Interim Results
HG Capital Trust PLC
02 September 2003
2 September 2003
HgCapital Trust plc
Interim Results for the six months ended 30 June 2003
- The net asset value per share increased by 4.2% in the six months to 30
June 2003 from 332.9p to 346.7p. The FTSE All-Share Index rose by 4.1% and
the FTSE SmallCap Index by 15.5% in the same period.
- Earnings per share of 2.4p (2002: 4.2p).
- New investments amounted to £5.1 million.
- Follow-on funding amounted to £2.6 million.
- Gilt and cash balances amounted to £7.2 million at 30 June 2003 (31.12.02:
£14.9 million).
- NAV was 348.6p at 31 July 2003.
The Chairman, David Bucks, comments:
'The Company continues to maintain its long term record of outperformance
against the FTSE All-Share Index. The net asset value per share increased by
4.2% from 332.9p at the end of 2002 to 346.7p at 30 June 2003. This compares
with increases of 4.1% in the FTSE All-Share Index and 15.5% in the FTSE
SmallCap Index, both in capital-only terms.
'Earnings per share were 2.4p, compared with 4.2p in the same period last year.
This decrease is due to the costs incurred in connection with the reorganisation
of the Company earlier this year. As these costs were a non-recurring item, the
Board intends to exclude them from consideration when deciding the dividend to
be recommended in respect of the current year.
'The Company committed £7.7 million to new and follow-on investments and
realisations yielded £2.3 million. As at 30 June 2003, the Company's cash
resources amounted to £7.2 million, approximately half the amount held at the
end of 2002. This trend is expected to continue and the Company will draw on
its £25 million borrowing facility.
'Finally, following the approval of the new management arrangements at the
Extraordinary General Meeting in April, the Company now has a direct contractual
relationship with HgCapital. One of the features of the new management
agreement is an alignment of part of the Manager's remuneration to the
performance of the Company's net asset value. The name of the Company has
changed to HgCapital Trust plc to reflect that relationship. The life of the
Company has been extended by a further period of six years to 2011.'
Ian Armitage of HgCapital, the Fund Manager, commented:
'In March, we completed the £17 million public-to-private management buy-out of
Rolfe & Nolan, the leading independent supplier of back-office processing
software to the futures and options industry.
'We also acquired Hoseasons, the leading independent self-catering holiday
agency in the UK, in a £40 million secondary buy-out. The growing market for
self-catering overseas holidays represents a significant opportunity for
Hoseasons.
'The larger, more established businesses within the portfolio are generating
cash, enabling them to repay acquisition debt and thus improve their financial
condition. There have been healthy increases in profits at Match, Tunstall,
Castlebeck, ClinPhone and Pharma Bio-Research. Early-stage companies are still
finding the business climate difficult and, where appropriate, we have reduced
valuations to reflect their performance and poorer prospects.
'The number of potential deals that we are seeing has increased across all the
sectors, particularly within Germany, where tough markets have caused companies
to dispose of peripheral activities. We have launched a bid to acquire the
issued share capital of W.E.T. Automotive Systems AG in order to take the
company private, offering a full price for what we believe to be a good
business.
'We remain cautiously optimistic for further opportunities to deploy capital.'
For further information please contact:
David Bucks - Chairman, HgCapital Trust plc
Tel: 020 7603 0466
Ian Armitage - Chief Executive, HgCapital
Tel: 020 7089 7979
Trevor Phillips - Holborn Public Relations
Tel: 020 7929 5599
REVENUE STATEMENT
for the six months ended 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
Note (unaudited) (unaudited) (audited)
Income 5 2,028 1,852 3,528
Investment management fee 6 (221) (206) (396)
Other expenses 7 (703) (174) (322)
Net revenue before finance costs and taxation 1,104 1,472 2,810
Interest payable and similar charges (11) (11) (22)
Revenue on ordinary activities before taxation 1,093 1,461 2,788
Taxation on ordinary activities (486) (398) (640)
Revenue on ordinary activities after taxation 607 1,063 2,148
Dividend in respect of equity shares 3 - - (2,015)
Transfer to reserves 607 1,063 133
Return per ordinary share 2.41p 4.22p 8.53p
Dividend per ordinary share - - 8.00p
STATEMENT OF TOTAL RETURN PER ORDINARY SHARE
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
(unaudited) (unaudited) (audited)
Earnings 2.41p 4.22p 8.53p
Capital return 11.43p (20.20p) (48.01p)
Total return 13.84p (15.98p) (39.48p)
BALANCE SHEET
as at 30 June 2003
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Fixed assets
Investments
- Listed at mid-market valuation 9,464 10,809 5,112
- Unquoted at directors' valuation 67,016 44,794 62,559
76,480 55,603 67,671
Current assets
Debtors 4,444 3,531 3,881
Government securities 6,658 33,135 13,843
Cash 588 108 1,031
11,690 36,774 18,755
Creditors - amounts falling due within one year (848) (607) (2,589)
Net current assets 10,842 36,167 16,166
Net assets 87,322 91,770 83,837
Capital and reserves
Called up share capital 6,296 6,296 6,296
Share premium account 14,123 14,123 14,123
Capital redemption reserve 1,248 1,248 1,248
Capital reserve - realised 76,895 80,599 78,079
Capital reserve - unrealised (14,997) (14,576) (19,059)
Revenue reserve 3,757 4,080 3,150
Total equity shareholders' funds 87,322 91,770 83,837
Net asset value per ordinary share 346.7p 364.4p 332.9p
SUMMARISED CASH FLOW STATEMENT
for the six months to 30 June 2003
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net cash flow from operating activities (490) 1,821 2,161
Returns on investment and servicing of finance 35 9 (7)
Taxation received 470 82 383
Capital expenditure and financial investment
Purchase of fixed asset investments (7,715) (3,212) (24,033)
Proceeds from the sale of fixed asset investments 2,295 18,069 20,246
Equity dividends paid (2,015) (2,015) (2,015)
Management of liquid resources 6,977 (14,959) 3,983
(Decrease)/increase in cash (443) (205) 718
Reconciliation of net return before finance costs and taxation to net cash flow
from operating activities
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Net return before finance costs and taxation 1,104 1,472 2,810
Investment management fee and finance costs (696) (651) (1,253)
charged to capital
Interest receivable (46) (9) (15)
(Increase)/decrease in accrued income (1,000) 1,027 357
Increase/(decrease) in creditors 90 (24) (56)
Effective yield adjustment 199 486 832
Tax on investment income included within gross
income (141) (480)
(514)
Net cash flow from operating activities (490) 1,821 2,161
NOTES TO THE INTERIM ANNOUNCEMENT
1. Principal activity
The principal activity of the Company is that of an investment company
within the meaning of section 266 of the Companies Act 1985.
2. Basis of preparation
The interim financial statements have been prepared on the basis of the
accounting policies set out in the Company's financial statements for the
year ended 31 December 2002. Income and operating expenses have been
recognised in accordance with the same principles used in the preparation
of the annual financial statements. The taxation charge has been calculated
by applying an estimate of the annual effective tax rate to the profit for
the period.
3. Dividend
It is intended that dividends will be declared and paid annually in respect
of each accounting period. A dividend of 8.00p per share, declared as a
final dividend, was paid on 1 May 2003 in respect of the year ended 31
December 2002.
4. Issued share capital
There were 25,186,755 ordinary shares in issue for the six months to 30
June 2003 (31 December 2002: 25,186,755).
5. Income
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Income from investments
UK unquoted investment income 1,724 1,235 2,209
UK listed dividends - 128 193
Overseas listed dividends 25 14 26
1,749 1,377 2,428
Other income
Gilt interest 233 465 1,060
Deposit interest 46 9 15
Other fees - 1 25
279 475 1,100
Total income 2,028 1,852 3,528
6. Investment management fee
Revenue Capital
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30.06.03 30.06.02 31.12.02 30.06.03 30.06.02 31.12.02
£'000 £'000 £'000 £'000 £'000 £'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Investment
management fee 188 175 337 565 526 1,010
Irrecoverable VAT
thereon 33 31 59 99 93 177
221 206 396 664 619 1,187
The investment management fee is levied quarterly in arrears and is charged 25%
to the revenue account and 75% to capital reserve - realised.
7. Other expenses
Six months Six months Year
ended ended ended
30 June 30 June 31 December
2003 2002 2002
£'000 £'000 £'000
(unaudited) (unaudited) (audited)
Custodian and administration fees 53 60 116
Reorganisation costs 522 - -
Other administration costs 128 114 206
703 174 322
8. Capital commitments
As at 30 June 2003 the Company was committed to further investments of
£1,734,000 (31 December 2002: £3,275,000).
9. New management arrangements and implementation of a limited
partnership structure
At an extraordinary general meeting held on 29 April 2003, shareholders
approved proposals to introduce new management arrangements and the
implementation of a limited partnership structure to hold the Company's
non-cash portfolio.
Details of the new management fee, together with the partnership profit
share arrangement, were set out in the Chairman's letter to shareholders
dated 4 April 2003 and will be disclosed in the Company's annual report for
the year ending 31 December 2003.
10. Publication of non-statutory accounts
The financial information contained in this interim report does not
constitute statutory accounts as defined in section 240 of the Companies
Act 1985. The financial information for the six months ended 30 June 2002
and 2003 has not been audited.
The information for the year ended 31 December 2002 has been extracted from
the latest published audited financial statements, which have been filed
with the Registrar of Companies. The report of the independent auditor on
those accounts contained no qualification or statement under sections 237
(2) or (3) of the Companies Act 1985.
11. Annual results
The Board expects to announce the results for the year ending 31 December
2003 at the end of February 2004. The annual report should be available by
mid-March 2004, with the Annual General Meeting being held in April 2004.
Third Floor, Minerva House
3-5 Montague Close
London SE1 9BB
2 September 2003
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