REI Regulatory News (RLE)

4 Apr 2007 07:01

Real Estate Investors PLC04 April 2007 REAL ESTATE INVESTORS PLC("REI" or "the Company") PRELIMINARY RESULTS FOR THE YEAR ENDED 31 DECEMBER 2006 Real Estate Investors PLC (AIM:RLE), the West Midlands based property company,today announces its preliminary results for the year ended 31 December 2006. Highlights: * £25 million share placing in December 2006 issued at premium to market price * Gross property assets up 21% to £23.9m (2005: £19.8m) * Rental income increased to £1.4m (2005: £1.2m) * Net assets up to £33.3m (2005: £5.8m), equivalent to 10p per share (excluding increase in value of trading stock) * Year end balance sheet cash £26.9m * Recent acquisition of investment properties for £11.5m in West Midlands For further information please contact: Enquiries:Real Estate Investors plc +44 (0)121 524 2588Paul Bassi Smith & Williamson Corporate Finance Limited +44 (0)20 7131 4000Azhic Basirov / Siobhan Sergeant Powerscourt Media Limited +44 (0)20 7236 5615Victoria Brough/ Claire Melly Notes to Editors 1. REI is an AIM listed property investment and development companyspecialising in commercial property throughout the Midlands and Central England 2. REI is focused on delivering shareholder value through returnsgenerated from strong yields and capital enhancements. This is achieved bytargeting investments in orphaned, distressed, part-let and underperformingcommercial property assets 3. REI's Board is led by respected property investor Paul Bassi, whohas over 23 years of property experience. Mr Bassi is also co-founder andchairman of Bond Wolfe Auctioneers and deputy chairman of Bigwood CharteredSurveyors - the combined businesses place them in the UK's top 50 propertyauction houses and estate agents 4. REI was admitted to trading on AIM in June 2004. In December2006, REI successfully raised £25 million to aggressively grow its propertyportfolio, at that time, estimated to be worth approximately £28 million. PaulBassi is the largest shareholder in the Company 5. Further information on REI can be found at www.reiplc.com CHAIRMAN'S STATEMENT It gives me considerable pleasure to be able to report to you on a year oftremendous progress and advancement in REI's activities. In my statement that accompanied the 2006 interim results, I commented that wehad created the solid platform necessary to enable further growth and the rapidexpansion of the business. Indeed, following the £2.7 million share subscriptionand the appointment to the board of Paul Bassi and Marcus Daly, we were pleasedto announce, on 20 December 2006, the successful completion of a £25 millioninstitutional fundraising, which was oversubscribed. We are greatly encouraged by the level of support from our new investors whichwill enable us to concentrate on implementing our strategy of building a £150million portfolio over the next 18 months. The background and reasons for the£25 million placing were well covered in the 20 December announcement and theboard, headed by our new Chief Executive and major shareholder Paul Bassi, hasmoved quickly to take advantage of market opportunities. I am pleased to report that our gross property assets increased over the year by21% from £19.8 million to £23.9 million. Rental income for 2006 was £1.4 millioncompared to £1.2 million for 2005 and net assets increased from £5.8 million to£33.3 million. The reported net asset value per share has been diluted to 9.8pper share mainly as a result of the share issues, but this figure excludes asignificant increase in the value of our trading stock, which is not revalued inthe accounts. Whilst the results for the year show a loss of £513,000, this was mainly as aresult of a deficit on property revaluation of £272,000, director's bonus andcompensation of £160,000 and a provision in respect of share warrants valued at£121,000. We started the new financial year with £26.9 million of cash balances,two major acquisitions and a market capitalisation of £40 million. Consistent with our strategy of concentrating our business in the Midlands andCentral England, we announced at the beginning of February this year our firstacquisition since the year end fundraising. We purchased, off market, thefreehold interest in 102/106 Colmore Row and 1-6 Bennett's Hill, Birmingham fora cash consideration of £6.3 million. This prime city centre property comprises30,000 square feet of offices and presently produces £200,000 in annual rental.We shall be refurbishing the vacant space and anticipate a strong demand fromquality tenants. On 19 March 2007 we announced our second acquisition - we purchased Avon House,Buntsford Gate, Bromsgrove for a cash consideration of £5.2 million. Theproperty consists of approximately 26,000 square feet of modern high qualityoffices, close to the Midlands motorway network and within easy access toBirmingham City centre and its international airport. The property is currentlypart let, with tenant interest already expressed in the void space. Once fullylet we anticipate that the property will generate in excess of £400,000 rent perannum. These deals are the first examples of the major opportunities availableto us now that the group has significant resources with which it is able to makeacquisitions for cash. We made a number of purchases and a disposal in the first six months of 2006,which were the subject of detailed coverage in our June interim statement. Thesetransactions increased the group's portfolio to £28 million and are performingwell. In order to focus on our preferred area of operations, we have decided totransfer our headquarters to West Bromwich, where REI's activities will besupported by Bond Wolfe Auctioneers and Bigwood Chartered Surveyors, of whichPaul Bassi remains Chairman. Marcus Daly, who joined the board in June 2006, has been appointed full timeFinance Director, effective from 1 January 2007. It has been an eventful and exciting year for Real Estate Investors PLC, one inwhich the group's market capitalisation has advanced to £40 million and thedemanding targets set at flotation in June 2004 have been achieved. Our strong,institutional shareholder base and the cash resources now available to the groupwill enable the board to take forward its stated strategy of creating asubstantial Central England focused listed property company and deliveringstrong returns for shareholders. At this stage the directors are not recommending the payment of a dividend. I recommend that you visit our interactive website www.reiplc.com wherefinancial and corporate information may be viewed. Continuously updatedinformation and news on REI can be accessed and company announcements emailed toyou. I am looking forward to writing to you again shortly. Peter H LewinChairman GROUP PROFIT AND LOSS ACCOUNTFor the year ended 31 December 2006 Note 2006 2005 £000 £000 Turnover - continuing operations 1,324 1,181 - acquisitions 167 - - share of joint venture (66) - ----- -----Group turnover 1,425 1,181Administration expenses (875) (441)Other operating income - 35 ----- -----Operating profit - continuing operations 544 775 - acquisitions 6 - ----- ----- 550 775Surplus on disposal of fixed asset investment property 45 45Share of operating profit of joint venture 57 -Deficit on revaluation of investment properties (272) - ----- -----Profit on ordinary activities before interest 380 820 Net interest payable and similar charges - group (892) (800) - joint venture (48) - ----- ----- (940) (800) ----- -----(Loss)/profit on ordinary activities before taxation (560) 20 Tax credit/(charge) on (loss)/profit on ordinaryactivities 47 (6) ----- -----(Loss)/profit on ordinary activities after taxation (513) 14 ===== ===== Basic (loss)/earnings per share 2 (0.62p) 0.03p ===== =====Diluted (loss)/earnings per share 2 (0.62p) 0.03p ===== ===== The results of the group for the period related entirely to continuingoperations. There is no difference between the profit on ordinary activities and theretained profit for the period stated above and their historical costequivalents. GROUP STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSESFor the year ended 31 December 2006 2006 2005 £000 £000 (Loss)/profit on ordinary activities after taxation (513) 14 Unrealised surplus on revaluation of investment properties 130 708 ----- -----Total recognised (losses) and gains for the year (383) 722 ===== ===== GROUP BALANCE SHEET AT 31 DECEMBER 2006 Note 2006 2005 £000 £000Fixed assetsIntangible assets - goodwill 165 117 - negative goodwill (903) (903) ------ ------ (738) (786)Tangible assets 14,248 10,216 ------ ------ 13,510 9,430Investment in joint ventureShare of gross assets 1,386 -Share of gross liabilities (1,062) - ------- ------- 324 - ------- ------- 13,834 9,430Current assetsStock 9,703 9,703Debtors 488 189Investments 435 1,282Cash at bank 26,889 1,065 ------ ------ 37,515 12,239Creditors: amounts falling due within one year 3 (1,162) (1,840) ------ ------Net current assets 36,353 10,399 ------ ------Total assets less current liabilities 50,187 19,829 Creditors: amounts falling due after more than one yearConvertible debt (325) (325)Other 3 (16,545) (13,695) ------- ------- (16,870) (14,020) ------- -------Net assets 33,317 5,809 ======= =======Capital and reservesCalled up share capital 4 3,407 523Share premium account 29,472 4,586Capital redemption reserve 45 45Other reserves 121 -Revaluation reserve 838 708Profit and loss account (566) (53) ------ -----Shareholders' funds 33,317 5,809 ====== ===== GROUP CASH FLOW STATEMENTFor the year ended 31 December 2006 2006 2005 £000 £000 Net cash inflow from operating activities 528 921 ----- -----Returns on investments and servicing of financeInterest received 90 36Interest paid (1,030) (658) ----- -----Net cash outflow from returns on investments and servicingof finance (940) (622) Taxation - (186) Capital expenditure and financial investmentPurchase of tangible fixed assets (2,011) (4,596)Sale of investment properties 456 1,170 ------ ------Net cash outflow from capital expenditure and financialinvestment (1,555) (3,426) Acquisitions and disposalsPurchase of subsidiary undertakings (349) (2,254)Investment in joint venture (224) -Payment of amounts owed by subsidiaries to vendors (247) (66)Net cash from purchase of subsidiaries 30 - ------ ------Net cash outflow from acquisitions and disposals (790) (2,320) Management of liquid resourcesTreasury deposits placed (24,750) - ------ ------ (24,750) -FinancingProceeds from issue of shares 27,840 1,061Expenses of issue of shares (1,071) (37)Receipts from borrowing 1,752 11,207Repayments of borrowing (784) (6,305)Funds deposited with lenders 847 (1,263)Finance lease taken out - 7Finance lease repaid (3) - ------ ------Net cash inflow from financing 28,581 4,670 ------ ------Increase/(decrease) in cash 1,074 (963) ====== ====== NOTES TO THE PRELIMINARY ANNOUNCEMENTFor the year ended 31 December 2006 1. Basis of preparation The preliminary results of the group set out in this preliminary announcement donot constitute statutory accounts as defined in Section 240 of the Companies Act1985. The financial information for the year ended 31 December 2006 has been extractedfrom the group's statutory financial statements to that date, upon which theauditor's opinion is unqualified and does not include any statement underSection 237 of the Companies Act 1985. The statutory financial statements havenot yet been filed with the Registrar of Companies. The financial information has been prepared under the historical cost conventionas modified by the revaluation of investment properties and in accordance withapplicable United Kingdom accounting standards, and is consistent with thepolicies set out in the group's statutory accounts for the period ended 31December 2006. 2. Earnings per share The calculation of earnings per share is based on the profit retained for theyear and on the weighted average number of shares in issue during the year. Thecalculation of diluted earnings per share is based on the basic earnings pershare adjusted for the issue of shares on the assumed conversion of theconvertible loan notes. Reconciliations of the earnings/(loss) and the weighted average numbers ofshares used in the calculations are set out below. 2006 2005 Loss/ Weighted Earnings Earnings Weighted Loss per earnings average per share £000 average share £000 number amount number amount of shares of sharesBasic earnings/(loss) per share (513) 82,085,371 (0.62p) 14 44,477,097 0.03p ------ ---------- ----- --- ---------- ----Dilutive effectof conversion of convertible loan 2,954,545notes ---------- Diluted earnings per share 14 47,431,642 0.03p --- ---------- ---- The conversion of convertible loan notes and exercise of share warrants wouldnot be dilutive to the loss per share. 3. Financial instruments Maturity of financial liabilities The group financial liabilities analysis at 31 December 2006 was as follows: Group Group 2006 2005 £000 £000 In less than one year:Bank borrowings 370 1,127In more than one year but less than two years:Bank borrowings 404 382In more than two years but less than five years:Bank borrowings 2,924 1,172In more than five years:Bank borrowings 13,463 12,377 ------ ------ 17,161 15,058Deferred arrangement costs (246) (236) ------ ------ 16,915 14,822 ====== ====== Borrowing facilities The group has no undrawn committed borrowing facilities at 31 December 2006. 4. Share capital 2006 2005 2006 2005 Number of Number £000 £000 shares of sharesAuthorised:Ordinary shares of 1p each 1,000,000,000 1,000,000,000 10,000 10,000 ============= ============= ====== ======Allotted, called up and fully paidOrdinary shares of 1p each 340,714,327 52,316,197 3,407 523 ============= ============= ====== ====== The excess of the total consideration for shares issued of £25,957,000 over thenominal value of £2,884,000 has been credited to the share premium account. On 9 March 2006 1,000,000 ordinary shares were issued for £100,000 as partconsideration for the acquisition of a freehold property in West Bromwich. On 26 June 2006 223,130 ordinary shares 1p were issued for £23,130 as partconsideration for services. On 29 June 2006 22,250,000 ordinary shares of 1p were issued for £2,175,000 incash. On 29 June 2006 675,000 ordinary shares of 1p were issued for £67,500 asconsideration for commission in connection with the share issue. On 25 July 2006 1,250,000 ordinary shares of 1p were issued for £125,000 incash. On 25 July 2006 7,000,000 ordinary shares of 1p were issued for £700,000 as partconsideration for the acquisition of the share capital of Rightforce Limited. On 2 August 2006 4,000,000 ordinary shares of 1p were issued for £400,000 incash. On 24 August 2006 2,000,000 ordinary shares of 1p were issued for £200,000 aspart consideration for the acquisition of a freehold property in Paisley. On 15 December 2006 250,000,000 ordinary shares of 1p were issued for£25,000,000 in cash. The directors were granted share warrants on 29 June 2006 in respect of10,637,500 Ordinary shares and on 25 July 2006 in respect of 4,750,000 Ordinaryshares. The share warrants are exercisable from two years from the date of thegrant of the option and will lapse within seven years if not exercised. Thewarrants were granted on the basis of 1 for 2 shares held at the date of thegrant and are exercisable at 12p. The fair value of these options of £121,000 has been charged to the profit andloss account. 5. Post balance sheet events The company completed the purchase on 26 March 2007 of freehold property at 102/106 Colmore Row and 1-6 Bennett's Hill, Birmingham for a consideration of £6.3million and on Avon House, Bromsgrove for a consideration of £5.2 millionsatisfied in cash. 6. Copies of announcement Copies of this announcement are available from the Company's business premisesat West Plaza, 8th Floor East, West Bromwich, West Midlands, B70 8JJ. 3 April 2007 This information is provided by RNS The company news service from the London Stock Exchange