Half Yearly Report

7th September 2009
RNS Number : 5889Y
Real Estate Investors PLC
07 September 2009
 

Real Estate Investors PLC 

(“REI” or “the Company”)

Interim Results for six months ended 30 June 2009

Real Estate Investors PLC (AIM: RLE), the AIM listed property group, announces its results for the six months ended 30 June 2009.

Highlights to date:

  • Rental income up 55% to £1.7 million (2008 £1.1 million)

  • Profit before tax £1.3 million (2008 £0.7 million)

  • Gain on valuation of interest rate swaps of £1.2 million (2008 £nil)

  • Profit before revaluations and gain on valuation of interest rate swaps of £100,000 (2008 £34,000) 

  • Cash and cash equivalents at 30 June 2009 of £14 million (2008: £22 million) 

  • Portfolio valuation plus inventories of £49 million (2008 £49 million)

For further information please contact:

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

Notes to Editors

1.  REI is an AIM listed property investment and development company specialising in commercial property throughout the 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’s Board is led by respected property investor Paul Bassi, who has over 25 years of property experience. Mr Bassi is also co-founder and chairman of Bond Wolfe Auctioneers and chairman of Bigwood Chartered Surveyors – the combined businesses place them in the UK‘s top 50 property auction houses and estate agents  

4.  REI was admitted to trading on AIM in June 2004. 

5.  Further information on REI can be found at www. reiplc.com

  

CHAIRMANS STATEMENT

As anticipated, when I last wrote to you in June 2009, the UK property markets have begun to stabilise, with steadier yields and capital values represented in an increasing number of transactions. Against this slowly improving background, we are pleased to confirm that our results for the six months interim period to 30 June 2009 have produced a profit before tax of £1.3 million (including a gain on our interest rate swaps of £1.2 million).

I am pleased to report that we have also concluded a new financing facility of £5 million for our unencumbered investments in Kings Heath and Great Charles StreetBirmingham. These new facilities, with Svenska Handelsbanken, provide REI with additional cash resources, which now total £14 million.

I wrote at length in my Chairman’s statement, which accompanied the 2008 Annual Report, on our strategy and the prospects for REI in this difficult and challenging financial climate. Let me comment further and emphasise that we have a healthy tenant profile in our investment and trading portfolios and that we have no overall concerns relating to arrears and insolvencies.

We have reviewed our portfolio valuations and consider that the valuations included in our 2008 financial statements are still appropriate.

I anticipate that our performance will continue to improve, as we turn our poor return from cash deposits into relatively high yielding income from a spread of investment property acquisitions. REI has some very attractive space which we are letting and will further add to revenue and portfolio valuation  a number of promising letting negotiations and lease renewals are at an advanced stage. Prospective tenants are continuing to be slow in making commitments relating to new space, but this is to be expected after the lengthy disorder in global financial markets.

Our strategy has been to capitalise on market opportunities, aided by our cash reserves and agreed banking facilities. However, we are not seeing adequate value or quality in potential purchases and remain cautious in the medium term. I am, nevertheless, now anticipating an increase in the availability of favourable acquisitions, particularly from institutional vendors, at valuations that we consider good value for REI. Our focus will be firmly on value and it is unlikely that vacant or refurbishment opportunities will come into consideration.

I am pleased to confirm that in August our protracted rights of light negotiations with British Land PLC have finally been concluded. British Land will pay us £430,000, of which £215,000 has already been received, with the balance payable when development works commence at Colmore Row Birmingham.

In July 2009 we completed the acquisition of Latitude, Bromsgrove StreetBirmingham, an unbroken retail parade of 11 units for £2.2 million. 

Towards the end of 2009, we will be considering disposals from our historic (trading) portfolio, at levels that will potentially provide REI with positive capital gains.

I trust that on the next occasion that I shall be writing to you, the UK property and capital markets will have shown further and lasting improvement.

Peter Lewin

Chairman

Real Estate Investors PLC
4 September 2009

  

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the 6 months ended 30 June 2009

 

 

Six months to

Six months to

Year ended

30 June
 2009

30 June
 200
8

31 December 2008

(Unaudited)

(Unaudited)

 

Note

£’000

£’000

£’000

Revenue

1,738 

1,066 

3,006 

Cost of sales

(191)

(154)

(3,079)

Gross profit/(loss)

1,547 

912 

(73) 

Administrative expenses

(510)

(441)

(1,169)

Share of operating (loss)/profit of joint venture

(11) 

1 

(335) 

Net valuation gains/(losses)

 

629 

(10,903) 

Profit/(loss) on ordinary activities before interest

1,026 

1,101 

(12,480) 

Finance income

254 

561 

1,054 

Finance costs

(1,180)

(999)

(2,174)

Gain/(loss) on financial liabilities held at fair value

1,184

(2,071)

Profit/(loss) on ordinary activities before taxation

 1,284

663 

(15,671)

Income tax (expense)/credit

(331)

(176)

4,584

 

 

 

 

Retained profit/(loss) for the period

953 

487 

(11,087) 

Basic earnings per share

6

0.28p

0.14p

(3.25)p

Diluted earnings per share

6

0.26p

0.13p

(3.25)p

  

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the 6 months ended 30 June 2009

Share

Share

Capital

Other

Retained

Total

capital

premium

redemption

reserves

earnings

account

reserve

£’000

£’000

£’000

£’000

£’000

£’000

At 31 December 2007

3,407 

29,472 

45 

121 

2,241 

35,286 

Transactions with owners

Profit for the period

487

487

Other comprehensive income

 

 

 

 

 

 

 

 

At 30 June 2008

3,407 

29,472 

45 

121 

2,728 

35,773 

Transactions with owners

Loss for the period

(11,574)

(11,574)

Other comprehensive income

 

 

 

 

 

 

At 31 December 2008

3,407 

29,472 

45 

121 

(8,846) 

24,199 

Transactions with owners

Profit for the period

953

953

Other comprehensive income 

 

 

At 30 June 2009

3,407 

29,472 

45 

121 

(7,893) 

25,152 

  

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

as at 30 June 2009

 

 

30 June 2009

30 June 2008

31 December 2008

(Unaudited)

(Unaudited)

 

£’000

£’000

£’000

Assets

Non current assets

Intangible assets

171 

171 

171 

Investment properties

43,405 

40,399 

42,608 

Property, plant and equipment

6 

26 

11 

Investment in joint venture

25

328

25

Deferred taxation

3,402 

 

3,733 

 

 

 

47,009 

40,924 

46,548 

Current assets

Inventories

5,879 

8,603 

5,879 

Trade and other receivables

2,399 

1,358 

1,346 

Cash and cash equivalents

13,837 

21,619 

11,369 

22,115 

31,580 

18,594 

Total assets

69,124 

72,504 

65,142 

Liabilities

Current liabilities

 

 

 

Bank loans

497 

437 

374 

Provision for current taxation

149

307

149 

Trade and other payables

2,222

979

2,326

Convertible debt

 

 

325 

 

2,868 

1,723 

3,174 

Non-current liabilities

 

 

 

Bank loans

40,217 

34,162 

35,698 

Liabilities at fair value

887

2,071

Convertible debt

 

325 

 

Deferred tax liabilities

 

521 

 

 

 

 

 

 

41,104 

35,008 

37,769 

 

 

 

Total liabilities

43,972 

36,731 

40,943 

 

 

 

 

Net assets

25,152 

35,773 

24,199 

Equity

Share capital

3,407 

3,407 

3,407 

Share premium account

29,472 

29,472 

29,472 

Capital redemption reserve

45 

45 

45 

Other reserves

121 

121 

121 

Profit and loss account

(7,893) 

2,728 

(8,846) 

Shareholders’ funds

25,152 

35,773 

24,199 

 

 

CONSOLIDATED STATEMENT OF CASHFLOWS

for the 6 months ended 30 June 2009

Six months to

Six months to

Year ended

30 June
 2009

30 June
 2008

31 December 2008

(Unaudited)

(Unaudited)

 

£’000

£’000

£’000

Cashflows from operating activities

 

Profit/(loss) after taxation

953 

487 

(11,087) 

Adjustments for:

Depreciation

5

13

25

Net valuation (losses)/gains

(629)

10,903

Share of loss/(profit) of joint venture

11

(1)

335

Finance income

(254)

(561)

(1,054)

Finance costs

1,180 

999 

2,174 

Gain/(loss) on financial liabilities held at fair value

(1,184)

2,071

Taxation expense/(credit) recognised in profit and loss

331 

176 

(4,584) 

Decrease in inventories

2,724

(Increase)/decrease in trade and other receivables

(1,053)

309

224

Decrease in trade and other payables

(104)

(316)

(16)

 

 

 

(115)

477

1,715

Interest paid

(1,180)

(999)

(2,174)

Income taxes paid

(12)

(1)

Net cash from operating activities

(1,295)

(534)

(460)

Cash flows from investing activities

Acquisition of subsidiaries net of cash acquired

(148)

Purchase of investment properties

(797)

(3,109)

(12,750)

Purchase of property, plant and equipment

(1)

Proceeds from sale of property, plant and equipment

4

Investment in joint venture

(11)

(32)

Interest received

254 

561

1,054

(554)

(2,548)

(11,873)

Cash flow from financing activities

Proceeds from bank loans

5,021

20,000

20,028

Payment of bank loans

(379)

(165)

(1,192)

Payment of convertible debt

(325)

4,317

19,835

18,836

Net increase in cash and cash equivalents

2,468

16,753

6,503

Cash and cash equivalents at beginning of period

11,369

4,866

4,866

Cash and cash equivalents at end of period

13,837

21,619

11,369

 

 

NOTES TO THE INTERIM REPORT

for the 6 months ended 30 June 2009

1.  BASIS OF PREPARATION

Real Estate Investors PLC, a Public Limited Company, is incorporated and domiciled in the United Kingdom.

The interim financial statements for the period ended 30 June 2009 (including the comparatives for the year ended 31 December 2008 and the period ended 30 June 2008) were approved by the board of directors on 4 September 2009.  Under the Security Regulations Act of the EU, amendments to the financial statements are not permitted after they have been approved.

It should be noted that accounting estimates and assumptions are used in preparation of the interim financial information. Although these estimates are based on management’s best knowledge and judgement of current events and action, actual results may ultimately differ from these estimates. The areas involving a higher degree of judgement or complexity, or areas where assumptions and estimates are significant to the interim financial information are set out in note 3 to the interim financial information.

The interim financial information contained within this report does not constitute statutory accounts within the meaning of the Companies Act 2006. The full accounts for the year ended 31 December 2008 received an unqualified report from the auditors and did not contain a statement under Section 237(2) or (3) of the Companies Act 1985.

2.  ACCOUNTING POLICIES

The interim financial report has been prepared under the historical cost convention.  

The principal accounting policies and methods of computation adopted to prepare the interim financial information are consistent with those detailed in the 2008 financial statements published by the Company on 26 June 2009 except for the adoption of IAS 1 Presentation of Financial Statements (Revised 2007).

The adoption of IAS 1 (Revised 2007) does not affect the financial position or profits of the Group, but gives rise to additional disclosures. The measurement and recognition of the Group’s assets, liabilities, income and expenses is unchanged, however some items that were recognised directly in equity are now recognised in other comprehensive income, for example revaluation of property, plant and equipment. IAS 1 (Revised 2007) affects the presentation of owner changes in equity and introduces a “Statement of comprehensive income”.

3.  CRITICAL ACCOUNTING ESTIMATES AND JUDGEMENTS

Critical accounting estimates and assumptions

The group makes estimates and assumptions concerning the future. The resulting accounting estimates will, by definition, seldom equal actual results. The estimates and assumptions that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next accounting year are as follows:

Investment property revaluation

The Group uses the valuations performed by its independent valuers or the directors as the fair value of its investment properties. The valuation is based upon assumptions including future rental income, anticipated maintenance costs, anticipated purchaser costs and the appropriate discount rate. The valuer and the directors also make reference to market evidence of transaction prices for similar properties.

4 SEGMENTAL REPORTING

Primary reporting – business segment

The only material business that the Group has is that of investment in and trading of commercial properties. Turnover relates entirely to rental income from investment properties and sale of trading properties within the UK.

Secondary reporting format – geographical segment

The only material segment that the Group operates in is the UK.

5 INVESTMENT PROPERTIES

The carrying amount of investment properties for the periods presented in the interim financial information is reconciled as follows:

£’000

Carrying amount at 31 December 2007

36,661

Additions

3,109

Revaluation

629

Carrying amount at 30 June 2008

40,399

Additions

9,641

On acquisition of subsidiary undertaking

4,100

Revaluation

(11,532)

Carrying amount at 31 December 2008

42,608

Additions

797

Carrying amount at 30 June 2009

43,405

6 EARNINGS PER SHARE

The calculation of the earnings per share is based on the earnings attributable to ordinary shareholders divided by the weighted average number of shares in issue during the period. The calculation of the diluted earnings per share is based on the basic earnings per share adjusted to allow for all dilutive potential ordinary shares.

Earnings per share have been calculated on the profit for the period of £953,000 (31 December 2008: loss of £11,087,000 and 30 June 2008: profit of £487,000) and on 340,714,327 ordinary shares, being the weighted average number of shares in issue during the period.

The diluted earnings per share has been calculated on a profit for the period of £953,000 (30 June 2008 £487,000) and on 363,693,372 ordinary shares, to include the effect on the ordinary shares of the conversion of the convertible loan notes and the exercise of the share warrants. For the year ended 31 December 2008 the shares that could be issued under the convertible loan and share warrants were anti-dilutive.

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

END

 
 

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