TIDMCRV
RNS Number : 3354R
Craven House Capital PLC
27 February 2019
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")
Unaudited Interim Report for the period ended 30 November
2018
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED 30
NOVEMBER 2018
For the unaudited six months to 30 November 2018, Craven House
Capital ended the period with a Net Asset Value of $21,426,000
which equates to $8.57 per share. This represents a decrease of
$3,439,000 from the NAV reported at the year ending May 2018. This
change was largely the result of mark-to-market prices of liquid
securities we intend to hold for an extended period of time. During
the period the company acquired a significant asset in the shares
of IIU, Inc. This acquisition marks our first significant presence
in the United States. As mentioned in previous communications we
see the US as an attractive investment destination given the global
investment markets and the current stage of the debt and business
cycles. We remain concerned about asset values in emerging markets
and Europe and have a current preference for smaller private and
listed enterprises in North America. It remains a difficult
environment for value investors, however, we have recently
identified what we believe are pockets of opportunity.
Portfolio Update
The summary of the valuations of Craven's investment holdings as
at the period end is as follows;
Investment Value at 30 Nov Value at 31
2018 May 2018
Shares in Craven Industrial Holdings
Plc $23,892,006 $26,993,468
Comprising:
Shares in DLC Holdings Corp. $6,491,893 $11,083,190
Shares in Qeton Ltd $1,551,814 $1,787,286
Shares in Craven House Angola LDA $8,903,150 $8,733,274
Shares in Craven House Capital
North America LLC $4,528,396 $2,677,994
Shares in Kwikbuild Corporation
Ltd $2,416,753 $2,711,724
DLC Holdings Corp. (TSX:DLC)
DLC Holdings Corp. is a primary investment subsidiary focused on
agricultural related investments in Brazil and South Africa. As a
micro-cap listed company, its share price can fluctuate
significantly without any change to the intrinsic value of the
company. Despite the shares trading recently at CAD $0.25 per share
on significant volume, the shares closed the period at CAD $0.15
resulting in an accounting valuation significantly lower than the
prior period. We remain highly confident in the long term value of
DLC's current portfolio and in the listed platform providing a
platform to consolidate other assets.
Craven House Angola LDA.
Craven House Angola is primarily engaged in the provision of
working capital, as previously announced, to successful European
and US entrepreneurs operating in Angola for many years. Oil
revenues comprise the vast majority of Angola's foreign currency
earnings and a multi-year weakness in the oil price has created a
scarcity of foreign currency within the banking system. As a
result, good companies have had to seek funding beyond the
traditional banks to finance imports. We are fortunate to have good
partners in Angola who have managed the difficult operating
environment profitably. The recent peaceful transition of political
power combined with higher oil prices have increased the likelihood
of an economic recovery. While we believe this does not present a
threat to our capital it is a threat to continued profitability and
margins. Should capital controls be reduced or lifted our funds
will no longer be needed by our partners. If this were to happen we
would need to find an alternative opportunity to deploy capital or
seek to expatriate funds. It is important to note that our
investment success in Angola is primarily the result of an economic
anomaly created by exogenous forces rather than business acumen or
operational expertise.
INVESTMENT MANAGER'S REPORT FOR THE SIX MONTH PERIODED
30 NOVEMBER 2018
Qeton Ltd
Qeton is a trading company which specialises in the purchase of
globally sourced products for importation into capital constrained
economies. At present the focus is on consumer goods and industrial
products into Angola where capital controls continue to add
significant friction to funds flow and trade. Our relationship with
on the ground operators in the region provide insights into the
shifting market dynamics. The current economic and political
situation remains positive for Qeton, however, this could change at
any moment if the Kwanza becomes more freely convertible or capital
controls are lifted entirely. Should this happen we would seek to
repatriate capital from Angola for investment elsewhere.
Craven House Capital North America LLC
As mentioned above, the United States is becoming an investment
focus for Craven House. Our holding in IIU, Inc. has been rewarding
as is demonstrated by the transaction announced on January 17, 2019
with LM Funding America, Inc. Additionally, we are finding
investment opportunities in small-cap and micro-cap listed
securities traded on the NYSE and NASDAQ. These companies have
largely been abandoned by investors as market dynamics have moved
towards passive index funds and other structured products.
Additionally, many US brokerages restrict shareholders buying
shares trading at less than $5 or with a market capitalisation of
under $50 million. We believe this presents significant
opportunities as many of these very small listed companies are
trading at a discount to their orderly liquidation value and/or
intrinsic value.
Kwikbuild Corp.
As mentioned in previous communication we are bearish on South
Africa given the political and economic climate. Our portfolio in
South Africa is in the process of being liquidated and we intend to
allocate the capital elsewhere. Fortunately, the bulk of our
portfolio consists of debt secured by assets and the proceeds can
be freely repatriated through the banking system unless further
currency controls are enacted. This is not an insignificant risk
given the state of the South African economy.
Reduction in Capital
We continue to move forward with the legal process to buy back
Craven House shares for cancellation. However, given the current
share price combined with the expected liquidity over then next
year, we expect share buybacks to be a central aspect of our
capital allocation process until such time as the share price
closes the gap with the intrinsic value of the company. Craven
House has consistently issued shares at a premium and will
endeavour to buy back as many shares as are available at a
discount. As highlighted in the May 2018 year-end accounts, the
Board will continue to assess the value of the AIM quote and will
provide any material updates to shareholders in due course.
Transaction after the end of period
After the period, Craven House announced a significant
transaction with LM Funding America, Inc. (NASDAQ:LMFA) whereby
LMFA would acquire IIU, Inc in a transaction which will likely
result in Craven House becoming the controlling shareholder in the
Nasdaq listed company. The conversion of funds due following the
sale in common stock of LMFA requires shareholder approval from
LMFA shareholders and is not certain. Should LMFA shareholder
approval be granted, Craven House will have another listed
subsidiary, with high market liquidity which could serve as a
platform for further growth. The likely result will be that Craven
House's primary holdings will be two subsidiary listed companies in
LMFA and DLC Holdings with the balance of the portfolio comprised
of African related assets concentrated in loan portfolios in Angola
and South Africa and a trading company focused on the export of
consumer and industrial products to Angola.
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:
The Company's Investing Policy is to invest in or acquire a
portfolio of companies, partnerships, joint ventures, businesses or
other assets globally in any geographic jurisdiction. The company
will invest in both developed and developing markets providing long
term patient capital and is often involved in special situations,
restructuring, expansion and turn around investments in crisis and
transitioning economies.
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
Six months ended Year Ended
30 Nov 2018 30 Nov 2017 31 May
2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
CONTINUING OPERATIONS
Changes in fair value (3,101) 42 590
Other operating income - - 3
Administrative expenses (339) (591) (988)
OPERATING LOSS (3,440) (549) (395)
Finance income 2 1 - -
------------ ------------ -----------
LOSS BEFORE INCOME TAX (3,439) (549) (395)
Income tax 3 - - -
------------ ------------ -----------
LOSS FOR THE PERIOD (3,439) (549) (395)
============ ============ ===========
Earnings per share expressed
In cents per share:
Basic and diluted 6 (137.61) (21.96) (15.80)
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF FINANCIAL POSITION
AS AT 30 NOVEMBER 2018
Six months ended Year Ended
30 Nov 2018 30 Nov 2017 31 May 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
ASSETS
NON-CURRENT ASSETS
Investments at fair value
through
profit or loss 4 23,892 26,445 26,993
------------ ------------ ------------
23,892 26,445 26,993
------------ ------------ ------------
CURRENT ASSETS
Trade and other receivables 910 79 924
Cash and cash equivalents 27 96 213
------------ ------------ ------------
937 175 1,137
------------ ------------ ------------
TOTAL ASSETS 24,829 26,620 28,130
============ ============ ============
EQUITY
SHAREHOLDERS' EQUITY
Called up share capital 5 12,594 12,594 12,594
Share premium 25,128 25,128 25,128
Accumulated deficit (16,296) (13,011) (12,857)
------------ ------------ ------------
TOTAL EQUITY 21,426 24,711 24,865
------------ ------------ ------------
LIABILITIES
CURRENT LIABILITIES
Trade and other payables 2,603 1,109 2,465
NON-CURRENT LIABILITIES
Loans and borrowings 7 800 800 800
------------ ------------ ------------
TOTAL LIABILITIES 3,403 1,909 3,265
------------ ------------ ------------
TOTAL EQUITY AND LIABILITIES 24,829 26,620 28,130
============ ============ ============
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
Called
up share Share Accumulated
capital premium deficit Total
$'000 $'000 $'000 $'000
Balance at 1 June
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
---------- ---------- -------------- ---------
Changes in equity
Issue of share capital - - - -
---------- ---------- -------------- ---------
Transactions with
owners 12,594 25,128 (12,462) 25,260
---------- ---------- -------------- ---------
Loss for the period - - (395) (395)
Balance at 31 May
2018 12,594 25,128 (12,857) 24,865
---------- ---------- -------------- ---------
Changes in equity
Issue of share capital - - - -
---------- ---------- -------------- ---------
Transactions with
owners 12,594 25,128 (12,857) 24,865
---------- ---------- -------------- ---------
Loss for the period - - (3,439) (3,439)
Balance at 30 November
2018 12,594 25,128 (16,296) 21,426
---------- ---------- -------------- ---------
CRAVEN HOUSE CAPITAL PLC
STATEMENT OF CASH FLOWS
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
Six months ended Year Ended
30 Nov 30 Nov 2017 31 May
2018 2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Cash flows from operating activities
Loss before income tax (3,439) (549) (395)
Adjustments for non-cash items
Fair value movement arising on
investments 3,101 (42) (590)
Decrease/(increase) in trade and
other receivables 14 (4) (849)
Increase/(decrease) in trade and
other payables 137 (120) 1,236
Increase in loans and borrowings - 800 800
------------ ------------ -----------
Net cash (used)/generated by operating
activities
Cash flows from investing activities (187) 85 202
Acquisition of investments - - (2,500)
Proceeds from loan advances repaid - - 2,500
------------ ------------ -----------
Net cash used in investing activities - - -
Cash flows from financing activities
Interest received 1 - -
------------ ------------ -----------
Net cash from financing activities 1 - -
Net (decrease)/increase in cash
and cash equivalents (186) 85 202
Cash and cash equivalents at the
beginning
of the period 213 11 11
Cash and cash equivalents at the
end of the period 27 96 213
============ ============ ===========
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
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 (ticker:
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 2019.
The financial information has been prepared under the historical
cost convention, except to the extent varied for fair value
adjustments required by accounting standards, and in accordance
with applicable International Financial Reporting Standards (IFRS)
as adopted for use by the European Union. 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 2018, 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 2018 was approved by the directors on 27 February
2019.
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. 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 the financial information.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
2. Finance income
Six months ended Year Ended
30 Nov 2018 30 Nov 2017 31 May
2018
(Unaudited) (Unaudited) (Audited)
$'000 $'000 $'000
Interest receivable 1 - -
1 - -
--------------- ------------ -----------
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
Quoted equity Unquoted
investments equity investments
$'000 $'000 Total
$'000
At 1 June 2018 11,083 15,910 26,993
Fair value movement (4,591) 1,490 (3,101)
-------------- -------------------- --------
At 30 November 2018 6,492 17,400 23,892
-------------- -------------------- --------
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 revaluation outlined above therefore represents the valuation
applied to the resulting investments held by Craven Industrial
Holdings Plc or its subsidiaries as at 30 November 2018 and are
described in further detail below.
Unquoted investments at 30 November 2018 have been measured on a
Level 3 basis as no observable market data was available.
Shares in Craven Industrial Holdings Plc are valued at
$23,892,006 representing a 100% holding. These have been valued
based on the underlying investments within Craven Industrial
Holdings Plc as at 30 November 2018. The value of Craven Industrial
Holdings Plc is segmented across its principal investments as
follows:
Shares in DLC Holdings Corp. are valued at $6,491,893
representing 13,676,700 common shares and 43,785,206 preferred
shares, which are freely convertible into common shares. Shares in
DLC Holdings Corp. are quoted on the Toronto Stock Exchange and
were valued at $CAD 0.15 per share as at 30 November 2018.
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
4. Investments at fair value through profit or loss (continued)
Shares in Qeton Ltd are valued at $1,551,814 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. Qeton Ltd generated EBITDA earnings of EUR544,873
during the year to 30 November 2018. Shares in Qeton Ltd have been
valued at 5x EBITDA earnings. Qeton Ltd has no debt and no material
liabilities.
Shares in Craven House Angola LDA are valued at $8,903,150 representing
a 100% holding. This shareholding has been valued on the net assets
of Craven House Angola LDA, which the directors consider represents
the best indication of the fair value at the period end. The vast
majority of the net assets of Craven House Angola LDA comprise principal
and accrued interest on loan facilities made to companies operating
in Angola. As of 30 November 2018 all of these loans are performing
according to their contractual terms and have therefore been valued
at face value plus accrued interest. Craven House Angola LDA has no
debt and no material liabilities.
Shares in Craven House Capital North America LLC are valued at $4,528,396
representing a 100% holding. This shareholding has been valued on
the net assets of Craven House Capital North America LLC, which the
directors consider represents the best indication of the fair value
at the period end. The vast majority of the assets of Craven House
Capital North America LLC comprise shares in IIU, Inc and LM Funding
America, Inc. (Nasdaq: LMFA).
Shares in Kwikbuild Corporation Ltd are valued at $2,416,753 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. The vast
majority of the net assets of Kwikbuild Corporation Ltd comprise shares
in its wholly owned South African subsidiary, which are valued on
a net asset basis. The South African subsidiary's assets comprise
loan facilities, which are performing according to their contractual
terms and real-estate holdings valued on market-comparables. Kwikbuild
Corporation Ltd has no debt and no material liabilities.
5. Called up share capital
Authorised, issued and fully paid share capital as at 30 November
2018 are as follows:
Number Class: Nominal 30 Nov 31 May
Value 2018 2018
(Unaudited) (Audited)
$'000 $'000
2,499,039 Ordinary $1.00 2,437 2,437
77,979,412 Deferred GBP0.09 9,234 9,234
77,979,412 Deferred GBP0.009 923 923
---------------- --------------
12,594 12,594
================ ==============
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIODED 30 NOVEMBER 2018
5. Called up share capital (continued)
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 2018, 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 2020. The warrants are exercisable
at a price of $15.00 per share.
6. Earnings per share
The calculation of basic earnings per share is based on the loss
attributable to the equity holders of $3,439,000 divided by the
weighted average number of shares in issue during the period of
2,499,038 (six months ended 30 November 2017: loss of $549,000 and
2,499,039 shares; year ended 31 May 2018: loss of $395,000 and
2,499,038 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 year ended 31 May 2018, the Company entered into a
$800,000 convertible loan note by way of settlement of a supplier's
outstanding fees in the sum of GBP600,000. The note holder, GEM
Investments America, has the right to convert the note at any time
prior to maturity.
The loan note bears no interest and has a five year term.
8. Related party disclosures
Craven Industrial Holdings Plc
During the period, the Company made a number of loans to its
subsidiary Craven Industrial Holdings Plc. At the period end the
outstanding balance of these loans was $41,364 (May 2018:
$38,969).
Craven House Capital North America LLC
During the period, the Company received a repayment against
loans from its subsidiary Craven House Capital North America LLC.
At the period end the outstanding balance of these loans was
$743,638 (May 2018: $793,629).
Craven House Angola LDA
During the period, there was no movement in the $896,781 loan
balance outstanding between Company and its subsidiary Craven House
Angola LDA.
Kwikbuild Corporation Ltd
During the period, the Company received a number of loans from
its subsidiary Kwikbuild Corporation Ltd. At the period end the
outstanding balance of these loans was $828,545 (May 2018:
$785,294).
CRAVEN HOUSE CAPITAL PLC
NOTES TO THE FINANCIAL INFORMATION - continued
FOR THE SIX MONTH PERIOD ENDED 30 NOVEMBER 2018
8. Related party disclosures (continued)
7Mobile LDA
During the period, the Company's subsidiary, Qeton Ltd, made
sales totalling EUR320,300 to 7Mobile LDA. 7Mobile LDA shares a
director with Craven House Capital Angola LDA. At the period end,
amounts receivable by Qeton Ltd from 7Mobile LDA were EUR1,151,700
(May 2018: $1,485,747).
Desmond Holdings Limited
During the period the Company incurred management fees of
$120,000 from Desmond Holdings Limited, the Investment Manager of
the Company. It also received a loan of $75,000 from Desmond
Holdings Limited, $25,000 of which was repaid before the period
end. At the period end, included in trade and other payables is an
amount of $572,400 due to Desmond Holdings Limited.
All amounts owed to related parties are interest free and
repayable on demand.
9. Events after the reporting period
4 January 2019: The Company passed a resolution to extend its
capital reduction program to include the cancellation of
155,958,824 deferred shares. This, along with the previously
announced resolution to cancel up to $5,000,000 of ordinary common
shares, is currently subject to approval by the High Court.
17 January 2019: The Company completed the sale of its wholly
owned subsidiary, IIU Inc., to LM Funding America Inc. (NASDAQ:
LMFA) for a consideration of c. $5.1 million.
The Interim Results for the six months ended 30 November 2018
will be available to download from the Company's website at:
http://www.cravenhousecapital.com
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR QDLFLKLFZBBF
(END) Dow Jones Newswires
February 27, 2019 12:15 ET (17:15 GMT)
Craven House Capital (LSE:CRV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Craven House Capital (LSE:CRV)
Historical Stock Chart
From Jul 2023 to Jul 2024