24 Nov

Broker presentation - full year results 30/9/21

HGL Ltd (ASX:HNG) Hancock & Gore Financial Results Presentation Financial Year Ending September 2021 Platform set for FY22 and Beyond PERFORMANCE HIGHLIGHTS FOR THE YEAR ENDED 30TH SEPTEMBER 2021 (FY21) 81% SHAREHOLDER RETURN 55% NTA PER SHARE GROWTH 94% NPAT RETURN ON NET ASSETS 24% FUM GROWTH $15.6M NET PROFIT AFTER TAX $47.1M NTA VALUE ~$0.26 NTA PER SHARE $0.01 FULLY FRANKED DIVIDEND FY21 HIGHLIGHTS Return to significant profitability – FY21 ~$15.6m NPAT Resumed paying dividends - 1 cent per share fully franked declared. Franking Credit balance of $9.2m Active transformation and value crystallisation of both JSB & BLC private investments releasing > $2m profit and liquidity in FOS Capital Ltd (FOS) and Cellmid Ltd (CDY) respectively Realised > $1m profit from ASX Listed share portfolio – annualised IRR of > 50% Acquisition of Funds Management Vehicle and relaunch of H&G High Conviction Fund. Fund achieved return of 18% in 6 months post acquisition New Private Equity Investments – T-Shirt Ventures & Mint Payments Increase in valuation of Mountcastle & Pegasus reflecting underlying earnings growth $5.8m EBIT generated by operating businesses (H&G share - no longer consolidated or equity accounted) Strong Balance sheet – in excess of $7m Cash available – NTA approx. $0.26 INVESTMENT TEAM SANDY BEARD EXECUTIVE CHAIRMAN • 30+ years of investment experience and Director of numerous public and private companies. NICHOLAS ATKINSON INVESTMENT DIRECTOR • 25+ years of experience across capital markets, corporate finance and investment management. • Former Executive Director of Institutional Equities at Morgans Financial (14 years). • MBA (Macquarie GSM) • Bachelor Commerce (UQ) • Grad Dip Applied Investment & Finance (FINSIA) PHILLIP CHRISTOPHER INVESTMENT DIRECTOR • 12+ years of experience across private equity, capital markets and investment management. • Former Director at Alceon Group Private Equity (6 years) and Analyst at Goldman Sachs. Director of Cellmid Limited and Pegasus Healthcare • Bachelor of Economics and Bachelor of Commerce (University of Western Australia) IAIN THOMPSON CFO & COMPANY SECRETARY • 30+ years of finance and company secretarial experience, including 6 years at H&G • Former Company Secretary of Brickworks Limited (ASX:BKW) • Chartered Accountant (CA) • Bachelor of Economics (Macquarie University) • GAICD • Grad Dip Company Secretarial Practice 70+ years of collective investment experience PORTFOLIO ACTIVITY SETS STRONG PLATFORM FOR GROWTH IN FY22 LIQUIDITY REALISATIONS: NEW INVESTMENTS: GROWTH/M&A: H&G SECTOR EXPOSURES Majority of portfolio is valued by independent 3 rd parties Education Healthcare Wellness & Beauty Payments Technology Trade Lighting Retail POS Funds Management Logistics Spatial Data ASX Listed Mountcastle ~4x LTM EBITDA 63% OF PORTFOLIO ASSETS VALUED AT <5x LTM EBITDA Pegasus Healthcare ~4.5x LTM EBITDA INVESTMENTS OVERVIEW BUSINESS INDUSTRY VALUATION PROFORMA PORTFOLIO % Mountcastle School wear $16.7m 36% Pegasus Healthcare Health $7.4m 16% Cellmid Ltd (ASX:CDY) Wellness & Beauty $3.9m 8% Mint Payments Payments Technology $3.0m 6% SPOS Retail POS $1.8m 4% T-Shirt Ventures Health $1.0m 2% FOS Capital (ASX:FOS) Trade Lighting $0.9m 2% ASX Listed Various $3.5m 8% H&G Investment Management Funds Management $0.7m 2% Cash $7.2m 16% FY’22 AND BEYOND 1 PRIVATE INVESTMENTS • Continue targeting at least 15% p.a. returns from earnings based value growth and income / dividends (across private equity and income investments) • Significant proprietary deal flow and opportunity to leverage balance sheet with syndication capability • Striving for outperformance significantly above 15% p.a. returns through transformation / realisation of select PE assets 2 LISTED INVESTMENTS • Continue >20% p.a. return targets across listed portfolio • Continue to access deal flow through networks • Support existing strategic asset investments via capital raisings 3 FUNDS MANAGEMENT • Continue FUM growth with enhanced distribution networks • Partner with experienced fund managers/industry experts to launch new products (e.g. Property Fund, Special Situations Fund, Venture Fund) to build capital light sustainable revenue streams 4 OTHER H&G is well positioned to continue delivering strong results • Increase advisory / ECM earnings from portfolio companies FY21 INCOME STATEMENT FINANCIAL YEAR ENDING SEPTEMBER 30TH FY21 Realised & Unrealised Gains on Investments $14.3m Other Income $2.4m Dividends $1.5m Operating Costs ($3.0m) Net Profit Before Tax $15.2m Net Profit After Tax (Income Tax Benefit in FY21) $15.6m 12 months to 30th September 2021 FY21 BALANCE SHEET FINANCIAL YEAR ENDING SEPTEMBER 30TH FY21 Cash $7.6m Receivables $0.2m Listed Investments $3.5m Private Investments $34.8m Intangibles $0.7m Other Assets $2.6m Bank Debt $(0.0)m Payables $(0.4)m Other Liabilities $(1.2)m Net Assets $47.8m $47.1M NET TANGIBLE ASSETS 12 months to 30th September 2021 BOARD OF DIRECTORS SANDY BEARD EXECUTIVE CHAIRMAN 30+ years experience and Director of numerous public and private companies. Executive Chair H&G (ASX:HNG) 2020-Present. Director of Centrepoint Alliance (ASX:CAF), FOS Capital Ltd (ASX:FOS) & Pure Foods Tasmania (ASX:PFT). Former CEO of CVC Limited (ASX:CVC) (between 2001- 2019) KEVIN ELEY NON-EXECUTIVE DIRECTOR 35+ years experience across capital markets, corporate finance and investment management Non-Executive Director H&G (ASX:HNG) 2010-Present. Director of Equity Trustees and Pengana. Former CEO of H&G (ASX:HNG) from 1985 – 2010. PETER MILLER NON-EXECUTIVE DIRECTOR 30+ years experience in Chartered Accounting & public practice. Non-Executive Director H&G (ASX:HNG) 2000- Present. Former Board Chair H&G (ASX:HNG) 2002-2019. CHERYL HAYMAN NON-EXECUTIVE DIRECTOR 20+ years of local and global consumer retail experience including digital strategy and brand development. Non-Executive Director H&G (ASX:HNG) 2016-Present. Director of Shriro Holdings Limited (ASX:SHM), Beston Global Foods Ltd (ASX:BFC) and Chartered Accountants Australia / New Zealand JOSEPH CONSTABLE EXECUTIVE DIRECTOR 5+ years of experience across capital markets and investment management Executive Director H&G (ASX:HNG) 2020 -Present Former Investment Manager at: Supervised Investments Australia; Smith and Williamson (UK); Hunter Hall Intl (UK) 120+ years of collective experience Not investment advice The information contained in this presentation is not investment or financial product advice (nor tax, accounting or legal advice) nor is it a recommendation to acquire securities in HNG. This presentation does not and will not form any part of any contract for the acquisition of securities in HNG. This presentation has been prepared without taking into account your investment objectives, financial situation or particular needs. Before making an investment decision you should consider whether it is a suitable investment for you in light of your own investment objectives, financial situation and particular needs, having regard to the merits or risks involved and seek appropriate adv ice, including financial, legal and taxation adv ice appropriate to your jurisdiction and circumstances. This presentation and its contents are provided on the basis that recipients will not deal in the securities of HNG in breach of applicable insider trading laws. Financial information This presentation contains certain financial information that has been presented in an abbreviated form insofar as it does not include all the presentation and disclosures, statements or comparative information as required by the Australian Accounting Standards, the International Financial Reporting Standards (including the interpretations of the International Financial Reporting Interpretations Committee) and other mandatory professional reporting requirements applicable to financial reports prepared in accordance with the Corporations Act. The financial information provided in this presentation is for illustrative purposes and is not represented as being indicative of HNG's (or anyone else's) view of its, nor anyone else's, future financial condition and/or performance. All dollar values are in Australian dollars ($ or A$) unless otherwise stated. A number of figures, amounts, percentages, estimates, calculations of value and fractions in this presentation are subject to the effect of rounding. Accordingly, the actual calculation of these figures may differ from the figures set out in this presentation. Company information HNG's historical information in this presentation is, or is based on, information that has been released to ASX. This presentation should be read in conjunction with HNG's other periodic and continuous disclosure information lodged with ASX, which are available at www2.asx.com.au. Third party information Certain market and industry data used in connection with this presentation may have been obtained from research, survey or studies conducted by third parties, including industry or general publications. The HNG Parties have not independently verified any such market or industry data. Historical information Past performance information in this presentation is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance. Forward looking information This presentation contains certain forward-looking statements, guidance, forecasts, estimates or projections in relation to future matters ( Forward Statements ) that involve risks and uncertainties, and which are provided as a general guide only. Forward Statements can generally be identified by the use of forward looking words such as “anticipate”, “estimate”, “will”, “should”, “could”, “may”, “expects”, “plans”, “forecast”, “target” or similar expressions and include, but are not limited to, indications of, or guidance or outlook on, future earnings or financial position or performance of HNG, the outcome and effects of the Equity Raising, and the use of proceeds from the Equity Raising. HNG can give no assurance that these expectations will prov e to be correct. You are cautioned not to place undue reliance on any forward-looking statements. None of the HNG Parties represent or warrant that such Forward Statements will be achieved or prov e to be correct or gives any warranty, express or implied, as to the accuracy, completeness, likelihood of achievement or reasonableness of any Forward Statement contained in this presentation. Actual results may differ materially from those anticipated in these forward-looking statements due to many important factors, risks and uncertainties including, without limitation, risks associated with future capital needs, general economic uncertainty and other risks detailed from time to time in HNG’s announcements to ASX. HNG does not undertake any obligation to release publicly any revisions to any “forward- looking statement” to reflect events or circumstances after the date of this presentation, except as may be required under applicable laws. IMPORTANT NOTICES MR. SANDY BEARD EXECUTIVE CHAIRMAN HGL LTD. (HANCOCK & GORE) sandy@xvgroup.com.au 0412 308 263 www.hgl .com.au
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