REG - Logistics Dev Grp - Final Results for year ended 30 November 2022
31/03/2023 07:00
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RNS Number : 8504U Logistics Development Group PLC 31 March 2023
31 March 2023
Logistics Development Group plc
("LDG" or the "Company")
Final Results for year ended 30 November 2022
Logistics Development Group plc, the AIM listed investing company, announces
its audited final results for the year ended 30 November 2022.
Full year 2022 Results Summary
· For the year ended 30 November 2022, the Company reported an
underlying EBIT(1) of £1.1m (2021: EBIT of £84.6m, before exceptional income
of £0.1m) and a profit before tax of £1.1m (2021: profit before tax of
£84.7m).
· Following the disposal of GreenWhiteStar Acquisitions Limited and
its subsidiaries in the prior year, the Board, in conjunction with its
investment manager DBAY, reviewed a number of investment opportunities and
came to the conclusion that there were more attractive opportunities to create
shareholder value outside the narrow logistics focused investing policy
adopted in December 2020. Additionally, the Board were aware that the
Company's shares had been trading at a significantly discounted level to the
amount of available cash per ordinary share. Furthermore, the Board noted
that the Company's capital structure required attention.
· Therefore, on 14 January 2022, the Company announced the
publication of a circular containing details of proposed changes to the
Company's investing policy ("Investing Policy"), the undertaking of a share
buyback programme (the "Buyback") and a reduction of capital.
· On 31 January 2022, at a general meeting of the Company, the
Shareholders gave their approval for both a change to the Investing Policy and
implementation of the Buyback. At the same general meeting, the Board approved
steps for a reduction in capital to create available distributable reserves.
· The change to the Investing Policy was aimed at enabling the
Company to take advantage of a wider sphere of opportunities than those
offered previously from the original logistics focused policy. The revised
Investing Policy provides for investments primarily in undervalued companies.
· Pursuant to the Buyback, the Company acquired 140,441,180
ordinary shares in its own capital at an average price of £0.157 per share
between 25 February 2022 and 6 April 2022.
· Over the last financial year, we had the opportunity to welcome
Peter Nixon as a director to the Board, he is an experienced chartered
accountant and was appointed to the Board from 9 December 2021, replacing Saki
Riffner as a representative of DBAY.
The details of the two investments made during the period are listed below.
· On 7 March 2022, LDG acquired the entire share capital of Fixtaia
Limited ("Fixtaia"), a company incorporated in Jersey, for £1.00. Investments
of £30.0m and £3.0m were made in Fixtaia on 21 March 2022 and 30 November
2022 respectively. Via this investment in Fixtaia, LDG indirectly held an
equity interest of 1.74% in CareTech Holding PLC ("CareTech"), acquired at a
cost of £13.1m, which includes £883k of investment transaction fees, from
March 2022 until September 2022, when this investment was disposed of. The
disposal of 1,974,130 ordinary shares in CareTech for an aggregate
consideration of £14.8m achieved a profit of £1.7m.
· During the period, the Company acquired, via its
investment in Fixtaia, a total of 11,457,000 ordinary shares in Finsbury Food
Group plc (AIM:FIF) ("Finsbury Food"), representing 8.79% of its issued share
capital, for an aggregate consideration of £9.1m.
Commenting on the results, Adrian Collins, Chairman of Logistics Development
Group plc said: "We are pleased to report a year of progress for LDG during
which we have evolved our investment policy and have since made a number of
attractive investments. As we look ahead whilst there may be choppy waters, we
are confident we can navigate these and deliver attractive returns."
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
A copy of the full year results are also available to be viewed on, or
downloaded from, the Company's corporate website at www.ldgplc.com
IMA Amendment and Related Party Transaction
At a general meeting held on 31 January 2022, LDG shareholders approved a
broadening of the investing policy which, inter alia, allowed LDG to invest up
to 50 per cent. of the Company's net asset value in certain funds managed by
DBAY (the "DBAY Funds") and so in order to bring into effect the revised
investing policy a new investment management agreement (the "New IMA") was
entered into on 14 January 2022. In contrast to a direct investment, for an
investment into a DBAY Fund, a management/monitoring fee would have been
payable at the time of commitment, even if no investments had been made in the
underlying DBAY Fund.
In order to compensate LDG for this disconnect, the changes to the New IMA
included DBAY agreeing not to receive management or performance fees from LDG
in respect of funds committed to the DBAY Investment Funds by the Company
(ensuring no double charging), and that DBAY would cover certain corporate
costs, providing the Company with an amount which is equal to the Company's
reasonable corporate expenses in the given year, provided that such amount
shall not exceed the lower of: (i) £800,000; or (ii) the management fees in
respect of investments made and/or amounts committed by the Company which are
received by DBAY in the relevant year.
Whilst at the time of entering into the New IMA there was an intent to make an
investment in one or more DBAY Funds in the near term, this is now less likely
and no such investments have been made to date. Given the New IMA envisaged
payments being made on the basis of all management fees and no investment in
DBAY Funds have been made, the New IMA has been amended by way of an addendum
dated 30 March 2023, to clarify that, with effect from the beginning of the
current financial year, the maximum amount payable would not exceed the lower
of (i) £800,000; and (ii) amounts paid to DBAY in respect of investments in
DBAY Funds specifically, and not all management fees received by DBAY (the
"IMA Amendment"), which better reflects the spirit of the original
agreement.
Given DBAY is the Company's investment manager and its current interest, via
its managed funds, is more than 10 per cent. of the Company's issued share
capital, it is therefore a related party (as defined in the AIM Rules for
Companies). Consequently, the proposed IMA Amendment is deemed to be a related
party transaction for the purposes of Rule 13 of the AIM Rules for Companies.
For the purposes of the AIM Rules for Companies, the Independent Directors
(being all Directors save for Peter Nixon), having consulted with the
Company's Financial and Nominated Adviser, Strand Hanson Limited, consider the
terms of the proposed changes to the Existing Investment Management Agreement
to be fair and reasonable so far as its Shareholders are concerned.
For enquiries:
Logistics Development Group plc Via FTI Consulting
FTI Consulting +44 (0) 20 3727 1340
Nick Hasell
Alex Le May
Cally Billimore
Strand Hanson Limited +44 (0) 20 7409 3494
(Financial and Nominated Adviser)
James Dance
Richard Johnson
Abigail Wennington
Investec Bank plc +44 (0) 20 7597 5970
(Broker)
Gary Clarence
Harry Hargreaves
Letter from Chairman
Dear Shareholders
I am pleased to present the annual report and the audited financial statements
for Logistics Development Group plc ("LDG" or the "Company") for the year
ended 30 November 2022.
For the year ended 30 November 2022, the Company reported an underlying
EBIT(1) of £1.1m (2021: EBIT of £84.6m, before exceptional income of £0.1m)
and a profit before tax of £1.1m (2021: profit before tax of £84.7m).
At a general meeting held on 31 January 2022, shareholders approved a
broadening of the investing policy. This has allowed DBAY Advisors Limited
("DBAY"), LDG's investment manager, to invest in opportunities outside the
logistics sector, broadening the opportunity set available to LDG. On 10 March
2022, the Company announced its first investment under the new investing
policy, as amended after the general meeting held on 31 January 2022, in
CareTech Holdings PLC (AIM:CTH) ("CareTech"). Over the course of the financial
year, the Company purchased a total of 1,974.130 shares in CareTech . On 4
April 2022 a consortium formed by Sheikh Holdings Group (Investments Limited)
made a recommended all cash offer for CareTech at 750 pence per share. As a
result of the offer being effected, the Company has disposed of its entire
holding of CareTech shares.
Details of additional investments are listed in the review of the year on page
2 below.
LDG's share price has consistently been trading at a discount to the Company's
cash per share, and so the Board determined to initiate a further share
buyback program. The necessary approvals were obtained at a general meeting on
6 March 2023 and the further share buyback program will commence in due
course. Over the last financial year, we had the opportunity to welcome Peter
Nixon as a director to the Board, he is an experienced chartered accountant
and was appointed to the Board from 9 December 2021, replacing Saki Riffner as
a representative of DBAY.
Since its approval in January 2022, the Company has been implementing its
broader investing policy. The Board is confident that the Company's investment
manager, DBAY, will make good use of the funds over the years to come and
avoid the cathartic re-rating of many companies which will not be able to
transition from "Growth at any price" to profitability. I am reminded of the
great man, Warren Buffet's, sage words "You don't find out who's been swimming
naked until the tide goes out". I firmly believe that your investment manager
will be able to navigate through the choppy waters and reward shareholders
accordingly.
Finally, I would like to thank shareholders, old and new, for their continued
support.
Adrian Collins
Chairman
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
Business and financial review for the year ended 30 November 2022
Review of the year
Following the disposal of GWSA Group in the prior year, the Board, in
conjunction with its investment manager DBAY, reviewed a number of investment
opportunities and came to the conclusion that there were more attractive
opportunities to create shareholder value outside the narrow logistics focused
investing policy adopted in December 2020. Additionally, the Board were aware
that the Company's shares had been trading at a significantly discounted level
to the amount of available cash per Ordinary Share. Furthermore, the Board
noted that the Company's capital structure required attention.
Therefore, on 14 January 2022, the Company announced the publication of a
circular containing details of proposed changes to the Investing Policy, the
undertaking of a share buyback programme (the "Buyback") and a reduction of
capital.
On 31 January 2022, at a General Meeting of the Company, the Shareholders gave
their approval for both a change to the Investing Policy and the Buyback. At
the same General Meeting, the Board approved steps to a reduction in capital
to create available distributable reserves.
The change to the Investing Policy was aimed at enabling the Company to take
advantage of a wider sphere of opportunities than those offered previously
from the original logistics focused policy. The revised investing policy
provides for investments primarily in undervalued companies.
The aim of the Buyback was to address the fact that the Company's shares had
been trading at a significantly discounted level to the amount of available
cash per Ordinary Share. The Company obtained shareholder approval to acquire
up to 20% of the issued share capital as at the date of the General Meeting.
Pursuant to the Buyback, the Company acquired 140,441,180 Ordinary Shares in
its own capital at an average price of £0.157 per share between 25 February
2022 and 6 April 2022.
On 22 February 2022, the Company received approval from the High Court of
England and Wales to proceed with a Capital Reduction thereby creating
available distributable reserves.
The details of the two investments made during the period are listed below.
· On 7 March 2022, LDG invested £1.00 to acquire the entire share
capital of Fixtaia Limited ("Fixtaia"), a company incorporated in Jersey.
Further investments of £30.0m and £3.0m were made in Fixtaia on 21 March
2022 and 30 November 2022 respectively. Via this investment in Fixtaia, LDG
indirectly held an equity interest of 1.74% in CareTech, acquired at a cost of
£13.1m, which includes £883k of investment transaction fees, from March 2022
until September 2022, when this investment was disposed of. The disposal of
1,974,130 ordinary shares in CareTech for an aggregate consideration of
£14.8m achieved a profit of £1.7m.
· During the period, the Company acquired, via its investment in
Fixtaia, a total of 11,457,000 ordinary shares in Finsbury Food Group plc
(AIM:FIF) ("Finsbury Food"), representing 8.79% of its issued share capital,
for an aggregate consideration of £9.1m.
Changes to the Board
Peter Nixon, an experienced chartered accountant, was appointed to the Board
from 9 December 2021, replacing Saki Riffner as DBAY representative.
Subsequent events
· On 1 December 2022 an investment of €18.5m (c.£15.9m) was made
into Synsion TopCo, which is the private holding company of a group of
companies formed by DBAY specifically to invest in SQLI S.A. (ENXTPA:SQI)
("SQLI"). This investment was made by the Company via its subsidiary Fixtaia.
The investment into Synsion TopCo was initially made by way of an €18.5m
loan which has been converted into an approximate 11.1% equity interest in
Synsion TopCo (the "Company's Interest"). Subsequent to the aforementioned
purchase of SQLI shares, the Synsion Group has drawn on available debt
funding, as a result of which the implied equity value of the Company's
interest was re valued at c.€14.4m. Consequently, under the terms of an
agreement between Fixtaia and Synsion TopCo, Synsion TopCo has capitalised the
loan in return for the issue of the Company's Interest and made payment in
cash of c.€4.1m to Fixtaia.
· On 1 December 2022 the Company, via its subsidiary Fixtaia, began
acquiring shares in Alliance Pharma Plc ("Alliance"). Alliance is an
international healthcare group founded in 1996 and headquartered in the United
Kingdom. Alliance acquires, markets and distributes consumer healthcare and
prescription medicine products. To date, via the investment in Fixtaia, the
Company indirectly holds 33,763,047 shares, which is 6.25% of Alliance, for a
consideration of £19.1m
· At a general meeting held on 6 March 2023, the Company's
shareholders approved the commencement of a further share buyback and capital
reduction:
1) It is the intention to acquire Ordinary Shares in the market (the
"Further Buyback"), representing approximately 20% of the Company's issued
share capital, which the Board believes may serve to reduce the observed
discount to NAV per Ordinary Share. The Board, however, expects to limit the
total consideration for the Further Buyback to an aggregate of £15.0m.
Through the Further Buyback, the Company intends to implement a discount
management policy, targeting a share price discount to NAV per share of no
more than 15% in normal market conditions. The discount to NAV per share will
be calculated on the basis of the NAV per Ordinary Share figure last notified
by the Company via RIS.
2) The 140,411,180 ordinary shares of £0.01 each which were subject to
the buyback effected by the Company between 25 February 2022 and 6 April 2022
(the "Capital Reduction"), which was approved by shareholders on 6 March 2023,
was sanctioned by the High Court of England and Wales ("High Court") on 28
March 2023. The order of the High Court confirming the Capital Reduction, and
the statement of capital approved by the High Court in connection therewith,
was delivered to the Registrar of Companies on 28 March 2023. The Capital
Reduction will then become effective upon the registration of the Court order
by the Registrar of Companies.
Following the Capital Reduction, the issued share capital of the Company
consists of 561,764,720 ordinary shares of £0.01 each.
Financial performance
The results for the current year reflect the group structure as at 30 November
2022.
The Company has elected to measure its investments in its wholly owned
subsidiary Fixtaia as an equity investment at fair value through profit and
loss. The election is taken based on the Company being classified as an
investment entity per IFRS 10.
Had the Company not met the definition of an investment entity, it would be
required to prepare consolidated financial statements which involve presenting
the results and financial position of the Company and Fixtaia as those of a
single economic entity.
At the reporting date, the fair value ascribed to the investments was £34.3m
(2021: £2.2m) which reflects the current NAV of the underlying investment at
the reporting date (2021: valuation basis reflected the current value at the
reporting date in respect of guaranteed expected future cash flows). The
Directors have reviewed this valuation approach and consider it to be
appropriate.
Administrative expenses before exceptional items are on par with the prior
year at £1.0m (2021: £1.1m).
The Company's underlying EBIT(1) in the year was a profit of £1.1m (2021:
profit of £84.6m, before exceptional income of £0.1m) and statutory profit
before tax was £1.1m (2021: profit before tax of £84.7m). During the prior
year, the exceptional income of £0.1m comprised of a refund of VAT in
relation to historical transaction costs relating to the 2019 GWSA disposal.
Net debt
As at the reporting date, the Company has cash and cash equivalents of £79.1m
(2021: £131.9m). Related party transactions amounted to £0.161m (2021:
£Nil). See note 13.
Exceptional items
During the year there are no exceptional items to report.
Tax
For the years ended 30 November 2022 and 2021, the Company incurred tax
losses. The deferred tax asset of £0.6m (2021: £0.3m) was not recognised as
the Directors do not consider that there is sufficient certainty over its
recovery. The unrecognised asset can be carried forward indefinitely.
Dividends
The Company did not pay an interim dividend (2021: £Nil) and no final
dividend is being recommended (2021: £Nil).
Earnings per share
Underlying basic and diluted earnings per share are both 0.2p (2021:
underlying basic and diluted loss per share were both 12.1p). Statutory basic
and diluted earnings per share are both 0.2p (2021: statutory basic and
diluted loss per share were both 12.1p). See note 3 and 9.
Investment Policy and Strategy
The investment objective of the Company is to provide shareholders with
attractive total return achieved through capital appreciation and, when
prudent, shareholder distributions or dividends. The Directors believe that
opportunities exist to create significant value for shareholders through the
acquisition of, and the implementation of substantial operational improvements
in, businesses in the sectors outlined in the Company's Investing Policy.
The investing policy can be found on the website www.ldgplc
(http://www.ldgplc) .com.
DBAY is tasked with full authority to manage the Company's assets to deliver
the investment strategy set out below in accordance with its investing policy,
reporting to the Board on a regular basis.
The Investing Policy, approved by shareholders on 31 January 2022, states that
the Company will seek to achieve its investment objectives by making
investments within the following parameters:
● Characteristics: investment primarily in undervalued companies,
with a focus on companies that generate or have the potential to generate
significant cash flows, where there is a high degree of revenue visibility and
a strong and distinctive market position;
● Investment Type: investment in equity and equity related
products, in both quoted and unquoted companies, and in the DBAY Investment
Funds;
● Sectors: a broader range of sectors, such as business services
including, amongst others, logistics, distribution, technology services,
security and manufacturing, or in funds managed by DBAY which invest in the
aforementioned sectors;
● Geography: there is no geographical restriction but expected to
be primarily within the United Kingdom or the European Union;
● Ownership: will range from a minority position to 100%,
non-operating ownership; and
● Restrictions: a maximum of 50% of the Company's Net Asset Value
("NAV") at the time the relevant investment is made, using the latest
available management accounts of the Company, can be invested in DBAY
Investment Funds. Investments made outside of the DBAY Investment Funds will
be limited to 10% of NAV per investment (on the same basis), unless approved
by the Board.
In addition, DBAY had agreed that it will fund the Company's reasonable
corporate costs going forward.
Investment Management agreement amendments
At a general meeting held on 31 January 2022, shareholders approved a
broadening of the investing policy and so in order to bring into effect the
revised investing policy a new investment management agreement was entered
into on 14 January 2022. The changes were:
· DBAY will not receive management or performance fees from LDG in
respect of funds committed to the DBAY Investment Funds by the Company. Fees
will only be charged by the fund, to ensure there will be no double charging;
· DBAY have made a commitment to ensure that any DBAY Investment
Funds in which the Company invests will retain investment policies that are
substantially the same as the new investing policy of the Company;
· DBAY has made a commitment that it will provide the Company with
an amount which is equal to the Company's reasonable corporate expenses in the
given year, provided that such amount shall not exceed the lower of: (i)
£800,000; or (ii) the management fees in respect of investments made and/or
amounts committed by the Company which are received by DBAY in the relevant
year;
· DBAY will ensure that there is at all times a contingency amount
of at least £2.0m on the Company's balance sheet to cover any exceptional
expenses that may arise in the future; and
· the new investment management agreement was further amended by
way of an addendum dated 30 March 2023, to state that, with effect from the
beginning of the current financial year, the maximum amount payable would not
exceed the lower of (i) £800,000; and (ii) amounts paid to DBAY in respect of
investments in DBAY Funds specifically, and not all management fees received
by DBAY.
Annual general meeting
The Company intends to hold its Annual General Meeting on 3 May 2023 in
London. Further details will be set out in the Notice of Meeting to be sent to
shareholders in due course and published on our website www.ldgplc.com.
(1) Underlying EBIT is an alternative performance measure (see Note 3) and is
defined as profit/loss before interest and tax adding back exceptional items.
Company Statement of Comprehensive Income
for the year ended 30 November 2022
Year ended Year ended
30 November 2022
30 November 2021
Note £'000 £'000
Gain on investments measured at fair value through profit or loss - net 10 1,993 85,665
Other income 173 -
Net finance income 2,166 85,665
Administrative expenses: before exceptional items (1,017) (1,100)
Administrative expenses: exceptional items 5 - 90
Total administrative expenses (1,017) (1,010)
Profit before tax 1,149 84,655
Income tax charge 7 - -
Profit and total comprehensive income for the year 1,149 84,655
Earnings per share
Basic 9 0.2p 12.1p
Diluted 9 0.2p 12.1p
The accompanying notes form part of the financial statements.
Company Statement of Financial Position
as at 30 November 2022
30 November 2022 30 November 2021
Note £'000 £'000
Assets
Non-current assets
Investments at fair value through profit or loss 10 34,338 2,218
34,338 2,218
Current assets
Other receivables 11 179 114
Cash and cash equivalents 11 79,064 131,902
Amounts owed from related undertakings 173 -
79,416 132,016
Total assets 113,754 134,234
Current liabilities
Amounts owed to group undertakings 11 (652) -
Other payables 11 (404) (290)
(1,056) (290)
Total liabilities (1,056) (290)
Net assets 112,698 133,944
Equity
Called up share capital 12 5,618 7,022
Share premium account 12 - 157,476
Own treasury shares 12 (11) (857)
Retained earnings 12 107,091 (29,697)
Total shareholders' funds 112,698 133,944
The accompanying notes form part of the financial statements.
The Company Financial Statements on pages 23 to 35 were approved by the Board
of Directors on 30 March 2023 and were signed on its behalf by:
Adrian Collins
Director
30 March 2023
Company number 08922456
Company Statement of Changes in Equity
for the year ended 30 November 2022
Share capital Share premium Own treasury shares Retained earnings Total
£'000 £'000 £'000 £'000 £'000
Balance at 1 December 2020 3,793 146,002 (2,611) (114,075) 33,109
Profit for the year - - - 84,655 84,655
Issue of share capital 3,229 12,951 - - 16,180
Transfers - fund raise costs 2020 - (1,477) - 1,477 -
Transfers - - 1,754 (1,754) -
Balance at 30 November 2021 7,022 157,476 (857) (29,697) 133,944
Profit for the year - - - 1,149 1,149
Share premium reduction - (157,476) - - (157,476)
Transfer to retained earnings - - - 157,476 157,476
Share repurchase (note 12) (1,404) - - (21,046) (22,450)
Disposal of own shares (note 12) - - 846 (791) 55
Balance at 30 November 2022 5,618 - (11) 107,091 112,698
The accompanying notes form part of the financial statements
Company Cash Flow Statement
for the year ended 30 November 2022
Year ended Year ended
30 November 2022
30 November 2021
Note £'000 £'000
Cash flows from operating activities
Profit for the year 1,149 84,655
Adjustments for:
Gain on investments measured at fair value through profit or loss - net 10 (1,993) (85,665)
Changes in:
Increase in other receivables 11 (65) (86)
Increase/(decrease) in other payables 11 114 (1,652)
Net outflow from operating activities (795) (2,748)
Cash flows from investing activities
Dividends received 10 2,873 125,295
Purchase of investment 10 (33,000) (6,000)
Amounts owed from related undertakings 11 (173) -
Amounts owed to subsidiary 11 652 -
Net cash (outflow)/inflow from investing activities (29,648) 119,295
Cash flows from financing activities
Issuing share capital and share premium - 16,180
Share issue costs paid - (1,477)
Share repurchase 12 (22,450) -
Disposal of own shares 12 55 -
Net cash (outflow)/inflow from financing activities (22,395) 14,703
Net (decrease)/increase in cash and cash equivalents (52,838) 131,250
Cash and cash equivalents at the start of the financial year 131,902 652
Cash and cash equivalents at the end of the financial year 79,064 131,902
The accompanying notes form part of the financial statements
Notes to the Company Financial Statements
for the year ended 30 November 2022
1. Basis of accounting
Logistics Development Group plc (the "Company") is a public company limited by
shares and incorporated and domiciled in England, United Kingdom. Its
registered address is 4th Floor, 3 More London Riverside, London, SE1 2AQ.
Basis of preparation
The Financial Statements were prepared in accordance with International
Accounting Standards in conformity with the requirements of the Companies Act
2006 ("IFRS").
The Financial Statements are presented in pounds sterling, rounded to the
nearest thousand, unless otherwise stated.
As at 30 November 2022, the Company has one subsidiary. As the Company is
defined under IFRS10 Investment Entity, consolidation exemption allows the
measuring of controlling interests in another entity at fair value through
profit and loss.
The Financial Statements present Company only information for the current and
comparative periods.
The Financial Statements were prepared under the historical cost convention,
except for financial assets recognised at fair value through profit or loss,
which have been measured at fair value. The Company is not registered for VAT
and therefore all expenses are recorded inclusive of VAT.
Significant holdings in undertakings other than subsidiary undertakings
As at 30 November 2022 the Company had a significant holding in Fixtaia
Limited ("Fixtaia"), incorporated in Jersey. Fixtaia has 331 ordinary shares
in issue, which the Company holds entirely. Its registered address is 2nd
Floor, Gaspé House, 66-72 Esplanade, St Helier, JE1 1GH, Jersey.
Going concern
The Directors have a reasonable expectation that the Company has sufficient
resources to continue in operation for the foreseeable future, a period of at
least 12 months from the date of this report. The Directors have prepared a
cash flow forecast for a period of 15 months to March 2024 which indicates
that available funds significantly exceed anticipated expenditure.
Consequently, the Directors of the Company continue to adopt the going concern
basis of accounting in preparing the annual financial statements.
2. Significant accounting policies
(a) Fair value measurement - the fair value measurement of the Company's
investments utilises market observable inputs and data as far as possible.
Inputs used in determining fair value measurements are categorised into
different levels based on how observable the inputs used in the valuation
technique utilised are (the "fair value hierarchy"):
- Level 1: Quoted prices in active markets for identical items (unadjusted);
- Level 2: Observable direct or indirect inputs other than Level 1 inputs; and
- Level 3: Unobservable inputs (i.e. not derived from market data and may
include using multiples of trading results or information from recent
transactions).
The classification of an item into the above levels is based on the lowest
level of the inputs used that has a significant effect on the fair value
measurement of the item. Transfers of items between levels are recognised in
the period they occur.
(b) Financial instruments
- Financial assets - other receivables and amounts owed to related
undertakings. Such assets are recognised initially at fair value plus any
directly attributable transaction costs. Subsequent to initial recognition,
such assets are measured at amortised cost using the effective interest
method, less any impairment losses.
- Cash and cash equivalents - in the Statement of Financial Position, cash
includes cash and cash equivalents excluding bank overdrafts. No expected
credit loss provision is held against cash and cash equivalents as the
expected credit loss is negligible.
- Financial liabilities - other payables and amounts owed to related
undertakings. Such liabilities are initially recognised on the date that the
Company becomes party to contractual provisions of the instrument. The Company
derecognises a financial liability when its contractual obligations are
discharged, cancelled or expire. Such financial liabilities are recognised
initially at fair value less any directly attributable transaction costs.
Subsequent to initial recognition, these financial liabilities are measured at
amortised cost using the effective interest method.
- Share capital - Ordinary shares are classified as equity. Incremental costs
directly attributable to the issue of ordinary shares are recognised as a
deduction from equity, net of any tax effects.
(c) Exceptional items - items that are material in size or nature and
non-recurring are presented as exceptional items in the Statement of
Comprehensive Income. The Directors are of the opinion that the separate
recording of exceptional items provides helpful information about the
Company's underlying business performance. Events which may give rise to the
classification of items as exceptional include restructuring of business units
and the associated legal and employee costs, costs associated with business
acquisitions, impairments and other significant gains or losses.
(d) Alternative performance measures (APMs) - APMs, such as underlying
results, are used in the day-to-day management of the Company, and represent
statutory measures adjusted for items which, in the Directors' view, could
influence the understanding of comparability and performance of the Company
year on year. These items include non-recurring exceptional items and other
material unusual items.
(e) Tax - tax expense comprises current and deferred tax. Current tax and
deferred tax are recognised in profit or loss except to the extent that it
relates to items recognised directly in equity or in other comprehensive
income. Deferred tax assets are recognised only to the extent that it is
probable that future taxable profit will be available against which the
temporary differences can be utilised.
(f) Operating segments - the Company has a single operating segment on a
continuing basis, namely investment in a portfolio of assets.
(g) Fund raise costs - transaction costs incurred in anticipation of an
issuance of equity instruments are recorded as a deduction from the retained
earnings reserve in accordance with IAS 32 and the Companies Act 2006.
(h) Own shares reserve (Own Shares) - transfer of shares from the trust to
employees is treated as a realised loss and recognised as a deduction from the
retained earnings reserve.
(i) Employee Benefit Trust - The cost of the Company's shares held by the
Employee Benefit Trust (EBT) is deducted from equity in the Company balance
sheet under the heading own treasury shares. Any cash received by the EBT on
disposal of the shares it holds is also recognised directly in equity. Other
assets and liabilities of the EBT (including borrowings) are recognised as
assets and liabilities of the Company.
New and amended IFRS Accounting Standards that are effective for the current
year
In the current year, the Group has applied a number of amendments to IFRS
Accounting Standards issued by the International Accounting Standards Board
(IASB) that are mandatorily effective for an accounting period that begins on
or after 1 January 2022. Their adoption has not had any material impact on the
disclosures or on the amounts reported in these financial statements.
- Annual Improvements to IFRS Standards 2018-2020
(Amendments to IFRS 1, IFRS 9, IFRS 16 and IAS 41) (effective for periods
commencing on or after 1 January 2022); and
- References to Conceptual Framework (Amendments
to IFRS 3) (effective for periods commencing on or after 1 January 2022).
New and revised IFRS accounting standards in issue but not yet effective
Certain standards, amendments to, and interpretations of, published standards
have been published that are mandatory for the Group's accounting years
beginning on or after 1 January 2023 or later years and which the Group has
decided not to adopt early:
• IAS 1: Classifications of Liabilities as Current
or Non-Current (effective for periods commencing on or after 1 January 2023);
• IAS 1 and IFRS Practice Statement 2: Disclosure
of Accounting Policies (effective for periods commencing on or after 1 January
2023);
• IAS 8: Definition of Accounting Estimates
(effective for periods commencing on or after 1 January 2023); and
• IAS 12: Deferred Tax related to Assets and
Liabilities arising from a Single Transaction (effective for periods
commencing on or after 1 January 2023).
None of the above listed changes are anticipated to have a material impact on
the Group's financial statements.
Critical judgements in applying the Company's accounting policies
In applying the Company's accounting policies, the Directors have made the
following judgements that have the most significant effect on the amounts
recognised in the financial statements (apart from those involving
estimations, which are dealt with below) and have been identified as being
particularly complex or involve subjective assessments.
(i) Measurement of the investments -during the year, the company elected to
measure its investment in Fixtaia at fair value through profit and loss.
The strategy of the Company as an Investing Company is to generate value
through holding investments for the short to medium term. Therefore, the
Directors believe that the fair value method of accounting for the investment
is in line with the strategy of the Company.
Had the elections not been made, the investments in Fixtaia would have been
accounted for as a subsidiary undertaking in consolidated financial
statements.
(ii) Fair value of the investments - the Directors have recorded the current
year investment in Fixtaia at fair value. The fair value at the end of the
period has been calculated on the basis of the net assets of Fixtaia. The net
assets of Fixtaia mainly consist of an investment in a listed entity, together
with cash/cash equivalents. This listed investment is carried at the quoted
price as at 30 November 2022.
The Directors believe that this valuation approach represents the price the
Company would expect to receive in an orderly transaction between market
participants.
Key sources of estimation in applying the Company's accounting
policies
The Directors believe that there are no key assumptions concerning the future,
and other key sources of estimation uncertainty at the balance sheet date that
have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year.
3. Alternative performance measures reconciliations
Alternative performance measures ("APMs"), such as underlying results, are
used in the day-to-day management of the Company, and represent statutory
measures adjusted for items which, in the Directors' view, could influence the
understanding of comparability and performance of the Company year on year.
The reconciliation of APMs to the reported results is detailed below:
2022 2021
£'000 £'000
Profit before tax 1,149 84,655
Exceptional income - (90)
Underlying EBIT 1,149 84,565
2022 2021
(in thousands) (in thousands)
Weighted average number of Ordinary Shares - Basic 606,921 702,206
Weighted average number of Ordinary Shares - Diluted 606,921 702,206
Underlying Basic earnings per share for total operations 0.2p 12.0p
Underlying Diluted earnings per share for total operations 0.2p 12.0p
4. Employees and Directors
Staff costs and the average number of persons (including Directors) employed
by the Company during the year are detailed below:
2022 2021
£'000 £'000
Staff and Director costs for the Company during the year
Wages and salaries 276 250
Social security costs 22 19
298 269
Average monthly number of employees and Directors
Employees and Directors 4 4
A summary of Directors' remuneration (key management personnel) is detailed
below:
2022 2021
£'000 £'000
Emoluments, bonus and benefits in kind 276 194
Total Directors' remuneration 276 194
Remuneration of the highest paid Director is detailed below:
2022 2021
£'000 £'000
Emoluments, bonus and benefits in kind 96 93
5. Exceptional items
There were no exceptional items incurred during the reporting period. During
the prior year, the Company recognised exceptional income in relation to a VAT
refund of £90k associated with the disposal of GWSA.
6. Audit fees
During the year, the Company obtained the following services from the
Company's auditors, the costs of which (inclusive of VAT as the Company is not
registered for VAT) are detailed below:
2022 2021
£'000 £'000
Fees payable for the audit of the Company's annual financial statements 66 119
Audit-related assurance services - -
Total fees payable to Company's auditors 66 119
7. Income tax charge
The Company did not recognise current and deferred income tax charge or credit
(2021: £Nil). In 2022, the deferred tax asset of £578k (2021: £412k) was
not recognised as the Directors do not consider that there is sufficient
certainty over its recovery. The underlying tax losses can be carried forward
indefinitely.
The income tax charge for the year included in the statement of comprehensive
income can be reconciled to loss before tax multiplied by the standard rate of
tax as follows:
2022 2021
£'000 £'000
Profit before tax 1,149 84,655
Expected tax charge/(credit) based on a corporation tax rate of 19% (2021: 218 16,084
19%)
Effect of expenses not deductible in determining taxable profit 52 98
Effect of income not taxable in determining taxable profit (378) (16,276)
Unused tax losses for which no deferred tax asset has been recognised 108 94
Income tax charge - -
The current effective UK corporation tax rate for the financial year is 19%.
The UK corporation tax rate will now remain at 19% until 31 March 2023. From 1
April 2023, the main rate for corporation tax will increase to 25%, for
companies with profits over £250k, and a small profits rate will be
introduced for companies with profits under £50k.
8. Dividends
At the date of approving these Financial Statements, no final dividend has
been approved or recommended by the Directors (2021: £Nil).
9. Earnings per share
Basic earnings per share amounts are calculated by dividing profit for the
period attributable to ordinary equity holders of the Company by the weighted
average number of ordinary shares outstanding during the 12 months to the
period end.
Diluted earnings per share amounts are calculated by dividing the profit
attributable to ordinary equity holders of the Company by the weighted average
number of ordinary shares outstanding during the year plus the weighted
average number of ordinary shares that would be issued on conversion of all
the potentially dilutive instruments into ordinary shares. The Company has no
dilutive instruments to be included in the calculation.
2022 2021
£'000 £'000
Profit attributed to equity shareholders 1,149 84,655
2022 2021
(in thousands) (in thousands)
Weighted average number of Ordinary Shares - Basic 606,921 702,206
Weighted average number of Ordinary Shares - Diluted 606,921 702,206
Basic earnings per share for total operations 0.2p 12.1p
Diluted earnings per share for total operations 0.2p 12.1p
10. Investments at fair value through profit or loss
Alpha Persei Marcelos Fixtaia Total investments
Limited Limited Limited
£'000 £'000 £'000 £'000
1 December 2020 - 35,848 - 35,848
Additions during the year 6,000 - - 6,000
Change in fair value 287 85,378 - 85,665
Dividends (6,287) (119,008) - (125,295)
30 November 2021 - 2,218 - 2,218
Additions during the year - - 33,000 33,000
Change in fair value - 655 1,338 1,993
Dividends - (2,873) - (2,873)
30 November 2022 - - 34,338 34,338
During the prior year, the Company announced the disposal of its interest in
GWSA Group, held through its investments in Marcelos and Marcelos' wholly
owned subsidiary Alpha Cassiopeiae Limited. In the prior year, the disposal
resulted in the Company receiving a dividend of £6.3m from Alpha Persei
Limited and a dividend of £119.0m from Marcelos. These dividends were
considered to be a return of capital and were offset against the carrying
value of the investment. As at 30 November 2021, the Company's investment in
Marcelos was revalued to £2.2m as a result of a dividend proposed to be paid
to the Company from Marcelos during 2022.
During the current year, the dividend of £2.2m was received from Marcelos, as
well as a further dividend of £655k. Upon the advice that the further
dividend of £655k was to be received, the investment in Marcelos was revalued
to £655k, resulting in a revaluation gain. These dividend payments totalling
of £2.9m were considered to be a return of capital and have been offset
against the carrying value of the investment, resulting in an investment of
£nil as at 30 November 2022.
On 7 March 2022, the Company acquired 100% of the share capital, consisting of
1 share of £1.00, of Fixtaia Limited ("Fixtaia"), a company incorporated in
Jersey, for consideration of £1.00. On 21 March 2022, the Company purchased
300 additional shares in Fixtaia for cash consideration of £30.0m to enable
Fixtaia to buy shares in CareTech Holdings for a total consideration of
£13.1m. On 28 September 2022, the shares in CareTech Holdings were disposed
of, resulting in a realised profit of £1.7m.
On 18 August 2022, through Fixtaia, the Company began to acquire shares in
Finsbury Food. As at 30 November 2022 11,457,000 shares in Finsbury Food were
held, for a total consideration of £9.1m.
On 28 November 2022, the Company invested a further £3.0m in Fixtaia for the
allotment of 30 additional shares which were subsequently allotted on 7
December 2022.
As at 30 November 2022, the investment in Fixtaia was revalued to £34.3m as
per the net asset value of Fixtaia, resulting in a net revaluation gain of
£1.3m.
11. Financial assets and liabilities
2022 2021
£'000 £'000
Financial assets at fair value through the profit or loss
Investments (see note 10) 34,338 2,218
Financial assets at amortised cost
Amounts owed by related undertakings (see note 13) 173 -
Other receivables 179 114
Total financial assets 34,690 2,332
Financial liabilities at amortised cost
Amounts owed to related undertakings (see note 13) (652) -
Other payables (404) (290)
Total financial liabilities (1,056) (290)
Cash and cash equivalents 79,064 131,902
Net funds 79,064 131,902
All financial assets and liabilities can be liquidated within one year. The
fair value of those assets and liabilities approximates their book value.
Other receivables represent receivables and prepayments. Other payables
include accruals of £295k (2021: £216k).
The Company's overall risk management programme focuses on reducing financial
risk as far as possible and therefore seeks to minimise potential adverse
effects on the Company's financial performance. The policies and strategies
for managing specific financial risks are summarised as follows:
Liquidity risk
The Company finances its operations by equity. The Company undertakes
short-term cash forecasting to monitor its expected cash flows against its
cash availability. The Company also undertakes longer-term cash forecasting to
monitor its expected funding requirements in order to meet its current
business plan.
Credit risk
The Company's principal exposure to credit risk is in the amounts owed by
related undertakings. There are no related undertakings in the current year.
Capital management
Capital comprises share capital of £5.6m (2021: £7.0m) and share premium of
£Nil (2021: £157.5m).
12. Capital and reserves
No of Called up share Share
shares capital premium account
'000 £'000 £'000
Ordinary shares of 1p each in issue at 30 November 2021 702,206 7,022 157,477
Ordinary shares of 1p each in issue at 30 November 2022 561,765 5,618 -
All of the ordinary shares in issue referred to in the table above were
authorised and are fully paid.
During February 2022, there was a reduction in share premium of £157.5m, and
this was transferred to retained earnings, resulting in share premium of £Nil
as at the end of 2022.
Share repurchase
During March and April 2022, the Company repurchased a total of 140,441,180 of
its shares from shareholders and these were subsequently cancelled, resulting
in share capital of £5.6m from 30 April 2022 onwards. The shares were
purchased for a premium, and transaction costs were incurred, resulting in a
reduction of retained earnings of £21.0m.
Own treasury shares
Included in the total number of ordinary shares outstanding above are 6,708
(2021: 535,440) ordinary shares held by the Company's employee benefit trust.
The ordinary shares held by the trustee of the Company's employee benefit
trust pursuant to the SIP are treated as Own shares in the Company's Balance
Sheet in accordance with IAS 32.
In June 2021, the Company disposed of 528,732 Own Shares, however this was not
reflected in the accounts at the time. As this error of omission is deemed to
be immaterial, a prior period adjustment has not been made and the disposal
has been recognised as at the current year end, resulting in a reduction of
Own Shares of £846k. The shares were sold for a lower price than their cost,
and as such the disparity between the cost and the sales price has been
recognised in retained earnings of £791k. The balance of Own Shares as at 30
November 2022 is 6,708 shares held at a cost of £1.60 per share.
13. Related party transactions
Transactions with related parties Amounts owed by related parties Amounts owed to related parties
2022 2022 2022
£'000 £'000 £'000
Related party
DBAY Advisors Limited 161 173 -
Transactions with group undertakings Amounts owed by group undertakings Amounts owed to group undertakings
2022 2022 2022
£'000 £'000 £'000
Group undertaking
Fixtaia Limited - - (652)
During the year, the Company generated income from related party DBAY Advisors
Limited in the form of a monitoring fee of £173k. This amount was outstanding
as at 30 November 2022. Also during the year, the Company reimbursed DBAY
Advisors Limited £12k for expenses it paid on the behalf of the Company.
The amount due to Fixtaia as at 30 November 2022 of £652k represents the
outstanding consideration payable for the Company's investment in Fixtaia.
During the year, Fixtaia incurred performance fee of £352k from DBAY Advisors
Limited, of which £195k are outstanding at the year end.
During the prior year, the Company settled the amount due to related party
GWSA as at the prior year end, for the value £1.2m. The Company did not enter
into any other related party transactions.
14. Capital commitments
At 30 November 2022, the Company had no commitments (2021: £Nil).
15. Contingent liabilities
At 30 November 2022, the Company had no contingent liabilities (2021: £Nil).
16. Subsequent events
On 1 December 2022, an investment of €18.5m (c.£15.9m) was made into
Synsion TopCo, which is the private holding company of a group of companies
formed by DBAY specifically to invest in SQLI S.A. (ENXTPA:SQI) ("SQLI"). This
investment was made by the Company via its subsidiary Fixtaia. The investment
into Synsion TopCo was initially made by way of an €18.5m loan which has
been converted into an approximate 11.1% equity interest in Synsion TopCo (the
"Company's Interest"). Subsequent to the aforementioned purchase of SQLI
shares, the Synsion Group has drawn on available debt funding, as a result of
which the implied equity value of the Company's Interest was re valued at
c.€14.4m. Consequently, under the terms of an agreement between Fixtaia
and Synsion TopCo, Synsion TopCo has capitalised the loan in return for the
issue of the Company's Interest and made payment in cash of c.€4.1m to
Fixtaia.
On 1 December 2022, the Company, via its subsidiary Fixtaia, began acquiring
shares in Alliance Pharma Plc ("Alliance"). Alliance is an international
healthcare group founded in 1996 and headquartered in the United Kingdom.
Alliance acquires, markets and distributes consumer healthcare and
prescription medicine products. To date, via the investment in Fixtaia, the
Company indirectly holds 33,763,047 shares, which is 6.25% of Alliance, for a
consideration of £19.1m.
At a general meeting held on 6 March 2023, the Company's shareholders approved
the commencement of a share buyback and capital reduction:
1) It is the intention to acquire Ordinary Shares in the market (the
"Further Buyback"), representing approximately 20% of the Company's issued
share capital, which the Board believes may serve to reduce the observed
discount to NAV per Ordinary Share. The Board, however, expects to limit the
total consideration for the Further Buyback to an aggregate of £15.0m.
Through the Further Buyback, the Company intends to implement a discount
management policy, targeting a share price discount to NAV per share of no
more than 15% in normal market conditions. The discount to NAV per share will
be calculated on the basis of the NAV per Ordinary Share figure last notified
by the Company via RIS.
2) The 140,411,180 ordinary shares of £0.01 each which were subject to
the buyback effected by the Company between 25 February 2022 and 6 April 2022
(the "Capital Reduction"), which was approved by shareholders on 6 March 2023,
was sanctioned by the High Court of England and Wales ("High Court") on 28
March 2023. The order of the High Court confirming the Capital Reduction, and
the statement of capital approved by the High Court in connection therewith,
was delivered to the Registrar of Companies on 28 March 2023. The Capital
Reduction will then become effective upon the registration of the Court order
by the Registrar of Companies.
Following the Capital Reduction, the issued share capital of the Company
consists of 561,764,720 ordinary shares of £0.01 each.
GLOSSARY
Term Definition
Accounts The financial statements of the Company
Admission The admission of the issued ordinary shares in the Company admitted to trading
on AIM that became effective on 31 December 2020
AGM Annual general meeting of the Company
AIM Alternative Investment Market of the London Stock Exchange
AIM Rules The AIM Rules for Companies published by the London Stock Exchange from time
to time (including, without limitation, any guidance notes or statements of
practice) which govern the rules and responsibilities of companies whose
shares are admitted to trading on AIM
AIM Investing Company An Investing Company as defined by the AIM rules
APMs Alternative Performance Measures
Board The Board of Directors of the Company
Company Logistics Development Group plc, a public limited company incorporated in
England and Wales with registered number 08922456
DBAY DBAY Advisors Limited and/or any fund(s) or entity(ies) managed or controlled
by DBAY Advisors Limited as appropriate in the relevant context
Directors The Directors of the Company as at the date of this document, as identified on
page 8
EPS Earnings per share
Fixtaia Fixtaia Limited, a company incorporated in Jersey (company no. 140806), whose
registered office is at 2nd Floor, Gaspé House, 66-72 Esplanade, St. Helier,
JE1 1GH, Jersey
FY21 Financial Year ended 30 November 2021
FY22 Financial Year ended 30 November 2022
GWSA
GWSA Group
HY21 Six month period ended 31 May 2021
HY22 Six month period ended 31 May 2022
IAS International Accounting Standards
IFRS International Financial Reporting Standards
Investment Management Agreement An investment management agreement entered into between the Company and DBAY,
pursuant to which DBAY has been appointed as the Company's investment manager
Investing Policy The Company's investing policy more particularly set out on pages 4 and 5
Marcelos Marcelos Limited, a company incorporated on the Isle of Man (company no.
016829v), whose registered office is at First Names House, Victoria Road,
Douglas, Isle of Man, IM2 4DF
Ordinary Shares/Shares Ordinary shares of £0.01 each in the capital of the Company
RFC QCA
QCA Governance Code QCA Corporate Governance Code for Small and Mid-Size Quoted Companies
published by the QCA
SIP Share Incentive Plan
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