Performance
· For the six months ended 30 June 2017, the Net Asset Value (“NAV”) per ordinary share increased by 4.94%, representing a 6.87% total return including distributions to shareholders, compared with an increase in value of the FTSE All-Share of 5.50% over the same period. The NAV per realisation share over the period increased by 8.84%. The increases in NAV per ordinary share and per realisation share over the period are primarily attributable to an increase in the share prices of Zegona Communications plc (“Zegona”) and BCA Marketplace plc (“BCA”).
· The Company's strategy has delivered a 206.53% total return to ordinary shareholders since inception in March 2006 to 30 June 20171, compared with a total return of 101.83% for the FTSE All-Share Index over the same period. The total return attributable to realisation shareholders since inception on 30 November 2016 to 30 June 2017 is 7.21%.
Distribution to shareholders
· Pursuant to the new distribution policy, quarterly interim dividends of 2.064p per ordinary share were made in January and April 2017. It is currently intended that a minimum dividend payment will continue to be made quarterly in January, April, July and October of each year.
Portfolio Companies
· In May and June 2017, an additional 14.5 million ordinary shares of BCA were acquired, with a further 0.5 million ordinary shares acquired in July 2017, increasing the Marwyn funds' beneficial ownership to 4.6% of BCA's issued share capital.
· On 27 June 2017, BCA released its preliminary results for the 12 months ended 2 April 2017, reporting strong results and strategic progress for the group. Revenue increased from £1.2 billion to £2.0 billion driven by growth in outsourced remarketing contracts, webuyanycar.com and acquisitions. Adjusted EBITDA of £135.6 million represents a 37.7% increase from the prior year3. Operational highlights included UK vehicle remarketing volume of 956,000 units (+7.7%), international vehicle remarketing volume of 347,000 units (+4.2%) and webuyanycar sold units of 194,000 (+12.8%).
· On 6 April 2017, Zegona released its results for 2016, in-line with guidance and reflecting the successful implementation over the period of Zegona's strategy since acquisition. Financial highlights included revenue up 3.0% to €138.5 million, EBITDA up 0.2% to €65.1 million, and cash flow up 9.7% to €35.6 million4.
· In May 2017, Zegona announced the sale of Telecable, its Spanish cable business, to Euskaltel for a total value of up to €701 million, comprising an Enterprise Value of €686 million and up to €15 million deferred consideration4. On 26 July 2017, the sale was completed. The consideration includes 26.8 million shares in Euskaltel (representing a 15% shareholding in the enlarged Euskaltel Group). The Company's Manager, Marwyn Asset Management Limited (“MAML”) has entered into an irrevocable undertaking accepting the tender offer in full.
· Le Chameau Group plc (“LCG”) launched a US e-commerce site in June 2017. The potential target audience in the US is significant with an estimated 14 million hunters, 6 million anglers and 6 million hikers in the top 20% income percentile.
· In March 2017, MAML authorised a subscription for £10 million of new ordinary shares in Wilmcote Holdings plc (“Wilmcote”) to provide due diligence and operating capital prior to a subsequent acquisition. Wilmcote is focused on creating value through the acquisition and subsequent development of target businesses in the downstream and specialty chemical sectors. Wilmcote intends to acquire and operate businesses initially with an enterprise value in the region of £500 million to £2 billion.
· Safe Harbour Holdings plc (“Safe Harbour”) is an investment vehicle established in 2016 with the objective of generating compounding returns for shareholders through an acquisitive growth strategy within the B2B distribution sector. The company has made good progress during the period in the development of its investment hypothesis and target identification.
· In June 2017, Gloo Networks plc (“Gloo”) published its results for the year ended 31 March 2017 disclosing a loss for the year of £4.4 million and residual cash of £23.5 million. Whilst Gloo has not yet completed a platform acquisition, the company stated that it had been actively pursuing its investment strategy whilst also maintaining a disciplined approach on valuation. Gloo's CEO, Rebecca Miskin, commented that management remain highly confident in their ability to execute an attractive acquisition and look forward to updating shareholders.
Chairman, Robert Ware, commented: “The progress of the existing portfolio companies, alongside the launch and subsequent IPO of Wilmcote and the increased availability of capital to invest following the successful close of MVI II LP ensure the Company is positioned to continue to deliver significant investment returns to shareholders. Zegona's successful sale of its first platform acquisition demonstrates the strength of its “buy-fix-sell” strategy while BCA continues to deliver significant progress and growth with the release of impressive results. The recently launched e-commerce site and the recruitment of David Robinson as CEO are significant steps for Le Chameau. Gloo, Safe Harbour and Wilmcote are all actively pursuing their strategies, seeking acquisition opportunities across the UK, Europe and the Americas. We anticipate these platform acquisitions will provide the Company with further exciting investment opportunities.”