TIDMAVC
RNS Number : 2866A
Aberdeen Development Capital PLC
28 January 2011
ABERDEEN DEVELOPMENT CAPITAL PLC
HALF-YEARLY FINANCIAL REPORT FOR THE SIX MONTHS ENDED 30
NOVEMBER 2010
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 2010.
Background
Set against the continuing unfavourable environment for the
realisation of interests in smaller unlisted companies, the six
months to 30 November 2010 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
7.8p to 7.3p. The Company's NAV benefited by some 1.4p as a result
of the repayment of VAT on investment management fees incorrectly
charged in the past. This has been offset by a further write-down
in the carrying values of portfolio holdings as we approach the
final repayment date on the ZDP shares, and by the continuing
accruing entitlement of ZDP shareholders.
Dividend
As outlined in my Chairman's Statement for the year ended 31 May
2010, a final dividend of 0.5p per Ordinary share was paid on 29
October 2010. Typical of a work-out fund, revenues have fallen
significantly over recent years, reducing the ability to pay
Ordinary dividends. Notwithstanding, the Board will continue to
recommend the payment of a dividend to Ordinary shareholders where
possible.
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.
Although no full exits have been achieved during the period,
some progress has been made towards delivering value. Given the
largely illiquid nature of many holdings, the investment manager
has had to consider alternative exit strategies. For portfolio
companies IFC Holdings and PLM Dollar Group for example, the
Company has agreed to swap equity for debt, with a repayment
schedule stretching beyond the ZDP share repayment date of 30 April
2012. Whilst the timing of this may not be ideal, the terms of the
deal at least provides an exit route and ring fences shareholder
value, which we believe is more beneficial to shareholders than the
alternative of being left with an illiquid minority stake in a
small private company.
Where the Board feels that illiquidity concerns has 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. An example of this is the holding in
Tennants Consolidated, a long-established, family owned and managed
chemicals business which is consistently profitable and which has
built up an extremely strong, debt-free balance sheet with
substantial property, cash and listed equity assets. However, due
to the tightly controlled share register and the proximity of the
Company's ZDP share repayment, the Board has taken the decision to
write down the value of the investment again to a level which we
believe significantly undervalues the true and fair worth of the
business - but which may encourage a buyer for the stake.
VAT Recovery
The Company has accepted the Manager's offer to refund
GBP386,000 representing all VAT charged on investment management
fees for the period 1 January 1990 to 4 December 1996 and an
additional GBP98,000 for the period 1 January 2001 to 31 December
2003. This has been recognised within the financial statements and
allocated to revenue and capital in accordance with the underlying
accounting policy. Consequently, all VAT charged in the claim
periods amounting to GBP1,043,000 has now been recovered. No VAT on
investment management fees has been charged since 31 August
2007.
No account has yet been taken for any interest due on the above
amount, and we understand that talks between HMRC and the manager
continue on this issue.
ZDP Share Repayment
Following receipt of the interest on the VAT recovery monies
highlighted above, the Board intends to declare a fifth return of
capital to ZDP shareholders. A separate announcement advising the
rate and timing of the payment will be made in due course.
Outlook
The majority of the remaining portfolio investments are illiquid
in nature, and will continue to prove challenging to realise,
particularly at a value which will return full value to
shareholders. However, we will continue to work hard to extract
optimum value in advance of the ZDP share repayment date in April
2012.
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. 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 assets of the Company are being realised, it is
anticipated that dividends will decrease.
Discount: The ability to buy back shares with the objective of
managing the discount on the Ordinary shares is dependent on a
number of factors including the ability to buy back shares in the
market, the ability to fund share buybacks, the authority to buy
back shares being renewed annually and the Board's discretion over
the making and timing of any buybacks. Even when Ordinary shares
are bought back, there can be no guarantee that this will result in
the discount narrowing.
Duration: There is no fixed life for the Ordinary shares of the
Company, however it is expected that the Company will be wound up
once all available assets have been realised and returned to
Shareholders under the Capital Return Scheme and Buy Back Programme
approved by Shareholders on 3 August 2007. 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 (42.11 pence per
share) on 30 April 2012. The Ordinary shares will cease to have any
value 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 2010
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
28 January 2011
Condensed Consolidated Statement of Comprehensive Income
Six months ended Six months ended Year ended
30 November 2010 30 November 2009 31 May 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 61 130 191 180 - 180 319 - 319
Investment
income 18 - 18 33 - 33 73 - 73
Other income 4 - 4 - - - 4 - 4
-------- -------- -------- -------- -------- -------- -------- -------- --------
83 130 213 213 - 213 396 - 396
Losses on held
at fair value
investments - (397) (397) - (642) (642) - (230) (230)
Expenses
Management
fees (10) (20) (30) (16) (32) (48) (33) (67) (100)
Other
operating
expenses (99) - (99) (101) - (101) (291) (97) (388)
VAT
recoverable
on investment
management
fees 230 254 484 - - - 95 193 288
Profit/(loss)
before
finance costs
and taxation 204 (33) 171 96 (674) (578) 167 (201) (34)
Finance costs
Zero dividend
preference
shares - (179) (179) - (262) (262) - (526) (526)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss)
before
taxation 204 (212) (8) 96 (936) (840) 167 (727) (560)
Taxation (5) - (5) (16) 9 (7) (78) - (78)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Profit/(loss)
after
taxation 199 (212) (13) 80 (927) (847) 89 (727) (638)
-------- -------- -------- -------- -------- -------- -------- -------- --------
Earnings per
Ordinary
share - basic
(pence) 0.56 (0.59) (0.03) 0.22 (2.59) (2.37) 0.25 (2.04) (1.79)
The Company does not have any income or expense that is not
included in profit/(loss) for the period, and therefore the
"Profit/(loss) for the period" is also the "Total comprehensive
income for the period" as defined in IAS 1 (revised).
All of the profit/(loss) 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
30 November 30 November At
2010 2009 31 May 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Non-current assets
Held at fair value investments 6,761 9,971 7,590
Current assets
Cash and cash equivalents 1,728 804 925
Other receivables 31 422 31
------------- ------------- ------------
1,759 1,226 956
------------- ------------- ------------
Current liabilities
Financial liabilities measured
at amortised
cost (156) (296) (168)
Zero dividend preference
shares - (4,162) -
------------- ------------- ------------
Total current liabilities (156) (4,458) (168)
------------- ------------- ------------
Net current assets/(liabilities) 1,603 (3,232) 788
------------- ------------- ------------
Total assets less current
liabilities 8,364 6,739 8,378
------------- ------------- ------------
Non-current liabilities
Zero dividend preference
shares (5,770) (4,162) (5,592)
------------- ------------- ------------
Total net assets 2,594 2,577 2,786
------------- ------------- ------------
Share capital and reserves
Called up Ordinary share
capital 357 357 357
Special reserve 17,395 17,395 17,395
Capital redemption reserve 12 12 12
Capital reserve - realised (13,531) (13,723) (13,926)
Capital reserve - unrealised (1,812) (1,608) (1,205)
Revenue reserve 173 144 153
------------- ------------- ------------
Equity shareholders' funds 2,594 2,577 2,786
------------- ------------- ------------
Net asset value per Ordinary
share - basic
(pence) 7.26 7.21 7.80
------------- ------------- ------------
Condensed Consolidated Statement of Changes in Equity
Capital Capital Capital
For the six
months ended Share Special Redemption Reserve Reserve Revenue
30 November
2010 Capital Reserve Reserve Realised Unrealised Reserve Total
(unaudited)
Net assets at GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
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 - - - 395 (607) 199 (13)
-------- -------- ----------- --------- ----------- -------- --------
Net assets at
30
November 2010 357 17,395 12 (13,531) (1,812) 173 2,594
-------- -------- ----------- --------- ----------- -------- --------
Capital Capital Capital
For the six
months ended Share Special Redemption Reserve Reserve Revenue
30 November
2009 Capital Reserve Reserve Realised Unrealised Reserve Total
(unaudited)
Net assets at GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
31 May 2009 357 17,502 12 (13,494) (910) 153 3,620
Return of
capital to
Ordinary
shareholders - (107) - - - - (107)
Dividends
paid and
declared
(note 6) - - - - - (89) (89)
Net
(loss)/gain
on ordinary
activities
after
taxation - - - (229) (698) 80 (847)
Net assets at
30
November 2009 357 17,395 12 (13,723) (1,608) 144 2,577
-------- -------- ----------- --------- ----------- -------- --------
Capital Capital Capital
Share Special Redemption Reserve Reserve Revenue
For the year
ended Capital Reserve Reserve Realised Unrealised Reserve Total
31 May 2010
(audited) GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Net assets at
31 May
2009 357 17,502 12 (13,494) (910) 153 3,620
Return of
capital to
Ordinary
shareholders - (107) - - - - (107)
Dividends
paid and
declared
(note 6) - - - - - (89) (89)
Net
(loss)/gain
on ordinary
activities
after
taxation - - - (432) (295) 89 (638)
Net assets at
31 May
2010 357 17,395 12 (13,926) (1,205) 153 2,786
-------- -------- ----------- --------- ----------- -------- --------
Condensed Consolidated Cash Flow Statement
Six months Six months
ended ended Year ended
30 November 30 November
2010 2009 31 May 2010
(unaudited) (unaudited) (audited)
GBP'000 GBP'000 GBP'000
Operating activities
Loss before tax (8) (840) (560)
Bad debt expense - - 87
Zero dividend preference shares
finance cost 179 262 526
Losses on investments held at
fair value through
profit and loss 397 642 230
Purchases of investments held
at fair value through
profit and loss - (49) (49)
Sales of investments held at
fair value through profit
and loss 562 86 2,878
Capitalised loan stock interest (130) - -
(Increase)/decrease in other
receivables - (5) 291
Decrease in other payables (18) (16) (129)
------------ ------------ ------------
Net cash inflow from operating
activities before
interest and tax 982 80 3,274
Tax paid - (9) (86)
------------ ------------ ------------
Net cash inflow from operating
activities 982 71 3,188
Financing activities
Dividends paid on Ordinary shares (179) (89) (89)
Return of capital to Ordinary
shareholders - (107) (107)
Return of capital to Zero dividend
preference
shareholders - (390) (3,386)
Net cash outflow from financing
activities (179) (586) (3,582)
Net increase/(decrease) in cash
and cash equivalents 803 (515) (394)
Cash and cash equivalents at
start of period 925 1,319 1,319
------------ ------------ ------------
Cash and cash equivalents at
end of period 1,728 804 925
------------ ------------ ------------
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 2010 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
2010 2009 31 May 2010
Income from investments GBP'000 GBP'000 GBP'000
Franked investment income 18 33 73
UK unfranked investment
income 59 180 314
------------ ------------ ------------
77 213 387
Other income
Deposit income 2 - 5
Other income 4 - 4
------------ ------------ ------------
Total income 83 213 396
------------ ------------ ------------
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 year to 31 May 2011 is 28%.
4. Operating expenses
During the period other operating expenses allocated to revenue
included a write-off of GBPnil (30 November 2009 - GBPnil, 31 May
2010 - GBP75 000) in respect of income previously recognised, which
is not anticipated to be recovered.
5. Return and net asset value per Ordinary share
30 November 30 November
2010 2009 31 May 2010
Net revenue attributable
to Ordinary shareholders
(GBP'000) 199 80 89
Net capital losses attributable
to Ordinary shareholders
(GBP'000) (212) (927) (727)
Equity shareholders' funds
(GBP'000) 2,594 2,577 2,786
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 earnings per Ordinary
share (p) 0.56 0.22 0.25
Capital earnings per Ordinary
share (p) (0.59) (2.59) (2.04)
------------ ------------ ------------
Total earnings per Ordinary
share (p) (0.03) (2.37) (1.79)
------------ ------------ ------------
Net asset value per Ordinary
share (p) 7.26 7.21 7.80
------------ ------------ ------------
6. Interim dividends
Six months Six months
to to Year ended
Ordinary dividends on equity 30 November 30 November
shares deducted from reserves 2010 2009 31 May 2010
are analysed below: GBP'000 GBP'000 GBP'000
Fourth interim dividend
for year ended 31 May 2009
- 0.25p - 89 89
Final dividend for the
year ended 31 May
2010 - 0.50p (2009 - nil) 179 - -
------------ ------------ ------------
179 89 89
------------ ------------ ------------
7. Transaction costs
During the period transaction costs of GBPnil were incurred on
purchases and sales of investments (30 November 2009 - GBPnil; 31
May 2010 - GBPnil).
8. Contingencies, guarantees and financial commitments
On 5 November 2007, the European Court of Justice ruled that
management fees should be exempt from VAT. HMRC has announced its
intention not to appeal against this case to the UK VAT Tribunal
and therefore protective claims which have been made in relation to
the Company will be processed in due course. The Company has not
been charged VAT on its investment management fees from 1 September
2007.
The Manager has refunded GBP1,043,000 to the Company for VAT
charged on investment management fees for the periods 1 January
1990 to 4 December 1996 and 1 January 2001 to 31 August 2007. The
sum of GBP271,000 for the period 1 January 2004 to 31 August 2007
was reflected in the financial statements for the year ended 31 May
2009 and the sum of GBP288,000 for the period 1 January 2001 to 31
December 2003 was reflected in the financial statements for the
year ended 31 May 2010. Receipts of GBP386 000 for the period 1
January 1990 to 4 December 1996 and an additional GBP98,000 for the
period 1 January 2001 to 31 December 2003 have been reflected in
these financial statements. These repayments have been allocated to
capital and revenue in line with the accounting policy of the
Company for the periods in which the VAT was charged. The timescale
for the receipt of interest due in respect of the principal
refunded remains uncertain and no account has been taken in these
financial statements of any such payment.
There are a number of other 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 (2009
- GBP48,000) of management fees were paid and payable, with a
balance of GBP13,000 (2009 - GBP19,000) being payable to AAM at the
period end.
The investment 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 2010 and 30 November 2009 has not
been audited.
The information for the year ended 31 May 2010 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
auditors.
11. This Half-Yearly Financial Report was approved by the Board
on 28 January 2011.
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 2011.
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
END
IR PGUWWGUPGGWR
Aberdeen Development Capital (LSE:AVC)
Historical Stock Chart
From Sep 2024 to Oct 2024
Aberdeen Development Capital (LSE:AVC)
Historical Stock Chart
From Oct 2023 to Oct 2024
