RNS Number:5864K
Strathdon Investments PLC
24 December 2007
24 December 2007
STRATHDON INVESTMENTS PLC
Unaudited interim results for the 6 months to 30 September 2007
Strathdon Investments plc ("the Company") today announces its unaudited interim
results for the six months to 30 September 2007
Chairman's Statement
Following on from my last report, the first half of this financial year has
continued to be challenging for Strathdon and I am disappointed to report a
significant reduction in Strathdon's Net Asset Value which has dropped to �6.94m
at 30 September 2007, equivalent to 13.4 pence per share. This write-down is
largely the result of the continued heavy losses incurred by its largest
investment, Stagebeach Limited, a consequence of which being that a full
provision has been made against this investment.
Strathdon has made considerable progress on a number of core operational
matters, most notably in the appointment of YFM Venture Finance Limited (YFM),
part of the YFM Group as Strathdon's Fund Manager. The relationship with YFM
will enable Strathdon to reduce operational costs and access high quality advice
on the management of its investments.
Strategic Review
The board started to take action to reduce Strathdon's core operational costs
last year. The investment management headcount was reduced from 5 people in
November 2006 to 1 Investment Director by June 2007 and, in parallel with this,
an exhaustive review of strategic options was undertaken with the assistance of
Intelli Corporate Finance.
This strategic review resulted in the appointment of YFM and a contract was
entered into on 20 August 2007. This has allowed us to close our office in
Winchester and to transfer all administration to YFM's headquarters in Leeds,
including the absorption of our remaining investment director.
YFM has appointed an experienced team to manage Strathdon's investment
portfolio. The team includes Peter Davies, who has over 10 years venture capital
experience, having previously been an Investment Director of Advent Venture
Partners' VCT division and an Investment Manger at 3i plc; David Gee, who
has over 18 years experience with YFM in making venture capital investments and
the realisation of these investments from trade sales through to full listed
flotations; and Nigel Owens, who has over 18 years of experience of
restructuring and growing businesses. The team is chaired by Phil Cammerman,
YFM's Group Development Director, who is widely recognised as a leading figure
in the venture capital community.
The impact of the cost saving measures has already started to show benefit with
administrative expenses down 26% on the comparative prior year. The full benefit
of these initiatives will become more apparent during 2008.
Portfolio Company Performance
Following a detailed review of the of the business of Stagebeach, and taking
into accounts an assessment of recent trading results, likely future financing
requirements, the potential returns on exit and the implementation risks of
alternative strategies, the Board, advised by its Fund Manager, decided not to
provide further financial support to Stagebeach.
In my 2007 annual statement, I reported that Meta Vision Systems was
experiencing operational difficulties and, as a result, a �0.6m provision had
been taken against this investment in the first half of this financial year. The
situation at Meta is now more stable and a detailed review is being carried out
to assess the prospects of this investment.
Performance of the remaining investments has been encouraging. The businesses
within Strathdon's investment portfolio now have average revenues of over �3
million, with revenues growing by 50% over the past 3 years. 9 companies
recorded operating profits in their most recent financial year; 2 more companies
have reached sustained operational cash breakeven; and Nanosight and Oxsensis
both successfully raised money from new investors at significant valuation
uplifts.
Realisations
Two partial realisations have been achieved during the first half of the year.
Half of our holding in Episys was sold for proceeds of �457,000, realising a
gain of over 4 times multiple on the original cost of the investment and the
majority of our holding in Utilyx was also sold for �149,000 representing a
small uplift based on original cost. In addition, Strathdon's entire holding in
Haldon Trust was realised for a small gain.
We remain focused on achieving further realisations in the second half of the
financial year. In November 2007, after the date of these financial results, we
realised our investment in Nova Weigh and Nova Weigh India for a combined cash
consideration of �539,000, with a further deferred and contingent consideration
due of up to �305,000.
Financial Results
With Reporting Standards committed to international convergence, Strathdon is
now required to prepare its financial statements in accordance with
International Financial Reporting Standards (IFRS). Consequently, comparatives
have been restated to reflect this change as set out in Strathdon's IFRS
Restatement Announcement released on 24 December 2007. The most significant
impact of adoption of IFRS on Strathdon's previously reported financial
information is with regard to the treatment of gains and losses on the
revaluation of investments.
At 31 March 2007, Strathdon held a controlling interest in Stagebeach Limited.
Under UK GAAP, due to its expected temporary nature, this was accounted for as a
fixed asset investment held at fair value. However, under IFRS, the criteria
for recognition as an asset held for sale do not appear to have been met, and so
no such exemption is available. Consequently, there would be a requirement to
account for Stagebeach Limited in accordance with IAS 27 'Consolidated and
Separate Financial Statements' as a subsidiary.
The investment in Stagebeach Limited has not been so accounted for in the
financial statements as the directors are of the opinion that it would not
assist shareholders in their understanding of these financial statements.
It would also be inconsistent with the nature of the business of the Company,
which is that of an investment company. Finally, access to the necessary
information to enable Stagebeach Limited's financial results to be accounted
for under IAS 27 would be limited.
Consequently, the results of Stagebeach have not been consolidated in these
interim financial statements and your attention is drawn to the auditors
representations in the IFRS restatement announcement of 24 December 2007. The
directors will take advice on what further information can be meaningfully
incorporated within the 2008 annual report.
The loss for the period was �7.05m compared to �1.10m for the first six months
of the prior year. This is after taking account of a write down on unrealised
investment valuations of �6.04m (six months to 30 September 2006: �0.32m) and an
associated debtor provision of �0.7m. The largest single impact was the write
down on Stagebeach, resulting in an adverse valuation movement of �5.26m
Total net assets at 30 September 2007 were �6.94m equivalent to a net asset
value per share of 13.4 pence.
At 30 September 2007, bank borrowings totalled �1.21m. The Board, with the
assistance of YFM, continue to work closely with our bankers, Kaupthing Singer &
Friedlander Limited, to manage the facility. The facility agreement has been
varied and extended to 31 March 2008 and at the current date borrowings have
been further reduced to �0.9m. Planned realisation negotiations of certain
investments are ongoing, the intention being that borrowings will be eliminated
as soon as possible.
Board
I have today announced my intention to step down as Chairman and to leave the
Board as soon as a suitable replacement can be appointed. After a very
challenging period for the Company I feel that the time has come to make way for
a fresh perspective and fresh leadership of the Board. Malcolm Williams has
agreed to step in to chair the Nominations Committee to appoint my successor,
and I have agreed to continue as Non-executive Chairman until this process is
complete.
Outlook
Strathdon's operations have been substantially restructured, culminating in the
appointment of YFM to manage and administer its investment portfolio. This has
reduced administration costs and provided direct access to a depth of venture
capital industry experience that the Company needs. The board remains totally
committed to realising value from the portfolio, and we are confident that with
the focus now being provided by YFM that the maximum possible returns will be
made for shareholders.
Andrew Firth
Chairman
24 December 2007
Consolidated Income Statement
For the 6 months ended 30 September 2007
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2007 2006 2007
Notes �000 �000 �000
Income (493) 409 729
Administrative expenses (474) (641) (1,316)
--------- --------- ---------
Operating loss (967) (232) (587)
--------- --------- ---------
Realised gains on financial assets
designated at fair value though profit
or loss (net) 25 (484) (597)
Unrealised losses on financial assets
designated at fair valuethrough profit
or loss (net) (6,043) (317) (988)
--------- --------- ---------
Net movement on investments (6,018) (801) (1,585)
--------- --------- ---------
Loss on ordinary activities before
finance costs and taxation (6,985) (1,033) (2,172)
Finance costs (66) (68) (109)
--------- --------- ---------
Loss from continuing
operations before taxation (7,051) (1,101) (2,281)
Taxation - - -
--------- --------- ---------
Loss for the period from
continuing operations (7,051) (1,101) (2,281)
--------- --------- ---------
Basic and diluted loss
per share 2 (13.61)p (2.12)p (4.40)p
--------- --------- ---------
Consolidated Balance Sheet
As at ended 30 September 2007
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2007 2006 2007
Notes �000 �000 �000
Assets
Non-current assets
Plant and equipment - 11 5
Financial assets designated at
fair value through profit or loss 8,355 14,239 14,674
--------- --------- ---------
8,355 14,250 14,679
Current assets
Trade and other receivables 307 1,292 1,027
Cash and cash equivalents 34 561 67
--------- --------- ---------
341 1,853 1,094
Liabilities
Current liabilities
Financial liabilities (1,205) - (1,280)
Trade and other payables (413) (541) (364)
--------- --------- ---------
(1,618) (541) (1,644)
--------- --------- ---------
Net current /(liabilities) assets (1,277) 1,312 (550)
--------- --------- ---------
Total assets less current liabilities 7,078 15,562 14,129
Non-current liabilities
Loans (141) (394) (141)
--------- --------- ---------
Net assets 6,937 15,168 13,988
--------- --------- ---------
Shareholders' equity
Share capital 2,591 2,591 2,591
Share premium account 6,392 6,392 6,392
Special reserve 36,290 36,290 36,290
Revaluation reserve - - -
Warrant reserve 928 928 928
Retained earnings (39,264) (31,033) (32,213)
--------- --------- ---------
Total Shareholders' equity 6,937 15,168 13,988
--------- --------- ---------
Net asset value per
Ordinary share 3 13.4p 29.3p 27.0p
--------- --------- ---------
Consolidated Statement of Changes in Shareholders' Equity
For the 6 months ended 30 September 2007
Share
Share premium Special Revaluation Warrant Retained Total
Capital account reserve reserve reserve earnings equity
�000 �000 �000 �000 �000 �000 �000
Balance at 31 March 2006 2,591 6,392 36,290 2,633 928 (32,565) 16,269
Transfer of the revaluation
reserve on adoption of IAS39 - - - (2,633) - 2,633 -
Loss for the period - - - - - (1,101) (1,101)
------- ------- ------- ------- ------- ------- -------
Balance at 30 September 2006 2,591 6,392 36,290 - 928 (31,033) 15,168
Loss for the period - - - - - (1,180) (1,180)
------- ------- ------- ------- ------- ------- -------
Balance at 31 March 2007 2,591 6,392 36,290 - 928 (32,213) 13,988
Loss for the period - - - - - (7,051) (7,051)
------- ------- ------- ------- ------- ------- -------
Balance at 30 September 2007 2,591 6,392 36,290 - 928 (39,264) 6,937
------- ------- ------- ------- ------- ------- -------
Consolidated Cash Flow Statement
For the 6 months ended 30 September 2007
Unaudited Unaudited Audited
6 months ended 6 months ended Year ended
30 September 30 September 31 March
2007 2006 2007
�000 �000 �000
Cash flows from operating activities
Investment Income received 19 17 227
Portfolio management fees 34 203 299
Investment management fee paid - - -
Salaries (196) (449) (874)
Other cash payments (59) (267) (684)
--------- --------- ---------
Net cash outflow from operating activities (202) (496) (1,032)
--------- --------- ---------
Cash flows (used in) / from investing
activities
Bank balances disposed of with subsidiary - - (45)
Purchase of financial assets (431) (1,250) (2,832)
Proceeds from sale of financial assets 730 4,312 5,115
--------- --------- ---------
Net cash (used in) / from investing
activities 299 3,062 2,238
--------- --------- ---------
Cash flows from / (used in)
financing activities
Repayment of borrowings (75) (2,252) (1,366)
Interest received 2 13 40
Interest paid (57) (54) (101)
--------- --------- ---------
Net cash from / (used in)
financing activities (130) (2,293) (1,427)
--------- --------- ---------
Net increase / (decrease) in cash
and cash equivalents (33) 273 (221)
Cash and cash equivalents
at the beginning of the period 67 288 288
--------- --------- ---------
Cash and cash equivalents
at the end of the period 34 561 67
--------- --------- ---------
Notes to the Financial Statements
For the 6 months ended 30 September 2007
1. These interim consolidated financial statements, which have been
approved by the directors, are unaudited, nor have they been reviewed by the
auditors pursuant to the Auditing Practices Board (ASB) guidance on Review of
Interim Financial Information. They do not constitute full financial statements
as defined in section 240 of the Companies Act 1985.
The interim financial statements comply with IAS 34 'Interim financial
reporting' and the accounting policies and methods of computation that the
directors anticipate will be complied with in the annual financial statements
and as set out in the IFRS Restatement Announcement released on 20 December
2007, which has been published at www.yfmgroup.co.uk, which is a website
maintained by the Company's Investment Adviser.
The comparatives for the year ended 31 March 2007 and six months ended 30
September 2006 were previously presented in accordance with UK accounting
standards. IFRS will be adopted for the year ended 31 March 2008. The effective
date of transition to IFRS for the comparative year was therefore 1 April 2006.
Consequently, the comparatives for the six months ended 30 September 2006 and
the year ended 31 March 2007 have been restated in accordance with IFRS, the
exception being the treatment of the investment in Stagebeach Limited.
At 1 April 2006 and 31 March 2007, Strathdon held a controlling interest in
Stagebeach Limited. Under UK GAAP, due to its expected temporary nature, this
was accounted for as a fixed asset investment held at fair value. However,
under IFRS, the criteria for recognition as an asset held for sale have not been
met, and so no such exemption is available. Consequently, there is a requirement
to account for Stagebeach Limited in accordance with IAS 27 as a subsidiary. The
investment in Stagebeach Limited has not been so accounted for in the financial
statements as the directors are of the opinion that it would not assist
shareholders in their understanding of these financial statements, and that it
would be inconsistent with the nature of the business of the Group, which is
that of an investment company. Furthermore, the company does not have access to
the necessary information to enable Stagebeach Limited's financial results to be
accounted for under IAS 27.
Further disclosure concerning the impact of IFRS on the financial statements can
also be found in the IFRS Restatement Announcement including the reconciliations
required by IFRS1 'First Time Adoption of International Financial Reporting
Standards'. The accounting policies are drawn up in accordance with
International Accounting Standards (IAS) and International Financial Reporting
Standards (IFRS), which comprise standards and interpretations approved by the
International Accounting Standards Board (IASB) and the International Accounting
Standards Committee (IASC) as adopted by the European Union and those parts of
the Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements for the year ended 31 March 2007 were prepared under UK
GAAP. Those accounts were reported upon without qualification by the auditors
and have been delivered to the Registrar of Companies.
2. The loss per share is based on the net loss from ordinary
activities after tax attributable to shareholders of �7,051,000 (30 September
2006: �1,101,000 and 31 March 2007: �2,281,000) and on 51,817,057 shares (30
September 2006 and 31 March 2007: 51,817,057), being the weighted average number
of shares in issue during the period.
The share options within the Employee Share Option Scheme and the warrants
exercisable at 36p per share are not considered to be non-dilutive potential
ordinary shares. The Company has no other securities that would have a dilutive
effect and hence basic and diluted earnings per share are the same.
3. The net asset value per share is calculated on attributable
assets of �6,937,000 and 51,817,057 shares in issue at the period end (30
September 2006: assets of �15,168,000 and 51,817,057 shares, 31 March 2007:
assets of �13,988,000 and 51,817,057 shares).
The share options within the Employee Share Option Scheme and the warrants
exercisable at 36p per share are not considered to be non-dilutive potential
ordinary shares. The Company has no other securities that would have a dilutive
effect and hence basic and diluted net asset values per share are the same.
4. Copies of the interim report can be obtained from the Company's
registered office: Saint Martins House, 210-212 Chapeltown Road, Leeds, LS7 4HZ.
For further information, please contact:
Andrew Firth, Strathdon Investment Plc Tel: 07889 438 023
Philip S Cammerman, YFM Group Limited Tel: 0113 294 5000
David Newton, Seymour Pierce Limited, Tel: 0207 107 8000
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR FFLLLDLBLFBD
Strathdon (LSE:STV)
Gráfica de Acción Histórica
De May 2024 a Jun 2024
Strathdon (LSE:STV)
Gráfica de Acción Histórica
De Jun 2023 a Jun 2024
