KEYBRIDGE CAPITAL LIMITED — Net Asset Value 2017

Jul 13, 2017

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ASX MARKET ANNOUNCEMENT

Friday, 14 July 2017

ASX Codes : KBC; KBCPA

NET ASSET BACKING – JUNE 2017

Keybridge Capital Limited (ASX:KBC) gives notice that its unaudited after-tax Net Asset Backing as at 30 June 2017 was $0.1797 per share.

Net Asset Backing

Net Asset Backing
	%	Current Month	Previous Month
Net Asset Backing for Period Ending:	Change	30 June 2017	31 May 2017
Pre-Tax Net Asset Backing per share	-3.7%	$0.1797	$0.1866
Post-Tax Net Asset Backing per share	-3.7%	$0.1797	$0.1866
Based on total issued (listed) share capital(1)		158,812,237	158,812,237

Net Assets

Net Assets
	Current Month		Previous	Month
	30 June 2017		31 May	2017
		% of Net		% of Net
	$’million	Assets	$’million	Assets
Cash	1.414	5.0%	1.553	5.2%
Investment in Associated entity(2)	2.584	9.1%	2.678	9.0%
Other Listed Securities	11.501	40.3%	11.172	37.7%
Managed Funds	0.232	0.8%	0.246	0.8%
Other Investments	0.103	0.4%	-	-
Loan Receivables:
•Private Equity(3)	5.250	18.4%	6.719	22.7%
•Infrastructure(4)	6.432	22.5%	6.449	21.8%
•Insurance(5)	3.250	11.4%	3.221	10.9%
•Property(6)	0.885	3.1%	0.885	3.0%
•Other(7)	0.757	2.7%	0.748	2.5%
Other Assets	0.529	1.9%	0.259	0.9%
Convertible Redeemable Promissory Notes	(4.141)	(14.5%)	(4.071)	(13.7%)
(ASX: KBCPA)(8)
Provision for tax	-	-	-	-
Other Liabilities	(0.256)	(0.9%)	(0.231)	(0.8%)
Net Assets	28.540	100%	29.628	100%

Keybridge Capital Limited | Registered Office | Company Secretarial Enquiries |

ABN 16 088 267 190 | ASX Codes KBC; KBCPA | Web www.keybridge.com.au Suite 614, Level 6, 370 St Kilda Road, Melbourne, Victoria 3004, Australia Telephone +61 8 9214 9767 Facsimile +61 8 9214 9701 Email info@keybridge.com.au

20170714 KBC ASX Net Asset Backing - June 2017.docx

Currency Exposure

Currency Exposure
	Current Month	Previous Month
% of Net Assets	30 June 2017	31 May 2017
Australian Dollars	45%	42%
Euros	24%	23%
US Dollars	18%	23%
New ZealandDollars	13%	12%

Major Investment Holdings

			Current Month	Current Month	Previous	Month
			30 June 2017		31 May	2017
				% of		% of
	ASX	Industry	Value	Net	Value	Net
Security	Code	Sector	$’million	Assets	$’million	Assets
Molopo Energy Limited	MPO	Energy	7.204	25.2%	7.204	24.3%
PTB Group Limited	PTB	Capital goods	2.947	10.3%	2.610	8.8%
HHY Fund	HHY	Financials	2.584	9.1%	2.678	9.0%
Metgasco Limited	MEL	Energy	0.928	3.3%	0.928	3.1%
Copper Strike Limited	CSE	Materials	0.312	1.1%	0.320	1.1%
Other managed funds	-	-	0.232	0.8%	0.246	0.8%
Other listed securities	-	-	0.110	0.4%	0.110	0.4%
Otherunlisted securities	-	-	0.103	0.4%	-	-
Total			14.42	50.60%	14.096	47.50%

In July 2017, Keybridge sold its shareholding in PTB on-market, realising gross proceeds of $2.95 million and generating a gain on disposal of $1.154 million from historical cost (there was no net gain/loss in respect of the 2017/2018 financial year).

On 7 July 2017, 3,666,285 shares in MPO (out of Keybridge’s total holding of 49,683,828 shares) were vested in the Commonwealth (on trust for Keybridge) under the declaration and orders of the Takeovers Panel in the matter of Molopo Energy Limited 03R, 04R & 05R.[1,][2] These shares will be sold by ASIC (via an appointed investment bank or stock broker within 6 months from their engagement) with the proceeds of sale accounted to Keybridge (net of the costs, fees and expenses of the sale and any costs, fees and expenses incurred by ASIC and the Commonwealth (if any)). Keybridge remains the second largest shareholder in MPO with 46,017,543 shares (18.478%)[3] .

Loan Receivable Holdings

Loan Receivable	Holdings
		Current Month			Previous Month
		30 June 2017			31 May 2017
Loan Exposure		$’million			$’million
to Industry	Gross		Carrying	Gross		Carrying
Sector	Value	Impairment	Value	Value	Impairment	Value
Private Equity	6.507	(1.257)	5.250	6.719	-	6.719
Infrastructure	12.514	(6.082)	6.450	12.532	(6.082)	6.450
Insurance	3.250	-	3.221	3.221	-	3.221
Property	4.189	(3.304)	0.885	4.189	(3.304)	0.885
Other	0.830	(0.073)	0.757	0.822	(0.074)	0.748
**Total **	27.290	(10.716)	16.574	27.483	(9.460)	18.023

• 1 Refer Takeovers Panel Media Release No. TP17/34 dated 30 June 2017: Molopo Energy Limited 03R, 04R & 05R – Declaration of Unacceptable Circumstances

2 Refer Takeovers Panel Media Release No. TP17/37 dated 10 July 2017: Molopo Energy Limited 03R, 04R & 05R - Orders

3 Refer KBC’s 11 July 2017: Change of Substantial Holder Notice for MPO

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20170714 KBC ASX Net Asset Backing - June 2017.docx

FOR FURTHER INFORMATION:

John Patton Chairman Tel: +61 3 9686 7000 Email: jpatton@keybridge.com.au

Victor Ho Company Secretary Tel: +61 8 9214 9767 Email: cosec@keybridge.com.au

ABOUT KEYBRIDGE CAPITAL LIMITED (ASX: KBC)

KBC is an investment and financial services group with a diversified portfolio of listed and unlisted investments/loan assets including in the solar (Spain), private equity (US), life insurance (New Zealand), property and funds management sectors and strategic holdings in HHY Fund (ASX:HHY), Molopo Energy Limited (ASX:MPO) and Metgasco Limited (ASX: MEL).

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20170714 KBC ASX Net Asset Backing - June 2017.docx

NOTES:

• (1) Net Asset Backing per share is based on Keybridge’s total listed shares on issue and excludes unlisted shares issued under the Company’s Executive Share Plan (for further details, refer KBC’s Notice of AGM released on ASX on 30 October 2014 and KBC’s ASX announcement dated 19 December 2014: Appendix 3B and Further Detail Regarding Issuance of Loan Funded Shares).

• (2) Investment in Associated entity : Keybridge’s investment in HHY Fund (ASX:HHY), an Associated Entity (i.e. an entity in which the Company has a greater than 20% interest and is considered to have ‘significant influence’ over), is accounted for under the equity method in the consolidated financial statements. Under the equity method, the carrying amount of such investment is cost plus a share of the Associate Entity’s net profit or loss (after tax) as provided to the Company by such Associated Entity (refer Note 3a(iv) (Significant Accounting Policies - Basis of Consolidation - Investments in equity-accounted investees) at page 37 of the Company’s 2016 Annual Report). The Directors have determined that where HHY’s net tangible asset ( NTA ) backing is lower than the value calculated under the equity method as at month end, the lower NTA backing value will be adopted as the carrying value instead.

As at month end, Keybridge’s 22,646,973 units (26.46% interest) (31 May 2017: 22,646,973 units and 26.46%) in HHY have a carrying value of $0.1141 per unit ($2.584m) based on HHY’s NTA backing as at month end (31 May 2017: $0.118 per unit ($2.698m) based on the equity method); this compares with HHY’s last bid price on ASX of $0.10 per unit ($2.265m) (31 May 2017: $0.10 per unit ($2.265m) and a value determined under the equity method of $0.115 per unit ($2.603m), at month end.

• (3) Loan Receivables - Private Equity : Keybridge holds a US$4.3m a limited recourse promissory note issued by RPE I Investor LLC ( RPE Investor ) (a subsidiary of Republic Financial Corporation ( RPC ), a US private investment company) secured (via collateral pledged) over RPE Investor’s ~53.5% (Limited Partners’) interest in the Republic Private Equity I Limited Liability Limited Partnership, a private equity fund (managed by a related party to RPC) with investments in two active US based manufacturing/distribution businesses ( RPE Fund ). The principal and accrued interest (at 14.5% pa) under the note is repayable on maturity on 29 December 2017 (which is subject to extension/re-finance by mutual agreement of the parties). As at month end, the loan was carried at Directors’ valuation (net of impairments) of US$4.04m (A$5.25m) (31 May 2017: US$5.01m (A$6.72m)).

(4) Loan Receivables – Infrastructure : In 2007/2008, Keybridge financed the development and construction of the Totana 1.05MWp Solar Photovoltaic Park in the Murcia region in southern Spain. Under Spanish Royal Decree, Spanish energy supplier, Iberdrola, (which has a 25 year (plus two 5 year extensions) purchase off-take arrangement) is required to purchase all electricity produced by Totana at Government mandated feed-in tariff prices plus (since July 2013 under Royal Decree) additional compensation payments (which are intended to provide a reasonable return on operations and capital invested for renewable energy sources and is subject to review every 3 years). The loan (which currently accrues interest at 7.25% pa) is repayable on maturity on or about December 2038. During the financial year to month end, Keybridge received €0.215m (A$0.319m) in cash loan repayments. As at month end, the loan was carried at Directors’ valuation (net of impairments) of €4.33m (A$6.43m) (31 May 2017: €4.3m (A$6.45m)). (5) Loan Receivables – Insurance : Keybridge has invested NZ$3.8m (A$3.4m) (via NZ$0.109m (10.13%) equity and NZ$3.691m notes) into Foundation Life, to finance Foundation’s acquisition of Tower Limited’s life insurance business in New Zealand in 2014. Interest of 9% pa is payable under the note, which is redeemable by noteholders in 10 years (May 2024) or by Foundation (from time to time). During the financial year to month end, Keybridge received NZ$0.289m (A$0.275m) interest and NZ$24k (A$23k) redemption proceeds from Foundation. As at month end, the loan balance is NZ$3.41m (A$3.25m) (31 May 2017: NZ$3.39m and A$3.22m) and Keybridge retains its 10.13% equity interest in Foundation Life, which the Directors have determined to reinstate the carrying value to cost of NZ$109m (A$0.103m). (6) Loan Receivables – Property : Keybridge has registered mortgages over strata title lots comprising Conference Facilities at a Hotel located in a beachside suburb in north Sydney as security for loans to private companies (which are in liquidation). As at month end, the loan was carried at Directors’ valuation (net of impairments) of A$0.885m (31 May 2017: A$0.885m) – this was based on an independent valuation received in respect of the lots in May 2016. Keybridge has also fully impaired a loan of $3.304m (in 2012/13) in respect of a multi-staged residential development in Sydney where Keybridge is (indirectly) the sole holder in unit trusts where the corporate trustees are in liquidation.

(7) Loan Receivables – Other : Includes $0.42m (31 May 2017: $0.41m) accrued interest receivable in respect of Executive Share Plan ( ESP ) loans attributable to former Directors.

(8) Convertible Redeemable Promissory Notes (ASX: KBCPA): Keybridge issued 4,956,936 listed Convertible Redeemable Promissory Notes on 30 June 2015. The notes have a face value of $1.00, pays interest at 7% pa and matures on 31 July 2020 (unless redeemed or bought-back by Keybridge earlier). Interest distributions are generally payable quarterly and have a franking credit component under Australian taxation law. Further details are contained in the Prospectus dated 17 June 2015. As at month end, 4,401,047 notes are on issue (31 May 2017: 4,401,047 notes).

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