REG - Marechale Capital - Final Results
23/08/2021 07:00
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RNS Number : 3804J Marechale Capital PLC 23 August 2021
23 August 2021
Marechale Capital plc
("Marechale" or the "Company")
Financial Statements for the year ended 30 April 2021
Marechale Capital plc, an established corporate finance firm providing
strategic, M&A and advisory services to a range of growth companies, is
pleased to announce its audited final results for the year ended 30 April
2021. The Company also announces a change in its broker to Cairn Financial
Advisers LLP with immediate effect.
Financial Highlights
· Revenue of £399,929 (FY20: £476,743)
· Profit of £245,886 (FY20 (£37,530))
· Cash increased by 48.37% to £233,287
· Balance sheet value has increased to £685,754 (FY20: £158,622)
· Equity raise of £250,000
Operational Highlights
· Four long standing clients looking for a trade exit or IPO in the
next three to 18 months
· Completed a number of projects during the year which included
additional equity and funding for hospitality clients and a European
telecommunications technology company, Fast2Fibre
· Hospitality clients are strongly positioned to expand and
capitalise on market opportunities
· Renewable energy and other corporate clients continue to perform
Chairman's statement
2020 was a year of significant challenges for a number of businesses across
the hospitality sector, among many others, due to the uncertainty caused by
Covid-19. Given the impact of the pandemic and Government restrictions on our
hospitality clients, it is testament to the skill and hard work of the
management teams Marechale advise that, not only have they survived, but they
are also strongly positioned to expand and capitalise on market opportunities
presented by inherent weaknesses in the sector.
Our renewable energy and other corporate clients continue to perform well.
Marechale has four long standing clients who are looking for a trade exit or
IPO in the next three to 18 months, which would crystalise the considerable
uplift already recorded on investments and warrants in Marechale's balance
sheet. Likewise, the pipeline of new and increasingly diversified projects for
Marechale to advise and finance remains robust.
The Company entered the 2020/21 financial year with high exposure to the
hospitality sector but recovered well in the second half of the year, funding
clients in this industry as well as other high growth sectors. Completed
projects included further equity funding for the European telecommunications
technology company, Fast2Fibre, and additional equity and loan note funding
with warrants for The Forest Road Brewing Company for its new brewery.
Marechale also raised further equity for national brew pub group, Brewhouse
& Kitchen, leading East Anglian Inn operator, Chestnut Group, and
award-winning craft spirits distiller, Oslo Distillery. Additionally, the
Company continues to generate professional services income by providing advice
to its hospitality, renewable and high growth business clients. It is
therefore pleasing that, against the effect that the Covid-19 pandemic had
earlier in our financial year, Marechale had a strong second half.
On revenue of £400,000 (2020: £477,000), our gross profit margin reduced
from 88% to 64%, which was almost entirely caused by higher than normal
third-party commissions payable on one particular client. Administrative
expenses remained steady at £463,000 (2020: £457,000).
Investments and warrants in three client companies generated unrealised gains
of £412,000, offset by a small realised loss of £1,500, compared to a net
overall loss in 2020 of £12,000, the latter being realised gains of £19,350
offset by a £21,000 write off and a £10,000 Covid-19 related fair value
decrease.
I am delighted to announce that the net effect is a profit for the year of
£246,000 compared to a loss of £37,500 in 2020. At the same time, the
balance sheet value has increased significantly during the year to £686,000
from £159,000 in FY20, due to adding both profit and new equity which is
explained in full in the Statement of Changes in Equity.
The Company's focus is to use its reputation and deal flow as a corporate
finance adviser to build shareholder value in Marechale's balance sheet. This
will be achieved by negotiating further equity and warrant positions, and
joint venture arrangements as part of its terms of engagement with growth
company clients. Marechale's historical investment performance has been
excellent in this regard, having achieved an average internal rate of return
of 13% across all of its client companies for its investor relationships since
2010. On its own account, since 2010, Marechale has realised an overall profit
of £253,000 by investing in and/or benefitting from warrants in client
companies, realising proceeds of £305,000 against a cost of £52,000.
Historically, the Company has had limited resources on its own balance sheet
to fully capitalise on the opportunity and potential to create sizeable gains.
The Company therefore embarked on a small capital raise earlier in 2021,
raising £250,000 of new equity to deploy and support the development of this
strategy in which Patrick Booth-Clibborn, Chief Executive, invested. We are
hopeful that our investments in Burgh Island, Chestnut Group, Fast2Fibre and
Future Biogas, amongst others, will deliver uplifts in value in due course.
Due to Marechale's track record as a corporate finance adviser in the £5-50
million Enterprise Value PE sector, the Board remains optimistic that the
Company will continue to generate further uplifts on its current and future
equity and warrant investments, both in the short and longer term.
Mark Warde-Norbury
Chairman
23 August 2021
For further information please contact:
Marechale Capital Tel: +44 (0)20 7628 5582
Mark Warde-Norbury / Patrick Booth-Clibborn
Cairn Financial Advisers LLP Tel: +44 (0)20 7213 0885
Jo Turner / Sandy Jamieson
Blytheweigh (Financial PR) marechalecapital@blytheweigh.com (mailto:marechalecapital@blytheweigh.com)
Tim Blythe / Megan Ray / Alice McLaren / Maddy Gordon-Foxwell
Tel: +44 (0)78 7574 4070
Notes to Editors:
Marechale is an established corporate finance firm providing strategic,
M&A and advisory services to a range of growth companies, historically
primarily in the hospitality and renewable energy sectors in the UK and
Europe. Marechale also finances earlier stage and growth capital companies
across other sectors with business and funding opportunities coming from its
family office, private investor and private equity relationships
Income Statement
Year ended 30 April 30 April
Notes 2021 2020
£ £
Revenue 3 399,929 476,743
Cost of sales (144,507) (54,5870)
Gross profit 255,422 422,156
Administrative expenses (463,343) (457,272)
Operating loss (207,922) (35,116)
Other income 10,209
44.354
Finance expense (1,063) (251)
Other gains/ (losses) 4 410,516 (12,372)
Profit/ (loss) before tax 245,886 (37,530)
Taxation - -
Profit/ (loss) for the year 245,886 (37,530)
Profit/ (loss) per share 5 Pence Pence
- Basic 0.39 (0.07)
- Diluted 0.35 (0.07)
Statement of Comprehensive Income
Profit/ (loss) for the year 245,886 (37,530)
Total recognised comprehensive profit/ (loss)
(all attributable to owners of the company) 245,886 (37,530)
Balance Sheet
As at 30 April 30 April
2021 2020
Notes £ £
Current assets
Investment in subsidiary 2 2
Equity investments at fair value through profit and loss 423,066 52,036
Warrants at fair value through profit and loss 90,013 891
Trade and other receivables 50,599 61,990
Cash and cash equivalents 233,287 157,232
Total current assets 796.967 272,139
Total assets 796,967 272,139
Current liabilities
Trade and other payables (61,213) (113,517)
Borrowings (7,500) -
Total current liabilities (68,713) (113,517)
Net current assets 728,254 158,622
Long-term liabilities
Borrowings (42,500) -
Net assets 685,754
158,622
Equity
Capital and reserves attributable to equity shareholders
Share capital 6 643,690 461,449
Share premium 85,247 -
Reserve for own shares (50,254) (50,254)
Reserve for share based payments 42,709 28,953
Retained losses (35,638) (281,527)
685,754 158,622
Statement of Changes in Equity
Share capital Share Reserve for own shares Reserve for share based payments Retained earnings
Premium
£ £ £ £ £
Balance at 30 April 2019 461,449 - (50,254)
11,939 (255,819)
Total comprehensive income
Charge/ (loss) for the financial year - - - 17,014 (25,705)
Total comprehensive income - - - 17,014 (25,705)
Balance at 30 April 2020 461,449 - (50,254) 28,953 (281,524)
Total comprehensive income
Charge/ profit for the financial year - - - 13,756 245,886
Issued in year 182,241 85,247 - - -
Total comprehensive income 182,241 85,247 - 13,756 245,886
Balance at 30 April 2021 643,690 85,247 (50,254) 42,709 (35,638)
Cash Flow Statement
Year ended 30 April 30 April
2021 2020
£ £
Net cash from operating activities
Profit/ (loss) before tax 245,886 (25,705)
Reverse provision for share based payments 13,756 17,014
Reverse (gains) losses on fair value investment through profit and loss (411,992) 10,880
Reverse losses/(gains) on disposal of investments 1492 (10,333)
Reverse net interest expense 1063 251
Operating cash outflows before movements in working capital (149,811) (7,893)
Movement in working capital
Decrease in receivables 11,391 43,216
(Decrease) in payables (52,303) (50,511)
(40,912) (7,295)
Cash outflow from operating activities (190,724) (15,188)
Investment activities
Interest received 14 45
Expenditure on equity investments (50,625) (7,601)
Proceeds from sale of equity investments through profit and loss 980 31,672
Cash (out)/ inflow from investing activities (49,631) 24,116
Financing
Issue of ordinary share capital 267,487 -
Issue of borrowings 50,000 -
Interest paid (1,077) (296)
Cash in/ (out) flow from financing activities 316,410 (296)
Net increase/(decrease) in cash and cash equivalents 76,055 8,632
Cash and cash equivalents at start of the financial year 157,232 148,600
Cash and cash equivalents at end of the financial year 233,287 157,232
Notes to the financial statements
Year ended 30 April 2020
1. General information
Marechale Capital plc is a company registered in England and Wales under the
Companies Act 2006. The Company's principal activities are the provision of
professional services advice and broking services to companies. The financial
statements are presented in pounds sterling, the currency of the primary
economic environment in which the Company operates.
The Company's registered office and principal place of business is 46 New
Broad Street, London, EC2M 1JH. The Company's registered number is 03515836.
2. Basis of preparation
a. Going concern
In establishing the applicability of the going concern basis, the Directors
have made enquiries as to the financial resources of the Company. The Company
does not benefit from reliable repetitive income, and instead relies on
deal-driven transactions whose timing is very difficult to predict accurately.
Whilst the Directors are confident that they will generate enough income on an
annual basis in order to continue as a going concern, they have 'alternative
strategies' in place, e.g., informal arrangements with creditors and/or the
ability to sell both Equity investments and/or Warrants should the need arise
to overcome any potential short-term cash flow shortage. Furthermore, in
February the Company raised £268,000 in new equity (net of fundraising
commission).
In order to preserve cash during Covid, as with many other businesses, the
Company has benefitted from both the formal arrangement with HMRC whereby
payment of monthly PAYE/NI was deferred until the September 2020 lockdown
restrictions, now fully repaid, and through the Company's existing bankers,
Barclays, via HMG backed guarantees. On 6 July 2020, the Company drew down in
full a £50,000 'Bounce Back Loan' not repayable until July 2021 over 5 years
in 60 monthly instalments of £833. Under the terms of the loan, no repayments
or interest is payable for the first year, with an applicable interest rate of
2.5% thereafter and there are no penalties for early repayment. Furthermore,
the Company benefitted from the HMRC Furlough Scheme relating to those staff
who were unable to work during lockdown.
Whilst the Directors recognise that there is significant material uncertainty
around going concern as a result of the current economic uncertainty and 2021
Operating Loss, the accounts have still been prepared on a going concern
basis, which is supported by confidence over the ability to raise sufficient
funds through the issue of further equity should the need arise.
b. Basis of accounting
These financial statements have been prepared in accordance with International
Financial Reporting Standards ('IFRS') as adopted by the European Union, IFRS
Interpretations Committee ('IFRS IC') interpretations and the Companies Act
2006 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis as
modified by the valuation of certain financial instruments.
3. Business and geographical segments
The directors consider that there is only one activity undertaken by the
Company, that of corporate finance advisory. All of this activity was
undertaken in the United Kingdom.
2021 2020
£ £
Broking commissions and fees earned from corporate finance 399,929 476,743
4. Other gains/ (losses)
2021 2020
£ £
Realised (losses) on equity investments (1,476) (1,492)
Unrealised gains/ (losses) on equity investments 322,860 (10,211)
Unrealised gains/ (losses) on warrants 89,132 (669)
410,516 (12,372)
5. Earnings per share
Earnings Earnings
2021 2020
£ £
Based on a profit/ (loss) of 245,886 (37,530)
No. shares No. shares
Weighted average number of Ordinary Shares in issue for the purpose of basic 62,772,480 57,681,151
earnings per share
Weighted average number of Ordinary Shares in issue for the purpose of diluted 70,626,730 57,681,151
earnings per share
6. Share capital - see also Statement of Changes in Equity (above)
Options (number/weighted average exercise price ('WAEP'))
Options WAEP
(number) (p)
Outstanding and exercisable at 1 May 2019 5,768,115 1.12p
Granted within the period - -
Outstanding and exercisable at 30 April 2020 5,768,115 1.12p
Granted within the period 4,354,927 1.25p
Exercised with the period (2,780,096) 1.12p
Forfeited within the period (276,870) 1.12p
Outstanding and exercisable at 30 April 2021 7,066,076 1.20p
The options granted in 2018 generated a charge of £5,167 (2020: £17,014).
The options granted in 2020 generated a charge of £8,589.
7. Other matters and Market Abuse Regulation (MAR) Disclosure
The financial information for the year ended 30 April 2020 set out in this
announcement does not constitute statutory financial statements, as defined in
section 434 of the Companies Act 2006, but is based on the statutory financial
statements for the year then ended. The auditors have issued an unqualified
opinion on these financial statements; their report included the following
statement:
Material uncertainty relating to Going concern
We draw attention to the Going Concern section of the Significant Accounting
Policies of the Company financial statements which explains that the Company
has unpredictable revenue due to the nature of Corporate Finance advisory and
the reliance upon deal-driven transactions. The impact of Covid-19 and
Government restrictions to reduce the spread of the pandemic has had a
significant impact on the wider economy and specifically the hospitality and
leisure sector which is one of the Company's main sector specialisms. Should
the Company not be able to generate sufficient revenue to meet its operating
costs it will generate operating losses as was the case during the year ended
30 April 2021 and 2020. Should losses continue to be generated at a similar
level without additional capital being raised from the shareholders or the
ability to liquidate a portion of the investments held then the company will
likely breach its capital resources requirement with the FCA and not be able
to meet its liabilities as they fall due in the foreseeable future.
Whilst the Directors believe sufficient profits will be generated or
additional capital provided by the shareholders these conditions along with
other matters discussed in note 2 to the financial statements indicate the
existence of a material uncertainty which may cast significant doubt over the
Company's ability to continue as a going concern.
Our opinion is not modified in respect of this matter.
Emphasis of matter - valuation of investments
In forming our opinion on the financial statements, which is not modified, we
have considered the fair value adjustment made by the directors on the
investments held at fair value through profit or loss. As discussed in Notes
13 and 14, an upward fair value adjustment on the investments and warrants was
made to the total of £411,992. This along with other valuations are estimates
based on the Directors' assessment of the performance of the underlying
investment and incorporating the ongoing impact of Covid-19 on the industry.
As explained further in our Key Audit Matter in regard to the valuation of
these estimates we consider there is a material uncertainty in respect of
their valuation. Our opinion is not qualified in respect of this matter.
Matters on which we are required to report by exception
In the light of the knowledge and understanding of the Company and its
environment obtained in the course of the audit, we have not identified
material misstatements in the strategic report or the directors' report.
We have nothing to report in respect of the following matters in relation to
which the Companies Act 2006 requires us to report to you if, in our opinion:
• adequate accounting records have not been kept, or returns
adequate for our audit have not been received from branches not visited by us;
or
• the financial statements are not in agreement with the
accounting records and returns; or
• certain disclosures of directors' remuneration specified by law
are not made; or
we have not received all the information and explanations we require for our
audit.
Copies of the Company's full audited Annual Report and Financial Statements
for the year ended 30 April 2021 will be delivered to the Registrar of
Companies and 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.
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