St Peter Port Capital : Final Results for the Year Ended 31 March 2019

RNS Number : 1692C

St Peter Port Capital Limited

14 June 2019

For Immediate Release

14 June 2019

St Peter Port Capital Limited (the "Company" or "St Peter Port" or "SPPC")

Final Results for the Year Ended 31 March 2019

St Peter Port Capital Limited, the AIM-quoted investment company announces its final audited results for the year ended 31 March 2019.

Highlights

• • Investments in 6 companies* at year end valued at £10.4 million (2018: 7 companies at £12.1 million)
  • NAV of 17.21p per share at 31 March 2019 (2018: 20.66p), down 16.7 per cent. on the year as a result of write-downs to carrying values.
  • FX movements during the year contributed 1.2p, equivalent to 7.0 per cent. of the NAV per share at the year-end.
  • £756,000 in cash at year end. Cash as at 12 June 2019 £634,000.
  • Further annual cost savings of £340,000 achieved during the year
• excluding companies entirely written down

Lynn Bruce, Chairman of St Peter Port, said:

"Although most of our portfolio companies have reported positive news during the period under review, the fact remains that none of them have yet reached an inflection point that would allow us to unlock value at any sensible valuation. We have for some time been exploring ways of maintaining the portfolio substantially in tact whilst reducing what will become, absent a sale of one or more of our investments, an economically unviable company."

For further information:
St Peter Port Capital Limited
Lynn Bruce, Director	[phone]
Grant Thornton UK LLP (Nominated	[phone]
Adviser)

Philip Secrett

Jamie Barklem

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

I report on the year ended 31 March 2019.

Background

There have been some positive developments at the majority of the portfolio companies during the period under review. Nevertheless, progress remains slow, liquidity events remain elusive and yet we know that shareholders wish us to liquidate the portfolio as soon as possible on good terms.

Realisation and Investments

During the financial year, St Peter Port realised investments generating £96,000 (2018: £17,000). The Company's £1m holding in a listed floating rate note matured in November 2018. No further realisations have been made since the year end.

The Company made no new investments during the year.

Financial Results

The balance sheet shows investments of £10.4 million (2018: £12.1 million, excluding the floating rate note which expired in November 2018), consisting of financial assets at fair value through profit or loss of £10.4 million (2018: £12.1 million, excluding the floating rate note). Net assets were £11.1 million (2018: £13.3 million), giving a net asset value of 17.21p per share (2018: 20.66p per share). Net assets have decreased by 20.3 per cent. since the interim results as at 30 September 2018. The changes result from write-downs to several of the portfolio valuations, all as described further in the Investment Manager's Report.

The write-downs were partially offset by favourable currency movements (strengthening of US dollar against sterling). These favourable FX movements during the year contributed 1.2p to the NAV, equivalent to 7.0 per cent. of the NAV per share at the year-end.

At the balance sheet date, the Company held £756,000 in cash (2018: £0.3 million in cash and £1.0 million in a listed liquid floating rate note which expired in November 2018). As at 12 June 2019, the Company held £634,000 in cash.

Dividends

It remains the Board's policy that, in respect of each period of six months and subject to the requirements of Guernsey Law regarding solvency, it will pay out in cash 50 per cent. of the net gains from all realisations made. There were no net gains on realisations during the year and so no dividend is being proposed.

Outlook and life of the Company

The Investment Manager's report below provides further detail around various positive developments at the majority of our portfolio companies during the period under review.

Notwithstanding these positive developments, none of the portfolio companies 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 reflect their underlying value.

Over the last couple of years, we have undertaken a significant cost-cutting exercise. This has involved us successfully negotiating reductions in the investment management fee, reductions in the directors' fees and reductions in the fees of numerous professionals, including the Guernsey based administrator. We have also recently changed auditors to cut costs even further. Nevertheless, there is a minimum cost below which it is simply not possible for an AIM- traded, Guernsey company to operate.

In addition to seeking to dispose of investments and trying to stimulate liquidity, we have also always been open to alternative opportunities that may help us deliver value to shareholders. To this end, we attempted to sell the company during 2017 by announcing a strategic review to the market. Although this led to some discussions, no transaction ensued. We therefore declared an intention in June 2017 to offer shareholders the opportunity to vote on whether or not to continue the life of the company on an annual basis, to coincide with the AGM of the Company each year.

We are currently in the early stages of exploring adding a new theme to our investment strategy whilst continuing to seek the realisation of the Company's existing portfolio. To this end the Board is in discussions with a new investment manager. Should the Board progress the above changes, and there is no certainty that this can or will be achieved, we will send a circular to shareholders later in the year detailing the proposals. In the event either that such a circular is not sent to shareholders or that it is and the proposal is not approved by shareholders, then we will convene a General Meeting, to take place before the end of 2019, at which shareholders will be given an opportunity to vote on the Company's future.

L Bruce

Lynn Bruce
Chairman
14	June	2019

Investment Manager's Report

St Peter Port's portfolio comprises a potash mine development in Brazil, an oil exploration project in the Caspian Sea, a large farmland owner in Uruguay, 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 nickel development project in Oregon, USA. 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 SPPC has an indirect controlling interest and the vaccine development company, in which SPPC has an interest of approximately 7%.

The following table shows the breakdown by sector of the investments as at 31 March 2019:

Investments by Sector as at 31 March 2019

Sector	Number	Cost	Book	Percentage
		£m	Value £m	(of book
				value)
Mining	2	3.7	5.8	55.8
Oil and Gas	1	1.8	2.9	27.9

Tech	2	1.7	1.5	14.4
Agriculture	1	1.9	0.2	1.9
Total	6	9.1	10.4	100.0

Investments

During the year ended 31 March 2019 the Company made no additional investments.

Realisations

During the year, the Company sold down the balance of its holding in Global Atomic, which obtained a Toronto Stock Exchange listing in December 2017 through a reverse takeover. This generated net proceeds of £96,000.

Portfolio - Detail

The following is a list of the Company's current investments (excluding those of nil value).

Company	Investment
	(acquisition terms)
Brazil Potash	US$2.5 million
	subscription for ordinary
	shares. Further US$1.5
	million subscription for
	ordinary shares.

Business

Potash exploration and development on licences covering 22.5 million hectares in the Amazon Potash Basin.

Buried Hill	US$850,000 subscription
	for ordinary shares.
	Further US$2.7 million
	acquisition of ordinary
	shares.

Oil and gas exploration company focused on the Caspian Sea.

iQur	£0.5 million initial
	subscription for ordinary
	shares. Further £51,000
	in convertible loan notes.
	Further £140,000 for
	additional ordinary
	shares.

Medical research company that is developing a novel vaccine platform.

Mediatainment	US$2 million subscription	Mediatainment is the holding company for an
	for ordinary shares.	investment in Stream TV. Stream TV has
		developed a solution to provide 3D TV without
		glasses in very high (4K) resolution.
Red Flat Nickel	US$4.2 million	Red Flat Nickel has claims over two nickel
	investment in loan notes.	laterite deposits in Oregon. The investment was
		originally made as a bridge loan and upon

	reaching its term, SPPC acquired an indirect
	majority interest in the company's equity.
Union	US$2 million subscription Uruguayan farming company.
Agriculture	for ordinary shares.
	Further US$1 million
	subscription for ordinary
	shares.

St Peter Port also held securities in a number of companies which it carries at nil value in its balance sheet. These include Seven Energy, Kerogen Shale (formerly Jordan Energy and Mining Limited), East Africa Timber & Farming Limited, Celadon, Mincore and M-Log (formerly Manabi).

Top Three Investments as at 31 March 2019

The following table lists SPPC's top three investments by value as at 31 March 2019 representing 92.7 per cent. by value of the portfolio.

Company	Cost	Valuation		Gain[1]	Status
	£000's		£000's		£000's
Brazil Potash Corp	2,336	5,627	3,291	Unquoted
Buried Hill Energy (Cyprus) Plc	1,749	2,841	1,092	Unquoted
Mediatainment	1,015	1,160	145	Unquoted
Total	5,100	9,628	4,528
Developments
Brazil Potash

Brazil Potash ("BP") 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 BP's management believes 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.

BP has obtained its Preliminary Licence, completed its Bankable Feasibility Study and is currently working towards obtaining the Installation Licence which will allow it to initiate construction of the mine.

BP recently announced to shareholders that it was very close to finalising a US$100 million royalty financing facility with two well-known and highly regarded mining specialist investors. BP's management reported that the funding was subject to extensive third-party expert due