Ladies and gentlemen, welcome to the Princess Private Equity Holding Q4 2022 investor conference call and live webcast. I'm Poppy, the Chorus Call operator. I would like to remind you that all participants will be in a listen-only mode, and the conference is being recorded. The presentation will be followed by a question-and-answer session. You can register for the questions at any time by pressing star one on your telephone. Webcast viewers may submit their questions or comments in writing via the relative field. For operator assistance, please press star zero. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Felix Haldner. Good morning, ladies and gentlemen. It's a pleasure to give you an update on Princess Q4 and partly, of course, last year. Everything is based on unaudited figures, so please bear with us. We'll publish the Annual Report in about three weeks from now. As you have seen by the release, the RNS today, we have a number of news for you. I'll walk through one by one. On the highlight side for Princess, certainly we have a great portfolio that weathers the storm. Partners Group is a thematic investor and the Princess' portfolio reflects it. We have always the full investment level of anywhere between 95% and 100%. As you have seen, we have reviewed the hedging policy and decided to unwind the currency hedging at the end of March. Basically, this is to reduce the cash flow volatility, which, as you'll recall, was one of the key reasons why we had to cancel last year's December dividend. The Board has confirmed its objective to pay 5% of opening NAV in two semi-annual installments. Partners Group is highly committed to Princess. To remind you, Princess is the only direct lead program of Partners Group, and by that showcasing its value creation capabilities. We have also, as a result of last quarter's dividend suspension, we have worked on with the Board and Partners Group to provide more clarity on controls and communication. Finally, the portfolio speaks for itself. As you see in the last line, we have an extraordinary last 12-month revenue growth on a look-through basis of 23.8% and an EBITDA last 12-month growth rate of 16.1%, an EBITDA margin of 22%. This is ultimately what is going to drive the NAV gains in the coming quarters and years. On this page, on the next page, you basically see the history of Princess that started as a bond linked to a portfolio, as a fund of fund. Only in 2011, we then changed it to a direct portfolio. Now in 2023, we can certainly say that this change, this transition, has been completed. By that, this the portfolio as of today serves as a basis for additional outperformance versus the MSCI World. The legacy portfolio has kind of provide some drag in the performance the last couple of years. This is now to an end. We have got just 2% left. By that, going forward, it's the NAV will develop according to the development of the underlying portfolio companies. Last year, in a very difficult environment, we observed a slight decrease of 1.6% on a total return basis, which however, kind of stacks up very positively to the MSCI World Index, which was down 12.7%. We invested EUR 157 million in 2022. That's probably about EUR 200 billion less than the year before. Still 12 major transactions, including the reinvestment in United States Infrastructure Corporation. We received distributions of EUR 109 million, the majority of which from the direct portfolio. At the bottom of this page, you basically see the bridge from NAV at beginning of the year to NAV at the end of the year. On the next page, just to recap, why did we employ this FX hedging policy overall this year? I mean, it follows a policy of our firm we employ for most of our client portfolios. It basically prioritizes NAV stability by hedging of the non-reference currency exposure. Given the initial composition of the shareholder basis, which was mainly European and Swiss, and the shift that over time happened towards I mean U.K. and other investors, and then those are reflecting that Princess Private Equity Holding is basically the only listed private equity company in the London market that employs such an FX hedging policy. As a result, of course, of last year's, of last quarter's dividend suspension, we came to that decision, which we announced earlier today. At the bottom of this page, you basically see what that this hedging policy provided the results that were it was designed for. However, what this table does not show, of course, is that with strong swings in currencies at the settlement date, there's cash settlement, which ultimately led to the liquidity squeeze in September last year. By that, terminating the FX hedges will then of course also limit the FX impact on liquidity, and by that also aligning it with the investment universe. This, whoever, I mean, we've got still a large investor base in the Euroraum, but also in Switzerland. Whoever wants to employ their own currency overlay can do so based on information we then provide in a timely manner. On the next page, you basically see what kind of information you can expect. That is basically the currency exposure now as of December, which then is the basis for each investor's own decision as to whether or not to employ an FX strategy. Just for those who won't, of course, fluctuating currencies will necessarily lead to an impact on the NAVs as expressed in the Princess' currency. At the bottom left, basically on this table, you see some of the sensibilities. If U.S. dollar moves on a 12-month horizon, you can see that a -10% is in the current portfolio, probably having an impact of about a 4.5% positive on the NAV or a +10% change on the opposite. On the next page, you'll see an additional portfolio management consideration that is basically our intention to be fully invested. That's how then our portfolio companies and their underlying growth then is basically contributing to the overall NAV of the company. We have managed to be there in the last couple of years with certain swings, so the target investment level should be around 95%-100%. To help us stay in that target range, we have actually extended and increased the size of the senior revolving credit facility, which you can see on the next page, which basically serves us to bridge cash flow needs on a more short-term basis. The facility will be increased to EUR 140 million. Previously it was at EUR 110 million. This is going to be implemented the next couple of days or weeks, and it is going to be extended to the end of 2026. Previously, it was until 2024. The key terms are basically substantially similar to the ones that are currently in place. The lender is Lloyds Bank Corporate Markets plc. By that, there were also questions over governance and control. Just to remind you, Princess Private Equity Holding has a Board of six, and the usual committees, including an Audit and Risk Committee and a Management Engagement Committee, the main tasks of which are described on this slide. We also announced earlier today that there is a change in so far that Richard Battey, the current Chair, is not standing for re-election. Hence, the Board, subject of course to re-election of its members then by the AGM, is going to change in so far that Steve Le Page is going to Chair. Fionnuala. Fionnuala is going to Head the Management Engagement Committee, and Merise Wheatley the Audit and Risk Committee. Whilst myself, being an Advisory Partner and shareholder of Partners Group, remain the representative of the investment manager on Princess Board. Many investors appear to suspect as to whether the net asset values of the private equity private markets companies really reflect what happened, for example, in public markets last year. I introduced you last quarter to a kind of a bridge chart which we have updated for the year-end. Let me start with the left-hand side where you see public markets this time, MSCI expressed in U.S. dollars. At the right-hand side that is basically the Partners Group platform performance, the private equity, a platform performance of +4%. That's quite a gap, and that's probably what investors ask themselves as to whether this is sound and it's a good basis. If you look at more closely what happened in our portfolio, at least, you first see that we corrected kind of the public markets index. T the MSCI, and basically only showed those sectors that are really that basically mirror more or less what we have in the portfolio. So by that, the gap is already smaller. The next step is, basing the third part from the left hand-side is, we, as a pro-forma bar, where we show the platform performance without, maybe some, I would say positive outliers. Then we have a number of positive outliers that the company said, its performance drivers that account for about 50% of the positive value creation in 2022. We were happy to hear that most of the six are actually part of Princess portfolio. So there are companies were valuations has been driven, for example for, for a recent landmark transaction, such as in the case of USIC which we discuss in one of the former, former calls. By that, we believe doing the fair value calculations on a month-by-month basis, valuing profitable companies, and then applying public market comparables results in very, very robust NAVs. Now, I can't speak for the whole industry, however, I can certainly stand behind the valuation approach and then the results you then can see in the Princess' NAV. That doesn't come as surprise that I will remind you that I believe there is a lot of value buying such a portfolio at such a great discount as the stock is trading at the exchange. This is actually further underpinned on the next page by just some of the metrics of the portfolio companies. Again, comparing them to some of the public market metrics. You will see that, for example, enterprise to EBITDA multiple as of the end of the last quarter was in the sector-adjusted public markets and in our portfolio, much higher than in the MSCI World. You also see that, then on top of that the EBITDA growth, so basically the selection of the companies and how we create value has resulted in EBITDA growth in 2022 of 15.7% as opposed to the public market sector-adjusted 8.3%. This is ultimately what then drives the NAV and the outperformance of the now fully invested portfolio. You can see this in different graphs at the bottom of that page. In more detail, on the NAV-weighted portfolio company metrics at the end of the last year, where we took basically about 75%-80% of the portfolio companies that's where we had exactly the right level of information. So it's like a kind of a consolidation on a look-through basis. You will see that the last 12-month revenue growth of 23.8% in a very difficult economic environment with inflation, with geopolitical turmoil and so on. We've got a last 12-month EBITDA growth of 16.1% and a margin of stellar 20.5%. Again, on the valuation metrics, below 16x enterprise value to EBITDA and a 6.1x, that's the net debt to EBITDA, which translates to about 40% net debt to enterprise value ratio. This is basically the result in figures of our thematic sourcing, so where we identify the most attractive growth trends, where we then employ our entrepreneurial governance playbook. Our companies are governed by the Boards, assisted by the whole Partners Group teams, and we then transform assets, enhance business models. We typically add fundamental value through targeted add-ons to grow companies and build greater resilience. This basically translates then into some examples. For the examples on our portfolio companies, I'll hand over to my colleague, Sarah. To give you a little more color around the results that we have been presenting to you, on the next slide, we highlight the top three performers for the year, which also happen to be in the top 10 in the Princess portfolio in terms of the largest investments. The first one on the left-hand side is PCI Pharma, which is the second largest investment in the Princess portfolio, and was the best performing holding in 2022 with a + 24.8% uplift in valuation. This company offers full service integrated pharmaceutical supply chain platforms, and the value creation came from increased sales and also improving operational efficiencies through lean manufacturing and digital transformation of their complex workflows, which then drove the further efficiencies SRS, you'll probably be quite familiar from our previous calls. We have covered it previously as it's our largest, sorry, our largest holding for Princess. For the year, it had a +21.6% revaluation. Its EBITDA grew thanks to recurring revenue streams that have been supported by the construction boom in the U.S., as well as flight to suburban areas since COVID. There have also been some extreme weather events, and on top of that, roofs typically have a replacement cycle of 15 to 20 years, which feeds into that recurring revenue stream. A company which we haven't brought to your attention before, but was actually the third best performer in our portfolio for the year is Apex Logistics. They are Asia's leading freight forwarder, especially on the Transpacific and Intra-Asia trade routes. Partners Group acquired a 24.9% stake in 2021 alongside the majority shareholder, Kuehne +Nagel Group, who in turn are one of the world's leading logistics companies. Here the key initiatives will include new freight forwarding routes, as well as identifying new growth verticals such as healthcare and M&A. Apex's performance has been driven by cross-border e-commerce. Next slide, please. On the following slide, we have the top 10 portfolio companies which we usually show you. We wanted here to highlight the revaluation not just for the fourth quarter, but also for the year. Here you see SRS and PCI on top, which have already been covered. Another company, which... W ell, there's two companies here which you'll see have had modest downward revaluations, which are Techem, the sub-metering company, and Vishal, the Indian mega mart franchisor. Here the revaluations for the year declined somewhat due to the multiples of observed comparables not being completely offset by the EBITDA growth. However, you'll see that in Q4, they have rebounded in particular for Techem. Next slide, please. The following two slides actually is the list of the notable direct investments that Princess made in 2022, and that amounts to EUR 156.7 million. We stated in the past that investments slowed since Q3, and the investments you see going through in the third and fourth quarters were mainly investments that were committed to earlier in the year. The one investment we haven't previously covered is USIC, or at least not recently. This is a provider of utility location services in the U.S. As a matter of background, Partners Group initially invested in this company in 2017. In 2022, Partners Group sold 50% to Kohlberg & Company to expand the shareholder base whilst retaining a 50% co-lead interest. The partial sale resulted in a EUR 36.7 million distribution for Princess. Princess invested EUR 20.6 million alongside Partners Group. Next slide. As Felix mentioned on slide five, EUR 109 million was received in distributions. Here you see the figure of EUR 241.4 million, because it includes EUR 132 million of redemptions throughout the year from a related party fund that invests in floating rate senior loans. This position has now been completely exited. The total of EUR 241.4 million is equivalent to 22.9% of opening NAV. The largest distribution from an exit of EUR 18 million came from the sale of Voyage Care, and they are a U.K. specialist care provider. The value that was created came from building a best in class management team and deepening the healthcare experience with strategic hires, as well as further developing and expanding specialisms via developments and select acquisitions. With that, I'll hand back to Felix. Thank you, Sarah. Before I open for questions, let me by that summarize and give you some outlook. The hedges will unwind end of March to give shareholders time to apply their own hedging overlay. Transition basically to a direct portfolio is now complete, and this is going to drive future performance basically through operational value creation. The direct private equity portfolio will be the main performance drivers. We invest in overarching, as we call them, giga themes, that benefit from structural change and secular growth. We call this actually thematic sourcing. At any time, we have 40 to 60 specific themes that then basically create the foundation for strong investment performance. Finally, once these companies are selected, the Boards of these companies, jointly with the team of Partners Group, basically is responsible for this extraordinary EBITDA growth. Now, as a company, Princess continues with its objective to pay 5% of opening NAV. This was reaffirmed. You can expect EUR 0.36 payable first time in June. I remind you that Princess has a track record of paying one of the highest dividend yields amongst its peers the last 10 years. We have increased the revolving credit facility, but also extended its term to further support the dividend claim. By that, I hand back for questions. We have seen some have been handed in in writing. First of all, I think we'll answer the questions that are asked on the phone. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch- tone telephones. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and two. Questioners on the phone are requested to use only handsets and eventually turn off the volume from the webcast. Webcast viewers may submit their question or comments in writing via the relative field. Anyone who has a question may press star and one at this time. The first question comes from the line of [Furley Dom] with DCI Investment Management. Please go ahead. Morning, Felix and Sarah. Thanks for the presentation. I'm just wondering whether you could shed any light. Are there any costs associated with unwinding the hedge? Thank you. There are absolute minor costs, so absolute negligible. Okay, good. If I can ask a second question. The underlying company performance looks pretty robust with margins, you know, above 20% earnings growth is pretty strong. Clearly the share price is still on a 34% discount to the last NAV, and that simply reflects the fact that the damage to sentiment from the cancellation of the dividend. What are you trying to do to kind of close that discount? 'Cause clearly there's value in the portfolio, how are you gonna kind of realize that value for shareholders? I think by this call and by the announcements of today, we have made hopefully made a big step by reassuring that we priority in in in paying a dividend by showing that the underlying portfolio is developing in a very difficult economic environment in a very satisfactory way. By that growing NAVs over time will then hopefully also convince shareholders that they really buy a lot of value for a depressed price. Okay, thank you. As a reminder, if you wish to register for a question, please press star and one on your telephone. Once again, to ask a question, please press star and one on your telephone. The next question comes from the line of Brown Chris with JP Morgan. Please go ahead. Hi. Hi, Felix. Hi, Sarah. Just a quick question. I just want to really sort of quickly run through what the cash position is and how you expect that to change over the coming months. Thank you. I mean, you could see the cash position as of December. That was positive. As we last looked at it the last week, it's still positive. Are there any sort of proceeds you're expecting in or any sort of big investments that are yet to complete that would change that number? I'm just thinking obviously in terms of the dividend and where we are there. This goes well in some other questions, in relation to, maybe exits or planned investments. Activities in the leveraged buyout market for the time being are very slow, I would say. This also applies for the Princess' portfolio. We don't expect immediate, large, exits nor acquisitions. The main reason for it is still, the, as I see it, the debt markets are still depressed, I would say. Buyers find it difficult to get the financing, bank financing and the like. The other thing is that in the current situation, sellers dream of the prices of the past and buyers look forward at prices they want to pay in the future. The matching process takes longer. This has been seen in similar situations in the past. It can unwind quickly. However, for the time being, we don't see it. Mr. Brown, are you done with your question? Yes. Thank you. Thank you, too. For any further questions, please press star and one on your telephone. At this time, there are no further audio questions. We may now proceed with the read and web questions from the live feedback. Thank you. One of the questions is, are you still invested in Global Blue? The quick answer to that is yes, we are. We have seen the performance of that company rebound, especially with the opening of the Asian markets and China. Another question that we have is in relation to, Sorry, just seeing here from Matt Hose at Jefferies, saying, "Just noting the difference between the Partners Group valuation multiple of 14.5x versus 16x as a result. What are the main differences in the composition of the two portfolios?" From what I think that's Q3 to Q... Well, I'm not sure actually what you're comparing there, Matt. If you're on the line, if you wouldn't mind just elaborating on that question. Sarah, maybe I can just skip in. Yeah. But the major difference is probably just the weighting. Th e weighting of the portfolio in the Partners Group, kind of overall portfolio versus the weighting within Princess. Great. Thank you, Felix. Another question we have is, are there still commitments from the legacy portfolio? The answer is yes. We do provide in the appendix of the presentation, which you'll have online. In the appendix, we say that about EUR 42.8 million in unfunded commitments is to third-party funds, of which EUR 22.1 million have completed their investment period. We don't expect investments to call any more capital. Another question that we have is from [McFrank Bielefeld]. The current market conditions for financing are not optimal. To what extent does this impact the acquisition initiatives by the portfolio companies who already have reasonable debt positions? Maybe I can answer this one. It's correct, yeah. It's not optimal. However, our portfolio companies, well, we have on average a secured financing for the next two to 2.5 years. By that, they rely on contracts being renewed on time. That's the one part. The other part is certainly, I mean, they not only rely on debt, they also produce a lot of own cash flow for the investment activities. Last but not least, in many investor cases, Partners Group with its investors have committed some additional equity to these portfolio companies. Thank you, Felix. Another question is, would you feel comfortable drawing down on the credit facility to pursue new investments at this stage? I think this is not the priority for what we have the credit line. Unless it would be for kind of a very short-term bridging of an expected cash flow that that would offset it again. The answer is we don't want to use the credit facility for gearing. Thank you, Felix. Another question is: Will the removal of the U.S. dollar hedging and the costs associated now make investing in the U.S. that bit more attractive and lead to greater U.S. exposure? That's not really a consideration we make. We look at regions, I mean, according to the opportunity set and certainly not because of, because of the currency moves. Thank you. A question around: Do you have an approximate estimate of the number of shareholders in the Swiss euro area in percentage terms? Have you discussed the hedging strategy with the largest shareholders in this area and their thoughts? Look, we have spent quite some time the last couple of months discussing with a number of shareholders or a large number actually, including in Germany, Switzerland and other countries. I'm well aware that most, for example, of the Swiss institutional investors employ currency overlay anyway. For them, it's basically just getting the right kind of receiving the right information. In Germany, this applies for many as well. Th ere will be some that have relied on Princess hedging and certainly do not. Well, would have appreciated if we had continued. Having said the two main drivers which led us to kind of discontinuing, that is basically the change of underlying shareholders, the and the composition. Also the fact that many of the shareholders in Euroraum by now have kind of established procedures to employ in their in their own currency hedging. Another question is, are you obliged to invest in ESG companies? Where do you find information regarding equity debt capital? Maybe this may be too. We are not obliged. However, we, as part of our due diligence, ESG considerations are at the forefront of our considerations. Not only at the investment due diligence stage, we specifically measure, define goals to improve companies in terms of ESG metrics. The second is, if I understand correctly, the equity to debt in underlying companies, w e don't disclose this information on a company-by-company basis. However, we disclose it on a Princess level in the metrics section where you said the 6.1x debt to EBITDA or the 40% debt to enterprise value, which is basically on a look-through basis. A 60% equity cushion. Another question we have is PEY's portfolio, EV/EBITDA multiple spiked up to 18.7x at 30 September, 2022, up from 15.6x in June, and now it's back at 16x at 31 December, 2022. What were the drivers for this? I can probably give a little more color on that. Basically in the past the calculation was based on assessment and manual adjustments. W e wanted the method going forward to be more mechanical and mathematical, so less dependent on judgment. We only include companies that are valued on EV/EBITDA, whereas in the past, we included companies that use DCF sum of parts, and we are no longer doing that. The spike in Q3 is due to us including all valuation methodologies and the small debt holdings that we had. There were no exclusions made at all, whereas now there will be. Another question we have is around the growth in EBITDA relative to revenue for the portfolio implies that there is margin compression. Is this something that you are seeing continuing into Q1 2023? Were the levels of growth in revenue and EBITDA in the last 12 months representative of the trends in Q4 and the first quarter of this year? That's a bit difficult to answer. I don't see... I wouldn't read too much into that particularly not in the trends. Something we'll observe over the next quarters. Another question we have is, what does the current USD hedging look like? Does the falling USD mean that liquidity improves overall and the first half dividend for 2023 can be paid out? Do you consider any buybacks given the big discount to NAV? We reconfirmed our objective for the dividend payment. That's an objective, and again, we reconfirmed it. You can expect we even, I mean, calculate it. That's what we intend to do. In terms of buybacks, this is a topic the Board discusses at every meeting. For the time being, our objective: pay the dividend. A related question is, in an environment where realizations are depressed, how comfortable are you in maintaining a dividend target of 5% of opening NAV? Does the RCF allow you to use it to pay a dividend if required? Yes, it allows us, yeah. The other answer is probably, we don't expect this environment to take for years and years. There have been times where exit activities have been reduced, other times where it reverts. It reverts sooner or later. Another question is, you note that sellers dream of prices in the past, implying valuations remain excessive in some quarters. Why would you say this does not apply to Princess? The last couple of quarters, we observed contraction in multiples, and we reflected this in our valuations. However, at the same time, again, our companies demonstrate on average, a very strong growth. Basically, strong revenue and EBITDA performance can still lead to higher valuations despite of lower multiples. Th at's exactly what we are observing and what our task is as a manager of these companies to help them keep that growth rate. The final question is, why do you think that Princess' returns have lagged that of other listed PE names? Until, let's put it that way. Until, let's say, the pandemic, the outbreak, we basically outperformed the relevant indexes. With the pandemic and then the extraordinary expansion of multiples in certain sectors that Princess was less exposed to, we probably lagged a bit. Particularly, Princess is not invested in non-profitable technology or healthcare, and these are exactly sectors that have seen unprecedented multiple expansions and also the reversion, as we observe, have observed since. The other observation is that until about five years ago, about 35% of the portfolio was still legacy, and the legacy portfolio clearly underperforms our direct investment portfolio. Now, as we have said, and reiterate, happy to reiterate, this is gone. This legacy portfolio is close to nil, and the performance going forward and also the expected outperformance over the indices is stemming from the direct portfolio. I believe that's all the questions. Ladies and gentlemen, I would now like to turn the conference back over to Felix Haldner for any closing remarks. Thank you. Thank you very much for your interest and, as I said, there's great value at this price. We can observe this from the broader secondary market where discounts are much smaller than what you now see in the stock price. I hope that, I'll see you on the buyers list. Thank you. Ladies and gentlemen, the conference now is over. Thank you for choosing Chorus Call, and thank you for your participation in the conference. You may now disconnect your lines. Goodbye.