RNS Number : 0953E
Radicle Projects Plc
14 December 2009
Radicle Projects PLC
Preliminary Unaudited Results for the year to 30 June 2009 and Unaudited Agricultural Asset Valuations
Radicle Projects PLC ("Radicle", the "Group" or the "Company") today announced its unaudited results for the year ended 30 June 2009.
Enquiries
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Radicle Projects PLC
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020 7016 5300
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Tim Bennett, CEO
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Charles Stanley Securities
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020 7149 6000
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Nominated Adviser
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Russell Cook / Ben Johnston
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Chairman's Statement
On 31 March 2009, the Company announced that the Board had been concentrating on implementing cost reductions and developing strategies to bring the Company's portfolio of agricultural assets through to production as quickly as possible so as to increase cash flow.
The unaudited annual financial results of the Company for the period are produced below. Full statutory accounts will be made available to shareholders following completion of the audit process and prior to 31 December 2009 in compliance with the AIM Rules.
The 2009 result reflects the higher operating expenses such as acquisition of the apples projects and outgoings on projects that are not yet mature and producing positive cash flow, and coupon financing costs.
Whilst a cost reduction program has been implemented by the Board, at this stage the Company is yet to generate profitable cash flow from its agricultural assets due to a number of factors including reduced grape and wine sales as a result of market oversupply conditions, and the immature stage of growth of its apples projects which were established in June 2008 and are expected to be in commercial production in 2010 for early season apples, and 2011 for organic apples. Radicle has also been impacted by the failure, and subsequent liquidation, of Timbercorp Limited, a manager of certain of the Company's assets. Whilst preserving cash by not making full payment for management fees to the manager, these are still included in liabilities. Anticipated positive cash income was not forthcoming in 2008-09.
Unexpected write downs affecting profit, but which are reflected in the 2009 valuations, include the provisions for the loss of value on the Timbercorp managed assets, which have not yet been realized, as well as a write down on the future cash value of the grains co-production project (primarily due to a softer wheat market as a result of the global financial crisis coupled with a strong Australian dollar and high global wheat stocks) and a reduced valuation on the Gumeracha vineyard (as a result of reduced prices for grapes and wine, again mainly as a result of the global financial crisis).
The valuations produced for the year ended 30 June 2009 have all been completed in the last 6 weeks taking into account current market conditions, in compliance with IFRS standards.
The assets owned by Radicle and managed by Timbercorp will form part of the sale of Timbercorp's assets by the liquidator. The Directors believe from press and liquidator reports that the liquidator is seeking to progress sales of almond assets and eucalypt timber. The Directors expect a net positive cash result to Radicle when the liquidation is settled. Additionally, going forward, the Directors believe that the Company will save operational expenses as a result of the sale of Timbercorp managed assets.
The Company historically has had higher operating expenses in the first half of the financial year, and many of the expenses for the 2009-10 financial year have already been met from existing cash resources.
However, the remaining cash is insufficient to fund the coupon payment due on the Notes on 31 December 2009 of approximately £1.21 million and other liabilities of the Company and its agricultural assets. The Company is therefore raising £822,000, before expenses, in order to provide additional working capital and to secure the agreement of Noteholders to the Note Restructure, the main features of which are a deferral of the coupon payment due in December and reduction in the face value of the Notes (more detail below).
As at 14 December 2009, the Company had £249,000 of cash in bank.
On 16 September 2009 the Company announced that it has reached an agreement in principle with the holders of the Notes representing more than 75 per cent. of the Noteholders, to restructure the terms of the Notes. This agreement is not legally binding.
The Company is aiming to finalise the Note Restructure with majority Noteholders shortly. Completion of the Note Restructure would be conditional upon the passing of the Resolutions at the GM.
If the Note Restructure is completed and approved it would allow for a deferral of the 8 per cent. coupon from 31 December 2009 to 30 June 2010. It may also provide the Company an opportunity to repurchase a significant proportion of the Notes at a discount to their par value. The Directors believe that if the Note Restructure is implemented, the proceeds of the Placing should allow the Company to conduct its asset sale program and potentially tender early to repay the Notes, significantly decreasing the gearing of the Company and improving the balance sheet, as well as saving significant cash expense by way of coupon payments.
Sales of immature assets not yet generating cash will also reduce the outlays on operating expenses and should return net cash to the Group, provided always that sales are made at or near valuation.
If the Resolutions are not passed and/or the Note Restructure is not agreed on 31 December 2009, the Directors are likely to be forced to put the Company into administration unless asset sales can be completed by the Company prior to 31 December 2009 to meet this liability. This would be likely to result in a total loss for shareholders.
The Company does not have sufficient working capital for its present requirements. The Company will not be able to fund the coupon payment of approximately £1.21 million due on the Notes on 31 December 2009 but is aiming to defer payment to 30 June 2010 pursuant to the Note Restructure. The Directors believe that the Note Restructure will not proceed unless the Placing proceeds.
Excluding the deferred coupon payment expected to fall due on 30 June 2010 (following the Note Restructure), the Directors expect the proceeds of the Placing to provide the Company with sufficient working capital to continue operations until November 2010. It is the intention of the Directors to make asset sales in order to raise further working capital, make the coupon payment and also tender for repayment of the Notes. The Directors anticipate cash from the net sale proceeds of Timbercorp assets owned by Radicle during 2010 as a result of the liquidation of Timbercorp group assets by its liquidator. Radicle has estimated the value of these assets at A$2.04m in the 2009 accounts following a 50% write down provision from the 2008 independent valuations.
UNAUDITED CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
Year ended Year ended
30 June 30 June
2009 2008
£ £
Continuing operations
Revenue 617,569 1,126,392
(Loss)/gain arising from changes in fair value
of biological assets (850,641) (1,751,099)
Operating expenses (3,449,871) (2,642,206)
Exchange (loss)/gain (5,548) 115,173
Investment income 102,044 539,251
Finance costs (1,396,971) (1,332,841)
Loss on disposal of investments - (144,961)
Impairment of available for sale investment (29,564) -
Aborted transaction costs (54,622) (427,091)
Impairment of property, plant and equipment (533,891) -
________ ________
(Loss)/profit on ordinary activities
before taxation (5,601,495) (4,517,382)
Taxation 133,791 1,089,365
________ ________
(Loss)/profit for the year attributable to
equity holders of the parent (5,467,704) (3,428,017)
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UNAUDITED CONSOLIDATED BALANCE SHEET
AS AT 30 JUNE 2009
2009 2008
£ £
Non-current assets
Property, plant & equipment 1,655,418 2,329,491
Available for sale investments 1,958,274 1,931,493
Biological assets 11,083,194 11,759,621
_________ ________
14,696,886 16,020,605
_________ ________
Current assets
Biological assets 3,988,869 3,602,888
Inventories 130,521 98,676
Trade & other receivables 1,654,143 1,385,434
Cash & cash equivalents 1,169,759 7,723,115
_________ ________
6,943,292 12,810,113
_________ ________
Total assets 21,640,178 28,830,718
_________ ________
Current liabilities
Trade & other payables 2,093,472 3,899,510
Current tax 26,338 95,471
Finance lease obligations 9,540 2,783
_________ ________
2,129,350 3,997,764
_________ ________
Net current assets 4,813,942 8,812,349
_________ ________
Non current liabilities
Finance lease obligations - 9,429
Borrowings 15,058,475 14,870,395
Deferred tax liabilities - 131,251
_________ ________
15,058,475 15,011,075
_________ ________
Total liabilities 17,187,825 19,008,839
_________ ________
Net assets 4,452,353 9,821,879
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Equity
Share capital 578,219 578,219
Share premium account 9,370,827 9,370,827
Share based payment reserve 90,880 87,975
Own shares held (151,241) (151,241)
Fair value reserve 1,109,197 1,075,566
Translation reserve 1,767,532 1,705,890
Convertible bond 284,165 284,165
Retained earnings (8,597,226) (3,129,522)
_________ _________
Total equity attributable to equity holders
of the parent 4,452,353 9,821,879
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UNAUDITED COMPANY BALANCE SHEET
AS AT 30 JUNE 2009
2009 2008
£ £
Non-current assets
Property, plant & equipment 2,337 3,608
Investments in subsidiary undertakings 18,965,305 14,047,487
Other investments 1,738 1,738
_________ _________
18,969,380 14,052,833
_________ _________
Current assets
Trade & other receivables 5,333,027 11,208,084
Cash & cash equivalents 275,267 515,366
_________ _________
5,608,294 11,723,450
_________ _________
Total assets 24,577,674 25,776,283
_________ _________
Current liabilities
Trade & other payables 462,234 672,823
Current tax 26,338 95,471
_________ _________
488,572 768,294
_________ _________
Net current assets 5,119,722 10,955,156
Non current liabilities
Borrowings 15,058,475 14,870,395
_________ _________
Total liabilities 15,547,047 15,638,689
_________ _________
Net assets 9,030,627 10,137,594
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Equity
Share capital 578,219 578,219
Share premium account 9,370,827 9,370,827
Share based payment reserve 90,880 87,975
Own shares held (151,241) (151,241)
Convertible bond 284,165 284,165
Retained earnings (1,142,223) (32,351)
_________ _________
Total equity attributable to equity holders 9,030,627 10,137,594
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UNAUDITED CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
Year ended Year ended
30 June 30 June
2009 2008
£ £
Operating activities
(Loss)/profit for the period before taxation (5,601,495) (4,517,382)
Adjustments for:
Depreciation of property, plant and equipment 173,013 78,704
Investment income (102,044) (539,251)
Finance costs 1,396,971 1,332,841
Foreign exchange loss/(gain) 5,548 (115,173)
Increase in inventories (30,682) -
(Increase)/decrease in trade and other receivables (268,709) (1,197,204)
Increase in payables (1,806,038) 785,706
Change in fair value of biological assets 850,641 1,751,099
Share based payment charge 2,905 30,376
Loss on disposal of investment - 144,961
Impairment of property, plant & equipment 533,891 -
Impairment of investments 29,564 -
________ ________
Cash (used)/generated in operations (4,816,435) (2,245,323)
Interest paid (1,208,891) (638,647)
Tax paid (69,132) (671,712)
________ ________
Net cash (used)/generated in operating activities (6,094,458) (3,555,682)
________ ________
Investing activities
Purchases of biological assets (352,694) (2,405,252)
Interest received 98,298 529,512
Purchase of investments - (153,384)
Purchases of property, plant & equipment (10,724) (2,070,422)
Proceeds on disposal of property, plant & equipment 77 -
Income received from investments 3,746 -
________ ________
Net cash used in investing activities (261,297) (4,099,546)
________ ________
Financing activities
Repayments of borrowings (2,783) (1,319)
Dividends paid - (572,219)
________ ________
Net cash (used)/generated in financing activities (2,783) (573,538)
________ ________
Net increase/(decrease) in cash and cash equivalents (6,358,538) (8,228,766)
Cash and cash equivalents at beginning of period 7,723,115 16,104,982
Effect of foreign exchange rate changes (194,818) (153,101)
________ ________
Cash and cash equivalents at end of period 1,169,759 7,723,115
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UNAUDITED COMPANY CASH FLOW STATEMENT
FOR THE YEAR ENDED 30 JUNE 2009
Year ended Year ended
30 June 30 June
2009 2008
£ £
Operating activities
Loss/profit for the period before taxation (1,109,873) (121,781)
Adjustments for:
Depreciation of property, plant and equipment 1,911 4,587
Investment income (187,755) (493,890)
Finance costs 1,396,080 1,331,749
Increase in trade and other receivables 5,875,057 (9,239,851)
Increase/(decrease) in payables (210,589) 333,974
Increase in share based payment reserve 2,905 30,376
________ ________
Cash (used)/generated in operations 5,767,736 (8,154,836)
Interest paid (1,208,000) (637,556)
Taxation paid (69,132) (671,713)
________ ________
Net cash (used)/generated/ in operating activities 4,490,604 (9,464,105)
Investing activities
Interest received 187,755 494,880
Purchase of investments (4,917,818) (4,561,738)
Purchases of property, plant & equipment (640) (2,634)
________ ________
Net cash used in investing activities (4,730,703) (4,069,492)
________ ________
Financing activities
Dividends paid - (572,219)
________ ________
Net cash (used)/generated in financing activities - (572,219)
________ ________
Net increase in cash and cash equivalents (240,099) (14,105,816)
Cash and cash equivalents at beginning of period 515,366 14,621,182
________ ________
Cash and cash equivalents at end of period 275,267 515,366
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UNAUDITED ACCOUNTING POLICIES AND NOTES
FOR THE YEAR ENDED 30 JUNE 2009
Basis of accounting
Statement of compliance
The financial statements have been prepared in accordance with International Financial Reporting Standards and IFRIC interpretations endorsed by the European Union ("IFRS") and in accordance with the Companies Act 1985 applicable to companies reporting under IFRS.
The financial statements have been prepared on the historical cost basis, except for the revaluation of biological assets and certain financial instruments.
Group Agricultural Asset Valuations
Radicle has finalised the valuations of its Australian farming assets with both valuers and Australian auditors. Final valuations of all fixed and project assets are completed annually by independent third party valuers, in accordance with IFRS obligations.
The total value of project and agribusiness assets (valued effective date of 30 June 2009, in AU$) is as follows:
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$10,507,790
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Paulownia
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$41,931
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Willmott Forests Limited Shares
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$2,100,000
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Bioforests Project
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$113,160
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Timbercorp Eucalypts
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$131,995
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Timbercorp Olives
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$1,793,123
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Timbercorp Almonds
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$224,231
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Adelaide Hills Vineyard projects
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$2,339,231
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Shares - Adelaide Hills Investments Limited
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$2,408,413
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Early season apples
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$6,129,607
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Organic Apples
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$1,950,392
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Shares - Rivercorp Land and Water
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$4,499,490
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Gumeracha Vineyard
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$6,090,345
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Wheat Co-production project
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$38,329,709
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Total
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Due to the liquidation of several companies in the failed Timbercorp group, valuation of the assets above managed by Timbercorp (Eucalypts, Olives and Almonds) has not been possible. Following discussions with the Company's auditors and independent valuers, the directors have included these assets in the portfolio at approximately 50% of the 2008 valuation due to the uncertainty surrounding the future of these assets. The Directors believe that most of these assets will be sold by Timbercorp's liquidator in the next 12 months and Radicle anticipates receiving a proportional share of sale proceeds from the sale of assets. The figures included in the above list represent the expected value after provision for losses.
The total of the agricultural assets listed above is AU$38.3m. At the exchange rate of 1.79 AUD per GBP, total value of assets lodged as security is £21.4m.
These assets serve as security for the £15.1m Series A convertible notes due June 2012 ("Note"). A total of 130% of the fully drawn value of the note is required to satisfy security covenants. The amount of security required amounts to GBP19.6m. Based on the above valuations (completed for the 30 June 2009 reference date), the Note security pool exceeds the Company's security obligation by £1.8m.
Transaction with a Related Party
Radicle Research is contracted to supply investment advice and research to Radicle Projects. Tim Bennett and John McLennan are both partners of Radicle Research, with interests of 13.3% and 8.3% respectively. Radicle Projects PLC is a 16.66% partner of Radicle Research.
This information is provided by RNS
The company news service from the London Stock Exchange
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