Interim Results

8 Sep 2006 07:00

Mercury Recycling Group PLC08 September 2006 MERCURY RECYCLING GROUP PLC INTERIM REPORT FOR THE PERIOD ENDING 30 JUNE 2006 Chairman's Statement I am pleased to report the Group's unaudited results for the six months ended 30June 2006, show a further increase in sales of nearly 20% compared to the sameperiod last year to £1,219,000 from £1,031,000. Operating profits at theinterim stage, excluding goodwill amortisation and exceptional items, increasedby 60% to £212,000 from £133,000, whereas the profit for the last financial yearwas £268,000. It will also be noted that, for the first time, we have apositive earnings. The results were achieved despite yet another Government delay in theintroduction of the WEEE Directive which, as I have indicated previously, willlegally enforce the recycling of all Gas Discharge Lamps. The Directive wasoriginally expected to be implemented in 2006 or early 2007. The Governmenthave now finally announced a firm commitment to implement this Directive in theSummer of 2007. As reported in the 2005 Report and Accounts, Share Options were granted to bothExecutive Directors and Senior Executives. Under new, and complex financialreporting requirements, the value of the share options has to be reported in theProfit and Loss Account and reflected as a reserve in the Balance Sheet. Aprior year adjustment has been required in respect of the effect on previousyears. Our enclosed Interim results show continuing sales growth and your Board isconfident of this trend continuing in the second half of the year. Futureprospects should be enhanced when the Directive is implemented in 2007. This isespecially important, as our new plant and premises have the capacity tosubstantially increase recycling output without any further capital expenditure. The Rt Hon The Lord Barnett JP PC Chairman 8 September 2006 Group Profit and Loss Account For the Six months ended 30 June 2006 As restated 6 Months 6 Months Year ended ended ended 30.6.06 30.6.05 31.12.05 £'000 £'000 £'000 Turnover 1,219 1,031 2,147 Cost of sales (104) (120) (218) Gross profit 1,115 911 1,929 Administrative expenses (1,034) (951) (2,110) Operating profit before amortisation, relocation costs 212 133 268 and share based payment costsRelocation costs (17) (57) (216)Share based payment costs (12) (14) (29)Goodwill amortisation (102) (102) (204) Group operating profit/(loss) 81 (40) (181) Interest receivable 1 7 2Interest payable (14) (1) (14) Profit/(loss) on ordinary activities before taxation 68 (34) (193) Taxation - - -Profit/(loss) on ordinary activities after taxation retained for the period 68 (34) (193) Earnings/(loss) per share: Basic (pence) 0.20p (0.10p) (0.57p) Diluted 0.19p N/A N/A Group Balance Sheet As at 30 June 2006 As restated As at As at As at 30.6.06 30.6.05 31.12.05 £'000 £'000 £'000Fixed assets Tangible assets 1,142 994 1,142 Intangible assets 3,124 3,327 3,225 4,266 4,321 4,367Current assets Debtors 493 445 531Cash at hand and in bank 29 181 1 522 626 532Creditors: amounts due within one year (302) (727) (515) Net current assets/(liabilities) 220 (101) 17 Creditors: amounts due after more than one year (290) (44) (308) Provisions for liabilities (84) - (44) Total assets less current liabilities 4,112 4,176 4,032 Capital and reserves Called up share capital 3,336 3,336 3,336 Share premium account 242 242 242Other reserve 448 612 530 Merger reserve (111) (111) (111)Share based payment reserve 59 32 47Profit and loss account 138 65 (12) Equity shareholders' funds 4,112 4,176 4,032 Group Cash Flow Statement For the six months ended 30 June 2006 As restated 6 Months 6 Months 6 Months ended ended ended 30.6.06 30.6.05 31.12.05 £'000 £'000 £'000 Net cash inflow from operating activities 127 148 145 Returns on investment and servicing of finance Interest paid (14) (1) (14) Interest received 1 7 2 Capital expenditure and financial investment Purchase of tangible fixed assets (77) (431) (706) 37 (277) (573) Financing New loan - 300 300 Repayment of loans (4) (7) - Capital element of hire purchase (5) (5) (25) Increase/(decrease) in cash in period 28 11 (298) Reconciliation of operating profit/(loss) to net cash inflow from operating activities Operating profit/(loss) 81 (40) (181)Depreciation 81 43 93 Amortisation of goodwill 102 102 204Share based payment costs 12 14 29Profit on disposal of assets (4) (5) (5)Relocation costs - Loss on disposal - - 122Decrease / (increase) in debtors 38 (98) (241)(Decrease) / increase in creditors (183) 132 124 Net cash inflow from operating activities 127 148 145 Notes 1. Earnings per share The calculation of basic earnings per share is based upon the profit for theperiod of £68,000 (2005 - first half - loss £34,000) and the weighted-averagenumber of 33,359,000 (2005 - first half - 33,359,000) shares in issue during theperiod. Adjusted earnings per share is calculated using earnings before amortisation ofgoodwill and exceptional items. Adjusted earnings is one of the primaryperformance measures used by the directors and is provided, in addition to thestatutory results prepared under UK GAAP, to assist the shareholders to gain aclearer understanding of the underlying performance of the business. 6 Months 6 Months 6 Months to to to 30.6.06 30.6.05 31.12.05 pence pence pence Basic earnings/(loss) per share 0.20 (0.10) (0.57) Goodwill, relocation costs and share based payment costs 0.47 0.52 1.33Adjusted earnings per share 0.67 0.42 0.76 2. Basis of preparation The interim financial information has been prepared on the basis of theaccounting policies set out in the accounts for the year ended 31 December 2005with the exception of share based payments set out in note 4. The interim financial information is unaudited. The financial information doesnot constitute statutory accounts as defined by section 240 of the Companies Act1985. Full accounts of the company for the year ended 31 December 2005 on whichthe Auditors gave an unqualified report, have been delivered to the Registrar ofCompanies. These accounts consolidate the accounts of Mercury Recycling GroupPlc and all of its wholly owned subsidiaries. The goodwill arising on theacquisition of Mercury Recycling Limited and Simister Engineering Limited hasbeen capitalised and amortised over the Directors' estimate of its useful life. 3. Copies of report Copies of this interim statement will be despatched to shareholders and will beavailable to the public at the Registered Office, Mercury House, 17 CommerceWay, Trafford Park, Manchester, M17 1HW. 4. Share based payments During the period the group has adopted FRS20 and restated comparative figuresaccordingly. The fair value of shares/options granted is recognised as an employee expensewith a corresponding increase in equity. The fair value is measured at thegrant date and spread over the period during which the employee becomesunconditionally entitled to the share/option. In accordance with the transitional provisions of FRS20, no expense is recordedin respect of grants made prior to 27 November 2002 or which have vested by 1January 2006. Operating profits have been reduced as follows:- 6 Months 6 Months 6 Months to to to 30.6.06 30.6.05 31.12.05 £'000 £'000 £'000 Share based payment charge 12 14 29 This information is provided by RNS The company news service from the London Stock Exchange