TIDMCRV
RNS Number : 1565G
Craven House Capital PLC
28 February 2018
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Craven House Capital Plc
("Craven House" or the "Company")
Interim Report for the period ended 30 November 2017
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED 30
NOVEMBER 2017
For the half year ending 30 November 2017, Craven House Capital
ended the period with a Net Asset Value of $24.7m which equates to
$9.89 per share. This is a slight decrease on the $25.3m NAV
reported at the year end in May; the decrease resulting from
operating costs during the period. Some small increases and
decreases in the value of our portfolio, which are outlined further
below, saw the gross value of portfolio holdings remain almost
unchanged at $26.4m.
As mentioned in previous communications with shareholders, it is
our belief that risks to the global economy in general and the
capital markets in particular are misunderstood and greatly
underestimated. Asset prices have been wildly distorted by nearly a
decade of aggressive monetary policy while fiscal policy remains
equally accommodative for politicians accustomed to making generous
promises to an electorate unwilling to pay for ever greater
government largesse. The effects of these twin phenomenon include:
Listed shares trading at historically high prices, bonds trading at
historically high prices (low rates) and an explosion in public and
private sector debt. Globally, the total amount of government debt
now exceeds $63.1 trillion, according to a Pew Research Center
analysis of International Monetary Fund data. Corporate debt
continues to grow as a percentage of global new issuances.
According to data provided by Deal Logic corporations borrowed 55%
of the $6.8 trillion in syndicated bond sales completed in
2017.
Where did these record borrowings go? Certainly some of the
proceeds went towards productive capital investment; bridges and
ports for governments and new plant and equipment for companies.
However, we suspect far more went to towards social welfare
spending, military adventures and public sector pay for the
government borrowers and share buy backs and dividend
recapitalizations for corporate debtors. On the corporate side,
where we spend our time analysing balance sheets and share prices,
the continuation of share buybacks accelerated. There is nothing
inherently wrong with buy backs. In fact a share buy back can be
one of the most effective tools for increasing shareholder value.
When the shares of a publicly traded company are selling at a
discount to their intrinsic value and the company is generating
free cash flow the highest and best use of capital may indeed be
reducing the shares in issue. Sadly, we are not seeing much of
that. What we are seeing is well paid managers, who own very little
of the company they manage, spending shareholder's funds to
purchase shares at or near all-time highs (Earnings multiple and
share price). This has the effect of increasing earnings per share
in the short term and thus often triggering bonus packages for
management that further takes more capital out of the company. This
capital may well be needed in the future. In many cases
shareholders fail to notice that their employees with very little
skin in the game, are making decisions that maximise their
compensation while they have little or no exposure to future
downside. This lack of skin in the game is rapidly becoming a
threat to long term shareholders and will become readily apparent
at the first economic downturn or financial crisis. It also
continues completely unchecked in an environment where individual
securities are purchased largely because of the money pouring into
passive funds. With this market dynamic as a framework, poor
decisions can be rewarded as long as the index continues to attract
net capital flows.
Portfolio Update
Our portfolio has not changed significantly since the year end.
There were no major transactions during the half year period and no
significant changes to the valuations of our portfolio holdings;
the valuation of our holding in Kwikbuild Corporation Ltd reduced
by c.$950,000 following the transfer of cash generated from the
sale of a loan owned by Kwikbuild during the period as announced in
August 2017, to Craven House Capital. The value of our holding in
Qeton Ltd, which has now commenced trading, increased to $1.8m
during the period (from $576,000 at the full year). Qeton has
reported encouraging initial sales orders and we will provide
further updates as these orders are completed. As illustrated
below, there were no other material changes to the value of
portfolio holdings.
CRAVEN HOUSE CAPITAL PLC
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED 30
NOVEMBER 2017
Investment Value at 30 Value at 31
Nov 2017 May 2017
Shares in Craven Industrial
Holdings Plc $26,445,391 $26,402,875
Comprising:
Shares in Ceniako Ltd $3,629,486 $3,937,840
Shares in Craven House
Industries Ltd $5,279,820 $5,365,563
Shares in Qeton Ltd $1,769,248 $576,079
Shares in Craven House
Angola Lda $9,440,194 $9,247,975
Shares in Kwikbuild Corporation
Ltd $3,826,643 $4,775,418
Loans made by Craven Industrial
Holdings Plc $2,500,000 $2,500,000
Our outlook for the markets where we are currently invested
remains much the same.
South Africa
We are seeking to exit our investments in South Africa. We
believe it is the right time both in the life cycle of our
investments and in the economic and political cycle of the country.
At the moment, there has been a relatively peaceful transition of
power within the ruling African National Congress (ANC). The
scandal plagued Jacob Zuma has been forced out of power and
replaced by wealthy businessman and ANC loyalist Cyril Ramaphosa.
Markets have reacted positively to this development and foreign
funds in search of yield have returned to the market in size. This
has resulted in a stronger Rand. Our view is that the combination
of yield starved foreign investors and the transition of power
within the ANC have masked the underlying frailty of both the
economic and political foundations in the country. Poor economic
policy and an increasingly restless populace lead us to believe
that the wealthy pro-business president must lurch to the left to
placate the angry and disappointed voters. South Africa is one of
the only sub Saharan nations which has not yet tried socialism and
despite the clear evidence of its failure in neighbouring Zimbabwe,
we wouldn't be surprised if that was the next step for the rainbow
nation. As a result we hope to exit our S. African assets in the
near future while sentiment is positive. We may not have much time
and the window may close before we can safely exit.
Kwikbuild Corporation Ltd is a holding company for the Company's
investments in South Africa, comprising a portfolio of
agricultural, industrial and logistics investments.
Angola
Like South Africa, Angola also had a recent peaceful transition
of power. After nearly four decades in power, President dos Santos
chose not to run for re-election and his hand-picked successor and
long-time ally João Lourenço was comfortably elected. Not only has
this transition been peaceful but Lourenço has surprised us with
his ability and willingness to dismantle his predecessor's iron
grip on both the government and the economy. He has removed dos
Santos family members from key positions in government as well as
in the sovereign wealth fund, the major banks and most importantly
the national oil company. This has had an immediate positive effect
on both local consumer spending and the perception of Angola by the
international community and banking system.
As outlined in previous communications, Angola is one of the few
countries that has truly hit economic rock bottom. Unlike other
nations who have prevented or postponed the pain with easy credit
and foreign investment in search of yield, Angola had little room
to manoeuvre when the oil price collapsed. Capital controls
paralyzed trade and most companies and entrepreneurs were largely
left to fend for themselves. It was at this time we entered the
country. We remain encouraged by the way the business owners we
funded have reacted to the situation on the ground. They remain
conservative, cautious and on guard for reversals while they
continue to grow their business. They have lots of skin in the
game. We are hedged on our loan portfolio (with loans denominated
in US dollars rather than Angolan Kwanza) and remain confident that
the importation of lubricants for the oil industry and mobile
phones for the masses will continue to see robust demand and strong
pricing dynamics. Angola still remains a very volatile and risky
place to operate but we like the horses we have backed and hope to
maintain the relationships throughout the recovery.
Craven House Angola is a holding company for the Company's
investments in Angola which comprise loans to foreign-owned
operating businesses in Angola
CRAVEN HOUSE CAPITAL PLC
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED 30
NOVEMBER 2017
Brazil
Brazil remains in a period of economic distress. Unlike Angola,
we do not think it has hit the bottom of the cycle. The banks are
sitting on bad loans they are unwilling to recognize. The necessary
hair-cuts needed to clear the market are unpalatable to Brazilian
banks who are likely insolvent. This has frozen access to credit
for small to mid-sized businesses who just a decade ago were being
encouraged by policy makers, through subsidies and loan guarantee
programs, to take on as much debt as possible to keep up with the
expected endless growth of Latin America's BRIC powerhouse. This
serves as a strong reminder despite "irrefutable evidence" in
support of the investment thesis du jour, be it Index Funds, Easy
Credit or BRIC dominance, the theory often disintegrates before
investors realise their capital has gone to money heaven. Somewhat
ironically, the situation in Brazil could bode well for us for two
related but somewhat opposite reasons. Firstly, while many
Brazilian individuals and companies were encouraged to borrow and
could access easy credit, this was never the case for
foreigners.
Most land and real estate owned by foreigners is owned debt
free. The current market for land consists primarily of bank
controlled land listed for sale at significant premiums to the
current market clearing price. Therefore the market has slowed and
is rapidly approaching a halt. Banks who control hundreds of
thousands of hectares as a result of defaulted loans will not sell
the properties or allow them to be sold. If they did, the
documented sales prices would then be used to extrapolate just how
much bad debt is on their books. As happened in North America and
Europe, the banks have adopted an "extend and pretend" policy in
hopes of an eventual recovery. The sad irony is that the market for
quality land is dampened by the excesses of profligate borrowers
and banks but it is the prudent land owner without debt but in need
of a sale who is suffering the most because he cannot liquidate his
holdings at a reasonable price. This presents the first
opportunity. There will be sellers with debt free property who need
to sell. We will be in the market when the price comes down to a
level where we believe we are buying at or near the bottom and the
productive capacity of the land justifies the purchase price.
The second opportunity may arise from nearly the inverse of the
first opportunity. In South America, precisely because the local
currency and banking system has long been unreliable, many wealthy
families prefer to purchase land as a store of wealth rather than
trusting the local currency or the banks. At the moment Florida and
other parts of the US are the preferred property investment
destination for wealthy Brazilians seeking to park cash. However,
as the BRL softens or if foreign investors chasing yield retreat,
we expect to see the ability of Brazilians to buy foreign property
diminish. Whether restricted by decreasing purchasing power abroad
or possibly capital controls, they will want to exchange cash for
land. Should that happen the assets we currently own will likely
rise in both price and desirability. Through our subsidiary, we own
a scarce, largely finite commodity in oceanfront land. Beachfront
land in South America has continued to appreciate though economic
crashes and periods of political instability. We are comfortable
that the land we own in Bahia will hold its value and may at some
time in this credit cycle be worth significantly more than we are
currently holding it on our books. In the interim period we will
continue to seek distressed opportunities to acquire debt free
parcels of productive land. On 23 August 2017, the Company issued a
circular to shareholders outlining the proposed transfer of
Craven's land holdings to Toronto Stock Exchange listed DLC
Holdings Corp. Following some unforeseen delays, this is now
expected to be completed in the coming weeks.
Ceniako Ltd and Craven House Industries Ltd are holding
companies for the Company's investments in certain Brazilian land
assets.
The United States
Also during the period we began looking at a most unusual
investment destination for Craven House; The United States. Changes
in the US corporate tax code, a low interest rate environment and
the flood of capital into index funds and away from small and
microcap companies have created attractive opportunities. We are
currently evaluating several opportunities in various industries
and are starting to see compelling prices. While we do not think
that public markets are priced to induce the hand to wallet reflex,
private companies are trading at low multiples when compared to
both Europe and most Emerging Markets. In particular there is an
opportunity to find opportunities in businesses that generate
steady cash flows but do not have exciting enough growth rates or
are too small for venture capital and private equity respectively.
Whereas, small businesses in Europe and the UK rely on banks for
financing, most US small and mid-sized businesses with less than
$10 million in EBITDA rely on equity financing. This is an area of
the market where we are spending the time and energy necessary to
evaluate opportunities.
CRAVEN HOUSE CAPITAL PLC
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED 30
NOVEMBER 2017
As discussed at the opening of this report, we believe we are in
a period where the market perceives the risks to be far less than
reality. At some point sooner rather than later, we believe there
will be a very disruptive reversal which will at a minimum see
asset prices reverting to the historical mean. Or it could be much
worse. Rather than mean reversal, we may experience an asymmetrical
reversal that brings asset prices down to well below historical
averages as measured by earnings multiples in shares or yield in
bonds and property. We believe the latter scenario becomes more and
more likely as the 'everything bubble' continues to inflate. We may
be wrong. Perhaps we fail to comprehend a new economic paradigm. If
this is the case than we shareholders will have to reconcile the
opportunity cost of a lost decade when almost everything except
Craven House shares rose in price. Perhaps we should have spent the
past half decade chasing expensive deals geared to the maximum
level without worrying about the downside. If, however, as we
expect, this time is not different, we should be in an excellent
position to capitalise on distressed prices sometime in the not too
distant future.
Desmond Holdings Ltd
Investment Manager to Craven House Capital Plc
For further information please contact:
Craven House Capital Plc Tel: 0203 286 8130
Mark Pajak
www.Cravenhousecapital.com
SI Capital Tel: 01483 413500
Broker
Nick Emerson
www.sicapital.co.uk
SPARK Advisory Partners Limited Tel: 0203 368 3550
Nominated Adviser
Matt Davis/Mark Brady
www.Sparkadvisorypartners.com
About Craven House Capital:
Craven House Capital is a frontier and emerging market focused
merchant bank seeking value oriented long term investments. Craven
House invests in all segments of the capital structure in
partnership with local entrepreneurs and the local business
community. Craven House provides long term patient capital and is
often involved in restructuring, expansion and turn around
investments in crisis and transitioning economies.
CRAVEN HOUSE CAPITAL PLC
INCOME STATEMENT
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2017
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
CONTINUING OPERATIONS
Changes in fair value 42 160 3,354
Administrative expenses (591) 1,407 (535)
OPERATING (LOSS)/PROFIT (549) 1,567 2,819
Finance costs 2 - (8) (11)
Finance income - 45 -
Other gains - - 240
------------ ------------ ----------
(LOSS)/PROFIT BEFORE
INCOME TAX (549) 1,604 3,048
Income tax 3 - - -
------------ ------------ ----------
(LOSS)/PROFIT FOR
THE PERIOD (549) 1,604 3,048
============ ============ ==========
Earnings per share
expressed
In cents per share:
Basic and diluted 6 (21.96) 79.75 135.98
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2017
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
(LOSS)/PROFIT FOR
THE PERIOD (549) 1,604 3,048
Items that will be
reclassified subsequently
to profit or loss
Foreign exchange
difference arising
on change in presentation
currency - - 184
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD (549) 1,604 3,232
============ ============ ==========
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2017
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
ASSETS
NON-CURRENT ASSETS
Investments at fair
value through
profit or loss 4 26,445 21,123 26,403
------------ ------------ ----------
26,445 21,123 26,403
------------ ------------ ----------
CURRENT ASSETS
Trade and other receivables 79 3,100 75
Cash and cash equivalents 96 36 11
------------ ------------ ----------
175 3,136 86
------------ ------------ ----------
TOTAL ASSETS 26,620 24,259 26,489
============ ============ ==========
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 5 12,594 12,564 12,594
Share premium 25,128 24,793 25,128
Retained earnings (13,011) (13,906) (12,462)
------------ ------------ ----------
TOTAL EQUITY 24,711 23,451 25,260
------------ ------------ ----------
LIABILITIES
NON CURRENT LIABILITIES
Convertible loan
note 7 800 - -
------------ ------------ ----------
800 - -
------------ ------------ ----------
CURRENT LIABILITIES
Trade and other payables 1,109 677 1,229
Interest bearing - 131 -
loans and borrowings
------------ ------------ ----------
1,109 808 1,229
------------ ------------ ----------
TOTAL LIABILITIES 1,909 808 1,229
------------ ------------ ----------
TOTAL EQUITY AND
LIABILITIES 26,620 24,259 26,489
============ ============ ==========
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2017
Called
up share Share Retained
capital premium Reserves earnings Total
$'000 $'000 $'000 $'000 $'000
Balance at 1
June 2016 (as
restated) 13,445 15,706 (184) (18,157) 10,810
Changes in equity
Issue of share
capital 1,003 11,350 - - 12,353
---------- ---------- ----------- ----------- ----------
Transactions
with owners 14,448 27,056 (184) (18,157) 23,163
---------- ---------- ----------- ----------- ----------
Profit for the
period - - - 1,604 1,604
Foreign exchange
difference arising
on change in
functional currency (1,884) (2,263) 184 2,647 (1,316)
Balance at 30
November 2016 12,564 24,793 - (13,906) 23,451
---------- ---------- ----------- ----------- ----------
Changes in equity
Issue of share
capital 30 335 - - 365
---------- ---------- ----------- ----------- ----------
Transactions
with owners 12,594 25,128 - (13,906) 23,816
---------- ---------- ----------- ----------- ----------
Profit for the
period - - - 1,444 1,444
Balance at 31
May 2017 12,594 25,128 - (12,462) 25,260
---------- ---------- ----------- ----------- ----------
Changes in equity
Issue of share - - - - -
capital
---------- ---------- ----------- ----------- ----------
Transactions
with owners 12,594 25,128 - (12,462) 25,260
---------- ---------- ----------- ----------- ----------
Loss for the
period - - - (549) (549)
---------- ---------- ----------- ----------- ----------
Balance at 30
November 2017 12,594 25,128 - (13,011) 24,711
---------- ---------- ----------- ----------- ----------
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2017
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Net cash generated/(used)
in operating activities 85 2,153 (1,090)
Cash flows from investing
activities
Equity investment - (13,531) (10,245)
Investment additions - (131)
Proceeds for sale of
investments - 538 563
Loan advances repaid - 724 734
------------ ------------ ----------
Net cash used in investing
activities - (12,269) (9,079)
Cash flows from financing
activities
Proceeds from issue
of share capital - 10,485 10,245
Repayment of convertible
loans - (471) (160)
Interest received - 45 -
------------ ------------ ----------
Net cash from financing
activities - 10,059 10,085
Net increase/(decrease)
in cash and cash equivalents 85 (57) (84)
Cash and cash equivalents
at the beginning 11 93 95
of the period
Cash and cash equivalents
at the end of the period 96 36 11
============ ============ ==========
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2017
1. ACCOUNTING POLICIES
General Information
Craven House Capital Plc is a company incorporated in the United
Kingdom under the Companies Act 2006. The address of the registered
office is given on the company information page. The Company is
listed on the AIM Market of the London Stock Exchange (code:
CRV).
The next annual financial statements of Craven House Capital Plc
will be prepared in accordance with applicable International
Financial Reporting Standards (IFRS) as adopted for use by the
European Union. Accordingly, the interim financial information in
this report has been prepared using accounting policies consistent
with IFRS. IFRS are subject to amendment and interpretation by the
International Accounting Standards Board (IASB) and the
International Financial Reporting Interpretations Committee (IFRIC)
and there is an on-going process of review and endorsement by the
European Commission. The financial information has been prepared on
the basis of the IFRS that the directors expect to be applicable as
at 31 May 2018.
The financial information has been prepared under the historical
cost convention except in relation to the fair value adjustments
required by accounting standards. The principal accounting policies
have been applied to all periods presented.
This financial information is unaudited and does not constitute
statutory financial statements within the meaning of Section 434 of
the Companies Act 2006. The financial statements of the Company for
the year ended 31 May 2017, which were prepared in accordance with
IFRS as adopted for use by the European Union, have been reported
on by the Company's auditors and delivered to the Registrar of
Companies. The report of the auditors was unqualified and did not
include any statement under Section 498 of the Companies Act
2006.
This financial information is presented in United States dollar,
rounded to the nearest $'000.
The directors do not propose the issuance of a dividend.
The interim financial information for the six months ended 30
November 2017 was approved by the directors on 9 February 2018.
Going concern
The Company has considerable financial resources. As a
consequence, the directors believe that the Company is well placed
to manage its business risks successfully despite the current
uncertain economic outlook. The directors have a reasonable
expectation that the Company has adequate resources to continue in
operational existence for the foreseeable future. Thus they
continue to adopt the going concern basis of accounting in
preparing financial information.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2017
2. Finance costs
Six months ended Year
Ended
30 Nov 30 Nov 31 May
2017 2016 2017
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Loan interest - 8 11
- 8 11
--------------------- ------------ ----------
3. Taxation
No tax charges arose in the period or in comparative periods as
a result of losses incurred.
4. Investments at fair value through profit or loss
Unquoted
equity
investments
$'000
At 1 June 2017 26,403
Fair value movement 42
At 30 November 2017 26,445
--------------
Following a corporate restructuring undertaken during 2016,
investments and loans were transferred from Craven House Capital
Plc to its wholly owned subsidiary, Craven Industrial Holdings Plc.
The fair value movement outlined above therefore represents the
valuation applied to the resulting investments held by Craven
Industrial Holdings Plc or its subsidiaries at 30 November 2017 and
are described in further detail below.
Unquoted investments at 30 November 2017 have been measured on a
Level 3 basis as no observable market data was available. These
investments are as follows:
Shares in Craven Industrial Holdings Plc are valued at
$26,445,391 representing a 100% holding. These have been valued
based on the underlying investments within Craven Industrial
Holdings Plc at 30 November 2017. The value of Craven Industrial
Holdings Plc is segmented across its principal investments as
follows:
Shares in Craven House Industries Limited are valued at
$5,279,820, representing a 95% holding. This shareholding has been
valued on a net assets basis which the directors believe represents
the best indication of the fair value at the period end.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2017
4. Investments at fair value through profit or loss
(continued)
Shares in Ceniako Limited are valued at $3,629,486
representing a 49% holding. This shareholding has been
valued on a net assets basis which the directors believe
represents the best indication of the fair value at
the period end.
Shares in Kwikbuild Corporation Ltd are valued at $3,826,643
representing a 97% shareholding. This valuation is
based on the value of the net assets of Kwikbuild Corporation
Ltd, which the directors believe represent the best
indication of the fair value at the period end.
Shares in Qeton Ltd are valued at $1,769,248 representing
a 50% holding. This shareholding has been valued on
an earnings multiple basis which the directors consider
represents the best indication of the fair value at
the period end.
Shares in Craven House Angola LDA are valued at $9,440,194
representing a 100% holding. This shareholding has
been valued on a net assets basis which the directors
consider represents the best indication of the fair
value at the period end.
Loans made by Craven Industrial Holdings Plc are valued
at $2,500,000 being the actual amount loaned.
5. Called up share capital
Authorised, issued and fully paid share capital as
at 30 November 2017 are as follows:
Number Class: Nominal 30 Nov 31 May
Value 2017 2017
(Unaudited) (Audited)
$'000 $'000
2,499,039 Ordinary $1.00 787 787
77,979,412 Deferred GBP0.09 10,734 10,734
77,979,412 Deferred GBP0.009 1,073 1,073
-------------- ------------
12,594 12,594
============== ============
The aggregate nominal values of the ordinary and deferred
shares include exchange differences arising from the
translation of shares at historic rates and the translation
at the rate prevailing at the date of the change in
functional currency. The deferred shares carry no entitlement
to receive notice of any general meeting, to attend,
speak or vote at such general meeting. Holders are
not entitled to receive dividends, and on a winding
up of the Company holders of deferred shares are entitled
to a return of capital only after the holder of each
Ordinary share has received a return of capital together
with a payment of GBP1 million per share. The deferred
shares may be cancelled at any time for no consideration
by way of a reduction in capital.
In the year ended 31 May 2017, the Company extended
the time scale of 78,632 fully transferable exercisable
warrants which were originally issued in the year ended
31 May 2012. At the date of issue, the warrants could
be exercised on or before 30 June 2014, this period
has now been extended to 30 June 2018. The warrants
are exercisable at a price of $15.00 per share.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2017
6. Earnings per share
The calculation of basic earnings per share is based on the loss
attributable to the equity holders of $549,000 divided by the
weighted average number of shares in issue during the period of
2,499,039 (six months ended 30 November 2016: profit of $1,604,000
and 2,011,226 shares; year ended 31 May 2017: profit of $3,048,000
and 2,241,518 shares).
Diluted earnings per share has not been disclosed as the
inclusion of the unexercised warrants described in note 5 would be
non-dilutive.
7. Convertible loan note
During the period, the Company entered into a $800,000
convertible loan note with GEM Investments America LLC ("GEM") by
way of full settlement of fees outstanding to GEM amounting to
GBP600,000. The loan note bears no interest as has a five year
term.
8. Related party disclosures
During the period, the Company entered into the following
transactions with related parties and connected parties:
Management fees payable to Desmond Holdings Limited
During the period the Company incurred charges of $121,556 from
Desmond Holdings Limited. At the period end, included in trade and
other payables, is an amount of $283,371 payable to Desmond
Holdings Limited.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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