Last checked at 1 Mar 2010 07:00
1 March 2010
Real Estate Investors plc
("REI" or "the Company" or "the Group")
Preliminary announcement
For the year ended 31 December 2009
Real Estate Investors PLC (AIM:RLE) the West Midlands based property group, today announces its preliminary results for the year ended 31 December 2009.
HIGHLIGHTS:
1. Gross property assets valued at £54.8 million (2008: £ 48.5 million)
2. Investment property assets up by 12.8% to £48 million (2008: £42.6 million)
3. Rental income up 8% to £3.2 million (2008: £3 million)
4. Profit on valuation of interest rate swap of £832,000 (2008: loss £2.1 million)
5. Net assets of £27.3 million (2008: £24.2 million)
6. Profit before tax of £4.3 million (2008: loss £15.7 million)
7. Loss before tax excluding net property valuation and financial instrument provisions of £21,000 (2008: £40,000)
8. Cash at bank of £10.8 million (2008: £11.4 million)
9. Total acquisitions of property in the year amounted to £2.8 million
10. Further equity fundraising of £10.1 million to enable the Company to capitalise on market opportunities throughout 2010/2011
Peter Lewin, Chairman of REI, commented: "I stated last year that these unprecedented market conditions would reveal winners and losers and I firmly believe that the Company, with the recent fundraising, coupled with its existing cash, banking arrangements, experienced and focussed management team, has a very positive outlook for 2010, revealing REI to have a winning business and strategy."
- End -
Enquiries:
| Real Estate Investors PLC Paul Bassi
| +44 (0)121 524 1174 |
| Smith & Williamson Corporate Finance Limited Azhic Basirov / Siobhan Sergeant
| +44 (0)20 7131 4000 |
| Singer Capital Markets Limited Roger Clarke
| +44 (0)20 3205 7500 |
| Tavistock Communications Jeremy Carey/Gemma Bradley
| +44 (0)20 7920 3150 |
Notes to Editors
1. REI is an AIM listed property investment company specialising in commercial property principally in the West Midlands and central England
2. REI is focused on delivering shareholder value through returns generated from strong yields and capital enhancements. This is achieved by targeting investments in orphaned, distressed, part-let and underperforming commercial property assets
3. REI is led by respected property investor Paul Bassi CBE, who has over 25 years of property experience in the West Midlands. Mr Bassi is also founder and chairman of Bond Wolfe and chairman of Bigwood Chartered Surveyors
4. REI was admitted to trading on AIM in June 2004 and has subsequently raised a total of £35 million in further equity issues as well as debt financing to grow its property portfolio. As at 31 December 2009, its portfolio and inventories were valued at £55 million
5. Further information on REI can be found at www.reiplc.com
CHAIRMAN'S STATEMENT
I am pleased to report on a positive set of results for the year ended 31 December 2009.
The property market has recently shown some healthy signs of improving values, and although there is limited evidence in the public domain at the year end, we believe that market data will reveal a strengthening in yields across most sectors. If these conditions remain, we anticipate that our portfolio valuations will benefit.
It is our view that these improving values are driven by limited property stock and a thirst for income, coupled with significant cash reserves from international, institutional and corporate investors.
The Group's strategy is focussed on creating value through lettings, change of use and refurbishment. In 2009, we completed nearly all our refurbishments and we have seen a slowdown from the occupier market during most of 2009. However, we are pleased to report that during the last quarter of 2009, occupier interest and tenant confidence did improve and we anticipate securing significant rental income from our existing portfolio during 2010.
This will result in improved profitability and if values remain at present levels, increased capital growth.
The types of opportunity we seek to secure have not been forthcoming during 2009 and we have not seen adequate value or potential value as the market place has been starved of stock. We have therefore been reluctant and relatively inactive in making new purchases.
However, through our network across the West Midlands, our relationships with the region's professional community and our privileged relationship with Bond Wolfe and Bigwood Chartered Surveyors, we have great confidence in investing our resources during 2010. We will be active in all sectors (other than industrial), with a focus on retail and residential as an investor, trader and will take on refurbishment projects where we see good value. Our focus will remain in the Midlands and, at all times, we will be opportunity, value and profit driven.
We raised a further £10 million in February this year at a premium to the share price, which demonstrated the confidence that our existing shareholders and some highly respected new shareholders have in our strategy and business model.
Our management team, who have made a further investment in the Company in the recent fundraising, experienced the recession of the early 1990's and have access to opportunities that they believe will provide the Group with significant capital value enhancement and positive income streams. Our existing cash resources and secured banking relationships place us in an enviable position to capitalise on these opportunities during 2010-11 and create a property portfolio of £100 million plus.
We anticipate that the banking sector will begin to release assets that they have placed in 'recovery' and the lack of banking finance available for our target acquisitions will place the Company in an advantageous position as an experienced cash buyer.
Outlook and Prospects
I stated last year that these unprecedented market conditions would reveal winners and losers and I firmly believe that the Company, with the recent fundraising, coupled with its existing cash, banking arrangements, experienced and focussed management team, has a very positive outlook for 2010, revealing REI to have a winning business and strategy.
We have no reliance on any one sector or tenants who could have a negative impact on the Company, and we believe market conditions are ideal for our asset management and regional focus. We believe that there will be a plethora of opportunities before us and we remain focussed on capitalising on them and produce another set of positive results for 2010.
Shareholders will be aware that I have been the Chairman of Real Estate Investors PLC since June 2006, when, as Chief Executive, I handed over the reins to Paul Bassi. I am delighted at the way that Paul has expanded the business and steered it through the recent economic turbulence.
However, I have now come to the view that the next phase of REI's development can be better achieved if the role of Chairman passes to an individual with a strong regional and West Midlands background and, accordingly, I will be stepping aside as your Chairman at the forthcoming AGM. At the same time, I am pleased to say that I have accepted an invitation to remain on the Board as a non executive director and I look forward to continuing to make a positive contribution to the Company's development. Details of my successor, as Chairman, will be sent to you in due course.
Finally, my colleagues and I extend our thanks to our staff and advisors for their continued enthusiasm and support.
Peter Lewin
Chairman
Real Estate Investors Plc
1 March 2010
Real Estate Investors plc
Consolidated statement of comprehensive income For the year ended 31 December 2009
|
|
| Note | 2009 | 2008 |
|
|
|
| £000 | £000 |
|
|
|
|
|
|
| Revenue |
|
| 3,244 | 3,006 |
|
|
|
|
|
|
| Cost of sales |
|
| 544 | (3,079) |
| Gross profit/(loss) |
|
| 3,788 | (73) |
|
|
|
|
|
|
| Administrative expenses |
|
| (1,185) | (1,169) |
| Share of loss of joint venture |
|
| (8) | (335) |
| Net gain/(loss) on valuation of investment properties |
|
| 2,659 | (10,903) |
| Profit/(loss) from operations |
|
| 5,254 | (12,480) |
| Finance income |
|
| 570 | 1,054 |
| Finance costs |
|
| (2,311) | (2,174) |
| Gain/(loss) on financial liabilities at fair value and through profit and loss |
|
| 832 | (2,071) |
|
|
|
|
|
|
| Profit/(loss) on ordinary activities before taxation |
|
| 4,345 | (15,671) |
|
|
|
|
|
|
| Income tax (expense)/credit |
|
| (1,224) | 4,584 |
|
|
|
|
|
|
| Net profit/(loss) after taxation and retained profit/(loss) attributable to the equity holders of the company |
|
| 3,121 | (11,087) |
| Other comprehensive income |
|
| - | - |
| Total comprehensive income/(expense) attributable to the owners of the parent |
|
| 3,121 | (11,087) |
|
|
|
|
|
|
| Total and continuing earnings per ordinary share |
|
|
|
|
| Basic |
| 2 | 0.91p | (3.25)p |
| Diluted |
| 2 | 0.85p | (3.25)p |
The results of the Group for the period related entirely to continuing operations.
Real Estate Investors plc
Consolidated statement of changes in equity For the year ended 31 December 2009
|
| Share | Share | Capital | Other | Retained | Total |
|
| capital | premium | redemption | reserves | earnings | |
|
|
| account | reserve |
|
| |
|
| £000 | £000 | £000 | £000 | £000 | £000 |
|
|
|
|
|
|
|
|
| At 1 January 2008 | 3,407 | 29,472 | 45 | 121 | 2,241 | 35,286 |
|
|
|
|
|
|
|
|
| Transactions with owners | - | - | - | - | - | - |
| Loss for the year | - | - | - | - | (11,087) | (11,087) |
| Other comprehensive income | - | - | - | - | - | - |
| Total comprehensive income | - | - | - | - | (11,087) | (11,087) |
| At 31 December 2008 | 3,407 | 29,472 | 45 | 121 | (8,846) | 24,199 |
|
|
|
|
|
|
|
|
| Transactions with owners | - | - | - | - | - | - |
| Profit for the year | - | - | - | - | 3,121 | 3,121 |
| Other comprehensive income | - | - | - | - | - | - |
| Total comprehensive income | - | - | - | - | 3,121 | 3,121 |
| At 31 December 2009 | 3,407 | 29,472 | 45 | 121 | (5,725) | 27,320 |
Real Estate Investors plc
Consolidated statement of financial position As at 31 December 2009
|
|
| Note | 2009 | 2008 |
|
|
|
| £000 | £000 |
| Assets |
|
|
|
|
| Non current |
|
|
|
|
| Intangible assets |
|
| 171 | 171 |
| Investment properties |
| 3 | 48,054 | 42,608 |
| Property, plant and equipment |
|
| 3 | 11 |
| Deferred tax |
|
| 2,509 | 3,733 |
|
|
|
| 50,737 | 46,523 |
|
|
|
|
|
|
| Investment in joint venture |
|
| 55 | 25 |
|
|
|
| 50,792 | 46,548 |
| Current |
|
|
|
|
| Inventories |
|
| 6,754 | 5,879 |
| Trade and other receivables |
|
| 2,671 | 1,346 |
| Cash and cash equivalents |
|
| 10,831 | 11,369 |
|
|
|
| 20,256 | 18,594 |
|
|
|
|
|
|
| Total assets |
|
| 71,048 | 65,142 |
| Liabilities |
|
|
|
|
| Current |
|
|
|
|
| Bank loans |
|
| (3,195) | (374) |
| Provision for current taxation |
|
| (149) | (149) |
| Trade and other payables |
|
| (1,942) | (2,326) |
| Convertible debt |
|
| - | (325) |
|
|
|
| (5,286) | (3,174) |
| Non current |
|
|
|
|
| Bank loans |
|
| (37,203) | (35,698) |
| Liabilities at fair value through profit and loss |
|
| (1,239) | (2,071) |
|
|
|
| (38,442) | (37,769) |
| Total liabilities |
|
| (43,728) | (40,943) |
|
|
|
|
|
|
| Net assets |
|
| 27,320 | 24,199 |
|
|
|
|
|
|
| Equity |
|
|
|
|
| Share capital |
|
| 3,407 | 3,407 |
| Share premium account |
|
| 29,472 | 29,472 |
| Capital redemption reserve |
|
| 45 | 45 |
| Other reserves |
|
| 121 | 121 |
| Retained earnings |
|
| (5,725) | (8,846) |
| Total Equity |
|
| 27,320 | 24,199 |
| Net assets per share |
| 2 | 8.0p | 7.1p |
Real Estate Investors plc
Consolidated statement of cash flows For the year ended 31 December 2009
|
|
| 2009 | 2008 |
|
|
| £000 | £000 |
| Cash flows from operating activities |
|
|
|
| Profit/(loss) after taxation |
| 3,121 | (11,087) |
| Adjustments for: |
|
|
|
| Depreciation |
| 8 | 25 |
| Net (gain)/loss on valuation of investment property |
| (2,659) | 10,903 |
| Share of loss of joint venture |
| 8 | 335 |
| Finance income |
| (570) | (1,054) |
| Finance costs |
| 2,311 | 2,174 |
| (Gain)/loss on financial liabilities at fair value through profit and loss |
| (832) | 2,071 |
| Income tax expense/(credit) |
| 1,224 | (4,584) |
| (Increase)/decrease in inventories |
| (875) | 2,724 |
| (Increase)/decrease in trade and other receivables |
| (1,325) | 224 |
| Decrease in trade and other payables |
| (384) | (16) |
|
|
| 27 | 1,715 |
| Interest paid |
| (2,311) | (2,174) |
| Income taxes paid |
| - | (1) |
|
|
|
|
|
| Net cash from operating activities |
| (2,284) | (460) |
| Cash flows from investing activities |
|
|
|
| Acquisition of subsidiaries net of cash acquired |
| - | (148) |
| Purchase of investment properties |
| (2,787) | (12,750) |
| Purchase of property, plant and equipment |
| - | (1) |
| Proceeds from sale of property, plant and equipment |
| - | 4 |
| Investment in joint venture |
| (38) | (32) |
| Interest received |
| 570 | 1,054 |
|
|
| (2,255) | (11,873) |
| Cash flows from financing activities |
|
|
|
| Proceeds from bank loans |
| 4,980 | 20,028 |
| Payment of bank loans |
| (654) | (1,192) |
| Payment of convertible debt |
| (325) | - |
|
|
| 4,001 | 18,836 |
|
|
|
|
|
| Net (decrease)/increase in cash and cash equivalents | (538) | 6,503 | |
| Cash and cash equivalents at beginning of period |
| 11,369 | 4,866 |
| Cash and cash equivalents at end of period |
| 10,831 | 11,369 |
NOTES:
Cash and cash equivalents consist of cash in hand and balances with banks only.
Real Estate Investors plc
Notes to the preliminary announcement
For the year ended 31 December 2009
1 Basis of preparation
The consolidated financial statements have been prepared under the historical cost convention, except for the revaluation of properties and financial instruments held at fair value through the profit and loss account, and in accordance with International Financial Reporting Standards (IFRS) adopted by the European Union. It should be noted that accounting estimates and assumptions are used in preparation of the financial statements. Although these estimates are based on management's best knowledge and judgement of current events and actions, actual results may differ from those estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the financial statements, are set out in the Group's annual report and financial statements The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to 31 December each year. Material intra-group balances and transactions, and any unrealised gains arising from intra-group transactions, are eliminated on consolidation. Unrealised losses are also eliminated unless the transaction provides evidence of an impairment of the asset transferred. The principal accounting policies are detailed in the Group's annual report and financial statements.
2 Earnings/(loss) per share and net assets per share
The calculation of earnings/(loss) per share is based on the result for the year after tax and on the weighted average number of shares in issue during the year. The calculation of diluted earnings/(loss) per share is based on the basic earnings/(loss) per share adjusted for the issue of shares on the assumed conversion of the warrants and the conversion of the convertible loan.
Reconciliations of the earnings/(loss) and the weighted average numbers of shares used in the calculations are set out below.
|
| 2009 | 2008 | ||||
|
|
| Average | Earnings |
| Average | Loss |
|
| Earnings | number | per | Loss | number of | per |
|
| £'000 | of shares | share | £'000 | shares | share |
|
|
|
|
|
|
|
|
| Basic earnings/(loss) per share | 3,121 | 340,714,327 | 0.91p | (11,087) | 340,714,327 | (3.25)p |
| Dilutive effect of conversion of |
|
|
|
|
|
|
| convertible debt and share warrants |
| 27,328,237 |
|
|
|
|
| Diluted earnings/(loss) per share | 3,121 | 368,042,564 | 0.85p |
|
| (3.25)p |
The impact of convertible debt and share warrants on the loss per share for the year ended 31 December 2008 is antidilutive.
The net assets per share is based on the net assets at 31 December 2009 of £27,320,000 (2008: £24,199,000) divided by the shares in issue at 31 December 2009 and 2008 of 340,714,327.
3 Investment properties
Investment properties are those held to earn rentals and for capital appreciation.
The carrying amount of investment properties for the periods presented in the consolidated financial statements as at 31 December 2009 is reconciled as follows:
|
|
|
| £'000 |
| Carrying amount at 1 January 2008 |
|
| 36,661 |
| Additions |
|
| 12,750 |
| On acquisition of subsidiary undertaking |
|
| 4,100 |
| Revaluation |
|
| (10,903) |
|
|
|
|
|
|
|
|
|
|
| Carrying amount at 31 December 2008 |
|
| 42,608 |
| Additions |
|
| 2,787 |
| Revaluation |
|
| 2,659 |
|
|
|
|
|
| Carrying amount at 31 December 2009 |
|
| 48,054 |
4 Publication The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. The consolidated statement of financial position at 31 December 2009 and the consolidated statement of comprehensive income, the consolidated statement of changes in equity, the consolidated statement of cash flows and the associated notes for the year then ended have been extracted from the Group's financial statements upon which the auditor's opinion is unqualified and does not include any statement under section 498 of the Companies Act 2006. The statutory accounts for the year ended 31 December 2009 will be delivered to the Registrar of Companies following the Group's Annual General Meeting.
5 Copies of the announcement
Copies of this announcement are available for collection from the Company's offices at West Plaza, 8th Floor, 144 High Street, West Bromwich, B70 6JJ.