Unaudited Interim Results 2020

RNS Number : 6643A

Marwyn Value Investors Limited

30 September 2020

 

LEI: 213800L5751QTTVEA774

30 September 2020

MARWYN VALUE INVESTORS LIMITED (THE "COMPANY")

Unaudited Interim Results 2020

Marwyn Value Investors Limited announces the publication of its interim results for the six months ended 30 June 2020.

The Interim Results are available on the 'Financial Reports' section of the Company's website, http://www.marwynvalue.com/company-information/financial-reports .

Company enquiries:

Louisa Bonney / Scott Danks

Axio Capital Solutions Limited

Telephone: [phone]

PR enquiries:

Alex Child-Villiers / Will Barker

Temple Bar Advisory

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Cautionary Statement

This announcement contains forward-looking statements which are made in good faith based on the information available at the time of its approval. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the Company's control that could cause the actual results, performance or achievement of the Company to be materially different from those expressed or implied by these forward-looking statements.

Neither the content of the Company's website (or any other website) nor the content of any website accessible from hyperlinks on the Company's website (or any other website) is incorporated into, or forms part of, this announcement.

MARWYN VALUE INVESTORS LIMITED

UNAUDITED INTERIM RESULTS

FOR THE SIX MONTHS ENDED 30 JUNE 2020

MARWYN VALUE INVESTORS LIMITED

REPORT OF THE CHAIRMAN

I am pleased to present to shareholders the unaudited interim results of Marwyn Value Investors Limited (the "Company") (LSE: MVI and MVIR) for the six months ended 30 June 2020.

Strategic Report

Reflecting on my strategic report included in the 2019 year end financial statements, it is now becoming clear that the impact of the Covid-19 pandemic, both in terms of the global economy and the restrictions placed on everyone's way of life are significantly greater than could have been expected when reports of the virus first emerged. However, our underlying portfolio of trading companies has performed well through the period with our largest trading investment, Zegona, benefiting from the impact of the lock downs on communications and data usage and our luxury brand, Le Chameau, seeing growth in their online business. In addition, primarily as a result of the sale of BCA Marketplace plc in December 2019, a majority of the underlying look-through portfolio NAV is held as cash. I believe that this provides the Manager with an excellent platform from which to consider the deployment of capital into new investments over the coming period and otherwise to maximise value to shareholders.

Our collective experience, through multiple recessions and times of economic distress,  supports the Board's and the Manager's view that this period has the potential to offer up significant opportunities but also that, in the interests of shareholders, this must be done with patience, holding firm to the Manager's core investing principles. Our belief is that investing in this environment will require caution. Over the years, the Manager has demonstrated clear operational and investment expertise, across bull and bear markets and the continued access to a bench of executives with long track records of navigating businesses through challenging times will be key to creating shareholder value.

We recently conducted a full review of our Board composition, considering the recommendations of the AIC Code, following which we were pleased to appoint two new independent non-executive directors, Peter Rioda and Victoria Webster, to the Board and appoint Martin Adams as Senior Independent Director. Biographies for all Board members are included on our website, www.marwynvalue.com . As a result of the new appointments, the Board now comprises a majority of independent non-executive directors. The experience and expertise Peter and Victoria bring to the Board complements our existing strong business and investment expertise and I look forward to working alongside them. I would like to thank the two out-going directors, Ron Hobbs and Louisa Bonney, for their valuable services to the Company over the years.

Progress over the period

Despite recent market volatility, the Company's net asset value has remained stable with the ordinary share NAV per share being 2.2% down for the six months to 30 June 2020 and the realisation share NAV per share down 3.5%, compared to a 17.5% drop in the FTSE All-Share index. The Manager discusses the drivers of this performance in detail later in this interim report, but it is pleasing that Euskaltel, Zegona's current investment, is continuing to progress with its national expansion plan under the Virgin brand, whilst Le Chameau's trajectory to profitability remains on track, despite the clearly challenging retail sector implications of the Covid-19 pandemic.

There are, of course, businesses which are significantly adversely impacted by the pandemic. Whilst the Safe Harbour board believed there would be investment opportunities emerging over the coming year for its platform acquisition, in response to the preferences of its major shareholders given current market conditions, the company is winding up and returning remaining capital to its shareholders.

As I have discussed previously, the level of the Company's ordinary share price discount to underlying net asset value ("NAV") has been a prime area of focus for myself, the Board and the Manager, with a number of measures introduced over the last 10 years. Despite this, the discount continued to grow through the start of 2020, reaching a peak of 49% in early May, driven, at least in part, by a market perception of an excess supply of shares from shareholders seeking liquidity. Consequently, we announced and completed an accelerated bookbuild in the Company's ordinary shares, funded by the proceeds from the crystallisation of the ordinary share carried interest. This bookbuild has had both short-term and long-term benefits to the Company's ordinary shareholders including:

· an immediate and significant liquidity event allowing shareholders who were seeking liquidity an opportunity to realise their investment;

· enhancement of the alignment of interests between Marwyn and the Company's shareholders through an increase in the carried interest recipients' ordinary shareholdings in the Company;

· a reduction in the perceived excess supply of shares, and the subsequent narrowing of the discount; and

· the re-introduction of a preferred return hurdle to the ordinary share carried interest, ensuring ordinary shareholders receive a 7.5% preferred return before any future carry accrues.

The shareholder uptake for the accelerated bookbuild, along with the ordinary share price increase and reduction in discount following the transaction (also aided by the continuation of our buyback programme) validate the rationale for the transaction. As at 30 June 2020, the share price discount to NAV stood at 35% and this has further narrowed to below 30% in September 2020. We believe that through well managed deployment of the cash available to the Manager and strong investment performance, this discount should narrow further. 

Looking forward

Throughout this year, and as can be expected for the short-term future, the consequences of the pandemic are continually evolving as businesses and governments react to combat the infection. As an investment company, we are ultimately reliant on the Manager, Investment Adviser and Administrator for day to day operations; these parties all have robust business continuity plans, which have been in place and proven to be effective throughout the period, to ensure they can continue to service the Company.

With this support, and an investment strategy which can thrive in turbulent market conditions, the Board continues to monitor the risks for the Company and we look forward to the growth of the existing portfolio companies and the launch of new acquisition vehicles.

Robert Ware

Chairman

29 September 2020

Marwyn Value Investors Limited
PERFORMANCE SUMMARY

Ordinary Shares

The NAV per ordinary share of the Company decreased during the period by 3.5p to £1.569, a decrease of 2.2%, whilst the FTSE All-Share declined by 17.5%.  As at 30 June 2020, the discount of the share price to NAV per ordinary share was 35.0%, compared to 34.3% as at 31 December 2019.

	NAV Total Return1	FTSE All-Share
Six months (to 30 June 2020)	(2.2)%	(17.5)%
Since inception (1 March 2006 to 30 June 2020)	126.3%	92.5%

Realisation Shares

The NAV per realisation share of the Company decreased during the period by 6.2p to £1.678, a decrease of 3.5% whilst the FTSE All-Share declined by 17.5%.  As at 30 June 2020, the discount of the share price to NAV per realisation share was 16.6%, compared to 18.1% as at 31 December 2019.

	Shareholder Total Return2	FTSE All-Share
Six months (to 30 June 2020)	(3.5)%	(17.5)%
Since inception (30 November2016 to 30 June 2020)	(16.3)%	5.7%

The decrease in NAV per ordinary share and realisation share over the period was primarily attributable to a decrease in Safe Harbour's share price from 132.5p per share at 31 December 2019 to 76p following the announcement of its liquidation, offset largely by the increase in Zegona's share price by 5p per share.

Despite the uncertainty and effects of the Covid-19 pandemic on the economy causing market volatility on a global scale, throughout the period, the NAV for both ordinary and realisation shares remained relatively stable. The maximum drop in NAV over the six months to 30 June 2020 of the ordinary shares and realisation shares was (7.1)% and (13.7)% respectively, compared to the FTSE All-Share index benchmark which fell by a maximum of (34.3)% during the period.

A review of the performance of the underlying investment assets is set out in the Report of the Manager.

A summary of costs ultimately incurred by the both ordinary shareholders and realisation shareholders is included in the 'Key Information Documents', located on the 'Documents' section of the Company's website, www.marwynvalue.com .

¹   For the ordinary shares, inception to date movement is based on the combined weighted average NAV of Marwyn Value Investors I, II and B shares prior to their amalgamation, using the conversion ratio published on 17 April 2008. Total return assumes the reinvestment of dividends paid to shareholders into the Company at NAV and is calculated on a cum-income basis

²   For the realisation shares, shareholder total return is calculated as the movement in total shareholder value, including all distributions made to realisation shareholders over the relevant period

MARWYN VALUE INVESTORS LIMITED

REPORT OF THE MANAGER

The Manager presents its 2020 interim report to the shareholders of the Company.

The review that follows refers to the underlying Portfolio Companies in which the Company is indirectly invested.

Market Outlook

As we highlighted in the full year accounts for 2019, we believe the current and expected macroeconomic environment is likely to provide an increase in special situation investment opportunities, accessible through our management partnerships and innovative investment company structure at more favourable valuations than have been seen for a number of years.

As the extent and duration of the fallout from the Covid-19 pandemic remains unknowable, we remain well-positioned with approximately 50% of the Company's underlying net asset value in cash and ready to be deployed into these special situations.

Working in combination with our management team partners will be key to securing differentiated deal flow in this environment and unlocking shareholder value creation in the platform businesses that we buy. We are working with a number of prospective management teams in developing investment opportunities and look forward to pursuing these in partnership with them.

Performance

For the six months to June 2020, the Company reported a net loss of £3.5 million, representing a loss per ordinary share of 5.3p and a loss per realisation share of 6.2p. The loss per ordinary share was partially offset by the per-share accretive benefit of the Company's buyback programme, which purchased 1.85 million shares at an average price of £0.998, improving NAV per ordinary share by 1.8p, resulting in a net decrease in NAV per ordinary share of 3.5p.

The significant contributor to the loss for the year has been the decline in value of Safe Harbour Holdings plc ("Safe Harbour"). Since listing on AIM in March 2018, Safe Harbour actively pursued its strategy to become a global leader in B2B distribution and/or business services through a well executed buy-and-build strategy, engaging at a detailed level with a number of potential acquisition targets. It was, however, unable to complete a platform acquisition for a variety of reasons, most notably differing views of fair valuation with vendors. In July 2020, Safe Harbour announced that, whilst its board believed that investment opportunities may emerge over the next 12 months, following discussions with major shareholders and in response to their preferences given current market conditions, it concluded that it is in the best interests of Safe Harbour shareholders as a whole at this time to seek a cancellation of Safe Harbour's shares from trading on AIM and to return remaining capital by means of a summary winding up. It is anticipated that after expenses, including the costs of the planned winding up, Safe Harbour shareholders will receive approximately 76p per share, which is the value at which the Safe Harbour investment is held as at 30 June 2020.  The first distribution of 74 pence per share was received on 25 September 2020.

Over these six months, Zegona has announced a series of key commercial and operational developments at its underlying investment, Euskaltel, including:

· the appointment of Ángel Olabuenaga Burón as CFO, replacing Jon Ander de las Fuentes;

· a new management incentive scheme based on a 3-year plan which allows senior management at Euskaltel to share in up to 4% of equity value creation (the maximum amount only achieved if Euskaltel's share price appreciates to €19 per share, from €7.90 at 30 June 2020); and

· a license agreement to introduce the Virgin brand to Spain. Management intend to launch a national expansion under the Virgin brand (using Euskaltel's existing platform in the north of Spain), which aims to bring a good value, high quality quad-play offering to a slightly more value-conscious customer segment in the 85% of Spain in which Euskaltel is currently not present.

Euskaltel's Q2 2020 results reported growth in the main financial metrics. Revenues increased year-on-year for the third consecutive quarter to €171.6 million. Driven by cost efficiencies, EBITDA from the traditional business grew by 8.8% to €91.8 million, and Euskaltel's operating cash flow grew over 10% to €50.9 million, including the investment of €7.4 million in the quarter to launch Virgin nationally, representing 29.6% of revenues.

Zegona itself has implemented a share buyback programme, with an anciliary aim of addressing the differential between Zegona's share price and the underlying asset value per share, primarily based on Zegona's investment in Euskaltel. Over the six month period to 30 June 2020, Zegona's share price increased by 5p to £1.14.

Since partnering with Bradshaw Taylor in November 2019 and with Corry Taylor as Le Chameau's CEO, Le Chameau has made significant progress in implementing the operating synergies which will significantly improve the business' ability to achieve profitability and positive cash generation.

The impact of Covid-19 has been particularly severe on retail markets, with high-street stores being forced to shut in many areas and with significantly decreased footfall when those shops have been able to open. Despite this, Le Chameau's year-to-date sales are broadly tracking budget and are slightly ahead of the same period in the prior year, with strong growth in the online channel and a particularly strong January and February (before the effects of Covid-19) thus far offsetting the impact of the pandemic on the retail channel.

As the majority of Le Chameau's sales occur in the autumn and winter months, any further restrictions imposed as a result of the pandemic could have an impact on the annual results for the business, and with Brexit approaching, there is also a risk of disruption to Le Chameau's supply chain in 2021. Accordingly, we have maintained the value of our investment in Le Chameau at the same level as at 31 December 2019.

Wilmcote continues to analyse possibilities for both potential new management teams and acquisition targets with impressive incumbent management teams, and believes opportunities should be forthcoming in the current macroeconomic environment.

Details of each of the Portfolio Companies are included on pages 12 to 13.

Allocation of NAV by company at 30 June 2020

Ordinary shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund and MVI II LP, the Company's total NAV attributable to ordinary shareholders is broken down across the following companies and percentages as at 30 June 2020:

Company	Ticker	Focus	% of NAV	Held by
Zegona Communications plc	ZEG LN	TMT	37.2%	MVI II LP
Wilmcote Holdings plc	WCH LN	Various	5.4%	MVI II LP
Safe Harbour Holdings plc		B2B Distribution & Business Services	4.9%	MVI II LP
Le Chameau Group plc		Luxury Goods	4.6%	Master Fund
Cash			49.5%
Other assets			0.1%
Liabilities			(1.7)%
Net assets			100.0%

Realisation shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund, the Company's total NAV attributable to realisation shareholders is broken down across the following companies in the following percentages as at 30 June 2020:

Company	Ticker	Focus	% of NAV	Held by
Zegona Communications plc	ZEG LN	TMT	72.0%	Master Fund
Safe Harbour Holdings plc		B2B Distribution & Business Services	9.5%	Master Fund
Le Chameau Group plc		Luxury Goods	7.4%	Master Fund
Cash			30.7%
Other assets			0.2%
Liabilities			(19.8)%
Net assets			100.0%

Allocation of NAV by company at 11 September 2020

Ordinary shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund and MVI II LP, the Company's total NAV attributable to ordinary shareholders is broken down across the following companies and percentages as at 11 September 2020, being the latest available published NAV:

Company	Ticker	Focus	% of NAV	Held by
Zegona Communications plc	ZEG LN	TMT	36.7%	MVI II LP
Wilmcote Holdings plc	WCH LN	Various	5.5%	MVI II LP
Safe Harbour Holdings plc		B2B Distribution & Business Services	5.0%	MVI II LP
Le Chameau Group plc		Luxury Goods	4.6%	Master Fund
Cash			49.6%
Other assets			0.3%
Liabilities			(1.7)%
Net assets			100.0%

Realisation shares

Based upon the Company's indirect investments in the Portfolio Companies through its interest in the Master Fund, the Company's total NAV attributable to realisation shareholders is broken down across the following companies and percentages as at 11 September 2020:

Company	Ticker	Focus	% of NAV	Held by
Zegona Communications plc	ZEG LN	TMT	70.4%	Master Fund
Safe Harbour Holdings plc		B2B Distribution & Business Services	9.6%	Master Fund
Le Chameau Group plc		Luxury Goods	7.2%	Master Fund
Cash			32.2%
Other assets			0.2%
Liabilities			(19.6)%
Net assets			100.0%

MARWYN VALUE INVESTORS LIMITED

REPORT OF THE MANAGER

Portfolio
http://www.zegona.com	http://www.lechameau.com
Zegona (ZEG LN) was established in partnership with former Virgin Media executives, Eamonn O'Hare and Robert Samuelson to execute a 'Buy-Fix-Sell' strategy in the European TMT sector, focusing on network-based communications and entertainment opportunities. Zegona originally acquired Spanish telecoms operator, Telecable in 2015 for an enterprise value of €640 million. Through the subsequent acquisition of that by Euskaltel and subsequent share purchases, Zegona currently holds c.21% of the equity in Euskaltel, has a number of Board and advisory positions and is working with the management to assist in the execution of their growth strategy.	Acquired in 2012 through Silvercloud Management Holdings plc, a vehicle established to pursue the acquisition of one or more operating companies in the luxury goods sector, Le Chameau is a heritage footwear brand specialising in the production of handmade rubber boots and other outdoor footwear, established in 1927. The business has undergone a 5-year transformation and recently entered into a joint venture and operating partnership with Bradshaw Taylor, the global distributor of Schöffel Country. Le Chameau, led by CEO Corry Taylor, and with the support of Bradshaw Taylor, is now growing in its core markets and expanding into new markets to provide best-in-class country footwear.
Sector: Telecommunications	Sector: Luxury Goods
Acquisition Company
The following listed company is an acquisition vehicle which was established to make subsequent acquisitions of operating companies.
Wilmcote Holdings PLC
http://www.wilmcoteplc.com
Wilmcote (WCH LN) is exploring opportunities to create significant value for shareholders through properly executed, acquisition-led growth strategies, in the industrials, manufacturing, engineering, construction, building products or support services sectors.
Sector: Various

MARWYN VALUE INVESTORS LIMITED

DIRECTORS' RESPONSIBILITIES  

Directors' Responsibilities

The directors are responsible for preparing the unaudited interim results in accordance with applicable law and IAS 34 'Interim Financial Reporting'.

We confirm to the best of our knowledge that:

· the interim report gives a true and fair view of the assets, liabilities and financial position at 30 June 2020 and total comprehensive expense for the period then ended; and

· the information contained in the interim report includes:

-  a fair review of important events that have occurred during the period and their impact on the unaudited interim results as required by DTR4.2.7; and

-  a fair review of related party transactions that have taken place during the period that have had a material effect on the financial position or performance of the Company, together with disclosure of any changes in related party transactions in the last annual financial statements that have had a material effect on the financial position or performance of the Company in the current period as required by DTR4.2.8.

Going Concern assessment re: Covid-19

During the period, the Covid-19 pandemic has caused extensive disruptions to businesses and economic activities globally and represents unprecedented challenges and uncertainties to the global economy, causing recent market volatility. The Board have considered the impact of Covid-19 on the Company, please refer to the Report of the Chairman.

The Manager, Investment Advisor and board of directors have undertaken a rigorous review of the Company's ability to continue as a going concern including considerations over;

· the impact of the underlying portfolio assets and performance during and recovery from the Covid-19 outbreak;

· current cash held, and cash flow forecasts for the next 12 months; and

· future prospects of the Company and the underlying portfolio assets post-Covid-19.

The underlying funds have adequate cash on hand at the reporting date to continue its operational activities for at least the next twelve months. This is not impacted by any potential future decline in the underlying share price.

By order of the Board

Robert Ware

Chairman

29 September 2020

MARWYN VALUE INVESTORS LIMITED

CONDENSED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2020 (unaudited)

	Notes	For the six month period  ended 30 June 2020 £				For the six month period  ended 30 June 2019 £
INCOME		Revenue	Capital	Total		Revenue	Capital	Total
Finance income		241	-	241		284	-	284
Distribution income		-	-	-		-	-	-
Net (loss)/gain on financial assets at fair value through profit or loss	5	-	(3,468,702)	(3,468,702)		-	(4,229,877)	(4,229,877)
TOTAL NET INCOME / (EXPENSE)		241	(3,468,702)	(3,468,461)		284	(4,229,877)	(4,229,593)
EXPENSES
Finance cost and bank charges		(241)	-	(241)		(284)	-	(284)
TOTAL OPERATING EXPENSES		(241)	-	(241)		(284)	-	(284)
PROFIT / (LOSS) FOR THE PERIOD		-	(3,468,702)	(3.468.702)		-	(4,229,877)	(4,229,877)
TOTAL COMPREHENSIVE INCOME / (LOSS)		-	(3,468,702)	(3.468.702)			(4,229,877)	(4,229,877)
RETURNS PER SHARE
Attributable to holders of ordinary shares		-	(3,210,777)	(3,210,777)		-	(3,679,794)	(3,679,794)
Weighted average ordinary shares in issue for the period ended 30 June		60,096,401	60,096,401	60,096,401		68,811,842	68,811,842	68,811,842
Return per ordinary share - Basic and diluted		-	(5.34p)	(5.34p)		-	(5.35p)	(5.35p)
Attributable to holders of realisation shares			(257,925)	(257,925)		-	(550,083)	(550,083)
Weighted average realisation shares in issue for the period ended 30 June	9	4,187,226	4,187,226	4,187,226		6,720.731	6,720,731	6,720,731
Return per realisation share - Basic and diluted		-	(6.16p)	(6.16p)		-	(8.18p)	(8.18p)

These condensed interim results are unaudited and are not the Company's statutory financial statements.

All items in the above statement derive from continuing operations. There was no other comprehensive income in the period.

Notes 1 to 14 form an integral part of these unaudited interim results.

MARWYN VALUE INVESTORS LIMITED

CONDENSED STATEMENT OF FINANCIAL POSITION

At 30 June 2020 (unaudited)

		30 June 2020 (unaudited)		31 December 2019 (audited)
		£		£
NON CURRENT ASSETS	Notes
Financial assets at fair value through profit or loss	5	99,685,025		105,008,302
CURRENT ASSETS
Cash and cash equivalents		128,614		128,372
TOTAL ASSETS		99,813,639		105,136,674
CURRENT LIABILITIES
Loan payable	7	(125,000)		(125,000)
Accruals		(3,614)		(3,372)
TOTAL LIABILITIES		(128,614)		(128,372)
NET ASSETS ATTRIBUTABLE TO EQUITY HOLDERS		99,685,025		105,008,302
CAPITAL AND RESERVES ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Share capital		91		91
Share premium		68,438,195		70,449,867
Special distributable reserve		26,346,979		26,346,979
Exchange reserve		54,385		54,386
Capital reserve		(8,098,228)		851,513
Revenue reserve		12,943,603		7,305,466
TOTAL EQUITY		99,685,025		105,008,302
Net assets attributable to ordinary shares		92,657,076		97,722,427
Ordinary shares in issue at 30 June / 31 December	10	59,044,907		60,903,687
Net assets per ordinary share		156.93p		160.45p
Net assets attributable to realisation shares		7,027,949		7,285,875
Realisation shares in issue at 30 June / 31 December		4,187,226		4,187,226
Net assets per realisation share		167.84p		174.00p

These condensed interim results are unaudited and are not the Company's statutory financial statements.

Notes 1 to 14 form an integral part of these unaudited interim results.

MARWYN VALUE INVESTORS LIMITED

CONDENSED STATEMENT OF CASH FLOWS

For the six months ended June 2020 (unaudited)

		For the six month period to 30 June 2020 £		For the six month period to 30 June 2019 £
Cashflowsfromoperatingactivities
Interest received		241		284
Bank charges paid		-		(25)
Distributions received on Class F and Class G interests in MVI LP		-		-
Net cash inflow from operating activities		241		259
Cash flows used in financing activities
Dividends paid to ordinary shareholders		-		-
Net cash flow used in financing activities		-		-
Net increase / (decrease)  in cash and cash equivalents		241		259
Cash and cash equivalents at the beginning of the period		128,373		127,827
Cash and cash equivalents at the end of the period		128,614		128,086

These condensed interim results are unaudited and are not the Company's statutory financial statements.

Notes 1 to 14 form an integral part of these unaudited interim results.

MARWYN VALUE INVESTORS LIMITED

CONDENSED STATEMENT OF CHANGES IN EQUITY

For the six months ended 30 June 2020

	Notes	Share capital		Share premium		Special distributable reserve		Exchange reserve		Capital reserve		Revenue reserve		Total
		£		£		£		£		£		£		£
Opening balance		91		70,449,868		26,346,979		54,386		851,513		7,305,466		105,008,303
Ordinary share re-purchases and exchange	9	-		(2,011,674)		-		157,098		-		-		(1,854,576)
Transfer of realised gains/(losses) and exchange to revenue reserve		-		-		-		(157,098)		(5,481,039)		5,638,137		-
Total comprehensive expense for the period		-		-		-		-		(3,468,702)		-		(3,468,702)
Closing balance		91		68,438,194		26,346,979		54,386		(8,098,228)		12,943,603		99,685,025

For the six months ended 30 June 2019

		Share capital		Share premium		Special distributable reserve		Exchange reserve		Capital reserve		Revenue reserve		Total
		£		£		£		£		£		£		£
Opening balance		94		82,671,859		26,346,979		54,386		28,568,828		9,503,662		147,145,808
Ordinary share re-purchases and exchange		-		(2,500,400)		-		(421,402)		-		-		(2,921,802)
Transfer of realised losses and exchange to revenue reserve		-		-		-		421,402		304,783		(726,185)		-
Total comprehensive expense for the period		-		-		-		-		(4,229,877)		-		(4,229,877)
Closing balance		94		80,171,459		26,346,979		54,386		24,643,734		8,777,477		139,994,129

These condensed interim results are unaudited and are not the Company's statutory financial statements.

Notes 1 to 14 form an integral part of these unaudited interim results .

MARWYN VALUE INVESTORS LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1.  General information

Marwyn Value Investors Limited (the "Company") is a closed-ended investment fund registered by way of continuation in the Cayman Islands (registered number MC-228005) and is traded on the Specialist Fund Segment of the Main Market of the London Stock Exchange. The rights of the shareholders are governed by Cayman Islands law and may differ from the rights and duties owed to shareholders in a UK incorporated company. The address of its registered office is PO Box 309, Ugland House, Grand Cayman, KY1-1104, Cayman Islands.

These unaudited interim results, which have not been reviewed by an independent auditor, have been prepared in accordance with International Accounting Standard 34: Interim Financial Reporting and are presented on a condensed basis. They do not include all the required information for full financial statements and should be read in conjunction with the Company's financial statements for the year ended 31 December 2019.

The unaudited interim results for 2020 were authorised for issue by the Board of Directors (the "Board") on 29 September 2020.

2.  Accounting policies

The accounting policies applied in these unaudited interim results are the same as those applied in the Company's financial statements for the year ended 31 December 2019 which are available on the Company's website. The auditor's report on the financial statements for the year ended 31 December 2019 was unqualified.

New standards, amendments and interpretations

A number of new standards, amendments and interpretations are effective for periods beginning after 1 January 2020. None of these have had a significant effect on the financial statements of the Company.

3.  Segment reporting

The Company is organised and operates as one segment by allocating its assets to investment funds managed by managers, which are not actively traded.

4.  Critical accounting estimates and judgements

The Company makes estimates, judgements and assumptions that affect the reported amounts of assets and liabilities. Estimates and underlying assumptions are continually evaluated and are based on historical experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances.

The fair value of the investment held in Marwyn Value Investors LP (the "Master Fund") is determined by the Directors on the basis of the NAV of the Master Fund as determined by the administrator of the Master Fund at the period end. In turn, the NAV of the Master Fund is primarily determined by the fair value of its underlying investments which comprise fair value hierarchy level 1, level 2, and level 3 investments. Due to their unobservable nature, level 3 investments are inherently subject to a higher degree of judgement and uncertainty. The fair value of the investment held by the Master Fund in Marwyn Value Investors II LP ("MVI II LP") (also a fund), is determined by the MVI II LP administrator and is also primarily based on the fair value of its underlying investments, which comprise level 1, level 2, and level 3 fair value hierarchy equities.

5.  Financial assets at fair value through profit or loss

As at 30 June 2020 100% (2019: 100%) of the financial assets at fair value through profit or loss relate to the Company's investment in the Master Fund, although there is a small cash balance which is not reflected due to rounding. The fair value of the investment in the Master Fund is based on the latest available NAV reported by the administrator of the Master Fund. The limited partnership interests in the Master Fund are not publicly traded. 

As a result, the carrying value of the Master Fund may not be indicative of the value ultimately realised on redemption. In addition, the Company may be materially affected by the actions of other investors who have invested in the Portfolio Companies in which the Master Fund has directly or indirectly invested.

References to Class F interests, Class G interests and Class R interests correspond to the respective classes of interests in the Master Fund.

Net Asset Value - investment movements

		30 June 2020		31 December 2019
Master Fund		£		£
Opening cost		90,910,464		106,682,063
Redemption of Class F and Class G interests		(15,484,639)		(12,229,555)
Redemption of Class R(F) and Class R(G) interests		-		(3,542,044)
Contribution in specie		19,111,102		-
Closing cost		94,536,927		90,910,464
Unrealised gain brought forward		14,097,840		40,463,745
Movement in unrealised gain		(8,949,741)		(26,365,907)
Unrealised gain carried forward		5,148,098		14,097,838
At fair value in accordance with IFRS 13		99,685,025		105,008,302
Class F interests		92,657,076		75,322,594
Class G interests		-		22,399,833
Total attributable to ordinary shareholders		92,657,076		97,722,427
Class R(F)1 interests		5,504,155		5,695,151
Class R(G)1 interests		1,523,794		1,590,724
Total attributable to realisation shareholders		7,027,949		7,285,875
At fair value in accordance with IFRS 13		99,685,025		105,008,302
Realised gain/(loss) on redemption of Class F and Class G interests		5,481,039		(1,146,481)
Realised gain on redemption of Class R(F) and Class R(G) interests		-		554,228
Total net realised gain/(loss) on redemptions		5,481,039		(592,253)
Unrealised loss recognised in the period / year		(8,949,741)		(26,365,907)
Net loss recognised in the Statement of Comprehensive Income		(3,468,702)		(26,958,160)

The net gain or loss recognised on financial assets measured at fair value through profit or loss reported in the Statement of Comprehensive Income consists of the movement in the unrealised gain or loss and the net realised gains or losses on redemptions. Realised gains or losses are subsequently transferred from the capital reserve to the revenue reserve .

Following the redesignation of Class G interests as Class F interests on 27 May 2020 (as described in Note 6), the Company now holds 100% of the Class F interests which represents 90.74% (31 December 2019, on an equivalent basis: 90.91%) of the NAV of the Master Fund.

The Company holds 100% of the Class R(F)1 interests which represent 5.39% (31 December 2019: 5.30%) of the NAV of the Master Fund and 100% of the Class R(G)1 interests which represent 1.49% (31 December 2019: 1.48%) of the NAV of the Master Fund.

During the period, Class F interests worth £19,111,102 (cost: £12,842,713) were redeemed as part of the accelerated bookbuild as described in Note 6, and Class F and Class G interests worth £1,854,576 (cost: £2,641,926) were cancelled through the Company's Buyback Programme as described in Note 9. The Class F incentive allocation acquired by the Company as part of accelerated bookbuild with a value of £19,111,102 was contributed in specie to the Master Fund.

As the Company has no legal, operating or management control over the activities of the Master Fund or MVI II LP and has no voting power in either of their affairs, neither the Master Fund nor MVI II LP are considered to be subsidiaries.

6.  Accelerated bookbuild

On 27 May 2020, the Company announced the completion of an accelerated bookbuild whereby Liberum Capital Limited ("Liberum"), the Company's broker, on behalf of Marwyn Long Term Incentive LP ("MLTI"), invited eligible shareholders to tender the Company's ordinary shares for purchase by MLTI on the terms and subject to the conditions set out in the Company's announcement on 22 May 2020.

The accelerated bookbuild was funded through the sale of the accrued incentive allocations in respect of Class F and Class G interests in the Master Fund (the "Ordinary Share Carried Interest Entitlement") to the Company. This had the effect of crystallising the Ordinary Share Carried Interest Entitlement as at the close of business on 21 May 2020 and accelerated its payment (to the extent amounts were then payable).

The consideration paid by the Company for the acquisition of these incentive allocations was £19,111,102, being the value of the accrued but unpaid Ordinary Share Carried Interest Entitlement as at 21 May 2020. Of the Ordinary Share Carried Interest Entitlement, £6,027,458 was already beneficially owned by the Master Fund through its ownership of Marwyn RP Limited (the entity which was set up to acquire the incentive allocation owed to former partners and employees of Marwyn). Consequently, of the total consideration, a net amount of £13,083,644, was paid.

Redemption and issue of interests in the Master Fund

The consideration for the purchase of the Ordinary Share Carried Interest Entitlement by the Company was funded by a partial redemption of interests in the Master Fund held by the Company in an amount equal to the consideration paid. 

Following completion of the sale and purchase of the Ordinary Share Carried Interest Entitlement, the Company contributed the Ordinary Share Carried Interest Entitlement to the Master Fund in consideration for the issue of interests in the Master Fund in an amount equal to the consideration paid. Subsequent to this contribution, the Master Fund owned the Ordinary Share Carried Interest Entitlement and therefore the liability of the Master Fund in respect of the Ordinary Share Carried Interest Entitlement was extinguished.

Alongside this, the Class F interests and Class G interests were merged.

Future carried interest entitlement

The future carried interest entitlement which would otherwise have accrued after 21 May 2020 (the "Future Carried Interest Entitlement") was reset with a reference amount of £90,289,249, being the Company's estimated ordinary share NAV as at close of business on 21 May 2020. After returns to ordinary shareholders totalling the reference amount, returns will be divided 80/20 between ordinary shareholders and carried interest partners, subject to ordinary shareholders receiving a preferred return of 7.5 per cent. Full details of the Future Carried Interest Entitlement are included in the Company's announcement on 22 May 2020.

7.  Loan payable

The Master Fund has made a loan to the Company of £125,000 (2019: £125,000) for which the Company pays interest received on the corresponding cash amount held. The loan will be repaid by set-off on the date that all of the Company's interests in the Master Fund are redeemed. As a cash balance is held to the value of the loan payable and all interest earned on the cash balance is added accruals, the effect of discounting is not material to the cash flows or balance sheet position.

8.  Reconciliation of net profit for the period to net cash outflow from operating activities

	30 June  2020		30 June 2019
	£		£
Loss for the period	(3,468,702)		(4,229,877)
Loss on investments held at fair value through profit or loss	3,468,702		4,229,877
Increase in accruals	242		259
Net cash inflow from operating activities	242		259

9. Share capital and distributions

The Company's buyback programme, as announced on 14 September 2018 (the "Buyback Programme") commenced in October 2018 as a mechanism to satisfy the Minimum Annual Distribution in respect of the Company's Ordinary Share Distribution Policy. Liberum, in its capacity as corporate broker to the Company, manages the programme and is authorised to effect on-market purchases of ordinary shares on behalf of the Master Fund.

Distributions in 2020

In the first quarter of 2020 (being January - March), the Master Fund purchased 1,422,228 ordinary shares in the

Company for a total of £1,460,730 through the Buyback Programme. In March 2020, these ordinary shares were converted into exchange shares under the Company's Exchange Procedure (as defined and described in the Company's prospectus dated 19 October 2016) and the corresponding limited partnership interests were cancelled.

In the second quarter of 2020 (being April - June), the Master Fund purchased 436,552 ordinary shares in the Company for a total of £393,846. These ordinary shares will be converted under the Company's Exchange Procedure and the corresponding limited partnership interests cancelled.

The remainder of the second quarter allocation of the Minimum Annual Distribution, totalling £1,066,884, was fully utilised through the Buyback Programme alongside the third quarter (July - September) allocation.

In aggregate, the per-share accretive benefit to the remaining ordinary shares arising from these ordinary shares being acquired at a discount to net asset value was 1.8p per ordinary share.

Distributions in 2019

In January 2019, the Master Fund, under instruction from the Manager made a partial offer to institutional   shareholders for ordinary shares in the Company, conducted by way of a reverse bookbuild process, whereby shareholders were able to offer to sell some or all of their shareholdings to the Master Fund; at the end of the offer period, the lowest clearing price submitted, allowing at least £5 million of ordinary shares to be purchased, was selected. Full details are set out in the RNS announcement made by the Manager on 3 January 2019 (available on the Company's website 'RNS' page). Pursuant to this offer, the Master Fund acquired 4,030,625 ordinary shares at a price of 130p per share for a total consideration of £5.2 million. Following approval by shareholders at the Company's September 2019 Annual General Meeting, these shares were converted to exchange shares under the Company's Exchange Procedure and the corresponding Master Fund limited partnership interests cancelled.

Under the Buyback Programme, during 2019, the Master Fund purchased 4,651,046 ordinary shares in the Company for a total of £5,843,262. These ordinary shares were all converted into exchange shares under the Company's Exchange Procedure and the corresponding limited partnership interests cancelled.

In November 2019, the Company announced that funds attributable to realisation shareholders received from the disposal of investments held by the Master Fund, would be returned to realisation shareholders by way of a redemption of realisation shares. Following a redemption of the Company's interests in Class R(F) and Class R(G) of the Master Fund to the value of £4.1 million, the distribution to realisation shareholders was effected by way of a redemption of 2,533,505 realisation shares which were subsequently cancelled. As required by IAS 32, this has been reflected through the Statement of Changes in Equity.

Share capital

As at 31 December 2019 and 30 June 2020 the authorised share capital was as follows:

Ordinary shares of 0.0001p each	10,892,258,506,473
Exchange shares of 0.0001p each	10,892,176,350,000
Deferred shares of 9.9999p each	82,156,473

The ordinary share capital of the Company with a par value of 0.0001p may be issued or redesignated in classes, and includes realisation shares.

Shares in issue

		Ordinary*		Exchange		Total
As at 31 December 2019		65,090,913		25,918,139		91,009,052
Exchange		(1,422,228)		1,422,228		-
Exchange pending**		(436,552)		436,552		-
As at 30 June 2020		63,232,133		27,776,919		91,009,052
Share capital (£)		63		28		91

*Includes both ordinary and realisation shares, which constitute a single class of share for the purpose of the Company's Articles and Cayman Islands law. As at 30 June 2020, the ordinary share total includes 4,187,226 (31 December 2019: 4,187,226) shares redesignated as realisation shares and 59,481,459 (31 December 2019: 60,903,687) shares with no class demarcation.

** As described in 'Distributions in 2020' above, these represent ordinary shares bought back during the period which are subject to the Exchange Procedure, but had not been exchanged at the period end.

10.  Financial instruments and associated risks

The Company invests substantially all its assets in the Master Fund, which is exposed to market risk (including currency risk, interest risk and price risk), credit risk and liquidity risk arising from financial instruments it directly or indirectly holds.

As at 30 June 2020, the Company owned 97.62% (31 December 2019: 97.69%) of the net assets of the Master Fund. There has been no significant change in the risks associated with the Company's investment since the disclosures made in the Company's Annual Report and Financial Statements for the year ended 31 December 2019.

11.  Material contracts and related party transactions

In the opinion of the Directors, on the basis of shareholdings advised to them, the Company has no ultimate controlling party.

The Company, the Master Fund and MVI II LP are each managed by the Manager.

Parties are considered to be related if one party has the ability to control the other party or exercise significant influence over the other party, or the parties are under common control or influence, in making financial or operational decisions.

(a) Management, investment advisory and incentive fees

Under the management agreement dated 29 November 2013, the Manager does not receive any fees from the Company to the extent that it invests its assets only in the Master Fund. In respect of any assets of the Company not invested in the Master Fund, the Manager is entitled to receive aggregate performance and management fees on the same basis as those to which it would have been entitled if such assets had been those of the Master Fund.

The Company has not made any such investments during the six months to 30 June 2020 and, as such, no fees were paid by the Company or were payable at the period end (2019: nil).

Under the Master Fund management agreement, the Manager receives monthly management fees from the Master Fund not exceeding 2% of the NAV before incentive allocations of each class of interests in the Master Fund, payable monthly in arrears. Since 30 November 2018, being 2 years after the creation of the realisation pool, the management fee on the realisation share interests has been calculated by reference to NAV before management fees and incentive allocation less the aggregate value of cash and near cash investments attributable to the realisation share interests. The total management fee expense, borne by the Master Fund for the period ended 30 June 2020, was £1,097,365 (30 June 2019: £1,513,968).

The Company does not incur any management fee or carried interest charge as a result of its indirect investment in MVI II LP through the Master Fund.

Incentive allocations borne by the Class F, Class R(F)1 and Class R(G)1 interests in the Master Fund are only payable on returns being made to shareholders as disclosed in the Company's RNS announcement published on 22 May 2020 for the Class F interests and as disclosed in Part II, section 9 of the Company's prospectus published on 19 October 2016 for the Class R(F)1 and R(G)1 interests. These documents are available on the Company's website.

As described in Note 6, pursuant to the completion of the accelerated bookbuild, the Future Carried Interest Entitlement commenced with a new preferred return to ordinary shareholders of 7.5 per cent.

The total incentive allocation accrued as at 30 June 2020 amounted to £2,361,753 (31 December 2019: £15,587,823).

(b) Administration fee

Axio Capital Solutions Limited ("Axio") is appointed as the administrator to the Company and is considered to be a related party as it has the same parent as the Manager.

Axio receives an annual fee of £140,000 (2019: £140,000) for the administration of the ordinary and realisation shares, including the Company's Buyback Programme, paid monthly in arrears. Axio is entitled to reimbursement of certain expenses incurred by it in connection with its duties. These fees are paid by the Master Fund.

(c) Board of Directors' remuneration

Directors' fees are paid by the Master Fund. The Directors received the following annual fees:

		Annual Fee		Payable from 1 January 2020 to 30 June 2020
Robert Ware		£45,000		£22,500
Ronald Hobbs		£40,000		£20,000
Martin Adams		£40,000		£20,000
Louisa Bonney*		£40,000		£20,000

These fees are unchanged from 2019.

As at 30 June 2020, Robert Ware owned 700,174 ordinary shares, Ronald Hobbs owned 200,000 ordinary shares and Martin Adams owned 40,000 ordinary shares in the Company.

All Directors are entitled to receive reimbursement for all travel and other costs incurred as a direct result of carrying out their duties as Directors.

12.  Capital management policies and procedures

The Company's capital management objectives are to ensure that it will be able to continue as a going concern and to maximise capital return to its equity shareholders.

The Board, with the assistance of the Manager, monitors and reviews the broad structure of the Company's capital on an ongoing basis and in response to the COVID 19 pandemic, the policies and procedures have been considered in the context of the recent market uncertainty and volatility. An assessment has been performed of the impact on the underlying portfolio, day-to-day operations, current cash levels, and the cash flow forecasts for the next 12 months. The Manager, Investment Advisor and Administrator all have robust business continuity plans in place and continue business as usual throughout the pandemic. The Company's objectives, policies and processes for managing capital therefore remain unchanged from the previous year.

13.  Commitments and contingent liabilities

There were no commitments or contingent liabilities of the Company outstanding at 30 June 2020 or 31 December 2020 that require disclosure or adjustment in these interim financial statements.

The Master Fund has an undrawn commitment to MVI II LP of £79.5 million as at 30 June 2020. The Manager is comfortable, based on financial, capital deployment and investment realisation projections, that the Master Fund will be able to meet all calls on the commitment as they fall due.

14.  Subsequent events

On 10 July 2020, the Company announced the appointment of Victoria Webster and Peter Rioda to the Board and the resignations of Ronald Hobbs and Louisa Bonney, all with immediate effect.

MARWYN VALUE INVESTORS LIMITED

ADVISERS

Registered office PO Box 309 Ugland House Grand Cayman KY1 - 1104 Cayman Islands	Legal Advisers to the Company as to English law Travers Smith LLP 10 Snow Hill London EC1A 2AL United Kingdom
Manager of the Company, the Master Fund, MVI II LP and MVI II Co-Invest LP and MVI II DCI I LP Marwyn Asset Management Limited One Waverley Place Union Street St Helier Jersey, JE1 1AX Channel Islands, British Isles	Legal Advisers to the Company as to Cayman Law Maples and Calder PO Box 309 Ugland House Grand Cayman KY1-1104 Cayman Islands
Investment Adviser to the Manager in respect of the Company, the Master Fund, MVI II LP and MVI II Co-Invest LP and MVI II DCI I LP Marwyn Investment Management LLP 11 Buckingham Street London WC2N 6DF United Kingdom	Administrator to the Company Axio Capital Solutions Limited One Waverley Place Union Street St Helier Jersey JE1 1AX Channel Islands, British Isles
Registrar Link Asset Services Mont Crevelt House St. Sampson Guernsey GY2 4JN Channel Islands, British Isles	Corporate Broker Liberum Capital Limited Ropemaker Place, Level 12 25 Ropemaker Street London EC2Y 9LY United Kingdom
Auditor PricewaterhouseCoopers LLP 7 More London Riverside London SE1 2RT United Kingdom

Marwyn Value Investors Limited
DISCLAIMER

DISCLAIMER

The report of the Manager (the "Manager's Report") is issued by Marwyn Asset Management Limited which has been registered as a fund service business provider under the Financial Services (Jersey) Law 1998 by the Jersey Financial Services Commission (the "Commission"), in connection with the Master Fund, Marwyn Value Investors II LP ("MVI II LP"), MVI II Co-Invest LP, MVI II DCI I LP and the Company (collectively, the "Marwyn Funds"). The Commission is protected by the Financial Services (Jersey) Law 1998 against liability arising from the discharge of its function under that law.

The Manager's Report does not constitute a prospectus or offering document relating to the Marwyn Funds, nor does it constitute or form part of any offer or invitation to purchase, sell or subscribe for, or any solicitation of any such offer to purchase, sell or subscribe for, any securities in the Marwyn Funds (an "Investment") nor shall the Manager's Report or any part of it, or the fact of its distribution, form the basis of, or be relied on in connection with, any contract therefor.

Persons who wish to make an Investment are reminded that any such Investment should only be made on the basis of the information contained in materials provided for that purpose for your consideration and not on the information contained in the Manager's Report. No reliance may be placed, for any purposes whatsoever, on the information contained in the Manager's Report or on its completeness and the Manager's Report should not be considered a recommendation by Marwyn Investment Management LLP, the Manager or any member of the Marwyn group or any of their respective advisers or affiliates or the Marwyn Funds (the "Relevant Entities") in relation to an Investment.

No representation or warranty, express or implied, is given by or on behalf of the Relevant Entities or any of their respective directors, partners, officers, employees, advisers or any other persons as to the accuracy, fairness or sufficiency of the information or opinions contained in the Manager's Report and none of the information contained in the Manager's Report has been independently verified by the Relevant Entities or any other person. Save in the case of fraud, no liability is accepted for any errors, omissions or inaccuracies in such information or opinions.

The distribution of this document in certain jurisdictions may be restricted by law and the persons into whose possession this document comes should inform themselves about, and observe, any such restrictions.

The Manager's Report includes "forward-looking statements" which includes all statements other than statements of historical facts, including, without limitation, those regarding the Master Fund's and the Company's financial position, business strategy, plans and objectives of management for future operations and any statements preceded by, followed by or that include forward-looking terminology such as the words "targets", "believes", "estimates", "expects", "aims", "intends", "can", "may", "anticipates", "would", "should", "could" or similar expressions or the negative thereof. Such forward-looking statements involve known and unknown risks, uncertainties and other important factors beyond the control of the Marwyn Funds that could cause the actual results, performance or achievements of the Marwyn Funds to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Such forward-looking statements are based on numerous assumptions regarding the present and future business strategies of the Marwyn Funds and the environment in which the Marwyn Funds will operate in the future.

These forward-looking statements speak only as at the date of the Manager's Report.

Investing in the Company involves certain risks, as detailed in the Company's financial statements for the year ended 31 December 2019, and as described more fully in the prospectus published by the Company on 19 October 2016.

 

END

 

 

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