REG - HG Capital Trust PLC - Annual Financial Report <Origin Href="QuoteRef">HGT.L</Origin> - Part 4
06/03/2017 07:05
- Part 4: For the preceding part double click ID:nRSF5401Yc
back: opening unrealised (appreciation)/depreciation - investments (48,039) 26,925
Add back: opening carried interest provision 29,206 1,088
Opening book cost as at 1 January 409,629 387,943
Movements in the year:
Additions at cost 104,100 65,489
Disposals - proceeds (102,193) (43,070)
- realised gains/(losses) on sales 13,284 (733)
Closing book cost of investments 424,820 409,629
Add: closing unrealised appreciation - investments 138,423 48,039
Less: closing carried interest provision (56,282) (29,206)
Closing valuation of investments as at 31 December 506,961 428,462
The investments above include investments in companies that are indirectly
held by the Company through its investment in HGT LP, HGT 6 LP, HGT 7 LP and
HgCapital Mercury D LP, as set out in note 3 above, and investments in fund
limited partnerships in HgCapital 6 E LP, Hg Renewable Power Partners LP and
HgCapital Renewable Power Partners 2 C LP.
13. Gains/(losses) on investments and liquidity funds
Capital return
2016£'000 2015£'000
Realised:
Realised gains/(losses) on sales - fixed asset investments 13,284 (733)
- liquidity funds 201 462
Net realised gains/(losses) 13,485 (271)
Unrealised:
Unrealised gains/(losses) - fixed asset investments 90,384 74,964
- liquidity funds (126) (453)
90,258 74,511
Carried interest charge against capital gains (note 5(c)) (27,076) (28,118)
Net unrealised gains 63,182 46,393
Total gains 76,667 46,122
14. Debtors and accrued income
2016£'000 2015£'000
Amounts receivable after one year:
Accrued income on fixed assets 65,280 64,162
Amounts receivable within one year:
Deferred tax recoverable (note 9(c)) 509 668
Prepayments and other accrued income 63 39
Total amounts receivable within one year 572 707
Total debtors 65,852 64,869
The Directors consider that the carrying amount of debtors approximates their
fair value.
15. Liquidity funds
2016£'000 2015£'000
Investments held at fair value through profit and loss:
Opening valuation 30,835 59,859
Purchases at cost 88,737 31,559
Sales and redemptions (80,200) (60,796)
Movement in unrealised capital losses (126) (453)
Accrued income 143 204
Realised capital gains 201 462
Closing valuation 39,590 30,835
16. Movement in net funds
2016£'000 2015£'000
Analysis and reconciliation of net funds:
Change in cash (3,332) 6,491
Net funds at 1 January 9,512 3,021
Net funds at 31 December 6,180 9,512
Net funds comprise:
Cash 6,180 9,512
Cash includes £2,198,000 held by the fund limited partnerships in which the
Company is the sole limited partner.
17. Creditors - amounts falling due within one year
2016£'000 2015£'000
Taxation payable 575 978
Loan facility (note 18) 1,458 1,487
Sundry creditors 794 1,190
Total creditors 2,827 3,655
The Directors consider that the carrying amount of creditors approximate their
fair value.
18. Bank facility
On 24 August 2011, the Company entered into a £40,000,000 multi-currency
revolving credit standby facility on an unsecured basis.
The facility was initially available for three years, before it was extended
during August 2014 to 31 December 2015. In December 2015, the facility was
extended by a further three and a half years to 30 June 2019. In addition, the
facility was increased to £80,000,000, with an additional £40,000,000
available from 31 December 2016. Under the facility agreement, the Company is
liable to pay interest on any drawn amount at LIBOR plus a margin of 2.25% to
2.50%, dependent on the loan to value ratio. A commitment fee of 0.95% p.a. is
liable on any undrawn commitment and a ticking fee of 0.30% p.a. is liable on
the increase of £40,000,000 during 2016 only. The facility was undrawn as at
the end of the year.
On 28 November 2012, HgCapital Mercury D LP, alongside the other Hg Mercury
funds, entered into a four-year multi-currency revolving term loan facility to
provide short-term funds to facilitate acquisitions. HgCapital Mercury D LP
participated for an amount of £4,736,842. Under the facility agreement, it is
liable to pay interest on any drawn amount at base rate plus a margin of
3.00%. A commitment fee of 0.50% p.a. is liable on any undrawn commitment. At
the end of the year, the Company's indirect share of amounts drawn via
HgCapital Mercury D LP, was £1,458,000.
19. Financial risk
The following disclosures relating to the risks faced by the Company are
provided in accordance with sections 11 and 12 of FRS 102. The reference to
investments in this note is in relation to the Company's direct investments in
Hg RPP LP, Hg RPP 2 LP, Hg6E LP and the underlying investments in HGT LP, HGT
6 LP, HGT 7 LP and HgCapital Mercury D LP as described in note 3 above.
Financial instruments and risk profile
The Company's investment objective is to achieve long-term capital
appreciation by indirectly investing in unquoted companies. It does this
through its investments in fund partnerships, mostly in the UK and Europe.
Additionally, the Company holds UK Government securities, cash, liquidity
funds and items such as debtors and creditors arising directly from its
operations. In pursuing its investment objective, the Company is exposed to a
variety of risks that could result in either a reduction of the Company's net
assets or a reduction in the profits available for distribution by way of
dividends. Valuation risk, market risk (comprising currency risk and interest
rate risk), liquidity risk and credit risk, and the Directors' approach to the
management of them, are described below. The Board and HgCapital coordinate
the Company's risk management. The objectives, policies and processes for
managing the risks, and the methods used to manage the risks, that are set out
below, have not changed from the previous accounting period.
Valuation risk
The Company's exposure to valuation risk arises mainly from movements in the
value of the underlying investments (held through fund partnerships), the
majority of which are unquoted. A breakdown of the Company's portfolio is
given on page 31 and a breakdown of the most significant underlying
investments is given above. In accordance with the Company's accounting
policies, the investments in fund limited partnerships are valued by reference
to their underlying unquoted investments, which are valued by the Directors
following the IPEV Valuation Guidelines. The Company does not hedge against
movements in the value of these investments, apart from foreign exchange
movements as explained below, though the borrowing arranged to fund these
investments is normally denominated in the currency in which the business is
operating. The Company has exposure to interest rate movements, through bank
deposits, UK government securities and liquidity funds.
In the opinion of the Directors, the diversified nature of the Company's
portfolio significantly reduces the risks of investing in unquoted companies.
FRS 102 requires the Company to classify fair value measurements using a fair
value hierarchy that reflects the significance of the inputs used in making
the measurements. The fair value hierarchy has the following levels:
• Quoted prices (unadjusted) in active markets for identical assets or
liabilities (level 1).
• Inputs other than quoted prices included within level 1 that are
observable for the asset or liability, either directly (that is, as prices) or
indirectly (that is, derived from prices) (level 2).
• Inputs for the asset or liability that are not based on observable
market data (that is, unobservable inputs) (level 3).
The level in the fair value hierarchy, within which the fair value measurement
is categorised in its entirety, is determined on the basis of the lowest level
input that is significant to the fair value measurement in its entirety. For
this purpose, the significance of an input is assessed against the fair value
measurement in its entirety. If a fair value measurement uses observable
inputs that require significant adjustment based on unobservable inputs, that
is a level 3 measurement. Assessing the significance of a particular input to
the fair value measurement in its entirety requires judgement, considering
factors specific to the asset or liability.
The determination of what constitutes an 'observable' input requires
significant judgement by the Board. The Board considers observable data
relating to investments actively traded in organised financial markets, in
which case fair value is generally determined by reference to stock exchange
quoted market bid prices at the close of business on the balance sheet date,
without adjustment for transaction costs necessary to realise the asset.
The following table analyses, within the fair value hierarchy, the fund's
financial assets (by class) measured at fair value at 31 December.
Level 1£'000 Level 2£'000 Level 3£'000 Total£'000
Investments held at fair value through profit and loss:
Unquoted investments - Investment in HGT 6 LP - - 229,986 229,986
- Investment in HGT 7 LP - - 175,957 175,957
- Investment in HGT LP - - 69,874 69,874
- Investment in HgCapital Mercury D LP - - 54,828 54,828
- Investment in Hg RPP2 LP - - 16,997 16,997
- Investment in Hg 6 E LP - - 14,448 14,448
- Investment in Hg RPP LP - - 1,153 1,153
- Liquidity funds - 39,590 - 39,590
- Carried interest provision - - (56,282) (56,282)
Other assets:
Accrued income - - 65,280 65,280
As at 31 December 2016 - 39,590 572,241 611,831
Level 1£'000 Level 2£'000 Level 3£'000 Total£'000
Investments held at fair value through profit and loss:
Unquoted investments - Investment in HGT 6 LP - - 235,441 235,441
- Investment in HGT 7 LP - - 100,654 100,654
- Investment in HGT LP - - 62,387 62,387
- Investment in HgCapital Mercury D LP - - 30,618 30,618
- Investment in Hg 6 E LP - - 14,684 14,684
- Investment in Hg RPP2 LP - - 12,459 12,459
- Investment in Hg RPP LP - - 1,425 1,425
- Liquidity funds - 30,835 - 30,835
- Carried interest provision - - (29,206) (29,206)
Other assets:
Accrued income - - 64,162 64,162
As at 31 December 2015 - 30,835 492,624 523,459
Investments whose values are based on quoted market prices in active markets,
and therefore classified within level 1, include government securities and
actively traded listed equities. The Company does not adjust the quoted bid
price of these investments.
Financial instruments that trade in markets that are not considered to be
active, but are valued based on quoted market prices, dealer quotations or
alternative pricing sources supported by observable inputs, are classified
within level 2. As level 2 investments include positions that are not traded
in active markets and/or are subject to transfer restrictions, valuations may
be adjusted to reflect illiquidity and/or non-transferability, which are
generally based on available market information.
Investments classified within level 3 have significant unobservable inputs.
Level 3 instruments include private equity and corporate debt securities. As
observable prices are not available for these securities, the Board has used
valuation techniques to derive the fair value. In respect of unquoted
instruments, or where the market for a financial instrument is not active,
fair value is established by using recognised valuation methodologies, in
accordance with IPEV Valuation Guidelines. Fair value is the amount for which
an asset could be exchanged between knowledgeable, willing parties in an arm's
length transaction.
There were no transfers of assets from level 1 to level 2 or 3, level 2 to
level 1 or 3 and level 3 to level 1 or 2.
The following table presents the movement in level 3 investments for the year
ended 31 December 2016 by class of financial instrument.
Accruedincome oninvestments2016£'000 Investmentsin limited partnerships2016£'000 Total 2016£'000
Unquoted investments:
Opening balance 64,162 428,462 492,624
Purchases - 104,100 104,100
Realisations at 31 December 2015 valuation (31,497) (86,706) (118,203)
Total gains for the year included in the income statement 32,615 88,181 120,796
Movement in carried interest provision - (27,076) (27,076)
Closing unrealised valuation of level 3 investments 65,280 506,961 572,241
Total gains for the year included in the income statement for investments held at the end of the year 33,626 81,830 115,456
Equity price risk
Equity price risk is the risk of a fall in the fair value of the Company's
ownership interests (comprising equities and shareholder loans) held by the
Company indirectly through its direct investments in fund limited
partnerships. The Board revalues each investment twice each year. The Board
manages the risks inherent in the investment portfolio by ensuring full and
timely access to relevant information from HgCapital. The Board meets
regularly and at each meeting reviews the trading performance of the principal
underlying investments. If there appears to the Board to be an impairment in
value between regular valuations, it can revalue the investment. The Board
also monitors HgCapital's compliance with the Company's investment objective
and investment policy.
HgCapital's best estimate of the effect on the net assets and total return due
to a reasonably possible change in the value of all unquoted securities, with
all other variables held constant, is as follows:
Change% £'000 NAV perOrdinary share Pence
Sensitivity to equity price risk:
Unquoted investments ±10% ±57,224 ±153.3
Credit risk
Credit risk
Credit risk is the risk of financial loss in the event that any of the
Company's market counterparties fail to fulfil their contractual obligations
to the Company. The Company's financial assets (excluding fixed asset
investments) that are subject to credit risk, were neither impaired nor
overdue at the year-end. The Company's cash balances were held with the Royal
Bank of Scotland and amounts not required for day-to-day use were invested in
liquidity funds managed by Royal London Asset Management which are rated AAA
by Fitch. Foreign exchange forward contracts and options are held with
counterparties which have credit ratings which the Board considers to be
adequate. The Board regularly monitors the credit quality and financial
position of these market counterparties. The credit quality of the above
mentioned financial assets was deemed satisfactory.
Market risk
The fair value of future cash flows of a financial instrument held by the
Company may fluctuate due to changes in market prices of comparable
businesses. This market risk may comprise: currency risk (see below), interest
rate risk and/or equity price risk (see above). The Board of Directors reviews
and agrees policies for managing these risks. HgCapital assesses the exposure
to market risk when making each investment decision, and monitors the overall
level of market risk on the whole of the investment portfolio on an ongoing
basis.
Currency risk and sensitivity
The Company is exposed to currency risk as a result of investing in fund
partnerships which invest in companies that operate and are therefore valued
in currencies, other than sterling. The value of these assets in sterling,
being the Company's functional currency, can be significantly influenced by
movements in foreign exchange rates. Borrowing raised to fund each acquisition
in such companies is normally denominated in the currency in which the
business is operating and valued, thus limiting the Company's exposure to the
value of its investments, rather than the gross value. From time to time, the
Company is partially hedged against movements in the value of foreign currency
against sterling where a movement in exchange rate could affect the value of
an investment, as explained below. HgCapital monitors the Company's exposure
to foreign currencies and reports to the Board on a regular basis. The
following table illustrates the sensitivity of the revenue and capital return
for the year in relation to the Company's year-end financial exposure to
movements in foreign exchange rates against sterling. The rates represent the
range of movements against sterling over the current year for the currencies
listed.
In the opinion of the Directors, the sensitivity analysis below may not be
representative of the year as a whole, since the level of exposure changes as
the portfolio changes through the purchase and realisation of investments to
meet the Company's objectives.
Revenue return Capital return
£'000 NAV perOrdinary share Pence £'000 NAV perOrdinary share Pence
Highest value against sterling during the year:
Danish krone (8.2227) 4 - 1,904 5.1
Euro (1.1052) 808 2.2 8,212 22.0
Norwegian krone (9.9597) - - 4,497 12.0
Swedish krona (10.6981) 242 0.6 321 0.9
Swiss franc (1.1949) - - 10 -
US dollar (1.2131) 154 0.4 1,098 2.9
1,208 3.2 16,042 42.9
Lowest value against sterling during the year:
Danish krone (10.1935) (9) - (4,666) (12.5)
Euro (1.3665) (1,922) (5.1) (19,539) (52.3)
Norwegian krone (13.1106) - - (12,498) (33.5)
Swedish krona (12.6356) (548) (1.5) (727) (1.9)
Swiss franc (1.4821) - - (30) (0.1)
US dollar (1.4807) (1,374) (3.7) (9,772) (26.2)
(3,853) (10.3) (47,232) (126.5)
At 31 December 2016, the following rates were applied to convert foreign
denominated assets into sterling: Danish krone (8.7108); euro (1.1715);
Norwegian krone (10.6361); Swedish krona (11.2254); Swiss franc (1.2559); and
US dollar (1.2357).
Portfolio hedging
At times, the Company uses derivative financial instruments such as forward
foreign currency contracts and option contracts to manage the currency risks
associated with its underlying investment activities. The contracts entered
into by the Company are denominated in the foreign currency of the geographic
areas in which the Company has significant exposure against its reporting
currency. The contracts are designated as a hedge and the fair values thereof
are recorded in the balance sheet as investments held at fair value.
Unrealised gains and losses are taken to capital reserves. At the balance
sheet date, there were no outstanding derivative financial instruments.
The Company does not trade in derivatives but may hold them from time to time
to hedge specific exposures with maturities designed to match the exposures
they are hedging. It is the intention to hold both the financial investments
giving rise to the exposure and the derivatives hedging them until maturity
and therefore no net gain or loss is expected to be realised.
Derivatives are held at fair value, which represents the replacement cost of
the instruments at the balance sheet date. Movements in the fair value of
derivatives are included in the income statement. The Company does not adopt
hedge accounting in the financial statements.
Interest rate risk and sensitivity
The Company has exposure to interest rate movements as this may affect the
fair value of funds awaiting investment, interest receivable on liquid assets
and managed liquidity funds, and interest payable on borrowings. The Company
has little immediate direct exposure to interest rates on its fixed assets, as
the majority of the underlying investments are fixed rate loans or equity
shares that do not pay interest. Therefore, and given that the Company has no
borrowings and maintains low cash levels, the Company's revenue return is not
materially affected by changes in interest rates.
However, funds awaiting investment have been invested in managed liquidity
funds and, as stated above, their valuation is affected by movements in
interest rates. The sensitivity of the capital return of the Company to
movements in interest rates has been based on the UK base rate. With all other
variables constant, a 0.25% decrease in the UK base rate should increase the
capital return in a full year by about £60,000, with a corresponding decrease
if the UK base rate were to increase by 0.25%. In the opinion of the
Directors, the above sensitivity analyses may not be representative of the
year as a whole, since the level of exposure changes as investments are made
and realised throughout the year.
Liquidity risk
Investments in unquoted companies, which form the majority of the Company's
investments, may not be as readily realisable as investments in quoted
companies, which might result in the Company having difficulty in meeting its
obligations. Liquidity risk is currently not significant as 7% of the
Company's net assets at the year-end are liquid resources and, in addition,
the Company has an £80 million multi-currency undrawn bank facility available.
The Board gives guidance to HgCapital as to the maximum amount of the
Company's resources that should be invested in any one company. For further
details refer to the Company's Investment Policy in the full Annual Report and
Accounts.
Currency and interest rate exposure
The Company's financial assets that are subject to currency and interest rate
risk are analysed below:
2016 2015
Fixed and floatingrate£'000 Non-interest-bearing£'000 Total£'000 Total% Fixed and floatingrate£'000 Non-interest-bearing£'000 Total£'000 Total%
Sterling 45,770 244,518 290,288 47.0 39,546 224,071 263,617 49.5
Euro - 150,396 150,396 24.3 - 167,399 167,399 31.4
US dollar - 67,346 67,346 10.9 - 17,378 17,378 3.3
Norwegian krone - 66,217 66,217 10.7 - 44,228 44,228 8.3
Danish krone - 32,141 32,141 5.2 801 22,488 23,289 4.4
Swedish krona - 11,428 11,428 1.9 - 12,309 12,309 2.3
Swiss franc - 195 195 - - 4,751 4,751 0.8
Total 45,770 572,241 618,011 100.0 40,347 492,624 532,971 100.0
Short-term debtors and creditors, which are excluded, are mostly denominated
in sterling, the functional currency of the Company. The fixed and floating
rate assets consisted of cash and liquidity funds, of which the underlying
investments are a combination of fixed and floating rate. The
non-interest-bearing assets represent the investment portfolio held in fund
limited partnerships, net of the provision for carried interest.
Through its investment into the HgCapital Mercury D LP fund, the Company had
outstanding borrowings of £1,458,000 (notes 17 and 18) at the year-end (2015:
£1,487,000). The numerical disclosures above exclude short-term debtors and
creditors.
Capital management policies and procedures
The Company's capital management objectives are to ensure that it will be able
to finance its business as a going concern and to maximise the revenue and
capital return to its equity shareholders.
The Company's capital at 31 December comprised:
2016£'000 2015£'000
Equity:
Equity share capital 9,331 9,331
Share premium 120,368 120,368
Capital redemption reserve 1,248 1,248
Retained earnings and other reserves 484,809 399,076
Total capital 615,756 530,023
With the assistance of HgCapital, the Board monitors and reviews the broad
structure of the Company's capital on an ongoing basis.
This review covers:
• the projected level of liquid funds (including access to bank facilities);
• the desirability of buying back equity shares, either for cancellation or
to hold in treasury, balancing the effect (if any) this may have on the
discount at which shares in the Company are trading against the advantages of
retaining cash for investment;
• the opportunity to raise funds by an issue of equity shares; and
• the extent to which revenue in excess of that which is required to be
distributed should be retained, whilst maintaining its status under Section
1158 of the CTA 2010.
The Company's objectives, policies and processes for managing capital are
unchanged from the preceding accounting period.
20. Called-up share capital
2016 2015
No. '000 £'000 No. '000 £'000
Ordinary shares of 25p each:
Allotted, called-up and fully paid:
At 1 January 37,325 9,331 37,325 9,331
At 31 December 37,325 9,331 37,325 9,331
Total called-up share capital 37,325 9,331 37,325 9,331
Whilst the Company no longer has an authorised share capital, the Directors
will still be limited as to the number of shares they can at any time allot,
as the Companies Act 2006 requires that Directors seek authority from
shareholders for the allotment of new shares.
21. Share premium account and reserves
Sharepremiumaccount£'000 Capital redemption reserve£'000 Capital reserveunrealised£'000 Capital reserverealised£'000 Revenuereserve£'000
As at 1 January 2016 120,368 1,248 14,023 353,107 31,946
Transfer on disposal of investments - - 2,203 (2,203) -
(Losses)/gains on liquidity funds - - (126) 201 -
Net gain on sale of fixed asset investments - - - 15,487 -
Net movement in unrealised appreciation of fixed asset investments - - 88,181 - -
Dividend paid - - - - (14,930)
Net return for the year after taxation - - - - 20,140
Net loans recovered from General Partners - - 3,856 - -
Carried interest provision - - (27,076) - -
As at 31 December 2016 120,368 1,248 81,061 366,592 37,156
22. Commitment in fund partnerships and contingent liabilities
Fund Originalcommitment£'000 Outstanding at 31 Dec
2016£'000 2015£'000
HGT 8 LP1 350,000 350,000 -
HGT 7 LP1 200,000 39,774 102,765
HGT 6 LP 285,029 11,050 17,860
HgCapital Mercury D LP 60,000 10,285 27,540
Hg RPP2 LP 29,4812 7,4823 8,2193
HGT LP4 120,000 1,261 1,261
Hg RPP LP 15,9495 8466 1,0166
Hg 6 E LP 15,000 582 940
Total outstanding commitments 421,280 159,601
1 The Company has the benefit of an opt-out provision in connection with its commitment alongside HgCapital 8, allowing it to
opt out of its obligation to fund draw-downs under its commitment, without penalty, where certain conditions exist.2 Sterling
equivalent of E40,000,000.3 Sterling equivalent of E8,765,000 (2015: E11,152,000).4 With effect from 21 October 2011, £12.0
million of the commitment was cancelled, followed by £9.0 million on 31 March 2013 and £4.7 million on 1 August 2014. These
amounts represent 10.0%, 7.5% and 3.9% respectively of the original £120 million commitment to the HgCapital 5 fund.5 Sterling
equivalent of E21,640,000.6 Sterling equivalent of E992,000 (2015: E1,378,000).
23. Key agreements, related party transactions and ultimate controlling party
HgCapital acts as Manager of the Company through a management agreement and
indirectly participates through fund limited partnership agreements as the
general partners and, alongside a number of HgCapital's executives (past and
present), as the founder partners of the fund partnerships in which the
Company invests. In addition, HgCapital acts as Administrator of the Company.
The Company has no ultimate controlling party.
The Company's related parties are its directors. Fees paid to the Company's
board are disclosed in the Directors' Remuneration Report in the full Report
and Accounts. There are no other identified related parties at the year end,
and as of 3 March 2017.
INDEPENDENT AUDITOR'S REPORT TO THE MEMBERS OF HgCAPITAL TRUST PLC
The Company's financial statements for the year ended 31 December 2016 have
been audited by Deloitte LLP. The text of the Auditor's Report can be found on
pages 87 to 90 of the full Annual Report and Accounts.
CORPORATE GOVERNANCE
EXTRACT FROM THE DIRECTORS' REPORT
The Directors present the Annual Report and Accounts of HgCapital Trust plc
(the 'Company') (Reg. No. 01525583) for the year ended 31 December 2016.
The Strategic Report, Chairman's Statement and Corporate Governance Report
forms part of this Directors' Report.
Results and dividend
The total return for the Company is set out in the income statement above. The
total return after taxation for the year, was £100,663,000 (2015: £65,049,000)
of which the revenue return was £20,140,000 (2015: revenue return of
£17,907,000).
The Directors recommend the payment of a dividend of 46.0 pence per Ordinary
share for the year ended 31 December 2016 (2015: 40.0 pence). Subject to
approval of this dividend at the forthcoming annual general meeting ('AGM'),
it will be paid on 16 May 2017 to shareholders on the register of members at
the close of business on 8 April 2017.
Greenhouse gas emissions
The Company has no greenhouse gas emissions to report from the operations of
the Company, nor does it have responsibility for any other emissions producing
sources reportable under the Companies Act 2006 (Strategic Report and
Directors' Report) Regulations 2013.
Stewardship
Our Manager, HgCapital, seeks to invest the Company's funds in businesses that
are well managed, with high standards of corporate governance.
The Directors of the Company believe this creates the proper conditions to
enhance long-term shareholder value and to achieve a high level of corporate
performance.
The exercise of voting rights attached to the Company's underlying proportion
of the portfolio lies with HgCapital.
HgCapital has a policy of active portfolio management and ensures that
significant time and resource is dedicated to every investment, with HgCapital
executives typically being appointed to investee company boards, in order to
ensure the application of active, results-orientated corporate governance.
Further information regarding the stewardship of investee companies by
HgCapital can be found in their review on above.
Derivative transactions
The Company had no outstanding derivative contracts at 31 December 2016.
Annual General Meeting ('AGM')
The AGM of the Company, which will include a presentation by HgCapital, will
be held at the offices of HgCapital, 2 More London Riverside, London SE1 2AP
on Wednesday 10 May 2017 at 11am. Light refreshments will be available from
10.30am. Notice of the AGM is given on pages 116 to 119 of the full Report and
Accounts. The Board is of the opinion that the passing of all resolutions
being put to the AGM would be in the best interests of the Company and its
shareholders. The Directors therefore recommend that shareholders vote in
favour of resolutions 1 to 14, as set out in the Notice of Meeting.
The Company's Board of Directors
Roger Mountford - Chairman
Richard Brooman
Mark Powell
Peter Dunscombe
Anne West
DIRECTORS' RESPONSIBILITIES STATEMENT IN RESPECT OF THE ANNUAL REPORT AND
ACCOUNTS
The Directors are responsible for preparing the Annual Report and Accounts in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements for each
financial year. Under that law, the Directors have elected to prepare the
financial statements in accordance with United Kingdom Generally Accepted
Accounting Practice (United Kingdom Accounting Standards and applicable law)
including FRS 102, "The Financial Reporting Standard applicable in the UK and
Ireland".
Under company law the Directors must not approve the financial statements,
unless they are satisfied that they give a true and fair view of the state of
affairs of the Company and of the profit or loss of the Company for that
period. In preparing these financial statements, the Directors are required
to:
• select suitable accounting policies and then apply them consistently;
• make judgements and accounting estimates that are reasonable and prudent;
• state whether applicable UK Accounting Standards have been followed; and
• prepare the financial statements on the going concern basis, unless it is
inappropriate to presume that the Company will continue in business.
The Directors are responsible for keeping adequate accounting records that are
sufficient to show and explain the Company's transactions and disclose with
reasonable accuracy at any time the financial position of the Company and
enable them to ensure that the financial statements comply with the Companies
Act 2006. They are also responsible for safeguarding the assets of the Company
and hence for taking reasonable steps for the prevention and detection of
fraud and other irregularities.
The Directors are responsible for the maintenance and integrity of the
corporate and financial information included on the Company's website.
Legislation in the United Kingdom governing the preparation and dissemination
of financial statements may differ from legislation in other jurisdictions.
Responsibility statement
We confirm that to the best of our knowledge:
• the financial statements, prepared in accordance with United Kingdom
Generally Accepted Accounting Practice, including FRS 102, "The Financial
Reporting Standard applicable in the UK and Ireland", give a true and fair
view of the assets, liabilities, financial position and profit or loss of the
Company;
• the extracts from the Strategic Report and HgCapital's Review include a
fair review of the development and performance of the business and the
position of the Company, together with a description of the principal risks
and uncertainties that it faces; and
• the Annual Report and Accounts, taken as a whole, is fair, balanced and
understandable and the information provided to shareholders is sufficient to
allow them to assess the Company's position and performance, business model
and strategy.
On behalf of the Board
Roger Mountford, Chairman
3 March 2017
Dividend
The dividend proposed in respect of the year ended 31 December 2016 is 46
pence per share.
Ex-dividend date 7 April 2017
(shares transferred without dividend)
Record date 8 April 2017
(last date for registering transfers to receive the dividend)
Last date for registering DRIP instructions 22 April 2017
Dividend payment date 16 May 2017
The dividend is subject to approval of the shareholders at the forthcoming
AGM.
National Storage Mechanism
A copy of the Annual Report and Accounts will be submitted shortly to the
National Storage Mechanism ("NSM") and will be available for inspection at the
NSM, which is situated at: www.morningstar.co.uk/uk/nsm
Neither the contents of the Company's website or the Manager's website, nor
the contents of any website accessible from hyperlinks in this announcement or
on those websites (or any other website), is incorporated into, or forms part
of, this announcement.
This information is provided by RNS
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