Mountcashel PLC - Interim Results
30 July 1998 - 6:31PM
UK Regulatory
RNS No 0072p
MOUNTCASHEL PLC
30th July 1998
INTERIM REPORT
Six months to 30 June 1998
Chairman's Statement
I am able to report that the first half of 1998 proved to be a
varied six months with some positive performance in the
portfolio.
Our investment strategy, as explained in the Investment Review
in the 1997 Annual Report, remains constant and, as stated, we
have monitored much more closely prevailing market valuations
of our investments which, in some cases, has caused us to
realise some profits.
Net assets at 30 June 1998, including net unrealised gains,
were 129.5 pence per share. This is an increase of 17 pence per
share or 15% on the net asset position at 31 December 1997.
The result for the six months to 30 June 1998 was a profit of
#800,800 or 10.5 pence per share.
In terms of changes in the portfolio there has been, what we
consider to be, a fairly high level of activity.
Firstly Cantab Pharmaceuticals plc, where 18% of our holding
was sold in the period under review, and the balance disposed
of earlier this month. Whilst there are no particular concerns
over the ability of Cantab to develop revenue generating
products, we have disposed of this holding as we believe that
the funds may be able to show better returns invested
elsewhere.
Wiggins continued to perform well and enabled us to realise
some profits, again for reinvestment elsewhere. We remain firm
holders in Wiggins who have some potentially interesting
projects at varying stages of negotiation.
Xaar, the inkjet technology business, which floated towards the
end of 1997, performed well, but we believe has much more
potential both in terms of the office printer market and in the
more varied industrial and commercial market. The business
will soon be housed in purpose built accommodation with its own
state of the art manufacturing facility. We have taken a small
amount of profit on Xaar merely to provide the necessary funds
for other opportunities.
Finally, on the disposals side, we have sold our holding in
Innovative Technologies. Following the previously mentioned
management changes we concluded that the business was unlikely
to achieve the demanding levels of return we are looking for
and that the funds might better be utilised elsewhere.
With the funds realised from the above we have added to our Key
Investments an interest in Internet Technology Group plc which,
as the name suggests, provides Internet related services.
These include the dial up business of Global Internet, the
corporate internet and intra-networking business of G X
Networks and recent joint venture with a US based company
called Wave. We believe this company has substantial growth
ahead of it.
As well as this newcomer we have raised our holdings in
Rackwood Mineral Holdings plc, Redstone Telecom plc and Utility
Cable plc.
Rackwood is a relatively low volume coal producer, with
interests in both the UK and USA. We doubled our stake in the
business in the belief that the management will be able to
generate good returns out of its existing assets in the UK and
abroad.
Redstone Telecom, currently our only unquoted investment,
successfully raised additional capital at a 70% premium to our
original cost and is continuing to develop its range of
services and infrastructure. We were able to acquire a further
695,000 shares from an existing investor at the fundraising
price.
Utility Cable was one of the businesses that experienced a
major problem last year. We have now had an opportunity to meet
with the new management and understand their strategy moving
forward. This led us to believe that not only should we hold
our existing stake but also that we should use this opportunity
to acquire a further stake at depressed prices. We purchased a
further 4,500,000 shares.
In the rest of the portfolio there have been few changes worthy
of note except for the continued decline in confidence and
therefore values in the biotechnology sector and a very
disappointing performance from Solvera (formerly OMI
International). Solvera has taken longer than expected to
restructure and reposition, but we believe there is now light
at the end of the tunnel. Xenova, the subject of our in depth
example in the 1997 Annual Report has gone down in value and is
now at 55% of our original cost. We will present an in depth
review of our valuation of this in the 1998 Annual Report.
The first six months of 1998 has been a period of recovery for
the portfolio, after the disappointing performance in the
second half of 1997. This must however be viewed with a
healthy degree of caution, particularly in the light of recent
performance of small companies in the stock market. The risks
of investing in smaller and less liquid shares are ever
present.
Thomas Vaughan
Chairman
30 July 1998
Consolidated Profit and Loss Account
Unaudited Unaudited Audited
Six Year
Six months to ended
months 30 June 31
to 1997 December
30 June #'000 1997
1998 #'000
#'000
Profit/(loss) on sale of 878.7 (34.3) 158.0
investments
Investment income 34.9 51.2 80.6
________ ________ ________
Total income 913.6 16.9 238.6
Provision for permanent
diminution in value of fixed - - (1,034.2)
asset investments
Management expenses (126.0) (86.4) (191.0)
_______ ________ ________
Profit/(loss) on ordinary
activities before interest
Interest receivable 787.6 (69.5) (986.6)
Interest payable 15.6 - -
(2.4) (16.0) (25.3)
________ ________ ________
Profit/(loss) on ordinary
activities before and after 800.8 (85.5) (1,011.9)
taxation ======= ======= =======
Earnings/(loss) per share - 10.58 (1.13) (13.37)
pence ======= ======= ========
Balance Sheet
Unaudited Unaudited Audited
Six Year
Six months to ended
months 30 June 31
to 1997 December
30 June #'000 1997
1998 #'000
#'000
Fixed assets
Tangible assets 1.7 3.2 2.5
Investments 7,046.9 7,962.2 6,512.6
_______ ________ ________
7,048.6 7,965.4 6,515.1
_______ ________ ________
Current assets
Debtors 544.5 355.5 98.3
Creditors: Amounts
falling due within (504.6) (1,106.9) (325.8)
one year _______ ________ ________
Net current 39.9 (751.4) (227.5)
assets/(liabilities) _______ ________ ________
7,088.5 7,214.0 6,287.6
======= ======= =======
Capital and
reserves (equity
and non-equity)
Called up share
capital 3,785.5 3,785.5 3,785.5
Share premium 757.9 757.8 757.8
Other reserves 2,743.5 2,743.5 2,743.5
Profit and loss
account (198.4) (72.8) (999.2)
------- ------- -------
Shareholders' funds 7,088.5 7,214.0 6,287.6
======= ======= =======
Net assets per 93.6 95.3 83.1
share - pence ======= ======= =======
Shareholders funds
(incorporating net unrealised
gains on investments) #'000 #'000 #'000
Shareholders funds - as above 7,088.5 7,214.0 6,287.6
Net unrealised gains on 2,714.5 2,455.0 2,230.7
investments ________ ________ ______
9,803.0 9,669.0 8,518.3
======= ======= ======
Net assets per share - pence
(incorporating net unrealised 129.5 127.7 112.5
gains) ====== ======= =======
Consolidated Cash Flow Statement
Unaudited Unaudited Audited
Six Six months Year
months to to ended
30 June 30 June 31
1998 1997 December
#'000 #'000 1997
#'000
Net cash outflow from (564.5) (119.9) (193.1)
operating activities ________ ________ ________
Returns on investment and
servicing of finance
Interest received 15.6 - -
Interest paid (6.3) (16.0) (23.9)
Income from fixed asset 34.9 41.0 75.5
investments ________ ________ ________
44.2 25.0 51.6
________ ________ ________
Capital expenditure and
financial investments
Purchase of tangible fixed - (1.9) (1.9)
assets
Purchase of fixed asset
investments (2,452.5) (986.5) (2,195.8)
Sale of fixed asset
investments 2,852.5 971.7 2,442.4
________ ________ ________
400.0 (16.7) 244.7
________ ________ ________
Cash (outflow)/inflow before
management of liquid resources (120.3) (111.6) 103.2
and financing ________ ________ ________
Financing
Issue of shares 0.1 - -
________ ________ ________
0.1 - -
________ ________ ________
(Decrease)/Increase in cash in (120.2) (111.6) 103.2
the year ======= ======== ========
Notes to the Accounts
1 Basis of preparation
The unaudited accounts for the six months ended 30 June 1998 do
not constitute statutory accounts.
The profit and loss account, balance sheet and cash flow
statement have been prepared on a basis consistent with the
statutory accounts for the year ended 31 December 1997.
Results for the year ended 31 December 1997 have been extracted
from the statutory accounts which were reported on by the
auditors, without qualification or statement under Section
237(2) or (3) of the Companies Act 1985 and have been delivered
to the Registrar of Companies.
2 Taxation
There is no corporation tax charge due to the availability of
losses within the Group.
3 Earnings per share
The earnings per share has been calculated on the consolidated
profit on ordinary activities after taxation of #800,800 and on
the weighted average number of ordinary shares in issue of
7,570,800.
4 Investments
Listed Unlisted Total
#'000 #'000 #'000
Cost
At 1 January 1998 6,692.9 853.9 7,546.8
Additions 1,366.8 1,141.3 2,508.1
Disposals (2,149.5) (249.9) (2,399.4)
________ ________ ________
At 30 June 1998 5,910.2 1,745.3 7,655.5
======= ======= =======
Provisions
At 1 January 1998 784.3 249.9 1,034.2
Released on disposal (175.7) (249.9) (425.6)
________ ________ ________
At 30 June 1998 608.6 - 608.6
======= ======= =======
Net Book Value
At 30 June 1998 5,301.6 1,745.3 7,046.9
======= ======= =======
At 31 December 1997 5,908.6 604.0 6,512.6
======= ======= =======
Aggregate market value
At 30 June 1998 7,313.4 2,448.0 9,761.4
======= ======= =======
Further details of the Key Investments are shown on page 7 of
this interim report.
5 Other Information
The interim statement was approved by the Directors on 30 July
1998.
A copy of the interim statement will be posted to shareholders
and made available to the public at the company's registered
office, 223a Kensington High Street, London W8 6SG.
Key Investments
Company name Number Class Percentage Cost Market
of of of at value at
shares ordinary issued 30-06-98 30-06-98
Held shares ordinary #'000 #'000
share
capital
Cantab Pharmaceuticals 162,550 5p 0.98 219 393
plc*
ERA Group Plc 5,345,000 5p 4.25 458 214
Internet Technology 775,000 20p 1.86 636 1,352
Group plc
Linx Printing
Technologies plc 320,000 5p 2.17 507 446
Rackwood Mineral
Holdings plc 2,000,000 10p 4.72 748 470
Redstone Telecom
plc * 2,618,887 10p 8.35 1,069 1,069
Solvera plc 3,725,000 5p 5.01 607 363
Tepnel Life Sciences 700,000 1p 1.43 316 228
plc
Utility Cable plc 7,025,000 1p 4.80 625 386
Wiggins Group plc 8,365,000 1p 1.43 432 1,255
Xaar plc 1,933,330 10p 3.75 928 2,803
Xenova Group plc 242,500 10p 1.04 594 315
* Denotes unquoted investment
* Denotes not key investment as defined in 1 below but disclosed
in 1997 Annual Report
Notes:
1 A "Key investment" is defined as being any holding which
accounts for 5 per cent, or more, by reference to original
cost or market value, of the total portfolio at the end of
the period.
2 Unquoted investments are valued at cost, or net realisable
value if, in the opinion of the Directors, this is below
cost.
3 All of the investments noted above are in undertakings
which are registered in England and Wales.
END
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