Interim Results

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 €115 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

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