RNS Number:4862F
Europasia Education PLC
30 June 2006
EUROPASIA EUDCATION PLC
UNAUDITED PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2005
EuropAsia Education plc, the AiM-listed educational investment group, announces
its 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. We
saw strong growth in the value of our Chinese investments, which now constitute
the major part of our business.
"The strategy of the Group is to consolidate our UK businesses, where margins
are tight and there are limited growth opportunities, and invest in the fast
growing Chinese education market.
"The Company has a market capitalisation of #2.2 million, a significant discount
to the market value of its investments. The directors are looking at various
ways of bringing the market capitalisation in line with the value of the
underlying assets.
"The directors are looking at the possibility of raising additional funds to
increase our stakes in China Education Group or Dalian Business Institute, or
both, or making an acquisition to give us a more meaningful size."
For further information, please contact:
James Holmes, Chairman
EuropAsia Education 020 7355 7928
Paul Quade 020 7248 8010
CityRoad Communications 07947 186 694
CHAIRMAN'S STATEMENT
I am pleased to report on a year of progress. We saw strong growth in the value
of 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 and
related companies worldwide, with a focus on those in Europe and Asia.
The loss for the year before goodwill amortisation and impairment of investments
was #235,915 (2004: #280,887) which is a reflection of our strategy of reducing
overheads. In the short term, we will consolidate our UK businesses, where
margins are tight and there are limited growth opportunities, and invest in the
fast growing Chinese education market, with investment made during the period in
CEG and post year end in DBI. These investments have both listed on the UK's
Ofex stock market and are trading at a considerable premium to our investment
cost.
Review of investments
Bournemouth Educational Centre
The year proved to be as challenging as anticipated at the Bournemouth
Educational Centre which operates English 2000, our language and vocational
training investment based in Bournemouth, UK. There were a significant number
of 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 significant
investment in marketing both of the existing and new courses. These measures
affected the profit levels, but figures so far this year show an improvement on
last year.
Columbia International Investments Limited ("Columbia")
Columbia, which operates Management International ("MI"), our business training
and work experience investment is repositioning its business by cutting
overheads and focusing on opportunities with better margins. Again in 2006,
this has borne fruit with a new Managing Director with an agreement concluded
with Guildford College and a new franchise business with MI centres at existing
schools in Germany, Romania and shortly Poland. We wrote off the goodwill on
this investment during the year.
China Education Group
In February 2005 the Group made a #1.0m investment in CEG, with an additional
investment in October 2005 of #0.4 million to increase our stake to 15%. CEG has
a 25 year license to run a private college in Shandong Province. The money
invested went to fund the expansion of the college facilities, and in July 2005
phase one of the new Weihei Campus was completed, providing capacity for an
additional 5,000 students on top of the 8,000 existing students. For the year
ended June 2005, CEG reported profits of #2.4 million and the September term
started with 11,000 students, up by 3,000. The target is for a 20,000 student
capacity from September 2007. In December 2005, CEG was admitted to trading on
the UK's Ofex market. Interim results to December 2005 showed a 50% increase in
profits, reflecting the new students filtering through. A contract signed in
March this year has meant CEG will be delivering distance learning courses to
schools throughout China.
This investment has translated into real value for your Company. The initial
share 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. Our
investment includes #0.4 million of convertible loan notes, with the 7% coupon
providing a regular income for the Group.
Dalian Business Institute ("DBI")
Post the year under review, the Company invested in a second Chinese education
business. DBI has 5,000 students and a similarly strong management team with
ambitious growth plans. The Group invested #0.7m on the back of profits to July
2005 of #1.7 million. When DBI announced its proposed Ofex admission, the Group
invested a further #0.4m to fund expanded facilities and for acquisition
purposes giving the Group a stake of 11% on admission. Our investment of #1.1
million now has a market value of #2.2 million.
Finance
Following the success of our first investment in China via CEG, it was announced
on 23 September 2005 that the Company was launching a fundraising to raise #1
million by way of five year unlisted convertible loan notes which the Directors
participated 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 discount
to the market value of its investments. The directors are looking at various
ways of bringing the market capitalisation more in line with the value of the
underlying assets. Mindful of being a small company and the costs of our
listing, the directors are looking at the possibility of raising additional
funds to increase our stakes in DBI or CEG, or both, or making an acquisition to
give us a more meaningful size, which would make more use of the Company's AiM
listing. We will keep shareholders informed as things progress.
James Holmes
Chairman
30 June 2006
CONSOLIDATED PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED
31 DECEMBER 2005
2005 2004
# #
Turnover 434,667 360,188
Cost of sales (171,782) (164,818)
-------- ---------
Gross profit 262,885 195,370
Administrative 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 20,095
Interest payable (4,783) (3,220)
-------- ---------
Loss on ordinary activities before taxation (518,369) (322,379)
Taxation 130 1,359
Loss 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 operations
are continuing.
There were no recognised gains or losses not dealt with through the profit and
loss account.
CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2005
2005 2004
# # # #
Fixed assets
Intangible assets 382,013 628,547
Tangible assets 27,633 36,767
Investments - 66,040
--------- ---------
409,646 731,354
Current assets
Debtors 37,735 58,486
Investments 1,414,844 -
Cash at bank and in hand 70,589 578,806
---------- ----------
1,523,168 637,292
Creditors: 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 1,018,798
Creditors: amounts falling due after more than one
year (452,399) -
Provisions for liabilities and charges
Deferred taxation (3,694) (3,694)
--------- ---------
Total assets less liabilities 1,334,960 1,015,104
Capital and reserves
Called up share capital 2,239,228 1,680,498
Share premium account 3,284,177 3,004,812
Profit 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 66,156 330,673
Investments 1,414,844 -
Cash at bank and in hand 30,718 163,842
----------- -----------
1,511,718 494,515
Creditors: 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 1,390,574
Creditors: amounts falling due after more than one
year (452,399) -
---------- ----------
Total assets less liabilities 1,721,243 1,390,574
---------- ----------
Capital and reserves
Called up share capital 2,239,228 1,680,498
Share premium account 3,284,177 3,004,812
Profit 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 20,095
Interest paid (4,783) (3,220)
--------- --------
Net cash inflow for returns on investments 4,624 16,875
and servicing of finance
Capital expenditure and financial investment
Payments 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
Financing
Issue of share capital - 539,194
Cash acquired with investments - 475,861
---------- ---------
(Decrease)/increase in cash in the year (508,217) 77,840
---------- ---------
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED
31 DECEMBER 2005
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 2005 or 31 December
2004. The statutory financial statements for the year ended 31 December 2005
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 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 shares
being 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 the
effects of dilutive potential ordinary shares.
The comparative has been restated to account for the 5:1 share consolidation
effected during the year.
The weighted average has been adjusted for the effects of convertible loan stock
outstanding at the year end that were dilutive during the year.
The calculation of diluted earnings per share does not include the effect of any
exercise of outstanding share options 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
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