TIDMSPPC
For Immediate Release 24 May 2012
Final Results for the Year Ended 31 March 2012
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 final results for the year ended 31 March 2012.
Highlights
* Investments in 41 companies* at year end
* NAV of 106.0p per share at 31 March 2012, up 1.2% since 30 September 2011
* GBP15.0m realised in the year 2011/12
* GBP55.7m realised since inception, generating a gain of 90% on these
investments
* GBP6.2m invested during the year, nearly all in the first half
* Major progress in advancing projects where we now have a majority equity
interest
* Significant positive developments in a number of our investments
* GBP11.0 million in cash
* Final dividend of 3 pence per share
* Circular to shareholders published recommending continuation of the Company
* excluding companies entirely written down
Bob Morton, Chairman of St Peter Port, said:
"Despite current stock market conditions for commodity-related stocks, a number
of our pre-IPO investments are planning to come to market over the coming
months. These developments offer the potential for further significant
realisations, hopefully at a significant premium to our current carrying cost.
We hope to be able to report further progress in realisations when we next
issue results. Whilst the climate for crystallising value is clearly currently
not ideal, the portfolio of high risk/high reward companies includes many
prospects for strong returns on our original investment."
Tim Childs, Investment Advisor to St Peter Port Investment Management Limited,
said:
"The portfolio has developed well and many of the companies in it have added
significantly to their value during our investment period. We fully expect that
process to continue. Inevitably, the timing of exit for the Company will depend
upon market conditions and opportunities arising and early liquidation would be
unlikely to be on good terms. Mostly these liquidity events are outside of our
control. Where we have taken control of the investee company, we have more
opportunity to influence the process and have exciting prospects to achieve
value gains in these cases."
For further information:
St Peter Port Capital Limited
Peter Griffin - 01481 751000
St Peter Port Investment Management Limited
Tim Childs - 020 7240 3765 / Graham Shore - 020 7408 4090
Buchanan Communications
Jeremy Garcia / Helen Chan - 020 7466 5000
Deloitte Corporate Finance - Nominated Adviser
Jonathan Hinton / James Lewis - 020 7936 3000
Shore Capital Stockbrokers Limited - Broker
Dru Danford - 020 7408 4090
Notes for Editors
St Peter Port Capital Limited floated on AIM on 16 April 2007, raising GBP75
million 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, given conditions since 2008, it may also include companies which are
already public whose value is not properly recognised by stock markets. The
principal focus has been 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 GBP1.2 billion, to act as its investment manager
(the "Investment Manager").
Chairman's Statement
Introduction
I am pleased to report that the year ended 31 March 2012 was a successful year
for the Company in terms of realisations and development of the Company's
portfolio.
Market Conditions and Investment Approach
The year 2011/12 saw volatile market conditions for small cap stocks focused on
resources and renewable technology. During the first part of the year, IPO
activity continued, but from the end of June the renewed debt crisis in the
Eurozone and fears of a global economic slowdown depressed the sector.
Beginning in December, conditions revived, and there are currently a number of
major IPOs in advance planning. It is hard to predict whether the most recent
Euro malaise arising from the French and Greek elections will persist and again
generate a summer of poor stock markets.
When we last reported in December, I noted that the investment climate had
caused a knock-on effect on commodity prices: whilst oil has remained firm
partly because of political risks, coal, industrial metals, such as iron, copper
and nickel and soft commodities, have fallen by between 15 and 25 per cent
(depending on the commodity) since May 2011. Although gold has a monetary
demand as a safe haven, it too has weakened.
During the year, the Company was active in making further realisations from the
existing portfolio where opportunities arose. In the first half of the year, the
Company made a number of new investments in companies with good prospects for
early liquidity events. However, given the imminence of the shareholder vote on
continuation (further details of which are provided below), during the second
half, its only investments were two small follow-ons.
Investments and Realisations during the Year
During the year, the Company realised or partly realised pre-IPO investments,
generating some GBP15.0 million in cash. This included GBP2.7 million of
realisations since the Company reported its interims on 19 December 2011.
Since launch, the Company has realised GBP55.7 million through disposals,
generating a gain on these investments of 90 per cent. The rate of realisations
is inevitably uneven, with major disposals linked to liquidity events in the
investee companies. However, there have also been disposals or part disposals of
some of the quoted portfolio when market conditions have made that attractive.
The Company invested GBP6.2 million in nine companies during the financial year,
nearly all in the first half. Five of these investments were follow-ons and
the other four were in new companies. Subsequent to the year end, we have made
one further follow-on investment of GBP144,000. In each case of new investment,
we judged that there was a credible expectation of a liquidity event in some
form within a relatively short period, such as a trade sale or repayment of a
loan. In the case of the follow-ons, they were internal rounds offered on
advantageous terms.
Financial Results
The balance sheet shows pre-IPO investments (including those which had a
listing) of GBP61.1 million. At the year end, GBP11.6 million was held in cash.
Net assets were GBP72.3 million, giving a net asset value of 106.0p per share.
Net assets have increased by 1.2 per cent since the interim results as at
30September 2011. They have increased by 0.6 per cent since the end of December
despite the increase in sterling against the dollar and other relevant
currencies.
As announced in our interim results, the weaker markets last summer affected the
carrying value of our quoted holdings and at that time we also reduced the
values of several unquoted holdings. The results were also affected by currency
movements. The net effect of these changes in valuations was to reduce net
asset value from the carrying value as at 31 March 2011. As a result, under
IFRS, this generated a loss for the year of GBP7.8 million (2010: profit of GBP15.1
million).
During the year there have also been material positive developments leading to
material revaluations. These are discussed in the Investment Manager's report,
together with the more significant reductions in valuations.
At the balance sheet date, the Company held GBP11.6 million in cash. As at the
close on 18 May 2012, the Company held GBP11.0 million in cash deposits.
Share Buybacks
In two transactions in August 2011, the Company bought back 2,128,500 of its
shares at an average price of 63.9 pence per share, a large discount to the then
prevailing NAV per share. These shares were subsequently cancelled.
Circular to Shareholders
As promised in its Admission Document and in accordance with its Articles of
Association, the Company has today issued a circular to its shareholders
convening an extraordinary general meeting to vote on a resolution on whether to
continue the fund or to commence a realisation of the investments over the next
year ("the Circular"). The Circular also contains a resolution, suggested by
certain institutional shareholders, proposing a change in the performance
incentive for holders of the founder shares making it relate solely to the
amount of cash returned to shareholders in excess of the 31 March 2012 net asset
value. Details from the Circular are contained in a separate announcement
issued this morning.
Dividends
The portfolio has matured considerably and, subject to market conditions, the
prospects for regular realisations are accordingly better. The board therefore
proposes to maintain the final dividend at 3 pence per share for the year,
payable on 26 June 2012 to shareholders on the register as at 8 June 2012.
The circular to shareholders proposes a new policy under which, in respect of
each future period of six months and subject to the requirements of Guernsey law
regarding solvency, it will pay out in cash 50 per cent of the net gains from
all realisations made. The Board hopes that this policy will improve the
attractiveness of the Company's shares and hence reduce the discount to net
asset value per share of the Company's share price.
Outlook
There are many exciting companies in the portfolio (as discussed in the
Investment Manager's report) which have made significant progress over the last
year. These companies will no doubt seek to time their liquidity events to take
advantage of appropriate market conditions, which will vary depending on their
sector and location around the world. The process of value generation is
evident; the precise timing of realisation more difficult to predict. St Peter
Port has realised significant cash in recent months and will continue to do so
where opportunities arise on good terms.
The Circular issued today to shareholders makes an overwhelming case for the
continuation of the Company rather than a rapid realisation of its portfolio,
which is likely to be on disadvantageous terms. Provided that the shareholders
support the resolutions, there is exciting scope to continue to reinvest some of
the proceeds of realisations where the Board is confident that we can obtain
strong returns and exits within a further short period. The proposal from
institutional shareholders to realign the performance conditions for dividends
to the holders of the founder shares to relate solely to cash distributions
seeks to ensure that all shareholders will share the risks and rewards in
judging the balance between reinvestments and distributions. We note that the
arbitrage gap between the prices of resource-related companies when private and
publicly traded remains at an unusually attractive level at present, reflecting
the reduced competition in our space and better public company valuations. This
is notwithstanding the more negative sentiment for resource stocks since last
June, which has fed into the pricing of pre-IPO deals. This will be a factor as
will the shareholders' desire for cash from realisations.
Despite current stock market conditions for commodity-related stocks, a number
of our pre-IPO investments are planning to come to market over the coming
months. These developments offer the potential for further significant
realisations, hopefully at a significant premium to our current carrying cost.
We hope to be able to report further progress in realisations when we next
issue results. Whilst the climate for crystallising value is clearly currently
not ideal, the portfolio of high risk/high reward companies includes many
prospects for strong returns on our original investment.
Bob Morton
Chairman
Investment Manager's Report
Our portfolio remains weighted to three sectors. These are oil and gas
(including enhanced recovery techniques); minerals including copper, gold,
nickel, uranium, rarer elements and coal; and environmentally friendly
technologies including cleaner/more efficient ways of burning conventional
fuels, second generation bio-fuels and hydrogen technologies. However, we have
also made investments in the largest and highly dynamic farmland owner in
Uruguay, in timber in Mozambique, in a potash mine in Brazil and in a US food
company. Finally, we hold investments in several technology companies.
The sectoral composition of our portfolio changed during the year, principally
as a result of the sale of our holding in HRT Petroleum which was completed in
April 2011, but also from the sale of other oil stocks. We are therefore now
more heavily weighted towards mining. Whilst the proportion held outside of the
mining/oil and gas area increased during the year, the portfolio weighting
towards investments of this type remains and we are also exposed to the soft
commodity companies mentioned above.
Most of the portfolio companies have their main activity outside of the UK and a
significant proportion were sourced from brokers whose main business is outside
the UK. Some are now listed in Canada or Australia and we have been disposing
of part or all of these holdings where there is sufficient liquidity. Others
have plans to list in Hong Kong or Brazil, possibly together with a listing on
another market. A third category are now more likely to seek acquisition by a
larger company rather than an IPO. Of the total portfolio, GBP8.0 million was
listed as at 31 March 2012, representing 13.34 per cent of the invested
portfolio at that date. This percentage reduced during the year as a result of
the sale of listed assets.
The table below shows the breakdown of the investments by sector as at 31 March
2012:
Investments by Sector as at 31 March 2012
Sector Number Cost GBPm Book Value GBPm Percentage (of value)
Oil and Gas 12 20.8 16.4 27.2
Mining 21 30.1 30.5 50.6
Technology 3 3.0 3.9 6.5
Renewable Energy 4 4.7 2.2 3.6
Other 7 9.8 7.3 12.1
Total 47 68.4 60.3 100.0
Realisations and listings
Over the last year several of the companies in our portfolio planned to go
public, but difficult market conditions in the summer led them to delay their
flotations. In particular Union Agriculture, a strong and well-financed company
planned a listing in New York which it put on hold after filing with the SEC,
whilst First Iron got to pathfinder stage. Other well-financed and exciting
companies which were less well advanced in their flotation turned to another
private funding round rather than an early IPO. For example Seven Energy raised
substantial further funding from Petrofac (its largest shareholder). A few of
our companies reversed into shells or merged with small quoted companies with
other assets, but these did not necessarily give rise to liquidity events.
The largest realisation during the year was in April when we completed the sale
of our warrants in HRT Participacoes em Petroleo SA ("HRT"), a Brazilian oil and
gas exploration company. We also sold our entire holding in Quetzal, a Canadian
company, at a small gain of GBP36,000 compared to the holding value as at 31
December 2011 (the last reported NAV). Quetzal has interests in petroleum
producing assets in Guatemala and is listed on the TSX. It released positive
results which provided the opportunity to dispose. Finally, we sold our entire
equity holding in Providence Resources following successful drilling for oil in
the Celtic Sea, which resulted in a profit of GBP460,000.
The Company also holds convertible loan stock in Providence Resources; a portion
of this was redeemed by the company when it disposed of a Nigerian asset which
was securing the loan. We continue to hold the balance of the convertible which
is now bearing an interest rate of approximately 15 per cent in Euros and is due
for redemption in July 2012. Providence has already raised the funding for this
redemption.
During the year, we also made partial disposals of a further four listed
holdings, taking advantage of liquidity when it arose. Another portfolio
company providing a degree of public trading in its assets was Homeland Uranium,
which has de-merged its silver interests and listed them on the TSX as Caracara
Silver, a Canadian company with mineral rights in the Princesa-Piluani silver
district of southern Peru. Southern Andes Energy (which was also a distribution
in specie from Homeland Uranium) has merged with another TSX company and is now
called Macusani Yellowcake.
Investments During The Year
During the 2012 financial year we made nine investments, five of which were
follow-ons and four new investments. We invested GBP6.2 million in total during
the year and another GBP144,000 just after the year end.
The follow-on investments were:
* African Timber and Farming, in which we had previously invested GBP750,000.
We added another GBP256,000 in two rounds, the second completing after the
year end. The company is developing fast growing timber in eastern
Mozambique and has strong prospects.
* Mongolian Minerals, in which we had previously invested CDN$1 million and
added a further CDN$2 million ( GBP1.25 million) for common shares. The
company has licences with a proven resource of 575 million tonnes of high
quality coal.
* Nusantara, in which we had previously invested GBP2.26 million and added a
further GBP100,000. It is developing a large deposit (at least 480 million
tonnes) of thermal coal in Sumatra, Indonesia. These purely internal rounds
were to provide additional finance for the company whilst it negotiates with
potential Indonesian partners and were on terms where it would have been
highly dilutive not to participate.
* Creso Exploration, in which we had already sold a substantial shareholding
at a higher price. We invested CDN$360,000 in a placing to increase the
company's working capital. Creso has licences to explore gold and silver in
northern Ontario and is listed on the TSX.
* iQur, in which we invested a further GBP6,500 in a rights issue. It is a
medical research company developing a novel vaccine platform, initially
focusing on the Hepatitis virus and has made good progress.
The four new investments were:
* US$2 million in Manabi Holding SA, a Brazilian iron ore company. It is
developing a very large iron ore resource in the Minas Gerais province of
Brazil. Our investment was part of a US$550 million round to secure the
asset and fund further development. Its shares now have a listing on Tier
1 of the BOVESPA (Brazilian Stock Market) and the company is planning to
list on the Nuevo Mercado of BOVESPA (the much more liquid market) in June
2012. The financiers behind this company were heavily involved in HRT,
which also listed on this market.
* Global Atomic Fuels Corporation ("Global Atomic"), in which we invested
CDN$2 million. Global Atomic is a uranium exploration and development
company. It has exploration rights in Niger and has discovered an unusually
high-grade of uranium mineralisation on the surface of its licensed area.
Our investment was part of a round of CDN$25.5 million raised to develop
the asset.
* Union Minerals, a company established to exploit mineral prospects in
Uruguay and holds a number of attractive licences. We invested US$1
million. Union is currently raising new equity in a subsidiary holding its
iron ore interests and has attracted strong interest.
* Royal Resources is an Australian company with a large iron ore deposit in
South Australia, where we invested A$2 million. It is currently listed on
the ASX, but is considering an additional listing in London when market
conditions are more favourable.
Portfolio - Detail
The following is a list of the Company's current Investments (excluding those of
nil value).
Company Investment Business
(initial terms)
African Timber and Farming GBP750,000 for ordinary A Mozambique-based timber
shares. Further GBP256,000 company.
for ordinary shares
AmLib US$2m subscription for A Jersey based company
ordinary shares established in May 2000
to explore for gold,
diamonds and other
natural resources in
Liberia. AmLib holds one
mineral development
agreement and seven
exploration licences
covering a total surface
area of 3,400km ².
Astrakhan Oil US$2.5m for ordinary An oil development
shares company with licence
interests in the Volga
Basin / Caspian Sea,
Russia.
Brazil Potash US$2.5m in ordinary It has licences covering
shares 22.5m hectares in the
Amazon potash basin to
develop potash mines.
Buried Hill US$850,000 subscription An international oil and
for and US$2.7m gas exploration company
acquisition of ordinary focused on Caspian Sea
shares and West Africa which is
in advanced discussions
to conclude a farm-in
agreement with an oil
major to develop the
Caspian assets.
Caracara Silver Distribution in specie A Canadian company
from Homeland Uranium exploring for silver with
mineral rights in the
Princesa-Piluani silver
district of southern
Peru.
Celadon Mining Ltd GBP3.7m subscription in two Chinese Government backed
tranches company which has
acquired major coking
coal mines in China and
Mongolia.
Creso Exploration CDN$2.2m subscription for A gold and base metals
common stock. Further exploration company with
CDN$700,000 subscription prospects in Canada,
for common stock and Mexico and Guatemala.
warrants Creso is listed on the
TSX.
Cuprum Resources Acquired in an auction A Panamanian company
as a result of the which holds the
default by Dominion exploration licence over
Minerals on the US$2m the Cerro Chorcha Copper
secured bond held by the Project in Panama.
Company
Dominion Minerals US$1.5m subscription for A US-based copper and
(see Cuprum above) common shares and gold exploration and
warrants. Further US$2m development company
in a secured bond focused on its Cerro
Chorcha Copper Project in
Panama and its gold and
copper/gold ventures in
China. We have exercised
our charge over the
asset.
Eden Energy US$4.56m subscription for An Australian diversified
ordinary shares clean energy company with
interests in hydrogen
production, storage and
transport fuel systems,
together with coal-bed
methane licences in South
Wales. Eden is listed in
Australia.
Enhanced Oil CDN$4m subscription and A Houston-based enhanced
further subscription of oil recovery resources
CDN$1.6m for common stock company which controls
and warrants the largest undeveloped
natural helium/CO2
resource in North
America. Enhanced Oil
has acquired depleted
oilfields where
significant enhanced oil
recovery resources remain
and where CO2 flooding is
effective.
First Iron US$2m subscription for A Jersey-based mineral
(formerly RAM Resources) ordinary shares Further and asset development
US$1m loan stock company which controls a
100 per cent owned iron
ore mining property in
the Kurgan region of
Russia.
Global Atomic CDN$2m for ordinary A Canadian company with
shares exploration interests in
Niger, which has
discovered a high-grade
uranium deposit.
Gourmet Express US$3m subscription for A leading consumer
ordinary shares. Further products company
loan with warrants of specialising in the
US$600,000 production, distribution
and marketing of a wide
variety of frozen food
products, in particular
the frozen skillet meal
category.
HaloSource Acquired in exchange for US-based company with a
another investment leading technology for
purification of water at
point of use. The
company went public on
AIM in October 2010.
Homeland Uranium CDN$2.2m subscription for Exploration company with
common stock and warrants uranium and vanadium
exploration in the USA,
Africa and Peru The main
emphasis has been on
exploration for uranium
in Niger.
Ilika GBP2.5m subscription for A company spun out of the
ordinary shares University of Southampton
which specialises in the
development and
application of high
throughput, combinatorial
R&D techniques for the
discovery of new
materials. Ilika was
admitted to AIM in May
2010 and our holding
increased by a ratchet.
International Goldfields GBP1m subscription for IGS is an Australian
("IGS") (formerly Latin ordinary shares in Latin quoted company which
Gold) Gold. Our interest was controls gold exploration
acquired by IGS for cash assets in Australia. It
and shares purchased Latin Gold (our
original investment) and
thereby acquired mineral
rights in Brazil to a
previously mined area
where low-tech artisanal
miners have produced an
estimated 4.5m oz from
soils over the last 11
years.
Iona Energy CDN$2m for ordinary A now publicly traded
shares (TSX) Canadian company
with development
interests in the North
Sea.
iQur GBP0.5m subscription for A medical research
ordinary shares. Further company that is
GBP6,500 for ordinary developing a novel
shares vaccine platform,
initially focusing on the
Hepatitis virus.
Jordan Energy US$1.05m subscription for A company with rights to
ordinary shares extract large shale oil
deposits in Jordan.
Macusani Yellowcake Distribution in specie Explorer and developer of
(after merger with from Homeland Uranium uranium projects in Peru.
Southern Andes post year It also has silver/lead
end) - zinc projects in Peru.
The company is listed on
the TSX.
Manabi Minerals US$2m for ordinary shares A Brazilian iron ore
in the company, which is development company with
now listed on Tier 1 of a resource of 3.5bn
the BOVESPA (Brazilian tonnes of high-grade iron
Stock Market) ore in the Minas Gerais
province of Brazil. The
company is planning to
list on the Nuevo Mercado
of BOVESPA in June 2012.
Mediatainment including US$2m subscription for A US developer of 3D
Stream TV (formerly STV) common shares electronic entertainment
solutions and Google
Android tablets.
MinCore CDN$2.025m subscription Has large base metal
for ordinary shares deposits in Mexico - both
copper and molybdenum.
Mongolian Minerals CDN$1m and a further A Canadian exploration
CDN$2m for common shares and development company
focused exclusively on
Mongolia. The company is
currently developing a
high-quality thermal coal
asset called Khotgor, in
the north western portion
of the country. Current
resources at Khotgor are
575 million tonnes.
Nusantara Energy GBP2.25m subscription for Nusantara is developing a
shares and warrants large deposit (at least
490 million tonnes) of
thermal coal in Sumatra,
Indonesia and seeking to
acquire further coal
interests in Sumatra.
Following an extensive
drilling programme,
Nusantara has confirmed
that the resource is good
quality thermal coal in
thick seams very close to
the surface. This
deposit is ideally
located to supply the
market for coal-fired
power generation in South
East Asia, where demand
is strong. It is
currently exploring a
trade sale.
Petro Kamchatka Resources US$2m and further A Canadian based oil and
(formerly CEP Resources) US$1.875m subscription of gas exploration company
equity after the year-end which owns interests in
two exploration licences
in Eastern Russia. It is
publicly traded in
Canada.
Providence Resources EUR3.2m subscription for An Irish oil and gas
convertible loan notes. company with substantial
Further GBP1m in ordinary offshore exploration
shares interests in Ireland,
further offshore
interests in Nigeria and
(largely producing)
onshore and offshore
assets in the UK and USA.
Listed on AIM; the
convertibles are
currently listed in the
Cayman Islands.
Puma Hotels plc GBP1.95m subscription for Puma Hotels holds a
convertible preference portfolio of 20 leading
shares British conference and
leisure hotels.
Red Flat Nickel US$4.2 million investment The company controls two
in loan notes in a nickel laterite deposits
complex deal in Oregon. The St Peter
Port loan has partly
funded some exploration
of deposits on the two
fully owned tenements.
Following the loan
reaching its term, St
Peter Port has acquired a
majority equity interest
as well as improving the
security of the loan.
Royal Coal US$1m subscription for An American coal
ordinary shares producing company
approaching profitable
production. It since
went public through a
reverse takeover.
Royal Nickel CDN$4m subscription for A Canadian nickel
ordinary shares developer with a world-
class nickel deposit in
northern Quebec. The
company floated on the
TSX in Canada in December
2010.
Royal Resources A$2m subscription for A mineral exploration and
shares development company
operating in South and
Western Australia,
focused on iron ore.
Their flagship project is
the Razorback iron ore
deposit, 240km from
Adelaide. Listed on the
ASX
Seven Energy US$5m subscription for A Nigerian company with
ordinary shares major gas interests
planning to serve the
local heavy industry and
utility market.
Southern Andes Energy Distribution in specie Explorer and developer of
from Homeland Uranium uranium projects in Peru.
It also has silver/lead
- zinc projects in Peru.
The company listed on the
TSX in December 2010. It
merged with Macusani
Yellowcake (see above)
after the year end.
Specialist Energy Group GBP500,000 subscription for Specialist Energy Group
(Formerly Nviro) ordinary shares reversed into Nviro, an
AIM listed clean tech
company. SEG specialises
in engineering,
particularly boiler
pumps, for the power
sector.
TMO Renewables GBP2.5m subscription for A world leader in novel
ordinary shares ethanol fermentation
technology which produces
bio-ethanol from low-
grade sugar by means of a
new fermentation
technique with
significantly higher
yields and lower
investment cost.
Tuscany Energy CDN$1.4m subscription for A Canadian development
shares company focused on
horizontal drilling of
heavy oil in Alberta and
Saskatchewan. Listed on
the TSX
Tuscany International US$2.25m subscription for A (now) listed Brazilian
Drilling ordinary shares oil drilling services
company.
Union Agriculture US$2m subscription for Uruguayan farming company
ordinary shares. Further which is now the largest
US$1m in ordinary shares owner of agricultural
land in Uruguay and
applying capital and
agronomy expertise to
enhance its value. Union
is currently planning to
list in the USA.
Union Minerals US$1m subscription for Uruguayan mineral
ordinary shares exploration company and
holder of the largest
minerals exploration
portfolio in Uruguay
including iron ore, gold,
titanium, ferrochrome and
diamonds.
We also hold securities in Rock Well Petroleum, Bio-thermal Technologies,
Develica Asia Pacific, Continental Petroleum and China Molybdenum; these are
carried at nil or negligible value.
Top Ten Investments as at 31 March 2012
The following table lists our top ten investments by value as at 31 March 2012:
Where we hold more than one instrument in a company, the holdings have been
aggregated.
Gain/
Company Cost Valuation (Loss) Status
GBP 000's GBP 000's GBP 000's
Red Flat Nickel Corp 2,271 6,255 3,984 Unquoted
Buried Hill Energy (Cyprus) Plc 1,749 5,791 4,042 Unquoted
Nusantara Energy Plc 2,361 3,682 1,321 Unquoted
Brazil Potash Corp 1,526 3,440 1,914 Unquoted
Ilika Technologies Limited 2,500 3,371 871 Listed
Seven Energy Limited 3,121 3,128 7 Unquoted
Mongolia Minerals Corporation 1,895 2,945 1,050 Unquoted
Union Agriculture 1,878 2,775 897 Unquoted
Astrakhan Oil Corporation Limited 1,550 2,424 874 Unquoted
Cuprum Resources (arising from loan to 1,211 2,189 978 Unquoted
Dominion Minerals)
--------- --------- ---------
Total 20,062 36,000 15,938
--------- --------- ---------
Commentary on Other Significant Developments
There are many companies in the portfolio which look very promising and which
should show significant uplifts. We highlight here some of the larger
investments where there has been specific relevant news and other significant
developments.
There have been important developments in two companies in the portfolio, Red
Flat Nickel and Dominion Minerals. In both of these cases we have now taken
control of the asset, in one case with an 80 per cent equity interest and the
other 100 per cent. In each case, we had held secured loan notes. These
companies were unable to repay their loans on the maturity date and the equity
interest we have acquired arose from these defaults. We are now working to
exploit the considerable potential which each of them offer.
Red Flat Nickel has licences over two nickel laterite deposits in Oregon. The
St Peter Port loan partly funded some exploration of deposits, but the company
had management issues. Following a restructuring of the company's balance
sheet, management and ownership, we now hold 80 per cent of the company's
ordinary shares in addition to our loan, the repayment due from this loan now
being more than US$14 million. We have agreed, as part of this re-structuring,
not to determine the loan earlier than October 2012. We are now in a position
to organise the development of these substantial nickel laterite deposits. We
have recruited a management team with strong expertise in the exploitation of
nickel laterite and are currently seeking outside funding to develop this
exciting prospect. We have revalued our investment in Red Flat Nickel to
reflect these developments.
Cuprum Resources is a Panamanian company which holds the exploration licence
over the Cerro Chorcha copper project in Panama. This was the principal asset
of Dominion Minerals and we had advanced a loan of US$2 million secured over
Dominion's shares in Cuprum Resources. Dominion Minerals had difficulties with
the Panamanian authorities which culminated in a court suspending the licence
for Cerro Chorcha because of environmental objections and Dominion entered into
a dispute with the Panamanian government. As a consequence, it was unable to
re-pay its loan to us on the due date. We have exercised our security and,
following an auction process, satisfied the principal of our loan through
acquiring its interest in the shares of Cuprum Resources. The licence for this
concession remains suspended, but we are working towards having it restored.
When the licence was suspended, we wrote off the original equity investment of
US$1.5 million in Dominion in its entirety, but have written up the value of our
shares in Cuprum reflecting progress made.
Gourmet Express, the US frozen food manufacturer, has re-structured its balance
sheet. We had previously written off our US$3 million investment in the equity
of the company but retained the valuation of the loan we hold in it. The
company has re-gained its contract with Walmart and is planning an IPO in the
Autumn. We have therefore written back the value of our equity holding to
US$2.3 million.
Stream TV Networks, a subsidiary of Mediatainment (formerly STV), has developed
a 3D TV platform, building on intellectual property it has licensed from
Philips. Philips closed their television division a few years ago and Stream
recruited some of their research and development team. It has significantly
enhanced the platform work done by Philips and created its own solution to the
provision of 3D TV images. Its 3D system works differently to most of the
competitors': it projects (and the mind super-imposes), images from both the
back and front of the screen rather than from lateral positions across the
screen. As a result, it can offer 3D without glasses, from a wide range of
viewing positions and without making the viewer uncomfortable after a few
minutes. It has recently contracted with a major manufacturer to supply units
under licence to three major customers in East Asia and is currently raising
funds at a large premium to our previous holding valuation.
Nusantara Energy, which has a large coal resource in Sumatra, Indonesia, has
been negotiating a trade sale for some time. To facilitate this sale, it has
been seeking to acquire an exploration licence for an area beyond its current
licensed area, but the process has been slow. The recent re-financings,
discussed above have been accompanied by some board changes to reinvigorate
activity. We have been actively involved with other major investors in
effecting these changes. To reflect the slower progress than hoped, we have
reduced the value of the holding from 43 pence per share to 30 pence, a
reduction of GBP1.6 million.
We have re-valued Union Minerals to US$2 million from our initial investment of
US$1 million as a result of its planned fundraising in its iron ore subsidiary
discussed above. As also discussed above, RAM Resources (now re-named First
Iron) was planning to float last summer. It is currently raising finance at a
reduced valuation and we have therefore written down our holding by US$2
million.
There have been a number of other significant developments in the portfolio
during the year, which led us to re-value and which we have previously reported
upon. There are many companies which could achieve large increases in value
from our current holding value if progress continues as it has done. We would
mention particularly Astrakhan Oil, Brazil Potash, Buried Hill, Global Atomic
Fuels, Seven Energy, TMO Renewables and Union Agriculture.
Pipeline and Prospects
The portfolio has developed well and many of the companies in it have added
significantly to their value during our investment period. We fully expect that
process to continue. Inevitably, the timing of exit for the Company will depend
upon market conditions and opportunities arising and early liquidation would be
unlikely to be on good terms. Mostly these liquidity events are outside of our
control. Where we have taken control of the investee company, we have more
opportunity to influence the process and have exciting prospects to achieve
value gains in these cases.
We are very cognisant of investors' desire to see cash returned where it cannot
be deployed to great effect. At the same time, we can see reduced competition
in pre-IPO financing, which has enabled us to strike some exceptional deals over
the last few years, exploiting the large arbitrage gap between pre-IPO and
public companies. We do not see that gap closing in the short-term. If the
continuation vote is passed, we will therefore focus both on seeking to harvest
the results of our investments as companies in the portfolio reach liquidity
events and to re-invest where we see compelling near-term return opportunities
which can generate significant value for shareholders.
Tim Childs as Investment Advisor to
St Peter Port Investment Management Limited
St Peter Port Capital Limited
Consolidated Statement of Financial Position
As at 31 March 2012
As at 31 March 2012 As at 31 March 2011
Assets GBP 000 GBP 000
Current Assets
Financial assets designated at fair
value through profit or loss 61,108 73,095
Trade and other receivables 32 5,839
Cash and cash equivalents 11,610 12,649
_______ _______
Total assets 72,750 91,583
_______ _______
Liabilities
Current liabilities
Financial liabilities designated at
fair value through profit or loss - 3,185
Trade and other payables 440 3,418
________ ________
Total liabilities 440 6,603
________ ________
Net assets 72,310 84,980
======= =======
Equity
Capital and reserves attributable to
equity holders of the company
Share capital - -
Share premium - -
Special reserve 64,963 68,498
Treasury reserve 3,498 2,733
Retained earnings 3,849 13,749
_______ _______
Total Equity 72,310 84,980
======= =======
Net asset value per share (pence per
share) 105.99 120.80
The accompanying notes 1to 7 form an integral part of these financial statements
St Peter Port Capital Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2012
Year ended Year ended
31 March 2012 31 March 2011
GBP 000's GBP 000's
Income
Net changes in fair value on financial assets (5,939) 20,683
Gains on foreign exchange 201 62
Interest income 179 110
Other income 417 -
________ ________
Net investment (loss)/income (5,142) 20,855
Administrative expenses (2,647) (2,387)
Withholding tax - (3,399)
________ ________
Net (loss)/income from operations before finance
costs (7,789) 15,069
Interest expense - (1)
________ ________
Total finance costs - (1)
________ ________
(Loss)/profit for the year (7,789) 15,068
======= =======
Basic and diluted return per Ordinary Share
(pence) (0.1130) 0.2098
The accompanying notes 1to 7 form an integral part of these financial statements
St Peter Port Capital Limited
Consolidated Statement of Changes in Equity
For the year ended 31 March 2012
Share Special Treasury Revenue
Premium Reserve Reserve Reserve Total
GBP 000's GBP 000's GBP 000's GBP 000's GBP 000's
Opening balance - 68,498 2,733 13,749 84,980
Loss for the year - - - (7,789) (7,789)
Dividends paid - (1,407) - (2,111) (3,518)
Repurchased shares held in treasury - - 765 - 765
Ordinary shares repurchased - (2,128) - - (2,128)
_______ _______ _______ _______ _______
Balance at 31 March 2012 - 64,963 3,498 3,849 72,310
======= ======= ======= ======= =======
FOR THE YEAR ENDED 31 MARCH 2011
Opening balance - 70,898 1,535 (1,319) 71,114
Profit for the year - - - 15,068 15,068
Repurchased shares held in treasury - - 1,198 - 1,198
Ordinary shares repurchased - (2,400) - - (2,400)
_______ _______ _______ _______ _______
Balance at 31 March 2011 - 68,498 2,733 13,749 84,980
======= ======= ======= ======= =======
The accompanying notes 1 to 7 form an integral part of these financial
statements
St Peter Port Capital Limited
Consolidated Statement of Cash Flows
For the Year Ended 31 March 2012
Year ended Year ended
31 March 2012 31 March 2011
Cash flows from operating activities GBP 000's GBP 000's
Interest and investment income received 576 573
Income from legal settlement 395 -
Interest paid - (1)
Operating expenses paid (2,486) (5,608)
Prepayments to brokers - (2,475)
Sale of investments 14,641 14,771
Purchase of investments (9,274) (1,421)
________ ________
Net cash generated in operating activities 3,852 5,839
________ ________
Cash flows from financing activities
Dividends paid (3,518) -
Purchase of own shares (1,363) (1,202)
________ ________
Cash outflow from financing activities (4,881) (1,202)
________ ________
Cash (outflow)/inflow for the year (1,029) 4, 637
Exchange losses during the year (10) -
Opening cash and cash equivalents 12,649 8,012
________ ________
Closing cash and cash equivalents 11,610 12,649
======= ======
The accompanying notes 1 to 7 form an integral part of these financial
statements
1. General Information
St Peter Port Capital Limited is a Guernsey registered, closed ended investment
company, listed on the London Stock Exchange's Alternative Investment Market
(AIM). St Peter Port's investment strategy is primarily to invest in unquoted
companies which are close to a liquidity event. The funds invested by St Peter
Port will often provide the working capital to make such an event possible. The
event could be an IPO, trade sale or repayment of a bridging loan (typically
with warrants or other form of participation) from a fund-raising achieved by
the investee at a higher price after the bridging event has occurred.
The universe for investment is principally companies across a broad range of
sectors and geography expecting to achieve a liquidity event in the months after
the Company's investment. However, in current conditions, it may also include
companies which are already publicly quoted but where the equity value has been
heavily eroded by the current market malaise. The initial focus has been on
companies targeting UK, US and Commonwealth stock markets, but companies looking
to float on other exchanges will also be considered.
The company's website is www.stpeterportcapital.gg.
2. Financial Information
The report on the full financial statements for the year ended 31 March 2012 has
been signed and the financial information presented in this results announcement
is an extract of these audited accounts. Whilst the financial information
included in this final results announcement has been computed in accordance with
IFRS, this announcement does not itself contain sufficient information to comply
with IFRS.
3. Earnings Per Share
The calculation of basic (loss)/earnings per share is based on the net
(loss)/profit from continuing operations for the year of ( GBP7,789,000) (2011:
GBP15,068,000) and on 68,948,050 (2011: 71,813,700) shares being the weighted
average number of shares in issue during the year. There is no difference
between basic earnings per share and diluted earnings per share.
4. Net Asset Value per Share
31 March 2012 31 March 2011
GBP 000's GBP 000's
Net Asset Value 72,310 84,980
Ordinary Shares in issue 68,222 70,350
Net Asset Value per Ordinary Share (pence per
share) 105.99 120.80
The Net Asset Value per Ordinary Share is based on the Net Asset Value at the
end of the reporting period and on 68,221,500 (2011: 70,350,000) Ordinary Shares
being the shares in issue at the year end.
5. Taxation
The Company has not suffered corporate income taxation.
6. Subsequent Events
The Company made one further investment following the year end; GBP0.14 million in
African Timber and Farming.
7. 2012 Report and Accounts
Copies of the 2012 accounts will be posted to shareholders in due course. Copies
of this announcement (and the 2012 accounts in due course) are available from
the Company at PO Box 119, Martello Court, Admiral Park, St Peter Port,
Guernsey, GY1 3HB or alternatively on the Company's website at:
www.stpeterportcapital.gg.
This announcement is distributed by Thomson Reuters on behalf of
Thomson Reuters clients. The owner of this announcement warrants that:
(i) the releases contained herein are protected by copyright and
other applicable laws; and
(ii) they are solely responsible for the content, accuracy and
originality of the information contained therein.
Source: St Peter Port Capital Limited via Thomson Reuters ONE
[HUG#1614729]
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