TIDMCRV
RNS Number : 3629Q
Craven House Capital PLC
29 February 2016
29 February 2016
Craven House Capital Plc ("Craven House" or "the Company")
Interim Report for the period ended 30 November 2015
Highlights
-- Net Asset Value was GBP4.6m compared to GBP4.7m at the year ending May 2015.
For further information please contact:
Craven House Capital Plc Tel: 020 7002 1027
Alexandra Eavis
Company Secretary
www.Cravenhousecapital.com
SPARK Advisory Partners Tel: 0203 368 3550
Limited
Nominated Adviser
Matt Davis/Mark Brady
www.Sparkadvisorypartners.com
CHAIRMAN'S STATEMENT
As an investment company with a variety of assets located in the
emerging markets, we have spent this period focusing on evaluating
our current portfolio companies' ability to withstand the current
market turmoil whilst at the same time conducting a thorough review
of the emerging market economic landscape.
While some of our portfolio companies in South Africa and Brazil
have been battered by rapidly falling currencies, political scandal
and capital flight, we have been impressed by their overall
resilience. Our NAV has dipped marginally as a result of currency
fluctuation but overall we believe our existing investments will
weather this storm and come out the other side as stronger
companies better prepared for future expansion. While we do not see
any imminent exits we are comfortable holding on to our positions.
Perhaps more importantly our strategic review has led us to the
conclusion that once in an economic cycle opportunities are now
available in emerging markets and we intend to increase both our
capacity to invest and our exposure to markets and companies whose
valuations have been reduced dramatically over the past year. While
we know we are incapable of calling a bottom or predicting the near
future, we do believe that the next year or two will present
excellent opportunities to enter or increase our presence in
markets with cyclically low entry points. To this end, during the
period, we announced a new GBP30m structured stock subscription
agreement with GEM and have recently announced our intention to
raise further new capital. Whilst there can be no guarantee that
any capital investment will be made, discussions with prospective
new investors continue to progress well.
Emerging markets are sensitive to a number of variables. Our
view is that the two most important variables after political
stability and the rule of law are international capital flows and
commodity prices. Our assessment is that in many markets the
adherence to the rule of law and political stability are rising
while capital flight is increasing and falling commodity prices are
accelerating. Capital flight is painful for emerging economies.
During the great commodity bull run many emerging economies
benefited from inward capital flows. These include foreign currency
denominated purchases of raw materials as well as financial capital
flooding the local markets in search of growth, higher interest
rates or in many cases the pursuit of a "riskless carry trade".
Investors and speculators alike poured dollars, euros and pounds
into Brazil, Angola, and Nigeria to the point that, as recently as
two years, ago all three governments had policies designed to stop
or slow the flow of capital into their economies for fear of
domestic inflation. Now these very same countries are desperate to
shore up their reserves and prop up their currencies.
This situation is further exacerbated by the modern financial
services industry's fixation on indexing and asset allocation.
Capital aggregators and allocators in distant lands, together with
their clients, determine their exposure to "emerging markets" based
as much on headlines as economics. If emerging market funds managed
in Chicago and Edinburgh are hit with redemptions from its
customers it effects the valuation of shares listed in Lusaka, Rio
and Nairobi. If hundreds of hedge funds borrow Yen to buy Niara,
Kwansa and Reals and then the carry trade unravels small businesses
in Legos, Luanda and Rio feel the pain as their access to capital
dries up. While the economy may slow marginally, the capital
available for transactions, expansion and day-to-day business dries
up at a much faster rate than the changes in the underlying economy
necessitate.
In the past year a slowdown in China and resulting commodity
price collapse combined with the expectation that the United States
Federal Reserve Board will raise interest rates resulted in a rapid
exodus of capital from many emerging markets. In several markets
the stock market multiples have cratered while the currencies
collapsed in dollar terms. This means that companies are selling at
much lower multiples while the cost of buying the shares in local
currency has dropped dramatically. The valuation of private
companies has been even further constrained by the lack of
liquidity in the marketplace.
If an investor entered the market at or near the top it is a
painful period. However, a new investor with fresh capital is now
presented with a plethora of buying opportunities. Our view is that
many emerging economies have experienced an overdue and well
deserved correction. Institutional capital spent the last decade
chasing emerging market growth and yield with free money provided
by developed world policy makers. Over a decade billions flooded
into markets ill equipped to withstand the onslaught of hot capital
while the commodity bull market raged on. These same economies were
even less equipped to handle the capital flight, which withdrew
from the market much faster than it entered. Everyone from finance
ministers to shopkeepers have been caught up in the riptide of
capital flight. We believe this has created a once in thirty-year
opportunity to invest in good companies.
Craven House is at its core a deep value investor.
-- .
CRAVEN HOUSE CAPITAL PLC
INCOME STATEMENT
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2015
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
CONTINUING OPERATIONS
Gross Portfolio return (38) (469) (705)
Administrative expenses (80) (96) (227)
OPERATING (LOSS) (118) (565) (932)
Finance costs 2 (9) (8) (27)
Finance income 5 28 48
------------ ------------ ----------
(LOSS) BEFORE INCOME
TAX (122) (545) (911)
Income tax - - -
------------ ------------ ----------
(LOSS) FOR THE PERIOD (122) (545) (911)
============ ============ ==========
Earnings per share
expressed
In pence per share:
Basic and diluted 6 (0.02) (0.07) (0.11)
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2015
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
(LOSS) FOR THE PERIOD (122) (545) (911)
OTHER COMPREHENSIVE - - -
INCOME
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD (122) (545) (911)
============ ============ ==========
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2015
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2015 2014 2015
(Unaudited) (Unaudited) (Audited)
GBP'000 GBP'000 GBP'000
ASSETS
NON-CURRENT ASSETS
Investments at fair
value through
profit or loss 4 4,635 5,626 4,673
------------ ------------ ----------
4,635 5,626 4,673
------------ ------------ ----------
CURRENT ASSETS
Trade and other receivables 337 116 312
Cash and cash equivalents 146 296 217
------------ ------------ ----------
483 412 529
------------ ------------ ----------
TOTAL ASSETS 5,118 6,038 5,202
============ ============ ==========
EQUITY
SHAREHOLDERS' EQUITY
February 29, 2016 02:23 ET (07:23 GMT)
At the period end the Company held shares in Royalty Sports
Brands Limited as included in unquoted investments. Mark Pajak was
a Director of Royalty Sports Brands Limited during the period.
At the period end, included in other receivables, is an amount
of GBP220,540 owed to the Company by Royalty Sports Brands
Limited.
Investment in Pressfit Holdings Plc
At the period end the Company held shares in Pressfit Holdings
Plc and a convertible loan was owed to the Company, both of which
were included in unquoted investments. Mark Pajak was Chairman of
Pressfit Holdings Plc during the year
9. EVENTS AFTER THE REPORTING PERIOD
On 5 February 2016 it was announced that Miss A N Eavis had
resigned from the Board of Directors with immediate effect and was
to be replaced with Mr C Morrison. Miss Eavis will remain as
Company Secretary.
On 5 February 2016, at a General Meeting, various resolutions
were passed which approved an increase in the authorised share
capital of the Company.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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(END) Dow Jones Newswires
February 29, 2016 02:23 ET (07:23 GMT)
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