Interim Results
Real Estate Investors PLC
Interim Results for the six months ended 30 June 2006
Real Estate Investors PLC ("REI" or "the Company"), the commercial property
investment company, today announces its interim results for the six months ended
30 June 2006
Highlights to date:
* Net assets as at 30 June 2006 up 36.7 per cent. to £7.9 million
* Net asset value per share currently estimated at 12.2p
* Subsequent acquisitions of Rightforce Limited and retail investment in Paisley
* Portfolio currently estimated to be valued at £28 million (including
subsequent acquisitions and increase in value of trading stock)
* Rental income increased over the period to £1.4 million per annum
* £2.175 million (gross) raised in June 2006 and £525,000 raised in August 2006
in placings with new investors
* Disposal of Newport investment
* Balance sheet cash as at 30 June 2006 of £2.6 million providing base for
further expansion with current cash of approximately £2.8 million
* New appointments in June strengthen board
For further information please contact:
Peter Lewin - Chairman 01923 776633
Real Estate Investors PLC
www.reiplc.com
Christopher Joll 0207 491 7776
MJ2 Business Communications Limited
Chairman's statement
The Company announced to shareholders in June, details of the important events
for REI, in particular a significant fundraising. Since the period end, further
share subscriptions with investors have been completed. In aggregate, REI raised
£2.7 million (gross) in cash from these subscriptions.
REI's acquisitions in the first half of 2006 have included a town centre office
investment in West Bromwich for £1,100,000 and an industrial estate, Menin
Works, Mitcham, was acquired for £2,400,000 in May through a 50/50 joint
venture. Financed on a long, fixed interest rate mortgage, the estate offers
opportunities for medium term improvement, leading to enhanced income.
The Company disposed of its Newport, South Wales investment, let to Barclays
Bank. Originally acquired in 2005, as part of the KBR portfolio, the sale
realised a cash surplus of £170,000 (after costs of disposal and repayment of
borrowings).
The acquisition of Rightforce Limited, completed in July 2006, added an
attractive office investment in Watford, Hertfordshire to the portfolio. Let to
tenants including Zurich Insurance and Royal Mail, the high specification
building also offers medium term redevelopment opportunities.
Another recent acquisition is a town centre retail investment in Paisley,
Strathclyde. It is let to Stead and Simpson Limited at a current rent of £74,500
per annum and extends the Company's activities into Scotland.
The Company's gross property assets increased in the six months to 30 June 2006
by 10.6 per cent. from £19.8 million to £21.9 million with rental income at
approximately £1.4 million per annum.. The Company's net assets as at 30 June
2006 increased 36.7 per cent. to £7.9 million. Following the subsequent
acquisitions and the estimated increase in value of the trading assets, the
Company has assessed the gross property assets to be worth in excess of £28
million, with rental income increasing to £1.6 million per annum.
Net asset value per share, following the share placings, is currently estimated
to be 12.2p.
Before `one off' exceptional items, the Company remains in surplus and further
progress will be made during 2006.
The commercial property markets are facing up to a shift in the UK interest rate
environment, and a more cautious approach by lending banks and institutions is
beginning to emerge. This changing market suits REI's business strategy and the
Company's cash balances will enable it to take advantage of exciting
opportunities.
In the two years following REI's admission to AIM, I believe we have created a
stable and profitable platform for the Company that will facilitate the further
growth and expansion of the business.
It has been your board's belief that REI would benefit from the combined network
and expertise of an additional executive director, together with the support and
guidance of a further non-executive director. We therefore welcomed Paul Bassi
and Marcus Daly to the board in June. They not only bring with them the
necessary skills, but access to additional markets, through their Bond Wolfe
business in the West Midlands, that, to date, REI has not entered. As a result,
we expect a significant increase in the Company's activity in the future.
The board now bids farewell to Malcolm Lewin, a founder director and Finance
Director. We wish him well for the future and whilst we complete arrangements
for the appointment of his replacement, Marcus Daly will assume the role of
interim Finance Director.
This is the first occasion that I have written to you as Chairman of REI. My
predecessor and fellow founder director, John Jack, has kindly agreed to
continue serving the board as Deputy Chairman and I am glad that we will
continue to be able to call upon him for his advice and support.
I shall look forward to writing to shareholders again shortly.
Peter Lewin
Chairman
INTERIM CONSOLIDATED RESULTS
for the six months ended 30
June 2006
Six Six
months to months to Year ended
30 June 30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Turnover - group and share 664 537 1,181
of joint ventures
Less: Share of joint 18 - -
ventures' turnover
----- ----- -----
Group turnover 646 537 1,181
Other administrative (247) (216) (441)
expenses
Exceptional item (Note 1) (282) - -
Total administrative (529) (216) (441)
expenses ----- ------ ------
Other operating income - - 35
----- ------ ------
Group operating profit 117 321 775
Share of operating profits 18 - -
of joint ventures ------ ------ ------
Total operating profit 135 321 775
Profit on sale of investment 45 47 45
properties ------ ------ ------
Profit on ordinary 180 368 820
activities before interest
Net interest payable - group (439) (366) (800)
Net interest payable - joint (11) - -
ventures ------ ------ ------
(Loss)/profit on ordinary (270) 2 20
activities before taxation
Taxation - - (6)
------ ------ ------
Retained (loss)/profit for (270) 2 14
the period ------ ------ ------
(Loss)/earnings per share (0.51p) 0.01p 0.03p
------- ------ ------
CONSOLIDATED BALANCE
SHEET
as at 30 June 2006
30 June 30 June 31 December
2006 2005 2005
(Unaudited)(Unaudited) ( Audited)
£'000 £'000 £'000
Fixed assets
Intangible assets
- goodwill 114 121 117
- negative goodwill (903) (906) (903)
------- ------ ------
(789) (785) (786)
Tangible assets 10,950 9,251 10,216
Investments in joint ventures:
Share of gross assets 1,275 - -
Share of gross liabilities (1,068) - -
-------- ------ ------
207 - -
-------- ------ ------
10,368 8,466 9,430
-------- ------ ------
Current assets
Stock 9,703 9,704 9,703
Debtors 701 148 189
Investments 425 1,418 1,282
Cash at bank 2,573 624 1,065
-------- ------ ------
13,402 11,894 12,239
Creditors - amounts falling
due within one year (1,179) (1,373) (1,840)
-------- ------ ------
Net current assets 12,223 10,521 10,399
-------- ------ ------
Total assets less current 22,591 18,987 19,829
liabilities
Creditors - amounts falling due
after more than one year
Convertible debt (325) (325) (325)
Other (14,326) (14,643) (13,695)
-------- -------- --------
(14,651) (14,968) (14,020)
-------- -------- --------
Net assets 7,940 4,019 5,809
-------- -------- --------
Capital and reserves
Called up share capital 765 414 523
Share premium account 6,623 3,626 4,586
Capital redemption 45 45 45
reserve
Other reserves 122 - -
Revaluation reserve 708 - 708
Profit and loss account (323) (66) (53)
-------- -------- --------
Shareholders' funds 7,940 4,019 5,809
-------- -------- --------
GROUP CASH FLOW STATEMENT
for the six months ended 30
June 2006
Six months Six months Year ended
to 30 June to 30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Net cash inflow from 347 605 921
operating activities ----- ----- -----
Returns on investment and servicing of
finance
Interest received 20 9 36
Interest paid (464) (216) (658)
----- ----- -----
Net cash (outflow)/inflow from
returns on investments and
servicing of finance (444) (207) (622)
Taxation - - (186)
Capital expenditure and financial
investment
Purchase of tangible fixed (1,053) (4,317) (4,596)
assets
Investment in joint venture (199) - -
Sale of investment properties - 1,184 1,170
------ ------ ------
Net cash outflow from capital (1,252) (3,133) (3,426)
expenditure and financial
investment
Acquisitions and disposals
Purchase of subsidiary - (2,254) (2,254)
undertakings
Payment of amounts owed by - (66) (66)
subsidiaries to vendors ------ ------ ------
Net cash outflow from - (2,320) (2,320)
acquisitions and disposals
Financing
Proceeds from issue of shares 2,157 - 1,061
Expenses of issue of shares (45) - (37)
Receipts from borrowing 825 11,218 11,207
Repayments of borrowing (944) (6,165) (6,305)
Funds deposited with lenders 866 (1,409) (1,263)
Finance lease (2) 7 7
----- ------ ------
Net cash inflow from 2,857 3,651 4,670
financing ----- ------ ------
Increase/(decrease) in cash 1,508 (1,404) (963)
----- ------ ------
STATEMENT OF CHANGES IN EQUITY
Six months Six months Year ended
to 30 June to 30 June 31 December
2006 2005 2005
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit/(loss) for the period (270) 2 14
Issue of ordinary shares 242 94 203
Premium on the issue of 2,037 922 1,883
ordinary shares
Shares issued on 7 January 2005 - (600) (600)
Surplus on revaluation of - - 708
investment properties
Share warrants issued 122 - -
------ ----- -----
Net increase in 2,131 418 2,208
shareholders' funds
Opening shareholders'funds 5,809 3,601 3,601
------ ----- -----
Closing shareholders'funds 7,940 4,019 5,809
------ ------ ------
NOTES:
1. Exceptional item
The exceptional item relates to compensation and bonus payments
of £160,000, and share warrants valued at £122,000 granted to
directors in connection with the fundraising of £2.3 million,
before costs, in June 2006.
2. Basis of preparation
The financial information for the periods ended 30 June 2005 and
30 June 2006 is unaudited and does not constitute statutory
accounts within the meaning of the Companies Act 1985. It has
been prepared on the basis of the accounting policies set out in
the Group's statutory accounts for the period ended 31 December
2005. The figures for the period ended 31 December 2005 have
been extracted from the statutory accounts which have been
reported on by the Group's auditors and have been delivered to
the Registrar of Companies. The auditors' report was unqualified
and did not contain any statement under Section 237 (2), (3) or
(4) of the Companies Act 1985.
3. Earnings per share
Earnings per share have been calculated on the loss for the
period of £270,000 (2005 profit £2,000) and on 53,204,277 (2005
38,974,107) ordinary shares of 1p each, which is the weighted
average number of shares in issue during the period ended 30
June 2006.
4. Copies of report
Copies of this report are available from the Company's business
address at REI House, Bury Lane, Rickmansworth, Hertfordshire
WD3 1ED.