Today saw the release of the first half yearly report from Alexander David Investments plc, following its translation from ReGen Therapeutics Plc "ReGen", a healthcare company, into Alexander David Investments PLC an investment company.
The Chairman went on to make the following statement on the report. The loss for the six months ended 30 June 2011 was £623,000 (six months ended 30 June 2010: £234,000) of which £512,000 relates to discontinued operations comprising the costs of the demerger and the loss attributable to the Company's healthcare operations prior to the demerger. The loss attributable to ongoing operations was £111,000.
The Company had said, in its circular of 12 January 2011, 'Its proposed investing policy would target small cap and special opportunities with a current bias towards investments in the basic resources and oil and gas sectors predominately, but not exclusively on AIM. Such investment will focus on new and secondary issues but may also include some pre IPO investments.'
The Company has followed this policy but unfortunately the 18 February 2011 coincided almost completely with the top of the FTSE AIM All Share super sector Oil and Gas index - by 30 June 2011 the index had declined 20 per cent from 18 February 2011. However, a loss of £21,000 on the portfolio represents a fall of only 2.3 per cent on the initial capital sum attributed to the Company at 18 February 2011. The quoted investments which are held are valued at the market price and the pre IPO investment in Evergreen Oil is valued at its initial investment cost, as this was only made on 7 June 2011.
A major Post Balance Sheet event is reflected in Note 10, however, increasing the value of the Evergreen Oil investment. Briefly Note 10 deals with the reverse takeover of Argyll Consultancies Plc by Evergreen Oil Limited, which became Evergreen Oil Plc on the PLUS market on 22 July 2011. At this date the transaction valued the enlarged share capital at £4,738,043 which in turn values ADI's 5.42 per cent shareholding in Argyll at £256,802 against the original investment of £150,000, the carrying value in this statement, an excess over book value of £106,802. As at 17 August the market value is approximately £166,000 an uplift of £16,000.
The Company is reviewing its investment strategy in light of the problems in its stated market and indeed the current market turmoil. Investors may be assured that every quoted stock in the portfolio is reviewed daily and as the Directors have said in the circular of 12 January 2011 it is an investing company, but not necessarily in the natural resources sector.
Turning now to the administrative expenses of £90,000 - these are relatively small and shareholders should note that Directors salaries account for only 22 per cent of the total cost. We are trying to keep expenses as low as possible.
The times are extremely challenging, but a small fund has the advantage of nimbleness in this market and the Directors continue to be proactive.