Publication of Annual Report 2019

The past reporting period should be assessed as successful, both in terms of achieving the assumed strategic goals and the achieved financial results. The record result on investment activities, dividend payment for 2018, entry into the register of Alternative Investment Companies, introduction of series E shares on the NewConnect market and a number of initiated investments in companies from the new technology sector constitute one year of intensive work for the Company’s shareholders. The achieved financial results confirm our belief in the rightness of the adopted strategy, under which the Company intends to manage the investment portfolio focused on small and medium-sized companies from the Polish and Romanian stock market. In turn, partnerships established last year increase the growth potential of Carpathia and open new and interesting investment opportunities.

The debut on the NewConnect market was to meet the expectations of some shareholders who signaled the need to trade in Carpathia shares on the Polish stock exchange. It was also an important element in building the awareness of Polish capital market participants about the profile of our business. As part of activities on the domestic market, in April, Carpathia Capital obtained an entry in the register of internally managed Alternative Investment Companies kept by the Polish Financial Supervision Authority. From the shareholders’ point of view, entry on the list provides additional supervision over the Company, possession of an ASI license also increases the value of the Company in real terms. As part of the INC group, we’ve initiated strategic cooperation with the InnerValue investor relations agency. Cooperation allows to reach companies seeking financing more effectively, especially entities from the new technologies sector, mainly gaming. As a result, Carpathia Capital obtains new investment opportunities on the private market on attractive terms, in enterprises with very high value growth potential.

Since the debut of CC shares on the AeRO market, each of the next four years of operations has been completed by the Company generating a net profit for shareholders. In 2019, it reached 404 thousand. zlotys. From the point of view of the company’s business profile, the result generated on investment activities is the key. The past year was record-breaking in terms of achieved investment profit, which in the last twelve months amounted to 1 043 thousand zlotys. It is worth emphasizing at this point that it was not a paper result, resulting from a change in the market valuation of held financial instruments, but came from the sale of securities at a profit and constituted a real cash flow to the Company.

Considering the current financial situation as well as the planned cash flow related to, among others, new investments, the Management Board intends to again recommend to the General Meeting of Shareholders the payment of dividend for 2019 in the amount of PLN 0.08 per share (representing 3.19% of the book value per share per day balance).

The first months of this year are marked by extreme economic (and even existential) uncertainty caused by the coronavirus pandemic. Its impact will certainly be felt for the entire economy, including the capital market. We remain, however, convinced that a sound investment policy and a relatively low correlation of the CC share portfolio with the main indices will allow maintaining the relative resistance of the Company’s results to current turbulence. The concentration of the investment portfolio on the new technologies sector means that most portfolio companies do not yet feel the significant impact of a pandemic on the value of generated revenues.

Annual Report 2019