Mercury Recycling Group PLC
08 September 2006
MERCURY RECYCLING GROUP PLC
INTERIM REPORT FOR THE PERIOD ENDING 30 JUNE 2006
Chairman's Statement
I am pleased to report the Group's unaudited results for the six months ended 30
June 2006, show a further increase in sales of nearly 20% compared to the same
period last year to £1,219,000 from £1,031,000. Operating profits at the
interim stage, excluding goodwill amortisation and exceptional items, increased
by 60% to £212,000 from £133,000, whereas the profit for the last financial year
was £268,000. It will also be noted that, for the first time, we have a
positive earnings.
The results were achieved despite yet another Government delay in the
introduction of the WEEE Directive which, as I have indicated previously, will
legally enforce the recycling of all Gas Discharge Lamps. The Directive was
originally expected to be implemented in 2006 or early 2007. The Government
have now finally announced a firm commitment to implement this Directive in the
Summer of 2007.
As reported in the 2005 Report and Accounts, Share Options were granted to both
Executive Directors and Senior Executives. Under new, and complex financial
reporting requirements, the value of the share options has to be reported in the
Profit and Loss Account and reflected as a reserve in the Balance Sheet. A
prior year adjustment has been required in respect of the effect on previous
years.
Our enclosed Interim results show continuing sales growth and your Board is
confident of this trend continuing in the second half of the year. Future
prospects should be enhanced when the Directive is implemented in 2007. This is
especially important, as our new plant and premises have the capacity to
substantially increase recycling output without any further capital expenditure.
The Rt Hon The Lord Barnett JP PC
Chairman
8 September 2006
Group Profit and Loss Account
For the Six months ended 30 June 2006
As restated
6 Months 6 Months Year
ended ended ended
30.6.06 30.6.05 31.12.05
£'000 £'000 £'000
Turnover 1,219 1,031 2,147
Cost of sales (104) (120) (218)
Gross profit 1,115 911 1,929
Administrative expenses (1,034) (951) (2,110)
Operating profit before amortisation, relocation costs 212 133 268
and share based payment costs
Relocation costs (17) (57) (216)
Share based payment costs (12) (14) (29)
Goodwill amortisation (102) (102) (204)
Group operating profit/(loss) 81 (40) (181)
Interest receivable 1 7 2
Interest payable (14) (1) (14)
Profit/(loss) on ordinary activities before taxation 68 (34) (193)
Taxation - - -
Profit/(loss) on ordinary activities after
taxation retained for the period 68 (34) (193)
Earnings/(loss) per share: Basic (pence) 0.20p (0.10p) (0.57p)
Diluted 0.19p N/A N/A
Group Balance Sheet
As at 30 June 2006
As restated
As at As at As at
30.6.06 30.6.05 31.12.05
£'000 £'000 £'000
Fixed assets
Tangible assets 1,142 994 1,142
Intangible assets 3,124 3,327 3,225
4,266 4,321 4,367
Current assets
Debtors 493 445 531
Cash at hand and in bank 29 181 1
522 626 532
Creditors: amounts due within one year (302) (727) (515)
Net current assets/(liabilities) 220 (101) 17
Creditors: amounts due after more than one year (290) (44) (308)
Provisions for liabilities (84) - (44)
Total assets less current liabilities 4,112 4,176 4,032
Capital and reserves
Called up share capital 3,336 3,336 3,336
Share premium account 242 242 242
Other reserve 448 612 530
Merger reserve (111) (111) (111)
Share based payment reserve 59 32 47
Profit and loss account 138 65 (12)
Equity shareholders' funds 4,112 4,176 4,032
Group Cash Flow Statement
For the six months ended 30 June 2006
As restated
6 Months 6 Months 6 Months
ended ended ended
30.6.06 30.6.05 31.12.05
£'000 £'000 £'000
Net cash inflow from operating activities 127 148 145
Returns on investment and servicing of finance
Interest paid (14) (1) (14)
Interest received 1 7 2
Capital expenditure and financial investment
Purchase of tangible fixed assets (77) (431) (706)
37 (277) (573)
Financing
New loan - 300 300
Repayment of loans (4) (7) -
Capital element of hire purchase (5) (5) (25)
Increase/(decrease) in cash in period 28 11 (298)
Reconciliation of operating profit/(loss) to
net cash inflow from operating activities
Operating profit/(loss) 81 (40) (181)
Depreciation 81 43 93
Amortisation of goodwill 102 102 204
Share based payment costs 12 14 29
Profit on disposal of assets (4) (5) (5)
Relocation costs - Loss on disposal - - 122
Decrease / (increase) in debtors 38 (98) (241)
(Decrease) / increase in creditors (183) 132 124
Net cash inflow from operating activities 127 148 145
Notes
1. Earnings per share
The calculation of basic earnings per share is based upon the profit for the
period of £68,000 (2005 - first half - loss £34,000) and the weighted-average
number of 33,359,000 (2005 - first half - 33,359,000) shares in issue during the
period.
Adjusted earnings per share is calculated using earnings before amortisation of
goodwill and exceptional items. Adjusted earnings is one of the primary
performance measures used by the directors and is provided, in addition to the
statutory results prepared under UK GAAP, to assist the shareholders to gain a
clearer understanding of the underlying performance of the business.
6 Months 6 Months 6 Months
to to to
30.6.06 30.6.05 31.12.05
pence pence pence
Basic earnings/(loss) per share 0.20 (0.10) (0.57)
Goodwill, relocation costs and share based payment costs 0.47 0.52 1.33
Adjusted earnings per share 0.67 0.42 0.76
2. Basis of preparation
The interim financial information has been prepared on the basis of the
accounting policies set out in the accounts for the year ended 31 December 2005
with the exception of share based payments set out in note 4.
The interim financial information is unaudited. The financial information does
not constitute statutory accounts as defined by section 240 of the Companies Act
1985. Full accounts of the company for the year ended 31 December 2005 on which
the Auditors gave an unqualified report, have been delivered to the Registrar of
Companies. These accounts consolidate the accounts of Mercury Recycling Group
Plc and all of its wholly owned subsidiaries. The goodwill arising on the
acquisition of Mercury Recycling Limited and Simister Engineering Limited has
been capitalised and amortised over the Directors' estimate of its useful life.
3. Copies of report
Copies of this interim statement will be despatched to shareholders and will be
available to the public at the Registered Office, Mercury House, 17 Commerce
Way, Trafford Park, Manchester, M17 1HW.
4. Share based payments
During the period the group has adopted FRS20 and restated comparative figures
accordingly.
The fair value of shares/options granted is recognised as an employee expense
with a corresponding increase in equity. The fair value is measured at the
grant date and spread over the period during which the employee becomes
unconditionally entitled to the share/option.
In accordance with the transitional provisions of FRS20, no expense is recorded
in respect of grants made prior to 27 November 2002 or which have vested by 1
January 2006.
Operating profits have been reduced as follows:- 6 Months 6 Months 6 Months
to to to
30.6.06 30.6.05 31.12.05
£'000 £'000 £'000
Share based payment charge 12 14 29
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