REG - Marechale Capital - Final Results <Origin Href="QuoteRef">MACT.L</Origin> - Part 1

Marechale CapitalAnnouncement

25/07/2016 07:05

RNS Number : 0486F
Marechale Capital PLC
25 July 2016
25 July 2016
Marechale Capital plc
("Marechale" or the "Company")
Consolidated Financial Statements for the year ended 31 March 2016
Marechale is pleased to announce its final results for the year ended 31 March 2015.
Chairman's Statement
Marechale Capital's revenues for the year were 742,000 (2015: 965,000) down on last year resulting in a gross profit of 446,000 (2015: 694,000), and a loss of 91,000 (2015: Profit of 150,000). These results reflect the difficulty in completing some deals in the current economic environment. 
Although the revenue figure is reduced, the Company has successfully mandated some exciting client transactions whilst putting measures in place to strengthen the Company's resources and particularly its ability to undertake and complete transactions. As previously announced, the Company is delighted to have appointed a new Director in the business in order to achieve this.
Marechale provides corporate finance advice and capital fund raising for growth companies. Fund raising activities center on two key areas. Firstly in Growth Capital private equity transactions for more established businesses, and secondly in Development Capital, fundraising for smaller growth companies, the latter typically being Enterprise Investment Scheme (EIS) qualifying. As part of its success fee, the Company secures warrants or equity on most of its projects, enabling Marechale's shareholders to have the opportunity of sharing in the potential upside of the equity value in these businesses. The Company's primary sector of operation, in which the team have a long term track record, is Consumer Brands, Leisure and Retail.
The Company successfully completed a number of leisure deals during the year. Further EIS funding has been raised for the brewhouse business, Brewhouse & Kitchen, and the East Anglia based gastro pub group, Chestnut Inns. Growth capital funding was also completed for The Rum Kitchen restaurant group, and equity funding has been raised for the acquisition of a Mallorca luxury resort hotel with a leading hotel management team. These further endorse Marechale's leading position in funding businesses in the leisure sector. 
A summary of the Company's other activities, including those in the renewables sector, are detailed below. Full details of the companies that Marechale has acted for as well as transactions that the Company has successfully completed are outlined on the Company's website: www.marechalecapital.com. 
Investments in client companies resulted in gains of 19,000 (2015: 72,000), although further substantial investee companies have yet to exit. Furthermore, the Company's investment in Northfield UK Solar Ltd ('Northfield'), referred to below, accounted for using the 'Equity Method' as an Associated Company, showed a further gain, net of costs and provision for potential project loss, now realized, of 15,000 (2015: 20,000).
Equity investments and warrants are valued at 'fair value', typically at a price that reflects their last funding round, and the underlying movement in fair value is reflected through the Profit and Loss Account in accordance with IFRS9. Although the balance sheet value NAV has decreased overall this year to 798,000 (2015: 850,000), the Directors believe that these investments have excellent further uplift potential in the medium to longer term. 
Marechale has also successfully launched the Odexia Consumer Brand Fund, which invests in EIS qualifying food, drink and cosmetic growth brands. The Fund has already completed its first two investments and is in the process of raising its next tranche of funding for additional investment opportunities that it has identified.
In the renewables sector funding has been raised for Longhedge Renewables Ltd and Future Biogas, the leading anaerobic digestion plant operator in the UK. For the latter, the Company has also recently completed debt and equity funding enabling Future Biogas to complete construction of its tenth plant in the UK.
Marechale's associated company, Northfield was established in 2013 to develop a portfolio of solar sites. This has been a challenging time for Northfield as the Government has changed the renewable energy support regime. However, since receiving Planning permission and securing a Grid connection offer for its largest site at RAF Desborough (a disused airfield), Northfield is actively working on how to commercialise this, which may result in a significant uplift value for Marechale's shareholders. The valuation on the balance sheet represents the last funding round, and the Company's investment is being carried at 146,000, based on the Equity Method of valuation and including a provision to reflect the uncertainties in proportion to Marechale's 25% beneficial ownership.
Marechale has a growing reputation as one of the leading UK Advisors to the Consumer Brands, Leisure and Retail sector and continues to see strong deal flow in this and its other core area Renewables. The Company is always on the lookout for strong management teams with enterprising businesses in most sectors to support with growth and development capital. As such Marechale remains committed to working with the management teams of quality companies to secure funding or refinancing capital from the Company's extensive list of private and institutional investors.
The Directors believe that backing the right growth companies, whilst not without its risks, represents an interesting private equity investment class for investors looking to diversify their portfolios. Over the last four and a half years, if an investor had invested in all of the 18 transactions Marechale has funded and completed, based on the last round of funding or exit value of these transactions, the Company calculates that they would have achieved an IRR of over 20% to date. 
Marechale is quoted on the London Stock Exchange as an AIM listed company. As such the Company continues to look at a number of potentially interesting acquisitions, investment and merger opportunities, particularly in fund management, and remains open to such approaches. However, none have been progressed to date. The Company is also looking to recruit further staff to support its corporate finance and sales activities.
There has been a strong trend towards Marechale concluding deals to coincide with the end of the tax year, which occurs 5 days after the Company's financial year-end. In past years the majority of these investments could be accounted for on or before 31 March. However, this year around 90,000 worth of commission revenue was received in April, even though all the related work took place before 31 March. This resulted in a 91,000 loss for the year. In past years the slippage had been modest and the Directors took the 'swings and roundabouts' view: however, following this year's slippage, the Directors have determined to seek Shareholder approval to move the Company's year-end to 30 April from 2017 onwards.
In addition, the Directors have received shareholder approval for the capital reorganization that will be necessary before dividends can be paid. The Company needs to change its Articles of Association in order to do this and, subject to receiving shareholder (along with the change to the Company's year-end date) and then court approval, will be able in due course to pay dividends when circumstances permit. A further announcement will be made around the time of the Company's AGM which is scheduled for 14 September 2016.
The Directors are pleased with the progress that the Company has made this year. The Company's track record and reputation are growing and the Directors believe that given the measures that have been put in place Marechale is well positioned to advance further in the year ahead.
Mark Warde-Norbury
Chairman
25 July 2016
For further information please contact:
Marechale Capital
Mark Warde-Norbury / Patrick Booth-Clibborn
Tel: +44 (0)20 7628 5582
Smith & Williamson Corporate Finance
Azhic Basirov / David Jones
Tel: +44 (0)20 7131 4000
Consolidated Income Statement
Year ended 31 March 2016
Year ended
Year ended
31-Mar
31-Mar
Notes
2016
2015
()
()
Continuing operations
Revenue
2
741,680
965,322
Cost of sales
(295,512)
(271,307)
Gross profit
446,168
694,015
Administrative expenses
(570,972)
(637,220)
Operating (loss)/ profit
(124,804)
56,795
Finance Income
0
974
Other gains 
19,231
72,458
Exceptional gain on dilution of interest in associate
5,726
166,140
Net loss in respect of associate
(106,245)
(31,191)
Release of/ (provision for) project loss in associate
115,000
 (115,000)
(Loss)/ profit before tax
(91,092)
150,176
Taxation
 - 
 - 
(Loss)/ Profit for the year on continuing operations
(91,092)
150,176
(Loss)/ Profit per share
(Pence)
(Pence)
Basic
- Continuing operations
3
-0.16
0.26
- Diluted
3
-0.14
0.25
Consolidated Statement of Comprehensive Income
(Loss)/ Profit for the year
(91,092)
150,176
Other comprehensive income
Revaluation of investments
4,191
38,246
4,191
38,246
Total recognised comprehensive (loss)/ income
(all attributable to owners of the parent)
(86,901)
188,422
Consolidated Balance Sheet
Year ended 31 March 2016
Year ended
Year ended
31-Mar
31-Mar
2016
2015
Notes
()
()
Non current assets
Investment in associate
154,275
139,794
Current assets
Available for sale investments
165,839
151,659
Trading investments
131,800
128,254
Trade and other receivables
518,577
491,108
Cash and cash equivalents
210,490
295,064
1,026,706
1,066,085
Total assets
1,180,981
1,205,879
Current liabilities
Trade and other payables
(383,376)
(356,043)
Total current liabilities
(383,376)
(356,043)
Net assets
797,605
849,836
Equity
Capital and reserves attributable to equity shareholders
Share capital
2,474,308
2,474,308
Share premium account
1,247,379
1,247,379
Revaluation reserve
94,326
90,135
Reserve for own shares
(50,254)
(50,254)
Retained losses
(2,968,154)
(2,911,732)
797,605
849,836
The financial statements were approved by the Board of Directors and authorised for issue on 25 July 2016.
They were signed on its behalf by:
Mark Warde-Norbury
Chairman
Statement of Changes in Equity
Year ended 31 March 2016
Share capital
Share premium
Revaluation reserve
Reserve for own shares
Retained earnings
Consolidated
()
()
()
()
()
Balance at 31 March 2014
2,474,308
1,247,379
51,889
(50,254)
(3,070,983)
Issue of ordinary share capital
-
-
-
-
-
Reserve for share based payments
-
-
-
-
9,075
Transactions with owners
0
0
0
0
9,075
Total comprehensive income
Profit for the financial year
-
-
-
-
150,176
Revaluation during the financial year
-
-
38,246
-
-
Total comprehensive income
0
0
38,246
0
150,176
Balance at 31 March 2015
2,474,308
1,247,379
90,135
(50,254)
(2,911,732)
Issue of ordinary share capital
-
-
-
-
-
Reserve for share based payments
-
-
-
-
34,670
Transactions with owners
0
0
-
-
34,670
Total comprehensive income
Loss for the financial year
-
-
-
-
(91,092)
Revaluation during the financial year
-
-
4,191
-
-
Total comprehensive income
-
-
4,191
-
(91,092)
Balance at 31 March 2016
2,474,308
1,247,379
94,326
(50,254)
(2,968,154)
Company
Balance at 31 March 2014
2,474,308
1,247,379
51,889
(50,254)
(3,190,321)
Issue of ordinary share capital
-
-
-
-
-
Reserve for share based payments
-
-
-
-
9,076
Transactions with owners
0
0
0
0
9,076
Total comprehensive income
Profit for the financial year
-
-
-
-
130,227
Revaluation during the financial year
-
-
38,246
-
-
Total comprehensive income
0
0
38,246
0
130,227
Balance at 31st March 2015
2,474,308
1,247,379
90,135
(50,254)
(3,051,018)
Issue of ordinary share capital
-
-
-
-
-
Reserve for share based payments
-
-
-
-
34,670
Transactions with owners
-
-
-
-
34,670
Total comprehensive income
Loss for the financial year
-
-
-
-
(105,573)
Revaluation during the financial year
-
-
4,191
-
-
Total comprehensive income
-
-
4,191
-
(105,573)
Balance at 31 March 2016
2,474,308
1,247,379
94,326
(50,254)
(3,121,921)
Group
Group
Company
Company
Retained losses consist of:
2016
2015
2016
2015
()
()
()
()
Retained losses
-3,011,899
-2,920,807
(3,165,667)
(3,060,094)
Reserve for share based payments
43,745
9,075
43,746
9,076
(2,968,154)
(2,911,732)
(3,121,921)
(3,051,018)
Consolidated Cash Flow Statement
Year ended 31 March 2016
Year ended
Year ended
31-Mar
31-Mar
2016
2015
()
()
Net cash from operating activities
Continuing operations:
Operating (loss)/ profit
(124,804)
56,795
Provision for share based payments
34,669
9,075
Operating cash flows before movements in working capital
(90,135)
65,870
Movement in working capital
(Increase) in receivables
(27,468)
(270,105)
Increase in payables
27,333
206,726
Tax paid
-
-
(135)
(63,379)
Operating cash flow
(90,270)
2,491
Investment activities
Interest receivable
0
974
Proceeds on disposal of trading investments
15,685
17,705
Proceeds on disposal of available for sale investments
0
3,626
Expenditure on available for sale investments
(9,989)
(5,000)
Cash flow from investing activities
5,696
17,305
Financing
Issue of share capital
 - 
 - 
Cash flow from financing activities
 - 
 - 
Net (decrease)/ increase in cash and cash equivalents
(84,574)
19,796
Cash and cash equivalents at start of the financial year
295,064
275,268
Cash and cash equivalents at end of the financial year
210,490
295,064
(Decrease)/ increase in cash and cash equivalents
(84,574)
19,796
Notes to the financial statements
Year ended 31 March 2016
1. Basis of preparation
The financial statements have been prepared in accordance with International Financial Reporting Standards ('IFRS') as adopted by the European Union and the International Financial Reporting Interpretations Committee ('IFRIC') interpretations in accordance with the Companies Act 2006. The financial statements have been prepared on the historical cost basis as modified by the valuation of certain financial instruments, as described below. 
2. Business and geographical segments
The directors consider that there is only one activity undertaken by the Group, that of corporate finance advisory. All of this activity was undertaken in the United Kingdom.
2016
2015
()
()
Broking commissions and fees earned from corporate finance 
741,680
965,322
3. Earnings per share
Earnings
Earnings
()
()
Based on a profit of (loss)/ profit of
(91,092)
150,176
No. shares
No. shares
Weighted average number of Ordinary Shares in issue
57,681,151
57,681,151
for the purpose of basic earnings per share
Weighted average number of Ordinary Shares in issue
63,737,672
59,988,397
for the purpose of diluted earnings per share 
4. Other matters and Market Abuse Regulation (MAR) Disclosure
The financial information for the year ended 31 March 2016 set out in this announcement does not constitute statutory financial statement, as defined in section 434 of the Companies Act 2006, but is based on the statutory financial statements for the year then ended. Those financial statements, upon which the auditors have issued an unqualified opinion, will be delivered to the Registrar of Companies.
Copies of the Company's full audited Annual Report and Financial Statements for the year ended 31 March 2016 will be sent to shareholders in due course and will be available on the Company's website: www.marechalecapital.com.
Certain information contained in this announcement would have been deemed inside information for the purposes of Article 7 of Regulation (EU) No 596/2014 until the release of this announcement.

This information is provided by RNS
The company news service from the London Stock Exchange
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