Last checked at 15 May 2009 07:00
Mercury Recycling Group PLC
15 May 2009
MERCURY RECYCLING GROUP PLC
PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2008
HIGHLIGHTS
Mercury Recycling Group PLC, the recycler of fluorescent light tubes and sodium street lights, quoted on AIM, announces final results for the year ended 31 December 2008.
Group sales up 15.7% to GBP 3,074,000 (2007: GBP2,657,000)
Operating profit (before exceptional items) up 21% to 558,000 (2007: GBP461,000)
Profit before tax up 20% to GBP 534 2007 (2007: GBP445,000)
Earnings per share (basic) up 10.1% to 1.20p (2007: 1.09p)
Commenting on the results, the Chairman, The Rt Hon The Lord Barnett JP PC stated:
"In the current economic climate these results are highly satisfactory. Our Balance Sheet shows a strong position, which will ensure that we are able to keep the Group moving forward. The current year has started well and sales in the first three months of 2009 are in line with management's budget".
Enquiries:
Bryan Neill, Executive Director
Mercury Recycling Group PLC Tel: 0161 877 0977
Andrew Raca, Director, Corporate Finance
Blue Oar Securities Plc Tel: 0207 448 4400
CHAIRMAN'S STATEMENT
I am pleased to report continuing progress for the year ended 31 December 2008. Sales increased by 15.7 % to £3,074,000 from £2,657,000 and operating profits by 21% to £558,000 from £461,000. In the current economic climate your Directors consider these results to be highly satisfactory.
As I have said, our customers can't escape the credit crunch, so in the current difficult economic situation, we are expecting price pressures and increased competition, which may have some impact on our trading performance. However, sales in the first three months of 2009 are in line with management's budget. Our Balance Sheet shows a strong position, which will ensure that we are able to keep the Group moving forward. We estimate that there are still a large number of lamps that are not being recycled, as yet, and the figure might be as much as 80 million lamps out of a total possible market of 130 million lamps, so that there is potential for us to use up further capacity under the existing cost structure.
In the years to come, the opportunity for growth in this recycling industry is self evident. The opportunity is also enhanced by new legislation which means that the non hazardous, tungsten bulb will be phased out to be replaced by the more energy efficient, but hazardous and mercury containing Compact Fluorescent Lamps (CFL). This change will open up a vast new market with exciting opportunities for us as the CFL lamps will fall under both the WEEE and Hazardous Waste Directives.
The Company, in conjunction with partners, has been awarded a tender by the Waste & Resources Programme (WRAP) with regard to the demonstration of Flat Panel Display (FPD) recycling technologies. The project will investigate the feasibility of automated processing of FPD's i.e. Plasma Flat TVs & computer screens etc., which will account for approximately 200,000 tonnes per annum of hazardous waste. These flat screens contain mercury bearing lamps which are embedded inside units and are extremely difficult and time consuming to remove. Because of the mercury content these units are deemed hazardous waste and the mercury content must be removed.
The research work, when completed, should help position Mercury Recycling as a leading player in this emerging major market. Meanwhile, we are considering offering related recycling services to our existing customers on other WEEE products.
Last year's acquisition of Envirolite has been integrated and we are now seeing the benefits. The cost price, as I forecast last year, has been met comfortably from our own resources. We are also looking at other suitable acquisitions in the waste sector.
As I have indicated, results continue to be satisfactory, but the Board have decided to defer any decision on dividends until economic conditions are clearer.
Finally, I would again like to thank my colleagues and all our staff for the hard work and continued
commitment to the Group.
Yours sincerely,
The Rt Hon The Lord Barnett JP PC
Chairman
CONSOLIDATED INCOME STATEMENT
| | Note | | 2008 | | 2007 |
| | | | £’000 | | £’000 |
| | | | | | |
| Revenue | 1 | | 3,074 | | 2,657 |
| | | | | | |
| Cost of sales | | | (170) | | (173) |
| | | | | | |
| Gross profit | | | 2,904 | | 2,484 |
| | | | | | |
| Administrative expenses | | | (2,346) | | (2,023) |
| | | | | | |
| Group operating profit | 3 | | | | |
| | | | | | |
| | | | | | |
| Investment revenues | | | 11 | | 7 |
| Finance costs | | | (35) | | (23) |
| | | | | | |
| Profit on ordinary activities before taxation | | | 534 | | 445 |
| | | | | | |
| Taxation | | | (130) | | (79) |
| | | | | | |
| Profit on ordinary activities after taxation retained for the year | | | 404 | | 366 |
| | | | | | |
| | | | | | |
| Earnings per share - Basic | 4 | | 1.20p | | 1.09p |
| | | | | | |
| - Diluted | 4 | | 1.19p | | 1.07p |
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
| | | | 2008 | | 2007 |
| | | | £’000 | | £’000 |
| | | | | | |
| New shares issued | | | 2 | | - |
| | | | | | |
| Share based payment costs | | | - | | 18 |
| | | | | | |
| Net income recognized directly in equity | | | 2 | | 18 |
| | | | | | |
| Profit for the period | | | 404 | | 366 |
| | | | | | |
| Total income and expense for the period | | | 406 | | 384 |
| | | | | | |
| Opening balance at 1 January 2008 | | | 4,559 | | 4,175 |
| | | | | | |
| Closing balance at 31 December 2008 | | | 4,965 | | 4,559 |
CONSOLIDATED BALANCE SHEET
| | | | 2008 | | 2007 |
| | | | £’000 | | £’000 |
| | | | | | |
| Non-current assets | | | | | |
| Goodwill | | | 4,122 | | 3,021 |
| Other intangible assets | | | - | | 1 |
| Property plant and equipment | | | 1,358 | | 1,158 |
| | | | | | |
| | | | 5,480 | | 4,180 |
| Current assets | | | | | |
| Trade and other receivables | | | 536 | | 673 |
| Cash and cash equivalents | | | 38 | | 379 |
| Assets held for sale | | | 5 | | - |
| | | | | | |
| | | | 579 | | 1,052 |
| | | | | | |
| Total assets | | | 6,059 | | 5,232 |
| | | | | | |
| Current liabilities | | | | | |
| Trade and other payables | | | (338) | | (265) |
| Bank overdrafts and loans | | | (153) | | (28) |
| Obligations under finance leases | | | (17) | | (7) |
| Current tax liabilities | | | 140 | | - |
| | | | | | |
| | | | (648) | | (300) |
| Non-current liabilities | | | | | |
| Trade and other payables | | | (51) | | (60) |
| Bank loans | | | (274) | | (233) |
| Deferred tax liabilities | | | (121) | | (79) |
| Obligations under finance leases | | | - | | (1) |
| | | | | | |
| | | | (446) | | (373) |
| | | | | | |
| Total liabilities | | | (1,094) | | (673) |
| | | | | | |
| Net assets | | | 4,965 | | 4,559 |
| | | | | | |
| | | | | | |
| Equity | | | | | |
| Share capital | | | 3,375 | | 3,373 |
| Share premium | | | 2442 | | 242 |
| Other reserve | | | 365 | | 365 |
| Retained earnings reserve | | | 983 | | 579 |
| | | | | | |
| Total equity | | | 4,965 | | 4,559 |
CONSOLIDATED CASH FLOW STATEMENT
| | | | 2008 | | 2007 |
| | | | £’000 | | £’000 |
| | | | | | |
| Net cash from operating activities | | | 965 | | 471 |
| | | | | | |
| Investing activities | | | | | |
| Interest received | | | 11 | | 7 |
| Proceeds on disposal of property, plant and equipment | | 18 | | - | |
| Purchases of property, plant and equipment | | (400) | | (201) | |
| Acquisition of businesses | | | (1,206) | | - |
| Cash acquired with businesses | | | 229 | | - |
| | | | | | |
| Net cash used in investing activities | | | (1,348) | | (194) |
| | | | | | |
| Financing activities | | | | | |
| Proceeds on issue of shares | | | 2 | | 17 |
| Repayment of borrowings | | | (42) | | (26) |
| Repayments of finance lease obligations | | | (7) | | (24) |
| | | | | | |
| Net cash used in financing activities | | | (47) | | (33) |
| | | | | | |
| Net (decrease)/increase in cash and cash equivalents | | (430) | | 244 | |
| | | | | | |
| Cash and cash equivalents at the beginning of year | | 379 | | 135 | |
| | | | | | |
| Cash and cash equivalents at end of year | | | (51) | | 379 |
NOTES
1. Basis of preparation [Auditors to confirm]
The Financial Statements have been prepared in accordance with International Financial Reporting Standards (IFRSs). The Financial Statements have also been prepared in accordance with IFRSs adopted by the European Union and therefore the Group Financial Statements comply with Article 4 of the EU IAS Regulation.
2. Revenue
The revenue and profit on ordinary activities before taxation arise from the Group's principal activity
| The Group’s revenue has been analysed by geographic area as follows: | 2008 | | 2007 | |
| | | £’000 | | £’000 |
| | | | | |
| United Kingdom | | 3,064 | | 2,641 |
| Republic of Ireland | | 10 | | 16 |
| | | | | |
| | | 3,074 | | 2,657 |
3. Profit for the year
| | 2008 | | 2007 | |
| Profit for the year is shown after charging / (crediting): | | £’000 | | £’000 |
| | | | | |
| Depreciation on tangible assets | | 186 | | 183 |
| Amortisation | | 1 | | 1 |
| Government grants | | (9) | | (0) |
| Profit on disposal of tangible assets | | 8 | | - |
| | | | | |
| | | | | |
| Fees paid to the auditor are analysed as follows: | | | | |
| Audit fees (Group excluding holding company) | | 15 | | 15 |
| Audit fees (Parent company) | | 4 | | 4 |
| Tax consultancy | | 4 | | 4 |
| Other review reports | | 10 | | 4 |
4. Earnings per share
Basic - The calculation of basic earnings/(loss) per share is based on a profit of £404,000 (2007 - £366,000) and on 33,731,179 (2007 - 33,726,154) 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 £404,000 and on 33,944,364 (2007 - 34,303,096) ordinary shares as adjusted for share options below:
| | 2008 | | 2007 | |
| | | Number | | Number |
| | | | | |
| Basic weighted average number of shares | | 33,731,179 | | 33,726,154 |
| Dilutive potential ordinary shares: | | | | |
| Dilution caused by options | | 213,185 | | 576,942 |
| | | | | |
| Diluted weighted average number | | 33,944,364 | | 34,303,096 |
5. Notice of Annual General Meeting
The Annual General Meeting of Mercury Recycling Group Plc will be held at Suite One, Courthill House, 66 Water Lane, Wilmslow, Cheshire SK9 5AS on Friday 19 June 2008 at 11:00 am. Copies of the audited report and accounts, which will be posted to shareholders shortly, can be viewed on the Company's website: www.mercuryrecycling.co.uk