TIDMVSA
RNS Number : 6160T
VSA Capital Group PLC
08 December 2011
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 SEPTEMBER 2011
VSA Capital Group plc
("VSA CAPITAL GROUP" or "THE COMPANY") (AIM:VSA)
8 December 2011
VSA Capital Group, the AIM listed natural resources focused
corporate finance advisory and broking firm, announces its interim
results for the six month period ended 30 September 2011.
HIGHLIGHTS
Trading:
-- Maiden results as a pure financial services business
-- Revenues from continuing operations for the six months ended
30 September 2011: GBP435,068 (H1 2010: GBP456,925)
-- Continued growth in retained clients at VSA Capital Limited.
At 30 November 2011: 18 mandated clients
-- Operating loss from continuing operations, before exceptional
items: GBP473,810 (H1 2010: GBP168,877 loss)
-- Exceptional item (impairment of the Company's former business
premises in Crawley): GBP125,000 (H1 2010, total exceptional items:
GBP161,824)
-- Loss for period: GBP598,810 (H1 2010: GBP351,391)
-- Operating costs of the plc reduced to c.GBP250,000 per annum
for 2011/12, including GBP36,000 ongoing share based payments
charge and GBP73,000 total interest payments on existing vendor
loan and convertible loan notes
-- Growing market interest in VSA Capital's corporate finance,
broking and investor relations services
Post Period Events:
-- The Company is continuing the process of obtaining Court
approval to reduce the Share Premium Account of the Company from
GBP5,644,003 to GBP61,723 with the amount of this reduction being
applied to reduce the deficit on the Profit and Loss Account of the
Company.
-- A share placing announced today raising approximately
GBP540,000 providing funding to pursue the Company's growth plans
for VSA Capital Limited
-- The Company's former business premises in Crawley, which are
used as security for the Vendor Loan provided by the seller of the
Softline software business, are scheduled to be remarketed or
auctioned in order to settle this debt early.
-- Key members of the former Blue Oar Securities management team
re-united to lead the Company's growth plans.
Commenting on today's results, Andrew Monk, Chief Executive of
VSA Capital Group, said:
"VSA Capital Group has endured the difficult market conditions
in this period, which have been widely reported, but we believe the
Company has started building the foundations of a highly regarded
natural resources focussed investment bank. The fund raising
announced today will enable the Company to continue to grow with
positive cash balances, a strong balance sheet and a determination
to expand. The Board looks forward to delivering positive results
for shareholders and is grateful for their continued support."
ENQUIRIES:
VSA Capital Group Plc Tel: 020-3005 5000
Andrew Monk, Chief Executive
Peter Joy, Finance Director www.vsacapital.com
NOMAD & JOINT BROKER
Shore Capital and Corporate Limited/Shore Capital Stockbrokers Limited Tel: 020-7468 7950
Bidhi Bhoma or Toby Gibbs www.shorecap.co.uk
JOINT BROKER
Rivington Street Corporate Finance Tel: 020-7562 3357 Jon
Levinson www.rs-cf.com
PUBLIC RELATIONS
Blythe Weigh Communications Tel: 020-7138 3204
Tim Blythe www.blytheweigh.com
Notes to Editors:
VSA Capital Group plc is an international investment banking and
institutional broking group headquartered in London. Via its
subsidiary, VSA Capital Limited, the group provides corporate
finance, broking, research, sales and capital raising capabilities
to companies in the natural resources sectors; Oil & Gas,
Mining, Agriculture and Timber. VSA Capital Limited is authorised
and regulated by the FSA and advises companies listed in London
(AIM and the Main Market), Canada (TSX) Australia (ASX) and the USA
(OTCBB) with assets on every continent. The firm currently has 18
retained corporate clients with an aggregate market value of over
$1bn.
CHIEF EXECUTIVE OFFICER'S STATEMENT
The market in the last few months has experienced some of the
worst conditions of the last 30 years and extremely challenging
conditions are being experienced across the spectrum of market
participants. Parts of the broking and investment banking industry
are in turmoil at present and whilst this means that we must take
care to avoid the pitfalls, it also provides the chance to benefit
from the opportunities that present themselves at such times.
Summary
The interim results are disappointing, although the underlying
loss is lower than the reported loss. August and September, when we
had hoped to complete a number of fund raisings for clients of VSA
Capital Limited, proved to be very difficult and the combination of
a falling market and loss of confidence in the Eurozone has now
made such fund raisings almost impossible. Currently VSA Capital
Limited relies on such fundraisings to ensure that it is profitable
and it is the lack of such opportunities that has been the main
cause of the Company's underperformance at the interim stage. Costs
have remained in line with budget and VSA Capital Limited has
continued to win new corporate clients, as budgeted.
VSA Capital Limited
Despite the difficult market conditions VSA Capital Limited has
started to gain good momentum and is building its presence in the
Natural Resources sector. So far we have grown quite cautiously as
we have recognised that market conditions are tough and that we
have limited resources. We now feel that the time is right to push
forward to the next level by commencing secondary trading
activities and recruiting suitable staff with a view to becoming an
AIM market Nominated Adviser (NOMAD). In the announcement of our
results for the fifteen months ended 31 March 2011 I stated that I
hoped to start secondary trading in the Autumn of 2011.
Unfortunately we have not been able to achieve this. Our
application for the enhanced regulatory permissions necessary to
undertake this business was delayed while we considered a number of
potential acquisitions, each of which would have come with these
permissions. None of these opportunities came to fruition and so we
are now in the process of applying for our own secondary trading
permissions. Depending on the timing of the FSA's approval, this is
expected to start in the spring/summer of 2012.
Becoming a NOMAD is also not without complications as again
approval has to be obtained from the London Stock Exchange and
there are strict requirements that must be fulfilled before this
status is granted.
We are pleased to have recruited Andrew Raca recently, our first
QE (qualified executive). Andrew worked for me as my Head of
Corporate Finance at Blue Oar Securities Plc and I am pleased to
announce that Nick Redfern has also joined the Company as our Head
of Equities. Nick was my Head of Equities at both Blue Oar
Securities Plc and Oriel Securities. We now effectively have the
Blue Oar Securities management team back together again at VSA, and
this is very exciting as we know we work well together and have a
proven track record.
The next level in VSA Capital Limited's development will mean
that we will be recruiting more staff. We believe the timing for
this is excellent as with the current market turmoil, many staff
are being laid off and some firms are even closing down completely.
Recruitment will increase our cost base but the placing announced
today will alleviate this issue. As I have stated above, our
industry is going through a very difficult period, we have looked
at making an acquisition but what is clear when we look at other
firms is that many have allowed their costs to rise too high when
markets were better and this partially explains their current
problems. We have gone to great lengths to ensure our basic costs
are kept as low as possible. Staff at VSA Capital Limited will be
paid good bonuses but only if the team creates good profits for the
Company.
VSA Capital Limited has a very clear strategy. Our aim is to
become the leading independent UK based resource focussed
investment bank and we are progressing well to achieve that aim.
The resources sector will continue to be active for many years to
come, especially as China shows no sign of wishing to slow the rate
at which it acquires assets.
Property
We own a property near Gatwick, which was the Company's former
headquarters building and was used by the software companies sold
earlier in the year. The property market around Gatwick has shown
no sign of improvement over recent months but we continue to look
to dispose of this property or find a bank prepared to lend against
it which, despite Government statements to the contrary, sadly
still seems impossible.
Current Trading
At the end of July trading conditions for VSA Capital Limited
changed dramatically and they have remained extremely tough since
then. We rely upon undertaking corporate transactions for our
clients and these have proved extraordinarily difficult to complete
in the second half of 2011.
VSA Capital Limited is currently engaged on a significant
transaction which, should it complete, would have a very
significant positive impact on the company. However, I would stress
that there is no certainty that this transaction will be brought to
a successful conclusion, particularly under current market
conditions.
VSA Capital Limited continues to win good quality retained
corporate clients and now has 18 in the fields of Mining, Oil &
Gas, Timber and Agriculture and this, in the longer term, is very
positive news. It also has a healthy pipeline of potential
transactions but completing them will be challenging as investors
are not keen to commit and, under current circumstances, valuations
are often excessively optimistic. We therefore must conclude that
transaction levels in 2012 will continue to be at a low level. I
hope we are wrong. What we can control is our cost base and we will
ensure that our growth plan does not run ahead of our budgets.
To that end, and following the advice of Mervyn King, the
Governor of the Bank of England, in order to build up VSA's
reserves against "extraordinarily serious and threatening" times,
we have announced today that we have raised approximately
GBP540,000 through an equity fundraising. This has been raised
mainly from existing shareholders and staff. These funds will
strengthen our balance sheet and give us comfort that we can ride
out the current turmoil which is an important factor for our staff.
We have built a great team at VSA Capital Limited. I would like to
pay tribute to their commitment and determination to build our
business and we recognise that it is vital in our industry to keep
them committed and excited by our prospects. I believe that over
the last 15 months we have established a platform in natural
resources that has positioned VSA Capital Limited to respond
positively to the opportunities arising in these difficult markets
and we look forward to building our business further in 2012 whilst
monitoring market conditions closely.
Andrew Monk Chief Executive Officer VSA Capital Group plc
8 December 2011
FINANCE DIRECTOR'S STATEMENT
Summary
Having spent the previous six month period with both software
distribution and financial services subsidiaries this interim
statement reports on the first period for which the Company has
been a pure financial services business.
Although our principal operating subsidiary, VSA Capital
Limited, continues to grow at a good rate from a very low base, the
Company is currently relatively small and continues to find it
difficult to meet the costs of maintaining its presence on a public
market (AIM) until further growth is achieved.
Turnover
Despite the uncertain state of the economy during the period,
turnover during the first half of the current financial year
totalled GBP435,068. Although comparative figures are shown in the
following Consolidated Income Statement, these are not strictly
comparable in view of the change in the Company's principal
activity in the previous period.
Cost reductions
We have continued to target cost reductions at plc level and
there are now very few elements of discretionary expenditure within
this entity. To the extent that such expenditure is incurred in the
future it is likely that it will relate to acquisition activities
undertaken for the benefit of the group as a whole.
Exceptional items
The Company has made a further exceptional impairment provision
against its former business premises in Crawley, West Sussex.
Share consolidation and cancellation of accumulated losses
The Company undertook a 1 for 20 consolidation of its issued
Ordinary Shares (the "Share Consolidation") whereby every 20
existing Ordinary Shares of 0.01p each were consolidated into 1 new
Ordinary Share of 0.2p each. The Company is currently in the
process of obtaining the necessary approvals such that the Share
Premium Account of the Company will be reduced from GBP5,644,003 to
GBP61,723 and that the amount of this reduction be applied to
reduce the deficit on the Profit and Loss Account of the
Company.
Cash flows
Notwithstanding the expenditure incurred in undertaking the
current growth phase at VSA Capital Limited, the Company had
accrued a healthy cash balance at 30 September 2011 totalling
GBP414,000, up from GBP134,000 at the previous period end. The
Company's expenditure through the period has been funded to a large
extent by the receipt of deferred consideration payments relating
to the disposal of its former software subsidiaries, together with
the proceeds received from a GBP274,000 share placing in June
2011.
A further share placing, announced today, will provide the
Company with additional working capital of approximately GBP540,000
and means that the Company maintains adequate cash resources to
meet its immediate financial obligations.
The Company continues to make regular monthly repayments of
GBP10,000, plus quarterly interest payments, to the vendor of
Softline Ltd under the terms of his Vendor Loan agreement, the
outstanding balance of which totals GBP510,000 at today's date. The
Company has an obligation to make half-yearly interest payments of
GBP13,500 to the holders of GBP300,000 Convertible Loan Notes which
are due for repayment in August 2015.
Under the terms of the agreement for disposal of the Company's
former software businesses, Rivington Street Ventures Limited is
due to make further deferred consideration payment instalments
totalling GBP316,000 per before 14 April 2012.
Peter Joy Finance Director VSA Capital Group plc
8 December 2011
CONSOLIDATED INCOME STATEMENT
For the period to 30 September 2011
Six months 15 months Six months
ended ended ended
30-Sep-11 31-Mar-11 30-Jun-10
(Unaudited) (Audited) (Unaudited)
GBP GBP GBP
CONTINUING OPERATIONS
Revenue 435,068 253,636 456,925
Cost of Sales (27,170) (15,333) (220,038)
GROSS PROFIT 407,898 238,303 236,887
Investment income 296 5,779 61
Other gains and losses - (205,390) -
Administrative expenses (968,878) (1,742,065) (405,731)
Finance costs (38,128) (69,462) (20,784)
Exceptional items - (183,003) (161,824)
LOSS FOR THE PERIOD FROM CONTINUING OPERATIONS (598,812) (1,955,838) (351,391)
DISCONTINUED OPERATIONS
(Loss)/profit for the period from discontinued
operations - (76,072) -
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD (598,812) (2,031,910) (351,391)
Basic loss per share from continuing
operations (p) (1.78) (0.41) (0.09)
Diluted loss per share from continuing
operations (p) (1.41) (0.32) (0.09)
Basic and diluted earnings per share
from discontinued operations (p) 0.00 (0.01) (0.09)
STATEMENT OF CHANGES IN EQUITY
For the period to 30 September 2011
Six months 15 months Six months
ended ended ended
30-Sep-11 31-Mar-11 30-Jun-10
(Unaudited) (Audited) (Unaudited)
GBP GBP GBP
Loss of the financial period (598,812) (2,031,910) (351,391)
Issue of share capital 274,000 1,538,480 208,480
Increase in equity for equity-settled
share-based payments 59,958 56,510 -
Net increase/(decrease) in shareholders'
equity (264,854) (436,920) (142,911)
Equity at the start of the period 767,544 1,204,464 1,204,464
Equity at the end of the period 502,690 767,544 1,061,553
CONSOLIDATED BALANCE SHEET
As at 30 September 2011
30-Sep-11 31-Mar-11 30-Jun-10
(Unaudited) (Audited) (Unaudited)
GBP GBP GBP
ASSETS
Non-current assets
Property, plant and equipment 533,436 679,700 844,248
Goodwill - - 50,000
Trade and other receivables 73,310 73,310 -
------------ ------------ ------------
606,746 753,010 894,248
Current assets
Investments 19,707 31,797 -
Inventories - - 28,517
Trade and other receivables 580,513 1,169,621 406,556
Cash and cash equivalents 414,150 133,904 230,815
Total current assets 1,014,370 1,335,322 665,888
Total assets 1,621,116 2,088,332 1,560,136
EQUITY AND LIABILITIES
Equity attributable to equity holders
of the parent
Share capital 544,972 540,406 704,306
Share premium 5,913,437 5,644,003 4,150,103
Share based payments reserve 116,468 56,510 -
Retained earnings (6,072,187) (5,473,375) (3,792,856)
502,690 767,544 1,061,553
Non-current liabilities
Long-term borrowings 710,000 770,000 223,053
Total non-current liabilities 710,000 770,000 223,053
Current liabilities
Trade and other payables 288,426 430,788 232,270
Current portion of long-term borrowings 120,000 120,000 43,260
Total current liabilities 408,426 550,788 275,530
Total liabilities 1,118,426 1,320,788 498,583
Total equity and liabilities 1,621,116 2,088,332 1,560,136
CONSOLIDATED CASH FLOW STATEMENT
For the period to 30 September 2011
Six months 15 months Six months
ended ended ended
30-Sep-11 31-Mar-11 30-Jun-10
(Unaudited) (Audited) (Unaudited)
GBP GBP GBP
Cash flows from operating activities
Operating loss (560,979) (1,822,706) (330,668)
Adjustments for:
Depreciation of property, plant and equipment 149,966 35,257 14,723
Impairment of property, plant and equipment - 175,000 -
Impairment of goodwill and other intangible
assets - 183,003 -
Share based payment expense 59,957 56,510 -
Losses on disposal of property, plant
and equipment - (3,000) -
Changes in working capital:
Inventories - 61,546 1,232
Current asset investments 12,089 - -
Trade and other receivables 589,109 (692,156) (30,675)
Trade and other payables (142,362) 392,740 (25,827)
Net cash flows used in operating activities 107,780 (1,613,806) (371,215)
Cash flows from investing activities
Interest received 296 389 61
Purchases of available-for-sale investments - (23,125) -
Proceeds from disposal of subsidiaries,
net of cash transferred - 1,081,020 509,818
Purchases of property, plant and equipment (3,702) - (911)
Purchases of subsidiary undertakings - (1,281,065) -
Net cash raised from/(used in) investing
activities (3,406) (222,781) 508,968
Cash flows from financing activities
Interest paid (38,128) (97,042) (20,784)
Proceeds from issue of ordinary shares 274,000 1,557,480 208,480
Costs of issuing shares - (19,000) -
Proceeds from issue of convertible loan
notes - 300,000 -
Costs of issuing convertible loan notes - (10,000) -
Decrease in borrowings (60,000) (296,341) (30,028)
Proceeds from vendor loan - 600,000 -
Net cash raised from/(used in) financing
activities 175,872 2,035,097 157,668
Net increase in cash and cash equivalents 280,246 198,510 295,421
Cash and cash equivalents at beginning
of period 133,904 (64,606) (64,606)
Cash and cash equivalents at end of period 414,150 133,904 230,815
NOTES TO THE UNAUDITED INTERIM REPORT
1. Basis of preparation
This announcement was approved by the Board of directors on 8
December 2011. The financial information set out in this interim
statement has been prepared under IFRSs as adopted by the European
Union and on the basis of the accounting policies set out in the
statutory accounts of VSA Capital Group plc for the fifteen month
period ended 31 March 2011. Comparative figures are provided for
the six months ended 30 June 2010, being the initial six months of
the preceding accounting period. This report is not prepared in
accordance with IAS 34 which is currently not mandatory. This
interim statement has not been audited.
The financial information does not constitute statutory accounts
within the meaning of section 434 of the Companies Act 2006.
Statutory accounts for VSA Capital Group plc for the fifteen month
period ended 31 March 2011 reported under IFRS, on which the
auditors gave an unqualified opinion, have been delivered to the
Registrar of Companies.
2. Earnings per ordinary share
The calculation of basic earnings per ordinary share is based on
the result for the period, for continuing operations as well as
total acquisitions, and the weighted average number of shares in
issue during the period. On 29 July 2011 the Company undertook 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.
Six months 15 months Six months
ended ended ended
30-Sep-11 31-Mar-11 30-Jun-11
(Unaudited) (Audited) (Unaudited)
Weighted average number of ordinary
shares in issue 33,718,039 482,172,925 372,473,587
Dilutive potential ordinary shares:
Employee share options 5,069,365 75,312,308 37,187,993
Contractual termination payment
to Director 500,000 10,000,000 -
Convertible Loan Note 2,727,273 54,545,455 -
Warrants attached to Convertible
Loan Note 250,000 5,000,000 -
Warrants attached to GBP5m Equity
Financing Facility 250,000 5,000,000 -
Loss after tax (GBP) (598,810) (2,031,909) (351,391)
Basic earnings per share - pence
per share (p) (1.78) (0.42) (0.09)
Diluted earnings per share -
pence per share (p) (1.41) (0.32) (0.09)
3. Segmental Reporting
Segment income
The loss for the period of GBP598,812 can be allocated to
continued operations as shown below.
SEGMENT REPORTING
For the period to 30 September
2011
Financial Plc
Services Unallocated Total
GBP GBP GBP
Rendering of services 377,601 0 377,601
Other income 37,133 20,334 57,467
Interest 62 234 296
Total revenue 414,796 20,568 435,364
Cost of sales (27,169) - (27,169)
Administrative expenses (610,672) (148,283) (758,955)
Depreciation (19,087) (5,879) (24,966)
Impairment - (125,000) (125,000)
Finance costs (282) (37,846) (38,128)
Share-based payments charge (12,309) (47,649) (59,958)
Loss for the period (254,723) (344,089) (598,812)
All sales were to third party customers. Although the Company
operates in global markets its businesses are based solely within
the UK and the Directors do not believe that a geographical
breakdown of the Company's activities would provide a meaningful
analysis of its performance.
Segment assets
As at 30 September 2011
Financial Plc
Services Unallocated Total
GBP GBP GBP
Assets
Non-Current 20,407 586,339 606,746
Current 247,093 767,277 1,014,370
Total Assets 267,500 1,353,616 1,621,116
Liabilities
Non-Current 0 710,000 710,000
Current 133,317 275,109 408,426
133,317 985,109 1,118,426
Net Assets/Liabilities 134,183 368,507 502,690
4. Taxation
Due to the Company's losses, no taxation charge has arisen for
the period.
5. Dividend
The Directors have not declared an interim dividend.
6. Availability of Accounts
Copies of this statement are available to shareholders and
members of the public, free of charge, from the Company's principal
place of business at 14 Austin Friars, London EC2N 2HE.
Alternatively a downloadable version is available from the
following web address: www.vsacapital.com
This information is provided by RNS
The company news service from the London Stock Exchange
END
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