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 [email protected]

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.