Interim Results

Medsea Estates Group PLC 29 September 2005 For immediate release 29 September 2005 MEDSEA ESTATES GROUP PLC ('Medsea or 'the Company') Unaudited Interim Financial Results for the period ended 30 June 2005 CHAIRMAN'S STATEMENT For the six months ended 30 June 2005, the Company reported turnover in the period of £5,526,000 compared with £6,893,000 for the same period last year. Pre-tax profit was £179,000 (£1,360,00 profit in 2004). The prime cause of this underperformance was the Board's concentration on expansion into new areas in order to create opportunities for long-term growth. Certain senior staff delegated to run the day to day business were inadequate for the task. During the first months of the year, agents were not receiving the high level of support they had received previously. The Board was being supplied with incorrect information, and because of this, a major geographical sector became involved in loss-making 'buy to sell' activities - which have always been outside of our policy. 'Hosting' costs escalated, a major agent ceased to trade, and bad selling techniques resulted in the cancellation rate doubling and closing rates falling. Since the Board has taken back the reins, we have introduced a number of major changes. Underperforming staff have gone and been replaced with hand-picked highly qualified, experienced personnel. A new sales structure has been implemented and an Agent Liaison Officer appointed to support Medsea's UK agents and recruit new ones. Our successful Euromed operation has now been restructured to further increase its efficiency. Euromed, which allows us exclusivity with developers and promoters on certain properties, is already making a positive contribution. Its first contract, the Frondoso Valley development in Murcia is producing a good revenue stream and the Group has sold 72 units at an average price of euros 185,000. A similar success is being shown by Euromed's second deal, the 7.5 million sq ft Torre del Obispo development, also in Murcia. It has sold 96 plots here, at an average price of euros 120,000. Unfortunately, the revenue from these deals comes too late to be included in the Interim figures. We have also launched into the German and Benelux markets through an agreement with Netherlands based Barka & Boom Real Estates. A recent link with Avanti International means that clients will soon be offered the IFA and Travel Agency services. Medsea has also just been selected as the only company in its sector to appear on the NHS Trusts' renowned Intranet Directories. This gives the group exclusive access to over 125,000 healthcare professionals. Tighter management, budgetary and forecasting controls are being installed to ensure total conformation to the Group's policies and we have just been awarded the ISO9001:2000 certificate of quality management. I am confident that, despite the disappointing results in the six months to June 2005, Medsea Group is now back on track. The Directors have refocused on our core activities and instituted a series of innovations which are already producing results. We believe that these, coupled with the growing success of new concepts such as Euromed, will improve future performance. Tony Gatehouse, Chairman Medsea Estates Group Plc UNAUDITED INTERIM FINANCIAL INFORMATION OF MEDSEA ESTATES GROUP PLC FOR THE SIX MONTHS ENDED 30 JUNE 2005 The unaudited interim financial information for the six months ended 30 June 2005 consolidate the results of Medsea Estates Group PLC and all of its subsidiary undertakings at 30 June 2005. The unaudited interim financial information, which is the responsibility of the directors does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 months 6 months ended ended 30 June 30 June 2005 2004 (unaudited) (unaudited) Notes £'000 £'000 Turnover 2 5,526 6,893 Costs of sales (3,881) (4,782) --------- --------- Gross profit 1,645 2,111 Administrative expenses (1,461) (746) --------- --------- Operating profit 184 1,365 Interest payable and similar charges (5) (5) --------- --------- Profit on ordinary activities before 179 1,360 taxation Taxation (152) (475) --------- --------- Profit on ordinary activities after taxation 27 885 Minority Interest (16) - --------- --------- Retained profit for the period 11 885 ========= ========= All results derive from continuing operations of the Group. CONSOLIDATED STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 30 June 30 June 2005 2004 (unaudited) (unaudited) Notes £'000 £'000 Profit for the financial year 11 1,324 Foreign exchange loss (219) - --------- --------- Total recognised gains relating to the (208) 1,324 period ========= ========= CONSOLIDATED BALANCE SHEET As at 30 As at 30 June June 2005 2004 (unaudited) (unaudited) Notes £000 £000 Fixed assets Trademarks 3 3 4 Negative goodwill - (38) --------- --------- Intangible assets 3 (33) Tangible assets 4 1,151 1,190 91 - --------- --------- 1,245 1,157 Current assets Stock 156 - Debtors 5 7,875 5,931 Cash at bank and in hand 615 1,246 --------- --------- 8,646 7,177 Creditors: amounts falling due within one 6 (4,813) (3,936) year --------- --------- Net current assets 3,833 3,241 --------- --------- Total assets less current liabilities 5,078 4,398 Creditors: amounts falling due in more than one year 7 (129) (237) Provisions for liabilities and charges 8 (1,097) (871) --------- --------- Net assets 3,852 3,289 ========= ========= Capital and reserves Called up share capital 9 7,063 3 Share premium 22 - Minority interest 17 - Revaluation reserve 92 120 Other reserve 163 114 Merger reserve (7,058) - Profit and loss account 3,553 3,052 --------- --------- Equity shareholders' funds 3,852 3,289 ========= ========= CONSOLIDATED CASH FLOW STATEMENTS 6 months 6 months ended ended 30 June 30 June 2005 2004 (unaudited) (unaudited) Notes £'000 £'000 Net cash inflow from operating activities 10 (271) 390 Returns on investments and servicing of finance Interest element of finance lease payments - - Other interest paid (5) (5) --------- --------- Net cash inflow/(outflow) from returns on investments and servicing of finance (5) (5) Taxation (29) (162) Capital expenditure and financial investment Purchase of intangible fixed assets - (3) Purchase of tangible fixed assets (76) (165) Proceeds from sale of tangible fixed assets 6 - --------- --------- Net cash flow from capital expenditure and financial investment (70) (168) Acquisitions and disposals Net cash acquired with subsidiary - 274 undertaking --------- --------- Net cash flow from acquisitions and - 274 disposals Management of liquid resources Acquisition of other investments (4) - --------- --------- Net cash flow from management of liquid resources (4) - Cash (outflow)/inflow before financing (379) 329 Financing Repayment of other loans (110) - Repayment of long term loans (118) (28) Capital element of finance lease payments (4) (13) --------- --------- Net cash inflow/(outflow) from financing (232) (41) --------- --------- (Decrease)/increase in cash in the period (611) 288 ========= ========= 6 months 6 months ended ended 30 June 30 June 2005 2004 (unaudited) (unaudited) Notes £'000 £'000 Reconciliation of net cash flow to movement in net debt (Decrease)/increase in cash in the period (611) 288 Cash (inflow)/outflow from increase in net debt and finance leasing 232 41 --------- --------- Movement in funds in the period (379) 329 Opening net funds/(debt) 667 614 --------- --------- Closing net funds 11 288 943 ========= ========= NOTES TO THE INTERIM FINANCIAL INFORMATION 1. Accounting policies The interim financial information has been prepared on the basis of the accounting policies used for the year ended 31 December 2004. The interim financial results are unaudited. 2. Turnover Turnover derives wholly from the principal activity of the Group which is carried out in Spain. 3. Intangible fixed assets Trademarks £'000 Cost As at 1 January 2005 8 Additions - --------- As at 30 June 2005 8 --------- Amortisation As at 1 January 2005 4 Charge for the period 1 --------- As at 30 June 2005 5 --------- Net book value As at 31 December 2004 3 ========= As at 30 June 2005 4 ========= 4. Tangible fixed assets Office Freehold Freehold equipment land and investment and motor buildings properties vehicles Total £'000 £'000 £'000 £'000 Cost or valuation As at 1 January 2005 261 462 585 1,308 Additions - - 76 76 Exchange gain/(loss) (15) (26) (33) (74) Disposals - - (8) (8) -------- -------- -------- -------- As at 30 June 2005 246 436 620 1,302 -------- -------- -------- -------- Depreciation As at 1 January 2005 15 - 119 134 Charge for the period 3 - 24 27 Exchange gain/(loss) (1) - (7) (8) Disposals - - (2) (2) -------- -------- -------- -------- As at 30 June 2005 17 - 134 151 -------- -------- -------- -------- Net book value As at 31 December 2004 246 462 466 1,174 ======== ======== ======== ======== As at 30 June 2005 229 436 486 1,151 ======== ======== ======== ======== 5. Debtors As at As at 30 June 30 June 2005 2004 £'000 £'000 Trade debtors 677 840 Other debtors 553 215 Prepayments and accrued income 6,645 4,876 -------- -------- 7,875 5,931 ======== ======== 6. Creditors: amounts falling due within one year As at As at 30 June 30 June 2005 2004 £'000 £'000 Bank loans 59 66 Other loans 134 - Trade creditors 314 410 Corporation tax 239 251 Other taxation and social security 336 507 Other creditors 215 183 Accruals and deferred income 3,516 2,517 -------- -------- 4,813 3,934 ======== ======== 7. Creditors: amounts falling due after more than one year As at As at 30 June 30 June 2005 2004 £'000 £'000 Bank loans 112 237 Obligations under finance lease 17 - -------- -------- 129 237 ======== ======== Analysis of loans - amounts repayable: In one year or less, or on demand 59 66 Between one and two years 59 72 Repayable between 2 and 5 years 53 161 -------- -------- 171 299 In more than 5 years, repayable by instalments - 3 -------- -------- 171 302 ======== ======== The bank loans are secured on the freehold investment properties owned by the Group, are repayable over twelve years by equal monthly instalments (or as the corresponding properties are sold) and carry interest at 2% above the bank's base rate. 8. Provisions for liabilities and charges As at As at 30 June 30 June 2005 2004 Deferred taxation: £'000 £'000 Provision at 1 January 1,042 388 On acquisition of subsidiary - 274 Charge for the period 55 209 -------- -------- Provision at 30 June 1,097 871 ======== ======== The provision for deferred taxation consists of the tax effects of timing differences in respect of income recognition. 9. Share capital As at As at 30 June 30 June 2005 2004 £'000 £'000 Authorised: 10,000,000 Ordinary shares of 10 pence each 10,000 3 ======== ======== Issued and fully paid: 70,629,412 Allotted, called up and fully paid ordinary shares of 10m pence each 7,063 3 ======== ======== 10. Reconciliation of operating profit to operating cash flows 6 months 6 months ended ended 30 June 30 June 2005 2004 £'000 £'000 Operating profit 184 1,366 Foreign exchange (162) - Depreciation and amortisation 28 6 (Increase)/decrease in debtors (375) (1,685) Increase/(decrease) in creditors 81 703 (Increase)/decrease in stock (27) - -------- -------- Net cash inflow from operating activities (271) 390 ======== ======== 11. Analysis of changes in net debt 6 months 6 months ended ended 30 June 30 June 2005 2004 £'000 £'000 Cash at bank and in hand 1,229 958 Finance leases (29) (13) Other loans (244) - Debt due within one year (57) (57) Debt due after one year (232) (274) -------- -------- Opening net funds/(debt) 667 614 Decrease/(increase) in cash in the period (614) 287 (Increase)/decrease in finance leases in the period 4 13 Decrease/(increase) in other loans 110 (Increase)/decrease in debt due within one year (2) (9) Decrease/(increase) in debt due after one year 120 37 Cash at bank and in hand 615 1,246 Finance leases (25) - Other loans (134) - Debt due within one year (59) (66) Debt due after one year (112) (237) -------- -------- Closing net funds 285 943 ======== ======== 12. Financial commitments At 30 June 2005 the Group had annual commitments under non-cancellable operating leases as set out below: As at As at 30 June 30 June 2005 2004 £000 £000 Land and buildings: Expiring within one year 28 26 Expiring in two to five years 14 13 ======== ======== These are not statutory accounts. Copies are available at the registered office, 10-13 Lovat Lane,London,EC3R 8DN for a period of 1 month For further information contact: Medsea Estates Group PLC: Tony Gatehouse, Chairman 0034 96 570 40 02 and Juan Carlos Rodriguez Martinez, Chief Executive Beaumont Cornish Limited Roland Cornish/Noelle Greenaway 0207 628 3396 Midas Investment Management Limited: 0161 228 1709 Mark Sheppard Weber Shandwick Square Mile: 0207 067 0700 Terry Garrett/ Alex White This information is provided by RNS The company news service from the London Stock Exchange IR QKLFLEKBXBBK

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