Kepler Trust Intelligence’s Post

Transcript

Hello, I'm Jim Strang. I'm the Chairman of Easty Capsule Trust. H Capital Trust is a portfolio of software and technology enabled business services companies which are private and which are managed and run by HG, which is a European private equity house based here in London. In terms of our results for the year ended December 2024, pleased to announce actually a a very solid set of results that the key highlights of those results being that the share price of the company increased by 25.7% over the course of the year. The net asset value of the company rose by 10.4% and the discount that the company traded on now over the course of the year. And actually we closed the year at a very modest 2% premium to the last. Voted now at the end of the year. So in aggregate a very strong set of results for the for the year ended December 2024. In terms of what drove the performance over the year, it really was a case of this the same much of the same. So the biggest driver of performance by far is the operating performance of the trading companies that sit underneath the portfolio. So there are there are 50 of them just over 50 at the end of the year and that group of companies actually saw a very solid. And consistent levels of growth similar to previous years, but the top 20 companies growing their underlying profitability in which we we use EBITDA as a proxy for that. And indeed, if you look at their sales performance, it was also similarly very strong. So the the main drivers of our performance are fundamentally that the portfolio of companies that sits in the business across HTT have done very well for us over the last year. In terms of the portfolio, as I noted, the performance was around 20% of the EBITDA level and slightly ahead of that at the revenue level at the top 20 holdings, similar to previous years I would say. It's really across the board, across these businesses that there has been a very resilient and strong level of performance. Nothing really stand out in nothing, no individual business that's really spiked the outcome. I would say just the strength across the board and of course from the HP's perspective and the company's perspective. Most of what we do has very similar business characteristics. So this is repeat revenue software sales with very high recurring customer engagement and with a sort of relatively compelling value proposition to the customer. So generally the businesses that invest in make other companies more efficient at what they do and that's a quite a compelling statement and quite compelling value opportunity. So we benefit from if you like. Solving other people's problems in a compelling way and that and that has been a feature of the businesses that we owned in the past and continued to own and that supports us over broad beast value creation which is what you see in the portfolio. In 2024, HTT invested 606,000,000 lbs into new investments across the portfolio. Those were 12 new deals and three significant follow on investments which added up to the 606. Again, all across the clusters that we use our HG users as its core investment strategy. So tax and accounting, legal and regulatory and compliance, insurance, fintech, we're all the areas where businesses were invested consistent with the operator of the investment model of the company. And indeed geographically significantly the investments were made in Europe with a notable, notable number of deals done in America as well. And I would say the most significant investment in the year was the investment in audit boards. That's the US based business which does what's called Sarbanes-Oxley compliance, which is a legal and regulatory requirement for American companies. And it's a highly successful fast growing business which Egg has acquires and which becomes as a result one of the larger investments in the company as well inside the top ten of individual holdings and HTC. Invested ��114 million into that business and also made a significant Co investment inside that business as well. So that was the if you'd like the stand out in terms of the scale and the potentially the size of the opportunity from these new investments that were made over the last year. So IN2024HG saw realized gains of just over 500 million pounds, 508 million and that was from six full axis and five partial exits done in the year that the biggest. With being Iris, which is our business people in the portfolio for a significant amount of time and that business went to a significant exit event and returning almost ��100 million into the HTT balance sheet. In terms of the uplist on exit, I mean I think I'm it's very pleasing to note that the exits are continuing to be made at at prices and valuations above the last carrying value that we all these assets at in the balance sheet and over the course of all the exits done in the year that number was 15%. So again a nice validation of the valuations of the portfolio that we hold and indeed also a proof point because the assets that we sell are typically valued at. Very elevated levels of reflecting the fact that they are very resilient, stable, fast growing businesses and therefore they are they are very valuable and indeed they exit environment talks to that. In terms of marketing environment more broadly, it definitely improved over the course of the year so that the markets are gradually unlocking for private equity type transactions and indeed they are unlocking from the top down. So it's the most resilient, attractive, highly profitable businesses which are actually proving to be the easier ones to sell. And certainly HTT benefits from the fact that that really looks like our portfolio. So if you look at the number of X's that. That and liquidity events have been achieved in the last couple of years across the portfolio and compare that to basically any other private equity firm in the world, it compares incredibly favorably and that's been a real benefit to HTT. In terms of the investment model the HTK employs, it is actually a very clearly defined way of investing. So the idea behind it is to adopt A focus on a particular area which is software and technology enabled business services. And to build the flywheel and what I mean by that is by focusing on that relatively narrow area, but going over it again and again and again and again then etc. And HG benefits from an experience curve. So what we're doing every time is learning everything and every iteration that we go through. So and that means that obviously we know more, we're better able to understand and price the risks of the investments that we make and I think also understand what their full potential. Is that effectively what we are doing And what Egg is doing is trying to identify the full potential of the businesses that fit within this definition that we think is attractive and then work collaboratively with the management teams of those companies to help them achieve their full potential. And that's either by helping them become more organically, more profitable and more successful by entering new markets, developing new products and optimizing their processes and also by building scale through M&A, so the sectors and clusters. We target the typical way of thinking about it is to try and find what you could call an attachment point, which is a place to start your journey. And then figuring out ways you can build scale through buying smaller companies that are additive and accretive to the place that you start from. And by building a bigger and more successful business, you improve its relative market position. And as you improve its relative market position, all things equal, you improve its level of profitability. And if you improve its level of profitability. Probably also improve the value that someone would attach to owning that business as the next order. And if you if you really wrap that all together into one package, then that really is the model that each to operates which is relatively distinct. There are not very many firms that do the private equity model implement it in that way. A handful an HP's obviously been incredibly successful implementing that and indeed has got a leadership position in the space that they operate. If you're interested in finding out more about the HTT annual results or indeed the company and its history, then please I would direct you to the website Https://llcwebsite, which contains all the information around the annual results that we've just released. And indeed a lot of further information around the company and indeed the activities of HG is the manager and all the things that they're doing in the technology space. Thanks very much.