15 Jun 2009 07:00
15 June 2009
Albany Capital plc
("Albany Capital" or "the Company")
Interim results for the six months ended 31 March 2009
Albany Capital plc (ticker: ALB.L) is pleased to announce unaudited interim results for the six months ended 31 March 2009 which are based on the recognition and measurement principles of IFRS.
Summary of results:
Loss before tax for the six months ended 31 March 2009 of £3,145,882 (31 March 2008: profit of £727,316)
Consolidated net assets per share at 31 March 2009 of 39.0 pence (31 March 2008: 55.9 pence)
Consolidated cash reserves at 31 March 2009 of £1.16 million (31 March 2008: £8.96 million)
Chairman's Statement
I am pleased to report Albany Capital's interim results for the six months ended 31 March 2009. These interim financial statements have been prepared in accordance with the International Financial Reporting Standards requirements ("IFRS"), as they are part of the period covered by the Company's IFRS financial statement for the year ending 30 September 2009.
In the six months to 31 March 2009, the Company made a loss before tax of £3,145,882 (31 March 2008: profit of £727,316) and reported net assets per share of 39.0 pence (31 March 2008: 55.9 pence).
Due to the current economic climate and market conditions, there was a loss on investments at fair value as at 31 March 2009 of £2,882,411 (31 March 2008: Gain of £1,035,866).
The underlying performance of the Company's core investment portfolio, which is invested in accordance with the strategy outlined in the Company's annual report and accounts for the period ended 30 September 2008, has performed in-line with our expectations despite the challenging conditions placed on both the Chinese economy and the well documented external economic conditions.
The Company's core investment portfolio is structured around the creation of listed shell companies, which subsequently targets the acquisition of larger companies by a method of reverse takeover. The first of these, Vestpa Plc, came to AIM in June 2007 and later successfully completed the reverse takeover of Full Fortune Holdings PTE in December 2007. The business was subsequently renamed China Food Company Plc ("China Food Company") and is a leading producer of soya sauce, vinegar and bean paste from its operations in Shandong province in the Peoples Republic of China.
China Food Company has recently reported its full year results for 31 December 2008 announcing profit before tax of £7.51 million (2007: £7.52 million) on revenues of £38.2 million (31 December 2007: £25.3 million) an increase of 51 per cent on the prior year, with an EBITDA of £8.2 million (31 December 2007: £8.0 million). China Food Company was able to increase its sales volumes, increase prices and maintain profitability by improving both its inventory management and manufacturing efficiency during the period. Albany Capital has a holding of 20% in China Food Company. In their recent trading update released on 27th May 2009, China Food Company stated that due to current market conditions it does not expect results for 2009 to match those achieved in 2008.
Albany Capital's second cash shell, Ninety Plc, was listed on AIM in October 2007 and in September 2008 successfully completed the reverse takeover of a leading food preservatives group, Sorbic International Plc ("Sorbic International") which is also based in Shandong province. Sorbic International has recently reported its interim results for the six months period ended 31 March 2009 announcing profit before tax of £2.59 million (31 March 2008: £1.9 million), an increase of 36% on the prior year. Strong demand pushed production to its highest level for the first quarter and despite the global recessionary environment, it maintained favourable margins although these came under pressure due to destocking and increased levels of competition in the second quarter of the period. Sorbic International achieved revenues of £8.5 million (31 March 2008: £6.7 million) an increase of 26.4% on the prior year, with a Gross Profit Margin of 40.8% (31 March 2008: 35.6%). Albany Capital has a holding of 26% in Sorbic International Plc.
To date Albany has invested £8.36 million in its core investment portfolio. The net book value of this portfolio at the 31 March 2009 was £7.6 million (31 March 2008: £8.9 million).
In line with our Chinese strategy, Albany Capital continues to focus on identifying further investment opportunities in Shandong province, North Eastern China.
The Company's non-core investment portfolio had a net book value of £2.01 million (31 March 2008: £3.4 million) relative to a cost of £5.05 million (31 March 2008: £4.0 million) at 31 March 2009 and consists of investments held in Evolve Capital Plc (formerly Blue Oar Plc), Densitron Technologies Plc, Journey Group Plc (formerly Watermark Plc), China Evoline Plc (formerly ZTC Plc) and Brimac Carbon Services Limited (unquoted). It is our intention to eventually dispose of our holdings in all of these investments.
Albany Capital entered into an agreement with Hermes Financial Group (BVI) Ltd dated 6 February 2009. Albany Capital agreed to lend up to £1.75 million on a secured short term basis at an interest rate of 18% and drawdown fee of 3%. Security is by way of charges in Albany Capital's favour over 5,561,072 ordinary shares in Sorbic International Plc. £1.5 million of the loan (net of interest and drawdown fee) was transferred on 10 March 2009 which was used by Hermes to pay off an existing debt owed to Sorbic International Plc. The loan matures six months from drawdown. On 15 May 2009, £661,010 of the Hermes loan was repaid to Albany Capital.
The Company's consolidated cash reserves at the 31 March 2009 were £1.16 million (31 March 2008: £8.96 million) and as at 31 May 2009 were £1.75 million.
John McLean
Chairman
15 June 2009
Enquiries:
| Albany Capital John McLean, Chairman | tel: +44 (0)7768 031454 | |
| WH Ireland James Joyce | tel: +44 (0) 20 7220 1698 | |
| Hansard Group John Bick | tel: +44 (0) 20 7245 1100 |
Consolidated interim income statement
| | 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 |
| | £ | £ | £ |
| | (unaudited) | (unaudited) | (audited) |
| (Loss)/gains on investments at fair value through profit or loss | (2,882,411) | 1,035,866 | (746,887) | |||
| Investment income | - | 13,200 | 33,000 | |||
| Fee income | 92,413 | 194,482 | 419,065 | |||
| ------------------------- | -------------------- | ------------------------- | ||||
| Total Revenue | (2,789,998) | 1,243,548 | (294,822) | |||
| ------------------------- | -------------------- | --------------------------- | ||||
| Management expenses | (314,279) | (653,400) | (878,453) | |||
| Loss on disposal of operations | - | (38,134) | - | |||
| Share based payments | (99,870) | (203,723) | (314,423) | |||
| ------------------------- | -------------------- | ------------------------- | ||||
| Operating expenses | (414,149) | (895,257) | (1,192,876) | |||
| ------------------------- | -------------------- | ------------------------- | ||||
| Operating profit/(loss) | (3,204,147) | 348,291 | (1,487,698) | |||
| Finance income | 58,265 | 379,025 | 447,073 | |||
| ------------------------- | -------------------- | ------------------------- | ||||
| (Loss)/profit before tax | (3,145,882) | 727,316 | (1,040,625) | |||
| Taxation | (258,657) | (278,667) | 192,951 | |||
| ------------------------- | -------------------- | ------------------------- | ||||
| (Loss)/profit for the period | (3,404,539) | 448,649 | (847,674) | |||
| ==================== | ================ | ===================== | ||||
Attributable to:
| Equity holders of the parent | (3,404,539) | 470,500 | (847,647) |
| Minority interest | - | (21,850) | - |
| --------------------- | --------------------- | --------------------- | |
| (3,404,539) | 448,649 | (847,647) | |
| ================= | ================= | ================ |
Earnings per share:
| Basic and diluted (note 3) | (10.79) | 1.491 | (2.69) |
| ============== | ================= | ================= |
The comparative figures have been extracted from the unaudited 31 March 2008 interim financial statements and the audited 30 September 2008 financial statements.
Consolidated interim balance sheet
| 31 March 2009 | 31 March 2008 | 30 September 2008 | ||||||
| £ | £ | £ | ||||||
| (unaudited) | (unaudited) | (audited) | ||||||
| ASSETS | ||||||||
| Non-current assets | ||||||||
| Property, plant and equipment | 6,330 | 11,332 | 8,831 | |||||
| Deferred tax | - | 109,598 | 258,657 | |||||
| ------------------------- | ------------------------ | ------------------------- | ||||||
| 6,330 | 120,930 | 267,488 | ||||||
| ------------------------- | ------------------------ | ------------------------- | ||||||
| Current assets | ||||||||
| Financial assets at fair value through profit or loss | 9,601,824 | 9,001,288 | 12,484,235 | |||||
| Trade and other receivables | 1,676,752 | 117,573 | 292,663 | |||||
| Cash and cash equivalents | 1,161,934 | 8,958,358 | 2,800,597 | |||||
| -------------------------- | ------------------------ | ------------------------- | ||||||
| 12,440,510 | 18,077,219 | 15,577,495 | ||||||
| ------------------------- | ------------------------ | ------------------------- | ||||||
| Total assets | 12,446,840 | 18,198,149 | 15,844,983 | |||||
| ============ | ============ | ============= | ||||||
| LIABILITIES | ||||||||
| Current liabilities | ||||||||
| Trade and other payables | 145,369 | 159,959 | 238,843 | |||||
| Current tax liabilities | - | 375,760 | - | |||||
| ------------------------- | ------------------------ | ------------------------- | ||||||
| Total liabilities | 145,369 | 535,719 | 238,843 | |||||
| ------------------------- | ------------------------ | ------------------------- | ||||||
| Net assets | 12,301,471 | 17,662,430 | 15,606,140 | |||||
| ============= | ============ | ============= | ||||||
| EQUITY | ||||||
| Equity attributable to equity holders of the parent | ||||||
| Share capital | 7,890,090 | 7,890,090 | 7,890,090 | |||
| Share premium account | 7,939,812 | 7,939,812 | 7,939,812 | |||
| Shares to be issued | 672,642 | 462,072 | 572,772 | |||
| Retained earnings / (deficit) | (4,201,073) | 532,451 | (796,534) | |||
| ------------------------ | ------------------------- | ------------------------- | ||||
| Equity attributable to owners of the parent | 12,301,471 | 16,824,425 | 15,606,140 | |||
| Minority interest | - | 838,005 | - | |||
| ------------------------ | ------------------------- | ------------------------- | ||||
| Total equity | 12,301,471 | 17,662,430 | 15,606,140 | |||
| ============ | ============= | ============= | ||||
Consolidated interim statement of recognised income and expense
| 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 | ||
| £ | £ | £ | ||
| (unaudited) | (unaudited) | (audited) | ||
| (Loss)/profit for the period | (3,404,539) | 448,649 | (847,674) | |
| ----------------------- | ----------------------- | ---------------------- | ||
| Total recognised income and expense for the period | (3,404,539) | 448,649 | (847,674) | |
| ============ | ============ | =========== | ||
Attributable to:
| Equity holders of the parent | (3,404,539) | 470,500 | (847,674) |
| Minority interest | - | (21,850) | - |
| ------------------------ | ---------------------- | ---------------------- | |
| (3,404,539) | 448,649 | (847,674) | |
| ============ | =========== | =========== |
Consolidated interim cash flow statement
| 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 | |
| £ | £ | £ | |
| (unaudited) | (unaudited) | (audited) |
Cash flows from operating activities
| Cash used in operations | (1,710,130) | (528,770) | (562,256) |
| Purchase of investments held at fair value through profit and loss | - | (2,536,195) | (7,723,420) |
| Interest received | 71,467 | 483,587 | 521,502 |
| Dividends received | - | 13,200 | 33,000 |
| ----------------------- | --------------------- | --------------------- | |
| Net cash used in operating activities | (1,638,663) | (2,568,178) | (7,731,174) |
| ----------------------- | --------------------- | --------------------- |
Cash flows from investing activities
| Purchase of subsidiary undertaking | - | (2,223,379) | - |
| Cash acquired with subsidiary undertaking | - | 3,065,370 | - |
| Deemed disposal of subsidiary net of cash | - | (2,914,029) | - |
| Purchase of property, plant and equipment | - | (8,352) | (8,351) |
| ----------------------- | --------------------- | --------------------- | |
| Net cash (used in) / from investing activities | - | (2,080,390) | (8,351) |
| ----------------------- | --------------------- | --------------------- |
| Net (decrease) / increase in cash and cash equivalents | (1,638,663) | (4,648,568) | (7,739,525) |
| Cash and cash equivalents at beginning of period | 2,800,597 | 13,606,926 | 10,540,122 |
| ------------------------ | --------------------- | --------------------- | |
| Cash and cash equivalents at end of period | 1,161,934 | 8,958,358 | 2,800,597 |
| ============ | ========== | ========== |
Notes to the consolidated interim financial statements
1. General information
Albany Capital plc ('Albany Capital') is the Group's ultimate parent company. It is incorporated and domiciled in Great Britain. The registered address of Albany Capital is 17 Hanover Square, London, W1S 1HU. Its shares are listed on the AIM of the London Stock Exchange.
These consolidated interim financial statements have been approved for issue by the Board of Directors on 12 June 2009.
The financial information set out in this interim report does not constitute statutory accounts as defined in Section 240 of the Companies Act 1985. The Group's statutory financial statements for the year ended 30 September 2008, prepared under IFRS, have been filed with the Registrar of Companies. The auditor's report on those financial statements was unqualified and did not contain any statements under Section 237(2) of the Companies Act 1985.
2. Basis of preparation
These interim financial statements have been prepared in accordance with the accounting policies which are based on the recognition and measurement principles of IFRS in issue as adopted by the European Union (EU) and were adopted and effective at 31 March 2009.
These financial statements have been prepared under the historical cost convention, except for revaluation of certain financial instruments. These interim financial statements are presented in Pounds Sterling (£), which is also the functional currency of the Company. The interim financial statements have not been prepared in accordance with IAS 34.
The accounting policies have been applied consistently throughout the Company for the purposes of preparation of these interim financial statements. The Company's revised accounting polices under IFRS will be published in full in the financial statements for the year ending 30 September 2009.
Financial Assets
Financial assets are divided into the following categories:
• loans and receivables
• financial assets at fair value through profit or loss
• available-for-sale financial assets
Financial assets are assigned to the different categories on initial recognition, depending on the characteristics of the instrument and its purpose. A financial instrument's category is relevant for the way it is measured and whether any resulting income and expense is recognised in profit or loss or directly in equity.
Loans and receivables
Generally, Albany Capital recognises all financial assets using settlement day accounting. An assessment of whether a financial asset is impaired is made at least at each reporting date. All income and expense relating to financial assets are recognised in the income statement line item "finance income" or finance costs" respectively. Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortised cost using the effective interest rate method, less provision for impairment. Any change in their value is recognised in profit or loss. Albany Capital's trade and most other receivables fall into this category of financial instruments. Discounting, however, is omitted where the effect of discounting is immaterial.
Significant receivables are considered for impairment on a case-by-case basis when they are past due at the balance sheet date or when objective evidence is received that a specific counterparty will default. All other receivables are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other available features of shared credit risk characteristics, if any. The percentage of the write down is then based on recent historical counterparty default rates for each identified group.
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets that are either classified as held for trading or are designated by the entity to be carried at fair value through profit or loss upon initial recognition. For listed investments fair value is considered to be market bid price at the date of valuation.
An associate is an entity over which the group is in a position to exercise significant influence, but not control or jointly control, through the financial and operating policy decisions of the investee entity. In accordance with IAS 39, investments are measured at fair value, with changes in fair value recognised in profit and loss in the period which they occur.
Available-for-sale financial assets
Available-for-sale financial assets are non-derivative financial assets that do not qualify for inclusion in any of the other categories of financial assets. Albany Capital's available-for sale financial assets include non-quoted investments. Non-quoted investments are stated at fair value, based on appropriate valuation techniques as described in IAS 32.
All other available-for-sale financial assets are measured at fair value, with subsequent changes in value recognised in equity. Gains and losses arising from financial instruments classified as available-for-sale are only recognised in profit or loss when they are sold or when the investment is impaired. In the case of impairment, any loss previously recognised in equity is transferred to the income statement. Losses recognised in the income statement on equity instruments are not reversed through the income statement but charged to equity. Losses recognised in prior period consolidated income statements resulting from the impairment of debt securities are reversed through the income statement, if the subsequent increase can be objectively related to an event occurring after the impairment loss was recognised in profit or loss.
Cash and cash equivalents comprise cash on hand and demand deposits, together with other short-term, highly liquid investments that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value.
Deferred taxation
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are recognised for all temporary difference and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary difference can be utilised.
The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is no longer probable that sufficient taxable profits will be available to allow all or part of the asset to be recovered.
Fee Income
Revenue for transaction and management services are recognised in the accounting period in which the services are rendered, by reference to completion of the specific transaction, assessed on the basis of the actual service provided as a proportion of the total service to be provided.
Equity
Share capital is determined using the nominal value of shares that have been issued.
Additional paid-in capital includes any premiums received on the initial issuing of the share capital. Any transaction costs associated with the issuing of shares are deducted from additional paid-in capital, net of any related income tax benefits.
Equity-settled share-based employee remuneration is credited to the shares to be issued reserve until related stock options are exercised.
Retained earnings include all current and prior period results as disclosed in the income statement.
Dividend distributions payable to equity shareholders are included in "other short term financial liabilities" when the dividends are approved in General Meeting prior to the balance sheet date.
3. Earnings per share and net asset value per share
Basic and diluted earnings per share
The calculation of the basic earnings per share is based on the earnings attributable to ordinary shareholders divided by the average number of shares in issue during the year. There were no dilutive instruments in issue for all periods.
Reconciliations of the earnings and weighted average number of shares used in the calculations are set out below.
| 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 | |
| £ | £ | £ | |
| (unaudited) | (unaudited) | (audited) | |
| Profit/(loss) after tax | (3,404,539) | 470,500 | (847,674) |
| Weighted average number of shares | 31,560,359 | 31,560,359 | 31,560,359 |
| Basic and diluted earnings / (loss) per share (pence) | (10.79) | 1.491 | (2.69) |
| ============= | =========== | ========== | |
Net asset value per share
The group's undiluted basic net asset value per ordinary share is based on the net assets of the company at period end and on the weighted average number of shares for the period. There were no dilutive instruments in issue for all periods. Reconciliations of the net asset value and weighted average number of shares used in the calculations are set out below.
| 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 | |
| £ | £ | £ | |
| (unaudited) | (unaudited) | (audited) | |
| Net asset value | 12,301,471 | 17,662,430 | 15,606,104 |
| Weighted average number of shares | 31,560,359 | 31,560,359 | 31,560,359 |
| Basic and diluted net asset value per share (pence) | 38.98 | 55.9 | 49.45 |
| ============= | =========== | ========== | |
4. Dividends
The directors do not propose the payment of a dividend for the period.
5. Reconciliation of operation profits to cash flows from operations activities
| 6 months to 31 March 2009 | 6 months to 31 March 2008 | Year to 30 September 2008 | |
| £ | £ | £ | |
| (unaudited) | (unaudited) | (audited) |
Cash flows from operating activities
| Profit / (loss) after taxation | (3,404,539) | 448,649 | (847,674) |
| Adjustments for: | |||
| Depreciation, amortisation and impairment | 2,501 | 1,612 | 4,112 |
| Taxation recognised in the income statement | 258,657 | 278,667 | (192,951) |
| Interest income | (58,265) | (379,025) | (447,073) |
| Dividend income | - | (13,200) | (33,000) |
| Investment revaluation in the income statement | 2,882,411 | (1,035,866) | 746,887 |
| Loss on disposal of subsidiary | - | 38,134 | - |
| Stock based compensation | 99,870 | 203,723 | 314,423 |
| (Increase)/decrease in trade receivables | (1,397,291) | (701,117) | (224,665) |
| Increase in trade payables | (93,474) | 629,653 | 117,685 |
| ---------------------- | -------------------- | -------------------- | |
| Cash used in operations | (1,710,130) | (528,770) | (562,256) |
6. Warrants and Further Subscription Rights
At 31 March 2009, there were 647,500 warrants in issue with a right to subscribe for one ordinary share of 25p at 62.50p which may be exercised at any time up to 31 December 2010.
At 31 March 2009, there were 440,000 further subscription rights in issue with the right to subscribe for one ordinary share of 25p at 62.50p which may be exercised at any time up to 31 December 2010.
At 31 March 2009, the fair value was calculated for the warrants and the further subscription rights using the Black Scholes model. This resulted in a fair value of £nil.