RNS Number:8317B
HG Capital Trust PLC
10 August 2004
10 August 2004
HgCapital Trust plc
Interim Results for the six months ended 30 June 2004
HIGHLIGHTS
- Net asset value per share ("NAV") rose over the six months by 7.3%, from 385.0p at the beginning of the
year to 413.0p on 30 June 2004.
- Over the same period the total return (NAV plus dividend) for the FTSE All-Share Index rose by 2.8% and
the FTSE SmallCap Index by 5.6%.
- The Company invested #4.8 million (2003: #7.7 million) in new and follow-on investments.
- The Company realised #1.2 million in cash (2003: #2.3 million).
- Earnings per share of 2.5p (2003: 2.4p).
- The NAV was 401.6p at 31 July 2004.
New investments
During the six months to 30 June 2004, the Company invested a total of #4.8 million and participated in one new
investment, the Euro115 million management buy-out of Hirschmann Electronics Holdings SA. The company is a world-leading
supplier of electronics equipment, components and related accessories. Its principal products include rail-mounted
industrial Ethernet, sophisticated car-antenna electronics, television transmission equipment and safety systems for
mobile plant equipment such as cranes. This was HgCapital's fourth acquisition in Germany in fourteen months.
Since the period end the Company has participated in the #102 million management buy-out of IRIS Software, the UK's
leading provider of financial, practice management and tax software to accountancy practices.
At the period end the Company had utilised #12.3 million of its #25 million borrowing facility.
Realisations
Realisation proceeds totalled #1.2 million, arising mainly from cash distributions and redemption proceeds.
Since the period end the Company has sold its entire quoted holding in Patientline, a healthcare company in which it
first invested in 1996. Over the life of the investment, the Company has realised a profit of #5.4 million, which
equates to a return of 2.6 times cost. The realisation had had no material effect on the Company's net asset value.
In June 2004, technology company Xyratex completed an IPO on NASDAQ some nine months after our investment. Since the
period end, the Company has received proceeds of #1.6 million from a placing of stock and retains over 87% of its
original shareholding, which is valued in accordance with BVCA guidelines at a 25% discount to closing mid-market
price.
Portfolio
At 30 June 2004 the Company's portfolio consisted of 48 investments (2003: 47) and the ten principal investments
represented 69% of the portfolio valuation excluding cash.
The valuation of the portfolio, excluding cash, increased to #106.1 million, benefiting from the profit growth of a
number of the larger unquoted companies and positive cash flow, leading to a reduction in bank debt, and from an
improvement in quoted stock prices. Early-stage companies generally continue to experience lower than planned growth
and, where appropriate, we have reduced valuations.
Following a particularly active year for new investments in 2003, we have seen an increase in pricing this year and
have chosen not to invest in a number of opportunities. While the overall environment may be more uncertain we are
rigorously pursuing those opportunities where we believe our strategy provides a strong, competitive advantage and
asset growth plan.
Other business
Roger Mountford and Andrew Murison were appointed to the Board on 20 April 2004 to fill the vacancies created by the
retirement of Michael Glover on 30 April 2004 and the forthcoming retirement of Anthony Crook on 30 September 2004.
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 2004
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
Note (unaudited) (unaudited) (audited)
Income 5 1,460 2,028 7,106
Investment management fees 6 (296) (221) (475)
Other expenses 7 (231) (703) (925)
Net revenue before finance costs and taxation 933 1,104 5,706
Interest payable and similar charges (46) (11) (11)
Revenue on ordinary activities before taxation 887 1,093 5,695
Taxation on ordinary activities (266) (486) (1,726)
Revenue on ordinary activities after taxation 621 607 3,969
Dividend in respect of equity shares 3 - - (3,022)
Transfer to reserves 621 607 947
Return per ordinary share 2.47p 2.41p 15.76p
Dividend per ordinary share - - 12.00p
STATEMENT OF TOTAL RETURN PER ORDINARY SHARE
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
(unaudited) (unaudited) (audited)
Earnings 2.47p 2.41p 15.76p
Capital return 25.56p 11.43p 48.36p
Total return 28.03p 13.84p 64.12p
BALANCE SHEET
as at 30 June 2004
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
(unaudited) (unaudited) (audited)
Fixed assets
Investments
- Listed at mid-market valuation 15,411 9,464 6,120
- Unquoted at directors' valuation 90,681 67,016 89,231
106,092 76,480 95,351
Current (liabilities)/assets
Debtors 10,673 4,444 9,393
Government securities - 6,658 17
Cash 634 588 546
11,307 11,690 9,956
Creditors - amounts falling due within one year (13,373) (848) (8,342)
Net current (liabilities)/assets (2,066) 10,842 1,614
Net assets 104,026 87,322 96,965
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 85,016 76,895 85,734
Capital reserve - unrealised (7,375) (14,997) (14,533)
Revenue reserve 4,718 3,757 4,097
Total equity shareholders' funds 104,026 87,322 96,965
Net asset value per ordinary share 413.0p 346.7p 385.0p
SUMMARISED CASH FLOW STATEMENT
for the six months to 30 June 2004
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
(unaudited) (unaudited) (audited)
Net cash outflow from operating activities (1,424) (444) (1,269)
Servicing of finance (46) (11) (11)
Taxation (paid)/received (822) 470 355
Capital expenditure and financial investment
Purchase of fixed asset investments (4,786) (7,715) (29,637)
Proceeds from the sale of fixed asset investments 1,421 2,295 15,006
Equity dividends paid (3,022) (2,015) (2,015)
Management of liquid resources 17 6,977 13,586
Net cash inflow from drawdown of loans 8,750 - 3,500
Increase/(decrease) in cash in the period 88 (443) (485)
Reconciliation of net REVENUE return before finance costs and taxation to net cash flow from operating activities
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
(unaudited) (unaudited) (audited)
Net return before finance costs and taxation 933 1,104 5,706
Investment management fee and finance costs
capitalised (1,025) (696) (1,458)
Increase in accrued income (1,378) (1,000) (5,785)
Increase in creditors 125 90 98
Effective yield adjustment - 199 225
Tax on investment income included within gross
income (79) (141) (55)
Net cash flow from operating activities (1,424) (444) (1,269)
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 2003. 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 12.0p per share, declared as a final dividend, was paid on 30 April 2004 in respect of
the year ended 31 December 2003.
4. Issued share capital
There were 25,186,755 ordinary shares in issue for the six months to 30 June 2004
(31 December 2003: 25,186,755).
5. Income
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
(unaudited) (unaudited) (audited)
Income from investments
UK unquoted investment income 1,358 1,724 6,730
Overseas dividends 82 25 46
1,440 1,749 6,776
Other income
Gilt interest - 233 276
Deposit interest 20 46 54
20 279 330
Total income 1,460 2,028 7,106
6. Investment management fees
Revenue Capital
Six months Six months Year Six months Six months Year
ended ended ended ended ended ended
30.6.04 30.6.03 31.12.03 30.6.04 30.6.03 31.12.03
#'000 #'000 #'000 #'000 #'000 #'000
(unaudited) (unaudited) (audited) (unaudited) (unaudited) (audited)
Investment
management fees 252 188 404 756 565 1,214
Irrecoverable VAT
thereon 44 33 71 132 99 212
296 221 475 888 664 1,426
The investment management fee is levied quarterly in arrears. Investment
management fees are charged 75% to capital reserve - realised and 25% to
revenue.
7. Other expenses
Six months Six months Year
ended ended ended
30.6.2004 30.6.2003 31.12.2003
#'000 #'000 #'000
(unaudited) (unaudited) (audited)
Custodian and administration fees 61 53 109
Reorganisation expenses - 522 499
Other administration costs 170 128 317
231 703 925
8. Capital commitments
At 30 June 2004, investment purchases of #2,461,000 (30 June 2003: #1,734,000, 31 December 2003:
#1,343,000) had been authorised and contractually committed.
9. 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 2004 and 2003 has not been audited.
The information for the year ended 31 December 2003 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.
10. Annual results
The Board expects to announce the results for the year ending 31 December 2004 at the end of
February 2005. The annual report should be available by mid-March 2005, with the Annual General
Meeting being held in April 2005.
Third Floor, Minerva House
3-5 Montague Close
London SE1 9BB
10 August 2004
This information is provided by RNS
The company news service from the London Stock Exchange
END
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