FST.L Regulatory News (FST)

30 Jun 2006 07:02

Corvus Capital Inc30 June 2006 Corvus Capital Inc Second Interim Results For the six month period ended 31 March 2006 30 June 2006, Corvus Capital Inc (AIM: CVS) announces its second interim resultsfor the six month period ended 31 March 2006 which is also part of the processof a change to the Company's accounting reference date from 31 March to 30September. The final part of this change process will be the reporting of apreliminary statement for the 18 month period ending 30 September 2006. Summary • Investment Activity: • Nanonscience acquired Toumaz Technology for £17.1m and raised an additional £7.1m. Toumaz is a spin-out from Imperial College London and it has exploited developments in ultra-low power silicon chip technology • Gable Holdings Inc. completed its acquisition of a European insurance company writing insurance for the construction industry distributing its products via FSA regulated brokers in the UK. Following the acquisition and placing Corvus holds shares representing 17.06% of the enlarged share capital of Gable. • Following the period end Commoditrade announced it had agreed to acquire from investment vehicle Tambelan Inc, its right to receive 75 per cent of the profits of the trading team on the London Metal Exchange of Sucden UK, a leading commodities trading group. Commoditrade paid an initial aggregate consideration of £24.4 million Profits are presented as returns from revenue and capital activities and grossrevenue and capital gain for the six month period ended 31 March 2006 was £2.6m.Total return was £0.6m and basic return per share for the six months 0.22p,diluted return per share 0.21p. Commenting, Andrew Regan, Chief Executive of Corvus Capital Inc, said: "The period has seen a number of important investment successes for the Company,the value of which we have yet to realise, particularly where we continue tohold significant shareholdings such as Gable and Commoditrade. We anticipatethey will continue to provide a growing level of value for shareholders as theinvestee companies execute their respective growth strategies. "We have created over £21m of unrealised gains and I believe we are now nearingthe end of the first stage of our strategy which was to build the financialresources to support the next phase: the due diligence and execution of a majoracquisition." Enquiries: John Bick tel: 020 7451 9800 or m: 07917 649362 www.corvus.com SECOND INTERIM STATEMENTI am delighted to present Corvus Capital's results for the six month periodended 31 March 2006, together with an update of events since the period end.Before I do so I would like to take the opportunity to remind shareholders thatas set out in our Annual Report, we announced the decision to change theCompany's accounting reference date from 31 March to 30 September. We publishedour first of two interim reports in December and this statement thereforerepresents the "second" Interim for the period from 1 October 2005 to 31 March2006, and will be followed by audited results for the 18 month period ending 30September 2006. Results Corvus produced gross revenue and capital gain for the six month period of £2.6mand a total return of £0.6m. Since 31 March 2005 Corvus has successfullyrealised investments for aggregate cash proceeds of £10.5m. As at 31 March 2006 there were 260.7m ordinary shares in issue. Investment Strategy The Company's strategy is to invest in companies with either of the twofollowing characteristics: • Companies with strong income generation or that have a proven or anticipated stable and cash-generating business. • Companies at a relatively early stage of their development which focus on specific sectors and which either have or will seek a quotation on a recognised investment exchange or which have the potential to be acquired. Corvus's investment strategy is intended to be long-term although wherecircumstances arise where investments or companies acquired by the Company maybe floated in their own right, or disposed of at a suitable premium, such exitswill be considered, converting the investment into cash for onward investment.Corvus will continue to consider investments based predominately in Europe,North America and Asia although it may also look at investment opportunitiesoutside of these regions and across a wide range of sectors. In the medium term, leveraging the capital generated from its investmentstrategy, it is Corvus's intention to acquire, either as principal or inpartnership, a sizeable company which has a proven stable and strong cashgenerating business, and which it believes has significant inherent value whichis not being realised by its incumbent management or reflected in its marketcapitalisation. Investment Activity I would like to update shareholders on our investment activity during the periodand since the balance sheet date, which together have been very successful forthe Company. There were significant milestone events during the period for several of ourinvestee companies, each arguably transforming investments for the companiesconcerned. The first of these was Nanoscience, the specialist nanotechnology investmentholding company in which Corvus has a 4.5 per cent shareholding, which announcedin November that it had completed the acquisition of Toumaz Technology Limitedfor £17.7 million satisfied through the issue of new Nanoscience shares. At thesame time Nanoscience placed additional new shares raising £7.1 million beforeexpenses. Toumaz Technology is a spin-out from Imperial College London and it hasexploited developments in ultra-low power silicon chip technology. Itsproprietary AMx(TM) technology (Advanced Mixed Signal) has resulted in thedevelopment of ultra low power techniques in signal processing and wirelesssystems for chips consuming up to 100 times less power than other state-of-theart devices. Toumaz has focussed its AMx(TM) technology on the healthcare sectorwhere applications include body sensors for monitoring chronic conditions andthe lifestyle management sector where applications have been developed for thedigital audio broadcast market. On 23 December 2005, Gable Holdings Inc. completed its acquisition of Brown DukeAG, together with a placing which raised £4.75 million and admission of theenlarged share capital of the company to trading on AIM. Brown Duke's name waschanged to Gable Insurance AG, which gained authorisation to write insurancebusiness in Europe following completion of the acquisition. The companyspecialises in providing insurance services to the construction sector whereGable's management team has a high level of expertise and experience in writingbusiness across several specific classes of business. Gable distributes itsproducts via FSA regulated brokers in the UK where it has strong relationships.Following the acquisition and placing Corvus holds shares representing 17.06per cent of the enlarged share capital of Gable. Just after the period ended, Commoditrade announced on 6 April that it hadagreed to acquire from investment vehicle Tambelan Company Limited, its right toreceive 75 per cent of the profits of the trading team on the London MetalExchange of Sucden UK, a leading commodities trading group. Commoditrade paidan initial aggregate consideration of £24.4 million, satisfied by the payment of£14 million in cash and by the issue of 83.4 million new ordinary shares of12.5p each. In addition, 6 million deferred consideration shares may be issuedon the achievement of certain performance criteria. Gross profits attributable to the Tambelan Agreement have grown to £7.1 millionin the three years ended 31 December 2005 and on the basis of this historic datathe interest has been acquired on a historic multiple of just 3.5 timesoperating profits. The LME Trading Team is well established and successful,with an in-depth knowledge of the markets on which it is represented and hasdeveloped strong client and market relationships. On the acquisition,Christopher Adams, who is the head LME trader at the Brokerage and GeoffreyConway-Henderson, who has over 35 years experience in the finance industry,dealing primarily in derivatives, interest rate swaps and options, both joinedthe Board of Commoditrade as non-executive directors. In overall terms theacquisition and board changes marked a very encouraging development forCommoditrade which was incorporated in 2005 to build a group specialising in thecommodities sector. The company now has a much larger shareholder base and itwas very encouraging to see several major financial institutions participate inthe placing of new shares in Commoditrade. Corvus now holds 21.1 per cent of the enlarged share capital. Outlook The period has seen a number of important investment successes for the Company,the value of which have yet to be fully realised and we anticipate they willcontinue to provide a growing level of value for shareholders as these investeecompanies execute their respective growth strategies. The Board will continueto monitor the performance of the Company's underlying assets and remains alertto opportunities for making further investments consistent with its investmentstrategy, acquiring interests in companies with considerable growth potential,each at varying stages of development. Graham Porter Chairman Andrew Regan Chief Executive 30 June 2006 GROUP STATEMENT OF TOTAL RETURN(INCORPORATING THE REVENUE ACCOUNT)FOR THE 6 MONTHS ENDED 31 MARCH 2006 Unaudited Unaudited Unaudited 6 months ended 6 months ended 6 months ended 31.3.06 31.3.06 31.3.06 Note Revenue Capital Total £'000 £'000 £'000Gains / (losses) on investments- realised - (460) (460)- unrealised - 2,749 2,749Other income 266 - 266 ------- ------- -------Gross revenue and capital gains 266 2,289 2,555Administrative expenses (2,174) - (2,174) ------- ------- -------Return on ordinary activities before interest and (1,908) 2,289 381taxIncome from investments 99 - 99Interest receivable and similar income 81 - 81 ------- ------- -------Return on ordinary activities before tax (1,728) 2,289 561 Tax on ordinary activities 2 - - - ------- ------- -------Return on ordinary activities after tax 6 (1,728) 2,289 561transferred (from)/to reserves ------- ------- ------- Basic (loss) / return per share (pence) 3 (0.67) 0.88 0.22 ------- ------- -------Diluted (loss) / return per share (pence) 3 (0.63) 0.84 0.21 ------- ------- ------- There were no recognised gains or losses other than as shown above. All amounts relate to continuing activities. GROUP STATEMENT OF TOTAL RETURN(Incorporating the Revenue Account)for the 12 months ended 31 March 2006 Unaudited Unaudited Unaudited 12 months ended 12 months ended 12 months ended 31.3.06 31.3.06 31.3.06 Note Revenue Capital Total £'000 £'000 £'000Gains on investments- realised - 1,359 1,359- unrealised - 4,115 4,115Other income 505 - 505 ------- ------- -------Gross revenue and capital gains 505 5,474 5,979Administrative expenses (3,647) - (3,647) ------- ------- -------Return on ordinary activities before interest and (3,142) 5,474 2,332taxIncome from investments 99 - 99Interest receivable and similar income 87 - 87 ------- ------- -------Return on ordinary activities before tax (2,956) 5,474 2,518 Tax on ordinary activities 2 - - - ------- ------- -------Return on ordinary activities after tax (2,956) 5,474 2,518transferred (from)/to reserves ------- ------- ------- Basic (loss) / return per share (pence) 3 (1.14) 2.12 0.98 ------- ------- -------Diluted (loss) / return per share (pence) 3 (1.10) 2.03 0.94 ------- ------- ------- There were no recognised gains or losses other than as shown above. All amounts relate to continuing activities. GROUP STATEMENT OF TOTAL RETURN(Incorporating the Revenue Account)for the year ended 31 March 2005 Audited Audited Audited Year ended Year ended Year ended 31.03.05 31.03.05 31.03.05 Note Revenue Capital Total £'000 £'000 £'000Gains on investments- realised - 68 68- unrealised - 22,044 22,044Other income 144 - 144 ------- ------- -------Gross revenue and capital gains 144 22,112 22,256Administrative expenses (1,083) - (1,083)Write-off of goodwill (2) (9,110) (9,112) ------- ------- -------Return on ordinary activities before interest and (941) 13,002 12,061taxInterest receivable and similar income 4 - 4 ------- ------- -------Return on ordinary activities before tax (937) 13,002 12,065 Tax on ordinary activities 2 - - - ------- ------- -------Return on ordinary activities after tax (937) 13,002 12,065transferred (from)/to reserves ------- ------- ------- Basic (loss) / return per share (pence) 3 (0.39p) 5.43p 5.04p ------- ------- -------Diluted (loss) / return per share (pence) 3 (0.38p) 5.27p 4.89p ------- ------- ------- There were no recognised gains or losses other than as shown above. All amounts relate to continuing activities. GROUP BALANCE SHEET at 31 March 2006 Unaudited Audited Note 31.3.06 31.3.05 £'000 £'000 Fixed assetsTangible assets 270 65Investments 4 21,741 24,729 ----------- ----------- 22,011 24,794 ----------- ----------- Current assetsDebtors 2,571 436Cash at bank and in hand 3,489 5 ----------- ----------- 6,060 441Creditors: amounts falling due within one year (278) (310) ----------- -----------Net current assets 5,782 131 ----------- ----------- Total assets less current liabilities 27,793 24,925 ----------- ----------- Capital and reservesCalled up share capital 5 13,035 12,816Share premium account 6 3,111 2,980Capital reserve - realised 6 (1,819) (10,652)Capital reserve - unrealised 6 18,685 22,044Revenue reserve 6 (5,219) (2,263) ----------- -----------Total equity shareholders' funds 7 27,793 24,925 ----------- ----------- ----------- -----------Net asset value per share (pence) - basic 10.66 9.73 ------- ------- ------- ------- - diluted 10.33 9.45 ------- ------- ------- ------- CASH FLOW STATEMENTFor the period ended 31 March 2006 Unaudited Unaudited Audited Note 6 months ended 12 months ended Year ended 31.3.06 31.3.06 31.3.05 £'000 £'000 £'000 Net cash outflow from operating activities 8 (3,483) (5,283) (1,102) Returns on investmentsIncome from investments 99 99 -Interest received 81 87 4 ------- ------- -------Net cash inflow from returns on investments 180 186 4 ------- ------- ------- Capital expenditure and financial investmentPurchase of subsidiary undertakings - - (157)Purchase of tangible fixed assets (230) (230) (84)Sale of tangible fixed assets - - 6Proceeds from sale of investments 2,019 10,480 668Purchase of investments (1,969) (2,019) (978) ------- ------- -------Net cash (outflow) / inflow from investing (180) 8,231 (545)activities ------- ------- ------- Net cash (outflow) / inflow before financing (3,483) 3,134 (1,643) FinancingIssue of shares 175 350 1,348 ------- ------- -------Movement in cash 9 (3,308) 3,484 (295) ------- ------- ------- ------- ------- ------- Significant non-cash movementsIncrease in value of investments 2,749 4,115 22,044 ------- ------- ------- ------- ------- ------- NOTES TO THE INTERIM ANNOUNCEMENT 1. BASIS OF PREPARATION The Company was incorporated as a corporation in the British Virgin Islands,which does not prescribe the adoption of any particular accounting framework.Accordingly, the Board have resolved that the Company will follow UK AccountingStandards and apply the Companies Act 1985 when preparing its annual financialstatements. The principal accounting policies of the Group are set out in the Group's 2005annual report and financial statements. The policies have remained unchangedsince the previous annual report. In the 2005 annual report the method ofvaluation of quoted investments was changed to that of middle market prices atthe balance sheet date and consolidated information was presented for the firsttime. The impact of this was to replace the intangible asset at 30 September2004 with a valuation of investments at 31 March 2005 and subsequent periodends. Interim financial information in this report has been neither audited norreviewed by the Group's auditors. 2. TAXATION The Company is not subject to UK corporation tax. The UKsubsidiary did not make a profit during the period and hence no tax arises inthe UK. 3. (LOSS) / RETURN PER SHARE The calculation of the basic return per share is based on the return on ordinaryactivities after taxation and on the weighted average number of ordinary sharesin issue during the period. The diluted return per share is based on theassumption that the outstanding share options and warrants are fully exercised.Returns and weighted average number of shares used in the calculations are setout below: Return Weighted average Return per £'000 number of shares share (pence)Basic (loss) / return per share 6 months ended 31.3.06Revenue (1,728) 259,364,851 (0.67)Capital 2,289 259,364,851 0.88Total 561 259,364,851 0.22 12 months ended 31.3.06Revenue (2,956) 258,274,774 (1.14)Capital 5,474 258,274,774 2.12Total 2,518 258,274,774 0.98 Year ended 31.3.05Revenue (937) 239,337,552 (0.39)Capital 13,002 239,337,552 5.43Total 12,065 239,337,552 5.04 Diluted (loss) / return per share 6 months ended 31.3.06Revenue (1,728) 272,401,092 (0.63)Capital 2,289 272,401,092 0.84Total 561 272,401,092 0.21 12 months ended 31.3.06Revenue (2,956) 269,028,158 (1.10)Capital 5,474 269,028,158 2.03Total 2,518 269,028,158 0.94 Year ended 31.3.05Revenue (937) 246,861,458 (0.38)Capital 13,002 246,861,458 5.27Total 12,065 246,861,458 4.89 4. INVESTMENTS Movements in investments during the period are as follows: Overseas AIM listed Unlisted Total £'000 £'000 £'000 £'000 Valuation at 1 April 2005 (Audited) 24,006 685 38 24,729 Additions at cost - - 50 50 Disposals:- proceeds (4,981) (3,480) - (8,461)- (loss) / gains on disposal (975) 2,795 - 1,820 Net unrealised gains in period 1,365 - - 1,365 ------- ------- ------- -------Valuation at 30 September 2005 (Unaudited) 19,415 - 88 19,503 Additions at cost 1,890 - 78 1,968 Disposals:- proceeds (2,019) - - (2,019)- loss on disposal (460) - - (460) Net unrealised gains in period 2,749 - - 2,749 ------- ------- ------- -------Valuation at 31 March 2006 (Unaudited) 21,575 - 166 21,741 ------- ------- ------- ------- ------- ------- ------- ------- Book cost at 31 March 2006 (Unaudited) 2,886 - 166 3,052Total unrealised gains 18,689 - - 18,689 ------- ------- ------- -------Valuation at 31 March 2006 (Unaudited) 21,575 - 166 21,741 ------- ------- ------- ------- ------- ------- ------- -------Book cost at 31 March 2005 (Audited) 2,058 589 38 2,685Total unrealised gains 21,948 96 - 22,044 ------- ------- ------- -------Valuation at 31 March 2005 (Audited) 24,006 685 38 24,729 ------- ------- ------- ------- ------- ------- ------- ------- 5. SHARE CAPITAL Authorised 31.3.06 31.3.05 No. No.Ordinary shares of 5p each 400,000,000 400,000,000 ------- ------- ------- ------- £'000 £'000Ordinary shares of 5p each 20,000 20,000 ------- ------- ------- ------- Allotted, called up, and fully paid No. No.Ordinary shares of 5p each 260,704,994 256,329,998 ------- ------- ------- ------- £'000 £'000Ordinary shares of 5p each 13,035 12,816 ------- ------- ------- ------- Allotments during the period On each of 4 June 2005, 4 September 2005, 5 December 2005 and 6 March 20061,093,749 ordinary shares were issued at 8p per share on exercise of shareoptions, raising £350,000 in total. 6. RESERVES Capital Capital reserve reserve Revenue Share premium (realised) (unrealised) reserve £'000 £'000 £'000 £'000 At 1 April 2005 (Audited) 2,980 (10,652) 22,044 (2,263)Share premium on issue of shares 65 - - -Net revenue loss for the period - - - (1,228)Unrealised gains - - 1,365 -Net gain on realisation of investments - 1,820 - -Unrealised gains brought forward realised - 5,985 (5,985) -during the period ----------- ----------- ----------- -----------At 30 September 2005 (Unaudited) 3,045 (2,847) 17,424 (3,491) Share premium on issue of shares 66 - - -Net revenue loss for the period - - - (1,728)Unrealised gains - - 2,749 -Net loss on realisation of investments - (460) - -Unrealised gains brought forward realised - 1,488 (1,488) -during the period ----------- ----------- ----------- -----------At 31 March 2006 (Unaudited) 3,111 (1,819) 18,685 (5,219) ----------- ----------- ----------- ----------- ----------- ----------- ----------- ----------- 7. RECONCILIATION OF SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 6 months ended 12 months ended Year ended 31.3.06 31.3.06 31.3.05 £'000 £'000 £'000 At beginning of period 27,057 24,925 262Net proceeds of share issues 175 350 12,598Net revenue loss for the financial period (1,728) (2,956) (937)Increase in capital reserves 2,289 5,474 13,002 ------- ------- -------At end of period 27,793 27,793 24,925 ------- ------- ------- ------- ------- ------- 8. RECONCILIATION OF RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAX WITH NET CASH OUTFLOW FROM OPERATING ACTIVITIES Unaudited Unaudited Audited 6 months ended 12 months ended Year ended 31.3.06 31.3.06 31.03.05 £'000 £'000 £'000 Operating profit 381 2,332 12,061Write off of goodwill - - 9,112Depreciation 13 26 13Movement in debtors (1,641) (2,135) (321)Movement in creditors 53 (32) 145Loss / (profit) on disposal of investments 460 (1,359) (68)Revaluation of investments (2,749) (4,115) (22,044) ------- ------- ------- (3,483) (5,283) (1,102) ------- ------- ------- ------- ------- ------- 9. ANALYSIS OF CHANGES IN CASH DURING THE PERIOD Unaudited Unaudited Audited 6 months ended 12 months ended Year ended 31.3.06 31.3.06 31.03.05 £'000 £'000 £'000 (Decrease) / increase in cash (3,308) 3,484 (295)Net funds at beginning of period 6,797 5 300 ------- ------- -------Net funds at end of period 3,489 3,489 5 ------- ------- ------- ------- ------- ------- PUBLICATION OF NON-STATUTORY ACCOUNTS The financial information set out in this interim report does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 March 2005 have been extracted from the statutoryfinancial statements. The auditors' report on those financial statements wasunqualified and did not contain a statement under section 237(2) of theCompanies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange