Interim Results
Medsea Estates Group PLC
28 September 2007
Medsea Estates Group PLC
INTERIM RESULTS to 30th June 2007
Chairman's Statement
Pre-tax profits for the period are £57,000 compared to £1,027,000 last year.
The first six months of 2007 have seen Group revenues increase to £7,667,000
compared to £5,267,000 in the first half of 2006, an increase of 45%. Similarly,
underlying Profit before Tax improved by 37% from £1,027,000 to £1,407,000.
Regrettably this encouraging performance has been off-set by the need to adjust
for a marked difference in our cancellation experience compared to that
reflected in the accounts at 31st December 2006. This difference was masked by a
problem with our database which was only recently identified and has now been
rectified.
At the end of each accounting period, the company accrues commissions receivable
and payable in respect of sales transactions confirmed by payment of deposits by
purchasers. However, not all depositors proceed with their purchase and so a
provision for cancellations is made against the level of commissions accrued.
The provision is based on the pattern of cancellations experienced up until the
time at which the relevant financial statements are finalised.
The actual cancellation experience in 2007 for sales prior to 31st December 2006
has been significantly greater than that for which provision had been made, due
to delays in property construction in Italy. It has therefore been necessary to
adjust both commission receivable and commission payable to reflect these
cancellations which might otherwise have been provided for at 31st December
2006. The impact of these cancellations is to reduce profits before tax by
£1,350,000.
The pattern of cancellations in respect of sales made this year has now fallen
back to the levels previously experienced. Indeed, cancellations in respect of
Spanish properties have dropped significantly below those of previous years.
The reduction of £364,000 in the profits from Associates reflects the fact that
last year the developments were at the peak of their sales cycle, and therefore
the number of properties currently available for sale has reduced.
Basic earnings per share amounted to 0.14p compared to 0.96p last year. Diluted
earnings per share are 0.13p.
In the first six months we sold 608 units against a budget of 603 and compared
to 424 last year. The value of property sold increased by £12.7M over the
previous year.
We have budgeted to sell a further 580 units in the second half of this year.
Currently we are on track to exceed this target.
Tony Gatehouse
Chairman
For further information:
HB Corporate
Ed Hutton/ Rachel Kane /Imran Ahmed 020 7510 8600
Threadneedle Communications
Alex White / Josh Royston 020 7936 9665
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM INCOME STATEMENT
FOR THE PERIOD ENDED 30 JUNE 2007
Unaudited Unaudited Audited
6 months 6 months 12 months
30 Jun 30 Jun 31 Dec
Notes 2007 2006 2006
£'000 £'000 £'000
Revenue 2 7,667 5,267 13,300
Amendment to cancellation
provision 3 (2,152)
Cost of sales (5,080) (3,858) (8,849)
Amendment to cancellation
provision 3 802
Administrative expenses (1,395) (958) (2,229)
Share of operating profit in
associates 226 590 702
Finance income 4 1
Finance expense (14) (14) (31)
Profit before tax 57 1,027 2,894
Tax on profit 35 (350) (1,019)
Profit for the period 92 677 1,875
Attributable to:
Equity holders of the
parent 97 688 1,880
Minority interests (5) (11) (5)
92 677 1,875
Earnings per share
Basic 11 0.14p 0.96p 2.66p
Diluted 11 0.13p 0.96p 2.66p
None of the group's activities were acquired or discontinued during the
above periods.
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM BALANCE SHEET
AS AT 30 JUNE 2007
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
Notes 2007 2006 2006
£'000 £'000 £'000
Non-current assets
Other intangible
assets 4 6 4 6
Property, plant and
equipment 5 962 933 872
Investments in
associates 1,064 827 687
Other investments - 7 -
2,032 1,771 1,565
Current assets
Inventories 192 309 301
Trade and other 6 11,691 8,769 12,245
receivables
Cash and cash
equivalents 1,672 555 944
13,555 9,633 13,490
Total assets 15,587 11,404 15,055
Shareholders' equity
Share capital 10 7,798 7,063 7,063
Share premium 22 22 22
Other reserve 117 120 117
Revaluation reserve 46 62 46
Merger reserve (7,058) (7,058) (7,058)
Retained earnings 5,489 4,299 5,446
Minority interests (1) (2) 4
6,413 4,506 5,640
Non-current
liabilities
Long-term borrowings 8 249 302 300
Deferred tax 9 1,328 1,147 1,535
1,577 1,449 1,835
Current liabilities
Trade and other payables 7 7,460 4,892 7,319
Short-term borrowings 7 137 557 261
7,597 5,449 7,580
Total equity and liabilities 15,587 11,404 15,055
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
Statement of Changes in Equity
For the period ended 30 June 2007
Share Share Other Revaluation Merger Retained Minority Total
capital premium reserves reserve reserve earnings interests Equity
£ £ £ £ £ £ £ £
Balance at 1 January 2006 7,063 22 118 95 (7,058) 3,631 9 3,880
Profit for the period - - - - - 677 - 677
Currency translation differences - - - - - (13) - (13)
Minority interest - - - - - 11 (11) -
Sales of revalued properties - - - (33) - 33 - -
Foreign exchange differences - - 2 - - (40) - (38)
Total recognised income
and expense
for the period 7,063 22 120 62 (7,058) 4,299 (2) 4,506
Balance at 30 June 2006
carried forward 7,063 22 120 62 (7,058) 4,299 (2) 4,506
Balance at 1 July 2006
bought forward 7,063 22 120 62 (7,058) 4,299 (2) 4,506
Profit for the period - - - - - 1,203 - 1,203
Currency translation differences - - - - - (7) - (7)
Minority interest - - - - - (11) 6 (5)
Sales of revalued properties - - - (16) - 16 - -
Foreign exchange differences - - (3) - - (54) - (57)
Total recognised income and
expense for the period 7,063 22 117 46 (7,058) 5,446 4 5,640
Balance at 31 December 2006
carried forward 7,063 22 117 46 (7,058) 5,446 4 5,640
Balance at 1 January 2007
brought forward 7,063 22 117 46 (7,058) 5,446 4 5,640
Profit for the period - - - - - 97 (5) 92
Currency translation differences - - - - - (54) - (54)
Total recognised income and
expense for the year 7,063 22 117 46 (7,058) 5,489 (1) 5,678
Issue of shares 735 - - - - - - 735
Balance at 30 June 2007
carried forward 7,798 22 117 46 (7,058) 5,489 (1) 6,413
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
FOR THE PERIOD ENDED 30 JUNE 2007
Unaudited Unaudited Audited
Notes 6 months 6 months 12 months
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Cash flows from operating activities
Profit/(loss) before tax 57 1,027 2,894
Adjustments for:
Depreciation 61 61 121
Foreign exchange (52) (18) (90)
Share of operating profit in associates (226) (590) (702)
Finance income (4) - (1)
Finance expense 14 14 31
Amortisation of intangible fixed assets - 1 3
(Profit)/loss on sale of property,
plant and equipment - (62) (52)
(Increase)/decrease in trade and
other receivables 450 (2,052) (5,527)
Decrease/(increase) in inventories 109 (127) (119)
Increase/(decrease) in trade and
other payables 140 1,581 4,056
Cash generated from operations 549 (165) 614
Tax on profits paid (219) (71) (164)
Interest paid (14) (12) (31)
Net cash from operating activities 316 (248) 419
Cash from investing activities
Interest received 4 (2) 1
Payments to acquire tangible fixed assets (153) (14) (107)
Proceeds from the sale of fixed assets - 188 276
Payments to acquire intangible assets - - (7)
Acquisition of other investments - (3) -
Net cash generated used in investing activities (149) 169 163
Cash from financing activities
Repayment of long term loans (145) 404 352
Share issues 735 - -
Other loans (13) (41) (118)
Capital element of finance lease payments (16) (4) 55
Net cash generated from financing activites 561 359 289
Net decrease in cash and cash equivalents 728 280 871
Cash and cash equivalents at the
beginning of the period 944 73 73
Cash and cash equivalents at the
end of the period 1,672 353 944
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE UNAUDITED CONSOLIDATED INTERIM FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 30 JUNE 2007
1 Basis of preparation
Medsea Estates Group PLC prepares its annual report and accounts on the basis of
International Financial Reporting Standards (IFRS) as adopted for use by the
European Union (EU). The financial information presented herein has been
prepared in accordancewith the accounting policies expected to be used in
preparing the Medsea Estates Group PLC annual report and accounts for the year
ended 31 December 2007, which do not differ significantly from those used for
the Medsea Estates Group PLC annual report and accountsfor the year ended 31
December 2006.
The financial information shown in this half year review is unaudited and does
not constitute statutory accounts within the meaning of Section 240 of the
Companies Act 1985.
The financial statements for the year ended 31 December 2006, which were
prepared under UK GAAP, have been reported on by the company's auditors and
delivered to the Registrar of Companies. The report of the auditors was
unqualified and did not contain statements under Section 237 (2) or (3) of the
Companies Act 1985.
These are the Group's first IFRS consolidated interim financial statements as
part of the first full year of reporting under IFRS and have been prepared in
accordance with IAS34 Interim Finanancial Reporting. IFRS 1 'First-time adoption
of International Financial Reporting Standards' has been applied. An explanation
as to how the transition in respect of IFRS has affected the reported financial
position, financial performance and cash flow of the group is provided in note
12. This note includes reconciliations of equity and profit or loss for the
comparative periods reported under UK GAAP to those reported for those periods
under IFRSs.
2 Revenue
Revenue derives wholly from the principal activity of the Group which is carried
out in countries adjacent to the Mediterranean.
3 Adjustment to cancellation provision
At the end of each accounting period, the company accrues for commissions
receivable and payable in respect of sales transactions confirmed by payment of
deposits by purchasers. Based on the pattern of cancellations experienced over
previous years, a provision is then made against the levels of commissions
accrued.
The actual cancellation experience in 2007 for sales prior to 31 December 2006
has been significantly greater than that for which provision had been made, due
to delays in property construction in Italy. Although these properties have now
been re-sold, it is necessary to adjust both commission receivable and
commission payable to reflect the cancellations which might otherwise have been
provided for at 31 December 2006.
The group has carried out an extensive review of contractual sales not yet
completed. There are current uncertainties in the financial markets which could
impact upon the willingness of clients to complete their property purchases and
it has therefore not proved possible to assess whether the provision for
cancellations included in these interim financial statements will prove either
to be sufficient or excessive.
4 Other intangible
assets
Unaudited Patents
£'000
Cost
At 1 January 2007 14
At 30 June 2007 14
Amortisation
At 1 January 2007 8
At 30 June 2007 8
Net Book Values
At 30 June 2007 6
At 31 December 2006 6
5 Property, plant and equipment
Unaudited Freehold Investment Office Total
land and properties equipment and
buildings motor
vehicles
£'000 £'000 £'000 £'000
Cost or valuation
At 1 January 2007 251 218 769 1,238
Additions - 93 60 153
Foreign exchange difference - - (2) (2)
At 30 June 2007 251 311 827 1,389
Depreciation
At 1 January 2007 27 - 339 366
Charge for year 3 - 58 61
At 30 June 2007 30 - 397 427
Net book value
At 30 June 2007 221 311 430 962
At 31 December 2006 224 218 430 872
6 Trade and other receivables Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Trade receivables 461 458 382
Corporation tax receivable 47 - -
Other receivables 1,604 1,439 1,831
Prepayments and accrued income 9,579 6,872 10,032
11,691 8,769 12,245
7 Trade and other payables
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Bank overdraft and loan 137 467 248
Other loans - 90 13
Trade payables 1,324 1,381 2,586
Corporation tax payable - 2 -
Other taxation and social security 288 253 248
Other payables 1,481 31 85
Accruals and deferred income 4,337 3,217 4,371
Obligations under finance lease 30 8 29
7,597 5,449 7,580
8 Long term borrowings
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Obligations under finance lease 30 9 47
Bank loan 219 293 253
249 302 300
9 Deferred tax
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Deferred tax:
At start of period 794 794 794
Acquired with subsidiary undertaking - - (16)
Charge/(credit) for period 534 353 757
At end of period 1,328 1,147 1,535
The provision for deferred taxation consists of the tax effects of timing
differences in respect of income recognition.
10 Share capital
Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2007 2006 2006
£'000 £'000 £'000
Authorised
Equity shares
100,000,000 Ordinary shares of
10 pence each 10,000 10,000 10,000
Allotted
Equity shares
77,979,412 Allotted, called up and fully
paid ordinary shares of 10 pence each 7,798 7,063 7,063
During the period, the Company issued 7,350,000 ordinary
shares of 10p each at 10p.
11 Earnings per share
The earnings per share is based on the profit for the period attributable to the
equity holders of the parent of £97,796 and on 71,847,644 ordinary shares of 10p
being the weighted average number of shares in issue during the period. The
diluted earnings per share is based on 73,407,232 ordinary shares of 10p being
the weighted average number of shares in issue during the period adjusted for
the outstanding warrants in issue at the period end.
12 Explanation of transition to IFRS
The Group has applied IAS34 Interim Financial Reports in preparing this
financial information. The Group's transition date is 1 January 2007 and as such
an opening IFRS balance sheet has been prepared at that date. However, 2006
comparative information has not been restated under these new accounting
standards as they result in no change to the figures.
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