TIDMCIP
RNS Number : 4645N
CIP Merchant Capital Ltd
30 September 2021
30 September 2021
CIP MERCHANT CAPITAL LIMITED
("CIP Merchant Capital" or the "Company")
INTERIM RESULTS FOR THE PERIODED 30 JUNE 2021
CIP Merchant Capital is pleased to announce its Interim Report
and Unaudited Consolidated Financial Statements for the six month
period ended 30 June 2021.
Highlights
-- The Company's portfolio comprised investments in 14 companies as at 30 June 2021
-- The Company's unaudited NAV as at 30 June 2021 was 88.85p
-- During the period, the Company invested in HSS Hire Group
plc, Ixico plc and Vertu Motors plc and secured an option with
certain shareholders of 7Star Srl ("Happy Friends") to potentially
acquire a further equity interest of up to 41.6 per cent. in Happy
Friends for a nominal consideration
-- Post the period end, the Company exited its investment in
Proactis Holdings plc, which was the subject of a recommended
takeover offer, delivering a 2.3x cash-on-cash return and a 50.04%
IRR
-- Post the period end, the Company invested a further GBP1.25
million in Brave Bison Group plc as part of its capital raising to
fund the acquisition of certain consulting businesses in ecommerce
technology and paid and organic media
For further information :
CIP Merchant Capital +44 1481 749 360
Independent Non-Executive Directors and Company Secretary c/o
Maitland
Administration (Guernsey) Limited
Merchant Capital Manager Limited (Investment Manager) +44 1481
749 363
Wikus van Schalkwyk
Strand Hanson Limited (Nominated Adviser and Broker) +44 20 7409
3494
James Bellman / Matthew Chandler / Ritchie Balmer
Chairman's Statement
Introduction
I am pleased to present CIP Merchant Capital Limited's (the
"Company" or "CIP") Interim Report and Unaudited Consolidated
Financial Statements for the period from 1 January 2021 to 30 June
2021 (the "Interim Financial Statements").
Since the Company's admission to AIM, its investment manager,
Merchant Capital Manager Limited (the "Investment Manager") has
been actively sourcing suitable investment opportunities. In
addition to the existing complexity of identifying and investing in
attractive companies, 2020 saw the outbreak of the COVID-19
pandemic, which remains ongoing and led to an asymmetry in our
portfolio. Some industry sectors benefited from the change in
circumstances, whilst others were severely affected by the
lockdowns, work-from-home policies and travel restrictions. This
led to a corresponding asymmetry in CIP's investments, with
accelerated growth in some of its investee companies and negative
impacts on other holdings. It also enabled CIP to build stakes in
companies that benefited from the easing of restrictions and
restarting of the global economy. Post the period end, CIP also
achieved its second exit, further to the successful recommended
offer for Proactis Holdings plc ("Proactis") by Café Bidco Limited,
delivering a 2.3x cash-on-cash return and a 50.04% IRR on the
Company's investment.
Following the divestment of Proactis, the Company has
approximately GBP9.7 million remaining for investment as at 24
September 2021, and we continue to monitor the market closely to
take advantage of opportunities as they arise in line with our
investment policy. In accordance with our cash management policy,
as at 30 June 2021, the Company had invested its liquidity in
short-dated sterling treasury and corporate bonds. Further details
on the current portfolio are set out in the Investment Manager's
Report.
I would urge shareholders to keep in mind that the Board
resolved not to hedge the Company's investments in foreign
currencies, such that shareholders are encouraged to consider
carefully the impact of a significant adjustment in Sterling due to
unforeseen eventualities, such as the ongoing trade negotiations
and friction between the United Kingdom and the European Union
since Brexit.
Before discussing the performance of the Company over the period
and more recently, it is important to also note the unsolicited
approach by Corporation Financière Européenne SA ("CFE") in respect
of a possible offer, announced on 26 January 2021, which the Board
felt significantly undervalued the Company and its portfolio. On 22
February 2021, CFE announced that it did not intend to make an
offer for CIP under Rule 2.7 of the City Code on Takeovers and
Mergers.
Performance
The Company's last unaudited NAV for the period was 88.85p per
share, representing a 14.14% increase from the audited NAV of
77.84p per share as at 31 December 2020, equating to almost double
the performance of the FTSE All Share Index (+7.9%) and almost four
times the performance of the FTSE AIM 100 (+3.9%) over the same
period.
During the period, the Company's ordinary shares traded between
49p and 63p, finishing the period at a middle market closing price
of 58.5p on 30 June 2021, equating to a discount of approximately
34.2% to the then unaudited NAV per share of 88.85p. The Company's
shares have traded at an average discount of 32.1% to NAV during
the period.
As at 28 September 2021, the Company's share price was 57.00p
per share, representing a discount of 38.46% to the unaudited NAV
on 24 September 2021 of 92.63p per share.
The resolution to allow share buy-backs was once again not
passed, limiting the Company's ability to undertake purchases, if
appropriate, in response to the share price discount to the
NAV.
Dividends
There were no dividends declared in the period. As stated in its
Admission Document, it is the Company's intention to reinvest the
net proceeds of any net income or realisations from its
portfolio.
Corporate Governance
We note that two directors of the Company, Marco Fumagalli and
Carlo Sgarbi, decided not to seek re-election as directors of the
Company at its annual general meeting held on 10 September 2021,
and accordingly retired from the Board on that date, but remain
directors of the Company's Investment Manager.
More generally, the Company will be seeking to improve
Shareholder communications going forward to ensure that Shareholder
concerns are addressed on a timely basis ahead of the Company's
next AGM.
The Board take their fiduciary and corporate governance
responsibilities seriously and I encourage Shareholders to contact
the Board via the Company Secretary at
guernsey.office@maitlandgroup.com should they have any questions or
would like to discuss anything with us.
Adrian Collins
Non-Executive Chairman
The Board of Directors
The Directors have overall responsibility for the Company's
activities including the review of its activities and
performance.
The Directors of the Company at the date of signing these
accounts, all of whom are non-executive, are listed below:
Adrian Collins (Independent Non-Executive Chairman) - appointed
November 2017
Mr. Collins has worked in the fund management business for over
45 years, a large part of which was at Gartmore Investment
Management Limited where latterly he was managing director. He was
until 2019, chairman of Liontrust Asset Management plc and is
currently on the boards of a number of quoted companies including
Logistics Development Group plc (formerly Eddie Stobart Logistics
plc) and Hargreaves Lansdown plc.
John Falla (Independent Non-Executive Director) - appointed
November 2017
Mr. Falla trained with Ernst & Young in London before moving
to their Corporate Finance Department. On returning to Guernsey he
worked for an international bank, before joining the Channel
Islands Stock Exchange as a member of the Market Authority. In
2000, Mr. Falla joined the Edmond de Rothschild Group in Guernsey
and provided corporate finance advice to clients including open and
closed-ended investment funds and institutions with significant
property interests. He was also a director of a number of Edmond de
Rothschild Group operating and investment companies. Mr. Falla is
now a non-executive director of a number of investment companies,
the majority of which are listed on the London Stock Exchange, and
a consultant. Mr. Falla is a Chartered Accountant and has a BSc
Hons degree in Property Valuation and Management from The City
University, London. He is a Chartered Fellow of the Chartered
Institute for Securities and Investment having been awarded their
diploma.
Robert King (Independent Non-Executive Director) - appointed
November 2017
Mr. King is a non-executive director of a number of open and
closed-ended investment funds including Weiss Korea Opportunity
Fund Limited and Tufton Oceanic Assets Limited (Chairman). Before
becoming an independent non-executive director in 2011 he was a
director of Cannon Asset Management Limited and their associated
companies. Prior to this he was a director of Northern Trust
International Fund Administration Services (Guernsey) Limited
(formerly Guernsey International Fund Managers Limited) where he
had worked from 1990 to 2007. He has been in the offshore finance
industry since 1986 specialising in the administration and
structuring of offshore open and closed ended investment funds. Mr.
King is British and resident in Guernsey.
Piero Sansalone (Non-Independent Non-Executive Director) -
appointed September 2020
Mr. Sansalone began his career in corporate finance at Deloitte
and later at KPMG. Mr Sansalone has expertise in business analysis
and valuation, as well as turnarounds, restructurings and mergers
and acquisitions. Between 2011 and 2013, Mr. Sansalone worked for
the same major Swiss family office as Messrs Sgarbi and Fumagalli
where he was responsible for managing private equity investments.
Until 2017, Mr. Sansalone was investment manager at Continental
Investment Partners SA, an affiliate of the Company's Investment
Manager, responsible for the Private Equity and Real Estate
activities. Mr. Sansalone is currently an independent financial
adviser and business consultant for SMEs, family offices and
Private Equity funds.
In addition, the following individuals were Directors of the
Company during the period but withdrew from re-election at the
Company's annual general meeting held on 10 September 2021. They
continue to serve as Directors of the Investment Manager.
Marco Fumagalli (Non-Independent Non-Executive Director) -
appointed September 2017; withdrew September 2021
Mr. Fumagalli has a significant transaction track-record as a
Global Partner at the PE house 3i Group, with significant results
in the management of investments in both private (e.g. Giochi
Preziosi, Coelsanus Preserves and Vis Pharmaceuticals) and listed
companies (e.g. Biosearch Italy and Datamat Novuspharma). From 2010
to 2013, he was responsible for managing the private equity
activities within a Swiss family office. Mr. Fumagalli is a
co-founder and principal of the Company's Investment Manager, and
Continental Investment Partners SA ("CIPSA") and is currently a
non-executive director of AIM quoted companies Sound Energy plc,
Echo Energy plc and Coro Energy plc.
Carlo Sgarbi (Non-Independent Non-Executive Director) -
appointed September 2017; withdrew September 2021
Mr. Sgarbi has over 20 years' experience in investment banking
with IMI Group, part of Intesa Sanpaolo, a leading Italian banking
group, which included being appointed Head of Debt Capital Markets
in 1995 for Banca IMI, the investment bank of the Intesa Sanpaolo.
Mr. Sgarbi was subsequently appointed Global Head of Fixed Income
and Derivatives, Co-Head of Global Markets Equities and
Derivatives, where he was responsible for managing approximately
300 professionals specialised in different areas of market
activities and risk. From 2007 to 2013, he was responsible for
managing all investment activities within a Swiss family office,
which Mr. Fumagalli was also involved with from 2010. He founded
both the Company's Investment Manager and CIPSA along with Mr.
Fumagalli and is a Managing Partner of CIPSA.
Investment Manager's Report
Investment Strategy
The Company aims to generate risk-adjusted returns through
capital appreciation, investing primarily in stocks and equity
securities and taking a private equity approach to seek to achieve
a target IRR of 20% over the medium to long term. Key investment
targets will predominantly be listed on a Western European stock
exchange and will typically have a market capitalisation below
GBP500 million at the time of investment, which the Board believes
often puts such companies below the radar of the larger
institutional investors in the market. A flexible mandate also
allows part of the Company's capital to be deployed in debt, as
well as funds or private equity.
The Investment Manager is continuously reviewing and considering
various investment opportunities that may meet the Company's
investment objectives and investing policy. Such opportunities are
actively sourced by the Investment Manager through its network of
contacts and through a proactive identification of target
investments via its proprietary database. The Company's primary
investment sectors are: oil and gas; healthcare; pharmaceuticals;
and real estate.
Market Conditions
Following the outbreak of the COVID-19 pandemic in 2020, the
world has gradually adapted to a new paradigm, as is intrinsic of
human nature. Many industries have now recovered since the sizeable
downturn of March 2020 and kept progressing, despite some
volatility. In general terms, the key global equity markets have
registered increases of between 10% and 20% over the first six
months of 2021.
At a deeper level, there are a variety of dynamics at play, with
many technology related companies performing well, other industries
such as car dealerships recovering strongly, whilst more challenged
sectors such as aerospace are still struggling to recover due to
extremely reduced demand.
Performance Review
During the period, we have been actively screening markets,
identifying potential investment opportunities, building new stakes
in companies and maintaining dialogue with the various management
teams of our existing investee companies. As at 30 June 2021, the
Company's portfolio comprised investments in fourteen companies, of
which three were new investments made during the period. Following
the period end, on 28 July 2021, we fully divested of our holding
in Proactis Holdings plc, following the completion of a recommended
takeover by Café Bidco Limited backed by funds advised and managed
by Pollen Street Capital Limited and DBAY Advisors Limited,
delivering a GBP1.2m net profit to the Company, corresponding to a
2.3x cash-on-cash return and a 50.04% IRR.
Portfolio Review
Portfolio Industry Country Period end 24 September 2021
Company
Cost Market Cost Market
GBP Value GBP GBP Value GBP
Alkemy SpA Software/Tech Italy 4,084,106 5,169,856 4,084,106 6,552,471
Brave Bison
Group
plc Software/Tech UK 1,180,700 1,162,832 2,430,700 2,680,343
CareTech
Holdings
plc Healthcare UK 5,143,558 8,449,276 5,143,558 9,075,664
Coro Energy plc
(shares) Oil & Gas UK 6,005,455 436,986 6,005,455 376,712
Coro Energy plc
(debt) Oil & Gas UK 2,809,964 3,000,913 2,809,964 3,034,693
EKF Diagnostics
Holdings plc Healthcare UK 2,199,727 2,906,250 2,199,727 3,146,500
Happy Friends* Healthcare Italy 3,829,455 1,913,419 3,829,455 1,909,152
HSS Hire Group Support
plc Services UK 3,941,454 4,700,000 3,941,454 4,275,000
Ixico plc Healthcare UK 2,719,902 2,857,550 2,719,902 3,086,153
Orthofix
Medical
Inc. Healthcare US 4,890,750 3,251,887 4,890,750 3,185,845
Proactis
Holdings
plc Software/Tech UK 928,211 2,062,250 - -
Redde Northgate Support
plc Services UK 1,988,189 2,704,879 1,988,189 2,837,238
Totally plc Healthcare UK 713,196 1,245,000 713,196 1,095,000
Trellus Health
plc Healthcare US 31,151 162,153 31,151 138,307
Vertu Motors Support
plc Services UK 627,214 699,016 627,214 793,561
Portfolio 41,093,032 40,722,267 41,414,821 42,186,639
-------------------------------------------- -------------- ------------------- -------------- -------------------
NAV 48,870,159 50,943,986
* This value is for the combined interest held in equity and
debt on a look through basis.
Alkemy SpA
Alkemy SpA ("Alkemy") serves large corporate clients in
designing and implementing digital strategies. As expected, the
pandemic and the resulting lockdowns has driven an increase in the
demand for Alkemy's services from clients. At the same time,
work-from-home policies and tight cost controls implemented by the
company's management, have led to an improvement in the economic
performance of the company. Consequently, Alkemy is now enjoying
growth in both revenue and profitability.
Brave Bison Group plc
Brave Bison Group plc ("Brave Bison"), a media and marketing
group that specialises in social media, has continued to expand its
reach through acquisitions as evidenced, post period-end, by the
conditional acquisition of Greenlight Digital Limited and
Greenlight Commerce Limited, consulting firms in the digital space
with a complimentary set of services and client portfolio. To
facilitate this transaction, Brave Bison successfully completed a
placing to raise gross proceeds of GBP6.2m, in which the Company
participated by way of a further GBP1.25m investment. This
transaction is expected to have a transformative impact on Brave
Bison, constituting a strategic leap forward with highly accretive
financial attributes.
CareTech Holdings plc
CareTech Holdings plc ("CareTech"), a leading operator of
residential care homes in the UK, reported another robust financial
performance for H1 2021. Following the acquisition of Cambian Group
back in 2019, CareTech has kept growing steadily in terms of its
business and financial results, with a consequent increase in the
value of its equity. Since the Company's first investment back in
April 2019, at 333p per share, the share price has increased
substantially to 653p as at 24 September 2021.
Coro Energy plc
Coro Energy plc ("Coro"), a Southern East Asian energy company,
has been seeking to progress its reorientation from gas exploration
to low carbon energy. Specifically, Coro has launched new
initiatives in the areas of clean energy storage and rooftop solar
projects.
However, with the oil and gas industry still showing signs of
disruption, it is now considered unlikely that Coro will be able to
repay its outstanding bonds due on April 2022 in which the Company
is invested. To date, no restructuring has yet been proposed by
Coro, and the Company has determined to carry the value of its
investment in the bond at a 15% discount, supported by Coro's
capacity and track record of raising capital earlier this year and
payment of the 2021 coupon.
EKF Diagnostics Holdings plc
EKF Diagnostics Holdings plc ("EKF"), a global medical
manufacturer of point-of-care and central lab devices and chemistry
reagents, had a busy first half of 2021, with a number of updates
raising expectations for its economic performance in 2021. In
addition, it also successfully floated Trellus Health plc
("Trellus"), a former venture in which EKF distributed all but one
"golden share" of its holding at the end of 2020 to its then
shareholders as a dividend in specie, thereby providing CIP with
its current interest in Trellus.
HSS Hire Group plc
HSS Hire Group plc ("HSS"), a leading supplier of tool and
equipment hire in the UK, benefited from the easing in COVID-19
related restrictions in 2021 and the consequent increase in
refurbishment activity by UK households. The Company established a
stake in HSS in March 2021 on the back of the digitalisation of the
business.
Ixico plc
During March 2021, the Company also built a stake in Ixico plc
("Ixico"), a leading provider of imaging biomarkers, exploiting a
trading update that negatively affected the company's share price
for a short period. In the Investment Manager's view, Ixico has a
solid pipeline with a contracted order book underpinned by its
advanced data analytics capability in neuroscience.
Happy Friends
7Star Srl ("Happy Friends"), the private Italian chain of
veterinary hospitals, saw a profound transformation, with its
founders leaving the board and a new Chief Executive Officer
("CEO") being appointed in August 2021. Based on the CEO's in-depth
industry experience as sales manager for a veterinary
pharmaceutical company, Happy Friends is now entering into a new
phase of growth and development, supported by the successful
performance of its third hospital which opened in September
2020.
In connection with this transition, as announced on 1 March
2021, CIP was granted the right to acquire a further 41.6 per cent.
interest in Happy Friends from its founders for nominal
consideration. As part of this arrangement, the Company agreed to
the repayment of EUR203,818 of loans to the exiting parties, such
parties agreeing to waive the balance of EUR320,474 to the benefit
of Happy Friends.
In order to incentivise the new CEO to drive the business
forward, the Company has agreed to grant him the right to receive a
2.5% equity interest in Happy Friends, and potentially up to 5%
subject to certain EBITDA targets beings met.
Orthofix Medical Inc.
Orthofix Medical Inc. ("Orthofix"), the reconstructive and
regenerative solutions provider in spinal and bone-related
conditions, has navigated the complex COVID-19 affected period with
elective procedures being suspended and postponed. However,
Orthofix demonstrated its resilience by expanding its technological
product portfolio and returned to revenue growth during the period.
Post period-end, Orthofix revised upwards its performance guidance
for the full 2021 year, which should see growth in its revenues of
between 15% and 16% with no less than US$58 million of EBITDA.
Proactis Holdings plc
During the first half of 2021, Proactis Holdings plc
("Proactis"), a procurement software company, kept expanding its
customer base. For a while, its share price did not reflect such
improvement, until Pollen Street Capital Limited, a Private Equity
firm, offered to take Proactis private. A recommended offer by Cafe
Bidco Limited, backed by funds managed and advised by both Pollen
Street Capital Limited and DBAY Advisors Limited, was successfully
completed in late July 2021, leading to the Company's second exit
with a satisfactory 2.3x cash-on-cash return and 50.04% IRR on its
investment.
Redde Northgate plc
Redde Northgate plc ("Redde"), a leading integrated mobility
solutions platform that provides services across a vehicle's
lifecycle and formed via the merger of Redde plc and Northgate plc
in February 2020, is another business that benefited from the
easing of restrictions and recovery in the UK economy. For its
financial year ended in April 2021, Redde delivered revenues in
excess of GBP1.1 billion (up from GBP779 million in the prior year)
and net income of GBP65.6m (up from GBP7.7m in the prior year),
deriving largely from the synergies arising from its merger.
Totally plc
The Company managed to grow its stake in Totally plc
("Totally"), a provider of solutions to the healthcare sector, in
January 2021, before the company's share price climbed following
its announcement of an interim dividend. Totally has continued to
secure new contracts and contract extensions, thereby confirming
the growth expectations that led CIP to initially invest in
Totally.
Trellus Health plc
Trellus Health plc ("Trellus"), a provider of scientifically
validated, resilience-based, connected health solutions for chronic
condition management, has recently announced its maiden unaudited
interim results following admission to trading on AIM on 28 May
2021. The Company raised c.GBP28.5m in conjunction with its
admission to AIM and management are confident of continuing to
deliver against their key operating milestones in accordance with
the company's plans.
Vertu Motors plc
Between March and April 2021, the Company invested in Vertu
Motors plc ("Vertu"), a car dealership group based in the United
Kingdom, in anticipation of the restart of activity following the
UK's successful vaccination programme rollout and subsequent easing
of restrictions.
Cash Management
In accordance with its cash management policy, the Company had
invested approximately GBP9.7 million in short dated treasury and
corporate bonds as at 30 June 2021.
Outlook
CIP's investee companies have, for the most part, navigated the
worst period of the COVID-19 pandemic well, which has generally
been reflected in their share price performance. We spend a lot of
time with our investee companies, not only monitoring their
performance, but also maintaining an active approach to engagement
and seeking ways to provide potential development opportunities. We
also continuously monitor and analyse markets and sectors, to seek
to identify companies where there is a strong fundamental business
case or where the market might not be fully pricing the earnings
potential of a company.
The relatively strong performance of the Company's portfolio
businesses has had a positive impact on the Company's NAV during
the period, which has increased by approximately 11p per share from
31 December 2020 to 30 June 2021.
Unaudited Condensed Consolidated Statement of Comprehensive
Income
For the period from 1 January 2021 to 30 June 2021
Period from Period from
1 January 1 January
2021 to 2020 to
30 June 30 June
2021 2020
Notes GBP GBP
INVESTMENT INCOME (Unaudited) (Unaudited)
Net gains/(losses) on investments
at fair value through profit or
loss 4 6,784,002 (4,314,261)
Foreign exchange (losses)/gains (6,671) 4,067
--------------------- ------------
NET INVESTMENT INCOME/(LOSS) 6,777,331 (4,310,194)
INCOME
Bank interest - (152)
--------------------- ------------
TOTAL LOSS - (152)
EXPENSES
Investment manager fees 3, 9 (450,181) (418,521)
Directors' fees 9 (57,500) (43,750)
Secretarial and administration
fees 3 (50,385) (39,136)
Advisory and consultancy fees - (20,000)
Legal and professional fees (37,874) (11,709)
Brokerage and custody fees (29,451) (8,199)
Audit fees (14,991) (13,924)
Other fees (79,607) (32,509)
--------------------- ------------
TOTAL EXPENSES (719,989) (587,748)
PROFIT/(LOSS) FOR THE FINANCIAL
PERIOD 6,057,342 (4,898,094)
--------------------- ------------
Interest expense and similar charges (771) (90)
TOTAL COMPREHENSIVE INCOME/(LOSS)
FOR THE PERIOD 6,056,571 (4,898,184)
===================== ============
EARNINGS/(LOSS) PER ORDINARY SHARE
Basic and diluted earnings/(loss)
per share 14 0.11 (0.09)
The notes form part of these Unaudited Interim Financial
Statements.
Unaudited Condensed Consolidated Statement of Financial
Position
As at 30 June 2021
As at 30 As at 31
June 2021 December 2020
Notes GBP GBP
ASSETS (Unaudited) (Audited)
Non-current assets
Investments at fair value through
profit or loss 4 40,507,025 28,951,368
------------------------ ------------------------
40,507,025 28,951,368
Current assets
Investments at fair value through
profit or loss 4 6,042,971 12,252,120
Receivables and prepayments 5 32,460 56,050
Cash and cash equivalents 2,574,001 1,817,959
------------------------ ------------------------
8,649,432 14,126,129
TOTAL ASSETS 49,156,457 43,077,497
LIABILITIES
Current liabilities
Payables and accruals 6 (286,298) (263,909)
------------------------ ------------------------
TOTAL LIABILITIES (286,298) (263,909)
TOTAL NET ASSETS 48,870,159 42,813,588
======================== ========================
EQUITY
Share capital 7 52,446,105 52,446,105
Retained earnings (3,575,946) (9,632,517)
TOTAL EQUITY 48,870,159 42,813,588
======================== ========================
Net Asset Value per share 10 0.89 0.78
Approved by the Board of Directors and authorised for issue on
29 September 2021.
John Falla Rob King
Director Director
The notes form part of these Unaudited Interim Financial
Statements.
Unaudited Condensed Consolidated Statement of Changes in
Equity
For the period from 1 January 2021 to 30 June 2021
Period from 1 January 2021 to 30 June
2021
Retained
Share capital earnings Total equity
GBP GBP GBP
TOTAL EQUITY AS AT 1 JANUARY
2021 52,446,105 (9,632,517) 42,813,588
Total comprehensive income
for the period - 6,056,571 6,056,571
TOTAL EQUITY AS AT 30 JUNE
2021 52,446,105 (3,575,946) 48,870,159
===================== ============= =============
Period from 1 January 2020 to 30 June
2020
Retained
Share capital earnings Total equity
GBP GBP GBP
TOTAL EQUITY AS AT 1 JANUARY
2020 52,446,105 (6,205,290) 46,240,815
Total comprehensive loss for
the period - (4,898,184) (4,898,184)
TOTAL EQUITY AS AT 30 JUNE
2020 52,446,105 (11,103,474) 41,342,631
===================== ============= =============
The notes form part of these Unaudited Interim Financial
Statements.
Unaudited Condensed Consolidated Statement of Cash Flows
For the period from 1 January 2021 to 30 June 2021
Period from Period from
1 January 2021 1 January 2020
to 30 June to 30 June
2021 2020
GBP GBP
CASH FLOWS FROM OPERATING ACTIVITIES (Unaudited) (Unaudited)
Total comprehensive income/(loss) 6,056,571 (4,898,184)
Adjustments for:
Decrease in receivables and prepayments 23,590 215,308
Increase/(decrease) in payables and
accruals 22,389 (45,645)
Net (gains)/losses on investments
at fair value through profit or loss (6,784,002) 4,314,261
Foreign exchange losses/(gains) 6,671 (4,067)
----------------------------- ----------------
(674,781) (418,327)
Investment income 134,376 72,413
Purchase of investments (7,899,331) (27,134,110)
Sale of investments 9,202,449 26,998,689
----------------------------- ----------------
NET CASH GENERATED FROM/(USED IN)
OPERATING ACTIVITIES 762,713 (481,335)
NET INCREASE/(DECREASE) IN CASH AND
CASH EQUIVALENTS 762,713 (481,335)
Cash and cash equivalents at the beginning
of the period 1,817,959 1,308,465
(Losses)/gains on exchange movements (6,671) 4,067
CASH AND CASH EQUIVALENTS AT OF PERIOD 2,574,001 831,197
============================= ================
Comprised of:
Cash and cash equivalents 2,574,001 831,304
Overdraft - (107)
The notes form part of these Unaudited Interim Financial
Statements.
Notes to the Unaudited Condensed Consolidated Interim Financial
Statements
For the period from 1 January 2021 to 30 June 2021
1. PRINCIPAL ACTIVITIES
The Company was incorporated with limited liability in Guernsey
under the Companies (Guernsey) Law, 2008, as amended, on 13
September 2017 with registered number 64013, and is a registered
closed-ended investment scheme pursuant to The Protection of
Investors (Bailiwick of Guernsey) Law, 1987, as amended and the
Registered Closed-ended Investment Scheme Rules (the "RCIS Rules").
The Company commenced business following the admission of the
Company's shares to trading on the AIM market of the London Stock
Exchange on 22 December 2017.
The registered office of the Company is at 3rd Floor, 1 Le
Truchot, St Peter Port, Guernsey, GY1 1WD.
The investment objective of the Company is to generate
risk-adjusted returns for its shareholders through investment in
equity and equity-related products and instruments, by targeting
appreciation in the value of its investments over the medium to
longer term, principally through capital growth.
2. PRINCIPAL ACCOUNTING POLICIES
The principal accounting policies applied in the preparation of
these financial statements are set out below. These policies have
been applied consistently, unless otherwise stated.
Basis of preparation
The Unaudited Interim Financial Statements for the period from 1
January 2021 to 30 June 2021 have been prepared on a going concern
basis in accordance with IAS 34, the AIM Rules for Companies and
applicable legal and regulatory requirements.
The Unaudited Interim Financial Statements should be read in
conjunction with the Annual Report and Financial Statements for the
period ending 31 December 2020, which were prepared in accordance
with International Financial Reporting Standards ("IFRS") and which
received an unqualified audit report.
These financial statements are presented in Sterling, the
Company's functional currency, being the currency of the primary
economic environment in which the Company operates.
Going concern
In assessing the going concern basis of accounting the Directors
have had regard to the guidance issued by the Financial Reporting
Council. After making enquiries and bearing in mind the nature of
the Company's business and assets, the Directors consider that the
Company has adequate resources to continue in operational existence
for the foreseeable future. Although COVID-19 has had, and
continues to have, an impact on the businesses and the valuation of
our portfolio companies, the Directors have reviewed the Company's
cash and cash equivalents including short dated treasury and
corporate bonds of GBP9.7 million as at 24 September 2021, and
consider that the Company will be able to meet its liabilities as
they fall due while also availing itself of investment
opportunities. For this reason, they continue to adopt the going
concern basis in preparing the financial statements.
Investment entity exemption
Investments are made by the Company via its Limited Partnership
- Merchant Capital LP (the "Limited Partnership"). The Limited
Partnership has met the criteria within IFRS 10 to qualify as an
investment entity. The Company itself also meets the definition of
an investment entity.
As per IFRS10 an investment entity is an entity that obtains
funds from one or more investors for the purpose of providing those
investors with investment management services, commits to its
investors that its business purpose is to invest funds solely for
returns from capital appreciation, investment income, or both, and
measures and evaluates the performance of substantially all of its
investments on a fair value basis.
The Company has therefore not consolidated the Limited
Partnership on the basis of the Limited Partnership being an
investment entity. The investment in the Limited Partnership has
therefore been reflected at fair value.
Basis of Consolidation
The "Group" is defined as the Company and its subsidiary
Merchant Capital GP Limited ("GP").
As the GP is itself not an investment entity and is solely in
the structure to be the general partner to the Limited Partnership
which itself is providing services to the Company, it has been
consolidated.
Where the Company has control over an investee, it is classified
as a subsidiary. The Company controls an investee if all three of
the following elements are present: power over the investee,
exposure to variable returns from the investee, and the ability of
the investor to use its power to affect those variable returns.
Control is reassessed whenever facts and circumstances indicate
that there may be a change in any of these elements of control.
All intra-group transactions, balances, income and expenses are
eliminated on consolidation. Accounting policies of subsidiaries
have been changed where necessary to ensure consistency with the
policies adopted across the Group.
Critical Accounting Estimates and Judgements
When preparing the Unaudited Interim Financial Statements
management relies on a number of estimates and assumptions that
affect the reported amounts of assets and liabilities and the
disclosure of contingent assets and liabilities at the date of the
financial statements and the reported amounts of income and
expenses during the period. Actual results could differ from those
estimates and assumptions. Refer to Note 11 for further information
regarding estimates and judgements applied to the investments in
Coro Energy plc (debt) and Happy Friends.
Information about significant areas of estimation uncertainty
and critical judgements in applying accounting policies that have a
significant effect on the amounts recognised in the financial
statements were the same as those applied to the Annual Report and
Financial Statements for the period ended 31 December 2020.
Financial assets
Classification
The Group's financial assets are classified in the following
measurement categories:
-- those to be measured at fair value through profit or loss; and
-- those to be measured at amortised cost.
The classification depends on the Group's business model for
managing the financial assets and the contractual terms of the cash
flows.
At initial recognition, the Group measures a financial asset at
its fair value, plus, in the case of a financial asset not at fair
value through profit or loss, transaction costs that are directly
attributable to the acquisition of the financial asset. Transaction
costs of financial assets carried at fair value through profit or
loss are expensed in profit or loss.
Financial assets held at amortised cost
Assets that are held for collection of contractual cash flows
where those cash flows represent solely payments of principal and
interest are measured at amortised cost. These assets are
subsequently measured at amortised cost using the effective
interest method.
The Group assesses on a forward-looking basis the expected
credit losses associated with its financial assets held at
amortised cost. The Group has applied the simplified approach
permitted by IFRS 9 in respect of trade and other receivables. This
approach requires expected lifetime losses to be recognised from
initial recognition of the receivables.
The Group's financial assets held at amortised cost include
trade and other receivables and cash and cash equivalents.
Financial assets at fair value through profit or loss.
The investment into the Limited Partnership is measured at fair
value as the business model is for capital appreciation and the
Group manages and evaluates the performance on a fair value basis.
The Limited Partnership holds listed and unlisted investments.
The Company's investment in short term debt instruments is for
investment purposes only and are not held for the collection of
contractual cashflows. They are carried at fair value through
profit or loss as part of the overall fair valuing of the
underlying investee.
The change in fair value is recognised in profit or loss and is
presented within the 'Net gains/(losses) on investments at fair
value through profit or loss' in the Unaudited Condensed
Consolidated Statement of Comprehensive Income.
Recognition, derecognition and initial measurement
A financial asset (in whole or in part) is derecognised either:
(i) when the Group has transferred substantially all the risks and
rewards of ownership; or (ii) when it has neither transferred nor
retained substantially all the risks and rewards and when it no
longer has control over the assets or a portion of the asset; or
(iii) when the contractual right to receive cash flow has
expired.
Financial liabilities
Recognition
Financial liabilities are recognised in the Unaudited Condensed
Consolidated Statement of Financial Position when the Group becomes
a party to the contractual provisions of the relevant financial
instrument. Financial liabilities are initially recognised at fair
value.
Classification and measurement
The Group only has financial liabilities which are classified as
amortised cost using the effective interest method. This method
discounts future cashflows of the liability using an effective
interest rate to calculate its carrying value.
De-recognition of financial liabilities
A financial liability (in whole or in part) is derecognised when
the Group's contractual obligation to deliver cash or other
financial assets is extinguished i.e. is discharged, expires or is
cancelled. Any gain or loss on de-recognition is recognised in the
Unaudited Condensed Consolidated Statement of Comprehensive
Income.
Segmental reporting
The decision maker is the Board of Directors. The Directors are
of the opinion that the Group is engaged in a single segment of
business with the primary objective of investing in securities to
generate capital growth for shareholders. Consequently, no business
segmental analysis is provided.
3. SIGNIFICANT ONGOING AGREEMENTS
The following significant contracts have been entered into by
the Company:
Investment Management Agreement
The Company, the GP and Merchant Capital Manager Limited (the
"Investment Manager") have entered into an Investment Management
Agreement dated 15 December 2017. Under the Investment Management
Agreement, the Investment Manager has been appointed to act as the
Group's investment manager and AIFM, subject to the overall control
and supervision of the Directors.
The Investment Manager receives from the Company an investment
manager fee of 2.0% per annum of the prevailing Net Asset Value.
The management fees are calculated on the last day of each quarter
and are payable in arrears.
Administration Agreement
Under the Administration Agreement, Maitland Administration
(Guernsey) Limited (the "Administrator") receives from the Company
a fee computed and payable quarterly in arrears. The fee is
calculated at the rate of 0.09% of the Net Asset Value of the
Company with a minimum fee per annum of GBP40,000.
The Administrator also receives a quarterly periodic fee in
respect of the Company Secretarial Services of GBP40,000 per annum
and is also reimbursed all out-of-pocket expenses reasonably
incurred.
Merchant Capital Limited Partnership Agreement
The Limited Partnership Agreement is an agreement between the
GP, the Company and the Investment Manager dated 30 November 2017
pursuant to which the parties agreed to establish the Limited
Partnership in order to make investments pursuant to the Company's
investing policy. The Limited Partnership shall continue until the
one hundredth anniversary of the date of its registration under the
Limited Partnership (Guernsey) Law, 1995 (the "Partnership Law")
unless it is dissolved or its life is extended under the Limited
Partnership Agreement.
The Limited Partnership Agreement may be terminated in certain
customary circumstances, including the death or insolvency of the
general partner, agreement among the partners to terminate, and
resignation, retirement, removal or withdrawal of the general
partner in accordance with the terms of the agreement.
The GP has agreed to act as general partner of the Limited
Partnership and will be solely responsible for the conduct and
management of the Limited Partnership's business. The limited
partners in the Limited Partnership, namely the Company and the
Investment Manager, shall take no part in the management and
control of the business and affairs of the Limited Partnership, and
shall have no right or authority to act for the Limited Partnership
or to take any part in or in any way interfere in the conduct or
management of the Limited Partnership or to vote on matters
relating to the Limited Partnership other than as set forth in the
Limited Partnership Agreement and/or as permitted by the
Partnership Law.
The GP, the Company and the Investment Manager have made capital
contributions of GBP1, GBP799 and GBP200 to the Limited Partnership
respectively. The Company is required to make loans to enable the
Limited Partnership to meet its obligations as they fall due for
such amount and for such purpose as the GP may request on not less
than five business days' written notice (or such shorter period as
may be necessary in an emergency). Where the Company makes a loan
to the Limited Partnership, the Limited Partnership shall not pay
interest on any loan and all loans shall be unsecured. While it
remains a limited partner of the Limited Partnership the Company
shall not be entitled to be repaid all or any part of a loan other
than on liquidation of the Limited Partnership or realisations by
the Limited Partnership.
The Investment Manager will receive 20% of the net realised cash
profits from investments and follow-on investments made over the
relevant period once the Company has received all loan capital and
a preferred return that equates to an IRR of 5% for the relevant
period and associated follow-on period.
4. INVESTMENTS
Limited Partnership Direct Investments Total Investments
GBP GBP GBP
(Level 3) (Level 1)
Non-current Current
Opening fair value as at 1 January
2021 28,951,368 12,252,120 41,203,488
Additions at cost 7,899,331 - 7,899,331
Disposal proceeds (3,029,298) (6,173,151) (9,202,449)
Net realised gain/(loss) on disposal
of investments 198,507 (24,961) 173,546
Net unrealised gain/(loss) on
revaluation of investments 6,487,117 (11,037) 6,476,080
Closing fair value as at 30 June
2021 40,507,025 6,042,971 46,549,996
==================== ===================== ======================
Limited Partnership Direct Investments Total Investments
GBP GBP GBP
(Level 3) (Level 1)
Non-current Current
Opening fair value as at 1 January
2020 22,957,684 22,043,470 45,001,154
Additions at cost 12,343,997 44,702,852 57,046,849
Disposal proceeds (3,856,042) (54,398,689) (58,254,731)
Net realised gain/(loss) on disposal
of investments 1,102,209 (101,861) 1,000,348
Net unrealised (loss)/gain on
revaluation of investments (3,596,480) 6,348 (3,590,132)
Closing fair value as at 31 December
2020 28,951,368 12,252,120 41,203,488
==================== ===================== ======================
30 June 31 December
2021 2020
GBP GBP
Net realised gain on disposal
of investments 173,546 1,000,348
Net unrealised gain/(loss) on
revaluation of investments 6,476,080 (3,590,132)
Investment Income 134,376 362,171
Net gains/(losses) on investments at fair
value through profit or loss 6,784,002 (2,227,613)
===================== ======================
5. RECEIVABLES AND PREPAYMENTS
30 June 31 December
2021 2020
GBP GBP
Accrued income - 48,421
Prepayments 30,676 6,601
Other receivables 1,784 1,028
32,460 56,050
===================== ====================
6. OTHER PAYABLES AND ACCRUALS
30 June 31 December
2021 2020
GBP GBP
Investment manager fees 237,006 214,140
Administration and company secretarial fee 20,667 20,559
Audit fee 12,345 20,988
Director's fee 7,500 -
Other expenses 8,780 8,222
286,298 263,909
======== =====================
7. SHARE CAPITAL
Number of
shares Share capital
GBP
Ordinary shares
Opening balance 55,000,000 52,446,105
Balance as at 30 June 2021 55,000,000 52,446,105
=========== ==============
Number of
shares Share capital
GBP
Ordinary shares
Opening balance 55,000,000 52,446,105
Balance as at 31 December 2020 55,000,000 52,446,105
=========== ==============
The Company was incorporated on 13 September 2017 with an issued
share capital of GBP2 represented by 2 ordinary shares of GBP1
each. These shares were redeemed immediately following the share
issue described below from the proceeds raised.
On 22 December 2017, the Company issued 55 million ordinary
shares at GBP1 per share in an offer for subscription, raising
GBP52,446,105 after expenses of broker fees and legal and
professional fees of GBP2,553,895.
8. DIVID POLICY
It is the current intention of the Directors to reinvest the net
proceeds of any realisations in the Company's portfolio. The
Directors may consider the payment of dividends in the future.
9. RELATED PARTY TRANSACTIONS
The basis of calculation of the fees due to the Investment
Manager are set out in Note 3. The Investment Manager earned
remuneration of GBP450,181 (30 June 2020: GBP418,521) from the
Company during the period in respect of normal services provided,
with GBP237,006 (31 December 2020: GBP214,140) outstanding at the
end of the period. In addition, GBP656,070 is included as an
accrual (31 December 2020: GBP182,083) for carried interest in
accordance with the limited partnership agreement, reflecting
investment performance as at 30 June 2021. The accrual of
GBP656,070 is included in the fair value of the Limited Partnership
investment as at 30 June 2021 and the expense relating to the
accrual is included within 'Net losses on investments at fair value
through profit or loss' in the Statement of Comprehensive Income.
Dependent on future investment performance, this amount may change,
and any amount which remains accrued as at 31 December 2021 will
crystallise only if the investment performance is maintained for a
further twenty four months following 31 December 2020.
During the period, the Directors received remuneration fees of
GBP57,500 (30 June 2020: GBP43,750), of which GBP7,500 (31 December
2020: GBPnil) were outstanding at the end of the period. The
Independent Non-Executive Directors received an annual remuneration
fee of GBP25,000 each. The Chairman receives an additional
GBP10,000 and the Chairman of the Audit Committee receives an
additional GBP5,000.
Mr Sgarbi and Mr Fumagalli signed a waiver letter dated 30
November 2017 and therefore have waived their Directors fees.
Mr Fumagalli, a Director of the Company during the reporting
period, has an indirect beneficial interest in the Company, of
3.87% (31 December 2020: 3.87%). Mr Fumagalli is also a
non-executive director of Coro Energy plc in which the Company
holds shares. Refer to the Unaudited Portfolio Statement for more
information.
Mr Sgarbi, a Director of the Company during the reporting
period, has an indirect beneficial interest in the Company of 3.87%
(31 December 2020: 3.87%) and a direct beneficial interest in the
Company of 0.36% (31 December 2020: 0.4%).
Mr Falla, a Director of the Company, has a direct beneficial
interest in the Company of 0.02% (31 December 2020: 0.02%).
Mr Collins, Chairman of the Company, has a direct beneficial
interest in the Company of 0.09% (31 December 2020: 0.09%).
Mr Nesta is an employee of Continental Investment Partners SA
who serves as a Director of Merchant Capital GP (Malta) Limited,
through which the investment Alkemy SpA is held, and Merchant
Capital HF Limited through which 7Star Srl is held. Mr Sgarbi and
Mr Fumagalli are also Directors of Merchant Capital GP (Malta)
Limited.
Mr Sgarbi and Mr Fumagalli are Directors of IVY Merchant Capital
Limited.
10. NET ASSET VALUE PER SHARE
The NAV per share is expressed in GBP and is determined by
dividing the net assets attributable to shareholders of the Company
by the number of ordinary shares in issue on the valuation day.
11. FAIR VALUE MEASUREMENT
Valuation of financial instruments
IFRS 13 requires the Group 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); and
-- 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 measurements 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 measurement 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 'observable' requires significant judgement by the
Company. The Company considers observable data to be that market
data that is readily available, regularly distributed or updated,
reliable and verifiable, not proprietary, and provided by
independent sources that are actively involved in the relevant
market.
The following table analyses, within the fair value hierarchy,
the Company's financial assets (by class) measured at fair value as
at 30 June 2021:
30 June 2021 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Investments in LP - - 40,507,025 40,507,025
Debt instruments 6,042,971 - - 6,042,971
6,042,971 - 40,507,025 46,549,996
===================== ===================== ===================== ================
31 December 2020 Level 1 Level 2 Level 3 Total
GBP GBP GBP GBP
Investments in LP - - 28,951,368 28,951,368
Debt instruments 12,252,120 - - 12,252,120
12,252,120 - 28,951,368 41,203,488
===================== ===================== ===================== ================
During the period, there were no transfers between levels.
The fair value of the investment in the Limited Partnership is
based on the net asset value of the Limited Partnership. This is
based on the components within the Limited Partnership. Further
details regarding the components of the Limited Partnership can be
found in the Portfolio Statement.
Alkemy SpA, Brave Bison plc, CareTech Holdings plc, Coro Energy
plc ("Coro Energy"), EKF Diagnostics Holdings plc, HSS Hire Group
plc, Ixico plc, Orthofix Medical Inc, Proactis Holdings plc, Redde
Northgate plc, Totally plc, Trellus Health plc and Vertu Motors plc
are all quoted equity securities and therefore their fair value is
taken from quoted bid prices as at close of business on 30 June
2021.
Merchant Capital HF Limited is an unquoted security and its fair
value is based on the underlying investment into 7Star Srl, being
the Company's investment in Happy Friends, which has been valued
using a revenue multiple approach. The multiples are considered
unobservable inputs to the valuation.
IVY Merchant Capital Limited and Merchant Capital GP (Malta)
Limited are unquoted securities, which were incorporated during
2019 to hold investments made by the Company. Their fair value is
based on the cost of the investment adjusted to the exchange rate
as at 30 June 2021. IVY Merchant Capital Limited has partial
ownership of Merchant Capital HF Limited, whilst Merchant Capital
GP (Malta) holds the investment in Alkemy SpA.
The Coro Energy plc Eurobond is currently valued at a 15%
discount to its nominal face value. Coro Energy plc warrants are
priced using the Black-Scholes model which gives a theoretical
estimate of the price of the option. The warrants are not material
to the interim financial statements. An additional note regarding
Coro Energy plc is included under 'Events after the reporting
period'.
Capital risk management
The capital structure of the Company is as disclosed in the
Unaudited Condensed Consolidated Statement of Financial Position
and is managed on a basis consistent with its investment objective
and policies.
12. ANALYSIS OF FINANCIAL ASSETS AND LIABILITIES BY MEASUREMENT BASIS
In the current and prior period, all Investments were measured
at fair value through profit or loss. Receivables and prepayments,
cash and cash equivalents and payables and accruals are valued at
amortised cost.
13. FINANCIAL RISK MANAGEMENT
The Group's activities expose it to a variety of financial
risks: Market risk (including price risk, interest rate risk and
foreign currency risk), credit risk and liquidity risk.
These Unaudited Condensed Interim Financial Statements do not
include the financial risk management information and disclosures
required in the annual financial statements; they should be read in
conjunction with the Group's annual financial statements for the
year ended 31 December 2020. The impact of the COVID-19 pandemic as
a risk continues to emerge and evolve the outcome of which remains
uncertain. The Directors continue to monitor its impact on markets
and portfolio companies.
14. BASIC AND DILUTED EARNINGS PER ORDINARY SHARE
Basic earnings/(loss) per ordinary share is calculated by
dividing the total comprehensive income for the period of
GBP6,056,571 (30 June 2020: loss of GBP4,898,184) by the weighted
average number of ordinary shares outstanding during the period
55,000,000 (30 June 2020: 55,000,000).
The basic and diluted value is the same as the Group does not
have any diluted shares.
15. EVENTS AFTER THE REPORTING PERIOD
On 27 July 2021, the arrangement in connection with the
recommended acquisition of the entire issued and to be issued share
capital of Proactis Holding plc by Café Bidco Limited at a price of
75 pence per share became effective. The disposal of the Company's
full position pursuant to acceptance of the terms of this offer
represents a 2.3x cash-on-cash return and a 50.04% IRR on the
Company's investment through the Limited Partnership, as announced
on 28 July 2021.
As announced on 16 August 2021, the Company, through the Limited
Partnership, invested a further GBP1,250,000 in Brave Bison Group
plc by way of participation in its proposed placing. Brave Bison is
a social media and marketing group quoted on AIM, a market operated
by London Stock Exchange plc, and acquired the entire issued share
capital of Greenlight Digital Limited and Greenlight Commerce
Limited for an aggregate consideration of c.GBP6.84 million in cash
and shares. The Company, through the Limited Partnership acquired a
further 92,500,000 Brave Bison shares, to give it a resultant total
shareholding of 167,521,407 Brave Bison Shares, representing
approximately 15.3 per cent. of Brave Bison's enlarged issued share
capital.
Coro Energy plc released their half-year report to 30 June 2021
on 9 September 2021, in which Coro states that it intends to seek
to restructure its Eurobond obligations. The Company holds Coro
Eurobonds due to mature on 12 April 2022 with a face value of
EUR4,050.000.
At the Annual General Meeting of the Company, held on 10
September 2021, Mr Sgarbi and Mr Fumagalli withdrew from
re-election as Directors of the Company, but continue to be
Directors of the Investment Manager.
Unaudited Portfolio Statement
As at 30 June 2021
Issued
currency Valuation as at
30 June 2021
GBP %
Merchant Capital L.P.
Alkemy SpA* EUR 5,169,856 10.58
Brave Bison Group plc* GBP 1,162,832 2.38
CareTech Holdings plc* GBP 8,449,276 17.29
Coro Energy plc** GBP 436,986 0.89
Coro Energy plc warrants 12/04/2022*** GBP - -
Coro Energy plc 5% 12/04/2022** EUR 3,000,913 6.14
EKF Diagnostics Holdings plc* GBP 2,906,250 5.95
HSS Hire Group plc* GBP 4,700,000 9.62
IVY Merchant Capital Limited*** EUR 1,030 -
Ixico plc* GBP 2,857,550 5.85
Merchant Capital GP (Malta) Limited*** EUR 1,030 -
Merchant Capital HF Limited*** EUR 1,913,419 3.92
Orthofix Medical Inc* USD 3,251,887 6.65
Proactis Holdings plc* GBP 2,062,250 4.22
Redde Northgate plc* GBP 2,704,879 5.53
Trellus Health plc* GBP 162,153 0.33
Totally plc* GBP 1,245,000 2.55
Vertu Motors plc* GBP 699,016 1.43
Other liabilities GBP (656,069) (1.34)
Other assets GBP - -
Cash and cash equivalents GBP 438,767 0.90
Fair value of Limited Partnership 40,507,025 82.89
The Company
European Investment Bank 2.25% 07/03/2020* GBP - -
European Investment Bank FRN 17/02/2020* GBP - -
European Investment Bank 0.625% 17/01/2020* GBP - -
United Kingdom, Bills 1.75% 07.09.2022* GBP - -
United Kingdom, Bills 0.5% 22.07.2022* GBP 6,042,971 12.37
United Kingdom, Bills 4.75% 07/03/2020* GBP - -
United Kingdom, Bills 0% 18/05/2020* GBP - -
Investments in the Company 6,042,971 12.37
Total Investments 46,549,996 95.26
============================================================= ================ ===================
Cash and cash equivalents 2,574,001 5.27
Other net current liabilities (253,838) (0.53)
Total net asset value 48,870,159 100.00
============================================================= ================ ===================
* Quoted
** Quoted but not actively traded
*** Unquoted
Reconciliation of Profit
Period to
30
The profit consists of: June 2021
Merchant Capital L.P.
Realised losses on investments 198,507
Unrealised losses on investments 6,487,117
Investment income 134,376
---------------
LP Fair value movement 6,820,000
Other Gains/Losses:
Realised losses on investments (24,961)
Unrealised losses on investments (11,037)
Exchange losses on currency
balances (6,671)
Investment income -
Bank interest -
Investment management fees (450,181)
Directors' fees (57,500)
Secretarial and administration
fees (50,385)
Advisory and consultancy fees -
Legal and professional fees (37,874)
Brokerage and custody fees (29,451)
Audit fees (14,991)
Other fees (79,607)
Interest expense and similar
charges (771)
Total comprehensive income for
the period 6,056,571
===============
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IR EAFNNAFDFEAA
(END) Dow Jones Newswires
September 30, 2021 02:00 ET (06:00 GMT)
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