Interim Results for the period ended 30 June 2022
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Alina Holdings PLC (ALNA)
Highlights for the 6 months ended 30 June 2022 GROUP RESULTS 1H 2022 versus 1H 2021
Chairman’s Statement Trading update The Company's hedging strategy served its purpose and partially protected ALNA shareholders during the first half of 2022, thereby reducing the impact of mark-to-market declines in the Companies quoted holdings. Both of the Company’s two largest holdings Dolphin Capital Investors (DCI LN) and HEIQ (HEIQ LN) traded lower, like many small cap. company shares, on lack of interest, rather than on concerted selling.
Macro Background Global Technology stock took the full brunt of the 2022 correction on the chin, which has seen Cathie Woods’ ARK Innovation ETF give back virtually all its ~383% gain and which is now down ~74% since peaking in December 2021. Many of ARK’s investments had no earnings or were trading on triple digit p/e multiples. Many of the major stock market indices have performed badly but not as badly as the investment vehicles with substantial exposure to “Story Stocks”. At the time of writing, the Dow Jones Index is down Year to Date (“YTD”) 15.29%, the S&P 500 is down 51% and the NASDAQ Index is down 29.19%. whilst European Indices are down YTD between ~7% and ~22%.
Macro Outlook Your Board is not convinced by the Markets recent rally, but take the view that there is another leg down in US and EU (incl. UK) Stock prices, which will be driven by research analysts reducing their overly optimistic earnings estimates for 2022, 2023 and 2024.
Analysts surveyed by Bloomberg are still estimating that S&P 500 earnings will increase from current level of 199.67 to 235.78, an increase of 18.08%, in 2022, by +5.22% in 2023, and by +9.02% in 2024. Given the fact that inflation is currently running at record levels, and our view that Central Bankers may well tighten too much, just as Western economic activity slows, we believe that analysts will rapidly start to reduce their 2022 Q3 and Q4, as well as 2023 and 2024, earnings estimates when they get back from their summer holidays.
Operations Real Estate We continue to actively manage the Company’s realestate assets and a number of properties will be put up for sale in the second half of the year. In respect of the Hastings and Bristol properties, the Board has actioned a refurbishment and capital expenditure plan, which we believe will enhance both the yield and potential sale value of both properties.
Holdings
https://www.dolphinci.com/?doing_wp_cron=1658743513.1735150814056396484375
ALNA currently owns ~3.2% of DCI, which is focused on the development of luxury leisure properties in the Eastern Mediteranean Greece, Cyprus and Croatia).
The company has had a torrid life and is currently trying to wind down its realesate portfolio and return capital to shareholders. DCI’s most recently released (July 2022) fact sheet indicates that the current NAV of the company stands at 12p/share versus a market price of 3.15p (at the time of writing). Clearly the new Board are struggling to convince the market that the liquidation of the company’s assets will return stated NAV!. Your Board has discounted the Company’s stated NAV by 33%, and estimate NAV to be ±8p, which if achieved would result in excess of a 100% ROI.
https://www.heiq.com/investors/
ALNA currently owns ~0.68% of HeiQ is an IP creator and established global brand in materials and textile innovation, adding hygiene, comfort, protection and sustainability to the products we use every day.
HeiQ has a core chemical business, which in 2021 generated Revenues of $57.9m and EBITDA of $6.5m.
HeiQ has a pipeline of innovative and potentially disruptive products such as:
HEIQ AeoniQ, an innovative high-performance cellulose filament yarn that has for the first time in textiles the potential to replace polyester and nylon. Made from waste, recycled or reactor grown cellulosic biopolymers that bind carbon (CO2) from the atmosphere.For every ton of polyester substituted by HeiQ AeoniQ, up to +5 tons of CO2 can be reduced.
As of February 2022, only four months after we announced the project, AeoniQ had on-boarded two global brands, The LYCRA Company and HUGO BOSS, with total financial commitments (subject to milestone achievements) exceeding US$10m.
HeiQ GrapheneX, a highly porous graphene membrane electronics, batteries and beyond.
Graphene is an atomically-thin, two-dimensional layer of carbon with unique properties, including exceptionally high strength, high conductivity, non-permeability, flexibility and chemical inertness. Permeable membrane materials are a critical feature in diverse filtration and separation applications that are essential to society and the environment. Membrane performance is determined by material strength, minimal permeation
Conclusion We remain cautious on the macro-economic outlook, and do not believe it is safe to get back into the water yet. Having said that, we continue to research and find potentially interesting businesses at increasingly appealing vauations as investor interest dwindles with the increasing expectation of recession.
Duncan Soukup Chairman Thalassa Holdings Ltd 1 August 2022 Responsibility Statement
We confirm that to the best of our knowledge:
Cautionary statement This Interim Management Report (IMR) has been prepared solely to provide additional information to shareholders to assess the Company’s strategies and the potential for those strategies to succeed. The IMR should not be relied on by any other party or for any other purpose.
Duncan Soukup Chairman Thalassa Holdings Ltd 1 August 2022
Interim Condensed Consolidated Statement of Income For the six months ended 30 June 2022
The notes on pages 13 to 16 form an integral part of this consolidated interim financial information.
For the six months ended 30 June 2022
The notes on pages 13 to 16 form an integral part of this consolidated interim financial information.
Interim Condensed Consolidated Statement of Financial Position As at 30 June 2022
The notes on pages 13 to 16 form an integral part of this consolidated interim financial information. These financial statements were approved by the board on 1 August 2022.
Signed on behalf of the board by:
Duncan Soukup Interim Condensed Consolidated Statement of Cash Flows For the six months ended 30 June 2022
The notes on pages 13 to 16 form an integral part of this consolidated interim financial information.
Interim Condensed Consolidated Statement of Changes in Equity For the six months ended 30 June 2022
The notes on pages 13 to 16 form an integral part of this consolidated interim financial information.
1. General information Alina Holdings PLC (“Alina” or the “Company”) is a company registered on the Main Market of the London Stock Exchange. 2. Significant Accounting policies The Group prepares its accounts in accordance with applicable UK Adopted International Accounting Standards (IFRSs). The accounting policies applied by the Company in this unaudited consolidated interim financial information are the same as those applied by the Company in its consolidated financial statements as at and for the period ended 31 December 2021 except as detailed below. The financial information has been prepared under the historical cost convention, as modified by the accounting standard for financial instruments at fair value. Estimates There are no changes to the estimates since last reporting period. Segmental reporting IFRS 8 requires operating segments to be identified on the basis of internal reports that are regularly reported to the chief operating decision maker to allocate resources to the segments and to assess their performance. Since the strategy review in July 2013 the Group has identified one operation and one reporting segment, being rental income in the UK, which is reported to the Board of directors on a quarterly basis. The Board of directors is considered to be the chief operating decision maker. 2.1. Basis of preparation The condensed consolidated interim financial information for the six months ended 30 June 2022 has been prepared in accordance with International Accounting Standard No. 34, ‘Interim Financial Reporting’. They do not include all of the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Company as at and for the year ended 31 December 2021. These condensed interim financial statements for the six months ended 30 June 2022 and 30 June 2021 are unaudited and do not constitute full accounts. The comparative figures for the period ended 31 December 2021 are extracted from the 2021 audited financial statements. The independent auditor’s report on the 2021 financial statements was not qualified. All intra-group transactions, balances, income and expenses are eliminated in full on consolidation. 2.2. Going concern The financial information has been prepared on the going concern basis as management consider that the Group has sufficient cash to fund its current commitments for the foreseeable future. 3. Earnings per share
4. Investment Properties
The six property assets held at 30 September 2020 were valued at that date by Allsop LLP. Two of the larger assets were subject to full RICS valuations, including site inspections, with the remainder subject to desktop updates of their previous carrying values. In view of the market uncertainty and the operational restrictions arising from the COVID-19 outbreak, the directors did not consider it appropriate to carry out a fresh valuation of the property portfolio at the half-year. The six properties contained in the portfolio were therefore continued to be recognised in the financial statements at their holding value in the Company’s accounts at 30 September 2020. One property was considered to be held for sale and its holding value in the Company’s accounts therefore took account of agreed pricing and sales costs. There were no sales during the period.
The Directors are pleased to announce the completion of sale of the Westcliff property held for sale as at 31 December 2020 and 2021, which was agreed under the previous board in 2019 and has taken this reporting period to finalise.
The Directors have concluded that they will be maintaining the valuation of the property portfolio at previous levels. The Board is also of the opinion that the carrying values, based on the "Red Book" valuation, do not reflect the real value of the properties. The Company's objective is still to liquidate the current portfolio of shopping assets which currently show a Gross Initial Yield of more than 16%, but only if a sale can achieve a sensible return in excess of the year end 2021 carrying value of £2.45m.
The Directors obtained pricing and yields of similar transactions made within the accounting period to December 2021 and compared them to the Gross Initial Yield stated above. In all cases the transactions that were measured came in at a lower value than that currently being achieved. As stated, although the data is below the Yield being achieved it was felt prudent to leave the valuations as they stand.
The outbreak of the Coronavirus (COVID-19), declared by the World Health Organization as a “Global Pandemic” on 11 March 2020, has impacted global financial markets and global economy. Despite the easing of restrictions, the future impact that COVID-19 might have on the real estate market gives that less certainty should be attached to the valuation than would normally be the case. A reconciliation of the portfolio valuation at 30 June 2022 to the total value for investment properties given in the Consolidated Balance Sheet is as follows:
5. Investment Holdings The Group classifies the following financial assets at fair value through profit or loss (FVPL):- Equity investments that are held for trading
Investments have been valued incorporating Level 1 inputs in accordance with IFRS7. They are a combination of cash and securities held with the listed broker. Financial instruments require classification of fair value as determined by reference to the source of inputs used to derive the fair value. This classification uses the following three-level hierarchy: Level 1 — quoted prices (unadjusted) in active markets for identical assets or liabilities; Level 2 — inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e., as prices) or indirectly (i.e., derived from prices); Level 3 — inputs for the asset or liability that are not based on observable market data (unobservable inputs).
6. Lease liabilities
In the above table, interest represents the difference between the carrying amount and the contractual liability/cash flow. All leases expire in more than five years.
7. Related party balances and transactions As at the period end the Group owed £49,303 (December 2021: £nil, June 2021: £139,599) to Thalassa Holdings Limited (“Thalassa”), a company under common directorship. The balance relates to accounting and registered office services supplied to the Group by Thalassa at cost. The total amount is treated as an unsecured, interest free loan made repayable on demand. During the period the Group was invoiced £88,887 (December 2021: £158,401, June 2021: £77,598) for consultancy and administrative services provided to the Group by a company in which the Chairman has a beneficial interest. The balance owed by the Group at the period end date was £88,887 (December 2021: nil, June 2021: £77,598)
8. Share capital
During the year to 30 September 2019, the Company underwent a Court approved restructure of capital and buy back of shares. Under this action the issued 20p shares were converted to 1p; capital reserves were transferred to distributable reserves; 59,808,456 shares were repurchased, and a new Capital Redemption Reserve of £0.598m was established. Investment in Own Shares At the year-end, 9,164,017 shares were held in treasury (June 2021: 9,164,017), and at the date of this report 9,164,017 were held in treasury.
9. Subsequent events There were no subsequent events.
10. Copies of the Interim Report The interim report is available on the Company’s website: www.alina-holdings.com. |
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| ISIN: | GB00B1VS7G47 |
| Category Code: | IR |
| TIDM: | ALNA |
| LEI Code: | 213800SOAIB9JVCV4D57 |
| OAM Categories: | 1.2. Half yearly financial reports and audit reports/limited reviews |
| Sequence No.: | 178537 |
| EQS News ID: | 1410705 |
| End of Announcement | EQS News Service |
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