Final Results

1st March 2010
RNS Number : 8048H
Real Estate Investors PLC
01 March 2010
 

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

 

 



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.

This information is provided by RNS
The company news service from the London Stock Exchange
 

END

 
 

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