Amd Commo Exagr Regulatory News (COMG)

30 Jun 2006 15:08

Europasia Education PLC30 June 2006 EUROPASIA EUDCATION PLC UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005 EuropAsia Education plc, the AiM-listed educational investment group, announcesits preliminary results for the year to 31 December 2005. Highlights: • Net assets up 32 per cent at £1.3 million (2004: £1.0 million) • Investment of £1.4 million in China Education Group valued at £2.8 million at year end • Post year end investment in Dalian Business Institute of £1.1 million now valued at £2.2 million • Current market value of listed investments £3.7 million above cost • Over £1 million raised post year end to fund new investments Chairman James Holmes said: "I am pleased to report on a year of progress. Wesaw strong growth in the value of our Chinese investments, which now constitutethe major part of our business. "The strategy of the Group is to consolidate our UK businesses, where marginsare tight and there are limited growth opportunities, and invest in the fastgrowing Chinese education market. "The Company has a market capitalisation of £2.2 million, a significant discountto the market value of its investments. The directors are looking at variousways of bringing the market capitalisation in line with the value of theunderlying assets. "The directors are looking at the possibility of raising additional funds toincrease our stakes in China Education Group or Dalian Business Institute, orboth, or making an acquisition to give us a more meaningful size." For further information, please contact: James Holmes, ChairmanEuropAsia Education 020 7355 7928 Paul Quade 020 7248 8010CityRoad Communications 07947 186 694 CHAIRMAN'S STATEMENT I am pleased to report on a year of progress. We saw strong growth in the valueof our Chinese investments, which now constitute the major part of our business,while consolidation has taken place in our UK investment interests. Highlights • Net assets at cost at year end up 32% to £1.3 million (2004: £1.0 million) • Investment of £1.4 million in China Education Group ("CEG"), valued at £2.8 million at 31 December 2005, a 99% increase over cost. Currently valued at £3.7 million, a 160% rise in value over cost. • Interim results to December 2005 at CEG showed 50% increase in profits. • Raised over £1 million post year end via issue of Convertible Loan Notes to fund new CEG type investments • Post year end investment in Dalian Business Institute ("DBI") now valued at £2.2 million, a 108% increase over costs. Strategy The strategy of the Group continues to be to invest in education businesses andrelated companies worldwide, with a focus on those in Europe and Asia. The loss for the year before goodwill amortisation and impairment of investmentswas £235,915 (2004: £280,887) which is a reflection of our strategy of reducingoverheads. In the short term, we will consolidate our UK businesses, wheremargins are tight and there are limited growth opportunities, and invest in thefast growing Chinese education market, with investment made during the period inCEG and post year end in DBI. These investments have both listed on the UK'sOfex stock market and are trading at a considerable premium to our investmentcost. Review of investments Bournemouth Educational Centre The year proved to be as challenging as anticipated at the BournemouthEducational Centre which operates English 2000, our language and vocationaltraining investment based in Bournemouth, UK. There were a significant numberof changes in staffing as we altered the course mix to higher margin courses,resulting in a number of one off payments. There was also a significantinvestment in marketing both of the existing and new courses. These measuresaffected the profit levels, but figures so far this year show an improvement onlast year. Columbia International Investments Limited ("Columbia") Columbia, which operates Management International ("MI"), our business trainingand work experience investment is repositioning its business by cuttingoverheads and focusing on opportunities with better margins. Again in 2006,this has borne fruit with a new Managing Director with an agreement concludedwith Guildford College and a new franchise business with MI centres at existingschools in Germany, Romania and shortly Poland. We wrote off the goodwill onthis investment during the year. China Education Group In February 2005 the Group made a £1.0m investment in CEG, with an additionalinvestment in October 2005 of £0.4 million to increase our stake to 15%. CEG hasa 25 year license to run a private college in Shandong Province. The moneyinvested went to fund the expansion of the college facilities, and in July 2005phase one of the new Weihei Campus was completed, providing capacity for anadditional 5,000 students on top of the 8,000 existing students. For the yearended June 2005, CEG reported profits of £2.4 million and the September termstarted with 11,000 students, up by 3,000. The target is for a 20,000 studentcapacity from September 2007. In December 2005, CEG was admitted to trading onthe UK's Ofex market. Interim results to December 2005 showed a 50% increase inprofits, reflecting the new students filtering through. A contract signed inMarch this year has meant CEG will be delivering distance learning courses toschools throughout China. This investment has translated into real value for your Company. The initialshare price on the Ofex admission was 32.25p and at the time of writing is 45p,valuing our stake at £3.7 million against an investment of £1.0 million. Ourinvestment includes £0.4 million of convertible loan notes, with the 7% couponproviding a regular income for the Group. Dalian Business Institute ("DBI") Post the year under review, the Company invested in a second Chinese educationbusiness. DBI has 5,000 students and a similarly strong management team withambitious growth plans. The Group invested £0.7m on the back of profits to July2005 of £1.7 million. When DBI announced its proposed Ofex admission, the Groupinvested a further £0.4m to fund expanded facilities and for acquisitionpurposes giving the Group a stake of 11% on admission. Our investment of £1.1million now has a market value of £2.2 million. Finance Following the success of our first investment in China via CEG, it was announcedon 23 September 2005 that the Company was launching a fundraising to raise £1million by way of five year unlisted convertible loan notes which the Directorsparticipated in. This was closed in January with in excess of £1 million raised. Future prospects The Company has a market capitalisation of £2.2 million, a significant discountto the market value of its investments. The directors are looking at variousways of bringing the market capitalisation more in line with the value of theunderlying assets. Mindful of being a small company and the costs of ourlisting, the directors are looking at the possibility of raising additionalfunds to increase our stakes in DBI or CEG, or both, or making an acquisition togive us a more meaningful size, which would make more use of the Company's AiMlisting. We will keep shareholders informed as things progress. James HolmesChairman30 June 2006 CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED31 DECEMBER 2005 2005 2004 £ £ Turnover 434,667 360,188Cost of sales (171,782) (164,818) -------- ---------Gross profit 262,885 195,370Administrative expenses Other (719,838) (534,624) Provision for diminution in value of fixed asset investment (66,040) - -------- ---------Operating loss (522,993) (399,254) -------- ---------Interest receivable and similar income 9,407 20,095Interest payable (4,783) (3,220) -------- ---------Loss on ordinary activities before taxation (518,369) (322,379)Taxation 130 1,359Loss on ordinary activities after taxation (518,239) (321,020) -------- --------- Loss per share Pence Pence Basic and diluted 1.2 1.1 The profit and loss account has been prepared on the basis that all operationsare continuing. There were no recognised gains or losses not dealt with through the profit andloss account. CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005 2005 2004 £ £ £ £Fixed assets Intangible assets 382,013 628,547Tangible assets 27,633 36,767Investments - 66,040 --------- --------- 409,646 731,354Current assetsDebtors 37,735 58,486Investments 1,414,844 -Cash at bank and in hand 70,589 578,806 ---------- ---------- 1,523,168 637,292Creditors: amounts falling due within one year (141,761) (349,848) ---------- ----------Net current assets 1,381,407 287,444 --------- ---------Total assets less current liabilities 1,791,053 1,018,798Creditors: amounts falling due after more than oneyear (452,399) -Provisions for liabilities and chargesDeferred taxation (3,694) (3,694) --------- ---------Total assets less liabilities 1,334,960 1,015,104 Capital and reservesCalled up share capital 2,239,228 1,680,498Share premium account 3,284,177 3,004,812Profit and loss account (4,188,445) (3,670,206) --------- ---------Shareholders' funds - equity interests 1,334,960 1,015,104 COMPANY BALANCE SHEET AT 31 DECEMBER 2005 2005 2004 £ £ £ £Fixed assets Investments 750,267 1,082,106 Current assets Debtors 66,156 330,673Investments 1,414,844 - Cash at bank and in hand 30,718 163,842 ----------- ----------- 1,511,718 494,515Creditors: amounts falling due within one year (88,343) (186,047) ----------- -----------Net current assets 1,423,375 308,468 ---------- ----------Total assets less current liabilities 2,173,642 1,390,574Creditors: amounts falling due after more than oneyear (452,399) - ---------- ----------Total assets less liabilities 1,721,243 1,390,574 ---------- ----------Capital and reservesCalled up share capital 2,239,228 1,680,498Share premium account 3,284,177 3,004,812Profit and loss account (3,802,162) (3,294,736) ---------- ----------Shareholders' funds - equity interests 1,721,243 1,390,574 ---------- ---------- CONSOLIDATED CASH FLOW STATEMENT 31 DECEMBER 2005 2005 2004 £ £ £ £Net cash outflow from operating activities (376,480) (326,367) Returns on investments and servicing of finance Interest received 9,407 20,095Interest paid (4,783) (3,220) --------- --------Net cash inflow for returns on investments 4,624 16,875and servicing of finance Capital expenditure and financial investmentPayments to acquire tangible assets (11,173) (3,895)Payments to acquire investments (156,148) (623,828)Proceeds on disposals of investments 30,960 - --------- --------Net cash outflow for capital expenditure (136,361) (627,723)and financial investment ---------- ---------Net cash outflow before management of (508,217) (937,215)liquid resources and financing FinancingIssue of share capital - 539,194Cash acquired with investments - 475,861 ---------- ---------(Decrease)/increase in cash in the year (508,217) 77,840 ---------- --------- NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED31 DECEMBER 2005 1. Basis of preparation The financial information set out in this announcement does not constitute theCompany's statutory financial statements within the meaning of section 240 ofthe Companies Act 1985, for the years ended 31 December 2005 or 31 December2004. The statutory financial statements for the year ended 31 December 2005will be delivered to the Registrar of Companies following the Company's AnnualGeneral Meeting. This announcement is prepared on the basis of the accounting policies as statedin 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 loss per share is based on the loss after tax of£518,369 (2004: £321,020) and on 43,131,334 (2004: 146,530,824) ordinary sharesbeing the weighted average number of ordinary shares in issue during the period. The calculation of diluted earnings per share is based on the loss after tax of£518,369 (2004: £321,020) and on 61,227,294 ordinary shares (2004: 146,530,824),being the weighted average number of ordinary shares in issue, adjusted for theeffects of dilutive potential ordinary shares. The comparative has been restated to account for the 5:1 share consolidationeffected during the year. The weighted average has been adjusted for the effects of convertible loan stockoutstanding at the year end that were dilutive during the year. The calculation of diluted earnings per share does not include the effect of anyexercise of outstanding share options as these are not dilutive in accordancewith FRS 22. This information is provided by RNS The company news service from the London Stock Exchange