23rd January 2012
Early Equity Plc
("Early Equity" or "the Company")
FINAL RESULTS FOR THE YEAR ENDED 31 AUGUST 2011
CHAIRMAN'S REPORT FOR THE YEAR ENDED 31 AUGUST 2011
I am pleased to present the results for Early Equity Plc ("the Company") for
the year ended 31 August 2011.
Highlights for the year to 31 August 2011 (compared to year to 31August 2010)
and Key Performance Indicators:
* Pre tax loss of £65,244 (2010 - £12,994) after write down of Eclector
Limited's investment and loan outstanding.
* Impairment provision against value of investments of £39,588 (2010 - £Nil)
including £37,500 relating to Eclector Limited. Further provision of £9,375
made against Eclector loan.
* Investment portfolio stated at cost, less impairment provisions - £234,159
(2010 - £277,384)
* Value of the investment in Tangibal Group Plc quoted on Frankfurt Börse
continues to stand at a premium to cost despite major fallback in price
over the course of the year.
* Alpha Prospects Plc share price remained unchanged. The value of the
investment continues to stand at a premium to cost.
* Investment portfolio stated at market value for PLUS and other quoted
stocks would result in an uplift in value of £198,478 over balance sheet
values (2010 - £1,186,913)
* Net assets of £169,295 down 28% on the previous year's figure of £234,539.
Based on a weighted average number of shares in issue of 39,434,001 (2010 -
39,434,001) the loss per share was 0.17p (2010 - 0.03p loss).
Unfortunately the result for the year is adversely impacted by the provisions
made against the investment in Eclector Limited ("Eclector") and a loan
advanced to it during the year to provide a short term working capital
facility. Eclector has made little progress in its markets during the year. It
has failed in its fundraising exercise in 2011and has had no success in raising
further capital. It does not have sufficient assets to repay the loan and given
the poor financial state of the company, a decision has been taken to make full
provision against all amounts of equity and loan capital and interest
outstanding, totalling £46,875.
The operating loss for the year of £16,525 (2010 - £28,740) was broadly in line
with expectations and essentially reflects the costs of maintaining a public
listing. A profit on sale of investments of £2,730 (2010 - £16,544) was
realised following the agreement by Rivington Street Corporate Finance Limited,
the Corporate Advisers to the Company, to accept shares in Alpha Prospects Plc
("Alpha") by way of settlement of £6,367 owed to it for services. Our
investment in Alpha remains non-core and we continue to seek to realise this
asset at an advantageous price.
The cost base of the Company has been reduced to a minimum level to enable the
Company to conserve cash. No fees or expenses were paid to directors during the
On 17 June 2011 the Company ceased to be listed on Investbx, the Birmingham
based trading platform. Since its formation, Investbx has not developed as
planned, having only three companies listed, and the board concluded that the
regional benefits it had anticipated were unlikely to crystallise.
The share price of the Company continues to trade below net asset value. The
price per share of 0.25p - 0.45p gives the Company a market capitalisation at
mid market prices of £138,019 (2010 - £128,160) against a net asset value of £
169,295 (2010 - £234,539). Although the market value of our investment
portfolio remains at a premium over cost, the Company has limited cash
The reduction in market value of the investments is principally related to a
reduction in the market price of Tangibal Group PLC ("Tangibal"), the digital
out of home media company, which is quoted on the Frankfurt Open Market.
Despite this reduction in valuation, we are pleased with the underlying
commercial progress of Tangibal, of which I am Chairman, and optimistic for its
future. Tangibal continues to roll out cinema networks in the UK and Norway
with a joint venture in place in Germany and is seeing increasing interest in
its digital portfolio.
Both Harbinger Capital Plc and Robert Painting, a director and major
shareholder, continued to provide loans to assist the Company. During the year
a further £10,000 was advanced by Robert Painting. Harbinger advanced an
additional £12,825 following the year end. At the year end the loans
outstanding were £27,200 (2010 - £14,375) payable to Harbinger and £30,000
(2010 - £20,000) owed to Robert Painting. In addition, a total of £3,643 (2010:
£1,158) of accrued interest on the loans remained unpaid.
Life on PLUS Markets for small investment companies such as ours has remained
difficult over the past year and these conditions are expected to continue for
the foreseeable future. Activity is constrained as a result of the Company's
"fully invested" status. The nature of the Company's investments is such that
whilst high returns are possible, liquidity in these investments is very low
and realisation of profit and cash through sales remains difficult.
Following the year end, on 20 December 2011, the Company issued 5,000,000
shares via a private placing, raising £25,000 before expenses and increasing
the shares in issue to 44,434,001. The proceeds will be used for investment and
working capital purposes.
The directors have made progress in developing a strategy which will bring in
more regular cash flows and profits by increasing the service base of the
offering and are seeking a solution which will be transformational for the
Company and its investors while remaining consistent with the Company's
existing investment strategy. As a result we remain cautiously optimistic.
Communication to shareholders will be sent when these plans are fully
Jonathan Hall - Chairman
19th January 2012
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED 31 AUGUST 2011
TURNOVER 17,000 12,332
Cost of sales - -
GROSS PROFIT 17,000 12,332
Administrative expenses (33,525) (41,072)
OPERATING LOSS (16,525) (28,733)
Interest receivable and similar income - 7
Amounts written off investments (39,588) -
Amounts provided against loans not recoverable (9,375) -
Profit on sale of investments 2,730 16,544
Interest payable and similar charges (2,486) (805)
LOSS ON ORDINARY ACTIVITIES
BEFORE TAXATION (65,244) (12,994)
Tax on loss on ordinary activities - -
LOSS FOR THE FINANCIAL YEAR
AFTER TAXATION (65,244) (12,994)
Loss per share expressed in pence per share:
Basic (0.17) (0.03)
Diluted (0.17) (0.03)
The profit and loss account has been prepared on the basis that all operations
are continuing operations.
TOTAL RECOGNISED GAINS AND LOSSES
The Company has no recognised gains or losses other than those passing through
the profit and loss account.
BALANCE SHEET AT 31 AUGUST 2011
£ £ £ £
Investments 234,259 277,484
Debtors 7,098 11,730
Cash at bank 3,000 1,320
Amounts falling due within one year (75,062) (55,995)
NET CURRENT LIABILITIES (64,964) (42,945)
TOTAL ASSETS LESS CURRENT
LIABILITIES 169,295 234,539
CAPITAL AND RESERVES
Called up share capital 197,170 197,170
Share premium 206,090 206,090
Profit and loss account (233,965) (168,721)
SHAREHOLDERS' FUNDS 169,295 234,539
CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 AUGUST 2011
Net cash outflow from operating activities (15,651) (39,457)
Returns on investments and servicing of finance (2,486) (798)
Amounts written off loans not recoverable (9,375) -
Proceeds from sales of investments 6,367 25,000
Financing 22,825 (5,000)
MOVEMENT IN CASH IN THE PERIOD 1,680 (20,255)
RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET
Increase/(decrease) in cash in the period 1,680 (20,255)
Change in net funds resulting from cash flows 1,680 (20,255)
Movement in net funds in period 1,680 (20,255)
OPENING NET FUNDS 1,320 21,575
CLOSING NET FUNDS 3,000 1,320
1. The financial information set out in this announcement does not constitute
statutory accounts within the meaning of the Companies Act 2006. This
financial information has been extracted from the audited full accounts of
the Group for the year ended 31 August 2011.
2. The financial statements are prepared in accordance with applicable
United Kingdom Accounting Standards (United Kingdom Generally Accepted
Accounting Practice). The audited accounts for the year ended 31 August
2011 were approved and signed on 19th January 2011. The audit report was
unqualified however included an emphasis of matter statement ("other
matters") in relation to certain going concern matters as summarised in
note 3 below.
3. Going concern - The current economic environment is challenging and the
Company has reported an operating loss for the year of £16,525, with net
current liabilities of £64,964 as at 31 August 2011. Operating losses will
continue in the current accounting year to 31 August 2012 due to the
continuing costs of maintaining a public quotation. The cash resources of
the Company have been further depleted due to additional advances to
Eclector Limited. However, the Company has raised £25,000, before expenses,
through an issue of new ordinary shares since the year end. These
circumstances create material uncertainties over future trading results and
cash flows of the Company.
The Board continues to pursue a programme of selective sales of its investments
to help improve its cash position. However, there can be no certainty that the
disposal of investments will be successful. Although the Company's investment
portfolio as a whole continues to show value in excess of its original cost, if
investments cannot be realised in a timely manner, the Company remains likely
to have a shortfall in its cash resources to meet its liabilities in the short
term. Certain major shareholders have agreed to provide working capital to the
Company to enable it to meets its liabilities as they fall due.
The directors have concluded that the combination of these circumstances
represent a material uncertainty that casts significant doubt upon the
Company's ability to continue as a going concern. Nevertheless after making
enquiries, and considering the uncertainties described above, the directors
have a reasonable expectation that the Company has adequate resources to
continue in operational existence for the foreseeable future. For these
reasons, they continue to adopt the going concern basis in preparing the
The financial statements do not include any adjustments that would result from
a failure to secure the additional finance that the Company requires to
continue funding its operations.
4. The directors do not recommend the payment of a dividend.
5. A copy of the Company's financial statements will be posted to shareholders
in February and after approval at the Company's Annual General Meeting,
which is due to be held on 27th February 2012, will be delivered to the
Registrar of Companies.
6. A copy of the full financial statements will be published on the Company's
Early Equity Plc
Tel: 079 7330 9458
Rivington Street Corporate Finance Limited
Tel: 0207 562 3393
Notes to Editors
Early Equity (PLUS:EEQP) is a Birmingham based investment company which listed
on PLUS Markets in October 2007
It focuses on the growth of capital value and generation of fee income from:
establishing and funding newly quoted sector focused companies; acquiring and
developing companies with growth potential; and taking minority equity
positions in smaller listed companies where there is a real opportunity to show
a significant capital gain for the company's shareholder.