Interim Report and Accounts

RNS Number : 2387M

HgCapital Trust PLC

22 August 2013

 



HgCapital Trust plc

Interim Results for the six months ended 30 June 2013

London, 22 August 2013:  HgCapital Trust plc ("the Trust"), which provides investors with a listed vehicle to invest in all private equity deals managed by HgCapital, today announces its interim results for the six months ended 30 June 2013.

Summary performance

	31 July 2013	30 June 2013	31 December 2012	% Total return*
Share price	1,205.0p	1,132.0p	1,016.0p	+13.6%
NAV per share (diluted)	1,177.4p	1,172.8p	1,221.7p	-2.2%
FTSE All-Share Index				+8.5%
				Movement
Market Capitalisation	£449.8m	£422.5m	£361.3m	+£61.2m
Net Asset Value	£439.5m	£437.7m	£438.0m	-£0.3m

* Assuming reinvestment of all dividends

Financial Highlights

§  Solid revenue and EBITDA growth of 8% and 5% respectively across the top 20 buyout investments over the last 12 months to 30 June 2013.

§  A valuation multiple of 10.8x EBITDA and net debt multiple of 3.9x EBITDA as at 30 June 2013.

§  The period ended with liquid resources of £135.6 million and outstanding commitments of £352.0 million. By 31 August 2013, liquid resources are estimated (including all post period transactions) to be £124.0m (28% of NAV), with expected outstanding commitments of £316.2m (72% of NAV).

§  19.4% p.a. 10-year compound annual growth rate of the share price vs. 9.0% p.a. from the FTSE All-Share Index, both calculated on a total return basis to 30 June 2013.

Operational Highlights

§  Consistent and encouraging growth from the majority of investments.

§  Decision to write-down under-performing investments has materially impacted the half year results:

-       Lumesse and NetNames are experiencing short term performance issues, leading us to reduce the valuation of the Trust's holding by £13.0 million (3% of NAV); in both cases the Manager believes that the investment case for each of these companies remains sound

-       Consumer facing businesses, Teufel and Americana, have continued to perform poorly and we have fully provided against their remaining value, reducing the Trust's NAV by a further £4.6 million (1% of NAV).

§  £46.5m returned to the Trust so far in 2013 including:

-       £7.3 million returned to the Trust from the sale of CSH in March;

-       £22.4 million received from the sale of ATC in August; and

-       £11.6 million from the refinancing of Manx Telecom and Epyx.

§  European bond markets have enabled the refinancing of Voyage Care and TeamSystem, through public bond issues, reducing their debt servicing costs and providing financial flexibility to enable future growth.

§  Three new buy-out investments completed during July and August 2013, deploying £35.0 million for the Trust.

Manager Outlook

§  We have already started to make a number of new investments and, based on our current pipeline, we would expect to complete more new investments over the next six months.

§  A clear area of focus is on the existing portfolio. We are happy with the level of revenue growth but are not yet seeing the operational leverage coming through that we expect.

§  Over the next twelve months we want to see a return on the investment we are making across the portfolio which, if delivered, will see the rate of profit growth accelerate.

§  Where companies have performed behind plan, we are actively working with the management teams to get the businesses back on track.

§  We believe that the above, together with continuing to realise investments for good value, will deliver steady NAV progression over the next couple of years and therefore we are confident that we will continue to reward our investors with superior returns.

Roger Mountford, Chairman of the Trust, commented:

"Our buyout portfolio continues to trade well overall. The Trust's commitments, supported by the Manager's investment in resources across all its chosen sectors, make it well placed to take advantage of opportunities to buy good businesses at reasonable prices over the next three to four years."

- Ends -

The Trust's 2013 Interim Report and a webcast from the Manager to accompany the results are available to view at:  http://www.hgcapitaltrust.com/.

For further details:

HgCapital
Stephen Bough              (CFO, HgCapital)	[phone]
Roger Mountford  (Chairman, HgCapital Trust plc) Maitland	[phone]
Peter Ogden Seda Ambartsumian	[phone] [phone]

About HgCapital Trust plc

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

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

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

In order to meet the requirements of the Disclosure and Transparency Rules, the full text of the interim report and accounts has been included below.

HgCapital Trust plc

INTERIM REPORT AND ACCOUNTS

30 June 2013

INVESTMENT OBJECTIVE

The objective of the Trust is to provide shareholders with long-term capital appreciation in excess of the FTSE All-Share Index by investing in unquoted companies.

The Trust provides investors with exposure to a diversified portfolio of private equity investments primarily in the UK and Continental Europe.

References in this interim report and accounts to HgCapital Trust plc have been abbreviated to 'HgCapital Trust' or the 'Trust'.
HgCapital refers to the trading name of HgPooled Management Limited and HgCapital LLP, who act as the 'Manager'.

PERIOD PERFORMANCE

MARKET CAPITALISATION £423 MILLION

The ordinary share price rose from £10.16 to £11.32 over the period. An increase (on a total return basis) of: +13.6%

NET ASSET VALUE ('NAV') £438 MILLION

The diluted NAV per ordinary share fell from £12.22 to £11.73 over the period following the payment of a 23p dividend. A total return of: -2.2%

LONG-TERM PERFORMANCE - 10 YEAR TOTAL RETURN*

19.4% p.a. - The compound annual growth rate of the HgCapital Trust plc share price over the last 10 years.

£5,867 - How much an investment of £1,000 in HgCapital Trust plc ten years ago would now be worth.

An equivalent investment in the FTSE All-Share Index would be worth £2,364.

*Total return assumes that all dividends have been reinvested

THE PORTFOLIO

HgCapital Trust plc gives investors access to a private equity portfolio of currently 23 active companies, managed by an experienced and well-resourced Manager that makes investments in private companies across Northern Europe in selected parts of the Healthcare, Industrials, Services and TMT sectors.

An investment in HgCapital Trust plc provides exposure to a portfolio of fast growing companies. The top 20 buyout investments currently account for 90% of the portfolio value. These companies have aggregate revenues- of £2.3 billion and EBITDA of £474 million, with net margins of 21%.

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

+8% p.a. revenue growth - The average growth in revenues of the top 20 buyout investments for the 12 months ended 30 June 2013.

+5% p.a. profit growth - The average growth in profits (EBITDA) of the top 20 buyout investments for the 12 months ended 30 June 2013.

10.8x EV/EBITDA multiple - The average valuation multiple used to value the top 20 buyout investments at 30 June 2013.

3.9x Net debt/EBITDA - The average net debt/EBITDA multiple of the top 20 buyout investments at 30 June 2013.

CHAIRMAN'S STATEMENT

Our buyout portfolio continues to trade well overall. The Trust's commitments, supported by the Manager's investment in resources across all its chosen sectors, make it well-placed to take advantage of opportunities to buy good businesses at reasonable prices over the next three to four years.

Performance in the first half

During the period, the Trust's share price performed strongly, rising from £10.16 to £11.32, delivering a total return of 13.6%. This compares well against a total return of 8.5% in the FTSE All-Share Index during the same period.

All the remaining subscription shares that we issued to shareholders in 2010 were exercised at the end of May this year, adding some £18 million to the net assets of the Trust and to the potential liquidity of our shares in the market, while removing any uncertainty about further dilution. This completes a successful share issue that has, in total, raised £110 million, increasing the resources available for investment, growing the market capitalisation of the Trust, improving liquidity in our shares and attracting new, long-term investors onto the register.

Changes in the NAV of the Trust in the first half of the financial year were influenced by a mix of factors, the net effect of which was a decline in diluted NAV per share of -2.2% on a total return basis. Following payment of a 23 pence dividend, diluted NAV at 30 June was £11.73 per share, compared with £12.22 at year-end.

The largest factor in the change in valuations in the buyout portfolio was the £13.0 million (3% of NAV) write-downs of both Lumesse and NetNames, where short-term performance issues have adversely affected their current value; however, the Manager believes that the investment case for each of these companies remains sound and that both businesses are well placed to grow over the course of the next year. In addition, two of the portfolio's consumer-facing businesses, Teufel and Americana, have continued to find trading difficult in the current environment: a full provision against the book value of these investments has been taken, accounting for £4.6 million (1% of NAV).

During the twelve months to June 2013, the revenues of our top twenty buyout investments grew by 8%, and their EBITDA grew by 5%; this was a broadly similar performance to that achieved at December 2012, although slower than a year earlier. The top ten buyout investments, representing 65% of the portfolio value, reported sales growth of 10% and EBITDA growth of 7%. Against an economic background that continues to be challenging, this represents solid growth. Profits in a number of our newer investments were reduced by strategic decisions to invest in the business or to incur expenses that the Manager believes will, in time, contribute to growth and to value; in the short-term, this adversely affects the valuation we ascribe to them. Foreign exchange movements had a positive effect on NAV.

Revenue return in the first six months was 13.11 pence per share, compared with 24.07 pence in the same period of 2012.

Reporting

The Board places great importance on the transparency and clarity of its reporting, as we believe that this not only helps investors to make well-informed decisions but also helps support the level at which our shares trade, compared with the Trust's NAV. Therefore, I am pleased to report that in the awards made by the Association of Investment Companies, our annual report and accounts were again selected as the best-in-class among specialist investment companies.

Prospects

Most businesses in the portfolio continue to achieve solid growth in revenues and profits, despite the lack of confidence in most of their markets, providing assurance that value continues to be steadily created. A few of our investments are exposed to consumer or public sector spending, which continues to affect their short-term prospects.

No new investments were made in the first half of the year, but £4.2 million was deployed primarily in the renewables fund. However, the Manager was seeing a good flow of attractive buyout opportunities and since the period-end has announced three new investments into which the Trust has deployed over £35 million; adhering to its pricing discipline, the Manager was outbid for some other businesses, providing evidence that both trade and private equity acquirers are keen to invest and able to raise finance. This is positive for the realisation of assets in the portfolio.

During the half-year period, the Trust received £24.2 million in proceeds from full or partial realisations and refinancings. The holding in Computer Software Holdings (CSH) was sold fourteen months after its acquisition with IRIS; the Manager's strategy was to separate the two businesses and then retain IRIS in order to realise its greater potential. CSH was sold for 1.5x cost, achieving a gross IRR of 36% p.a. Two buyout investments, Manx Telecom and Epyx, were refinanced, releasing £11.6 million to the Trust. Since the period-end, the Manager completed the sale of ATC, achieving proceeds to the Trust of £22.4 million, a return of 2.3x original cost and a gross IRR of 40% p.a.

In addition, in the Manager's first renewables fund, the entire UK onshore wind development assets were sold in January to Blue Energy at a multiple of 1.6x original cost, delivering a gross IRR of 15% p.a. Continuing uncertainty created by the Spanish government is unwelcome, but those of our renewable assets in Spain that are affected represent only a small proportion of the Trust's portfolio.

Following the latest transactions announced, the Trust is estimated to have liquid resources totalling £124 million by 31 August 2013. Whilst the buyout portfolio remains relatively immature, there are likely to be further liquidity opportunities through both refinancing and some potential exits over the next twelve months. The assets of the Trust are expected to be increasingly fully invested for some time, before cash spinning off the existing portfolio exceeds drawdowns under current commitments. Against this background, the Trust's commitment to invest alongside the Manager's Hg7 fund was finalised at £200 million. HgCapital 7 provides the Manager with £2 billion of funds to continue to implement its investment strategy.

Together with the Trust's commitment to the Manager's Mercury fund and the tail of residual commitments to earlier funds, the Trust had some £352 million in outstanding investment commitments, which has reduced to £316 million following the post period-end transactions.

With these commitments, supported by the Manager's investment in resources across all its chosen sectors, the Trust looks well-placed to take advantage of opportunities to invest in good businesses at reasonable prices over the next three to four years. Meanwhile, robust trading in the existing buyout portfolio will lead to value being steadily added, continuing to reward patient investors seeking long-term capital growth.

Roger Mountford

Chairman

21 August 2013

INTERIM MANAGEMENT REPORT & RESPONSIBILITY STATEMENT

Interim management report

The important events that have occurred during the period under review are set out in the Chairman's statement and in the Manager's review, which also include the key factors influencing the financial statements.

The Directors do not consider that the principal risks and uncertainties have changed since the publication of the annual report for the year ended 31 December 2012. A detailed explanation of the risks summarised below can be found on page 83 of the Annual Report which is available at www.hgcapitaltrust.com.

Performance risk

The Board is responsible for deciding the investment strategy to fulfil the Trust's objectives and for monitoring the performance of the Manager. An inappropriate strategy may lead to poor performance.

Regulatory risk

The Trust operates as an investment trust in accordance with Sections 1158 and 1159 of CTA 2010. As such, the Trust is exempt from corporation tax on any capital gains realised from the sale of its investments so the loss of investment trust status would represent a significant risk to the Trust.

Operational risk

In common with most other investment trust companies, the Trust has no employees. The Trust therefore relies upon the services provided by third parties and is dependent upon the internal control systems of the Manager and the Trust's other service providers.

Financial risks

The Trust's investment activities expose it to a variety of financial risks that include valuation risk, liquidity risk, market price risk, credit risk, foreign exchange risk and interest rate risk.

Liquidity risk

The Trust, by the very nature of its investment objective, predominantly invests in unquoted companies and the liquidity in their securities can be constrained, potentially making the investments difficult to realise at, or near, the Directors' published valuation at any one point in time.

Responsibility statement

The Directors confirm that to the best of their knowledge:

•    The condensed set of financial statements has been prepared in accordance with the Statement on Half-yearly Financial Reports issued by the UK Accounting Standards Board and gives a true and fair view of the assets, liabilities, financial position and profit of the Trust;

•    The Interim Management Report (incorporating the Chairman's Statement and the Manager's Review of the Period) includes a fair review of the information required by:

(a) DTR 4.2.7R of the Disclosure and Transparency Rules, being an indication of important events that 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 and Transparency Rules, being related party transactions that have taken place in the first six months of the current financial year and that have materially affected the financial position or performance of the Trust during that period; and any changes in the related party transactions described in the last annual report that could do so. There were no related party transactions during the period.

This half-yearly financial report was approved by the Board of Directors on 21 August 2013 and the above responsibility statement was signed on its behalf by Roger Mountford, Chairman.

LONG-TERM PERFORMANCE RECORD

HgCapital Trust plc's share price has consistently delivered significant outperformance against the FTSE All-Share Index over the long-term.

HISTORICAL TOTAL RETURN* PERFORMANCE

	Six months to 30 June 2013 % pa	One year % p.a.	Three years % p.a.	Five years % p.a.	Seven years % p.a.	Ten years % p.a.
Share price	13.6	28.2	14.4	8.2	11.0	19.4
NAV per share (diluted*)	(2.2)	4.9	9.5	4.8	10.1	15.4
FTSE All-Share Index	8.5	17.9	12.8	6.7	5.2	9.0
Share price outperformance per annum relative to the FTSE All-Share Index	5.1	10.3	1.6	1.5	5.8	10.4

*The remaining subscription shares were exercised at the end of May 2013.

HgCAPITAL TRUST PLC

THE TRUST'S INVESTMENT OBJECTIVE AND INVESTMENT POLICY

INVESTMENT OBJECTIVE

The Investment Objective of the Trust is to provide shareholders with long-term capital appreciation in excess of the FTSE All-Share Index by investing in unquoted companies. If the Board proposes to amend the Trust's Investment Objective, it will seek the approval of shareholders in a general meeting.

INVESTMENT POLICY

The policy of the Trust is to invest, directly or indirectly, in a portfolio of unlisted companies that are expected to grow organically or by acquisition and to spread investment risk through appropriate diversification. The Trust's maximum exposure to unlisted investments is 100% of the gross assets of the Trust from time to time. At the time of acquisition, no single investment in an unlisted company, whether made directly or indirectly, will exceed a maximum of 15% of gross assets.

The Trust may invest in other listed closed-ended investment funds up to a maximum at the time of acquisition of 15% of gross assets.

The Trust may invest its liquid funds in government or corporate securities, or in bank deposits, in each case with an investment grade rating, or in managed funds that hold investments of a similar quality.

Any material change to the Trust's Investment Policy will be made only with the approval of shareholders in a general meeting.

Sectors and markets

The Trust invests primarily in companies whose operations are headquartered or substantially based, or which serve markets, in Europe. The Trust invests in companies operating in a range of countries, but there is no policy of making allocations to specific countries or markets. The Trust invests across a range of sectors, but there is no policy of making allocations to sectors.

Gearing

Underlying investments or funds are typically leveraged to enhance value creation, but it is impractical to set a maximum for such gearing. The Trust may over-commit to invest in underlying assets in order to maintain the proportion of gross assets that are invested at any time. The Trust has the power to borrow and to charge its assets as security. The Articles currently restrict the Trust's ability to borrow no more than, broadly, twice the aggregate of the Trust's paid up share capital and reserves (without shareholder approval).

Hedging

The Trust may use derivatives to hedge its exposure to interest rates, currencies, equity markets or specific investments for the purpose of efficient portfolio management.

RATIONALE AND BUSINESS MODEL

The Board has a clear view of the rationale for investing in private equity through an investment trust and this informs its decisions on the operation of the Trust and the evolution of the Board's Business Model.

RATIONALE

The Board believes that there is a convincing rationale for investing in well-researched private businesses where there is potential for growth in value, especially where the Investment Manager and the management of the business can work together to implement strategic or operational change. These can result in higher rates of growth in sales and enhanced profits, offering investors capital gains on realisation.

Many large institutional investors have been making an allocation to private equity funds for decades, each time committing to a 10-12 year closed end fund, investing time to select a manager and negotiate complex and lengthy limited partnership agreements, and then assuming the burdens of administration, monitoring and accounting that these vehicles impose. In return, the best managers have delivered better performance than most investors have received from their listed equity, bond, hedge fund and property portfolios. This long-term commitment may not be practical for smaller pension schemes - especially if they intend to de-risk over time - or wealth managers, funds and private individuals. As an alternative, these investors can gain access to the private equity ownership model by buying shares in the Trust. As an investment trust, it has an independent Board and is committed to transparent and regular reporting, and the Trust is well covered by published research. The Trust's shares are listed on the London Stock Exchange.

BUSINESS MODEL

Working within the framework of the Trust's Investment Policy, the Board and the Manager have together developed a Business Model, which is kept under regular review. The Business Model evolves as market conditions change and new opportunities appear.

Asset class

The Trust invests directly in special purpose limited partnerships that invest on its behalf ordinarily in unquoted businesses in the UK and Continental Europe alongside other institutional clients of HgCapital, an experienced private equity manager. From time to time the Trust may directly or indirectly hold listed securities in pursuit of its investment policy. The Trust is not a fund of funds and does not invest in other managers' funds. This provides greater transparency for the Board and shareholders in the Trust and avoids the double level of fees inherent in a fund of funds model.

Most of the Trust's investments are held through partnerships, of which it is the sole limited partner and which invest alongside pooled funds managed by HgCapital; the Trust continues to invest alongside the Manager's Hg6 fund and, when this is fully invested, will invest alongside the Hg7 fund in the same way. The Trust is also investing in smaller TMT buyouts via the Manager's specialist Mercury fund. The Trust invests on the same terms as institutional investors.

The Manager is organised in investment teams that focus on business sectors that the Manager researches in depth. The Manager does not make top-down allocations to these sectors or to particular countries; the balance between sectors and countries may change as investment opportunities appear and portfolio companies are sold.

The Board of the Trust decides, after consultation with the Manager, on the timing, amount and terms of each commitment it makes to invest in or alongside any of the Manager's funds. Such commitments are normally drawn down over five years as investment opportunities arise. The Board agrees each commitment at a level it believes the Trust will be able to fund from its own resources or from temporary borrowing. However, to mitigate the risk of being unable to fund any drawdown under its commitment the Board has negotiated a right to 'opt-out', without penalty, of any investment (made by the Hg6 and Hg7 funds) where certain conditions exist (see note 22 to the financial statements).

In addition, the Trust has invested in renewable power generating projects, an area where the Manager has developed its skills and built a specialist team. This sector provides the Trust with an element of diversification, as it has fundamentally different drivers of risk and return, and the profile of its cash returns will complement those from buyout investments. In this sector, it is advantageous to the Trust to participate with other institutional clients of HgCapital as limited partners in HgCapital's two renewable energy funds.

Cash and borrowing

The Board and the Manager agree that prudent use of borrowing to fund acquisitions can increase diversification within the portfolio and increase rates of return to shareholders. Businesses in the underlying portfolio are acquired with the benefit of bank borrowing at levels that can be serviced from the cash flows generated within that business. The Board does not currently see any advantage in using a further level of structural borrowing by the Trust, as this would add risk without any certainty of enhancing returns. The Trust has a bank facility on which it can draw to meet short-term needs, for example, between making an investment and receiving the proceeds from a realisation. At certain points in the investment cycle the Trust may hold substantial cash awaiting investment, which it holds in bank deposits or invests in short-dated government bonds.

If there appears to be 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.

Hedging

The Trust offers exposure to a range of businesses operating in the UK, the eurozone and the Nordic region. The Trust does not strategically hedge investments back into sterling. From time to time, the Manager may use derivatives approved by the Board to hedge tactically with the object of protecting the anticipated sterling value of proceeds from realising investments in other currencies.

Comparators

For most shareholders, their investment in the Trust represents a small allocation of funds that would otherwise be invested in UK equities. The Manager's aim is to achieve returns in excess of the FTSE All-Share Index over the long term but the Trust is not managed so as to reflect movements in the Index. To assess the Manager's performance relative to other private equity managers, the Board regularly compares the Trust's NAV and share price performance against a basket of peers listed on the London Stock Exchange and against the UK and pan-European indices of listed private equity companies published by LPX.

Priorities as a listed investment company

As the rationale for the Trust is to provide investors with a way to invest in an illiquid asset class, through a liquid listed vehicle, the Board has a number of priorities including: retaining the status of an investment trust; maintaining a liquid market in its shares; providing shareholders with transparent reports on the underlying portfolio; adopting prudent valuations; and avoiding adding risk at the Trust level.

Valuation

The Board reviews the values of each of its investments in fund limited partnerships after considering, for the underlying investments held by the funds, the following: analytical and performance data; the valuations prepared by the Manager; and the Manager's valuation process. The Manager's valuations are carried out in accordance with the International Private Equity and Venture Capital ('IPEV') Valuation Guidelines, September 2009 edition. Further information can be found at www.privateequityvaluation.com.

NAV and trading in the Trust's shares

The Board values the portfolio and publishes the Trust's NAV as at 30 June and 31 December. Each month, following these valuations, the NAV figure is published after adjustment for realisations and movements in foreign exchange and the market prices of any listed securities.

The Trust's shares trade on the London Stock Exchange at prices that are independent of the Trust's NAV but reflect the NAV and expectations of future changes in it. The shares have traded at a discount to the NAV and, at times, at a premium to it. The Board has not attempted to manage any discount through repurchase of shares, which it believes usually has only temporary effect. The Board believes that discounts to NAV are minimised through consistent long-term returns, transparent reporting, rigorous valuation and avoidance of risk at Trust level.

Dividends

The Board does not structure the Trust's balance sheet or underlying investments in order to deliver any target level of dividend. To maintain the Trust's status as an investment trust, annual net revenue return retained, after dividend distributions in respect of that financial year, may not exceed 15% of the annual total taxable income. The level of the net revenue return varies from year to year according to the level of the Trust's liquid funds and the short-term interest rates that can be earned on them, and the structure of the buyouts held at the time; net revenue return is also affected by the valuation of accrued, but unpaid, interest on loans to investee companies. Accordingly, dividends may vary from year to year. Where possible, the Trust has elected to 'stream' its income from interest-bearing investments as dividends that will be taxed in the hands of shareholders as interest income; this reduces the tax charge payable by the Trust.

THE MANAGER

HgCapital is a private equity investor focused on the European mid-market.

Its business model combines deep sector specialisation with dedicated portfolio management support. HgCapital invests primarily in growth companies in expanding sectors via leveraged buyouts and in renewable energy-generating projects across Europe.

HgCapital's vision is to be the most sought after private equity manager in Europe, being a partner of choice for management teams and renewable power developers, so as to produce consistent top quartile returns for its clients and a rewarding environment for its staff.

References in this interim report and accounts to the 'portfolio', 'investments', 'companies' or 'businesses', refer to a number of primary buyout investments, held indirectly by the Trust through its direct investments in fund limited partnerships (HGT LP and HGT6 LP, HGT7 LP and HgCapital Mercury D LP ('Hg Mercury')) of which the Trust is the sole limited partner; direct investments in secondary buyout investments in HgCapital's 6 fund through HgCapital 6 E LP ('Hg6E'), in which the Trust is a limited partner, and direct investments in renewable energy fund limited partnerships (HgRenewable Power Partners LP ('RPP1') and HgCapital Renewable Power Partners 2 C LP ('RPP2')), of which the Trust is a limited partner.

INTRODUCTION TO THE MANAGER

HgCapital began life as Mercury Private Equity (MPE), the private equity arm of Mercury Asset Management plc, a long-established, listed, UK-based asset management firm. Mercury was bought by Merrill Lynch in 1997 and, in December 2000, MPE negotiated its independence as HgCapital and became a fully independent firm, wholly owned by its partners.

HgCapital has progressively invested in and strengthened its business over the years to establish a significant competitive advantage.

With over 100 employees in two investment offices in the UK and Germany, HgCapital has assets under management of £5.6 billion serving a range of highly regarded institutional investors, including private and public pension funds, charitable endowments, insurance companies and family offices.

HgCapital's largest client is HgCapital Trust plc. Established in 1989, the Trust appointed HgCapital as its Investment Manager in 1994. It offers investors a liquid investment vehicle, through which they can obtain an exposure to its diversified portfolio of private equity investments with minimal administrative burdens, no long-term lock-up or minimum size of investment, and with the benefit of an independent board.

SECTOR FOCUS

HgCapital's five sector teams combine the domain knowledge and expertise of a trade buyer - giving them superior credibility and the ability to make confident decisions - with the speed of execution and discipline of a financial investor; leading to high conversion rates on deals.

This deep sector focus is channelled through a rigorous, research-based investment process, to identify systematically the most attractive growth sub-sectors and business models of the European mid-market and then repeatedly invest in them, optimising deal flow and improving returns.

Following each investment, HgCapital's dedicated portfolio management team works to protect and enhance value by adopting clear strategies for growth and ultimately for realisation of the value created.

With experienced people and an approach that focuses on delivering value, HgCapital has the capability and commitment to deliver strong investment returns to investors.

THE MANAGER'S STRATEGY AND TACTICS

Middle-market focus

HgCapital primarily focuses on middle-market buyouts with enterprise values of between £50 million and £500 million, lower mid-market buyouts in the TMT sector between £20 million and £80 million and renewable power generating projects using proven technologies. This market offers a high volume of companies with proven financial performance and defensible market positions.

These companies are small enough to provide opportunities for operational improvement, yet large enough to attract high quality management and to offer multiple exit options across market cycles.

European focus

HgCapital primarily focuses its buyout investments in the UK, Germany and the Nordic Region, as well as Switzerland and Benelux.

The renewable energy investments are focused on the UK and Ireland, the Nordic region and Spain.

All investments are managed by specialist, dedicated sector and portfolio management teams located in London and Munich who work with a common purpose and culture, applying consistent processes.

Clear investment criteria

HgCapital applies a rigorous and commercial investment approach when evaluating all investment opportunities. Its objective is to complete the most attractive investments rather than be constrained by a top-down asset allocation.

For buyouts, HgCapital seeks industry champions with predictable revenues, which offer a platform for growing market share or have the potential for significant performance improvement. HgCapital targets situations where the Manager's specialist knowledge and skills can make a real difference in supporting management to grow industry champions.

Broad coverage

HgCapital's dedicated sector teams provide investors with access to the substantial majority of private equity activity within their target size range and across their chosen geographies.

A full description of the Manager and its key staff is available on www.hgcapital.com

Active portfolio management

HgCapital's sole objective is to ensure that all businesses in which it invests maximise their long-term potential and reward all of their stakeholders. As a result, HgCapital typically invests as the lead, majority shareholder and appoints HgCapital executives to the companies' boards to assist each firm in applying active, results-oriented corporate governance.

HgCapital professionals support the management of its portfolio companies to develop, execute and monitor value enhancement strategies for each business. Accordingly, HgCapital is in a position to review the performance of all of its investments, identify quickly any issues that demand attention and ensure that appropriate action is taken.

Deep resources

HgCapital's practice of employing specialisation - both in investment selection and portfolio management - places significant demands on its time. Accordingly, it has built a deeply resourced business employing over 100 staff, including more than 60 investment professionals.

Investing in businesses, many of which have a global footprint and which are located across Europe, requires time and a deep understanding of local cultures. Accordingly, its people come from around the globe, including ten Western European countries. Its partners have, on average, 15 years' experience in private equity management.

LOCATION OF PRINCIPAL ACTIVE INVESTMENTS BY NUMBER AT 30 JUNE 2013:

Buyout Investments

Nordic Region: 3

UK: 12

Germany: 5

Benelux: 1

Switzerland: 1

Italy: 1

Renewable Energy Assets

Swedish Onshore Wind: 3

UK Onshore Wind: 4

Irish Onshore Wind: 1

French Onshore Wind: 2

Spanish Mini-Hydro: 2

Spanish Solar: 7

MANAGER'S REVIEW OF THE PERIOD

Net Asset Value

During the first half of 2013, the Trust's diluted NAV per share decreased by -2.2% on a total return basis from 1,222p to 1,173p with net assets falling by -0.1% from £438.0 million to £437.7 million.

Attribution analysis of current year movements in NAV	Revenue (£'000)	Capital (£'000)	NAV (£'000)
Opening NAV as at 1 January 2013	17,233	420,723	437,956
Dividends paid	(8,180)	-	(8,180)
Proceeds from exercise of subscription shares	-	18,045	18,045
Interest income, gilts, expenditure and taxation	7,835	(779)	7,056
Realised capital proceeds from investment portfolio in excess of 31 December 2012 book value	-	1,228	1,228
Net unrealised capital depreciation of investment portfolio	-	(14,692)	(14,692)
Investment management costs:
Priority profit share - current year charge	(3,673)	-	(3,673)
Priority profit share - net loan allocation	525	(525)	-
Closing NAV as at 30 June 2013	13,740	424,000	437,740

There are three main drivers that contributed to the movement in net assets over the period:  the revaluation of the unquoted portfolio (£14.7 million), primarily driven by the write-downs of NetNames and Lumesse; the dividend payment of £8.2 million; and an £18.0 million cash in-flow from the exercise of subscription shares.

Top 20 portfolio trading performance

Despite continued economic weakness in Europe and the UK over the last year, the top 20 buyouts (representing 90% of the total portfolio) have delivered aggregate sales growth of 8% and EBITDA growth of 5% over the last 12 months to 30 June 2013. This compares with sales growth of 9% and EBITDA growth of 6% as reported at 31 December 2012.

Sixteen companies (91% by value) reported an increase in year-on-year sales, while thirteen out of the 20 companies (77% by value) increased EBITDA. Of these top 20 investments, six (36% by value) increased sales by greater than 10% and eight (51% by value) grew EBITDA by more than 10% over the last 12 months.

Of the top 20 investments, seven have reported a decline in EBITDA year-on-year. For some of the companies, this decline in EBITDA is a function of continued investment in the businesses. For example, Parts Alliance is seeing short-term profits impacted by a significant increase in the cost base as we consolidate the four businesses acquired over the last year with a centralised infrastructure.

Lumesse and NetNames are performing below expectations and trading is weak; profits are further affected by continued investment in the businesses, as we seek to secure higher, more sustainable growth in the future.

Some portfolio companies have seen a marked improvement in their recent trading compared to 2012. For example, Frösunda and Schleich have seen a return to growth in 2013.

Several businesses within the portfolio, including Visma, Iris, ATC, Achilles, JLA, Atlas and Sporting Index, have seen strong growth over the last year.

Valuation and Gearing Analysis

The portfolio is valued consistently from year to year, applying the IPEV Valuation Guidelines. Our valuation of each company has produced an average EBITDA multiple for the top 20 buyout investments of 10.8x EBITDA. This multiple is broadly consistent with December 2012, despite an upturn in public equity market ratings.

We continue to take a considered and prudent approach in determining the level of maintainable earnings to use in each investment valuation. For June 2013 valuations, the majority of the portfolio is valued using the last twelve months earnings to May 2013, unless we anticipate that the outlook for the full current financial year is likely to be lower, in which case we will use forecast earnings.

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

During the first half of 2013, a downturn in profits combined with a conservative view as to ratings (compared to recent M&A transactions) led to a material write-down in the value of Lumesse and NetNames totalling £13.0 million. In both cases, we believe that these are short-term issues and we are working with the management teams to get the businesses back on track.

Over half the portfolio has seen an increase in value through strong profit growth and debt reduction; most notably, Sporting Index, Atlas and Frösunda.

Our portfolio companies make appropriate use of gearing, with average gearing for the top 20 of 3.9x last-twelve-months EBITDA as at 30 June 2013. Two of our companies (Manx and Epyx) were under-geared at the end of 2012 and we have taken the opportunity to refinance these and return cash to our investors. In addition, we have taken advantage of the European bond market by refinancing the bank debt in Voyage Care and TeamSystem, through public bond issues, reducing their debt servicing costs and providing financial flexibility to enable future growth through bolt-on acquisitions.

REALISED AND UNREALISED MOVEMENTS IN INVESTMENT PORTFOLIO (INCLUDING INTEREST) FOR THE SIX MONTHS ENDED 30 JUNE 2013
Investment name and ranking, where relevant, within mid-cap buyout investment portfolio at 30 June 2013	Net unrealised appreciation/(depreciation) of investments £'m	Realised proceeds in excess of 31 December 2012 book value £'m (includes gross revenue)
ATC* (4)	4.2	-
Sporting Index (14)	3.0	-
Atlas (12)	2.8	-
Frösunda (13)	2.1	-
CSH (Sold)	-	1.7
IRIS (2)	1.7	-
QUNDIS (9)	1.4	-
Achilles (5)	0.9	-
Epyx (11)	0.8	-
Casa Reha (20)	0.8	-
Manx Telecom (17)	0.8	-
Other	0.3	0.4
Valueworks	(1.0)	-
Americana (26)	(1.2)	-
Mainio Vire (21)	(1.3)	-
Mondo (23)	(1.4)	-
RPP2	(2.9)	-
Teufel (25)	(3.4)	-
Lumesse (8)	(6.4)	-
NetNames (15)	(6.6)	-
*realised since the period-end

During the period, the portfolio decreased by £23.2 million. This change is mainly attributable to the following negative movements: the decrease of £17.8 million from acquisitions and disposals (realised at a gain of £2.1 million over the 31 December 2012 carrying value); the trading decline in the underlying portfolio (-£1.9 million); a decrease in ratings contributing - £17.2 million.  These declines were partially offset by positive movements of £13.7 million from a reduction in net debt and foreign exchange revaluations over the period.

During the first half of 2013, the Trust made a new commitment of £200 million to invest alongside the Manager's latest buyout fund, HgCapital 7, which closed in April 2013, following strong demand from institutional clients. HgCapital 7 provides the Manager with £2 billion of funds to continue its investment strategy over the next three to four years. As with HgCapital 6, the Trust has the benefit of an opt-out provision in its commitment to invest so that it can opt out of a new investment without penalty, should it not have the cash available to invest.

OUTSTANDING COMMITMENTS OF THE TRUST
Fund	Vintage	Original commitment £'million	Outstanding commitments as at 30 June 2013		Outstanding commitments as at 31 December 2012
			£'million	%of NAV	£'million	%of NAV
HGT 7 LP	2013	200.0	200.0	45.7%	-	-
HGT 6 LP	2009	285.0	67.2	15.4%	64.5	14.8%
Hg Mercury	2011	60.0	54.6	12.5%	55.3	12.6%
RPP2	2010	34.32	19.2	4.4%	22.0	5.1%
HGT LP (Pre-Hg6 vintage)	pre-2009	120.0	6.3	1.4%	15.8	3.6%
Hg 6 E1	2009	15.0	3.5	0.8%	3.6	0.8%
RPP1	2006	18.5 3	1.2	0.2%	1.0	0.2%
Total			352.0	80.4%	162.2	37.1%
Liquid resources			135.6	31.0%	115.8	26.5%
Net outstanding commitments less liquid resources			216.4	49.4%	46.4	10.6%
1Partnership interest acquired during 2011.      2Sterling equivalent of €40.0 million.      3Sterling equivalent of €21.6 million.

The period ended with liquid resources of £135.6 million. This compares with the outstanding commitments amounting to £352.0 million in the funds as listed above. The Trust also has a £40 million bank facility that is currently undrawn.

	Fund limited partnerships	Location	Vintage year	Residual cost £'000	Total valuation £'000	Portfolio value %
	Primary mid-cap buyout funds
1	HGT 6 LP	Europe	2009	177,088	175,851	58.1%
2	HGT LP	Europe	Pre-2009	70,187	99,085	32.7%
	Total primary mid-cap buyout funds			247,275	274,936	90.8%
	Secondary mid-cap buyout funds
3	HgCapital 6 E LP	Europe	2009	8,789	9,333	3.1%
	Total secondary mid-cap buyout funds			8,789	9,333	3.1%
	Primary small-cap buyout funds
4	HgCapital Mercury D LP	Europe	2011	2,340	1,341	0.4%
	Total primary small-cap buyout funds			2,340	1,341	0.4%
	Total buyout funds			258,404	285,610	94.3%
	Renewable energy funds
5	HgRenewable Power Partners LP	Europe	2006	7,513	7,594	2.5%
6	HgCapital Renewable Power Partners 2 C LP	Europe	2010	14,875	9,675	3.2%
	Total renewable energy funds			22,388	17,269	5.7%
	Total all investments (6)			280,792	302,879	100.0%

Portfolio of Investments

HgCapital's strategy is to invest in five sectors, four of them (Healthcare, Industrials, Services and TMT) by way of buyouts of businesses. Our primary focus is on middle-market buyouts between £50 million and £500 million and also in lower mid-market buyouts in the TMT sector between £20 million and £80 million. The buyout portfolio currently represents 94% of the portfolio by value at 30 June 2013.

Investment in the fifth sector, renewable power generation (currently 6% of the portfolio value), is made in projects through RPP1 and RPP2.

Deal type by value

>93%    Buyout - mid-cap

6%       Renewable Energy

<1%     Buyout - small-cap

Analysis by value of investment return* relative to its original cost

78%      Above

22%      Below

*Representing aggregate realised proceeds and unrealised valuations of an investment

Primary buyout portfolio

As at 30 June 2013, the Trust's buyout portfolio comprised 23 active companies alongside a small number of residual interests in companies we had sold, which were mostly valued at, or close to, zero.

TMT represented 53% of the total primary buyout portfolio (58% at 31 December 2012). The majority of this value was represented by companies that are users of technology, rather than developers of technology with the associated frequent challenges of new product development. The common themes that run through each one are highly visible revenues, strong market positions and strong cash conversion that permits debt repayment, whilst the businesses expand and grow.

Visma, TeamSystem and IRIS are providers of business software and services in the Nordic region, Italy and UK respectively. These businesses benefit from high recurring revenues and a very large and diversified customer base. Visma and IRIS are performing well and have delivered strong double-digit revenue and profit growth over the last year, but no material change in value has been recognised. TeamSystem, based in Italy, is seeing low single-digit growth against a stagnant Italian economy. We are pleased with this relative outperformance but, in absolute terms, it is taking longer than originally anticipated materially to grow value.

Lumesse, a European provider of strategic HR software, continues to see demand for its products, leading to positive organic growth in recurring software revenues. However, in 2013, consulting and bespoke sales performances have been disappointing and resulted in reduced profits overall. This led to a write-down in its valuation in the period.

Achilles and Epyx, two electronic market place investments, have continued to deliver strong year-on-year revenue and profit growth in 2013, as they have consistently since acquisition.

NetNames, an internet domain name manager and online brand protection service provider, has seen weak trading over the past twelve months further affected in 2013 by currency rates and significant investment being made in the business. We have written the valuation of this business down accordingly.

Manx Telecom is the incumbent integrated fixed and mobile telecom operator on the Isle of Man. The business continues to trade solidly and cash generation ahead of expectations led to a refinancing in the first quarter of 2013.

Services investments represented 21% of the primary buyout portfolio (17% at 31 December 2012).

ATC, a Dutch fiduciary services business acquired in early 2011, has delivered a strong trading performance since acquisition with double digit profit growth and strong cash generation. In June we announced the sale of this business to Intertrust for €303 million. This sale completed in August 2013 (see the Realisations section below).

JLA, a leading provider of laundry equipment, finance and maintenance has continued to see strong double-digit growth in the last year, driven by an increase in the rental market and the success of innovative sales initiatives.

Atlas is a leading provider of interactive e-learning products for the oil and gas sector and has seen strong growth over the last twelve months.

Sector by value of primary buyout portfolio

53%      TMT

21%      Services

10%      Healthcare

10%      Industrials

6%       Consumer & Leisure

Net assets by class

69%      Unquoted

31%      Cash & other assets

Healthcare represented 10% of the primary buyout portfolio (9% at 31 December 2012). We have previously invested in two areas: long-term care where the payer risks are low, with a preference for specialist care of people with acute disabilities; and low cost pharmaceuticals.

We own long-term care assets in the UK, Germany, Sweden and Finland.

In the UK, the Government's fiscal consolidation translated into a reduction in fees that local authorities and social services will pay for care, which has resulted in a squeeze on margins affecting most care home operators. However, Voyage Care has a more defensive business model and has grown both revenue and EBITDA in the first half of 2013 benefiting from the synergies of recent acquisitions. However, the underlying trading conditions remain tough, both with respect to occupancy and fee rates.

In Germany, labour shortages have increased labour costs and squeezed margins. Despite this, Casa Reha has seen improved trading performance in 2013, from: three new homes opened; better operational controls over staff; and tighter cost control overall.

In 2012 Frösunda, a Swedish care home business, went through a period of consolidation following a poorly executed acquisition programme the previous year. This led to damaged margins and revenues and a reduction in the holding value. The business has now stabilised and is seeing a recovery in 2013 and we continue to work with the new management team to further improve performance.

Our Finnish investment, Mainio Vire, continues to grow sales; however, profits have been impacted by occupancy rates, management problems, higher than budgeted sick leave rates and poor cost control. This investment has been further marked down in value.

Industrials represented 10% of the primary buyout portfolio (11% at 31 December 2012). Here, the common theme is that we are backing companies that own and develop high quality products, based on technologically advanced German design, but manufactured in low cost locations.

Following weak profit performance in 2012, primarily due to a poor economic environment and our continued investment for growth, SimonsVoss, a German developer and manufacturer of digital battery-powered locking and access control systems, is starting to see improved performance in 2013.

QUNDIS, acquired in May 2012, is a leading provider of sub-metering devices and services in Germany and Italy with a presence in other European markets. Problems in 2012 with the automated assembly line have now been resolved and the order book is strong. The business has seen modest growth in 2013.

Teufel is a designer and online direct retailer of loudspeaker systems in Germany. The business has performed poorly over the last twelve months. Whilst sales growth remains positive, profits are weak and, in addition, the company is facing short-term cashflow issues. These factors have led us to apply a full provision against this investment at 30 June 2013.

Finally, our legacy Consumer and Leisure portfolio represented 6% of the primary buyout portfolio (5% at 31 December 2012). Sporting Index, a sports spread betting firm, has seen strong growth in the last year leading to the business being written back up over its original cost at 30 June 2013. Schleich, the German toy figurine producer, suffered weak performance in 2012 but has seen a return to growth over the first half of 2013. Americana's continued trading deterioration has led us to provide in full against this investment.

Mercury

HgCapital's Mercury Fund specialises in lower mid-market buyouts in the TMT sector with an Enterprise Value of between £20 million and £80 million. This is an area where the Manager has historically made many profitable investments and has now set up a dedicated team of investment professionals focused on this niche. To date, the Fund has made two investments.

Valueworks is a UK based electronic marketplace serving landlords and contractors in the housing construction and maintenance market. Investment in management and premises in 2012, together with lower revenues from professional services, has materially impacted growth, leading to a write-down in the valuation at 30 June 2013.

The acquisition of IntelliFlo, which was announced in July 2013, completed in August 2013; please refer to the Investments section, below, for details of this transaction.

Renewable energy

The Trust invests in renewable energy projects where HgCapital's management skills can be applied to create and realise value. The Trust is a limited partner in RPP1 and RPP2, two funds managed by our dedicated team of specialists. The underlying portfolios are divided into five platforms: UK Onshore Wind, Nordic Onshore Wind, Irish Wind, Spanish Mini-Hydro and Spanish Solar.

The assets are split into onshore wind at 61% of value, solar at 20% and mini-hydro at 19% of value. All of them use proven and commercially viable technologies within the framework of current power price regimes across Europe. Each platform's operating performance, since inception, continues to be in line with our original investment case.

The European power sector is at a cyclical low, with the recession and fall in industrial production reducing the demand for power. Low US gas prices are reducing global coal demand with cheap US coal coming to Europe and displacing gas fired generation, driving down power prices. In turn, this is leading to reduced European utility share prices and write-downs of gas-fired generation assets. How this plays out for renewables differs by market.

As previously reported, the Spanish government has been reviewing power sector regulation as part of its aim to tackle the shortfall between power sector costs and what consumers pay. This follows earlier retroactive regulatory changes to the sector that affected the Trust's investments.

Despite earlier statements to the contrary, Spain continues to refuse to pass on power generation costs to consumers in full, and makes retroactive tariff cuts to both renewable and conventionally generated power, in the hope of driving a manufacturing-led recovery.

In July 2013, Spain announced new legislation making further changes which are expected to have a material impact on the value of the Spanish assets. Although the general outline of these reforms is known, the detailed implementation is not and so it is not yet possible fully to calculate the impact, but it could result in the need to restructure the debt in both the solar and mini-hydro platforms and further write-downs to the portfolio value of the Spanish assets.

In Sweden, lower power demand has made the market in green certificates more volatile than anticipated; however, there appears to be political will to correct the system, which could mitigate the adverse affects on our investments. Power prices are below the five-year average, driven by weak demand and low coal and carbon prices, in what we think is a cyclical low trough.

In Germany, Ireland, France and the UK, there remains strong institutional investor interest in yielding, contracted, renewable assets and policies still favour growth in renewable generation. Investor interest in operating assets comes from both the unlisted and listed markets, creating a new exit market, from which our Irish investments and potentially our Nordic assets should benefit.

These macro changes have led us to reduce the valuation of our renewable energy portfolio by £3.2 million at 30 June 2013 (see the Investments in Renewable Energy section below).

Geography and Vintage Analysis

At 30 June 2013, the geographical weighting of the total primary buyout portfolio, including Mercury, was split 54% in the UK, 16% in the Nordic Region and 21% in Germany and Benelux. TeamSystem, which is our sole investment in Italy, accounts for about 9% of the primary buyout value.

Geographic spread by value of primary buyout portfolio

54%      UK

16%      Nordic Region

13%      Germany

9%       Italy

8%       Benelux

Vintage by value of primary buyout portfolio

7%       2012

22%      2011

32%      2010

4%       2009

9%       2008

26%      pre 2008

Prospects

We have consistently held a cautious view of Western European economic prospects since 2009, assuming minimal levels of GDP growth and greater volatility, generally taking a more bearish stance than most economic commentators over the last four years. Although there may be positive leading indicators in the UK and some Nordic countries, for the time being our core position remains unchanged.

Economic growth has continued to disappoint, as had been anticipated, but we do not believe that it fundamentally affects our ability to make good investment returns for our clients. We continue to believe that macro-economic factors have relatively little bearing on our investment performance over the medium and long-term. This is because our investment strategy is focused on using deep sector expertise to identify market niches that will exhibit strong secular growth despite a weak overall economy and provide consistent opportunities to invest in multiple businesses that benefit from these fundamental growth trends. This sector expertise, developed over 10-15 years, is used to identify the highest quality growth companies in sub-sectors which themselves are growing at typically

2-3 times GDP, driven by fundamental long-term factors. Our investments over the last six months, as well as in the last 4-5 years or more, have continued to exhibit these superior growth characteristics versus GDP, RPI and other relevant benchmarks.

Whilst we remain relatively cautious about new investment, we believe that within our sectors of expertise we can continue to find pockets of opportunity to acquire market leading businesses at reasonable prices, usually where there has been the opportunity for us to build relationships with such companies over many years before making an investment. This was borne out in the last couple of months, where the strong pipeline of opportunities that we commented on in our prior report converted into several new investments that were all generated on a proprietary basis from many years of sector research.

Both trade and financial buyers continue to express interest in acquiring a number of our portfolio companies, as a result of their growth and market positions. This has been demonstrated with the two realisations in the first half of 2013 (ATC and CSH) for 2.0x original cost and a 39% p.a. gross IRR. We will continue to consider realising investments as we have done consistently over several years.

INVESTMENTS

No new investments in the first six months of 2013

A total of £4.2 million has been invested by the Trust in the current portfolio over the first half of 2013; the majority of this was in the renewable energy portfolio.

INVESTMENTS MADE DURING THE PERIOD*
Company	Sector	Geography	Activity	Deal Type	Cost   £'000
RPP1 and RPP2	Renewable energy	Europe	Further capital calls	Fund	3,913
Voyage Care	Healthcare	UK	Bolt-on acquisition	Buyout	269
Other investments					61
Total investments on behalf of the Trust					4,243
*The numbers in the table relate to the Trust's share of transactions

£35.0 million invested in three new buyouts since 30 June 2013

We have seen a notable increase in investment activity since the period-end with three acquisitions completed during July and August.

In July, the TMT team agreed the acquisition of e-conomic for an enterprise value of £77.0 million.

The deal completed in August. e-conomic provides Software-as-a-Service ('SaaS') accounting services to SMEs in its home market of Denmark and in eight other European countries, including the UK, the Nordic region and Germany. Its core customer base is small businesses with 1-50 employees as well as accountancy practices. The company was founded in 2001 and has 115 employees working in its headquarters in Copenhagen and a research and development centre in Ukraine. The Trust's share of this investment is £11.5 million.

In August, the Mercury Fund acquired IntelliFlo Limited at an enterprise value of £50.0 million. IntelliFlo is one of the leading SaaS providers of front and back office software to financial advisors, advisor networks and brokers. Nearly ten thousand advisors and administrators use IntelliFlo's software on a daily basis to manage workflows and respond to customer and regulatory needs. The Trust's share of this investment is £4.0 million.

Also in August, the Services team completed the acquisition of Nair & Co., a UK headquartered provider of tailored solutions for fast growing companies looking to expand into international markets, for an enterprise value of £123.0 million. Nair & Co. sets up the required international entities and integrates legal, accounting, payroll, tax and human resources services to ease the process of international expansion. The Trust's share of this investment is £19.5 million.

REALISATIONS

£24.2 million returned to the Trust during the period with a further £22.4 million received from the sale of ATC in August

In January 2013, the development assets of RPP1's UK Onshore Wind portfolio, including the developer, Ridgewind, were sold to Blue Energy, at an investment multiple of 1.6x and a gross IRR of 15% p.a. The proceeds from the sale returned £2.8 million to the Trust with some residual value expected in the future.

In March 2013, Computer Software Holdings Limited (CSH) was sold to Advanced Computer Software Plc, a trade buyer, at an Enterprise Value of £110 million. The sale represented an investment multiple of 1.5x original cost and a gross IRR of 36% p.a. over an investment period of fourteen months. The Trust received proceeds of £7.3 million, representing an uplift of £1.7 million over the carrying value of £5.6 million at 31 December 2012.

In June 2013, we announced the sale of ATC to Intertrust for €303 million. This realisation represented an investment multiple of 2.3x original cost and a gross IRR of 40% p.a. over the two year investment period. The Trust received proceeds of £22.4 million on completion of the transaction in August 2013, which is an uplift of £3.8 million over the carrying value of £18.6 million at 31 December 2012. The anticipated sale proceeds of ATC were reflected in the NAV of the Trust at 30 June 2013.

In addition to these realisations, further distributions of £14.1 million were received by the Trust, primarily from the refinancing of Manx Telecom, a telecom provider on the Isle of Man, and Epyx, an electronic marketplace serving the vehicle leasing market.

REALISATIONS MADE DURING THE PERIOD1
Company	Sector	Exit route	Cost £'000	Proceeds2 £'000	Cumulative gain/(loss)3 £'000	Current year gain/(loss)4 £'000
CSH	TMT	Trade sale	5,058	7,338	2,280	1,666
Other5			1,672	857	(815)	38
Full realisations			6,730	8,195	1,465	1,704
Manx Telecom	TMT	Refinancing	6,569	8,548	1,979	-
Hg RPP Fund	Renewable energy	Distributions received	2,561	3,343	782	81
Epyx	TMT	Refinancing	650	3,040	2,390	-
HgCapital 6 E	Fund	Distributions received	760	760	-	81
Other			-	264	264	254
Partial realisations			10,540	15,955	5,415	416
Total realisations by the Trust			17,270	24,150	6,880	2,120
1 The numbers in the table relate to the Trust's share of transactions 2 Includes gross revenue received during the period ended 30 June 2013 3 Realised proceeds including gross revenue received, in excess of historic cost 4 Realised proceeds including gross revenue received, in excess of 31 December 2012 book value 5 Related to the disposal of Weston Presido Capital III and Tiger Capital

UNDERLYING MID-CAP INVESTMENTS HELD BY THE PRIMARY BUY-OUT FUND LIMITED PARTNERSHIPS The top 20 primary buyout investments account for 90% of the investments by value
	Investments (in order of value) Primary mid-cap buyout investments	Fund	Sector	Location	Year of Invest-ment	Residual Cost £'000	Total valuation £'000	Portfolio value %	Cum. Value %
1	Visma	HGT LP	TMT	Nordic Region	2006	701	32,841	10.8%	10.8%
2	IRIS	HGT 6 LP	TMT	UK	2011	25,598	27,299	9.0%	19.8%
3	TeamSystem	HGT 6 LP	TMT	Italy	2010	24,432	24,814	8.2%	28.0%
4	ATC	HGT 6 LP	Services	Benelux	2011	9,913	22,709	7.5%	35.5%
5	Achilles	HGT LP	TMT	UK	2008	5,218	19,622	6.4%	42.0%
6	JLA	HGT 6 LP	Services	UK	2010	12,227	17,301	5.7%	47.7%
7	Voyage Care	HGT LP	Healthcare	UK	2006	15,336	13,334	4.4%	52.1%
8	Lumesse	HGT 6 LP	TMT	UK	2010	19,430	12,927	4.2%	56.4%
9	QUNDIS	HGT 6 LP	Industrials	Germany	2012	11,552	12,902	4.2%	60.7%
10	SimonsVoss	HGT 6 LP	Industrials	Germany	2010	11,936	12,704	4.2%	64.9%
11	Epyx	HGT 6 LP	TMT	UK	2009	5,738	11,450	3.8%	68.7%
12	Atlas	HGT LP	Services	UK	2007	9,597	11,325	3.7%	72.4%
13	Frösunda	HGT 6 LP	Healthcare	Nordic Region	2010	14,296	10,036	3.3%	75.7%
14	Sporting Index	HGT LP	C&L1	UK	2005	7,440	9,486	3.1%	78.8%
15	NetNames	HGT 6 LP	TMT	UK	2011	14,249	7,764	2.6%	81.4%
16	Schleich	HGT LP	C&L1	Germany	2006	4,650	7,677	2.5%	83.9%
17	Manx Telecom	HGT 6 LP	TMT	UK	2010	3,274	7,372	2.4%	86.3%
18	Investment in the Parts Alliance	HGT 6 LP	Services	UK	2012	6,655	5,673	1.9%	88.2%
19	KVT	HGT LP	Industrials	Switzerland	2008	5,829	2,488	0.8%	89.0%
20	Casa Reha	HGT LP	Healthcare	Germany	2008	8,990	2,115	0.7%	89.7%
21	Mainio Vire	HGT 6 LP	Healthcare	Nordic Region	2011	8,306	1,971	0.7%	90.4%
22	Goldshield2	HGT 6 LP	Healthcare	UK	2009	-	929	0.3%	90.7%
23	Mondo Minerals2	HGT LP	Industrials	Nordic Region	2007	-	172	0.1%	90.8%
24	ACT Venture Capital3	HGT LP	Healthcare	Ireland	1994	27	25	-	90.8%
25	Teufel	HGT 6 LP	Industrials	Germany	2010	9,482	-	-	90.8%
26	Americana	HGT LP	C&L1	UK	2007	4,625	-	-	90.8%
27	Elite2	HGT LP	TMT	Benelux	2005	-	-	-	90.8%
28	SHL2	HGT LP	Services	UK	2006	-	-	-	90.8%
29	W.E.T.2	HGT LP	Industrials	Germany	2003	7,774	-	-	90.8%
	Total primary mid-cap buyout investments (29)					247,275	274,936	90.8%
1 Consumer and Leisure 2 Residual ownership in holding company structures, following earlier realisations of underlying operating company group, awaiting liquidation and final proceeds 3 Small residual holding, awaiting final realisation by fund manager

TOP 10 BUYOUT INVESTMENTS

representing 65% of the total portfolio

Primary buyout investments are held through limited partnerships of which HgCapital Trust plc is the sole limited partner. The Trust invests alongside other clients of HgCapital. Typically, the Trust's holding forms part of a much larger majority interest held by HgCapital clients in buyout investments in companies with an enterprise value ('EV') of between £50 million and £500 million. The Manager's review generally refers to each transaction in its entirety, apart from the tables detailing the Trust's participation or where it specifically says otherwise.

1 Visma

Website: www.visma.com

Original enterprise value: NOK4.3 billion

HgCapital clients' total equity: 15.8%

Business description

Visma is a leading provider of mission-critical business software and out-sourcing services to small and medium-sized enterprises in the Nordic region. Headquartered in Norway, the company provides accounting, resource planning and payroll software, outsourced bookkeeping, payroll services and transaction process outsourcing to its customer base of over 400,000 enterprises across the Nordics and the Netherlands.

Why did we invest?

Visma was an early example of HgCapital's focus on recurring revenue, business critical application software companies focused on SME's and their advisors. The company enjoys high levels of predictable recurring revenue resulting from a subscription payment model.

At the acquisition in 2006, performance improvements were identified in both organic and acquisition driven revenue growth as well as significant opportunities to increase profit margins that were below those of most of its competitors. This was in part due to significant R&D investment in the business and a delay in the benefits expected from a number of recent acquisitions.

How do we intend to create value?

Visma has consistently exceeded our 2006 investment plans. In September 2010, a 64% stake in the business was sold to KKR. This valued the business at £1.2 billion, of which our clients' stake was worth £380.0 million (an investment multiple of 3.7x). HgCapital retained an interest of approximately 16% in Visma, to benefit from its continued growth and remains represented on the Board.

What has been achieved?

During the course of the investment, the company has made more than 60 bolt-on acquisitions of which 5-6 are major and many are small product purchases. Major acquisitions included Accountview, Sirius IT, Mamut ASA and Agda. These deals strengthened organic growth from innovation in new services and products, while margins were improved through a re-organisation of Visma's internal processes. Visma is now positioned as one of the largest software businesses and one of the leading and largest web/SaaS companies in Europe.

How is it performing?

2013 has seen continued strong revenue and EBITDA growth year on year with investment in sales initiatives positively impacting year to date organic growth.

How will we crystallise value?

Visma has a scale and growth profile which will make it an attractive IPO candidate, as well as a target for large private equity or trade buyers.

Visma - Trust's underlying investment through HGT LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
TMT	Nordic Region	May 2006	701	32,841

2 IRIS

Website: www.iris.co.uk

Original enterprise value: £425 million

HgCapital clients' total equity: 68.8%

Business description

IRIS is a leading provider of both core application software to the UK accountancy market, and payroll applications to key business segments including the UK General Practitioners market. Headquartered in Berkshire, the company provides business critical software and services to more than 15,000 UK accountants and 30,000 small and medium-sized companies.

Why did we invest?

HgCapital has been an investor in IRIS since 2004, retaining a minority stake following its sale and merger with CSH in 2007, and becoming a majority investor again in 2011 when we separated the two businesses. IRIS is one of the earliest examples of our focus on business critical software firms operating in attractive, predictable end-markets. IRIS operates a business model with a high level of revenues coming from subscriptions, and low customer churn. The company has grown consistently through the recession with organic growth in excess of 7%, even in 2008-9. The investment decision was based on our belief in continuing organic growth potential and acquisition-led consolidation opportunities in the sector.

How do we intend to create value?

The company is achieving good organic revenue and profit growth through a combination of market share gains, price optimisation, and the on-going development of new solutions to sell into the existing customer base. Furthermore, the UK accountancy and SME software markets remain fragmented, offering additional acquisition opportunities to IRIS.

What has been achieved?

Significant investment has been made in senior management and the new team is working well. The CEO has also made good progress in achieving revenue synergies and applying best practice between the Accountancy and SME Payroll divisions. The company has been successful in broadening its market by expanding its offering portfolio, both by organic product development and by acquisition.

How is it performing?

Whilst the business continues to invest significantly in marketing, new product development and infrastructure, IRIS saw double-digit revenue and EBITDA growth in its latest financial year (ending 30 April 2013).

How will we crystallise value?

IRIS would be an attractive acquisition target to private equity players due to its high organic growth, margins, cash conversion and recurring revenue levels. It would also be a strong strategic fit with a number of tax and financial information providers and other larger software companies.

IRIS - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
TMT	UK	Dec 2011	25,598	27,299

3 TeamSystem

Website: www.teamsystem.com

Original enterprise value: €562 million

 HgCapital clients' total equity: 50.0%

Business description

TeamSystem is a leading provider of business-critical, regulatory-driven SME software products in Italy. Headquartered in Pesaro, the company has a broad base of c. 120,000 customers. It has 27 offices across Italy and employs approximately 1,100 people.

Why did we invest?

TeamSystem is HgCapital's fifth platform investment in business-critical back office software, following Iris (2004), Addison (2005), Visma (2006) and CSG (2007).

The company has a track record of solid growth throughout the economic cycle and delivered compound organic revenue growth of 6% p.a. between 2007 and 2009, trading resiliently through that downturn. Its stable nature (with more than 50% of revenues by way of annual subscriptions), strong cash generation and potential for growth in both the business and its market, all supported our decision.

How do we intend to create value?

Alongside organic growth, management has increased its cross-sell of products to the existing client base through the use of add-on modules such as reporting, analytics and payroll. The potential to complete a number of add-on acquisitions of complementary businesses in Italy has also been identified.

What has been achieved?

Several improvement projects were identified post acquisition including: enhanced reporting and pricing; product development; investment in the M&A process; and sourcing new ways to grow the micro-SME customer base. The focus on M&A has led to the completion of six acquisitions, including a controlling stake in Daneasoft, a leading accountancy software provider to the Italian micro-SME market.

How is it performing?

Despite a weak Italian economy, TeamSystem has continued to see low single-digit growth in the first halfof 2013, well in excess of local GDP growth (one of the attractive characteristics of the accounting software businesses). Notwithstanding the difficult market environment, the business continues to win market share.

In April 2013, TeamSystem completed its debt re-financing, issuing €300 million of public bonds to the Italian market. This has lowered borrowing costs and provided financial flexibility.

How will we crystallise value?

We see a diverse range of exit options for TeamSystem, with interest from trade and financial buyers previously evidenced in the sector and an IPO on the Italian stock market a possibility given the scale of the company and local demand for technology stocks.

TeamSystem - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
TMT	Italy	Sep 2010	24,432	24,814

4 Iris ATC Group

Website: www.atcgroup.com

Original enterprise value: €187 million

HgCapital clients' total equity: 63.9%

Business description

ATC provides fiduciary, management and administration services to corporations, financial institutions and fund managers through a global presence. The company sets up and maintains corporate structures to allow the efficient intra-group movement of cash and/or balance sheet management, e.g. divisional holding companies or acquisition bid vehicles.

Corporate structures typically last for seven to ten years and need to comply with legal, accounting and tax regulations in multiple jurisdictions. ATC uses functional expertise and economies of scale to provide these services for a fraction of the cost of in-house provision.

Why did we invest?

The fiduciary services market is a structurally high growth market, achieving 3x GDP growth rates over multiple decades. The long tenure nature of corporate structures leads to predictable and recurring revenues, low customer concentration and high margins.

ATC achieves the highest revenue per structure in the sector, a reflection of the sophisticated services it provides to the highest value and most resilient segment of the market place. Finally, the company has very low capital expenditure and working capital requirements, leading to high cash conversion.

How have we created value?

HgCapital supported investment in a professional sales force driving revenue growth. Investment in sales efficiency helped to manage the sales team and allowed clearer analysis of the sources of growth.

What has been achieved?

HgCapital helped ATC's management to launch a number of programmes including management assessment, leadership development and sales effectiveness, as well as initiating a sales force reorganisation and strengthening of the compliance function. The team was also assisted in the evaluation of a number of acquisition opportunities with a clear focus on high margin service providers operating in onshore jurisdictions.

How is it performing?

The first half of 2013 saw ATC deliver double-digit revenue and EBITDA growth against the prior year.

The key drivers of this strong performance have been increased individual client yields following on from the company's sales initiative.

The exit

In June 2013, HgCapital announced the sale of ATC to Intertrust for €303.0 million, returning 2.3x cost and a 40% p.a. gross IRR. The sale of ATC completed in August 2013.

ATC Group - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
Services	Benelux	Mar 2011	9,913	22,709

5 Achilles

Website: www.achilles.com

Original enterprise value: £75 million

HgCapital clients' total equity: 63.0%

Business description

Achilles is a global leader in supplier data and validation services. The business operates an online platform where buyers require their suppliers to subscribe and to provide standardised information to the Achilles online database; suppliers join the platform if they wish to supply to the buyer group and both buyers and suppliers pay annual subscription fees. The data gathered and delivered by Achilles is crucial to support processes around risk management, compliance with legislation, and health and safety. Achilles currently operates more than 30 schemes across 22 countries.

Why did we invest?

Achilles is another good example of a subscription based business model with significant recurring revenue streams. It is a market leader in the regulatory compliance industry, with stable growth driven by the increasing need for risk management.

How do we intend to create value?

With high levels of contracted revenue, Achilles' position as a global, scalable business model has considerable potential in revenue and margin growth as well as multiple opportunities for expansion both into new geographies and new industries.

What has been achieved?

Achilles' senior management team has been strengthened with significant new hires, while internal process projects on pricing, back-office management and sales practices are beginning to bear fruit. The business has made substantial investment in a new global technology platform and has started the migration of some existing schemes to the same platform, a material transformation for the business. Achilles is in the process of rolling out its services to sophisticated multinational customers.

How is it performing?

Achilles continues to see strong revenue and EBITDA growth year-on-year. Significant investment in the global infrastructure has held back short-term profit growth and we would expect margins to rise over the medium-term as global efficiencies are achieved.

How will we crystallise value?

There has been strong interest in Achilles from both strategic and private equity buyers and the business's recurring revenue base is likely to maintain this interest throughout the economic cycle.

Achilles - Trust's underlying investment through HGT LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
TMT	UK	Jul 2008	5,218	19,622

6 JLA

Website: www.jla.com

Original enterprise value: £150 million

HgCapital clients' total equity: 83.1%

Business description

JLA is a leading provider of on-premises laundry services, providing distribution, rental and servicing of commercial laundry machines to the UK SME market including care homes and small hotels.

The company is also a leading provider of coin operated, commercial machines into accommodation units (e.g. universities, worker accommodation units etc.) which it services via its Circuit brand typically provided under eight year contracts.

JLA has recently extended its offering into kitchen and medical equipment and supplying detergents.

Why did we invest?

JLA is a leader in its field with strong operating performance, including sustained organic growth through the period 2007-2009.

The customer base is highly fragmented and considers laundry as a mission-critical part of their day-to-day business. With a high proportion of customers in long-term contracts (representing a high level of revenues and a greater proportion of profits), there are attractive recurring revenues and a high level of forward revenue visibility.

How do we intend to create value?

HgCapital is working alongside management to increase the benefit of selling new products and services through JLA's existing sales force and service network.

In addition, there are plans to drive add-on acquisitions, both in the laundry space and in adjacent areas.

What has been achieved?

A number of projects have been initiated covering strategic planning, customer retention and pricing.

In addition, a new CEO and CFO have been recruited and five smaller bolt-on acquisitions have been completed. The business now has a dedicated M&A team and a strong pipeline of further acquisition targets.

How is it performing?

In the first half of 2013, JLA saw robust organic revenue and EBITDA growth over the equivalent prior year period. This has been driven by growth in rentals and also the Circuit brand, supported by the success of innovative sales initiatives.

How will we crystallise value?

HgCapital is focused on positioning JLA as a platform for selling critical asset maintenance services into SMEs. The most likely exit route for JLA is either a secondary sale or a trade sale.

JLA - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
Services	UK	Mar 2010	12,227	17,301

7 Voyage Care

Website: www.voyagecare.com

Original enterprise value: £320 million

HgCapital clients' total equity: 64.5%

Business description

Voyage Care owns and operates small community-based homes and provides flexible home care services for adults with learning disabilities (LD) and associated physical disabilities, autistic spectrum disorders, complex needs and acquired brain injury.

The company now has c.2,400 beds in c.350 locations across the UK. Voyage offers a range of care provision from daily help (generally in supported living tenancies) to intensive physical and mental support in modified accommodation.

Why did we invest?

A significant shortage in residential care supply of this level underpins the opportunity for growth. Voyage enjoys a strong market position and a high quality estate of stable, cash generative assets. The business had a track record of delivering organic and acquisition-led growth which typically exceeded its forecasts.

How do we intend to create value?

Historically, growth has been generated by organic roll-out of purpose-built homes. Going forward, the strategy is to broaden the service offering to include care in the patient's own home.

We intend to grow value by continuing to grow organically in the Supported Living side of the business, an area in which we have invested in resources and management and through taking advantage of the harsher economic climate to acquire earnings at low entry multiples.

What has been achieved?

Voyage completed the acquisition of Solor Care in April 2012 and ILG in January 2013. Voyage is now the largest pure LD operator in the UK market. There has also been a senior recruitment push to prepare for further acquisitions, as well as organic growth through sales and marketing.

In January 2013, Voyage completed its debt refinancing, issuing £272 million of public market bonds to repay its existing bank debt and securing a £30 million revolving credit facility to provide additional liquidity for the company to pursue its acquisition strategy.

How is it performing?

As a result of the acquisitions, both revenues and EBITDA have seen strong growth. However, the underlying trading conditions remain tough, both with respect to occupancy and fee rates.

How will we crystallise value?

The most likely exit routes are via an IPO or to a private equity-backed trade buyer; a secondary private equity sale is also a possible option.

Voyage Care - Trust's underlying investment through HGT LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
Healthcare	UK	Apr 2006	15,366	13,334

8 Lumesse

Website: www.lumesse.com

Original enterprise value: €110 million

HgCapital clients' total equity: 80.8%

Business description

Lumesse is a leading provider of strategic HR software (for recruiting, talent management and learning) to medium and large enterprises in Europe. It operates in 16 countries with c.700 employees. The business operates a subscription-based model (more than 60% of total revenue) with a strong consulting element. Customer retention rates are high at around 94%.

Why did we invest?

Strategic HR software for large enterprises is a long-term growth market. As an on-line 'Software as a Service' (SaaS) provider, Lumesse experiences high levels of recurring revenue, leading to higher predictability. With strong organic sales growth, it was identified that further investment would drive market share, revenue and strategic value over the longer term.

How do we intend to create value?

Lumesse's management intends to drive subscription revenue growth by capitalising on their leading technology, improving cross- and up-selling into the existing customer base as well as acquiring new customers in what remains an underpenetrated market.

There is also an increased focus on efficiency and scale effects with a view to improving margins and strengthening the company's international presence both organically and through bolt-on acquisitions.

What has been achieved?

Two bolt-on acquisitions, Mr. Ted (recruitment software) and Edvantage (learning management software), have been made and added to the Lumesse range of services. Investment in the sales force has helped to drive organic growth. Lumesse's senior management team has been strengthened with significant new hires, including a new CEO in March 2013. An internal project focused on cost reduction and increased efficiency is under way.

How is it performing?

Lumesse is currently performing below expectations and has been marked down in value until we see a return to positive profit growth. Whilst recurring revenues continue to see good organic growth, consulting and bespoke sales performance in 2013 have been disappointing, reflecting the significant changes the business is undergoing.

How will we crystallise value?

There is high demand for SaaS companies, providing multiple options for exit. Lumesse has received strong interest from trade buyers, but we may also look at an IPO or a sale to another private equity buyer.

Lumesse - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
TMT	UK	May 2010	19,430	12,927

9 QUNDIS

Website: www.qundis.com

Original enterprise value: €151.0 million

HgCapital clients' total equity: 85.0%

Business description

QUNDIS is a leading provider of sub-metering devices in Germany and Italy with potential for international expansion in the Turkish and Russian markets.

It was created in 2008 from the merger of QVEDIS (previously part of Siemens) and KUNDO SystemTechnik and currently employs c. 210 employees. The company supplies a comprehensive range of sub-metering devices used to measure, collect and transmit consumption-dependent data for heating and water usage on a unit level.

Why did we invest?

QUNDIS has a robust business model, benefitting from a recurring and predictable revenue stream:

•  A significant proportion of sales are replacement related, hence recurring in nature; the remainder is based on new installations, driven by increasing market regulation;

•  There is a fragmented customer base of independent, SME service providers, serving an installed base of c. 5 million flats and offices across Europe; and

•  Strong cash conversion and industry leading profitability.

Over the period 2000 to 2013, QUNDIS saw 10% p.a. revenue growth.

How do we intend to create value?

HgCapital is supporting management to pursue strong expansion, including building presence in adjacent European markets with robust growth potential. Profitability is expected to increase through economies of scale and higher production efficiency at the new site.

What has been achieved?

Management has been strengthened, and internal processes have been improved. The company has recently started the consolidation of its current production facilities into a single modern production site. This will allow for additional capacity to drive international growth and drive profitability through increased efficiency.

How is it performing?

Problems associated with the design of the automated assembly line in 2012 have now been resolved and the last fiscal year was used to improve management, processes and production. Performance has recovered with a promising outlook for the next year.

How will we crystallise value?

There has been strong appetite in the past from strategic buyers looking to diversify their product portfolio. The large market opportunity, robust business model and track record of growth will drive interest from financial investors looking for a cash generative asset in a growing market segment.

QUNDIS - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
Industrials	Germany	May 2012	11,552	12,902

10 SimonsVoss

Website: www.simons-voss.com

Original enterprise value: €113 million

HgCapital clients' total equity: 90.0%

Business description

SimonsVoss is a European leader in the development, manufacture and marketing of electronic battery-powered locking and access control systems for public, commercial and residential buildings. Revenues primarily originate in Germany, with an increasing number of international subsidiaries.

Why did we invest?

Operating in a niche segment with considerable technological expertise, the company's robust trading through the recession saw them thrive in a depressed market with EBITDA growing by an average of 19% p.a. between 2005 and 2012. The business continues to grow in Germany and internationally, as well as into attractive new product segments. SimonsVoss has an established in-house R&D function aiming for a constant expansion of its innovative product range, while reducing production costs.

How do we intend to create value?

Having rebuilt and grown the sales teams, SimonsVoss is now looking towards growing markets with a focus on Central, Western and Northern Europe as well as Asia. This is supported by new, innovative products including passive technology, digital door fittings and compact readers. Profitability is improving through higher volumes and various operational efficiencies.

What has been achieved?

During HgCapital's involvement, SimonsVoss has developed away from a single-product-focused company into a solution provider in electronic access control, offering a comprehensive product family.

In order proactively to address new technology trends and to push internationalisation, the Board has been complemented by a strong chairman, the former Chief Marketing Officer at Vodafone plc.

A new CEO, with an impressive track record in multi-channel sales, will join the business in September. He will focus on pushing growth through new customer groups, distribution channels and geographic markets.

How is it performing?

In 2012 growth was weaker than in prior years, driven by softening demand throughout the market and investment into growth (including sales and international expansion). The year-to-date 2013 performance is stronger, with order intake up 10% and sales above prior year.

How will we crystallise value?

SimonsVoss represents a strong technology platform to enter the fast growing market for electronic locks so an exit to a trade buyer seems most likely.

SimonsVoss - Trust's underlying investment through HGT 6 LP
Sector	Location	Date of investment	Residual cost £'000	Unrealised value £'000
Industrials	Germany	Jun 2010	11,936	12,704

INVESTMENTS IN SMALL-CAP TMT

In 2011, the Trust made a £60 million commitment to HgCapital's new Mercury Fund, specialising in TMT investments with an Enterprise Value of between £20 million and £80 million. Smaller technology buyouts is an area where HgCapital has historically made many profitable investments and Mercury has allowed the establishment of a dedicated team of investment professionals focused on these deals.

This dedicated fund will target smaller buyouts in the same thematic TMT sub-sectors and in doing so adds significant incremental resources to the existing HgCapital TMT sector team. The addition of Mercury materially increases the scale and capability of HgCapital within this sector.

In October 2012, the fund acquired its first investment. Valueworks provides a private B2B electronic marketplace through which c.300 buyers (principally social housing organisations) procure goods and services, primarily related to planned repair and maintenance.

Investment in management and premises in 2012, together with lower Professional Services revenues, has adversely affected profits and this has led to a write-down of the investment at 30 June 2013. HgCapital is working with management on several initiatives to recover value including: developing the sales processes; work on the longer-term national pipeline strategy; evolving industry relationships; developing a product for private construction partners; and energy saving schemes.

In August, the HgCapital Mercury Fund completed an investment in IntelliFlo Limited, a leading SaaS provider of front and back office software to financial advisors, advisor networks and brokers. Nearly ten thousand advisors and administrators use IntelliFlo's software on a daily basis to manage workflows and respond to customer and regulatory needs. The Trust's share of this investment is £4.0 million.

	Total Valuation £'000	Portfolio value %
Valueworks	1,341	0.4
Total Mercury investments	1,341	0.4

INVESTMENTS IN RENEWABLE ENERGY

Business description

HgCapital's specialist team uses private equity skills to identify and acquire high quality European renewable energy projects with minimal GDP risk, favourable inflation links and the use of proven technologies.

RPP1 (€303 million raised in 2006)

HgCapital's first renewable energy fund has built a number of utility-scale power platforms across Europe, optimising them using our specialist experience. HgCapital Trust's commitment to the Fund is €21.6 million. Following the successful disposal of the UK platform, the remaining platforms are:

• Swedish onshore wind: one operating project of 95MW;

• Spanish solar PV: seven operating projects of 61MW.

RPP2 (€542 million raised in 2010)

The second fund replicates the strategies of the first. HgCapital Trust's commitment to the Fund is €40 million. The second fund's platforms are:

• Swedish onshore wind: two operating projects of 96MW, one 89MW project in pre-construction and a development business with a pipeline of over 700MW;

• Spanish mini-hydro: two operating projects of 120MW;

• Irish onshore wind: 87MW of projects in construction and a further 200MW of projects in pre-construction.

As at 30 June 2013, electricity equivalent to the power consumption of more than 240,000 homes is generated from the operational energy plants in the portfolio.

Why do we invest?

Renewable energy is the fastest growing segment of the European electric power sector and is expected to account for the majority of new European energy asset investment over the next ten years. This growing demand is driven by renewable energy's increasing cost competitiveness, legally binding carbon reduction targets set by the EU, replacement of ageing generation capacity, and the need to increase the security of energy supplies in Europe.

How do we intend to create value?

Investment returns are anticipated through a combination of yield during operation and capital gain at refinancing or exit, providing a return profile that should complement returns from our core investments in leveraged buyouts. By bringing individual investments together into platforms, we can enhance value through economies of scale, shared expertise and aggregated generation capacity.

How will we crystallise value?

HgCapital is developing groups of projects based on the platforms shown below. These platforms can then be refinanced efficiently or sold as portfolios of closely related projects to industry buyers or financial investors.

Exit

In January 2013, the development assets of RPP1's UK Onshore Wind portfolio were sold to Blue Energy, at an investment multiple of 1.6x and a gross IRR of 15% p.a. The proceeds from the sale returned £2.8 million to the Trust.

Principal investments by platform	Total Valuation £'000	Portfolio value %
Spanish Solar	3,429	1.1
UK Onshore Wind	2,041	0.7
Swedish Onshore Wind	1,919	0.6
Other	205	0.1
RPP1 Fund	7,594	2.5
Swedish Onshore Wind	3,323	1.1
Spanish Mini-Hydro	3,153	1.0
Irish Onshore Wind	2,940	1.0
Other	259	0.1
RPP2 Fund	9,675	3.2
Total renewable energy investments	17,269	5.7

DIVERSIFICATION BY VALUE

Geography

39%      Spain

31%      Sweden

18%      Ireland

12%      UK

Resource

61%      Onshore wind

20%      Solar

19%      Hydro

FINANCIAL STATEMENTS

INCOME STATEMENT

for the six months ended 30 June 2013

	Note	Revenue return			Capital return			Total return
		Six months ended		Year ended	Six months ended		Year ended	Six months ended		Year ended
		30.6.13 £'000 (unaudited)	30.6.12 £'000 (unaudited)	31.12.12 £'000 (audited)	30.6.13 £'000 (unaudited)	30.6.12 £'000 (unaudited)	31.12.12 £'000 (audited)	30.6.13 £'000 (unaudited)	30.6.12 £'000 (unaudited)	31.12.12 £'000 (audited)
(Losses)/gains on investments and government securities		-	-	-	(14,243)	21,344	48,944	(14,243)	21,344	48,944
Losses on priority profit share loans advanced to General Partners	7b	-	-	-	(525)	(58)	(583)	(525)	(58)	(583)
Net income	6	6,726	9,303	13,600	-	-	-	6,726	9,303	13,600
Other expenses	8	(1,717)	(1,307)	(2,602)	-	-	-	(1,717)	(1,307)	(2,602)
Net return on ordinary activities before taxation		5,009	7,996	10,998	(14,768)	21,286	48,361	(9,759)	29,282	59,359
Taxation on ordinary activities	10	(322)	(335)	(600)	-	-	-	(322)	(335)	(600)
Net return on ordinary activities after taxation attributable to reserves		4,687	7,661	10,398	(14,768)	21,286	48,361	(10,081)	28,947	58,759
Return per Ordinary share	11a	13.11p	24.07p	32.13p	(41.31p)	66.89p	149.42p	(28.20p)	90.96p	181.55p
The total return column of this statement represents the Trust's income statement. The supplementary revenue and capital return columns are both prepared under guidance published by the Association of Investment Companies ("AIC"). All recognised gains and losses are disclosed in the revenue and capital columns of the income statement and as a consequence no statement of total recognised gains and losses has been presented. All revenue and capital items in the above statement derive from continuing operations. No operations were acquired or discontinued during the period.

BALANCE SHEET

as at 30 June 2013

	Note	30.6.13 £'000 (unaudited)	30.6.12 £'000 (unaudited)	31.12.12 £'000 (audited)
Fixed assets
Investments held at fair value
Unquoted at Directors' valuation		258,543	301,554	286,026
Total fixed assets		258,543	301,554	286,026
Current assets - amounts receivable after one year
Accrued income on fixed assets		44,336	42,982	40,060
Current assets - amounts receivable within one year
Debtors		2,108	539	2,306
Government securities		130,483	26,999	108,359
Cash		3,774	4,364	5,867
Total current assets		180,701	74,884	156,592
Creditors - amounts falling due within one year		(1,504)	(3,801)	(4,662)
Net current assets		179,197	71,083	151,930
Net assets		437,740	372,637	437,956
Capital and reserves
Called up share capital		9,331	8,012	8,908
Share premium account		120,368	68,135	102,746
Capital redemption reserve		1,248	1,248	1,248
Capital reserve - realised		318,207	280,792	317,366
Capital reserve - unrealised		(25,154)	(46)	(9,545)
Revenue reserve		13,740	14,496	17,233
Total equity shareholders' funds		437,740	372,637	437,956
Basic NAV per Ordinary share (pence)	11b	1,172.8	1,170.8	1,231.5
Diluted NAV per Ordinary share (pence)	11b	1,172.8	1,138.3	1,221.7
Ordinary shares in issue at 30 June / 31 December	11b	37,324,698	31,826,507	35,564,185

CASH FLOW STATEMENT

for the six months ended 30 June 2013

	Note	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Net cash inflow/(outflow) from operating activities	9	472	(5,267)	603
Taxation (paid)/received		(1,210)	7	(78)
Capital expenditure and financial investment
Purchase of fixed asset investments		(4,243)	(19,730)	(37,582)
Proceeds from the sale of fixed asset investments		18,262	7,526	68,939
Net cash inflow/(outflow) from capital expenditure and financial investment		14,019	(12,204)	31,357
Financing activities
Proceeds from issue of share capital		18,045	40	35,547
Equity dividends paid		(8,180)	(3,182)	(3,182)
Net cash inflow/(outflow) from financing activities		9,865	(3,142)	32,365
Net cash inflow/(outflow) before management of liquid resources		23,146	(20,606)	64,247
Management of liquid resources
Purchase of government securities		(132,974)	-	(90,006)
Sale/redemption of government securities		107,735	20,494	27,150
Net cash (outflow)/inflow from management of liquid resources		(25,239)	20,494	(62,856)
(Decrease)/increase in cash and cash equivalents in the period		(2,093)	(112)	1,391
Cash and cash equivalents at 1 January		5,867	4,476	4,476
Cash and cash equivalents at 30 June / 31 December		3,774	4,364	5,867

RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS

for the six months ended 30 June 2013

	Note	share capital £'000	Share premium account £'000	Capital redemption reserve £'000	Capital reserves £'000	Revenue reserve £'000	Total £'000
At 31 December 2012		8,908	102,746	1,248	307,821	17,233	437,956
Issue of Ordinary shares	5	441	17,604	-	-	-	18,045
Conversion of Subscription shares	5	(18)	18	-	-	-	-
Net return from ordinary activities		-	-	-	(14,768)	4,687	(10,081)
Dividends paid	4	-	-	-	-	(8,180)	(8,180)
At 30 June 2013		9,331	120,368	1,248	293,053	13,740	437,740
At 31 December 2011		8,011	68,096	1,248	259,460	10,017	346,832
Issue of Ordinary shares	5	934	34,613	-	-	-	35,547
Conversion of Subscription shares	5	(37)	37	-	-	-	-
Net return from ordinary activities		-	-	-	48,361	10,398	58,759
Dividends paid	4	-	-	-	-	(3,182)	(3,182)
At 31 December 2012		8,908	102,746	1,248	307,821	17,233	437,956

NOTES TO THE FINANCIAL STATEMENTS

1. Principal activity

The principal activity of the Trust is that of an investment trust company. The Trust is an investment company as defined by Section 833 of the Companies Act 2006 and an investment trust within the meaning of Sections 1158 and 1159 of the Corporation Tax Act 2010 ('CTA 2010').

2. Basis of preparation

The accounts 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') and with the Statement of Recommended Practice 'Financial Statements of Investment Trust Companies' ('SORP'), dated January 2009. All of the Trust's operations are of a continuing nature.

The Trust has considerable financial resources and, as a consequence, the Directors believe that the Trust is well placed to manage its business risks successfully despite the current uncertain economic outlook. After making enquiries, the Directors have a reasonable expectation that the Trust will have adequate resources to continue in operational existence for the foreseeable future.

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

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

3. Organisational structure, manager arrangements and accounting policies

Partnerships where the Trust is the sole Limited Partner

The Trust entered into four separate partnership agreements with general and founder partners in May 2003 (subsequently revised in January 2009), January 2009, July 2011 and March 2013, at which point investment holding limited partnerships were established to carry on the business of an investor, with the Trust being the sole limited partner in these entities.

The purpose of these partnerships, HGT LP, HGT 6 LP, HgCapital Mercury D LP and HGT 7 LP (together the 'primary buyout funds') is to hold all the Trust's investments in primary buyouts. Under the partnership agreements, the Trust made capital commitments into the primary buyout funds, with the result that the Trust now holds direct investments in the primary buyout funds and an indirect investment in the fixed asset investments that are held by these funds, as it is the sole limited partner. These direct investments are shown as fixed asset investments on the balance sheet and in the investment portfolio above.

Partnerships where the Trust is a minority Limited Partner

In July 2011, the Trust made a direct secondary investment in HgCapital 6 E LP ('Hg6 E LP'), one of the partnerships that comprise the Hg6 Fund, in which the Trust is now a limited partner alongside other limited partners. This is a direct investment in the HgCapital 6 E LP Fund, as shown on the balance sheet and in the investment portfolio above.

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

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

Under the terms of the primary buyout fund limited partnership agreements ('LPAs'), the general partner is entitled to appropriate, as a first charge on the net income of the funds, an amount equivalent to its priority profit share ('PPS'). The Trust is entitled to net income from the funds, after payment 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 via a loan from the Trust. Such loan is only recoverable from the general partner by an appropriation of net income; until net income is earned, no value is attributed to this loan.

Furthermore, under the primary buyout funds' LPAs, the founder partner 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 distributed to the Trust.

Accordingly, the Trust'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 and the cash flow statement disclose the gross income and gross capital gains of the primary buyout funds (including the associated cash flows) and also reflect the proportion of net income and capital gains in the buyout funds that have 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, whereas PPS paid as an interest-free loan, if any, 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.

4. Dividends

It is intended that dividends will be declared and paid annually in respect of each accounting period. A dividend of 23.0p per share was paid on 15 May 2013 in respect of the year ended 31 December 2012 (year ended 31 December 2011: dividend of 10.0p per share).

5. Issued share capital

	Six months ended 30.6.13 (unaudited)		Six months ended 30.6.12 (unaudited)		Year ended 31.12.12 (audited)
	No. '000	£'000	No. '000	£'000	No. '000	£'000
Ordinary shares of 25p each
Allotted, called-up and fully paid
At 1 January	35,564	8,890	31,822	7,956	31,822	7,965
Issued following exercise of subscription rights	1,761	441	5	1	3,742	934
At 30 June / 31 December	37,325	9,331	31,827	7,957	35,564	8,890
Subscription shares of 1p each
Allotted, called-up and fully paid
At 1 January	1,761	18	5,503	55	5,503	55
Conversion into Ordinary shares	(1,761)	(18)	(5)	-	(3,742)	(37)
At 30 June / 31 December	-	-	5,498	55	1,761	18
Total share capital	37,325	9,331	37,325	8,012	37,325	8,908

The Trust's issued share capital at the beginning of the year consisted of 35,564,185 Ordinary shares and 1,760,513 Subscription shares. Each Subscription share entitled the holder to subscribe for one Ordinary share upon exercise of the subscription right and payment of the subscription price. The final exercise date was on 31 May 2013 at a subscription price of £10.25 per share. On 11 June 2013, 1,760,513 new Ordinary shares were issued pursuant to the exercise of Subscription shares on 31 May 2013 and total proceeds of £18,045,000 were received by the Trust.

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

6. Income

	Revenue return
	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Income from investments held by HGT LP and HGT 6 LP
UK unquoted investment income	7,433	8,949	16,258
Foreign unquoted investment income	2,021	3,717	3,260
Other investment income
UK unquoted investment income	710	-	929
Gilt interest less amortisation of premium	(296)	84	(237)
Total investment income	9,868	12,750	20,210
Other income
Deposit interest	6	31	42
Total other income	6	31	42
Total income	9,874	12,781	20,252
Priority profit share charge against income
Current year - HGT LP	(715)	(636)	(1,383)
Prior year - HGT LP	-	(402)	(402)
Current year - HGT 6 LP	(2,433)	(2,440)	(4,867)
Total priority profit share charge against income	(3,148)	(3,478)	(6,652)
Total net income	6,726	9,303	13,600
Total net income comprises:
Interest	6,726	9,303	13,600
Total net income	6,726	9,303	13,600

7. Priority profit share and carried interest

(a) Priority profit share payable to General Partners

	Revenue return
	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Priority profit share payable
Current year amount	3,673	3,536	7,235
Less: Current year loans advanced to General Partners	(525)	(460)	(985)
Current year charge against income	3,148	3,076	6,250
Add: Prior year loans to General Partners recovered from priority profit share	-	402	402
Total priority profit share charge against income	3,148	3,478	6,652

The priority profit share payable on HGT LP, HGT 6 LP and Hg Mercury D LP rank as a first appropriation of net income from investments held in HGT LP, HGT 6 LP and Hg Mercury D LP respectively and is deducted prior to such income being attributed to the Trust in its capacity as a Limited Partner. The net income of HGT LP, HGT 6 LP and Hg Mercury D LP earned during the year, after the deduction of the priority profit share, is shown on the income statement.

(b) Loans to General Partners

	Capital return
	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Movements on loans to General Partners
Losses on current year loans advanced to General Partners	(525)	(460)	(985)
Gains on prior year loans advanced to General Partners recovered against income	-	402	402
Total losses on loans recoverable from General Partners	(525)	(58)	(583)

In years in which the funds described in note 7(a) 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 matching loan from the Trust. Such loan is only recoverable from the general partner 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 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Carried interest payable
Current year amount	-	2,522	2,728
Total carried interest charge against capital gains	-	2,522	2,728

The carried interest payable ranks as a first appropriation of capital gains on the investments held in HGT LP, HGT 6 LP and Hg Mercury D LP, limited partnerships established solely to hold the Trust's investments, and is deducted prior to such gains being paid to the Trust in its capacity as a Limited Partner. The net amount of capital gains of HGT LP, HGT 6 LP and Hg Mercury D LP during the year, after the deduction of carried interest, is shown on the income statement.

8. Other expenses

	Revenue return
	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Custodian and administration fees	265	226	479
Other administration costs	1,452	1,081	2,123
	1,717	1,307	2,602

9. Cash flow from operating activities

	Six months ended 30.6.13 £'000 (unaudited)	Six months ended 30.6.12 £'000 (unaudited)	Year ended 31.12.12 £'000 (audited)
Reconciliation of net return before taxation to net cash flow from operating activities
Net return before taxation	(9,759)	29,282	59,359
Add back: Losses/(gains) on investments held at fair value	14,243	(23,866)	(51,672)
(Decrease)/Increase in carried interest payable	(2,728)	443	649
Amortisation of premium on government securities	2,336	941	2,704
Increase in prepayments and accrued income	(4,076)	(12,048)	(10,199)
Increase in debtors	(2)	-	-
Increase/(decrease) in creditors	458	(19)	(238)
Net cash (outflow)/inflow from operating activities	472	(5,267)	603

10. Taxation

Tax for the six month period is charged at 24% to 31 March 2013 and 23% from 1 April 2013 (31 December 2012: 24%), 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, the Trust 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 year. The Trust expects to designate all of any dividend declared in respect of this financial year as an interest distribution to its shareholders. This distribution is treated as a tax deduction against taxable income, resulting in no corporation tax being payable by the Trust on the interest income designated as a dividend.

11. Return and NAV per Ordinary share

(a) Return per Ordinary share

	Revenue return			Capital return
	Six months ended 30.6.13  (unaudited)	Six months ended 30.6.12  (unaudited)	Year ended 31.12.12  (audited)	Six months ended 30.6.13  (unaudited)	Six months ended 30.6.12  (unaudited)	Year ended 31.12.12  (audited)
Earnings (£'000):
Return on ordinary activities after taxation	4,687	7,661	10,398	(14,768)	21,286	48,361
Number of shares ('000)
Weighted average number of shares in issue	35,749	31,823	32,366	35,749	31,823	32,366
Return per Ordinary share (pence)	13.11	24.07	32.13	(41.31)	66.89	149.42

The Trust's issued Ordinary share capital at the beginning of the year consisted of 35,564,185 Ordinary shares. On 11 June 2013, 1,760,513 new Ordinary shares were issued pursuant to the exercise of Subscription shares on 31 May 2013.

(b) NAV per share

	Six months ended 30.6.13  (unaudited)	Six months ended 30.6.12  (unaudited)	Year ended 31.12.12  (audited)
NAV (£'000)
Net assets	437,740	372,637	437,956
Assuming exercise of all outstanding Subscription shares	-	52,233	18,045
Fully diluted NAV	437,740	424,870	456,001
Number of Ordinary shares ('000)
Number of Ordinary shares in issue	37,325	31,827	35,564
Potential issue of new Ordinary shares on exercise of Subscription shares	-	5,498	1,761
Ordinary shares in issue following exercise of Subscription shares	37,325	37,325	37,325
Basic NAV per share (pence)	1,172.8	1,170.8	1,231.5
Diluted NAV per share (pence)	1,172.8	1,138.3	1,221.7

12. Commitment in fund partnerships

Original and outstanding commitments in Fund partnerships Fund	Original commitment £'000	Outstanding
		30.6.13 £'000	30.6.12 £'000	31.12.12 £'000
HGT 7 LP1	200,000	200,000	-	-
HGT 6 LP1	285,029	67,241	78,155	64,479
HgCapital Mercury D LP	60,000	54,601	58,454	55,274
HgCapital Renewable Power Partners 2 C LP	34,2822	19,1673	23,090	22,052
HGT LP4	120,000	6,272	14,794	15,791
HgCapital 6 E LP5	15,000	3,539	4,113	3,586
Hg Renewable Power Partners LP	18,5476	1,1817	452	985

¹  HgCapital Trust plc has the benefit of an investment opt-out provision in its commitment to invest alongside HgCapital 6 and HgCapital 7 so that it can opt out of a new investment without penalty should it not have the cash available to invest.

²  Sterling equivalent of €40,000,000.

³  Sterling equivalent of €22,364,000 (30 June 2012: €28,537,000; 31 December 2012: €27,188,000).

⁴  With effect from 21 October 2011, £12 million (10% of the original £120 million loan commitment) was cancelled and on 31 March 2013 the commitment was further reduced by £9 million (7.5% of the original £120 million loan commitment).

⁵  Acquired in a secondary purchase in July 2011.

⁶  Sterling equivalent of €21,640,088.

⁷  Sterling equivalent of €1,378,000 (30 June 2012: €559,000; 31 December 2012: €1,215,000

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 2013 and 30 June 2012 has not been audited. The information for the year ended 31 December 2012 has been extracted from the latest published audited financial statements, which have been filed with the Registrar of Companies. The report of the auditors on those accounts contained no qualification or statement under section 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 2013 in March 2014. The Annual Report should be available by the end of March 2014, with the Annual General Meeting being held in May 2014.

BOARD, MANAGEMENT AND ADMINISTRATION

Board of Directors
Roger Mountford (Chairman)

Richard Brooman (Chairman of the Audit & Valuation Committee)

Peter Gale (Deputy Chairman and Senior Independent Director)

Andrew Murison

Mark Powell

Piers Brooke (retired from the Board in May 2013)

HgCapital Trust plc
2 More London Riverside
London
SE1 2AP

www.hgcapitaltrust.com

Registered office
(Registered in England No. 1525583)
2 More London Riverside
London
SE1 2AP

Manager
HgCapital¹
2 More London Riverside
London
SE1 2AP

Telephone: [phone]
www.hgcapital.com

Secretary and administrator
Hg Pooled Management Limited²
2 More London Riverside
London
SE1 2AP

Telephone: [phone]
www.hgcapital.com

Custodian
Hg Investment Managers Limited²
2 More London Riverside
London
SE1 2AP

Registrar
Computershare Investor Services PLC²
The Pavilions
Bridgwater Road
Bristol BS99 6ZZ

Telephone: [phone]
www-uk.computershare.com/investor

Stockbroker
Numis Securities Ltd²
The London Stock Exchange Building
10 Paternoster Square
London EC4M 7LT

Telephone: [phone]
www.numiscorp.com

Independent auditor
Deloitte LLP
2 New Street Square
London EC4A 3BZ

AIC
Association of Investment Companies
www.theaic.co.uk

LPEQ
Listed Private Equity
www.lpeq.com

HgCapital Trust plc is a founder member of LPEQ. LPEQ is a group of private equity investment trusts and similar vehicles listed on the London Stock Exchange and other major European stock markets, formed to raise awareness and increase understanding of what listed private equity is and how it enables all investors - not just institutions - to invest in private equity.

LPEQ provides information on private equity in general, and the listed sector in particular, undertaking and publishing research and working to improve levels of knowledge about the asset class among investors and their advisers.

¹HgCapital is the trading name of Hg Pooled Management Limited and HgCapital LLP

²Authorised and regulated by the Financial Conduct Authority.

 

END

 

 

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