HgCapital Trust plc Regulatory News (HGT)

10 May 2012 12:00

HgCapital Trust plcInterim Management Statement10 May 2012

HgCapital Trust plc (the `Trust'), today issues its Interim Management Statement in accordance with FSA Disclosure and Transparency Rule 4.3. This statement relates to the period from 1 January 2012 to 9 May 2012 and incorporates the Trust's calculation of its Net Asset Value (NAV) at 30 April 2012, in the same form as is issued following the end of each month. The NAV at 30 April 2012 is based on the valuations of unquoted investments as at 31 December 2011, as set out in the annual report issued on 16 March 2012, with any subsequent investment completed by the date of the announcement accounted for at cost; adjustments are made for realisations, exchange rates, changes in the value of quoted securities, dividends payable and net revenues during the period.

Activity during the periodInvestment Environment

The macro-economic environment is weak across Western Europe where the Manager invests. Consistent with the comments made in the prior reporting period, since June 2011 we have seen a clear downturn in both key economic indicators and market sentiment across most of the regions in which our Manager, HgCapital, invests. However, the Board and the Manager have held a cautious view of Western European economic prospects since 2009, assuming minimal levels of GDP growth and more volatility, generally taking a more bearish stance than most economic commentators over the last three years. The Manager believes, however, that macro-economic factors have relatively little bearing on its investment performance over the medium and long-term because its investment strategy is focused on using its deep sector expertise to identify market niches that will exhibit strong secular growth despite economic conditions and provide consistent opportunities to invest in multiple businesses that benefit from these fundamental growth trends despite a weak overall economy.

Put simply, the Manager uses its sector expertise, developed over 10-15 years in each sector team, to identify the highest quality and fastest growth companies in market niches which themselves are growing at typically 2-3 times GDP driven by fundamental long-term factors. The most obvious example is the increasing penetration of internet-based transactions for businesses, a trend identified many years ago by the Manager and exploited in several different sectors. Companies such as SHL and Visma acquired by the manager in 2006, Achilles or Epyx acquired in 2008/9, Lumesse in 2010 or GroupNBT acquired in the last 6 months all benefit from this trend and produce consistent revenue and profit growth in excess of 10% per annum since 2008 as a result. The Manager also believes that such companies are more attractive to both trade investors and other financial acquirers when the time comes to realise its investments.

The Manager has been relatively cautious on new investment over the last 18 months and will continue to adopt a similar stance, although within its sectors of expertise it continues to find pockets of opportunity to acquire market leading businesses at reasonable prices, often where it has had the opportunity to build relationships with such companies over many years before making an investment. The Manager continues to see active interest in acquiring a number of its portfolio companies, as a result of their growth and market positions, from external trade or financial buyers. It will continue to consider realising its investments as it has done consistently over several years.

New Investments

Since the year-end, the Trust has announced one new buyout investment alongside other clients of the Manager. On 3 May 2012, HgCapital announced the acquisition of Qundis GmbH ("Qundis"), Germany's foremost provider of submetering devices and systems for consumption-dependent billing of heat and water. The deal, pending approval by the antitrust authorities, is expected to complete for approximately £79.0 million. The Trust's share of this will be approximately £11.8 million.

The Trust has also participated in further small investments in the buy-out and Renewable Energy funds, to give a total for all investments in the period of £ 17.1 million.

Current trading

The Manager is represented on the board of every material investment in the portfolio and receives monthly management accounts from all the buyouts in which the Trust is invested. These are regularly discussed with the Board, together with other information about the trading environment, strategy, prospects and leadership of each business, and the actions that the Manager is taking to effect improvements. The latest available trading figures for companies in the portfolio are for the period ended March 2012.

The top 20 companies in the buyout portfolio have seen average sales growth in the last twelve months of 12%, down from 13% as reported in the annual results. Of these investments, 10 increased sales by greater than 10%, including 4 by 20% or more. Only four have reported sales materially below last year.

During the last twelve months, average growth in EBITDA of the top 20 buyout investments increased by 10%, the same increase as was reported in the annual results. Of these investments, 8 increased EBITDA by more than 10%, including 6 by more than 20%. Five investments have reported EBITDA materially below the prior year.

The Trust has a significant exposure to euro denominated assets. As at 30 April 2012, the depreciation of the euro against sterling, by 2.5% since 31 December 2011, has resulted in a decrease in the valuation of that portion of the portfolio. Similarly, the depreciation of Norwegian Kroner and Swedish Kroner against sterling of 0.3% and 2.5% respectively, has resulted in a decrease in the sterling valuation of assets denominated in those currencies.

Investment objective

The Trust gives investors access to a private equity portfolio run by an experienced and well-resourced Manager that makes investments in private companies across Northern Europe in the Healthcare, Industrials, Services and TMT sectors. In addition, the Trust has made a commitment to small-cap TMT deals, where the Manager has many years of experience, through HgCapital's Mercury fund. Finally, it also holds investments in the Manager's two renewable energy funds.

The objective of the Trust is to provide shareholders with long-term capital appreciation in excess of the FTSE All-Share Index by investing in unquoted companies. The Trust provides investors with exposure to a diversified portfolio of private equity investments primarily in the UK and Continental Europe.

Performance

The Manager's aim is to achieve returns in excess of the FTSE All-Share Index over the long term, but is not intended to reflect movements in the Index.

Between 31 December and 30 April the total return (diluted NAV plus dividend) increased by 0.5%, compared with a 5.8% increase in the FTSE All-Share Index. The Trust's share price at 30 April 2012 was 951.0 pence, a discount of 10.6% against the diluted NAV of 1,064.3 pence and a discount of 12.3% against the basic NAV of 1,084.1 pence per share. The Trust's share price (on a total return basis) decreased by 0.9% over the four months to 30 April 2012, in a period when the FTSE All-Share Index increased by 5.8%.

These calculations of NAV are based on valuations of the portfolio as at 31 December 2011, using market multiples at that date, and therefore do not reflect changes in the ratings of comparable listed companies between 1 January 2012 and 30 April 2012. The book value of the unquoted portfolio will next be reviewed, as usual, at 30 June 2012 in accordance with IPEV guidelines, taking account of each company's maintainable earnings and ratings of comparable businesses in the relevant listed markets at that time.

The table below represents the performance at month end with net income reinvested. All information is at 30 April 2012 and is unaudited.

One month Four One year Three Five Ten years months years years p.a. p.a. p.a. NAV per Ordinary (0.5%) 0.5% (2.1%) 8.0% 9.4% 13.2%share (diluted) NAV per Ordinary (0.8%) 0.4% (2.9%) 8.7% 9.8% 13.4%share (basic) Ordinary Share 0.3% (0.9%) (15.0%) 8.0% 4.5% 14.5%price FTSE All-Share (0.3%) 5.8% (2.0%) 15.0% 1.3% 5.3%Index Sources: HgCapital, FactsetResultsAt 30 April 2012NAV per share:(1) - Diluted (2) 1,064.3p - Basic 1,084.1p

Share price - ordinary shares: 951.0p

Ordinary share price premium/ (10.6%) (discount) to NAV (diluted): Ordinary share price premium/ (12.3%) (discount) to NAV (basic): Share price - subscription 51.0p shares: Total net assets: £345.0m Net yield: 1.1% Gearing: Nil% Ordinary shares in issue: 31,822,330

Subscription shares in issue: 5,502,368

* includes 4 months net revenue of 12.0p. Ticker codes: Ordinary shares HGT Subscription shares HGTS

1. Post a dividend provision of 10.0 pence announced on 16 March 2012, with an

ex-dividend date of 4 April 2012 and payable on 15 May 2012.

2. The diluted NAV per share calculation is based on the assumption that all

Subscription shares in issue are exercised at the price of 950 pence per share, which is the exercise price applicable in May and October 2012; the exercise price in May 2013 (the last date for exercise) will increase to £ 10.25.

Unaudited NAV per Share

The investment portfolio has not been revalued at 30 April 2012. The unaudited NAV at 30 April 2012 is based on the NAV at 31 December 2011, adjusted to reflect purchases and sales of investments, currency movements and market prices (at bid) in respect of listed investments.

Net revenue for the four months to 30 April 2012 was 12.0p.

Balance Sheet

At 30 April 2012 the Trust's summary balance sheet was as follows:

£m % Unquoted investments 265.7 77.0 Accrued income on 36.5 10.6 investments Total investment 302.2 87.6 portfolio Cash and other liquid 42.3 12.3 assets (1) Other net assets 0.5 0.1 NAV 345.0 100.0

1. As at 30 April 2012, adjusting for the impact of the dividend payable in

May 2012.

After adjusting for the impact of the dividend payable in May 2012 and the recently announced acquisition of Qundis, liquid resources (including a £40 million undrawn loan facility) are estimated to be £67.2 million. The Trust's undrawn commitments to invest in or alongside the Manager's Hg6, Hg5, Mercury, RPP and RPP2 funds total £176.8 million.

Portfolio

The twenty largest investments at 30 April 2012 (at valuation including accruedinterest) were: Investment % of Sector Total Assets 1 TeamSystem 7.5 TMT 2 IAS 7.4 TMT 3 VISMA 6.7 TMT 4 SHL 6.2 Services 5 Lumesse 4.8 TMT 6 MercuryPharma (formerly 4.8 Healthcare Goldshield) 7 Hg Renewable Power Partners 4.7 Renewable Energy LP 8 Achilles 4.2 TMT 9 ATC 4.2 Services 10 Group NBT 4.1 TMT 11 Epyx 3.7 TMT 12 Manx Telecom 3.4 TMT 13 JLA 3.0 Services 14 HgCapital 6 E 2.7 Fund 15 SimonsVoss 2.5 Industrials 16 Voyage 2.3 Healthcare 17 Mainio Vire 2.2 Healthcare 18 Frosunda 2.0 Healthcare 19 Schleich 2.0 Consumer & Leisure 20 Teufel 1.9 Industrials Total 80.3% % of Total Sector Assets TMT 43.3 Services 14.0 Healthcare 12.1 Renewable Energy 6.5 Industrials 5.1 Consumer & Leisure 3.6 Other 3.1 Cash and other liquid assets 12.3 Total 100.0%

This statement is a general description of the financial position and performance of the Trust for the period from 1 January 2012 to 9 May 2012. It does not contain any profit forecast or forward looking information. Future performance and share price are likely to be affected by a number of factors, including (but not limited to) general economic and market conditions and specific factors affecting the financial performance or prospects of individual investments within the Trust's portfolio.