St Peter Port Captial Preliminary Results for the Year Ended 31
March 2009
Released
on: August 4, 2009, 3:07 am
Author: St Peter Port Capital
Industry: Financial
Preliminary Results for the Year
Ended 31 March 2009
St
Peter Port Capital Limited (the “Company” or “St
Peter Port”), the AIM listed investment company whose aim
is to generate value by investing predominantly in growth companies
shortly before an initial public offering (“IPO”)
or other exit event, announces its preliminary results for its
second year of investment..
Highlights
• 36 investee companies
at year end
•
realised to date, £22.5m in cash from investee companies,
generating a gain on investment of 39%
•
following the year end, a further £5.67m invested in five
companies, two of which are new to the portfolio
• NAV of 105.6p per share,
up 3.1% over the year
• profit of £877,000
(2008: £3.69m), eps of 1.2p (2008: 4.9p)
Bob Morton, Chairman of St Peter
Port, said:
“I am pleased to report that the Company has weathered the
storm and maintained the net asset value of the portfolio. We
believe that many of the companies within the portfolio have considerable
upside potential in a portfolio of high risk/high reward companies.”
Tim Childs, Chief Executive of
St Peter Port Investment Management Limited, said:
“As at the 14 July 2009, we had £16.6m to invest in
new opportunities and follow-on investments. Competition is limited
and we are therefore being offered these on attractive terms.”
Notes for Editors
St
Peter Port Capital Limited floated on AIM on 16 April 2007, raising
£75m in new equity. The Company is a Guernsey registered
closed-ended investment company. The Company’s objective
is to achieve returns from the uplift on or shortly after IPO,
but the exit from the investment could also be a trade sale. The
universe for investment is principally companies across a broad
range of sectors and geography expecting to conduct an IPO or
achieve a trade sale or other liquidity event in the months after
the Company’s investment. However, in current conditions,
it may also include companies which are already public whose value
is not properly recognised by stock markets. The initial focus
is on companies targeting UK, US and Commonwealth stock markets
although pre-IPO companies looking to float on other exchanges
will also be considered. The Company appointed St Peter Port Investment
Management Limited, a joint venture between Broughton Investments
Group Limited (“Broughton”), a company in which Tim
Childs is interested, and Shore
Capital Limited (“Shore Capital”), the absolute
return fund management specialist which currently manages approximately
£1.4 billion, to act as its investment manager (“the
Investment Manager”).
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Chairman’s Statement
Introduction
Although
our second year of investment was a year of unprecedented difficulty
for financial markets around the world, I am pleased to report
that the Company has weathered this storm well. It has maintained
the net asset value of its portfolio which includes a number of
companies with considerable upside potential.
Investment
Environment and Portfolio Composition
St
Peter Port was relatively fully invested at the start of 2008/9,
having invested most of the funds raised at flotation in the previous
year. A number of companies in which we had invested were coming
to market shortly or otherwise close to a liquidity event such
as a trade sale. The portfolio accumulated in the first year was
weighted its towards three sectors: oil and gas exploration and
production; mining and resources and renewable energy/clean technology,
reflecting suitable opportunities which had been identified for
St Peter Port’s strategy. At the start of 2008/9 St Peter
Port held stakes in 41 companies.
During
the earlier part of 2008/9, commodity prices remained high, giving
rise to a number of flotations and other exit opportunities. Wherever
possible, as described in the report below, the Investment Manager
took full advantage of these to release cash. Over the same period
the Company redeemed nearly all its hedge fund holdings other
than one much reduced holding in a third party fund of funds which
has staged redemption arrangements. However, after the banking
crisis became extreme in September 2008 the opportunities for
achieving exits vanished and only began tentatively to return
since the year end.
Given
the extent of the turmoil in financial markets, and its impact
on the global economy, the Company refrained from making any further
investments in the second half of 2008/9. This reflected the conditions
for a number of months in which markets - were unable to find
any sort of equilibrium.
Investments
and Realisations during the Year
During
the first half of 2008/9, the Company invested a further £14.9m
in nine companies, two of the investments being follow-ons. The
focus of these investments shifted from a possible exit through
flotation to investments where there was a credible expectation
of a liquidity event in any form within a relatively short period,
such as a trade sale or repayment of a loan.
To
date the Company has realised over £22.5 million through
disposals (over £22 million in 2008/9), generating a gain
on investment of 39 per cent. This was largely derived from six
investments which were wholly or substantially realised during
the year and one other which was partially realised.
Share
Buy-Back
Shortly
before the year end the Company bought back 1.95m of its own shares
at 30p per share. These shares are currently being held in treasury.
As discussed below, the effect of this buy-back was to enhance
net asset value per share.
Basis of Valuation for Financial Results
Determining
the Company’s financial results for the year is an exercise
largely dependent on an assessment of the fair value of each investment
held. Where investments are now quoted, there is an external basis
for determining fair value and we have valued holdings at the
bid price of the shares. Where this is not available IFRS rules
require us to select a fair value.
Values
of our oil and gas and resource stocks are influenced by a number
of factors, including company progress, exchange rates and commodity
prices. Where we have invested in a mining or petroleum project,
when the company receives positive results from drilling geological
investigation this should lead to a rise in value. We report in
sterling but many of our investments were made in foreign currency.
Even where this was not the case, the value of the investment
is frequently determined by reference to dollar values rather
than sterling. We have also taken account of any pre-defined uplift
on a liquidity event; in some cases we have written investments
down heavily and in others written them up.
Financial
Results
The
Company made a profit in the year of £877,000 (2007/8: £3.69m),
generating earnings per share of 1.2p (2007/8: 4.9p). Income arose
largely from the net gains in fair value of investments of £2.51m
(2007/8: £4.57m).
Net
assets at year end were largely unchanged from the previous year
at £77.13m (31 March 2008: £76.84m). However, net
asset value per share increased by 3.1 per cent to 105.58p (31
March 2008: 102.45p), largely as a result of the share buy-back.
Balance
Sheet
As
at 31 March 2009, the Company held £54.3m in investments
in companies, being equity investments and loan instruments (31
March 2008: £55.9m). Nearly all of the remaining balance
sheet was in cash, £22.6m (31 March 2008: £12.5m –
including commercial paper), the principal difference being that
£8.7m was held in hedge funds at 31 March 2008, which was
reduced to £130,000 at the year end.
Activity
since the Year End
Since
the year end conditions have become more stable and the Company
has resumed making new investments, described below in the Investment
Manager’s report. Three of these investments are follow-ons
into companies in which we were already shareholders and the other
two are new investments. The pricing of each of these reflects
the depressed market conditions which currently prevail and offer
the prospects of significant uplifts on exit.
As
a result of these investments since the year end, the Company,
as at the 14 July 2009, held £16.6m in cash and available
for investment. We therefore have the cash to cherry pick from
the best of our existing portfolio and new opportunities at a
time when many potential participants are illiquid.
The
investment climate has become less volatile and commodity prices
have recovered substantially since their lows around the turn
of 2008. Competition in our area from other funders is limited.
We believe that many of the companies within the portfolio have
considerable upside potential in a portfolio of high risk/high
reward companies. The Board views the future with confidence.
Bob Morton
Chairman
Contact Details: Tel :44 (0)20 7408 4090 press@shorecapital.co.uk
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