TIDMPTH
RNS Number : 6553T
Promethean PLC
08 December 2011
Promethean plc
Unaudited preliminary Results for the 12 months ended 30 June
2011
8 December 2011
Promethean plc (the "Company" or the "Group") today announces
its unaudited preliminary results for the twelve months ended 30
June 2011.
Financial highlights:
- Net assets as at 30 June 2011 were GBP30.3m (67.1 pence per
share)
- NAV per share has decreased by 2.9% or 2.0 pence per share
when compared to prior year NAV per share of 69.1 pence.
- To date, a total of 88 pence per share has been returned to
continuing shareholders (including carried interest distributions
paid to eligible shareholders).
Extracts from the Company's Report and Accounts for the year end
30 June 2011 ("R&A") are set out below, hard copies of which
have been posted to Shareholders today. The R&A will be
available on the Company's website shortly.
The Company's annual general meeting will be held at the offices
of The Registered Agent, Promethean plc, 3rd floor, Exchange House,
Athol St, Douglas, Isle of Man, IM1 1JD, on 30 December 2011 at
9:30 a.m. The notice of general meeting is contained in the
R&A.
- End -
Enquiries:
Sir Peter Burt
Promethean Investments LLP +44 (0) 207 479 7660
Tom Durie / Gillian McCarthy
Fairfax I.S. PLC +44 (0) 207 598 5368
Chairman's Statement
Introduction
General market uncertainty together with banks' and investors'
consequent aversion to risk is making exits from investments both
challenging and slower to complete as well as having an adverse
effect on realisable value. At the time of writing, the broader
continuing negative impact of the Eurozone crisis on the economy
means that we are seeking to realise our portfolio at a
particularly adverse time in the cycle.
Despite these difficulties and the economic strains, our
investments have continued to show good underlying performance
although in the case of Cambria and of IFG, this has not
necessarily been reflected in their share prices. Indeed, Cambria,
whose share price at the June year end was 39 pence per share has
suffered subsequently from stock market volatility with the price
of 28 pence per share at the close of trading on 5 December 2011.
In IFG's case the withdrawal by the bidder in September from the
takeover has had the inevitable impact on the IFG share price.
Promethean sold its holding in IFG subsequent to the year end. More
detail on both Cambria and IFG are given in the Manager's
Report.
On the plus side, TIS' management has done an excellent job of
stabilising the earnings of the business. The Manager has increased
the investment value reported at December 2010 by GBP3.7m to
GBP5.9m. At present the Manager is working with the TIS management
on a potential exit from the investment.
January Loan Services continues to make solid progress despite
the current turmoil within the UK mortgage market. The Manager has
increased the valuation to GBP0.5m at the year end.
In summary, it has continued to be a challenging environment for
the business although we have made some positive steps in spite of
some unpredictable events.
Following a number of discussions with shareholders during the
year, it is evident that there is some confusion regarding the
management fees paid to the Manager. The management fee payable to
the Manager was voted on and agreed at the 2009 AGM. In the
calendar year to December 2011, the management fee due to the
Manager is GBP875,000. As at 30 June 2011, the Manager had drawn
down fees totalling GBP291,000 and indicated that total fees for
the year to 31 December 2011 will not exceed GBP617,350,
representing a reduction of GBP257,650 on the agreed fee. The
highest paid member of the Manager received GBP120,488 for the year
to 30 June 2011.
As you will be aware, after the year end, the Board received
notices requisitioning an Extraordinary General Meeting with
resolutions seeking to replace the majority of the Board on two
separate occasions. Attempts to avoid the cost and disruption of
calling an EGM were unsuccessful and the EGM was duly called on 30
September 2011, all resolutions were defeated as announced to the
Market. The Company incurred costs of approximately GBP280,000 in
dealing with this matter. The Board and the Manager have reiterated
their commitment to realising the remaining portfolio as
efficiently as possible, as agreed with shareholders at the 2009
AGM.
As always, the Board and I are available to speak to any
shareholders who have any queries or who would like further
information.
Sir Peter Burt
Chairman
8 December 2011
Investment Manager's Review
Promethean Investments Fund LP ("Promethean") is managed by
Promethean Investments LLP (the "Manager"). Promethean is a limited
partnership that holds the Group's investments and of which the
Company is a Member along with its senior executives.
Overview
For the last 12 months the Manager has been looking to position
the portfolio to allow timely exits. The environment's volatility
has meant this process has been slower than anticipated. The
Manager's approach has been to try to focus on an exit route for
particular businesses within the portfolio then develop and execute
that route. In almost all cases due to market conditions these
exits are taking longer than anticipated to achieve.
To date, a total of 88 pence per share has been returned to
continuing shareholders (including carried interest distributions
paid to eligible shareholders).
Portfolio
As at 30 June 2011, the portfolio was as follows:
Cost Valuation(4) Gain/(Loss)
Company Sector GBP'000 GBP'000 GBP'000
--------------------- ------------ --------- ------------- ------------
Cambria Automobiles Automotive
plc (1) retailing 8,114 12,995 4,881
--------------------- ------------ --------- ------------- ------------
Financial
IFG Group plc services 6,316 6,928 612
--------------------- ------------ --------- ------------- ------------
InterMediactive Telecoms
Group (2) services - 3,061 3,061
--------------------- ------------ --------- ------------- ------------
January Loan
Services Limited Financial
(3) services 115 575 460
--------------------- ------------ --------- ------------- ------------
Media Square Marketing
plc services 6,098 132 (5,966)
--------------------- ------------ --------- ------------- ------------
Financial
TIS Group services 10,006 5,909 (4,097)
--------------------- ------------ --------- ------------- ------------
Total 30,649 29,600 (1,049)
----------------------------------- --------- ------------- ------------
Notes:
(1) The cost of Cambria Automobiles plc reflects the original
cost of the investment less the cost of the in specie capital
return and carried interest distributions made on 1 April 2010.
(2) The cost of InterMediactive Group has been reduced to zero
as the remaining investment reflects the carrying value of the
vendor loan notes only following the sale of InterMediactive on 1
April 2010.
(3) The cost of January Loan Services Limited reflects the
amount of the secured loan notes held by Promethean in Enterprise
Group that were offset to reflect the assets retained by January
Loan Services Limited.
(4) The valuations are in accordance with IFRS / IPEVCV
guidelines. Valuation of listed investments is based on the closing
bid price as at 30 June 2011. The valuation of private companies
also includes accrued interest on loan notes which is disclosed
separately on the statement of financial position.
Portfolio Review
Cambria Automobiles plc
The Manager and the Board of Cambria Automobiles plc have been
in discussions regarding the early release of the lock up deed that
prevents the sale or distribution of the Cambria shares held by
Promethean on or before 30 June 2012. The discussions are
continuing but have so far not led to a mutually agreeable
conclusion.
Cambria recently announced their trading results for the year to
31 August 2011. For the fourth successive year, Cambria had
achieved an increase in underlying profit before tax, to GBP4.9m,
an increase of GBP0.7m on the previous year. Net assets increased
21.9% in the year to GBP19.5m from GBP16.0m.
While the outlook for the UK automotive market for the next 12
months remains challenging, the Cambria business remains well
positioned in the sector with a strong management team, led by Mark
Lavery, who are keen to take advantage of the current economic
environment to extend their successful buy and build strategy. The
Manager believes that the automotive market turmoil will continue
for the foreseeable future and see this as a good opportunity for
the business to build upon its excellent results to date.
The Manager's primary goal is to create an environment where the
Board of Cambria are able to maximise the return to all
shareholders in the business and will continue to support them in
that goal. The Manager believes that the EGM action impacted the
Cambria share price and the business and while that process was
outside the Manager's hands, we will take all steps necessary to
ensure that any future exit happens in a controlled manner in order
to enhance and protect value for both Cambria and Promethean
shareholders.
This investment is valued at the closing bid price at 30 June
2011 of 39 pence per share. On 5 December 2011 the closing bid
price was 28 pence per share.
IFG Group plc
Promethean sold its stake in IFG Group plc ("IFG") in November
2011 for GBP3.8m. This resulted in a realised loss on the cost of
the investment of GBP2.5m. Gross dividends received over the period
of investment amounted to GBP0.5m.
InterMediactive Group
Promethean holds loan notes in InterMediactive ("IMA") which
were part of the deferred consideration received on its sale.
Although the notes are not due for early repayment, the Manager is
in continuing discussions with IMA's management team about a
prepayment of the outstanding amounts. These discussions may result
in an early prepayment of the loan notes and a settlement of the
deferred consideration on mutually acceptable terms.
January Loan Services Limited
The business has grown over the last year and is forecast
continued growth in 2012. The business is highly dependent on a
small but talented management team. The banking crisis has led to a
complete shake up in the mortgage market in the UK with many of the
largest players failing (including Enterprise Group). This has led
to a significant opportunity to build the next generation of large
mortgage brokers and lenders. January Loan Services is already
recognised as an industry leader in its chosen space of secured
loans and bridging finance and the Manager is confident it will
only continue to cement this position over time. Promethean holds a
30% minority stake of the company with January management being the
majority shareholders.
Media Square plc
Media Square plc ("MSQ") is a listed marketing services and
communications group. As per the EGM Circular, Promethean has been
looking to actively exit this investment.
MSQ recently updated the Market with its interim results for the
six month period ended 31 August 2011. Despite reporting
satisfactory results with a headline EBITDA of GBP1.1m, down
GBP0.1m from the corresponding period in 2010, the group
acknowledged it remained constrained by the level of debt and
associated funding costs within the group.
This investment is valued at the closing bid price at 30 June
2011 of 3.75 pence per share. On 5 December 2011 the closing bid
price was 0.7 pence per share, however, due to MSQ's lenders not
committing to additional funding, shares were suspended on 8
December 2011.
TIS Group
The Manager has written up the investment in TIS from GBP2.2m
reported in December 2010, to GBP5.9m. This is to reflect the
stabilisation of the business which resulted in slightly higher
profits for the year.
Promethean believe that there may be an opportunity to exit TIS
during Q1 of 2012. However, Promethean has no ability to force an
exit from TIS without the consent of the vendor loan note holders
who are not due repayment until 2014. To facilitate an early exit,
Promethean is asking shareholders to authorise an exit where some
of Promethean's interest in TIS is given up.
Outlook
If all goes according to plan the Manager would anticipate
exiting IMA, Cambria, Media Square and TIS in calendar year 2012.
The process to exit these transactions has been under consideration
from before the EGM requisition last summer. However the market
environment is extremely uncertain and nothing can be taken for
granted.
Principles of valuation of unlisted investments
Investments are stated at amounts considered by the directors to
be a reasonable assessment of their fair value, where fair value is
the amount at which an asset could be exchanged between
knowledgeable, willing parties in an arm's length transaction.
All investments are valued according to one of the following
bases:
-- Cost (less any provision required)
-- Earnings multiple
-- Sale price
-- Price of recent transaction or
-- Net assets
Investments are only valued at cost for a limited period after
the date of acquisition, otherwise investments are valued on one of
the other bases described above, and generally the earnings'
multiple basis of valuation will be used unless this is
inappropriate, as in the case of certain asset-based
businesses.
When valuing on an earnings' multiple basis, profits before
interest and tax of the current year will normally be used,
depending on whether or not more than six months of the accounting
period remain and the predictability of future profits. Such
profits will be adjusted to a maintainable basis, taxed at the full
corporation tax rate and multiplied by an appropriate and
reasonable price/earnings multiple. This is normally related to
comparable quoted companies, with adjustments made for points of
difference between the comparator and the company being valued, in
particular for risks, earnings' growth prospects and surplus assets
or excess liabilities.
Where a company has incurred losses, or if comparable quoted
companies are not primarily valued on an earnings' basis, then the
valuation may be calculated with regard to the underlying net
assets and any other relevant information, such as the pricing for
subsequent recent investments by a third party in a new financing
round that is actively being sought, then any offers from potential
purchasers would be relevant in assessing the valuation of an
investment and are taken into account in arriving at the
valuation.
Where appropriate, a marketability discount may be applied to
the investment valuation, based on the likely timing of an exit,
the influence over that exit, the risk of achieving conditions
precedent to that exit and general market conditions.
When investments have obtained an exit (either by listing or
trade sale) after the valuation date but before finalisation of
Promethean's relevant accounts, (interim or final), the valuation
is based on the exit valuation subject to an appropriate discount
to take account of the time period between valuation and exit
dates.
In arriving at the value of an investment, the percentage
ownership is calculated after taking into account any dilution
through outstanding warrants, options held by third parties or
other investors and performance related mechanisms.
Principles of valuation of listed investments
Investments are valued at bid-market price or the conventions of
the market on which they are quoted, subject if appropriate, to
marketability discounts where formal restrictions on trading
exist.
Events after the Reporting Period
As at 5 December 2011 the closing bid price for Cambria
Automobiles plc was 28 pence per share, resulting in a decrease in
the value of the investment of GBP3.1m or 8.1 pence per share on a
NAV basis.
As at 5 December 2011 the closing bid price for Media Square plc
was 0.7 pence per share, resulting in a decrease in the value of
the investment of GBP0.1m or 0.2 pence per share on a NAV basis.
However, due to Media Square's lenders not committing to additional
funding, shares were suspended on 8 December 2011.
As stated above, Promethean realised its investment in IFG for
GBP3.8m in November 2011. This resulted in a further reduction in
the carrying value of the investment at 30 June 2011 of GBP3.1m or
6.9 pence per share.
The impact of the share price movements in Cambria and MSQ and
realisation of IFG post the statement of financial position date
would result in an unaudited NAV per share as at 5 December 2011 of
51.9 pence per share. This represents a decrease of 22.7% versus
the pro forma NAV per share of 67.1 pence as stated in the audited
statement of financial position as at 30 June 2011.
On 30 September 2011, the Company held an EGM that had been
requisitioned by Laminvest N.V. (a registered holder of 22.1% of
the ordinary share capital of the Company) and Knox D'Arcy (which
is not a registered shareholder). All four resolutions were
rejected.
Promethean Investments LLP
8 December 2011
Promethean plc
Group Statement of Comprehensive Income
for the year to 30 June 2011
Unaudited
Year Year
ended ended
30 June 30 June
2011 2010
GBP'000 GBP'000
Investing Operations
Investment and other income 3,223 3,070
Realised and unrealised
(loss)/gain on financial
investments (2,768) 9,806
-------- --------
455 12,876
Management and other expenses (1,326) (2,550)
(Loss)/Profit from investing
activities (871) 10,326
-------- --------
(Loss)/Profit before finance
costs and taxation (871) 10,326
-------- --------
Finance income 3 8
Finance costs (5) (9)
(Loss)/Profit before tax (873) 10,325
-------- --------
Income tax expense (34) (57)
Group (Loss)/Profit (907) 10,268
-------- --------
Discontinued operations
Profit for the year from
discontinued operations - 3,056
(Loss)/Profit for the year (907) 13,324
-------- --------
Other comprehensive income,
net of tax - -
Total comprehensive income
for the year (907) 13,324
-------- --------
Attributable to:
Equity holders of the parent (907) 5,965
Minority interest - 7,359
(907) 13,324
-------- --------
(Loss)/Earnings per share
- (basic and diluted)
- Continuing (2.01p) 8.13p
- Discontinued nil 5.07p
-------- --------
- Total (2.01p) 13.20p
Promethean plc
Group Statement of Financial Position
as at 30 June 2011
Unaudited
June June
2011 2010
GBP'000 GBP'000
Non-current assets
Property, plant and equipment 12 28
Investments held at fair
value through profit or
loss 29,524 29,691
29,536 29,719
--------- ---------
Current assets
Trade and other receivables 665 278
Cash and cash equivalents 1,249 2,281
--------- ---------
1,914 2,559
Total assets 31,450 32,278
--------- ---------
Current liabilities
Trade and other payables 1,099 1,026
Taxation liabilities 35 29
Total liabilities 1,134 1,055
--------- ---------
Net assets 30,316 31,223
--------- ---------
Equity
Share capital 452 452
Share premium 13,103 13,103
Unrealised investment revaluation
reserve (20,096) (17,374)
Retained earnings 36,857 35,042
--------- ---------
Equity attributable to
equity holders of the parent 30,316 31,223
Minority interest - -
--------- ---------
Total equity 30,316 31,223
--------- ---------
Net asset per share GBP0.67 GBP0.69
Promethean plc
Statement of changes in equity for
the year ended 30 June 2011
Unaudited
Group
Unrealised
investment Retained
Share Share revaluation earnings Minority
capital premium reserve distributable interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 30 June
2010 452 13,103 (17,374) 35,042 - 31,223
--------- --------- ------------- --------------- ---------- ---------
Loss for the year - - - (907) - (907)
Unrealised gains reserve
transfer - - (2,722) 2,722 - -
--------- --------- ------------- --------------- ---------- ---------
Loss for the year - - (2,722) 1,815 - (907)
Other comprehensive
income - - - - - -
--------- --------- ------------- --------------- ---------- ---------
Total comprehensive
income for the year - - (2,722) 1,815 - (907)
Balance as at 30 June
2011 452 13,103 (20,096) 36,857 - 30,316
--------- --------- ------------- --------------- ---------- ---------
Group
Unrealised
investment Retained
Share Share revaluation earnings Minority
capital premium reserve distributable interest Total
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
Balance as at 30 June
2009 452 26,017 (19,111) 30,814 1,650 39,822
--------- --------- ------------- --------------- ---------- ---------
Capital return - (12,899) - - - (12,899)
Distribution to equity
holders - - - - (6,647) (6,647)
Minority interest - - - - (2,362) (2,362)
Expenses relating
to the return of capital
to the shareholders - (15) - - - (15)
--------- --------- ------------- --------------- ---------- ---------
Transactions with
owners - (12,914) - - (9,009) (21,923)
Profit for the year - - - 5,965 7,359 13,324
Unrealised gains reserve
transfer - - 1,737 (1,737) - -
--------- --------- ------------- --------------- ---------- ---------
Profit for the year - - 1,737 4,228 7,359 13,324
Other comprehensive
income - - - - - -
--------- --------- ------------- --------------- ---------- ---------
Total comprehensive
income for the year - - 1,737 4,228 7,359 13,324
Balance as at 30 June
2010 452 13,103 (17,374) 35,042 - 31,223
--------- --------- ------------- --------------- ---------- ---------
Promethean plc
Statement of Cash Flows for the year ended
30 June 2011
Unaudited
Group Company Group Company
2011 2011 2010 2010
GBP'000 GBP'000 GBP'000 GBP'000
Cash (outflow)/inflow from
operating activities
Net (loss)/profit for the
year (873) (907) 10,325 (1,041)
Adjustments for :
Depreciation 16 - 44 -
Profit on disposal of subsidiaries - - (4,618) -
Distribution paid to minority
interests - - (3,049) -
Finance income 3 - 8 -
Finance cost (5) - (9) -
Unrealised investment losses/(gains) 2,722 580 (1,737) 8,958
(Increase) / decrease in trade
and other receivables (3,070) - (3,496) (1)
Increase/(decrease) in payables 73 (30) 461 (39)
Tax (paid)/received (28) 6 (28) (29)
Cash flows from operating
activities (discontinued operations) - - (52) -
Net cash (outflow)/inflow
in operating activities (1,162) (351) (2,151) 7,848
-------- -------- -------- --------
Cash inflow from investing
activities
Disposal of subsidiaries - - 8,602 -
Proceeds from sale of investments - - 2 -
Proceeds from returns on investments 128 - - -
Purchase of property, plant
& equipment - - (13) -
Finance income (3) - (8) -
Cash flows from investment
activities (discontinued operations) - - (72) -
Net cash inflow in investing
activities 125 - 8,511 -
-------- -------- -------- --------
Cash inflow/(outflow) from
financing activities
Capital return - - (7,484) (7,484)
Finance cost 5 - 9 -
Cash flows from investment
activities (discontinued operations) - - (2,029) -
Net cash inflow/(outflow)
in financing activities 5 - (9,504) (7,484)
-------- -------- -------- --------
Net (decrease)/increase in
cash and cash equivalents (1,032) (351) (3,144) 364
-------- -------- -------- --------
Cash and cash equivalents
at beginning of year 2,281 540 5,425 176
-------- -------- -------- --------
Cash and cash equivalents
at end of year 1,249 189 2,281 540
-------- -------- -------- --------
This information is provided by RNS
The company news service from the London Stock Exchange
END
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