RNS Number:5898J
Europasia Education PLC
28 September 2006
28 September 2006
Europasia Education plc
("EPE" or "the Group")
Interim Results 2006
I am pleased to report on a very good six months for the Group.
Highlights include:
* #1.1 million invested in a Chinese education business, which subsequently
listed on PLUS doubling the value of our stake;
* Continued strong growth at investee China Education Group;
* Fund raising successfully closed at over #1 million;
* Considerable reduction in running costs
Financial Results
Turnover is primarily derived from our two wholly owned UK businesses,
Management International ("MI") and Bournemouth Education Centre Ltd ("E2000").
Turnover was marginally down on the same period last year, primarily as a result
of the scaling back of operations at MI, with E2000 showing a considerable
improvement in performance compared to the equivalent period last year following
the restructuring in the second half of last year.
Costs have been reduced considerably, so that the operating loss is #105,000
against #337,000 for the same period last year. E2000 and MI are both trading
profitably, but the loss arises as a result of group overheads primarily related
to the costs of being listed, as well as a one-off charge to VAT of #43,000.
Net assets of #1.5 million consist primarily of our holdings in PLUS listed
China Education Group ("CEG") and Dalian Business Institute ("DBI"), totalling
#2.5 million at cost. These had a market value of #5.9 million at 30 June 2006,
showing an unrealised profit of #3.4 million.
In the early part of the year, the Group raised over #1 million via the issue of
unlisted secured convertible loan notes, with the proceeds used to increase our
stake in DBI and provide additional working capital.
Investment Review
In 2005 we invested #1.4 million in CEG for a 15% stake. CEG had a market
capitalisation at 30 June 2006 of #24.4 million, valuing our stake at #3.7
million. CEG continues to perform strongly, announcing interim profits to 31
December 2006 of #1.7 million, up nearly 50%. In March CEG signed a joint
venture agreement with the Beijing Chuangshi Huangiu Technology Development
Company to offer distance learning courses throughout China.
EPE holds a 10.8% stake in DBI, acquired during the period at a cost of #1.1
million. Based in Liaoning Province, DBI consists of six colleges and five
independent faculties teaching eight business and business related subjects to
five thousand students. DBI had a market capitalisation of #20.3 million at 30
June 2006, valuing our stake at #2.2 million. DBI announced interim profits to
31 January 2006 of #0.9m, up 13%.
Outlook
We remain committed to a strategy of growing the business to a more meaningful
size to make better use of its AiM listing, either by further investments in our
current investees or an acquisition of a larger business.
James Holmes
Chairman
28 September 2006
Europasia Education plc
Consolidated Unaudited Unaudited Audited
Profit and Loss Account 6 months to 6 months to Year to
30 Jun 06 30 Jun 05 31 Dec 05
# # #
Turnover 213,320 289,026 434,667
Cost of Sales (52,641) (98,773) (171,782)
-------- -------- --------
Gross Profit 160,679 190,253 262,885
Administrative expenses (266,004) (460,719) (719,838)
Provision for investments - (66,040) (66,040)
-------- -------- --------
Operating loss (105,325) (336,506) (522,993)
Interest received 5,905 6,530 9,407
Interest payable (70,111) (3,735) (4,783)
-------- -------- --------
Loss before taxation (169,531) (333,711) (518,369)
Taxation (121) 130 130
-------- -------- --------
Loss after taxation (169,652) (333,581) (518,239)
-------- -------- --------
Basic and diluted loss per share (0.7p) (1.6p) (1.2p)
Consolidated Unaudited Unaudited Audited
Balance Sheet as at as at as at
30 Jun 06 30 Jun 05 31 Dec 05
# # #
Fixed Assets
Goodwill 359,760 431,743 382,013
Tangible assets 18,246 26,793 27,633
---------- ---------- ----------
378,006 458,536 409,646
Current assets
Debtors 129,219 70,054 37,735
Investments 2,454,144 993,861 1,414,844
Cash 367,170 288,894 70,589
---------- ---------- ----------
2,950,533 1,352,809 1,523,168
Current liabilities (190,188) (288,033) (141,761)
---------- ---------- ----------
Net current assets 2,760,345 1,064,776 1,381,407
Convertible loan notes (1,635,898) - (452,399)
Provision for deferred taxation (3,694) (3,694) (3,694)
---------- ---------- ----------
Total assets less current
liabilities 1,498,759 1,519,618 1,334,960
---------- ---------- ----------
Called up share capital 2,461,528 2,239,228 2,239,228
Share premium account 3,395,328 3,284,177 3,284,177
Profit and loss account (4,358,097) (4,003,787) (4,188,445)
---------- ---------- ----------
Equity shareholders funds 1,498,759 1,519,618 1,334,960
---------- ---------- ----------
Europasia Education plc
Consolidated Unaudited Unaudited Audited
Cash Flow statement 6 months to 6 months to Year to
30 Jun 06 30 Jun 05 31 Dec 05
# # #
Net cash inflow/(outflow) from
operating activities 41,086 (136,630) (376,480)
Returns on investments and servicing
of finance
Interest received 5,905 6,530 9,407
Interest paid (70,111) (3,735) (4,783)
Capital expenditure and financial investment
Payments to acquire tangible assets - (311) (11,173)
Receipts from disposal of tangible
assets 2,050 - -
Payments to acquire investments (705,849) (155,766) (156,148)
Proceeds on disposal of investments - - 30,960
---------- ---------- ----------
Net cash outflow before management of
liquid resources and financing (726,919) (289,912) (508,217)
Financing
Issue of convertible loan notes 1,023,500 - -
---------- ---------- ----------
Increase/(decrease) in cash in
period 296,581 (289,912) (508,217)
---------- ---------- ----------
Reconciliation of net cash flow movement
Opening net funds 70,589 578,806 578,806
Increase/(decrease) in cash in
period 296,581 (289,912) (508,217)
---------- ---------- ----------
Closing net funds 367,170 288,894 70,589
---------- ---------- ----------
Europasia Education plc
Notes to the interim results
1 Basis of preparation
The information relating to the six month period ended 30 June 2006 is unaudited
and has not been reviewed by the Auditors. These statements have been prepared
on accounting bases and policies that are consistent with those used in the
preparation of the financial statements of the company for the year ended 31
December 2005 with the exception of the adoption of FRS 20: Share based payments
which is discussed in note 2 below.
The information relating to the year ended 31 December 2005 is extracted from
the audited accounts of the Company, which have been filed at Companies House
and on which the auditors issued an unqualified opinion.
The financial information relating to the six month period ended 30 June 2006
does not constitute statutory accounts within the meaning of Section 240
Companies Act 1985. The financial information contained in this report was
approved by the Board of Directors on 27 September 2006.
2 Share based payments
The Group is required to adopt FRS 20: Share based payment which is applicable
for all periods commencing on or after 1 January 2006. FRS 20 requires an
expense to be recognised in respect of share options granted to directors and
employees. The expense is calculated by reference to the fair value at the date
of grant of the share options which is charged to the profit and loss account
over the vesting period of the options. There is no impact on the Group's cash
flow.
The fair value of options on the date of grant has been estimated using the
Black Scholes valuation model. The significant inputs to the model were:
a) Share price on the date of the grant
b) Exercise price
c) Expected volatility (50% based on historic volatility)
d) Risk free rate on date of grant
e) Expected dividend yield
No share options were issued in 2005 or 2006. The historic share options issued
by the Group vested immediately. Consequently there is an equal and opposite
entry to the Group's reserves and therefore no impact on the Group's net assets.
3 Loss per share
Loss per share is based on the loss after tax of #169,652 (30 June 2005:
#333,581) on 23,511,585 ordinary shares (30 June 2005: 20,585,624) being the
weighted average number of ordinary shares in issue in the period ended 30 June
2006. There is no dilutive effect of options.
4 Dividend
The directors do not recommend the payment of an interim dividend.
5 Taxation
The tax charge relates to a subsidiary of the Group which is not permitted to
claim relief from group tax losses brought forward.
6 Interim Results
Copies of the Interim Results are available on the Company's web site,
www.europasiaeducation.com, or from the Company's registered office, 4th Floor,
35 Park Lane, London W1K 1RB. Send an email to cynthia.zhu@londonasia.com if you
would like a copy of the accounts posted to you.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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