REG-Marechale Capital Plc: Financial Statements for the Year Ended 30 April 2023
22/08/2023 07:15
22 August 2023
Marechale Capital plc
("Marechale" or the "Company")
Financial Statements for the Year Ended 30 April 2023
Marechale Capital Plc (AIM: MAC), 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 2023 (the “Period”).
Chairman’s Statement
Marechale Capital plc (AIM: MAC), 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
and technology companies in the UK and Europe, is pleased to announce its
audited final results for the year ended 30 April 2023 (the “Period”).
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.
As reported in the interim results statement announced in December 2022, it
has been a challenging year generally, particularly in the hospitality sector,
as a number of businesses navigated a continuing period of market uncertainty,
with increased overheads caused largely by inflation driven wage rises,
compounded by general staff shortages, and high energy costs, particularly
over the winter period. Furthermore, customer discretionary spending is also
being squeezed. However, against this challenging backdrop, 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 last year included raising further
equity funding for the European telecommunications technology company,
Fast2Fibre, and additional funding for Weardale Lithium, Chestnut Group - the
leading East Anglian Inn Group, and 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 Chestnut Group and Burgh Island. All of the fundraisings were at
premiums to Marechale’s equity and warrant holdings investment value.
In the clean energy space, general market uncertainty has impacted some of our
corporate clients whose progress has been delayed and resulted in some
investee and advisory company exits being postponed. However, we are pleased
to report the exit of our investment in Future Biogas, the leading UK farm
crop anaerobic digestion biogas business, after its acquisition by 3i. We also
report that Burgh Island, both an investee and advisory client, is for sale
Significant progress continues to be made with the lithium extraction
business, Weardale Lithium Ltd (“Weardale”), and our pipeline of new and
increasingly diversified projects remains robust.
Weardale is Marechale’s largest investment, holding 500,000 founder shares
and 22,400 options with a combined value of £2.8 million based on the last
funding round in July 2022, 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. Marechale remains optimistic for a positive future outcome on
this investment.
Investments and warrants in client companies generated losses of £52,000
(2022: gain of £2,716,000). It is worth noting that we have £770,000 of
unused capital tax losses to offset against any possible future tax liability
on realisation of gains.
During the last year, Marechale generated revenue of £376,000 (2022:
£622,000), and, although our gross profit margin decreased from 53% to 32%,
due to high 3(rd) party commissions associated with one particular client,
administrative expenses remained steady at £488,000 (2022: £483,000).
In summary, we announce a net loss for the year of £426,000 (2022: profit of
£2,562,000): however, as noted above, 2022’s profits included £2,716,000
unrealised investment gains. During the same period, Marechale’s balance
sheet value has only marginally decreased to £3,227,000 (2022: £3,630,000)
representing Net Asset Value/Share of 3.4p (2022: 3.8p).
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 equity and warrant positions, and joint
venture arrangements as part of its terms of engagement with growth company
clients. Marechale’s historical investment performance for its investor
relationships 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, and Forest Road Brewery, 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.
One of the most recent strategic events is to welcome Chris Kenning as a with
his strategic investment of 9.9% of the Company in June 2023. As announced at
the time, the plan is to digitise Marechale’s activities and continue to
develop strategic partnerships with the objective of enhancing shareholder
value.
Whilst the current economic climate remains challenging, the Board considers
that the Company has sufficient cash reserves for its current requirements and
remains positive about the investments that it holds in its client companies,
and is 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 as the Board and Management Team continue to use Marechale’s
proven track record as a corporate finance adviser in the £5-50 million
Enterprise Value PE sector for new projects and partnerships.
Mark Warde-Norbury
Chairman
21 August 2023
This announcement contains inside information for the purposes of the UK
Market Abuse Regulation.
For further information please contact:
Marechale Capital plc Tel: +44 (0)20 7628 5582
Mark Warde-Norbury / Patrick Booth-Clibborn
Cairn Financial Advisers LLP (Nomad and Broker) Tel: +44 (0)20 7213 0880
Jo Turner / Sandy Jamieson
Statement of Comprehensive Income
For year ended 30 April 2023
Year ended Year ended
30-Apr 30-Apr
2023 2022
(£) (£)
Continuing operations
Revenue 375,726 621,573
Cost of sales (260,581) (291,632)
Gross profit 115,145 329,941
Administrative expenses (487,626) (483,499)
Operating loss (372,481) (153,558)
Finance expense (912) (876)
Other (losses)/ gains (52,124) 2,716,237
(Loss)/profit before tax (425,516) 2,561,803
Taxation - -
(Loss)/ profit for the year on continuing operations (425,516) 2,561,803
Earnings per share (Pence) (Pence)
Basic - Continuing operations (0.45) 2.95
- Diluted (0.40) 2.70
Statement of Comprehensive Income
(Loss)/ profit for the year on continuing operations (425,516) 2,561,803
Total recognised comprehensive profit
(all attributable to owners of the company) (425,516) 2,561,803
Statement of Financial Position
As at 30 April 2023
Year ended Year ended
30-Apr 30-Apr
2023 2022
(£) (£)
Current assets
Investment in subsidiary 2 2
Equity investments at fair value through profit and loss 2,862,653 3,125,189
Warrants at fair value through profit and loss 130,076 146,589
Trade and other receivables 75,933 43,778
Cash and cash equivalents 282,795 413,970
Total current assets 3,351,459 3,729,528
Total assets 3,351,459 3,729,528
Current liabilities
Trade and other payables (91,558) (57,368)
Borrowings (10,000) (10,000)
Total current liabilities (101,558) (67,368)
Net current assets 3,249,902 3,662,160
Long-term liabilities
Borrowings (22,500) (32,500)
Net assets 3,227,402 3,629,660
Equity
Capital and reserves attributable to equity shareholders
Share capital 763,690 763,023
Share premium 329,330 328,413
Reserve for own shares (50,254) (50,254)
Reserve for share based payments 83,988 62,313
Retained profits/(losses) 2,100,648 2,526,165
3,227,402 3,629,660
Statement of Changes in Equity
For year ended 30 April 2023
Share capital Share premium Reserve for own shares Reserve for share based payments Retained earnings
Company
Balance at 30 April 2021 643,690 85,247 (50,254) 42,709 (35,638)
Total comprehensive income
Profit for the financial year - - - 19,604 2,561,803
Issued in year* 119,333 243,166 - - -
Total comprehensive income 119,333 243,166 - 19,604 2,561,803
Balance at 30 April 2022 763,023 328,413 (50,254) 62,313 2,526,165
Total comprehensive income
(Loss) for the financial year - - - 21,675 (425,517)
Issued in year* 667 917 - - -
Total comprehensive income 667 917 - 21,675 (425,517)
Balance at 30 April 2023 763,690 329,330 (50,254) 83,988 2,100,648
* Issue of ordinary shares in the year (net of expenses)
Statement of Changes of Cash Flows
For year ended 30 April 2023
Year ended Year ended
30-Apr 30-Apr
2023 2022
(£) (£)
Net cash from operating activities
(Loss)/profit before tax (425,516) 2,561,803
Reverse provision for share based payments 21,676 19,603
Reverse losses/ (gains) on fair value investment through profit and loss 16,513 (2,716,237)
Reverse losses on disposal of investments 18,075 0
Reverse net interest expense 912 876
Operating cash outflows before movements in working capital (368,341) (133,955)
Movement in working capital
(Increase)/decrease in receivables (32,157) 6,822
Increase/(decrease) in payables 34,190 (3,845)
Tax paid - -
2,033 2,977
Cash outflow from operating activities (366,308) (130,978)
Investment activities
Interest received 0 (1)
Expenditure on equity investments 0 (42,462)
Proceeds from sale of equity investments through profit and loss 226,925 0
Cash inflow/(outflow) from investing activities 226,925 (42,463)
Financing
Issue of ordinary share capital 1,584 362,500
Repayment of borrowings (10,000) (7,500)
Interest payable (912) (876)
Cash inflow from financing activities (9,328) 354,124
Net increase in cash and cash equivalents (148,711) 180,683
Cash and cash equivalents at start of the financial year 413,970 233,287
Cash and cash equivalents at end of the financial year 16 282,795 413,970
Notes to the Financial Statements
Year ended 30 April 2023
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
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 £283k of cash reserves (2022: £414k) which as at that date
equated to approximately 7 months of overheads. Whilst the company generated
operating losses of £372k in the financial year (2022: £153k) 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.
3. Business and geographical segments
The directors consider that there is only one activity undertaken by the
Company, that of corporate finance professional services advisory. All of this
activity was undertaken in the United Kingdom.
2023 2022
(£) (£)
Broking commissions and fees earned from corporate finance 375,726 621,573
4. Other gains/ (losses)
2023 2022
(£) (£)
Realised (losses) on equity investments (18,075) 0
Unrealised gains on equity investments (17,536) 2,659,661
Unrealised gains on warrants (16,513) 56,576
(52,124) 2,716,237
5. Earnings per share
Earnings Earnings
(£) (£)
(425,516) 2,561,803
Based on a gain/ (loss) of 2,561,803 245,886
No. shares No. shares
95,419,581 86,947,358
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 2023 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. In 2023 a net downward
fair value adjustment on the investments and options was made to the total of
£52,000, and in 2022 a net upward adjustment of £2,716,000, 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
On 28 June 2023 the Company issued 10,480,000 shares at 2.25 per share raising
£235,800.
Cautionary statement
Certain statements made in this announcement are forward-looking statements.
Such statements are based on current expectations and assumptions and are
subject to a number of risks and uncertainties that could cause actual events
or results to differ materially from any expected future events or results
expressed or implied in these forward-looking statements. Persons receiving
this announcement should not place undue reliance on forward-looking
statements. Unless otherwise required by applicable law, regulation or
accounting standard, the Company does not undertake to update or revise any
forward-looking statements, whether as a result of new information, future
developments or otherwise.
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