Interim Results

Medsea Estates Group PLC 04 August 2004 ANNOUNCEMENT Embargoed to : 4 August 2004 Medsea Estates Group PLC Unaudited Interim Results for the six months ended 30th June 2004 The Company is pleased to report the unaudited interim results of Medsea Group S.L. for the six months ended 30th June 2004. The Company acquired 100% of Medsea Group S.L. on 23 July 2004 and the information presented here is intended to complement that provided in the Company's recent AIM Admission Document dated 29 July 2004. The Company itself did not trade prior to 30 June 2004. Turnover in the period was €10,313,000 and profit on ordinary activities before taxation was €2,035,000. As anticipated, property sales in the current financial year have commenced well and overall are ahead of last year. The Directors are particularly pleased with the growing contribution from the office in Almeria and from the new office in Costa Tropical. The Group has, through its 95 per cent owned subsidiary Euromed Investments S.L., recently entered into an exclusive contract with a developer for the sale of properties on a prime new development site. Subject to the developer securing the necessary financing for the development, building work and the sale of properties is expected to commence in the current financial year and is expected to complete within two years. The plans indicate that there will be 786 residential properties on the site and the Group will receive commissions at 20 per cent of sale value. The Group will take on the principal marketing role (ie. effectively act as a promoter) for this development and commissions payable are expected to be in the range of 10 per cent to 15 per cent, although it is hoped that many of the properties will be sold through existing Group companies. At completion of the development, the Group shall also be entitled to a 20 per cent share of any profit that the developer makes. The Directors believe that this contract was secured as a result of the strong reputation of the Group and the fact that it can offer direct access for the developer to one of the largest distribution networks in the region. The Directors anticipate securing further contracts of this nature and believe that this broadening of the scope of the Group's activities to take on an exclusive promoter type role will significantly enhance the prospects for future growth. The Group is developing plans to expand into other Mediterranean countries, Greece and its islands, and other suitable locations, using a similar business model to that described above. For further information contact: Tony Gatehouse, Chairman Juan Carlos Rodriguez Martinez, Director, Medsea 0034 96 570 40 02 Roland Cornish, Beaumont Cornish Limited, Nominated Advisor 020 7628 3396 UNAUDITED INTERIM FINANCIAL INFORMATION OF MEDSEA GROUP S.L. FOR THE SIX MONTHS ENDED 30 JUNE 2004 The unaudited interim financial information for the six months ended 30 June 2004 consolidates the results of Medsea Group S.L. and all of its subsidiary undertakings at 30 June 2004. The unaudited interim financial information, which is the responsibility of the directors and was approved by them on 3 August 2004 does not constitute statutory accounts within the meaning of Section 240 of the Companies Act 1985. CONSOLIDATED PROFIT AND LOSS ACCOUNT 6 months ended 30 June 2004 (unaudited) Notes €'000 Turnover 2 10,313 Costs of sales (7,154) --------- Gross profit 3,159 Administrative expenses (1,116) --------- Operating profit 2,043 Interest payable and similar charges (8) --------- Profit on ordinary activities before taxation 2,035 Taxation (711) --------- Retained profit for the period 10 1,324 ========= All results derive from continuing operations of the Group. There are no recognised gains or losses other than the profit for the period. CONSOLIDATED BALANCE SHEET As at 30 June 2004 (unaudited) Notes €'000 Fixed assets Trademarks 3 8 Negative goodwill 3 (57) --------- Intangible assets (49) Tangible assets 4 1,780 --------- 1,731 Current assets Debtors 5 8,873 Cash at bank and in hand 1,864 --------- 10,737 Creditors: amounts falling due within one year 6 (5,888) --------- Net current assets 4,849 --------- Total assets less current liabilities 6,580 Creditors: amounts falling due in more than one year 7 (354) Provisions for liabilities and charges 8 (1,303) --------- Net assets 4,923 ========= Capital and reserves Called up share capital 9 4 Capital redemption reserve - Revaluation reserve 179 Other reserve 171 Profit and loss account 4,569 --------- Equity shareholders' funds 10 4,923 Minority interests 14 - --------- Total capital employed 4,923 ========= CONSOLIDATED CASH FLOW STATEMENT 6 months ended 30 June 2004 (unaudited) Notes €'000 Net cash inflow from operating activities 11 583 Returns on investments and servicing of finance Interest element of finance lease payments (1) Other interest paid (7) --------- Net cash (outflow) from returns on investments and servicing (8) of finance Taxation (242) Capital expenditure and financial investment Purchase of intangible fixed assets (5) Purchase of tangible fixed assets (247) Proceeds from sale of tangible fixed assets 1 --------- Net cash flow from capital expenditure and financial investment (251) --------- Acquisitions and disposals Net cash acquired with subsidiary undertaking 410 --------- Net cash flow from acquisitions and disposals 410 Cash inflow before financing 492 Financing Repayment of long term loans (42) Capital element of finance lease payments (20) --------- Net cash (outflow) from financing (62) --------- Increase in cash in the period 430 ========= Reconciliation of net cash flow to movement in net debt Increase in cash in the period 430 Cash outflow from decrease in net debt and finance leasing 62 --------- Movement in funds in the period 492 Opening net funds 919 --------- Closing net funds 12 1,411 ========= NOTES TO THE INTERIM FINANCIAL INFORMATION 1. Accounting policies The interim financial information has been prepared on the basis of the accounting policies used for the year ended 31 December 2003. The interim financial results are unaudited. 2. Turnover Turnover derives wholly from the principal activity of the Group which is carried out in Spain. 3. Intangible fixed assets Negative goodwill Trademarks €'000 €'000 Cost As at 1 January 2004 - 6 Additions (95) 5 --------- --------- As at 30 June 2004 (95) 11 --------- --------- Amortisation As at 1 January 2004 - 2 Charge for the period (38) 1 --------- --------- As at 30 June 2004 (38) 3 --------- --------- Net book value As at 31 December 2003 - 4 ========= ========= As at 30 June 2004 (57) 8 ========= ========= On 3 March 2004 Medsea Group S.L. acquired 99% of the issued share capital of Medsea Estates Almeria S.L. from Tony Gatehouse, the ultimate controlling shareholder of Medsea Group S.L. The total consideration for the acquisition was €990,000. The fair value of the net assets of Medsea Estates Almeria S.L. at acquisition amounted to €1,096,000. The resulting negative goodwill of €95,000 has been capitalised and shown separately in the accompanying balance sheet. The Directors consider that the negative goodwill relates primarily to commissions due on contracts and intend to recognise the negative goodwill in the balance sheet over ten months, the period over which the Group is expected to benefit from that negative goodwill. Medsea Estates Almeria S.L. is now a wholly owned subsidiary of Medsea Group S.L. 4. Tangible fixed assets Office Freehold Freehold equipment land and investment and motor buildings properties vehicles Total €'000 €'000 €'000 €'000 Cost or valuation As at 1 January 2004 365 850 359 1,574 Additions 17 - 230 247 Acquired with subsidiary undertaking - - 152 152 Disposals - - (34) (34) -------- -------- -------- -------- As at 30 June 2004 382 850 707 1,939 ======== ======== ======== ======== Depreciation As at 1 January 2004 11 - 120 131 Charge for the period 5 - 40 45 Acquired with subsidiary undertaking - - 16 16 Disposals - - (33) (33) -------- -------- -------- -------- As at 30 June 2004 16 - 143 159 ======== ======== ======== ======== Net book value As at 30 June 2004 366 850 564 1,780 ======== ======== ======== ======== 5. Debtors As at 30 June 2004 €'000 Trade debtors 1,256 Other debtors 322 Prepayments and accrued income 7,295 -------- 8,873 ======== 6. Creditors: amounts falling due within one year As at 30 June 2004 €'000 Bank loans (secured) 99 Trade creditors 614 Corporation tax 376 Other taxation and social security 759 Other creditors 274 Accruals and deferred income 3,766 -------- 5,888 ======== 7. Creditors: amounts falling due after more than one year As at 30 June 2004 €'000 Bank loans 354 ======== Analysis of loans - amounts repayable: In one year or less, or on demand 99 Between one and two years 108 Repayable between 2 and 5 years 241 -------- 448 In more than 5 years, repayable by instalments 5 -------- 453 ======== The bank loans are secured on the freehold investment properties owned by the Group and carry interest at 2% above the bank's base rate. 8. Provisions for liabilities and charges As at 30 June 2004 Deferred taxation: €'000 Provision at 1 January 580 Acquired with subsidiary undertaking 410 Charge for the period 313 -------- Provision at 30 June 1,303 ======== The provision for deferred taxation consists of the tax effects of timing differences in respect of income recognition. 9. Share capital As at 30 June 2004 €'000 Authorised: 100 ordinary shares of €36 each 4 ======== Issued and fully paid: 100 ordinary shares of €36 each 4 ======== 10. Reconciliation of movement in shareholders' funds 6 months ended 30 June 2004 €'000 Profit for the period 1,324 Opening shareholders' funds 3,599 -------- Closing shareholders' funds 4,923 ======== 11. Reconciliation of operating profit to operating cash flows 6 months ended 30 June 2004 €'000 Operating profit 2,043 Amortisation of negative goodwill (38) Other depreciation and amortisation 47 (Increase) in debtors (2,521) Increase in creditors 1,052 -------- Net cash inflow from operating activities 583 ======== 12. Analysis of changes in net debt 6 months ended 30 June 2004 €'000 Cash at bank and in hand 1,434 Finance leases (20) Debt due within one year (85) Debt due after one year (410) -------- Opening net funds 919 Increase in cash in the period 430 Decrease in finance leases in the period 20 (Increase) in debt due within one year (14) Decrease in debt due after one year 56 -------- Cash at bank and in hand 1,864 Finance leases - Debt due within one year (99) Debt due after one year (354) -------- Closing net funds 1,411 ======== 13. Financial commitments At 30 June 2004 the Group had annual commitments under non-cancellable operating leases as set out below: As at 30 June 2004 €'000 Land and buildings: Expiring within one year 39 Expiring in two to five years 20 ======== 14. Minority interests On 5 March 2004 Medsea Group S.L. subscribed at par for 94.98% of the issued share capital of Euromed Investment S.L., a company incorporated in Spain on that date. On 30 April 2004 Medsea Group S.L. acquired a further 0.03% of the issued share capital of Euromed Investment S.L. As at 30 June 2004, Euromed Investment S.L. had not traded and no minority interest had accrued. 15. Post balance sheet events On 16 July 2004 the entire issued share capital of Medsea Group S.L. was acquired by Medsea UK Limited. On 23 July 2004 the entire issued share capital of Medsea UK Limited was acquired by Medsea Estates Group PLC. A copy of this announcement is available from: Beaumont Cornish Limited, 63 Coleman Street, London EC2R 5BB, for a period of one month, free of charge. MEDSEA GROUP S.L. Independent review report to Medsea Estates Group PLC Introduction We have been instructed by the company to review the financial information on Medsea Group S.L. and its subsidiary undertakings for the six months ended 30 June 2004 which comprises a consolidated profit and loss account, consolidated balance sheet, consolidated cash flow statement and associated notes numbered 1 to 15. We have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the interim report and for ensuring that the accounting policies and presentation applied to the interim figures are consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of group management and applying analytical procedures to the financial information and underlying financial data and based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly, we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2004. Spofforths Chartered Accountants 3 August 2004 30 Worthing Road Horsham West Sussex RH12 1SL This information is provided by RNS The company news service from the London Stock Exchange

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