Thalassa : Interim Results (30 June 2023)

Highlights for the 6 months ended 30 June 2023………………………………………………………………………………4

Chairman's Statement…………………………………………………………………………………………………………….5

Financial Review…………………………………………………………………………………………………………………..8

Interim Condensed Consolidated Statement of Income………………………………………………………………………9

Interim Condensed Consolidated Statement of Comprehensive Income………………………………………………….. 10

Interim Condensed Consolidated Statement of Financial Position…………………………………………………………..11

Interim Condensed Consolidated Statement of Cash Flows…………………………………………………………………12

Interim Condensed Consolidated Statement of Changes in Equity………………………………………………………….13

Notes to the Interim Condensed Financial Information………………………………………………………………………..14

3

Highlights for the 6 months ended 30 June 2023

GROUP RESULTS 1H 2023 versus 1H 2022, unless otherwise stated (Unaudited)

*2 based on actual number of shares in issue as at 30 June 2023 of 7,945,838 (2022: 7,945,838) *3 includes all holdings ex cash

4

Chairman's Statement

Macro

H1 2023 was all about Big Tech, the magnificent seven as they are now referred to, META, GOOG(L), MSFT, AMZN, NVDA, AAPL, TSLA, which now represent more than 40% of US Large Cap Active Managers' Assets, compared with 12% last year. (Source: Bank of America).

There is always a problem in the making when stock market leadership narrows to the point of stupidity…just as with the timeless children's game of musical chairs…at some point there will be nowhere to sit, and when investors decide that NVDA may not be worth 41x Revenues or that Apple, Amazon Meta, Alphabet and Microsoft are in fact mature companies, valuations will compress and the price of these shares will fall dramatically (read plummet).

For those die-hard believers that the above 'Famous Five' are still growth stock, the chart below courtesy of StoneX Financial graphically shows what Momentum and Quant investors simply ignore, namely the fact that Revenues of the above 5 companies barely keep up with US nominal gross domestic product and their collective net income fell to $263 billion in the past four quarters, down 9% from $289 billion the year before.

As Vincent Deluard of StoneX points out "If stock prices are the net present value of their future cash flows, higher rates should penalize growth stocks, (or perceived growth stocks), which derive most of their profits from distant profits."

These 'mega' companies should clearly weather an economic slowdown or recession better than more cyclical companies…but they are not immune!

Where next?

The US Govt. is famous (in old Westerns!) for speaking with a forked tongue…on the one hand the FED is raising interest rates, and reversing quantative easing, whilst on the other, the Federal Government continues to spend, like money grows on trees, which if you oversee the printing press, it clearly does. Exactly one year ago, President Biden signed the Inflation Reduction Act, meant in large part to deliver on the administration's climate goals. The law provides for $369 billion in new spending to help accelerate renewable energy projects in the US,

increase EV auto manufacturing and spur electric everything adoption. This latest 'give away' follows the $1.9 trillion January 2021 Economic Rescue Plan, which augmented the $3 trillion coronavirus relief bill from March 2020, and the $900 billion legislation from December 2020, which was scaled back to garner support from Senate Republicans.

Clearly, some (read a lot) of this money has flowed into the stock market and consequently ramped-up prices.

Stock markets are driven by sentiment, by a feeling of well-being and, lest we forget, by greed.

For the past nine months, experienced commentators, including Jeremy Grantham, founder of GMO, have warned of the dangers of a 3 Sigma Bubble and the devastating impact that a massive correction in stocks, bonds and real estate will have on personal and corporate wealth. Few, very few have listened and the 'smart money' managers that shared Jeremy's point of view and took on large short positions have been flattened by the magnitude of the increase in share prices in 2023…led by the Magnificent 7.

Like it or not, the Board of THAL believe that sentiment and by consequence, money flows, have already changed direction and the combination of higher interest rates, spiking energy prices and Apple's Black Swan(?) moment following the Chinese Govt. ban on the use of Apple's I-Phones has finally forced even the most ardent believers of 'to infinity and beyond' valuations, to the need for earnings and free cash flow.

We believe that the S&P 500 (SPX), the NASDAQ Composite (CCMP) and the NASDAQ 100 (NDX) have already begun a correction which coupled with declining economic activity and reduced earnings could evolve into a perfect storm which could in turn result in a decline in the S&P well below fair value (estimated at about -20% below current levels) as a correction overshoots. To this end, a small portion of the Company's assets have again been invested in various SPX, QQQ,VIX and TSLA hedges.

Holdings -

• There was little or no movement in our positions in H1 2023.

Real Estate -

• The Real Estate owned by the Chairman, but pledged to the Company, is currently let until September 2024. Planning permission has and is being sought for certain developments, which it is hoped will increase the value of the property. It is anticipated that the sales process will begin in Q4 2023.and that a sale can be completed in Q4 2023/Q1 2024.

5