RNS Number : 8069X
Medsea Estates Group PLC
30 June 2008
Medsea Estates Group PLC
PRELIMINARY RESULTS for the year ended 31st December 2007
Chairman's Statement
Turnover rose 30% in the year to �10.5 million, but I regret to report that the Group recorded a loss before tax of �1.3 million.
Clearly this was a very disappointing performance, but reflects the position we announced in our trading update in February. The Group's
revenue in the second half of the year was only �4.6 million on a re-stated basis, a reflection not only of slowing activity, but also of
the difficulties we have experienced as a result of our dependence on third parties to complete the sales processes in a timely manner.
The Board has taken the decision to change the Group's revenue recognition policy, so we are no longer taking into account income that
is in the pipeline. Additionally, we have decided that the degree of influence Medsea now exercises over its investments is no longer
sufficient in all cases to justify their inclusion as associates and accordingly certain investments have been reclassified as available for
sale investments and profits will now be recognised when they crystallise rather than on the equity basis.
Basically, 2007 was characterised by two distinct halves: the first half of the year witnessed exceptionally strong sales growth for our
Italian business as the attractiveness of properties in Calabria led to record sales of 608 units in the first half year. The unexpected
complexity of operating in this market however led to cancellations and, most importantly commission collection delays in the second half of
the year.
In general, our experience to date in the burgeoning Italian market has brought the following issues to light:
* The process by which reservations are converted to firm, billable and collectable commissions has been generally hampered by
regulatory and third party inefficiencies
* Delays in Medsea receiving such commissions have resulted in a cash flow squeeze for both Medsea and its agents, with the latter
resulting in a throttling of the new business pipeline
* Costs related to the expansion in the Italian market impacted profitability in the second half of the year
The Group has focused heavily on easing the commission backlog and is hopeful that the use of its call centre and other initiatives will
enable commissions to flow more readily in the coming months.
Quite clearly, recent events in the credit markets have placed pressure on the markets in which Medsea operates. Cancellations are often
linked to financial pressures experienced by buyers. The Spanish market has been experiencing a downturn already for a number of years and
market forces have created a buyer's market. Medsea is not immune to such developments and is continually right sizing the business to
reflect these conditions. Nevertheless, the general trend of Northern Europeans seeking either a primary or secondary home in the
Mediterranean has not ceased and reduced prices are likely to increase the attractiveness for new buyers.
As an AIM company, we notified in our interim results announcement that the Group is now required to report according to International
Financial Reporting Standards. In fact, this change from UK GAAP has no material impact on our numbers, but we have taken the opportunity
provided by this change to review the accounting policies that we were advised to implement when the Group was floated on AIM.
The reality is that whilst the policy in relation to income recognition was absolutely proper, the alternative approach to which we have
now changed provides a better measure of performance and where management should focus their attention. This change also has the advantage
that our results will no longer be affected by actual cancellations being at different levels to cancellation provisions in our accounts as
the latter will no longer be needed. An explanation of the impact of these changes is provided in the financial statements.
January 2008 started better than we had expected, but since then sales have continued to decline which has led the company to implement
a series of cost-cutting measures. We believe this will enable us to emerge as a stronger Group once market conditions improve.
Tony Gatehouse
Chairman
Finance Review
Income Statement
Year on year increase in turnover to �10,537,000 represents an increase of 30% over the year 2006. Loss before tax has increased to
�1,297,000 compared to a loss of �1,048,000 in the previous year.
Gross margins improved from 13.7% in 2006 to 21.5% in 2007, but this was off-set by an increase in administrative costs of �1,400,000.
The results for the year have been drawn up using a different income recognition policy to that hitherto. The basic effect is that only
income that has been invoiced or is invoicable by the year end has been taken to the profit and loss account. This means that commissions
that would have been receivable and payable under the previous policy have not been included in these accounts.
Due to external changes and the impact of the credit squeeze, the Group has reviewed the degree of influence it currently exercises in
relation to its Associates. As a result the directors consider that the Group no longer exercises the appropriate influence in respect of
two of the investments, and these have been re-classified as available for sale financial assets.
Earnings per share, basic and diluted, in the year are minus 1.76 pence compared to minus 1.67 pence in 2006.
Balance Sheet
There has been a significant increase in the sums invested in Associates, resulting from the matters referred to in note 26 of the 2006
accounts and in note 25 of these accounts. This has in turn resulted in the decrease in trade receivables as reported at the 2006 year end.
It is now expected that the profits from Associates will start to crystalise in 2009.
Cash Flow
The Group raised �735,000 through a share placing in June 2007.
The net cash outflow during the year in respect of operating activities reflects the impact of the loss recorded.
MEDSEA GROUP ESTATES PLC AND SUBSIDIARY UNDERTAKINGS
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
As restated
�'000 �'000
Revenue 10,537 8,066
Cost of sales (8,274) (6,963)
Administrative expenses (3,556) (2,121)
Finance income 24 1
Finance expense (28) (31)
Loss before taxation (1,297) (1,048)
Tax (charge)/credit on loss (14) (129)
Loss for the year (1,311) (1,177)
Attributable to:
(1,307) (1,172) (5)
Equity holders of the parent (4)
Minority interests
(1,311) (1,177)
Loss per share (pence)
Basic and diluted (1.76) (1.67)
None of the group�s activities was acquired or discontinued during the above periods.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
2007 2006
As re-stated
�'000 �'000
ASSETS
Non-current assets
Other intangible assets 4 6
Property, plant and equipment 1,057 871
Investments in associates 646 -
Other financial assets 100 92
1,807 969
Current assets
Inventories 165 301
Trade and other receivables 1,788 2,319
Current tax recoverable 15 -
Cash and cash equivalents 317 944
2,285 3,564
Total assets 4,092 4,533
EQUITY AND LIABILITIES
Shareholders' equity
Share capital 7,798 7,063
Share premium 22 22
Other reserve 128 117
Revaluation reserve 51 46
Merger reserve (7,058) (7,058)
Foreign currency translation reserve (170) (109)
Retained earnings (475) 778
Minority interests - 4
296 863
Non-current liabilities
Long-term borrowings 209 300
Deferred tax - 91
209 391
Current liabilities
Trade and other payables 3,065 3,031
Short-term borrowings 522 248
3,587 3,279
Total equity and liabilities 4,092 4,533
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2007
2007 2006
re-
stated
�'000 �'000
Cash flows from operating activities
Profit/(loss) before tax (1,297) (1,048)
Adjustments for:
Depreciation 127 121
Foreign exchange (63) (90)
Finance income (24) (1)
Finance expense 28 31
Amortisation of other intangible assets 2 3
Loss / (profit) on sale of property, plant and equipment 15 (52)
Decrease / (increase) in trade and other receivables 548 (477)
Decrease / (increase) in inventories 136 (119)
Increase in trade and other payables 47 2,246
Cash (absorbed by) / generated from operations (481) 614
Tax on profits paid (137) (164)
Interest paid (28) (31)
Net cash (absorbed by) / generated from operating activities (647) 419
Cash from investing activities
Interest received 24 1
Purchase of property, plant and equipment (256) (107)
Proceeds from the sale of property, plant and equipment - 276
Payments to acquire shares in associates (654) -
Payments to acquire other intangible assets (1) (7)
Net cash (used) / generated in investing activities (887) 163
Cash from financing activities
Receipt of borrowings 123 352
Share issues 735 -
Other loans (13) (118)
Capital element of finance lease (payments)/receipts (27) 55
Net cash generated from financing activites 818 289
Net (decrease)/ increase in cash and cash equivalents (715) 871
Cash and cash equivalents at the beginning of the period 944 73
Cash and cash equivalents at the end of the period 229 944
Cash and cash equivalents consists of:
Cash and cash equivalents included in current assets 317 944
Bank overdraft included in current liabilities (88) -
229 944
1. Basis of preparation
The financial statements have been prepared under the historical cost convention, as modified by the revaluation of certain non-current
assets and in accordance with applicable International Financial Reporting Standards (IFRS) as adopted for use by the European Union.
These are the Group's first IFRS consolidated financial statements. IFRS 1 'First-time adoption of International Financial Reporting
Standards' has been applied. An explanation as to how the transition in respect of IFRS has affected the reported financial position,
financial performance and cash flow of the group is provided below in the reconciliations of equity and profit or loss for the comparative
periods reported under UK GAAP to those reported for those periods under IFRSs; the impact of the change in the accounting policy for income
recognition is also explained.
The group financial statements consolidate Medsea Estates Group PLC and all its subsidiary undertakings drawn up to 31 December each
year. Medsea Estates Group PLC acquired shares in Medsea UK Limited and its subsidiaries on 16 July 2004. The financial statements have been
prepared using merger accounting so that all the combining entities' results are shown from 1 January 2004.
As this business combination occurred before the transition date to IFRS of 1 January 2006, the exemption from retrospective application
of IFRS3 Business Combinations has been taken.
2. Operating loss
The operating loss is arrived at after charging: 2007 2006
�'000 �'000
Depreciation of owned assets 109 111
Depreciation of leased assets 18 10
Amortisation of intangible assets 2 3
Loss/(Profit) on disposal of property, plant and equipment 15 (52)
Hire of equipment - operating leases - motor vehicles 655 373
Hire of equipment - operating leases - land and buildings 143 174
Auditors' remuneration - other services 27 2
Auditors' remuneration - audit services 40 31
Share capital Share premium Other reserves * Revaluation reserve
Merger reserve Foreign Currency Retained earnings Minority interests Total Equity
Translation Reserve
�'000 �'000 �'000 �'000
�'000 �'000 �'000 �'000 �'000
Balance at 1 January 2006 7,063 22 117 96
(7,058) 1,944 9 2,193
-
Loss for the year - - - -
- (1,172) - (1,172)
-
Exchange differences arising on translation of - - - (1)
- (109) (43) - (153)
foreign operations
Minority interest - - - -
- - (5) (5)
-
Sales of revalued properties - - - (49)
- 49 - -
-
Total recognised income and expense for the period 7,063 22 117 46
(7,058) (109) 778 4 863
Payment of dividends - - - -
- - - -
-
Balance at 31 December 2006 carried forward 7,063 22 117 46
(7,058) (109) 778 4 863
Balance at 1 January 2007 brought forward 7,063 22 117 46
(7,058) (109) 778 4 863
Loss for the period - - - -
- (1,307) - (1,307)
-
Exchange differences arising on translation of - - 11 5
- (61) 54 - 9
foreign operations
Minority interest - -
- - (4) (4)
-
Sales of revalued properties - - - -
- - - -
-
Total recognised income and expense for the year 7,063 22 128 51
(7,058) (170) (475) - (439)
Issue of shares 735 - - -
- - - - 735
Payment of dividends - - - -
- - - -
-
Balance at 31 December 2007 carried forward 7,798 22 128 51
(7,058) (170) (475) - 296
* Each company in the Group registered in Spain is required to transfer 10% of its profit each year to a non-distributable reserve until
the balance on that reserve reaches 20% of that company's paid up share capital. This balance is reflected under other reserves and the
reserve was fully funded at 31 December 2007
4. Explanation of transition to IFRS and change in Revenue Recognition Policy
The Group has applied IFRS1, First Time Adoption of International Financial Reporting Standards in preparing these consolidated
financial statements. The Group's transition date is 1st January 2006 and as such an opening IFRS balance sheet has been prepared at that
date. Consequently, 2006 comparative information has been restated under these new accounting standards.
IFRS 1 allows certain exemptions from full retrospective application of certain standards. In preparing these consolidated financial
statements, the group has elected to apply the business combinations exemption in IFRS 1. Therefore, it has not restated the business
combinations that took place prior to the 1 January 2006 transition date, which resulted in the creation of the merger reserve.
As part of adopting IFRS, the Directors have also decided to alter the accounting policy in respect of revenue recognition.
Hitherto commission income and the consequent commission payable have been accrued in full at the time that clients made payment of a
non-refundable reservation deposit to the developer. To allow for subsequent cancellations, a cancellation provision was then made against
these accruals in order to reduce the accrued income and expenditure in the accounts to levels that would be comparable with what was
actually invoiced. Because of the sometimes protracted period between reservation and completion, establishing the correct level of
cancellation provision has become increasingly difficult. Accordingly, the consolidated accounts will now report on commission receivable on
the basis of whether it was invoiced or invoicable by the end of the accounting period concerned. This means that commission (both
receivable and payable) is only being recognised if the client purchasers have paid the first full instalment on their property purchase
(often 50% of the selling price) which then triggers the contractual arrangement whereby commission can be claimed from the developer
Due to external changes and the impact of the credit squeeze, the Group has reviewed the degree of influence it currently exercises in
relation to its Associates. As a result the directors consider that the Group no longer exercises the appropriate influence in respect of
two of the investments, and these have been re-classified as available for sale financial assets
5. Reconciliation of the consolidated income statement for the year ended 31 December 2006
Effect of Effect of
change to change to Restated Effect of Restated
2006 status of income 2006 transition 2006
UK GAAP associates recognition UK GAAP to IFRS IFRS
�'000 �'000 �'000 �'000 �'000 �'000
Revenue 13,300 - (5,234) 8,066 - 8,066
Cost of sales (8,849) - 1,886 (6,963) - (6,963)
Administrative expenses (2,229) - 108 (2,121) - (2,121)
Share of operating profit in 702 (702) - - - -
associates
Finance income 1 - - 1 - 1
Finance expense (31) - - (31) - (31)
Profit/(loss) before taxation 2,894 (702) (3,240) (1,048) - (1,048)
Tax (charge)/credit on loss (1,019) 890 (129) - (129)
Profit/(loss) for the year 1,875 (702) (2,350) (1,177) - (1,177)
Attributable to:
Equity holders of the parent 1,880 (702) (2,350) (1,172) - (1,172)
Minority interests (5) - - (5) - (5)
Retained profit/(loss) for the year 1,875 (702) (2,350) (1,177) - (1,177)
Earnings/(loss) per share (pence)
Basic and diluted 2.66 (1.67) (1.67)
6. Reconciliation of consolidated equity at 31 December 2006 (last date of UK GAAP statements)
Effect of Effect of
change to change to Restated Effect of Restated
2006 status of income 2006 transition 2006
UK GAAP associates recognition UK GAAP to IFRS IFRS
�'000 �'000 �'000 �'000 �'000 �'000
ASSETS
Non-current assets
Other intangible assets 6 - - 6 - 6
Property, plant and equipment 871 - - 871 - 871
Investments in associates 687 (687) - - - -
Other financial assets - 92 - 92 - 92
1,564 (595) - 969 - 969
Current assets
Inventories 301 - - 301 - 301
Trade and other receivables 12,245 - (9,926) 2,319 - 2,319
Cash and cash equivalents 944 - - 944 - 944
13,490 - (9,926) 3,564 - 3,564
Total assets 15,054 (595) (9,926) 4,533 - 4,533
EQUITY AND LIABILITIES
Shareholders' equity
Share capital 7,063 - - 7,063 - 7,063
Share premium 22 - - 22 - 22
Other reserve 117 - - 117 - 117
Revaluation reserve 46 - - 46 - 46
Merger reserve (7,058) - - (7,058) - (7,058)
Foreign currency translation - - - 0 (109) (109)
reserve
Retained earnings 5,446 (595) (4,182) 669 109 778
Minority interests 4 - - 4 - 4
5,640 (595) (4,182) 863 - 863
Non-current liabilities
Long-term borrowings 300 - - 300 - 300
Deferred tax 1,535 - (1,444) 91 - 91
1,835 - (1,444) 391 - 391
Current liabilities
Trade and other payables 7,331 - (4,300) 3,031 - 3,031
Short-term borrowings 248 - - 248 - 248
Current tax payable - - - - - -
7,579 - (4,300) 3,279 - 3,279
Total equity and liabilities 15,054 (595) (9,962) 4,533 - 4,533
Re-statement of Interim results as at 30 June 2007
These numbers are unaudited and do not form part of the financial statements for the year 2007. They are furnished for information
purposes.
UNAUDITED CONSOLIDATED INCOME STATEMENT
AS AT 30 JUNE 2007
Group reconciliation of profit for the 6 months to 30 June 2007
Unaudited Unaudited Unaudited Unaudited
Original Effect of Effect of Restated
30 June change to change to 30 June
2007 status of Income 2007
associates Recognition
�'000 �'000 �'000 �'000
Revenue 5,515 - 406 5,921
Cost of sales (4,278) - (116) (4,394)
Administrative expenses (1,395) - (11) (1,406)
Share of operating profit in 226 (226) (226) -
associates
Finance income 4 - 0 4
Finance expense (14) - - (14)
Profit/(loss) before taxation 58 (226) 53 111
Tax on profit/(loss) (35) - (50) (15)
Profit/(loss) after taxation 93 (226) 3 96
UNAUDITED CONSOLIDATED BALANCE SHEET
Group reconciliation of equity at 30 June 2007
Unaudited Unaudited Unaudited Unaudited
Original Effect of Effect of Restated
30 June change to change to 30 June
2007 status of Income 2007
associates Recognition
�'000 �'000 �'000 �'000
Non-current assets
Other intangible assets 6 - - 6
Property, plant and equipment 962 - - 962
Investments in associates 1,064 (839) (747) 317
Other financial assets 0 92 - 92
2,032 (747) (747) 1,285
Current assets
Inventories 192 - - 192
Trade and other receivables 11,691 (9,553) 2,138
Cash and cash equivalents 1,672 - - 1,672
13,555 - (9,553) 4,002
Total assets 15,587 (747) (10,300) 5,287
Shareholders' equity
Share capital 7,798 - - 7,798
Share premium 22 - - 22
Other reserve 117 - - 117
Revaluation reserve 46 - - 46
Merger reserve (7,058) - - (7,058)
Retained earnings 5,489 (747) (4,658) 831
Minority interests (1) - - (1)
6,413 (747) (4,658) 1,755
Non-current liabilities
Long-term borrowings 249 - - 249
Deferred tax 1,328 (1,325) 3
1,577 - (1,325) 252
Current liabilities
Trade and other payables 7,460 (4,317) 3,143
Short-term borrowings 137 - - 137
7,597 - (4,317) 3,280
Total equity and liabilities 15,587 (747) (10,300) 5,287
Publication of non-statutory accounts
The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 240 of
the Companies Act 1985. Statutory accounts for 2007 will be delivered to the Registrar following the Company's Annual General Meeting.
The Independent Auditors have reported on these accounts. Their report was unqualified and did not contain statements under section
237(2) or (3) of the Companies Act 1985.
Other information
The report and accounts for the year ended 31 December 2007 will be posted to shareholders shortly and laid before the Group's Annual
General Meeting.
Copies will also be available via the website (www. www.medseaestates-ir.com) in accordance with AIM Rule 26 and at the Company's
registered office, Medsea Estates Group PLC, 85 Elsenham Street, London, SW18 5NX.
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR SEDEFUSASEDM
Medsea Estates (LSE:MEA)
과거 데이터 주식 차트
부터 5월(5) 2024 으로 6월(6) 2024
Medsea Estates (LSE:MEA)
과거 데이터 주식 차트
부터 6월(6) 2023 으로 6월(6) 2024
