Terra Capital PLC Fund Manager's Update Q1 2017 (2538G)

TIDMTCA

RNS Number : 2538G

Terra Capital PLC

25 May 2017

Terra Capital Plc

Fund Manager's Update Regarding Q1 2017

Terra Capital Plc. ('TCA' or the 'Fund'), the AIM quoted investment company focused on investing in value opportunities globally, primarily in frontier markets is pleased to report that it has received the latest report from Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager'), covering its activities in Q1 2017.

The Fund Manager's update covering Q1 2017 is reproduced below.

Terra Partners Asset Management Limited

Portomaso Tower, 8/5A

Portomaso Avenue

St Julian's STJ 4011 MALTA

Telephone [phone]

Regulated by the Malta Financial Services Authority, Reg. No. C 56353

Registered Investment Adviser with the US Securities & Exchange Commission

May 25, 2017

Terra Partners Asset Management Limited ('TPAM' or the 'Fund Manager') presents its First Quarter 2017 Update to shareholders regarding the activities of Terra Capital Plc. ('TCA' or the 'Fund'), an AIM quoted investment trust investing globally in value opportunities, primarily in frontier markets. The opinions expressed in this document represent the views of TPAM, the Fund Manager of TCA, at the time of its preparation. This document has been prepared from publicly available information, internally developed data and other sources believed to be reliable, and all reasonable precautions have been taken to ensure its accuracy; however, no representation or warranty about the accuracy of the information contained in, or of any omissions from, this document or any supplementary information made available to any interested party or its advisers is implied, and any liability in respect of such information or omissions is hereby expressly disclaimed.

Note that the information herein is not all of the information TPAM had available, or which it relied upon, when making its initial and continuing investment decisions. TPAM reserves the right to amend the information provided herein, and its opinions, at any time, and undertakes no obligation (express or implied) to provide any recipient with any further information or to correct any inaccuracies or omissions which may subsequently become apparent. Readers are advised that a fund managed by TPAM, and some officers and employees of TPAM currently own positions in TCA. This document is for information purposes only and it is not intended as an offer or solicitation regarding the purchase or sale of any security or investment vehicle.

Investments in Emerging and Frontier markets usually suffer from liquidity problems, and are often affected by governmental interference in the free market, local politics and vagaries in commodity and currency prices; therefore, their prices can be very volatile. This means that it can be difficult to acquire and subsequently sell the shares "noted" in TCA's portfolio. All current and prospective investors should be aware that PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE RESULTS.

All solicitations or offers regarding TCA are made and transacted on the public market of the AIM Section of the London Stock Exchange and occur by reference to TCA's Offering Memorandum and the document titled "Tender Offer to Purchase Ordinary Shares at the Tender Price and Restructuring and Amendment to the Directors' Incentive Plan and Change of name to Terra Capital PLC and Notice of Extraordinary General Meeting" of the April 30, 2012 (the "Circular") as amended by subsequent resolutions, primarily the one passed at the January 26, 2015 EGM. Documents are accessible on TCA's website www.terracapitalplc.com in the "Investor Centre" tab under the Documents and Announcements section of the file "AIM Rule 26". This website contains important information which may supplement, modify or differ from the information contained herein and no prospective investment decision should be considered before careful reading of documentation found on TCA's website.

By accepting this document, you agree to be bound by the foregoing limitations.

TCA's 1(st) Quarter 2017 Return & Portfolio

The Fund's NAV increased to $1.076 at March 31, 2017 from $1.016 as of December 31, 2016, a net total return of 5.9% for the quarter.

The Fund's investment level (equity, fixed income and hedging) increased from 86.3% at December 31 (including commitment to Terra Argentine Fund, L.P.) to 98.5% at March 31. The large increase in invested level is the byproduct of the decrease in cash used to fund the recent tender offer.

Specific Areas of Investment

Americas

The allocation to the Americas increased from 25.5% to 30.9% and is the Fund's largest regional allocation. The Fund increased its position in Ferreycorp (Peru) and decreased its position in Refineria La Pampilla (Peru).

Europe

The Fund's exposure to Europe increased from 18.9% to 21.7% and is the second largest regional allocation. The Fund increased its positions in Forte (Poland) and Speedy (Bulgaria) and decreased its position in Kernel (Ukraine).

Middle East

The Fund's exposure to the Middle East increased on the quarter from 16.2% to 17.4%. The Fund initiated new positions in BBK (Bahrain) and Amanat Holdings (UAE) and increased its position in Bank Muscat (Oman), Ooredoo (Oman), and Oman Cement (Oman). The fund decreased its position in Blom Bank (Lebanon), Abu Dhabi Commercial Bank (UAE), and Air Arabia (UAE). The fund liquidated its position in Doha Bank (Qatar).

Asia

The Fund's exposure to Asia decreased from 16.3% to 14.5%. The Fund liquidated its positions in Emperador (Philippines), Lotte Chilsung (Korea), Kumho Petro (Korea), and Shinyoung Securities (Korea). It decreased its positions in Bank of Georgia (Georgia) and Square Pharma (Bangladesh). The Fund increased its positions in Great Wall Motor Company (China), Qingling Motors (China), Travelers International Hotels (Philippines), and Belle Corp (Philippines).

Africa

The allocation to Africa increased from 9.4% to 14.0%. The fund increased its positions in Coop Bank (Kenya), Residences Dar Saada (Morocco), Onatel (Burkina Faso), Emaar Misr for Development (Egypt), and Nigerian Breweries (Nigeria). It initiated a new position in African Oxygen (South Africa). The fund liquidated its position in UAC (Nigeria).

Fund Details

The following page details the Fund's holdings, changes from the prior quarter, and the total return of each company's shares over the quarter in both U.S. dollars and local currency. The numbers provided are based on TPAM's internal calculations:

 
                                                                                                          1Q        1Q 
                                                                                  %          Change       US$       LC$ 
                                                                   Market          of       in Share     Total     Total 
 Region      Country        Security                  Shares        Value          Fund     Holdings     Return    Return 
----------  -------------  ------------------------  -----------  -------------  -------  -----------  --------  -------- 
                            Co-operative 
 AFRICA      Kenya           Bank of Kenya             8,700,000   1,177,158.10    1.78%     Increase     5.09%     5.68% 
                 Residences Dar 
  Morocco         Saada                                   60,083   1,046,335.92    1.58%     Increase    -4.65%    -5.41% 
  South 
   Africa        Holdsport Ltd.                          230,501   1,030,794.00    1.56%    No Change     4.33%     1.82% 
  Burkina 
   Faso          Onatel BF                                56,809   1,008,721.36    1.52%     Increase    -6.78%    -8.33% 
  South          African Oxygen 
   Africa         Ltd.                                   660,000     973,995.48    1.47%          New     6.78%     4.21% 
                 Emaar Misr for 
  Egypt           Development                          6,761,000     955,131.31    1.44%     Increase   -12.46%   -12.07% 
  Tunisia        One Tech Holding                        248,305     948,235.95    1.43%    No Change     3.53%     2.47% 
                 Automobile reseau 
                  tunisien et 
  Tunisia         services                               246,934     919,181.72    1.39%    No Change     9.57%     8.45% 
  Tunisia        Tunisie Leasing                          87,818     616,050.51    0.93%    No Change   -11.95%   -12.85% 
  South          Onelogix Group 
   Africa         Ltd.                                 2,128,792     507,727.90    0.77%    No Change     0.39%    -2.09% 
                 Nigerian Breweries 
  Nigeria         PLC                                    244,747      98,678.91    0.15%     Increase    -9.93%   -12.44% 
  Nigeria        UAC of Nigeria                                0              0    0.00%   Liquidated   -20.41%   -22.67% 
 -------------  -----------------------------------  -----------  -------------  -------  -----------  --------  -------- 
                                                                      9,282,011   14.03% 
 
 AMERICAS    Brazil         XXXX                         745,146   4,498,237.04    6.80%    No Change 
                 Terra Argentine 
  Argentina       Fund LP                              1,700,000   2,808,654.66    4.25%    No Change 
                 National Commercial 
  Jamaica         Bank Jamaica                         5,431,719   2,619,743.94    3.96%    No Change    25.41%    24.80% 
                 IRSA Inversiones 
                  y represent. 
  Argentina       SA GDR RCTP                             81,433   1,995,922.83    3.02%    No Change    32.92%    32.92% 
                 Copa Holdings 
  Panama          SA - Class A                            15,265   1,713,496.25    2.59%    No Change    24.14%    24.14% 
                 Terra Argentine 
  Argentina       Fund LP Commitment                   1,700,000   1,700,000.00    2.57%    No Change     0.00%     0.00% 
                 Scotia Group 

  Jamaica         Jamaica                              5,429,031   1,652,418.33    2.50%    No Change     6.65%     6.12% 
  Peru           Ferreycorp SAA                        2,107,381   1,322,379.96    2.00%     Increase    24.33%    20.71% 
                 Jamaica Money 
                  Market Brokers 
  Jamaica         - Jamaica                            8,500,000   1,209,976.00    1.83%    No Change    26.42%    25.79% 
                 Refineria La 
  Peru            Pampilla SA                         12,543,116     906,684.79    1.37%     Decrease     3.88%     0.86% 
 -------------  -----------------------------------  -----------  -------------  -------  -----------  --------  -------- 
                                                                     20,427,514   30.88% 
 
 ASIA        Bangladesh     Square Pharma                522,707   1,810,098.27    2.74%     Decrease    10.14%    11.56% 
  Bangladesh     Summit Power                          2,596,398   1,336,214.80    2.02%    No Change    10.20%    11.62% 
  Philippines    Belle Corp                           14,984,000   1,193,944.22    1.80%     Increase    26.28%    27.97% 
                 Kcell JSC - 
  Kazakhstan      GDRs                                   318,630   1,147,068.00    1.73%    No Change    12.50%    12.50% 
  China          Qingling Motors                       3,362,615   1,094,687.15    1.65%     Increase     7.42%     7.66% 
  Philippines    RFM Corporation                      11,003,750   1,052,151.39    1.59%    No Change    -5.45%    -4.20% 
                 Travellers International 
  Philippines     Hot                                 16,131,000   1,028,270.92    1.55%     Increase    -4.01%    -2.74% 
                 Great Wall Motor 
  China           Company-H                              609,600     694,193.56    1.05%     Increase    21.96%    22.24% 
                 Bank of Georgia 
  Georgia         Holdings Plc                             5,280     213,153.86    0.32%     Decrease     9.70%     7.98% 
                 Ardent Leisure 
  Australia       Group                                        0              0    0.00%   Liquidated   -17.15%   -21.79% 
  Philippines    Emperador Inc.                                0              0    0.00%   Liquidated   -12.21%   -11.05% 
                 Lotte Chilsung 
                  beverage Co 
  Korea           - Pref                                       0              0    0.00%   Liquidated    -5.57%   -12.54% 
                 Kumho Petro 
                  Chemical Co 
  Korea           - PFD                                        0              0    0.00%   Liquidated     2.80%    -4.78% 
                 Shinyoung Securities 
  Korea           LTD                                          0              0    0.00%   Liquidated     7.75%    -0.20% 
 -------------  -----------------------------------  -----------  -------------  -------  -----------  --------  -------- 
                                                                      9,569,782   14.47% 
 
                            Any Security 
                             Printing Co.Plc 
 EUROPE      Hungary         (AlamiNyomda)               553,679   2,554,646.66    3.86%    No Change    19.29%    17.41% 
                 Galenika-Fitofarmacija 
  Serbia          DP                                      79,115   1,866,294.11    2.82%    No Change     1.69%     0.74% 
                 Komercijalna 
  Macedonia       Banka AD Skopje                         28,845   1,399,381.45    2.12%    No Change     0.23%    -1.91% 
  Russsia        X5 Retail GDR                            39,416   1,326,348.40    2.00%    No Change     3.70%     3.70% 
  Slovenia       Gorenje Velenje                         175,399   1,309,809.57    1.98%    No Change    18.42%    16.76% 
                 FABRYKI MEBLI 
  Poland          FORTE SA                                58,000   1,200,105.92    1.81%     Increase    14.02%     7.96% 
                 Kernel Holding 
  Ukraine         SA                                      61,923   1,116,531.62    1.69%     Decrease    18.27%    11.98% 
  Italy          QF Polis                                  1,789   1,072,579.92    1.62%    No Change     7.12%     5.51% 
  Bulgaria       Speedy AD                                42,318     946,401.57    1.43%     Increase    16.54%    13.10% 
                 Crnogorski Telekom 
  Montenegro      a.d.                                   222,624     641,237.26    0.97%    No Change    -2.89%    -4.26% 
                 Silvano Fashion 
  Estonia         Group AS                               148,299     461,959.69    0.70%    No Change     0.05%    -1.35% 
                 QF BNL Portfolio 
  Italy           IMM                                        845     461,959.69    0.70%    No Change     1.23%     0.00% 
 -------------  -----------------------------------  -----------  -------------  -------  -----------  --------  -------- 
                                                                     14,357,256   21.70% 
 
 MIDDLE                     Blom Bank GDS 
  EAST       Lebanon         ord B shs                   127,272   1,616,354.40    2.44%     Decrease    16.51%    16.51% 
  Lebanon        Solidere- GDRs                          114,499   1,052,249.03    1.59%     Increase    -8.10%    -8.10% 
                 ABU DHABI COMMERCIAL 
  U.A.E.          BANK                                   558,000   1,033,080.13    1.56%     Decrease     4.35%     4.35% 
  Oman           Bank Muscat                           1,045,455   1,042,739.08    1.58%     Increase    -9.28%    -9.28% 
  Oman           Oman Refreshment                        175,000     981,818.18    1.48%    No Change     4.87%     4.87% 
                 Al Meera Consumer 
  Qatar           Goods                                   21,218     981,273.50    1.48%    No Change     1.08%     1.08% 
  Oman           OOREDOO                                 649,000     910,285.71    1.38%     Increase   -11.82%   -11.82% 
  Bahrain        BBK                                     900,000     686,965.50    1.04%          New    -1.50%    -1.50% 
  Oman           Oman Cement                             566,950     739,243.90    1.12%     Increase    12.24%    12.24% 
                 Amanat Holdings 
  U.A.E.          PJSC                                 2,400,000     725,312.42    1.10%          New    13.15%    13.15% 
                 Gulf Hotel Group 
  Bahrain         b.s.c.                                 488,700     758,328.05    1.15%     Increase     4.45%     4.45% 
                 Gulf Warehousing 
  Qatar           Company                                 40,750     586,411.45    0.89%    No Change    -3.57%    -3.57% 
  U.A.E.         Air Arabia PJSC                       1,473,500     425,252.53    0.64%     Decrease   -15.04%   -15.04% 
  Qatar          Doha Bank QSC                                 0              0    0.00%   Liquidated     1.77%     1.77% 
 -------------  -----------------------------------  -----------  -------------  -------  -----------  --------  -------- 
                                                                     11,539,314   17.44% 
 
   Total Equity 
    Holdings                                                         65,175,877   98.52% 
 
   Cash                                                                 979,121    1.48% 
 
   Total Fund                                                        66,154,997 
 

* These figures were prepared by the Fund Manager based on its internal records and calculations.

RESPECTFULLY SUBMITTED BY:

Terra Partners Asset Management Limited

Portomaso Tower, 8/5A, Portomaso Avenue,

St. Julian's STJ 4011 MALTA

Regulated by the Malta Financial Services Authority, Reg. No. C 56353

Registered Investment Adviser with the US Securities & Exchange Commission

Contact: Galileo Fund Services Limited (Administrator)

Ian Dungate or Suzanne Jones

[phone]

Panmure Gordon (Nominated adviser and corporate broker)

Paul Fincham or Jonathan Becher

[phone]

NOTES:

Terra Capital Plc is an AIM quoted investment trust focussed on generating high absolute returns while ensuring volatility is kept to a minimum. The fund predominantly invests in under-researched and under-valued companies. The Fund Manager targets companies that are trading at less than their intrinsic worth and so, aside from any potential growth prospects, provide scope for capital appreciation as a result of a reversion towards underlying value. Investments are also made in companies which are viewed as fair value but offer opportunities for growth at a reasonable price. Due to inherent market inefficiencies, the Fund Manager believes many such 'value' opportunities can be found in Frontier Markets and utilises in-house teams of analysts on the ground in areas of interest to investigate suitable opportunities rather than rely on third party research.

This information is provided by RNS

The company news service from the London Stock Exchange

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May 25, 2017 09:00 ET (13:00 GMT)