TIDMEVOL
RNS Number : 3165J
Evolve Capital PLC
29 June 2011
Evolve Capital Plc ("Evolve" or the "Company")
Results for the year ended 31 December 2010
Chairman's Statement
I am pleased to present Evolve Capital Plc's audited results for
the year ended 31 December 2010. A summary of the financial
performance of the Group can be found at the end of this
statement.
When Evolve was formed in 2007 its stated strategy was to invest
in promising companies that were either already on the PLUS market
or who were seeking to join the PLUS market. The Company raised an
initial GBP4 million to enable it to prove the viability of this
strategy, and it has subsequently invested in a cross section of
businesses, details of which are outlined below.
The second half of 2010 saw tough conditions for small and
developing businesses, which still continue today. Some of the
businesses in which we have invested are showing signs of being
quite exciting, but in the short term will need nurturing and may
possibly have a requirement for fresh funding. Nobody has a crystal
ball and can see how long this challenging period is going to last.
Evolve has taken a cautious view and not made any significant
investments in the second half of the year, and has made every
effort to preserve the Company's cash balances.
During 2010 the Company successfully raised additional funds; in
part through the disposal of a part of its holding in unquoted
Aconite Technology Limited but principally through a fully
underwritten open offer to shareholders, which completed on 8th
September and was encouragingly well supported.
OPERATIONS AND INVESTMENT ACTIVITY
Evolve's wholly owned subsidiary St Helens Capital Partners LLP
continues to be one of the leading Corporate Advisors to
PLUS-quoted companies. In May 2011 at the PLUS Awards Dinner St
Helens won the award for the 'Fundraising of the Year' and
subsequently went on to win the Growth Company Investor award for
'PLUS Advisor of the Year'. This is a commendable achievement, and
the staff at St Helens are to be congratulated for their continued
commitment to the development of the small cap market.
Despite the restrictions caused by the financial crisis St
Helens has continued to play an active role in sponsoring events to
promote the development of the market. During the year under review
its clients have successfully raised some GBP7.5 million of new
capital. The business continues to trade in a satisfactory manner
and the Board of Evolve is confident that it will flourish as
financial conditions improve.
Evolve's investments as at 31 December 2010 can be summarised as
follows.
Shares Cost - FairValue
Name Market held % GBP - GBP
------------ ---------- ------------- ------- ----------- -----------
Aconite Private 201,190 2.69 211,249 26,750
------------ ---------- ------------- ------- ----------- -----------
Astaire AIM 110,067,610 53.61 9,476,171 572,351
------------ ---------- ------------- ------- ----------- -----------
Bluehone PLUS 22,870,093 19.23 457,401 552,010
------------ ---------- ------------- ------- ----------- -----------
Pulse PLUS 6,718,888 7.33 295,600 271,315
------------ ---------- ------------- ------- ----------- -----------
Woodspeen PLUS 3,000,000 14.62 450,000 905,250
------------ ---------- ------------- ------- ----------- -----------
3D AIM 53,974,354 31.70 1,289,925 3,555,561
------------ ---------- ------------- ------- ----------- -----------
INVESTMENT REVIEW
Aconite Technology Limited ("Aconite")
Aconite is a private company that has developed and is marketing
a suite of open platform software products that enable the issuers
of credit cards and other plastic payment cards to migrate to the
new EMV industry standard (chip and pin) cards without the need to
replace their existing infrastructure. The company's software also
enables card issuers to issue and manage pre-paid debit cards and
contactless payment cards. Due to financial difficulties that the
company faced toward the end of 2009, Evolve, as a matter of
prudence, wrote down the value of its holding in the company to
GBP200,000.
In July 2010 Evolve sold 275,000 shares in Aconite to
Elderstreet Investments for GBP250,000 in cash, which generated a
profit of GBP77,000 over the UK GAAP written down value of the
shares. One of Evolve's directors, Michael Jackson, is also a
director of and a shareholder in Elderstreet and as a consequence
this transaction was classified as a related party transaction.
Since that time Aconite has signed a number of new contracts and
its prospects have improved significantly. The company is now
trading profitably which might indicate that Evolve's remaining
holding could be worth more than its current carrying value.
Astaire Group Plc ("Astaire Group")
Astaire Group had two principal trading businesses, Astaire
Securities Plc which was an institutional stockbroker, corporate
financial advisor and AIM Nominated advisor, and Rowan Dartington
& Co Ltd which was an established private client stockbroker
based in the South and West of England. Both these businesses have
now been sold, Astaire Securities for GBP2,450,000 and Rowan
Dartington for GBP1 million in five year zero coupon loan notes and
a 30% equity interest in the new holding company, Rowan Dartington
Holdings Limited. Astaire Group generated a loss of GBP7.7 million
for the year to 31 December 2010.
This has proved to be a particularly unsuccessful investment on
a number of levels and one for which I again apologise
wholeheartedly to all Evolve shareholders but we are now
considering a range of alternatives for generating some value from
this investment.
Bluehone Plc ("Bluehone")
Bluehone was established in 2005 and specialises in managing
funds focused on investing in small companies. Its executive
directors previously worked together at F&C Asset Management
and F&C is an investor in the business. Evolve acquired a 19.2%
stake through investing GBP457,401 in shares at a price of 2p per
share. In recent times the company has experienced a number of
set-backs, the most significant of which was the transfer of one of
its funds to new managers. The company is currently seeking to
raise a new debt fund for smaller companies and it is hoped that
this will be successful and will lead to a restoration of its
fortunes, therefore the Directors believe no impairment is
necessary.
Pulse Group plc ("Pulse")
Pulse is a leading provider of RPO (research process
outsourcing) in the Asia Pacific region and services market
research companies based throughout the world. During the course of
2010 both the company and its chief executive, Bob Chua, have won a
number of awards for excellence and have generated a considerable
volume of positive coverage in the local press. However, the
company remains relatively small in size and needs to expand or to
merge with a larger entity in order to realise its full
potential.
Woodspeen Training plc ("Woodspeen")
Woodspeen is a training company addressing the government funded
non academic adult training sector. The company is run by three
former main Board directors from BPP, a fully listed company that
is one of the UK's leading professional training companies. Since
joining the PLUS-quoted market in March 2008, the company has made
a number of complimentary acquisitions and continues to trade
profitably.
3D Diagnostic Imaging plc ("3D")
3D owns the exclusive rights to a technology platform using
ACIST (Alternating Current Impedance Spectroscopy Technology) to
accurately measure the integrity of a given structure. There are
believed to be a number of substantial commercial applications for
this technology. 3D's wholly owned subsidiary, CarieScan Limited,
has launched the first commercial product based on the technology,
which is a hand held, simple to use, highly accurate device for the
early detection and monitoring of dental caries (tooth decay). In
June 2010 the company signed a distribution agreement with
Patterson Dental, one of the largest distributors of dental
equipment in the USA with annual turnover of some $2 billion, and
entered the US market. The initial launch of the product went well
and the company's product received a number of plaudits from
influential industry figures, which sparked considerable interest
in the product in countries outside of North America. However,
early in 2011 the company suspended the selling of its product for
a period whilst it resolved a manufacturing defect that had been
detected. Selling activity has now been resumed and the company has
recently signed distribution agreements covering India, Germany and
China, all of which have the potential to be substantial markets.
The company moved from the PLUS quoted market to AIM in November
2010.
Evolve has, to-date, made a total investment in the ordinary
share capital of 3D of GBP1,289,925.
FINANCIAL PERFORMANCE
Overall the loss for the year was GBP8.8 million, compared to a
loss in 2009 of GBP2.6 million. Further details of the financial
performance are covered in the Financial Review which follows this
statement.
During the period under review significant steps have been taken
to reduce the Company's overhead base.
At 31 December 2010, the Company currently had net assets of
GBP3.5 million including cash resources of GBP0.3 million. The
consolidated group had net assets of GBP11.5 million including cash
resources of GBP4.5 million.
For the moment we are patiently waiting for one or more of our
investments to come to fruition, as well as hoping to derive some
value from Astaire (albeit that this may take some time) since this
will enable the board to focus on our core strategy and recommence
the investment process in pre-IPO and PLUS quoted companies. I look
forward to advising you of further progress in due course.
Oliver Vaughan
Executive Chairman
28 June 2011
For further information please contact:
Evolve Capital plc Tel: 020 7937 4445
Oliver Vaughan
Allenby Capital Limited Tel: 020 3328 5656
Nick Naylor
Nick Athanas
Financial Review
Results
The loss after tax for the year from all operations was GBP8.8
million compared with a loss of GBP2.6 million in 2009, and the
loss after tax from continuing operations was GBP4.5 million in
2010 compared to GBP1.9 million profit in 2009.
The result before tax can be divided into the following:
2010 2009
GBP'000 GBP'000
(Loss) / profit from continuing operations before taxation
(4,164) 2,016
Loss from discontinued operations before taxation (4,990)
(5,113)
"Continuing operations" consists of the ongoing investment
activities of Astaire Group, which is active in seeking to realise
value from the assets it holds and minimise its exposure to
liabilities. In the case of its subsidiary Corporate Synergy
Holdings Ltd the liabilities relate almost exclusively to the
recently settled litigation and elsewhere in the Astaire Group they
relate to a property lease. Astaire Group continues to incur the
costs associated with running a publicly quoted group, although
Astaire Group has recently announced its intention to seek the
cancellation of the Admission of its shares from trading on
AIM.
"Discontinued operations" relate to the activities of Astaire
Securities Plc which was sold during the year, Dowgate Capital
Stockbrokers Ltd where there was a signed contract to sell prior to
the year end and Rowan Dartington & Co Ltd, where the Group had
resolved to sell and were in advanced discussions with a view to
completion of a sale early in 2011. Subsequent to the year end the
sales of both Rowan Dartington and Dowgate Capital Stockbrokers
were completed and announced.
Income Statement
Gross fee and commission income for the Group in 2010 was
GBP0.53 million and related almost exclusively to St Helens as all
the other revenues generated arose from "discontinued"
operations.
Realised gains on equity investments and option positions
delivered a net gain of GBP0.36 million (2009: GBP0.67 million).
The as yet unrealised movement in the valuation of options and
warrants held at 31 December 2010 was a loss of GBP0.19 million
(2009: gain of GBP3.1 million).
Following the disposal of Astaire Securities Plc by Astaire
Group, the Group made a loss on the investment of GBP1.1
million.
Operating expenses excluding impairments, amortisation,
share--based payments and restructuring charges, fell significantly
as they are not now included due to being discontinued operations.
Group expenses are expected to be reduced further during 2011 with
very low headcount.
The carrying value of goodwill and other intangibles has been
reviewed in the light of the anticipated discontinued nature of the
operations and impaired accordingly; these impairments are
incorporated into the discontinued operations line, other than that
related to the ongoing business of St Helens. The amortisation and
impairment charges, included in discontinued operations, for 2010
was GBP3.93 million. These charges related to both Rowan Dartington
and Dowgate businesses.
Restructuring costs of GBPNil (2009: GBP897,000) primarily
relate to the costs of redundancies effected earlier in the year,
and again are included in discontinued operations.
Business Review
Astaire Group Plc
As stated in the Chairman's statement this has been a very
disappointing investment, Astaire Group reported its results for
2010 including a loss after tax of GBP7.7 million.
St Helens Capital Partners LLP
St Helens had a satisfactory year of trading generating GBP0.53
million of revenue and a profit of GBP0.04 million.
Investments
During the year the Group sold approximately half of its holding
in Aconite and invested further funds into 3D.
Loss Per Share
The basic loss per share from continuing operations for the year
was 2.13 pence compared to earnings in 2009 of 1.15 pence. The loss
per share from continuing and discontinued operations was 4.18
pence (2009: 1.59p).
Balance Sheet
Net assets per share declined from 7.68 pence at 31 December
2009 to 3.25 pence at 31 December 2010. The main contributors to
this were the trading loss from discontinued operations together
with the impairment of intangibles and goodwill previously referred
to and the loss on disposal of Astaire Securities Plc.
Included in assets, at 31 December 2010 was GBP4.5 million of
cash (31 December 2009: GBP7.8 million) in the continuing
operations (there remained cash in both Rowan Dartington & Co
Limited and Dowgate Capital Stockbrokers Limited which is not
included in this GBP4.5 million as it left the Group on the sales
of those businesses).
Cash Flow
At 31 December 2009 the cash and cash equivalents held by the
consolidated group totaled GBP7.9 million. Since then Group cash
and cash equivalents have fallen to GBP4.5 million at 31 December
2010, representing net cash per share of 1.58 pence (31 December
2009: 4.42 pence). The Group cash balances include cash held within
the Astaire Group which are not available to Evolve. As at 31
December 2010 Evolve had cash resources of GBP0.3 million.
Dividends
The Board are not recommending the payment of a final dividend
for 2010 (2009: nil).
Oliver Vaughan
Director
28 June 2011
Consolidated Income Statement
for the year ended 31 December 2010
2010 2009
GBP'000 GBP'000
Fee and commission income 533 256
Fee and commission expenses (23) (17)
---------- ----------
Net fee and commission income 510 239
Other income - -
---------- ----------
Total income 510 239
Profit on disposal of available-for-sale
investments 359 671
(Loss) / gain on fair value through
profit and loss investments (186) 3,087
Loss on sale of subsidiary undertaking (1,052) (616)
Operating expenses
Impairment of goodwill & other intangibles (362) -
Amortisation of other intangibles (76) (52)
Restructuring costs - -
Share-based payments credit 85 775
Share-based payments charge - (54)
Other operating expenses (3,445) (2,132)
---------------------------------------------- ---------- ----------
Total operating expenses (3,798) (1,463)
----------
Operating (loss) / profit (4,167) 1,918
Investment revenue 36 104
Finance costs (33) (6)
---------- ----------
(Loss) / profit on ordinary activities
before taxation (4,164) 2,016
Taxation charge (327) (114)
---------- ----------
(Loss) / profit from continuing operations (4,491) 1,902
Discontinued operations
Loss from discontinued operations
(note 3) (4,346) (4,546)
---------- ----------
Loss for the period (8,837) (2,644)
========== ==========
Attributable to :
Owners of the Company (5,279) 315
Non-controlling interests (3,558) (2,959)
---------- ----------
(8,837) (2,644)
========== ==========
(Loss) / earnings per ordinary share
(pence)
From continuing operations
- Basic (2.13) 1.15
---------- ----------
- Diluted (1.85) 1.15
From continuing and discontinued
operations
- Basic (4.18) (1.59)
---------- ----------
- Diluted (3.65) (1.59)
========== ==========
Consolidated Statement of Comprehensive Income
for the year ended 31 December 2010
2010 2009
GBP'000 GBP'000
Loss for the period (8,837) (2,644)
========== ==========
Other comprehensive income:
Gains on revaluation of available-for-sale
investments taken to equity,
net of tax 208 310
Exchange differences on translation
of foreign operations - 3
Exchange differences on sale
of foreign operations - (3)
Transferred to profit or loss
on sale of available-for-sale
investments (63) (5)
Deferred tax relating to components
of other comprehensive income (171) 101
---------- ----------
Other comprehensive income for
the year, net of tax (26) 406
---------- ----------
Total comprehensive income for
the year (8,863) (2,238)
========== ==========
Total comprehensive income attributable
to:
Owners of the Company (5,286) 702
Non-controlling interests (3,577) (2,940)
---------- ----------
(8,863) (2,238)
========== ==========
Consolidated Balance Sheet
as at 31 December 2010
31 December 31 December 28 December
2010 2009 2008
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill - 1,400 -
Other intangible assets 160 3,967 -
Property, plant and equipment 7 503 7
------------- ------------- -------------
Total non-current assets 167 5,870 7
Current assets
Trade and other receivables 1,816 8,296 314
Available-for-sale investments 2,346 2,963 1,603
Fair value through profit and
loss investments 4,484 4,813 25
Cash and cash equivalents 4,463 7,895 2,423
Assets held for sale 7,272 - -
Total current assets 20,381 23,967 4,365
------------- ------------- -------------
Total assets 20,548 29,837 4,372
============= ============= =============
LIABILITIES
Current liabilities
Trade and other payables 2,478 8,638 73
Current tax liabilities 1 20 -
Provisions - 511 -
Liabilities directly associated
with assets held for sale 5,373 - -
Total current liabilities 7,852 9,169 73
------------- ------------- -------------
Non-current liabilities
Deferred tax liabilities 1,032 1,082 133
Convertible loan stock 172 - -
------------- ------------- -------------
Total non-current liabilities 1,204 1,082 133
------------- ------------- -------------
Total liabilities 9,056 10,251 206
------------- ------------- -------------
EQUITY
Share capital 1,890 1,785 463
Share premium account 11,789 11,457 3,478
Equity reserve 247 - -
Fair value and other reserves 721 728 341
Retained deficit (5,448) (255) (116)
------------- ------------- -------------
Parent Company's shareholders'
equity 9,199 13,715 4,166
Non-controlling interests 2,293 5,871 -
------------- ------------- -------------
Total equity and liabilities 20,548 29,837 4,372
============= ============= =============
Consolidated Statement of Changes in Equity
For the year ended 31 December 2010
Fair
value
and Non-
Share Share Equity other Retained controlling Total
capital premium Reserve reserves earnings Total interests Equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance at 28
December
2008 463 3,478 - 341 (116) 4,166 - 4,166
Issue of share
capital 1,322 7,929 - - - 9,301 8,811 18,112
Share-based
payments
credit - - - - (454) (454) - (454)
Loss for the
year - - - - 315 315 (2,959) (2,644)
Total
comprehensive
income for
the period - - - 387 - 387 19 406
---------------- --------- --------- --------- ---------- ---------- --------- ------------- ---------
Balance at 31
December
2009 1,785 11,457 - 728 (255) 13,715 5,871 19,586
---------------- --------- --------- --------- ---------- ---------- --------- ------------- ---------
Issue of share
capital 105 419 - - - 524 - 524
Share issue
expenses - (87) - - - (87) - (87)
Issue of
convertible
loan stock - - 241 - - 241 - 241
Share-based
payments
credit - - - - 92 92 - 92
Loss for the
year - - - - (5,279) (5,279) (3,558) (8,837)
Transfer
between
reserves - - 6 - (6) - - -
Other
comprehensive
income for
the year - - - (7) - (7) (20) (27)
Balance at 31
December
2010 1,890 11,789 247 721 (5,448) 9,199 2,293 11,492
================ ========= ========= ========= ========== ========== ========= ============= =========
Consolidated Cash Flow Statement
for the year ended 31 December 2010
2010 2009
GBP'000 GBP'000
Net cash used in operating activities (3,653) (5,045)
---------- ----------
Investing activities
Interest received 49 343
Dividends received 17 21
Proceeds on disposal of available-for-sale
investments 599 3,341
Purchases of available-for-sale
investments (211) (3,230)
Purchases of fair value through
profit and loss investments (450) (815)
Proceeds on disposal of property,
plant and equipment 1
Purchases of property, plant
and equipment (437) (201)
Acquisition of subsidiary - 10,651
Disposal of subsidiary (263) (95)
Net cash (used in) / from investing
activities (695) 10,015
---------- ----------
Financing activities
Capital element of finance leases
repaid - (25)
Proceeds from issue of ordinary
share capital 524 501
Proceeds from issue of convertible
loan stock 480
Expenses of share issues (88) -
Net cash from financing activities 916 476
---------- ----------
Net (decrease) / increase in
cash and cash equivalents (3,432) 5,446
Cash and cash equivalents at
beginning of year 7,895 2,423
Effect of foreign exchange rates - 26
Cash and cash equivalents at
end of year 4,463 7,895
========== ==========
Notes to the Preliminary Announcement
for the year ended 31 December 2010
1. Basis of preparation
This announcement has been based on the Companies financial
statements which have been prepared in accordance with IFRS as
adopted by the European Union and IFRIC interpretations and with
the Companies Act 2006.
The consolidated financial statements have been prepared under
the historical cost convention, with the exception of financial
instruments, which are stated in accordance with IAS 39 Financial
Instruments: Recognition and Measurement.
2. Going concern
As part of its regular assessment of the prospects for the
Group, the Board has reviewed a plan to 31 December 2012. Group
cash balances have decreased further during 2010 and since the year
end, but the Group has sufficient cash resources to meet its
requirements.
The Board assesses the prospects of the Company only, as the
prospects and going concern basis as applied to investee companies
including Astaire Group Plc and subsidiaries are assessed by the
Boards of these entities.
As a result of their considerations, the Directors have a
reasonable expectation at the time of approving the financial
statements that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
For this reason, they continue to adopt the going concern basis in
preparing the financial statements.
3. Discontinued operations
On 22 October 2010 the Group completed the disposal of Astaire
Securities Plc, its London based investment banking business. The
Group had also taken the decision prior to the year end, to sell
both Dowgate Capital Stockbrokers Limited and Rowan Dartington
& Co Limited.
Contracts were exchanged for the sale of Dowgate Capital
Stockbrokers Limited on 24 December 2010 and the disposal
subsequently completed on 14th February 2011. The Group had also
entered in a agreement granting exclusivity to certain parties who
subsequently exchanged contracts and then completed on the
acquisition of Rowan Dartington & Co Limited on 8th March 2011.
Accordingly the activities of Astaire Securities Plc, Dowgate
Capital Stockbrokers Limited and Rowan Dartington & Co Limited
have been treated as discontinued.
On 3 June 2009 the Group completed the disposal of Inteq
Limited, its Australian corporate finance subsidiary. During 2009
the Group's subsidiary Blue Oar Asset Management LLP closed both
its managed funds and ceased operations. These actions were
effected as part of the Group's strategy, implemented following the
operating review carried out by the Board immediately following the
Group's acquisition by Evolve Capital Plc on 29 December 2008, to
cut costs and exit loss making businesses.
The results of the discontinued operations, which have been
included in the consolidated income statement, were as follows:
2010 2009
GBP'000 GBP'000
Total income 10,996 13,834
Profit on disposal of investments 6 78
Expenses (15,992) (19,025)
---------- ----------
Loss before taxation (4,990) (5,113)
Attributable taxation expense 644 562
---------- ----------
(4,346) (4,546)
Loss on disposal of discontinued operations (1,052) (616)
Attributable taxation expense 217 -
---------- ----------
Loss from discontinued operations (attributable
to owners of the Company) (5,181) (5,162)
---------- ----------
The major classes of assets and liabilities comprising the
operations classified as held for sale are as follows:
2010 2009
GBP'000 GBP'000
Property, plant and equipment 577 -
Trade and other receivables 5,885 -
Cash and bank balances 810 -
---------- ----------
Total assets classified as held for sale 7,272 -
---------- ----------
Trade and other payables (5,373) -
---------- ----------
Total liabilities associated with assets classified (5,373) -
as held for sale
---------- ----------
Net assets of disposal group 1,899 -
---------- ----------
4. Preliminary announcement
Whilst the financial information included in this announcement
has been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting Standards
(IFRS), this announcement does not itself contain sufficient
information to comply with IFRS. Full financial statements that
comply with IFRS were approved by the Board of Directors on 28 June
2011 and are expected to be published on the Group's website,
www.evolvecapital.co.uk and posted to shareholders before 30 June
2011.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2010
or 2009, but is derived from those accounts. Statutory accounts for
2009 have been delivered to the Registrar of Companies and those
for 2010 will be delivered following the Company's annual general
meeting. The auditors have reported on these accounts; their
reports were unqualified, did not draw attention to any matters by
way of emphasis without qualifying their report and did not contain
statements under s498(2) or (3) of the Companies Act 2006 or
equivalent preceding legislation.
This announcement was approved at a meeting of the Board of
Directors held on 28 June 2011.
5. Availability of report and accounts
The Group's full report and accounts will be dispatched to
shareholders as soon as is practicable and in any event no later
than 30 June 2011. Copies will also be available on the Group's
website, www.evolvecapital.co.uk, and on request from the Group's
head office at 223a Kensington High Street, London W8 6SG.
6. General Meeting
A General Meeting to approve the accounts is to be held on 27
July 2011. Notice of the General Meeting will be dispatched to
shareholders with the Group's report and accounts.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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