TIDMAVC
RNS Number : 3149W
Aberdeen Development Capital PLC
27 January 2012
ABERDEEN DEVELOPMENT CAPITAL PLC
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30
NOVEMBER 2011
Interim Board Report
The investment objective of Aberdeen Development Capital PLC is
to conduct an orderly realisation of the assets of the Company, to
be effected in a manner which maximises value for Ordinary
Shareholders.
The following is the unaudited Interim Board Report for the six
months ended 30 November 2011.
Background
Set against the continuing unfavourable environment for the
realisation of minority interests in smaller unlisted companies,
the six months to 30 November 2011 and in particular in the period
after this date has seen your Company's investment manager continue
to make headway with the process of liquidating the portfolio in an
orderly fashion.
Performance
The net asset value per Ordinary share ("NAV") has fallen from
5.9p to 5.4p. The fall in NAV is attributable to a combination of
factors; firstly the continuing accretion of entitlement to Zero
Dividend Preference ("ZDP") shareholders within the Zero subsidiary
companies; and secondly costs associated with the early liquidation
of the aforementioned companies and an accrual in respect of
expected liquidation costs for the remaining group companies.
Winding up of Zero Subsidiaries
In August 2011 proposals were announced to put subsidiaries, ADC
Zeros 2010 PLC and ADC Zeros 2012 PLC into early voluntary
liquidation to facilitate further returns to ZDP shareholders of
these companies. The proposals did not involve any change to the
capital entitlements of ZDP shareholders which continue to accrue
at the same rate up the previous planned winding up date of 30
April 2012. Following shareholder approval the Zero subsidiaries
were placed into voluntary liquidation on 16 September 2011 and on
23 September 2011 a payment of 8p per share was made to ZDP
shareholders leaving a final entitlement due on 30 April 2012 of
approximately 23.05p per share at 30 November 2011.
I am pleased to report that it is the Liquidator's intention to
make a second distribution at a rate of 12p per ZDP share, which
will be paid on or around 3 February 2012 to ZDP shareholders. This
will leave a final entitlement due to ZDP shareholders on 30 April
2012 of approximately 10.87p per share.
Portfolio Activity
In accordance with the investment objective, no new investments
have been made during the period and there have been no calls for
follow-on investment. There have been a number of full and partial
exits during the period to report, and two others subsequent to the
balance sheet date.
During the period, partial exits have been made from two
investments; Cash Bases and IFC Holdings. In the case of Cash Bases
the business repaid institutional loan stock and preference shares
of GBP1.1 million and under a share redemption agreement IFC
Holdings made the second of four annual repayments of GBP300,000. A
further two full exits were achieved during the period; firstly the
exit from Nevis Range Developments, a legacy holding acquired for
nil cost a number of years ago and sold for GBP8,000 and secondly
the disposal of THL Midlands realising cash proceeds of GBP159,000
with the potential for a further GBP66,000 of deferred proceeds in
June 2012 upon the expiry of a previously awarded guarantee.
The most significant disposal came after the period end, with
the sale of the holding in Pilgrim Systems for GBP1.5 million and
potentially up to a further GBP0.25 million of deferred proceeds
payable should the company's sale to Thomson Reuters be completed
at a value above a pre-determined level. I can also report the sale
of A Ordinary shares in Tennants Consolidated in January for
GBP50,000 which represented the previous carrying value. Attempts
to exit the larger holding of Ordinary shares will of course
continue to be pursued.
Where the Board feels that illiquidity concerns have become a
limiting factor in achieving an optimum exit for certain holdings,
the carrying value has been reduced to levels which we feel may
stimulate some interest. Accordingly, write-downs have been applied
against the carrying values of investments in Tennants Consolidated
and Whiteness Property Company. This policy has been followed for
many of the "tail-end" of the portfolio holdings and we remain
hopeful of achieving an uplift on these investments when disposal
actually occurs.
Outlook
The majority of the remaining portfolio investments are illiquid
in nature, and will continue to prove challenging to realise,
particularly at levels which will return full value to
shareholders. Given this and also bearing in mind there are legal
agreements in place for two holdings, IFC Holdings and PLM Dollar
Group, to mature in 2013 and 2015 respectively, it is likely that
investments will not be realised in full before the target date for
ZDP repayment unless agreements can be made with those companies.
Accordingly, the Board has begun planning for the voluntary
liquidation of the Company and its two other subsidiaries, ADC
(Glasgow) Limited and ADC Fund Limited Partnership, on or shortly
after the target ZDP repayment date of 30 April 2012. It is
expected that the Manager will assist the Liquidator with the
realisation of remaining investments, at no additional cost to the
Company.
Principal Risks and Uncertainties and Related Party
Transactions
Investment and Market Risks: Investments in smaller unlisted
companies carry substantially greater risk, in terms of price and
liquidity, than investments in larger companies or companies listed
on the Official List.
Shares: The market value of the Ordinary shares, as well as
being affected by the net asset value, also takes into account
their supply and demand. The market value of an Ordinary share can
fluctuate and may not always reflect its underlying net asset
value. There can be no guarantee that appreciation in the value of
the Company's investments will occur and investors may not get back
the full value of their original investment.
Investment Objective: There is no guarantee that the investment
policy adopted by the Company will provide the returns sought by
the Company.
Gearing: The Company currently utilises gearing in the form of
ZDP shares through its arrangement with ADC Zeros 2010 PLC (in
Members Voluntary Liquidation) and ADC Zeros 2012 PLC (in Members
Voluntary Liquidation). Gearing has the effect of exacerbating
market falls and market gains.
Dividends: The ability of the Company to pay dividends in
respect of the Ordinary shares and any future dividend growth
depends on the level of income received from its investments. Given
that the majority of the Company's income producing assets have
been realised and bearing in mind winding up costs, it is unlikely
that any dividends will now be made before the planned winding up
date on or shortly after 30 April 2012.
Discount: In view of the Company's obligations with regard to
ZDP repayment, the Company is unable to buy back shares to manage
the discount on the Ordinary shares.
Return of Capital: The 2010 ZDP shares and 2012 ZDP shares are
due for redemption on 30 April 2012. There is no guarantee that the
final capital entitlement of the 2010 ZDP shares and 2012 ZDP
shares will be paid in full (10.87p per share) on 30 April 2012.
The Ordinary shares will cease to have any value and no capital
will be returned to Ordinary shareholders if the Company has
insufficient assets to repay the aggregate capital entitlement of
the ZDP shares.
Taxation Controls: Any change in the Company's tax status or in
taxation legislation (including the tax treatment of dividends or
other investment income received by the Company) could affect the
value of the investments held by the Company, affect the Company's
ability to provide returns to shareholders or alter the post-tax
returns to shareholders.
Related Party Transactions: The related party transactions
during the period are disclosed in the notes to the accounts. There
have been no related party transactions that have had a material
effect on the financial position of the Company during the
period.
Responsibility Statement
The Directors are responsible for preparing the half-yearly
financial report in accordance with applicable law and regulations.
The Directors confirm to the best of their knowledge:
a) the condensed set of financial statements contained within
the half-yearly financial report has been prepared in accordance
with the Accounting Standards Board's Statement 'Half-Yearly
Financial Reports';
b) the Interim Board Report (constituting the interim management
report) includes a fair review of the information required by DTR
4.2.7R of the UK Listing Authority Disclosure and Transparency
Rules (being an indication of important events that have occurred
during the first six months of the financial year and their impact
on the condensed set of financial statements and a description of
the principal risks and uncertainties for the remaining six months
of the financial year) and 4.2.8R (being related party transactions
that have taken place during the first six months of the financial
year and that have materially affected the financial position of
the Company during that period and any changes in the related party
transactions described in the last annual report that could so
do).
The half-yearly report for the six months to 30 November 2011
comprises the Interim Board Report and a condensed set of financial
statements, and has not been audited or reviewed by the external
auditors pursuant to the Auditing Practices Board guidance on
Review of Interim Financial information.
For and on behalf of the Board of Aberdeen Development Capital
PLC
John Milligan
Chairman
27 January 2012
Condensed Consolidated Statement of Comprehensive Income
Six months Six months Year ended
ended ended
30 November 30 November 31 May 2011
2011 2010
(unaudited) (unaudited) (audited)
Revenue Capital Total Revenue Capital Total Revenue Capital Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Interest income 91 - 91 61 130 191 535 130 665
Investment
income 38 - 38 18 - 18 37 - 37
Other income - - - 4 - 4 4 - 4
-------- -------- -------- -------- -------- -------- -------- --------- ---------
129 - 129 83 130 213 576 130 706
Gains/(losses)
on held at
fair value
investments - 127 127 - (397) (397) - (1,001) (1,001)
Expenses
Management
fees (10) (20) (30) (10) (20) (30) (20) (40) (60)
Other operating
expenses (261) - (261) (99) - (99) (203) - (203)
VAT recovered
on
investment
management
fees - - - 230 254 484 230 254 484
(Loss)/profit
before
finance costs
and taxation (142) 107 (35) 204 (33) 171 583 (657) (74)
Finance costs
Zero dividend
preference
shares - (128) (128) - (179) (179) - (342) (342)
-------- -------- -------- -------- -------- -------- -------- --------- ---------
(Loss)/profit
before
Taxation (142) (21) (163) 204 (212) (8) 583 (999) (416)
Taxation (4) - (4) (5) - (5) (87) - (87)
-------- -------- -------- -------- -------- -------- -------- --------- ---------
(Loss)/profit
after
taxation (146) (21) (167) 199 (212) (13) 496 (999) (503)
-------- -------- -------- -------- -------- -------- -------- --------- ---------
Return per
Ordinary
share (pence) (0.41) (0.06) (0.47) 0.56 (0.59) (0.03) 1.39 (2.80) (1.41)
The Group does not have any income or expense that is not
included in (loss)/profit for the period, and therefore the
"(Loss)/profit for the period" is also the "Total comprehensive
income for the period" as defined in IAS 1 (revised).
All of the (loss)/profit and total comprehensive income is
attributable to the equity holders of Aberdeen Development Capital
PLC. There are no minority interests.
The total column of this statement represents the Statement of
Comprehensive Income of the Group, prepared in accordance with
IFRS. The revenue and capital columns are supplementary to this and
are prepared under guidance published by the Association of
Investment Companies.
All items in the above statement derive from continuing
operations.
Condensed Consolidated Balance Sheet
At At At
30 November 30 November 31 May
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Held at fair value
investments 4,601 6,761 6,104
Current assets
Cash and cash equivalents 908 1,728 577
Other receivables 38 31 27
------------- ------------- -----------
946 1,759 604
------------- ------------- -----------
Current liabilities
Financial liabilities
measured at amortised
cost (245) (156) (168)
Zero dividend preference
shares (3,365) - (4,436)
------------- ------------- -----------
Total current liabilities (3,610) (156) (4,604)
------------- ------------- -----------
Net current (liabilities)/assets (2,664) 1,603 (4,000)
------------- ------------- -----------
Total assets less
current liabilities 1,937 8,364 2,104
------------- ------------- -----------
Non-current liabilities
Zero dividend preference - (5,770) -
shares
------------- ------------- -----------
Total net assets 1,937 2,594 2,104
------------- ------------- -----------
Equity
Share capital 357 357 357
Special reserve 17,395 17,395 17,395
Capital redemption
reserve 12 12 12
Capital reserve -
realised (14,631) (13,531) (13,682)
Capital reserve -
unrealised (1,520) (1,812) (2,448)
Revenue reserve 324 173 470
------------- ------------- -----------
Equity shareholders'
funds 1,937 2,594 2,104
------------- ------------- -----------
Net asset value per
Ordinary share (pence) 5.42 7.26 5.89
------------- ------------- -----------
Condensed Consolidated Statement of Changes in Equity
Capital Capital Capital
For the six Share Special Redemption Reserve Reserve Revenue
months ended
30 November Capital Reserve Reserve Realised Unrealised Reserve Total
2011
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net assets 357 17,395 12 (13,682) (2,448) 470 2,104
at 31 May
2011
Net (loss)/gain
on
ordinary activities
after
taxation - - - (949) 928 (146) (167)
-------- -------- ----------- ---------- ----------- -------- -----------
Net assets
at 30
November 2011 357 17,395 12 (14,631) (1,520) 324 1,937
-------- -------- ----------- ---------- ----------- -------- -----------
Capital Capital Capital
For the six Share Special Redemption Reserve Reserve Revenue
months ended
30 November Capital Reserve Reserve Realised Unrealised Reserve Total
2010
(unaudited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net assets 357 17,395 12 (13,926) (1,205) 153 2,786
at 31 May
2010
Dividends
paid and
declared (note
6) - - - - - (179) (179)
Net gain/(loss)
on
ordinary activities
after
taxation - - - 395 (607) 199 (13)
Net assets
at 30
November 2010 357 17,395 12 (13,531) (1,812) 173 2,594
-------- -------- ----------- ---------- ----------- -------- --------
Capital Capital Capital
Share Special Redemption Reserve Reserve Revenue
For the year Capital Reserve Reserve Realised Unrealised Reserve Total
ended
31 May 2011 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
(audited)
Net assets
at 31 May
2010 357 17,395 12 (13,926) (1,205) 153 2,786
Dividends
paid and
declared (note
6) - - - - - (179) (179)
Net gain/(loss)
on
ordinary activities
after
taxation - - - 244 (1,243) 496 (503)
Net assets
at 31 May
2011 357 17,395 12 (13,682) (2,448) 470 2,104
-------- -------- ----------- ---------- ----------- -------- --------
Condensed Consolidated Cash Flow Statement
Six months Six months Year ended
ended ended
30 November 30 November 31 May
2011 2010 2011
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
Loss before tax (163) (8) (416)
Zero dividend preference
shares finance cost 128 179 342
(Gains)/losses on investments
held at fair value
through profit and loss (127) 397 1,001
Purchases of investments
held at fair value through
profit and loss - (130) (244)
Sales of investments held
at fair value through
profit
and loss 1,631 562 729
(Increase)/decrease in
other receivables (11) - 4
Increase/(decrease) in
other payables 72 (18) (15)
------------ ------------ -----------
Net cash inflow from operating
activities before
interest and tax 1,530 982 1,401
Tax paid - - (72)
------------ ------------ -----------
Net cash inflow from operating
activities 1,530 982 1,329
Financing activities
Dividends paid on Ordinary
shares - (179) (179)
Return of capital to Zero
dividend preference
shareholders (1,199) - (1,498)
Net cash outflow from
financing activities (1,199) (179) (1,677)
Net increase/(decrease)
in cash and cash equivalents 331 803 (348)
Cash and cash equivalents
at start of period 577 925 925
------------ ------------ -----------
Cash and cash equivalents
at end of period 908 1,728 577
------------ ------------ -----------
Notes to the Financial Statements
1. Accounting policies
(a) Basis of accounting
The financial statements have been prepared in accordance with
International Accounting Standard ('IAS') 34 - 'Interim Financial
Reporting' as adopted by the International Accounting Standards
Board (IASB), and interpretations issued by the International
Financial Reporting Interpretations Committee of the IASB
(IFRIC).
The financial statements have been prepared on a basis other
than that of a going concern which includes, where appropriate,
writing down the Company's net assets to a net realisable value.
The financial statements do not include any provision for the
future costs of terminating the business of the Company except to
the extent that such were committed at the Balance Sheet date.
The financial statements are prepared under the historical cost
convention, except for the measurement at fair value of investments
and in accordance with the Statement of Recommended Practice
'Financial Statements of Investment Trust Companies and Venture
Capital Trusts' issued in January 2009.
The half-yearly financial statements have also been prepared
using the same accounting policies applied for the year ended 31
May 2011 financial statements, which were prepared in accordance
with International Financial Reporting Standards and which received
an unqualified audit report.
(b) Dividends payable
Dividends are recognised on the date on which they are paid.
2. Income
The breakdown of income was as follows:-
30 November 30 November 31 May
2011 2010 2011
Income from investments GBP'000 GBP'000 GBP'000
Franked investment
income 38 18 37
UK unfranked investment
income 84 59 254
------------ ------------ --------
122 77 291
Other income
Deposit income 7 2 9
Interest on VAT recovered - - 402
Other income - 4 4
------------ ------------ --------
Total income 129 83 706
------------ ------------ --------
3. The taxation expense reflected in the Condensed Consolidated
Statement of Comprehensive Income is based on management's best
estimate of the weighted average annual corporation tax rate
expected for the full financial year. The estimated annual tax rate
used for the period to 31 May 2012 is 26%.
4. Other operating expenses
During the period other operating expenses of GBP152,000 (30
November 2010 - GBPnil and 31 May 2011 - GBPnil) were allocated to
revenue including expenses relating to the ongoing winding up of
subsidiary companies ADC Zeros 2010 PLC and ADC Zeros 2012 PLC and
a provision for the costs of the proposed winding up of the
remaining group companies.
5. Return and net asset value per Ordinary share
30 November 30 November 31 May
2011 2010 2011
Net revenue attributable
to Ordinary shareholders
(GBP'000) (146) 199 496
Net capital losses
attributable to Ordinary
shareholders (GBP'000) (21) (212) (999)
Equity shareholders'
funds (GBP'000) 1,937 2,594 2,104
The weighted number
of Ordinary shares
in issue at the end
of the period on
which the return
was calculated, was: 35,719,225 35,719,225 35,719,225
The number of Ordinary
shares in issue at
the end of the period
on which the net
asset value was calculated,
was: 35,719,225 35,719,225 35,719,225
Revenue return per
Ordinary share (p) (0.41) 0.56 1.39
Capital return per
Ordinary share (p) (0.06) (0.59) (2.80)
------------ ------------ ------------
Total earnings per
Ordinary share (p) (0.47) (0.03) (1.41)
------------ ------------ ------------
Net asset value per
Ordinary share (p) 5.42 7.26 5.89
------------ ------------ ------------
6. Dividends
Six months Six months Year ended
to to
Ordinary dividends 30 November 30 November 31 May
on equity shares 2011 2010 2011
deducted from reserves GBP'000 GBP'000 GBP'000
are analysed below:
Final dividend for
the year ended 31
May
2011 - nil (2010
- 0.50p) - 179 179
------------- ------------ -----------
- 179 179
--------------------------------------- ------------ -----------
7. Transaction costs
During the period transaction costs of GBPnil were incurred on
purchases and sales of investments (30 November 2010 - GBPnil; 31
May 2011 - GBPnil).
8. Contingencies, guarantees and deferred considerations
On 19 November 2010 the Company entered into a guarantee with
London South Eastern Railways ("LSER") on behalf of portfolio
company THL Midlands to ensure they can fulfil any liabilities
falling under the terms of a contract with LSER to supply certain
products and services. The maximum exposure to the Company is
GBP66,000 and has a termination date of 30 June 2012. During the
period, the Company sold its holding in THL Midlands to management
for the sum of GBP225,000; payable GBP159,000 on completion of the
transaction and GBP66,000 payable on 30 June 2012 should the
aforementioned guarantee not be called up.
There are a number of deferred considerations from previous
sales transactions where the amount and timing of receipt remain
uncertain and the Company has taken no account of any such receipt
in the financial statements.
9. Related party disclosure
Mr Gilbert is a director of Aberdeen Asset Managers Limited,
('AAM'), which acts as the Company's Investment Manager and is also
a director of Aberdeen Asset Management PLC, the Secretary of the
Company and the holding company of AAM.
The management fee is payable monthly in arrears based on a
fixed annual amount of GBP60,000. During the period GBP30,000 (2010
- GBP30,000) of management fees were paid and payable, with a
balance of GBP15,000 (2010 - GBP13,000) being payable to AAM at the
period end.
The management fees are charged 33% to revenue and 67% to
capital.
10. The financial information in this Half-Yearly Financial
Report comprises non-statutory accounts as defined in Sections
434-436 of the Companies Act 2006. The financial information for
the six months ended 30 November 2011 and 30 November 2010 has not
been audited.
The information for the year ended 31 May 2011 has been
extracted from the latest published audited financial statements
which have been filed with the Registrar of Companies. The report
of the auditors on those accounts contained no qualification or
statement under Section 498 (2), (3) or (4) of the Companies Act
2006.
This report has not been reviewed or audited by the Company's
auditor.
11. This Half-Yearly Financial Report was approved by the Board on 27 January 2012.
The Half-Yearly Report will shortly be available
from the Company's website (www.developmentcap.co.uk)
and will be posted to shareholders in February 2012.
Please note that past performance is not necessarily a guide to
the future and that the value of investments and the income from
them may fall as well as rise. Investors may not get back the
amount they originally invested.
For Aberdeen Development Capital PLC
Aberdeen Asset Management PLC, Secretary
This information is provided by RNS
The company news service from the London Stock Exchange
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