CIP Merchant Capital Limited Q3 2019 - Corporate Presentation
Table of Contents 1. Overview • Executive Summary • Performance Review • Portfolio Review • Portfolio Companies 2. Outlook • Public Markets 3. Appendix • Investment Objective and Policy • Investment Team • Note to recipients
Overview
Executive Summary 4 50% of the NAV invested in 7 companies Software/Tech Software/Tech Healthcare Oil & Gas Alkemy S.p.A. Brave Bison Group CareTech Holdings Coro Energy plc (“ Alkemy ”) plc plc (“ Coro ”) Italian digital consulting (“ Brave Bison ”) (“ CareTech ”) UK exploration and firm production company Video maker Specialist social care services Healthcare Healthcare Software/Tech 7Star S.r.l. Orthofix Medical Inc. Proactis Holdings plc (“ Happy Friends ”) (“ Orthofix ”) (“ Proactis ”) Italian veterinary clinics US medical devices producer Procurement software chain
Performance Review • 5 Cautious approach taken to deploy capital • Remain well placed to take advantage of investment opportunities Share Price and NAV progress Share 100.00p 95.50p 89.50p 88.00p 72.00p 68.50p 64.50p 54.00p Price Share Price NAV 1 95.36p 94.73p 92.18p 92.46p 87.20p 86.86p 88.51p 88.69p 2 FTSE AIM All Share AIM All 100 97.43 103.97 105.52 81.7 88.07 88.31 84.28p Share 2 Proactis: 2.4% 3 or 2.09p 4 Share Price, FTSE AIM All Share & NAV (p) Brave Bison:1.3% 3 or 1.19p 4 CareTech: 7.1% 3 or 6.32p 4 Happy Friends: 8.2% 5 or 7.25p 4 Alkemy: 6.8% 3 or 6.06p 4 Orthofix: 9.6% 3 or 8.49p 4 Coro Energy: 13.0% 6 or 11.56p 4 Cash & gilts: 51.4% 3 or 45.55p 4 Q4 2017 Q1 2018 Q2 2018 Q3 2018 Q4 2018 Q1 2019 Q2 2019 30.8.19 Analysis based on public information 1 NAV in Q4 2017 is equal to the NAV on admission, being the net proceeds of the fundraise divided by the number of CIP Merchant shares in issue 2 FTSE AIM All Share, 27/12/2017 rebased to 100 3 Market Value of the listed investment divided by NAV 4 Value of the investment divided by number of CIP Merchant shares in issue. For private companies Value is Book Value, for list ed businesses Value is Market Value, for Coro’s bonds is discounted cash flow 5 Book Value of the investment divided by NAV 6 Value of the investment consists of Market Value of Coro’s shares, warrants valued using Black Scholes model and bonds with a discounted cash flow valuation, all divided by NAV
Portfolio Review Current 1 portfolio value: £24.5 million 30 August 2019 • 6 • Diversification among different industries, countries and type of securities • 50% of NAV invested Current Portfolio Composition (industry, country and type of security as % of portfolio) Industry Country Security Debt 13% Oil & Italy Gas 30% Private 29% Equity Healthca 16% UK re 51% 50% Public Software Equity US /Tech 71% 19% 21% Analysis based on public information NOTE: the Company accounts and share price are denominated in sterling. All the investments in foreign currencies are not hedged at this time. Investors are encouraged to consider thoroughly and carefully the impact of fluctuations in the exchange rates in relation to their unique needs, goals and risk considerations. 1 Based on 30 August 2019 NAV as reported to shareholders on 3 September 2019.
Alkemy S.p.A. 7 Market : AIM, Borsa Italiana R ATIONALE OF THE INVESTMENT Ticker: ALK 1. Double digit growth both through organic growth Country : Italy and aggressive M&A policy Industry : Software/Tech 2. High standing and cross-industry client base, First investment date : July 2018 with high loyalty and room for cross-selling Transaction : Purchase of shares on market 3. Plan to move from AIM Italia to the STAR Strategy : Active approach segment of Borsa Italiana’s Main Market MTA 4. Trading at a discount to peers and potential for a S IGNIFICANT SHAREHOLDERS re-rating R ECENT DEVELOPMENTS Jul.19 Acquisition of an initial 20% stake of Design Group Italia, an internationally accredited 29% innovation & design consultancy company counting on 50 years of experience and Directors/founders offices in Milan, Reykjavik, New York and Palo Alto. Aug.19 Announced 1H2019 results with +53% growth in revenue vis-à-vis 1H2018, +42% in 55% EBITDA and +33% in Net Income. free float (market) 7% Business development 8% 72 45 € m 42 35 29 1 treasury shares 18 1 6 5 1% 4 3 3 1 Source: Alkemy’s website FY 2014 FY 2015 FY 2016 FY 2017 FY 2018 1H 2019 T HE CASE Revenue EBITDA Alkemy grows through acquisitions: it first identifies leading digital Source: Alkemy's financial statements and market releases consulting firms in niches out of those already covered, acquires and integrates the firm into its environment and then maximise the value cross- selling the enlarged range of services to present and acquired clients.
Brave Bison Group plc 8 Market : AIM, London Stock Exchange R ATIONALE OF THE INVESTMENT Ticker: BBSN 1. Growth potential from its market leadership, with Country : UK the benefits of the operating leverage all still to be Industry : Software/Tech exploited. First investment date : June 2019 2. Valuation extremely attractive for a digital Transaction : Purchase of shares on market company which has recently turned into a Strategy : Opportunistic profitable company. 3. Truly global footprint and the potential to bank on S IGNIFICANT SHAREHOLDERS Asia Pacific growth. R ECENT DEVELOPMENTS 19% Jul.19 Interim results for 1H2019 show 9% growth vis-à-vis 1H2018, thanks to development in fee-based APAC branded content business and despite revenue impacted by 39% demonetisation of Facebook pages. Adjusted 9% EBITDA for the period £0.3 million and cash free float (market) balance as at 30 June 2019 of £3.7 million (31 Vesuvius Limited December 2018: £5.4 million). Operational targets for 2019: exclusively 8% licensing the content, diversifying platforms revenue streams, expanding APAC footprint. Aug.19 Appointment as Non-executive Director of 3% 7% Simon Davies Miriam Mulcahy, who relies on multi-year 5% 5% 5% strategy consulting experience within the James Russell DeLeon TCG LLC media and technology sector. Source: Brave Bison’s website T HE CASE The share price of the company collapsed after the announcement of business issues, including the new Facebook’s policies which required the Source: Brave Bison's financial statements and market releases company to demonetise its pages. Having recently changed its Chief Executive, Brave Bison has the potential for a share price recovery.
CareTech Holdings plc 9 R ATIONALE OF THE INVESTMENT Market : AIM, London Stock Exchange 1. Despite gearing of 102%, the company has a solid, Ticker: CTH steadily growing business. Country : UK 2. Management capabilities may unlock further value Industry : Healthcare from Cambian Group plc operation. First investment date : April 2019 3. Potential takeover target for international player Transaction : Purchase of shares on market seeking to enter the market or increase its share. Strategy : Opportunistic 4. The company owns a large real estate portfolio, potentially capable to unlock hundreds of millions S IGNIFICANT SHAREHOLDERS of £ with second ground rent transaction. R ECENT DEVELOPMENTS 14% Aug.19 Announced 1H2019 results, comprising Cambian Group plc figures. Richard Griffiths 1H2019 1H2018 Change free float (market) 10% Group revenue £192.5m £87.6m 120% 45% CareTech LFL (i) revenue £98.2m £87.6m 12% Underlying EBITDA (i) £33.3m £19.5m 71% 8% CareTech LFL (i) EBITDA £20.2m £19.5m 4% 0.9% Underlying profit before tax (ii) £20.7m £13.8m 50% Underlying basic EPS (ii) 15.82p 14.86p 7% 7% Statutory PBT £6.9m £8.5m (19)% 6% Statutory EPS 5.77p 8.62p (33)% 3% 6% Net debt (iii) £293.0m £147.0m 99% Net assets £328.4m £208.3m 58% Source: CareTech's website Interim dividend 3.75p 3.50p 7% T HE CASE The company is the leading independent provider of social care services. Having acquired, in Q4 2018, Cambian Group plc, CareTech has increased its reach and offering yet further. Source: CareTech’s financial statements and market releases
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