Craven House Capital Regulatory News (CRV)

4 April 2012

Correction

The following clarifies the "Interim Results" announcement released on 29 February 2012 at 07:00 under RNS number 3110Y.

In all the tables where figures for the six months ended 30 November 2011 were compared with the six months ended 30 November 2010, the two columns were incorrectly labelled. All figures labelled as being for 30 November 2010 were in fact for 30 November 2011 and vice versa. These figures were incorrectly labelled in the Statement of Comprehensive Income, Statement of Financial Position and Statement of Cash Flows, as well as in Note 2 to accounts.

There are no other changes.

The full amended announcement is set out below.

CRAVEN HOUSE CAPITAL PLC

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 NOVEMBER 2011

Highlights

·; New Investing Policy adopted

·; Desmond Holdings appointed as Investment Manager

·; Focus on frontier and emerging markets

·; Three new investments in the period

·; One investment exited at a profit

·; $1.0m raised in a private placement at a price of 1.25p per share

For further information please contact:

Chairman's Statement

The first half of the Company's financial year (the period running from 1 June 2011 to 30 November 2011) was a period of significant transformation and exciting progress for Craven House Capital Plc ("Craven House").

The Company ended the period in considerably better shape than it begun with the balance sheet strengthened, new management in place and a number of investments executed, all of which are performing well.

As well as identifying attractive opportunities in our target emerging and frontier markets, I am particularly pleased to report that we have been able to demonstrate our ability to secure investments utilising our shares as currency; a clearly defined and central aspect of our investment strategy. We were able to execute all share transactions and a $1,000,000 private placement at a share price of 1.25p per ordinary share. The Company's ability to execute transactions at a premium to the current market price underlines the Board's belief in the Company's future growth prospects and its opinion that the Company's shares are presently trading under value.

Private Placement

On 27 June 2011, the Company closed a private placement of shares at 1.25p per ordinary share, raising approximately £722,000. 57,726,266 ordinary shares, and 57,726,266 warrants exercisable at any time before 30 June 2014 at an exercise price of 1.5p per share, were issued. A number of value added investors subscribed in the placing and we were happy that an internal target of $1,000,000 was exceeded in this very early stage fundraising round.

Investment Activity & Performance

During the period, Craven House made investments in the following companies;

·; Mongolia Growth Group (YAK:CN), a real estate and financial services conglomerate operating in Mongolia and listed on the Canadian National Stock Exchange;

·; Farm Lands of Guinea Inc. (FLGI:OB), a green-field agribusiness operating in West Africa, which controls over 100,000 hectares of land and is listed in New York; and

·; Pressfit Holdings Plc, a UK private holding company with subsidiaries manufacturing specialist plumbing parts in China.

I am pleased to report that the share prices of Mongolia Growth Group (up 18%) and Farm Lands of Guinea (up 24%) were both significantly higher than the subscription price at the period end. Progress at Pressfit Holdings Plc is also very promising with a number of orders confirmed and an IPO in Hong Kong looking like the most likely near term exit. Post the period end, Craven House acquired 4.5% of Pressfit Holdings Plc from an existing shareholder, thereby increasing its potential holding in Pressfit Holdings Plc from 3% (if convertible loan made on 1 September 2011 is converted into shares) to 7.5%.

During the period, Craven House exited an investment in Shenzen Cadro (Catic Group) Hydraulic Equipment Co. Limited, yielding a 6% return on the original investment over the course of one year. Due to market conditions, this company was unable to achieve a satisfactory valuation to warrant its planned IPO, so returned the initial convertible loan plus interest. The Company used these funds to pay down debt.

Corporate Restructuring

At the Company's Annual General Meeting on 24 August 2011, shareholders approved changing the name of the Company from AIM Investments Plc to Craven House Capital Plc; named after the foundations on which the headquarters of the British East India Company was built. Craven House seeks to emulate the company that inspires its name, by adopting an old style merchant banking approach; seeking out quality businesses in emerging and frontier markets, owned and operated by talented entrepreneurs.

At the AGM, shareholders also approved the Company's new Investing Policy giving the Company more flexibility in its ability to structure international investments. At Craven House, we strongly believe emerging and frontier markets offer the greatest potential reward for knowledgeable investors who are able to identify compelling investment opportunities. With far fewer sources of capital and many more small and medium sized companies in search of funding - as investors we are able to craft better terms than would be available in the developed world.

During the period, the Company's Non-Executive Chairman, Sir Bernard Zissman; the Finance Director, Andrew Fletcher; and the Company Secretary, Robert Macdonald Watson; stepped down from the Board. I would like to take this opportunity to thank all of them for their hard work in securing the future of the Company. Alexandra Eavis has taken up the role of Company Secretary in addition to her directorship, and I am currently serving as Acting Chairman, while the Board is restructured in line with its exclusive frontier and emerging market focus. Consequently, the Board was joined in the period by Mr. Balbir Bindra, a Partner and Head of Asia Banking & Finance at international law firm, Gide Loyrette Nouel, in Hong Kong. Mr. Bindra has extensive experience in international finance law and has represented multinationals, banks, securities houses, hedge funds, private equity groups, multilateral and sovereign lenders, including the World Bank, with interests in Asia, the PRC, Africa and South America.

After adoption of the revised Investing Policy, the Company entered into a Management Services Agreement with Desmond Holdings Ltd ("Desmond") of Hong Kong, which is also Craven House's largest shareholder. The management of Desmond, which includes myself, have over 15 years' experience in investing in emerging and frontier markets, and have managed gross assets of over $500million. Desmond has an established network of relationships in emerging and frontier markets, which generate a high volume of prospective investment opportunities, in particular, but not exclusively, in South America, Asia and Sub-Saharan Africa. Desmond's track record, and the access they provide to relationships in the Company's target markets, make Desmond an ideal strategic partner for the Company. The activities of the Investment Manager are overseen by our Non-Executive Board of Directors, two of which are independent.

Working Capital

The operating costs in the period were elevated as a result of the restructure and repayment of all outstanding legacy liabilities. After the period end, these costs have more than halved and the on-going monthly operating costs are expected to be less than £15,000.

Immediate working capital needs will be met by cash in the bank and the continued support of the Company's major shareholder, Desmond. Going forward, the Directors aim to generate cash from yield-based investments; or full / partial exits of the Company's more liquid investments (if required). Making additional investments in cash generative businesses is the Company's main priority over the next year with the initial aim of meeting the Company's operating costs, and over time enabling the Company to pay a dividend. The Company may also seek to execute an additional capital raise when market conditions are suitable for such fundraising activity.

Outlook

We are delighted with the progress that has been made by the Company over the past six months. We have successfully restructured our operations to place the Company on a very firm footing from which to further implement our strategy. We have proved the viability of this strategy by securing very attractive investments in our target sectors and markets, on excellent terms, utilizing our shares as currency. Several of the companies we have invested in (or their associates) are now shareholders in Craven House in their own rights.

In the coming months, we will continue to seek out high quality businesses and management teams, in which we can establish solid, long-term positions. In particular, we will seek to secure stakes or outright ownership of mature, cash-flowing businesses. The resulting cash flows will be used by Craven House to execute further investments. In addition, we value the patience and support of our shareholders and we intend to reward this through the implementation of an on-going dividend policy as soon as possible.

Mark Pajak

Acting Chairman

Statement of Comprehensive Income for the Six Months ended 30 November 2011

None of the Company's activities were acquired or discontinued during the period.

Statement of Financial Position as at 30 November 2011

Statement of Changes in Equity for the Six Months ended 30 November 2011

Share capital represents the aggregate nominal value of shares issued to date.

Share premium represents the aggregate amount by which subscription price exceeds nominal value of shares issued to date net of the costs of shares issued and any permissible utilisation of share premium account.

Retained earnings represent accumulated net retained losses to date.

Statement of Cash Flows for the Six Months ended 30 November 2011

The Company has adopted the policy of determining that cash and cash equivalents shall comprise cash in hand and demand deposits, together with short-term liquid investments that are readily convertible to a known amount of cash, and that are subject to an insignificant risk of changes in value. At the end of the reporting period cash and cash equivalents consisted of cash at bank.

Notes to the Financial Information for the Six Months ended 30 November 2011

1. Principal accounting policies

Basis of preparation

Craven House Capital plc is a company incorporated in the United Kingdom under the Companies Act. The Company is listed on the AIM Market of the London Stock Exchange.

The financial information has been prepared under the historical cost convention, except to the extent varied below 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 and with IAS34 'Interim Financial Reporting'. The principal accounting policies used in the preparation of the interim financial information do not differ significantly from those set out in the Company's report and financial statements for the year ended 31 May 2011.

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 2011, 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.

Segment reporting

Operating segments are reported in a manner consistent with the internal reporting provided to the directors. The directors, who are responsible for allocating resources and assessing performance of the operating segments, have been identified as the senior management that make strategic decisions. The Company is principally engaged in investment business, the directors consider there is only one business segment significant enough for disclosure.

Restated amounts

In the financial statements for the year ended 31 May 2011 in order to correct an error an amount of £7,060,000 previously presented as a merger reserve was re-classified within retained earnings. The comparative amounts for the period ended 30 November 2010 have been re-stated accordingly.

Going concern

At the balance sheet date, the Company had outstanding non-interest bearing loans of £520,000 payable to Desmond and a $100,000 loan payable to Wise Star Capital Investment Ltd ("Wise Star"), accruing interest at 6% per annum. Loans were drawn down to enable the Company to make qualifying investments under its Investing Policy and to provide working capital for the Company. Although amounts drawn down are repayable within 12 months of the balance sheet date, Desmond and Wise Star has agreed that it will not seek repayment of outstanding balances in respect of both facilities unless the Company is in a position to make the repayment.

2. Finance expense

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

Increase in the Value of Listed Investments

The Company has a holding of 42,500 shares in Mongolian Growth Group Ltd which were acquired at a cost of CAD$3.51 each and were listed on the relevant exchange at the close of business on 30/11/11 at CAD$4.14. This represents an increase of CAD$26,775 in total investment value.

The Company also has a holding of 200,000 shares in Farm Lands of Guinea which were acquired at a cost of USD$5.00 each (together with warrants) and were listed on the relevant exchange at the close of business on 30/11/11 at USD$6.20. This represents an increase of USD$240,000 in total investment value.

Non-Listed Investments

As the directors are not aware of any adverse elements that would materially affect the value of the various non-listed investments held by the Company, they consider the original cost is an appropriate valuation as at 30 November 2011.

5. Loans

Included in 'Trade and other payables' are loans of £583,000 comprising advances made by Desmond, and Wise Star Capital Investment, both Hong Kong investment companies. The loans were provided to enable the Company to make qualifying investments under its Investing Policy and to provide working capital for the Company.

The terms of the loans are as follows:

a) Investment facility from Desmond Holdings

Non-interest bearing loan facility of up to £700,000. The Company may only make drawdowns in order to enter into investment agreements with companies introduced by Desmond should they comply with the Company's Investing Policy and be approved by the Board of Directors. $106,000 was repaid to Desmond in the period, after repayment of a convertible loan made to Shenzen Cadro (Catic Group) Hydraulic Equipment Co. Limited in December 2010.

b) Working capital loans from Desmond Holdings and Wise Star

Interest-bearing (6% p.a.) loans to provide financial support to enable the Company to meet its reasonable working capital requirements. The facilities will remain in place for at least 12 months from the date the loans were provided.

Desmond and Wise Star have agreed that they will not seek repayment of outstanding balances in respect of both facilities unless the Company is in a position to make the repayment.

6. Share capital

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 £1 million per share. The deferred shares may be cancelled at any time for no consideration by way of a reduction in capital.

During the period the Company issued 82,226,266 ordinary shares of 0.1p per share at a premium of 1.15p per share and 2,900,000 ordinary shares of 0.1p per share at 1p per share.

During the period the Company issued warrants to purchase 82,226,266 ordinary shares at 1.5p per share.

The calculation of earnings per share is based on the loss attributable to the equity holders for the period of £15,000 and on weighted average number of shares in issue of 256,250,205 (Six months ended 30 November 2010: loss of £81,000 and 132,483,068 shares; Year ended 31 May 2011 loss of £328,000 and 161,998,742 shares) being the weighted average number of shares, both basic and diluted, in issue during the period.

7. Related party transactions

During the period, $106,000 was repaid to Desmond after repayment of a convertible loan made to Shenzen Cadro (Catic Group) Hydraulic Equipment Co. Limited in December 2010. Mark Pajak, Non-Executive Director and Chairman, is a director and shareholder of Desmond.

8. Events after the reporting period

On 5 January 2012, the Company announced it had purchased 1,387,507 shares in Pressfit Holdings Plc ("Pressfit") (representing approximately 4.5% of the Company's issued share capital) from an existing shareholder at 9.875p per share, amounting to an aggregate consideration of circa £137,000. This purchase of shares was conditional upon the shareholder subscribing for 10,961,305 new ordinary shares of 0.1 pence each in the Company for 1.25p per share. Following this issue, the total issued share capital of the Company was 291,086,971 ordinary shares.