HG Capital Trust plc – Annual Financial Report

HgCapital Trust plc

ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2024

RESILIENT NAV PERFORMANCE DRIVEN BY STRONG TRADING IN THE UNDERLYING PORTFOLIO AND CONTINUED REALISATION ACTIVITY IN A CHALLENGING MACRO ENVIRONMENT

London, 10 March 2025:  HgCapital Trust plc (‘HgT’), today announces its annual results for the year ended 31 December 2024. 

HgT provides investors with a listed vehicle to invest in unquoted businesses managed by Hg, Europe’s largest investor in software & services companies.

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

This objective has been demonstrated with a 10-year share price total return of +20.5% p.a., outperforming the FTSE All-Share Index by +14.3% p.a. over this period.

Highlights over 2024 included:

• 25.7% total share price return

• 10.4% NAV per share growth on a total return basis, with net assets of £2.5 billion

• Discount narrowed from 13% to 2% premium¹

• LTM revenue and EBITDA growth of 19% and 23% respectively for the top 20 companies (76% of the portfolio), with an average EBITDA margin of 34%

• Investments of £606 million and gross realisations of £508 million

• £336 million of liquid resources available, including a £375 million credit facility, of which £98 million was drawn at year end

• £735 million of outstanding commitments to Hg funds to be invested over the next two to three years

Based on HgT’s share price at 31 December 2024 and allowing for all historic dividends being reinvested, an investment of £1,000 made 20 years ago would now be worth £19,166, a total return of 1,817%. An equivalent investment in the FTSE All-Share Index would be worth £3,777.

Jim Strang, Chairman of HgT, commented:

“I am happy to report that HgT performed well in 2024, successfully navigating the challenging investment environment in the Private Equity market. The portfolio continued to see strong underlying trading performance, with sales and EBITDA across the top 20 investments (76% of the portfolio) growing at 19% and 23% respectively. Investment and realisation activity continued at a pace in 2024 and beyond, consistent with the cycle that underpins long term value creation at HgT. The strong progress in 2024 supported a near 26% increase in the share price of HgT alongside a material narrowing of the discount. HgT shares ended the year at a 2% premium to NAV¹.”

David Toms, Head of Research at Hg, commented:

“The portfolio demonstrates exceptional operational strength with LTM EBITDA growth of 23% outpacing revenue growth of 19%, driving margins to 34%. With resilient business models and strong recurring revenues, the portfolio is well-positioned for both organic growth and strategic M&A opportunities in the current market environment.”

Performance overview

Net assets of £2.5 billion, with continued long-term outperformance of the FTSE All-Share over one, three, five, ten and twenty-year periods:

• NAV per share of 545.5p, a total annual return of +10.4% to 31 December 2024.

• Share price total return of +25.7% over the year.

• Proposed final dividend of 3.5p per share (full year dividend of 5.5p per share).

Strong double-digit growth from the top 20 (76% of the portfolio):

• Revenue and EBITDA growth of 19% and 23% respectively across the top 20 investments over the last twelve months, EBITDA margins of 34%.

• Valuation multiple (EV/EBITDA) of 26.1x and net debt to EBITDA ratio of 7.4x for the top 20 investments.

Continued portfolio activity to drive future value:

• £508 million of gross realisations

• Full and partial exits in the last year were achieved at an average of 15% above their last reported carrying value.

• Continued investment with £606 million invested on behalf of HgT into companies that Hg (the Manager) has known for many years and have demonstrated a track record of strong performance across market cycles.

POST PERIOD TO 28 FEBRUARY 2025

• Pro forma NAV per share of 545.0p.

• Pro forma Net assets of £2.5 billion.

• Share price of 526.0p, performance of -2.4% since 31 December 2024.

Realisations and investments

• Estimated £87 million realised post December 2024, primarily from the refinancing of The Citation Group that completed in the first quarter of 2025 and the full exit of Trackunit announced in February 2025.

• £30 million invested by HgT, primarily into The Citation Group.

Liquid resources and commitments

• Commitment of $1 billion to Hg Saturn 4, expected to be called over the next three to four years

• Available liquid resources (including the £375 million credit facility, of which £21 million was drawn at the end of February) post-completion of all announced transactions and the full year dividend payable in May 2025, are £376 million (15% of 28 February pro-forma NAV). Outstanding commitments of £1.4 billion (57% of 28 February pro-forma NAV).

Outlook

Commentary from Hg (the Manager):

The combination of the long-term nature of listed private equity investment, the types of growth businesses that Hg invests in, is expected to continue to drive long-term performance

• Resilient trading performance underpinned by mission-critical nature of products and services provided by portfolio companies

• Improving deal environment and increased Hg Investment Committee activity is supportive of further investment activity

• We continue to focus on consistency of realisations, with further liquidity events anticipated

• We remain excited by the long-term investment opportunity, as businesses seek to automate workflow to improve productivity and manage rising labour costs

¹ Based on the last published NAV per share at 31 December 2024

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