Half-year Report

RNS Number : 0117Z

HgCapital Trust PLC

12 September 2022

 

H gCapital Trust plc

INTERIM Results FOR THE SIX MONTHS ENDED 30 JUNE 2022

CONTINUED POSITIVE NAV performance

delivered FROM a RESILIENT PORTFOLIO OF software and service businesses

London, 12 September 2022:  HgCapital Trust plc ('HGT'), today announces its interim results for the six months ended 30 June 2022 . 

HGT provides investors with a listed vehicle to invest in unquoted businesses managed by Hg, one of Europe's largest and fastest-growing investors in software & service businesses.

The objective of HGT is to provide shareholders with consistent long ‑ term returns in excess of the FTSE All ‑ Share Index by investing predominantly in unquoted companies where value can be created through strategic and operational change.

Highlights over the first six months of 2022 include:

¡ Strong portfolio trading and value creation continues to offset a decline in valuation multiples of listed comparable companies, leading to a total return NAV increase of 1.8% to a NAV per share of £4.43 and net assets of more than £2 billion

¡ £71 million invested alongside Hg's other institutional clients, with an estimated further £355m invested post-period

¡ £29 million of returns realised on behalf of HGT, with an estimated further £465m returned post-period at an uplift of c. 29% to December book value

¡ Continued strong long-term performance driven by robust trading

¡ Performance provided through access to Hg's investment platform, which in aggregate represents the one of the largest and fastest growing technology firms in Europe ^[1] .

An investment of £1,000 made 20 years ago in HGT would now be worth £18,370, a total return of 1,737%[2]. An equivalent investment in the FTSE All-Share Index would be worth £3,521.

Jim Strang, Chairman of HGT, commented:

"Despite the obvious challenges and uncertainty presented by the current macro-economic and geo-political environment, the Board remains optimistic about the future prospects for HGT. The businesses within the portfolio are resilient, and in such an environment as today's continue to provide critical solutions to their clients and reduce the costs and complexity of doing business. The long-term value creation prospects from owning such a portfolio remains attractive."

SUMMARY performance

	31 August 2022	% Total return2	30 June 2022	31 December 2021	% Total return2
NAV per share	447.5p	2.7	443.2p	440.4p	+1.8
Share price	374.0p	-10.0	330.5p	420.5p	-20.5
FTSE All-Share Index		2.1			-4.6
		YTD 2022 Movement			H1 2022 Movement
Net Asset Value	£2.05bn	+£44m	£2.03bn	£2.00bn	+£25m

Note: Hg undertakes full revaluations of the portfolio on a quarterly basis, the next process being 30 September 2022, therefore the movement in unrealised value of the portfolio to the end of August 2022 is attributable to any post-period transactions and FX only.

Performance overview

Net assets of more than £2.0 billion, with continued outperformance of the FTSE All-Share over the long-term:

-  NAV per share of 443.2 p, a total return of 1.8% to 30 June 2022.

-  Share price total return decrease of 20.5% over the period.

-  Interim dividend of 2.5p per share (2.0p 30 June 2021) to be paid in October.

Strong growth in revenue and EBITDA continues across the portfolio offset by declines in valuation multiples:

-  Revenue and EBITDA growth of 31% and 26% respectively across the top 20 investments (79% of the portfolio) over the last twelve months.

-  A 13% uplift in the portfolio value was driven by strong trading performance and partially offset by an 8% reduction, primarily due to a decline in the trading multiples of publicly listed peers within the comparable basket of companies

-  Valuation multiple (EV/EBITDA) of 27.1x and net debt to EBITDA ratio of 7.5x for the top 20 investments (79% of the portfolio).

-  £29m of cash returned to HGT from liquidity events in the period

Continued investment and commitments to drive future value:

-  Investment activity continues, despite challenging market conditions with £71 million invested on behalf of HGT into companies with proven, resilience that align to Hg's investment model and where relationships have been formed over many years.

-  New commitments made to the Hg Saturn 3 and Hg Genesis 10 funds, totalling £530 million.

-  Total outstanding commitments at 30 June 2022 of £1.6 billion (December 2021: £992 million), expected to be drawn down over the next three to four years.

Credit facility and new equity issuance:

-  In 2021, the Board of HGT agreed a further £50 million multi-currency revolving credit facility bringing the total facility to £250 million, of which £136 million was drawn at 30 June 2022.

-  The Board will look to increase further the facility over the course of 2022.

-  £12 million of new equity raised over 2022 via tap issuance.

-  HGT retains the ability to opt out of any new investment without penalty, should it not have the cash available to invest.

POST PERIOD EVENTS AS AT 31 AUGUST 2022

§ Pro-forma NAV of 447.5p , YTD performance of +2.7%

§ Pro-forma Net assets of £2.05 billion.

§ Share price of 374.0p , YTD performance of -10.0%.

§ Estimated £355 million realised post-period at a c.29% uplift to December book value.

§ Estimated £465 million invested post-period

§ Available liquid resources (including undrawn balance of credit facility), post-completion of all announced transactions and the interim year dividend payable in October 2022, are £366 million (18% of 31 August pro-forma NAV).

§ Outstanding commitments of £1.1 billion (54% of 31 August pro-forma NAV) expected to be drawn down over the next three to four years.

Outlook

David Toms, Head of Research at Hg, commented:

"Increasingly, we see this environment as one of opportunity, as short-term valuations create space for greater long-term performance for those who have and will continue to maintain a disciplined approach and strategy."

Portfolio

§ Positive trading outlook underpinned by increasing digitalisation of business processes

§ Resilient business models with recurring revenues and pricing power

Robust balance sheet

§ Multiple levers in place to manage balance sheet efficiently

§ Further liquidity events expected over next six to 12 months

Investment activity

§ Recent commitments to Hg funds ensure access to deal flow and support long term NAV growth

§ Attractive pipeline of investment opportunities in Hg's target 'clusters'

- Ends -

The Company's 2022 Interim Report, an animated and full presentation to accompany the results are available to view at:  http://www.hgcapitaltrust.com/ .

For further details:

	HgCapital Trust plc
	Laura Dixon (Senior Investor Relations Manager, Hg)		[phone]
Brunswick
Azadeh Varzi		[phone]

About HgCapital Trust plc

HgCapital Trust plc, whose shares are listed on the London Stock Exchange (ticker: HGT.L), gives investors exposure through a liquid vehicle to a portfolio of high-growth private companies in the software and services sector. The selection of new investments and creation of value in these businesses are managed by Hg, 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, please see www.hgcapitaltrust.com.

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

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HgCapital Trust plc

Interim report and accounts

30 June 2022

The objective of HgCapital Trust ('HGT') is to provide shareholders with consistent long-term returns in excess of the FTSE All-Share Index by investing predominantly in unquoted companies where value can be created through strategic and operational change.

HGT provides investors with unique exposure to a fast-growing portfolio of unquoted investments, primarily in the software and business services sectors, located throughout Europe and North America.

References in this interim report and accounts to HgCapital Trust plc have been abbreviated to 'HgCapital Trust' or 'HGT'. Hg refers to the trading name of Hg Pooled Management Limited and HgCapital LLP. Hg Pooled Management Limited is the 'Manager'.

References in this interim report and accounts to 'total return' refer to a return where it is assumed that
an investor has reinvested all historic dividends at the time when they were paid.

References in this interim report and accounts to pounds sterling have been abbreviated to 'sterling'.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested..

The investment opportunity

HGT provides investors with a unique opportunity to participate in the growth in value of a portfolio of 46 private companies sourced by Hg. Value is created through implementing an investment strategy focused on software and business service companies with resilient, recurring revenue streams and from leveraging the network and expertise of Hg to support management teams to deliver the full potential of their respective businesses.

With highly predictable and stable cash flows, the top 20 businesses (representing 79% by value of HGT's investments) reported aggregate sales of £7.7 billion ¹ and EBITDA of £2.4 billion ¹ over the last 12 months, equating to an EBITDA margin of 31% .

Hg brings to HGT an experienced team of more than 300 employees , including more than 170 investment and portfolio management professionals , supported by a network of portfolio partners , all of them seasoned senior managers from across industry, who work with
the management teams of the companies in which we are invested to create value for shareholders. At the centre of this network, Hg builds and shares knowledge and expertise by facilitating the active collaboration of management teams across sector clusters and geographies.

HGT's funds are invested pro rata alongside those of Hg's other institutional clients. This enables shareholders to invest, on similar terms, alongside some of the world's largest investors in private equity, in high-growth private companies, which might otherwise be inaccessible. This allows HGT to achieve diversification across markets and geographies and gain exposure to fast growing portfolio companies at different stages of their development and size - from an enterprise value of £100 million to over £10 billion .

¹ Source Hg: LTM 30 June 2022 revenue and EBITDA for the Top 20 investments (79% of the portfolio).

Financial and performance highlights

+ 1.8 %¹

NAV per share (443.2p)²

30 June 2021: +21.4%

£ 2.0 bn

Net assets

31 December 2021: £2.0bn

-20.5 %¹

Share price (330.5p)

30 June 2021: +17.4%

£ 1.5 bn

Market capitalisation

31 December 2021: £1.9bn

2.5 p

Interim dividend

30 June 2021: 2.0p

1.3 %

Total annualised ongoing charges

30 June 2021: 1.6%³

£ 71 m

Cash invested on behalf of HGT

30 June 2021: £165m

£ 29 m

Cash returned to HGT

30 June 2021: £82m

£ 550 m¹

Available liquid resources
(27% of NAV)

31 December 2021: £470m

This includes a bank facility of £250m of which £114m was undrawn at 30 June.

£ 1.6 bn

Outstanding commitments
(76% of NAV)

31 December 2021: £992m

Commitments will be drawn down over the next three to four years (2022-26) and are likely to be financed partly by cash from future realisations.

HGT can opt out of a new investment without penalty, should it not have the cash available to invest.

Top 20 investments (79% of portfolio value)

+ 31 %

Top 20 LTM sales growth

30 June 2021: +20%

+ 26 %

Top 20 LTM EBITDA growth

30 June 2021: +27%

27.1 x⁴

Top 20 EV to EBITDA multiple

31 December 2021: 27.4x

7.5 x⁴

Top 20 net debt to EBITDA ratio

31 December 2021: 7.1x

¹ NAV per share and share price returns on a total return basis assuming all historical dividends have been re-invested, available liquid resources includes liquid resources and the undrawn bank facility. These financial metrics are Alternative Performance Measures ('APM').

² Please refer to note 11(b) on page 71 of the full Interim Report and Accounts or below for further detail on the calculation of NAV per share.

³ Please refer to page 74 of the full Interim Report and Accounts or below for further detail on the calculation of ongoing charges.

⁴ These figures are calculated on a value‑weighted basis (not a straight average). Therefore, larger exposures within HGT's NAV have a higher weighting in the metrics (e.g. The Access Group). For further information on the top‑20 portfolio trading performance and valuation and net debt analysis, please refer to Hg's review below or on pages 34-35 of the full Interim Report and Accounts.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested.

Historical total return performance

Both HGT's share price and net asset value per share have continued to outperform the FTSE All-Share Index over the long-term.

	6 months to June 2022 %	1 year %	3 years % p.a.	5 years % p.a.	10 years % p.a.	20 years % p.a.
NAV per share*	1.8	20.6	24.4	22.2	17.0	15.9
Share price	(20.5)	(5.4)	17.4	16.7	16.9	15.7
FTSE All-Share Index	(4.6)	1.6	2.4	3.3	6.9	6.5
NAV per share performance relative to the FTSE All-Share Index	6.4	19.0	22.0	18.9	10.1	9.4
Share price performance relative to the FTSE All-Share Index	(15.9)	(7.0)	15.0	13.4	10.0	9.2

*Please refer to note 11(b) on page 71 of the full Interim Report and Accounts or below for further detail on the calculation of NAV per share.

Based on HGT's share price at 30 June 2022 and allowing for all historic dividends being reinvested, an investment of £1,000 made 20 years ago would now be worth £18,370, a total return of 1,737% . An equivalent investment in the FTSE All-Share Index would be worth £3,521.

Long-term net asset growth

2013 £18m £18m raised from subscription shares

2018 FTSE 250 Promotion to the FTSE 250

2019 10:1 10:1 share-split

2019 £75m £75m equity raised

2020 £25m £25m equity raised

2021 £141m £141m equity raised

2022 £12m £12m equity raised

Chairman's statement

"Despite the obvious challenges and uncertainty presented by the current macro-economic and geo-political environment, the Board remains optimistic about the future prospects for HGT. The businesses within the portfolio are resilient, and in such an environment as today's continue to provide critical solutions to their clients and reduce the costs and complexity of doing business. The long-term value creation prospects from owning such a portfolio remains attractive."

Jim Strang, Chairman, HgCapital Trust plc

Dear Shareholder,

The first six months of 2022 have seen a very material increase in the global risk environment all companies face. As the direct effects of the COVID-19 pandemic recede, new risks, both geo-political and macro-economic, have emerged in force and seem set to remain for the foreseeable future. The elevated level of risks that prevail and the changing expectations around economic growth, levels of inflation and interest rates have had a direct impact on stock markets around the world, with high growth companies particularly affected. These factors have dragged on the share price of HGT in the first half of the year.

Against this very challenging picture, the fundamental performance of HGT has remained robust with over 95% of the companies that make up HGT's portfolio demonstrating strong, profitable growth. The nature of these businesses, which are mission-critical to the hundreds of thousands of business end-customers they serve, has allowed them to demonstrate their resilience once again in this challenging environment. Furthermore our Manager, Hg, as a highly experienced owner of these businesses with significant operating resources, has been able to make meaningful contributions to further protect and enhance value across the portfolio.  

As I have noted in the past, the investment policy that HGT follows is one of clear focus and discipline. The clarity of this focus and the effectiveness that Hg demonstrates in its execution of this investment strategy has allowed the investment process to continue to function effectively over the course of the last six months. Three new companies were added to the portfolio during H1, either as primary platform investments or as value accreting acquisitions for existing investments, and a further three new investments were announced that are due to complete over H2 2022. As regards realisation activity, again 2022 has been a productive year-to-date with three full or partial exits announced validating the prior valuations placed on these businesses. Exits announced over 2022 have been at an average of 29% over the December 2021 carrying NAV, again highlighting the consistently conservative approach we have taken to our holding valuations.

The Board speaks regularly to its Manager, Hg, to assess the continued innovation and improvement in Hg's processes, as well as ensuring a thorough understanding of the investment strategy, as it continues to evolve, helping to ensure that Hg's operations are at the forefront of best practice in the private equity industry. This is a broad-based effort that encompasses not only the investment and value creation capabilities of Hg but also the critical topics of Sustainability, Diversity and Inclusion. 

Hg's culture of continuous improvement provides the Board of HGT with confidence to continue to support Hg as it raises new investment funds. In April 2022, the Board increased the commitment made in 2021 to Hg's latest large-cap fund, Hg Saturn 3, from $850 million to $1,075 million. The Board also agreed an initial commitment of €400 million to Hg's latest mid-market fund, Hg Genesis 10, and anticipates further commitments to follow in the coming year, as your Board looks to invest across the Hg fund family to support the long-term growth of HGT's NAV. Through this programme of commitments, HGT will continue to be Hg's largest client and the most substantial investor in its funds.

Highlights in the first six months of 2022 included:

• 1.8% NAV per share growth on a total return basis, with net assets attaining a record level of £2.0 billion;

• £71 million of new and further investments by HGT, primarily into three new businesses across the core investment clusters targeted by Hg, and significant investments made post period end;

• £29 million of proceeds returned to HGT, primarily from two refinancings with further realisations post-period at uplifts to their December 2021 book value;

• £12 million of new equity issued;

• £530 million newly committed to invest alongside new Hg funds over the next three to four years.

Performance

Following very strong performance in 2021, the NAV per share over H1 2022 has seen a small increase from £4.40 to £4.43, representing 1.8% on a total return basis.

It is important to note that valuations are applied consistently, in accordance with the IPEV Valuation Guidelines. Each company has been valued individually, based on the trading multiples of comparable businesses and relevant and recent M&A activity. Over the first six months of 2022, these valuations have reflected the impact of declines in the multiples for comparable public companies, offset by transactions at uplifts to the December 2021 book value and continued strong trading across the portfolio. There is further colour on this in the Manager's Outlook section later in the report.

The underlying performance of the portfolio saw the top 20 underlying companies (79% of the portfolio) continue to show strong growth, generating revenue growth over the last 12 months of 31% (June 2021: 20%) and EBITDA growth of 26% (June 2021: 27%) reflecting the defensive nature of the businesses in which HGT is invested.

These businesses have continued to trade successfully, despite the ongoing disruptions affecting major economies and, with their significant and predictable forward cash flows, are appropriately financed with significant covenant flexibility at an average net debt-to-EBITDA ratio of 7.5x. Currently, 93% of the portfolio by value is held above its original cost of acquisition. The total net assets of HGT at 30 June 2022 were £2.0 billion, an increase of £25 million over the reported figures at 31 December 2021. The analysis of NAV movements and attribution analysis (below or on pages 32-33 of the full Interim Report and Accounts) set out a breakdown of movements in the NAV and the underlying investment portfolio.

Over the first half of 2022, HGT's share price has fallen (on a total return basis) by 20.5%; over the last 10 years the HGT share price has seen a total return CAGR of 17%, outperforming the FTSE All-Share index by 10% per annum over the same period.

Investments and realisations

During the first half of 2022, HGT invested £71 million, primarily in three new investments, LucaNet, Pirum and Fonds Finanz, with further investment made into existing portfolio companies: Howden; Lyniate and GGW. Since the period-end, a further £465 million of investment has been made primarily into three new investments including: IFS/Workwave; Waystone and Ideagen - businesses that Hg has been tracking closely for several years before investing - and further investment into The Access Group, team.blue and Norstella. These investments all fall within Hg's eight focus 'clusters', solving workflow problems and serving the needs of similar business customer sets in comparable end-markets. Hg targets businesses with compelling market positions within these clusters, and while such companies often command a full price on acquisition, the experience and capability which Hg brings help to drive these companies to realise their full potential.

It is also worth noting that HGT currently holds around 6% of NAV in co-investments; these are investments made alongside Hg funds and are free from any fees or carried interest payable to the Manager. HGT will continue to take up co-investment opportunities as they arise and will seek to hold 10 to 15% of NAV in this strategy across different fund deployment cycles. Co-investments provide a useful mechanism to optimise the use of HGT's balance sheet capital and help reduce overall costs.

Over the first half of 2022, Hg returned £29 million to HGT, through the re-financing of Lyniate and Argus Media. Post period, Hg has announced several further exits returning c. £355 million to HGT through the sale of itm8 and Medifox and cash returns from the partial sale of Intelerad and a refinancing of The Access Group. Combined, these realisations represent an aggregate average uplift to their December valuations of 29%, with an average multiple of cost achieved of 4.2x. This consistent performance continues to reinforce the value that buyers place on the quality of the businesses within the portfolio. For further information about investments and realisations, please refer to pages 38-41 of the full Interim Report and Accounts or below.

New commitments

Long-term shareholders will be familiar with the commitment-investment-realisation cycle which underpins the HGT investment model. Every two to four years, HGT and Hg's other institutional investors make commitments to invest in funds which seek to make investments over the following three to four years. HGT thereby enables shareholders to invest alongside the world's largest institutional investors in businesses which might otherwise be inaccessible to public market investors.

In 2021, HGT committed $850 million to Hg's latest upper mid-market fund, and made a further $225 million commitment to this in the first half of 2022. Additionally, the HGT Board agreed a commitment of €400 million to Hg's latest mid-market fund over the period. We will continue to commit across Hg's fund family, ensuring that HGT can participate in all the investments made by Hg. Further detail on all commitments to Hg funds can be found on page 36 of the Manager's Review in the full Interim Report and Accounts or below.

Across all funds, HGT will continue to have the benefit of an 'opt ‑ out' from the commitment to invest in any individual new transaction, if HGT does not have sufficient funds available; this unique feature, is of considerable benefit to managing HGT's balance sheet efficiently.

Balance sheet

Given these new commitments, the Board increased the multi-currency revolving credit facility of £200 million to £250 million in 2021 in order to optimise balance sheet management and to help manage foreign exchange risk. We will look to increase further the facility over the course of 2022. A total of £114 million remained undrawn from this facility at 30 June 2022.

Including cash on the balance sheet, and the undrawn facility above, HGT had available liquid resources of £550 million at the end of June 2022.

As shares in HGT traded at a premium to NAV over the first quarter of 2022, HGT took the opportunity to increase balance sheet liquidity further through equity tap issuance, raising more than £12 million. When possible, the Board will continue to consider new equity issuance, providing that market conditions permit, offering existing and new investors the opportunity to subscribe to and increase HGT's equity base, while always bearing in mind our current shareholders' interests.

In addition, in recent months the Board has refreshed and updated HGT's existing share buy-back policy to ensure that the Board has the fullest range of tools to manage discount levels at its disposal.

The Board regularly reviews the balance sheet, commitment profile and available liquid resources at hand to optimise this mix for the benefit of HGT and long-term NAV growth.

Impact and responsible investment

Your Board and the Manager continue to increase their focus on the topics of ESG and sustainability. We share a firmly held view that not only should the financial returns to you, the shareholders, be attractive, but these must be delivered in a manner which is consistent with our responsibility to society. As a technology investor, we understand the need to ensure that those businesses in which we invest reduce their carbon footprint and contribute to tackling climate change. Hg is, itself, independently certified as a carbon‑neutral company with a UNPRI assessment of Hg's approach to responsible investment of AA++ (the highest available rating). The Board of HGT meets regularly with the Hg Responsible Investment team to ensure that Hg's work is well understood and endorsed by the Board.

As we have previously reported, Hg launched The Hg Foundation in 2020 - a charitable initiative to provide funding and operational support to initiatives across Europe, the UK and the US. The Hg Foundation's goal is to have an impact on the development of those skills and learning most required for employment within the technology industry, focusing on individuals who might otherwise experience barriers to access this education. This Foundation is funded by the Hg management company and its team members. For further information about this and the responsible investment focus at Hg, please see pages 28-31 of the Manager's Review of the full Interim Report and Accounts or below .

Dividend

As noted previously, HGT aims to achieve growth in the net asset value per share and in the share price, rather than to achieve a specific level of dividend. Furthermore, the ability of HGT to pay dividends is very much influenced by the capital structures of the transactions entered into by Hg and by income received on any liquid resources held subject to investment. Nevertheless, HGT will continue to provide guidance as to the broad dividend objectives and, currently, the Board expects to be able to deliver modest dividend progression.

As regards the current financial year HGT will deliver an interim dividend of 2.5 pence per share (2021: 2.0 pence per share), payable in October, following the full year dividend of 7.0 pence per share in 2021 (2020: 5.0 pence per share). The Board keeps the dividend objective of HGT under regular review and will communicate, to shareholders, further guidance on the dividend when it is practicable to do so.

For more information on the timing of the dividend and details of the dividend re-investment plan, please refer to page 13 of the full Interim Report and Accounts .

Board and corporate governance

As previously communicated, and in line with the Board's succession plan, Peter Dunscombe retired from the Board at the AGM in May 2022. Consequently, the Board undertook an externally supported search process to find a new Non-Executive Director. I am pleased to announce that Erika Schraner joined the HGT Board on 1 August 2022. Erika has a wealth of technology, software and digital expertise, as well as extensive experience in M&A, deal value creation, realisations, and finance.

The process of finding a new Director has been informed by the results of the regular Board effectiveness review, ensuring that new joiners to the Board bring with them the most relevant skills and experience for, not only today, but for the future development of HGT. In closing, I would like to extend my sincere thanks on behalf of all my Board colleagues to Peter for his many years of service and for his significant contribution to the success of HGT.

Prospects

Turning to the future, the environment of elevated risk on multiple dimensions seems set to persist, posing obvious challenges to all businesses. The companies that constitute HGT's portfolio will have to deal with the impact of a rising interest rate environment for the first time in more than a decade and also with the sharp increase in inflation witnessed around the world.  Significantly, the increase in geo-political risk around the world seems set to persist for some time. While the direct impact on HGT and its underlying investments is less material than in some other sectors, the collateral risks and in particular the threat posed by cyber attacks, are of real relevance for the HGT portfolio and the many cloud software businesses within it. This is an area of focus for the Board and one that the Hg portfolio team spend significant time on to mitigate.

Despite these obvious challenges and the uncertainty that current times present, the Board remains optimistic about the future prospects for HGT. The companies within the portfolio are resilient and defensive in such an environment, providing critical solutions to their clients and reducing the costs and complexity of doing business. Notwithstanding the high multiples that these types of business continue to attract, the long-term value creation prospects from owning such a portfolio remain very positive and the machinery Hg operates to refresh this portfolio while enhancing returns, continues to improve. The Board continues to work collaboratively with Hg to optimise the investment opportunity for HGT and shareholders, while always ensuring the many risks that prevail are as comprehensively and effectively managed as is possible.

Jim Strang
Chairman
9 September 2022

"In partnership with our Hg colleagues, whose guidance and expertise has been invaluable, we have driven successful transformation at IRIS in the past two years. The Hg portfolio team helped us roll out our Quantum Programme, which has brought disparate divisions onto a single best practice set of processes and systems, enabling us to vastly improve general efficiency and effectiveness - with the benefit of also materially improving our commercial ability to cross-sell and up-sell. Thank you for helping us maximise the potential of our IRIS success."

Elona Mortimer-Zhika, CEO, IRIS

Investment objective and investment policy

The objective of HGT is to provide shareholders with consistent long-term returns in excess of the FTSE All-Share Index by investing predominantly in unquoted companies where value can be created through strategic and operational change.

Investment policy

The policy of HGT is to invest, directly or indirectly, in a portfolio of unlisted companies where Hg believes that it can add value through increasing organic growth, generating operational improvements, driving margin expansion, reorganisation or acquisition - to achieve scale. HGT seeks to maximise its opportunities and reduce investment risk by holding a spread of businesses diversified by end-market and geography.

Risk management

HGT has adopted formal policies to control risk arising through excessive leverage or concentration. HGT's maximum exposure to unlisted investments is 100% of the gross assets of HGT from time to time. On investment, no investment in a single business will exceed a maximum of 20% of gross assets. HGT may invest in other listed closed-ended investment funds, up to a maximum at the time of investment of 15% of gross assets.

Sectors and markets

As HGT's policy is to invest in businesses in which Hg can play an active role in supporting management, Hg invests primarily in companies whose operations are headquartered or substantially based in Europe. These companies operate in a range of countries, but there is no policy of making allocations to specific countries or markets. Investments are made across a range of sectors where Hg believes that its skills can add value, but there is no policy of making allocations to sectors.

HGT may, from time to time, invest directly in private equity funds managed by Hg where it is more economical and practical to do so.

Leverage

Each underlying investment is usually leveraged, but no more than its own cash flow can support, in order to enhance value creation; it is impractical to set a maximum for such gearing across the portfolio as a whole. HGT commits to invest in new opportunities in order to maintain the proportion of gross assets which are invested at any time, but monitors such commitments carefully against projected cash flows.

HGT has the power to borrow and to charge its assets as security. The articles restrict HGT's ability (without shareholders' approval) to borrow to no more than twice HGT's share capital and reserves, allowing for the deduction of debit balances on any reserves.

Hedging

Part of HGT's portfolio is located outside of the UK, predominantly in northern Europe, with a further part in businesses which operate in US dollars. HGT may therefore hold investments valued in currencies other than sterling. From time to time, HGT may put in place hedging arrangements with the objective of protecting the sterling translation of a valuation in another currency. Derivatives are also used to protect the sterling value of the cost of investment made or proceeds from realising investments in other currencies, between the exchange of contracts and the completion of a transaction.

Commitment strategy

HGT employs a commitment strategy to ensure that its balance sheet is managed efficiently. The level of commitment is regularly reviewed by the Board and Hg.

Liquid funds

HGT maintains a level of liquidity to ensure, as far as can be forecast, that it can participate in all investments made by Hg throughout the investment-realisation cycle. At certain points in that cycle, HGT may hold substantial amounts of cash awaiting investment. HGT may invest its liquid funds in government or corporate debt securities, or in bank deposits, in each case with an investment grade rating, or in managed liquidity funds which hold investments of a similar quality.

If there is surplus capital and conditions for new investment appear to be unfavourable, the Board will consider returning capital to shareholders, probably through the market purchase of shares.

Any material change to HGT's investment objective and policy will be made only with the approval of shareholders in a general meeting.

Business model and risk framework

The Board has a clear view of the rationale for investing in unquoted businesses where the private equity ownership model has the potential to accelerate the growth in value creation. HGT seeks to capture this upside, whilst operating within a rigorous risk-management framework.

The Board believes that there is a convincing rationale for directly investing in well-researched private businesses where there is potential for substantial growth in value, notably where there is the ability to work with management to implement strategic or operational improvements.

HGT offers a simple and liquid means by which shareholders can invest in unquoted growth companies, while benefiting from an investment company's governance model.

Business model

To achieve HGT's investment objective and within the limits set by the investment policy, HGT is an investor in unquoted businesses managed, and in most cases controlled, by the Manager. From time to time, HGT may hold listed securities in pursuit of its investment policy.

HGT is currently invested in 46 companies (as set out below or on page 44 of the full Interim Report and Accounts or below ), ranging in size, sector and geography, providing diversification.

The Board has delegated the management of HGT's investments to Hg Pooled Management Limited (the 'Manager' or 'Hg'). Further details of the terms of the management agreement are set out on page 74 of the full Interim Report and Accounts or below. The Manager invests predominantly in unquoted software and business service companies in expanding sectors and provides portfolio management support. Hg's review on pages 32-37 of the full Interim Report and Accounts or below outlines how HGT's investments are managed on behalf of HGT.

Most of HGT's investments are held through special-purpose partnerships, of which it is the sole limited partner.

Periodically, HGT enters into a formal commitment to invest in businesses identified by the Manager, alongside institutional investors which invest in an Hg Limited Partnership Fund. Such commitments are normally drawn down over three to four years. The institutional investors and HGT invest on similar terms.

HGT is usually the largest investor in each business. The Board has a further objective of keeping HGT as fully invested as is practicable, while ensuring that it will have the necessary cash available when a new investment arises.

The Board, on the advice of the Manager, makes assumptions about the rate of deployment of funds into new investments and the timing and value of realisations. However, to mitigate the risk of being unable to fund any draw-down under its commitments to invest, the Board has negotiated a right to opt out, without penalty, of its obligation to fund such draw-downs, should the need arise.

HGT may also take up a co-investment in some businesses (in addition to the investment which it has committed to make).

Typically, HGT has no liability to pay fees on such co-investment and no carried interest incentive is payable to the Manager on realisation (currently 6% of HGT's NAV is in co-investments). HGT may also offer to acquire a limited partnership interest in any of Hg's funds, in the event that an institutional investor wishes to realise its partnership interest.

The Board regularly monitors progress across all of the businesses in which it is invested as well as their valuation, the development of the Manager's investment strategy and the resources and sustainability of the business model.

Investment trust status

As HGT is constituted as an investment trust and its shares are listed on the London Stock Exchange, it can take advantage of tax benefits available to investment trusts. This allows HGT to realise investments from its portfolio without liability to corporation tax. The Board intends to retain this status provided that it is in shareholders' interest to do so. This will require the Board to declare dividends so that not more than 15% of taxable income is retained each year.

Performance targets

HGT's aim is to achieve returns in excess of the FTSE All-Share Index over the long term. In the year to 30 June 2022, HGT's NAV per share increased by 1.8% on a total return basis. The FTSE All-Share Index decreased by 4.6% on a total return basis over the period. The year to date total return of HGT's share price decreased by 20.5%. NAV per share has grown by 17.0% p.a. compound over the last 10 years and 15.9% p.a. compound over the last 20 years. The share price has seen broadly similar performance growing by 16.9% p.a. compound over the last 10 years and 15.7% p.a. compound over the last 20 years.

All of the above returns assume the reinvestment of all historical dividends. The Board and the Manager aim to continue to achieve consistent, long-term returns in this range.

HGT is not managed so as to achieve any short-term performance relative to any index. The Board also compares HGT's NAV and share price performance versus other comparable indices with similar characteristics.

Dividend

The Board reviews HGT's approach to dividends on a regular basis, taking into consideration feedback from shareholders and the evolving nature of HGT's income streams, which are driven by the investment structures Hg utilises in its various transactions. In the 2021 Annual Report, the Board stated that it regarded a 5.0 pence full year dividend as a sustainable level, absent some material shift in underlying deal structures. From time to time, the pattern of deployment and the income which arises may allow for a higher level of dividend to be supported, and 2021 was an example of this, with a full year dividend of 7.0 pence. The Board has declared an interim dividend in 2022 of 2.5 pence (2021: 2.0 pence).

It is important to note that HGT, in order to qualify for investment trust tax status, can retain no more than 15% of its gross income.

Going concern

HGT's business activities, together with those factors likely to affect its future development, performance and financial position are described in the Board's Strategic Report and Hg's Review. The financial position of HGT, its cash flows, liquidity and borrowing facilities are described in the Strategic Report. The Directors have considered the FRC Guidance on Risk Management, Internal Control and Related Financial and Business Reporting and believe that HGT is well placed to manage its business risks successfully. The Directors review cash flow projections regularly, including important assumptions about future realisations and the rate at which funds will be deployed into new investments. The Directors have a reasonable expectation that HGT will have adequate resources to continue in operational existence for at least the next 12‑month period from the date of approval of this Report and to be able to meet its outstanding commitments. Accordingly, they continue to adopt the going concern basis in preparing these results.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested.

Principal and emerging risks and uncertainties

During the period, the Board has continued to develop and refine a comprehensive Risk Management Framework to assess the principal and emerging risks facing HGT. Managing risk is fundamental to the sustainable long-term delivery of HGT's strategy and this framework provides the objective context for decisions taken by the Board, particularly as they relate to performance, liquidity, valuation and business model.

The Risk Management Framework is dynamic and used by the Audit, Valuations and Risk Committee ('AVRC') to assess the probability and likely impact of principal risks, to ensure that HGT operates within a defined risk appetite for each risk category, and that focus is maintained upon those risks which require attention, prioritising mitigating actions from both HGT and the Manager. This risk register is regularly stress-tested, providing assurance that the performance of HGT is insulated, as far as practical, from exogenous factors in the operating environment.

The Risk Management Framework provides the toolkit to measure and stress test HGT's business planning against a rapidly changing global backdrop. During 2021, the resilience of HGT's investment model was thoroughly tested by the conditions of the global pandemic, as was the performance of the portfolio companies. 

In the 2021 annual report, the potential effects of increasing interest rates, cost inflation and a tightening fiscal environment were discussed, and in H1 2022, the UK economy has experienced the compounding effects of accelerating inflation, interest rate rises and a tightening of the markets for new debt and equity issuance. Against this environment, the resilience of the portfolio investments and their valuations has continued to be demonstrated although the overall level of risk is now beyond the Board's stated risk appetite.

Looking forward, the Board and AVRC recognise that the more challenging environment is likely to cause the level of mitigated risk to remain elevated throughout 2022. Whilst the revenues and operations of Hg's portfolio companies are not significantly reliant upon the economies of Russia or Ukraine, the heightened geo-political uncertainty in Eastern Europe is a continuing risk that has been seen to lead to broader economic impacts, including material increases in energy costs and cyber-crime. The Board and AVRC, following careful consideration, have determined that it is appropriate to accept this elevated level of risk on a temporary basis and remain confident in the resilience of the business models of the underlying portfolio investments. Further mitigating actions will be taken should the overall level of risk continue to remain beyond the Board's stated risk appetite.

HGT considers the principal risks to be in four main categories:

Investment Risk: the risk to HGT that inappropriate investment or realisation decisions reduce the returns made.

Financial Risk: the risk that HGT's valuation, liquidity or resources are insufficient to allow HGT to invest.

Operational Risk: the risk of changing regulation: failure of Hg's processes and internal control systems and underlying portfolio performance.

External Risk: the risk of adverse macro-economic, regulatory or geo-political change.

Risk trend:  ↑improving   -stable  ↓ worsening

Appetite:  √ within  X outside

Potential risk	Potential impact	Mitigation  Trend/Appetite
Investment
Performance Risk that underlying portfolio companies underperform.	• Reduction in NAV • Reduction in share price • Reputational damage	• Deployment of capital is a rigorous process determined by the Hg Investment Committee, operated by experienced investment professionals. • Portfolio performance is reviewed regularly by Hg's Realisation Committee comprising experienced investment professionals and the HGT AVRC. • An operational performance group interacts across the portfolio to drive performance.   • Realisations continue to be made at or above valuation.	- √
Financial
Valuations Risk that inaccurate valuations would lead to a misleading NAV.	• False market in HGT shares • Reputational damage • Reduction in share price • Constrained access to capital	• Valuations are prepared in accordance with IPEV guidelines and tested against HGT's Valuation Policy. • The Manager's Valuation Committee, independently chaired, reviews and approves valuations quarterly. • The auditors of both Hg funds and HGT review the valuation and methodology as part of their audit procedures. • The AVRC reviews and cross-checks valuations against a broad range of objective valuation methodologies.	- √
Liquidity Risk that insufficient liquid resources are available to make investments.	• Reputational damage • Reduced NAV growth • Reduced shareholder return	• Borrowing structures and cash flow forecasts are considered at each HGT Board meeting. • An additional £250 million of liquidity is available through a bank facility, which was 54% drawn at 30 June 2022. • An opt-out facility is available across all investing funds.	- √
Commitment Risk that capacity is insufficient to underwrite future commitments to Hg funds.	• Reduced shareholder return • Reduction in share-price	• A bank facility is in place to facilitate orderly management of the balance sheet. • There is an opt-out facility across all investing funds. • A five year cash and commitment forecast is independently reviewed by the AVRC.	- √
Operational
Regulation Risk that regulation changes affect investment trust status.	• Increased corporation tax, leading to higher fees and potential impact on valuation • Reduction in share price	• The Manager monitors investment movements, forecast income and expenditure and retained income (if any) to ensure compliance with sections 1158 and 1159 of the CTA. • Continuing investment trust status is certified by the Manager at each meeting of the Board.	- √
Regulation Risk that other changes in legislation, regulation or government policy could influence the decisions of investors.	• Misunderstood or misreported regulation leading to reduced demand for shares • Lack of adherence to regulation leading to reputational risk	• Regular compliance and risk reviews are reported to the Board by the Manager's compliance team. • Strong shareholder engagement through: - dedicated investor relations team - corporate broker - company secretary	- √
Manager internal controls and processes Risk that control weaknesses of the Manager lead to poor performance or non-compliance with regulations.	• Reputational damage • Reduced shareholder returns	• The Manager is regulated and supervised by the FCA. • The Manager has controls in place, including those related to investment decisions; portfolio reviews; recruitment, training and promotions; financial performance and payments; protection of client assets; compliance; regulation. • The Board of HGT and its auditors regularly review these processes and controls.	- √
Cyber security Risk of cyber attack and data loss at Hg and portfolio companies.	• Loss of or lack of control over data due to cyber attacks • Reputational damage • Regulatory sanction	• Increased investment in the  portfolio cyber security team to monitor cyber security across Hg and the portfolio companies and mandate improvements. • The GDPR Committee has successfully implemented mandatory training for all staff.	- X
External
Political and macro-economic uncertainty Risk arising from geo-political instability and conflict.	• reduction in valuation of portfolio investments • disruption to capital markets	• Hg's portfolio is diversified with a high degree of recurring revenue. • The Manager remains focused on the various issues which may need to be addressed, including: - reduced availability of credit to fund future investments - regulation, marketing, trade and foreign exchange movements • These are regularly monitored by the Board of HGT, considering a range of downturn scenarios in our business planning.	- X
Foreign exchange Risk of foreign exchange movements affecting investments made in currencies other than Sterling.	• Reduction in shareholder returns	• The Board of HGT regularly monitors currency fluctuations. • The Hg treasury functions hedge currency exposure and actively mitigate currency risk where appropriate.	- √
Global pandemic Risk of performance and investment disruption from current and future pandemic events.	• Portfolio companies suffer revenue declines • Earnings multiples of listed companies applied to valuations might be adversely affected	• Portfolio resilience is stress-tested against pandemic impacts. • The majority of revenues are derived from subscription-based recurring revenues for non-discretionary technology-led services. • Operational performance, valuations and investment deal flow have shown resilience to pandemic disruptions. • All operating territories are now free from material restrictions.	↑ √

Interim management report and responsibility statement

Interim management report

The important events which have occurred during the period under review are described in the Chairman's Statement and in the Manager's Review - these also include the key factors influencing the financial statements.

Statement of Principal Risks and Uncertainties

The principal risks faced by HGT can be found under the heading 'Principal and Emerging Risks and Uncertainties' within the Rationale and business model section above or on pages 14-18 of the full Interim Report and Accounts. HGT's principal risks and uncertainties have not changed materially since the last annual report and are not expected to change materially for the second half of HGT's financial year. The Directors have ensured that all principal risks will be kept under review throughout the year.

Related party transactions

There have been no material changes in the related party transactions described in the last annual report.

Going concern

As stated in note 2 to the condensed financial statements, the Directors are satisfied that HGT has sufficient resources to continue in operation for the foreseeable future, a period of not less than 12 months from the date of this report. Accordingly, they continue to adopt the going concern basis in preparing the condensed financial statements.

Responsibility statement

The Directors confirm that, to the best of their knowledge,:

• the condensed set of Financial Statements has been prepared in accordance with FRS 104 'Interim Financial Reporting' and gives a true and fair view of the assets, liabilities, financial position and return of HGT.

• the interim management report (incorporating the Chairman's Statement and the Manager's review) includes a fair review of the information required by:

(a)   DTR 4.2.7R of the Disclosure Guidance and Transparency Rules, being an indication of important events which have occurred during the first six months of the financial year and their impact on the condensed set of financial statements - and a description of the principal risks and uncertainties for the remaining six months of the year; and

(b)   DTR 4.2.8R of the Disclosure Guidance and Transparency Rules, being related-party transactions which have taken place in the first six months of the current financial year and which have materially affected the financial position or performance of HGT during that period - and any changes in the related-party transactions described in the 2021 annual report which could have a material effect on the financial position or performance of HGT in the first six months of the current financial year.

We consider the interim report and accounts, taken as a whole, to be fair, balanced and understandable and to provide the information necessary for shareholders to assess HGT's position and performance, business model and strategy.

This interim financial report was approved by the Board of Directors on 9 September 2022.

Jim Strang

Chairman

9 September 2022

Hg's review

Building businesses which change how we all do business

Hg is a specialist private equity investor focused on software and business service companies.

Our business model combines deep sector specialisation with dedicated operational support.
Hg invests in growth companies in expanding sectors, primarily via leveraged buyouts in businesses with operations in or across Europe.

Hg's vision is to be the most sought-after private equity investor within our sector focus,
being a partner of choice for management teams, to provide consistent, superior returns for HGT and our other clients, while providing a rewarding environment for Hg colleagues.

References in this interim report and accounts to the 'portfolio', 'investments', 'companies' or 'businesses' refer
to a number of investments, held as:

• indirect investments by HGT through its direct investments in fund-limited partnerships (HGT LP, HGT 6 LP ('G6'),
HGT 7 LP ('G7'), HGT 8 LP ('G8'), HGT Genesis 9 LP ('G9'), HgCapital Mercury D LP ('M1'), HGT Mercury 2 LP ('M2'), HGT Mercury 3 LP ('M3'), HGT Saturn LP ('S1'), HGT Saturn 2 LP ('S2') and HGT Saturn 3 LP ('S3').

• direct investments in renewable energy fund limited partnerships, Asper Renewable Power Partners LP
('Asper RPP I LP'), of which HGT is a limited partner.

Hg Pooled Management Limited was authorised as an alternative investment fund manager with effect from
22 July 2014. For further details, refer to pages 132-134 of the 2021 Annual report  https://www.hgcapitaltrust.com/sites/hgcapital-trust/files/all-pdf/full-year-results-2021/hgt-annual-report-and-accounts-2021.pdf.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested.

About Hg

Europe's largest software and services investor with a transatlantic network

> 25

years of investment

> 300

employees across London, Munich, New York, San Francisco and Paris

> 200

highly regarded institutional investors

>$ 55 bn

funds under management

Overview

Hg is, itself, an entrepreneurially led, fast-growing business, 100% owned and managed by its partners.

Hg began life as Mercury Private Equity, the private equity arm of Mercury Asset Management plc. Mercury Asset Management was acquired by Merrill Lynch in 1997. In December 2000, the executives of Mercury Private Equity negotiated independence from Merrill Lynch, and Hg was established as a fully independent partnership.

Since then, Hg has worked hard to develop a unique culture and approach - setting us apart from other investors. We are committed to building businesses which change the way we all do business, through deep sector specialisation and dedicated, strategic and operational support.

Today, Hg has more than 300 employees, representing the largest technology investment team in Europe.

We have five investment offices, which are in London, Munich, New York, San Francisco and Paris, with funds under management of more than $55 billion (£45 billion) and serving more than 200 highly regarded institutional investors, including private and public pension funds, insurance companies, endowments and foundations.

HGT is the largest client of Hg, which has been contracted to manage HGT's assets since 1994 and offers investors a liquid investment vehicle, through which they can obtain exposure to Hg's diversified network of unquoted investments with minimal administrative burdens, no long-term lock up or minimum size of investment - and with the benefit of a Board of independent Directors and corporate governance. HGT's strategy is to invest in parallel with all of Hg's current funds.

Investment strategy

Hg's investments are focused primarily on defensive growth buyouts in software and business service companies operating in specific end-market 'clusters' with enterprise values ('EVs') of £100 million to over £10 billion, growing faster than the broader economy. We predominantly seek controlling equity buyout investments in businesses headquartered in Europe and North America, though such companies will often have a global footprint and customer base.

Hg's objective is to pursue investment theses supporting long-term growth, leveraging its expertise working in these sectors to implement initiatives designed to maximise organic expansion, as well as through rolling up fragmented sectors, over typical hold periods of approximately five years.

Hg has led over 175 investments in the software and service sector during the last 25 years. This focus means that we have developed an institutional expertise and a deep understanding of the markets and businesses in which we invest.

Hg applies a rigorous approach when evaluating all investment opportunities. Our objective is to invest in the most attractive businesses, rather than be constrained by a top-down asset allocation.

This flexible approach to investment means that, at any given time, the Hg portfolio is likely to comprise over 40 software and tech-enabled business service companies with similar characteristics, but of different sizes, end-market focus and maturity profiles.

Hg's offices in New York and San Francisco enhance the ability to crystallise and develop transatlantic investment opportunities, manage existing investments and make bolt-on acquisitions, as well as continue to engage with - and ultimately sell - portfolio companies to North American trade buyers. As the US has the largest technology sector, this also helps to consolidate Hg's position as Europe's leading software investor.

Note: All figures as at 30 June 2022.

Hg Mercury

Lower mid-market

EVs: £100m-£450m

Hg Genesis

Mid-market

EVs: £450m-£1.3bn

Hg Saturn

Upper mid-market

EVs: >£1.3bn

One strategy over three funds across the size range in software and service businesses

HGT has made commitments to invest on the same financial terms as all institutional investors in Hg funds, with investments made into businesses with enterprise values ranging from £100 million to over £10 billion.

The power of the portfolio

Hg has a unique approach and strategy, with a focus on achieving scale in tightly defined clusters of expertise.

As a result, we have assembled a portfolio of 46 companies, sharing similar characteristics, yet differing in size and maturity. This creates a natural environment for knowledge-sharing, creating a network effect to drive best practices and value-creation initiatives. This is why we believe in collaboration and the 'power of the portfolio'.

This scale and focus enable our businesses to benefit from being part of one larger organisation, while retaining their own identity with each management team, incentivised by their own success.

The Hg portfolio, if taken as one company, would be one of the largest and fastest-growing software companies in Europe.

The 'Hg sweet-spot' business model

Hg has a clear and robust business model, focused on long-term, consistent and defensive growth, predominantly through investment in buyouts located throughout Europe and North America. We seek companies which share similar characteristics, often providing a platform for merger and acquisition ('M&A') opportunities.

We believe that such companies have the potential for significant performance improvement.

We invest primarily in two main market sectors:

Software

Software is our largest sector of investment. We focus on businesses providing B2B vertical market application software and data, regulatory software and fintech and internet infrastructure.

We have invested in high-quality industry champions which have strong sector reputations and diverse customer bases and which feature subscription-based business models generating predictable revenues and cash flows. With more than 40 software investments in our portfolio, we bring a unique set of networks and insights to help to support value creation in our businesses.

Tech-enabled services

Our business services investments focus on companies with high levels of intellectual property, large fragmented customer bases and long-term and stable customer relationships - and businesses which provide business-critical services, preferably on a repeat or recurrent basis.

We target businesses with strong reputations within a niche and aim to grow and scale these businesses, either organically within existing markets or through acquisitions.

Deep knowledge and networks within our end-market clusters

Hg has a unique approach and strategy, with a focus on achieving scale in tightly defined clusters of expertise. This specialisation helps us to build deep know-how.

Tax & Accounting
18+ years
TeamSystem • Visma • Iris • Sovos • Azets • Silverfin • Prophix • CaseWare • Bright • insightsoftware • Serrala • LucaNet

ERP & Payroll
18+ years
TeamSystem • Visma • Iris • Access • Transporeon • P&I • Benevity • Revalize • Bright • IFS/Workwave

Legal & Regulatory Compliance
15+ years
The Citation Group • Litera • Septeo • ProcessMap •waystone

Automation and Engineering
14+ years
MeinAuto • Trackunit • AUVESY-MDT • Geomatikk • revalize

SME Technology Services
12+ years
Commify  • team.blue • F24 • The Citation Group

Capital Markets & Wealth Management IT
9+ years
FE Fundinfo • Argus • SmartTrade • Gen II • Riskalyze • Pirum •waystone

Insurance
8+ years
GGW Holding • Howden Group • Fonds Finanz

Healthcare IT
7+ years

Lyniate • Medifox •Intelerad • HHAeXchange • norstella

Note: Number of years refers to the number of years for which Hg has invested in each cluster. As at 30 June 2022.

Working together

"With our focused yet scaled portfolio, we have a unique opportunity to provide deep, systematic support to management across all the key value creation levers our types of businesses offer."

Christopher Kindt, Head of Value Creation, Hg

Sharing Hg know-how and experience

By virtue of the fact that Hg invests repeatedly in specific business models, our dedicated Portfolio Team has been able to develop an approach to drive value creation during our ownership. Following each investment, our portfolio team works with the management of our investee companies to focus on a set of operational levers which is key to performance in an 'Hg sweet‑spot' business model: growth, technology & product, business systems and processes, cyber security, data and AI, ESG, talent, planning and finance. For each of these levers, the portfolio team has the experience and deep knowledge of best practices to help drive value creation.

Every company can access the team and their IP, yet the nature of support can take a variety of forms. Often, our Portfolio Team members provide direct support, co-owning and driving specific initiatives to help the business create value more quickly. Another option is for our experienced industry experts to mentor senior executives, helping them to build more scalable functions. In other instances, the support comes through introducing management teams to their counterparts in other companies in which Hg is invested, specifically those who have faced comparable challenges.

66

C-suite and board placements led by in-house talent team over last 3 years

>$ 30 m

of software cost savings for our portfolio from Hg's collective deals

>$ 40 m

ARR delivered through the data monetisation driven by Hg Data Scientists

Value creation

• We have over 50 senior operational specialists who work with our portfolio management teams to drive impact through specific value creation projects. Each specialist maintains a network of trusted third party associates and partners to further drive execution.

• The Portfolio Team continually invests in codifying operational best practices, developing IP that represents decades of accumulated expertise. This yields templates and blueprints that enable best practices to be implemented swiftly. Increasingly, these are embedded in proprietary Hg software tools and services to deliver value even more rapidly.

• We seek to use our collective scale to access better commercial terms with key partners and vendors. For example, Hg collective deals are saving more than $30 million p.a. of cost on back-office system license costs alone across our portfolio.

• We conduct value creation diagnostics upfront, benchmarking a company's operational maturity against our database of KPIs and best practices, to identify the highest potential projects to pursue.

• We then support the company in building a value creation plan to help achieve those enhancements. As part of this planning we identify where our IP and experts can help the company sharpen and accelerate their improvements.

Portfolio Team days worked on the portfolio, April to June 2022, annualised

Data  1,355

Tech  926

BST¹  839

Talent  818

Growth  685

VCP²  648

¹ Business Systems & Transformation  ² Value Creation Planning

"We joined the Hg Portfolio family at the end of 2021, and we are definitely proud to be a part of it now. Our experience with the entire team has been beyond cooperative. The network and expertise the Hg Portfolio Team offers is exceptional and will certainly help us to improve in some aspects of our business."

Markus Kiener & Norbert Porazik, CEOs, Fonds Finanz

Portfolio events

The Portfolio Engagement team runs an extensive calendar of virtual and in-person events for executives from across the portfolio. By bringing together the management teams of portfolio companies with similar business models, the Hg portfolio events provide attendees with invaluable opportunities to build connections, problem-solve, and share experiences. In 2021, the Portfolio Team held 88 events overall reaching close to 6,000 people and driving engagement across the entire portfolio. 

Our focus areas

From sharing best practice and resources, through to tailored teams of technical experts, we work closely with the companies in which we invest to ensure that they gain the tools and guidance required for business success.

Growth
Sales
Marketing
Pricing
Customer Success & Operations

Tech, Product, Cyber

R&D and tech platform
Right-shoring
Product management
Cyber security

Data
BI, warehousing, snowballs
Data cleansing & enrichment
ML driven optimisations
Data monetisation

Projects Support
First 100-days, onboarding
Value Creation Planning
PMO and governance
DSP Accelerator Program

Talent and Org
Exec search
Management assessments
Org design and structure
CHRO topics: hiring, L&D, etc

Finance and FP&A
Reporting and analysis
CFO & Finance team set-up
Special projects (e.g. exit prep)
ERP implementation

ESG and Legal
Assessments & reporting
Legal support, strategic projects
Professionalising GC office
Carbon reduction, ESG support

Business Systems
Enterprise Systems Architecture
Systems selection, vendor deals
Implementation support
Process design & transformation

Geographic Coverage
UK, Europe, US
In-person when needed
Multi-lingual 2022 YTD:

35

Portfolio team-led online and in-person events

>1,000

total people in attendance

The Hg Portfolio community

We view all our business management teams as a part of the Hg portfolio community and that means promoting a culture of working together to problem solve and innovate more rapidly. One of the most powerful ways in which we motivate change is through peer‑to‑peer collaboration, allowing management teams the opportunity to exchange ideas and insights, and learn from others across the Hg portfolio and our network of experts. In the last year, we've offered portfolio companies a full end‑to‑end digital engagement experience, by hosting virtual events and facilitating an increase in activity on the Hg online collaboration platform, Hive.

Hive

Hg's online community for everyday collaboration

Hive, Hg's online portfolio engagement platform, enables collaboration at scale across the entire Hg family and plays a central role in Hg's value-add proposition to portfolio companies. By facilitating engagement opportunities across the thousands of people who are a part of the portfolio of Hg-invested businesses, Hive provides members with a space to network with peers, and share specialist knowledge, experience and expertise.

Spotlight on our CEO community

Our CEO community has gone from strength to strength over the last few years. We held our first in-person CEO event in France earlier this year and in October will launch our inaugural Hg North America CEO & Chair Forum in the US. The CEO hangouts have proven an invaluable touchpoint for the community and continue on a monthly basis. These virtual meetings provide an opportunity for our CEOs to share live experiences, problem-solve and seek advice from one another, with many CEOs now referring to the virtual gatherings as a chance to connect with a 'group of friends'.

2022 YTD:

3,000

active members and growing

21

Live communities

For further information, please visit hive.hgcapital.com

For further information, please visit hgcapital.com/working-together

"Over the last few years we have continued to invest in our people and our expertise, especially given our focus on working with the very best management teams in our target clusters and to actively help them to build great businesses."

Steven Batchelor, Chief Operating Officer, Hg

>300

members of the team

5

investment offices in London, Munich, New York, San Francisco and Paris

>170

investment and portfolio management executives

8

clusters of expertise

Our team

Hg succeeds through the analysis and understanding of new and emerging dynamics in the clusters in which it invests. This requires profound knowledge of technology, markets and business practices. To this end, we employ diverse and exceptionally talented teams to identify and execute investment opportunities and accelerate value creation during our ownership. This specialisation - in both investment selection and portfolio management - requires significant resources, and we have built a business employing more than 300 people, including more than 170 investment, portfolio management executives and other professionals. Our investment and portfolio management executives come from a range of backgrounds and experience, including private equity, consulting, investment banking, accounting and industry specialists. Our portfolio team comprises a mix of senior operators and functional specialists, typically with substantial experience in their respective specialist operational and strategic roles. Investing primarily in European businesses, many of which have a global footprint, requires time and a deep understanding of local cultures. Accordingly, our people come from around the globe, and have representation of 42 different nationalities. On average, our partners have 15 years' experience in the management of private businesses.

In September 2022 we opened two new investment offices in San Francisco and Paris increasing our global reach.

Talent attraction and talent development

To position ourselves as a best-in-class recruiter, Hg's recruitment and selection processes are rigorous and agile. These, along with our strong brand, leadership, sector focus, fund performance, vibrant culture and only working with recruitment partners who ensure that their search methodology is inclusive, providing diverse talent, allow us to attract and hire the best talent in our industry.

We have enhanced our talent processes so that we can identify and accelerate the development of our top performers and high‑potential talent within the business. We believe this to be the basis of effective career and succession‑planning which is led by our Head of Talent, who joined in January this year to focus on and to continue to build and enhance our practices.

Employee engagement

Our people are highly motivated by, and committed to, delivering outstanding value to HGT, our other institutional clients and our portfolio company leadership teams. They participate through their work, our values and the opportunity to grow to their full potential within Hg. Our values have evolved over many years and are embodied in our working culture; these are aligned with our performance and reward structures. Hg works hard to ensure that our employees are fully involved. We use independent external benchmarks to gauge levels of engagement and take appropriate actions to ensure the highest possible levels of commitment here. We have a strong focus on career and personal development, providing a range of development opportunities to enable our talent to reach their full potential and perform at their best.

Developing future leaders

We are explicit about those behaviours which we wish to encourage at Hg and have aligned recruitment, learning and development, coaching, performance and rewards to our values for everybody across the organisation, including our leadership. We know that longevity of success means doing it the right way, thinking long term and always being willing to listen and learn. These values can be seen and felt everywhere you look, around our offices and in everyday interactions - it's really what makes us Hg.

For a description of Hg's key staff please visit: hgcapital.com/our-people

"With diversity, you source and analyse deals, ask and answer questions and manage teams differently. It adds up to better investment and business decisions. The more complex the challenge at hand, the greater the returns."

Nic Humphries, Senior Partner, Hg

Diversity and inclusion

Hg has introduced several new policies and built on its existing ones, as part of a wider initiative around diversity and inclusion. We have an established D&I steering group, comprising a range of individuals from across the firm. Its aim is to promote a culture of inclusion which clearly values diversity in all of its forms. We have several global initiatives - with four networks covering gender, ethnicity, socio-economic and LGBTQ+, flexible working, mentoring programmes, education and awareness events - to drive internal change. We also look to support events such as Black History month, International Women's day and Mental Health Awareness week. This is also echoed and supported through our HR learning and development initiatives, including structured mentoring programmes, recruitment processes and training, embedding awareness of unconscious bias and inclusion.

Hg will maintain its commitment to industry-wide initiatives such as Level 20, a not‑for‑profit organisation aligned around a common vision to inspire more women to join the industry.
Hg senior partner Nic Humphries continues his role on Level 20's advisory council.

Hg is an active participant in the Institutional Limited Partners Association's 'diversity in action' initiative, acknowledging our ongoing commitment to take concrete steps to advance diversity, equity and inclusion across our organisation and the industry more broadly.

In addition, in our second year working with #10000 Black Interns we welcomed several interns through the programme, helping black students gain experience and kick‑start their career in investment management. This year we have increased the number of interns we have recruited and expanded the number of areas of the business that they will gain experience in.

We are also excited to partner with Sponsors for Educational Opportunity (SEO) in London and New York as they help prepare talented students from ethnic minority or low socio-economic backgrounds for career success.

"At Hg, our ambition is to be the employer of choice in private equity and we have a robust strategy enabling us to attract, develop and retain world class diverse talent. Everybody at Hg is accountable for contributing to our inclusive culture, and ensuring people can be their whole self at work."

Kerry Heaton, Head of Talent, Hg

Hg is now a member of the LGBT Great network and as part of this partnership has contributed to two of their research projects: LGBT+ investing lens, research exploring the practice of investing for financial return while also considering the benefits to those who identify as LGBT+, such as improving economic opportunities or social inclusion for the LGBT+ community.

Responsible investment

"In the past six months, Hg has focused on a number of initiatives to advance our ESG performance. We made some big commitments in 2021, including setting targets approved by the Science Based Target initiative. We are now focused on delivering against these commitments. I am delighted to have had the opportunity to grow our ESG team from two to four members, which means more time can be spent delivering additional impact across the Hg portfolio and providing further transparency to our investors. For example, we now collect scope 1, 2 and 3 emissions data for our portfolio companies and are supporting them with benchmarking and identifying reduction opportunities."

Caroline Löfgren, Chief Sustainability Officer, Hg

Why responsible investment is important to us

Hg engages in Responsible Investment because it sits right at the core of its Purpose: 

Hg is trusted to improve the future of millions of investors by building sustainable businesses for tomorrow. These are carefully chosen words - trust, future, sustainable, tomorrow. Choosing how we do business.

What this means in practice is that Hg looks to grow sustainable businesses which are great employers and good corporate citizens, whilst also generating strong returns for the millions of pensioners and savers who are invested in the Hg funds. Everyone at Hg is ultimately pulling together towards this goal. 

This commitment supports the backbone of Hg's investment philosophy and has helped the firm to determine a very focused approach, which has evolved over the last 20 years. Hg's focus is to invest exclusively in growing software and services businesses. They look to ensure that both time and capital support the sustainable growth of these knowledge businesses. These businesses then contribute to society by changing and modernising how their customers work, whilst providing quality employment opportunities for thousands of people worldwide, across innovative and growing sectors. 

Stable growth is crucial to Hg. It provides stability to those beneficiaries that Hg serves including teachers, public servants, first-responders and charities - there are pension savers all around them who are benefitting from this stability for their future.

As with other operations and functions, Hg takes an active interest in how its portfolio companies manage Environment, Society and Governance ('ESG') risks and opportunities. Hg's portfolio team consist of over 50 experts, four of whom are specialists in ESG and provide support to portfolio companies to help them advance their ESG agenda. Hg's sector focus and expertise mean that they have a good understanding of which ESG metrics are most material to service and software companies. The team focuses on these metrics to help build best-in-class ESG practices across the Hg portfolio. 

Finally, Hg actively champions this topic and talks about its approach openly both internally and externally. They want all their employees to be proud of what they do, because they should be, and they want their investors to be confident in Hg's intentions when they commit capital to them for ten years or more.

Matthew Brockman, Managing Partner, Hg

For more information and t o watch our Responsible Investing video, please go to hgcapital.com/responsibility

Climate Change

Hg recognises that climate change is one of the most pressing topics today. It is at the top of the agenda for society, regulators, Hg and its investors. Acting on climate change is important and working collaboratively is critical to driving material change. Hg is a founding member of the UK network of the Initiative Climat International ('iCI') which is a network of Private Equity firms working collaboratively to tackle climate change in its industry endorsed by the UNPRI. Hg is a member of the UK Operating Committee of iCI and the NetZero and Carbon Footprint working groups. In 2021, Hg worked with its peers in the iCI to fund and develop guidance on how PE firms can set science-based targets and Hg became one of the first PE firms globally to get approved Science Based Targets in line with this standard [add hyperlink: hgcapital.com/hg-joins-group-of-six-pioneering-firms-representing-e133bn-aum-to-combat-climate-change-by-setting-ambitious-science-based-targets-for-the-industry/]. As a member of the NZAMi [add hyperlink hgcapital.com/hg-joins-leading-private-equity-investors-commit-to-net-zero], Hg recognises the importance of setting short-term targets to limit warming to 1.5 degrees Celsius and the firm is targeting net zero across all portfolio companies within the next 30 years. 

For more information about Hg's commitment to climate change, please see Hg's TCFD report and annual carbon footprint report here: [https://hgcapital.com/responsibility/] 

As for HgCapital Trust, it has no carbon footprint to report as the Trust has no employees, fleet, premises or other emission sources. 

Diversity, Equity and Inclusion ('DEI')

Hg believes that having a diverse workforce deepens its talent pool and brings a wider range of perspectives. It manifests in how they navigate the business world, including investment decisions. Not only is it fundamentally the right thing to do, but Hg has also seen first-hand how diversity and inclusion ('D&I') create a virtuous cycle: the more diverse and inclusive a company is, the more each individual can add value. That translates to a greater impact for all stakeholders - investors, portfolio companies, employees and the communities in which we work and live. Hg is proud to have 48% female employees across the firm and 35% female executives. 

To encourage diversity and inclusion across Hg's portfolio, Hg's Portfolio DEI Council, a group of 10 portfolio companies representing different regions and sizes, co-developed a DEI toolkit which was launched in May 2022. The toolkit is a 100-page long guide, covering all aspects of diversity, equity and inclusion, which is split into four sections - DEI strategy, People, Culture and Communication. It has been shared across the Hg portfolio for all companies to leverage.

In 2020, Hg broadened its DEI focus externally by launching the Hg Foundation. Through the Hg Foundation, Hg takes action to remove barriers to education and skills in technology, encouraging a greater diversity of entrants into tech careers.

For more information and our latest DEI report please see hgcapital.com/diversity-and-inclusion/

ESG in the deal process

ESG is embedded into the entire deal process, from screening to exit. Hg is very clear, as outlined in their exclusion list, on the types of businesses in which they do not invest. During due diligence, Hg assesses companies for compliance with relevant laws about ESG, H&S, bribery and corruption. 

Once invested, all Hg's businesses are assessed against their Sustainable Business Framework as part of onboarding and annually thereafter. Hg's assessment is very comprehensive; covering over 170 metrics across key areas that are most relevant to tech businesses. It takes external frameworks, such as SASB, ILPA's diversity in action initiative and the ESG Data Convergence initiative into account.

However, Hg's ESG onboarding is not limited to the Sustainable Business Framework. In addition, they conduct separate assessments on cyber security, data privacy, carbon footprints and climate change risks. 

Each year Hg reviews and updates its ESG assessment to account for new topics, trends and regulations. In 2021, they included 20 additional questions to cover further aspects of data privacy, anti-competitive behaviour, diversity and inclusion and climate change. All portfolio companies are assigned a score from 0-10 and receive an action list to support improvement. Hg's ESG team provide support to help advance the business's ESG performance and each business is then reassessed on an annual basis.

Hg's Sustainable Business Framework

Hg's Sustainable Business Framework outlines key ESG focus areas for Software and Services companies. Please see https://hgcapital.com/responsibility/ for further details about the framework.

A signatory to the UNPRI since 2012.

A+A+ 2022 PRI assessment score:

'A+' for strategy and governance and

'A+' for private equity ownership

Hg is a founding member of the UK network of the Initiative Climate International (iCI)

Hg is one of the first PE firms globally to have committed to and had targets approved in line with the SBTi.

Hg is committed to report our ESG progress in line with several recognised external standards.

Winner of The Private Equity Award's Diversity and Inclusion Leader of the Year in 2021 and 2022

For more information and to watch our Responsible Investing video, please go to hgcapital.com/responsibility

The Hg Foundation

Removing barriers to education & skills in technology

The Hg Foundation has committed to nine partnerships since its launch in 2020, all with the aim of supporting the development of skills required for employment within the technology industry, focusing on individuals who may otherwise experience barriers to access.

The most recent partnership in July 2022 was a commitment of over $4 million to Cornerstone VC, a new seed-stage UK Technology VC firm, born out of black led angel group Cornerstone Partners.

At Hg we have learned that, time and time again, diversity leads to better investment and business decisions. This is why diversity in our own firm, across our portfolio and in the technology sector more generally continues to be one of the highest strategic priorities for Hg and is at the heart of The Hg Foundation's goals.

The Hg Foundation is funded by Hg through a proportion of carried interest from current and future Hg funds, a proportion of Hg's annual profits and also through charitable activities carried out across the firm. The Foundation acts independently of Hg and grant decisions are made by the Board of Trustees.

$ 12.5 m

committed to date

9

partnerships

> 8,000

students directly supported

For more information, please visit the Hg Foundation's website: www.thehgfoundation.com

Net asset value (NAV)

During the period, the NAV of HGT increased by £25 million, from £2.01 billion at 31 December 2021 to £2.03 billion at 30 June 2022.

Attribution analysis of movements in NAV

	Revenue £000	Capital £000	Total £000
Opening NAV as at 1 January 2022	35,114	1,970,610	2,005,724
Realised capital and income proceeds from investment portfolio in excess of 31 December 2021 book value	(32)	1,849	1,817
Net unrealised capital and income appreciation of investment portfolio	27,817	84,070	111,887
Net realised and unrealised gains from liquid resources	794	(22,964)	(22,170)
Share issue	-	12,324	12,324
Dividend paid	(22,764)	-	(22,764)
Expenditure	(4,306)	(746)	(5,052)
Taxation	-	-	-
Investment management costs:
Priority profit share - current year paid	(10,382)	-	(10,382)
Priority profit share - reallocation between capital and income	4,320	(4,320)	-
Carried interest - current year paid	-	-	-
Carried interest - current year provision	-	(40,942)	(40,942)
Closing NAV as at 30 June 2022	30,561	1,999,881	2,030,442

Analysis of NAV movements

Several underlying factors contributed to the increase in NAV. Positive impacts were the £111.9 million revaluation of the unquoted portfolio and uplifts of £1.8 million on the realisation of investments, compared with their carrying value at the start of the period. Shares issued during the period contributed a further £12.3 million.

Reductions in NAV included: the payment of £22.8 million of dividends to shareholders and a £40.9 million increase in the provision for future carried interest.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested.

Attribution analysis of movements in the value of investments

During the year, the value of the unrealised investments increased by £111.9 million, before the provision for carried interest. The majority of the increase, £280.5 million, relates to increases from profit growth in the underlying investments. A decrease in valuation multiples reduced the value of investments by £160.7 million.

Acquisitions net of realisations at carrying value of £43.5 million increased the value further and positive currency movements of £71.9 million increased the value of the unrealised portfolio. An increase in net debt of £83.0 million contributed negatively to the unrealised portfolio.

Top 20 portfolio trading performance as at 30 June 2022

With highly predictable and stable cash flows, the top 20 businesses (representing 79% by value of HGT's investments) have delivered strong sales growth of 31% (June 2021: 20%) and EBITDA growth of 26% (June 2021:27%) over the last 12 months ('LTM'), reflecting the defensive and resilient nature of the businesses in which HGT is invested. This represents reported aggregate sales of £7.7 billion and EBITDA of £2.4 billion over the last 12 months, equating to an EBITDA margin of 31%.

This is consistent with the high double-digit trading performance that the HGT portfolio has demonstrated over many years. Over the last five years, the EBITDA growth of the top 20 companies has been at an average of 25% LTM.

The business model characteristics of the companies in which we are invested give us confidence that this sustainable growth can be achieved consistently, going forward.

More than 95% by value of the top 20 businesses within the portfolio achieved double-digit revenue growth, and more than 75% have delivered double-digit EBITDA growth over the last 12 months.

We have seen very robust and consistent trading performance from the majority of the portfolio, with particularly strong growth from Intelerad, Litera, The Access Group, Howden, Septeo, Sovos and FE fundinfo.

Where a company does not perform as well, it is reflected in its valuation.

For further information on how individual companies have performed over 2022, please refer to the realised and unrealised valuations table on page 33 of the full Interim Report and Accounts .

Valuation and net debt analysis as at 30 June 2022

Our valuation policy is applied consistently, in accordance with the IPEV Valuation Guidelines. Each company has been valued based on the trading multiples of comparable businesses and recent M&A activity; the average EBITDA multiple for the top 20 investments is 27.1x (27.4x at 31 December 2021).

The basis of this approach is to apply a relevant multiple to a suitable earnings-based performance metric. We take a considered approach in determining the level of maintainable earnings in each valuation: an earnings-based valuation being most appropriate. Where a company has negative or significantly depressed earnings, a revenue-based valuation can be used. Most holdings have been valued using LTM earnings, or available information at the reporting date. The earnings figure used may be adjusted on a pro-forma basis reflecting acquisitions, disposals or other adjustments to the extent a buyer would make these.

The multiple is derived by reference to market-based multiples. This will be a weighted combination of a quoted and M&A comparable basket and the multiple at which the company transacted. These weightings can be adjusted as necessary to address risk and broader economic challenges. When constructing the basket, we look to identify companies that are similar, in terms of risk and growth attributes, to the company being valued. This is more likely to be the case where the companies are similar in terms of business activities, market and geography.

We then cross-check the existing valuation against a range of other valuation techniques, and also use back testing to understand substantive differences that may legitimately occur between an exit price and the previous fair value assessment, to inform our valuation policy.

Our companies make appropriate use of gearing, with a weighted average net debt to EBITDA ratio for the top 20 of 7.5x LTM (7.1x at 31 December 2021). Many of our businesses have highly predictable revenues, strong earnings growth and are very cash generative, enabling us to use debt to reduce their cost of capital and improve returns.

Outstanding commitments of HGT

At 30 June 2022, HGT held liquid resources of £435 million and had outstanding commitments of £1,550 million, as listed below. We anticipate the majority of these outstanding commitments will be drawn down over the next three to four years (2022-26) and are likely to be partly financed by cash flows from future realisations. Additionally, to mitigate the risk of being unable to fund any draw-down under its commitments to invest alongside Hg's funds, the Board has negotiated a right to opt out, without penalty, of HGT's obligation to fund such commitments, where it does not have the funds to do so or certain other conditions exist. HGT also has access to a £250 million bank facility which was 54% drawn as at 30 June 2022.

Fund	Fund vintage	Original commitment £million	1	Outstanding commitments as at 30 June 2022		Outstanding commitments as at 31 December 2021
				£million	% of NAV	£million	% of NAV
S3	2022	885.1	2	883.4	43.5	627.5	31.3
G10	2022	344.3	3	344.3	17.0	-	-
HGT	Various	102.9	4	102.9	5.1	92.3	4.6
S2	2020	329.4	5	63.6	3.1	67.8	3.4
G9	2020	309.9	6	50.6	2.5	66.2	3.3
G8	2018	350.0		48.9	2.4	51.5	2.6
M3	2020	99.0	7	35.3	1.7	64.0	3.2
S1	2018	150.0		15.1	0.7	15.9	0.8
M1	2011	60.0		3.3	0.2	3.3	0.2
M2	2017	80.0		1.6	0.1	1.8	0.1
G7	2013	200.0		0.8	-	1.0	-
Asper RPP I	2006	18.6	8	0.6	-	0.6	-
Total				1,550.4	76.3	991.9	49.5
Liquid resources				435.4	21.4	371.5	18.5
Net outstanding commitments unfunded by liquid resources				1,115.0	54.9	620.4	31.0

¹ Excluding any co-investment participations made through HGT LP.

² Sterling equivalent of $1.1 billion.

³ Sterling equivalent of €400 million.

⁴ Sterling equivalent of $125 million of junior debt.

⁵ Sterling equivalent of $400 million.

⁶ Sterling equivalent of €360 million.

⁷ Sterling equivalent of €115 million.

⁸ Sterling equivalent of €21.6 million.

Investment portfolio of HGT

Fund limited partnerships	Residual  cost £000	Total valuation1 £000	Portfolio value %
Primary buyout funds:
HGT 8 LP	252,956	871,182	42.4
HGT 8 LP - Provision for carried interest	-	(125,342)	(6.1)
HGT Saturn 2 LP	223,889	333,373	16.3
HGT Saturn 2 LP - Provision for carried interest	-	(18,752)	(0.9)
HGT Genesis 9 LP	250,726	290,640	14.2
HGT Genesis 9 LP - Provision for carried interest	-	(5,760)	(0.3)
HGT Saturn LP	136,361	260,053	12.7
HGT Saturn LP - Provision for carried interest	-	(18,088)	(0.9)
HGT LP	142,324	189,469	9.2
HGT Mercury 2 LP	57,688	159,579	7.8
HGT Mercury 2 LP - Provision for carried interest	-	(25,776)	(1.3)
HGT 7 LP	24,226	83,752	4.1
HGT 7 LP - Provision for carried interest	-	(16,754)	(0.8)
HGT Mercury 3 LP	58,576	65,415	3.2
HgCapital Mercury D LP	2,316	10,153	0.5
HgCapital Mercury D LP - Provision for carried interest	-	(2,049)	(0.1)
Total buyout funds	1,149,062	2,051,095	100.0
Renewable energy funds:
Asper RPP I	5,039	367	-
Total investments net of carried interest provision	1,154,101	2,051,462	100.0

¹ Includes accrued income of £128,585,000 and the carried interest provision as referenced but before the deduction of the fund level facility of £325,311,000.

Hg cluster by value

29%  ERP & Payroll

28%  Tax & Accounting

10%  Healthcare IT

8%  Legal & Regulatory Compliance

7%  SME Technology Services

7%  Capital Markets & Wealth Management IT

6%  Insurance

5%  Automation & Engineering

Investment vintage by value

2%  2022

26%  2021

28%  2020

7%  2019

37%  pre-2019

Geographic spread by value

39%  UK

24%  North America

17%  Germany

13%  Scandinavia

7%  Other Europe

Investments and realisations

Investments

Over the course of the period, Hg invested a total of £826 million on behalf of its clients, with HGT's share being £71 million. HGT has made significant new and further investments post 30 June.

The vast majority of our investments are generated by establishing and developing relationships with companies over the longer term and typically pursuing opportunities where we have a strong relationship with a founder or management team. By doing this, we believe that we can invest in the very best businesses within our chosen clusters.

We continue to look for businesses which share similar underlying business model characteristics, such as: high levels of recurring revenues; a product or service which is business critical, but typically low spend; low customer concentration and low sensitivity to market cycles. This is a theme which runs through many of our new investments - and we believe that companies with these characteristics will remain in high demand across market cycles.

New investments in the six months to 30 June 2022

LucaNet

£15.6m invested on behalf of HGT

In June, Hg completed an investment in LucaNet AG ('LucaNet'), a leading German headquartered financial consolidation and planning software business. Founded in 1999, LucaNet began with a vision to create a one-stop-shop software solution, bringing together financial control, planning and consolidation. Since then, the company has evolved into a leader in its core segment, the Office of the CFO for mid-sized companies. With a loyal customer base of more than 3,500 organizations in over 50 countries, offices in China, Singapore and the Americas as well as a strong European base, LucaNet employs around 500 people worldwide.

Pirum

£13.9m invested on behalf of HGT, including £4.5m in co-investment

In June, Hg completed an investment in Pirum Systems, a leading provider of post-trade automation and collateral management technology for the global securities finance industry. Pirum's software provides a secure processing hub which seamlessly links industry participants, allowing them to process and verify key transaction details electronically. This delivers significant trade and collateral efficiency, lowers costs and enhances regulatory compliance for its network of clients. Pirum's products assist 90 of the most prestigious global financial institutions to process over $3 trillion of transactions daily.

Fonds Finanz

£7.9m invested on behalf of HGT

In February, Hg completed an investment in Fonds Finanz, a leading tech-enabled financial intermediary pool in the German insurance sector. Founded in 1996 and headquartered in Munich, Fonds Finanz serves more than 28,000 customers including brokers, distributors, insureTechs and banks across Germany. With a comprehensive software, advisory and service offering, Fonds Finanz gives customers access to a full-service platform, comprising products from more than 500 insurance and financial product vendors in Life, Health, Property & Casualty and Investment funds.

Further investments in the six months to 30 June 2022

Howden

£21.4m invested on behalf of HGT, including £11.6m in co-investment

Over the first half of the year, Hg made a further investment in Howden Group Holdings ('Howden').

Hg announced its original investment in Howden, a leading international insurance group (previously known as Hyperion Insurance Group Limited), in 2020.

Lyniate

£12.1m invested on behalf of HGT, including £4.0m in co-investment

In January, Hg completed an additional investment into Lyniate, a leader in healthcare data interoperability. Over 1,300 healthcare organisations around the globe rely on Lyniate interoperability solutions to connect people through increased access to data.

GGW

£2.1m invested on behalf of HGT

In January, due to the continued strong opportunity to acquire high quality and accretive brokers, Hg completed a further investment in GGW, a leading Property & Casualty focused insurance broker principally serving SMEs in the DACH region, to fund recent larger M&A.

New investments since the period end

IFS Workwave

£148.2m invested on behalf of HGT, including £12.6m in co-investment

In July, Hg completed a significant minority investment, alongside EQT and TA Associates, in IFS and WorkWave, valuing the company at $10bn. IFS is a leading software vendor for organisations who want to differentiate on service. With thousands of the world's most respected brands as customers, IFS is a recognised provider across multiple sectors including Service Management (both Field Service Management and Enterprise Service Management), Enterprise Asset Management (EAM) and Enterprise Resource Planning (ERP). WorkWave's suite of products empower service-oriented companies in its target verticals to reach their full potential through scalable, cloud-based software solutions that support every stage of a business life cycle, including marketing, sales, service delivery, customer interaction and financial transactions.

Ideagen

£71.5m invested on behalf of HGT

In June, Ideagen, a leader in compliance software for regulated industries, delisted from the London Stock Exchange's Alternative Investment Market, following a positive shareholder meeting, which showed support for Hg's offer for the business.

Established in 1993 and headquartered in Nottingham, UK, Ideagen's software helps companies comply with regulation and manage risk. It is a leader in the regulatory and compliance software sector, serving highly regulated industries such as life sciences, healthcare, banking and finance and insurance.

Waystone

Estimated £32.0m invested on behalf of HGT

In January, Hg announced an investment in Waystone Group, a leading provider of institutional governance, risk and compliance services to the asset management industry. This investment is via the Hg Saturn 2 fund, alongside Montagu, a leading private equity firm; Hg will join as a strategic investor and joint shareholder. Montagu first announced its investment in Waystone in July 2021. Hg's investment is subject to regulatory approval and customary closing conditions.

Further investments since the period end

The Access Group

Estimated £176.6m invested on behalf of HGT

In June, Hg announced a further investment in The Access Group ('Access'), a leading provider of business management solutions to mid-market organisations in the UK, Ireland and Asia Pacific via the Hg Saturn Fund.

This further strategic investment from Hg, and TA Associates, a leading global growth private equity firm, is significant. In addition, GIC, a global institutional investor, has confirmed a new investment to become a minority shareholder in the company.

Team.blue

Estimated £32.4m invested on behalf of HGT

In July, Hg announced a further investment in team.blue, a leading digital enabler for companies and entrepreneurs across Europe. This investment will help to supercharge the business and enable team.blue to implement ambitious plans for further expansion in its product offering of online solutions, as well as increase its local presence across more countries in Europe.

Norstella

Estimated £4.7m invested on behalf of HGT

In June, Hg, via the Hg Genesis 9 Fund announced an investment in Citeline (formerly Pharma Intelligence) - a leading provider of specialist intelligence, data and software for clinical trials, drug development and regulatory compliance - which has announced an agreement to merge with Norstella, an organisation that helps life sciences companies navigate the complexities of the drug life cycle.

Realisations

Over the course of the period, Hg has returned a total of £260 million to its clients, including £30 million to HGT.

Hg has seen some significant exits post June at an average c.29% uplift to their December carrying value and we will continue to assess further opportunities to return cash proceeds to our clients, including HGT.

Refinancings in the six months to 30 June 2022

Lyniate

£19.8m returned to HGT

In January, Hg completed a refinancing of Lyniate, a global leader in healthcare data interoperability and data liquidity solutions. Over 1,300 healthcare organisations around the globe rely on Lyniate interoperability solutions to connect people through increased access to data. Hg retains a majority stake in Lyniate.

Argus Media

£8.6m returned to HGT

In June, the Hg Saturn team completed the refinancing of Argus Media, a provider of independent price assessments, essential data and analysis of the international energy and commodity sectors. With over 160 publications and 26,000 price assessments, Argus is one of the two largest price reporting agencies globally.

Full exits since the period end

Medifox

Estimated £47.0m returned to HGT

In June, Hg announced that it had agreed the sale of MEDIFOX DAN, a leading provider of digital solutions for the German care and therapy sectors, to ResMed, a global leader in cloud-connected medical devices and out-of-hospital software-as-a-service (SaaS) business solutions, in a transaction valuing the business at an enterprise value of around $1 billion.

This transaction represents an uplift of £15.0 million (47%) over HGT's carrying value at 31 December 2021.

Itm8

Estimated £32.7m returned to HGT

In May Hg announced that it had agreed the sale of itm8, a leading supplier of IT services for private businesses and the public sector in Europe to Axcel, a Nordic private equity fund.

This transaction represents an uplift of £2.6 million (9%) over HGT's carrying value at 31 December 2021.

Partial exits since the period end

Intelerad

£27.5m returned to HGT

In August, Hg completed a partial sale of Intelerad, a leading global provider of enterprise medical imaging solutions, to TA Associates ('TA'), a leading global growth private equity firm. TA joins Hg and ST6 in supporting Intelerad to accelerate growth.

This transaction represents an estimated uplift of £17.8 million (26%) over HGT's carrying value at 31 December 2021.

Team.blue

Estimated £16.0m returned to HGT

In July, Hg announced the partial sale of team.blue, a leading digital enabler for companies and entrepreneurs across Europe.

This transaction valued HGT's existing investments in the business at £51.3 million representing an uplift of £11.1 million (28%) over the carrying value at 31 December 2021.

Refinancings since the period end

The Access Group

Estimated £232.2m returned to HGT

In June, Hg announced the recapitalisation of The Access Group ('Access'), a leading provider of business management solutions to mid-market organisations in the UK, Ireland and Asia Pacific.

This transaction valued Access at 42% over the carrying value at 31 December 2021.

To view our press releases, please visit www.hgcapitaltrust.com/news-insights/press-releases/year/2022

Summary of investment and realisation activity

Investments made during the period

Company	Cluster	Location	Cost £000
LucaNet	Tax & Accounting	Germany	15,649
Pirum	Capital Markets & Wealth Management IT	UK	13,928
Fonds Finanz	Insurance	Germany	7,864
New investments			37,441
Howden	Insurance	UK	21,374
Lyniate	Healthcare IT	North America	12,068
GGW	Insurance	Germany	2,136
Other 2			(1,892)
Follow-on investments			33,686
Total investments on behalf of HGT			71,127

Realisations made during the period

Company	Cluster	Exit route	Proceeds1 £000
Lyniate	Healthcare IT	Refinancing	19,796
Argus Media	Capital Markets & Wealth Management IT	Refinancing	8,636
Other 2			1,005
Partial realisations			29,437
Total proceeds from realisations			29,437
Carried interest paid to the Manager			-
Total proceeds from realisations received by HGT			29,437

¹ Includes gross revenue received of £1.4 million during the period ended 30 June 2022.

² Other investments and realisations includes immaterial transactions in relation to the remaining portfolio.

Hg's outlook

"Increasingly, we see this environment as one of opportunity, as short-term valuations create space for greater long-term performance."

David Toms, Director of Research, Hg

Market Update / Outlook

We remain of the view that market concerns about inflation will have muted long-term impacts on our businesses. However, we are also aware that events rarely align perfectly along a timeline, and there is a risk that a combination of geo-political challenges, fiscal tightening, supply chain constraints, and cost increases, cause broad economic challenges to which our portfolio's end customers may respond with temporarily lower investment (postponing investments in systems and software) before the structural factors that drive the need for software reassert themselves. To claim immunity from any potential macro downturn or recession would be naïve, and we are alert to the risks of near-term volatility in the general economic backdrop, as well as to the structural opportunities this could create for an investor like Hg with long-term horizons.

Q2 in the public markets saw a faster rate of valuation and price decline than Q1, as investors continued to reprice equities in light of higher interest rates, geo-political instability and a growing expectation of recession. A 'typical' downturn (if there really is such a thing) tends to lead with multiple contraction, followed by earnings contraction, and an eventual recovery catalysed either, in recent downturns, by central bank stimulus, or historically, earnings recovery. Assuming that inflation leaves central bankers with fewer options than the GFC and COVID downturns, earnings momentum could be the most important indicator over the next 12-24 months.

As we move into Q2 reporting season, we are starting to see a slightly mixed picture emerging from software and services majors. Some have sounded a moderately more cautious note whereas others have reiterated a robust underlying outlook for the next 3-6 months. This variability does not surprise us; in the main, macro changes are outweighing underlying trading, particularly in the US where overseas earnings are impacted by the near-unprecedented strength of the US Dollar. In addition, cyclical pressures are growing, but not evenly - for example, whilst there is clear evidence of lengthening sales cycles, this is currently focused on larger deals at the 'enterprise' end of the market. However, what is also clear to us is that the structural drivers of our sector are intact and, if anything, enhanced by the macro-economic shifts we see, as companies invest in technology in order to help offset cost inflation.

Note; Based on R3K listed US software & Services sector, c.400 companies in total dataset. Unprofitable = EV:EBITDA >50 or negative.

Source: Factset, Hg analysis

Valuation environment

Despite the positive structural drivers for the sector, public market investors remain focused on current macro concerns. A striking pattern, consistent with the theme of macro-driven sentiment shifts, can be seen in public market valuation movements over the past 12 months. In the second half of 2021, 'unprofitable software' was impacted hard. Moving into the first quarter of 2022, this spread to 'profitable software', and in Q2-22, the impact spread across most other sectors of public markets.

The pendulum of public market valuations has swung from the SPAC-fuelled euphoria of 2021 to a more downbeat perspective in 2022, (the archetypal illustration of Ben Graham's manic-depressive 'Mr Market'). The same lack of selectivity that occurred on the way up in 2020 and 2021, is now impacting in the opposite direction.

We see this valuation environment as one of emerging opportunity as the dust settles. Our existing platform businesses, particularly those with significant M&A machines (Access and Visma being the most impressive examples), should be able to capitalise on more attractive prices and thus potential returns. Entry points for new platforms should be lower, and possibly most importantly, there will be opportunities to invest in high-quality businesses that are otherwise inaccessible. We have already seen this with recent investments into businesses that we have been tracking for years, but only now have become amenable to partner with us.

Although our valuation process is based partly on public comparators, as with our companies, the vast majority of these are profitable, established businesses. As we have shown, such businesses have shown much more limited valuation volatility than the high growth, low/no profit businesses that headline more often in the media.

Consistent with our previous commentary, in any quarter, there are two main factors influencing our valuations: earnings multiple change in public comparators, and growth in actual earnings. Our companies typically grow their EBITDA by c.10-15% organically each year, i.e. c.3% each quarter, and approximately double this on an 'all in' basis including M&A. In addition, our valuations are also affected by changes in private markets comparators, which have a smoothing effect against public market equivalents.

The latter two factors have meant that our funds have been less exposed to public market volatility during challenging periods, as well as providing some protection against broader de-rating in the long term. The relative pace of movements (public rating changes can be relatively rapid; earnings growth and private comparators tend to be much steadier) dictates movements in any one quarter, but over the long term, earnings growth tends to dominate.

Activity levels

Over the first half of 2022, Hg has invested more than £826 million, primarily into 6 new and further investments, including
£71 million on behalf of HGT. Following the period end Hg deployed a further £3.2 billion into new and existing companies, including £252 million from HGT. All these investments sit firmly within Hg's 'sweet-spot' in software and service businesses across eight industry verticals or 'clusters'. This investment continues to cement Hg's role as one of the largest software groups in the world, whether measured as an investor, or as an industry participant.

We have commented previously that in any 12-month period, the investment teams across Hg aim to make between 8 and 16 new platform investments in total across the active Hg Saturn, Hg Genesis and Hg Mercury funds, and that we also generally seek to deliver similar numbers of liquidity events (sales or partial sales of portfolio companies and refinancings) each year. We believe the pace of investment should continue at broadly this level over the medium term. However, while we continue to see many compelling opportunities, we may well see a period of reduced activity through to the end of this financial year as seller expectations adjust and react to the macro-outlook.

From these investments, there is a further cascade of M&A opportunities, adding to the breadth and depth of our organic development and catalysing cross sales to existing and acquired customers. On average, our portfolio companies may acquire two to three businesses a year, meaning across a portfolio of more than 46 B2B software and services companies we would typically expect to make more than 100 M&A investments each year (and to diligence and reject many more). To give a further sense of this scale, Hg's combined portfolio enterprise value has risen from c. $100 billion in December 2021 to over $115 billion at 30 June 2022.

"...we are alert to the risks of near-term volatility in the general economic backdrop, as well as to the structural opportunities this could create for an investor like Hg with long-term horizons."

https://www.hgcapitaltrust.com/news-insights/video-library?vid=1539

https://hgcapital.com/insight/bitesize-tech-sector-insight-from-david-toms/

Overview of the underlying investments

held through HGT's limited partnerships

Investments (in order of value)		Fund	Sector	Location	Vintage	Residual cost £000	Total valuation1 £000	Portfolio value %	Cum. Value %
1	Access	G8/HGT	ERP & Payroll	UK	2018	60,653	428,794	19.0	19.0
2	Visma	G7/S1/S2/HGT	Tax & Accounting/ERP & Payroll	Scandinavia	2020	90,332	221,903	9.8	28.8
3	Howden	S2/HGT	Insurance	UK	2021	63,401	101,809	4.5	33.3
4	Litera	G8/G9	Legal & Regulatory Compliance	N.America	2019	28,999	99,319	4.4	37.7
5	Transporeon	G8/HGT	ERP & Payroll	Germany	2019	41,993	87,370	3.9	41.6
6	Intelerad	G8	Healthcare IT	N.America	2020	32,885	87,136	3.8	45.4
7	IRIS	S1	Tax & Accounting/ERP & Payroll	UK	2018	36,380	83,082	3.7	49.1
8	P&I	G7/S1/HGT	ERP & Payroll	Germany	2020	36,347	80,612	3.6	52.7
9	Sovos	S2/HGT	Tax & Accounting	N.America	2020	54,455	72,923	3.2	55.9
10	MeinAuto	G8	Automation & Engineering	Germany	2017	33,967	63,626	2.8	58.7
11	insightsoftware	S2/HGT	Tax & Accounting	N.America	2021	55,071	63,227	2.8	61.5
12	Septeo	G9	Legal & Regulatory Compliance	France	2020	38,545	61,814	2.7	64.2
13	team.blue	G8/M2	SME Technology Services	Benelux	2019	16,530	51,069	2.3	66.5
14	Medifox	M2/HGT	Healthcare IT	Germany	2018	11,659	47,027	2.1	68.6
15	FE fundinfo	M2/G9	Capital Mkts & Wealth Mgmt IT	UK	2021	22,090	44,166	2.0	70.6
16	Norstella	M2/G9/HGT	Healthcare IT	UK	2021	24,595	42,311	1.9	72.5
17	Argus Media	S1/HGT	Capital Mkts & Wealth Mgmt IT	UK	2020	31,725	39,389	1.7	74.2
18	Azets	G7/HGT	Tax & Accounting	UK	2016	20,966	39,285	1.7	75.9
19	Lyniate	M2/M3/HGT	Healthcare IT	N.America	2018	17,866	35,536	1.6	77.5
20	Caseware	G8	Tax & Accounting	N.America	2020	28,612	34,908	1.5	79.0
21	Benevity	S2/HGT	ERP & Payroll	N.America	2021	32,079	33,323	1.5	80.5
22	itm8	G8	SME Technology Services	Scandinavia	2018	16,069	32,709	1.4	81.9
23	Trackunit	G9	Automation & Engineering	Scandinavia	2021	26,593	32,159	1.4	83.3
24	Citation	G8	SME Technology Services	UK	2020	21,998	31,726	1.4	84.7
25	GGW	M2/M3	Insurance	Germany	2020	11,280	26,766	1.2	85.9
26	Gen II	G9	Capital Mkts & Wealth Mgmt IT	N.America	2020	19,921	25,830	1.1	87.0
27	Prophix	G9	Tax & Accounting	N.America	2021	17,139	24,640	1.1	88.1
28	HHA	G9	Healthcare IT	N.America	2021	24,035	22,390	1.0	89.1
29	Revalize	G9	ERP & Payroll	N.America	2021	18,686	20,933	0.9	90.0
30	TeamSystem	G8	Tax & Accounting/ERP & Payroll	Italy	2021	14,250	19,695	0.9	90.9
31	Riskalyze	M3/HGT	Capital Mkts & Wealth Mgmt IT	N.America	2021	15,868	19,214	0.8	91.7
32	DEXT	S1/HGT	Tax & Accounting	UK	2021	15,620	18,417	0.8	92.5
33	Project CH	S2	Tax & Accounting	Germany	2021	18,647	18,163	0.8	93.3
34	Commify	M1/HGT	SME Technology Services	UK	2017	4,080	18,029	0.8	94.1
35	Serrala	G9	Tax & Accounting	Germany	2021	23,086	16,235	0.7	94.8
36	LucaNet	G9	Tax & Accounting	Germany	2022	15,649	16,228	0.7	95.5
37	smartTrade	M2/HGT	Capital Mkts & Wealth Mgmt IT	France	2020	18,821	14,782	0.7	96.2
38	Silverfin	M2/HGT	Tax & Accounting	Benelux	2019	11,387	13,961	0.6	96.8
39	Pirum	M3/HGT	Capital Mkts & Wealth Mgmt IT	UK	2022	13,928	13,575	0.6	97.4
40	F24	M2/HGT	SME Technology Services	Germany	2020	10,458	12,370	0.5	97.9
41	Geomatikk	M2/HGT	SME Technology Services	Scandinavia	2021	11,392	10,894	0.5	98.4
42	Auvesy	M3	Automation & Engineering	Germany	2021	8,204	10,461	0.5	98.9
43	Mitratech	G7/HGT	Legal & Regulatory Compliance	N.America	2017	3,328	9,375	0.4	99.3
44	Fonds Finanz	M3	Insurance	Germany	2022	7,864	7,634	0.3	99.6
45	Bright	M3	ERP & Payroll	Ireland	2021	6,529	7,532	0.3	99.9
46	ProcessMAP	M3	Legal & Regulatory Compliance	N.America	2021	5,249	5,515	0.2	100.1
	Non-active investments (2)					9,833	-	-	100.1
	Total buyout investments (48)					1,149,064	2,267,862	100.1
	Currency hedges	Various	Forward sale of US$ and €			-	(4,246)	(0.1)	100.0
	Renewable energy	Asper I	Renewable energy			5,040	367	-	100.0
	Total all investments					1,154,104	2,263,983	100.0

¹ Including accrued income of £128,585,000, but before a deduction for the provision for carried interest of £212,521,000 and fund level facility of £325,311,000. Note that the investments held at fair within the Balance Sheet on page 62 of the full Interim Report and Accounts or below exclude accrued income but include the deduction for carried interest and the fund level facilities.

Top 10 investments

representing 59% of the value of HGT's investments

Investments are held through limited partnerships, of which HGT is the sole limited partner. HGT invests alongside other clients of Hg. Typically, HGT's holding forms part of a much larger majority interest held by Hg's clients in buyout investments in companies with an enterprise value ('EV') of between £100 million and over £10 billion.

Hg's review generally refers to each transaction in its entirety, apart from the tables detailing HGT's participation or where it specifically says otherwise.

Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations and investors may not get back the amount they originally invested.

The Access Group

a leading provider of fully integrated business-management software to UK mid-market organisations

01	Investment date	Location	Cluster	Website
	June 2018	UK	ERP & Payroll	theaccessgroup.com

HGT's investment through G8 and HGT LP
Hg clients' total equity:	51.3%
Unrealised value (£000):	428,794
% of NAV:	21.1%

llll

Recurring revenue

llll

Long-term growth

llll

Thousands of customers

llll

Platform for M&A

Business description

Founded in 1991, the Access Group ('Access') is a leading enterprise resource‑planning ('ERP') business, providing financial management systems ('FMS') and human capital management ('HCM') software, as well as industry specific software solutions. Access' software helps over 60,000 UK businesses and not-for-profit organisations to work efficiently, with expertise across numerous industries, SME, mid‑market and enterprise customers in Australia, Ireland, and the UK.

Hg first invested in Access in June 2018, alongside TA Associates and the management team. In October 2020, we agreed to reinvest to acquire a further stake in the business, with existing shareholders TA Associates and management selling down a net portion of their stakes, with Hg becoming the majority shareholder. In 2022, Hg signed the refinancing of its Access stake and the partial exit of Hg Genesis 8's stake with a further investment made via Hg's latest upper middle-market fund, Hg Saturn 3. This transaction valued Access at an EV of £9 billion.

Why we invested

The investment in Access builds on Hg's previous experience in the SME, tax, accounting, HR and payroll software spaces. Access demonstrates many of the characteristics which Hg seeks in an investment, including business‑critical software and potential for M&A. Access benefits from a high‑quality management team, led by a strong CEO and an impressive team of functional leaders. Our further investment in Access, in 2020 and 2022, reflects our continued conviction in our investment hypothesis.

Value creation

Following Hg's investment, we have been focused on several work streams with the business, including: M&A support; encouraging the transition to a fully SaaS and subscription sales model; continuing to improve customer success; developing a data‑driven predictive model to support the company's cross‑sell efforts.

Performance

Access has traded well since our investment, with bookings momentum remaining strong throughout FY22. Growth remains robust, with the business seeing >20% organic recurring revenue growth in FY22. With the partial exit, refinancing and reinvestment in the business in 2022, this has led to HGT's valuation of its stake in Access rising by £128.1 million over the first half of 2022.

Exit

We believe that Access will be an attractive acquisition target for private equity buyers, as it demonstrates high levels of organic revenue growth, strong recurring revenue and robust EBITDA margins. We also see an IPO as a potential route to exit, given the business growth profile and strong cash generation. Lastly, there are several notable potential trade buyers.

Visma

a leading provider of mission-critical business software to SMEs in Northern Europe

02	Investment date	Location	Cluster	Website
	August 2020	Scandinavia	Tax & Accounting/ERP & Payroll	visma.com

HGT's investment through G7, S1, S2 and HGT LP
Hg clients' total equity:	54.8%
Unrealised value (£000):	221,903
% of NAV:	10.9%

llll

Recurring revenue

llll

Long-term growth

llll

Thousands of customers

llll

Platform for M&A

Business description

Providing business‑critical software to SMEs and the public sector in the Benelux and Nordic regions and headquartered in Oslo, Visma provides c. 1.3 million enterprise customers with: accounting; resource‑planning and payroll software; transaction process-outsourcing, such as debt collection and procurement services. It is the largest European provider of SaaS to these sectors, with over £1.1 billion in pure SaaS revenues.

Why we invested

Visma is a business with recurring revenues, offering business‑critical application software, supplying a fragmented customer base - a focus which forms some of the 'Hg sweet‑spot' investment criteria today. At the time of our initial 2006 acquisition, we had identified opportunities for Visma to grow its existing segments and acquire new ones - and to further transition the business to a SaaS‑focused model. 

Value creation

Visma has consistently outperformed, generating a total return between 2006 and 2014 of 5.2x original cost and a gross IRR of 33%. Hg's 2014 investment was fully exited in 2020 and delivered 4.2x original cost and a gross IRR of 30%. 

Year	Transaction                                                                                                                                                                         Implied EV
2014	Hg reinvested in the business, via Hg Genesis 7 and co-investment, alongside KKR and Cinven	£2.1bn
2017	Hg completed a further investment in Visma	£4.2bn
2019	Hg acquired the remaining Cinven stake, alongside the Canada Pension Plan Investment Board	£5.5bn
2020	Further investments from TPG, Warburg Pincus and GA as new minority shareholders, while existing CPPIB and GIC increased their stake.	£9.5bn
2021	Expansion of shareholder base through a secondary sale to Aeternum Capital, Government Pension Fund Norway, Vind & GIC.	€16bn

Performance

Since 2006, Visma has acquired more than 270 companies across the Benelux and Nordic regions, strengthening organic growth from innovation in new products, as well as driving margin improvement through a reorganisation of internal processes and is now positioned as one of the leading and largest SaaS companies in Europe. Over the first half of 2022, Visma has seen a small reduction in ratings leading to HGT's valuation of its stake in Visma reducing by £5.9 million.

Exit

The scale and growth profile of Visma would make it an attractive candidate for an initial public offering (IPO) or a large private IPO.

Visma produces detailed reporting on its website on a quarterly basis: www.visma.com/investors/financial-reports

Visma case study: www.hgcapital.com/case-studies/visma-joining-the-fight-against-unconscious-discrimination-towards-women-in-business

Howden Group Holdings

a leading tech-enabled insurance distribution group, serving clients across North America, Europe, the Middle East and Asia Pacific

03	Investment date	Location	Cluster	Website
	March 2021	UK	Insurance	howdengroup.com

HGT's investment through S2 and HGT LP
Hg clients' total equity:	22.6%
Unrealised value (£000):	101,809
% of NAV:	5.0%

llll

Recurring revenue

llll

Long-term growth

llll

Thousands of customers

llll

Platform for M&A

Business description

Founded in 1994 and headquartered in London, UK, Howden Group Holdings ('Howden') is the largest European headquartered insurance intermediary, serving an international client base. Howden is a tech-enabled insurance distributor, which has a differentiated position as one of the top brokers internationally and within the Lloyd's of London market. Following Howden's acquisition of APG and Aston Lark, the combined Howden UK business today is a Top 5 UK insurance broker.

Howden facilitates the provision of B2B insurance through its core activities of retail insurance broking, specialty and reinsurance broking and managed agency underwriting. The group operates across >250 offices in 45 countries, managing $30 billion of Gross Written Premium.

Why we invested

Hg's investment in Howden represents our sixth investment in the insurance cluster and is the culmination of a process that first began in late 2019. We identified Howden as a leader in what is a large and defensible sector, well-positioned across specialty lines of insurance in which clients rely deeply on Howden's expertise to navigate the complex insurance value chain. Benefiting from over 150 hours with management during the diligence process, we were able to build conviction in the company's differentiated pool of talent and entrepreneurial culture, which will be key enablers for continued outperformance and strong growth.

Value creation

Product expertise and innovation is a core pillar of Howden's strategy, and there is further headroom to drive organic growth through a continued focus on the rollout of specialty expertise in order to better serve clients across the group's global footprint. In addition, the acquisition and retention of top talent through leveraging Howden's unique culture remains key to achieving differentiated outperformance. Inorganically, there is a significant opportunity to grow through the execution of strategic M&A to enhance scale and the breadth of the product offering. Finally, the business will also continue to invest into technology and Howden X ('Hx'), with the ambition to be a thought-leader across digital and data-driven initiatives in insurance.

Performance

In 2022, Hg made a further investment into Howden. This transaction combined with strong performance over the year-to-date period has led to an increase in the valuation of HGT's stake since December 2021 of £8.9 million.

Exit

Given the unique strategic positioning of Howden as a leading independent insurance intermediary, we believe that the business will be an attractive potential IPO candidate. In addition, through continuing to grow organically and via M&A, maintaining long-standing client relationships and strong levels of revenue retention and margins, and bolstering its leading position across key geographies and lines of business, Howden will also be an attractive target for a secondary sponsor buyout.

Litera

scaled legal-tech platform helping lawyers focus on what matters

04	Investment date	Location	Cluster	Website
	May 2019	North America	Legal & Regulatory Compliance	litera.com

HGT's investment through G8 and G9
Hg clients' total equity:	92.3%
Unrealised value (£000):	99,319
% of NAV:	4.9%

llll

Recurring revenue

llll

Long-term growth

llll

Thousands of customers

llll

Platform for M&A

Business description

Litera is a leading provider of end-to-end document lifecycle solutions to the legal and life sciences industries globally. Litera has developed a suite of legal document productivity applications, delivered as an end-to-end platform to more than 1,300 organisations across the globe. Based in Chicago, New York and London, Litera provides a suite of best-in-class productivity tools that help customers to focus on what matters: creating the highest quality documents.

Why we invested

Litera exhibits several typical 'Hg sweet‑spot' business model criteria: a leading provider of a differentiated set of products with a clear ROI for lawyers and other customers; high customer loyalty; attractive, high‑quality recurring revenue model; potential for M&A; a fragmented customer base; cross‑sell opportunities into the established customer set, supplemented by potential new customers; high operating leverage which should provide margin upside as the business grows. 

Value creation

Since our investment in May 2019, we have supported Litera on 16 add‑on acquisitions, focused on acquiring high-quality legal SaaS and AI-enabled workflow products to provide customers with best-in-class tools. Most prominent acquisitions include Workshare, a UK provider of secure enterprise file‑sharing and collaboration applications, in July 2019; Foundation Software Group, a leading provider of experience‑management software, in December 2020; Kira, a leader in machine learning enabled contract analytics in August 2021; and Prosperoware, a leading governance and collaboration software in January 2022. 

Hg is focused on supporting the board and management team in the successful operational integration of its acquisitions, driving further add‑on acquisitions of complementary legal software vendors and implementing operational excellence across functions. 

Performance

Litera has continued to see robust trading over the first half of 2022, and HGT's stake in the business is currently valued at £99.3 million.

Exit

We believe the scalability of the business, its sustained revenue growth and strong recurring revenue profile should allow for meaningful exit discussions with large trade players and technology consolidators; we also believe the business could be very attractive to other financial sponsors.

Transporeon

a European SaaS logistics connectivity platform

05	Investment date	Location	Cluster	Website
	March 2019	Germany	ERP & Payroll	transporeon.com

HGT's investment through G8 and co-investment through HGT LP
Hg clients' total equity:	75.3%
Unrealised value (£000):	87,370
% of NAV:	4.3%

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Recurring revenue

llll

Long-term growth

lll ¡

Thousands of customers

lll ¡

Platform for M&A

Business description

Transporeon is a leading cloud-based logistics network and transport management software for road freight in Europe. The platform enables thousands of trucks to be booked and tracked as they haul freight across the continent. As a sector leader, the business benefits from favourable industry dynamics, connecting 145,000 carriers and 1,400 shippers using a modern SaaS platform able to serve 100 countries and available in 25 languages. It serves these customers with a mission-critical cloud software platform which enables more efficient tendering, dispatching, scheduling, and better communication between the hundreds of enterprises looking to move freight by road, air and ocean, and the thousands of SME operators that provide the trucks.

Why we invested

Transporeon is a highly strategic asset, operating in an industry with material room for growth, through new and existing clients, underpinning future growth in line with historical levels. The business has seen uninterrupted double‑digit revenue CAGR for the past 20 years across all market cycles. Transporeon exhibits several 'Hg sweet‑spot' business model criteria, including: business-critical, high quality software product suite; high net revenue retention; high customer loyalty; a strong position in an expanding sector; considerable growth opportunities from new customers, as well as broader adoption, through up- and cross-sell, by its current customer base.

Value creation

Transporeon has undergone major management change under Hg's ownership (new CEO, CFO, CCO, CHRO and CMO). With the new team in place, we now view the company as well placed to capitalise on opportunities for further operational efficiencies. Additionally, certain learnings from COVID‑19 have been introduced permanently, resulting in lower costs (e.g. remote implementations). Furthermore, as of 2021, Transporeon embedded its proprietary Real Time Visibility ('RTV') feature in its core platform, thereby delivering additional value to all network participants and contributing to Transporeon's strategic profile while driving revenue growth via bundling of RTV capabilities and the offering. Further to operational improvements, we executed four acquisitions in 2021/2022, including TNX, SupplyStack, Nexogen and LogitOne, to complement Transporeon's offering and strengthen its strategic positioning. Additionally, we have identified multiple other M&A targets which could drive value creation further.

Performance

Coming out of a strong 2021, the business continues to perform well, expecting c.20% organic growth in FY22. HGT's investment in Transporeon is currently valued at £87.4 million representing a small uplift since the 2021 year end.

Exit

We believe Transporeon will be a highly strategic asset to other software or service providers in the broader Transportation Management space. In addition, Transporeon will continue to be a very attractive company from a PE perspective due to its high net recurring revenue, strong cash conversion, and a long-term organic growth story.

"At Transporeon we work intensively with several members of Hg's portfolio team. We closely collaborate on growth themes in sales and marketing, have jointly developed the most comprehensive data lake in the transportation industry with Hg's experts in data science, we benefited from Hg's talent team support in strengthening our senior management team and benefit greatly from Hg's regular assessments in cyber security and ESG."

Stephen Sieber, CEO, Transporeon

Intelerad

provides medical imaging  software that specialises in diagnostic viewing, reporting  and collaboration solutions  for radiologists

06	Investment date	Location	Cluster	Website
	February 2020	North America	Healthcare IT	intelerad.com

HGT's investment through G8
Hg clients' total equity:	82.0%
Unrealised value (£000):	87,136
% of NAV:	4.3%
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Recurring revenue
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Long-term growth
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Thousands of customers
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Platform for M&A

Business description

Founded in 1999, Intelerad is a leading global provider of enterprise workflow and medical imaging software solutions that enhance productivity and information accessibility for radiologists. The core product is a Picture Archiving and Communication System that helps radiologists and physicians view and interpret medical images, enabling faster and more accurate diagnoses. Headquartered in Montreal, Canada, Intelerad employs over 700 staff across the globe and serves a customer base of c. 1,500 healthcare organisations, including radiology groups, imaging centres, health systems and life science companies. Intelerad's software is critical to the operations of more than 7,000 radiologists globally and has achieved over 15% organic revenue CAGR in recent years driven by overall market scan volume growth plus ongoing consolidation within the radiology services market to the major players.

Why we invested

Hg recognises Intelerad's leading role in supporting radiologists globally to deliver highly accurate diagnoses at optimum productivity. The business is a key enabler of healthcare delivery against a backdrop of increasing global demands, in radiology, for scalable and more efficient imaging, data management and workflow solutions. Intelerad is led by a highly talented team who have developed powerful solutions for radiologists that create superior outcomes for both patients and healthcare providers. Healthcare technology is a core sector for Hg, with an investment focus on healthcare operations, core systems, life sciences digitisation, interoperability and population health. Intelerad represents the fourth healthcare technology investment in Hg's current portfolio.

Value creation

The Hg team, including the portfolio team, is focused on several work streams with Intelerad, including:

• M&A support: helping to source potential opportunities and assess possible sizable additions to the group, resulting in seven acquisitions closed during Hg's ownership.

• Continued expansion to new markets and product capabilities.

• Continued build out of Intelerad's enterprise imaging platform, with deeper hospital and health system penetration.

Performance

Volumes have continued to increase in the last six months with a rise in earnings. This has led to an increase in HGT's stake in the business of £17.9 million over the period.

Exit

We believe Intelerad will be an attractive acquisition target for private equity buyers as it demonstrates strong recurring revenue and robust EBITDA margins. An IPO is also a possible route to exit given the business' growth profile and strong cash generation. Lastly, there are several potential trade buyers that would likely be interested and have previously expressed interest.

IRIS

A leading transatlantic provider of business-critical software solutions focused on accountants and their end-customers

07	Investment date	Location	Cluster	Website
	September 2018	UK	Tax & Accounting/ERP & Payroll	iris.co.uk

HGT's investment through S1
Hg clients' total equity:	65.0%
Unrealised value (£000):	83,082
% of NAV:	4.1%

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Recurring revenue

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Long-term growth

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Thousands of customers

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Platform for M&A

Business description

IRIS is a leading transatlantic provider of business-critical software solutions, serving over 100,000 customers and three million users. It is one of the UK's largest software companies and North America now makes up c. 20% of group revenues. Focused on software solutions for accounting practices and their connected SME customers, IRIS delivers a suite of software that provides business-critical record systems with regulatory and compliance driven updates.  IRIS empowers accountants to deliver both regulatory compliance services and value-added 'Client Accounting Services' to improve SME's planning and performance.

Why we invested

IRIS was one of our first investments in the Tax and Accounting segment and is an early example of our focus on firms which provide business‑critical, daily‑use software for professionals and SMEs in attractive, predictable end markets. The original investment decision was based on the potential for organic growth and acquisition‑led consolidation opportunities. With strong business model characteristics, IRIS has grown organically every year over the last 20 years.

Value creation

The long‑standing partnership between Hg and IRIS started with the 2004 buyout (£102 million EV) led by Hg, followed by retaining a minority position after the sale to Hellman & Friedman in 2007. In 2011, we again became the majority shareholder through the Hg Genesis 6 Fund. In 2018, Hg agreed on the sale of IRIS to Hg Saturn and ICG, in a joint‑control deal, representing an EV of £1.3 billion.

IRIS has succeeded in expanding its offering, both organically and by acquisition into segments such as payroll, HR and education software and continues to deliver value to its customers, through regular regulatory and feature updates, leading to high customer loyalty. The strong level of reinvestment into innovative product development and outstanding customer support continues to fuel outperformance.

IRIS  continues to build its position as a leading transatlantic software provider, implementing best-in-class systems, processes and cloud development infrastructure to support growth over the next decade, with M&A enabling IRIS to unlock a higher TAM into North America and expand its product offering, this underpins a long-term track record of high-single digit % organic growth.

Performance

IRIS consistently delivers strong organic revenue growth, driven by secular growth and cross-sell and upsell initiatives into a highly loyal base, and expansion into North America. Over H1 2022, a decline in public ratings, used in the valuation process, has led to a decrease of £8.3 million in HGT's position in IRIS.

Exit

We believe IRIS will be an attractive software business acquisition target for private equity buyers as it demonstrates high levels of organic revenue growth, strong net recurring revenue and high EBITDA margins, coupled with a leading sector position and large growth opportunity, particularly in USA.

For a full case study on IRIS, please visit: www.hgcapitaltrust.com/investment-portfolio/case-studies/iris.aspx

P&I

providing integrated software for human resources management to the German and European Mittelstand

08	Investment date	Location	Cluster	Website
	March 2020	Germany	ERP & Payroll	pi-ag.com

HGT's investment through G7, S1 and co-investment through HGT LP
Hg clients' total equity:	64.4%
Unrealised value (£000):	80,612
% of NAV:	4.0%

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Recurring revenue

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Long-term growth

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Thousands of customers

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Platform for M&A

Business description

Founded in 1968 and headquartered in Wiesbaden, Germany, Personal & Informatik AG ('P&I') is a leading provider of payroll and strategic HR software and services. A full suite provider of cloud-based HR software solutions, P&I's mission-critical integrated SaaS platforms allow HR functions to be managed efficiently, delivering strong value for its customers and a truly differentiated experience for its users. Through constant innovation, and with its fully integrated, end-to end SaaS suite, P&I provides technologically advanced HR software to its clients with a superior level of service.

P&I has secured its position as a leader in its segment and serves over 15,000 end customers, ranging from small and medium-sized private businesses (SMB) to public sector organisations of all sizes, mainly in Germany, Switzerland and Austria (DACH region).

Why we invested

Hg is a serial investor in the regulatory‑driven software space and continues to see attractive, long‑term growth for leading and innovative players in the sector. P&I's scalable subscription‑based platform exhibited characteristics within Hg's core focus: a broad, diversified and loyal customer base; strong position in the DACH payroll and HR market; exceptional historical operating performance, with over 10 years' consistent revenue and EBITDA growth. We believe that the SaaS migration of the existing customer base and the expansion of the HRaaS offering, complemented by value‑accretive M&A, will contribute to driving highly profitable growth over the next few years.  

Value creation

Hg initially invested in P&I in 2013 and retained a minority investment in 2016, following its majority sale to funds advised by Permira - which delivered a 36% IRR and 2.3x original cost investment multiple. P&I is a driver of innovation in HR technology and stands out in the German HR software space as the only provider of a fully integrated payroll and HCM SaaS suite for the mid-market. Its advanced SaaS product set allows HR tasks to be managed in the most modern and efficient manner, delivering strong value to its customers and a truly differentiated experience to its users. In March 2020, Hg completed an investment, via the Hg Saturn Fund, to become the majority shareholder again, valuing the company at an enterprise value of around €2 billion.

Performance

Whilst P&I has continued to see very positive trading performance over year-to-date 2022, the EV to EBITDA multiple has reduced slightly, and this has led to a decrease of £5.8 million in the valuation of HGT's stake since December 2021.

Exit

We believe that the combination of an increase in recurring revenues, high cash flow conversion and a strong product will be highly attractive at exit for both trade and financial buyers, as well as public market investors.

Sovos

Sovos is a Leading Provider of Comprehensive Global Tax and Regulatory Compliance Software

09	Investment date	Location	Cluster	Website
	September 2020	North America	Tax & Accounting	sovos.com

HGT's investment through S2 and HGT LP
Hg clients' total equity:	57.1%
Unrealised value (£000):	72,923
% of NAV:	3.6%

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Recurring revenue

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Long-term growth

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Thousands of customers

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Platform for M&A

Business description

A leading global provider of tax compliance software solutions that helps customers manage an increasingly complex end-to-end tax determination and regulatory reporting process. Sovos' solutions manage all aspects of the tax compliance process from tax calculation, forms completion, and ultra-high volume filing to state and local revenue departments. At the heart of the Sovos software suite is a powerful tax-calculating engine, leveraging the industry's most comprehensive repository of over 210 million tax rules, in more than 19k jurisdictions, across more than 200 countries.

Headquartered in Boston, US with over 2,200 employees spread across 14 countries, Sovos has a growing presence in Europe and Latin America, with over 100k customers globally and products capable of serving both large enterprises and SMEs.

Why we invested

Hg had tracked Sovos for several years, investing initially in 2016. In 2020, Hg Genesis 7 exited its investment and Hg Saturn 2 acquired a majority stake in the company alongside TA Associates. We identified Sovos initially as a scale specialist in tax compliance for enterprise customers, with the opportunity to expand outside of the US market. This has played out and we will continue to build on this during the next leg of growth via Hg Saturn 2. Sovos sits right in the 'Hg sweet‑spot', with a strong and predictable business model, including c. 93% contractually recurring revenue, a fragmented loyal customer base, and high margins.

Value creation

In addition to continuing to grow revenues organically, Sovos has a strong track record of M&A. The market remains fragmented and we believe that there are many attractive opportunities for Sovos to grow by acquisition, with additional potential through further margin improvement. Sovos has completed several acquisitions since 2016, while Hg continues to support management in further M&A opportunities, as well as key pricing-improvement initiatives and in operationalising the customer success team, leading to higher customer loyalty.

Sovos underwent rapid internationalisation under Hg's leadership in the first leg of its journey and is well-positioned to continue to benefit from long term global trends in tax compliance and regulation.

Performance

Sovos has seen rapid growth since our initial investment driven by a combination of organic and inorganic growth. We have been successful in deploying material capital into M&A and see several additional opportunities ahead of us. Whilst performance remains strong, lower public market comparators have led to a decrease of £5.6 million in the valuation of HGT's stake over the period.

Exit

We believe Sovos will be an attractive acquisition target for private equity buyers given its robust revenue growth, EBITDA margins, and strong market positioning. Other potential routes to exit include an IPO or selling to several potential trade buyers.  

MeinAuto Group

the leading online retailer for new cars in Germany

10	Investment date	Location	Cluster	Website
	December 2017	Germany	Automation & Engineering	meinauto.de

HGT's investment through G8
Hg clients' total equity:	82.5%
Unrealised value (£000):	63,626
% of NAV:	3.1%

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Recurring revenue

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Long-term growth

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Thousands of customers

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Platform for M&A

Business description

MeinAuto Group ('MeinAuto') provides customers with easy access to automotive subscriptions via end-to-end online journeys. It is transforming the traditional approach of vehicle retailing, from an offline service to an integrated digital delivery model.

MeinAuto operates three brands and the company's products range from traditional mobility offerings, such as vehicle purchasing, to innovative flat rate offers. Its operations are highly automated, including tailored online front ends, as well as digital back-end processes, allowing it to capture significant economies of scale. The unique selling point for the customer is a richness of choice (unique multibrand offer), ease of use (fast and hassle free) and attractive value (transparent, all-inclusive price).

MeinAuto Group was established following our investment in both MeinAuto.de and Athletic Sport Sponsoring, both leading B2C online platforms for car and mobility subscriptions, and Mobility Concept, a leading bank and OEM-independent fleet leasing provider to B2B customers in Germany.

Why we invested

This continues Hg's strategy to develop technology‑enabled service providers in the automotive financing and distribution space and is the result of considerable sector work undertaken in recent years, including previous investments in Epyx, Eucon, Parts Alliance and Zenith. The €80‑billion German new car market is at a tipping point for online and subscription disruption. Automotive distribution is moving from a traditional, offline, dealership-centric model to a multichannel, online‑enabled structure. MeinAuto actively addresses this transformation - and its product IP and customer access, combined with strong growth and profitability, make it an attractive investment, with a strong management team of visionary leaders in the online car industry. 

Value creation

MeinAuto continues to execute its plan formulated in 2018. Current key focus areas include increasing customer reach, additional partnerships and brand marketing. Furthermore, the team is optimising lead conversion through smart pricing algorithms (Deal Machine) and optimised customer journeys. As such, MeinAuto is the ideal platform for growth, combining highly recurring revenues and a resilient risk profile. Hg is supporting the management of the business in several specific operational areas, while also helping to realise several synergies across the group and additionally looking at further strategic M&A opportunities.

Performance

MeinAuto continues to show strong trading growth, with its car orders outperforming sector growth at very stable margins. HGT's holding in the company is currently valued at £63.6 million.

Exit

We are firmly convinced that a leading platform in online car distribution, specifically when combined with a fully transactional and vertically integrated offering, is of high relevance to strategic buyers in the mobility ecosystem (e.g. large leasing companies and automotive OEMs) and also attractive to financial sponsors.

Other investments

For information regarding Hg's other investments, please visit: hgcapital.com/our-portfolio/

11 insightsoftware
Cluster:	Tax & Accounting
Web:	insightsoftware.com
Date of investment:		September 2021
Unrealised value (£000):		63,227
% of NAV:		3.1%

insightsoftware ('ISW') is a leading provider of reporting, planning and analytics tools into the 'Office of the CFO'. ISW provides a variety of software products/modules that sit around and interact with the core ERP system (SAP, Oracle, Microsoft Dynamics, Infor, etc.) for medium and large enterprise customers.

Headquartered in Raleigh, North Carolina, ISW has significant revenues and operations in Europe, and European and global expansion is a core part of its growth plans.

Initiated by TA Associates and ST6 in 2018 as a consolidation platform for financial reporting software, ISW has built up a suite of products via M&A across reporting, budgeting & planning, consolidation, tax, disclosure and equity management and currently services over 28,000 customers on more than 140 ERP systems globally.

12 Septeo
Cluster:	Legal & Regulatory Compliance
Web:	septeo.fr
Date of investment:		December 2020
Unrealised value (£000):		61,814
% of NAV:		3.0%

Founded in 1988, The Septeo Group ('Septeo') is a French provider of ERP software for notaries, law firms, corporate legal departments, bailiffs, real estate professionals, accountants as well as HR solution to SMEs in France. Headquartered in Montpellier and founder owned prior to our investment, the acquisition of Septeo is another example of how Hg's cluster strategy can deliver bilateral opportunities to invest, having tracked the business for many years.

Septeo has over 17,000 clients operating in France, Belgium, Canada and the US.

By putting innovation, long-term vision and customer relationships at the heart of its strategy, Septeo enables expert SMEs to make the most of digital transformation and has a constant stream of new solutions for its clients.

13 teamblue
Cluster:	SME Technology Services
Web:	team.blue
Date of investment:		March 2019
Unrealised value (£000):		51,069
% of NAV:		2.5%

team.blue is a leading European provider of mass hosting services to small offices/home offices and SMEs active across Europe. The business has c. 2.5 million customers and is a one‑stop partner for web hosting, domains, e‑commerce and application solutions.

Hg initially invested in Combell Group, which was focused mainly on the Belgian and Danish sectors with a smaller presence in the Netherlands, in March 2019, before supporting the transformational acquisition of TransIP Group, also focused on the Netherlands, in June 2019. Finally, in September 2019, team.blue acquired Register Group, which focuses on growth sectors in Southern Europe, Italy and Spain, as well the UK and Ireland). Following these acquisitions, the combined group rebranded as team.blue.

In July 2022, Hg Genesis 10 acquired a c.28% stake in team.blue, alongside Hg Genesis 8.

14 Medifox DAN
Cluster:	Healthcare IT
Web:	medifox.de
Date of investment:		October 2018
Unrealised value (£000):		47,027
% of NAV:		2.3%

Medifox DAN ('Medifox') is a leading provider of software solutions to >16,000 outpatient care services, elderly care homes, therapist practices, youth care institutions and non-professional care-givers in Germany. The business supports care providers with key challenges including resource and route planning, care documentation, regulatory compliance and quality assurance of services provided, as well as invoicing, reimbursement and factoring.  Medifox is headquartered in Hildesheim, Germany, and employs >500 people across six locations.

In June, Hg announced the sale of Medifox to ResMed, a global leader in cloud-connected medical devices and out-of-hospital software-as-a-service (SaaS) business solutions, in a transaction valuing the business at an enterprise value of around US $1 billion. This was at an uplift of 47% to the carrying value at the end of 2021.

15 FE fundinfo
Cluster:	Capital Markets & Wealth Management IT
Web:	fefundinfo.com
Date of investment:		January 2017
Unrealised value (£000):		44,166
% of NAV:		2.2%

FE fundinfo is a leading provider of data, analytics software and infrastructure for the global funds industry, facilitating the distribution of retail funds and investment decision-making by banks, asset and wealth managers. The business connects fund managers and fund distributors and enables them to share and act on trusted, insightful data.

Initially formed via three Hg-led acquisitions (the merger of FE, fundinfo and F2C). The business has also executed on more than five M&A deals under Hg's ownership, with four strategic M&A deals over 2020-H1 2022 (CSSP, CashCalc, Zenith and FundConnect).

The business is headquartered in London, with other key offices in Luxembourg, Zurich and Sydney, and has >900 employees today.

16 Norstella
Cluster:	Healthcare IT
Web:	norstella.com
Date of investment:		September 2021
Unrealised value (£000):		42,311
% of NAV:		2.1%

MMIT Evaluate combined MMIT, a leading provider of US 'gold standard' pharmaceutical data and Evaluate, a UK based provider of commercial data to the Life Sciences industry. In Q2 2022, the Group rebranded as Norstella and entered into a transformative merger with Pharma Intelligence (Informa), a leader in clinical trials pharma intelligence.

Together, Norstella is one of the top 5 global providers of commercial pharmaceutical data. The business improves patient access to medications and enables PharmaCos to forecast performance and develop strategy.

17 Argus Media
Cluster:	Capital Markets & Wealth Management IT
Web:	argusmedia.com
Date of investment:		January 2020
Unrealised value (£000):		39,389
% of NAV:		1.9%

Founded in 1970, Argus Media ('Argus') produces independent price assessments, essential data and analysis on the international energy and commodity sectors, anchoring physical commodity trade throughout global supply chains and underpinning financial derivatives markets. With over 160 publications and 26,000 price assessments, Argus is one of the two largest price reporting agencies globally and has delivered over 15 years of consistent growth above sector peers, with its offering of critical, proprietary information stemming from significant investment in developing new benchmarks and proven methodologies. Argus provides pricing data and high-quality editorial content to a diverse, global customer base across 140 countries.

18 Azets
Cluster:	Tax and Accounting
Web:	azets.co.uk
Date of investment:		October 2016
Unrealised value (£000):		39,285
% of NAV:		1.9%

Following years of development, Azets (formerly Cogital) was launched in 2017 through the acquisitions and merger of  Visma BPO, Baldwins and Blick Rothenberg to form a platform providing various business services to SMEs in Northern Europe.

Azets is the only modern, integrated, scaled provider of business-critical accounting, tax, payroll, audit and advisory services to SMEs, with considerable opportunity to become the clear leader across Northern Europe in a large market with strong regulatory and technology growth drivers, and resilience to macroeconomic cycles. In the UK, Azets is one of the top 10 national accountancy firms, as defined by Accountancy Age. The Group now has c.100,000 customers with c.7,000 employees operating from offices in the UK, Norway, Sweden, Denmark and Finland, with  >800 offshore employees based in Romania and Estonia, as well as a significant technology team focused on the automation of such services.

19 Lyniate
Cluster:	Healthcare IT
Web:	lyniate.com
Date of investment:		October 2018
Unrealised value (£000):		35,536
% of NAV:		1.8%

Headquartered in Boston, USA, Lyniate is a global leader in healthcare interoperability and data liquidity solutions providing software that serves hospitals, health systems, Health Information Exchanges, Original Equipment Manufacture vendors, public health departments and federal government organisations. In 2019, Rhapsody acquired Corepoint Health, building a global segment leader in a strategic and attractive sector; the combined business subsequently rebranded as Lyniate.  Lyniate is truly global, serving c.1,300 customers in more than 36 countries.

In January 2022, the Hg Mercury 3 Fund agreed to invest in Lyniate alongside Hg Mercury 2. This investment will help continue to build a unique and strategically important global champion in healthcare software.

20 caseware
Cluster:	Tax and Accounting
Web:	caseware.co.uk
Date of investment:		December 2020
Unrealised value (£000):		34,908
% of NAV:		1.7%

Founded in 1988, caseware is a global provider of innovative compliance workflow and data analytics software solutions for Certified Public Accountants ('CPAs') and in-house auditors worldwide.

Based in Toronto, Canada, caseware's primary product is Working Papers which assists in compliance and non-compliance workflows such as audits, statutory accounts, tax and financial statement production, and IDEA, an internal and external financial audit analytics software primarily used by corporates and Governments.

The business has expanded strongly in recent years and now has a global client base across Europe (c.30% revenues and increasing), North America (c.30% revenues) and the Rest of the World (c.40% revenues).

21 Benevity
Cluster:	ERP & Payroll
Web:	benevity.com
Date of investment:		January 2021
Unrealised value (£000):		33,323
% of NAV:		1.6%

Founded in 2008 and headquartered in Calgary, Canada, Benevity is a leading provider of Corporate Social Responsibility ('CSR') SaaS solutions, serving a global client base of c. 900 customers.

The business' unique solutions enable clients to grow their CSR programs, which drive strategic value by improving reputation / brand equity; attracting, motivating and retaining talent; and improving operational efficiency. Benevity's positioning and leading product (modern, pure SaaS with integrated payments) creates a powerful network effect: Benevity has more high quality, large brands as clients than anyone else and more vetted charity links (with automated electronic payment capability) than peers.

Altogether, the business connects c. 900 corporations and their 13.9 million users with more than 2.2 million charities globally in a single scalable platform with unique content and drives annual donation volumes of more than CAD $2.5 billion.

22 itm8
Cluster:	SME & Tech Services
Web:	itm8.com
Date of investment:		August 2018
Unrealised value (£000):		32,709
% of NAV:		1.6%

Founded in 2003, itm8 (formerly IT Relation) provides services which allow SMEs to move their IT infrastructure and operations into the cloud, as well as providing end user support and consulting as part of a full-service IT offering. The company has >1,100 employees across 14 offices supporting thousands of customers and tens of thousands of users in Denmark, Sweden and around the world.

This investment is consistent with Hg's focus on SME Technology Services in Europe, with other activity in this sector including investments in Zitcom (2015), Register (2017) and team.blue (2019), all providers of online hosting services to SMEs.

In 2022 Hg announced the sale of itm8 to Axcel at a 9% uplift to its December value. At 30 June HGT's investment in itm8 rose by £2.6 million from its December 2021 carrying value.

23 Trackunit
Cluster:	Automation & Engineering
Web:	trackunit.com
Date of investment:		June 2021
Unrealised value (£000):		32,159
% of NAV:		1.6%

Founded in 1998, Trackunit is a leading provider of SaaS-based 'Internet of Things' ('IoT') solutions and machine insights to the global construction industry.

The business' solutions allow users to collect and analyse machine data in real-time to deliver actionable, proactive and predictive information, empowering customers with data-driven foresight. From operator safety and machine health to business optimisation, Trackunit's industry-leading SaaS products and services benefit the everyday operations of customers worldwide.

Trackunit is headquartered in Denmark, with offices in the US, Canada, Sweden, Norway, France, the Netherlands, Germany, the UK, Australia, Japan and Singapore.

In November 2021 Trackunit completed the merger with the Industrial IoT division of ZTR, a leading off-highway IoT provider in North America.

24 The Citation Group
Cluster:	SME Technology Services
Web:	citation.co.uk
Date of investment:		December 2020
Unrealised value (£000):		31,726
% of NAV:		1.6%

Founded in 1996, the Citation Group provides long-term, subscription-based Compliance (HR/Employment Law, Health & Safety) and Quality (ISO certification, supplier verification) solutions to over 70,000 SMEs in the UK and Australia. In doing so, it helps SMEs navigate the critical and complex regulatory environment with which they need to comply through its proprietary 'Atlas' technology platform and by providing 24/7 advice from highly skilled and qualified experts.

Hg first invested in Citation in 2016 via the Hg Genesis 7 Fund. Following the exit of the business to KKR in August 2020, we exercised an option to re-invest in the business as a co-controlling stakeholder alongside KKR in December 2020.

25 GGW Holding
Cluster:	Insurance
Web:	ggw.de
Date of investment:		February 2020
Unrealised value (£000):		26,766
% of NAV:		1.3%

GGW Holding ('GGW') is a leading Property & Casualty focused insurance broker mainly serving SMEs in the DACH region. The company spans several B2B insurance brokers across Germany and Austria. To date, 29 platform add-ons have been acquired and now has more than 850 employees. The business plans to acquire further high-quality brokers across the DACH region and has aspirations to expand further beyond DACH.

In September 2021, the Mercury 3 Fund agreed to invest in GGW alongside Mercury 2. The initial equity investment will be used to fund near term M&A in this roll-up of the DACH broker market. Due to continued strong opportunity to acquire high quality and accretive brokers, a further investment was made in January 2022 to fund recent larger M&A.

26 Gen II
Cluster:	Capital Markets & Wealth Mgmt IT
Web:	gen2fund.com
Date of investment:		December 2020
Unrealised value (£000):		25,830
% of NAV:		1.3%

Founded in 2009 and serving a global customer base, Gen II is a transatlantic business with offices in the US (New York, Denver) and Europe (Luxembourg). It is a leading pure-play provider of alternative asset fund administration services, with a diverse customer base of c. 220 clients across different investment strategies including Buyout, Real Estate and Infrastructure.

The business differentiates itself by providing a high-touch and high-quality service to its clients in fund administration, accounting, reporting and regulatory compliance, having shown consistent uninterrupted double-digit growth in revenue and EBITDA over the last 10 years.

27 Prophix
Cluster:	Tax & Accounting
Web:	prophix.com
Date of investment:		February 2021
Unrealised value (£000):		24,640
% of NAV:		1.2%

Founded in 1987 and based in Toronto, Prophix is a leading player in CPM software, serving mid-market companies across multiple industries worldwide - providing planning, budgeting, financial reporting and consolidation software into the 'office of the CFO'.

Prophix's software allows organisations to improve their financial reporting capabilities, while also standardising and streamlining the budgeting process, to generate ROI through a faster time to close, reducing budgeting errors and enabling companies to reforecast in a more agile way.

Prophix is a leader in its segment with a global customer base of 2,300+ customers, industry-leading retention rates (>107% NRR) and a consistently high customer NPS (70+).

28 HHAeXchange
Cluster:	Healthcare IT
Web:	hhaexchange.com
Date of investment:		October 2021
Unrealised value (£000):		22,390
% of NAV:		1.1%

Founded in 2008, HHAX is a leading vendor of state, payer and provider management software in the US homecare space. Its comprehensive solution helps to improve patient outcomes, drive operational efficiency and increase compliance across the homecare ecosystem.

HHAX offers a unique value proposition by addressing the needs of both sides of the payer-provider segments by allowing states' Medicaid offices, payers and providers to interact in real-time, driving automation around core workflows and network effects (i.e. billing, claims management, workforce management, care coordination and documentation, and visit compliance).

With over 1,700 customers, HHAX is a leading player in a vital and growing segment of US healthcare, facilitating over 125 million annual home care visits and driving better outcomes for the most vulnerable and fragile members of society.

29 Revalize
Cluster:	ERP & Payroll
Web:	revalizesoftware.com
Date of investment:		December 2021
Unrealised value (£000):		20,933
% of NAV:		1.0%

Revalize is a platform of niche vertical manufacturing configure, price, quote ('CPQ') solutions providers that was launched in April 2021. With 13 acquisitions of complementary targets in 2021, Revalize has become one of the largest vertically focused vendors in this fragmented category.

It is a leading global provider of software solutions helping manufacturers and distributors optimise revenue operations through design applications, engineering simulations, product selection, visualisations, and data analytics.

Revalize serves over 10,000 customers across North America and Europe, with the aim of becoming a one-stop shop for complex manufacturers who need specialised software to manage the end-to-end process, across the design to sale value chain.

30 TeamSystem
Cluster:	Tax & Accounting/ERP & Payroll
Web:	teamsystem.com
Date of investment:		February 2021
Unrealised value (£000):		19,695
% of NAV:		1.0%

Headquartered in Pesaro, Italy, TeamSystem is a leader in its core business of providing regulatory‑driven software applications to accountants, labour professionals and SMEs. In recent years, it has built a cloud product portfolio with multiple products targeting the micro SME segment, as well as migrating existing on‑premises customers. The company is well positioned to capture the large cloud opportunity in Italy, which is early in cloud adoption, compared with that of other western economies. TeamSystem has a large and diversified customer base, with c 1.5 million customers served by a strong direct sales force and a distribution platform of over 350 software partners. In 2021, HGT sold its minority investment through Hg Genesis 6 and invested £14.3 million through the Hg Genesis 8 Fund.

Financial statements

Income statement

for the six months ended 30 June 2022

	Notes	Revenue return			Capital return			Total return
		Six months ended		Year ended	Six months ended		Year ended	Six months ended		Year ended
		30.6.22	30.6.21	31.12.21	30.6.22	30.6.21	31.12.21	30.6.22	30.6.21	31.12.21
		£000	£000	£000	£000	£000	£000	£000	£000	£000
		(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
Gains on investments and liquidity funds		-	-	-	21,267	272,292	566,130	21,267	272,292	566,130
Losses on priority profit share calls	7(b)	-	-	-	(4,320)	(3,964)	(7,821)	(4,320)	(3,964)	(7,821)
Net income	6	22,517	22,046	47,433	-	-	-	22,517	22,046	47,433
Other expenses	8(a)	(2,836)	(3,524)	(5,703)	-	-	-	(2,836)	(3,524)	(5,703)
Net return before finance costs and taxation		19,681	18,522	41,730	16,947	268,328	558,309	36,628	286,850	600,039
Finance costs	8(b)	(1,470)	(629)	(5,094)	-	-	-	(1,470)	(629)	(5,094)
Net return before taxation		18,211	17,893	36,636	16,947	268,328	558,309	35,158	286,221	594,945
Taxation	10	-	-	192	-	-	-	-	-	192
Net return after taxation		18,211	17,893	36,828	16,947	268,328	558,309	35,158	286,221	595,137
Basic and diluted return per ordinary share	11(a)	3.99 p	4.22 p	8.49 p	3.71 p	63.34 p	128.70 p	7.70 p	67.56 p	137.19 p

The total return column of this statement represents HGT'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 comprehensive income has been presented.

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

No operations were acquired or discontinued during the period.

The following notes form part of these financial statements.

Balance sheet

as at 30 June 2022

	Notes	30.6.22	30.6.21	31.12.21
		£000	£000	£000
		(unaudited)	(unaudited)	(audited)
Fixed asset investments
Investments at fair value through profit or loss:
Unquoted investments		1,597,566	1,343,772	1,678,008
Total fixed asset investments		1,597,566	1,343,772	1,678,008
Current assets - amounts receivable after one year:
Accrued income on fixed assets		128,585	88,271	102,166
Current assets - amounts receivable within one year:
Debtors		7,095	5,637	8,090
Investments at fair value through profit or loss:
Liquidity funds		202,224	217,310	277,049
Uninvested capital in limited partnerships		963	9,835	160
Cash at bank		232,189	11,366	94,280
Total current assets		571,056	332,419	481,745
Creditors - amounts falling due within one year		(2,053)	(1,392)	(2,887)
Net current assets		569,003	331,027	478,858
Creditors - amounts falling due after one year		(136,127)	(35,192)	(151,142)
Net assets		2,030,442	1,639,607	2,005,724
Capital and reserves:
Called-up share capital		11,453	10,976	11,382
Share premium account		372,224	294,344	359,971
Capital redemption reserve		1,248	1,248	1,248
Capital reserve - unrealised		710,013	466,851	712,188
Capital reserve - realised		904,943	841,177	885,821
Revenue reserve		30,561	25,011	35,114
Total equity shareholders funds		2,030,442	1,639,607	2,005,724
Net asset value per ordinary share	11(b)	443.2 p	373.4 p	440.5 p
Ordinary shares in issue at 31 December		458,129,808	439,054,808	455,279,808

The financial statements of HgCapital Trust plc (registered number 01525583) in this announcement (or on pages 60-72 of the full Interim Report and Accounts) were approved and authorised for issue by the Board of Directors on 9 September 2022 and signed on its behalf by:

Jim Strang, Chairman

Richard Brooman, Director

The following notes form part of these financial statements.

Statement of cash flows

for the six months ended 30 June 2022

		Six months ended		Year ended
	Notes	30.6.22	30.6.21	31.12.21
		£000	£000	£000
		(unaudited)	(unaudited)	(audited)
Net cash outflow from operating activities	9	(25,490)	(3,787)	(2,088)
Investing activities:
Purchase of fixed asset investments		(71,127)	(164,881)	(424,336)
Proceeds from the sale of fixed asset investments		28,074	138,987	279,628
Proceeds from fund level refinancing		160,877	-	90,180
Purchase of liquidity funds		-	(135,200)	(195,200)
Redemption of liquidity funds		72,500	57,490	57,490
Net cash inflow/(outflow) from investing activities		190,324	(103,604)	(192,238)
Financing activities:
(Repayment)/Drawdown of loan facility		(15,015)	35,368	152,481
Servicing of finance		(1,470)	(629)	(5,094)
Equity dividends paid		(22,764)	(12,828)	(21,660)
Proceeds from issue of shares		12,324	75,198	141,231
Net cash (outflow) / inflow from financing activities		(26,925)	97,109	266,958
Increase/(decrease) in cash and cash equivalents in the period		137,909	(10,282)	72,632
Cash and cash equivalents at 1 January		94,280	21,648	21,648
Cash and cash equivalents at 30 June/31 December		232,189	11,366	94,280

The following notes form part of these financial statements.

Statement of changes in equity

for six months ended 30 June 2022

		Non-distributable				Distributable
	Notes	Share capital £000	Share premium  account  000	Capital  redemption  reserve £000	Capital  reserve - unrealised £000	Capital reserve - realised £000	Revenue  reserve £000	Total £000
At 1 January 2021		10,400	219,722	1,248	240,712	798,988	19,946	1,291,016
Net return after taxation		-	-	-	226,139	42,189	17,893	286,221
Contributions of equity net of transaction costs		576	74,622	-	-	-	-	75,198
Equity dividends paid	4	-	-	-	-	-	(12,828)	(12,828)
At 30 June 2021		10,976	294,344	1,248	466,851	841,177	25,011	1,639,607
At 1 July 2021		10,976	294,344	1,248	466,851	841,177	25,011	1,639,607
Net return after taxation		-	-	-	245,337	44,644	18,935	308,916
Contributions of equity net of transaction costs		406	65,627	-	-	-	-	66,033
Equity dividends paid	4	-	-	-	-	-	(8,832)	(8,832)
At 31 December 2021		11,382	359,971	1,248	712,188	885,821	35,114	2,005,724
At 1 January 2022		11,382	359,971	1,248	712,188	885,821	35,114	2,005,724
Net return after taxation		-	-	-	(2,175)	19,122	18,211	35,158
Contributions of equity net of transaction costs		71	12,253	-	-	-	-	12,324
Equity dividends paid	4	-	-	-	-	-	(22,764)	(22,764)
At 30 June 2022		11,453	372,224	1,248	710,013	904,943	30,561	2,030,442

The following notes form part of these financial statements.

Notes to the financial statements

1.  Principal activity

The principal activity of HGT is investment. HGT is an investment company as defined by section 833 of the Companies Act 2006 and an investment trust under sections 1158 and 1159 of the Corporation Tax Act 2010 ('CTA 2010') and is registered as a company in England and Wales under number 01525583, with its registered office at 2 More London Riverside, London, SE1 2AP.

2.  Basis of preparation

The financial statements have been prepared under the historical cost convention, except for the revaluation of financial instruments at fair value as permitted by the Companies Act 2006 and in accordance with applicable UK law and UK Accounting Standards ('UK GAAP'), including Financial Reporting Standard 104 (FRS 104) 'Interim Financial Reporting' and the AIC's Statement of Recommended Practice issued in November 2014 and updated in October 2019 and April 2021.

After making enquiries, the Directors have a reasonable expectation that HGT will have adequate resources to continue in operational existence for the next 12-month period from the date of approval of this report. Accordingly, they continue to adopt the going-concern basis in preparing these financial statements.

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

3.  Organisational structure and accounting policies

Partnerships where HGT is the sole limited partner

HGT entered into eleven separate partnership agreements with general and founder partners in May 2003 (subsequently revised in January 2009), January 2009, July 2011, March 2013, December 2016, February 2017, January 2018, February 2018, February 2020, December 2021 and April 2022; at each point, an investment-holding limited partnership was established to carry on the business of an investor, with HGT being the sole limited partner in these entities.

The purpose of these partnerships, HGT LP, HGT 6 LP, HGT 7 LP, HGT 8 LP, HgCapital Mercury D LP, HGT Mercury 2 LP, HGT Saturn LP, HGT Transition Capital LP, HGT Saturn 2 LP, HGT Genesis 9 LP, HGT Mercury 3 LP, HGT Saturn 3 LP and HGT Genesis 10 LP (together the 'primary buyout funds'), is to hold all of HGT's investments in primary buyouts. Under the partnership agreements, HGT made capital commitments into the primary buyout funds, with the result that HGT now holds direct investments in the primary buyout funds and an indirect investment in the fixed-asset investments which are held by these funds, as it is the sole limited partner. These direct investments are included under fixed-asset investments on the balance sheet and in the table of investments above or on page 37 of the full Interim Report and Accounts. The underlying investments which are held indirectly are included in the overview of investments above or on page 44 of the full Interim Report and Accounts.

HGT does not have control over the operating, financial or governance activities of the limited partnerships in which it is the sole limited partner. The general partner of these partnerships has the day to day control and ultimate decision making powers over the activities of these partnerships. As a result, these limited partnerships are not consolidated in the financial statements.

Partnerships where HGT is a minority limited partner

In July 2011, HGT acquired a direct secondary investment in HgCapital 6 E LP ('Hg 6 E LP'), one of the partnerships which comprise the Hg 6 Fund, in which HGT is now a limited partner pari passu with other limited partners. This is a direct investment in the Hg 6 E LP Fund.

HGT also entered into partnership agreements with other limited partners, with the purpose of investing in renewable energy projects, by making capital commitments in Asper Renewable Power Partners LP ('Asper RPP I LP'). This is a direct investment in the renewable funds, as shown on the balance sheet and in the table of investments above or on page 37 of the full Interim Report and Accounts.

Priority profit share and other operating expenses, payable by partnerships in which HGT is a minority limited partner, are recognised as unrealised losses in the capital return section of the income statement and are not separately disclosed within other expenses.

Priority profit share and carried interest under the primary buyout limited partnership agreements

Under the terms of the primary buyout fund limited partnership agreements ('LPAs'), each general partner (see note 7) is entitled to appropriate, as a first charge on the net income of the funds, an amount equivalent to its priority profit share ('PPS'). HGT is entitled to net income from the funds, after payment of the PPS.

In years in which these funds have not yet earned sufficient net income to satisfy the PPS, the entitlement is carried forward to the following years. The PPS is payable quarterly in advance, even if insufficient net income has been earned. Where the cash amount paid exceeds the net income, an interest-free loan is advanced to the general partner by these primary buyout funds, which is funded by a capital call from HGT. Such loan is recoverable from the general partner only by an appropriation of net income until net income is earned.  At the HGT level such a call is expensed in the capital column as these amounts are not recoverable (see note 7(b)).

Furthermore, under the primary buyout funds' LPAs, each founder partner (see note 7(c)) is entitled to a carried-interest distribution, once certain preferred returns are met. The LPAs stipulate that the primary buyout funds' capital gains or net income, after payment of the carried interest, are allocated to HGT, when the right to these returns is established.

Accordingly, HGT's entitlement to net income and net capital gains is shown in the appropriate lines of the income statement. Notes 6, 7 and 9 to the financial statements disclose the gross income and gross capital gains of the primary buyout funds and also reflect the proportion of net income and capital gains in the buyout funds which has been paid to the general partner as its PPS and to the founder partner as carried interest, where applicable.

The PPS paid from net income is charged to the revenue account in the income statement, where there is insufficient income PPS is charged as an unrealised 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 receivable

As stated above, all income that is recognised by the primary buyout funds, net of PPS, is allocated to HGT and recognised when the right to this income is established. Income from Hg 6 E LP and the renewable energy funds would normally consist of income distributions and these distributions are recognised as income in the financial statements of HGT when the right to such distribution is established.

The accounting policies below apply to the recognition of income by the primary buyout funds, prior to allocation between the Partners:

Interest income on non-equity shares and fixed income securities is recognised on a time apportionment basis so as to reflect the effective yield when it is probable that it will be realised. Dividends receivable on unlisted equity shares where there is no ex-dividend date and on non-equity shares are brought into account when the right to receive payment is established.

Income from listed equity investments, including taxes deducted at source, is included in revenue by reference to the date on which the investment is quoted ex-dividend. Where dividends are received in the form of additional shares rather than cash dividends, the equivalent of the cash dividend is recognised as the income in the revenue account and any excess in the value of the shares received over the amount of the cash dividend is recognised in the capital reserve - realised.

4.  Dividends

A final dividend of 5.0p per share was paid on 13 May 2022 in respect of the year ended 31 December 2021 (2021: interim dividend in respect of the year ended 31 December 2021 of 2.0p per share and final dividend of 3.0p per share in respect of the year ended 31 December 2020).

5.  Issued share capital

While HGT no longer has an authorised share capital, the Directors will still be limited as to the number of shares they can allot at any time, as the Companies Act 2006 requires that Directors seek authority from shareholders for the allotment of new shares.

	Six months ended				Year ended
	30.6.22		30.6.21		31.12.21
	(unaudited)		(unaudited)		(audited)
	No. 000	£000	No. 000	£000	No. 000	£000
Ordinary shares of 2.5p each:
Allotted, called up and fully paid:
At 1 January	455,280	11,382	416,000	10,400	416,000	10,400
Sub-division of ordinary shares	-	-	-	-	-	-
Issues of ordinary shares	2,850	71	23,055	576	39,280	982
At 30 June/31 December	458,130	11,453	439,055	10,976	455,280	11,382
Total called-up share capital	458,130	11,453	439,055	10,976	455,280	11,382

6.  Income

	Revenue return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Total net income comprises:
Interest	22,517	22,046	44,954
Dividend	-	-	2,479
Total net income	22,517	22,046	47,433

All income which is recognised by the primary buyout funds, net of PPS, is allocated to HGT and recognised when the right to this income is established. This income and PPS are analysed further below.

	Revenue return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Income from investments held by the primary buyout funds
Unquoted investment income	27,785	25,512	52,862
Dividend Income	-	-	2,479
Other investment income:
Unquoted investment income	-	8	8
Liquidity funds income	798	206	648
Total investment income	28,583	25,726	55,997
Total other income	(4)	(6)	-
Total income	28,579	25,720	55,997
Priority profit share charge against income:
Current year - HGT Genesis 9 LP	(2,258)	(396)	(1,440)
Current year - HGT 8 LP	(2,119)	(1,568)	(3,946)
Current year - HGT Saturn LP	(710)	(649)	(1,388)
Current year - HGT Mercury 3 LP	(631)	-	-
Current year - HGT Titan 1 LP	(183)	-	(55)
Current year - HGT 7 LP	(113)	(396)	(400)
Current year - HgCapital Mercury D LP	(48)	(95)	(154)
Current year - HGT Mercury 2 LP	-	(548)	(1,154)
Current year - HGT LP	-	(22)	(27)
Total priority profit share charge against income (note 7(a))	(6,062)	(3,674)	(8,564)
Total net income	22,517	22,046	47,433

7.  Priority profit share and carried interest

(a) Priority profit share payable to general partners	Revenue return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Priority profit share payable:
Current period amount	10,382	7,639	16,385
Less: Current period loans advanced to general partners (note 7(b))	(4,320)	(4,296)	(8,153)
Add: Prior period loans recovered from general partners (note 7(b))	-	332	332
Current period charge against income	6,062	3,675	8,564
Total priority profit share charge against income	6,062	3,675	8,564

The priority profit share payable on the primary buyout funds ranks as a first appropriation of net income from investments held in these partnerships respectively and is deducted before such income is attributed to HGT in its capacity as a limited partner. The net income of the primary buyout funds earned during the period, after the deduction of the priority profit share, is shown on the income statement.

The terms of the above priority profit share arrangements during 2022 were:

Primary buyout fund partnership	Priority profit share
HGT Genesis 10 LP	1.75% on the fund commitment during the investment period
HGT Genesis 9 LP	1.75% on the fund commitment during the investment period
HGT Mercury 3 LP	1.75% on the fund commitment during the investment period
HGT 8 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT Mercury 2 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT 7 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HgCapital Mercury D LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT Saturn 3 LP	1.0% on the fund commitment during the investment period
HGT Saturn 2 LP	1.0% on the fund commitment during the investment period
HGT Saturn LP	1.0% on invested capital
HGT LP	1.0% on invested capital excluding co-investment

(b) Priority profit share loans to general partners within the underlying limited partnerships	Capital return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Movement on loans to general partners:
Losses on current-period loans advanced to general partners	(4,320)	(4,296)	(8,153)
Gains on prior-period loans recovered from general partners	-	332	332
Total losses on priority profit share loans advanced to general partners	(4,320)	(3,964)	(7,821)

In years in which the funds have not yet earned sufficient net income to satisfy the priority profit share, the entitlement is carried forward to the following years. The priority profit share is payable quarterly in advance, even if insufficient net income has been earned. Where the cash amount paid exceeds the net income, an interest-free loan is advanced to the general partner by these primary buyout funds, which is funded via a loan from HGT. Such loan is recoverable from the general partner only by an appropriation of net income, until sufficient net income is earned. No value is attributed to this loan and hence an unrealised capital loss is recognised and reversed, if sufficient income is subsequently generated.

(c) Carried interest to founder partners	Capital return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Carried interest charge against capital gains:
Current year charge against realised capital gains	-	20,910	32,472
Current period charge against unrealised capital gains	40,942	42,460	90,063
Total carried-interest charge against capital gains	40,942	63,370	122,535

The carried interest payable ranks as a first appropriation of capital gains, after preferred return, on the investments held in the primary buyout funds, limited partnerships established solely to hold HGT's investments, and is deducted before such gains are paid to HGT in its capacity as a limited partner. The net amount of capital gains of the primary buyout funds during the period, after the deduction of carried interest, is shown in the income statement.

The details of the carried-interest contracts, disclosed in the Directors' report on page 114 in the full 2021 annual report and accounts, state that carried interest is payable once a certain level of repayments has been made to HGT. Based on the repayments made during 2022, nil (2021: £32,472,000) of carried interest was paid in respect of the current financial year. If the investments in HGT 6 LP, HGT 7 LP, HgCapital Mercury D LP, Hg 6 E LP, HGT 8 LP, HGT Mercury 2 LP, HGT Saturn LP, HGT Genesis 9 LP and HGT Saturn 2 LP are realised at the current fair value and then distributed to partners, an amount of £212,521,000 will be payable to the founder partner (2021: £171,579,000 payable to the founder partner); therefore, the Directors have made a provision for this amount. No provision is required in respect of HGT's investment in the other fund-limited partnerships, because they are still in their investment period.

8.  Other expenses

(a) Operating expenses	Revenue return
	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Registrar, management and administration fees	616	358	1,544
Legal and other administration costs¹	2,220	3,166	4,159
Total other expenses	2,836	3,524	5,703

¹ Includes employer's National Insurance contributions year to date of £29,000 (Full year 2021: £38,000).

	Revenue return
	Six months ended		Year ended
(b) Finance costs	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Interest paid	537	142	1,677
Non-utilisation fees and other expenses	2,142	16	2,279
Arrangement fees	(1,209)	471	1,138
Total finance costs	1,470	629	5,094

9.  Cash flow from operating activities

Reconciliation of net return before finance costs and taxation to net cash flow from operating activities	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21
	£000	£000	£000
	(unaudited)	(unaudited)	(audited)
Net return before finance costs and taxation	36,628	286,850	600,039
Gains on investments held at fair value and liquidity funds	(75,201)	(315,412)	(657,515)
Carried interest paid	-	(20,910)	(32,472)
Increase in carried interest provision	40,942	42,460	90,063
Increase in accrued income from liquidity funds	(798)	(206)	(648)
Increase in accrued income and other debtors	(25,424)	(13,427)	(29,775)
(Decrease)/increase in creditors	(834)	222	1,717
(Increase)/decrease in uninvested capital	(803)	16,636	26,311
Taxation (paid)/received	-	-	192
Net cash outflow from operating activities	(25,490)	(3,787)	(2,088)

Gains on investments held at fair value and liquidity funds includes realised and unrealised gains of £85.9 million in relation to gains on investments, and losses of £10.7 million in relation to liquidity funds and fund level facilities.

10.  Taxation

Taxation for the six-month period is charged at 19% (31 December 2021: 19%), representing the best estimate of the average annual effective tax rate expected for the full year, applied to the pre-tax income of the six-month period.

In the opinion of the Directors, HGT has complied with the requirements of Section 1158 and Section 1159 of the CTA 2010 and will therefore be exempt from corporation tax on any capital gains made in the period. Where possible, HGT aims to designate all of any dividends declared in respect of this financial year as interest distributions to its shareholders. These distributions are treated as a tax deduction against taxable income, resulting in no corporation tax being payable by HGT on any interest income designated as a dividend.

11.  Return and net asset value per Ordinary share

(a) Basic and diluted return per ordinary share	Revenue return			Capital return
	Six months ended		Year ended	Six months ended		Year ended
	30.6.22	30.6.21	31.12.21	30.6.22	30.6.21	31.12.21
	(unaudited)	(unaudited)	(audited)	(unaudited)	(unaudited)	(audited)
Amount (£000):
Net return after taxation	18,211	17,893	36,828	16,947	268,328	558,309
Weighted average number of ordinary shares (000):
Weighted average number of ordinary shares in issue	456,727	423,616	433,799	456,727	423,616	433,799
Basic and diluted return per ordinary share (pence)	3.99	4.22	8.49	3.71	63.34	128.70

	Capital return
	Six months ended		Year ended
(b) Net asset value per ordinary share	30.6.22	30.6.21	31.12.21
	(unaudited)	(unaudited)	(audited)
Amount (£000):
Net assets	2,030,442	1,639,607	2,005,724
Number of ordinary shares (000):
Number of ordinary shares in issue	458,130	439,055	455,280
Net asset value per ordinary share (pence)	443.2	373.4	440.5

12.  Commitment in fund partnerships and contingent liabilities

Fund	Original commitment		Outstanding at
		1	30.6.22		30.6.21	31.12.21
	£000		£000		£000	£000
			(unaudited)		(unaudited)	(audited)
HGT Saturn 3 LP	883,355	2	883,355		-	627,538
HGT Genesis 10 LP	344,323	3	344,323		-	-
HGT LP	102,923	4	102,923		72,385	92,285
HGT Saturn 2 LP	329,354	5	63,583		131,191	67,835
HGT Genesis 9 LP	309,891	6	50,624		208,107	66,162
HGT 8 LP	350,000		48,872		51,394	51,499
HGT Mercury 3 LP	98,993	7	35,282		89,609	64,033
HGT Saturn LP	150,000		15,134		8,057	15,944
HgCapital Mercury D LP	60,000	9	3,265		3,277	3,265
HGT Mercury 2 LP	80,000		1,566		5,087	1,849
Asper RPP I LP	18,628	8	596	10	594	581
HGT 7 LP	200,000	9	829		987	992
HGT Transition Capital LP	75,000		-		49,551	-
HGT 6 LP	285,029	9	-		2,250	-
Hg6E	15,000	9	-		118	-
Total outstanding commitments			1,550,349		622,607	991,983

¹ HGT has the benefit of an opt-out provision in connection with its commitments to invest alongside Hg Mercury 2, Hg Mercury 3, Hg Saturn, Hg Saturn 2, Hg Saturn 3, Hg Genesis 8, Hg Genesis 9 and Hg Genesis 10, allowing it to opt out of its obligation to fund draw-downs under its commitments, without penalty, where certain conditions exist.

² Sterling equivalent of $1,075 million.

³ Sterling equivalent of €400 million.

⁴ Sterling equivalent of $125 million of junior debt.

⁵ Sterling equivalent of $400 million.

⁶ Sterling equivalent of €360 million.

⁷ Sterling equivalent of €115 million.

⁸ Sterling equivalent of €21.6 million.

⁹ 5.5% of the original £300 million to the HgCapital 6 Fund, 7.6% of the £60 million to the Mercury 1 Fund and 12.4% of the original £200 million to the HgCapital 7 Fund have subsequently been cancelled, as the Manager deemed that it was unlikely to be required.

¹⁰ Sterling equivalent of €692,000 (2021: €692,000).

13.  Publication of non-statutory accounts

The financial information contained in this half-yearly financial report does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The financial information for the six months ended 30 June 2022 and 30 June 2021 has not been audited or reviewed by the Audtior pursuant to the Auditing Practices Board Guidance on 'Review of Interim Financial Information'. The information for the year ended 31 December 2021 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The Auditors' Report on those accounts was not qualified, did not include a reference to any matters to which the Auditors drew attention by way of emphasis without qualifying its report and did not contain statements under sections 498 (2) or (3) of the Companies Act 2006.

14.  Annual results

The Board expects to announce the results for the year ending 31 December 2022 in March 2023. The 2022 annual report should be available by the end of March 2023, with the annual general meeting being held in May 2023.

Further information

Investment management and ongoing charges

Over the first six months of 2022, HGT's assets were managed by Hg Pooled Management Limited ('Hg'). HGT pays a priority profit share in respect of either its commitments to or invested capital alongside Hg funds, on similar terms as those payable by all institutional investors in these funds as listed below:

Fund partnership	Priority profit share (% p.a)
HGT Genesis 10 LP	1.75% on the fund commitment during the investment period
HGT Genesis 9 LP	1.75% on the fund commitment during the investment period
HGT Mercury 3 LP	1.75% on the fund commitment during the investment period
HGT 8 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT Mercury 2 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT 7 LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HgCapital Mercury D LP	1.5% of original cost of investments in the fund, less the original cost of investments which have been realised or written off
HGT Saturn 3 LP	1.0% on the fund commitment during the investment period
HGT Saturn 2 LP	1.0% on the fund commitment during the investment period
HGT Saturn LP	1.0% on invested capital
HGT LP	1.0% on invested capital excluding co-investment

For HGT's investment alongside the Hg Genesis 6, Hg Genesis 7, Hg Genesis 8, Hg Genesis 9, Hg Genesis 10, Hg Mercury, Hg Mercury 2, Hg Mercury 3, Hg Saturn 2 and Hg Saturn 3 funds, the carried interest arrangements are identical to that which applies to all limited partners in these funds. Under these arrangements, carried interest is payable based on 20% of the aggregate profits, but only after the repayment to HGT of its invested capital and a preferred return, based on 8% p.a., calculated daily, on the aggregate of its net cumulative cash flows in each fund and such preferred return amount which is capitalised annually.

For HGT's investment alongside the Hg Saturn fund, the carried interest arrangement is also identical to that which applies to all limited partners in this fund. Under this arrangement, carried interest is payable based on 12% of the aggregate profits, payable after the repayment to HGT of its invested capital and a preferred return based on 8% p.a. or 20% of the aggregate profits, payable after the repayment to HGT of its invested capital and a preferred return of 12% p.a..

No priority profit share or carried interest will apply to any co-investment made alongside Hg Genesis 5, Hg Genesis 6, Hg Mercury, Hg Genesis 7, Hg Mercury 2, Hg Genesis 8, Hg Saturn 2, Hg Genesis 9, Hg Mercury 3, Hg Saturn 3 and Hg Genesis 10 in excess of HGT's pro-rata commitment. Therefore, the co-investments made by HGT in P&I, Visma, Azets (formerly CogitalGroup), Mitratech, Commify, MediFox, Argus Media, smartTrade, Transporeon, Norstella, F24, Geomatikk, Benevity, Silverfin, Dext,insightsoftware, Lyniate, Riskalyze and Pirum do not entitle Hg to any priority profit share or carried interest.

No compensation would be due to Hg on termination of the agreement.

Hg has also been appointed as administrator of HGT for a fee equal to 0.1% p.a. of the NAV.

Link Company Matters Limited was appointed as company secretary on 13 May 2015.

Calculation of ongoing charges

For the period to 30 June 2022, HGT's annualised ongoing charges were calculated as 1.3% (30 June 2021: 1.6%).

The calculation is based on the ongoing charges (numerator) expressed as a percentage of the average published NAV (denominator) over the relevant year.

The ongoing charges, in accordance with guidelines issued by The Association of Investment Companies ('AIC'), are the annualised expenses which are operational and recurring by nature and specifically exclude, among others, the expenses and gains or losses relating to the acquisition or disposal of investments, performance-related fees (such as carried interest), taxation and financing charges.

HGT's ongoing charges consist of its current year priority profit share payable of £10.4 million and operating expenses of £2.8 million as described in notes 7 and 8 to the financial statements respectively. The average NAV for the period to 30 June 2022 was £2.0 billion. This has been annualised for the full year 2022.

Shareholder information

Financial calendar

The announcement and publication of HGT's results may normally be expected in the months shown below:

March	• Final results for year announced • Annual report and accounts published
May	• Annual general meeting and payment of final dividend • Release of Manager's quarterly update with updated 31 March NAV
September	• Interim figures announced and interim report published
October	• Payment of interim dividend
November	• Release of Manager's quarterly update with updated 30 September NAV

Dividend

The interim dividend proposed in respect of the year ended 31 December 2022 is 2.5 pence per share.

Ex-dividend date (date from which shares are transferred without dividend)	22 September 2022
Record date (last date for registering transfers to receive the dividend)	23 September 2022
Last date for registering DRIP instructions (see below)	3 October 2022
Dividend payment date	24 October 2022

Payment of dividends

Cash dividends will be sent by cheque to the first-named shareholder at their registered address, to arrive on the payment date. Alternatively, dividends may be paid direct into a shareholder's bank account. This may be arranged by contacting HGT's registrar, Computershare Investor Services PLC ('Computershare'), on 0370 707 1037.

Dividend re-investment plan ('DRIP')

Shareholders may request that their dividends be used to purchase further shares in HGT.

Dividend re-investment forms may be obtained from Computershare on 0370 707 1037 or may be downloaded from www.computershare.co.uk/DRIP. Shareholders who have already opted for dividend re-investment do not need to re-apply. The last date for registering for this service for the forthcoming dividend is  3 October 2022. 

Directors

Jim Strang
(Chairman)

Richard Brooman
(Chairman of the Audit, Valuations and Risk Committee)

Pilar Junco

Guy Wakeley

Anne West
(Senior Independent Director)

Erika Schraner
(Chair of the Management Engagement Committee, appointed on 1 August 2022)

Company secretary

Link Company Matters Limited
65 Gresham Street
London
EC2V 7NQ

Telephone: [phone]

Registered office

2 More London Riverside
London
SE1 2AP

Registered number

01525583

Website

www.hgcapitaltrust.com

Investment manager

Hg Pooled Management Limited¹
2 More London Riverside
London
SE1 2AP

Telephone: [phone]
www.hgcapital.com

Registrars and transfer office

Computershare Investor Services PLC¹
The Pavilions
Bridgwater Road
Bristol
BS99 6ZZ

Telephone: [phone]

www.computershare.com/uk

Broker

Numis Securities Ltd¹
45 Gresham Street
London
EC2V 7BF

Telephone: [phone]
www.numiscorp.com

Auditor

Grant Thornton UK LLP¹
30 Finsbury Square
London
EC2A 1AG

Telephone: [phone]

www.grantthornton.co.uk

Legal adviser

Dickson Minto
16 Charlotte Square
Edinburgh
EH2 4DF

Telephone: [phone]
www.dicksonminto.com

Bank

The Royal Bank of Scotland International

7th Floor
1 Princes Street
London
EC2R 8BP

Telephone: [phone]
www.rbsinternational.com

Administrator

Hg Pooled Management Limited¹
2 More London Riverside
London
SE1 2AP

Telephone: [phone]
www.hgcapital.com

Depositary

Apex Depositary (UK) Limited¹
6th Floor
140 London Wall
London
EC2Y 5DN

Telephone: [phone]

www.theapexgroup.com

AIC

Association of Investment Companies www.theaic.co.uk

The AIC represents closed-ended investment companies. It helps its member companies through lobbying, media engagement, technical advice, training and events.

The AIC's website includes information about investments via investment companies, including investments in listed private equity companies.

¹ Authorised and regulated by the Financial Conduct Authority.

Neither the contents of the Company's website nor the contents of any website accessible from hyperlinks on this announcement (or any other website) is incorporated into, or forms part of, this announcement.

---

1 By Enterprise Value, Source: Hg, Factset

2 All references to total return allow for all historic dividends being reinvested

Please note: Past performance is not a reliable indicator of future results. The value of shares and the income from them can go down as well as up as a result of market and currency fluctuations. You may not get back the amount you invest.

LEI: 213800J7QUJJBEFSIN38 

 

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