MXC Capital Limited Pre-close Trading Update (5794L)
September 09 2019 - 1:00AM
UK Regulatory
TIDMMXCP
RNS Number : 5794L
MXC Capital Limited
09 September 2019
The information contained within this announcement is deemed by
the Company to constitute inside information stipulated under the
Market Abuse Regulation (EU) No. 596/2014. Upon the publication of
this announcement via the Regulatory Information Service, this
inside information is now considered to be in the public
domain.
MXC Capital Limited
("MXC" or the "Company")
Pre-close Trading Update, Proposed Demerger of Transactional
Businesses and Proposed Tender Offer
MXC (AIM: MXCP), the technology focused adviser and investor, is
pleased to provide an update on trading for the year ended 31
August 2019 and other corporate matters.
Financial Summary
The Company expects to report a profit at Trading EBITDA
level(1) of no less than GBP1.7m for the year (2018: loss of GBP1.2
million). This return to trading profit has been delivered as a
result of the combination of management fees from the joint venture
with Liberty Global plc ("LGJV") and the partnership with
Ravenscroft Limited to advise the GIF Technology & Innovation
Cell (the "GIF") in addition to transaction and consultancy fees
and loan interest. These revenue streams have continued into the
current year.
The Company confirms that as at 31 August 2019 it had an
unaudited Net Asset Value(2) ("NAV") of 116 pence per share (31
August 2018: 95 pence per share) with the underlying portfolio and
liquid assets(3) valued at 103 pence per share (31 August 2018:
80.5 pence per share). Cash as at 31 August 2019 amounted to
GBP21.5 million. The Company has a strong pipeline of investment
opportunities and expects that the majority of the cash will be
invested within the next few months.
Progress with Investments
In terms of our quoted investments, both Adept4 plc ("AD4") and
IDE Group Holdings plc ("IDE") have stabilised and have begun their
journey of recovering the previously lost value.
With respect to our partnerships, LGJV successfully completed
two additional transactions and now has a solid platform of monthly
profitability. Additional deals continue to be reviewed. The GIF is
substantially invested with a current pipeline that should see the
fund fully invested or committed by the end of this calendar year.
Dialogue has commenced with the shareholders of the GIF about a
follow-on fund leading to potential further management fees in the
future.
Proposed Demerger of Transactional Businesses
In September 2018, MXC announced the sale of 25% of the issued
share capital of MXC Capital UK Limited ("MXCUK") to Ravenscroft
Holdings Limited which valued the division at GBP9 million. MXCUK
is a subsidiary of MXC and is the holding company of the Group's
transactional businesses which receive the management,
transactional and consultancy fees generated by the Group. The
value of this division is not fully reflected in MXC's NAV and
hence the Board is proposing to demerge this business into a new
company and list this company on The International Stock Exchange
in Guernsey ("TISE"). Should the proposed demerger be approved by
shareholders, all existing shareholders in MXC will receive their
pro-rata allocation of shares in the new company and its shares
will be able to be traded on TISE. It is anticipated that the
demerged business will be dividend paying. A circular will be sent
to shareholders in due course with further details about the
proposed demerger and subsequent listing on TISE and requesting
shareholder approval.
Proposed Tender Offer
MXC is pleased to announce that the Board has decided to reward
shareholder loyalty by reviving its policy of returning capital to
shareholders. The Board's intention is to establish a progressive
policy which will see capital being returned to shareholders by way
of periodic tender offers. The mechanism of a tender offer gives
shareholders the flexibility to either realise a return by allowing
the Company to purchase a portion of their shares for cash, or to
retain a potentially larger relative holding in the Company so that
they might further benefit from any future capital growth. The
proposed amount for this year's tender offer is equivalent to the
trading profit for the Group, being GBP1.7 million, and, subject to
shareholder approval, is expected to be paid out in October this
year. The price for the tender offer will be 116 pence per share,
being the NAV per share as at 31 August 2019. A circular will be
sent to shareholders giving further detail of the proposed tender
offer and the expected timetable shortly.
Peter Rigg, Chairman of MXC, commented:
"The year to 31 August 2019 saw significant progress for MXC
both in terms of trading profitability and with respect to its
investments. Post a couple of difficult years, I am delighted that
the hard work of the MXC team is paying off and that we can reward
shareholders for their loyalty by way of a return of capital.
Furthermore, the Board believes that the proposed demerger of the
Group's transactional businesses into a separate listed company
will give shareholders the opportunity to benefit from the value in
these businesses which is currently not fully recognised in MXC's
NAV or its share price. We look forward to the coming years with
confidence."
(1) earnings from trading activities before interest payable,
tax, depreciation, amortisation, non-recurring and exceptional
items, share-based payments and movements in fair value of
investments and after interest income under the effective interest
method as this is considered to be part of the trading activities
of the Group
(2) total balance sheet net assets plus market value of shares
held in the Employee Benefit Trust as at 31 August 2019
(3) comprises cash balances, investments, outstanding loan
capital and accrued interest and the market value of shares held in
the Employee Benefit Trust as at 31 August 2019
MXC Capital Limited
Ian Smith
+44 (0) 20 7965 8149
Zeus Capital Limited (Nominated adviser and broker)
Nick Cowles, Dan Bate
+44 (0) 161 831 1512
About MXC Capital Limited www.mxccapital.com
MXC is a specialist technology adviser and investor with a track
record of investing in and advising companies in the TMT sector.
MXC brings together a deep knowledge of technology, first-hand
experience of managing companies in the sector, an ability to make
meaningful investments and a highly experienced corporate advisory
team in support, all of which combine to grow shareholder
value.
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contact rns@lseg.com or visit www.rns.com.
END
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