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Property Recyling Group plc (PROP)

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Monday 27 April, 2009

Property Recyling Group plc

Final Results

27 April 2009


Property Recycling Group plc (AIM: PROP), which acquires and improves
brownfield sites  before selling  them to  developers or  end  users,
announces its results for the year ended 31 December 2008.

For further information please contact:

Paul Rackham, Chairman,                       01953 717176
Property Recycling Group plc
Geoff Nash/Leslie Kent                       020 7600 1658
FinnCap (Nominated adviser and joint broker)
John Webb/Robert Luetchford                  020 7490 3788
Marshall Securities Limited (Joint broker)

The report and financial  statements for the  year ended 31  December
2008 are expected to be posted to shareholders by 1 May 2009.  Copies
of  the  accounts  will  be  available  on  the  Company's   website:

The Annual General Meeting of the Company will be held at 10.30  a.m.
on 2 June 2009 at the  offices of Mayer Brown International LLP,  201
Bishopsgate, London EC2M 3AF.
Visit our website:



The economic  environment which  I described  in September  2008  has
worsened considerably. The virtual collapse of the banking system and
the knock on impact to the  real economy have created a breakdown  in
the property market. I see little  prospect of an improvement in  the
foreseeable  future  and  I  believe  that  many  commentators   have
underestimated the depth and length of the current downturn. There is
little evidence of  the low  interest rate  environment described  by
government ministers feeding through to property businesses, in  fact
the contrary.

During the year we made  two property acquisitions and no  disposals.
We have  continued our  policy  to maximise  income from  short  term
lettings, although  the income  is no  longer adequate  to cover  our
operating costs. The Group has low gearing and continues to move with
extreme caution in respect of acquisitions and expenses.

Financial results

In the year  ended 31  December 2008  the Group  achieved revenue  of
£0.88 million  (2007:  £0.97  million).  There  was  no  income  from
property sales in  2008 (2007: £0.09  million). Administrative  costs
were almost unchanged from  the previous year  at £0.90 million.  The
loss before tax was £0.20 million (2007: profit £0.23 million).  Loss
per share was 0.51p (2007: earnings  0.80p). At 31 December 2008  the
Group had  net borrowings  of £2.20  million (2007:  net funds  £0.54

In the  light of  the results  for  the year  and the  prospect  that
economic conditions will continue to  be difficult for some time  the
Directors recommend that no dividend be paid.

Property portfolio

The portfolio comprises eight properties totalling 346 hectares.

In April  2008  we completed  the  acquisition of  this  121  hectare
freehold site  at  Kentford  near  Newmarket  in  Suffolk  for  £2.05
million. The site has three dwellings which are let and  agricultural
land, some of which is let.  The property has been considered in  the
past for  substantial  development  and  we  believe  it  will  offer
significant opportunity in the longer term.
We acquired  this  vacant freehold  17  hectare site  at  Welford  in
Northamptonshire for  £0.58 million  at the  end of  2008. The  site,
which  is  located  at  the  junction  of  the  A14  and  the  A5199,
approximately 5 miles from the Cathorpe interchange of the Ml and the
M6, has planning permission for the full range of motorway services.

Freehold 8 hectare site  located adjacent to  the A1, midway  between
Stamford and Grantham, has  planning consent for general  industrial,
storage and distribution use. There are a number of storage buildings
on the  site amounting  to  220,000 sq.  ft. of  which  approximately
three-quarters are let.
Freehold vacant  37 hectare  site  located near  Bury St  Edmunds  in
Suffolk. The site has  the benefit of  an existing planning  approval
for an 111,480 sq m distribution  centre granted in August 2006.   In
the first half of 2008 our  agents marketed the property but none  of
the potential enquirers had the capacity to implement a transaction.

Freehold  50  hectare  site  near  Scunthorpe  in  Lincolnshire  with
industrial / commercial planning permission. A three year option  was
granted over five hectares of the  site in August 2007 in  connection
with a potential biomass plant. We have made a major submission under
the Local Development  Framework for  a mixed  residential/commercial
development on part of the site.   Some of the buildings on the  site
are let.

Fornham Park
Freehold 89 hectare  site located  near Bury St  Edmunds in  Suffolk.
Approximately half  of the  site  has planning  approval for  a  golf
course and 28 log cabins. Following the sale of a part of the site in
2006 and 2007 for development as five residential properties, we have
been actively working on  the balance of this  site which we  believe
has  considerable  future  potential.  In  the  meantime  we  receive
agricultural rental in respect of approximately half of the site.

Freehold 20 hectare  investment property located  near Huntingdon  in
Cambridgeshire, let to ADAS Consulting Limited on a ten year  lease.
We continue to work  with our tenant to  maximise the future  earning
potential of the  undeveloped land  and to  establish the  site as  a
centre of excellence for composting technology.

Stoke Holy Cross
Freehold 5 hectare site  outside Norwich in  Norfolk. A former  radar
base. This is a longer term  site which will require the  acquisition
of additional  land  to maximise  potential  and in  due  course  the
preparation of a master plan.


Sam Wauchope, who has  been a non-executive  director of the  Company
since flotation, has indicated that due to increasing demands on  his
time from his other business activities he wishes to resign from  the
board. He  will  stand  down  with  effect  from  the  close  of  the
forthcoming annual general meeting. I would like to record my own and
the Board's thanks to  Sam for his advice  and valuable support  over
the years. We wish him well for the future.


We see little prospect of property sales at acceptable prices in  the
current financial year.  We expect  this to be  a long  haul and  are
seeking to minimise our  expenses and retain as  much of our  letting
income as  is possible  at a  time when  several of  our tenants  are
experiencing difficult trading conditions.  We are working with  some
tenants to restructure their rental obligations in order to avoid the
costs and  income  disruption to  the  Group associated  with  tenant

We continue to  believe that the  portfolio will deliver  shareholder
value in the long term.

Paul Rackham
Executive Chairman
27 April 2009

Year ended 31 December 2008

                                        Year ended         Year ended
                                       31 December        31 December
                                              2008               2007
                                  Note           £                  £

Revenue                            3      880,944            970,101

Cost of sales                                                      -

Gross profit                              739,144            970,101

Administrative expenses                  (899,830)         (938,663)

Operating (loss)/profit                  (160,686)            31,438

Investment revenue                         50,969            284,542
Finance costs                             (90,137)           (86,385)

(Loss)/profit before tax                 (199,854)           229,595

Tax credit                         4        16,082            61,375

(Loss)/profit for the year               (183,772)           290,970
attributable to equity holders of
the parent

(Loss)/earnings per share          6
Basic (pence)                               (0.51)              0.80

Diluted (pence)                             (0.51)              0.80

In 2008 and 2007 all results derived from continuing operations.

Year ended 31 December 2008

                                            Year         Year
                                           ended        ended
                                     31 December  31 December
                                Note        2008         2007
                                               £            £
Balance at 1 January                 11,217,380   11,273,647
(Loss)/profit for the year             (183,772)     290,970
Dividends paid                     5   (253,400)    (434,400)
Increase in equity reserve               53,548       40,338
Increase in revaluation reserve           3,955       46,825
Balance at 31 December               10,837,711   11,217,380

Equity  comprises  share  capital,  share  premium,  merger  reserve,
revaluation reserve, equity reserve and retained earnings.

31 December 2008

                                   31 December 2008 31 December 2007
                                                  £                £
Non-current assets
Property, plant and equipment              123,735          159,261
Investment property                      2,962,000        2,962,000
Finance lease receivables                   71,718           88,218
Deferred tax asset                               -            1,066
                                         3,157,453        3,210,545
Current assets
Inventories                             10,161,220        7,477,515
Finance lease receivables                   16,500           16,500
Trade and other receivables                446,551          773,634
Current tax assets                          26,684                 -
Cash and cash equivalents                   18,007        1,734,929
                                        10,668,962       10,002,578
Total assets                            13,826,415       13,213,123

Current liabilities
Trade and other payables                  (159,671)        (172,766)
Current tax liabilities                          -          (40,451)
Borrowings                     7        (1,371,278)        (139,275)
Deferred revenue                          (197,673)        (178,993)
                                        (1,728,622)        (531,485)
Net current assets                       8,940,340        9,471,093

Non-current liabilities
Borrowings                     7          (851,608)      (1,051,920)
Deferred tax liabilities                  (408,474)        (412,338)
                                        (1,260,082)      (1,464,258)
Total liabilities                       (2,988,704)      (1,995,743)
Net assets                              10,837,711       11,217,380

Share capital                            1,810,000        1,810,000
Share premium account                    6,428,529        6,428,529
Merger reserve                             821,833          821,833
Revaluation reserve                      1,696,035        1,692,080
Equity reserve                             159,032          105,484
Retained (losses)/earnings                 (77,718)         359,454
Total equity                            10,837,711       11,217,380

Year ended 31 December 2008

                                                     Year        Year
                                                    ended       ended
                                              31 December 31 December
                                                     2008        2007
                                     Note               £           £

Net cash outflow from operating       8       (2,456,045) (4,529,616)
Investing activities
Interest paid                                    (90,137)    (86,385)
Interest received                                 50,969     284,542
Purchase of property, plant and                        -    (176,498)

Net cash (deficit)/increase from
investing activities                             (39,168)     21,659

Financing activities
Dividends paid                        5         (253,400)   (434,400)
Repayments of borrowings                        (148,940)   (133,839)
Proceeds from borrowing                         1,180,631           -

Net cash used in financing                       778,291    (568,239)

Net decrease in cash and cash                 (1,716,922) (5,076,196)

Cash and cash equivalents at
beginning of year                              1,734,929   6,811,125

Cash and cash equivalents at end of               18,007   1,734,929


1.         Presentation of financial information
This financial  information does  not constitute  statutory  accounts
within the meaning of Section 240  of the Companies Act 1985 for  the
Group for the year ended 31  December 2008 but has been derived  from
those accounts. The statutory accounts for the year ended 31 December
2008 have been reported on by the auditors without qualification  and
such report did not contain a statement under sections 237(2) or  (3)
of the  Companies  Act 1985.  The  accounts  for the  year  ended  31
December 2008 will  be delivered  to the Registrar  of Companies  for
England  and  Wales  in  due  course   and  will  also  be  sent   to

Statutory accounts  for the  year ended  31 December  2007 have  been
filed with the Registrar of Companies. The auditors' report on  those
accounts was unqualified,  and did  not contain  any statement  under
Section 237 (2) or (3) of the Companies Act 1985.

2.         Significant accounting policies
Basis of accounting
The financial  information  has  been  prepared  in  accordance  with
International Financial Reporting Standard (IFRSs).

The financial information  has been prepared  on the historical  cost
basis. The principal accounting policies adopted were set out in  the
statutory accounts  for  the year  ended  31 December  2007  and  are
included in the  statutory accounts  for the year  ended 31  December

3.      Revenue and segmental information
Revenue for the year 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:

                              Year        Year
                             ended       ended
                       31 December 31 December
                              2008        2007
                                 £           £
Sale of properties              -       87,500
Property rental income    859,976      829,729
Other income               20,968       52,872
                          880,944      970,101
Investment revenue         50,969      284,542
                          931,913    1,254,643

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

4.      Tax

                                                     Year        Year
                                                    ended       ended
                                              31 December 31 December
                                                     2008        2007
                                                        £           £
Current tax (credit)                             (17,239)     42,315
Deferred tax                                       1,157    (103,690)
Total tax (credit) on profit on ordinary         (16,082)    (61,375)

Corporation tax is  calculated at  28% (2007: 30%)  of the  estimated
assessable profit for the year.

The charge  for the  year can  be reconciled  to the  profit per  the
income statement as follows:

                                 Year     Year        Year       Year
                                ended    ended       ended      ended
                          31 December       31 31 December         31
                                 2008 December        2007   December
                                    £     2008           £       2007
                                             %                      %

(Loss)/profit before tax:   (199,854)             229,595
Tax at the UK corporation
tax rate of 28% (2007:       (55,959)   (28.0)     68,878       30.0
Tax effect of expenses
that are not deductible
in determining taxable          7,139      3.5     10,774        4.7
Permanent differences re            -        -    (33,498)     (14.6)
Impact of abolition of
allowances/charges on        (18,007)    (9.0)   (137,783)     (60.0)
Tax effect of utilisation
of tax losses not
previously recognised               -        -     (1,704)      (0.7)
Increase in unrecognised
deferred tax  re tax           26,305     13.2       7,609        3.3
Tax effect of
unrecognised deferred tax
on share based payments        14,994      7.5      12,104        5.3
Change in deferred tax              -        -     (7,532)      (3.3)
Marginal relief                     -        -     (3,689)      (1.5)
Tax effect of losses
surrendered in previous        26,686     13.4           -          -
Prior year adjustment re
current tax                  (17,240)    (8.6)      1,864        0.7
Prior year adjustment re
deferred tax                        -        -      21,602        9.4
Tax expense and effective
tax rate for the year                            (61,375)      (26.7)
                             (16,082)    (8.0)

In addition to the amount  charged to the income statement,  deferred
tax relating to  the revaluation of  the Group's investment  property
amounting to  £3,955 (2007:  £46,825) has  been charged  directly  to

5.      Dividends

                                                     Year        Year
                                                    ended       ended
                                              31 December 31 December
                                                     2008        2007
                                                        £           £
Amounts recognised as distributions to
equity holders in the period:

Final dividend for the year ended 31
December 2007                                     253,400     253,400
of 0.7p (2006: 0.7p) per share.

Interim dividend for the year ended 31
December 2008                                           -     181,000
of Nil p (2007: 0.5p) per share.
                                                  253,400     434,400

Proposed final dividend for the year ended 31
December 2008 of Nil p (2007: 0.7p) per share.              - 253,400

6.     (Loss)/earnings per share
The  calculation  of  earnings   per  share  arising  on   continuing
activities for the current  year is based on  the loss on  continuing
activities for the year  of £183,772 (2007:  profit of £290,970)  and
the  weighted  average   number  of  shares   of  36,200,000   (2007:
36,200,000).  The Company  had 36,200,000  shares in issue  as at  31
December 2008.

                                           Year        Year
                                          ended       ended
                                    31 December 31 December
                                           2008        2007

(Loss)/earnings per share (pence)
- continuing operations                  (0.51)        0.80

The calculation  of  diluted  (loss)/earnings per  share  arising  on
continuing activities 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 (2007: 36,200,000).

                                           Year        Year
                                          ended       ended
                                    31 December 31 December
                                           2008        2007

(Loss)/earnings per share (pence)
- continuing operations                  (0.51)        0.80

7.         Borrowings

                                           31 December 31 December
                                                  2008        2007
                                                     £           £
Secured borrowing at amortised cost
Bank overdrafts                              1,180,631           -
Bank loans                                   1,042,255   1,191,195
                                             2,222,886   1,191,195

Amount due for settlement within 12 months   1,371,278     139,275
Amount due for settlement after 12 months      851,608   1,051,920
                                             2,222,886   1,191,195

The principal features of the Group's borrowings are as follows:

Bank overdrafts are  repayable on demand.   An overdraft facility  of
£1.8 million (2007: £1,000,000) dated 14 March 2008, had been secured
by a  charge  over  two  of  the  Group's  properties.   The  average
effective interest rate on bank  overdraft for the year  approximated
5.77%   and was determined  based on 1�% plus  bank base rate.  On  7
April 2009 the Group secured  its position with Lloyds Banking  Group
converting its  overdraft facility  of  £1,800,000 into  a  revolving
credit facility for a term of three years at an interest rate of 2.5%
over 3 month LIBOR with a 1.5% non utilisation fee.

The Group has one principal bank loan.  The loan of £1,042,255 (2007:
£1,191,195) is secured by a charge over one of the Group's properties
dated 27 September 2004.  The payments commenced on 20 December  2004
and will  continue until  20  September 2014.   The loan  carries  an
interest rate of 1% over Lloyds Banking Group base rate.

The weighted  average interest  rates paid  during the  year were  as

                31 December 31 December
                       2008        2007
                          £           £
Bank overdrafts       5.77%           -
Bank loans            5.67%       6.51%

8.         Notes to the cash flow statement

                                               Year ended  Year ended
                                              31 December 31 December
                                                     2008        2007
                                                        £           £
(Loss)/profit for the year                      (183,772)    290,970
Adjustment for:
Investment revenues                              (50,969)   (284,542)
Finance costs                                     90,137      86,385
Income tax (credit)/expense                      (16,082)    (61,375)
Depreciation of property, plant and equipment     35,526      17,876
Losses on disposals of property, plant and             -       1,122
Share based payment expense                       53,548      40,338
Operating cash flows before movements in
working capital                                 (71,612)      90,774

Increase in inventories                       (2,683,705) (4,918,718)
Decrease in receivables                          343,583     632,492
Increase/(decrease) in payables                    5,585    (267,892)

Cash absorbed in operations                   (2,406,149) (4,463,344)

Tax paid                                         (49,896)    (66,272)

Net cash from operating activities            (2,456,045) (4,529,616)

Cash and cash equivalents (which are  presented as a single class  of
assets on the face  of the balance sheet)  comprise cash at bank  and
other short-term highly liquid investments with an original  maturity
of one month or less.

9.         Analysis and reconciliation of net funds

                          At                                       At
                   1 January        Cash         Non-cash 31 December
                        2008        Flow         Movement        2008
                           £           £                £           £
Cash and cash     1,734,929  (1,716,922)                -     18,007

Borrowings due
after more than  (1,051,920)           -         200,312    (851,608)
one year
Borrowings due     (139,275) (1,031,691)        (200,312) (1,371,278)
within one year

Total net funds     543,734  (2,748,613)               -  (2,204,879)

                                              31 December 31 December
                                                     2008        2007
                                                        £           £
Decrease in cash and liquid resources in year (1,716,922) (5,076,196)
Cash outflow from decrease in debt            (1,031,691)    133,839
Change in net funds resulting from cash flows (2,748,613) (4,942,357)

Net funds at beginning of year                   543,734   5,486,091

Net (deficit)/funds at end of year            (2,204,879)    543,734


This announcement was originally distributed by Hugin. The issuer is 
solely responsible for the content of this announcement.


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