NGE Capital : Investment and NTA update - December 2018

Investment and NTA update | As at 31 December 2018

NGE CAPITAL LIMITED SUMMARY

ASX ticker

Share price (31-Dec-18) Shares outstanding Market cap

NTA per share before tax NTA per share after tax NTA before tax

NTA after tax

OVERVIEW

NGE Capital Limited is an internally managed Listed Investment Company which allows investors to gain exposure to a concentrated, high conviction, actively managed portfolio of financial assets. NGE primarily focuses on listed ASX and international equities, with the aim of generating strong risk-adjusted returns over the medium to long term.

INVESTMENT STRATEGY

NGE has a flexible investment mandate and invests according to a defined set of investment principles, summarised as follows:

• • Only invest in a compelling opportunity, otherwise hold cash;

• • Invest based on fundamental analysis;

• • Target investments that can generate strong returns with an adequate margin of safety; and

• • Aim to hold a concentrated portfolio of high conviction investments.

BOARD & MANAGEMENT

Non-Executive Director Company Secretary & Chief Financial Officer

Ilan Rimer

CONTACT DETAILS

Level 4, North Building 333 Collins Street Melbourne VIC 3000 [phone]

NET TANGIBLE ASSETS (NTA) PER SHARE

31 Dec 2018

NTA per share before tax

$0.765

Expected tax liability on realised and unrealised income and gains

($0.037)

Previously unrecognised tax losses now brought to account to reduce tax expense

$0.037

Previously unrecognised tax losses now brought to account as a Deferred Tax Asset

30 Nov 2018

$0.752

($0.034)

$0.034

$0.054

$0.000

NTA per share after tax

$0.819

NTA PER SHARE PERFORMANCE SUMMARY

$0.752

1 month	Year-to-date	months	(p.a.)	(cum.)
1.7%	21.4%	21.4%	21.5%	50.0%

Last 12

Since inception (1)

Note:Returns are before tax and net of all operating expenses. As an internally managed LIC NGE does not incur external management and performance fees.

(1)

From 30 November 2016, the date on which NGE became a LIC.

TOP HOLDINGS (% OF NTA)

Company Powerwrap

United Company RUSAL Yellow Cake plc

Ticker Unlisted HKE:0486 LSE:YCA

Eureka Group Horizon Oil Base Resources Warrior Met CoalASX:EGH

%

• 21.0% Listed equities

• 19.2% Unlisted equities

• 15.4% Convertible notes

8.7% Cash less other net assetsASX:HZN 7.4%

ASX:BSE 6.1%

NYS:HCC 5.6%

UNRECOGNISED TAX LOSSES

PORTFOLIO COMPOSITION

Total

31 Dec 2018

69%

22%

3%

6%

100%

After providing for the expected tax liability on year-to-date realised and unrealised income and gains NGE has approximately $22m of realised tax losses that are not currently carried on the Company's balance sheet as a deferred tax asset. The Board resolved to recognise a deferred tax asset of $2m on the balance sheet as at 31 December, thereby reducing the value of realised but unrecognised tax losses to $14m. In addition, NGE also has approximately $22m of capital losses available as at 31 December 2018.

The Company has received tax advice that these losses should be available to be offset against future tax liabilities, which in the aggregate equates to a potential future tax benefit of approximately $12m or $0.33 per share, so long as NGE continues to satisfy the continuity of ownership test as set out in Divisions 165 and 166 of the Income Tax Assessment Act 1997 (Cth).

MONTHLY COMMENTARY

NGE's portfolio produced a return of 1.7% for the month of December and 21.4% for the financial year ended 31 December 2018. These returns do not include the recognition of $2m in deferred tax assets.

On 19 December the US Department of Treasury's Office of Foreign Assets Control (OFAC) announced that it would remove the sanctions imposed on United Company RUSAL Plc (HKE:0486) in 30 days, after the company agreed to undergo significant restructuring and governance changes that sever Oleg Deripaska's control and significantly reduce his ownership stake. The sanctions will be lifted unless the US Congress decides to pass a resolution of disapproval prior to the 30 day review period.