TIDMPROP
27 April 2009
PROPERTY RECYCLING GROUP PLC
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
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:
www.propertyrecycling.co.uk.
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: www.propertyrecycling.co.uk
EXECUTIVE CHAIRMAN'S REPORT
Introduction
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
GBP0.88 million (2007: GBP0.97 million). There was no income from
property sales in 2008 (2007: GBP0.09 million). Administrative costs
were almost unchanged from the previous year at GBP0.90 million. The
loss before tax was GBP0.20 million (2007: profit GBP0.23 million). Loss
per share was 0.51p (2007: earnings 0.80p). At 31 December 2008 the
Group had net borrowings of GBP2.20 million (2007: net funds GBP0.54
million).
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.
Kentford
In April 2008 we completed the acquisition of this 121 hectare
freehold site at Kentford near Newmarket in Suffolk for GBP2.05
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.
Welford
We acquired this vacant freehold 17 hectare site at Welford in
Northamptonshire for GBP0.58 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.
Colsterworth
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.
Stanton
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.
Brigg
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.
Woodhurst
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.
Board
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.
Prospects
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
failure.
We continue to believe that the portfolio will deliver shareholder
value in the long term.
Paul Rackham
Executive Chairman
27 April 2009
CONSOLIDATED INCOME STATEMENT
Year ended 31 December 2008
Year ended Year ended
31 December 31 December
2008 2007
Note GBP GBP
Revenue 3 880,944 970,101
Cost of sales -
(141,800)
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.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended 31 December 2008
Year Year
ended ended
31 December 31 December
Note 2008 2007
GBP GBP
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.
CONSOLIDATED BALANCE SHEET
31 December 2008
31 December 2008 31 December 2007
GBP GBP
Note
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
Equity
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
CONSOLIDATED CASH FLOW STATEMENT
Year ended 31 December 2008
Year Year
ended ended
31 December 31 December
2008 2007
Note GBP GBP
Net cash outflow from operating 8 (2,456,045) (4,529,616)
activities
Investing activities
Interest paid (90,137) (86,385)
Interest received 50,969 284,542
Purchase of property, plant and - (176,498)
equipment
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)
activities
Net decrease in cash and cash (1,716,922) (5,076,196)
equivalents
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
year
NOTES TO THE FINANCIAL INFORMATION
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
shareholders.
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
2008.
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
GBP GBP
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
above.
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
GBP GBP
Current tax (credit) (17,239) 42,315
Deferred tax 1,157 (103,690)
Total tax (credit) on profit on ordinary (16,082) (61,375)
activities
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
GBP 2008 GBP 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
30%)
Tax effect of expenses
that are not deductible
in determining taxable 7,139 3.5 10,774 4.7
profit
Permanent differences re - - (33,498) (14.6)
IBAs
Impact of abolition of
balancing
allowances/charges on (18,007) (9.0) (137,783) (60.0)
buildings
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
losses
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)
rate
Marginal relief - - (3,689) (1.5)
Tax effect of losses
surrendered in previous 26,686 13.4 - -
year
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 GBP3,955 (2007: GBP46,825) has been charged directly to
equity.
5. Dividends
Year Year
ended ended
31 December 31 December
2008 2007
GBP GBP
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
Basic
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 GBP183,772 (2007: profit of GBP290,970) 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
Diluted
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
GBP GBP
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
GBP1.8 million (2007: GBP1,000,000) 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 GBP1,800,000 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 GBP1,042,255 (2007:
GBP1,191,195) 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
follows:
31 December 31 December
2008 2007
GBP GBP
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
GBP GBP
(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
equipment
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
GBP GBP GBP GBP
Cash and cash 1,734,929 (1,716,922) - 18,007
equivalents
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
GBP GBP
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
=--END OF MESSAGE---
This announcement was originally distributed by Hugin. The issuer is
solely responsible for the content of this announcement.
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