RNS Number:3397Z
Europasia Education PLC
29 June 2007
EUROPASIA EDUCATION PLC: FINAL RESULTS
EuropAsia Education plc, the AIM-listed education investment group, announces
its audited results for the year to December 31 2006.
Main points:
* New Chief Executive appointed
* Change of strategy
* Planned disposals
* Proposed name change to Commodity Growth plc
* Net Assets #1.4m (2005: #1.3m)
* Net assets at market value #4.5m equal to 7.8p per share
* Continued profit growth at Chinese investee companies
* Operating loss #150,000 (2005: #250,000)
EPE Chairman James Holmes said: "The Board has reached the conclusion that the
best interests of shareholders are served by abandoning the current education
focused investment strategy and implementing a strategy of investing in rare
commodities, particularly those used in the energy and environment sectors.
"As part of the change in strategy we are proposing a resolution at the AGM to
change the Company's name to Commodity Growth plc and in order to finance the
new strategy we intend to dispose of the existing education portfolio.
"2006 was a challenging year for the Group despite the growth in our Chinese
education investments. The combined value of our holdings in Plus-market listed
China Education Group and Dalian Business Institute as at 31 December 2006 was
#5.9 million against a cost of #2.8 million.
"Under current accounting rules EPE does not recognise the gain in market value
of these investments on the balance sheet or through the profit and loss account
nor a share of their respective profits, resulting in an overall loss for the
year.
"With the new management team, the change in investment strategy, and the move
to dispose of our existing assets, we look forward to moving the Company forward
to restore shareholder value".
For further information
James Holmes, Chairman 020 7231 0282
EuropAsia Education Plc
Paul Quade 07947 186694
CityRoad Communications 020 7248 8010
Nandita Sahgal
Insinger de Beaufort 020 7190 7000
CHAIRMAN'S STATEMENT
2006 was a challenging year for the Group as, despite the growth in our Chinese
education investments, the share price continued to languish, a decline which
has continued since the year end, preventing us from expanding the business.
Highlights
* Net assets #1.4 million (2005: #1.3 million), equal to 2.4p per share
* Net assets at market value as at year end of #4.5 million, equal to 7.8p
per share
* Interim results of our main investments CEG and DBI show continued
profit growth
* Raised over #1 million via the issue of Convertible Loan Notes
* Appointment of new Chief Executive post year end
Financial results
Turnover relates primarily to our wholly owned UK business, Bournemouth
Educational Centre Ltd ("E2000"), which is a language and vocational training
college based in Bournemouth. Turnover was lower than 2005, but as a result of
various changes at the business to reduce costs and focus on higher margin
courses, E2000 returned to profit in 2006.
The operating loss before interest and amortisation of goodwill was #0.14
million (2005: #0.22 million). The reduction in losses compared to last year is
a result of improved performance at E2000, and our strategy of reducing
overheads across the Group by stopping all new business and business development
operations, and laying off all non essential staff.
Whilst E2000 has returned to profits, it remains a small business with marginal
profits, and we have decided to provide against the goodwill which arose on the
making of the investment, resulting in a charge of #0.4 million.
We raised over #1 million in new funds early in 2006. During the year we
increased our holding in PLUS Markets listed China Education Group ("CEG") by
#0.4 million to #1.8 million, giving us a 16.9% holding in the company. CEG
achieved profits of #2.3 million for the period ended 30 June 2006 (a nine month
operating period) and interim profits to 31 December 2006 of #1.7 million, up
nearly 50%.
We also invested a total of #1.1 million in Dalian Business Institute ("DBI"),
which subsequently listed on PLUS Markets in May 2006. DBI, based in Liaoning
Province, consists of six colleges and five independent faculties teaching eight
business and business related subjects to 5,000 students. DBI announced interim
profits to 31 January 2007 of #0.9 million.
The combined value of our holdings in CEG and DBI as at 31 December 2006 was
#5.9 million against a cost of #2.8 million, an increase of #3.1 million. Under
current accounting rules EPE does not recognise the gain in market value of
these investments on the balance sheet or through the profit and loss account
nor a share of their respective profits, resulting in an overall loss for the
year.
Strategy
We continue to generate losses and our share price continues to decline. The
Board has previously stated that it believes the business is too small to both
cover the costs, and reap the benefit of an AiM listing. As a result, the Board
has been looking for some time for either an acquisition to increase the size of
the business or an acquirer to buy the Company, but has to date been
unsuccessful and we do not hold out much hope of being any more successful going
forward. The Company has no money to make acquisitions and, given the current
significant discount to assets, it is not attractive to existing shareholders to
carry out a placing other than via a rights issue. In April we entered into
discussions for a possible takeover of the Company, but the offeror terminated
discussions in May.
The Board has therefore been considering alternative strategies to preserve
shareholder value and take the Company forward. As part of this process we
recently announced the appointment to the Board of Benson Day as Chief
Executive. Benson has over 30 years experience in corporate finance, mergers and
acquisitions, and commodities investments across Asia. He has helped launch
several successful ventures in China and South East Asia and co founded the
International Association of Energy Economics (Singapore). Benson has
significant expertise in the commodity and energy sectors, currently managing a
private commodity fund with its own proprietary benchmark commodity index. His
specialities are in rare commodities for which there are currently no futures
market and those commodities used in clean technology and the energy sector.
The Board has reached the conclusion that the best interests of the shareholders
are served by abandoning the current education focused investment strategy and
implementing a strategy of investing in rare commodities, particularly those
used in the energy and environment sectors, in line with Benson's expertise and
a resolution to that effect is to be proposed at the upcoming Annual General
Meeting ("AGM"). The details of the revised investment strategy are outlined in
the Chief Executive's Statement.
Benson is bringing in a small team to assist in the implementation of the
strategy. Benson and the new team are being awarded up to 10 million new
ordinary shares in lieu of cash salaries. This will reduce the cash burn of the
Company and align the interests of the management team with the shareholders.
The new staff must complete at least one year's service before they are entitled
to sell the shares and the shares are being purchased by the team in lieu of
salary at the equivalent of 5p per share, a significant premium to the current
EPE share price.
As part of the change in strategy, we are proposing a resolution at the AGM to
change the Company's name to Commodity Growth plc.
In order to finance the new strategy we intend to dispose of the existing
education portfolio. The E2000 management team, along with myself and fellow
EPE director George Allnutt, has made an offer of #70,000 to acquire the entire
UK business consisting of E2000 and Management International ("MI"). Payment
will be made via the cancellation of EPE's 10% Convertible Loan Notes. The
acquisition price represents approximately three times the combined E2000 and MI
profits for 2006. Additional consideration may become payable based on any
increase in profit in 2007 over 2006. The independent directors, Simon
Littlewood and Victor Ng, have determined that the sales price and acquisition
terms are reasonable. In view of the interests of George Allnutt and myself, the
proposed disposal constitutes a substantial property transaction under section
320 of the Companies Act 1985, and, accordingly, is conditional on the approval
of shareholders at the AGM.
We have received an offer from AiM listed London Asia Capital plc and its
associates ("LDC") to acquire up to #1.5 million worth of CEG shares and our
entire holding of DBI shares. The valuation of our holdings for the purpose of
the transaction is based on the average closing mid market price of the previous
five trading days as quoted by PLUS at the time of the transaction, less 30%.
Based on current share price and assuming the full acquisition, this would
equate to sales proceeds of #2.8 million against a book cost for the investments
sold of #2.1 million, generating a profit for EPE on the deal of #0.7 million.
LDC will pay for its stake via the cancellation of #452,399 of EPE 10%
Convertible Loan Notes and via LDC ordinary shares at a valuation per share
equal to the average closing mid market price of the previous five trading days
as quoted on AiM. The transaction will result in a significant reduction in
liabilities for the Group, a saving of #45,240 in interest costs per annum, a
profit in the accounts on the sale of the investments and the holding of more
liquid LDC AiM stock rather than CEG and DBI's relatively illiquid PLUS stock
which can be sold to generate funds for the new investment strategy. Given the
relative illiquidity of PLUS listed stock, we have been unable to realise our
holdings in DBI and CEG to date and do not anticipate that situation changing in
the near future. I therefore as independent director, recommend this
transaction. As Simon Littlewood and George Allnutt are interested in the share
capital of LDC, the proposed disposals constitute substantial property
transactions under section 320 of the Companies Act 1985, and, accordingly, are
conditional on the approval of shareholders at the AGM.
Outlook
With the new team, the change in investment strategy and the move to dispose of
our existing assets, we look forward to moving the Company forward to restore
shareholder value.
James Holmes
Chairman
29 June 2007
CHIEF EXECUTIVE'S STATEMENT
We will be proposing a resolution to shareholders at the AGM that the investment
strategy of the business be amended so that going forward the investment
objective will be to achieve capital appreciation by investing in listed
company, pre-IPO and private company investments in the natural resources
sector, targeting businesses that explore for, mine or process rare commodities
which are not traded on a recognised exchange or which are used in the energy or
clean technology sector.
The Company's initial focus will be investing in those companies involved in
molybdenum and also investing in, holding, selling and otherwise transacting in
physical molybdenum.
Currently there is no futures market for molybdenum. The Company will provide a
platform for investors to invest in the physical assets to realise potential
future gains against rising prices which we anticipate will result from
increasing demand for molybdenum.
Demand For Molybdenum
Molybdenum is used principally as an alloying agent in steels, cast irons and
high strength low alloy steel to enhance hardenability, strength, toughness and
resistance to wear and corrosion. It is usually added in combination with other
alloying metals such as chromium, columbium, manganese, nickel, tungsten and
niobium to enhance the properties of the alloy. Molybdenum is also used as a
catalyst in petroleum refining and plastics as specialty grease, and is one of
the primary alloying elements in high temperature mechanical components of jet
and turbine engines. In most cases, it is difficult to substitute other elements
for Molybdenum. It is used across a range of industries, including:
* aerospace
* the steel alloys construction sector
* oil and gas exploration
* drill stem tubing
* nuclear reactors
* pipelines
* refineries
* coal Liquefaction plants.
Global forecast of molybdenum consumption by application, 2005 and 2010
2005 2010
Kt % AAGR(%) Kt %
Stainless steel 50 28 6.0 67 30
Full alloy steel 27 15 3.5 32 14
Tool and high speed steel 18 10 3.0 21 9
High strength low alloy (HSLA) steel 17 9 4.5 21 10
Carbon steel 16 9 2.5 18 8
Catalysts 14 8 5.0 18 8
Molybdenum metal and alloys 13 7 3.0 15 7
High performance alloys (HPA) 9 5 4.0 11 5
Cast iron 6 3 2.0 6 3
Lubricants 6 3 3.0 6 3
Pigments/corrosion inhibitors 4 2 3.5 4 2
Other chemical 2 1 3.0 2 1
Total 181 100 4.2 223 100
AAGR - annual average growth rate
Whilst the demand for molybdenum is global, much of the increasing demand is
coming from the booming Asia markets. We predict a significant increase in
demand for molybdenum due to a combination of economic growth in China, the
limited number of current suppliers, producers and roasting capacity, as well as
increased demand for stainless steel, chemicals, catalysts and super-alloys
worldwide.
Current Molybdenum Supply
The primary producers of molybdenum are the United States, Chile, and China.
Canada, Peru and Russia are also significant producing countries. Mine
production of molybdenum increased from about 280 million pounds in 2002 to over
400 million pounds in 2005.
Molybdenum Pricing
Molybdenum is an unhedged metal with no forward markets. The price is primarily
determined by changes in supply and demand which are in turn affected by global
economic conditions. Molybdenum is sold largely on a spot basis by traders and
dealers worldwide. Some business is done on the basis of long term supply
contracts between producers and consumers. Since 2002 prices have peaked and
dropped several times, reaching a high of US$45 per pound in June 2005.
Molybdenum is currently trading around US$30 to US$35 per pound.
Investing Strategy
The Company will enable investors to gain exposure to molybdenum through a
managed diversified portfolio of global molybdenum assets which the Company will
invest into, selected through rigorous analysis and on-going monitoring by its
experienced team members. This will allow for risk diversification and provides
an alternative to a direct investment in a mining company which could be subject
to a number of operating risks, hazards, unexpected maintenance or technical
problems, periodic interruptions due to bad weather conditions and natural
disasters, industrial accidents and various other unexpected variations in
mineralisation, geological or mining conditions resulting in major delays and
increased costs.
The Company intends to take advantage of the commodities super-cycle, driven by
the strong growth demand identified by its research. The Company aims to use its
cash and listed paper to acquire molybdenum physical stocks, companies and
businesses initially focusing on China, where it has already identified
potential investments.
Benson Day
Chief Executive
29 June 2007
EUROPASIA EDUCATION PLC
CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
# # # #
Turnover 366,424 434,667
Cost of sales (106,594) (171,782)
---- ----
Gross profit 259,830 262,885
Administrative expenses:
Other administrative expenses (791,919) (719,838)
Provision for diminution in value of fixed
asset investment
- (66,040)
---- (791,919) ---- (785,878)
----- -----
Operating loss (532,089) (522,993)
Interest receivable and similar income 30,597 9,407
Interest payable on convertible loan notes (155,296) (4,783)
Interest payable - other (6,582) -
----- -----
Loss on ordinary activities before
taxation (663,370) (518,369)
Taxation (121) 130
----- -----
Loss on ordinary activities after
taxation (663,491) (518,239)
----- -----
2006 2005
Pence Pence
Loss per share
Basic and diluted 1.3 1.2
EUROPASIA EDUCATION PLC
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
2006 2005
# # # #
Fixed assets
Intangible assets - 382,013
Tangible assets 14,398 27,633
----- -----
14,398 409,646
Current assets
Debtors 177,858 37,735
Investments 2,830,317 1,414,844
Cash at bank and in hand 313,068 70,589
----- -----
3,321,243 1,523,168
Creditors: amounts falling due within
one year (302,231) (141,761)
----- -----
Net current assets 3,019,012 1,381,407
----- -----
Total assets less current liabilities 3,033,410 1,791,053
Creditors: amounts falling due after
one year (1,635,898) (452,399)
Provisions for liabilities and charges
Deferred taxation (3,694) (3,694)
----- -----
Total assets less liabilities 1,393,818 1,334,960
----- -----
Capital and reserves
Called up share capital 2,850,426 2,239,228
Share premium account 3,395,328 3,284,177
Profit and loss account (4,851,936) (4,188,445)
----- -----
Shareholders' funds 1,393,818 1,334,960
----- -----
EUROPASIA EDUCATION PLC
COMPANY BALANCE SHEET
AS AT 31 DECEMBER 2006
2006 2005
# # # #
Fixed assets
Investments 70,000 750,267
Current assets
Debtors 447,768 66,156
Investments 2,830,317 1,414,844
Cash at bank and in hand 9,101 30,718
----- -----
3,287,186 1,511,718
Creditors: amounts falling due within
one year (270,146) (88,343)
----- -----
Net current assets 3,017,040 1,423,375
----- -----
Total assets less current liabilities 3,087,040 2,173,642
Creditors: amounts falling due after
one year (1,635,898) (452,399)
----- -----
Total assets less liabilities 1,451,142 1,721,243
----- -----
Capital and reserves
Called up share capital 2,850,426 2,239,228
Share premium account 3,395,328 3,284,177
Profit and loss account (4,794,612) (3,802,162)
----- -----
Shareholders' funds 1,451,142 1,721,243
----- -----
EUROPASIA EDUCATION PLC
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
# # # #
Net cash outflow from operating activities (89,442) (376,480)
Returns on investments and servicing of finance
Interest received 9,134 9,407
Interest paid (75,995) (4,783)
----- -----
Net cash (outflow)/inflow for returns on
investments
and servicing of finance (66,861) 4,624
Capital expenditure and financial investment
Payments to acquire tangible assets (640) (11,173)
Payments to acquire investments (978,875) (156,148)
Proceeds on disposals of tangible assets 2,399 30,960
----- -----
Net cash outflow for capital expenditure
and financial investment (977,116) (136,361)
----- -----
Net cash outflow before management of
liquid resources and financing (1,133,419) (508,217)
Financing
Issue of share capital 252,399 -
Issue of loan notes 1,123,499 -
----- -----
Net cash inflow from financing activities 1,375,898 -
----- -----
Increase/(decrease) in cash in the year 242,479 (508,217)
----- -----
Reconciliation to net (debt)/cash flow
Net (debt)/cash at 1 January (381,810) 578,806
Increase/(decrease) in net cash 242,479 (508,217)
Issue of convertible loan notes (1,183,499) (452,399)
----- -----
Net debt at 31 December (1,322,830) (381,810)
----- -----
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2006
1. Basis of preparation
The financial information set out in this announcement does not constitute the
Company's statutory financial statements within the meaning of section 240 of
the Companies Act 1985, for the years ended 31 December 2006 or 31 December
2005. The statutory financial statements for the year ended 31 December 2006
will be delivered to the Registrar of Companies following the Company's Annual
General Meeting.
This announcement is prepared on the basis of the accounting policies as stated
in the previous year's financial statements.
2. Dividend
No dividend has been proposed in respect of the year.
3. Loss per share
The calculation of basic and diluted loss per share is based on the loss after
tax of #663,491 (2005: #518,239) and on 49,261,162 (2005: 43,131,334) ordinary
shares being the weighted average number of ordinary shares in issue during the
period.
The calculation of diluted loss per share does not include the effect of any
exercise of outstanding share options, warrants or the effects of the
convertible loan stock outstanding at year end as these are not dilutive in
accordance with FRS 22.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR FLMJTMMITBLR
Europasia Education (LSE:EPE)
Historical Stock Chart
Von Okt 2024 bis Nov 2024
Europasia Education (LSE:EPE)
Historical Stock Chart
Von Nov 2023 bis Nov 2024
