Interim Results

Braemar Group PLC 10 November 2006 BRAEMAR GROUP PLC 10 November 2006 Braemar Group plc ('Braemar' or 'the Group') is pleased to announce its unaudited interim results for the six months ended 30 September 2006. CHAIRMAN'S STATEMENT Today is exactly twelve months since the announcement of the Group's acquisition of The Braemar Group Limited and the raising of £1,500,000 through a placing at 3p. During this time the Group has made the following key achievements: • Both primary operating divisions (property management and fund management) contributing positively towards central costs • Corporate Finance division secured FSA authorisation • Launch of a new fund, Coronation IV • Continued development of a SIPP/REIT fund for 2007 • Creation of block management and freehold reversionary business Financial Highlights • Turnover of £586,442 (up 117% from six months to 31 March 2006) • Gross profit of £260,829 (up 67% from six months to 31 March 2006) • Operating loss pre goodwill amortisation of £182,830 (down 30% from six months to 31 March 2006) Operating Highlights The business is monitored internally by the performance of the now three operating divisions and the highlights in the period under review are as follows: Fund Management - Our fourth fund, Coronation IV, has been launched with a fund raising target of £5 million, which is due to close in December 2006. This continues our series of tax efficient residential property funds and further consolidates Braemar's position as a residential property fund manager. We continue to develop a major new fund for launch in 2007, which will be eligible for SIPP investment and will seek to benefit from the REIT legislation. The fund management division is positively contributing towards central costs. Property Management - This division comprises property management and block management. Property management has contributed positively towards central costs in the period under review and has successfully completed the £3.5 million development for Coronation III in Tunbridge Wells and is now actively marketing these 17 apartments for letting. We continue to maintain our track record for our properties under management with an average occupancy rate of 96% in the six months to 30 September 2006. Block management is a newly established business and to date manages our funds' block management requirements including maintenance, facilities management and service charge collection. In addition we have secured three external mandates and we expect this combined business to be contributing positively towards central costs within the current financial year. Our block management strategy is to complement our existing property management capabilities and through external mandates to build sufficient scale to develop a profitable business on a standalone basis. To further this aim we have developed a pipeline of potential freehold reversionary interest acquisitions, which will provide an investment asset as well as supporting our block management business. Corporate Finance - Braemar Securities Limited secured its regulatory approval from the FSA on 2 October 2006. This authorisation has now removed the need for Braemar to appoint an external promoter to its funds and in addition Braemar Securities seeks to secure its own Corporate Finance mandates. Since the period end, Braemar Securities has completed its first two external assignments and has commenced work on another two. The success of this division now means that all three divisions of the Group are presently making positive contributions towards central costs. Financial Results The unaudited results for the six months to 30 September 2006 report a loss before taxation of £244,051. Comparisons have been included for the six months to 30 September 2005 (unaudited), when the company was a cash shell, and for the six months ended 31 March 2006 (audited), the first trading period since the reverse takeover of The Braemar Group Limited by the Group. The comparative loss for the six months to 31 March 2006 was £300,980 and a loss of £73,939 for the six months to 30 September 2005. These results are after charging goodwill amortisation of £56,979 in six months ended 30 September 2006 (30 September 2005, nil; 31 March 2006 £34,967). The Board is aware of the requirement to produce financial statements under IFRS for the interim results for the six months ended 30 September 2007 and all periods thereafter and have established a working party to prepare for the potential implications of this change. The net assets of the Group stood at £2,160,066 at 30 September 2006 (30 September 2005: £69,389 and 31 March 2006: £2,408,617). Cash balances at 30 September 2006 were £212,437 while net debt stood at £1,162,253 (31 March 2006: net debt of £339,997), the movement reflecting the recent acquisition of the Toffee Works property in Harrogate for £965,000. Outlook The financial performance as reported shows the Group making an operating loss, reflecting a continuing investment in establishing the structure for our future funds and an investment in recruitment and people costs to equip ourselves for the next stage of our growth. The outlook is positive for the Group and with its focus on residential property funds, it is well placed to benefit from the expected continued inflows into residential property through SIPP investments and the potential benefits from the launch of the REIT regime in January 2007. The second half of the year has started well with the launch of Coronation IV, advanced planning for the next fund, FSA authorisation for our Corporate Finance business and the development of our block management business. The progress made in the first half is already translating into new revenue streams for the business and the Directors remain confident in the prospects for the Group. Martin Robinson Chairman BRAEMAR GROUP PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT SIX MONTHS ENDED 30 SEPTEMBER 2006 Unaudited Unaudited Audited 6 months ended 6 months ended 6 months ended 30 September 2006 30 September 2005 31 March 2006 Notes £ £ £ TURNOVER 586,442 - 269,277 Cost of sales (325,613) - (113,431) ________ ________ ________ GROSS PROFIT 260,829 - 155,846 Administration expenses (500,638) (76,129) (453,708) ___________________________________________________________ | | Operating loss pre goodwill | (182,830) (76,129) (262,895)| amortisation | | Goodwill amortisation | (56,979) - (34,967)| | ________ ________ ________| OPERATING LOSS | (239,809) (76,129) (297,862)| | ________ ________ ________| |__________________________________________________________| Interest receivable 17,751 2,190 11,128 Interest payable and similar charges (21,993) - (14,246) ________ ________ ________ LOSS ON ORDINARY ACTIVITIES BEFORE TAXATION (244,051) (73,939) (300,980) TAXATION 3 - - - ________ ________ ________ LOSS FOR THE FINANCIAL PERIOD (244,051) (73,939) (300,980) ________ ________ ________ Loss per share - basic 4 0.21p 0.39p 0.42p Loss per share - pre goodwill amortisation 4 0.16p 0.39p 0.37p The Group has no recognised gains or losses other than the results for the period as set out above. BRAEMAR GROUP PLC CONSOLIDATED BALANCE SHEET AS AT 30 SEPTEMBER 2006 Unaudited Unaudited Audited 30 September 30 September 31 March 2006 2005 2006 £ £ £ Notes FIXED ASSETS Intangible assets 2,187,194 - 2,244,174 Tangible assets 15,070 - 30,452 Investments 2,000 - 2,000 _________ _________ _________ 2,204,264 2,276,626 _________ _________ _________ CURRENT ASSETS Stock 1,114,028 - 124,700 Debtors 182,116 6,581 547,792 Cash at bank and in hand 212,437 89,189 557,524 _________ _________ _________ 1,508,581 95,770 1,230,016 CREDITORS _________ _________ _________ Amounts falling due within one year Bank overdrafts (456,463) - - Trade creditors (83,646) (16,906) (70,908) Other creditors (8,341) (1,850) (8,115) Other taxes and social security (59,784) - (34,105) Accruals and deferred income (57,395) (7,625) (97,747) Deferred consideration (250,000) - (250,000) Convertible loan notes (637,150) - (637,150) _________ _________ _________ (1,552,779) (26,381) (1,098,025) _________ _________ _________ NET CURRENT (LIABILITIES)/ ASSETS (44,198) 69,389 131,991 _________ _________ _________ NET ASSETS 2,160,066 69,389 2,408,617 _________ _________ _________ CAPITAL AND RESERVES Called up share capital 1,137,950 191,666 1,137,950 Share premium account 1,953,945 264,521 1,958,445 Profit and loss account (931,829) (386,798) (687,778) _________ _________ _________ SHAREHOLDERS' FUNDS 5 2,160,066 69,389 2,408,617 _________ _________ _________ BRAEMAR GROUP PLC CONSOLIDATED CASH FLOW STATEMENT SIX MONTHS ENDED 30 SEPTEMBER 2006 Unaudited Unaudited Audited 6 months ended 6 months 6 months ended ended 30 September 30 September 31 March 2006 2005 2006 Notes £ £ £ Reconciliation of operating loss to net cash outflow from operating activities Operating loss (239,809) (76,129) (297,862) Loss on sale of fixed assets 4,820 - - Amortisation of intangible assets 56,979 - 34,967 Depreciation of tangible fixed assets 3,080 - 3,770 Decrease/ (increase) in debtors 367,596 (6,581) (132,264) (Decrease)/ increase in creditors (24,335) 11,725 101,170 Increase in stock (989,328) - - _________ _________ _________ CASH FLOW STATEMENT Net cash outflow from operating activities (820,997) (70,985) (290,219) _________ _________ _________ Returns on investments and servicing of finance Interest paid (1,287) - (3,875) Interest received 17,751 2,190 11,128 Net cash inflow from returns on investments and servicing of finance 16,464 2,190 7,253 _________ _________ _________ Taxation paid - - (68,251) _________ _________ _________ Capital expenditure and financial investment Proceeds/ (payments) to acquire tangible fixed assets 7,483 - (12,260) Acquisition of The Braemar Group Limited - - (592,821) _________ _________ _________ Net cash (outflow)/ inflow from capital expenditure and financial investment 7,483 - (605,081) _________ _________ _________ Net cash outflow before financing (797,050) (68,795) (956,298) _________ _________ _________ Financing Issue of share capital - - 1,623,275 Share issue costs (4,500) - (198,642) _________ _________ _________ Net cash inflow from financing (4,500) - 1,424,633 _________ _________ _________ (DECREASE)/ INCREASE IN CASH 6,7 (801,550) (68,795) 468,335 1 BASIS OF PREPARATION The results for the six months ended 30 September 2006 are unaudited. They have been prepared on accounting bases and policies that are consistent with those used in the preparation of the financial statements of the Group for the period ended 31 March 2006, which were audited. The interim results were approved by the Board on 9 November 2006. The financial statements contained in this report do not constitute statutory accounts within the meaning of Section 240 Companies Act 1985. The results for the period ended 31 March 2006 were reported on by the auditors and received an unqualified audit report. Full accounts for the period ended 31 March 2006 have been delivered to the Registrar of Companies. The results for the six months ended 30 September 2005 are unaudited. 2 DIVIDEND No dividend is proposed for the six months ended 30 September 2006. 3 TAXATION Unaudited Unaudited Audited 6 months ended 6 months ended 6 months ended 30 September 2006 30 September 2005 31 March 2006 £ £ £ UK corporation tax - - - Adjustments to prior years - - - Current tax charge - - - There is no provision for UK corporation tax due to tax losses incurred by the group companies subject to agreement with HMRC. No deferred tax assets have been recognised on accumulated tax losses due to uncertainty over the time of such utilisation. 4 LOSS PER SHARE Unaudited Unaudited Audited 6 months ended 6 months ended 6 months ended 30 September 2006 30 September 2005 31 March 2006 £ £ £ Loss for the period 244,051 73,939 300,980 Weighted average number of shares 113,795,000 19,166,666 72,454,432 Loss per share - basic 0.21p 0.39p 0.42p Loss per share - pre goodwill amortisation 0.16p 0.39p 0.37p 5 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS Unaudited Unaudited Audited 6 months ended 6 months ended 6 months ended 30 September 2006 30 September 2005 31 March 2006 £ £ £ Opening shareholders funds 2,408,617 143,328 69,389 Loss for the financial period (244,051) (73,939) (300,980) Proceeds from the issue of shares (4,500) - 2,640,208 Closing shareholders funds 2,160,066 69,389 2,408,617 6 ANALYSIS OF NET DEBT At 1 Cash flows Non-cash At 30 April changes September 2006 2006 £ £ £ £ Cash Cash at bank and in hand 557,524 (345,087) - 212,437 Debt Bank overdraft - (456,463) - (456,463) Convertible loan notes (637,150) - - (637,150) Convertible loan notes accrued interest (10,371) - (20,706) (31,077) Deferred consideration (250,000) - - (250,000) ________ _________ _________ ___________ Net debt (339,997) (801,550) (20,706) (1,162,253) ________ _________ _________ ___________ 7 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS/ (DEBT) Unaudited Unaudited Audited 6 months ended 6 months ended 6 months ended 30 September 2006 30 September 2005 31 March 2006 £ £ £ (Decrease)/ Increase in cash (801,550) (68,795) 468,335 Non cash movement in debt (20,706) - (897,521) _________ _________ ___________ Movement in net (debt)/ funds during the (822,256) (68,795) (429,186) period Opening net (debt)/ funds (339,997) 157,984 89,189 _________ _________ ___________ Closing net (debt)/ funds (1,162,253) 89,189 (339,997) _________ _________ ___________ 8 COPIES OF THE INTERIM FINANCIAL STATEMENTS Copies of the interim financial statements will be sent to shareholders and copies will be available on request from the Group's head office at Richmond House, Heath Rd, Hale, Cheshire, WA14 2XP. For further information please contact: Martin Robinson, Chairman, Braemar Group plc 0161 929 4969 Marc Duschenes, Chief Executive, Braemar Group plc 0161 929 4969 Alex Clarkson, Zeus Capital 0161 831 1512 Notes to Editors Braemar Group plc creates and manages residential property investment funds, via collective and tax efficient investment schemes, targeted at the high net worth individual community. Braemar's businesses include property management, fund management and corporate finance divisions to facilitate a smooth and profitable base for investors and shareholders alike. Braemar has three divisions: Fund Management Braemar currently has four funds under management. Braemar receives an annual management fee plus a carried interest or performance fee, which may be linked to an index. Following A-Day, Braemar is also preparing for the launch of a £25 million residential property fund that will be suitable for SIPP investment in the new year and is also monitoring the developments in Real Estate Investment Trusts (REITs). Property Management This division comprises property management and block management. Once a fund is put in place, Braemar manages the properties in-house. Whilst project driven fees typically generate a high margin up front, the longer term management activity provides Braemar with a trail of recurring fee income. Braemar's block management activity, a newly established business, takes a pro-active interest in the properties it manages and ensures a cost effective programme of maintenance is in place that, wherever possible, enhances the value of the properties. Braemar also trades reversionary residential property, acting as agent or principal and from time to time is involved in property development on its own account. Corporate Finance This division primarily acts as arranger and promoter to the various residential property funds being launched by the Group, and offers specialist advisory and fund raising services for both public and private companies, through a network of high net worth individuals and financial intermediaries. This division, Braemar Securities Limited, is authorised and regulated by the Financial Services Authority. This information is provided by RNS The company news service from the London Stock Exchange

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