28th Aug 2009 07:00
HgCapital Trust plc
Private equity investment trust of the year
Investment Week Awards 2005, 2006, 2007 and 2008
Half-yearly report and accounts
30 June 2009
Investment objective
The objective of the Company is to provide shareholders with long-term capital appreciation in excess of the FTSE All-Share Index by investing in unquoted companies.
The Company provides investors with exposure to a diversified portfolio of private equity investments primarily in the UK and Continental Europe.
Financial highlights
of the first six months of 2009
-2.9% A decline in NAV resulting from further provisions against a small number of investments, FX movements and payment of the dividend
+21.2% Share price and dividend (total return) versus an increase in the FTSE All-Share Index of 0.8% and in the FTSE Small-Cap of 22.7%
46% A high level of net assets available in liquid funds ( 100.7 million), representing over 4.00 per share, to deploy in attractive opportunities
+15.6% Ten year total performance p.a. versus 0.1% p.a. from the FTSE All-Share Index
>4x Ten year investment return for every 1 invested
15m Net cash invested, as low level of activity both in terms of investments and realisations reflects current market conditions
Chairman's statement
Our aim continues to be delivery of long-term growth in value in an efficient and liquid investment vehicle
PerformanceFollowing the long series of successful realisations between 2005 and 2008 theCompany entered this severe downturn of the economic cycle with substantialholdings of cash and a compact portfolio of investments. The top ten buy-outinvestments now account for 80% of the total portfolio by value (excludingcash). As usual, the Board has valued the Company's investments at 30 June inaccordance with the International Private Equity and Venture Capital ValuationGuidelines (`IPEV'). Five of the top ten investments have been revaluedupwards, due to changes in the ratings used for valuations or improved trading,in several cases following hard work by the Manager alongside companymanagement to redirect strategy or improve performance. After careful review,two recent investments have been held at cost. Several other investments havebeen written down (in some cases to zero value), due to weak trading or lowermultiples. Overall, in local currency terms, the value of the portfolio wasbroadly unchanged, but the appreciation of sterling against the eurocontributed to a small fall in net asset value. An analysis of individualmovements and an attribution analysis are set out below.
As a consequence, in the first six months of 2009 the Company's NAV fell by 5.5% or 51.3 pence per share (of which 25.0 pence relates to the dividend paid in May 2009) from 929.4 pence at 31 December to 878.1 pence at 30 June 2009.
Total return to shareholders (NAV plus dividend) over the period was -2.9%compared with +0.8% for the FTSE All-Share Index and +22.7% for the FTSESmall-Cap Index. The Company's share price has traded within the range 640.0 -817.0 pence, ending the period at 786.0 pence; this represents a discount of10.5% to NAV, a far lower discount than comparable investment trusts,reflecting the Company's strong investment record and the defensive value ofthe Company's high liquidity.In anticipation of better investment opportunities becoming available in thenear future, the Manager made only one investment. As a result, the Companyended the period with liquid funds of more than 100 million, representing 46%of net assets.Revenue return per share was 7.8 pence, compared with 29.1 pence in the sameperiod last year, which had reflected, in part, a one-off receipt of income. Asexplained in earlier reports to shareholders, the Company's revenue will varyfrom year to year in accordance with the structure of the underlyinginvestments and income from the Company's holding of liquid funds awaitingreinvestment. The reduced size of the portfolio and the low yields available onliquid funds inevitably result in much reduced revenues and this is likely tobring the Company's dividend back to levels paid in earlier years.
Realisations
With the current low valuation environment and no pressure to achieve disposals, only small realisations were made in order to tidy up the portfolio.
Investments
The Manager continued to approach new investment selectively, completing onepurchase in the period: we share the view that, given the state of economic andmarket conditions, good businesses will progressively become available forpurchase and at better value than in the past. The Company's substantialliquidity positions it well to take advantage of such opportunities.
Principal risks and uncertainties
This section of my statement sets out the Directors' views, as required by the Disclosure and Transparency Rules, concerning the principal risks and uncertainties facing the Company in the second half of the year.
While remaining nervous, equity markets are showing early expectations of economic recovery. The Manager has reserved a significant portion of the HgCapital 5 fund for further investments to support the portfolio and exploit market opportunities.
The severe problems suffered by a few private equity investment trusts haveaffected sentiment towards the sector as a whole and discounts to NAV remainwide. However, the shares of HgCapital Trust have not fallen as far against NAVas others have and they currently stand at a low discount compared with ourpeer group. We believe this reflects the Manager's track record of success inidentifying and realising investments, its focus on improving operationalperformance, our policy of transparency in reporting and the Company's prudentmanagement of liquidity through the economic cycle. As confidence in othertrusts is rebuilt, sector discounts may return to more normal levels.The raising of debt in large amounts remains difficult; however, there aresigns of some easing in its availability for the mid-market acquisitions inwhich HgCapital specialises. A number of other private equity managers, whoseinvestors are seeking to reduce their commitments or who are struggling toraise funds for investment, have - at least for now - withdrawn from themarket, and the excesses in pricing, often debt fuelled, have abated.Nevertheless, we think it is prudent to remain cautious in making newinvestments while economic visibility remains poor; although this is improving.In addition, the availability of non-distressed and quality assets is expectedto increase next year. Both features are likely to affect the speed at whichthe Company's liquid funds will be deployed.
Outlook
In current economic and market conditions the Company has two priorities. The first is to preserve value through active support of portfolio companies, guiding managers through difficult trading conditions and making underlying businesses efficient and well positioned for an upturn. As a specialist in mid-market buy-outs our Manager, HgCapital, has always sought to add value through active management of portfolio companies and maintains a specialist team to focus on operational improvement undistracted by new deals.
The second priority is to build a pipeline of high quality investmentopportunities so that the Company can take full advantage of its liquidity at atime when we expect good businesses to become available for purchase atreasonable prices. In order to build and manage the pipeline, earlier this yearHgCapital reorganised its specialist sector teams so as to have more resourcesready to mobilise whenever an opportunity develops.The Board of HgCapital Trust has consistently said that an allocation toprivate equity was sensible for investors able to take a long term view. Wehold to this opinion despite the ending of the long bull market, though recentexperience has shown up the importance of selecting investments with aresilient business model, prudent use of leverage, continuous focus onperformance, and careful interpretation of the economic cycle. The very realdifficulties suffered by some other private equity investment trusts do notundermine the case for an allocation to private equity; rather, they point upthe risks of over-commitment, excessive leverage at an inflection point in theeconomic cycle, and the limited flexibility inherent in very largeacquisitions.We are entering a period that we believe will prove in due course to have beena good time for investment in private equity. To take full advantage of this,earlier this year the Board committed to invest 250 million, and in certaincircumstances up to a further 50 million, alongside the Manager's new fund.This commitment was based on our best estimate at the time of the level ofinvestment necessary to maintain the Company's progress. The commitment is madewith the flexibility to invest less, if cash is unavailable at the time, ormore, through co-investments, if conditions for investment are attractive andthe Company has access to additional funds. In making these judgments the Boardand Manager will continue to pursue the very clear Investment Objective whichwe have set, with the aim of delivering to shareholders consistent long-termgrowth in value in excess of public equity markets, in a form which provides anefficient and liquid investment vehicle.Roger MountfordChairman27 August 2009
Interim management report and responsibility statement
Interim management report
The important events that have occurred during the period under review are setout in the Chairman's statement and in the Manager's review, which also includethe key factors influencing the financial statements.
The principal risks and uncertainties for the remaining six months of the financial year are set out in the Chairman's statement.
The Directors do not consider that the principal risks and uncertainties havechanged since the publication of the annual report for the year ended 31December 2008. The principal risks are performance risk, income/dividend risk,regulatory risk, operational risk, financial risk, and liquidity risk as setout on page 50 of the annual report which is available at http://www.hgcapitaltrust.com.Performance risk
The Board is responsible for deciding the investment strategy to fulfil the Company's objectives and for monitoring the performance of the Manager. An inappropriate strategy may lead to poor performance.
Income/dividend risk
The amount of dividends and future dividend levels will depend on the income received and receivable from the Company's underlying portfolio.
Regulatory risk
The Company operates as an investment trust in accordance with section 842 of `ICTA'. As such, the Company is exempt from corporation tax on any capital gains realised from the sale of its investments.
Operational risk
In common with most other investment trust companies, the Company has no employees. The Company therefore relies upon the services provided by third parties and is dependent upon the control systems of the Manager and the Company's other service providers.
Financial risk
The Company's investment activities expose it to a variety of financial risks that include valuation risk, liquidity risk, market price risk, foreign exchange risk and interest rate risk.
Liquidity risk
The Company, by the very nature of is investment objective, invests in unquotedcompanies, and liquidity in their securities can be constrained, potentiallymaking the investments difficult to realise at, or near, the Director'spublished valuation at any one point in time.HgCapital, as Manager of the Company, is considered to be a related party byvirtue of its management contract with the Company. During the period, paymentsto HgCapital for services, excluding carried interest, were 3,096,000 (30 June2008: 1,946,000; 31 December 2008: 4,000,000). At 30 June 2009, the amountdue to HgCapital, disclosed under creditors, was 462,000 (30 June 2008: 988,000; 31 December 2008: 1,046,000). Where applicable, amounts are inclusiveof VAT.Responsibility statement
The Directors confirm that to the best of their knowledge:
-- The condensed set of financial statements has been prepared in accordancewith the Statement on Half-yearly Financial Reports issued by the UK AccountingStandards Board;
-- The Interim management report includes a full review of the information required by:
(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication ofimportant events that have occurred during the first six months of thefinancial year and their impact on the condensed set of financial statements;and a description of the principal risks and uncertainties for the remainingsix months of the year; and(b) DTR 4.2.8R of the Disclosure and Transparency Rules, being related partytransactions that have taken place in the first six months of the currentfinancial year and that have materially affected the financial position orperformance of the entity during that period; and any changes in the relatedparty transactions described in the last annual report that could do so.
The Directors are responsible for the maintenance and integrity of the corporate and financial information included on the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial information differs from legislation in other jurisdictions.
This half-yearly report was approved by the Board of Directors on 27 August2009 and the above Responsibility statement was signed on its behalf by RogerMountford, Chairman.Performance recordFinancial highlights Assets at: 30.6.09 30.12.08 % (unaudited) (audited) change Net assets ( '000) 221,163 234,094 (5.5) Net assets per share 878.1p 929.4p (5.5) Share price (mid-market) 786.0p 668.5p 17.6 Revenue six months ended: 30.6.09 30.6.08 % (unaudited) (unaudited) change Net revenue ( '000) 1,953 7,333 (73.4) Earnings per share 7.8p 29.1p (73.4)
Historical total return* performance
Six One year Three Five Ten years months to years years June 2009 % p.a. % p.a. % p.a. % p.a. % pa Net asset value (2.9) (12.6) 10.6 18.7 13.5 Share price 21.2 (5.4) 9.9 19.6 15.6 FTSE All-Share Index 0.8 (20.5) (6.5) 3.1 0.1 FTSE Small-Cap Index 22.7 (19.1) (10.5) (0.4) 0.9Based on the Company's share price at 30 June 2009 and allowing for dividends to be reinvested, an investment of 1,000 ten years ago would now be worth 4,247. An equivalent investment in the FTSE All-Share Index would be worth
1,014.
\* Total return assumes all dividends have been reinvested. Source: Factset
Manager's review
All investments referred to in this report, excluding the investment in Hg Renewable Power Partners LP, are held by HGT LP and HGT6 LP. The Company is the sole limited partner in HGT LP and HGT6 LP.
Analysis of movements in net asset value for the six months ended 30 June 2009
Opening net asset value as at 1 January 2009 234,094 Gross revenue 3,659 Priority profit share to General Partner (2,962) Other expenditure (312)
VAT recovery on prior years' management fees
553 Taxation (874) Dividends paid (6,297) Realised proceeds in excess of 31 December 2008 book value (excluding 485gross revenue) Net unrealised depreciation of investments (excluding accrued (7,183)interest) Closing net asset value as at 30 June 2009
221,163
Overview
The Company invests in unquoted companies identified by the Manager, HgCapital, alongside other clients with the objective of providing shareholders with long-term capital appreciation in excess of the FTSE All-Share Index.
HgCapital aims to act as controlling investor in middle-market buyouts ofbetween 50 million and 500 million enterprise value ("EV"), located inEurope. Typically, the Company's holding forms part of a much larger HgCapitalstake in these businesses. In general, throughout this report financialinformation refers to each transaction in its entirety, apart from the tableswhich detail the Company's participation, and where this review specificallystates otherwise.The Company's net asset value fell from 234.1 million to 221.2 million duringthe period under review. This fall mainly arose from unfavourable movements inthe valuation of the unrealised portfolio, a large proportion of which relatesto foreign exchange rates, and the 2008 final dividend payment of 6.3 million.The fall in net asset value of 2.9% (total return basis) compares to asignificant increase in the FTSE Small-Cap (+22.7%) in the six months to 30June 2009. This short term underperformance is to be expected given both thehigh weighting of liquid assets within the portfolio (45%) and the applicationof the IPEV guidelines where we have taken a cautious approach to valuingunrealised investments in the current economic climate.
The Company realised proceeds during the period amounting to 1.9 million. These proceeds arose principally from deferred consideration received from Hirschmann and the sale of Newchurch.
During the period, the Company invested a total of 16.9 million including participation in one new buyout investment. This new investment was made in Epyx.
Portfolio
Trading conditions have been challenging during the period and, whilst therehave been some strong performers such as Visma and Pulse, a number of theCompany's investments performed below expectations. SHL, KVT, Fabory and Mondohave all been impacted by a fall in end-user demand. In light of this pressureon revenues, cost reduction programmes have been implemented across all thebusinesses in order to support profitability. HgCapital actively works with allportfolio companies and encouraged early and strong action in anticipation ofdemand falls. Systems designed, inter alia, to indicate future trading outlookare monitored centrally. Overall HgCapital has been very pleased with the speedof action and positive attitude of portfolio company managers.The impact of market ratings on portfolio valuations has been mixed withfavourable movements in comparables causing write ups in certain investmentssuch as Visma and Pulse, and unfavourable movements negatively impacting otherinvestments such as Voyage, Elite, SHL and Casa Reha. The leveraged nature ofmany investments means that small changes in enterprise value have a gearedimpact on equity valuations.
Realised and unrealised movements in investment portfolio valuation (including accrued interest) for the six months ending 30 June 2009
Net unrealised Realised proceeds in appreciation/ excess of 31 December 2008 (depreciation) of book value 'm (excludes investments 'm gross revenue) Pulse (1)* 9.5 - Visma (2) 2.8 - Euro Hedge 1.5 - Sporting Index (4) 1.1 - Voyage (7) 0.5 - Americana (9) 0.5 - SLV 0.3 - Hirschmann - 0.3 Newchurch - 0.2 Other - 0.2 SHL (1.0) - Cornish (1.1) - Weston Presidio III (1.3) - Schleich (5) (1.4) - KVT (1.4) - Atlas (2.0) - Casa Reha (10) (2.6) - Elite (2.8) - Mondo (8) (2.9) - Fabory (3.1) -
*Investment name and ranking within top 10 investment portfolio
Outlook
We see significant opportunities for private equity arising from the currentand prospective economic environment. Lower availability of debt finance, whichhistorically fuelled asset pricing, coupled with more cautious or distractedcompetition, should present better value opportunities and, as visibilitystarts to improve, risk adjusted prices should fall and returns on equityincrease.Business disposals beyond fire sales and poor quality assets are likely toincrease in volume during the coming year. An increasing number of businessesneeding to restructure or drive operational change will further add toopportunities for equity providers, and strategic M&A and ownership change willnot remain on hold as the economy levels out. Historically, private equityinvestments made following an economic downturn have been particularlysuccessful and we believe the coming period will not be dissimilar.HgCapital's portfolio is now compact and under control despite the challengingeconomic conditions. A cautious approach to new investment will continue,although as visibility and stability improve HgCapital would expect to begin todeploy more capital. Given the current economic and M&A conditions we do notexpect to see a significant number of exits in the near term, but will continueto evaluate all options for the portfolio and exit opportunities.
Portfolio analysis
A diverse portfolio, invested along sector lines, across the UK and Continental Europe
At 30 June 2009 the Company's portfolio consisted of 37 investments, of whichthe 10 principal investments represented 80% of the portfolio valuation. TheCompany offers both sector and geographic diversification in a portfolio ofprivately owned mid cap stocks. The valuation of the Company's unrealisedportfolio (including interest) as at 30 June 2009 was 121.5 million,representing 55% of net assets.
One substantial new investment was made during the period: the management buyout of Epyx, a provider of an electronic market place for automotive fleet services.
During the period there were no full realisations of investments, but deferred proceeds from Hirschmann as well as other small realisations returned 1.9 million.
The Company ended the period with 101 million of liquid assets. Having accessto substantial liquidity positions the Company well to take advantage ofchanging market conditions and to exploit new investment opportunities as thesearise.Asset class**Unquoted 55%Liquid assets 45%Valuation basis****Earnings 54%Written down 26%Cost 13%Fund net assets 6%Other 1%Sector by value****TMT 32%Healthcare 28%Consumer & Leisure 20%Industrials 9%Renewable energy 6%Services 4%Fund 1%Deal type by value****Buyout 92%Renewable energy 6%Expansion 1%Fund 1%
Geographic spread by value****
UK 56%Nordic Region 21%Germany 14%Rest of Europe 6%Benelux 2%North America 1%Vintage by value****2009 9%2008 9%2007 17%2006 36%2005 8%Pre 2005 21%*
** Percentages are based on net assets
**** Percentages are based on investments at value including accrued interest
*18% relates to Pulse Staffing
Investments
Selective investments in businesses which should perform across market cycles
During the first half of 2009, HgCapital invested 115 million on behalf of its clients, including 16.9 million for the Company.
Company Sector Activity Deal Type Cost GBP'000 Epyx TMT A private car fleet Buyout 10,826 services marketplace New investments 10,826 Hg RPP LP Renewable Renewable energy fund Fund 3,007 energy SHL Services Psychometric testing and Buyout 1,503 assessment VISMA TMT Business application Buyout 1,341 software Other 212 Further investments 6,063 Total investment by 16,889the Company
Figures below refer to the total size of each acquisition, including debt raised from third parties, made by HgCapital on behalf of its clients, including the Company.
NEW INVESTMENTSEpyxIn June 2009, HgCapital completed the buyout of Epyx Limited through theholding company Quadrum Investments, in partnership with management.HgCapital's clients have a 49% stake in this business, but HgCapital haseffective control rights over and above its economic holding. Epyx provides aprivate electronic marketplace serving the contract car hire and leasingmarket. The Epyx electronic trading environment enables both customers andsuppliers to reduce costs and increase efficiency across multiple businessprocesses such as servicing and disposals. Epyx operates over 50 buyer schemesand hosts 11,000+ registered suppliers.
FURTHER INVESTMENTS
SHL
In May 2009 HgCapital invested a further 12.0 million in SHL, in order to fundrestructuring and ensure liquidity during a period of challenging trading. Thisis mainly a repayment of the 9.0 million early repayment of loan stockreceived in July 2007.
Visma
In February 2009 HgCapital invested a further 8.3 million in Visma in order tofund the acquisition of the Finnish accounting services business Teemuaho.Visma also continues to make incremental value-enhancing acquisitions, fundedout of cash flow.Hg Renewable Power Partners
In the first quarter of 2009 HgCapital invested EUR35.2 million in MercurioSolar, a portfolio of four operational solar photovoltaic projects in Spainwith a total capacity of 35MW. A further EUR7.5 million was invested in WindDirect Solutia, a 5MW two turbine wind project in Newport, South Wales. In thesecond quarter HgCapital invested EUR12 million to acquire the 5MW Bargas SolarPV project to grow our platform in Spain.
Realisations
During the first half of 2009, HgCapital realised total proceeds of 19 million on behalf of its clients, including 1.9 million for the Company.
Company Sector Exit route Cost Proceeds* Cumulative Current gain/ year GBP'000 GBP'000 (loss)** gain*** GBP'000 GBP'000 Hirschmann Industrials Release of - 1,165 1,165 346 escrow Other 956 774 (182) 597 Partial 956 1,939 983 943realisations Total 956 1,939 983 943realisations
* Includes gross revenue received during the period. ** Realised proceeds including gross revenue received, in excess of historic cost
*** Realised proceeds including gross revenue received, in excess of 31 December 2008 book value and accrued interest Figures below refer to the total value of each realisation, including, whereappropriate, repayment of third party debt. Proceeds to clients, including theCompany, are stated net of any such repayment.
PARTIAL REALISATIONS
Hirschmann
Hirschmann is a supplier of electronics equipment, components and relatedaccessories. The initial investment in the business by HgCapital was made inMarch 2004 and the business was successfully exited in March 2007 returningover 5.0x the original investment. A remaining release of escrow in Hirschmannwas realised in May 2009 returning a further 7.4 million to HgCapital clients,of which the Company's share was 1.2 million.
Further small realisations were received relating to Newchurch which was sold to Tribal plc, in exchange for cash proceeds of 0.2 million and shares in Tribal plc, currently valued at 0.1 million.
REALISATION PROSPECTS
HgCapital works continually with all the companies in its portfolio to positionthem for best value on exit. In considering the timing of any exit, HgCapitalevaluates market conditions, current and potential growth in the portfoliocompany and likely purchaser interest in any sale process. Given the currentuncertain market conditions, HgCapital is not planning to make any significantrealisations in the next six months. Despite this, we will continue to monitorthe market and our portfolio and ensure we maximise value for investors.
Review of principal investments
1 Pulsewww.pulsejobs.comSector: HealthcareLocation: UKDate invested: June 1999
Original enterprise value: 67 million
Total HgCapital clients' equity: 74%
Business description
* Pulse is one of the UK's leading providers of comprehensive labour
management, recruitment and deployment services in the healthcare sector.
* The company works in partnership with healthcare organisations in the public and private sectors to provide staffing, management services and consultancy. Performance * + Current trading: both revenues and EBITDA are significantly up year on year. The business has no external borrowings. * Exit strategy: Pulse is anticipated to be a target for both private equity and trade buyers. 2 Vismawww.visma.comSector: TMTLocation: NorwayDate invested: May 2006
Original enterprise value: NOK 4.3 billion
Total HgCapital clients' equity: 53%
Business description
* VISMA is the number one provider of business software and related services
to small and medium-sized enterprises in the Nordic region.
* The company provides accounting, resource planning and payroll software,
outsourced book-keeping, payroll services and transaction process
outsourcing.
Performance
* Current trading: performance in the year to date has been strong, with good
growth in both sales and EBITDA.
* Exit strategy: significant interest from secondary buyers is expected. An
IPO or trade sale to software/publishing companies provide alternative exit options. 3 Epyxwww.epyx.co.ukSector: TMTLocation: UKDate invested: June 2009
Original enterprise value: Undisclosed
Total HgCapital clients' equity: 49%
Business description
* Epyx provides a private electronic marketplace serving the vehicle contract
hiring and leasing market. The Epyx service enables both customers and
suppliers to reduce costs and increase efficiency across multiple business
processes. * Epyx operates over 50 buyer schemes and hosts 11,000+ supplier registrations.
Performance
* Current trading: materially ahead of prior year, as planned.
* Exit strategy: most likely exit via trade sale with potential secondary
private equity interest. 4 Sporting Indexwww.sportingindex.comSector: Consumer & LeisureLocation: UKDate invested: November 2005
Original enterprise value: 73 million
Total HgCapital clients' equity: 70%
Business description
* Sporting Index is a sports spread betting firm well positioned in the UK
market.
* It aims to offer more markets, more `fun bets', and more choice than any
other sports spread betting company.
Performance
* Current trading: sales and profit slightly down on prior year.
* Exit strategy: the company will be positioned for a trade exit, most likely
to an industry consolidator.
5 Schleichwww.schleich-s.comSector: Consumer & LeisureLocation: GermanyDate invested: December 2006
Original enterprise value: EUR165 million
Total HgCapital clients' equity: 76%
Business description
* Schleich is the leading producer of classic plastic toy figurines, such as
farm and wildlife animals, historical characters and The Smurfs.
* Its products, trading under the well recognised brand Schleich-S, are sold
in over 30 countries, including its home market of Germany, the US, the UK
and France. Performance
* Current trading: continued good growth in both revenues and EBITDA during
the year to date as the company continues to expand internationally.
* Exit strategy: several multi-national toy makers represent natural trade
buyers; stable profits and risk profile could also support an IPO.
6 Voyagewww.voyagecare.comSector: HealthcareLocation: UKDate invested: April 2006
Original enterprise value: 322 million
Total HgCapital clients' equity: 52%
Business description
* Voyage is an operator of small community-based homes for adults with learning disabilities and associated physical disabilities, autistic spectrum disorders, complex needs and acquired brain injury. * Currently, the company has 1,900 beds in 260 homes across England and Scotland.
Performance
* Current trading: performance in the first half of 2009 was strong with both
sales and EBITDA ahead of prior year.
* Exit strategy: projected exit to either a secondary or a trade buyer,
although an IPO is also possible.
7 Mondo Mineralswww.mondominerals.comSector: IndustrialsLocation: Nordic regionDate invested: October 2007
Original enterprise value: EUR230 million
Total HgCapital clients' equity: 91%
Business description
* Mondo is the world number two in talc mining and processing. The company's
core markets are the European paper and paint industries. * Mondo supplies the majority of talc for paper producers in the highly regional market of Finland, the rest of the Nordic region and Northern Europe.
Performance
* Current trading: current trading conditions are challenging due to a fall
in end-user demand. Cost reduction plans have been implemented to mitigate
this impact.
* Exit strategy: Mondo is anticipated to be an attractive target for both
private equity and trade buyers.
8 Americanawww.bench.co.ukSector: Consumer & LeisureLocation: UKDate invested: March 2007
Original enterprise value: 180 million
Total HgCapital clients' equity: 45%
Business description
* Americana is a branded apparel business, manufacturing and marketing the
Bench brand, which is targeted at the youth market.
* The company predominantly operates through UK wholesale channels, with
increasing wholesale revenues in continental Europe, and is building a UK
retail presence. Performance
* Current trading: both sales and profit for the year to June 2009 were ahead
of prior year as the company expands internationally.
* Exit strategy: options include a trade sale or secondary buyout.
9 Casa Rehawww.casa-reha.deSector: HealthcareLocation: GermanyDate invested: January 2008
Original enterprise value: EUR327 million
Total HgCapital clients' equity: 51%
Business description
* Casa Reha is a leading German private provider of elderly care services,
specialising in high quality, affordable assisted living.
* Founded in 1995, Casa Reha has a nationwide portfolio of 52 homes providing
around 7,000 beds. Performance
* Current trading: performance for the first half of 2009 was mixed, with
sales marginally ahead and profit marginally behind prior year.
* Exit strategy: the business should be a strong IPO candidate or attractive
to larger private equity buyers.
10 Achilleswww.achilles.comSector: TMTLocation: UKDate invested: July 2008
Original enterprise value: 75 million
Total HgCapital clients' equity: 79%
Business description
* Achilles is a global leader in buyer-sponsored supplier data management and
validation services.
* The company has 22 offices worldwide and has more than 32,000 customers,
with focus on industries with "high cost of supplier failure" (e.g. oil &
gas and construction). Performance * Current trading: performance in the first half of 2009 was strong with significant growth on prior year in both sales and EBITDA. * Exit strategy: an IPO, secondary or trade sale to a software company, business process outsourcer or b2b exchange all provide possible exit routes. Company Residual Unrealised Accrued Total Valuation cost value interest value methodology GBP'000 GBP'000 GBP'000 GBP'000 Pulse 6,131 22,223 93 22,316 Earnings Visma 14,609 16,531 2,050 18,581 Earnings Epyx 10,826 10,826 - 10,826 Cost Sporting Index 7,092 4,405 3,202 7,607 Earnings Schleich 4,634 5,999 1,338 7,337 Earnings Voyage 8,755 4,179 2,767 6,946 Written down Mondo Minerals 7,004 5,599 1,253 6,852 Written down Americana 4,625 4,483 1,708 6,191 Earnings Casa Reha 8,151 4,626 648 5,274 Written down Achilles 5,226 5,226 - 5,226 Cost RENEWABLE ENERGY
Hg Renewable Power Partners LP
Renewable energy benefits from a highly favourable regulatory and policyenvironment with climate change solidly on the political agenda. The investmentin the fund will give the Company exposure to a diversified portfolio of assetsoffering both income and capital appreciation in a rapidly growing sector. Theinvestment class has lower case by case target returns than private equity butsimilarly attractive risk adjusted returns and a higher proportion coming inthe form of income.In June 2006, the Company made a commitment of EUR21 million to Hg RenewablePower Partners LP, a dedicated renewable energy fund managed by HgCapital. TheEUR303 million fund is one of the largest raised to date for renewable energyinvestments in Europe and is focused on long-term investments in renewablepower projects using proven technologies, including wind, solar, small hydro,landfill gas and waste-to-energy in Western Europe.The fund has investments in eight wind projects in construction or operationtotalling 197MW; four biogas projects that are in operation totalling 1.4MW,and five operational solar projects totalling 41MW. It has made a few smallerinvestments in companies that develop wind projects, giving it the right toacquire a further 281MW of new wind projects. The fund's investments have beenin France, Germany, Ireland, Italy, Sweden, Spain and the United Kingdom.The Renewable Power Partners' portfolio is performing well with allconstruction projects to date completed on time and on budget, operating assetsperforming within the expected range and one realisation completed ahead oforiginal plan. To date, the fund is 65% committed, of which 49% has been drawn.As described above, the portfolio is performing well with portfolio yield on anupward trend.
The Fund's portfolio now includes the following investments:
Tir Mostyn
A 21.25MW operating wind farm in North Wales. The original investment was madein November 2004, with construction completed in October 2005. The wind farmhas now been operating for over three years.
Sorne Wind
A 32 MW operating wind farm in Donegal, Ireland. This investment was made inJuly 2005, with the farm entering operation in November 2006. On 5 March 2009the Fund's interests in Sorne were sold for a gross price of EUR10 million, withnet proceeds (after transaction costs) of EUR9.88 million. This represents agross multiple of 2.3x the Fund's investment and an IRR of 43%.
Picardy Wind
A portfolio of two wind farms in Northern France in operation with a totalcapacity of 23.5MW. The initial investment was made in July 2006. The fund hasthe right to acquire the two further projects that are under construction witha total capacity of 24MW.Wind Direct
A business that installs, owns and operates wind turbines on UK industrialsites, providing its customers with low cost, direct energy supplies. Theinvestment was made in 2006 and includes one site in operation with a capacityof 4MW, one 5MW project in construction and the option to acquire two furtherpermitted projects.HavsnasA 95.4 MW project is under construction, located in central Sweden. Theinvestment, which is the first project-financing of renewable generation in theNordic market, was completed in March 2008. The project will be the largeston-shore wind farm in Sweden. Construction began in April 2008 and commercialoperation will begin in April 2010.
RidgeWind
A UK wind farm developer with 293MW of wind farms in development, including twoprojects totalling 54 MW that have secured planning permission and the 16MWBagmoor project in Lincolnshire, entered full operation one month early, on
31July 2009.Rewind
An investment of EUR2.1 million was made in August 2006 to develop a 120MWportfolio of wind farms in Italy. In October 2007 this agreement was terminatedon terms that give the fund the right to success fees or acquisition rights ifthe projects achieve planning permission.
Bayern Energie
Four operating anaerobic digestion (biogas) plants with a combined capacity of1.4MW in Germany. Our involvement in the development of further biogas projectshas been terminated with no further costs.
Mercurio
A total investment of EUR47 million has been made into the Mercurio portfoliothat consists of five operating Spanish solar photovoltaic plants totalling41MW. The initial acquisition of four projects completed in March 2009 and theportfolio was added to with the acquisition of the 5MW Bargas plant in April2009.The Company's top 20 investments by value**
Company Sector Residual Valuation* Year of Portfolio Cum cost investment value % Value % GBP'000 GBP'000 1 Pulse Staffing Healthcare 6,131 22,316 1999 18.4% 18.4% Ltd 2 VISMA Holdings TMT 14,609 18,581 2006 15.3% 33.7%
3 Epyx Investments TMT 10,826 10,826 2009 8.9%
42.6% Limited 4 Sporting Index Consumer & 7,092 7,607 2005 6.3% 48.9% Group Ltd Leisure 5 Schleich Consumer & 4,634 7,337 2006 6.0% 54.9%
Luxembourg SA Leisure 6 Hg Renewable Renewable 7,416 7,138 2006 5.9% 60.8% Power Partners LP energy 7 Voyage Group Ltd Healthcare 8,755 6,946 2006 5.7% 66.5% 8 Mondo Minerals Industrials 7,004 6,852 2007 5.6% 72.1% Co-op 9 Americana Consumer & 4,625 6,191 2007 5.1% 77.2% International Leisure Holdings Ltd 10 Casa Reha SARL Healthcare 8,151 5,274 2008 4.3% 81.5% 11 Achilles Group TMT 5,226 5,226 2008 4.3% 85.8% Holdings Limited 12 SLV Electronik Industrials 5,962 4,190 2007 3.4% 89.2% SARL 13 SHL Group Services 7,991 2,458 2006 2.0% 91.2% Holdings 1 Ltd 14 Elite Holding SA TMT 5,749 2,410 2005 2.0% 93.2% (t/a SiTel) 15 Hoseasons Group Consumer & 2,197 2,300 2003 1.9% 95.1% Ltd Leisure 16 Atlas Energy Services 8,153 2,227 2007 1.8% 96.9% Group Ltd 17 Software TMT 530 1,277 2006 1.1% 98.0% (Cayman), LP - re Blue Minerva 18 Cornish Bakehouse Consumer & 4,200 1,159 2007 1.0% 99.0% Investments Ltd Leisure 19 Weston Presidio Fund 2,320 867 1998 0.7% 99.7% Capital III, LP 20 Software TMT 253 592 2007 0.5% 100.2% (Cayman), LP - re Guildford Total (Top 20 i 121,824 121,774 100.2% 100.2% nvestments) Other investments 30,440 948 0.8% 101.0% (17) Euro Hedge - (1,262) (1.0%) 100.0% Total all 152,264 121,460 100.0% 100.0% investments (37)
*Including investment valuation of 104,311,000 and accrued interest 17,149,000.
** The above investments, other than Hg Renewable Power Partners LP, are held through the Company's investment in HGT LP and HGT6 LP. See Note 1 of the Financial Statements.
Income statement
for the six months ended 30 June 2009
Revenue return Capital return Total return Six months Year ended Six months Year ended Six months Year ended ended ended ended Note 30.06.09 30.06.08 31.12.08 30.06.09 30.06.08 31.12.08 30.06.09 30.06.08 31.12.08 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited) (unaudited)
(audited) (unaudited) (unaudited) (audited)
(Losses)/ - - - (6,698) 21,091 (4,491) (6,698) 21,091 (4,491)gains on investments and government securities Losses on 3(b) - - - (2,188) - - (2,188) - -loans receivable from General Partner
Net income 6 2,885 11,136 12,068 - -
- 2,885 11,136 12,068 Investment 7(a) 138 (450) (643) 415 (1,350) (1,930) 553 (1,800) (2,573)management fee rebate/ (charge) Other 8(a) (312) (361) (932) - - - (312) (361) (932)expenses Net return/ 2,711 10,325 10,493 (8,471) 19,741 (6,421) (5,760) 30,066 4,072(deficit) on ordinary activities before taxation Taxation on 9 (758) (2,992) (3,048) (116) 391 550 (874) (2,601) (2,498)ordinary activities Transfer to 1,953 7,333 7,445 (8,587) 20,132 (5,871) (6,634) 27,465 1,574/(from) reserves Return/ 7.75p 29.11p 29.56p (34.09p) 79.93p (23.31p) (26.34p) 109.04p 6.25p(deficit) per ordinary share The total column of this statement represents the Company'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. All revenue and capital items in the above statement derive from continuing
operations.
Final dividend for the year ended 31 December 2008 of 25.00p ( 6,297,000) declared on 13 March 2009 and paid on 12 May 2009. Final dividend for the year ended 31 December 2007 of 25.00p ( 6,297,000) declared on 13 March 2008 and paid on 1 May 2008.
Balance sheetas at 30 June 2009 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) Fixed assets
Investments held at fair value
Quoted at market valuation 84 2,224 - Unquoted at Directors' valuation 104,227 134,619 94,732 104,311 136,843 94,732 Current assets Debtors 17,516 17,655 16,258 Government securities 97,258 112,203 124,014 Cash 3,419 2,742 5,841 118,193 132,600 146,113 Creditors amounts falling due within (1,341) (9,458) (6,751)one year Net current assets 116,852 123,142 139,362 Net assets 221,163 259,985 234,094 Capital and reserves Called up share capital 6,296 6,296 6,296 Share premium account 14,123 14,123 14,123 Capital redemption reserve 1,248 1,248 1,248 Capital reserve - realised 239,390 219,922 238,606 Capital reserve - unrealised (50,314) 3,744 (40,943) Revenue reserve 10,420 14,652 14,764 Total equity shareholders' funds 221,163 259,985
234,094
Net asset value per ordinary share 878.1p 1,032.2p
929.4p
Cash flow statement
for the six months ended 30 June 2009
Note Six months Six months Year ended ended ended 30.6.08 30.6.07 31.12.07 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) Net cash (outflow)/inflow from operating 8(b) (4,248) 18 1,550activities Taxation refunded/(paid) 352 (3,026) (5,514)
Capital expenditure and financial
investment Purchase of fixed asset investments (16,889) (15,901)
(25,987)
Proceeds from the sale of fixed asset 1,651 61,340 86,027investments Net cash (outflow)/inflow from capital (15,238) 45,439
60,040
expenditure and financial investment
Equity dividends paid (6,297) (6,297) (6,297) Net cash (outflow)/inflow before (25,431) 36,134
49,779
management of liquid resources Management of liquid resources 23,009 (33,509)
(44,055)
(Decrease)/increase in cash in the (2,422) 2,625
5,724
period
Reconciliation of movements in shareholders' funds
for the six months ended 30 June 2009
Note share Share Capital Capital Revenue Total capital premium redemption reserves reserve GBP'000 GBP'000 account reserve GBP'000 GBP'000 GBP'000 GBP'000 At 31 December 2008 6,296 14,123 1,248 197,663 14,764 234,094 Net (deficit)/return - - - (8,587) 1,953 (6,634)from ordinary activities Dividends paid 4 - - - - (6,297) (6,297) At 30 June 2009 6,296 14,123 1,248 189,076 10,420 221,163 At 31 December 2007 6,296 14,123 1,248 203,534 13,616 238,817 Net (deficit)/return - - - (5,871) 7,445 1,574from ordinary activities Dividends paid 4 - - - - (6,297) (6,297) At 31 December 2008 6,296 14,123 1,248 197,663 14,764 234,094
Notes to the financial statements
1. Principal activity
The principal activity of the Company is that of an investment trust company.The Company is an investment company as defined by section 833 of the CompaniesAct 2006 and an investment trust within the meaning of section 842 of theIncome and Corporation Taxes Act 1988.
2. Basis of preparation
The accounts have been prepared in accordance with applicable UK law andAccounting Standards (`GAAP') and with the Statement of Recommended Practice`Financial Statements of Investment Trust Companies' (`SORP'), dated January2003 and revised in December 2005. All of the Company's operations are of acontinuing nature.The Company has considerable financial resources and as a consequence, theDirectors believe that the group is well placed to manage its business riskssuccessfully despite the current uncertain economic outlook. After makingenquiries, the Directors have a reasonable expectation that the Company 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.
The same accounting policies, presentation and methods of computation are followed in the condensed set of financial statements as applied in the Company's latest annual audited financial statements.
3. Organisational structure
In May 2003 (subsequently revised in January 2009) and January 2009, theCompany entered into partnership agreements with general and founder partners,at which point investment holding limited partnerships were established tocarry on the business of an investor, with the Company being the sole limitedpartner in these entities.Under the partnership agreements, the Company made capital commitments of itsnon-cash investment portfolio to HGT LP and HGT 6 LP ("funds"), with the resultthat the Company now holds investments in the funds and all fixed assetinvestments, excluding the investment in Hg Renewable Power Partners LP, arenow held by the funds. The fixed asset investments on the Balance Sheet and theInvestment portfolio above present the underlying investments held by thefunds.Under the terms of the limited partnership agreements the general partner isentitled to appropriate, as a first charge on the net income of the funds, anamount equivalent to its priority profit share ("PPS"). In years in which thefunds have not yet earned sufficient net income to satisfy the PPS, theentitlement is carried forward to the following years. The PPS is payablequarterly in advance, even if insufficient net income has been earned. Wherethe cash amount paid exceeds the net income, an interest free loan is advancedto the general partner by the funds, which is funded via a loan from theCompany. This loan is only recoverable from the general partner by anappropriation of net income; until net income is earned, no value is attributedto this investment from the Company.
In addition to the PPS, the founder partner is entitled to a carried interest distribution once certain preferred returns are met.
The agreements stipulate that the funds' income and capital gains, afterpayment of the carried interest and the PPS, are distributed to the Company.Consequently these amounts (including the associated cash flows) are shown inthe appropriate lines within the Income Statement, Cash Flow Statement and therelated notes, to then reflect the income and gains appropriated to the generaland founder partner in satisfaction of the PPS and carried interest, so as toreflect the Company's proportion of net income and capital gains in the fundsthat have been paid to the general and founder partner as its PPS and carriedinterest.The PPS paid from net income is charged to the revenue account, whereas the PPSpaid as an interest-free loan, is charged as an unrealised depreciation to thecapital account. The carried interest paid from net income and capital gainsare charged to the revenue and capital account respectively.
4. Dividends
It is intended that dividends will be declared and paid annually in respect ofeach accounting period. A dividend of 25.00p per share, declared on 19 March2009 as a final dividend, was paid on 11 May 2009 in respect of the year ended31 December 2008 (year ended 31 December 2007: 25.00p per share, declared on 13March 2008 and paid on 12 May 2008).
5. Issued share capital
There were 25,186,755 ordinary shares in issue for the six months ended 30 June 2009 and 30 June 2008; and the year ended 31 December 2008.
6. Income Six months Six months Year ended ended ended 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) Income from investments UK and overseas unquoted investment 3,239 8,765 7,115income
UK dividends from unquoted investments 2 6
11 Gilt interest 374 2,271 4,704 3,615 11,042 11,830 Other income Deposit interest 44 94 238 44 94 238 Total income 3,659 11,136 12,068
Priority profit share attribution (774) -
- Total net income 2,885 11,136 12,068
7. Fees, priority profit share and carried interest paid to Manager
(a) Investment management fee
The investment management fee is levied quarterly in arrears and charged 75% tocapital and 25% to revenue. Revenue return Capital return Six months Six months Year Six months Six months Year ended ended ended ended ended ended 30.6.09 30.6.08 31.12.08 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited)
(unaudited) (audited) Investment management - 450 935 - 1,350 2,805fee VAT recovered (138) - (292) (415) - (875) (138) 450 643 (415) 1,350 1,930
On 28 June 2007, the European Court of Justice announced that it had found infavour of the Association of Investment Companies and JPMorgan ClaverhouseTrust plc in declaring that management expenses of investment trusts should beexempt from VAT. HMRC has accepted this decision and the Company will thereforeno longer be charged VAT on management expenses. VAT for the period May 2003 toSeptember 2007 was recovered during the prior year. In June 2009, the Company,through its previous Manager, recovered a further 553,000 of VAT charged bythat Manager during the period April 2001 to April 2003. Recovery of VATsuffered prior to March 2001 remains uncertain and has not been recognised inthese Financial Statements.(b) Priority profit share Revenue return Capital return Six months Six months Year Six months Six months Year ended ended ended ended ended ended 30.6.09 30.6.08 31.12.08 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Priority profit share 2,962 - - - - -paid to General Partners Investment income (774) - - - - -attribution Loan recoverable (2,188) - - - - -funding - - - - - -(c) Carried interest Revenue return Capital return Six months Six months Year Six months Six months Year ended ended ended ended ended ended 30.6.09 30.6.08 31.12.08 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited) Carried interest - 5,795 5,132 - 5,795 5,132payable to Founder Partner Gains on investments - (5,795) (5,132) - (5,795) (5,132)attribution - - - - - -8. Other expenses(a) Operating expenses Six months Six months Year ended ended ended 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited)
Custodian and administration fees 134 146
260 Other administration costs 178 215 672 312 361 932(b) Reconciliation of net revenue return before taxation to net cash flow fromoperational activities Six months Six months Year ended ended ended 30.6.09 30.6.08 31.12.08 GBP'000 GBP'000 GBP'000 (unaudited) (unaudited) (audited)
Net (deficit)/return before taxation (5,760) 30,066 4,072
Loss/(gains) on investments held at 8,886 (26,886) (641)fair value and loans
Priority profit share advanced (2,188) -
-
Amortisation of premium on government 2,708 -
-securities Movement in carried interest (5,132) (394) (1,057) Increase in accrued income (1,711) (3,754) (1,904) Decrease in debtors - 5 5 (Decrease)/increase in creditors (1,050) 981
1,076
Tax on investment income included (1) -
(1)within gross income Net cash (outflow)/inflow from (4,248) 18 1,550operating activities 9. TaxationTax for the six month period is charged at 28% (30% to 31 March 2008; 28% from1 April 2008 to 31 December 2008), representing the best estimate of theaverage annual effective tax rate expected for the full year, applied to thepre-tax income of the six month period.
10. Capital commitments
At 30 June 2009, investment purchases of 9,605,000 (30 June 2008: 12,048,000 and 31 December 2008: 14,760,000) had been authorised and contractually committed, including an undrawn commitment to Hg Renewable Power Partners LP.
The Company has committed to invest 250 million alongside the Manager's latestbuyout fund, HgCapital 6, increasing to a maximum of 300 million if the sizeof the funds raised for HgCapital 6, including the Company's commitment,reaches 2 billion. The Company has agreed to pay fees on its commitment. TheCompany will be entitled, without penalty, to opt out of any investment whichcould cause the Company to lose its status as an investment trust, result inthe Company not having the cash resources to meet any of its projectedliabilities or expenses, or result in it not being able to pay dividends orundertake any intended share buy-back.
11. Publication of non-statutory accounts
The financial information contained in this half-yearly report does notconstitute statutory accounts as defined in Section 435 of the Companies Act2006. The financial information for the six months ended 30 June 2009 and 2008has not been audited. The information for the year ended 31 December 2008 hasbeen extracted from the latest published audited financial statements, whichhave been filed with the Registrar of Companies. The report of the auditors onthose accounts contained no qualification or statement under section 237(2) or(3) of the Companies Act 1985.
12. Annual results
The Board expects to announce the results for the year ending 31 December 2009 in March 2010.
The Annual report should be available by the end of March 2010, with the Annual General Meeting being held in May 2010.
Independent review report
to HgCapital Trust plc
Introduction
We have been engaged by the Company to review the condensed set of financialstatements in the half-yearly financial report and accounts for the six monthsended 30 June 2009 which comprises the income statement, the balance sheet, thecash flow statement, the reconciliation of movements in shareholders' funds andrelated notes 1 to 12. We have read the other information contained in thehalf-yearly financial report and considered whether it contains any apparentmisstatements or material inconsistencies with the information in the condensedset of financial statements.This report is made solely to the company in accordance with InternationalStandard on Review Engagements (UK and Ireland) 2410 "Review of InterimFinancial Information Performed by the Independent Auditor of the Entity"issued by the Auditing Practices Board. Our work has been undertaken so that wemight state to the company those matters we are required to state to them in anindependent review report and for no other purpose. To the fullest extentpermitted by law, we do not accept or assume responsibility to anyone otherthan the company, for our review work, for this report, or for the conclusionswe have formed.Directors' responsibilities
The half-yearly financial report is the responsibility of, and has been approved by, the Directors. The Directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Services Authority.
As disclosed in note 2, the annual financial statements of the company are prepared in accordance with United Kingdom Generally Accepted Accounting Practice. The condensed set of financial statements included in this half-yearly financial report have been prepared in accordance with the accounting policies the group intends to use in preparing its next annual financial statements.
Our responsibility
Our responsibility is to express to the Company a conclusion on the condensedset of financial statements in the half-yearly financial report based on ourreview.Scope of review
We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410 "Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity" issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making inquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly,we do not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that causes us tobelieve that the condensed set of financial statements in the half-yearlyfinancial report for the six months ended 30 June 2009 is not prepared, in allmaterial respects, in accordance with the Disclosure and Transparency Rules ofthe United Kingdom's Financial Services Authority.
Deloitte LLP
Chartered Accountants and Statutory Auditors
London27 August 2009Management and AdministrationBoard of DirectorsRoger Mountford (Chairman)Timothy AmiesPiers BrookeRichard BroomanPeter GaleAndrew MurisonHgCapital Trust plc2 More London RiversideLondonSE1 2APwww.hgcapitaltrust.comRegistered office
(Registered in England No. 1525583)
2 More London RiversideLondonSE1 2APManagerHgCapital***2 More London RiversideLondonSE1 2APTelephone: 020 7089 7888www.hgcapital.comSecretary and administratorHgCapital***2 More London RiversideLondonSE1 2APTelephone: 020 7089 7888StockbrokerWinterflood Securities*The Atrium BuildingCannon Bridge25 Dowgate HillLondonEC4R 2EATelephone: 020 7621 0004www.winsresearch.co.ukIndependent auditorDeloitte LLP2 New Street SquareLondonEC4A 3BZRegistrar
Computershare Investor Services plc*
The PavilionsBridgwater RoadBristolBS99 6ZYTelephone: 0870 702 0131
www-uk.computershare.com/investor
AIC
Association of Investment Companies
www.theaic.co.uk
HgCapital Trust is a member of the Association of Investment Companies
LPEQListed Private Equitywww.lpeq.comHgCapital Trust is a founder member of LPEQ (formerly iPEIT). LPEQ is a groupof private equity investment trusts and similar vehicles listed on the LondonStock Exchange and other major European stock markets, formed to raiseawareness and increase understanding of what listed private equity is and howit enables all investors - not just institutions - to invest in private equity.
LPEQ provides information on private equity in general, and the listed sector in particular, undertaking and publishing research and working to improve levels of knowledge about the asset class among investors and their advisers.
*Authorised and regulated by the Financial Services Authority.
** HgCapital is the trading name of Hg Pooled Management Limited
vendorRelated Shares:
HgCapital Trust plc