ACP Mezzanine Limited announces Preliminary Year End Results
1 February 2007
ACP Mezzanine, a Jersey incorporated, closed-ended limited liability investment company whose shares were admitted to trading on AIM in July 2006, announces its preliminary results for the year ending 31 December 2006.
Financial Highlights
ACP Mezzanine generated Revenue of €3.0 million and Profit for the Period of €2.0 million. Diluted earnings per share for the Period were 2 Euro cents. The Directors are recommending a dividend for the Period of 2 Euro cents per share, which exceeds the minimum targeted level of 1 Euro cent per share stated in the Company’s AIM admission document.
ACP Mezzanine has successfully increased its investments by more than 135% since the time of its listing, ending the Period with €107.5 million of investments. The origination of an additional €62.5 million of investments translates into an annualised run-rate origination volume of approximately €145 million, which is approximately 20% above ACP Mezzanine’s year one target at listing.
ACP Mezzanine also completed its first underwriting during the Period, jointly underwriting a €100 million debt package alongside ACP Capital Limited (“ACP Capital”) for Nordsee GmbH (“Nordsee”), Europe’s largest fish specialty restaurant chain. Nordsee was recently acquired by IFR Capital plc, an AIM listed food retail acquisition vehicle in which ACP Capital, the parent of ACP Mezzanine’s investment manager, currently owns a 17.1% interest. The transaction represents the Company’s first underwriting transaction since its listing and demonstrates ACP Mezzanine’s ability to rapidly and competitively take advantage of its integrated finance strategy alongside ACP Capital and its strategic platforms and vehicles. The debt package contains €80 million of senior debt and the extension of the maturity of two existing mezzanine loans to Nordsee totalling €20 million of principal.
Given the significant increase in investments, ACP Mezzanine has recently accessed its €125 million leverage facility with The Royal Bank of Scotland, borrowing €19.3 million to finance the purchase of additional investments. Borrowings under the facility helped increase the current net running yield of ACP Mezzanine’s portfolio to approximately 11%, given the lower cost of borrowing relative to the yield on investments purchased with such borrowings. ACP Mezzanine is also in advanced discussions with another bank regarding an additional leverage facility, which is expected to have a longer maturity and other terms which are expected to increase the net running yield of the portfolio, as well as provide greater flexibility. The Company expects to close this new facility by the end of February 2007.
Portfolio Highlights
At year end 31 December 2006, ACP Mezzanine’s portfolio consisted of €107.5 million of non- cash investments broken down as follows:
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The portfolio at the end of the Period consisted of 14 assets from 10 borrowers, with an average exposure of €7.7 million, the largest asset totalling €40 million and the smallest asset totalling €1.2 million. The largest single borrower is Nordsee with three loans totalling €60 million of principal, of which €40 million represents an underwriting exposure, consistent with ACP Mezzanine’s stated underwriting limits, which is expected to be syndicated or refinanced in the near term.
Dividend Recommendation
The Directors are recommending a dividend for the Period of 2 Euro cents per share, which exceeds the minimum targeted level of 1 Euro cent per share stated in the Company’s AIM admission document. The dividend is subject to shareholder approval at the Annual General Meeting to be held on 28 February 2007, and will be paid on 9 March 2007 to all shareholders on the register at close of business on 16 February 2007.
Liquidity Analysis
At the end of the Period, ACP Mezzanine had €15.8 million of cash, although this is expected to reduce to approximately €2.7 million in the near term given the purchase of two additional assets totalling approximately €11.1 and the payment of the recommended dividend. The Company expects to generate additional cash for investments through the syndication or refinancing of the Nordsee senior loan, together with the ability to borrow against unrated assets under the expected new leverage facility.
Net Asset Value Calculation
The Company’s net asset value at 31 December 2006 was equal to €0.98 per share.
Derek Vago, Chief Executive Officer of ACP Capital Limited, the parent of ACP Mezzanine’s investment manager, said:
“ACP Mezzanine has made a strong start and is currently almost fully invested in less than six months from listing. The Company has exceeded expectations with respect to the origination volumes and dividends set out at the time of listing. Importantly, ACP Mezzanine has reached two important milestones during the year. First, it successfully executed its first underwriting during the period. As it seeks to differentiate itself from its peers, ACP Mezzanine’s strategy of underwriting financing solutions for borrowers in the SME sector will be a key competitive advantage in its origination efforts. Secondly, the Nordsee refinancing demonstrates the advantages of pursuing an integrated finance strategy alongside ACP Capital Limited and its strategic platforms and vehicles. The Nordsee refinancing is a great example of the power of providing complete financing solutions for the SME sector, with ACP Mezzanine providing senior and mezzanine financing alongside ACP Capital Limited’s equity investment and provision of a part of the senior debt. ACP Mezzanine intends to continue to develop its underwriting efforts through this integrated finance strategy alongside ACP Capital in an effort to further ramp-up and diversify ACP Mezzanine’s portfolio”.
For further information please contact:
Redleaf Communications
Rob Bain - +44 (0) 20 7822 0200
“Notes to Editors"
ACP Mezzanine Limited
ACP Mezzanine Limited is a Jersey-incorporated company which listed on AIM in July 2006 and whose strategy is to pursue a primary strategy as a mezzanine lender, originating, structuring and underwriting the majority of its mezzanine investments. ACP Mezzanine's investment strategy is implemented and managed by a subsidiary of ACP Capital through an Investment Management Agreement. ACP Mezzanine's strategy is different from that followed by a number of participants in the mezzanine financing market, which focus on acquiring assets directly from third parties through a syndication process.
ACP Mezzanine lends primarily across Europe, with origination arising through a direct integrated finance approach alongside ACP Capital's strategic platforms and managed vehicles, and, to a lesser extent, purchases assets in the secondary market if the expected risk adjusted returns are attractive. It is expected that the integrated finance approach will account for at least two thirds of ACP Mezzanine's investments over time.
ACP Mezzanine’s Board includes Derek Vago, Jeff Bennett, Christophe Tanghe and 2 other Non- Executive Directors. In addition, Wolfgang Mellinghoff is expected to be appointed to the Board in the near future.
ACP Capital Limited
ACP Capital is a Jersey-incorporated niche integrated finance provider specialising in the European SME market whose shares were admitted to trading on AIM in January 2006. As an integrated finance specialist, ACP Capital can offer a combination of equity, mezzanine and senior debt to companies in niche markets, such as the German "Mittelstand" (small and middle- sized privately-owned companies), and for asset backed transactions, for example, in the real estate and infrastructure sectors.
As an asset manager, ACP Capital manages a series of investment vehicles that can provide the required funding for its integrated finance capabilities. ACP Capital intends to launch at least 2 managed vehicles each year in specific sectors in its target markets. ACP Capital's strategy is to develop strong synergies between its broad funding capabilities and its various managed vehicles, providing optimal financing solutions to its clients while securing a strong flow of recurring revenue for its core business.
ACP Capital's CEO is Derek Vago, who is assisted on the Board by Non-executive Directors Heiner Kamps, Francois Georges, Alan Braxton and Executive Directors Nikolaj Larsen and Eric Youngblood (as well as two other Non-Executive Directors). A further key team member is Jeff Bennett, who is the Group's Chief Investment Officer for ACP Mezzanine. For more information please see www.acpcapital.com
IFR Capital Plc
IFR Capital Plc ("IFRC"), which was admitted to the AIM list of the London Stock exchange in a circa €135m flotation in November 2006, has been established to act as an acquisition platform intending to target small and mid-sized businesses in the continental European food industry, within three sub-sectors: retail (mainly shops/restaurants), industry (wholesale and production) and distribution. IFRC will firstly focus on the retail and industry segments as the Directors of the Company believe that these areas offer an initial opportunity for achieving synergies and shareholder returns. The Directors believe that the distribution segment of the industry is to be relevant but only once IFRC has reached a certain scale.
The Directors believe there is a unique consolidation opportunity in the food retail sector in Continental Europe, and especially Germany, and anticipate a need for cross border consolidation with an increasing focus on brands and chains. At the same time, the Directors believe that the succession problems for many small and mid sized companies may lead to a number of potential acquisition opportunities. The Directors believe that Heiner Kamps with his track record will be viewed positively as an entrepreneur within the food industry, especially as the Directors believe that there is a hesitant view both among owners and managers of small and medium-sized enterprises towards private equity investment companies. As such, the Directors believe that IFRC has an opportunity to approach various targets in Germany 'off the market'.
ACP Mezzanine Limited
Preliminary and
unaudited Consolidated Income Statement
For the period from 31 May 2006 to 31 December 2006
These accounts do not constitute full statutory accounts within the meaning of Article 104 Companies (Jersey) Law 1991
| £ | |
| Revenue | |
| Investment income | 3,035,995 |
| Fees receivable | 2,885 |
| 3,038,880 | |
| Interest payable and other related financing costs | (67,401) |
| Exchange movements | (42,398) |
| Equity-settled share-based payments | (41,069) |
| Investment manager's fees | (753,460) |
| Other operating expenses | (96,838) |
| Profit before tax | 2,037,714 |
| Income Taxes | - |
| Profit for the period attributable to the equity shareholders | 2,037,714 |
| 2,028,240 | |
| Earnings per share: | |
| Basic | 2.01 cents |
| Diluted | 1.99 cents |
All activities relate to continuing operations.
There are no recognised gains and losses other than the profit for the period stated above. Accordingly, a separate consolidated statement of recognised income and expense is not presented in these financial statements.
ACP Mezzanine Limited
Preliminary and unaudited Balance Sheet as at 31 December 2006
These accounts do not constitute full statutory accounts within the meaning
of Article 104 Companies (Jersey) Law 1991
| £ | |
| Assets | |
| Non-current assets | |
| Investments | |
| Loans and receivables | 107,522,875 |
| Total non-current assets | 107,522,875 |
| Current assets | |
| Trade and other receivables | 1,507,980 |
| Cash and cash equivalents | 15,798,227 |
| Total current assets | 17,306,207 |
| Total assets | 124,829,082 |
| Equity & Reserves | |
| Issued capital | - |
| Share premium | 95,783,580 |
| Share-based payment reserve | 1,781,071 |
| Retained earnings | 2,037,714 |
| Equity Shareholders' funds | 99,602,365 |
| Non-current liabilities | |
| Loans and borrowings | 19,265,934 |
| Total non-current liabilities | 19,265,934 |
| Current liabilities | |
| Trade and other payables | 5,960,783 |
| Total current liabilities | 5,960,783 |
| Total liabilities | 25,226,717 |
| Total equity and liabilities | 124,829,082 |
ACP Mezzanine Limited
Preliminary and unaudited Cash Flow Statement
For the period from 31 May 2006 to 31 December 2006
These accounts do not constitute full statutory accounts within the meaning
of Article 104 Companies (Jersey) Law 1991
| £ | |
| Cash flow from operating activities | |
| Purchase of investments | (101,850,248) |
| Investment income | 1,566,230 |
| Investment manager's fee | (607,627) |
| Other operating expenses | (57,246) |
| Net cash flow from operations | (100,948,891) |
| Cash flow from financing activities | |
| Proceeds from issues of share capital | 100,000,000 |
| Costs of issues of share capital | (2,476,418) |
| Drawdown of bank loan facilities | 19,265,934 |
| Net cash flow from financing activities | 116,789,516 |
| Effect of exchange rate fluctuations | (42,398) |
| Closing cash and cash equivalents | 15,798,227 |
ACP Mezzanine Limited
Preliminary and unaudited Movement in Equity
As at 31 December 2006
These accounts do not constitute full statutory accounts within the meaning
of Article 104 Companies (Jersey) Law 1991
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