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Property Recycling (PROP)

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Friday 27 August, 2010

Property Recycling

Half Yearly Report

RNS Number : 7265R
Property Recycling Group PLC
27 August 2010
 

           

PROPERTY RECYCLING GROUP PLC

 

Interim Results

For the six months ended 30 June 2010

 

Property Recyling Group plc (the "Company") (AIM: PROP), which acquires and prepares brownfield sites for development, today announces its interim results for the six months ended 31 June 2010.

 

For further information please contact:

 

Stephen Stuteley, Director

Property Recycling Group plc                                                                     01953 717176

 

Geoff Nash

finnCap, Nominated adviser and joint broker                                    020 7600 1658

 

John Webb

Marshall Securities, Joint broker                                                              020 7490 3788

 

 

Executive Chairman's Report

Introduction

 

I said at the onset of the financial crisis that we had positioned ourselves for an extended period of tough times by reducing our costs and seeking to maximise short term income. That remains our approach and, as shown below, it has served us well in the period to June 2010. There is little reason to challenge our view that the economy will take a considerable period to rebalance and recover.

 

In our sector there have been a few well publicised bank realisations of property but we expect that there are many more to come. The very gradual unwinding of the bank balance sheets is no doubt vital at the national economic level, but it seems that much of the property sector faces a prolonged period of difficult financing which will delay the realisation of development assets.

 

Financial results

 

In the period the Group achieved revenue of £666,215, up from £436,611 in the same period last year. While rental income fell as a result of the overall economic downturn, our approach of securing option fees generated £300,000 in the period. There were no property realisations in either period. The operating profit was £205,532 (2009: loss £13,341) reflecting the benefit of increased turnover and £26,554 which arose from the absence of a charge relating to share options in the current period following cancellation of the scheme in the second half of last year. Net interest expense was £26,895 (2009: £20,404). Profit before tax was £178,637 (2009: loss £33,745). Earnings per share were 0.49p (2009: loss 0.09p) all of which is attributable to continuing operations.

 

At 30 June 2010 the Group had net debt of £1.83m compared to £1.65m at 31 December 2009 as a result of a prepayment of revenue received in 2009 relating to the current period.

 

No interim dividend is proposed.

 

Property portfolio

 

The Group currently owns eight freehold sites totalling 346 hectares, all of which have planning approval for industrial, commercial, residential or leisure use. There have been no acquisitions or disposals in the period. We continue to progress further the value of these sites by remediation and improved planning permissions and to explore long term disposals through option arrangements.

 

Planning approval for a Biomass plant at Brigg was refused and an appeal against this decision has been lodged by the optionholder.

 

Prospects

 

The prospects for the Company are unchanged from those I described in March 2010. We expect that it is going to be some time before demand for development sites returns to normal activity levels. In the meantime we concentrate on maintaining our rental income, controlling costs and exploring ways of increasing the underlying value of our sites. In this context we have received an option fee of £500,000 in August 2010 which extends a previous agreement. We are confident that the portfolio will deliver value to shareholders in the longer term.

 

Paul Rackham

 

Executive chairman

27 August 2010

 



 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the six months ended 30 June 2010

 


 

 

 

Note

Six months ended 30 June 2010

£

Six months ended 30 June 2009

£

Year ended 31 December 2009

£

 

Revenue

 

4

 

666,215 

 

436,611 

 

1,162,910 

Cost of sales


  -

              -

(974,694)

Gross profit


666,215

436,611 

188,216 

Administrative expenses


(460,683)

(449,952)

(1,038,213)

Operating profit/(loss)


  205,532

(13,341)

   (849,997)

Investment revenues


    244

1,621 

2,466 

Finance costs


(27,139)

(22,025)

(57,693)

 

Profit/(loss) before tax


 

  178,637

 

(33,745)

 

(905,224)

Tax (charge)/credit

5

 (1,338)

1,534

21,872 

Profit/(loss) for the period


 

 

 177,299

 

 

(32,211) 

 

 

(883,352) 

 

Credit to property revaluation reserve


 

          

  12,047

 

 

988

 

         

    10,120

Other comprehensive income for the period


 

  12,047

 

988

 

   10,120

 

Total comprehensive income for the period


 

 

 189,346

 

 

(31,223)

 

 

(873,232)

 

Earnings/(Loss) per share

 

6




 

Basic (pence)


 

0.49

 

(0.09)

            

 (2.44) 

 

Diluted (pence)


 

0.49

 

    (0.09)

 

(2.44) 

 

 

The results for the period are derived from continuing operations. 

 

 



UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For six months ended 30 June 2010

 

 
Share
 capital
Share
 premium
Revaluation
 reserve
Other
 reserves
Retained
 earnings/
(losses)
Total
 equity
 
£
£
£
£
£
£
 
 
 
 
 
 
 
At 1 January 2009
1,810,000
6,428,529
1,696,035
980,865
(77,718)
10,837,711
Loss for the 6 month
period
-
-
-
-
(32,211)
(32,211)
Other comprehensive income – reversal of deferred tax liability
-
-
988
-
-
988
Share based payment
               -
               -
               -
 26,554
               -
       26,554
At 1 July 2009
1,810,000
6,428,529
1,697,023
1,007,419
(109,929)
10,833,042
Loss for the 6 month
period
-
-
-
-
(851,141)
(851,141)
Other comprehensive income – reversal of deferred tax liability
-
-
9,132
-
-
9,132
Share based payment
-
-
-
93,050
-
93,050
Transfer from equity reserve to retained earnings/(losses)
               -
               -
               -
 (278,636)
  278,636
               -
At 1 January 2010
 1,810,000
 6,428,529
 1,706,155
   821,833
 (682,434)
10,084,083
Profit for the 6 month
period
-
-
-
-
177,299
177,299
Other comprehensive income – reversal of deferred tax liability
               -
               -
     12,047 
                -
               -
     12,047 
At 30 June 2010
1,810,000
6,428,529
1,718,202
821,833
(505,135)
10,273,429

 

 

Equity comprises share capital, share premium, merger reserve, revaluation reserve, equity reserve and retained earnings/(losses).

 

Other reserves comprise merger reserve and equity reserve.  Following the cancellation of the share option scheme, the balance on the equity reserve was transferred to retained earnings/(losses) in 2009.

 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 30 June 2010


 

 

 

Note

As at

30 June

2010

£

As at

30 June

2009

£

As at

31 December 2009

£

Non-current assets





Property, plant and equipment


              70,613

              105,973

88,293 

Investment property


        2,962,000

          2,962,000

2,962,000 

Finance lease receivables


              46,968

                63,468

55,218 

Deferred tax asset

5

 5,380

1,443

                  6,718



         3,084,961

          3,132,884

3,112,229 

Curret assets





Inventories


         9,412,101

10,273,669 

9,373,414 

Finance lease receivables


16,500

16,500

16,500 

Trade and other receivables


309,232 

381,366 

251,188 

Current tax assets

Cash and cash equivalents


 11,783

               483,829

 26,684

 53,653

              11,783

               43,996 



         10,233,445

         10,751,872

9,696,881 

Total assets


         13,318,406

        13,884,756

12,809,110 






Current liabilities





Trade and other payables


       (161,282)

       (197,798)

(177,385)

Borrowings


    (1,771,597)

    (1,511,750)

(1,054,064)

Deferred revenue


       (187,027)

       (193,280)

(456,735)



    (2,119,906)

    (1,902,828)

(1,688,184)

Net current assets


      8,113,539

      8,849,044

8,008,697 






Non-current liabilities





Borrowings


       (538,855)

       (741,491)

(638,580)

Deferred tax liabilities

5

       (386,216)

       (407,395)

(398,263)



       (925,071)

    (1,148,886)

(1,036,843)

Total liabilities


    (3,044,977)

    (3,051,714)

(2,725,027)

Net assets


    10,273,429

    10,833,042

10,084,083 






Equity





Share capital


1,810,000 

1,810,000 

1,810,000 

Share premium account


6,428,529 

6,428,529 

6,428,529 

Merger reserve


821,833 

821,833 

821,833 

Revaluation reserve


         1,718,202

          1,697,023

          1,706,155

Equity reserve


                - 

185,586 

                - 

Retained losses


  (505,135)

  (109,929)

(682,434)

 

Total equity


 

        10,273,429

 

         10,833,042

 

10,084,083 

 



 

UNAUDITED CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

For the six months ended 30 June 2010

 


Note

Six months ended 30 June 2010

£

Six months ended 30 June   2009

£

Year ended

31 December 2009

£

Net cash (outflow)/inflow from operating activities

 

8

 

       (151,080)

 

25,695

 

611,458






Investing activities










Interest received


244

1,621

2,466 

 

Net cash surplus from investing activities


 

       

              244

 

        

             1,621

 

 

2,466 






Financing activities





Repayment of borrowings

Proceeds from borrowing

Interest paid


       (102,192)

         720,000

         (27,139)

         (98,221)

         128,576

         (22,025)

(1,380,242)

          850,000

         (57,693)

 

Net cash from financing activities


 

        590,669

 

             8,330

 

       (587,935)

Net increase in cash and cash equivalents


 

         439,833

 

           35,646

 

25,989

Cash and cash equivalents at beginning of period


 

           43,996

 

           18,007

 

18,007 

Cash and cash equivalents at end of period


 

        483,829

 

           53,653

 

43,996 






 

NOTES TO THE CONSOLIDATED INTERIM STATEMENT

1.        General information

The nature of the operations and principal activities of the Company and its subsidiaries (together called the Group) are set out in note 4.

 

Property Recycling Group plc is the Group's ultimate parent company.  It is incorporated in the United Kingdom under the Companies Acts.  The address of the registered office is Manor Farm, Bridgham, Norwich, NR16 2RX. 

 

Property Recycling Group plc shares are traded on AIM, a market of the London Stock Exchange. 

 

This consolidated interim statement was approved for issue by the Board of Directors on 26 August 2010.         

                                                                                                                               

2.       Basis of preparation

The consolidated interim statement should be read in conjunction with the annual financial statements for the year ended 31 December 2009, which have been prepared in accordance with IFRS as adopted by the European Union on the historical cost basis. 

 

The interim financial information has not been audited and does not constitute statutory accounts within the meaning of Section 434 of the Companies Act 2006.  The Company's statutory accounts for the year ended 31 December 2009 have been filed with the Registrar of Companies and are available at www.propertyrecycling.co.uk.  The auditors' report on these financial statements was unqualified and did not contain any statement under Section 498 (2), (3) or (4) of the Companies Act 2006. 

 

3.        Accounting policies

The accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2009, as described in those annual financial statements. 

 

4.            Revenue and segmental information

Revenue comprises the invoiced value of property sales, property rentals and other goods and services which fall within the Group's ordinary activities after deduction of trade discounts and value added tax.  Income from operating leases is accounted for according to the terms of the leases. 

 

 

An analysis of the Group's revenue is as follows:

 

 

 

 

 


Six months

ended 30 June

2010

£

Six months

ended 30 June

2009

£

Year ended

31 December

2009

£






Sale of properties


     -

               -

              -

Option fees


          300,000

 -

          300,000

Property rental income


          360,706

          434,325

854,376 

Other income


 5,509

 2,286

8,534 



          666,215

          436,611

1,162,910 

Investment income


    244

 1,621

2,466 



          666,459

          438,232

1,165,376 

 

Business segments

For management purposes, the Group is organised into one segment being the sale or rental of property.  Analysis of the Group's revenue between sale of property and rental income is presented above. 

 

Geographical segments

The Company operates solely from the UK and management considers there to be only one geographical segment.  

 



5.            Taxation

(i).          Analysis of tax (charge)/credit on ordinary activities. 

 

 

 

 

 

Current tax:


Six months ended 30 June 2010

£

 

Six months ended 30 June

2009

£

 

Year ended 31 December 2009

£

 

Corporation tax credit


-

              - 

            15,063

Deferred tax:





Deferred tax (charge)/credit


           (1,338)

1,534

             6,809

 

Total tax (charge)/credit on profit /(loss)


 

           (1,338)

 

1,534 

 

21,872

 

 

(ii).         Deferred taxation liability/(asset) 

The amounts included in the accounts and the amounts not recognised are as follows:

 

 

 

 

 

Included:


Six months ended 30 June 2010

£

 

Six months ended 30 June

2009

£

 

Year ended 31 December 2009

£

 

Investment property


          386,216

407,395 

398,263 

Accelerated capital allowances


 

           (5,380)

 

(1,443) 

 

(6,718)



          380,836

405,952 

   391,545

Not recognised:





Trading losses


         (44,008)

(132,921)

         (87,416)

 

(iii).       Factors that may affect the future tax charge

No deferred tax asset has been recognised in respect of timing differences relating primarily to tax losses as there is insufficient evidence that the asset would be recoverable.  The asset will be recoverable if the Group generates suitable taxable profits. 

 

6.            Earnings/(loss) per share

Basic

Basic earnings/(loss) per ordinary share is calculated by dividing the (loss)/profit after taxation for the periods by the weighted average number of ordinary shares in issue as shown in the table.  The Company had 36,200,000 shares in issue as at 30 June 2010. 

 

 

 


Six months

ended 30 June 2010

 

Six months ended 30 June

2009

 

Year ended

31 December 2009

 

Profit/(loss) for period

          £177,299

£(32,211)

£(883,352)





Weighted average number of shares

        36,200,000

36,200,000

36,200,000





Earnings/(loss) per ordinary share (pence)




-

Continuing operations

   0.49

(0.09)

(2.44)

 

 

Diluted

The calculation of diluted (loss)/earnings per share is calculated by adjusting the weighted average number of shares to assume conversion of share options.  The adjusted weighted average number of shares is 36,200,000. 

 

 

 


Six months

ended 30 June 2010

 

Six months ended 30 June

2009

 

Year ended

31 December 2009

 

Profit/(loss) for period

          £177,299

£(32,211)

£(883,352)





Weighted average number of shares

       36,200,000

36,200,000

36,200,000





Earnings/(loss) per ordinary share (pence)




-

Continuing operations

   0.49

(0.09)

(2.44)

 

7.            Dividends

 

No dividends were paid during the period, the same period last year, or the year ended 31 December 2009.

 

The Board has not declared an interim dividend for the year ended 31 December 2010 (2009: Nil pence).

 

 

8.            Notes to the consolidated statement of cash flows

 



Six months ended 30 June 2010

£

Six months ended 30 June

2009

£

Year ended 31 December 2009

£

Profit/(loss) for the period


         177,299

         (32,211)

(883,352) 

Adjustment for:





Investment revenues


              (244)

           (1,621)

(2,466)

Finance costs


           27,139

           22,025

57,693 

Income tax charge/(credit)


             1,338

           (1,534)

(18,592)

Depreciation of property, plant and equipment


 

           17,680

 

           17,762

 

35,442 

Provision against inventories


                  -

                  -

         974,694

Share based payment expense


                  -

           26,554

119,604 

Operating cash flows before movements in working capital


 

         223,212

 

           30,975

 

283,023 

Increase in inventories


         (38,687)

       (112,449)

(186,888)

(Increase)/decrease in receivables


        

         (49,794)

         

           73,435

 

211,863 

(Decrease)/increase in payables


       (285,811)

           33,734

         276,776

Cash (absorbed)/generated in operations


 

       (151,080)

 

25,695

 

584,774

Tax paid


     -

     -

26,684

Net cash (outflow)/inflow from operating activities


 

       (151,080)

 

25,695

 

611,458

 

 

9.            The Interim Statement will be posted shortly to shareholders and will be available from the Company's Registered Office at Manor Farm, Bridgham, Norwich, NR16 2RX and from the Company's website: www.propertyrecycling.co.uk.    

 

 


This information is provided by RNS
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