ECP Emerging Growth : 2021 Half Year Report

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ECP EMERGING GROWTH LIMITED

INTERIM FINANCIAL REPORT

For the Half-Year Ended 31 December 2021

CONTENTS

Directors' report

Auditor's Independence Report

Financial Statements

Directors' Declaration

Auditor's Review Report

ECP Emerging Growth Limited

ACN 167 689 821

Level 4

The Pavilion Building

388 George Street

Sydney NSW 2000

AUSTRALIA

Tel:	1800 352 474
Fax:	[phone]
Email:	[e-mail]

For personal use only

ECP Emerging Growth Limited

Directors' Report

Your Directors submit the Interim Financial Report of ECP Emerging Growth Limited (the "Company") for the half-year ended 31 December 2021.

Directors

The following persons were Directors of ECP Emerging Growth Limited since 30 June 2021 and up to the date of this report, unless stated otherwise.

• Mr Murray d'Almeida (Chairman)
• Mr David Crombie AM
• Mr Jared Pohl

Principal Activity

The principal activity of the Company is investing in a diversified portfolio of quality small to mid-cap companies listed on the Australian Securities Exchange. There have been no significant changes in the nature of this activity during the period.

Review of Operations

During the last six months, dividends received amounted to $183,606 which is a $46,377 (or 33.8%) increase on last year. However, the portfolio has only moderately increased during the half-year due to high PE (Price/Earnings) growth stocks coming under pressure in an environment of rising inflation and increased interest rates. This is seen in the Statement of Profit or Loss where profit for the period is $1,130,246 compared to $5,519,536 last year.

The impact on the portfolio is not isolated to ECP Emerging Growth Limited. In the six months to December 2021 the ASX Small Ordinaries Index has increased by 4.3% compared to 18.9% last year. The ECP Emerging Growth portfolio performance is positive 4.2% for the financial year to date, the long-term performance (5yrs) is 23.4% compared to the ASX Small Ordinaries index which has increased by 8.2%.

Portfolio Performance

	6 mths	12 mths	2 years	5 years	Since Inception
	to Dec 2021	to Dec 2021			(23 Jan 2014) p.a.
ECP Portfolio	4.2%	16.9%	29.9%	23.4%	19.1%
ASX Small Ordinaries	4.3%	14.2%	10.4%	8.2%	6.4%

Market Commentary

In Australia over the past six months the focus has been on the vaccine rollout to provide a buffer to the effects of COVID-19. New variants of the virus including Omicron serve as a reminder that the pandemic is not over yet and therefore an uninterrupted "normal" is still a mirage in the distance. In business news a few key themes have rotated in the headlines, including: supply chain disruption from low inventories, semi-conductor chip shortages, AdBlue shortages or labour shortages, rising inflation also featured and the forecast impact on interest rates.

In 2022 while corporate earnings appear robust, it is expected that markets will remain volatile, impacted by the developments in the pandemic and macro-economic conditions. For ECP Emerging Growth Limited the focus remains on creating Shareholder wealth through active management of the investment portfolio. This is executed by the manager, ECP Asset Management Pty Ltd through the disciplined implementation of the investment process. To read more about the investment process, please visit the manager's website ecpam.com.

Subsequent Events

As at 31 January 2022 the net tangible assets of the Company have decreased by 14.3% which is representative of market conditions. The ASX Small Ordinaries index decreased by 9.0% during January 2022 amid continued inflation concerns and forecasted increases in interest rates.

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ECP Emerging Growth Limited

Net Tangible Asset Backing

The net tangible asset backing (NTA) per share (tax on realised gains only) at 31 December 2021 was 180.2 cents per share compared with 177.5 at 30 June 2021. The graph below depicts the movement in NTA in terms of the contribution of the portfolio and outgoings in running the Company.

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Contribution to NTA - 1 July 2021 to 31 December 2021

(cents per share)

200.0
190.0	+10.39	-0.18	-2.75	-2.97
	177.50			-1.76	180.23
180.0			(+21.05)
170.0

160.0

150.0

140.0

130.0

120.0

110.0

100.0

NTA FY21	Portfolio	Performance	Dividends	Tax	Operating	NTA FY22
	Performance	Fee Accrued	Paid		Expenses

Significant Changes In State Of Affairs

There have been no significant changes to the operations of the Company during the last six months.

Dividend Declared

A fully franked interim dividend of 2.1 cents per share in respect to the half-year ended 31 December 2021 is to be paid on 15 March 2022. This represents a 5% increase on the interim dividend paid in March 2021.

During the six-month period to December 2021 the Company paid a final dividend for the 2021 financial year of 2.75 cents per share. This was as a result of the performance achieved during the 2021 financial year and was an increase on the prior year of 22.2%. The total distribution of $503,746 was paid on 15 September 2021.

Capital Gains Component Of Dividend

The capacity of the Company to continue to facilitate access to the capital gain benefit of the dividend, will depend on the Company's capacity to generate capital profits.

The interim dividend will include an LIC capital gain component.

Auditor's Independence Declaration

The Auditor's Independence Declaration under section 307C of the Corporations Act 2001 is set out on page 4 and forms part of the Directors' Report for the half-year ended 31 December 2021.

This report is made in accordance with a Resolution of the Directors.

Murray d'Almeida

Chairman

GOLD COAST

22 February 2022

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ECP Emerging Growth Limited

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ECP Emerging Growth Limited

Condensed Statement of Profit or Loss and Other Comprehensive Income

For the Half-Year Ended 31 December 2021

Note	31 Dec	31 Dec
	2021	2020
	$	$

	Revenue		2		183,607
	Net cumulative gain on sale of financial assets at fair value				2,104,190
	Net unrealised gains/(losses) on financial assets at fair value				(384,075)
	Other Expenses				(354,313)
	Profit/(Loss) before income tax				1,549,409
	Income tax (expense)/benefit				(419,163)
	Net Profit/(Loss) after income tax for the half-year				1,130,246

138,218

3,695,348

5,128,438

(1,120,588)

7,841,416

(2,321,880)

5,519,536

For personal use only

	Other Comprehensive Income
	Other Comprehensive Income/(Loss) for the half-year, net of tax		-		-
	Total Comprehensive Income/(Loss) for the half-year		1,130,246		5,519,536

Earnings per share:	Cents	Cents
Basic earnings per share based on net profit/(loss)	6.17	30.13
Diluted earnings per share based on net profit/(loss)	6.17	30.13
Comprehensive Earnings/(Loss) per share	6.17	30.13

The above Condensed Statement of Profit or Loss and Other Comprehensive Income should be read in conjunction with the Notes to the Condensed Financial Statements.

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