Publication of quarterly report for the fourth quarter of 2020

The fourth quarter of 2020 will begin under the restoration of pandemic restriction measures, heavily loosened early for months. The record number of infections and deaths, the closure of shopping malls, restaurants and cultural institutions, as well as relocation caused the economic activity LEDs to decline (industrial production in the reader -1.2%, and retail trade – 2.3% y / y). In this area, market prices were under pressure – October was one of the worst months in history for the main indices on the Warsaw Stock Exchange (this year, major declines were recorded only in March).

December with a change in moods due to information about positive verification of the vaccine against Covid-19, which raised hopes for a quick return to normal levels of economic activity. On the other hand, the prospect of an end to a pandemic discount, assuming the use of a pandemic pandemic. From the point of view of the structure of Carpathia Capital’s investment portfolio, the latter factor was of greater importance.

From the perspective of the investment activities carried out in the Company, the fourth quarter was a period of intense investments, described in more detail in the next paragraph. At the same time, the shares of listed companies held in the portfolio did not, in the opinion of the investment team, create attractive divestment opportunities, hence the relatively low level of cash flows from the sale of securities and the high value of funds involved in the purchase of securities.

In the fourth quarter, a number of new investments were initiated – mainly as part of projects carried out by the INC group. Funds were invested in the shares of Genomtec SA (producer of quick tests for coronavirus infection), Mazurska Manufaktura Alkoholi SA (producer of premium vodkas, beers and disinfectants), Gamivo SA (owner of a platform for trading digital goods and games) and Iron VR SA (producer games – mainly ports of conventional screen games – prepared in VR technology). After the end of the quarter, further investments were made – including shares in Stream Cards SA or shares in Skriware Sp. z o.o.

It should be noted that two of the portfolio companies debuted on the NewConnect market in the second half of December – Detalion Games SA and Play2Chill SA. Both debuts were positive – the price on the day of the first listing was clearly higher than the average share acquisition price (approximately 90% in the case of Detalion Games – the acquisition price of PLN 5.50, approximately 70% in the case of Play2Chill – the acquisition price of PLN 6.90), which was automatically found translated into the investment result of Carpathia. After closing the quarter, in the first half of January, two more companies, which were an investment of Carpathia – United Label S.A., debuted on the NewConnect market. and Incuvo S.A. The debuts turned out to be a success for the issuers (especially the first listing of Incuvo was impressive) and created attractive opportunities to liquidate some of the investments.

Going forward a bit, in the coming weeks further investment projects will be implemented in the field of issues carried out within the group, in the case of identifying investment opportunities among companies already listed – also as part of transactions on the secondary market. It is worth noting that the coming months will bring more introductions of portfolio companies to trading. If the debuts turn out to be successful, then this will translate into the financial result of CC (currently valued at the purchase price – after the debut in the books, recognized at the market price).

The economic situation in individual segments of the stock market will be of key importance for the results in the next quarter. The shares of GenXone SA remain the largest item in the investment portfolio, thus the development of the epidemic situation in the country and the demand for diagnostic tests for COVID-19 disease will have a significant impact on the financial result of Carpathia. It is worth emphasizing that at present several portfolio companies (Drago Entertainment SA, Punch Punk Games SA, Genomtec SA, Polkon SA) have submitted an information document to the WSE in order to apply for the introduction of shares on the NewConnect market. It is possible that in the coming weeks they will be admitted to trading, which, if enthusiastically received by investors, will have a positive impact on the final annual financial result. If the economic situation continues, further divestments are also planned in order to accumulate cash for further investment projects.