ALB.L Regulatory News (ALB)

24 Jan 2008 07:01

Albany Capital PLC24 January 2008 Embargoed Release: 07:00hrs Thursday 24 January 2008 Albany Capital PLC Preliminary Announcement of Results for the year ended 30 September 2007 Albany Capital PLC ("the Company", "Albany Capital"), the activist investmentcompany is pleased to announce its Preliminary Results for the year ended 30September 2007 Key Highlights: • Moved into profit and new strategy implemented • Profit after tax of £61,952 (loss after tax of £254,120 for 2006) • Net assets 2.04p per share on a Company basis, (2.1 p per share for 2006) • Appointment of New Chairman John McLean • The appointment today of Christopher Mills as a non-executive Director • Cash raised in the year to 30 September 2007 of £12 million net of expenses • Launch of a cash shell Vestpa plc raising £3.1m net of expenses • Adoption of a strategic focus on China and on track to deliver further growth in net assets value per share. John McLean Chairman of Albany Capital, commented: "2007 was Albany Capital's first year of operation under new management anddirection and a period of transition as we have exited from most of our legacyinvestments and have put in place a strategy where we can use our skills tocreate value for our shareholders. The first results of the new strategy havebeen very successful with the announcement after the year end of the acquisitionof the China Food Company by way of a reverse takeover with our first cash shellVestpa PLC. Albany Capital now owns 20% of the enlarged group. We now haveanother cash shell, Ninety plc, where we will seek to repeat the success ofVestpa. We are pleased to report that since the year end, and as at 31 December 2007 ournet assets based on unaudited management information have increased to 2.41pence per share principally as a result of unrealised profit of £2.8m on our£4.1m investment in China Food Company representing 68% return on investment. Inaddition to £12m raised during the year ended 30 September 2007, we have acommitted facility for a further £6m agreed in December 2007. As at 31 December2007 we have in excess of £14m for further investment held in Albany Capital andin our subsidiary Ninety PLC. I am very pleased to announce today that Christopher Mills, a founding directorof JO Hambro Capital Management Limited, has agreed to join the Board and I lookforward to him playing an active role in our continued development. For 2008, we look forward to developing our Chinese strategy and seekingacquisitions where we can create value" Enquiries: John McLean, Chairman, Albany Capital +44 (0)203 178 4506 James Joyce, WH Ireland +44 (0) 207 220 1698 Adam Reynolds/John Bick, Hansard Group +44 (0) 207 245 1100 Albany Capital plc Chairman's Statement Overview I am pleased to report for the year ended 30 September 2007, Albany made aprofit after tax of £61,952, which compares to a loss of £254,120, for theprevious year. At the year-end, the net asset value per share for the Companywas 2.04p, which is a small decrease on 2006, however, as further describedbelow, the net asset per share based on unaudited management information hasincreased since the year-end following the flotation of China Food Company plc,and now stands, as of 31 December 2007, at 2.41p, which represents a net assetincrease of 19% or £3 million. Net asset value per share is calculated on thenet assets of the Company Balance Sheet. Strategy At the outset of the year, Albany initially focussed on pre-IPO investments andtaking minority interests in small UK companies. However, as the yearprogressed, it became apparent that although this market segment producedinvestment opportunities, the prospective returns and timescale did not meet ourinvestment criteria. Accordingly a fresh approach was adopted, which includedlooking at possible Chinese investments, where the Board has a good degree ofexpertise. The new strategy focuses on investments into mature growing companieswith high quality local management teams based in Peoples Republic of China ("PRC"). The Board will favour companies that have predictable earnings and cashflow and are significantly profitable at the time of investment. Albany is ableto provide local entrepreneurs with an attractive package of capital forinvestment and a path to liquidity via a reverse acquisition using one of itslisted cash shells. Following a number of visits to China, our new strategyadopted during the year resulted in our first investment after the year end.The investment was in a well established food manufacturing business based inShangdong province in the North East of the PRC, making soy sauce, vinegar, beanpaste and other food products. Following the reverse acquisition of thisbusiness into Vestpa plc, the company was renamed China Food Company PLC (ChinaFood). The original business had started trading in 1994 and last year reportedprofits before tax of £6.01 million. The company has a very experiencedinternational management team and it is currently building a new manufacturingfacility in order to increase capacity in line with future growth prospects forits products, particularly soy sauce where it is seeing increasing demand. Webelieve the future growth prospects for China Food are very positive and themanagement team is already exploring expansion plans into other provinces inaddition to Shandong province which is the PRC's second largest province with 92million people and a GDP in 2006 of US$274 billion. Following the investment in China Food, we are now seeking out additionalbusinesses in China in which it can make an investment through one of our cashshells. To ensure that there is both deal flow and local ability to assess the qualityof any prospective deal, Albany is at an advanced stage of negotiating aco-operation agreement with a business which has a presence in China. Furtherdetails of which will be announced as soon as an agreement is concluded. Board To reflect the above, various changes have been made to the Board, which haveseen the appointment of myself as Chairman, Simon Wharmby as non executiveDirector and Jeremy Milne as an interim finance director, and today, I ampleased to welcome onto the board, Christopher Mills. Christopher is a foundingdirector of JO Hambro Capital Management Limited and the Chief Executive andInvestment Manager of North Atlantic Smaller Companies Investment Trust PLC(NASCIT) and brings a wealth of experience and business acumen, which will helpAlbany in increasing its investment returns. Cash resources In order to fund the business, Albany raised £12.0m net of expenses during theyear, following the placing of new shares, and since the year end on 18December, 2007, announced that it had reached agreement to issue £6million ofredeemable convertible unsecured loan notes 2011 (Loan Notes) convertible at2.85p to Westminster Enterprises Limited, a related party and currentshareholder who holds 29.8% interest in Albany. As at 31 December based onunaudited management accounting information, Albany, after including the newLoan Notes and cash available in its subsidiary Ninety PLC, had approximately£14.8million of cash available for investment. After the issue of Loan Notes,Albany will have borrowings of £6 million repayable in 2011 unless converted into equity shares. Investments Investments made during the year, before the decision to focus on China Watermark PLC In June 2007 Albany Capital contributed £0.8m to a £8m Secured Fixed RateConvertible Bond issue for Watermark PLC. Watermark PLC represents asubstantial company in the airline services industry with revenues in the yearto 31 December 2006 of £93m. The group is currently undergoing a turnaround toprofitability. The loan is convertible to equity and pays interest at 15.5% perannum payable in the form of further bonds. The Bonds are convertible to equityat 20 pence per share. The implied market capitalisation of the company at timeof conversion would be £17.4m or 18% of 2006 sales. On a fully diluted basisAlbany Capital will own 4.7% of the equity in Watermark PLC. The investment issecured with a Guarantee and Debenture over all the assets of Watermark. Thisinvestment represents a structured transaction with the downside protection of aloan instrument but an equity upside if the turnaround is successful andWatermark returns to profitability. Watermark's activities include the provisionof catering, travel supplies and cabin management services to the internationalairline and travel industry. Densitron Technologies PLC During the year Albany Capital acquired shares in Densitron Technologies PLC andinvested £0.6m for 13.4% of the company. Since the year-end we have invested afurther £240,000, representing an additional 4.4%. Albany Capital is workingclosely with the company (Simon Wharmby joined the Densitron Board in December2007) to explore ways of realising value from its operating business DisplaySolutions Limited , its minority investment in Evervision Electronics Limited inTaiwan and investments in land at Blackheath. Densitron Technologies is a worldleading designer and manufacturer of information display systems. Blue Oar PLC Albany Capital acquired a 3.4% interest in Blue Oar PLC during the year at acost of £1.4m. At the year end, due to fall in share price, the Board has made aprovision of £230,000 against the value of this investment. Blue Oar is a nicheinstitutional investment banking business acting for small and mid capcompanies. ZTC Telecom PLC In early 2007 Albany Capital acquired a 5.8% stake in ZTC Communications PLC for£0.8m. The company makes mobile handsets in China and has a number of high endfeature phones for the domestic market. It is too early to tell how thisinvestment may perform but ZTC is positioned in a high growth market. We notethat this is not now regarded as a core investment as it would not meet ourinvestment criteria under our new strategy set out earlier. Investment developments since the year end Vestpa plc/China Food Company plc On 11 June, Albany listed its first shell company Vestpa plc ("Vestpa") on theAIM market raising £3.1m (net of expenses) of which Albany Capital contributed£1.7m. After the year end, Vestpa acquired Full Fortune Holdings PTE whosetrading subsidiaries comprise a large food manufacturing group in Shandongprovince, North Eastern China. The transaction was completed by way of a reverseacquisition to form the China Food Company which completed its admission on 6December 2007. Full Fortune Holdings PTE, owns Fuss Feed and Fu Rich, two foodmanufacturing companies based in Shandong province north eastern China. AlbanyCapital owns 20% of the enlarged group after the transaction. Since the year endand as at 31 December, 2007, Albany had made an unrealised gain of £2.812m on aninitial investment of £4.1million, representing an uplift 68.5%. China FoodCompany is a high value, high margin food manufacturing company with excitinggrowth trajectory and a pipeline of new products. In the year to December 2006,China Food Company produced net earnings of £4.4m on revenues of £19.6m. At thetransaction value of 50 pence per share the company is valued on an historicalprice earnings ratio of 7.5 times and we would anticipate some advance on thisas China Food Company delivers on its business plan. Ninety plc After the year end Albany successfully launched our second shell company NinetyPLC raising a further £3.1m (net of expenses) of which Albany Capitalcontributed £2.05m. Ninety PLC will look to undertake a further reverse takeovertransaction in 2008. Profit and Loss account Gains/ (losses) on Investments Albany made net gains on equity investments of £165,000 during the year (2006loss £233,000). This includes a net provision of £176,000 against the value ofinvestments held at the year end and net profits of £341,000 on the sale oflegacy equity investments sold during the year ended 30 September 2007. Netprofits on the sale of equity investments sold during year reflect the actualsale value less investment valuation as at 30 September 2006. Loss on disposal of loan notes During the year ended 30 September 2007 Albany disposed of loans made tocompanies in prior years for less their book valuation as at 30 September 2006.This resulted in losses arising on disposal of loan notes of £315,000. Management expenses In line with increased activity, raising further capital and undertaking furtherinvestments, management expenses have risen to £419,000 (2006 £145,000).Management expenses still represent less than 3 % of the year end net assets. Share based payments In March 2007 an unapproved share option scheme was put in place to rewardDirectors for increased share price performance. The provisions included inthe consolidated profit and loss account for the year ended 30 September 2007represents a non cash cost of £258,000 (2006 £nil). Corporate matters As part of our fresh approach, we will be proposing at the AGM, that our sharesbe consolidated, on a 1 for 25 basis; that the Company be allowed to purchaseits own shares for treasury and that the Board be given authority to issue up to10% of new shares, without seeking shareholder approval. Further, the Companywill be calling an EGM, which is expected to be in April, to allow shareholdersto approve a waiver of Rule 9 of the City Code in respect of WestminsterEnterprises Limited potential subscription to £6million Loan Notes. Outlook Albany Capital is starting to build a strong position in the market forinnovative financing solutions for entrepreneurial companies with the ability toleverage our capital using our special purpose listed shell companies. In 2007we have shown we can source a reverse acquisition candidate, execute atransaction and create value for our shareholders in the process. In addition wecontinue to be alive to opportunities with quoted and unquoted companies wherewe can unlock value by direct investment. We will, in the medium term be focussing our resources on investments in Asiawhere we can use our shell companies and expertise to create value. We lookforward to another positive year. John McLean Chairman 23 January 2008 Unaudited Profit and Loss Accountfor the year ended 30 September 2007 for continuing operations 2007 2007 2007 Existing Acquired Total 2006 £ £ £ £ Gains / (losses) on investments 164,729 - 164,729 (232,930) Loss on disposal of loan notes (314,999) - (314,999) - Dividends receivable 18,150 - 18,150 - Other fees 20,000 - 20,000 - Total income (112,120) - (112,120) (232,930) Management expenses (367,360) (51,521) (418,881) (145,453) Share-based payments (258,349) - (258,349) - Operating loss (737,829) (51,521) (789,350) (378,383) Profit on part disposal of subsidiary 74,666 - Interest receivable 756,776 136,321 Profit / (loss) on ordinary activities before taxation 42,092 (242,062) Taxation 12,505 (12,058) Profit/(loss) on ordinary activities after taxation 54,597 (254,120) Minority interest 7,355 - Profit/(loss) attributable to equity shareholders 61,952 (254,120) Earnings/(loss) per ordinary share Basic 0.008p (0.155)p There were no recognised gains and losses other than the results shown above. Unaudited Consolidated Balance Sheetas at 30 September 2007 2007 2006 2007 2006 Group Group Company Company £ £ £ £ Fixed assetsTangible fixed assets 4,592 - 4,592 -Investments - 25,000 1,739,000 25,000 4,592 25,000 1,743,592 25,000 Current assetsInvestments 3,625,826 1,326,773 3,625,826 1,326,773Debtors 358,885 38,208 362,363 38,208Cash and short term deposits at bank 13,606,926 2,456,870 10,540,122 2,456,870 17,591,637 3,821,851 14,528,311 3,821,851 Creditors: amounts falling due within one (201,462) (81,760) (185,712) (81,760)year Net current assets 17,390,175 3,740,091 14,342,599 3,740,091 Net assets 17,394,767 3,765,091 16,086,191 3,765,091 Capital and reservesCalled up share capital 7,890,090 1,779,256 7,890,090 1,779,256Share premium account 7,939,812 2,814,889 7,939,812 2,814,889Shares to be issued reserve 258,349 - 258,349 -Profit and loss account 61,952 (829,054) (2,060) (829,054) Shareholders' funds 16,150,203 3,765,091 16,086,191 3,765,091 Attributable to minority interest 1,244,564 - - - Attributable to equity shareholders' of the 17,394,767 3,765,091 16,086,191 3,765,091group Unaudited Consolidated Cash Flow Statement for the year 2007 2006ended 30 September 2007 £ £ Net cash outflow from operating activities (328,534) (167,754) Returns on investment and servicing of financeInterest received 509,253 136,321Dividends received 18,150 - 527,403 136,321 Taxation paid (12,234) (18,823) Capital expenditure and financial investmentPurchase of tangible fixed assets (6,652) -Sale of fixed asset investments 53,249 - 46,597 -Acquisitions and disposalPurchase of subsidiary undertaking (1,739,000) -Cash acquired with subsidiary undertaking 3,065,585 - 1,326,585 -Cash inflow / (outflow) before management of liquid 1,559,817 (50,256)resources and financing Management of liquid resourcesPurchase of current asset investments (4,409,628) (2,126,593)Sale of current asset investments 1,935,056 1,671,932Increase in short term deposits (6,500,000) - (8,974,572) (454,661)FinancingProceeds from issue of ordinary share capital 12,271,667 400,000Expenses of share issues (206,856) - 12,064,811 400,000 Increase / (decrease) in cash in the year 4,650,056 (104,917) 30 September Cash flow 30 September 2006 £ 2007 £ £Analysis of changes in net fundsCash at bank and in hand 2,456,870 4,650,056 7,106,926Liquid deposits - 6,500,000 6,500,000 2,456,870 11,150,056 13,606,926 2007 2006Reconciliation of net cash flow to movement in net funds £ £ Increase / (decrease) in cash for the year 4,650,056 (104,917)Cash inflow from change in liquid resources 6,500,000 - Movement in net funds in the year 11,150,056 (104,917)Net funds at 30 September 2006 2,456,870 2,561,787 Net funds at 30 September 2007 13,606,926 2,456,870 Notes to the Preliminary Announcementfor the year ended 30 September 2007 1. Basis of preparation The figures for the year ended 30 September 2007 are un-audited and are not fullfinancial statements. The figures for the years ended 30 September 2007 and 2006do not constitute statutory accounts within the meaning of Section 240 (5) ofthe Companies Act 1985. The figures for the year ended 30 September 2006 arenon-statutory and have been extracted from the financial statements filed withthe Registrar of Companies which contain an unqualified audit report and nostatements under Sections 237 (2) or 237 (3) of the Companies Act 1985. During the year the company adopted FRS 20: Share-based Payments and FRS 26:Financial Instruments. All other accounting policies are consistent with thoseapplied for the financial statements for the year ended 30 September 2006. The company has recognised an expense, measured at fair value, in respect ofshare options granted to employees in accordance with FRS 20. Since there wereno share option schemes in existence at 30 September 2006, no prior yearadjustment was required. Current asset investments held at the balance sheet date have been valued attheir fair value through the profit and loss account in accordance with FRS 26.For listed investments fair value is considered to be market bid price at thedate of valuation. At 30 September 2007, the majority of investments were inlisted companies. At 30 September 2006, the application of FRS 26 to theinvestment portfolio would not have resulted in a material difference and so noprior year adjustment has been made. 2 Earnings/ (loss) per share The calculation of basic earnings/ (loss) per ordinary share is based on theprofit/ (loss) on ordinary activities after tax and on the weighted averagenumber of ordinary shares in issue during the year. The profit (loss) and weighted average number of shares used in the calculationare set out in the table below: 2007 2006 Weighted average Earnings per Weighted average Loss per Profit number of shares share pence Loss number of shares share pence £ £ Basic Earnings/(loss) 61,952 731,443,899 0.008p (254,120) 163,624,264 (0.155)pper ordinary share There were no dilutive instruments in issue during either year. 3 Annual Report and Accounts and AGM The Annual Report and Accounts will be posted to shareholders and to the Companywebsite (www.alabanycapital.co.uk) on the 4 February. The AGM will be held on 27February. This information is provided by RNS The company news service from the London Stock Exchange