TIDMVSA
RNS Number : 3121J
VSA Capital Group PLC
29 June 2011
FINAL RESULTS FOR THE FIFTEEN MONTH PERIOD ENDED 31 MARCH 2011,
PLACING OF NEW SHARES AND PROPOSED CAPITAL REORGANISATION
VSA CAPITAL GROUP PLC
("VSA CAPITAL GROUP" or "THE COMPANY") (AIM: VSA.L)
Following the change in its accounting reference date to 31
March, the Board of VSA Capital Group plc, the AIM listed natural
resources focused specialist corporate finance business (formerly
Formjet Plc and Third Quad Capital Plc), is pleased to announce
today its final results for the fifteen month period ended 31 March
2011.
HIGHLIGHTS
Group management & structural changes
In the financial period ending 31 March 2011 the shape and
structure of the group changed considerably.
-- Peter Joy was appointed as Finance Director on 1 February
2010, replacing Tony Lee who retired on the same date
-- Lyndon Chapman stepped down as long serving Executive
Chairman to become Non-Executive Chairman at the Company's AGM held
on 4 March 2010
-- John McCartney joined the Board as Director responsible for
the Group's Technology Division with the acquisition of Softline
Ltd on 20 August 2010 and resigned on 14 February 2011 when the
Group disposed of its Technology Division
-- Relocation of all group activities to 14 Austin Friars,
London EC2N 2HE. The Company's original HQ premises in Crawley,
West Sussex are now let out on a 3 year lease and will be sold when
the commercial property market improves
Trading
-- Overall trading results for the period do not provide a clear
view of the Company's current or future prospects as the purchase
and subsequent sale of Softline together with all of the Group's
other software companies and a significant restructuring of the
plc's cost base have resulted in a significantly smaller business
based around the VSA Capital Limited acquisition, with
correspondingly lower ongoing running costs
-- Sales from continuing operations GBP253,636 (principally VSA
Capital Limited, 7[1/2] months from 12 August 2010 to 31 March
2011)
-- Operating loss from continuing operations GBP1,955,838
includes loss on disposal of Technology Division and other
non-recurring Plc costs incurred whilst re-organising the
activities of the group
-- Ongoing operating costs of the Plc reduced to GBP250,000 per
annum for 2011/12, including GBP36,000 share based payments charge
and GBP73,000 total interest payments on Vendor Loan and
Convertible Loan Notes
-- Growing interest in VSA Capital's corporate finance, broking
and investor relations services from major natural resources
corporations and institutional investors
Acquisition and disposal activity
-- Successful acquisition of VSA Capital Limited on 12 August
2010
-- Four companies purchased in the period together with the
subsequent disposal of seven companies comprising the Group's
Technology Division plus the dissolving of two dormant
subsidiaries, resulting in a Group comprising the AIM quoted plc,
its operating subsidiary, VSA Capital Limited, and a dormant
subsidiary, Third Quad Securities Limited
-- Acquisition of Softline Ltd group of companies on 20 August
2010 for GBP1,300,000 payable in cash and ordinary shares
-- Disposal of the Group's entire Technology Division comprising
its Softline and Formjet/Ability software businesses on 14 February
2011 for a consideration of GBP1,300,000 receivable in cash
instalments, less the crystallisation of a total of GBP225,000
comprising a performance payment and compensation for loss of
office to John McCartney, original vendor of Softline
-- On-going examination of further potential acquisition
opportunities in the financial services arena which the board
believes will lead to further activity in the current financial
year. Whilst the group has an ongoing strategy adding scale through
the expansion of VSA, it will continue to pursue further
acquisitions where opportunities present themselves.
Financing of the Group's activities
-- Six placings of new ordinary shares were undertaken in the
period raising an additional GBP1.08m of capital
-- GBP300,000 in Convertible Loan Notes were issued to fund the
Group's acquisition of VSA Capital Limited, with a further
GBP50,000 raised when associated warrants were subsequently
exercised by one holder
-- The purchase, and subsequent sale, of Softline was partially
funded by a GBP600,000 vendor loan and the issue of GBP400,000
worth of new ordinary shares
-- The Company secured a three year Equity Financing Facility of
up to GBP5 million with Darwin Strategic Limited which, if drawn,
would be used to finance the continued development of VSA and its
subsidiaries
PLACING OF NEW SHARES
The Board is pleased to announce that it has successfully raised
GBP274,000 before expenses by way of a placing of 45,666,667 new
ordinary shares of 0.01p each in the capital of the Company ("new
Ordinary Shares") at 0.6 pence ("Placing Price") per new Ordinary
Share (the "Placing"). The Placing was undertaken with a strategic
investor and others, including staff members. The strategic
investor is well placed and connected in the MENA (Middle East
North Africa) region and it is anticipated he will be able to
introduce business from this area to VSA. Much of the MENA region
is currently undergoing significant political and economic change
and it is at times like these that benefits can arise for
businesses that are alive to such opportunities. The net proceeds
of this Placing will be used for working capital purposes. The
45,666,667 new Ordinary Shares to be issued pursuant to the Placing
will rank pari passu in all respects with the existing issued
Ordinary Shares of the Company. Application will be made for the
new Ordinary Shares to be admitted to trading on AIM and trading is
expected to commence on 4 July 2011.
Holdings on completion of the placing
Set out below are the interests of Coach House Holdings which is
participating in the Placing:
Shareholder Aggregate Number of new Aggregate Percentage of
interests prior Ordinary Shares interests the enlarged
to completion being issued following issued share
of the Placing completion of capital
the Placing
Coach House Holdings - 31,666,667 31,666,667 5.19%
Set out below are the interests of the Directors in the
Company's issued share capital following completion of the
Placing:
Aggregate
Aggregate interests
interests prior to following Percentage of the
completion of the completion of the enlarged issued
Director Placing Placing share capital
Lyndon Chapman (Non
Executive
Chairman) 5,000,000 5,000,000 0.72%
Andrew Monk
(CEO) 83,000,000 83,000,000 11.91%
Peter Joy
(Finance Director) 10,000,000 10,000,000 1.44%
Total voting rights
Following the Placing, the issued share capital of the Company
will increase by 7.01 per cent. to 696,819,812 Ordinary Shares of
0.01p each. This figure may be used by shareholders as the
denominator for the calculations by which they will determine if
they are required to notify their interest in, or a change to their
interest in, the share capital of the Company under the Disclosure
and Transparency Rules (as applied to the Company by AIM Rule
17).
PROPOSED CAPITAL REORGANISATION
The Company proposes to undertake, subject to Shareholder
approval, a 1 for 20 consolidation of its issued Ordinary Shares
(the "Share Consolidation") whereby every 20 existing Ordinary
Shares of 0.01p each are consolidated into 1 new Ordinary Share of
0.2p each. In addition the Company proposes that the Share Premium
Account of the Company be reduced from GBP5,644,003 to GBP61,723
and that the amount of this reduction be applied to eliminate the
deficit on the Profit and Loss Account of the Company.
Notice of the Annual General Meeting together with a circular
letter to Shareholders from the Chairman of the Company, which
provides further details of the proposed capital reorganisation,
will be posted to Shareholders later today. If approved by
Shareholders, the Record Date for the proposed Capital
Reorganisation (being the date that any fractional entitlements
will be calculated) will be the close of business on 21 July 2011
and the Share Consolidation is expected to become effective on 22
July 2011.
Commenting on today's results, Andrew Monk, Chief Executive
Officer of VSA Capital Group plc, said:
"The overall results are totally backwards looking and bear
little relevance to our current business. Their presentation is
also overly complex as a result of the need to adopt similar
accounting practices to a FTSE 100 company which, frankly, add
little value in exchange for the additional cost incurred by a
company of your size. Going forward VSA is now a simpler and more
focussed business and I have, in my Chief Executive Officer's
statement, provided an update of how the business is developing.
Corporate broking is a competitive industry and the current
economic environment is not making life easy for any of the
participants. The old model, where businesses relied upon
commissions generated by secondary trading operations to cover the
firm's cost base, is becoming increasingly difficult to sustain as
commission rates continue to succumb to downward pressure to a
point where they are now at or below cost. There is an abundance of
small domestic firms fighting for business, which has lowered their
ability to create healthy profitability which also lowers the value
creation ability of all market participants. At VSA I have changed
that business model. We are a focussed resources house but have
taken a global approach and although we are looking to enter the
secondary market soon, it will be via a small low cost
facility.
VSA is about value creation for its shareholders - and
operational gearing is required to create that value. The "old
broking model" now has little operational gearing but at VSA I will
continue to look to develop areas where there is greater
operational gearing. Value in a company like ours is created by
building a respected team and a quality client list. I have already
made significant progress on both of these fronts. Resource stocks
may be cyclical in the market, but there will always be the need to
have good analysts and placing power for the client companies
involved. Resource companies tend to operate globally, including in
emerging markets, and so it is important to retain a global
outlook. Likewise investors in resource companies are global (both
in their domicile and in their outlook) and, although London
remains an important source of funds, the Middle East and Far East
are becoming increasingly important. By being a global player
(despite our size) we can create a truly unique business in London.
To achieve this aim of being a global player it is helpful to have
strategic investors who we can leverage off and I am delighted
today to have announced our first step with a strategic investor
who has expertise and connections in the MENA (Middle East North
Africa) region. We welcome him in joining us as a shareholder and
look forward to working with him. Building this business will not
happen overnight, but if we can continue with our plans as we have
so far, then VSA will become a very valuable business."
For further information, please contact:
VSA Capital Group plc Andrew Monk, CEO +44 (0)20 3005 5000
Shore Capital and Corporate Limited Andrew Raca +44 (0)20 7408
4090
Rivington Street Corporate Finance
Jon Levinson +44 (0)20 562 3357
CHAIRMAN'S STATEMENT
Introduction I am pleased to comment on the financial period
ending 31 March 2011. The fifteen month period commenced against a
backdrop of considerable change towards the end of 2009 resulting
in our business consisting solely of the smaller elements of our
Software Division, following the disposal of our former principal
business Panda Software (UK) Limited, and the appointment of new
Executive Directors who joined from the Financial Services
industry. The strategy of the Board was to add value to the
Software Division through expansion and to lead the group into the
Financial Services sector either through start up or
acquisition.
The Board looked at a number of acquisition opportunities during
the first half of 2010, but concluded that these were either too
highly priced or unlikely to fit into the Group's existing
structure. However in August 2010 the Group made two acquisitions,
one in Software (Softline Ltd) and the other in Financial Services
(VSA Capital Limited). It soon became clear that the purchase of
Softline was a mistake and swift action was taken to dispose of it
together with the other businesses in our Software Division. A sale
was concluded in February 2011 for the sum GBP1,300,000, resulting
in a loss on disposal of GBP115,551 which, whilst unfortunate, has
allowed the Board to focus entirely on VSA Capital and bring to it
their considerable skill and experience in the Financial Services
industry.
Following the disposal the restructured Group consists of one
main trading subsidiary, VSA Capital Limited, a stockbroking
business specialising in Mining, Oil & Gas and the Natural
Resources sector. Given the importance of VSA to the Group, a name
change to VSA Capital Group Plc was made in February 2011 at the
same time that the Software Division was sold. The natural
resources sector has experienced much growth in recent years with
mining and oil & gas companies accounting for about one third
of the FTSE 100 index and VSA Capital Limited is well placed in
providing specific expertise through its corporate finance
services, including fund raisings and listings in this important
market.
Trading
Andrew Monk has commented in detail in his CEO's statement on
trading in the period therefore, because current trading is a
reflection of the discontinued elements of the business and
effective start up of VSA, my comments are necessarily brief. The
coming year will therefore be the first reliable indication of the
progress the group is making as a dedicated Financial Services
business.
Board Changes and Staff Appointments
The period in question is my first as Non-Executive Chairman,
having previously served the group as Executive Chairman for many
years. The current structure of the Board reflects, and is
proportionate to, the existing size of the Group, however as the
planned growth takes place, or as acquisitions are made, the Board
will be augmented to reflect its growing responsibilities.
Andrew Monk and Peter Joy have committed considerable energy and
resources in preparing the restructured group for success and it is
important that they are supported with high quality personnel at
all levels given the complexity and regulatory burden of operating
in the financial services sector.
I believe that the board has made some excellent staff
appointments in recent months and this investment will enable the
Group to expand in a controlled and professional manner.
Acquisitions
In my previous statements I have stressed the importance of a
well thought through strategic acquisition programme to enable the
Group to justify its public listing and, whilst acknowledging that
significant organic growth can also be achieved by the VSA Capital
team, I believe that this remains an important goal. To this end
the Board considers carefully all acquisition opportunities
presented to it and continues to explore a number of creative
routes in expanding the business.
Outlook
The outlook for the Group is one of a business totally focused
in the Financial Services Industry providing stock broking services
to its corporate clients. The management team are able to
demonstrate considerable previous success in the industry and I
believe this will provide the status and qualification for the
company to attract and expand its corporate client base in the year
ahead. One should not underestimate, however, the challenging
circumstances in which the company operates and I anticipate that
the growth of the business will be greatly enhanced through
strategic acquisition and investment in an expanded range of
services it can offer its clients.
In looking to the future the Board must consider ways of
delivering returns to shareholders and as the business moves
towards profitability it is seeking to undertake a rationalisation
of the shareholders' funds on its balance sheet, including a
consolidation of its shares.
The year ahead will determine the future success of your
company, and the directors and staff are confident of providing the
basis for a stable and profitable stockbroking business for years
to come. The change from a Software company into a Financial
Services company has not been without its stresses and setbacks,
however the directors and staff have committed to the task
throughout and I would like to thank them and our loyal
shareholders and advisers for their ongoing support.
Lyndon Chapman Non-Executive Chairman 28 June 2011
CHIEF EXECUTIVE OFFICER'S STATEMENT
These financial statements record the end of your company's
involvement with its former software businesses and the start of a
new business focused purely in the financial services sector via
its new subsidiary, VSA Capital Limited. This transformation has
been a hard and lengthy process, and not without its hiccups, but I
believe that as shareholders you now have a brighter and more
secure future than you did 18 months ago when I joined as your new
Chief Executive.
Summary
As I predicted in our second interim report issued at the end of
March, the results recorded in these full period financial
statements appear worse than would be case if they reflected solely
the business you now own. The Group's acquisition of Softline and
the subsequent disposal of its entire software division, combined
with the latter's underperformance in the final quarter of 2010,
had a major negative impact on our results for the period, but
these will not be recurring. My focus now is to build VSA Capital
Limited and already I have recruited a motivated and high calibre
team. Together we must now deliver the deal flow that I know we can
achieve.
VSA Capital Limited
We have now owned VSA Capital Limited for ten months and I have
made some significant changes in that time. I continue to recruit
talented and well respected people who have helped VSA to win an
enviable list of retained corporate clients. To have done so in
such a short length of time is a positive sign for future revenue
growth prospects. The combined market capitalisation of our
corporate clients now exceeds $1bn.
I believe VSA Capital Limited is quickly establishing not just a
presence in the resources space but also a growing respect for
providing an excellent service. As a specialist firm in the
resource sector, VSA operates well alongside the more general
broking firms and has already worked jointly with Seymour Pierce,
Collins Stewart, Winterfloods and Oriel Securities in the UK, as
well as numerous firms in Canada and Australia.
Corporate broking remains a very competitive industry and to be
successful a firm needs to try and differentiate itself from its
competition. One of the key differentiating strategies adopted by
VSA is to be completely exchange agnostic - to be as comfortable
operating on the TSX, ASX and other overseas markets as it is in
London. This might be regarded as a bold strategy for a business in
its infancy but VSA has already had success winning mandates from
and raising capital for clients listed on the TSX and ASX. I am
hopeful that in the coming months VSA will do its first deals on
the Oslo Bors (which has huge experience in Oil & Gas and
Timber) and the Frankfurt exchange.
As reported previously, we have invested in the first stages of
building up the business in terms of both people and also
marketing, having attended the Indaba Mining Conference in Cape
Town, PDAC in Toronto, the Mines and Money Conference in Hong Kong
and The Master Investor Show in London, together with being a
regular sponsor of Minesite and Oil Barrel investor
conferences.
We have built a very credible team and I am delighted with the
quality of people who have chosen to join me at VSA Capital.
Building a team from scratch is never easy and when completed
creates value in its own right and is opening many new doors for
us. Our team is the foundation to the success and future growth of
the business.
I am very aware of the importance of staying focussed on the
plan we have set ourselves and also that we must walk before trying
to run and, although we have some very ambitious plans, we must
complete each stage of our build up before moving onto the next.
The next step for us, and something that we have been quietly
working on recently, is to obtain the regulatory permissions
necessary for us to commence secondary trading. Unfortunately we
cannot put a time frame on obtaining these permissions but we are
hopeful they will be received in the autumn. The physical
preparations to start trading are already largely in place. This
will not only mean an additional income stream but will also
provide us with significantly more exposure in the market place -
which will help us with our corporate business.
Once this is in place and we are satisfied it is working well we
can look to the next stage of our development.
Property
Sadly the property market in the Gatwick area remains weak and
disposal of the group's former headquarters property in the short
term looks unlikely. As stated in my second interim report we are
continuing to investigate alternative funding options for this
property, to replace the vendor loan with borrowings the costs of
which would more closely match the rental income we receive from
this property.
Consolidation of Share Capital and Reserves
Recognising that VSA is, effectively, a new business I feel it
is appropriate that the company conducts a 1:20 share consolidation
and uses part of the balance on its share premium to offset the
deficit on the company's retained earnings account, thus providing
greater flexibility when developing a dividend payment policy once
the group is trading profitably. Further details of these proposals
are set out in the documentation providing Notice of the Annual
General Meeting which accompanies these Report and Accounts.
Current trading
We have continued to win new mandated clients at a good rate
which is promising for the future. Whilst the first three months of
the current financial year have been quieter than expected for fund
raisings, as we report we are currently in a very busy period which
could more than compensate. VSA is building a good pipeline of
business for the second half of our year and, overall, I am very
pleased with how we are performing - but I am also always aware
that we work in dynamic markets that can change overnight
Andrew Monk Chief Executive Officer 28 June 2011
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For The Fifteen Month Period Ended 31 March 2011
2011 2009
GBP GBP
Continuing operations
Revenue 253,636 868,733
Cost of Sales (15,333) (334,814)
GROSS PROFIT 238,303 533,919
Investment income 5,779 813
Other gains and losses (205,390) (344,520)
Administrative expenses (1,742,065) (844,444)
Finance costs (69,462) (36,016)
Exceptional items (183,003) (1,280,000)
Loss for the period from continuing operations (1,955,838) (2,010,248)
Discontinued operations
(Loss)/profit for the period from discontinued
operations (76,072) 518,786
Loss for the period (2,031,910) (1,491,462)
----------- -----------
Other comprehensive income, net of income tax - -
Total Comprehensive income for the period (2,031,910) (1,491,462)
----------- -----------
Earnings per share
Basic earnings per share from continuing operations
Diluted earnings per share from continuing (0.41p) (0.50p)
operations (0.32p) (0.50p)
Basic and diluted earnings per share from
discontinued operations (0.01p) (0.04p)
GROUP BALANCE SHEET
As at 31 March 2011
31 March 31 December
2011 2009
GBP GBP
ASSETS
Non-current assets
Goodwill - 50,000
679,700 870,342
Property, plant and equipment 73,310 -
Trade and other receivables ________ ________
753,010 920,342
Total non-current assets ________ ________
Current assets
Inventories - 27,285
Investments 31,797 -
Trade and other receivables 1,169,621 875,881
Cash and cash equivalents 133,904 23,950
_________ ________
Total current assets 1,335,322 927,116
_________ ________
2,088,332 1,847,458
Total assets _________ ________
EQUITY AND LIABILITIES
Capital and reserves attributable to equity holders
Share capital 540,406 510,306
Share premium account 5,644,003 4,135,623
Share based payments reserve 56,510 -
Retained earnings (5,473,375) (3,441,465)
_________ ________
Total equity 767,544 1,204,464
Non-current liabilities
Borrowings 770,000 253,081
Current liabilities
Trade and other payables 430,788 258,097
Borrowings 120,000 131,816
________ ________
550,788 389,913
________ ________
Total liabilities 1,320,788 642,994
________ ________
Total equity and liabilities 2,088,332 1,847,458
________ ________
GROUP CASH FLOW STATEMENT
For The Fifteen Month Period Ended 31 March 2011
2011 2009
GBP GBP
Cash flows from operating activities
Operating loss (1,822,706) (1,986,259)
Depreciation of property, plant and equipment 35,257 38,622
Impairment of property, plant and equipment 175,000 -
Amortisation of intangible fixed assets - 70,550
Impairment of goodwill and other intangible assets 183,003 375,758
Goodwill impairment charge - 164,254
Impairment of assets held to maturity Share based - 397,405
payment expense Profits on disposal of property, 56,510 -
plant and equipment (3,000) -
Changes in working capital:
Inventories 61,546 213,082
Trade and other receivables (692,156) (7,615)
392,740 (596,653)
Trade and other payables _________ _________
(1,613,806) (1,330,856)
Cash flows used in operating activities _________ _________
Cash flows from investing activities
Interest received 389 813
Investments held to maturity - (189,320)
Purchases of available-for-sale investments (23,125) -
Proceeds from disposal of subsidiaries, net of cash
transferred 1,081,020 1,011,947
Purchases of property, plant and equipment - (10,114)
(1,281,065) -
Purchases of subsidiary undertakings ________ ________
(222,781) 813,326
Net cash flows used in investing activities _______ _______
Cash flows from financing activities
Interest paid (97,042) (36,016)
Proceeds from issue of ordinary shares 1,557,480 250,000
Costs of issuing shares (19,000) (6,350)
Proceeds from issue of convertible loan notes 300,000 -
Costs of issuing convertible loan notes (10,000) -
(Decrease) / increase in borrowings (296,341) (53,055)
600,000 -
Proceeds from vendor loan _______ _______
2,035,097 154,579
Net cash flows from financing activities ______ ______
Net increase/(decrease) in cash and cash equivalents 198,510 (362,951)
Cash and cash equivalents at beginning of year (64,606) 298,345
________ ________
Cash and cash equivalents at end of year 133,904 (64,606)
_______ _______
EARNINGS PER SHARE
The basic earnings per share is calculated by dividing the loss
after taxation by the weighted average number of shares in
issue.
2011 2009
number number
The weighted average number of shares were:
Basic weighted average number of shares 482,172,925 298,636,296
Details of potential dilutive ordinary shares are set out
below.
2011 2009
number number
Employee share options (note 26) 75,312,308 38,662,993
Contractual termination payment to Director 10,000,000 -
Convertible Loan Note (note 22) 54,545,455 -
Warrants attached to Convertible Loan Note (note 22) 5,000,000 -
Warrants attached to GBP5m Equity Financing Facility 5,000,000 -
ACCOUNTS
The Company will post the Report and Accounts for the period
ended 31 March 2011 to shareholders on 29 June 2011. The Accounts
are also available on the Company's website
www.vsacapitalgroup.com. Copies of the Report and Accounts will be
available for collection from the Company's Trading Office at 14
Austin Friars, London EC2N 2HE.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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