Regulatory Announcement
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Company Crown Corporation Limited
TIDM CCO
Headline Preliminary Results
Released 12:30 07-Jun-05
Number 2426N
RNS Number:2426N
Crown Corporation Limited
07 June 2005
Crown Corporation Limited
Preliminary Results for the period ended 31 December 2004
Crown Corporation Limited (" Crown" or " the Company" ), the UK listed investment
company, announces its maiden results since joining AIM in October 2003.
Highlights for the period:
• Pre-tax profit €243,371,000. EPS - €0.537
• Asset value €510,000,000 equivalent to €3.53 per share (240p per share)
Post Period Events
• New Chief Executive appointed
• Langbar Capital acquired for £700,000, the consideration wholly satisfied
in Crown common shares issued at 35p each. Langbar Capital is a corporate
finance advisory and investment company
• Arden Partners appointed Nominated Adviser and Broker
• Proposed reorganisation of capital structure and name change
Stuart Pearson, Chief Executive and Acting Chairman, commented:
" The performance of the share price has been disappointing and represents a very
large discount to the asset value. In order to address this situation and to
improve future returns to shareholders, the Company is pleased to announce a
number of new initiatives, including the appointment of a new management team.
" The strategy for the future will be to produce consistent and growing earnings
and capital appreciation by actively managing the investments.
" The Company is already looking at a number of interesting opportunities where
profit and shareholder value can be significantly enhanced. Investments made are
likely to have more of a UK focus and to be strong in assets where return on
capital can be improved and ultimate shareholder value realised through trade
sale or flotation."
7 June 2005
ENQUIRIES:
Crown Corporation Limited Tel: 00 44 (0) 113 284 3838
Stuart Pearson, Chief Executive
Bankside Consultants Tel: 00 44 (0) 20 7444 4140
Michael Padley / Susan Scott
CHAIRMAN'S STATEMENT
I have today been appointed Chief Executive of Crown Corporation Limited to
replace Dr Mariusz Rybak who has stepped down to pursue other business
interests. Dr Rybak has been chairman and chief executive of Crown since it came
to AIM in October 2003 and I wish to place on record, our sincere thanks for his
efforts during this period. We wish him well in his future activities.
Also stepping down today is our non-executive director, Mr Friedrich Kramer. We
thank him for his contribution over the last few years and wish him well in the
future.
The Company is now poised to make some significant changes, all aimed at
improving the returns on our capital and to our shareholders. Before setting out
these changes, I will quickly review the results and financial position of the
Company.
In November 2003, the Company obtained a number of large scale contracts in
South America which it was able to dispose of for a significant profit. The
gross proceeds of Euro280million (£190.4m) were satisfied by a bank guaranteed
promissory note, maturing on 31 May 2005. I am pleased to say these Promissory
Notes were repaid ahead of maturity and the proceeds, together with accrued
interest, have been deposited in term deposits with the Banco do Brasil.
The gross income for the period under review amounted to Euro285.9million
(£194.4m) and the profit on ordinary activities was Euro243.4million (£165.5m).
A dividend in kind has been paid of €219.5million (£149.3m) leaving
Euro23.9million (£16.2m) to carry forward. No further dividends are proposed and
the Company has no charge for taxation.
During 2004 and early 2005, your Board investigated a number of major investment
opportunities in the oil, property and mineral sectors. Unfortunately, the
stringent criteria demanded by your Board has resulted in no projects
progressing beyond the due diligence stage. It is now intended to broaden the
investment criteria to include smaller capitalisation companies, joint ventures
and pre-IPO funding. The Board also intends to provide corporate finance
advisory services and ongoing support to its investee companies on a more
formalised basis.
During the year, the Company distributed to shareholders by way of a dividend in
specie, the shares in a newly created company, Crown Pharmaceuticals Ltd (" Crown
Pharma" ). Within Crown Pharma were Euro235.01million (£169.8m) certificates of
bank deposits which were to be utilised to acquire a pharmaceutical business.
This transaction did not materialise and since the year end, the certificates of
deposits have been re-acquired by Crown in exchange for an issue of common
shares. This transaction is a related party transaction in view of Dr Rybak's
interests in the share capital of Crown Pharma. The directors (other than Dr
Rybak), who have consulted with Arden & Partners Limited, its new nominated
adviser, consider that the terms of the transaction are fair and reasonable so
far as the shareholders of Crown are concerned. Crown now holds over
Euro515million (£350.2m) in term deposits awaiting investment.
As part of the new strategy, the Board have agreed a number of new initiatives
aimed at improving the visibility and attraction of Crown as an investment. The
Founders Shares are to be converted to common shares on a one for one basis and
all common shares will rank pari passu in all respects with each other.
Crown has today agreed to acquire the whole of the issued share capital of
Langbar Capital Limited, a corporate finance and investment company, from me and
my family. It is intended to recommend to shareholders that the name of the
Company be changed to Langbar International Ltd at the forthcoming Annual
General Meeting on 25 July 2005. The Board will also be recommending the
introduction of a share option scheme to be used as part of the long term
incentive plans for senior executives in the Company.
In addition the Company has appointed Arden Partners Limited as its new
nominated adviser and broker. Crown has agreed to grant to Arden total of
3,120,000 warrants to subscribe for new common shares of Crown at 35p each,
exercisable for the period of two years from today. It is appropriate to thank
Nabarro Wells for their help and support during this initial period of the
Company's life.
The Board will be making further appointments in due course and it is proposed
to establish an Advisory Board to assist the executive team in assessing its
investment opportunities, the ongoing monitoring of investment performance and
to provide a depth of sector experience in the proposed areas of activity.
It is intended that the Company will be highly active and shareholders will be
kept abreast of the expansion programme. The strong net asset position of over
Euro3.53 per share (£2.40) and the highly motivated management team provide an
excellent platform for sustainable long term growth.
G Stuart Pearson
Acting Chairman and Chief Executive 7 June 2005
REVIEW OF BUSINESS
During the period under review Crown investigated a number of markets in pursuit
of its objectives of investing in under-performing companies and sectors. It
examined a number of possible transactions in the North American market,
particularly Canada, and various opportunities in Russia. A number of these
appeared to be attractive but, for various reasons, none of them were completed.
Crown was successful in acquiring substantial construction and supply contracts
in Argentina and Brazil; however, these proved to be less attractive for the
Group to fulfil and accordingly the Group profitably disposed of its interests
in the contracts for US$350million.
Crown is continuing to seek suitable investment opportunities. Various new
initiatives have been started since the year end and further details are set out
in the Chairman's Statement and the Post Balance Sheet Events paragraph below.
POST BALANCE SHEET EVENTS
On 6 June 2005, Crown Corporation Limited acquired the whole of the issued share
capital of Langbar Capital Limited, the consideration being satisfied by the
issue of 2,000,000 common shares in Crown.
On 6 June 2005, Crown Corporation Limited and CMC Crown Management Limited
(" CMC" ) mutually agreed to terminate the existing management contract forthwith,
and have entered into an agreement to convert the 100,000 issued Founder Shares
into common shares, ranking pari passu with the existing common shares. The
resolutions necessary to effect the conversion of the Founder Shares will be
proposed at the annual general meeting of the Company to be held on 25 July
2005. As part of the arrangements for this termination outstanding accrued
management fees totalling Euros10,700,000 will be satisfied as to Euros5,000,000
by the issue to CMC of new common shares of Crown at their average mid-market
closing price over the 30 dealing days following the date of this announcement
and as to Euros5,700,000 by the issue of loan notes redeemable on 31 May 2008
and convertible into common shares at the same average mid-market closing price.
It has also been agreed that payment of additional sums totalling approximately
Euros9,500,000 due to CMC or Dr Rybak or secured by him will be deferred. The
directors (other than Dr Rybak) who have consulted with Arden & Partners
Limited, its new nominated adviser, consider that the terms of the transaction
are fair and reasonable so far as the shareholders of Crown are concerned.
PROPOSED NEW NAME
A resolution will also be proposed at the annual general meeting on 25 July 2005
that the name of the Company be changed to Langbar International Limited.
PROFIT & LOSS ACCOUNT
Note € 000s
------
Revenues 285,901
Operating expenses 3 (25,887)
--------
Operating result 260,014
Finance costs - net (16,643)
--------
Profit on ordinary activities before taxation 243,371
Taxation -
Profit on ordinary activities after taxation 243,371
Dividend in kind (219,469)
---------
Profit retained (after dividend in kind) 23,902
Profit on ordinary activities after taxation per share, basic
and diluted 4 5.472633
Profit retained (after dividend in kind) per share, basic and
diluted 4 0.537479
No separate statement of total recognised gains and losses has been presented as
all such gains and losses have been dealt with in the profit and loss account.
BALANCE SHEET
Note €000s
-------
Hardware & Software 8
Tangible fixed assets 8
Investments 1,580
Debtors 259,234
Cash at bank and in hand 30
----
Current assets 260,844
Creditors (8,842)
-------
Amounts falling due within one year
Net current assets 252,002
Total assets 252,010
Capital and reserves
Called up share capital 71
Share premium account 5 234,356
Value adjustments through equity (6,319)
Profit and loss account 5 23,902
--------
Equity shareholders' funds 252,010
CASHFLOW STATEMENT
Note € 000s
------
Cash flow from operating activities 6 13,386
Returns on investments and servicing finance (16,841)
Capital expenditure and financial instruments 88
----
Cash in / outflow before financing (3,367)
Financing 3,397
------
Increase in cash in the period 30
Reconciliation of net cash flow to movement in net funds
€ 000s
------
Net funds beginning of period -
Movement during the period 30
----
Net funds end of period 30
NOTES TO THE ACCOUNTS
1. General Information about the Company
The Company was incorporated in Bermuda on 4 June 2003. The Company intended to
establish itself as a diversified holding company providing management and other
services to companies in which it would hold substantial interests.
Crown's primary objective is to create value for its shareholders by making
investments in publicly traded companies in which it can assume an active role
and have significant influence over the management and strategic direction of
such companies.
The Company has its registered office in Bermuda and representative office in
Lugano in Switzerland.
2. Accounting policies
Accounting convention
The attached financial statements have been prepared under the historical cost
convention.
Finance costs
Finance costs of debt and non-equity shares are recognised in the profit and
loss account over the term of such instruments at a constant rate on the
carrying amount.
Foreign currencies
Assets and liabilities denominated in foreign currencies are translated at the
rate of exchange ruling at the balance sheet date. Transactions in foreign
currencies are recorded at the rate ruling at the date of the transaction. All
exchange differences are taken to the profit and loss account.
Investments
Long term investments are described as participating interests and are
classified as fixed assets. Short term investments are classified as current
assets.
Participating interests are stated at cost in the company balance sheet. Other
investments listed on a recognised stock exchange are valued at the lower of
cost and mid-market value at the balance sheet date. Unlisted investments are
stated at cost. Provision is made for any impairment in the value of
investments.
Other financial instruments
The other current asset financial instruments or term debt supported by such
instruments are stated at the lower of cost and net realizable value.
Revenues
All net income arising from the disposal of assets held as investments is
treated as revenues.
3. Operating expenses From 4 June 2003
to
31 December 2004
------------------
€ 000s
------
Administrative expenses (2,554)
Depreciation of tangible fixed assets (5)
Dividend on founders' shares (management fees) (23,328)
--------
(25,887)
The founder shares are entitled to a fixed monthly dividend equal to 0.75% of
the net assets of the Company.
A founder share dividend of €23,327,611 for the above mentioned period, together
with any interest thereon, has been waived by CMC, Crown Management Corporation
Limited (CMC). CMC is the proprietor of the founder shares and is a company
controlled by Dr. M. Rybak, a Director of the Company.
4. Earnings per share
Basic earnings per share have been calculated by dividing the profit on ordinary
activities after taxation and the profit retained (after dividend in kind) for
the period by 44,470,550 shares, being the weighted average of shares in issue
during the period from incorporation to December 31, 2004.
No adjustment is required to determine diluted earnings per share as the average
market price of the common shares during the period was below the exercise price
of the outstanding options.
5. Profit and loss account From 4 June 2003
to
31 December 2004
------------------
€ 000s
------
Profit carried forward -
Profit for the period 243,371
Dividend in kind: Crown Pharmaceuticals Corp (219,448)
Dividend in kind: Crown Development (21)
-----
23,902
6. Cash flow from operating activities From 4 June 2003
to
31 December 2004
-----------------
€ 000s
------
Reconciliation of operating loss to net cash inflow
from operating activities
Operating result 260,014
Depreciation of tangible fixed assets 5
Founder shared accrued management fee 23,328
Increase in debtors (257,837)
Non cash exchange loss on capital Banco
do Brasil 2,938
Increase prepaid expenses and accrued
income (15,385)
Increase in creditors 323
-----
13,386
7. Dividends
During December 2004, the Company distributed to shareholders by way of a
dividend in specie, the shares in a newly created company, Crown Pharmaceuticals
Ltd. Within Crown Pharmaceuticals Ltd were Euro235.01million (£169.8m)
certificates of bank deposits which were to be utilised to acquire a
pharmaceutical business. This transaction did not materialise and since the year
end, the certificates of deposits have been re-acquired by Crown in exchange for
an issue of ordinary shares of Crown. Crown now holds over Euro515million
(£350.2m) in term deposits awaiting investment.
8. Annual General Meeting
The annual general meeting of the Company will be held at 12 noon on 25 July
2005. Notice of the meeting will be circulated to shareholders with the audited
accounts.
Copies of the statement are available from the offices of Bankside Consultants
Limited, 123, Cannon Street, London EC4N 5AU
ENDS
This information is provided by RNS
The company news service from the London Stock Exchange
END
©2004 London Stock Exchange plc. All rights reserved
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