REG-Marechale Capital Plc: Final Results
22/08/2022 07:15
22 August 2022
Marechale Capital plc
("Marechale" or the "Company")
Financial Statements for the Year Ended 30 April 2022
Marechale Capital plc, an established City of London based corporate finance
house with a long-term track record and a strong reputation for advising and
financing high growth consumer brands, leisure, clean energy, mineral
extraction and technology companies, is pleased to announce its audited final
results for the year ended 30 April 2022 (the “Period”).
Financial Highlights
* Increased profit to £2,562,000 (FY21: £246,000)
* Significant increase in balance sheet to £3,630,000 (FY21: £686,000)
* Revenue of £622,000 (FY21: £400,000)
* Investments and warrants in client companies generated gains of £2,716,000
(FY21: £412,000)
* Successful fundraise of £207,000 in March 2022
* Strategic investment of £160,000 from Luke Johnson in October 2021
Operational Highlights
* Further equity funding for Fast2Fibre
* Additional funding secured for The Forest Road Brewing Company
* Strategic funding advice given to Future Biogas, Chestnut Group and the
Burgh Island Hotel
* Luke Johnson took a 9% stake in the Company in October 2021
* Hospitality clients are strongly positioned to expand and capitalise on
market opportunities
* Renewable energy and other corporate clients continue to perform providing
strong return opportunities for our shareholders
Post Period Highlights
* Completion of fundraise for Weardale Lithium Ltd (“Weardale”);
Marechale’s total interest in Weardale is now 8.5%
Chairman’s Statement
Marechale is an established corporate finance house with a long-term track
record and a strong reputation in advising and financing high growth consumer
brands, leisure, clean energy, and technology companies in the UK and Europe.
Marechale also uses its balance sheet to co-invest in its client companies,
along with warrants and founder equity, in order to create shareholder value.
I am pleased to provide the following update for the Period.
It has been an active year in the hospitality sector as a number of businesses
negotiated through the pandemic and Government restrictions; two years of
market uncertainty have now been prolonged with the advent of war in Europe,
which is compounding increasing inflationary pressures, and discretionary
spending is being squeezed. However, against this challenging backdrop, we
believe that there are significant market opportunities for Marechale’s
clients.
The Company entered the Period with good levels of business activity and
funded clients in both the hospitality sector, as well as clients in other
high growth sectors. Completed projects include further equity funding for the
European telecommunications technology company, Fast2Fibre, and additional
funding for The Forest Road Brewing Company, the award-winning London craft
brewer.
Marechale continues to generate professional services income by providing
advice to its clients. In the last year, this included strategic and funding
advice for Future Biogas, Chestnut Group and the Burgh Island Hotel. All these
fundraisings were at premiums or significant premiums to Marechale’s equity
and warrant holdings. It is pleasing to report that overall Marechale has had
a record year in increasing net asset value for shareholders.
One of the key strategic events of the last year was welcoming Luke Johnson as
a 9% shareholder as reported in October 2021. Luke provides a wealth of
experience as one of the UK’s most successful retail private equity
(‘PE’) investors, and Marechale had been and will continue to work closely
with him.
In the clean energy space, general market uncertainty has also impacted some
of our corporate clients whose progress has been delayed and resulted in some
investor exits being postponed for the next 12-18 months. We are, however,
pleased to report that significant progress has been made with the lithium
extraction business, Weardale Lithium Ltd, as announced on 09 August 2022, and
that our pipeline of new and increasingly diversified projects remains
robust.
Weardale Lithium Ltd is Marechale’s largest investment, holding 500,000
founder shares and 22,400 Options with a combined value of £2.8 million which
has been recorded in the balance sheet. Weardale has secured mineral
extraction rights in Co. Durham via existing boreholes where there is proven
lithium in the brine hundreds of feet below the surface. Since the initial
fundraising in August 2021, the price of lithium has increased 300%, giving
Marechale cause to be optimistic for a positive future outcome.
During the last year Marechale has generated revenue of £622,000 (2021:
£400,000), and, although our gross profit margin decreased from 64% to 53%,
owing to higher third-party commissions, administrative expenses remained
steady at £483,000 (2021: £463,000).
Importantly, investments and warrants in client companies generated unrealised
gains of £2,716,000 (2021: £412,000). It is worth noting that we have
£1,393,000 of unused losses to offset against any possible future tax
liability on realisation.
I am delighted to announce an increased profit for the year of £2,562,000
(2021: £246,000). During the same time, the balance sheet value has increased
significantly to £3,630,000 (2021: £686,000), representing 3.8 pence per
share (2021: 0.8 pence per share), 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 has been 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 double digit internal rates of
return across all the companies that it has funded since 2010. We are
confident that our investments in Weardale Lithium, Burgh Island, Chestnut
Group, Fast2Fibre, Forest Road Brewery and Future Biogas, amongst others, will
deliver uplifts in value in due course.
The Company has continued with its strategy of utilising its balance sheet to
take enhanced positions in its client companies, and embarked on two small
capital raises, welcoming Luke Johnson’s strategic investment of £160,000
in October 2021, and, secondly, raising a further £207,000 from shareholders
and new investors in March 2022.
Due to Marechale’s proven 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
22 August 2022
For further information please contact:
Marechale Capital plc Mark Warde-Norbury / Patrick Booth-Clibborn Tel: +44 (0)20 7628 5582
Cairn Financial Advisers LLP (Nomad and Broker) Jo Turner / Sandy Jamieson Tel: +44 (0)20 7213 0880
BlytheRay (Financial PR) Tim Blythe / Megan Ray / Madeleine Gordon-Foxwell Tel: +44 (0)20 7138 3204 marechalecapital@blytheray.com
Statement of Comprehensive Income
For year ended 30 April 2022
Year ended Year ended
30-Apr 30-Apr
2022 2021
(£) (£)
Continuing operations
Revenue 621,573 399,929
Cost of sales (291,632) (144,507)
Gross profit 329,941 255,422
Administrative expenses (483,499) (463,343)
Operating loss (153,558) (207,922)
Other Income - 44,354
Finance expense (876) (1,063)
Other gains/(losses) 2,716,237 410,516
Profit/ (loss) before tax 2,561,803 245,886
Taxation - -
Profit/ (loss) for the year on continuing operations 2,561,803 245,886
Earnings/ (loss) per share (Pence) (Pence)
Basic - Continuing operations 2.95 0.39
- Diluted 2.70 0.35
Statement of Comprehensive Income
Profit/ (loss) for the year 2,561,803 245,886
Total recognised comprehensive profit/ (loss)
(all attributable to owners of the company) 2,561,803 245,886
Statement of Financial Position
As at 30 April 2022
Year ended Year ended
30-Apr 30-Apr
2022 2021
(£) (£)
Current assets
Investment in subsidiary and associate 2 2
Equity investments at fair value through profit and loss 3,125,189 423,066
Warrants at fair value through profit and loss 146,589 90,013
Trade and other receivables 43,777 50,599
Cash and cash equivalents 413,970 233,287
Total current assets 3,729,527 796,967
Total assets 3,729,527 796,967
Current liabilities
Trade and other payables (57,368) (61,213)
Borrowings (10,000) (7,500)
Total current liabilities (67,368) (68,713)
Net current assets 3,662,159 728,254
Long-term liabilities
Borrowings (32,500) (42,500)
Net assets 3,629,659 685,754
Equity
Capital and reserves attributable to equity shareholders
Share capital 763,023 643,690
Share premium 328,413 85,247
Reserve for own shares (50,254) (50,254)
Reserve for share based payments 62,312 42,709
Retained profits/(losses) 2,526,165 (35,638)
3,629,659 685,754
Statement of Changes in Equity
For year ended 30 April 2022
Share capital Share premium Reserve for own shares Reserve for share based payments Retained earnings
Company
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)
Total comprehensive income
Charge/ profit for the financial year - - - 19,603 2,561,802
Issued in year* 119,333 243,167 -
Total comprehensive income 119,333 243,167 - 19,603 2,561,802
Balance at 30 April 2022 763,023 328,413 (50,254) 62,312 2,526,164
* Issue of ordinary shares in the year (net of expenses)
Statement of Changes in Equity
For year ended 30 April 2022
Year ended Year ended
30-Apr 30-Apr
2022 2021
(£) (£)
Net cash from operating activities
Profit/ (Loss) before tax 2,561,803 245,886
Reverse provision for share based payments 19,603 13,756
Reverse (gains)/ losses on fair value investment through profit and loss (2,716,237) (411,992)
Reverse losses/ (gains) on disposal of investments - 1,476
Reverse net interest expense 876 1,063
Operating cash outflows before movements in working capital (133,955) (149,811)
Decrease in receivables 6,822 11,391
(Decrease) in payables (3,845) (52,303)
Tax paid - -
2,977 (40,912)
Cash outflow from operating activities (130,978) (190,724)
Investment activities
Interest received (1) 14
Expenditure on equity investments (42,462) (50,625)
Proceeds from sale of equity investments through profit and loss - 980
Cash (out)/ inflow from investing activities (42,463) (49,631)
Financing
Issue of ordinary share capital 362,500 267,487
(Repayment)/Issue of borrowings (7,500) 50,000
Interest payable (876) (1,077)
Cash in/ (out) flow from financing activities 354,124 316,410
Net increase in cash and cash equivalents 180,683 76,055
Cash and cash equivalents at start of the financial year 233,287 157,232
Cash and cash equivalents at end of the financial year 413,970 233,287
Notes to the Financial Statements
Year ended 30 April 2022
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
The company has unpredictable revenue due to the nature of corporate finance
advisory and the reliance upon deal-driven transactions, however as at the
year end the company had £414k of cash reserves (2021: £233k) which at as
that date equated to approximately 10 months of overheads. Whilst the company
generated operating losses of £153k in the financial year (2021: £207k) the
directors remain confident that the project pipeline will generate sufficient
income on top of the cash reserves in order to meet the company’s
liabilities as they fall due over the next twelve months. Furthermore, there
is the ability to fund working capital by equity issues, sales of equity
investments and/or warrants and deferral of directors’ salaries.
b. Basis of accounting
These financial statements have been prepared in accordance with UK Adopted
International Reporting Standards ('IFRS'). 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, as described
below.
The Directors have chosen not to prepare consolidated accounts because the two
subsidiaries, Marechale Ltd and Marechale Capital Investments Ltd, are both
dormant, have never traded, and therefore highly immaterial to the financial
statements.
Subsidiaries are entities over which the Group has control, being the power to
govern the financial and operating policies of the acquired entity so as to
obtain benefits from its activities.
An associate is an entity over which the Group has significant influence.
Significant influence is the power to participate in the financial and
operating decisions of the investee, but it is not control or joint control,
over those policies.
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.
2022 2021
£ £
Broking commissions and fees earned from corporate finance 621,573 399,929
4. Other gains/ (losses)
2022 2021
£ £
Realised (losses) on equity investments - (1,476)
Unrealised gains on equity investments 2,659,661 322,860
Unrealised gains on warrants 56,576 89,132
2,716,237 410,516
5. Earnings per share
Earnings Earnings
2022 2021
£ £
Based on a gain/ (loss) of 2,561,803 245,886
No. shares No. shares
Weighted average number of Ordinary Shares in issue for the purpose of basic earnings per share 86,947,358 62,772,480
Weighted average number of Ordinary Shares in issue for the purpose of diluted earnings per share 94,784,268 70,626,730
6. Other matters and Market Abuse Regulation (MAR) Disclosure
The financial information for the year ended 30 April 2022 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:
7. Valuation of investments including options
The Directors have considered the fair value adjustment made on the
investments held at fair value through profit or loss. A net upward fair value
adjustment on the investments and options was made to the total of £2,716,000
(2021: £410,000) consisting of positive adjustments of £2,806,000 uplift on
Weardale Lithium Limited, offset by net negative adjustments on other
companies. This along with other valuations are estimates based on the
Directors’ assessment of the performance of the underlying investment and
reliable information such as recent fundraising. There is however inherent
uncertainty when valuing private companies such as these in the natural
resources sector.
8. Post balance sheet events
There are no post balance sheet events.
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