Last checked at 23 May 2011 07:00
MERCURY RECYCLING GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2010
HIGHLIGHTS | |||
Mercury Recycling PLC, the AIM listed recycler of fluorescent light tubes and sodium street lamps together with other mercury contaminated waste, announces its final results for the year ended 31 December 2010. | |||
·; | 4% fall in sales to £2.7m reflecting continued difficult trading conditions | ||
·; | Profit before tax of £273k (down 18%) | ||
·; | On-going discussions with a major customer with a view to reversing current unacceptable downward pressure on pricing | ||
·; | Steps taken to diversify business through expansion in the battery recycling market | ||
·; | Board strengthened through the appointment of Giles Clarke and Nick Harrison | ||
Commenting on the results, the Chairman, The Rt Hon The Lord Barnett stated | |||
'I am satisfied with the performance of the business reported today, which has been achieved against a challenging backdrop. However, trading in the current year will be adversely impacted by changes recently imposed by a major customer. We are seeking to modify these through discussion with the customer and I will provide an update to shareholders at the appropriate point. In the meantime we continue to explore opportunities to diversify the business in line with the strategy set out to shareholders in September 2010'. | |||
ENQUIRIES: | |
Mercury Recycling Group PLC | |
Bryan Neill, Managing Director | 0161 877 0977 |
Smith & Williamson Corporate Finance Limited | |
Nick Reeve, Director Corporate Finance | 0117 376 2213 |
Barrie Newton - Broking | 07958 065 858 |
CHAIRMAN'S STATEMENT
I am pleased to report sales for the year ended 31 December 2010 were £2,668,000, just marginally down from £2,789,000. This is despite the loss of a number of days in December due to the freeze. We also had to cope with the continuing squeeze on our profit margins. The recession too, was also far from over. Despite all this we managed through efficiency savings, to prevent a major fall in our operating profits. Non recurring share based payment costs on the share option reissue also reduced pre-tax profits, which finished at £273,000 compared to £333,000 in 2009.
Mercury has been engaged in ongoing discussions with Recolight, the operator of the UK's major producer compliance scheme within the lamp recycling sector, regarding the unacceptable downward pressure on the price paid for recycling services and the implementation of a more equitable operational model. In consequence the future remains uncertain, and I will notify shareholders as soon as I have definite news.
I have to report that although the Recast WEEE Directive should eventually result in much higher volumes of recycling of lamps, this has not yet happened, and industry recycling tonnages remain low. The authorities have done little to improve public awareness of mercurial damage.
However the European Union under the Recast WEEE Directive, are proposing much higher recycling levels of 85% from 2016. The proposals now have to be agreed by the Council of Ministers and draft Regulations drawn up, but if they go through they should have a huge impact on the lamp recycling industry and be positive for Mercury.
In the meantime we are continuing to look at other areas for diversification, to broaden our sales base. We are also considering further action to try to improve general recycling levels. The recycling sector still offers excellent opportunities for growth, and we are actively exploring where we can best expand. As an example, the battery recycling market is growing very strongly, as the Battery Directive is working much more effectively. We are therefore establishing a new subsidiary called "Battnet" (Battery Network), and investing in it, with a view to expanding our current battery recycling levels substantially, by the end of 2011.
Cash flow remains good, and as will be seen from the Balance Sheet, our net asset position is strong. Net cash balances were £396,000 but at present the Directors do not think it appropriate to pay a dividend.
As I announced earlier this year, two new Directors join the Board, with Giles Clarke and Nick Harrison representing Westleigh, both bring great experience and success, which will be invaluable. As I said at the time, I am confident that the Westleigh arrangement with Giles Clarke and Nick Harrison joining the Board, will ensure, as their record shows, that we will be moving steadily forward. Joe Dwek and Anthony Leon will be leaving at the AGM. I would like to express my very great thanks to them both for their great service to the Group for many years. I also want to again thank all our staff for their commitment and diligence during the last year.
The Rt Hon The Lord Barnett JP PC
Chairman
CONSOLIDATED INCOME STATEMENT | ||||||||||||
2010 | 2009 | |||||||||||
£000 | £000 | |||||||||||
Revenue | 2,668 | 2,789 | ||||||||||
Cost of sales | (137) | (163) | ||||||||||
Gross profit | 2,531 | 2,626 | ||||||||||
Administrative expenses | (2,251) | (2,283) | ||||||||||
Operating profit | 280 | 343 | ||||||||||
Finance costs | (7) | (10) | ||||||||||
Profit before tax | 273 | 333 | ||||||||||
Tax | (13) | (53) | ||||||||||
Profit for the period | 260 | 280 | ||||||||||
(Attributable to owners of the company) | ||||||||||||
Earnings per share | - Basic | 0.75p | 0.83p | |||||||||
- Diluted | 0.75p | 0.82p | ||||||||||
The income statement has been prepared on the basis that all operations are continuing operations. | ||||||||||||
There is no difference between the results as disclosed above and the results on an historical cost basis. | ||||||||||||
CONSOLIDATED BALANCE SHEET | ||||||||||||
2010 | 2009 | |||||||||||
£000 | £000 | |||||||||||
Non-current assets | ||||||||||||
Goodwill | 4,122 | 4,122 | ||||||||||
Property, plant and equipment | 1,495 | 1,509 | ||||||||||
5,617 | 5,631 | |||||||||||
Current assets | ||||||||||||
Trade and other receivables | 441 | 471 | ||||||||||
Cash and bank balances | 412 | 1 | ||||||||||
Current tax assets | - | 10 | ||||||||||
853 | 482 | |||||||||||
Total assets | 6,470 | 6,113 | ||||||||||
Current liabilities | ||||||||||||
Trade and other payables | (270) | (249) | ||||||||||
Borrowings | (86) | (139) | ||||||||||
Current tax liabilities | (35) | (39) | ||||||||||
(391) | (427) | |||||||||||
Non-current liabilities | ||||||||||||
Trade and other payables | (33) | (42) | ||||||||||
Borrowings | (155) | (225) | ||||||||||
Deferred tax liabilities | (140) | (146) | ||||||||||
(328) | (413) | |||||||||||
Total liabilities | (719) | (840) | ||||||||||
Net assets | 5,751 | 5,273 | ||||||||||
Equity | ||||||||||||
Share capital | 3,583 | 3,403 | ||||||||||
Share premium | 235 | 242 | ||||||||||
Other reserves | 386 | 365 | ||||||||||
Retained earnings | 1,547 | 1,263 | ||||||||||
Total equity | 5,751 | 5,273 | ||||||||||
(attributable to owners of the company) | ||||||||||||
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY | ||||||||||||||
Share | Share | Other | Retained | Total | ||||||||||
Capital | Premium | Reserve | Earnings | Equity | ||||||||||
£000 | £000 | £000 | £000 | £000 | ||||||||||
Balance at 1 January 2009 | 3,375 | 242 | 365 | 983 | 4,965 | |||||||||
Profit for the period | - | - | - | 280 | 280 | |||||||||
Issue of share capital | 28 | - | - | - | 28 | |||||||||
Balance at 31 December 2009 | 3,403 | 242 | 365 | 1,263 | 5,273 | |||||||||
Profit for the period | - | - | - | 260 | 260 | |||||||||
Warrants issued | - | - | 21 | - | 21 | |||||||||
Issue of share capital | 180 | (7) | - | - | 173 | |||||||||
Credit to equity for equity-settled | ||||||||||||||
share based payments | - | - | - | 24 | 24 | |||||||||
Balance at 31 December 2010 | 3,583 | 235 | 386 | 1,547 | 5,751 | |||||||||
CONSOLIDATED CASH FLOW STATEMENT | ||||||||||||
2010 | 2009 | |||||||||||
£000 | £000 | |||||||||||
Net cash from operating activities | 567 | 395 | ||||||||||
Investing activities | ||||||||||||
Proceeds on disposal of property, plant and equipment | - | 13 | ||||||||||
Purchases of property, plant and equipment | (229) | (393) | ||||||||||
Net cash used in investing activities | (229) | (380) | ||||||||||
Financing activities | ||||||||||||
Proceeds on issue of equity | 194 | 28 | ||||||||||
New bank loans raised | - | 100 | ||||||||||
Repayment of borrowings | (66) | (145) | ||||||||||
Repayments of finance lease obligations | - | (17) | ||||||||||
Net cash generated from / (used in) financing activities | 128 | (34) | ||||||||||
Net increase / (decrease) in cash and cash equivalents | 466 | (19) | ||||||||||
Cash and cash equivalents at the beginning of year | (70) | (51) | ||||||||||
Cash and cash equivalents at end of year | 396 | (70) | ||||||||||
NOTES | ||||||||||||
1. Basis of preparation | ||||||||||||
The information in this announcement has been extracted from the Company's audited Financial Statements which have been prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the European Union. | ||||||||||||
2. Revenue | ||||||||||||
The revenue and profit on ordinary activities before taxation arise from the Group's principal activity. | ||||||||||||
2010 | 2009 | |||||||||||
The Group's revenue has been analysed by geographic area as follows: | £000 | £000 | ||||||||||
United Kingdom | 2,668 | 2,789 | ||||||||||
3. Operating profit | ||||||||||||
2010 | 2009 | |||||||||||
Profit for the year is shown after charging / (crediting): | £000 | £000 | ||||||||||
Depreciation on tangible assets | 243 | 229 | ||||||||||
Research and development | - | 34 | ||||||||||
Government grants | (9) | (9) | ||||||||||
Profit on disposal of tangible assets | 1 | 4 | ||||||||||
4. Earnings per share | ||||||||||||
Basic - The calculation of basic earnings per share is based on a profit of £260,000 (2009 - £280,000) and on 34,509,795 (2009 - 33,891,087) ordinary shares, being the weighted average number of ordinary shares in issue during the year. | ||||||||||||
Diluted - The diluted earnings per share is based on the profit for the year of £260,000 (2009 - £280,000) and on 34,627,588 (2009 - 34,098,675) ordinary shares as adjusted for share options below: | ||||||||||||
2010 | 2009 | |||||||||||
Number | Number | |||||||||||
Basic weighted average number of shares | 34,509,795 | 33,891,087 | ||||||||||
Dilutive potential ordinary shares: | ||||||||||||
Dilution caused by options | 117,793 | 207,588 | ||||||||||
Diluted weighted average number | 34,627,588 | 34,098,675 | ||||||||||
5. Annual General Meeting | ||||||
The Annual General Meeting of Mercury Recycling Group plc ("the Company") will be held at Mercury House, 17 Commerce Way, Trafford Park, Manchester M17 1HW on 17 June 2011, at 11.00 a.m. | ||||||
6. Posting of Financial Statements | ||||||
The Company's Financial Statements for the year ended 31 December 2010 together with the Notice of the Annual General Meeting are being posted to shareholders today and will be available for download from the Company's website at www.mercuryrecycling.co.uk | ||||||