TIDMSPPC
RNS Number : 2815O
St Peter Port Capital Limited
29 May 2020
For Immediate Release 29 May 2020
St Peter Port Capital Limited (the "Company" or "St Peter Port"
or "SPPC")
Final Results for the Year Ended 31 March 2020
St Peter Port Capital Limited, the AIM-quoted investment company
announces its final audited results for the year ended 31 March
2020.
For further information:
St Peter Port Capital Limited
Lynn Bruce, Director +44 (0) 1481 724 222
Grant Thornton UK LLP (Nominated
Adviser)
Philip Secrett
Jamie Barklem +44 (0) 20 7383 5100
The information contained within this announcement is deemed to
constitute inside information as stipulated under the Market Abuse
Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
Chairman's statement
Introduction
I report upon the year ended 31 March 2020.
Background
These final results have been prepared using the information we
have available, but against the backdrop of major economic
disruption. Measures to deal with COVID-19 have impacted the entire
economy of the world and, most probably, touched every sector. It
is too early to comment on the medium-term effects on investment
markets and values. We can only at this stage comment upon the
short term impacts on the Company's portfolio
Some of our core companies have achieved further progress in the
reporting period but progress remains slow. It has not been helped
by the current COVID-19 pandemic. We continue to seek opportunities
to sell down St Peter Port's positions at a sensible price and
remain focused on shareholders' wish to liquidate the portfolio as
soon as possible on reasonable terms.
Financial Results
The balance sheet shows investments of GBP9.8 million (2019:
GBP10.4 million), consisting of financial assets at fair value
through profit or loss of GBP9.8 million (2019: GBP10.4 million).
Net assets were GBP10.2 million (2019: GBP11.1 million), giving a
net asset value of 15.81p per share (2019: 17.21p per share). Net
assets have decreased by 12.9 per cent. since the interim results
as at 30 September 2019. The changes result from write-downs to
several of the portfolio valuations, all as described further in
the Investment Report below.
At the balance sheet date, the Company held GBP425,000 in cash
(2019: GBP756,000). As at 27 May 2020, the Company held GBP395,000
in cash, sufficient for at least another 12 months of the Company's
operations.
Realisation and Investments
The Company made no new investments during the year and,
reflecting the current illiquidity of our portfolio, made no
realisations during the period under review.
Investment Report
As previously reported, having terminated its discretionary
investment management agreement with St Peter Port Investment
Management Limited, the Company is now a self-managed fund.
The Company's portfolio comprises a potash mine development in
Brazil, an oil exploration project in the Caspian Sea, a nickel
development project in Oregon, USA, a company engaged in the
development and manufacture of technology for screens which allows
viewers to watch in 3D without glasses, a vaccine development
company in the UK focused on a universal flu vaccine and a large
farmland owner in Uruguay. As previously reported, the size of each
holding as a percentage of each portfolio company's share capital
is small (less than 2 per cent), other than in the case of the
nickel development project, in which the Company has an indirect
controlling interest and the vaccine development company, in which
the Company has an interest of approximately 7 per cent. Most of
the portfolio companies have their main activity outside of the UK
and all the holdings are currently in private companies, its
remaining listed positions having been sold down during previous
financial years.
The following table shows the breakdown by sector of the
portfolio (excluding investments fully written off) as at 31 March
2020:
Sector Number Cost Book Percentage
GBPm Value (of book
GBPm value)
Mining 2 3.7 6.1 62.4
Oil and Gas 1 1.8 3.0 30.4
Technology 2 1.7 0.5 5.6
Ag./ Forestry 1 1.9 0.2 1.6
------- ------ ------- -----------
Total 6 9.1 9.8 100.0
======= ====== ======= ===========
The table below shows the breakdown by region of the portfolio
(excluding investments fully written off) as at 31 March 2020:
Analysis Number Cost Book Percentage
by continent* GBPm Value (of book
GBPm value)
Europe 1 0.7 0.3 3.6
North America 2 3.2 0.4 4.1
Asia 1 1.8 3.0 30.4
South America 2 3.4 6.1 61.9
Total 6 9.1 9.8 100.0
* This is based on area of company's principal activities,
rather than its place of incorporation. Stream TV has been included
in North America as this is where a significant element of its
administration and sales activities takes place, but it has R&D
in Europe and manufacturing in Asia.
Top Three Investments as at 31 March 2020
The following table lists SPPC's top three investments by value
as at 31 March 2020 representing 94.3 per cent. by value of the
portfolio.
Company Cost Valuation Gain Status
GBP000's GBP000's GBP000's
Brazil Potash Corp 1,507 5,906 4,399 Unquoted
Buried Hill Energy (Cyprus)
Plc 1,749 2,982 1,233 Unquoted
iQur 727 348 (379) Unquoted
Total 3,983 9,236 5,253
========= ============= =========
Portfolio review
Brazil Potash
Brazil Potash owns the key mineral rights in a world-class scale
potash basin some 120 kilometres south-east of Manaus, one of the
main cities in northern Brazil. The site is about eight kilometres
from the Madeira River (feeding into the Amazon), which should
allow the company to transport planned production to fertiliser
plants downriver by barge. Brazil is one of the major importers of
potash today, and the management of Brazil Potash believe that the
company should be able to mine, process and deliver its product for
an amount equivalent to the delivery costs alone of potash imports
from Canada and Russia.
Brazil Potash's management report that the company has recently
achieved some major permitting milestones, including the approval
by Brazil's mineral agency of their economic development plan
("EDP") which is one of the main authorizations required to be
issued by Brazil's Mining Minister pre-construction. This means 76
of the required 78 social and environmental studies needed to
obtain the Installation License as required for project
construction to commence have been completed out of which 69 have
been approved by the Amazonas State Environmental Agency. The final
two items required relate to completion of indigenous consultations
which have started but are currently on hold due to the outbreak of
the Coronavirus. In addition to having the EDP approved, Brazil
Potash has also received approval for its port construction
authorization license.
As noted in the Company's interim report, last year Brazil
Potash signed a binding Engineering, Consulting and Construction
("EPC") contract with CITIC Construction ("CITIC") that includes a
condition whereby CITIC committed to arranging the bulk of funding
required for project construction in exchange for being awarded the
EPC contract. CITIC's parent company, CITIC Ltd., has a market
capitalization of over US$200 billion and is one of the largest
State-Owned Enterprises ("SOE") in China. Whilst Brazil remains in
Coronavirus lockdown, China is beginning to return to normal so the
management are progressing discussions with a consortium of Chinese
investors for project construction.
Brazil Potash also recently announced its intention to undertake
a new United States Regulation A+ equity raise to bring the project
to a construction ready state.
Whilst Brazil Potash is no closer to an exit by way of an IPO or
sale of the company, we are encouraged by this progress which
should help SPPC's efforts to sell its position in Brazil Potash in
the secondary market. The board decided to leave the valuation as
is at US$2.50 per share.
Buried Hill
Buried Hill has a Production Sharing Agreement ("PSA") with the
government of Turkmenistan in relation to one of the largest oil
blocks under the Caspian Sea. However, the block lies beneath a
disputed border between Turkmenistan and Azerbaijan and all
operational activities at the site ceased several years ago,
pending a resolution between the two countries of this border
dispute. The project is fully funded by Buried Hill's co-venturer
(an international oil major) and the company's leadership is
strong.
We understand that shortly before the year end, the presidents
of Turkmenistan and Azerbaijan met and agreed to go ahead with the
joint development on the terms of the 2016 "agreement" - i.e. 70%
to Turkmenistan and 30% to Azerbaijan. Buried Hill's management
team was given the news personally by the Turkmenistan Oil
Minister. Lukoil will be the partner on the Azeri side with Buried
Hill the partner on the Turkmen side and we understand that Lukoil
and Buried Hill have been negotiating a formal agreement in the
last few months. Unfortunately, the Coronavirus lockdown has slowed
this process but Buried Hill remain confident that the agreement
will be signed in the short term.
Meanwhile, Buried Hill's ongoing focus has been on protecting
its rights under the Block III PSA whilst reviewing its ongoing
costs to maintain a sustainable level. As previously reported,
Buried Hill has placed the licence into Force Majeure which should
achieve all the objectives envisaged under freezing but, as a
unilateral act, is not without risk.
In the event the Turkmenistan/Azerbaijan agreement is concluded,
we would expect renewed interest in Buried Hill which should help
SPPC's efforts to sell its position in the secondary market.
Meanwhile, Buried Hill remains substantially funded (in relation to
this project) and your board has decided to leave the valuation as
is at US$1.60 per share.
iQur
iQur is a vaccine development company. Its lead candidate
vaccine is FLUTCORE - a universal Influenza A vaccine. The company
owns an exclusive worldwide licence to a platform technology called
Tandem Core, which is a modified hepatitis B protein that forms
virus like particles (VLPs) which can be coated with specific
antigens. These VLPs stimulate antigen specific immune responses,
and FLUTCORE is designed to harness Tandem Core technology to
stimulate a prophylactic immune response to the conserved
(non-variable) parts of flu. Although other companies (large and
small) are also looking to develop universal flu vaccines, iQur's
approach and technology is unique.
The company reported some time ago that it has shown that its
influenza vaccine lead candidate protects against lethal influenza
infection in mice (with experiments conducted at three different
independent laboratories) and is confident that its vaccine has
true potential as a "universal" flu vaccine on the basis of these
tests. iQur continues to seek funding to pursue a phase 1 clinical
trial of its flu vaccine, but the investment climate for small
bio-tech companies for the last two years has been difficult. The
company's CEO has told us that the company has sufficient cash for
its immediate needs and that its small diagnostics business
continues to generate some net cash.
iQur's technology has the capability to deliver vaccines against
a broad range of viral diseases. The company has done some very
preliminary work and believes that its Tandem Core platform could
be used to deliver antigens related to COVID-19. It is in the early
stages of exploring whether there is potential to fund such a
development.
The board decided to leave the valuation as is at GBP2.10 per
share
Red Flat Nickel
St Peter Port is the indirect owner of 80 per cent. of the
issued share capital of Red Flat Nickel Corporation, a Las Vegas
company which owns 86 claims on top of Red Flat Mountain ("Gold
Beach") and some 137 claims on the McGrew Summit ("Cleopatra").
Both the Gold Beach and Cleopatra claims lie on federal land, which
is administered by the United States Forest Service (a part of the
United States Department of Agriculture).
Red Flat Nickel estimates that there may be 143,000 tonnes of
nickel in Gold Beach alone (the smaller site). It estimates that
the average amount of nickel required for an electric vehicle is
about 40kg, and for this reason the company believes that there is
potentially enough nickel in Gold Beach for over 3,500,000 electric
vehicles. To be able to supply the material for such a large number
of electric vehicles would represent a huge environmental benefit
and we note that Tesla is building a large battery plant on the
California/ Nevada border.
In addition to the nickel, RFNC also believes that there are
economically viable quantities of scandium and cobalt (also a
battery constituent) at both sites. Both scandium and cobalt are
included in the Department of Interior's 2018 list of 35 minerals
considered critical to the economy and security of the United
States (and both of which the US is increasingly reliant on China
and other countries for imports). The United States imports all
three minerals from countries with much lower environmental
standards than are applied in its own territory.
In the last days of the Obama administration, the Bureau of Land
Management announced that the Assistant Secretary for Land and
Minerals Management had signed a public land order for a 20 year
term withdrawing certain lands managed by the U.S. Forest Service
(including all the land on which RFNC owns its claims) from entry
under the US mining laws.
Objections to some minor test drilling which was initially
proposed at Red Flat in 2013 were adopted and then led by, amongst
others, Senators Wyden and Merkley in Oregon and resulted in the
20-year withdrawal (which Senator Wyden is seeking to make
permanent). The objections themselves could not possibly have been
about the very light drilling programme which was proposed (and
which the local Forest Service itself advised would have no
environmental impact), and rather were about stymieing the project
before it had any momentum.
Red Flat Nickel has continued to explore available options to
reverse the decision to have its claims withdrawn from mineral
extraction. To that end, Red Flat continues to engage with local
officials and make representations in Washington DC. Meanwhile, it
has ensured that its mining claims are kept renewed to allow it to
seek to establish that it had Valid Existing Rights prior to the
withdrawal, in an effort to obtain compensation for the loss of its
opportunity.
The board decided to leave the valuation unchanged.
Mediatainment - Stream TV Networks
Stream TV ("STV") is the owner of a technology which powers 3D
TV without glasses. STV's solution has been to insert a proprietary
printed circuit board mounting a programmed chip into the panels of
TV and display screens made by a wide variety of manufacturers.
Devices which could use the technology currently range in size from
tablets and games machines to 65 inch screens.
During the year under review, following an intra-group
restructuring, SPPC's shares are now held directly in Stream TV
Networks, Inc (previously they were held through a holding company,
Mediatainment, Inc.) which should put SPPC in a better position to
take advantage of any future realisation opportunity.
As previously reported, STV has entered into a strategic
alliance with Chinese panel manufacturing giant BOE. has expanded
its approved and already strong patent portfolio and added a team
based in Silicon Valley who are closer to the market for recent
commercialisation / productisation developments.
However, recent developments have been less encouraging. STV
recently reported that, as a result of recent developments in
television screen and tablet technology, it needs to develop a new
generation of its own technology. The lockdown in China and now the
lockdown in California have led to delays in progressing this work.
Consequently, it anticipates that it is still 18 months away from
being able to fully commercialise its products. Moreover, we have
been made aware of a potentially damaging dispute between the
management of STV and some of its non-executive directors and
debt-holders. As a result of these recent developments, your board
has decided to write down SPPC's carrying value of this investment
from US$1.00 to US$0.25 per share.
Agriculture Investment Group (formerly Union Agriculture Group)
("AIG")
Agriculture Investment Group ("AIG") is a diversified
agribusiness firm that is the largest agricultural company
operating in Uruguay with more than 100 farms across over 180,000
hectares , nearly 1% of Uruguay's total land mass. AIG also has
trading and logistics operations through its subsidiary, Granosur
Holding Limited, which owns 5 silo plants in Uruguay, a fleet of
transportation vehicles and the company has a 50 per cent. interest
in a further silo as well as a 37 per cent. interest in a Uruguayan
rice producer, processor and exporter.
Shortly before the year-end, AIG carried out an auction at which
the company sold treasury shares at US$0.57 per share (exceeding
the minimum price which had been set at US$0.50). The proceeds of
the sale were used to further reduce AIG's debt as well as provide
further cash at the start of this harvest season under the
extremely uncertain conditions resulting from the Coronavirus
pandemic.
AIG's latest shareholder report notes that it has achieved a
positive EBITDA (US$0.6 million) for the third consecutive year
and, as well as the company's debt reduction programme, it remains
focused on reducing operational costs where possible.
SPPC had been valuing its investment at US$0.825 per share;
however, given the results of the treasury share sale referred to
above and notwithstanding the company's most recently reported NAV
(US$2.34 per share as at 31 December 2019), your board has decided
to write down SPPC's carrying value of this investment to US$0.57
per share, or a discount of some 75% to the last net asset value
reported by AIG.
Other developments
We continue to monitor all SPPC's written-down investments but
there has been no substantive news in relation to any of these
during the period under review.
Dividends
There were no net gains on realisations during the year and so
no dividend is being proposed.
Outlook and life of the Company
As reported above, whilst there have been some positive
developments in our portfolio of companies, none are any closer to
being in a position where they are able to realise a liquidity
event (a sale of the company or an IPO). Moreover, despite all our
efforts, we have not been able to sell any of these holdings in the
secondary market on terms which your board believes is reasonably
close to their underlying value.
Over the last couple of years, we have undertaken a significant
cost-cutting exercise. We are now a self-managed fund with
significantly reduced costs. All your directors have reduced their
fees and have negotiated reductions in the fees of numerous
professionals, including the Guernsey based administrator. As you
will note, we have also recently changed auditors to cut costs even
further.
We recognise the mandate given to us at the EGM earlier this
year at which shareholders voted to continue the life of the
Company for another year. Despite the unprecedented market
turbulence in light of the COVID-19 pandemic, we remain focused on
liquidating the portfolio as soon as possible on sensible
terms.
Lynn Bruce
Chairman
for and on behalf of
St Peter Port Capital Limited
28 May 2020
St Peter Port Capital Limited
Consolidated Statement of Financial Position
As at 31 March 2020
As at 31/03/2020 As at 31/03/2019
GBP'000 GBP'000
Assets
Current Assets
Financial assets at fair value through
profit or loss 9,795 10,382
Loans and other receivables 20 11
Cash and cash equivalents 425 756
Total assets 10,240 11,149
----------------- -----------------
Liabilities
Current liabilities
Trade and other payables (86) (96)
Total liabilities (86) (96)
----------------- -----------------
Net assets 10,154 11,053
================= =================
Equity
Capital and reserves attributable
to equity holders of the Company
Share capital - -
Share premium - -
Special reserve - -
Revenue reserve 10,154 11,053
Total Equity 10,154 11,053
================= =================
Net asset value per Ordinary Share
(pence per share) 15.81 17.21
The accompanying notes 1 to 8 form an integral part of these
financial statements.
St Peter Port Capital Limited
Consolidated Statement of Comprehensive Income
For the year ended 31 March 2020
Year ended Year ended
31/03/2020 31/03/2019
GBP'000 GBP'000
Income
Net losses on financial assets at
fair value through profit or loss (587) (1,682)
Interest income 3 1
Foreign exchange gain 1 -
Other income - 7
Net investment loss (583) (1,674)
Administrative expenses (316) (541)
Net loss from operations (899) (2,215)
Loss for the year attributable to
shareholders of the Company (899) (2,215)
============ ============
Basic and diluted loss per Ordinary
Share (pence) (1.40) (3.45)
The accompanying notes 1 to 8 form an integral part of these
financial statements.
St Peter Port Capital Limited
Consolidated Statement of Changes in Equity
For the year ended 31 March 2020
Special Revenue
reserve reserve Total
GBP'000 GBP'000 GBP'000
Opening balance as at 1 April 2018 - 13,268 13,268
Loss for the year - (2,215) (2,215)
Balance as at 31 March 2019 - 11,053 11,053
Loss for the year - (899) (899)
Balance as at 31 March 2020 - 10,154 10,154
========== ========= ========
The accompanying notes 1 to 8 form an integral part of these
financial statements.
St Peter Port Capital Limited
Consolidated Statement of Cash Flows
For the Year Ended 31 March 2020
Year ended Year ended
31/03/2020 31/03/2019
GBP'000 GBP'000
Cash flows from operating activities
Interest and investment income 3 1
Operating expenses paid (335) (676)
Net cash outflow from operating activities (332) (675)
------------ ------------
Cash flows from investing activities
Sale of investments - 1,096
Repayment of subsidiary loans - 34
Cash (outflow)/ inflow from investing
activities - 1,130
------------ ------------
Net (decrease)/ increase in cash and
cash equivalents (332) 455
Foreign exchange gain 1 -
Opening cash and cash equivalents 756 301
Closing cash and cash equivalents 425 756
============ ============
The accompanying notes 1 to 8 form an integral part of these
financial statements.
1. General Information
St Peter Port Capital Limited is a Guernsey registered, closed
ended investment company, admitted to trading on the AIM Market of
the London Stock Exchange. St Peter Port's investment strategy is
primarily to invest in unquoted companies which are close to a
liquidity event. The funds invested by St Peter Port will often
provide the working capital to make such an event possible. The
event could be an IPO, trade sale or repayment of a bridging loan
(typically with warrants or other form of participation) from a
fund-raising achieved by the investee at a higher price after the
bridging event has occurred.
The universe for investment is principally companies across a
broad range of sectors and geography expecting to achieve a
liquidity event in the months after the Company's investment.
The company's website is www.stpeterportcapital.gg .
2. Financial Information
The report on the full financial statements for the year ended
31 March 2020 has been signed and the financial information
presented in this results announcement is an extract of these
audited accounts. Whilst the financial information included in this
final results announcement has been computed in accordance with
IFRS, this announcement does not itself contain sufficient
information to comply with IFRS. The auditor's report on the 31
March 2020 financial statements was unqualified and not modified. A
key audit matter was included in the accounts concerning the fair
valuation of unquoted investments and a material uncertainty
paragraph relating to going concern.
3. Earnings Per Share
The calculation of basic loss per share is based on the net loss
from continuing operations for the year of GBP899,000 (2019:
GBP2,215,000 net loss) and on 64,221,500 (2019: 64,221,500) shares
being the weighted average number of shares in issue during the
year. There is no difference between basic earnings per share and
diluted earnings per share.
4. Net Asset Value per Share
As at 31/03/2020 As at 31/03/2019
GBP'000 GBP'000
Net asset value 10,154 11,053
Ordinary shares in issue 64,222 64,222
Net Asset Value per Ordinary Share
(pence per share) 15.81 17.21
The Net Asset Value per Ordinary Share is based on the Net Asset
Value at the end of the reporting period and on 64,221,500 (2019:
64,221,500) Ordinary Shares being the shares in issue at the year
end.
5. Taxation
The Company is exempt from taxation under the terms of the
Income Tax (Exempt Bodies) (Guernsey) Ordinance 1989 and is liable
to an annual fee of GBP1,200. Subsidiaries are subject to tax in
their respective jurisdictions.
6. Pre-IPO and other investments
At the end of the reporting period, the Company held 6
investments totalling GBP9,795,000. This excludes all pre-IPO
investments which have been written off.
7. Subsequent Events
There has not been any matter or circumstance occurring
subsequent to the end of the financial year that has significantly
affected, or may significantly affect, the operations of the
company, the results of those operations, or the state of affairs
of the company in future financial years.
8. 2020 Report and Accounts
Copies of the 2020 accounts will be posted to shareholders in
due course. Copies of this announcement (and the 2020 accounts in
due course) are available from the Company at 3(rd) Floor, 1 Le
Truchot, St Peter Port, Guernsey, GY1 1WD or alternatively on the
Company's website at: www.stpeterportcapital.gg.
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
FR UWANRRKUVUAR
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