Interim Results

Medsea Estates Group PLC 27 September 2006 For immediate release 27 September 2006 MEDSEA ESTATES GROUP PLC ('Medsea or 'the Company') Unaudited Interim Financial Results for the period ended 30 June 2006 Medsea Estates Group PLC, the AIM-listed Spanish-based estate agency group, announces unaudited interim results for the six months to 30 June 2006. HIGHLIGHTS •Pre-tax profits increased circa five and half times to £1.03m (2005:£179,000) •Turnover £5.27m (2005: £5.53m) •Earnings per share 0.96p •Expansion into Italy contributes to strong first half performance •Subsequently a strategic partnership signed with Saga in July Chairman Tony Gatehouse said: 'The first half of the current year has demonstrated a substantial recovery following the downturn in the market last year with a profit before tax of £1.03m. There is no doubt that the Group has regained its momentum, our expansion into the Italian market has been exceptionally successful and the investment we made last year has contributed significantly to the improvement in the half year performance. The Group has continued to make good progress during the second half and I am particularly excited about our strategic partnership with Saga as our partnership not only enables us to offer our services to millions of Saga customers but is also an endorsement of the quality of our services. The Board is encouraged by the progress made so far and looks forward to the rest of the year with confidence.' For further information contact: Tony Gatehouse, Chairman, Medsea 0034 96 570 42 Juan Carlos Rodriguez Martinez, Chief Executive, Medsea 0034 96 570 02 HB Corporate 0207 510 8600 Imran Ahmad/Luke Cairns/Cecil Jordaan Weber Shandwick Square Mile Terry Garrett/Alex White/John Moriarty 0207 067 0700 Notes to editors Medsea Estates Group Plc is a leading Spanish-based estate agency group which floated on AIM in August 2004. It was established in 1998 to service the marketplace of the increasing number of UK and Irish nationals looking to acquire residential properties in Spain. Over the past six years the group has expanded to become one of the leading agents within the area and now operates in a wide range of other European countries including Italy, Portugal, Turkey, and Cyrpus. Medsea Estates Group PLC Unaudited Interim Results for the six months ended 30th June 2006 The first half of the current year has demonstrated a substantial recovery, with pre-tax profits rising circa five and half times to £1.03m. This is an extremely pleasing performance after the downturn in the market last year undermined our sales activities at a time when the Group was making significant investments in its core activities including important geographic expansion. I am pleased to report that the investments made last year, which expanded the group into important new regions such as Calabria in Italy, have resulted in a substantial improvement in the half year performance. In the six months to 30 June 2006 turnover of £5.27m (2005: £5.53m) was still marginally lower by some 5% but the Group still managed to achieve a significant increase in operating profits and, coupled with a good performance from our associates, Promilorci S.l. and Bishop Properties S.l, pre-tax profits for the six months rose sharply to £1.03m compared to £179,000 for the comparable period and a loss of £231,000 for the second half of the year to 31 December 2005. After a taxation charge of £350,000, the net profit for the six months was £677,000, equivalent to earnings per share of 0.96p per share. There can be no doubt that the Group has regained its momentum. Aided by an ever-increasing number of supporting agents in the UK, we are steadily regaining our share of the Spanish market. Since the beginning of the year, our offices in North and South Costa Blanca, Costa Almeria, Costa Tropical and Costa Calida have sold 313 units, resulting in sales of €54.8m. We have also recently introduced an innovative initiative called Easybuy, which eliminates the need for British people, buying off-plan in Spain, to pay the 30/50% of the purchase price normally demanded within thirty days. This, we believe, will attract a whole new range of customers. Our move into the Italian market has been exceptionally successful. The initial contract with Bella Calabria SRL in October last year was for 110 units. In July this year the contract was renewed for a five year period, giving us the opportunity to sell a minimum of 250 units per annum. With 345 sales already completed, we have already exceeded this minimum figure. We believe the deal will generate sales for Medsea in excess of €4m annually. The end of July saw a major strategic partnership develop as the Group entered into a contract with Saga, the leading provider of holidays and financial services for the over 50s market. This positions Medsea as key provider of overseas homes for Saga customers, giving it the opportunity to offer its services to millions of Saga customers. This is not only an important source of future sales, it is an endorsement of the quality of our services. Since the beginning of the second half, the Group has continued to make good progress and at the time of writing we are just beginning to see the first signs of buying activity coming from customers through our recently signed venture with Saga. We now have a good spread of properties across a number of key centres in Spain, Italy, Turkey, Portugal and Cyprus. It is too early to predict the outcome for the full year but visitor levels remain encouraging, our conversion rate is good and the Board looks forward to the rest of the year with confidence. Tony Gatehouse, Chairman 27 September 2006 UNAUDITED INTERIM FINANCIAL INFORMATION OF MEDSEA ESTATES GROUP PLC FOR THE SIX MONTHS ENDED 30 JUNE 2006 The unaudited interim financial information for the six months ended 30 June 2006 consolidates the results of Medsea Estates Group PLC and all of its subsidiary undertakings at 30 June 2006. 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 2006 2005 (unaudited) (unaudited) Notes £'000 £'000 Turnover 2 5,267 5,526 Costs of sales (3,858) (3,881) ----------- ----------- Gross profit 1,409 1,645 Administrative expenses (958) (1,461) ----------- ----------- Operating profit 451 184 Share of operating profit in associate 590 - Interest payable and similar charges (14) (5) ----------- ----------- Profit on ordinary activities before taxation 1,027 179 Taxation (350) (152) ----------- ----------- Profit on ordinary activities after taxation 677 27 Minority Interest 11 (16) ----------- ----------- Retained profit for the period 688 11 =========== =========== All results derive from continuing operations of the Group. GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES 6 months 6 months ended ended 30 June 30 June 2006 2005 (unaudited) (unaudited) Notes £'000 £'000 Profit for the financial period 688 11 Foreign exchange gain/(loss) (13) (219) Unrealised surplus on revaluation of investment properties (34) - ----------- ----------- Total recognised gains/(losses) relating to the year 641 (208) =========== =========== CONSOLIDATED BALANCE SHEET As at 30 As at 30 June June 2006 2005 (unaudited) (unaudited) Notes £'000 £'000 Fixed assets Intangible assets 4 3 Tangible assets 4 933 1,151 Investments 7 91 Investments in associates 827 - ----------- ----------- 1,771 1,245 Current assets Stock 309 156 Debtors 5 8,769 7,875 Cash at bank and in hand 555 615 ----------- ----------- 9,633 8,646 Creditors: amounts falling due within one year 6 (5,449) (4,813) ----------- ----------- Net current assets 4,184 3,833 ----------- ----------- Total assets less current liabilities 5,955 5,078 Creditors: amounts falling due in more than one year 7 (302) (129) Provisions for liabilities and charges 8 (1,147) (1,097) ----------- ----------- Net assets 4,506 3,852 =========== =========== Capital and reserves Called up share capital 9 7,063 7,063 Share premium 22 22 Minority interest (2) 17 Revaluation reserve 62 92 Other reserve 120 163 Merger reserve (7,058) (7,058) Profit and loss account 4,299 3,553 ----------- ----------- Equity shareholders' funds 4,506 3,852 =========== =========== CONSOLIDATED CASH FLOW STATEMENTS 6 months 6 months ended ended 30 June 30 June 2006 2005 (unaudited) (unaudited) Notes £'000 £'000 Net cash (outflow)/inflow from operating activities 10 (176) (271) Returns on investments and servicing of finance Interest element of finance lease payments (1) - Other interest paid (13) (5) ----------- ----------- Net cash (outflow)/inflow from returns on investments and servicing of finance (14) (5) Taxation (70) (29) Capital expenditure and financial investment Purchase of tangible fixed assets (14) (76) Proceeds from sale of tangible fixed assets 190 6 ----------- ----------- Net cash flow from capital expenditure and financial investment 176 (70) Management of liquid resources Acquisition of other investments - (4) ----------- ----------- Cash (outflow)/inflow before financing (84) (379) Financing Repayment of other loans (41) (110) Repayment of long term loans - (118) Raising of long term loans 404 - Capital element of finance lease payments (4) (4) ----------- ----------- Net cash inflow/(outflow) from financing 359 (232) ----------- ----------- Increase/(decrease) in cash in the period 275 (611) =========== =========== Reconciliation of net cash flow to movement in net debt Increase/(decrease) in cash in the period 275 (611) Cash (inflow)/outflow from increase in net debt and finance leasing (359) 232 ----------- ----------- Movement in funds in the period (84) (379) Opening net funds/(debt) (228) 667 ----------- ----------- Closing net (debt)/ funds 11 (312) 288 =========== =========== 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 2005. The interim financial results are unaudited. 2. Turnover Turnover derives wholly from the principal activity of the Group which is carried out in the EU. 3. Intangible fixed assets Patents £'000 Cost As at 1 January 2006 11 Additions - ----------- As at 30 June 2006 11 ----------- Amortisation As at 1 January 2006 6 Charge for the period 1 ----------- As at 30 June 2006 7 ----------- Net book value As at 30 June 2006 4 =========== As at 31 December 2005 5 =========== 4. Tangible fixed assets Office Freehold equipment land and Investment and motor buildings properties vehicles Total £'000 £'000 £'000 £'000 Cost or valuation As at 1 January 2006 257 449 678 1,384 Additions - - 14 14 Disposals - (160) - (160) Foreign exchange difference 2 1 3 6 --------- --------- --------- --------- As at 30 June 2006 259 290 695 1,244 ========= ========= ========= ========= Depreciation As at 1 January 2006 21 - 228 249 Charge for the period 3 - 58 61 Disposals - - - - Foreign exchange difference - - 1 1 --------- --------- --------- --------- As at 30 June 2006 24 - 287 311 ========= ========= ========= ========= Net book value As at 30 June 2006 235 290 408 933 ========= ========= ========= ========= As at 31 December 2005 236 449 450 1,135 ========= ========= ========= ========= 5. Debtors As at As at 30 June 30 June 2006 2005 £'000 £'000 Trade debtors 458 677 Other debtors 1,439 553 Prepayments and accrued income 6,872 6,645 --------- --------- 8,769 7,875 ========= ========= 6. Creditors: amounts falling due within one year As at As at 30 June 30 June 2006 2005 £'000 £'000 Bank loans and overdrafts 467 59 Other loans 90 134 Trade creditors 1,381 314 Corporation tax 2 239 Other taxation and social security 253 336 Other creditors 31 215 Accruals and deferred income 3,217 3,516 Obligation under finance lease 8 --------- --------- 5,449 4,813 ========= ========= 7. Creditors: amounts falling due after more than one year As at As at 30 June 30 June 2006 2005 £'000 £'000 Bank loans 293 112 Obligations under finance leases 9 17 --------- --------- 302 129 --------- --------- Analysis of loans - amounts repayable: In one year or less, or on demand 260 59 Between one and two years 52 59 Repayable between 2 and 5 years 241 53 --------- --------- 553 171 In more than 5 years, repayable by instalments - - --------- --------- 553 171 ========= ========= 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 2006 2005 Deferred taxation: £'000 £'000 Provision at 1 January 794 1,042 Charge for the period 353 55 --------- --------- Provision at 30 June 1,147 1,097 ========= ========= 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 2006 2005 £'000 £'000 Authorised: 100,000,000 ordinary shares of 10 pence each 10,000 10,000 ========= ========= Issued and fully paid: 70,629,412 ordinary shares of 10 pence each 7,063 7,063 ========= ========= 10. Reconciliation of operating profit to operating cash flows 6 months 6 months ended ended 30 June 30 June 2006 2005 £'000 £'000 Operating profit 451 184 Share of operating profit in associate 590 - Profit on disposal of fixed assets (62) - Foreign exchange (29) (162) Depreciation and amortisation 62 28 (Increase)/decrease in debtors (2,642) (375) Increase/(decrease) in creditors 1,581 81 (Increase)/decrease in stock (127) (27) --------- --------- Net cash inflow from operating activities (176) (271) ========= ========= 11. Analysis of changes in net debt 6 months 6 months ended ended 30 June 30 June 2006 2005 £'000 £'000 Cash at bank and in hand 156 1,229 Bank Overdraft (83) - Finance leases (21) (29) Other loans (131) (244) Debt due within one year (54) (57) Debt due after one year (95) (232) --------- --------- Opening net funds/(debt) (228) 667 Increase/(decrease) in cash in the period 399 (614) (Increase)/decrease in overdrafts in the period (124) - Decrease/(increase) in finance leases in the period 4 4 Decrease/(increase) in other loans 41 110 (Increase)/decrease in debt due within one year (206) (2) (Increase)/decrease in debt due after one year (198) 120 --------- --------- Total movement in funds (84) (382) Cash at bank and in hand 555 615 Bank Overdraft (207) - Finance leases (17) (25) Other loans (90) (134) Debt due within one year (260) (59) Debt due after one year (293) (112) --------- --------- Closing net funds/(debt) (312) 285 ========= ========= 12. Financial commitments At 30 June 2006 the Group had annual commitments under non-cancellable operating leases as set out below: As at As at 30 June 30 June 2006 2005 £'000 £'000 Land and buildings: Expiring within one year 143 28 Expiring in two to five years - 4 ========= ========= This information is provided by RNS The company news service from the London Stock Exchange

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