RNS Number:7176M
Strathdon Investment PLC
27 November 2006
STRATHDON INVESTMENTS PLC
Interim results for the 6 months ended 30 September 2006
"Strathdon" or "the Company"
Chairman's Statement
The first six months of the financial year has been another disappointing period
for Strathdon. Net Asset Value (NAV) per share has dropped by some 7% from 31.4p
to 29.3p, but more importantly the business has not achieved significant progress
in making realisations from the portfolio and the cost base remains too high.
Strategic Review
The board has completed its strategic review against this background and I am
able to announce the outcome of that review today. The primary objective of the
review was to select a strategy that would best preserve the value of the
portfolio and give shareholders the best possible chance of realising its
undoubted potential. We are determined not to sell the portfolio cheaply in
order to escape the frustrations of the current situation. We are therefore
taking the following actions, designed to cut costs and improve focus on the
existing portfolio.
I have announced to all Strathdon investment managers that we will be entering a
statutory consultation period which is likely to result in significant
redundancies. Whilst meeting all our obligations to our people, and ensuring
that they are all given the best possible opportunities available, my
expectation is that this will result in one Investment Manager remaining to lead
the management of the portfolio. Hugh Stewart will be leaving the business with
immediate effect, as described below. Michael Roller, our Finance Director, has
already reduced his time commitment to two days per week, and we will be
reducing the non-executive directors from 4 to 2 once we have overseen this
period of transition. These actions will result in one-off costs of
approximately #150,000, but will generate annualised savings of some #350,000.
Additional cost savings are being targeted in all areas with the aim of driving
a further #150,000 of annualised costs out of the cost base.
We will no longer be developing our limited partnership secondaries business.
That business has potential, however the board does not feel that the risks and
the longer time horizons inherent in such a new undertaking are appropriate for
our current situation. Hugh Stewart will now be leading this opportunity
privately and he is currently in conversations with all the parties concerned to
secure an appropriate way forward.
The board have changed the investment strategy to reflect these new
circumstances. Strathdon will no longer be making new investments, and the
portfolio will be managed intensively to realise its potential and to optimise
the opportunities to return cash to shareholders. As part of the strategic
review we have had conversations with a small number of potential strategic
partners who could assist us in realising the potential of the portfolio. I am
optimistic that one of these arrangements will develop over the coming months,
although in the meantime we will continue to drive the business forward
independently.
Performance in the period
Three principal items have contributed to the movement in the Net Asset Value in
the period in addition to the operating loss; a reduction in value of Stagebeach
of #783,000, a loss on disposal of the remaining quoted investments of #224,000
and an uplift in the value of AMG Systems of #475,000. AMG has performed well
above expectations in the period under review and the outlook for it in 2007 is
encouraging.
Stagebeach is a training and e-learning business, and is our largest investment,
comprising 30% of the portfolio by value at 30 September 2006. Stagebeach's
performance in the period under review has fallen short of expectations as a
result of a poor trading quarter and a delay in signing a significant licence
fee deal. We remain confident about the potential of the business, however the
Board believes it prudent to reduce the holding value by 15% to #4.3m. A further
detailed update on the performance of Stagebeach will be made at the end of the
financial year.
Realisations in the period include Strathdon's stake in the Esprit Capital 1
Fund (formerly the Cazenove New Europe Access Fund) of #0.9m, which was sold for
net asset value in July 2006. The sale of Room Solutions was announced at the
time of our year end results and the remainder of the deferred consideration
accrued at that time has now been received. During the period, the remainder of
the quoted portfolio was sold down and proceeds applied to reduce the group's
term loan and to invest further in the unquoted portfolio. The group had minimal
net debt at the period end, although a #2m facility remains in place with the
group's bankers.
Conclusion
The Board has spent the last 6 months reviewing all the possible options for the
business and we have held discussion with a limited but appropriate number of
potential acquirers and partners. The underlying portfolio contains a number of
excellent companies, and we continue to believe that these can deliver value for
shareholders. We are confident that the way forward announced today is in the
best interests of shareholders, and we will continue to keep all our options
under review as we move forward.
Andrew Firth
Chairman
Contact:
Andrew Firth 01962 870492
Consolidated profit and loss for the period 1 April 2006 to 30 September 2006
Six months ended 30 Six months ended 30 Year ended 31
September 2006 September 2005 March 2006
#'000 #'000 #'000
Turnover 298 122 458
Administration
Expenses (641) (720) (1,466)
Operating Loss (343) (598) (1,008)
---------- ---------- ----------
Loss on
disposal of
fixed asset
investments (851) (535) (1,209)
Loss on
ordinary
activities
before
provision
against
carrying value
of investments
and interest (1,194) (1,133) (2,217)
Change in
provision
against
carrying value
of investments 342 (61) (3,125)
Interest
payable (68) (93) (212)
Interest
receivable 111 119 206
Loss on
ordinary
activities
before
taxation (809) (1,168) (5,348)
---------- ---------- ----------
Taxation - - -
Retained loss
for the
financial
period (809) (1,168) (5,348)
---------- ---------- ----------
Return per pence pence pence
Ordinary Share
Basic &
Diluted (1.56) (2.44) (10.76)
Consolidated Statement of total recognised gains and losses for period 1 April
2006 to 30 September 2006
Six months ended 30 Six months ended 30 Year ended 31
September 2006 September 2005 March 2006
#'000 #'000 #'000
Loss for the
financial
period (809) (1,168) (5,348)
Change in
unrealised
gain on
investments (659) (285) 1,306
Total
losses
relating to (1,468) (1,453) (4,042)
the period ---------- ---------- ----------
Consolidated Balance sheet at 30 September 2006
Six months ended 30 Six months ended 30 Year ended 31
September 2006 September 2005 March 2006
#'000 #'000 #'000
Fixed Assets
Tangible Fixed
Assets 11 16 13
Investments 14,239 17,607 18,497
14,250 17,623 18,510
Current Assets ---------- ---------- ----------
Debtors 1,292 674 786
Cash at bank 561 883 288
1,853 1,557 1,074
Creditors: ---------- ---------- ----------
amounts
falling due
within one
year (541) (299) (669)
---------- ---------- ----------
Net Current
Assets 1,312 1,258 405
---------- ---------- ----------
Total Assets
less current
liabilities 15,562 18,881 18,915
---------- ---------- ----------
Long Term Loan (394) (1,980) (2,646)
---------- ---------- ----------
Total Net
Assets 15,168 16,901 16,269
---------- ---------- ----------
Capital and
Reserves
Called Up
Share Capital 2,591 2,391 2,591
Share Premium
account 6,392 5,392 6,392
Special
Reserve 36,290 36,290 36,290
Revaluation
Reserve 1,974 1,042 2,633
Warrant
Reserve 928 926 928
Profit and
Loss Account (33,007) (29,140) (32,565)
---------- ---------- ----------
Total
Shareholders'
Funds 15,168 16,901 16,269
---------- ---------- ----------
Net Asset Value per Pence Pence Pence
Ordinary Share
Basic &
Diluted 29.27 35.35 31.40
Consolidated cash flow statement for the period 1 April 2006 to 30 September 2006
Six months ended 30 Six months ended 30 Year ended
September 2006 September 2005 31 March 2006
#'000 #'000 #'000
Operating Activities
Investment
Income
Received 17 18 37
Portfolio
Management
Fees 203 101 220
Investment
Management Fee
Paid - - (37)
Salaries (449) (435) (777)
Other Cash
Payments (267) (334) (693)
Net Cash
outflow from
operating
activities (496) (650) (1,250)
---------- ---------- ----------
Returns on investment and
servicing of finance
Interest
Received 13 18 61
Interest Paid (54) (97) (193)
Net Cash
outflow from
returns on
investment and
servicing of
finance (41) (79) (132)
---------- ---------- ----------
Capital Expenditure and
Financial Investmtent
Purchases of
Investments (1,250) (1,244) (3,040)
Sales of
Investments 4,312 3,416 4,607
Purchases of
Tangible Fixed
Assets (-) (5) (8)
Repayment of
Borrowings (2,252) (1,000) (334)
Net Cash
inflow from
Capital
Expenditure
and Financial
Investment 810 1,167 1,225
---------- ---------- ----------
Net Cash
inflow /
(outflow)
before and
after
financing 273 438 (157)
---------- ---------- ----------
Increase /
(decrease) in
Cash 273 438 (157)
---------- ---------- ----------
Notes to the financial statements:
1) The figures for the six months ended 30 September 2006 and for the six months
ended 30 September 2005 are unaudited.
2) Basic return per share for the six months ended 30 September 2006 is
based on the loss for the period of #809,000 and an average of 51,817,057 shares
being in issue during the period (six months ended 30 September 2005: loss of
#1,168,000 and 47,817,057 shares in issue, year ended 31 March 2006: loss of
#5,348,000 and 49,701,989 shares in issue). The diluted earnings per share is
equal to the basic earnings per share because the share options within the
Employee Share Scheme and the warrants exercisable at 36p per share are
considered to be non-dilutive potential ordinary shares over the period ended 30
September 2006.
3) Included in debtors at 30 September 2006 is #nil due after more than
one year (30 September 2005: #226,000)
4) The basic net asset value per share at 30 September 2006 is based on
net assets of #15,168,000 (30 September 2005: #16,901,000, 31 March 2006:
#16,269,000) and 51,817,057 shares in issue at that date (30 September 2005:
47,817,057 shares in issue; 31 March 2006: 51,817,057 shares in issue).
5) The interim financial information has been prepared on the basis of the
accounting policies set out in the Group's Annual Report for the year ended 31
March 2006, with the exception of the adoption of the provisions FRS 20 (Share
Based Payments). Adoption of this standard has had no material effect on the
group's results.
6) The foregoing financial information does not constitute statutory
financial statements as defined in Section 240 of the Companies Act 1985. The
statutory accounts for the period ended 31st March 2006, which contained an
unqualified auditor's report, have been lodged with the Registrar of Companies
and did not contain a statement under Section 237(2) or (3) of the Companies Act
1985
This information is provided by RNS
The company news service from the London Stock Exchange
END
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