Annual Financial Report

16th Mar 2012 07:00

HgCapital Trust plc Final results for the year ended 31 December 2011

London, 16 March 2012: HgCapital Trust plc (the "Trust"), which provides investors with a listed vehicle to invest in all private equity deals managed by HgCapital, today announces its full year results for the year ended 31 December 2011.

HGCAPITAL TRUST PLC CONTINUES TO DELIVER LONG TERM OUTPERFORMANCE

Summary performance 31 December 31 December % % Total 2011 2010 Change return* Share price 970.0p 1,006.0p -3.6% -1.2% NAV per share (diluted) 1,069.3p 1,090.7p -2.0% +0.5% (basic) 1,089.9p 1,118.8p -2.6% -0.2% FTSE All-Share -3.5%Index Movement Net Asset £346.8m £348.0m -£1.2m Value

* Assuming reinvestment of all dividends

Financial Highlights

* Sales and EBITDA growth from top 20 buyout investments of +13% and +10%

respectively over last 12 months to 31 December 2011.

* Valuation multiple of 10.2x EBITDA (Dec 10: 9.7x) and debt multiple of 4.0x

EBITDA (Dec 10: 3.6x) as at 31 December 2011.

* Total available liquid resources were £94m (27% of NAV) with outstanding

commitments of £195m (56% of NAV).

* +15.7% p.a. 10-year compound annual growth rate of the share price on a

total return basis vs. 4.8% p.a. from the FTSE All-Share Index on a total

return basis to 31 December 2011.

Operational Highlights

* £87m deployed over the period, principally in five new buyout investments.

* £62m of cash proceeds from 2011 realisations; full exits achieved in aggregate at a 56% uplift to 31 December 2010 book value.

* The Trust was chosen, for the seventh consecutive year, as Private Equity

Investment Trust of the Year in the `Investment Week' awards.

Events since 31 December 2011

* Proposed final dividend for the year of 10.0 pence per ordinary share to be

paid on 10 May 2012, subject to shareholder approval. * NAV per share at 29 February 2012 was 1,080.2p (diluted) and 1,102.7p (basic); movement from December mainly due to foreign exchange fluctuations.

Outlook

* 80% of the balance sheet invested in buyouts of which c. 80% is in

companies with a low exposure to the weak macro-economic cycle and only 20%

is in companies where ratings and earnings are sensitive to the economy.

* Market leading businesses, with low gearing in growth segments, well placed

for platform builds. * Interest in a number of our businesses may result in successful realisations over the next 12 months.

* New investment will continue to be highly selective by only investing in

businesses that meet our thematic criteria and can be bought for value. * Owning a portfolio of quality companies run by talented managers should build significant shareholder value over the medium-term.

Long Term Total Return Performance*

1 3 5 7 10 year years years years years % % % % % p.a. p.a. p.a. p.a. Ordinary share price (1.2) 16.4 8.6 14.2 15.7 Net asset value (diluted) 0.5 7.6 10.2 14.4 13.2 FTSE All-Share Index (3.5) 12.9 1.2 6.1 4.8

Share price outperformance p.a. against the FTSE 2.3 3.5 7.4 8.1 10.9 All Share Index

* Assuming reinvestment of all dividends

Roger Mountford, Chairman of the Trust, commented:

"The Trust has protected shareholder value during a poor year in equitymarkets. The portfolio is trading well, the top 20 buyouts having delivereddouble digit revenue and profit growth over the year. The Trust continues todeliver long-term outperformance and offers the prospect of renewed growth invalue for shareholders."

The Trust's 2011 Annual Report and a webcast from the Manager to accompany the results are available to view at: http://www.hgcapitaltrust.com/.

For further details:

HgCapital Ian Armitage (Chairman, HgCapital) +44 (0)20 7089 7888 Roger Mountford (Chairman, HgCapital Trust +44 (0)7799 662601 plc) Maitland +44 (0)20 7379 5151 Rowan Brown George Hudson About HgCapital Trust plc

HgCapital Trust plc is an investment trust whose shares are listed on the London Stock Exchange. The Trust gives investors exposure, through a liquid vehicle, to a portfolio of high-growth private companies, managed by HgCapital, an experienced and well-resourced private equity firm with a long-term track record of delivering superior risk-adjusted returns for its investors.

For further details, see www.hgcapitaltrust.com and www.hgcapital.com

HgCapital Trust plcAnnual report and accounts31 December 2011HgCapital Trust plc announces that the annual report and accounts of the Trustfor the year ended 31 December 2011 have been published. The full annual reportand accounts can be accessed via the Trust's website at http://hgcapitaltrust.com/sites/default/files/HgT2011.pdf or by contacting theTrust's Registrar (Computershare Investor Services plc) on telephone number0870 707 1037.In order to meet the disclosure requirements of DTR 6.3.5(2), this announcementincludes certain extracts from the annual report below. Any references to pagenumbers, sections or notes in the following text are references to the annualreport and accounts, which can be accessed via the Trust's website as notedabove.The financial information set out below does not constitute the Company'sstatutory accounts for the years ended 31 December 2011 or 2010. Statutoryaccounts for 2010 have been delivered to the registrar of companies, and thosefor 2011 will be delivered in due course. The auditors have reported on thoseaccounts; their report was (i) unqualified, (ii) did not include a reference toany matters to which the auditors drew attention by way of emphasis withoutqualifying their report; and (iii) did not contain a statement under Section498 (2) or (3) of the Companies Act 2006.

References in the annual report and accounts and this announcement to HgCapital Trust plc have been abbreviated to `HgCapital Trust' or the `Trust'.

HgCapital refers to the trading name of HgPooled Management Limited and HgCapital LLP, who act as the `Manager'.

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.

FINANCIAL HIGHLIGHTS

2011 PERFORMANCE

MARKET CAPITALISATION £309 MILLIONThe ordinary share price fell from £10.06 to £9.70 over the year. A decrease(on a total return basis) of -1.2%NET ASSET VALUE (`NAV') £347 MILLIONThe NAV (diluted) per ordinary share fell from £10.91 to £10.69 over the year,following the payment of a 28p dividend.A total return performance of +0.5%CASH DEPLOYED£87 million - The amount of capital deployed in 2011, primarily in five newbuyout investments.CASH REALISED£62 million - Cash realised in 2011, primarily from the sale of SLV and MondoMinerals at an average uplift on book value on full realisations of 56%.

LONG-TERM PERFORMANCE - 10 YEAR TOTAL RETURNS

COMPOUND ANNUAL GROWTH RATE 15.7% p.a. - The compound annual growth rate of the HgCapital Trust plc ordinary share price over the last 10 years.

10 YEAR RETURN ON £1,000£4,289 - How much an investment of £1,000 made ten years ago in HgCapital Trustplc would now be worth.*An equivalent investment in the FTSE All-Share Index would be worth £1,595.

*Assuming reinvestment of all dividends

BALANCE SHEET ANALYSIS

£347 million - The net assets of HgCapital Trust plc as at 31 December 2011.

£94 million - The liquid resources available (including a £40 million undrawn bank facility) for deployment as at 31 December 2011 representing 27% of NAV.

£195 million - The amount of outstanding commitments as at 31 December 2011 representing 56% of NAV.

THE PORTFOLIO

HgCapital Trust plc gives investors access to a private equity portfolio of currently 31 companies, 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.

An investment in HgCapital Trust plc primarily provides exposure to a portfolioof fast growing companies. The top 20 buyout investments currently account fornearly 87% of the portfolio value. These companies have aggregate revenues of £2.0 billion and profits of £480 million.

In addition, the Trust has made a commitment to small-cap TMT deals, where it has many years of experience, through HgCapital's Mercury fund. Finally, it also holds investments in the Manager's two renewable energy funds.

+13% p.a. revenue growthThe average growth in revenues of the top 20 buyout investments over the lastyear.+10% p.a. profit growthThe average growth in profits (EBITDA) of the top 20 buyout investments overthe last year.10.2x EV/EBITDA multipleThe average valuation multiple used to value the top 20 buyout investments at31 December 2011.

4.0x net debt/EBITDA The average net debt/EBITDA multiple of the top 20 buyout investments at 31 December 2011.

CHAIRMAN'S STATEMENT

With a portfolio of businesses that continue to trade well, the Trust haspreserved value for shareholders in a year when equity markets have been weakand volatile. The Manager's active engagement with each of our businesses helpsthem to grow sales and profits, despite challenging macro-economic prospects.

The year in review

2011 was a volatile and disappointing year for investors in equity markets,with the overall modest gains of the first half more than reversed in thesecond. Against a total return of -3.5% in the FTSE All-Share Index, theTrust's diluted NAV per share, after payment of a 28 pence dividend, was downonly marginally at £10.69 (31 December 2010: £10.91, both fully diluted). Afteradjusting for movements in foreign exchange, the Trust's diluted NAV at 29February 2012 had increased to £10.80.

Share price performance

At £9.70 (31 December 2010: £10.06) the Trust's ordinary share price wasslightly lower at 31 December 2011 than a year before, a decrease on a totalreturn basis (taking into account the dividend paid during the year) of -1.2%,reflecting a modest widening of the discount to diluted NAV. However, theTrust's shares continue to stand at a much smaller discount to NAV than thoseof its direct peers.The modest widening in discount has little impact on returns to a patient,long-term investor. The Trust's ten-year total return to shareholders was againmore than 10% p.a. in excess of the FTSE All-Share Index. An investment of £1,000 made in the Trust ten years earlier, with dividends reinvested, would nowhave a value of £4,289, compared with £1,595 if invested in the FTSE All-ShareIndex.With the reduction in the remaining period for exercise of the Trust'ssubscription shares, and weak market conditions generally, their market pricein the early part of the year was not sustained in the second half, closing inDecember 2011 at 53 pence. However, the price has increased by some 34% to 70pence in the first two months of 2012. I remind shareholders that eachsubscription share entitles the holder to subscribe to one new ordinary share,on 31 May or 31 October 2012, or on the final exercise date of 31 May 2013. Ifexercised in 2012 the subscription price will be £9.50 per share; if exercisedin 2013 the price will be £10.25. During 2011, 718,415 subscription shares,representing 12% of all subscription shares in issue, were exercised raisingnearly £7 million. If all the remaining subscription shares are exercised itwill raise new funds of between £52 million and £56 million for the Trust todeploy and will further enhance the liquidity of the market in the Trust'sshares.

Dividend

The Trust is managed with the objective of achieving capital growth, not todeliver any target earnings or dividend. For the first time since 1994,earnings were negative in the year. This has been due to a number of factors,most notably from the relatively immature Hg6 vintage portfolio where incomehas not yet been recognised on all the investments, and the majority of theincome recognised during the current year has been offset by the cumulativeinvestment management costs, charged since 2009 on the Hg6 commitment made bythe Trust. In addition, accrued income that had been recognised since March2007 on our investment in Americana has required a provision through the IncomeStatement. Finally, in a low interest rate environment, negligible yield hasbeen generated on our liquid resources which averaged £90 million in the year(26% of NAV). Taking account of the one-off nature of factors that depressedincome in the year, the Board has decided to recommend that a dividend of 10.0pence (2010: 28.0 pence) be paid.

Portfolio

Following a record year for investment in 2010, the Trust deployed £87 million in the year under review, including £70 million in five new acquisitions.

Realisations generated proceeds of £62 million for the Trust. This included thesale of five companies that in aggregate were achieved at prices 56% above thevaluations adopted in the Trust's accounts at 31 December 2010 and the sale oftwo residual holdings. Total realisations added some £20 million to NAV.This was partially offset by the unrealised revaluation of portfolioinvestments and accrued income, which reduced shareholder value by a net totalof £7.5 million. The Manager's attribution analysis indicates that the growthin profits of the businesses in the Trust's buyout portfolio was more thanoffset by adverse movements in ratings. The effect of changes in the value ofsterling against the currencies in which some investments are held was broadlyneutral.Despite challenging economic conditions, during 2011 most of the companiesmaking up the top 20 buyout investments continued to trade well. In aggregate,the top 20, representing 87% of the total portfolio value, grew revenues by 13%and EBITDA by 10%. The Manager monitors the trading of every portfolio companyon a monthly basis and reports in detail on the latest trading figures to theBoard of the Trust at every meeting.The Manager has continued to build the in-house resources available to workwith the management of each business in the portfolio, to develop and implementstrategic and operational change so as to assist in meeting the economicheadwinds and increasing challenges in their markets. Executives of HgCapital'sspecialist teams act as board members of every investment, supportingmanagement in setting the direction of the business, and where appropriateprovide skilled hands-on support in implementing change, often drawing on theexperience gained in earlier investments. The Board recognises this commitmentto achieving strategic and operational improvement in the businesses acquiredas the most important driver of value creation, which will be increasinglyimportant in a low-growth environment with less use of leverage than in prioryears.Corporate developmentsDuring the year we announced that the Board had agreed to co-invest up to £60million alongside HgCapital's Mercury fund. This fund will invest exclusivelyin the TMT sector in the UK and Continental Europe, with a focus on smallercompanies, with an enterprise value at acquisition of between £20 million and £80 million. This is the segment of the buyout market where HgCapital originallyestablished itself as a successful investor. The Board is pleased to note that,although HgCapital has like other managers moved up in the scale of itsactivities and deals, it has not vacated this profitable segment of the market.For the first time, the Trust acquired a £15 million limited partnershipinterest in Hg6 from an investor in HgCapital funds who decided to withdrawentirely from investment in private equity. The transaction comprised a paymentof £7.8 million for funds already invested, with the balance by way ofinvestment in future deals. The acquisition from other investors of interestsin funds managed by HgCapital, with which the Trust's Board is of course veryfamiliar, represents a further means to optimise the deployment of the Trust'sresources. The Board may from time to time make further such acquisitions, orindeed might sell an interest, if this were appropriate in the strategicmanagement of the Trust.In parallel with these new deployments of the Trust's resources, the Boarddecided to gain further flexibility in managing its cash flows by arranging afacility with its bankers. The Trust now has in place a £40 million three-yearstandby facility with Lloyds TSB Bank plc, on an unsecured basis.

Reporting

Over several years we have continually sought to improve the transparency andclarity of our reporting. In the annual report we describe in some detail allthe top 20 companies we own and last year we introduced into our report a casestudy of one investment, to describe its history throughout the period ofownership by HgCapital. Another case study is set out in the annual report, anda library of these case studies is available at www.hgcapitaltrust.com.Late in 2011 we achieved a further advance in enhancing the Trust's reporting,with a complete redesign of the Trust's website, www.hgcapitaltrust.com, whichwe hope investors and analysts will find useful.

In line with this policy of transparency, the Manager also publishes a pre-close statement on its website just prior to the half-year and year-end dates.

Prospects

The Trust began 2012 with a relatively young portfolio and less exposure tocyclical businesses than before. The geographic balance of the buyout portfoliohas shifted back towards the UK, with a smaller portfolio focused on northernEurope and Germany, and one investment in Italy.At 31 December the Trust held some £54 million in cash and liquid resources andhad access to a £40 million undrawn bank facility. The prospects for all formsof equity investment are vulnerable, of course, to instability in Europeaneconomies and low economic growth. However, a number of our businesses areattracting interest that may result in successful realisations in the nexttwelve months. The Trust's portfolio appears well positioned and, with theManager's commitment to active engagement with the businesses we own, the Boardconsiders that the Trust offers an attractive investment opportunity.As a listed investment trust, HgCapital Trust provides an attractive vehiclefor investors to gain access to private equity. I am pleased to report that, inthe Investment Week awards, the Trust was again chosen, for the seventhconsecutive year, as Private Equity Investment Trust of the Year.Roger MountfordChairman15 March 2012MANAGER'S REVIEW OF THE YEARSummary

In 2011 the diluted NAV per share increased by 0.5% on a total return basis and the total share price return declined by 1.2%. This static picture fails to reflect significant activity in buying and selling assets as well as in the necessary work to build companies which we believe, after taking account of setbacks some have experienced, will be rewarded in future periods.

New investment activity, whilst lower than in 2010, a record year, includedfive new buyouts following three well established HgCapital investment themes.In total, we invested £521 million, including £87.1 million for the Trust. Theabove mentioned new investments were: ATC, a Dutch fiduciary business; MainioVire, a Finnish care home operator; the public-to-private acquisition of GroupNBT plc, a provider of internet domain name management; IAS, the UK's leadingprovider of application software for accountants; and ISG, a provider ofsoftware for lawyers and for charities.In total, realisations produced £442 million, of which the Trust's shareamounted to £62.4 million. The full realisations produced a 56% uplift over theDecember 2010 book value, the largest being the sale of SLV discussed as a casestudy in the annual report, which produced cash proceeds of £24.2 million forthe Trust. The next most significant was the sale of Mondo Minerals, a talcmining operation, where the Trust's share of proceeds was £13.0 million. Elitecontributed £9.4 million, with the balance of £7.3 million coming from the saleof smaller and residual holdings in companies and £8.5 million from there-financing of recent buyouts with new debt facilities, improving the capitalefficiency of these businesses.Our top 20 investments, which represent 87% of the portfolio value, grewsolidly during the year, recording average growth in revenue and EBITDA of over13% and 10% respectively. Our renewable power generating assets, whichrepresent 7% of the portfolio value, generated cash, repaid debt and recordedgrowing earnings.

At the year-end, the Trust had available liquid resources (including a debt facility of £40 million) of £94 million. Outstanding commitments to HgCapital funds amounted to £195 million.

Performance

Share price performance over the year has been marginally negative, albeitoutperforming public markets again. It is our belief that listed private equityfunds are better measured over periods of three, five and ten years consistentwith the long-term nature of private equity investment in generating returnsfor clients.Over three years, the share price of the Trust (on a total return basis) hasout-performed the FTSE All-Share Index by 3.5% p.a., over five years by 7.4%p.a., and over ten years by 10.9% p.a., net of all costs. £1,000 invested inDecember 2001 would be worth £1,595 in December 2011 if invested in the FTSEAll-Share Index and £4,289 if invested in the Trust. As for 2011, the totalreturn to shareholders was -1.2%, which compared with -3.5% for the FTSEAll-Share Index.The growth in NAV per share is a lead indicator and driver of share priceperformance over the long run; during the year it rose modestly by 0.5% (totalreturn on a diluted basis). Gains made at the half year were driven primarilyby realisations in the first half of 2011 delivering cash proceeds in excess ofthe 31 December 2010 book value; these were eroded in the second half of theyear due to mark downs in the buyout portfolio. This unrealised depreciation ismostly due to falling ratings and in a few cases declining earnings (seebelow).TOTAL RETURN* OUTPERFORMANCE AGAINST THE FTSE ALL SHARE INDEX

FTSE All-Share Index HgCapital Trust plc % per Current value of £1,000 % per Current value of £1,000 year invested at the year invested at the beginning beginning of the period of the period with with reinvestment of reinvestment of dividends dividends 1 year (3.5) £965 (1.2) £988 3 years 12.9 £1,438 16.4 £1,579 5 years 1.2 £1,062 8.6 £1,513 7 years 6.1 £1,513 14.2 £2,526 10 year 4.8 £1,595 15.7 £4,289

\* Total return assumes all dividends have been reinvested. Trading performanceThe top 20 companies, which represent 87% of the total portfolio value, grewrevenues by 13% and EBITDA by 10% during the year: a healthy growth rate butslower than 2010 when the top 20 grew EBITDA at 16%. A backdrop of a slowingeconomy partially explains this reduction in rates of growth. The balance maybe attributed to some companies investing in their business in advance ofdelivering revenues from new products and markets. These additionalexpenditures also partially explain revenue growth out-stripping profit growth.However, it is clear that tougher market conditions have limited the ability ofsome companies to raise prices in line with costs, particularly those in thelong-term care sector and in consumer-facing businesses.Average net margins of 24%, healthy growth rates and good market positionsindicate that these companies have, for the most part, been robust. They aremanaged by talented managers, who are very committed, with every manager havinga significant part of their net worth invested in the companies they run.The tables below show the revenues and earnings for the last twelve months to31 December 2011 for the top 20 buyout portfolio companies, expressed in growthbands. Over half of the portfolio by value has seen profits grow by more than10%. 15% of portfolio companies by value have seen a decline in profits in theyear. Our portfolio companies are exposed to comfortable levels of gearing (seebelow). The average gearing in the top 20 is 4.0x EBITDA.We have taken advantage of the highly predictable earnings and free cash flowsgenerated by some businesses (IAS, Group NBT, TeamSystem, JLA, Voyage and ManxTelecom) to use cheap debt to gear our returns. In others, such as Achilles,Epyx, SHL and Goldshield, the balance sheets are under-geared and the companieshave the financial flexibility to make acquisitions, expand more aggressivelyor to refinance and return capital. In addition, during the year, we took theopportunity to refinance both Lumesse and SimonsVoss, where both investmentswere initially completed on an all equity basis.TOP 20 LAST TWELVE MONTHS (`LTM') SALES GROWTH

Exposure to £2.0 billion of sales that have grown on average at 13% over the last 12 months to December 2011

Sales growth bands LTM Sales Number of % of top 20 investments portfolio by £' million within value within associated associated band band (13%) - (5%) pa 119 2 7% (5%) - 0% pa 153 2 5% 0% - 10% pa 374 5 26% 10% - 15% pa 312 3 25% >15% pa 1,037 8 37%

TOP 20 LAST TWELVE MONTHS (`LTM') PROFIT GROWTH

Exposure to £480 million of EBITDA that have grown on average at 10% over the last 12 months to December 2011

EBITDA growth bands LTM EBITDA Number of % of top 20 investments portfolio by £' million within value within associated associated band band (38%) - (15%) pa 7 1 1% (15%) - (10%) pa 31 2 7% (10%) - 0% pa 76 3 7% 0% - 10% pa 99 4 30% 10% - 20% pa 150 3 21% >20% pa 117 7 34%

Valuation and Concentration Analysis

The portfolio is valued consistently from year to year, applying the IPEV Valuation Guidelines. Our valuation of each company has produced an average EBITDA multiple for the top 20 buyout investments of 10.2x.

We continue to take a considered and prudent approach in determining the levelof maintainable earnings to use in each investment valuation. Where companieshave a December year end and we are confident that they will continue to seegrowth in 2012, we have used full year earnings for 2011 to derive the value.Where we anticipate future earnings for companies to be below 2011 levels wehave used the lower forecast figure.

In selecting an appropriate multiple to apply to the company's earnings, we look for a basket of comparable companies primarily from the quoted sector, but where relevant and recent, we will also use private M&A data.

During the course of the year, strong profit growth and cash generation in a number of businesses within the portfolio has led to an increase in their value, most notably SHL, ATC, Goldshield, Epyx and Achilles.

At Teufel and SPIN, planned expenditure, designed to grow earnings insubsequent years, has reduced profits. At Americana and Schleich, softerconsumer demand has taken its toll on earnings. At Mainio Vire, we paid apremium price to buy the business and acquire a platform for growth. To date,we haven't completed any acquisitions and have therefore written the holdingvalue down. At Fr¶sunda, poor execution of an acquisition programme has reducedthe equity value.Fair value classification*58% Earnings16% Price of recent investment15% Written down10% Net assets1% Other* Percentages are based on fixed assets (excluding hedges) and accrued interestand are shown by valueTOP 20 DEBT TO EBITDA RATIO

Average debt ratio of the top 20 buyout investments of 4.0x

Debt to EBITDA bands Number of % of top 20 investments portfolio by within value within Debt associated associated £' million band band (1.0)x - 0x (3) 1 3% 0x - 2.0x 97 4 25% 2.0x - 3.0x 87 2 8% 3.0x - 4.0x 211 4 17% 4.0x - 5.0x 745 5 22% 5.0x - 6.0x 359 2 13% 6.0x - 7.0x 464 2 12%

TOP 20 EV TO EBITDA VALUATION MULTIPLE Average ratings multiple of 10.2x

EV to EBITDA bands Number of % of top 20 investments portfolio by within value within Debt associated associated £' million band band 6.0x - 7.0x 99 5 16% 7.0x - 10.0x 121 6 22% 10.0x - 12.0x 156 4 23% 12.0x - 15.0x 94 3 27% 15.0x - 16.0x 22 2 12%Balance sheet

Over the course of 2011, the net assets of the Trust decreased by £1.2 million (0.3%) from £348.0 million to £346.8 million at the year end.

During the year we continued to put money to work, so that 85% of net assets were invested as at 31 December 2011, up from 74% last year.

ATTRIBUTION ANALYSIS OF CURRENT YEAR MOVEMENTS IN NAV

Revenue return Capital return Total

return

Opening NAV as at 1 January 2011 19,371 328,622 347,993 Dividend paid (8,709) - (8,709) Proceeds from exercise of - 6,825 6,825subscription shares Gross revenue 17,159 - 17,159 Government securities realised and - (329) (329)unrealised net losses Realised capital proceeds from - 16,528

16,528

investment portfolio in excess of

31 December 2010 book value Net unrealised capital - (20,769) (20,769)depreciation of investment portfolio Expenditure and taxation (2,597) - (2,597) Investment management costs: Priority profit share - current (7,190) - (7,190)year charge

Priority profit share - net loan (8,017) 8,017

-recovery Carried interest - (2,079) (2,079)

Closing NAV as at 31 December 2011 10,017 336,815 346,832

REALISED AND UNREALISED MOVEMENTS IN INVESTMENT PORTFOLIO (INCLUDING INTEREST) FOR THE YEAR ENDED 31 DECEMBER 2011

Investment name and Net unrealised Realised proceeds inranking within investment appreciation/ excess of 31 December 2010portfolio at 31 December (depreciation)of book value (includes gross2011 investments revenue) SLV (sold) - 9.6 SHL (4) 6.8 - ATC (9) 4.4 - Elite (sold) - 4.3 Goldshield (7) 4.0 - Other 2.0 1.5 Epyx (10) 2.9 - Mondo (sold) - 2.4 RPP1 and RPP2 2.4 - IRIS and CSG (sold) - 1.8 Achilles (8) 1.6 - Cornish Bakehouse (sold) - 0.7 Atlas (23) (2.2) - JLA (12) (2.4) - Teufel (17) (3.2) - SPIN (20) (3.9) - Mainio Vire (14) (4.7) - Americana (24) (6.5) - Fr¶sunda (16) (8.7) -

ANALYSIS OF NAV MOVEMENTS FOR THE YEAR ENDED 31 DECEMBER 2011

Over the course of the year, the NAV of the Trust decreased by 0.3% from £348.0million to £346.8 million. There were a number of underlying factorscontributing to the movement in the NAV. Positive impacts on the NAV were: theexercise of 12% of the subscription shares in issue (+£6.8 million); income netof expenses from the underlying portfolio and gilts (+£14.2 million); anduplifts on the realisation of investments compared to their carrying value atthe start of the year (+£16.5 million). Reductions in the NAV were caused by:the payment of a dividend to shareholders (-£8.7 million); the Manager'sremuneration totalling £9.3 million for both the annual management of theportfolio (-£7.2 million) and long term performance incentives (-£2.1 million);and the movement in value of the unrealised portfolio (-£20.8 million).

ATTRIBUTION ANALYSIS OF UNREALISED MOVEMENTS IN THE INVESTMENT PORTFOLIO (INCLUDING ACCRUED INTEREST MOVEMENT OF £4.3 MILLION) FOR THE YEAR ENDED 31 DECEMBER 2011

During the period, the value of the unrealised portfolio increased by £37.5million. This change can be attributed primarily to the following factors: netinvestment activity (+£45.0 million); profit growth in the underlying portfolio(+£18.5 million); and a decrease in ratings during the year on those assets notheld at cost (-£20.9 million).

In July the Trust took the opportunity to increase its exposure to the HgCapital 6 vintage investments by acquiring a secondary fund interest commitment of £15million in HgCapital 6 E LP.

In addition, a commitment of £60 million was made to the Manager's new MercuryFund, specialising in TMT investments in the £20-£80 million Enterprise Valuerange.The year ended with available liquid resources totalling £94 million(comprising £54 million of cash and government securities and a £40 millionundrawn standby bank facility), which compares with outstanding but undrawncommitments of £195 million on Hg5, Hg6, RPP1, RPP2 and Mercury. Totaloutstanding commitments less available liquid resources represent 29% of NAV(35% at 31 December 2010).

OUTSTANDING COMMITMENTS OF THE TRUST

Fund Vintage Original Outstanding Outstanding commitment commitments as at commitments as at £'million 31 December 2011 31 December 2010 £ % of NAV £ % of NAV 'million 'million HGT pre-2009 120.0 17.1 4.9% 22.3 6.4% HGT 6(1) 2009 285.0 85.9 24.8% 155.9 44.8% HgCapital 6 E LP(2) 2009 15.0 4.7 1.4% - - Mercury 2011 60.0 59.0 17.0% - - RPP LP 2006 18.1(3) 1.2 0.3% 1.8 0.5% RPP2 C LP 2010 33.4(4) 27.2 7.8% 32.0 9.2% Total outstanding 195.1 56.2% 212.0 60.9%commitments Liquid resources 53.5 15.4% 90.2 25.9% Bank facility 40.0 11.5% - -

Total available liquid 93.5 26.9% 90.2

25.9%resources Net outstanding 101.6 29.3% 121.8 35.0%commitments less available liquid resources

1 HgCapital Trust plc has the benefit of an investment opt-out provision in its commitment to invest alongside HgCapital 6, so that it can opt out of a new investment without penalty should it not have the cash available to invest.

2 Partnership interest acquired during 2011.

3 Sterling equivalent of €21.6m.

4 Sterling equivalent of €40.0m

Portfolio of InvestmentsThe Trust's strategy is to invest in five sectors, four of them by way ofbuyouts of businesses (representing 93% of the portfolio by value at year-end).Investment in the fifth sector, renewable power generation (7%), is made intoprojects through RPP1 and RPP2.Buyout portfolioAs at 31 December 2011, the Trust's buyout portfolio comprised 31 investmentsincluding a small number of residual interests in companies we had sold, whichwere mostly valued at, or close to, zero. The Trust held investments, includedabove, which had performed poorly and been written down to zero in previousperiods. This report covers only those companies with value.TMT represented 57% of the primary buyout portfolio (42% at 31 December 2010).The majority of this value was represented by companies that are all users oftechnology, rather than developers of technology with the associated frequentchallenges of new product development. The common themes that run through eachone are highly visible revenues, strong market positions and strong cashconversion that permits debt repayment, whilst the businesses expand and grow.

Achilles and Epyx, two electronic market place investments, continue to grow strongly, delivering double digit growth year on year.

Visma and TeamSystem are both providers of business software and services tosmall and medium sized enterprises in the Nordic region and Italy respectively.Both benefit from high recurring revenues, a very large and diversifiedcustomer base and they continue to grow through a combination of organic growthand acquisitions.Manx Telecom is the incumbent integrated fixed and mobile telecom operator onthe Isle of Man. It has generated cash ahead of expectation, reducing its debteach year.Three new investments were made in this sector during the year, representingnearly 16% of the overall portfolio value: IAS, the number one provider of coreapplication software to the UK Accountancy Practice market; ISG, a softwareprovider to the UK's legal and not-for-profit sectors; and Group NBT, aninternet domain name manager and online brand protection service provider.

Services investments represented 18% of the primary buyout portfolio (11% at 31 December 2010).

Following the merger with PreVisor at the beginning of the year, SHL, theglobal leader in psychometric assessment services, has delivered strong doubledigit revenue and profit growth. SHL benefited from the successful completionof an ambitious restructuring exercise which cut costs, increased productivityand accelerated innovation and sales growth.

ATC, a new investment in early 2011, has delivered a strong trading performance in 2011 with double digit profit growth and strong cash generation.

JLA, a provider of equipment, finance and maintenance to laundries had a disappointing 2011, recording a flat level of profits compared with 2010. There are signs that a new management team has improved performance with profits growing in the second half of the year.

Healthcare represented 14% of the primary buyout portfolio (14% at 31 December2010). We are invested in two areas: long-term care where the payer risks arelow, with a preference for specialist care of people with acute disabilities;and low cost pharmaceuticals.Sector by value of primary buyout portfolio157% TMT18% Services14% Healthcare7% Industrials4% Consumer & LeisureDeal type by value(1)93% Buyout7% Renewable EnergySector by class(2)86% Unquoted14% Cash & other assets

1 Percentages are based on fixed assets (excluding hedges) and accrued interest

and are shown by value2 Percentages are based on net assetsWe own long-term care assets in the UK, Germany, Sweden and Finland. In the UK,the Government's fiscal consolidation translates into a reduction in fees thatlocal authorities and social services will pay for care. This resulted in asqueeze on margins and therefore ratings across the sector have fallen tohistoric lows. Voyage, which has a more defensible business model, has managedto maintain profits and repay debt; however, low ratings have taken their tollon our book value. In Germany, labour shortages have increased labour cost andsqueezed margins. Casa Reha has maintained earnings through expanding itsestate. At Fr¶sunda, based in Sweden, a poorly executed acquisition programme,which coincided with an operational improvement project, damaged margins andrevenues, leading to a reduction in the holding value.Our Finnish investment, Mainio Vire, has traded to plan, although a significantbolt-on acquisition, lined up when we completed this investment, was notconcluded. Accordingly, the premium paid to obtain this platform company hasnot been recouped from expected synergies arising from the further acquisition.We have therefore marked our investment down and written off this premiumcompletely.

Goldshield, a pharmaceutical company, continued to grow its core business after selling, as planned, a weak and declining consumer business. It has seen earnings rise and debt reduce rapidly; it is now well placed to make acquisitions and/or commence paying dividends.

Industrials represented 7% of the primary buyout portfolio (18% at 31 December2010). Here, the common theme is that we are backing companies that own anddevelop high quality products based on technologically advanced German designbut manufactured in low cost locations.During 2011 we realised both SLV and Mondo at healthy uplifts to their carryingvalues and delivered overall investment returns on these investments of 4.0xand 2.1x original cost respectively. No new investments were made in thissector during the year.

SimonsVoss, the German developer and manufacturer of digital battery powered locking and access control systems, grew very strongly in 2011 and enjoyed record levels of order intakes. New product innovation is being positively received by customers and the company is now focusing on expanding into adjacent countries.

Finally, our legacy Consumer and Leisure portfolio represented 4% of theprimary buyout portfolio (9% at 31 December 2010). 2011 proved to be adifficult trading environment for businesses exposed to the consumer and as aresult we have seen a significant deterioration in the trading of Americana,which designs and sells branded clothing. Schleich, which designs and marketstoy figurines, has also seen a small decline in year-on-year trading results.Sporting Index, a sports spread betting firm, experienced volume and profitsdecline in 2011, compared with 2010 which benefited from the Football WorldCup. The scale of this event distorted year-on-year trading comparison, as dothe current year costs of developing a new trading platform.Renewable energyThe Trust invests in renewable energy through RPP1 and RPP2, two UK fundsmanaged by our dedicated team of seven specialists. The underlying portfoliosare divided into four platforms: UK Onshore Wind, Swedish Onshore Wind, SpanishMini-Hydro and Spanish Solar. The assets are split into onshore wind at 63% ofvalue, mini-hydro at 9% and solar at 28% of value. All use proven andcommercially viable technologies within the framework of current power priceregimes across Europe. Each of the platform's operating performance continuesto be in line with our investment case since inception. The investment case forpower generation remains positive as Western Europe faces both a huge need tore-equip its creaking power infrastructure and to reduce its CO2 emissions.

Mercury

The Trust has made a £60 million commitment to the Manager's new Mercury Fund,specialising in TMT investments with an Enterprise Value of between £20 and £80million. This is an area where the Manager has historically made manyprofitable investments and has now set up a dedicated team focused on thisniche.This dedicated fund is intended to target smaller buyouts in the same thematicTMT sub-sectors but with significant incremental resources added to theexisting HgCapital sector team. The addition of Mercury alongside the existingTMT team further reinforces the scale and capability of HgCapital within thissector.Geography and vintage analysisAt 31 December 2011 the geographical weighting of the total primary buyoutportfolio had moved towards the UK, (up from 45% in December 2010 to 60%) andaway from Germany (down from 18% in December 2010 to 9%) and the Nordic andBenelux regions (down from 22% in December 2010 to 21%). Our largest investmentin the portfolio, TeamSystem, is based in Italy and accounts for about 10% ofthe primary buyout portfolio value.

Clearly we are exposed to developments in each of these economies but also exposed to growth sectors and to the global economy too, as many of the companies within the portfolio are exporters.

Prospects

We saw a marked downturn in leading indicators and activity across WesternEurope in the second half of 2011 and we believe that this will continue into2012. A weakened global financial system, exposed in Europe to sovereign debtdefaults, presents challenges for business and for investors.Our current expectation is that in 2012 our energies will be directed towardsenhancing the value of our portfolio; making earnings enhancing acquisitionswhere appropriate and exploiting the strong competitive positions most of ourcompanies have in order to gain market share. In addition, we have businessesin our portfolio that have navigated the downturn and implemented changeprogrammes which have improved their earnings and competitive capabilities. Inthese cases, we will sell if we can secure attractive prices. New investmentwill occur, where we can secure a business that fits our thematic criteria andwhich can be bought for value.Our portfolio of buyouts continues to grow profits and revenues at healthyrates, even in a slowing economy. They tend not to be over exposed to cyclicaltrends in demand. Most, if not all, provide products or services which aredifferentiated, valued by and in some cases vital to their customers.Consequently, they earn healthy net margins and generate cash. Each businesswill continue to take measured risks in making investments to improve the paceof growth or quality of earnings, so that we can secure premium ratings onexit.Geographic spread by value of primary buyout portfolio*60% UK15% Nordic Region10% Italy9% Germany6% BeneluxVintage by value of primary buyout portfolio*26% 201132% 201011% 20097% 200824% pre 2008

*Percentages are based on fixed assets (excluding hedges) and accrued interest and are shown by value

INVESTMENTS - £87 million invested in 2011

Five new primary buyout investments were made with a total enterprise value of£948 million, using £463 million (£521 million invested in total) of equityfrom our clients, with the Trust's share being £69.5 million. In each case, wehave applied the knowledge acquired in our research into various investmentthemes: compliance and mission critical services; and long-term acute care.In addition, £17.6 million was provided to existing investments; £10.2 millionof which was a secondary fund commitment, increasing the Trust's exposure tothe HgCapital 6 fund.In the renewable power business, two new investments with total project valuesof £155 million required £71 million of equity from RPP2 and RPP 1. The Trust'sshare of these new investments, other further investments and their share offees payable via the fund was £4.7 million.INVESTMENTS MADE DURING THE YEAR*

Company Sector Geography Activity Deal Cost type £'000 IAS TMT UK Accountancy software Buyout 25,598 Group NBT TMT UK Domain name management Buyout 16,623 Mainio Vire Healthcare Nordic Specialist disability Buyout 12,330 Region care ATC Services Benelux Fiduciary management and Buyout 9,913 administration services SG TMT UK Provider of business Buyout 5,058 software New investments 69,522HgCapital 6 E Fund UK Secondary interest in Fund 10,207LP mid-cap buyout fund RPP2 Fund Renewable Europe Renewable energy fund Fund 4,110 energy Lumesse TMT UK Strategic HR software Buyout 1,509 JLA Services UK On-premise laundry Buyout 751 services and commercial machine sales RPP1 Fund Renewable Europe Renewable energy fund Fund 568 energy Sporting Index Consumer UK Sports spread betting Buyout 332 & Leisure firm Other 102investments Further 17,579investments Total 87,101investment by the Trust

\* The numbers in the table relate to the Trust's share of transactions

REALISATIONS

Realisations of seven investments for £52 million at a 56% uplift over book value in December 2010

Two investments, SLV, a B2B lighting business, and SiTel Semiconductor (heldunder Elite), a designer of application-specific microprocessors for voiceapplications, were realised in the first half of 2011. Together, they returned£241 million of proceeds for our clients, the Trust's share being £33.6million, resulting in an average life to date multiple of cost of 2.9x and acombined uplift over book value, at 31 December 2010, of 71%.

In addition, the investment in Fabory, the Dutch industrial fasteners distributor, was restructured into a new holding company, in which HgCapital clients now only have a 3% equity holding, valued at nil.

During July 2011, we completed the sale of Cornish Bakehouse, returning £0.7 million of proceeds to the Trust. This investment was previously fully written-off.

In October 2011, Mondo Minerals, a talc mining company was sold, initiallyrealising cash proceeds of £12.7 million with a further £0.3 million receivedin December. Further proceeds, which are currently valued at £2.0 million, areexpected over the next two years. This represents a 2.1x return on an originalcost of £7 million.REALISATIONS MADE DURING THE YEAR(1)

Company Sector Exit Route Current Cost Proceeds(2) Cumulative year £'000 £'000 gain/ gain/ (loss)(3) (loss)(4) £'000 £'000 SLV Industrials Secondary sale 5,999 24,170 18,171 9,638 Mondo Industrials Secondary sale 6,987 13,043 6,056 2,422Minerals Elite TMT Trade sale 3,540 9,441 5,901 4,325

Software TMT Secondary sale 530 3,420 2,890 1,197(Cayman)- re Blue Minerva Software TMT Secondary sale 253 1,585 1,332 554(Cayman) - re Guildford Cornish Consumer & Trade sale 4,200 672 (3,528) 672Bakehouse Leisure Fabory Industrials Transfer for 7,474 - (7,474) - no value Full 28,983 52,331 23,348 18,808

realisations Lumesse TMT Refinancing 5,035 5,601 566 625 SimonsVoss Industrials Refinancing 2,164 2,940 776 713 Other 2,824 1,560 (1,264) 132 Partial 10,023 10,101 78 1,470realisations Total 39,006 62,432 23,426 20,278realisations

1 The numbers in the table relate to the Trust's share of transactions 2 Includes gross revenue received during the year

3 Realised proceeds including gross revenue received, in excess of historic cost

4 Realised proceeds including gross revenue received, in excess of 31 December

2010 book value and accrued interest INVESTMENT PORTFOLIO

THE TOP 20 PRIMARY BUYOUT INVESTMENTS ACCOUNT FOR 87% OF THE PORTFOLIO BY VALUE

Primary buyout Sector Location Year of Residual Total Portfolio Cum. investments investment Cost valuation value value £'000 £'000(1) % %(in order of value) 1 TeamSystem Holdco TMT Italy 2010 24,432 25,671 8.7% 8.7% SARL 2 IAS Guernsey Limited TMT UK 2011 25,598 25,598 8.6% 17.3% 3 Visma Norway Holdco TMT Nordic 2006 701 23,156 7.8% 25.1% Region 4 SHL Group Holdings 1 Services UK 2006 7,991 21,078 7.1% 32.2% Limited 5 Group NBT Limited TMT UK 2011 16,623 16,623 5.6% 37.8% 6 Lumesse Holdings TMT UK 2010 15,790 16,251 5.5% 43.3% SARL 7 Goldshield Equityco Healthcare UK 2009 8,545 16,007 5.4% 48.7% SARL 8 Achilles Group TMT UK 2008 5,226 14,418 4.9% 53.6% Holdings Limited 9 ATC Holdco SARL Services Benelux 2011 9,913 14,269 4.8% 58.4% 10 Epyx Investments TMT UK 2009 6,388 12,273 4.1% 62.5% Limited 11 Manx Telecom Limited TMT UK 2010 11,033 11,436 3.9% 66.4%

12 JLA Equityco Limited Services UK 2010 12,227 9,814 3.3% 69.7%

13 SimonsVoss Luxco Industrials Germany 2010 7,901 8,824 3.0% 72.7% SARL 14 Mainio Vire SARL Healthcare Nordic 2011 12,330 7,627 2.6% 75.3% Region 15 Schleich Luxembourg Consumer & Germany 2006 4,650 6,801 2.3% 77.6% SARL Leisure 16 Fr¶sunda Luxco SARL Healthcare Nordic 2010 14,296 6,692 2.3% 79.9% Region

17 Teufel Holdco SARL Industrials Germany 2010 9,428 6,449 2.2% 82.1%

18 Voyage Holdings Healthcare UK 2006 13,136 5,729 1.9% 84.0% Limited 19 ISG Bidco Limited TMT UK 2011 5,058 5,058 1.7% 85.7%

20 Sporting Index Group Consumer & UK 2005 6,503 2,777 0.9% 86.6%

Holdings Limited Leisure

21 Casa Reha SARL Healthcare Germany 2008 8,296 2,235 0.8% 87.4%

22 Mondo Minerals Co-op Industrials Nordic 2007 - 2,003 0.7% 88.1% Region 23 Atlas Energy Group Services UK 2007 9,597 1,856 0.6% 88.7% Limited 24 Americana Consumer & UK 2007 4,625

1,430 0.5% 89.2%

International Leisure Holdings Limited 25 Weston Presidio Fund North 1998 1,723 588 0.2% 89.4% Capital III, L.P. America 26 KVT Co-invest Sarl Industrials Switzerland 2008 5,829 523 0.2% 89.6% 27 Tiger Capital TMT UK 2008 632 417 0.1% 89.7% Limited 28 Elite Holding SA TMT Benelux 2005 - 254 - 89.7% 29 ACT Venture Capital Fund Ireland 1994 27 26 - 89.7% Limited

30 W.E.T Holding Industrials Germany 2003 7,775

- - 89.7% (Luxembourg) SA

31 BMFGH II BV Services Benelux 2007 -

- - 89.7% Hg5 Euro Hedge n/a n/a n/a - (52) - 89.7% Total primary buyout 256,273 265,831 89.7% investments(2) Secondary buyout investments 1 HgCapital 6 E LP Fund UK 2011 10,087 9,444 3.2% 92.9% Total buyout 266,360 275,275 92.9% investments Renewable energy investments 1 RPP1 Fund Renewable Europe 2006 14,975 15,806 5.3% 98.3% energy 2 RPP2 Fund Renewable Europe 2010 6,424 5,202(3) 1.8% 100.0% energy Total renewable 21,399 21,008 7.1% energy investments Total all 287,759 296,283 100.0% investments (34) 1 Including investment valuation of £265,421,000 and accrued interest of £ 30,862,000. 2 Buyout investments are held through the Trust's investment in HGT LP and HGT 6 LP. 3 Reflecting the draw down of fees and fund establishment expenses in the early phase of the fund. FINANCIAL STATEMENTSINCOME STATEMENT

for the year ended 31 December 2011

Note Revenue return Capital return Total return 2011 2010 2011 2010 2011 2010 £'000 £'000 £'000 £'000 £'000 £'000

(Losses)/gains on investments 13 - - (6,649) 63,529 (6,649)

63,529and government securities Gains/(losses) on loans 5(b) - - 8,017 (4,199) 8,017 (4,199)recoverable from priority profit share due to General Partners Net income 4 1,952 12,165 - - 1,952 12,165 Other expenses 6 (2,597) (2,062) - - (2,597) (2,062) Net return on ordinary (645) 10,103 1,368 59,330 723 69,433activities before taxation Taxation on ordinary 9(a) - (50) - - - (50)activities Net return on ordinary (645) 10,053 1,368 59,330 723 69,383activities after taxation attributable to reserves Return per Ordinary share 10(a) (2.05p) 34.02p 4.34p 200.77p 2.29p 234.79p

The total return column of this statement represents the Trust's income statement. The supplementary revenue and capital return columns are both

prepared under guidance published by the Association of Investment Companies (`AIC'). All recognised gains and losses are disclosed in the revenue and

capital columns of the income statement and as a consequence no statement of total recognised gains and losses has been presented.

The movements in reserves are set out in note 21 to the financial statements.

All revenue and capital items in the above statement derive from continuing

operations.

No operations were acquired or discontinued during the year.

BALANCE SHEET as at 31 December 2011 Note 2011 2010 £'000 £'000 Fixed assets

Investments held at fair value Unquoted at Directors' valuation 265,421 232,184 Total fixed assets 12 265,421 232,184

Current assets -amounts receivable

after one year Accrued income on fixed assets 14 30,862

26,606

Current assets -amounts receivable

within one year Debtors 14 618 1,826 Government securities 15 48,497 86,498 Cash 16 4,476 3,473 Total current assets 84,453 118,403 Creditors - amounts falling due within 17 (3,042) (2,594)one year Net current assets 81,411 115,809 Net assets 346,832 347,993 Capital and reserves Called up share capital 20 8,011 7,838 Share premium account 21 68,096 61,444 Capital redemption reserve 21 1,248 1,248 Capital reserve - realised 21 282,934 274,913 Capital reserve - unrealised 21 (23,474) (16,821) Revenue reserve 21 10,017 19,371 Total equity shareholders' funds 346,832

347,993

Basic net asset value per Ordinary 10 1,089.9p 1,118.8pshare Diluted net asset value per Ordinary 10 1,069.3p 1,090.7pshare Ordinary shares in issue at 31 December 31,822,330

31,103,915

The financial statements were approved and authorised for issue by the Board of Directors on 15 March 2012 and signed on its behalf by:

Roger Mountford, Chairman Richard Brooman, Director CASH FLOW STATEMENT

for the year ended 31 December 2011

Note 2011 2010 £'000 £'000 Net cash inflow from operating activities 7 3,759 4,311 Taxation received/(paid) 1,590 (10)

Capital expenditure and financial investment Purchase of fixed asset investments 12 (87,101)

(111,418)

Proceeds from the sale of fixed asset 12 49,623 72,600investments Net cash outflow from capital expenditure and (37,478) (38,818)financial investment Financing activities Proceeds from issue of share capital 6,825

50,000

Fees paid on issue of share capital - (1,137) Equity dividends paid 11 (8,709) (6,297) Net cash (outflow)/inflow from financing (1,884) 42,566activities Net cash (outflow)/inflow before management (34,013) 8,049of liquid resources

Management of liquid resources Purchase of government securities 15 (117,127)

(205,535)

Sale/redemption of government securities 15 152,143 198,086

Net cash inflow/(outflow) from management of 35,016 (7,449)liquid resources

Increase in cash and cash equivalents in the 16 1,003

600year Cash and cash equivalents at 1 January 3,473

2,873

Cash and cash equivalents at 31 December 16 4,476

3,473

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS for the year ended 31 December 2011

Note Share Share Capital Capital Revenue Total capital premium redemption reserves reserve £'000 £'000 account reserve £'000 £'000 £'000 £'000 At 31 December 2010 7,838 61,444 1,248 258,092 19,371 347,993

Issue of Ordinary shares 20,21 180 6,652 - - -

6,832 Conversion of 20 (7) - - - - (7)Subscription shares Net return from ordinary - - - 1,368 (645) 723activities Dividends paid 11 - - - - (8,709) (8,709)

At 31 December 2011 20,21 8,011 68,096 1,248 259,460 10,017

346,832 At 31 December 2009 6,296 14,123 1,248 198,762 15,615 236,044 Issue of Ordinary shares 1,480 48,520 - - - 50,000 Issue of Subscription 62 (62) - - - -shares Cost of share issue - (1,137) - - - (1,137) Net return from ordinary - - - 59,330 10,053 69,383activities Dividends paid 11 - - - - (6,297) (6,297)

At 31 December 2010 20,21 7,838 61,444 1,248 258,092 19,371 347,993

The following notes form part of the financial statements.

NOTES TO THE FINANCIAL STATEMENTS

1. Principal activityThe principal activity of the Trust is that of an investment trust company. TheTrust is an investment company as defined by Section 833 of the Companies Act2006 and an investment trust within the meaning of Sections 1158 and 1159 ofthe Corporation Tax Act 2010 (`CTA 2010').2. Basis of preparationThe accounts have been prepared under the historical cost convention, exceptfor the revaluation of financial instruments at fair value as permitted by theCompanies Act 2006, and in accordance with applicable UK law and UK AccountingStandards (`UK GAAP') and with the Statement of Recommended Practice `FinancialStatements of Investment Trust Companies' (`SORP'), dated January 2009. All ofthe Trust's operations are of a continuing nature.The Trust has considerable financial resources and, as a consequence, theDirectors believe that the Trust is well placed to manage its business riskssuccessfully despite the current uncertain economic outlook. After makingenquiries, the Directors have a reasonable expectation that the Trust will haveadequate resources to continue in operational existence for the foreseeablefuture. Further details are provided in the Directors' report (see below).

Accordingly, they continue to adopt the going concern basis in preparing the annual report and accounts.

The same accounting policies, presentation and methods of computation are followed in these financial statements as applied in the Trust's previous annual audited financial statements.

3. Organisational structure, manager arrangements and accounting policies

Partnerships

The Trust entered into three separate partnership agreements with general andfounder partners in May 2003 (subsequently revised in January 2009), January2009 and July 2011, at which point investment holding limited partnerships wereestablished to carry on the business of an investor, with the Trust being thesole limited partner in these entities.The purpose of these partnerships, HGT LP, HGT 6 LP and HgCapital Mercury D LP(together the `primary buyout funds') is to hold all the Trust's investments inprimary buyouts and other investments, other than liquid funds. Under thepartnership agreements, the Trust made capital commitments into the primarybuyout funds with the result that the Trust now holds direct investments in theprimary buyout funds and an indirect investment in the fixed asset investmentsthat are held by these funds, as it is the sole limited partner. The fixedasset investments on the balance sheet and the investment portfolio (see above)comprise the underlying investments held by these primary buyout funds.In July 2011, the Trust made a direct secondary investment into HgCapital 6 ELP (`Hg6 E LP'), one of the partnerships that comprise the Hg6 funds, in whichthe Trust is now a limited partner alongside other limited partners. This is adirect investment in the HgCapital 6 E LP fund, as shown on the balance sheetand the investment portfolio (see above).

The Trust also entered into partnership agreements with the purpose of investing in renewable energy projects by making capital commitments alongside other limited partners in Hg Renewable Power Partners LP (`Hg RPP LP') and HgCapital Renewable Power Partners 2 C LP (`Hg RPP2 LP') (together the `renewable funds'). These are direct investments in the renewable funds, as shown on the balance sheet and the investment portfolio (see above).

Priority profit share and carried interest per the primary buyout limitedpartnership agreementsUnder the terms of the primary buyout fund limited partnership agreements(`LPAs'), the general partner is entitled to appropriate, as a first charge onthe net income of the funds, an amount equivalent to its priority profit share(`PPS'). The Trust is entitled to net income from the funds, after payment ofthe PPS.In years in which these funds have not yet earned sufficient net income tosatisfy the PPS, the entitlement is carried forward to the following years. ThePPS is payable quarterly in advance, even if insufficient net income has beenearned. Where the cash amount paid exceeds the net income, an interest freeloan is advanced to the general partner by these primary buyout funds, which isfunded via a loan from the Trust. Such loan is only recoverable from thegeneral partner by an appropriation of net income; until net income is earned,no value is attributed to this loan.Furthermore, under the primary buyout funds' LPAs, the founder partner isentitled to a carried interest distribution once certain preferred returns aremet. The LPAs stipulate that the primary buyout funds' capital gains (or netincome), after payment of the carried interest, are distributed to the Trust.Accordingly, the Trust's entitlement to net income and net capital gains areshown in the appropriate lines of the income statement. Notes 4, 5 and 7 to thefinancial statements and the cash flow statement disclose the gross income andgross capital gains of the primary buyout funds (including the associated cashflows) and also reflect the proportion of net income and capital gains in thebuyout funds that have been paid to the general partner as its PPS and to thefounder partner as carried interest, where applicable.The PPS paid from net income is charged to the revenue account in the incomestatement, whereas PPS paid as an interest-free loan, if any, is charged as anunrealised depreciation to the capital return on the income statement.

The carried interest payments made from net income and capital gains are charged to the revenue and capital account respectively on the income statement.

Investment income and interest receivableAs stated above, all income that is recognised by the primary buyout funds, netof PPS, is attributed to the Trust. The Trust will recognise such net incomeand reflect this as income in its financial statements, once recognised in thebuyout funds. Income from HgCapital 6 E LP and the renewable funds wouldnormally consist of income distributions and these distributions are recognisedas income in the financial statements of the Trust when the right to suchdistribution is established.

The accounting policies below apply to the recognition of income by the primary buyout funds.

Interest income on non-equity shares and fixed income securities are recognisedon a time apportionment basis so as to reflect the effective yield when it isprobable that economic benefit will flow to the Trust. Premiums paid ordiscounts received with the acquisition of government securities are amortisedover the remaining period up to the maturity date and are recognised ininterest income on government securities. Dividends receivable on unlistedequity shares where there is no ex-dividend date and on non-equity shares arebrought into account when the Trust's right to receive payment is established.Income from listed equity investments, including taxes deducted at source, isincluded in revenue by reference to the date on which the investment is quotedex-dividend. Where the Trust elects to receive dividends in the form ofadditional shares rather than cash dividends, the equivalent of the cashdividend is recognised as income in the revenue account and any excess in thevalue of the shares received over the amount of the cash dividend is recognisedin capital reserve - realised.

Expenses

All expenses are accounted for on an accruals basis. All administrative expenses are charged wholly to the revenue account. Expenses that are incidental to the purchase or sale of an investment are included within the cost, or deducted from the proceeds, of the investment.

Dividends

Dividend distributions to shareholders are recognised as a liability in the year that they are approved unconditionally.

Current and other non-current assetsFinancial assets and financial liabilities are recognised in the Trust'sbalance sheet when the Trust becomes a party to the contractual provisions ofthe instrument. Trade receivables are stated at nominal value. Appropriateallowances for estimated irrecoverable amounts are recognised in the revenuereturn on the income statement.

Government securities are short-term investments made in fixed rate government gilts. Cash comprises current accounts held with banks.

Foreign currencyAll transactions in foreign currencies are translated into pounds sterling atthe rates of exchange ruling at the dates of such transactions and theresulting exchange differences are taken to capital reserve - realised. Foreigncurrency assets and liabilities at the balance sheet date are translated intopounds sterling at the exchange rates ruling at that date and the resultingexchange differences are taken to capital reserve - unrealised.

Taxation

Income taxes represent the sum of the tax currently payable, withholding taxessuffered and deferred tax. Tax is charged or credited in the income statement.Deferred taxation is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future, or the rightto pay less, have occurred at the balance sheet date. This is subject todeferred assets only being recognised if it is considered more likely than notthat there will be suitable profits from which the future reversal of theunderlying timing differences can be deducted. Timing differences aredifferences between the Trust's taxable profits and its results, as stated inthe financial statements, which are capable of reversal in subsequent periods.

Investments

The general principle applied is that investments should be reported at `fairvalue' in accordance with Financial Instruments: Recognition and Measurement(`FRS26') and the International Private Equity and Venture Capital (`IPEV')Valuation Guidelines, September 2009 edition. Where relevant, the Trust appliesthe policies stated below to the investments held by HGT LP, HGT 6 LP andHgCapital Mercury D LP, in order to determine the fair value of its investmentsin these limited partnerships.Purchases of investments are recognised on a trade date basis. Sales ofinvestments held through the primary buyout funds are recognised at the tradedate of the disposal. Sales from the investments in HgCapital 6 E LP and therenewable energy funds would normally consist of capital distributions andthese distributions are recognised as a realisation when the right to suchdistribution is established. Proceeds are measured at fair value, which isregarded as the proceeds of sale less any transaction costs.

Quoted: Quoted investments are designated as held at fair value, which is deemed to be their bid price.

Unquoted: Unquoted investments are also designated as held at fair value and are valued using the following guidelines:

(i) initially, investments are valued at the price of recent investment

including fees and transaction costs, unless the prevailing market

conditions and/or trading prospects of the investment result in this price

being an inappropriate measure of fair value and (ii) or (iv) below is

required;

(ii) subsequent to the initial fair value recognition in (i), companies are

valued based on the level of maintainable earnings and an appropriate earnings

multiple, unless (iv) is required;

(iii)where more appropriate, investments are valued with reference to their net

assets rather than to their earnings; and

(iv) appropriate provisions are made against all individual valuations where

necessary to reflect unsatisfactory financial performance or a fall in

comparable ratings, leading to an impairment in value.

Limited partnership funds: These are investments that are set up by a managerin which the Trust has a direct investment, but is not the sole limited partnerand does not hold a majority share. These investments are valued at fair value,based on the manager's valuation after any required adjustment by theDirectors.

Government securities: These are short-term investments made in fixed rate government gilts and are valued at the current fair market value of the gilt.

Derivative financial instruments: Derivative financial instruments are held atfair value and are valued using quoted market prices for financial instrumentstraded in active markets, or dealer price quotations for financial instrumentsthat are not actively traded.

Both realised and unrealised gains and losses arising on fixed asset investments, financial assets and liabilities and derivative financial instruments, are taken to capital reserves.

Capital reserves

Capital reserve - realised

The following are accounted for in this reserve:

(i) gains and losses on the realisation of investments;

(ii) attribution of gains to the founder partners for carried interest;

(iii) losses on investments within the portfolio where there is little prospect

of realisation or recovering any value;(iv) realised exchange differences of a capital nature; and(v) expenses, together with the related taxation effect, charged to this reserve in accordance with the above policies.

Capital reserve - unrealised

The following are accounted for in this reserve:

(i) increases and decreases in the valuation of investments held at the year end;

(ii) increases and decreases in the valuation of the loans to general partners; and

(iii) unrealised exchange differences of a capital nature.

4. Income 2011 2010 £'000 £'000

Income from investments held by HGT LP and HGT 6 LP

UK unquoted investment income 4,474 7,672 Foreign unquoted investment income 12,591 6,267 UK dividends - 1,396 Gilt interest less amortisation of premium 53 (472) Total investment income 17,118 14,863 Other income Deposit interest 23 27 Other interest income 18 136 Total other income 41 163 Total income 17,159 15,026

Priority profit share charge against income

Current year - HGT LP (1,357) (2,861) Current year - HGT 6 LP (4,914) - Prior year - HGT 6 LP (8,936) - Total priority profit share charge against income (15,207) (2,861) Total net income 1,952 12,165 Total income comprises: Dividends - 1,396 Interest 1,952 10,769 Total net income 1,952 12,165

5. Priority profit share and carried interest

(a) Priority profit share payable to General Partners Revenue return 2011 2010 £'000 £'000 Priority profit share payable Current year amount 7,190 7,060

Less: Current year loans advanced to General Partners (919) (4,199)

Current year charge against income 6,271

2,861

Add: Prior year loans to General Partners recovered from 8,936

-priority profit share Total priority profit share charge against income 15,207

2,861

The priority profit share payable on HGT LP, HGT 6 LP and Hg Mercury D LP rankas a first appropriation of net income from investments held in HGT LP, HGT 6LP and Hg Mercury D LP respectively and is deducted prior to such income beingattributed to the Trust in its capacity as a Limited Partner. The net income ofHGT LP, HGT 6 LP and Hg Mercury D LP earned during the year, after thededuction of the priority profit share, is shown on the income statement.Details of these arrangements are disclosed in the Directors' report.(b) Loans to General Partners Capital return 2011 2010 £'000 £'000

Movements on loans to General Partners

Losses on current year loans advanced to General Partners (919) (4,199)

Gains on prior year loans to General Partners recovered 8,936

-against income

Total gains/(losses) on loans recoverable from General 8,017 (4,199) Partners

In years in which the funds noted in note 5(a) have not yet earned sufficientnet income to satisfy the priority profit share, the entitlement is carriedforward to the following years. The priority profit share is payable quarterlyin advance, even if insufficient net income has been earned. Where the cashamount paid exceeds the net income, an interest free loan is advanced to thegeneral partner by these primary buyout funds, which is funded via a loan fromthe Trust. Such loan is only recoverable from the general partner by anappropriation of net income; until net income is earned, no value is attributedto this loan and hence an unrealised capital loss is recognised and reversed ifsufficient income is subsequently generated.(c) Carried interest to Founder Partners Capital return 2011 2010 £'000 £'000 Carried interest payable Current year amount 2,079 1,136

Total carried interest charge against capital gains (note 2,079 1,136 13)

The carried interest payable ranks as a first appropriation of capital gains onthe investments held in HGT LP, HGT 6 LP and Hg Mercury D LP, limitedpartnerships established solely to hold the Trust's investments, and isdeducted prior to such gains being paid to the Trust in its capacity as aLimited Partner. The net amount of capital gains of HGT LP, HGT 6 LP and HgMercury D LP during the year, after the deduction of carried interest, is shownon the income statement. Details of the carried interest contracts aredisclosed in the Directors' report.6. Other expensesOperating expenses 2011 2010 £'000 £'000

Custodian and administration fees 445

324

Directors' remuneration (note 8) 189

178

Bank facility fees and expenses 840

-

Legal and other administration costs 1,053 1,432 2,527 1,934

Fees payable to the Trust's auditors Audit of the Trust's annual accounts 48

46 Tax compliance services 18 17 Tax advisory services - 24 Other non-audit services 4 41

Total fees payable to the Trust's auditors 70

128 Total other expenses 2,597 2,062

The Trust's total expense ratio (`TER'), calculated 2.82% 3.12% as total expenses

including the priority profit share as a percentage of average net assets was:

7. Cash flow from operating activities

Reconciliation of net return before taxation to net 2011 2010 cash flow from operating activities

£'000 £'000 Net return before taxation 723 69,433 Add back: Losses/(gains) on investments held at 4,570 (64,665)fair value

Increase in carried interest payable 943

74

Amortisation of premium on government securities 2,656

3,980

Increase in prepayments and accrued income (4,648) (5,919) Decrease in debtors 17 2,691 Decrease in creditors (495) (1,276)

Tax on investment income included within gross (7)

(7)income Net cash inflow from operating activities 3,759

4,311

8. Directors' remuneration

The aggregate remuneration of the Directors for the year to 31 December 2011 was £189,000 (2010: £178,000).

Further information on the Directors' remuneration is disclosed in the Directors' remuneration report.

9. Taxation on ordinary activities

(a) Analysis of charge in the year 2011

2010 £'000 £'000 Current tax: UK corporation tax - 2,438 Income streaming relief - (2,438) Prior year adjustment - 50

Total current tax (note 9(b)) -

50

(b) Factors affecting current tax charge for the year

The tax assessed for the year is the same as the standard rate of corporation tax in the UK for a large company (26%; 2010: 28%).

The differences are explained below:

2011 2010 £'000 £'000 Net revenue return on ordinary activities before (645) 10,103taxation UK corporation tax (credit)/charge at 26% thereon (171) 2,829(2010: 28%) Effects of: Non taxable UK dividends - (391) Tax relief from interest distribution -

(2,438)

Unutilised losses arising in the year 171

-

Tax in relation to the prior year -

50 171 (2,779)

Current revenue tax charge for the year (note 9(a)) -

50

In the opinion of the Directors, the Trust has complied with the requirementsof Section 1158 and Section 1159 of the CTA 2010 and will therefore be exemptfrom corporation tax on any capital gains made in the year.

10. Return and net asset value per Ordinary share

(a) Return per ordinary share Revenue return Capital return Year Year Year Year ended ended ended ended 31.12.11 31.12.10 31.12.11 31.12.10 Earnings (£'000): Return on ordinary activities after (645) 10,053 1,368 59,330taxation Number of shares (`000) Weighted average number of shares in 31,518 29,552 31,518 29,552issue

Return per Ordinary share (pence) (2.05) 34.02 4.34 200.77

At the beginning of the year the Trust had 6,220,783 Subscription shares inissue. On 10 June 2011 and 11 November 2011 respectively, 695,810 and 22,605new Ordinary shares were issued pursuant to the exercise of Subscriptionshares. The remaining Subscription shares are convertible into Ordinary shareson 31 May 2012 and 31 October 2012, with the final exercise date on 31 May2013.(b) Net asset value per share Year

Year ended ended 31.12.11 31.12.10 Net asset value (£'000) Net assets 346,832 347,993 Assuming exercise of all outstanding Subscription 52,272 59,097shares Fully diluted net asset value 399,104 407,090

Number of Ordinary shares (`000) Number of Ordinary shares in issue 31,822

31,104

Potential issue of new Ordinary shares on exercise of 5,503 6,221Subscription shares Ordinary shares in issue following exercise of 37,325 37,325Subscription shares Basic net asset value per share (pence) 1,089.9

1,118.8

Fully diluted net asset value per share (pence) 1,069.3

1,090.7

The diluted NAV per share is calculated by adding to the current NAV (basic) of£346,832,000 the proceeds of £52,272,000 from the exercise of Subscriptionshares, assuming all outstanding Subscription shares will be exercised at theminimum price of £9.50, and then dividing the adjusted NAV (diluted) by theadjusted number of Ordinary shares in issue (37,324,698).

11. Dividends on Ordinary shares

Register Payment 2011 2010 date date £'000 £'000 Dividend of 25.0p for the year 26 February 31 March - 6,297ended 31 December 2009 2010 2010 Dividend of 28.0p for the year 8 April 2011 13 May 8,709 -ended 31 December 2010 2011 8,709 6,297The proposed dividend of 10.0 pence per Ordinary share for the year ended 31December 2011 is subject to approval by the shareholders at the annual generalmeeting and has not been included as a liability in these financial statements.The retention test in CTA 2010, section 1159 has been met as there is noundistributed income from qualifying investments in the period.12. Fixed asset investments 2011 2010 £'000 £'000

Investments held at fair value through profit and

loss Investments held in HGT LP Unquoted investments 69,181 96,746

Investments held in HGT 6 LP

Unquoted investments 165,787 121,186

Other investments held by the Trust

Unquoted investments 30,453 14,252 Total fixed asset investments 265,421

232,184

Total fixed asset investments consisting of:

Equity shares 32,436 15,205 Non-equity shares 56,433 13,280 Fixed income securities 176,604 204,445 Derivative instruments (52) (746) Total fixed asset investments 265,421 232,184 2011 2010 £'000 £'000 Opening valuation as at 1 January 232,184

127,204

Add back: opening unrealised depreciation - investments 5,885 35,830 - financial derivative instruments 1,595

2,294

Opening book cost as at 1 January 239,664 165,328 Movements in the year: Additions at cost 87,101 111,418 Disposals - proceeds (49,623) (72,600) - realised gains on sales 10,617 35,518 Closing book cost of investments 287,759

239,664

Less: closing unrealised depreciation

- investments (22,286)

(5,885)

- financial derivative instruments (52)

(1,595)

Closing valuation of investments as at 31 December 265,421 232,184

The above investments include investments in companies that are indirectly heldby the Trust through its investment in HGT LP, HGT 6 LP and Hg Mercury D LP, asset out in note 3 (see above), and investments in fund limited partnerships inHgCapital 6 E LP, Hg Renewable Power Partners LP and HgCapital Renewable PowerPartners 2 C LP.

13. (Losses)/gains on investments and government securities

2011 2010 £'000 £'000 Realised Realised gains/(losses) on sales - fixed asset investments 11,455

35,518

- financial derivative instruments (838)

- - government securities (517) (1,484) 10,100 34,034 Carried interest charge against capital gains (note (2,079) (1,136)5(c)) Net realised gains 8,021 32,898 Unrealised Change in unrealised depreciation - fixed asset investments (16,401)

29,945

- financial derivative instruments 1,543

699 - government securities 188 (13) Net unrealised (losses)/gains (14,670) 30,631 Total (losses)/gains (6,649) 63,529

14. Debtors and accrued income

2011 2010 £'000 £'000

Amounts receivable after one year Accrued income on fixed assets 30,862

26,606

Amounts receivable within one year

Taxation recoverable 7 1,590

Accrued income on government securities 543

181

Prepayments and other accrued income 68

38 Other debtors - 17 618 1,826 Total debtors 31,480 28,43215. Government securities 2011 2010 £'000 £'000

Investments held at fair value through profit and

loss Opening valuation 86,498 84,526 Purchases at cost 117,127 205,535 Sales and redemptions (152,143) (198,086)

Movement in unrealised capital gains/(losses) 188

(13)

Amortisation of premium on acquisition (2,656) (3,980) Realised capital losses (517) (1,484) Closing valuation 48,497 86,49816. Movement in net funds

Analysis and reconciliation of net funds 2011

2010 £'000 £'000 Change in cash 1,003 600 Net funds at 1 January 3,473 2,873 Net funds at 31 December 4,476 3,473 Net funds comprise: Cash 4,476 3,473

17. Creditors - amounts falling due within one year

2011 2010 £'000 £'000 Carried interest 2,079 1,136 Sundry creditors 963 1,458 3,042 2,594

The Directors consider that the carrying amount of creditors approximate their fair value.

18. Bank facilityOn 24 August 2011, the Trust entered into a £40,000,000 multicurrency revolvingcredit facility on an unsecured basis. The facility is available for threeyears. Under the facility agreement, the Company is liable to pay interest onany drawn amount at LIBOR plus a margin of 2.75%. A commitment fee of 1.1% isliable on any undrawn commitment. No amount was drawn during the currentfinancial year.

19. Financial risk

The following disclosures relating to the risks faced by the Trust are providedin accordance with Financial Reporting Standard 29, `Financial instruments:disclosures'. The reference to investments in this note is in relation to theTrust's direct investments in RPP1, RPP2, Hg6E and the underlying investmentsin HGT LP, HGT 6 LP and HgCapital Mercury D LP as described in note 3.Financial instruments and risk profileAs a private equity investment trust, the Trust's investment objective is toachieve long-term capital appreciation by indirectly investing in unquotedcompanies. It does this through its investments in fund partnerships, mostly inthe UK and Europe. Additionally, the Trust holds government gilts and cash anditems such as debtors and creditors arising directly from its operations. Inpursuing its investment objective, the Trust is exposed to a variety of risksthat could result in either a reduction of the Trust's net assets or areduction in the profits available for distribution by way of dividends.Valuation risk, market risk (comprising currency risk and interest rate risk),liquidity risk and credit risk, and the Directors' approach to the managementof them, are described below. The Board and the Manager coordinate the Trust'srisk management. The objectives, policies and processes for managing the risks,and the methods used to manage the risks, that are set out below, have notchanged from the previous accounting period.Valuation riskThe Trust's exposure to valuation risk arises mainly from movements in thevalue of the underlying investments (held through fund partnerships), themajority of which are unquoted. A breakdown of the Trust's portfolio is givenabove. In accordance with the Trust's accounting policies, the investments infund limited partnerships are valued by reference to all underlying unquotedinvestments, which are valued by the Directors following the IPEV guidelines.The Trust does not hedge against movements in the value of these investments,apart from foreign exchange movements as explained below. The Trust hasexposure to interest rate movements, through cash and gilt holdings.

In the opinion of the Directors, the diversified nature of the Trust's portfolio significantly reduces the risks of investing in unquoted companies.

The Trust adopted the amendment to FRS 29, effective 1 January 2009. This requires the Trust to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels:

• Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1).

• Inputs other than quoted prices included within level 1 that are observablefor the asset or liability, either directly (that is, as prices) or indirectly(that is, derived from prices) (level 2).

• Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (level 3).

The level in the fair value hierarchy within which the fair value measurementis categorised in its entirety is determined on the basis of the lowest levelinput that is significant to the fair value measurement in its entirety. Forthis purpose, the significance of an input is assessed against the fair valuemeasurement in its entirety. If a fair value measurement uses observable inputsthat require significant adjustment based on unobservable inputs, that is alevel 3 measurement. Assessing the significance of a particular input to thefair value measurement in its entirety requires judgement, considering factorsspecific to the asset or liability.The determination of what constitutes an `observable' input requiressignificant judgement by the Board. The Board considers observable datarelating to investments actively traded in organised financial markets, inwhich case fair value is generally determined by reference to stock exchangequoted market bid prices at the close of business on the balance sheet date,without adjustment for transaction costs necessary to realise the asset.The following table analyses, within the fair value hierarchy, the Fund'sfinancial assets and liabilities (by class) measured at fair value at 31December.Financial assets Level 1 Level 2 Level 3 Total £'000 £'000 £'000 £'000

Investments held at fair value through

profit and loss Unquoted investments - Investment in HGT LP - - 69,181 69,181 - Investment in HGT 6 LP - - 165,787 165,787 - Investment in Hg 6 E LP - - 9,445 9,445 - Investment in Hg RPP LP - - 15,806 15,806 - Investment in Hg RPP2 LP - - 5,202 5,202 - Government securities 48,497 - - 48,497 Other assets Accrued income 543 - 30,862 31,405 As at 31 December 2011 49,040 - 296,283 345,323Financial assets Level 1 Level 2 Level 3 Total £'000 £'000) £'000 £'000)

Investments held at fair value through

profit and loss Unquoted investments - Investment in HGT LP - - 96,746 96,746 - Investment in HGT 6 LP - - 121,186 121,186 - Investment in Hg RPP LP - - 12,426 12,426 - Investment in Hg RPP2 LP - - 1,826 1,826 - Government securities 86,498 - - 86,498 Other assets Accrued income 181 - 26,606 26,787 As at 31 December 2010 86,679 - 258,790 345,469Investments whose values are based on quoted market prices in active markets,and therefore classified within level 1, include government securities andactively traded listed equities. The Trust does not adjust the quoted bid priceof these instruments.Financial instruments that trade in markets that are not considered to beactive, but are valued based on quoted market prices, dealer quotations oralternative pricing sources supported by observable inputs, are classifiedwithin level 2. As level 2 investments include positions that are not traded inactive markets and/or are subject to transfer restrictions, valuations may beadjusted to reflect illiquidity and/or non-transferability, which are generallybased on available market information.Investments classified within level 3 have significant unobservable inputs.Level 3 instruments include private equity and corporate debt securities. Asobservable prices are not available for these securities, the Board has usedvaluation techniques to derive the fair value. In respect of unquotedinstruments, or where the market for a financial instrument is not active, fairvalue is established by using recognised valuation methodologies, in accordancewith IPEV Valuation Guidelines. Fair value is the amount for which an assetcould be exchanged between knowledgeable, willing parties in an arm's lengthtransaction.

There were no transfers of assets from level 1 to level 2 or 3, level 2 to level 1 or 3 and level 3 to level 1 or 2.

The following table presents the movement in level 3 investments for the period ended 31 December 2011 by class of financial instrument.

Unquoted investments Accrued Investments income on in limited investments partnerships Total 2011 2011 2011 £'000 £'000 £'000 Opening balance 26,606 232,184 258,790 Purchases - 87,101 87,101

Realisations at 31 December 2010 valuation (9,059) (33,095) (42,154)

Total gains/(losses) for the year included 13,315 (20,769) (7,454)in the income statement

Closing valuation of level 3 investments 30,862 265,421 296,283

Total gains for the year included in the 14,511 (21,436) (6,925) income statement for investments held at

the end of the year Equity price riskEquity price risk is the risk that the fair values of equities (includingloans) held by the Trust indirectly through its direct investments in fundlimited partnerships, decrease as a result of changes in the values ofunderlying businesses. The Board revalues each investment twice each year. TheBoard manages the risks inherent in the investment portfolio by ensuring fulland timely access to relevant information from the Manager. The Board meetsregularly and at each meeting reviews the trading performance of the principalunderlying investments. If there appears to the Board to be an impairment invalue between regular valuations, it can revalue the investment. The Board alsomonitors the Manager's compliance with the Trust's investment objective andinvestment policy. The Manager's best estimate of the effect on the net assetsand total return due to a reasonably possible change in the value of unquotedsecurities, with all other variables held constant, is as follows: % change £'000 NAV per Ordinary share (pence) Unquoted 10% 29,628 93.1Credit riskCredit risk is the risk of financial loss in the event that any of the Trust'smarket counterparties fail to fulfil their contractual obligations to theTrust. The Trust's financial assets (excluding fixed asset investments) thatare subject to credit risk, are not impaired or overdue. The Trust's cashbalances are held with the Bank of New York Mellon and any significant balancesare invested in government securities issued by the United Kingdom. Foreignexchange forward contracts and options are held with counterparties which havecredit ratings that the Board considers to be adequate. The Board regularlymonitors the credit quality and financial position of these marketcounterparties. The credit quality of the above mentioned financial assets wasdeemed satisfactory.Market riskThe fair value of future cash flows of a financial instrument held by the Trustmay fluctuate due to changes in market prices of comparable businesses. Thismarket risk may comprise: currency risk (see below), interest rate risk and/orequity price risk (see above). The Board of Directors reviews and agreespolicies for managing these risks. The Manager assesses the exposure to marketrisk when making each investment decision, and monitors the overall level ofmarket risk on the whole of the investment portfolio on an ongoing basis.Currency risk and sensitivityThe Trust is exposed to currency risk as a result of investing in fundpartnerships which invest in companies that operate in currencies other thansterling. The value of these assets in sterling, being the Trust's functionalcurrency, can be significantly influenced by movements in foreign exchangerates. The Trust is partially hedged against movements in the value of the euroagainst pounds sterling affecting the value of its investments, as explainedbelow. The Manager monitors the Trust's exposure to foreign currencies andreports to the Board on a regular basis. The following table illustrates thesensitivity of the revenue and capital return for the year in relation to theTrust's year-end financial exposure to movements in foreign exchange ratesagainst the Trust's functional currency. The rates represent the range ofmovements against sterling over the current year for the currencies listed.In the opinion of the Directors, the sensitivity analysis below may not berepresentative of the year as a whole, since the level of exposure changes asthe portfolio changes through the purchase and realisation of investments tomeet the Trust's objectives. Revenue return Capital return £'000 NAV per £'000 NAV per Ordinary Ordinary share share (pence) (pence)

Highest value against sterling

during the year Euro (1.1070) 856 2.7 9,813 30.8 Euro forward contract (1.1070) - - (143) (0.5) Norwegian kroner (8.5649) - - 1,919 6.0 Swedish kroner (9.9620) 70 0.2 465 1.5 Swiss franc (1.1744) 28 0.1 28 0.1 US dollar (1.5341) - - 8 - 954 3.0 12,090 37.9

Lowest value against sterling during

the year Euro (1.2037) (57) (0.2) (655) (2.1)

Euro forward contract (1.2037) - - (4)

- Norwegian kroner (9.3987) - - (305) (1.0) Swedish kroner (10.8286) (16) (0.1) (108) (0.3) Swiss franc (1.5639) (8) - (8) - US dollar (1.6704) - - (41) (0.1) (81) (0.3) (1,121) (3.5)

At 31 December 2011, the following rates were applied to convert foreign denominated assets into sterling: Euro (1.1972); Norwegian Kroner (9.2748); Swedish Kroner (10.6538); Swiss Franc (1.4532); and US Dollar (1.55450).

Portfolio hedgingThe Trust uses derivative financial instruments such as forward foreigncurrency contracts and option contracts to manage the currency risks associatedwith its underlying investment activities. The contracts entered into by theTrust are denominated in the foreign currency of the geographic areas in whichthe Trust has significant exposure against its reporting currency. Thecontracts are designated as a hedge and the fair values thereof are recorded inthe balance sheet as investments held at fair value. Unrealised gains andlosses are taken to capital reserves. At the balance sheet date, the notionalamount and value of outstanding forward foreign exchange contracts are asfollows: 2011 2010 Currency No. `000 £'000 No. `000 £'000 Forward foreign currency Euro 1,544 (52) 25,040 (1,384)contracts Currency option Euro - - 12,520 95 Currency option NOK - - 125,724 543The Trust does not trade in derivatives but holds them to hedge specificexposures, they have maturities designed to match the exposures they arehedging. It is the intention to hold both the financial investments giving riseto the exposure and the derivatives hedging them until maturity and thereforeno net gain or loss is expected to be realised.

The derivatives are held at fair value which represents the replacement cost of the instruments at the balance sheet date. Movements in the fair value of derivatives are included in the income statement. The Trust does not adopt hedge accounting in the financial statements.

Interest rate risk and sensitivityThe Trust has exposure to interest rate movements as this may affect the fairvalue of funds awaiting investment, interest receivable on liquid assets andshort-dated government securities, and interest payable on borrowings. TheTrust has little immediate direct exposure to interest rates on its fixedassets, as the majority of these are fixed rate assets or equity shares that donot pay interest. Therefore, and given that the Trust has no borrowings andmaintains low cash levels, the Trust's revenue return is not materiallyaffected by changes in interest rates.However, funds awaiting investment are invested in Government securities and,as stated above, the valuation is affected by movements in interest rates. Thesensitivity of the capital return of the Trust to movements in interest rateshas been based on the UK base rate. With all other variables constant, a 0.5%decrease in the UK base rate should increase the capital return in a full yearby £242,000, with a corresponding decrease if the UK base rate were to increaseby 0.5%. In the opinion of the Directors, the above sensitivity analyses maynot be representative of the year as a whole, since the level of exposurechanges as investments are made and realised throughout the year.Liquidity riskInvestments in unquoted companies, which form the majority of the Trust'sinvestments, may not be as readily realisable as investments in quotedcompanies, which might result in the Trust having difficulty in meeting itsobligations. Liquidity risk is currently not significant as about 15% of theTrust's net assets at the year-end are liquid resources and, in addition, theTrust has a £40 million undrawn bank facility available. The Board givesguidance to the Manager as to the maximum amount of the Trust's resources thatshould be invested in any one company. For details refer to the investmentpolicy on page 9 of the Annual Report and Accounts.Currency exposureThe currency denomination of the Trust's financial assets is shown below.Short-term debtors and creditors, which are excluded, are mostly denominated inpounds sterling, the functional currency of the Trust. 2011 2010 Fixed Floating Non Total Fixed Floating Non Total interest-bearing

interest-bearing

rate rate £'000 rate rate £'000 £'000 £'000 £'000 £'000 £'000 £'000 Pounds 160,065 6,071 34,469 200,605 159,841 5,897 16,191 181,929sterling Euro 87,448 2,164 28,675 118,287 96,871 2,948 23,401 123,220 Euro hedge - - (52) (52) - - (1,289) (1,289) Norwegian - - 23,156 23,156 - - 23,116 23,116kroner Norwegian - - - - - - 543 543kroner hedge Swedish 6,692 - - 6,692 11,323 - 4,095 15,418kroner Swiss franc 523 - - 523 - - - - US dollar - - 588 588 5,367 - 638 6,005 Total 254,728 8,235 86,836 349,799 273,402 8,845 66,695 348,942The fixed rate assets comprise gilts and fixed rate loans to investeecompanies. Fixed rate loans to investee companies had a weighted averageinterest rate of 11.5% per annum (2010: 11.3%) and a weighted average life tomaturity of 11.1 years (2010: 12.1 years). Otherwise, fixed rate assetscomprised two gilts with interest rates of 5.25% and 4.50% per annum and whichmature on 7 June 2012 and 7 March 2013 respectively. It is the intention tore-invest the proceeds at maturity in another short dated gilt. The floatingrate assets consisted of cash.

The non interest-bearing assets represented the equity content of the investment portfolio and the financial derivative instruments.

The Trust did not have any outstanding borrowings at the year-end (2010: £nil). The numerical disclosures above exclude short-term debtors and creditors.

Capital management policies and proceduresThe Trust's capital management objectives are to ensure that it will be able tofinance its business as a going concern and to maximise the revenue and capitalreturn to its equity shareholders, through an appropriate balance of equitycapital and debt.The Trust's capital at 31 December comprised: 2011

2010 £'000 £'000 Equity: Equity share capital 8,011 7,838 Share premium 68,096 61,444 Capital redemption reserve 1,248 1,248 Retained earnings and other reserves 269,477 277,463 Total capital 346,832 347,993

As stated above, the Trust did not have any outstanding borrowings at the year-end (2010: nil). With the assistance of the Manager, the Board monitors and reviews the broad structure of the Trust's capital on an ongoing basis. This review covers:

• the planned level of gearing, which takes into account the Manager's projections of cash flow;

• the desirability of buying back equity shares, either for cancellation or tohold in treasury, balancing the effect (if any) this may have on the discountat which shares in the Trust are trading against the advantages of retainingcash for investment;

• the need to raise funds by an issue of equity shares, including issues from treasury; and

• the extent to which revenue in excess of that which is required to be distributed should be retained, whilst maintaining its status under Section 1158 of the CTA 2010.

The Trust's objectives, policies and processes for managing capital are unchanged from the preceding accounting period.

20. Issued share capital 2011 2010 No.'000 £'000 No.'000 £'000

Ordinary shares of 25p each Allotted, called-up and fully paid

At 1 January 31,104 7,776 25,187 6,296 Issued as part of placing and open - - 5,917 1,480offer

Issued following exercise of 718 180 -

-subscription rights At 31 December 31,822 7,956 31,104 7,776

Subscription shares of 1p each Allotted, called-up and fully paid

At 1 January 6,221 62 - -

Issued as part of placing and open - - 6,221

62offer and bonus issue

Conversion into Ordinary shares (718) (7) -

- At 31 December 5,503 55 6,221 62 Total share capital 37,325 8,011 37,325 7,838

The Trust's issued share capital at the beginning of the year consisted of31,103,915 Ordinary shares. On 10 June 2011 and 11 November 2011 respectively,695,810 and 22,605 new Ordinary shares were issued pursuant to the exercise ofSubscription shares. The subscription price paid per Ordinary share was £9.50and total proceeds of £6,825,000 were received by the Trust.At the beginning of the year, the Trust had 6,220,783 Subscription shares inissue. Each Subscription share entitles the holder to subscribe for oneOrdinary share upon exercise of the subscription right and payment of thesubscription price. The first opportunity to exercise such right was on 31 May2011 when 695,810 Subscription shares were exercised. The Ordinary sharesissued commenced trading on 15 June 2011. The second opportunity to exercisesuch right was on 31 October 2011 when 22,605 Subscription shares wereexercised. The Ordinary shares commenced trading on 14 November 2011. The nextopportunity to exercise subscription rights is on 31 May 2012 and, thereafter,31 October 2012, at a price of £9.50 per Ordinary share. The final exercisedate is on 31 May 2013 at a subscription price of £10.25 per share.Whilst the Trust no longer has an authorised share capital, the Directors willstill be limited as to the number of shares they can at any time allot as theCompanies Act 2006 requires that Directors seek authority from the shareholdersfor the allotment of new shares.

21. Share premium account and reserves

Share Capital Capital Capital Revenue premium redemption reserve reserve reserve account reserve realised unrealised £'000 £'000 £'000 £'000 £'000 As at 1 January 2011 61,444 1,248 274,913 (16,821) 19,371 Issue of Ordinary shares 6,652 - - - - Transfer on disposal of - - (5,911) 5,911 -investments

(Losses)/gains on government - - (517) 188

-securities

Net gain on sale of fixed - - 16,528 -

-asset investments

Net movement in unrealised - - - (20,769)

-

depreciation of fixed asset

investments Dividends paid - - - - (8,709) Net return for the year - - - - (645)after taxation Loans to General Partners - - - 8,017 -recovered

Carried interest to Founder - - (2,079) -

-Partner As at 31 December 2011 68,096 1,248 282,934 (23,474) 10,017

22. Commitment in fund partnerships and contingent liabilities

(a) Original and outstanding Original Outstanding Outstanding commitments in Fund partnerships Commitment at at

Fund £'000 31 December 31 December 2011 2010 £'000 £'000 HGT LP(1) 120,000 17,094 22,350 HGT 6 LP(2) 285,029 85,888 155,884 HgCapital 6 E LP 15,000 4,732 - Hg Mercury LP 60,000 58,970 - Hg RPP LP 18,076(3) 1,236(4) 1,823 Hg RPP2 C LP 33,411(5) 27,222(6) 31,964

Total outstanding commitments 195,142 212,021

1 With effect from 21 October 2011, £12 million (10% of the original £120 million loan commitment to the Hg5 fund) was cancelled.

2 HgCapital Trust plc has the benefit of an investment opt-out provision in its commitment to invest alongside HgCapital 6, so that it can opt out of a new investment without penalty should it not have the cash available to invest.

3 Sterling equivalent of €21,640,088

4 Sterling equivalent of €1,479,000 (2010:€2,127,000)

5 Sterling equivalent of €40,000,000

6 Sterling equivalent of €32,590,000 (2010: €37,302,000)

(b) Contingent liabilitiesThe Trust's derivative financial instruments held through HGT LP expire on 29August 2012. In order to meet any potential liability arising on this date, anamount of £376,000 (2010: £6,260,000) has been reserved for this purpose. Thisamount is therefore callable from the Trust at this or any earlier date.

23. Related party transactions

HgCapital and its subsidiaries, acting as Manager of the Trust through amanagement agreement and participating through limited partnership agreementsas General and Founder partners of the fund partnerships that the Trust investsin, are considered to be related parties by virtue of the above agreements.

During the year, priority profit shares allocated to HgCapital were £7,190,000 (2010: £7,060,000) and a carried interest profit allocation of £2,079,000 (2010: £1,136,000) was made to HgCapital during the year.

HgCapital also acts as secretary and administrator of the Trust. Total fees for the year amounted to £342,000 (2010: £250,000).

At 31 December 2011, the amount due to HgCapital relating to the above, disclosed under creditors, was £2,165,000 (2010: £1,731,000).

INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HGCAPITAL TRUST PLC

The Trust's Financial Statements for the year ended 31 December 2011 have beenaudited by of Deloitte LLP. The text of the Auditor's report can be found onpage 79 of the Trust's annual report and accounts.

DIRECTORS' REPORT

The Chairman's statement, the description of the Trust's investment objective, investment policy, rationale & business model, and corporate governance statement form part of this Directors' report.

The Directors present the annual report and financial statements of HgCapital Trust plc (the `Trust') (Reg. No. 1525583) for the year ended 31 December 2011.

BUSINESS REVIEWBackground

The purpose of the business review is to provide an overview of the business of the Trust by:

• Analysing development and performance using appropriate key performance indicators (`KPIs');

• Outlining the principal risks and uncertainties affecting the Trust;

• Describing how the Trust manages these risks;

• Explaining the future business plans of the Trust;

• Setting out the Trust's environmental, social and ethical policy;

• Providing information about persons with whom the Trust has contractual or other arrangements which are essential to the business of the Trust; and

• Outlining the main trends and factors likely to affect the future development, performance and position of the Trust's business.

Principal activity and business reviewThe principal activity of the Trust is to operate as an investment trustproviding access to a diversified portfolio of private equity investments. Areview of the development and performance of the business for the year ended 31December 2011 is given in the Chairman's statement, which forms part of thisDirectors' report, and in the Manager's review.Status of the TrustHMRC accepted the Trust as an investment trust for the purposes of Section 1158of the Corporation Tax Act 2010 (`CTA 2010') for the year ended 31 December2010. It is the intention of the Trust to continue to seek approval forclassification as an investment trust under Section 1158 of the CTA 2010 forsubsequent tax years. In the opinion of the Directors, the Trust continues toconduct its affairs as an investment trust within the definition prescribed bythe CTA and is not a close company as defined by relevant tax legislation andprovisions.Capital StructureAs at 9 March 2012, the Trust had 31,822,330 ordinary shares of 25 pence eachand 5,502,368 subscription shares of 1 penny each in issue. Each ordinary sharehas one voting right attached to it and the subscription shares carry no votingrights. Consequently, the total number of voting rights in the Trust at thisdate was 31,822,330. Further information on the share capital of the Trust canbe found in note 20 to the financial statements.Going concernThe Trust's business activities, together with the factors likely to affect itsfuture development, performance and position are described in the Chairman'sstatement and in the Manager's review. The financial position of the Trust, itscash flows, liquidity position and borrowing facilities are described in theDirectors' report. In addition, note 19 to the financial statements includesthe Trust's objectives, policies and processes for managing its capital; itsfinancial risk management objectives; details of its financial instruments andhedging activities; and its exposures to credit risk and liquidity risk. TheDirectors believe that the Trust is well placed to manage its business riskssuccessfully, despite the current uncertain economic outlook. The Directorsreview cash flow projections regularly, including important assumptions as tofuture realisations and the rate at which funds will be deployed into newinvestments. The Directors have a reasonable expectation that the Trust willhave adequate resources to continue in operational existence for theforeseeable future. Accordingly, they continue to adopt the going concern basisin preparing the annual report and accounts.Borrowing facilityThe Board keeps the management of the Trust's resources under constant reviewand regularly considers long-term cash flow projections for the Trust and theuse of gearing.During 2011 the Board finalised a £40 million three-year multicurrency standbyfacility with Lloyds TSB Bank plc, on an unsecured basis. The Directors believethe borrowing facility gives the Board further flexibility in managing theTrust's resources, without adding undue risk. The facility was unutilised as at31 December 2011.

Performance

In the year to 31 December 2011, the Trust's NAV per share (including dividends re-invested) increased by 0.5%. This compares with a decrease in the FTSE All-Share Index (total return) of -3.5%. The Trust's ordinary share price decreased by -1.2% on a total return basis.

Results and dividendThe total return for the Trust is set out in the income statement. The totalreturn for the year, after taxation, was £723,000 (2010: £69,383,000) of which-£645,000 was revenue return (2010: £10,053,000).The Directors recommend the payment of a dividend of 10.0p per ordinary sharefor the year ended 31 December 2011 (2010: 28.0p). Subject to approval of thisdividend at the forthcoming annual general meeting (`AGM'), it will be paid on15 May 2012 to shareholders on the register of members at the close of businesson 10 April 2012.Key performance indicatorsEach Board meeting conducts a detailed review of the portfolio and reviewstrading results and ratios to understand the impact on the Trust of the tradingperformance of the individual portfolio holdings. The KPIs used to measure theprogress and performance of the Trust over time and which are comparable tothose reported by other investment trusts include NAV per share, share price,return per share, average monthly trading volumes and cash flow. Furtherinformation on KPIs and the Trust's progress against these can be found in theChairman's statement (see above) and the Manager's review (see above). TheDirectors recognise that it is in the long-term interest of shareholders thatshares do not trade at a significant discount to the prevailing NAV and theymonitor the Trust's discount or premium regularly.

PRINCIPAL RISKS The key risks faced by the Trust are set out below and in note 19 to the financial statements. The Board regularly reviews and agrees policies for managing each risk, as summarised below.

Performance riskThe Board is responsible for deciding the investment strategy to fulfil theTrust's objectives and for monitoring the performance of the Manager. Aninappropriate strategy may lead to poor performance. To manage this risk theManager provides an explanation of all investment decisions and the rationalefor the composition of the investment portfolio. The Manager monitors andmaintains an adequate spread of investments, based on the diversificationrequirements inherent in the Trust's investment policy, in order to minimisethe risks associated with particular countries or factors specific toparticular sectors.Regulatory riskThe Trust operates as an investment trust in accordance with Sections 1158 and1159 of CTA 2010. As such, the Trust is exempt from corporation tax on anycapital gains realised from the sale of its investments, so the loss ofinvestment trust status would represent a significant risk to the Trust. TheManager monitors investment movements, the level and type of forecast incomeand expenditure, and the amount of retained income (if any) to ensure that theprovisions of Sections 1158 and 1159 of CTA 2010 are not breached. The resultsare reported to the Board at each meeting.

General changes in legislation, regulation or government policy could significantly influence the decisions of investors or impact upon the markets in which the Trust invests.

Operational riskIn common with most other investment trust companies, the Trust has noemployees. The Trust therefore relies upon the services provided by thirdparties and is dependent upon the internal control systems of the Manager andthe Trust's other service providers. For example, the security of the Trust'sassets, dealing procedures, accounting records and maintenance of regulatoryand legal requirements, depend on the effective operation of these systems.These are regularly tested and monitored and an internal control report, whichincludes an assessment of risks together with procedures to mitigate suchrisks, is prepared by the Manager and reviewed by the Audit & ValuationCommittee twice a year.The Board has considered an Assurance Report on Internal Controls (AAF 01/06)as prepared by the Manager for the year-ended 31 December 2011, andindependently reviewed by Deloitte LLP, and confirms that no material issueswere raised in the report.Financial risksThe Trust's investment activities expose it to a variety of financial risksthat include valuation risk, liquidity risk, market price risk, credit risk,foreign exchange risk and interest rate risk. Further details are disclosed innote 19 to the Financial Statements, together with a summary of the policiesfor managing these risks.Liquidity riskThe Trust, by the very nature of its investment objective, invests in unquotedcompanies, and liquidity in their securities can be constrained, potentiallymaking the investments difficult to realise at, or near, the Directors'published valuation at any one point in time. The Manager has regard to theliquidity of the portfolio when making investment decisions, and the Trustmanages its liquid resources to ensure sufficient cash is available to meet itscontractual commitments.

In the event that the Directors have any particular concerns regarding the liquidity of the Trust and its cash resources, the Trust may exercise an opt-out in respect of new buyout investments alongside HgCapital 6 in order to manage the risk of over-commitment.

During 2011 the Directors also arranged a £40 million three-year standby facility (see above), allowing further flexibility in the management of the Trust's resources.

SOCIAL, ENVIRONMENTAL & ETHICAL POLICY

In 2006 and again in 2010, the Trust committed to invest in the Hg RenewablePower Partners funds, which the Board believes offer a profitable route for theTrust to participate in efforts to combat climate change.

The Manager addresses other investment opportunities on a sector basis. The sectors chosen do not generally raise ethical issues.

The Trust has no employees and has limited direct impact on the environment.The Trust aims to conduct itself responsibly, ethically and fairly and hassought to ensure that HgCapital's management of the portfolio of investmentstakes account of social, environmental and ethical factors where appropriate.

Stewardship

HgCapital and the Trust seek to invest in companies that are well managed, withhigh standards of corporate governance. The Directors believe this creates theproper conditions to enhance long-term shareholder value. In aiming to achievea high level of corporate performance, the Trust adopts a positive approach tocorporate governance and engagement with companies.The exercise of voting rights attached to the Trust's portfolio has beendelegated to HgCapital. As acknowledged by the Walker Review, the distancebetween owner and manager within the private equity model is relatively shortand the link between the two is an important ingredient in investmentperformance. HgCapital has a policy of active portfolio management and ensuresthat significant time and resource is dedicated to every investment, withHgCapital executives typically being appointed to investee company boards inorder to ensure the application of active, results-orientated corporategovernance. Further information regarding the stewardship of investee companiesby HgCapital can be found in the Manager's review.FUTURE PROSPECTSThe Board's main focus is on the achievement of capital growth and the futureof the Trust is dependent upon the success of the investment strategy. Theoutlook for the Trust is discussed in the Chairman's statement and theManager's review.DERIVATIVE TRANSACTIONSOn 27 August 2008, the Manager, on behalf of the Trust, entered into a €25million forward foreign exchange contract and a €12.5 million option contractwith a duration of four years, in order to partially offset the effect ofsterling exchange rate movements on euro currency exposure. The contractsecures a sterling/euro exchange rate of €1.24 on the forward contract and astrike price of €1.40 on the option contract compared with an average exchangerate of €1.42 at which euro-denominated assets in HgCapital 5 were acquired.During the year, the option contract was realised and the forward foreignexchange contract was partially realised, reducing our exposure to €1.5million. The current write-down of £52,000 on the remaining derivative is morethan offset by unrealised foreign exchange gains on the euro-denominatedassets.The contract requires no cash funding until expiry, by which time the Managerexpects to be in a position to cover any funding requirement from euro proceedsfrom the sale of investments. Further details are provided in note 19 of thefinancial statements.

\* The annual report contains the following statement regarding the Directors' responsibility for preparing the annual report and financial statements.

STATEMENT OF DIRECTORS' RESPONSIBILITIESin respect of the annual report and the financial statements

The Directors are responsible for preparing the annual report and the financial statements in accordance with applicable law and regulations.

Company law requires the Directors to prepare financial statements for eachfinancial year. Under that law the Directors have elected to prepare thefinancial statements in accordance with United Kingdom Generally AcceptedAccounting Practice (United Kingdom Accounting Standards and applicable law).Under company law the Directors must not approve the accounts unless they aresatisfied that they give a true and fair view of the state of affairs of theTrust and of the profit or loss of the Trust for that period. In preparingthese financial statements, the Directors are required to:

• select suitable accounting policies and then apply them consistently;

• make judgements and accounting estimates that are reasonable and prudent;

• state whether applicable UK Accounting Standards have been followed; and

• prepare the financial statements on the going concern basis unless it is inappropriate to presume that the Trust will continue in business.

The Directors are responsible for keeping adequate accounting records that aresufficient to show and explain the Trusts' transactions and disclose withreasonable accuracy at any time the financial position of the Trust and enablethem to ensure that the financial statements comply with the Companies Act2006. They are also responsible for safeguarding the assets of the Trust andhence for taking reasonable steps for the prevention and detection of fraud andother irregularities.

The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Trust's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

Responsibility statement

We confirm that to the best of our knowledge:

• the financial statements, prepared in accordance with UK Accounting Standardsgive a true and fair view of the assets, liabilities, financial position andprofit or loss of the Trust; and

• the Directors' Report includes a fair review of the development and performance of the business and the position of the Trust, together with a description of the principal risks and uncertainties that it faces.

By order of the BoardRoger Mountford, Chairman15 March 2012

Annual General Meeting (`AGM')

The AGM of the Trust, which will include a presentation by the Manager, will beheld at the offices of HgCapital, 2 More London Riverside, London SE1 2AP onThursday 10 May 2012 at 12 noon. Light refreshments will be available at theconclusion of the AGM. Notice of the AGM is given in the annual report andaccounts.

National Storage Mechanism

A copy of the annual report and financial statements will be submitted shortlyto the National Storage Mechanism ("NSM") and will be available for inspectionat the NSM, which is situated at: www.hemscott.com/nsm.do.Neither the contents of the Trust's website or the Manager's website, nor the contentsof any website accessible from hyperlinks in this announcement or on thosewebsites (or any other website), is incorporated into, or forms part of, thisannouncement.

XLON

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Related Shares:

HgCapital Trust plc