Last checked at 30 Sep 2008 07:00
Medsea Estates Group PLC
INTERIM RESULTS to 30th June 2008
Chairman's Statement
Pre-tax profits for the period were £25,000 compared to £111,000 for the same period last year.
Revenue in the period declined by 28.7% from £5,921,000 to £4, 216,000 whilst gross margins improved slightly from 25.8% to 28.8%.
Administrative overheads have been reduced by 14.5%, but the ongoing level of reduction should be higher than this because the first half of the year included severance costs and these economies were made during the period rather than at the start.
Trading is, of course, very depressed, the result of current adverse market conditions. The reduction in staff and offices mirrors the steps taken by our competitors - some of whom have now ceased trading. However, the group maintains its minority interests in several developments and I anticipate that these will still bear fruit towards the end of 2009 and into 2010 - it is not until that time that we shall recognise our profits from these activities in our accounts.
Trading since 30 June 2008 has continued at a much reduced level.
Our key objective at this time is to trade on a basis that enables us to at least break-even, so that we can capitalise on our position in the market place when there is an up-turn in sentiment.
In the meantime I would like to thank all our staff and associates for their considerable fortitude in such difficult circumstances.
The Company announced on 8 September 2008 that it had resolved to seek shareholder approval for the cancellation of admission to trading on AIM of the Ordinary shares in the Company (the "Delisting"). The circular to shareholders convening the general meeting to consider the Delisting resolution is expected to be posted shortly.
Tony Gatehouse
Chairman
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM INCOME STATEMENT
FOR THE SIX MONTHS TO 30 JUNE 2008
| Unaudited 6 months 30 Jun | Unaudited 6 months 30 Jun | Audited 12 months 31 Dec | ||||
| 2008 | 2007 | 2007 | ||||
| Notes | £'000 | £ 000 | £'000 | |||
| Revenue | 2 | 4,216 | 5,921 | 10,537 | ||
| Cost of sales | (3,004) | (4,394) | (8,274) | |||
| Other income | 31 | - | - | |||
| Administrative expenses | (1,201) | (1,406) | (3,556) | |||
| Finance income | 2 | 4 | 24 | |||
| Finance expense | (19) | (14) | (28) | |||
| Profit/(loss) before taxation | 25 | 111 | (1,297) | |||
| Tax charge on profit/(loss) | (19) | (15) | (14) | |||
| Profit/(loss) for the period | 6 | 96 | (1,311) | |||
| Attributable to: Equity holders of the parent | 6 | 96 | (1,307) | |||
| Minority interests | - | - | (4) | |||
| 6 | 96 | (1,311) | ||||
| Earnings/(loss) pence per share Basic and diluted | 12 | 0.01 | 0.13 | (1.76) |
None of the group's activities was acquired or discontinued during the above periods.
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM BALANCE SHEET
AS AT 30 JUNE 2008
| Unaudited 6 months | Unaudited 6 months | Audited 12 months | |||||
| Notes | 30 Jun 2008 | 30 Jun 2007 | 31 Dec 2007 | ||||
| £'000 | £'000 | £'000 | |||||
| ASSETS Non-current assets Other intangible assets | 4 | 3 | 6 | 4 | |||
| Property, plant and equipment | 5 | 1,056 | 962 | 1,057 | |||
| Investments in associates | 694 | 225 | 646 | ||||
| Other financial assets | 6 | 100 _ | 92 | 100 | |||
| 1,853 | 1,285 | 1,807 | |||||
| Current assets Inventories | 178 | 192 | 165 | ||||
| Trade and other receivables | 7 | 1,717 | 2,091 | 1,788 | |||
| Current tax recoverable | 8 | - | 47 | 15 | |||
| Cash and cash equivalents | 121 | 1,672 | 317 | ||||
| 2,016 | 4,002 | 2,285 | |||||
| Total assets | 3,869 | 5,287 | 4,092 | ||||
| EQUITY AND LIABILITIES Shareholders' equity Share capital | 11 | 7,798 | 7,798 | 7,798 | |||
| Share premium | 22 | 22 | 22 | ||||
| Other reserve | 137 | 117 | 128 | ||||
| Revaluation reserve | 54 | 46 | 51 | ||||
| Merger reserve | (7,058) | (7,058) | (7,058) | ||||
| Foreign currency translation reserve | (165) | - | (170) | ||||
| Retained earnings | (472) | 830 | (475) | ||||
| 316 | 1,755 | 296 | |||||
| Non-current liabilities Long-term borrowings | 9 | 202 | 249 | 209 | |||
| Deferred tax | 10 | - | 3 | - | |||
| 202 | 252 | 209 | |||||
| Current liabilities Trade and other payables | 8 | 2,708 | 3,143 | 3,065 | |||
| Short-term borrowings | 8 | 634 | 137 | 522 | |||
| Corporation tax | 8 | 9 | - | - | |||
| 3,351 | 3,280 | 3,587 | |||||
| Total equity and liabilities | 3,869 | 5,287 | 4,092 |
The interim financial information was approved at a meeting of the board held on 29 September 2008 and signed on its behalf by
G Jeffs
Director
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
UNAUDITED CONSOLIDATED INTERIM BALANCE SHEET
FOR THE SIX MONTHS TO 30 JUNE 2008
| Share capital | Share premium | Other reserves | Revaulation reserve | Merger reserve | Foreign currency translation reserve | Retained earnings | Minority interests | Total equity | |
| £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
| Balance at 1 January 2007 brought forward | 7,063 | 22 | 117 | 46 | (7,058) | (109) | 778 | 4 | 863 |
| Loss for the period | - | - | - | - | - | - | (1,307) | - | (1,307) |
| Exchange differences arising on translation of foreign operations | - | - | 11 | 5 | - | (61) | 54 | - | 9 |
| Minority interest | - | - | - | - | - | - | - | (4) | (4) |
| Sales of revalued properties | - | - | - | - | - | - | - | - | - |
| Total recognised income and expense for the year | - | - | 11 | 5 | - | (61) | (1,253) | (4) | (1,302) |
| Issue of shares | 735 | - | - | - | - | - | - | - | 735 |
| Balance at 31 December 2007 carried forward | 7,798 | 22 | 128 | 51 | (7,058) | (170) | (475) | - | 296 |
| Balance at 1 January 2008 brought forward | 7,798 | 22 | 128 | 51 | (7,058) | (170) | (475) | - | 296 |
| Profit for the period | - | - | - | - | - | - | 6 | - | 6 |
| Exchange differences arising on translation of foreign operations | - | - | 9 | 3 | - | 5 | (3) | - | 14 |
| Total recognised income and expense for the period | - | - | 9 | 3 | - | 5 | 3 | - | 20 |
| Balance at 30 June 2008 carried forward | 7,798 | 22 | 137 | 54 | (7,058) | (165) | (472) | - | 316 |
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE SIX MONTHS TO 30 JUNE 2008
| Unaudited 6 months 30 Jun | Unaudited 6 months 30 Jun | Audited 12 months 31 Dec | |
| 2008 | 2007 | 2007 | |
| £'000 | £'000 | £000 | |
| Cash flows from operating activities Profit/(loss) before tax | 25 | 111 | (1,297) |
| Adjustments for: Depreciation | 70 | 61 | 127 |
| Foreign exchange | (73) | (42) | (63) |
| Finance income | (2) | (4) | (24) |
| Finance expense | 19 | 14 | 28 |
| Amortisation of other intangible assets | 1 | - | 2 |
| (Profit)/loss on sale of tangible assets | 15 | - | 15 |
| (Profit) on sale of other financial assets | (31) | - | - |
| (Increase)/decrease in trade and other receivables | 71 | 134 | 548 |
| (Increase)/decrease in inventories | (13) | 109 | 136 |
| Increase/(decrease) in trade and other payables | (354) | 82 | 47 |
| Cash generated from operations | (272) | 465 | (481) |
| Tax on profits paid | 5 | (135) | (137) |
| Interest paid | (19) | (14) | (28) |
| Net cash from operating activities | (286) | 316 | (646) |
| Cash from investing activities Interest received | 2 | 4 | 24 |
| Purchase of property, plant and equipment | (7) | (153) | (256) |
| Proceeds from the sale of other financial assets | 39 | - | - |
| Payments to acquire shares in associates | - | - | (654) |
| Payments to acquire other intangible assets | - | - | (1) |
| Net cash generated used in investing activities | 34 | (149) | (887) |
| Cash from financing activities Repayment of borrowings | (16) | (145) | 123 |
| Share issues | - | 735 | 735 |
| Other loans | - | (13) | (13) |
| Capital element of finance lease payments | (15) | (16) | (27) |
| Net cash generated from financing activities | (31) | 561 | 818 |
| Net (decrease)/increase in cash and cash equivalents | (283) | 728 | (715) |
| Cash and cash equivalents at the beginning of the period | 229 | 944 | 944 |
| Cash and cash equivalents at the end of the period | (54) | 1,672 | 229 |
| Cash and cash equivalents consists of: Cash and cash equivalents included in current assets | 121 | 1,672 | 317 |
| Bank overdraft included in current liabilities | (175) | - | (88) |
| 54 | 1,672 | 229 |
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30 JUNE 2008
1 Principal accounting policies
Basis of preparation
Medsea Estates Group PLC prepares its annual report and accounts on the basis of International Financial Reporting Standards (IFRS) as adopted for use by the European Union (EU). The financial information presented herein has been prepared in accordance with the accounting policies expected to be used in preparing the Medsea Estates Group PLC annual report and accounts for the year ended 31 December 2008, which do not differ significantly from those used for the Medsea Estates Group PLC annual report and accounts for the year ended 31 December 2007.
The financial information shown in this half year review is unaudited and does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985.
The financial statements for the year ended 31 December 2007, which were prepared under IFRS, have been reported on by the company's auditors and delivered to the Registrar of Companies. The report of the auditors was unqualified and did not contain statements under Section 237 (2) or (3) of the Companies Act 1985.
2 Revenue
Revenue derives wholly from the principal activity of the Group which is carried out in countries adjacent to the Mediterranean. Revenue is the total amount receivable by the group for goods supplied and services provided, excluding value added tax.
Commission income receivable in respect of property sales is recognised at the point at which a legally binding contract for sale has been signed between the purchaser and the developer. In addition, the terms of the contracts with the developers has to have been fulfilled in terms of commissions being invoicable to them. Commissions payable in respect of property sales are recognised at the same time as the corresponding commission income is recognised, and are not payable until after commissions income is received.
3 Going concern
The group has advanced sums to a developer in Calabria and this has been offset in these accounts against other amounts owed by the group to the same developer. The group has been heavily involved in the marketing and promotion of the properties being constructed by that developer and accordingly their ability to make the commission payments as they fall due is a significant issue. The net sum due to the group is £113,269 which is included in trade debtors.
The group is also dependent upon future commission income from introductions made to developers. This future commission income will be significantly affected by the slow down in the European property market and the availability of credit to enable purchasers to complete transactions that have already been entered into. After making enquiries, the Directors have a reasonable expectation that the Group has adequate resources to continue in operational existence for the foreseeable future. For this reason they continue to adopt the going concern basis in preparing the financial statements.
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30 JUNE 2008
| 4 | Intangible assets | |||||||||||
| Trademarks | ||||||||||||
| £'000 | ||||||||||||
| Cost | ||||||||||||
| At 1 January 2008 | 14 | |||||||||||
| Foreign exchange difference | 2 | |||||||||||
| At 30 June 2008 | 16 | |||||||||||
| Amortisation | ||||||||||||
| At 1 January 2008 | 10 | |||||||||||
| Provided during the year | 1 | |||||||||||
| Foreign exchange difference | 2 | |||||||||||
| At 30 June 2008 | 13 | |||||||||||
| Net book values | ||||||||||||
| At 30 June 2008 | 3 | |||||||||||
| At 31 December 2007 | 4 | |||||||||||
| 5 | Tangible fixed assets | |||||||||
| Freehold | Investment | Office | Total | |||||||
| land and | properties | Equipment and | ||||||||
| buildings |
| motor vehicles |
| |||||||
| £'000 | £'000 | £'000 | £'000 | |||||||
| Cost or valuation | ||||||||||
| At 1 January 2008 | 275 | 341 | 953 | 1,569 | ||||||
| Additions | - | - | 7 | 7 | ||||||
| Disposals | - | - | (70) | (70) | ||||||
| Foreign exchange difference | 20 | 25 | 70 | 115 | ||||||
| At 30 June 2008 | 295 | 366 | 960 | 1,621 | ||||||
| Depreciation | ||||||||||
| At 1 January 2008 | 36 | - | 476 | 512 | ||||||
| Charge for year | 3 | - | 67 | 70 | ||||||
| Disposals | - | - | (58) | (58) | ||||||
| Foreign exchange difference | 2 | - | 39 | 41 | ||||||
| At 30 June 2008 | 41 | - | 524 | 565 | ||||||
|
| ||||||||||
| Net book value | ||||||||||
| At 30 June 2008 | 254 | 366 | 436 | 1,056 | ||||||
| At 31 December 2007 | 239 | 341 | 477 | 1,057 | ||||||
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30 JUNE 2008
| 6 | Other financial assets | |||||||||||
| Available for sale investments | £'000 | |||||||||||
| Fair value | ||||||||||||
| At 1 January 2008 | 100 | |||||||||||
| Disposal | (8) | |||||||||||
| Foreign exchange difference | 8 | |||||||||||
| At 30 June 2008 | 100 | |||||||||||
| Amounts written off | ||||||||||||
| At 1 January 2008 | - | |||||||||||
| At 30 June 2008 | - | |||||||||||
| Net book value | ||||||||||||
| At 30 June 2008 | 100 | |||||||||||
| At 31 December 2007 | 100 | |||||||||||
| 7 | Trade and other receivables | |||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| 30 Jun | 30 Jun | 31 Dec | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Trade debtors | 365 | 461 | 354 | |||||||||
| Other debtors | 1,350 | 1,604 | 1,209 | |||||||||
| Prepayments and accrued income | 2 | 26 | 225 | |||||||||
| 1,717 | 2,091 | 1,788 | ||||||||||
| 8 | Trade and other payables | |||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| 30 Jun | 30 Jun | 31 Dec | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Bank overdraft and loan | 634 | 137 | 522 | |||||||||
| Trade payables | 1,957 | 1,324 | 1,072 | |||||||||
| Other taxation and social security | 225 | 288 | 289 | |||||||||
| Other payables | 136 | 1,481 | 1,521 | |||||||||
| Accruals and deferred income | 363 | 20 | 153 | |||||||||
| Obligations under finance lease | 27 | 30 | 30 | |||||||||
| 3,342 | 3,280 | 3,587 | ||||||||||
| Corporation tax payable | 9 | - | - | |||||||||
| 3,351 | 3,280 | 3,587 | ||||||||||
MEDSEA ESTATES GROUP PLC AND SUBSIDIARY UNDERTAKINGS
NOTES TO THE FINANCIAL STATEMENTS
FOR THE SIX MONTHS TO 30 JUNE 2008
| 9 | Long term borrowings | |||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| 30 Jun | 30 Jun | 31 Dec | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Obligations under finance lease | 7 | 30 | 19 | |||||||||
| Bank loan | 195 | 219 | 190 | |||||||||
| 202 | 249 | 209 | ||||||||||
| 10 | Provisions for liabilities and charges | |||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| 30 Jun | 30 Jun | 31 Dec | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Deferred tax: | ||||||||||||
| At start of period | (17) | 91 | 91 | |||||||||
| Foreign exchange difference | - | - | (9) | |||||||||
| Charge/(credit) for the period | - | (88) | (99) | |||||||||
| At end of period | (17) | 3 | (17) | |||||||||
| The deferred tax balance arises in respect of losses in the UK which are expected to be available to set against future profits. The balance is included in other debtors. | ||||||||||||
| 11 | Share Capital | |||||||||||
| Unaudited | Unaudited | Audited | ||||||||||
| 30 Jun | 30 Jun | 31 Dec | ||||||||||
| 2008 | 2007 | 2007 | ||||||||||
| £'000 | £'000 | £'000 | ||||||||||
| Authorised | ||||||||||||
| Equity shares | ||||||||||||
| 100,000,000 Ordinary shares of 10 pence each | 10,000 | 10,000 | 10,000 | |||||||||
| Allotted | ||||||||||||
| Equity shares | ||||||||||||
| 77,979,412 Allotted, called up and fully paid ordinary | ||||||||||||
| shares of 10 pence each | 7,798 | 7,798 | 7,798 | |||||||||
| 12 | Earnings per share | |||||||||||
| The calculation of the earnings per share is based on the profit attributable to the equity holders for the period of £7,000 and on 77,979,412 shares in issue during the period. | ||||||||||||
| During 2007, Medsea Estates Group PLC issued 7,350,000 ordinary shares of 10p each at 10p and issued share warrants for 1,559,588 ordinary shares of 10p each in the company. The share warrants were not included in the calculation of diluted EPS as the average share price for the period was less than the exercise price. | ||||||||||||