Seneca Growth Capital says it made continued progress in half year period

Seneca Growth Capital, the Haydock-based finance specialist, saw the value of its net assets in both its share categories decline in the six months to June 30, 2023.

The ordinary share pool fell from £2.426bn a year ago to £1.858bn, while the B share pool reduced from £14.966bn in 2022, to £14.131bn.

The return on ordinary activities after tax showed a £988,000 deficit for the ordinary shares, while the B shares were £1.882bn in deficit. That compares with deficits of £731m and £1.809bn, respectively the previous year.

Net asset value per share also fell, from 29.9p in 2022 to 22.9p for ordinary shares, and from 87.5p the previous year, to 69.4p in the B share pool.

The dividends declared for the reporting period are 2p for ordinary shares, compared with nil payout last year, and 1.5p for B pool shares, the same as the previous year.

Chairman, John Hustler, said: “I am pleased to present the unaudited results for the six months to 30 June 2023 and report on the continued progress of the company.

“Investors will recall that the B share class is the more active of the company’s two share classes, with the company’s investment manager, Seneca, completing two further investments in the six months to 30 June 2023 totalling £0.9m.

“Seneca continues to raise funds under the current offer and remains focused on securing further realisations for this share class.

“In parallel and in line with the investment strategy for the ordinary share pool, the board continues to seek opportunities to realise the company’s ordinary share investments.”

Key highlights for the reporting period included continued fundraising for the company’s B share pool with a further 1,641,263 B shares allotted raising £1.2m, deployment of £0.9m into two new investments from the B share pool, successful realisation of B share holding in unquoted company Qudini, payment of a further B share dividend of 1.5p per share taking the total B share dividends paid since launch to 13.5p per B share, and payment of a further ordinary share dividend of 2p per share.

The company’s B share pool has now raised a total of £19.6m and the board expects to issue a further prospectus shortly to enable the company to continue to raise funds for the ongoing development of the B share portfolio.

Mr Hustler said: “Due to continued softening in the AIM market, combined with the B share dividend paid during the period, the company reports a reduction in the net asset value (NAV) per B share. Whilst the decrease in the B share NAV was driven principally by the reduction in the majority of bid prices for the B share pool’s quoted investments, our relatively high percentage cash holding and unquoted company portfolio continues to dilute any such impact.

“The B share pool held £5.2m in cash as at 30 June 2023 equivalent to 37% of the B share pool’s NAV. As such, the company’s B share pool is well placed to take advantage of some of the current AIM quoted and private company investment opportunities being reviewed by Seneca.

“The AIM market, known for the dynamic and entrepreneurial nature of the businesses seeking to be quoted there, continues to attract innovative and high growth businesses. It remains an attractive route for many companies seeking capital to fuel their expansion plans and achieve their strategic objectives.”

He added: “Seneca remains committed to identifying and investing in the most attractive AIM quoted businesses which benefit from access to capital markets, improved liquidity, stronger reporting and governance requirements.

“Seneca continues to believe that the recent softening in AIM prices can create attractive entry points for investors. As valuations adjust, the B share pool has the opportunity to acquire shares in promising companies at more favourable valuations, enhancing the potential for capital appreciation when market sentiment rebounds.

“Seneca also recognises the importance of a diversified portfolio in managing risk and delivering returns. Seneca continues to exercise a disciplined investment approach which focuses on carefully selecting a range of companies across sectors and equity types to give the company access to the best possible opportunities to deliver returns to B shareholders.”