RNS Number:5867E
London Asia Capital PLC
27 September 2007
27 September 2007
Embargoed for 0700hrs
London Asia Capital plc
("London Asia" or "the Group")
Interim Results 2007
London Asia Capital plc (AIM: LDC.L) the Asian focused investment group, today
announces Interim Results for the six months ended 30 June 2007.
Financial Highlights
* Net assets increased 44% to #44.4 million (2006: #30.7 million), equal to
13.6p per share (2006: 13.7p);
* Profit before investment revaluations for the six months up 94% to
#0.6 million (2006: #0.3 million); and
* Market value of listed investments #11 million at 30 June 2007. Combined
value of cash and listed investments is #17.4 million, equal to 5.3p
per share
Operational Highlights
* Recurring advisory income covers running costs
* Overheads down 18% as staff numbers reduced
* New clients signed up for listing on PLUS
Commenting on outlook Jack Wigglesworth, Chairman said, "Our balance sheet
position continues to strengthen, with net assets of #44.4 million, equal to
13.6p per share, compared to net assets of #33.1 million at the end of 2006.
The significant growth in net assets relates mainly to the acquisitions
completed in May and June of this year, totalling #11.3 million. Together with
the recent acquisitions announced towards the end of the period, 57% of our
portfolio is still shown at cost".
He added: "The markets in which we operate are booming, and our own
business is performing well, despite the restrictions placed on it by the
collapse of the share price, which is trading at a considerable discount to
reported net asset value. We are profitable, cash generative and seeing
continuous growth in the value of our investment portfolio. We are working on
various ways to restore the confidence of the market in our shares".
For further information please visit www.londonasiacapital.com or contact:
Cecilia Wong John West/Andrew Dunn Jonathan Wright
London Asia Ltd Tavistock Communications Seymour Pierce
Tel: +852 2251 8373 Tel: +44 (0)20 7920 3150 Tel: +44 (0)20 7107 8000
Chairman's Statement
I am pleased to announce a strong set of interim results for the six months
ended 30 June 2007. Highlights for the period include:
* Profit before investment revaluations for the six months up 94% to
#0.6 million (2006: #0.3 million);
* Profit after tax and investment revaluations #0.3 million (2006:
#0.8 million), hit by #0.7 million charge against the value of UK listed
portfolio
* Net assets increased 44% to #44.4 million (2006: #30.7 million); and
* Market value of listed investments #11 million at 30 June 2007. Combined
value of cash and listed investments is #17.4 million, equal to 5.3p
per share
Financial performance
The results are prepared under International Financial Reporting Standards
("IFRS")in line with the new requirements for AIM listed companies to
comply with IFRS.
Turnover is up 50% to #1.2 million (2006: #0.8 million), with operating
overheads down 18% to #0.6 million (2006: #0.7 million), resulting in a near
doubling of profits before investment revaluations and tax to #0.6 million
(2006: #0.3 million). Including movements on the investment portfolio, profits
after tax were #0.3 million (2006: #0.8 million). Turnover is a mix of fund
management fees, corporate finance fees and dividends, with recurring advisory
revenue amounting to #0.7 million, covering our overheads. No account has been
taken of any performance related fees, which may be due based on the performance
of the London Asia Chinese Private Equity Fund ("LACPE Fund").
Overheads are down, primarily as a result of lower staff related costs as staff
were made redundant or left, in line with the Group's change in focus to that
of an investment company. The strength of sterling relative to Asian currencies
resulted in a foreign exchange loss of #0.1 million on assets denominated in
Chinese Renmimbi and Hong Kong Dollars.
The six month period saw a net decrease of #0.2 million in the value of our
investment portfolio. Gains on our investments listed in Singapore and Malaysia
were offset by mark-downs of #0.7 million to reflect recent weakening of the
value of UK listed China stocks and bring them to realisable value in line with
our policy of accelerating the realisation of assets.
Basic earnings per share (excluding investment revaluations) for the six months
increased to 0.23p (2006: 0.12p), with fully diluted earnings per share 0.22p
(2006: 0.12p).
Our balance sheet position continues to strengthen, with net assets of #44.4
million, equal to 13.6p per share, compared to net assets of #33.1 million at
the end of 2006. The significant growth in net assets relates mainly to the
acquisitions completed in May and June of this year, totalling #11.3 million.
Together with the recent acquisitions announced towards the end of the period,
57% of our portfolio is still shown at cost.
The table below provides an analysis of the Group's net asset position:
30 June 31 Dec
2007 2006
#'000 #'000
Unlisted investments 28,434 19,221
Cash 6,417 5,391
Listed investments 11,019 10,200
Other net liabilities (1,485) (1,670)
-------- --------
44,385 33,142
======== ========
Our cash position remains healthy at #6.4 million as at 30 June 2007, equal to
2p per share, up from #5.4 million at 31 December 2006. The increase in cash is
the result of the surplus generated from the advisory side of our business as
well as from the proceeds of investment realisations. The combined value of cash
and listed investments is #17.4 million, equal to 5.3p per share.
Investment portfolio
The Group's core business has always been investment of its own capital in
businesses in Asia, and the majority of our assets consist of investments in
public and private companies operating in Asia. Following a period during which
few investments were made while resources were focused on investing the LACPE
Fund, the Group has again been active in investing in Asia, with over #11
million of new investments made in the period, increasing the amount currently
invested by approximately a third.
The table below provides a summary of our top holdings:
LAC Zhongying 28.6%
Asia Power 13.4%
China Financial Services 11.8%
China Exchange 7.7%
Yellow River Securities 6.4%
London Asia Capital Land 6.4%
London Asia Limited 6.4%
China Eastsea Business Software 3.4%
China Biotech Healthcare 3.2%
China MobileNet 1.9%
Total 89.2%
New investments
During the period the Group invested over #10.9 million in four Asian financial
services companies in which it holds 40% stakes, the combined capital of which
is over #27 million. The investments were made via the issue of 97.9 million
London Asia shares at an average price of just over 11p. The new businesses have
already begun making investments off their own balance sheets, with over #8.8
million invested by them to date. These businesses cover a range of advisory,
debt based and trading activities in Asia, where we see significant
opportunities given the strong trading environment. These investments comprise:
* Yellow River Securities, focussing on short term investments in Asian
businesses going to IPO, and in undervalued or overlooked existing listed
businesses, including those Asian businesses listed in the UK.
* China Exchange Ltd ("CEL"), which has acquired a 40% stake in Xi'an Private
Equity Exchange ("XPEE"), the leading private equity exchange in Northwest
China. XPEE aims to take advantage of the tough requirements and long waiting
list for companies to list on China's main stock exchanges resulting in
equity exchanges becoming more prominent for the sale of assets and projects,
particularly state owned. XPEE also provides a range of investment banking
and related services, including venture capital and share custodian services,
manages funds for wealthy individuals and companies and providing short term
financing to enterprises and advises on financing, equity trading services,
listings on local and foreign stock exchanges, and project finance. CEL also
has a stake in a mortgage and pawn broking company, authorised to provide its
services nationwide, and an 80% stake in SYGC, which provides credit
guarantee services, mainly targeted at SMEs.
* London Asia Capital Land ("LACL") which focuses on transactions in China's
property sector, primarily distressed assets.
* London Asia Limited, a Hong Kong based advisory business, which has acquired
a 51% stake in Jin Lian Ann Insurance Broker ("JLAI"), headquartered in
Beijing, China, which operates nationwide through 30 branches, focusing on
corporate clients, as well as a 51% stake in Zhong Nan Auction House
("ZNAH"), based in Guangdong Province, China, whose business includes the
auction of items confiscated by the Guangdong municipal government,
distressed property and items with no identifiable ownership.
We also invested #0.5 million in Mayapanda International, an Indonesian Bank
listed on the Jakarta Stock Exchange.
Operational Review
There have been significant changes in the structure and operation of the Group
over the past year, with a considerable simplification of the Group under the
revised strategy of focusing resources primarily on investment, realising the
value in the investment portfolio, and expanding our operational activities
through London Asia Ltd ("LAL"), our 40% investee company, rather than
directly.
The diagram below sets out the revised structure of the Group:
LAC plc
UK listed
Net assets #44.4m
|
|
--------------------------------------------------- - - - - - - - - -
| | |
Investments Operating Companies London Asia Ltd
#39.5m 40%
| |
-------------------------- -------------------------
| | | |
Private companies Listed companies LA LA
#28.5m #11.0m Corporate Finance Fund Management
|
|
|_ LACPE Fund
Day to day management of the Group is now contracted to LAL. All decision making
is done by the Group's Board of Directors, based on recommendations from LAL.
The majority of our former staff and offices have moved across to LAL, so that
the Group now has minimal staff, reflected in the reduction in overheads. The
remaining staff work primarily to support the corporate finance operations in
the UK, which continues to act as corporate finance adviser to nine UK PLUS
listed companies, as well as a number of new businesses looking to come to PLUS,
and to provide advisory services to the UK AIM listed London Asia Chinese
Private Equity Fund. The income generated from these activities is used to pay
the running costs of the Group.
Our 40% stake in LAL provides us with exposure to the potential upside from
expanding operational activities in Asia, without the exposure - in terms of
capital, management and need to account for losses and liabilities - that a
majority stake would entail. LAL is working on a number of projects in the fund
management and corporate finance advisory sectors for which it hopes to see
results next year.
Board and Management Changes
Victor Ng and Simon Littlewood have both left the Board during the period, to
concentrate on developing the operational side of the business, disposing of
assets and managing LACPE Fund, where they still hold Board seats. The LAC Board
now consists of three non executive directors. We are actively looking to
increase the size of the Board going forward.
Outlook
The markets in which we operate are booming, and our own business is performing
well, despite the restrictions placed on it by the collapse of the share price,
which is trading at a considerable discount to reported net asset value. We are
profitable, cash generative and seeing continuous growth in the value of our
investment portfolio. We are working on various ways to restore the confidence
of the market in our shares.
Jack Wigglesworth
Chairman
27 September 2007
INCOME STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Unaudited Unaudited
30 June 30 June
2007 2006
#'000 #'000
Revenue 1,213 811
Administrative expenses (605) (734)
------- --------
Operating profit 608 77
Interest income 66 62
Increase in value of investments disposed of 3 170
Share based payment charge - (7)
Foreign exchange losses (100) -
Finance costs (5) (7)
------- --------
Profit before taxation and unrealised (losses)/ 572 295
profits on investments
Unrealised (losses)/profits on revaluation of (247) 561
investments ------- --------
Profit before taxation 325 856
Taxation - (13)
------- --------
Profit for the period 325 843
======= ========
Attributable to:
Equity holders of the parent 331 838
Minority interest (6) 5
------- --------
325 843
======= ========
Earnings per share Pence Pence
Basic 0.13 0.37
Diluted 0.13 0.35
Adjusted earnings per share Pence Pence
Basic 0.23 0.12
Diluted 0.22 0.12
BALANCE SHEET
30 JUNE 2007
Unaudited Unaudited
30 June 30 June
2007 2006
#'000 #'000
Non-current assets
Goodwill 319 319
Property, plant and equipment 23 26
Investments 37,702 29,587
-------- --------
38,044 29,932
======== ========
Current assets
Investments 1,821 474
Trade and other receivables 1,626 1,680
Cash and cash equivalents 6,417 4,171
-------- --------
9,864 6,325
-------- --------
Total assets 47,908 36,256
======== ========
Current liabilities
Trade and other payables (3,379) (5,253)
Current tax liabilities - (39)
-------- --------
(3,379) (5,292)
-------- --------
Net current assets 6,485 1,033
-------- --------
Non-current liabilities
Bank loans (144) (223)
-------- --------
Total liabilities (3,523) (5,515)
-------- --------
Net assets 44,385 30,741
======== ========
Equity
Share capital 16,368 11,280
Share premium 27,265 21,332
Share options reserve 477 469
Retained loss (43) (2,475)
-------- --------
Equity attributable to equity holders of the 44,067 30,606
parent
Minority interest 318 135
-------- --------
Total equity 44,385 30,741
======== ========
STATEMENT OF CHANGES IN EQUITY
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Share Share Share Translation Retained Total
capital premium options reserve loss
reserve
Balance at 1 January 2007 11,381 21,330 477 2 (374) 32,816
Issue of shares 4,987 5,935 10,922
Profit for the period 331 331
Exchange differences
arising on translation
of foreign operations (2) (2)
------------------------------------------------------------------
16,368 27,265 477 - (43) 44,067
==================================================================
CASH FLOW STATEMENT
FOR THE SIX MONTHS ENDED 30 JUNE 2007
Unaudited Unaudited
30 June 2007 30 June 2006
#'000 #'000
Net cash from operating activities 418 1,488
Investing activities
Interest received 66 62
Proceeds on disposal of investments 1,048 1,155
Purchase of property, plant and equipment - (10)
Purchase of investments (570) (1,157)
-------- --------
Net cash used from investing activities 544 50
-------- --------
Financing activities
Proceeds on issue of shares 95 51
Repayment of bank loans (31) (18)
-------- --------
Net cash from financing activities 64 33
-------- --------
Net increase in cash and cash equivalents 1,026 1,571
Cash and cash equivalents at beginning of year 5,391 2,600
-------- --------
Cash and cash equivalents at end of period 6,417 4,171
======== ========
NOTES TO THE INTERIM RESULTS
1. Basis of preparation
The results for the six months ended 30 June 2007 are unaudited and have not
been reviewed by the Auditors. They have been prepared on accounting bases
and policies that are consistent with those used in the preparation of the
financial statements of the Group for the year ended 31 December 2006.
The financial statements contained in the report do not constitute statutory
accounts within the meaning of Section 240 of the Companies Act 1985. The
results for the year ended 31 December 2006 were reported on by the auditors
and received an unqualified audit report. Full accounts for the year ended
31 December 2006 have been delivered to the Registrar of Companies.
2. Significant accounting policies
Financial instruments
Financial instruments are recognised in the Group's balance sheet when the
Group becomes a party to the contractual provisions of the instrument.
Investments
Investments are recognised and derecognised on a trade date where a purchase
or sale of an investment is under a contract whose terms require delivery of
the investment within the timeframe established by the market concerned, and
are initially measured at fair value, net of transaction costs except for
those financial assets classified as assets at fair value through profit and
loss which are initially measured at fair value.
Investments are classified as assets at fair value through profit and loss
and are measured at subsequent reporting dates at fair value. Gains and
losses arising from changes in fair value are included in net profit or loss
for the period.
The fair values of quoted investments in active markets are based on current
bid prices. If the market for a financial asset is not active, or the asset
is an unlisted security, fair values are established by using valuation
techniques. These include the use of recent arm's length transactions,
discounted cash flow analysis and the valuation techniques commonly used by
market participants.
Trade receivables
Trade receivables are measured at initial recognition at fair value, and are
subsequently measured at amortised cost using the effective interest rate
method. Appropriate allowances for estimated irrecoverable amounts are
recognised in profit or loss when there is objective evidence that the asset
is impaired. The allowance recognised is measured as the difference between
the asset's carrying amount and the present value of estimated future cash
flows discounted at the effective interest rate computed at initial
recognition.
Cash and cash equivalents
Cash and cash equivalents comprise cash on hand and demand deposits, and
other short-term highly liquid investments that are readily convertible to
a known amount of cash and are subject to an insignificant risk of changes
in value and have an original maturity of three months or less.
Financial liabilities and equity
Financial liabilities and equity instruments are classified according to the
substance of the contractual arrangements entered into. An equity instrument
is any contract that evidences a residual interest in the assets of the
Group after deducting all of its liabilities.
Trade payables
Trade payables are initially measured at fair value, and are subsequently
measured at amortised cost, using the effective interest rate method.
Impairment of financial assets
Financial assets, other than those assets at fair value through profit and
loss, are assessed for indicators of impairment at each balance sheet date.
Financial assets are impaired where there is objective evidence that as a
result of one or more events that occurred after the initial recognition of
the financial asset the estimated future cash flows of the investment have
been impacted. For loans and receivables the amount of the impairment is the
difference between the asset's carrying amount and the present value of
estimated future cash flows, discounted at the original effective interest
rate.
The carrying amount of the financial asset is reduced by the impairment loss
directly for all financial assets with the exception of trade receivables
where the carrying amount is reduced through the use of an allowance account.
When a trade receivable is uncollectible, it is written off against the
allowance account. Subsequent recoveries of amounts previously written off
are credited against the allowance account. Changes in the carrying amount
of the allowance account are recognised in profit or loss.
If, in a subsequent period, the amount of the impairment loss decreases and
the decrease can be related objectively to an event occurring after the
impairment was recognised, the previously recognised impairment loss is
reversed through the income statement to the extent the carrying amount of
the investment at the date the impairment is reversed does not exceed what
the amortised cost would have been had the impairment not been recognised.
Equity instruments
Equity instruments issued by the Company are recorded at the proceeds
received, net of direct issue costs.
3. Earnings per share
30 June 30 June
2007 2006
#'000 #'000
Earnings
Earnings for the purposes of basic and diluted
earnings per share being net profit attributable
to equity holders of the parent 331 838
Investment revaluation losses/(gains) 247 (561)
-------- --------
Adjusted earnings 578 277
-------- --------
Number of shares
Weighted average number of ordinary shares for the
purposes of basic earnings per share
247,766,318 224,268,852
Effect of dilutive potential ordinary shares:
Share options 10,042,791 14,258,230
Warrants 1,993,390 2,175,746
----------- -----------
Weighted average number of ordinary shares for the
purposes of diluted earnings per share
259,742,500 240,702,828
=========== ===========
Earnings per share
Basic (pence) 0.13 0.37
----------- -----------
Diluted (pence) 0.13 0.35
----------- -----------
Adjusted earnings per share
Basic (pence) 0.23 0.12
Diluted (pence) 0.22 0.12
4. Dividend
The directors do not recommend the payment of an interim dividend.
5. Interim Results
Copies of the Interim Results are available on the Company's web site,
www.londonasiacapital.com, or from the Company! s registered office, 197
Providence Square, London, SE1 2DG. Send an email to
cecilia.wong@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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