TIDMEVOL
RNS Number : 4338G
Evolve Capital PLC
29 June 2012
Evolve Capital plc
("Evolve" or the "Company")
Final Results for the year ended 31 December 2011
CHAIRMAN'S STATEMENT
I am pleased to report to you on the Company's activities during
the year to 31 December 2011.
Events during the period in both Europe and closer to home
conspired to create the most challenging market conditions in the
UK that have been seen for many years. In response to these
conditions the Company has continued to bear down on its cost base
and to focus on supporting those investments which the Directors
believe have the potential to generate a significant return for the
Company in the medium to long term.
At the start of the period under review Evolve had a 53.61%
stake in Astaire Group Plc ("Astaire"). As announced in October
2011 Evolve increased its holding in Astaire to 100% through a
court sanctioned Scheme of Arrangement. This was achieved by the
issue of 21,563,454 new ordinary shares in Evolve to certain
Astaire shareholders and by the payment of an aggregate of
GBP1,596,782 in cash to certain other of its shareholders who had
elected to exit from their investment in Astaire. On 27 October
2011 Astaire's trading facility on AIM was cancelled and it ceased
to be a public company in its own right.
As a consequence of this transaction Evolve has gained access to
some GBP2.5 million of additional cash resources and acquired a
number of additional investments from which it may be possible to
generate future returns for its shareholders. As at 31 December
2011 Evolve had available cash resources of GBP1.2 million.
During the period Evolve invested a further GBP500,000 in 3D
Diagnostic Imaging Plc ("3D"), an AIM listed company in which
Evolve already held a significant stake. This investment was made
as a part of a larger fundraising exercise by the company from
which it raised GBP1.41 million. As a consequence Evolve now holds
32.8% of 3D's issued share capital. The performance of this
investment has been very disappointing and is referred to in more
detail below.
Also during the period under review Evolve invested GBP500,000
into Central Asian Minerals and Resources Plc ("CAMAR"), a PLUS
quoted company whose wholly owned subsidiary owns a 49% stake in a
joint venture gold mining project based in Tajikistan, to acquire
769,231 units. Each unit comprised one new ordinary share with an
issue price of 65 pence and a warrant to acquire one additional
CAMAR share at an issue price of 65 pence. This investment was made
as a part of a larger fundraising exercise by the company and
following that exercise Evolve now holds 5.3% of CAMAR's issued
share capital. The performance of this company is referred to in
more detail below.
In order to make these investments, both of which took place
before Evolve had secured access to the cash resources within
Astaire, Evolve borrowed an additional GBP775,000 from Kimono
Investment Holdings Limited ("Kimono"), an existing shareholder of
Evolve. A new loan agreement was entered into with Kimono that
consolidated this additional loan and the existing indebtedness of
the Company to Kimono of GBP479,636 under a single loan agreement.
I also agreed to lend the Company GBP100,000 at the same rate of
interest as the loan from Kimono. Full details of these
arrangements were announced by Evolve on 24 August 2011 and both of
these loans were subsequently repaid in full in November 2011.
Evolve's on-going strategy is to optimise its returns through a
series of staged exits from the investments that it has made
directly and from those acquired as a consequence of the Astaire
transaction. It is currently anticipated that these exits will take
a number of years to achieve.
Operations and Investment Activity
As referred to above, Astaire's trading facility on AIM has now
been cancelled and it has ceased to be a public company in its own
right. Over the coming years every effort will be made to optimise
the returns from the orderly disposal of the underlying assets
acquired from Astaire with a view to mitigating the historic losses
experienced by Evolve from its investment in this group.
Evolve's other wholly owned subsidiary, St Helens Capital
Partners LLP ("St Helens"), continues to be one of the leading
advisers to companies on the PLUS-SX market or seeking to join that
market. In March 2012 St Helens once again won the industry award
for 'PLUS Adviser of the Year'.
Market conditions for small cap companies continue to be very
difficult and speculation as to the future ownership of PLUS Stock
Exchange Plc, the company that operates the PLUS-SX market, prior
to its recent acquisition by ICAP has served to further dampen the
level of activity in this market. That said, St Helens is
continuing to maintain tight control over its cost base and is well
placed to develop as market sentiment improves.
Evolve's principal investments as at 31 December 2011 can be
summarised as follows.
Name Market Shares % Cost - GBP Fair Value
held - GBP
----------------------------- ---------- ------------ ------- ------------ ------------
3D Diagnostic Imaging
Plc AIM 78,974,354 32.80 1,789,925 503,462
----------------------------- ---------- ------------ ------- ------------ ------------
Aconite Technology Limited Private 201,190 2.69 211,250 26,750
----------------------------- ---------- ------------ ------- ------------ ------------
Bluehone Holdings Plc PLUS 23,615,411 19.23 386,763 301,096
----------------------------- ---------- ------------ ------- ------------ ------------
Central Asian Minerals
and Resources Plc PLUS 885,895 5.30 503,750 544,926
----------------------------- ---------- ------------ ------- ------------ ------------
Pulse Group Plc PLUS 6,079,888 7.33 328,595 64,599
----------------------------- ---------- ------------ ------- ------------ ------------
Woodspeen Training Group
Plc PLUS 3,000,000 14.62 450,000 573,750
----------------------------- ---------- ------------ ------- ------------ ------------
Investment Review
3D Diagnostic Imaging Plc ("3D")
3D is an AIM listed company that owns the intellectual property
rights to a specific technology platform. The first commercial
product, based on the technology, is a highly accurate, hand-held
device for the early detection and monitoring of hidden tooth
decay. The company is now believed to have successfully overcome
the technology and regulatory hurdles, achieved industry
recognition and received a number of complimentary testimonials
from key opinion leaders. What remains to be achieved is volume
sales penetration. Unfortunately, during the early part of the
period under review, the company experienced a manufacturing
defect, which was promptly resolved but which adversely impacted
both its sales performance during the period and its available cash
resources. As a consequence 3D's share price fell sharply and it
was obliged to raise additional capital by issuing shares at a
price of 2p per share. The sales development profile after the
year-end, albeit from a modest starting position, is more
encouraging. However, the company's cash resources continue to be
constrained and it is once again exploring ways in which to
strengthen its balance sheet. The marked drop in 3D's share price
over the period under review, and subsequently, has resulted in a
significant write-down in the carrying value of this investment and
this write-down is a major contributor to Evolve's reported loss
for the year.
Aconite Technology Limited ("Aconite")
Aconite is a private company that develops and supplies software
for use in the card payment arena. During the period under review
revenues have been below expectation as a consequence of delays in
the signing of various contracts.
Bluehone Holdings Plc ("Bluehone")
Bluehone maintained a low profile during the period under review
as its management explored various options to increase the level of
funds under management. Since the year-end the company has launched
a new small company secured debt fund and announced an intention to
move from PLUS to the AIM market.
Central Asian Minerals and Resources Plc ("CAMAR")
CAMAR is a PLUS quoted company with a 49% stake in a joint
venture gold mining project in Tajikistan. During the period under
review the company raised an additional GBP4.4 million (before
costs) and after the year-end raised a further $4.5 million before
costs. The company is now focused on establishing the extent of the
additional resources that are believed to lie within the licensing
areas.
Pulse Group Plc ("Pulse")
Pulse is a PLUS quoted company and is a leading provider of
research process outsourcing in the Asia Pacific region with
clients drawn from around the world. During the period under review
the company won a number of new contracts but continued to be
sub-scale in size. The management are seeking a merger with one or
more strategic partners as a means of achieving the critical mass
that is anticipated will lead to a marked increase in shareholder
value.
Woodspeen Training Group Plc ("Woodspeen")
Woodspeen experienced difficult trading conditions during the
period under review principally due to changes and to uncertainty
in the funding of the Government sponsored training sector.
However, the company has a strong management team and a solid level
of cash resources with which to ride out the current period of
uncertainty.
Financial Performance
During the period under review the Group reported a loss of
GBP4.0 million (2010: loss of GBP8.8 million). The principal
contributor to this loss was the GBP3.5 million deterioration in
the carrying value of Evolve's investment in 3D. The losses from
2010 were a consequence of impairment and restructuring costs
associated with the discontinued operations within Astaire
Group.
At 31 December 2011 the Group had net assets of GBP5.1 million
(31 December 2010: GBP11.5 million) which included cash resources
of GBP1.2 million (31 December 2010: GBP4.5 million).
It is the Board's intention that we continue to focus on our
core strategy of optimising returns from orderly exits from various
of our existing investments and from continuing to support those
investments where we consider there is the future potential to
generate significant returns. I look forward to updating you on
further progress in due course.
Oliver Vaughan
Executive Chairman
28 June 2012
For further information please contact:
Evolve Capital plc
Oliver Vaughan Tel: 020 7937 4445
Allenby Capital Limited
(nominated adviser and broker) Tel: 020 3328 5656
Nick Naylor
Nick Athanas
FINANCIAL REVIEW
Results
The loss after tax for the year from all operations was GBP4.0
million compared with a loss of GBP8.8 million in 2010, and the
loss after tax from continuing operations was GBP4.0 million in
2011 compared with a loss of GBP4.5 million in 2010.
The result before tax can be divided into the following:
2011 2010
GBP'000 GBP'000
Loss from continuing operations before taxation (4,880) (4,164)
Profit / (loss) from discontinued operations before
taxation 46 (4,990)
"Continuing operations" consists of the on-going investment
activities conducted by the Group, which is actively seeking to
realise value from the assets it holds and minimise its exposure to
liabilities.
"Discontinued operations" relate to the activities within
Astaire Group Limited. In particular the sales of both Rowan
Dartington and Dowgate Capital Stockbrokers were completed and
announced before Astaire itself became a wholly owned subsidiary of
the Company and left the AIM market.
Income Statement
Gross fee and commission income for the Group in 2011 was
GBP0.49 million and related exclusively to St Helens.
Realised gains on equity investments and option positions
delivered a net gain of GBP1.2 million (2010: GBP0.4 million). The
as yet unrealised movement in the valuation of options and warrants
held at 31 December 2011 was a loss of GBP0.9 million (2010: GBP0.2
million). Unrealised losses in respect of Evolve's investment in 3D
were responsible for a further loss of GBP3.5 million.
The disposal of Dowgate Capital Stockbrokers Plc and Rowan
Dartington & Co Limited by Astaire Group, realised losses
totalling GBP0.2 million within the Group.
Operating expenses excluding impairments, amortisation,
share--based payments and restructuring charges, fell significantly
as they were substantially concluded during 2010. Group expenses
are expected to be reduced further during 2012 with lower
headcount.
The carrying value of goodwill and other intangibles for
discontinued operations had been reduced to GBPNil at 31 December
2010, in anticipation of their disposal during 2011. The carrying
value of other intangibles for continuing operations has been
reviewed and impaired as considered appropriate.
Business Review
Astaire Group Limited
As has been stated in the Chairman's statements this has been a
disappointing investment, Astaire Group's reported results for 2011
including a loss after tax of GBP0.7 million.
St Helens Capital Partners LLP
Given market circumstances St Helens had a satisfactory year of
trading generating GBP0.49 million of revenue and a small loss of
GBP0.1 million.
Investments
During the year the Group invested further funds into both 3D
and CAMAR.
Loss Per Share
The basic loss per share from continuing operations for the year
was 1.40 pence compared to 2.13 pence in 2010. The loss per share
from continuing and discontinued operations was 1.39 pence (2010:
4.18 pence).
Balance Sheet
Net assets per share declined from 4.06 pence at 31 December
2010 to 1.69 pence at 31 December 2011. The main contributor to
this decline was the unrealised loss arising from Evolve's
investment in 3D.
Included in assets, at 31 December 2011 was GBP1.2 million of
cash (31 December 2010: GBP4.5 million).
Cash Flow
At 31 December 2010 the cash and cash equivalents held by the
consolidated group totalled GBP4.5 million. Since then Group cash
and cash equivalents have fallen to GBP1.2 million at 31 December
2011, representing net cash per share of 0.38 pence (31 December
2010: 1.58 pence).
Dividends
The Board are not recommending the payment of a final dividend
for 2011 (2010: GBPNil).
Oliver Vaughan
Director
28 June 2012
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
Fee and commission income 492 533
Fee and commission expenses (2) (23)
Net fee and commission income 490 510
Other income 639 -
Total income 1,129 510
Profit on disposal of available-for-sale
investments 1,159 359
Loss on fair value through profit and
loss investments (4,481) (186)
Loss on sale of subsidiary undertakings (241) (1,052)
Operating expenses
Impairment of goodwill - (299)
Impairment of other intangibles (31) (63)
Amortisation of other intangibles (77) (76)
Share-based payments credit - 85
Other operating expenses (2,348) (3,445)
----------------------------------------------- ---------- ----------
Total operating expenses (2,456) (3,798)
Operating loss (4,890) (4,167)
Investment revenue 50 36
Finance costs (40) (33)
Loss on ordinary activities before taxation (4,880) (4,164)
Taxation credit / (charge) 846 (327)
Loss from continuing operations (4,034) (4,491)
Discontinued operations
Profit / (loss) from discontinued operations 46 (4,346)
Loss for the period (3,988) (8,837)
========== ==========
Attributable to :
Owners of the Company (3,723) (5,279)
Non-controlling interests (265) (3,558)
(3,988) (8,837)
========== ==========
Loss per ordinary share (pence)
From continuing operations
- Basic (1.40) (2.13)
========== ==========
- Diluted (1.11) (1.85)
From continuing and discontinued operations
- Basic (1.39) (4.18)
========== ==========
- Diluted (1.10) (3.65)
========== ==========
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
Loss for the period (3,988) (8,837)
Other comprehensive income:
Gains on revaluation of available-for-sale
investments taken
to equity (618) 208
Transferred to profit or loss on sale
of available-for-sale
investments (1) (63)
Deferred tax relating to components of
other comprehensive
income 146 (171)
Other comprehensive income for the year,
net of tax (473) (26)
Total comprehensive income for the year (4,461) (8,863)
========== ==========
Total comprehensive income attributable
to:
Owners of the Company (4,294) (5,286)
Non-controlling interests (167) (3,577)
(4,461) (8,863)
========== ==========
CONSOLIDATED BALANCE SHEET
as at 31 December 2011
31 December 31 December 31 December
2011 2010 2009
GBP'000 GBP'000 GBP'000
ASSETS
Non-current assets
Goodwill - - 1,400
Other intangible assets 52 160 3,967
Property, plant and equipment 3 7 503
Total non-current assets 55 167 5,870
Current assets
Trade and other receivables 734 1,816 8,296
Available-for-sale investments 3,462 2,346 2,963
Fair value through profit and
loss investments 503 4,484 4,813
Cash and cash equivalents 1,169 4,463 7,895
Assets held for sale - 7,272 -
Total current assets 5,868 20,381 23,967
Total assets 5,923 20,548 29,837
============= ============= =============
LIABILITIES
Current liabilities
Trade and other payables 739 2,478 8,638
Current tax liabilities - 1 20
Provisions - - 511
Liabilities directly associated - 5,373 -
with assets held for sale
Total current liabilities 739 7,852 9,169
Non-current liabilities
Deferred tax liabilities 40 1,032 1,082
Convertible loan stock - 172 -
Total non-current liabilities 40 1,204 1,082
Total liabilities 779 9,056 10,251
------------- ------------- -------------
EQUITY
Share capital 1,911 1,890 1,785
Share premium account 11,758 11,789 11,457
Equity reserve 247 247 -
Fair value and other reserves 150 721 728
Retained deficit (8,922) (5,448) (255)
Parent Company's shareholders'
equity 5,144 9,199 13,715
Non-controlling interests - 2,293 5,871
Total equity and liabilities 5,923 20,548 29,837
============= ============= =============
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2011
Fair
value Non-
Share Share Equity and 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 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
Issue of share
capital 21 259 - - - 280 - 280
Share issue
expenses
/ Costs
associated with
acquisition of
non-controlling
interest - (290) - - - (290) - (290)
Consideration
given
for non-
controlling
interest - - - - - - (1,877) (1,877)
Transfer of
equity
reserves
arising from
acquisition
of
non-controlling
interest - - - - 249 249 (249) -
Transfer between - -
reserves - - - - - -
Loss for the
year - - - - (3,723) (3,723) (265) (3,988)
Other
comprehensive
income
for the year - - - (571) - (571) 98 (473)
Balance at 31
December
2011 1,911 11,758 247 150 (8,922) 5,144 - 5,144
================== ========== ========== ========== ============ =========== ========= ============= =========
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2011
2011 2010
GBP'000 GBP'000
Net cash generated / (used) in operating
activities 600 (3,653)
---------- ----------
Investing activities
Interest received 32 49
Dividends received 18 17
Proceeds on disposal of available-for-sale
investments 47 599
Purchases of available-for-sale investments (619) (211)
Purchases of fair value through profit
and loss investments (500) (450)
Proceeds on disposal of property, plant
and equipment - 1
Purchases of property, plant and equipment - (437)
Acquisition of non-controlling interest (1,877) -
of subsidiary
Disposal of subsidiaries (506) (263)
Net cash from investing activities (3,405) (695)
---------- ----------
Financing activities
Repayment of loan stock (1,254) -
Repayment of director's loan (100) -
Proceeds from issue of ordinary share
capital 280 524
Proceeds from issue of loan stock 775 480
Loan raised on director 100 -
Expenses of share issues (290) (88)
Net cash from financing activities (489) 916
---------- ----------
Net decrease in cash and cash equivalents (3,294) (3,432)
Cash and cash equivalents at beginning
of year 4,463 7,895
Cash and cash equivalents at end of
year 1,169 4,463
========== ==========
NOTES TO THE PRELIMINARY ANNOUNCEMENT
for the year ended 31 December 2011
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 2013. Group
cash balances have decreased further during 2011 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 14 February 2011. The Group had also
entered into an agreement granting exclusivity to certain parties
who subsequently exchanged contracts and then completed on the
acquisition of Rowan Dartington & Co Limited on 8 March 2011.
Accordingly the activities of Astaire Securities Plc, Dowgate
Capital Stockbrokers Limited and Rowan Dartington & Co Limited
have been treated as discontinued.
The results of the discontinued operations, which have been
included in the consolidated income statement, were as follows:
2011 2010
GBP'000 GBP'000
Total income 1,104 10,996
(Loss) / profit on disposal of investments (35) 6
Expenses (1,023) (15,992)
Profit / (loss) before taxation 46 (4,990)
Attributable taxation credit - 644
46 (4,346)
Loss on disposal of discontinued operations (241) (1,052)
Attributable taxation credit - 217
Loss from discontinued operations (attributable
to owners of the Company) (195) (5,181)
========== ==========
A loss after taxation of GBP44,000 arose on the disposal of
Dowgate Capital Stockbrokers Plc. During the year Dowgate Capital
Stockbrokers Limited contributed an outflow of GBP82,000 (2010:
inflow of GBP472,000) to the Group's net operating cash flows,
received GBPNil (2010: GBP2,900) in respect of investing activities
and paid GBPNil (2010: GBP451,000) in respect of financing
activities.
A loss after taxation of GBP197,000 arose on the disposal of
Rowan Dartington & Co Limited. During the year Rowan Dartington
& Co Limited contributed an inflow of GBP208,000 (2010: outflow
of GBP409,000) to the Group's net operating cash flows, paid GBPNil
(2010: GBP429,000) in respect of investing activities and received
GBP1,000 (2010: GBP865,000) in respect of financing activities.
A loss after taxation of GBP835,000 arose on the disposal of
Astaire Securities Plc in 2010. During that year Astaire Securities
Plc contributed an outflow of GBP382,000 to the Group's net
operating cash flows and paid GBP2,800 in respect of investing
activities.
The major classes of assets and liabilities comprising the
operations classified as held for sale are as follows:
2011 2010
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
as held for sale - (5,373)
----------- ----------
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
2012 and are expected to be published on the Group's website,
www.evolvecapital.co.uk and posted to shareholders before 30 June
2012.
The financial information set out above does not constitute the
Company's statutory accounts for the years ended 31 December 2011
or 2010, but is derived from those accounts. Statutory accounts for
2010 have been delivered to the Registrar of Companies and those
for 2011 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 2012.
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 2012. 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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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