SPPC.L Regulatory News (SPPC)

20 Dec 2007 07:01

St Peter Port Capital Limited20 December 2007 Interim Results for the Period Ended 30th September 2007 St Peter Port Capital Limited ("the Company" or "St Peter Port"), the AIM listedinvestment company whose aim is to generate value by investing in growthcompanies shortly before an initial public offering ("IPO") ("pre-IPO companies"), announces its maiden interim results following its successful IPO on AIM on16th April 2007 which raised £75m in new money. Highlights • £34m invested in 21 pre-IPO companies at period end; • subsequently, a further £10m invested in another 7 companies; • NAV of 97.55p per share unchanged since flotation (unquoted pre-IPO investments held at cost in local currency reflecting short period of investment and quoted investments at bid price); • post September 30th, material progress in a number of companies within the portfolio, in particular Buried Hill, Petaquilla Copper and River Diamonds. Tim Childs, Chief Executive of St Peter Port Investment Management Limited,said: "We are pleased with the investments we have made so far and with thestrong deal flow we have secured. We have an exciting portfolio which isgrowing in value. We expect to invest the balance of our funds during thecourse of 2008." For further information: St Peter Port Investment Management LimitedTim Childs - 020 7877 5064 / Graham Shore - 020 7408 4090 St Peter Port Capital LimitedPeter Griffin - 01481 751000 Citigate Dewe RogersonFiona Mulcahy / Sarah Gestetner - 020 7638 9571 Deloitte & Touche LLP- Nominated AdvisorJonathan Hinton / James Lewis - 020 7936 3000 Shore Capital Stockbrockers Limited - BrokerDru Danford - 020 7408 4090 Notes for Editors St Peter Port Capital Limited floated on AIM on 16th April 2007, raising £75m innew equity. The Company is a Guernsey registered closed ended investmentcompany. The Company's objective is to achieve returns from the uplift on orshortly after IPO, but the exit from the investment could also be a trade sale. The universe for investment is principally companies across a broad range ofsectors and geography expecting to conduct an IPO in the months after theCompany's investment. The initial focus is on companies targeting UK, US andCommonwealth stock markets although pre-IPO companies looking to float on otherexchanges will also be considered. The Company appointed St Peter PortInvestment Management Limited, a joint venture between Broughton InvestmentsGroup Limited ("Broughton"), a company in which Tim Childs is interested, andShore Capital Limited ("Shore Capital"), the absolute return fund managementspecialist which currently manages approximately US $3 billion, to act as itsinvestment manager (" the Investment Manager"). The Investment Manager is mandated to manage the Company's portfolio activelywith the aim of achieving its investment objective. Initially, whilst suitableinvestments are being identified, the Investment Manager is seeking to minimisecash drag by investing a significant proportion of the net proceeds of theplacing in absolute return products intended to generate a positive return,principally hedge funds and funds of hedge funds. Chairman's Statement Introduction I am pleased to report our first set of interim results for the period from theCompany's inception on 6 March 2007 to 30 September 2007. The Company wassuccessfully admitted to AIM on 16 April 2007 when it raised £75m beforeexpenses. The Company made its first pre-IPO investments in May and theseinterim results therefore represent the outcome of about 5 months of investing. Investment strategy The Company's investment strategy is to build a diversified portfolio of growingsmall to mid-sized companies which are seeking to achieve an IPO within areasonably short time horizon. It is intended that investments areopportunistic and not sector or regionally focused and that they are typicallypassive in nature. The Company may also invest in quoted companies (forexample, where a company becomes a shell and is about to make a majoracquisition). The intention is to build a portfolio of investments of in the region of fortycompanies over twelve to eighteen months. The Investment Manager is mandated tomanage the Company's portfolio actively in order to enhance returns, with anemphasis on realising gains in the medium term. The intention is to re-investthe proceeds of realisations into new pre-IPO investments. In the first fewmonths of the life of the Company before the cash is fully deployed in pre-IPO,the Investment Manager is to seek to minimise cash drag by investing asignificant proportion of the net proceeds of the placing in a range of absolutereturn products intended to generate a positive return, principally hedge fundsand funds of hedge funds. Progress to Date In this first period the Company has made a strong start, making investmentsduring the period of over £34m in 21 pre-IPO companies. The average size ofinvestment per company was £1.6m. The balance of its funds was invested inhedge funds (directly or in a fund of funds) or held in cash. The investments made follow the stated strategy and represent a promisingportfolio of companies, some of which are now seeking to come to market. Sincethe period end, the Company has invested a further £10m in an additional 7pre-IPO companies. The portfolio and its prospects are discussed in theInvestment Manager's Report below. Financial Results The Company is a Guernsey domiciled closed-ended investment company whose sharesare traded on AIM. As such, it reports its results under IFRS and in particularunder IPEVC, an international guideline for valuing unquoted investments. This,in contrast to BVCA guidelines which used to be commonly adopted by companiesholding unquoted investments, requires the Board to attempt to determine thefair market value of each investment held and to revalue the Company's holdingsto that value, whether this requires an increased or decreased valuation andirrespective of whether there has been any investment or sale by a third partywhich would help validate that change in the holding value. St Peter Port isreporting using this new set of principles, but as its holdings are all veryrecently acquired, its Board has decided that in this case cost is a fair guideto market value in each case. However, in the case of those investments made inforeign currency, their value has been adjusted to reflect differences inexchange rates between the date of investment and the period end. Wherecompanies are already quoted, their shares have been valued at the bid price. The income statement for the period shows that the Company made a small profitfor the period. This reflects the small excess of finance income over operatingexpenses of the Company. The foreign exchange movements in relation to pre-IPOinvestments and changes in hedge fund values ended up more or less cancellingeach other. The balance sheet showed pre-IPO investments at £34.5m, a small surplus overcost as a result of foreign exchange movements. £32.0m was held in hedge fundsand the balance was represented by cash. The pre-IPO investments were madethroughout the 5 months after flotation and the cash balance therefore variedover the period. Total assets were £73.4m, giving a net asset value of 97.55pper share. This reflects a small profit and is close to the net asset valueimmediately after flotation. Outlook The Board believes that the Company's strategy is beginning to bear fruit. TheInvestment Manager's focus on sectors where profitable exits remain a goodprospect and on seeking down round protection wherever possible should hold theCompany in good stead. The Board views the outlook with confidence. Bob Morton Chairman Investment Manager's Report As stated in the Company's investment strategy at admission, the investments wehave sought to make have been opportunistic rather than sectorally or regionallyfocused. Our principal criterion has been whether we believe that the potentialinvestee company is a credible candidate for a successful IPO in the nearfuture, taking into account our assessment of likely market conditions anddevelopment of the company. In this process, we are conditioned by the views ofthe brokerage community who bring us deals in which to invest. If they believethat, for example, oil and gas companies with exciting prospects can stillsuccessfully float in current market conditions whilst the prospects forretailers to float are currently much cloudier, then they will not bring focusedretailers as pre-IPO deals and we cannot therefore select them. But we can pickand choose amongst those deals which they do bring forward and select thosewhich we think have the best prospects. It is for this reason that our portfolio of investments made to date is heavilyweighted towards three sectors: oil and gas (including two investments incompanies using novel techniques to improve recovery rates); minerals includingcopper, gold, nickel, uranium, iodine and rarer elements; and environmentallyfriendly technologies including cleaner/more efficient ways of burningconventional fuels, second generation bio fuels and hydrogen technologies.These sectors account for the great majority of investments. Many of the investments in these sectors are outside of the UK, and asignificant proportion are sourced from brokers whose main business is outsidethe UK. We expect many of them to list in North America (particularly Canada)or other markets rather than the UK. We have provided details of most of theseinvestments in earlier announcements. Since the last announcement we have made a further eight investments. One wasbefore the period end, although fully completed after it, in Cadogan Petroleum.The other seven were made entirely post balance sheet. Table 1 shows the breakdown of the pre-IPO investments by sector as at 30September 2007, but including both tranches of the Cadogan investment: Table 1 Investments by Sector as at 30 September 2007 Sector Number £m PercentageOil and Gas 7 15.5 42.6Mining 7 9.0 24.7Environmental 5 9.5 26.1Other 2 2.4 6.6Total 21 *36.4 100.0 * includes £2.25m committed as at 30 September 2007 Table 2 shows the same information at the date of this report. Table 2 Investments by Sector as at 19 December 2007 Sector Number £m PercentageOil and Gas 8 16.5 34.9Mining 12 16.5 34.9Environmental 5 9.5 20.1Other 3 4.8 10.1Total 28 47.3 100.0 Recent Investments The pre-IPO investments made since the last announcement on 7 September 2007 areas follows: • a £3.75m subscription for ordinary shares in Cadogan Petroleum Plc ("Cadogan Petroleum"); • a £3m subscription of ordinary shares in China Molybdenum Limited ("China Molybdenum"); • a £1m subscription for ordinary shares in Sumatra Copper & Gold Limited ("Sumatra Copper & Gold"); • a US$1m subscription for ordinary shares in CDR Minerals Inc. ("CDR Minerals"); • a Cdn$4m subscription for ordinary shares in Royal Nickel Corporation ("Royal Nickel"); • a Cdn$2.025m subscription for ordinary shares in MinCore Inc. ("MinCore"); • a £1m subscription for ordinary shares in Iofina plc ("Iofina"); and • a US$5m subscription for convertible loan notes in Panceltica Limited ("Panceltica"). Cadogan Petroleum is an oil and gas exploration and development company focusedon the Ukraine. China Molybdenum was formed in 2005 to acquire several mining assets with anestimated value of £265m representing abundant molybdenum and nickel miningproduction opportunities in Zhangjiajie City, Hunan Province China. Sumatra Copper & Gold controls nearly 18,000 sq km of land on the island ofSumatra, Indonesia with advanced resources of gold, silver and copper. CDR Minerals is an early stage nickel and copper play in Quebec and copper andcobalt play in Zambia. Royal Nickel owns what is thought to be one of the largest single nickeldeposits in the world and has already attracted the attention of major miningcompanies. MinCore has large deposits in Central America - a molybdenum deposit in Venadoand a second mineral deposit of Cu-Mo in Pico Prieto. Iofina has more than 30,000 acres of prospective acreage in northern Montana,which should enable the company to become one of the leading iodine producers inthe USA within 5 years. Panceltica is a privately owned specialist construction company based in Qatar,which uses a proprietary steel structure framework system which enables rapidconstruction of steel-framed tower buildings. The Company understands that each of these eight companies is planning to floator gain a secondary listing within the next 12 months. Investment Structuring- Down- Round Protection and Investment Size In structuring investments we have been very aware of the difficult stock marketconditions affecting smaller companies prevailing since we began investing. Forthis reason we have given strong emphasis to protections as a condition of ourinvestment, principally by investing in convertible loans whose pricing is at apre-set discount to the IPO price, often with a ratchet to increase the discountif the IPO is delayed. In some cases we have also obtained fuller down-roundprotections. In others, particularly where the pre-IPO placing is in strongdemand we have not obtained such protections, but we believed in those casesthat a successful IPO at a substantial uplift was a highly likely event. In general we have also sought to ensure that our size of investment wastailored to the size of the company in which we invested, the size of thepre-IPO placing and the likely size of the IPO. Hedge Funds Our strategy has been to hold a large proportion of the Company's assets not yetcommitted to pre-IPO investments in hedge funds. The aim was to enhance returnand avoid cash drag. However, as a result of turbulent markets in August andunderperformance from equity market neutral funds, the funds have performedbelow expectations and during the period generated a small loss. Since theperiod end performance has improved and over the entire period we now have asmall profit from these holdings. As the portfolio of pre-IPO investments hasgrown we have reduced our holdings of hedge funds. Pre IPO to IPO - Investment Progress We are pleased to report a number of positive developments in our portfoliowhich have occurred in recent weeks: • Buried Hill, an oil and gas company in which we invested $3.6m, hassuccessfully acquired its licences in Turkmenistan. It was a condition of partof our investment becoming firm that such licences were granted. We understandthat Buried Hill's shares are trading at a substantial premium to our purchaseprice on an over the counter market; • Petaquilla Copper, in which we invested Cdn$8.0m at C$2.00/unit, hasjust announced a private placement at C$3.50/unit of up to 14.5m units raisingup to Cdn$50.75m; and • River Diamonds, in which we have invested £500,000 at 1.35 pence/share, has announced that it is acquiring the balance of the Emperor Gold Minein Fiji it did not own, is issuing shares to the vendors in part considerationand has agreed a conditional placing at 6 pence/share to raise £4.25m. Further Investments We are at an advanced stage with a number of other investments. Tim Childs St Peter Port Investment Management Limited Independent review report to St Peter Port Capital Limited Introduction We have been engaged by the company to review the financial information for theperiod ended 30 September 2007, which comprises the income statement, balancesheet, statement of changes in equity, cash flow statement and related notes. Wehave read the other information contained in the interim financial report andconsidered whether it contains any apparent misstatements or materialinconsistencies with the financial information. Directors' responsibilities The financial information is the responsibility of, and has been approved by,the directors. The directors are responsible for preparing the interim report inaccordance with the AIM rules for companies. Scope of review We conducted our review in accordance with International Standard on ReviewEngagements (UK and Ireland) 2410, 'Review of Interim Financial InformationPerformed by the Independent Auditor of the Entity' issued by the AuditingPractices Board for use in the United Kingdom. A review of interim financialinformation consists of making enquiries, primarily of persons responsible forfinancial and accounting matters, and applying analytical and other reviewprocedures. A review is substantially less in scope than an audit conducted inaccordance with International Standards on Auditing (UK and Ireland) andconsequently does not enable us to obtain assurance that we would become awareof all significant matters that might be identified in an audit. Accordingly, wedo not express an audit opinion. Conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the period ended 30September 2007. PricewaterhouseCoopers CI LLP Chartered Accountants ST PETER PORT CAPITAL LIMITED INTERIM INCOME STATEMENT FOR THE PERIOD ENDED 30 SEPTEMBER 2007 Total Note 30 Sept 2007 £ 000'sRevenue 11Operating expenses (586) Operating loss (575) Finance income 594Finance costs (3) Profit for the period 16 Attributable to:Equity holders of the company 16 Earnings per share for profit attributable to the 3 0.02equity holders of the company (pence per share) This interim financial information is unaudited and is not the Company'sstatutory financial statements. ST PETER PORT CAPITAL LIMITED INTERIM BALANCE SHEET AS AT 30 SEPTEMBER 2007 Note 30 Sept 2007Assets £ 000's Non-current assetsFinancial assets at fair value through profit or loss 34,496 Total non-current assets 34,496 Current assetsFinancial assets at fair value through profit or loss 32,004Trade and other receivables 4 225Cash and cash equivalents 5 6,691 Total current assets 38,920Total assets 73,416 Equity Capital and reserves attributable to equityholders of the companyShare capital -Share premium -Special reserve 75,000Other reserves (1,852)Retained earnings 16 Total Equity 73,164 Liabilities Current liabilitiesTrade and other payables 6 252 Total current liabilities 252Total liabilities 252Total equity and liabilities 73,416 Net asset value per share (pence per share) 9 97.55 This interim financial information is unaudited and is not the Company'sstatutory financial statements. ST PETER PORT CAPITAL LIMITED INTERIM STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD ENDED 30 SEPTEMBER 2007 Share Special Other Retained Total Note Capital Reserve Reserves Earnings Equity £ 000's £ 000's £ 000's £ 000's £ 000's Initial set-up costs - - (1,852) - (1,852) Net loss recognised directly in equity - - (1,852) - (1,852) Profit for the period - - - 16 16 Total recognised profit for theperiod to 30 September 2007 - - (1,852) 16 (1,836) Proceeds from shares issued - 75,000 - - 75,000 Balance at 30 September 2007 - 75,000 (1,852) 16 73,164 This interim financial information is unaudited and is not the Company'sstatutory financial statements. ST PETER PORT CAPITAL LIMITED INTERIM CASH FLOW STATEMENTFOR THE PERIOD ENDED 30 SEPTEMBER 2007 Notes £ 000'sCash flows from operating activities Continuing operations (26) Net cash used in operating activities (26) Cash flows from investing activities purchase of investments (66,431) Net cash used in investing activities (66,431) Cash flows from financing activities Issue of shares 75,000Initial costs taken directly to reserves (1,852) Net cash generated from financing activities 73,148Net increase in cash and cash equivalents 6,691Cash and cash equivalents at beginning of period -Cash and cash equivalents at end of period 6,691 This interim financial information is unaudited and is not the Company'sstatutory financial statements. Notes to the Interim Results 1. GENERAL INFORMATION St Peter Port Capital Limited (the "Company") is a Guernsey registered, closedended investment company. The Company has been established with the aim ofgenerating value for Shareholders by investing in growth companies, which areseeking to achieve an initial public offering ("IPO") within a reasonably shorttime horizon. Investments will be made across a broad range of sectors andgeography. The address of the registered office is shown in note 11. The company's websiteis www.stpeterportcapital.gg. The Company is listed on the AIM Market of the London Stock Exchange. This interim financial information is unaudited and is not the Company'sstatutory financial statements. 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This interim financial information for the period ended 30 September 2007 hasbeen prepared in accordance with Rule 18 of the AIM listing requirements. Asthis is the Company's first reporting period, no comparative figures have beendisclosed. These interim financial statements have been prepared using thefollowing principles and policies. 2.1 Accounting Policies a) Income Investment income is recognised on a time apportioned basis using the effectiveinterest method. Interest income on bank balances is accrued for on a day to day basis. b) Running costs and expenses The Company will bear all fees and out of pocket expenses properly incurred bythe Investment Manager, the Administrator and the Registrar. In addition, itwill meet all of its own costs and expenses, including aborted transaction fees,the remuneration of those Directors for whom fees are payable and their expensesand the costs of all employees, advisers and consultants acting in theperformance of the Company's business, commissions, banking fees, legalexpenses, insurance costs, regulatory fees, acquisition and disposal fees,auditors' fees, listing costs and the costs of distribution of reports andaccounts and other documentation to shareholders. c) Valuation of investments The Company classifies its investments at fair value through profit or loss.Transaction costs are expensed in the income statement. Subsequent to initialrecognition, all financial assets and financial liabilities at fair valuethrough profit or loss are measured at fair value. The Investment Manager's assessment of fair value is determined in accordancewith the International Private Equity and Venture Capital ("IPEVC") ValuationGuidelines. It is the opinion of the Investment Manager, that the IPEVCvaluation methodology used in deriving a fair value is not materially differentfrom the fair value requirements of IAS 39. Investments are initially measured at cost. A summary of the more relevantaspects of IPEVC Valuations is set out below: Marketable (Listed) Securities - Where an active market exists for the security,the value is stated at the bid price on the last trading day in the period.Marketability discounts should generally not be applied unless there is somecontractual, governmental or other legally enforceable restriction preventingrealisation at the reporting date. Unlisted Investments - are carried at such fair value as the Investment Managerconsiders appropriate given the performance of each Investee Company and aftertaking account of the effect of dilution, the exercise of ratchets, options orother incentive schemes. Where the investment being valued was made recently, it's cost may provide anindication of fair value. Methodologies used in arriving at the fair value include prices of recentinvestment, earnings multiples, net assets, discounted cash flows analysis andindustry valuation benchmarks. Investment income is recognised as a separate line item in the Income Statementin the period in which a realisation of the underlying investment occurs. Notwithstanding the above, the variety of valuation basis adopted and quality ofmanagement information provided by the underlying Investee Company means thereare inherent difficulties in determining the value of these investments.Amounts realised on the sale of these investments will differ from the valuesreflected in these interim financial statements and the difference may besignificant. d) Taxation The company has been granted exempt status under the Income Tax (Exempt Bodies)(Guernsey) Ordinance 1989, and is therefore subject to the payment of an annualfee which is currently £600. e) Foreign currency translation (i) Functional and reporting currency The functional currency of the Company is Pounds Sterling as substantially allexpenses relating to the investments are made in Pounds Sterling. The reporting currency of the Company for accounting purposes is also PoundsSterling. (ii) Transactions and balances Foreign currency balances are translated into Pounds Sterling at the rate ofexchange ruling on the last day of the Company's financial period. Foreigncurrency transactions are translated at the rate of exchange ruling on the dateof transaction. Gains and losses arising on currency translation are includedin the Income Statement as net changes in fair value of financial assets andliabilities at fair value through profit and loss. 3. EARNINGS PER SHARE The calculation of basic earnings per share is based on the net profit fromcontinuing operations for the period and on 75,000,000 shares being the weightedaverage number of shares in issue during the period. There is no differencebetween basic earnings per share and diluted earnings per share. 4. TRADE AND OTHER RECEIVABLES 30 Sept 2007 £000'sDebtors 195Prepayments 30 225 5. CASH AND CASH EQUIVALENTS 30 Sept 2007 £000's 6,691 The cash equivalent investments are considered to be highly liquid, so that bookcost is considered equivalent to book value. The weighted average interest rateon cash balances at 30 September was 5.76%. The Company has no material interestbearing liabilities. 6. TRADE AND OTHER PAYABLES 30 Sept 2007 £000'sDirectors fees payable 20Audit fee payable 17Sundry creditors 215 252 7. SHARE CAPITAL Founder Shares 30 Sept 2007 £10,000 Founder Shares of £0.01 each authorised 100issued and fully paid Ordinary Shares There are an unlimited number of ordinary shares of nil par value authorised. Atthe balance sheet date 75,000,000 have been issued and fully paid. The Ordinary Shares do not carry any right to fixed income. 8. SHARE PREMIUM AND SPECIAL RESERVE 30 Sept 2007 £000'sShare premium -Special reserve 75,000 75,000 On Friday 13th April 2007 the Royal Court of Guernsey approved the reduction ofcapital by way of a cancellation of the Company's share premium account. Theamount cancelled has been credited as a distributable reserve established in theCompany's books of account. This shall be available as distributable profits tobe used for all purposes permitted under Guernsey Company Law including the buyback of shares and the payment of dividends. 9. NET ASSET VALUE PER SHARE 30 Sept 2007 £000'sNet Asset Value 73,164Average number of Ordinary Shares in issue 75,000Net Asset Value per Ordinary Share (pence per share) 97.55 The Net Asset Value per Ordinary Share is based on the Net Asset Value at theBalance Sheet date and on 75,000,000 Ordinary Shares being the average number ofshares in issue during the year to date. 10. POST BALANCE SHEET EVENTS On 18th October 2007, the Company's investment into pre-IPO companies passed thehurdle at which management fees become payable at 2 per cent per annum. TheInvestment Manager's report details investments made after the balance sheetdate. 11. FURTHER INFORMATION Copies of these interim results are available from the offices of Fortis, PO Box119, Martello Court, Admiral Park, St Peter Port, Guernsey, GY1 3HB. This information is provided by RNS The company news service from the London Stock Exchange