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Half Year Result For Salvus Strategic Investments

22 February 2005

Half Year Result For Salvus Strategic Investments

Executive Summary

- Net Asset Value (NAV) per share as at 18 February 2005 was $1.0824, representing an 11.8% increase since listing on 8 July 2004
- The performance was achieved during a period when the company was investing the $20.1 million raised through its Initial Public Offering
- The company is currently 72% invested with the balance (28%) in cash
- The portfolio is currently made up of 19 holdings of which two are NZAX-listed and one unlisted company
- Major holdings include: CDL Hotels, Methven, NZX, Provenco and 42 Below. Together these make up 35% of the investment portfolio
- Each major holding has outperformed the benchmark since the time of purchase

The Directors of investment company Salvus Strategic Investments Limited (“SSI”) are pleased to announce the results of its first six months of trading to 31 December 2004. The company achieved a net surplus after taxation of $222,702 after incurring issue expenses of $656,402 related to the Initial Public Offering and grew the Net Asset Value (“NAV”) of the company by 4.5% (after estimating a provision for all charges and holding a higher than average cash balance while the portfolio was being invested). At the time of writing, the NAV of the company has increased further to $1.0824 or an increase of 11.8% since listing on 8 July 2004.

At the time of writing, the portfolio was 72% invested. The investment program has been carried out in a disciplined manner bearing in mind the illiquid nature of smaller company shares and the lead times involved in completing private equity transactions. The stock market conditions have been buoyant over the period which makes a fast entry into the market tempting, but not logical. It is a credit to the Manager that they have stuck rigorously to their “value” investment style that should reward shareholders over the long run.

From the outset, the Board has put in place appropriate control mechanisms and governance procedures to formalize the relationship between the Board and the Manager.

The Board has agreed to meet five times a year but there are numerous informal meetings between Board members because of the active role the Board is taking in working with the Manager. The Board has requested that the Manager seek approval for any investment greater than 7.5% of NAV. In addition, if the Manager wishes to subscribe for an Initial Public Offering or carry out a private equity transaction, it is also required to seek approval from the Board prior to taking any action.

SSI shares and warrants are quoted on NZSX under the symbol SAM and SAMWA.

Each SSI share was issued with an attached warrant at the time of listing. At the time of writing, the combined package of one SSI share and warrant was quoted at $1.10 compared to an issue price of $1.00, an increase of 10%.

The Board of Salvus Strategic Investments has decided not to pay a dividend for this period. In the future, SSI’s policy is to pay dividends equivalent to the interest and dividend income received by SSI after deducting all operating and management costs of the Company. The Directors intend that imputation credits will be attached to dividends where possible.

We are grateful for the support of our shareholders. SSI publishes its NAV weekly to the NZX and updates its shareholders with quarterly reports between interim and annual reports. Shareholders who wish to receive this information by e-mail should register on our website


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