Final Results

RNS Number : 0518H

Mercury Recycling Group PLC

23 May 2011

 



MERCURY RECYCLING GROUP PLC

PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010

HIGHLIGHTS
Mercury Recycling PLC, the AIM listed recycler of fluorescent light tubes and sodium street lamps together with other mercury contaminated waste, announces its final results for the year ended 31 December 2010.
·	4% fall in sales to £2.7m reflecting continued difficult trading conditions
·	Profit before tax of £273k (down 18%)
·	On-going discussions with a major customer with a view to reversing current unacceptable downward pressure on pricing
·	Steps taken to diversify business through expansion in the battery recycling market
·	Board strengthened through the appointment of Giles Clarke and Nick Harrison
Commenting on the results, the Chairman, The Rt Hon The Lord Barnett stated
'I am satisfied with the performance of the business reported today, which has been achieved against a challenging backdrop. However, trading in the current year will be adversely impacted by changes recently imposed by a major customer. We are seeking to modify these through discussion with the customer and I will provide an update to shareholders at the appropriate point. In the meantime we continue to explore opportunities to diversify the business in line with the strategy set out to shareholders in September 2010'.

ENQUIRIES:
Mercury Recycling Group PLC
Bryan Neill, Managing Director	0161 877 0977
Smith & Williamson Corporate Finance Limited
Nick Reeve, Director Corporate Finance	0117 376 2213
Barrie Newton - Broking	07958 065 858

CHAIRMAN'S STATEMENT

I am pleased to report sales for the year ended 31 December 2010 were £2,668,000, just marginally down from £2,789,000. This is despite the loss of a number of days in December due to the freeze.  We also had to cope with the continuing squeeze on our profit margins. The recession too, was also far from over.  Despite all this we managed through efficiency savings, to prevent a major fall in our operating profits.  Non recurring share based payment costs on the share option reissue also reduced pre-tax profits, which finished at £273,000 compared to £333,000 in 2009.

Mercury has been engaged in ongoing discussions with Recolight, the operator of the UK's major producer compliance scheme within the lamp recycling sector, regarding the unacceptable downward pressure on the price paid for recycling services and the implementation of a more equitable operational model. In consequence the future remains uncertain, and I will notify shareholders as soon as I have definite news.

I have to report that although the Recast WEEE Directive should eventually result in much higher volumes of recycling of lamps, this has not yet happened, and industry recycling tonnages remain low.  The authorities have done little to improve public awareness of mercurial damage.

However the European Union under the Recast WEEE Directive, are proposing much higher recycling levels of 85% from 2016. The proposals now have to be agreed by the Council of Ministers and draft Regulations drawn up, but if they go through they should have a huge impact on the lamp recycling industry and be positive for Mercury.

In the meantime we are continuing to look at other areas for diversification, to broaden our sales base. We are also considering further action to try to improve general recycling levels.  The recycling sector still offers excellent opportunities for growth, and we are actively exploring where we can best expand.  As an example, the battery recycling market is growing very strongly, as the Battery Directive is working much more effectively.  We are therefore establishing a new subsidiary called "Battnet" (Battery Network), and investing in it, with a view to expanding our current battery recycling levels substantially, by the end of 2011.

Cash flow remains good, and as will be seen from the Balance Sheet, our net asset position is strong. Net cash balances were £396,000 but at present the Directors do not think it appropriate to pay a dividend.

As I announced earlier this year, two new Directors join the Board, with Giles Clarke and Nick Harrison representing Westleigh, both bring great experience and success, which will be invaluable. As I said at the time, I am confident that the Westleigh arrangement with Giles Clarke and Nick Harrison joining the Board, will ensure, as their record shows, that we will be moving steadily forward. Joe Dwek and Anthony Leon will be leaving at the AGM.  I would like to express my very great thanks to them both for their great service to the Group for many years.  I also want to again thank all our staff for their commitment and diligence during the last year.

The Rt Hon The Lord Barnett JP PC

Chairman

CONSOLIDATED INCOME STATEMENT
										2010		2009
										£000		£000
Revenue										2,668		2,789
Cost of sales										(137)		(163)
Gross profit										2,531		2,626
Administrative expenses										(2,251)		(2,283)
Operating profit										280		343
Finance costs										(7)		(10)
Profit before tax										273		333
Tax										(13)		(53)
Profit for the period										260		280
(Attributable to owners of the company)
Earnings per share			- Basic							0.75p		0.83p
			- Diluted							0.75p		0.82p
The income statement has been prepared on the basis that all operations are continuing operations.
There is no difference between the results as disclosed above and the results on an historical cost basis.

CONSOLIDATED BALANCE SHEET
										2010		2009
										£000		£000
Non-current assets
Goodwill										4,122		4,122
Property, plant and equipment										1,495		1,509
										5,617		5,631
Current assets
Trade and other receivables										441		471
Cash and bank balances										412		1
Current tax assets										-		10
										853		482
Total assets										6,470		6,113
Current liabilities
Trade and other payables										(270)		(249)
Borrowings										(86)		(139)
Current tax liabilities										(35)		(39)
										(391)		(427)
Non-current liabilities
Trade and other payables										(33)		(42)
Borrowings										(155)		(225)
Deferred tax liabilities										(140)		(146)
										(328)		(413)
Total liabilities										(719)		(840)
Net assets										5,751		5,273
Equity
Share capital										3,583		3,403
Share premium										235		242
Other reserves										386		365
Retained earnings										1,547		1,263
Total equity										5,751		5,273
(attributable to owners of the company)

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
					Share			Share		Other		Retained		Total
				Capital				Premium		Reserve		Earnings		Equity
					£000			£000		£000		£000		£000
Balance at 1 January 2009					3,375			242		365		983		4,965
Profit for the period					-			-		-		280		280
Issue of share capital					28			-		-		-		28
Balance at 31 December 2009					3,403			242		365		1,263		5,273
Profit for the period					-			-		-		260		260
Warrants issued					-			-		21		-		21
Issue of share capital					180			(7)		-		-		173
Credit to equity for equity-settled
share based payments						-		-		-		24		24
Balance at 31 December 2010						3,583		235		386		1,547		5,751

CONSOLIDATED CASH FLOW STATEMENT
										2010		2009
										£000		£000
Net cash from operating activities										567		395
Investing activities
Proceeds on disposal of property, plant and equipment										-		13
Purchases of property, plant and equipment										(229)		(393)
Net cash used in investing activities										(229)		(380)
Financing activities
Proceeds on issue of equity										194		28
New bank loans raised										-		100
Repayment of borrowings										(66)		(145)
Repayments of finance lease obligations										-		(17)
Net cash generated from / (used in) financing activities										128		(34)
Net increase / (decrease) in cash and cash equivalents										466		(19)
Cash and cash equivalents at the beginning of year										(70)		(51)
Cash and cash equivalents at end of year										396		(70)

NOTES

1.  Basis of preparation

The information in this announcement has been extracted from the Company's audited Financial Statements which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union.

2.  Revenue
The revenue and profit on ordinary activities before taxation arise from the Group's principal activity.
										2010		2009
The Group's revenue has been analysed by geographic area as follows:										£000		£000
United Kingdom										2,668		2,789

3.  Operating profit
										2010		2009
Profit for the year is shown after charging / (crediting):										£000		£000
Depreciation on tangible assets										243		229
Research and development										-		34
Government grants										(9)		(9)
Profit on disposal of tangible assets										1		4

4.  Earnings per share

Basic - The calculation of basic earnings per share is based on a profit of £260,000 (2009 - £280,000) and on 34,509,795 (2009 - 33,891,087) ordinary shares, being the weighted average number of ordinary shares in issue during the year.

Diluted - The diluted earnings per share is based on the profit for the year of £260,000 (2009 - £280,000) and on 34,627,588 (2009 - 34,098,675) ordinary shares as adjusted for share options below:

										2010		2009
										Number		Number
Basic weighted average number of shares										34,509,795		33,891,087
Dilutive potential ordinary shares:
Dilution caused by options										117,793		207,588
Diluted weighted average number										34,627,588		34,098,675

5.  Annual General Meeting
The Annual General Meeting of Mercury Recycling Group plc ("the Company") will be held at Mercury House, 17 Commerce Way, Trafford Park, Manchester M17 1HW on 17 June 2011, at 11.00 a.m.

6.  Posting of Financial Statements
The Company's Financial Statements for the year ended 31 December 2010 together with the Notice of the Annual General Meeting are being posted to shareholders today and will be available for download from the Company's website at www.mercuryrecycling.co.uk

 

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