Embargoed for release at 7.00 a.m. on 9 September 2008
PROPERTY RECYCLING GROUP PLC
INTERIM RESULTS
Property Recycling Group plc (the "Company") (AIM: PROP), which
acquires and prepares brownfield sites for development, announces
interim results for the six months ended 30 June 2008.
� Profit before tax of £4,278 (2007: £75,405) on a turnover of
£433,960 (2007: £406,190).
� Acquisition of a 121 hectare site at Kentford, near Newmarket.
� The Group currently owns seven freehold sites totalling 329
hectares, all of which have planning approval for either industrial,
commercial, residential or leisure use.
Paul Rackham, the chairman of Property Recycling Group plc, said: "It
is clear that the UK economy in general and the property sector in
particular are experiencing difficult conditions. We anticipated this
situation and have kept our overheads under tight control. Our
balance sheet is strong and when there are signs of improvement we
expect to see opportunities to make attractive purchases. However, we
do not expect such improvement in the near term."
For further information please contact:
Paul Rackham, Chairman
Property Recycling Group plc
01953 717176 www.propertyrecycling.co.uk
Geoff Nash / Leslie Kent
FinnCap (Nominated adviser and joint broker)
020 7600 1658
Robert Luetchford/John Webb
Marshall Securities Limited (Joint broker)
020 7490 3788
PROPERTY RECYCLING GROUP PLC
EXECUTIVE CHAIRMAN'S REPORT
Introduction
I am pleased to present Property Recycling Group plc's unaudited
interim results for the six months ended 30 June 2008.
Background
Our objective is to create shareholder value through recycling
brownfield sites, which represent an attractive alternative source of
development land.
Government policy is to increase significantly the proportion of
development land sourced from brownfield sites.
Property portfolio
We completed the purchase of Moorland Stud, a 121 hectare site at
Kentford near Newmarket in April 2008 for £1.96 million.
The Group currently owns seven freehold sites totalling 329 hectares,
all of which have planning approval for either industrial,
commercial, residential or leisure use. It is our intention to
progress further the value of these sites by remediation and through
new and improved planning permissions.
We have received a number of expressions of interest for our site at
Stanton.
Financial results
In the period the Group achieved turnover of £433,960, compared to
£406,190 in the same period last year. There were no property
realisations in either period. The operating loss was £9,862 (2007:
loss £87,340) reflecting improved rental income from Colsterworth and
reduced operating expenses as we reviewed all costs. Net interest
income was £14,140 (2007: £162,745) reflecting reduced net cash
following the purchase of Colsterworth last year and Moorland Stud in
April 2008. Profit before tax was £4,278 (2007: £75,405). Earnings
per share were 0.02p (2007: 0.13p) all of which is attributable to
continuing operations. The results of future periods will be
affected by the timing of significant realisations.
At 30 June 2008 the Group had net borrowings of £1.4m (2007: net
funds £5.4m), following the completion of the Moorland Stud and
Colsterworth purchases.
Dividend
I indicated in the Company's preliminary results that we intend to
pay interim dividends only in the event of a substantial realisation
of property and to pay a final dividend each year based on the
results for the year. Accordingly, no interim dividend is proposed.
Prospects
The effects on the property sector of the difficulties in world
markets have been widely reported and we expect them to continue. In
the short term we expect that the continued absence of liquidity and
tightening bank lending will result in vendors experiencing increased
pressure to sell against falling demand. In the longer term,
however, we consider that the demographic pressures and the continued
development of the East of England will drive demand for development
land. With political pressure to preserve remaining greenfield
areas, brownfield sites will provide a vital source for development
land.
In the meantime, we have a low overhead base and we remain vigilant
on costs. Our borrowings are modest and serviceable from operating
cash flow. We are well positioned for the current environment.
Paul Rackham
Executive chairman
9 September 2008
PROPERTY RECYCLING GROUP PLC
UNAUDITED CONSOLIDATED INCOME STATEMENT
For the six months ended 30 June 2008
Six months Six months Year ended 31
ended 30 June ended 30 December 2007
2008 June 2007 £
Note £ £
Revenue 4 433,960 406,190 970,101
Cost of sales - - -
Gross profit 433,960 406,190 970,101
Administrative expenses (443,822) (493,530) (938,663)
Operating (loss)/profit (9,862) (87,340) 31,438
Investment revenues 50,291 205,936 284,542
Finance costs (36,151) (43,191) (86,385)
Profit before tax 4,278 75,405 229,595
Tax credit/(charge) 5 3,311 (28,747) 61,375
Profit for the period
attributable to equity
holders of the parent 7,589 46,658 290,970
Earnings per share 6
Basic (pence) 0.02 0.13 0.80
Diluted (pence) 0.02 0.13 0.80
The results for the period are derived from continuing operations.
PROPERTY RECYCLING GROUP PLC
UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For six months ended 30 June 2008
Note £
Balance at 1 January 2007 11,273,647
Net profit for the financial period 46,658
Dividends paid 7 (253,400)
Increase in equity reserve 33,308
Increase in revaluation reserve 39,706
Balance at 30 June 2007 11,139,919
Net profit for the financial period 244,312
Dividends paid 7 (181,000)
Increase in equity reserve 7,030
Increase in revaluation reserve 7,119
Balance at 31 December 2007 11,217,380
Net profit for the financial period 7,589
Dividends paid 7 (253,400)
Increase in equity reserve 26,701
Increase in revaluation reserve 11,666
Balance at 30 June 2008 11,009,936
Equity comprises share capital, share premium account, merger
reserve, revaluation reserve, equity reserve and retained earnings.
PROPERTY RECYCLING GROUP PLC
UNAUDITED CONSOLIDATED BALANCE SHEET
As at 30 June 2008
As at As at As at
30 June 30 June 31 December 2007
2008 2007 £
Note £ £
Non-current assets
Property, plant and 141,499 531 159,261
equipment
Investment property 2,962,000 2,962,000 2,962,000
Finance lease 79,969 96,469 88,218
receivables
Deferred tax asset 5 1,189 - 1,066
3,184,657 3,059,000 3,210,545
Current assets
Inventories 9,630,096 7,605,823 7,477,515
Finance lease 16,500 16,500 16,500
receivables
Trade and other 374,096 756,834 773,634
receivables
Cash and cash - 6,680,014 1,734,929
equivalents
10,020,692 15,059,171 10,002,578
Total assets 13,205,349 18,118,171 13,213,123
Current liabilities
Trade and other (224,736) (5,038,915) (172,766)
payables
Current tax liabilities (37,263) (88,696) (40,451)
Borrowings (141,116) (136,582) (139,275)
Deferred revenue (169,869) (66,504) (178,993)
Bank overdraft (243,068) - -
(816,052) (5,330,697) (531,485)
Net current assets 9,204,640 9,728,474 9,471,093
Non-current liabilities
Borrowings (978,689) (1,121,014) (1,051,920)
Deferred tax 5 (400,672) (526,541) (412,338)
liabilities
(1,379,361) (1,647,555) (1,464,258)
Total liabilities (2,195,413) (6,978,252) (1,995,743)
Net assets 11,009,936 11,139,919 11,217,380
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 1,703,746 1,684,961 1,692,080
Equity reserve 132,185 98,454 105,484
Retained earnings 113,643 296,142 359,454
Total equity 11,009,936 11,139,919 11,217,380
PROPERTY RECYCLING GROUP PLC
UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
For the six months ended 30 June 2008
Note Six months Six months Year ended
ended 30 June ended 30 31 December
2008 June 2007 2007
£ £ £
Net cash (outflow)/inflow
from operating activities 8 (1,667,347) 26,983 (4,529,616)
Investing activities
Interest paid (36,151) (43,191) (86,385)
Interest received 50,291 205,936 284,542
Purchase of property,
plant and equipment - - (176,498)
Net cash from investing 14,140 162,745 21,659
activities
Financing activities
Dividends paid 7 (253,400) (253,400) (434,400)
Repayment of borrowings (71,390) (67,439) (133,839)
Net cash used in financing (324,790) (320,839) (568,239)
activities
Net decrease in cash and
cash equivalents (1,977,997) (131,111) (5,076,196)
Cash and cash equivalents
at beginning of period 1,734,929 6,811,125 6,811,125
Cash and cash equivalents
at end of period (243,068) 6,680,014 1,734,929
Comprising:
Cash and cash equivalents - 6,680,014 1,734,929
Bank overdrafts (243,068) - -
(243,068) 6,680,014 1,734,929
PROPERTY RECYCLING GROUP PLC
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 Act
1985. The address of the registered office is Manor Farm, Bridgham,
Norwich, NR16 2RX.
Property Recycling Group plc shares are quoted on the Alternative
Investment Market on the London Stock Exchange.
This consolidated interim statement was approved for issue by the
Board of Directors on 9 September 2008.
2. Basis of preparation
The consolidated interim statement should be read in conjunction with
the annual financial statements for the year ended 31 December 2007,
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 240 of
the Companies Act 1985. The Company's statutory accounts for the
year ended 31 December 2007 have been filed with the Registrar of
Companies and are available at www.propertyrecycling.co.uk. The
auditor's report on these financial statements was unqualified and
did not contain any statement under Section 237 (2) or (3) of the
Companies Act 1985.
3. Accounting policies
The accounting policies applied are consistent with those of the
annual financial statements for the year ended 31 December 2007, as
described in those annual financial statements.
4. Revenue and segmental information
Turnover 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 Six months Year ended
ended 30 June ended 30 June 31 December
2008 2007 2007
£ £ £
Sale of properties - - 87,500
Property rental income 421,688 391,936 829,729
Other income 12,272 14,254 52,872
433,960 406,190 970,101
Investment income 50,291 205,936 284,542
484,251 612,126 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
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 (credit)/charge on ordinary activities.
Six months Six months Year ended 31
ended 30 June ended 30 December 2007
2008 June £
£ 2007
Current tax: £
Corporation tax (3,188) 24,287 40,451
(credit)/charge
Prior year adjustment - - 1,864
Total current tax
(credit)/charge (3,188) 24,287 42,315
Deferred tax:
Deferred tax (credit)/charge (123) 4,460 (103,690)
Total tax on profit on
ordinary activities (3,311) 28,747 (61,375)
(ii). Deferred taxation liability/(asset)
The amounts included in the accounts and the amounts not recognised
are as follows:
Six months ended Six months Year ended 31
30 June 2008 ended 30 June December 2007
£ 2007 £
£
Included:
Investment property 400,672 419,457 412,338
Accelerated capital
allowances (1,189) 107,084 (1,066)
399,483 526,541 411,272
Not recognised:
Trading losses (106,532) (110,291) (106,532)
(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 per share
Basic
Basic earnings per ordinary share is calculated by dividing the
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 2008.
Six months Six months Year ended
ended 30 June ended 30 June 31 December
2008 2007 2007
Profit for period £7,589 £46,658 £290,970
Weighted average number of 36,200,000 36,200,000 36,200,000
shares
Earnings per ordinary share
(pence)
- Continuing operations 0.02 0.13 0.80
Diluted
The calculation of diluted 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 Six months Year ended
ended 30 June ended 30 June 31 December
2008 2007 2007
Profit for period £7,589 £46,658 £290,970
Weighted average number of 36,200,000 36,200,000 36,200,000
shares
Earnings per ordinary share
(pence)
- Continuing operations 0.02 0.13 0.80
7. Dividends
Six months Six months Year ended 31
ended 30 June ended 30 December 2007
2008 June pence
pence 2007
Ordinary Dividend: pence
Final paid in respect of
year ended 31 December 2006
(£253,400) - 0.70 0.70
Interim paid in respect of
year ended 31 December 2007
(£181,000) - - 0.50
Final paid in respect of
year ended 31 December 2007
(£253,400) 0.70 - -
0.70 0.70 1.20
The Board has not declared an interim dividend for the year ended 31
December 2008 (2007: 0.50 pence).
8. Notes to the cash flow statement
Six months Six months Year ended 31
ended 30 June ended 30 June December 2007
2008 2007 £
£ £
Profit for the year 7,589 46,658 290,970
Adjustment for:
Investment revenues (50,291) (205,936) (284,542)
Finance costs 36,151 43,191 86,385
Income tax (3,311) 28,747 (61,375)
(credit)/expense
Depreciation of property,
plant and equipment 17,762 1,230 17,876
Losses on disposals of
property, plant and - - 1,122
equipment
Share based payment 26,701 33,308 40,338
expense
Operating cash flows
before movements in 34,601 (52,802) 90,774
working capital
Increase in inventories (2,152,581) (5,047,026) (4,918,718)
Decrease in receivables 407,787 641,042 632,492
Increase/(decrease) in 42,846 4,485,769 (267,892)
payables
Cash generated by (1,667,347) 26,983 (4,463,344)
operations
Tax paid - - (66,272)
Net cash (outflow)/inflow
from operating activities (1,667,347) 26,983 (4,529,616)
9. The Interim Statement will be posted 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.
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