments over the last 12 months.

Ten year total return of 15% per annum versus 1% per annum from the FTSE All-Share Index.

Unchanged final dividend of 25p per share.

The NAV per share at 31 December 2008 was 929.4p, 918.0p at 31 January 2009 and 918.6p at 28 February 2009.

Operational Highlights

Despite challenging market conditions, it was a strong year for realisations with proceeds of £92 million (2007: £106.3 million), primarily from nine significant realisations of which the following realised a gain of £35.8 million over their December 2007 book value: The Sanctuary Spa, Clarion Events, Classic Copyright, Addison Software and Orbiscom.

Invested £18.9 million selectively against increasingly adverse economic conditions, including Casa Reha (Germany, €327 million EV), Achilles (UK, £75 million EV) and KVT (Switzerland, CHF 530 million EV).

The Company has a significant exposure to euro denominated assets, and valuations as at 31st December have benefited from the appreciation of the euro against the sterling over the course of the year.

The Trust won the private equity investment trust of the year for an unprecedented fourth consecutive year at the Investment Week Awards, again demonstrating the consistent strong performance of the company. 

Economic Outlook

We expect 2009 to present continued and significant challenges for portfolio companies as the full impact of the recession bites. 

Every effort has been made to ensure pre-emptive management action has been taken and the Manager has significant resources dedicated to manage the portfolio. 

Against a background of economic recession, volatility in equity market ratings and the credit crisis, valuing private businesses is challenging and valuations must be subject to material uncertainty.

Roger Mountford, the Chairman, commented:

"In 2008, we saw a turning point in the balance of advantage between being fully invested or holding liquid assets. The Trust is well placed, holding liquid funds representing 55% of net assets, available for deployment as the recession progresses, capitalising on the opportunity to acquire good businesses at attractive prices.

"Our manager, HgCapital, has pursued a policy of realising investments before markets turned, reflected in another positive year of outperformance by the Trust against wider industry benchmarks. Following these realisations, the Trust holds a reduced portfolio of unquoted investments that are diversified across sectors and economies, and largely oriented towards non-cyclical growth. We believe this will continue to provide a strong base for further value creation over the coming years.

"Change brings with it opportunity and the Trust retains confidence in the Manager's ability to take advantage, with due caution and patience, of new market conditions." 

For further details: 

About HgCapital

HgCapital is a private equity investor in the European mid-market. We focus on investments with an enterprise value in the range of £50-500 million. Our business model combines sector specialisation with dedicated, proactive support to our portfolio companies as well as the application of significant human resource and the corresponding management expertise across all phases of the investment process. HgCapital manages more than £2.4 billion for some of the world's leading institutional and private investors. Our goal is to achieve outstanding results for our investors, management team and intermediaries.

For further details, see www.hgcapital.com