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VALUE OF THE PORTFOLIO
INVESTMENT PORTFOLIO RETURN
TOP 30 LTM EARNINGS GROWTH (JUN 18)
Six months to 31 July 2018
Operating performance and realisation activity continue to drive strong returns
Strong operating performance and realisations at significant uplifts to carrying value have generated a constant currency return of 7.9% during the six months, or 10.4% in Sterling, further extending the average 14.8% p.a. constant currency growth that the Portfolio has generated over the last five years. Almost a quarter of the underlying Portfolio gain in the six months came from exit activity.
High quality portfolio with top 30 companies reporting double digit earnings and revenue growth
Our largest 30 underlying companies, which represent 47% of the Portfolio by value and are dominated by our high conviction companies, continue to perform well, reporting aggregate LTM earnings growth of 14% and revenue growth of 13%. It is particularly encouraging that around a third of these companies are generating LTM earnings growth in excess of 20%, driven by both organic growth and M&A activity. Over the six months, valuation multiples increased marginally to 10.8x from 10.6x, a reflection of the change of mix and weightings in the largest 30 underlying companies rather than an increase in aggregate multiples overall. The net debt/EBITDA ratio has fallen marginally from 4.2x to 4.0x. As we look across the Portfolio, the growth and valuation trends are similar.