Corvus Capital Inc
27 March 2008
Corvus Capital Inc.
Preliminary Results for the year ended 30 September 2007
27 March 2008, Corvus Capital Inc. (AIM: CVS), the international investment
company, announces its results for the year ended 30 September 2007.
Commenting, Andrew Regan, Chief Executive of Corvus Capital Inc, said:
"During the first half of the year we achieved good levels of cash and
unrealised gains from our investments, predominantly those listed, or planning
to seek a listing on AIM. During the second half we continued to invest in new
market entrants across a range of sectors and these additional gains will fall
into the first half of the current year. Despite the unstable nature of the
international equity markets the Company remains well positioned to identify
substantially larger investment opportunities where it can secure significant
additional value for shareholders."
Enquiries:
Adrian Collins, Chairman, Corvus Capital tel: +44 (0)20 7451 9800
Andrew Regan, Chief Executive, Corvus Capital tel: +44 (0)20 7451 9800
John Bick, Hansard Group tel: +44 (0)20 7451 9800
http://WWW.CORVUS.COM
CHAIRMAN'S STATEMENT
Results
Corvus Capital's results for the year ended 30 September 2007 produced gross
revenue and capital gains for the period of £4.0 million (18 month period ended
30 September 2006 as restated: £17.4 million) and a total loss of £0.6 million
(18 month period ended 30 September 2006 as restated: £10.3 million).
Since 30 September 2007 Corvus has successfully realised investments for
aggregate cash proceeds of £2.5 million. The Group had investments valued as at
30 September 2007 of £35.6 million.
Strategy
When I was asked to become Chairman of Corvus in August 2007 and undertake a
strategic review with the Chief Executive, little did we know that the world
financial markets would deteriorate to such an extent.
The Board concluded that it no longer made sense to hold such large stakes in so
many small listed AIM companies, and that our energies would be better served by
concentrating our fire power in fewer but more substantial investments, in line
with our stated strategy. With that in mind we have to date realised some £2.5
million from asset sales and continue to hold certain investments including our
current 22.6 per cent holding in Commoditrade as we believe this company will
continue to thrive in its exciting market area.
It would be strange if I did not comment on the current market conditions that
we are experiencing. It seems that what started as a liquidity crisis has moved
to a solvency crisis and regrettably will roll through many sectors of the
financial community.
I believe that our own position remains stable and despite the market turmoil
the Company's strategy remains very much intact. Corvus has the risk capital
resources to target larger scale assets or companies and access to funding with
which to acquire those assets, either as principal or in partnership, which it
believes have significant inherent value.
Adrian Collins
Non-executive Chairman
27 March 2008
CHIEF EXECUTIVES STATEMENT
I am pleased to report that, over the last three years, we have made significant
progress with regard to our strategic objectives. When I acquired my stake in
and was appointed Chief Executive of Corvus Capital, it was one of a number of
investment companies that, having been admitted to AIM at the height of the "dot
com boom" to invest in technology companies, had lost almost all of its equity
capital. My objective was to turn Corvus into a sound platform from which to
undertake investments of a significant size.
One of our initial objectives was to build a more substantial financial base,
allowing Corvus to rely less on external capital providers, therefore reducing
our cost of capital to be more in line with our likely competitors.
In the period from 1 April 2004 to 30 September 2007, Corvus has produced cash
profits on listed investments of over £11.7 million and at 30 September 2007 had
unrealised gains on investments of £31.8 million. These accounts to 30
September 2007 show investment gains over the past three reporting periods of
over £43.5 million. A summary of investment performance is shown below:
To 31/3/05 To 30/9/06 To 30/9/07 Total
£000 £000 £000 £000
Cash cost b/f 198 976 2,006 198
Cash cost of investments 997 2,699 1,212 4,908
Disposals (219) (1,669) (1,330) (3,218)
---------- ---------- ---------- ----------
Cash cost of investments c/f 976 2,006 1,888 1,888
Revaluation on acquisition of Everdene 1,667 1,667 1,667 1,667
---------- ---------- ---------- ----------
Reported cost per accounts 2,643 3,673 3,555 3,555
========== ========== ========== ==========
Disposal proceeds 668 10,576 3,678 14,923
Cash cost of investments sold (219) (1,669) (1,329) (3,218)
Cash profit made on disposals 449 8,907 2,349 11,705
========== ========== ========== ==========
Market value of investments 24,691 33,155 33,687
Unrealised gain against cash cost 23,715 31,149 31,799
The shareholders of Corvus are not alone in reaping these benefits. The
methodology employed in our historic investment strategy of creating AIM shells
into which target businesses are reversed, has meant that a number of
individuals (including management) and institutions which have co-invested with
Corvus have also benefitted. Even though the markets have moved dramatically
downwards since our balance sheet date, as at 26 March 2008, in total, the value
generated by the projects undertaken by Corvus exceeds £420 million.
As Adrian has noted in his report, we now feel that the time is right, in line
with our stated strategy, to move towards fewer but individually more
significant projects. Adrian and I, together with the other members of the
Board, will continue to assess the best way to approach this from a strategic
perspective and in the meantime we continue to realise our smaller investments
where the opportunity arises. If appropriate, we may consider a dividend
payment if surplus cash resources permit. The current market turmoil has seen a
significant fall in our share price and the valuation placed on our business by
the markets will be a significant factor in our strategic deliberations.
Andrew Regan
Chief Executive officer
27 March 2008
Corvus Capital Inc.
GROUP STATEMENT OF TOTAL RETURN
For the year ended 30 September 2007
(As (As
restated) restated)
18 month 18 month 18 month
Year Year Year period period period
ended ended ended ended ended ended
30.9.07 30.9.07 30.9.07 30.9.06 30.9.06 30.9.06
Note Revenue Capital Total Revenue Capital Total
£'000 £'000 £'000 £'000 £'000 £'000
(Losses)/gains on investments
- realised - (2,404) (2,404) - 1,435 1,435
- unrealised - 5,117 5,117 - 14,906 14,906
Losses on other financial - (14) (14) - - -
assets/liabilities held at fair
value
Other income 1,265 - 1,265 1,040 - 1,040
------- ------- ------- ------- ------- -------
Gross revenue and capital gains 1,265 2,699 3,964 1,040 16,341 17,381
------- ------- ------- ------- ------- -------
Administrative expenses (5,482) - (5,482) (7,268) - (7,268)
------- ------- ------- ------- ------- -------
Return on ordinary activities (4,217) 2,699 (1,518) (6,228) 16,341 10,113
before interest and tax
Interest receivable and similar 923 - 923 215 - 215
income
------- ------- ------- ------- ------- -------
Return on ordinary activities (3,294) 2,699 (595) (6,013) 16,341 10,328
before tax
Tax on ordinary activities 2 (4) - (4) (3) - (3)
------- ------- ------- ------- ------- -------
Return on ordinary activities (3,298) 2,699 (599) (6,016) 16,341 10,325
after tax transferred (from)/to
reserves
======= ======= ======= ======= ======= =======
Basic (loss)/return per share 3 (1.18p) 0.97p (0.21p) (2.32p) 6.30p 3.98p
(pence)
======= ======= ======= ======= ======= =======
Diluted (loss)/return per share 3 (1.18p) 0.91p (0.21)p (2.32p) 6.08p 3.84p
(pence)
======= ======= ======= ======= ======= =======
There were no recognised gains or losses other than as shown above.
All amounts relate to continuing activities.
Corvus Capital Inc.
GROUP BALANCE SHEET
at 30 September 2007
Note (As
restated)
2007 2006
£'000 £'000
Fixed assets
Tangible assets 159 226
Investments 4 35,601 33,727
------- -------
35,760 33,953
------- -------
Current assets
Debtors 3,395 2,361
Cash at bank and in hand 798 287
----- -------
4,193 2,648
Creditors: amounts falling due within one year (982) (449)
------- -------
Net current assets 3,211 2,199
------- -------
Total assets less current liabilities 38,971 36,152
======= =======
Capital and reserves
Called up share capital 14,376 13,144
Share premium account 4,863 3,127
Capital reserve - realised (282) (1,747)
Capital reserve - unrealised 30,714 29,480
Share based payment reserve 877 427
Revenue reserve (11,577) (8,279)
------- -------
Total equity shareholders' funds 38,971 36,152
======= =======
Net asset value per share (pence) - basic 13.55p 13.75p
======= =======
- diluted 13.16p 13.27p
======= =======
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
(As
restated)
18 months
Year ended period ended
30.9.2007 30.9.2006
£'000 £'000
At beginning of period 36,152 24,925
Issue of shares (net of issue costs) 2,968 525
Total return for period (599) 10,325
Share based payment 450 377
------- -------
At end of period 38,971 36,152
======= =======
Corvus Capital Inc.
GROUP CASH FLOW STATEMENT
For the year ended 30 September 2007
18 month 18 month
period period
Note Year ended Year ended ended ended
30.9.07 30.9.07 30.9.06 30.9.06
£'000 £'000 £'000 £'000
NET CASH OUTFLOW FROM OPERATING 5 (4,619) (7,579)
ACTIVITIES
RETURNS ON INVESTMENTS
Interest and income from 42 215
investments received
TAXATION (2) -
CAPITAL EXPENDITURE AND
FINANCIAL INVESTMENT
Purchase of tangible fixed assets (2) (224)
Sale of tangible fixed assets - 2
Proceeds from sale of investments 3,678 10,576
Purchase of investments (1,554) (3,233)
------- -------
NET CASH INFLOW FROM INVESTING 2,122 7,121
ACTIVITIES
------- -------
NET CASH OUTFLOW (2,457) (243)
BEFORE FINANCING
FINANCING
Issue of shares 3,068 525
Issue costs (100) -
------- -------
NET CASH INFLOW FROM FINANCING 2,968 525
------- -------
MOVEMENT IN CASH 6 511 282
======= =======
SIGNIFICANT NON-CASH MOVEMENTS
Increase in value of investments 5,117 14,906
======= =======
Corvus Capital Inc.
NOTES TO THE FINANCIAL STATEMENTS
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 Accounting
Standards and apply the Companies Act 1985 when preparing its annual financial
statements. The financial statements are prepared under the historical cost
convention and in accordance with applicable accounting standards and with the
Statement of Recommended Practice "Financial Statements of Investment Trust
Companies".
The principal accounting policies adopted by the Group remain unchanged from
those set out in the Group's 2006 annual report and financial statements other
than as detailed below:
Changes in accounting policy
In preparing the accounting policies for the current year the Group has adopted
for the first time Financial Reporting Standard 20 (FRS 20) 'Share Based
Payment'.
FRS 20 'Share-Based Payment (IFRS 2)' requires the recognition of equity-settled
share-based payments at fair value at the date of the grant. Prior to the
adoption of FRS 20, the Group did not recognise the financial effect of
share-based payments until such payments were settled.
In accordance with the transitional provisions of FRS 20, the Standard has been
applied retrospectively to all grants of equity instruments after 7 November
2002 that were unvested as of 1 October 2006.
This change in accounting policy has resulted in a prior year adjustment for the
Group. For the period ended 30 September 2006, the change in accounting policy
has resulted in a net decrease in Group and Company revenue reserve of £377,000
and a net decrease in share premium of £50,000. The balance sheets at 30
September 2006 have been restated to reflect the inclusion of a share based
payment reserve of £427,000. The Group statement of total return for the period
ended 30 September 2006 has been adjusted to reflect the additional share based
payment charge of £377,000.
For the year ended 30 September 2007 the change in accounting policy has
resulted in a net charge to the Group statement of total return of £450,000 At
30 September 2007, the share based payment reserve amounted to £877,000.
2. TAXATION
As a company incorporated in the British Virgin Islands and carrying on its
business overseas, the Company is not subject to UK corporation tax. The UK
subsidiary did not make a profit during the year and hence no tax arises in the
UK.
The tax charge for the year of £4,000 (period ended 30 September 2006: £3,000)
arises on the profit in the year made by Corvus Management (Suisse) SA which is
payable in Switzerland. The UK subsidiary has tax losses available to carry
forward and offset against future taxable trading profits of approximately
£50,000 (30 September 2006 : £200,000). The unprovided deferred tax asset on
these losses amounts to approximately £15,000 (30 September 2006 : £60,000).
3. (LOSS)/RETURN PER SHARE
The calculation of the basic (loss)/return per share is based on the (loss)/
return on ordinary activities after taxation and on the weighted average number
of ordinary shares in issue during the period. Returns and weighted average
number of shares used in the calculations are set out below:
Weighted
average Return
Return number per share
£000 of shares (pence)
Basic (loss)/return per share
2007
Revenue (3,298) 279,495,741 (1.18)
Capital 2,699 279,495,741 0.97
Total (599) 279,495,741 (0.21)
2006
Revenue (As restated) (6,016) 259,371,738 (2.32)
Capital 16,341 259,371,738 6.30
Total (As restated) 10,325 259,371,738 3.98
Diluted (loss)/return per share
2007
Revenue - - -
Capital 2,699 296,133,909 0.91
Total - - -
2006
Revenue (As restated) - - -
Capital 16,341 268,923,116 6.08
Total (As restated) 10,325 268,923,116 3.84
18 month
Year ended period ended
30.9.2007 30.9.2006
Weighted average number of shares for calculating basic
(loss)/return per share 279,495,741 259,371,738
Effect of dilutive share options and warrants 16,638,168 10,551,378
============ ============
Weighted average number of shares for calculating diluted 296,133,909 268,923,116
(loss)/return per share ============ ============
The share options for revenue and total loss per share for 2007 are
anti-dilutive and for revenue in 2006.
4. INVESTMENTS
2007 2006
£'000 £'000
AIM 33,687 33,155
Overseas listed 50 50
Unlisted (all UK) 1,864 522
------- -------
35,601 33,727
------- -------
Movements in investments during the year are as follows:
Overseas
AIM listed Unlisted Total
£'000 £'000 £'000 £'000
Valuation at 1 October 2006 33,155 50 522 33,727
Additions at cost 1,212 - 342 1,554
Uplift to fair value 881 - - 881
Transfer from prepayments - - 404 404
Disposals:
- proceeds (3,678) - - (3,678)
- loss on disposal (2,404) - - (2,404)
Net unrealised gains in year 4,521 - 596 5,117
------- ------- ------- -------
Valuation at 30 September 2007 33,687 50 1,864 35,601
======= ======= ======= =======
Book cost at 30 September 2007 3,555 50 1,268 4,873
Total unrealised gains 30,132 - 596 30,728
------- ------- ------- -------
Valuation at 30 September 2007 33,687 50 1,864 35,601
======= ======= ======= =======
The investments made in companies consist of ordinary shares only. Corvus's
relationship with these companies is one of a portfolio investor and the value
to the Group is through marketable value as part of a basket of investments
rather than as a media through which the Group carries out its business.
Therefore, even where shareholdings are in excess of 20% or 50% the investee
companies are not accounted for as associated or subsidiary undertakings. In
fact over time the Group expects its shareholdings to be diluted to below a 20%
holding.
5. RECONCILIATION OF RETURN ON ORDINARY ACTIVITIES BEFORE INTEREST AND TAX
WITH NET CASH OUTFLOW FROM OPERATING ACTIVITIES
(As restated)
18 month
Year ended period ended
30.9.2007 30.9.2006
£'000 £'000
Return on ordinary activities before interest and tax (1,518) 10,113
Share based payment 450 377
Depreciation 65 57
Loss on disposal of tangible fixed assets - 4
Movement in debtors (1,234) (1,925)
Movement in creditors 313 136
Movement in other financial assets/liabilities held at fair value 14 -
Foreign exchange 4 -
Loss/(profit) on disposal of investments 2,404 (1,435)
Revaluation of investments (5,117) (14,906)
----------- -----------
Net cash outflow from operating activities (4,619) (7,579)
=========== ===========
6. ANALYSIS OF CHANGES IN CASH DURING THE PERIOD
18 month
Year ended period ended
30.9.2007 30.9.2006
£'000 £'000
Increase in cash 511 282
Net funds at 30 September 2006 287 5
----------- -----------
Net funds at 30 September 2007 798 287
=========== ==========
7. PUBLICATION OF NON STATUTORY ACCOUNTS
The financial information set out in this preliminary announcement does not
constitute statutory accounts as defined in section 240 of the Companies Act
1985.
The Group balance sheet at 30 September 2007 and the Group statement of total
return, Group reconciliation of movement in shareholders' funds, Group cash flow
statement and associated notes for the period then ended have been extracted
from the Group's 2007 statutory financial statements upon which the auditors
opinion is unqualified and does not include any statement under section 237 of
the Companies act 1985.
This information is provided by RNS
The company news service from the London Stock Exchange