29 September 2011

Speymill plc ("Speymill" or the "Company")

Interim Results for the six months to 30 June 2011

Speymill (AIM: SYG), the property service business specialising in real estate investment management, property management and property construction, today announces its interim results for the six months to 30 June 2011.

Contacts:

Chairman's statement

Dear Shareholders,

I am pleased to take this opportunity to provide you with an update on the Group's activities for the first six months of 2011.

Results

Turnover for continuing operations increased by 123.9% to £13.4 million (2010: £6.0 million), £6.6 million of this increase is attributable to Speymill Contracts Limited. The remainder being derived from the Group's property investment activities.

During the six months ended 30 June 2011, the Group made a loss before tax on operations of £59,000 (2010: a profit of £8.36 million). Last year's interim report included a profit of £9.12 million in respect of discontinued and discontinuing operations, £7.28 million of which was in relation to the termination of the investment management agreement with Speymill Deutsche Immobilien Company plc ("SDIC"). Thus on a like-for-like continuing basis, the 2010 loss would have been £755,000.

The results include a profit before tax of £0.12 million in respect of the Group's German property investment activities: there is no comparative result for the six months ending 30 June 2010. The results also include a reduced loss before tax of £0.13 million (2010: loss of £0.2 million) for Speymill Contracts Limited ("Speymill Contracts").

Financial position

As at 30 June 2011, the Group had net assets of £3.65 million (2010: £5.80 million).

As I reported in our annual statement for 2010 I, together with Burnbrae Limited, agreed to provide a revised shareholder loan facility.  The new facility shall continue to be revolving, with a limit of £5 million and an expiry date of 30 June 2012, in addition the interest rate was reduced to 8% from 9% under the previous arrangement. As at 30 June 2011, a total of £3.39 million (2010: £3.07 million) of the shareholder loan facility had been drawn down by the Group.    

German Property investment

The Group's German property investment activities returned a profit before tax of £0.12 million for the six months ended 30 June 2011. These activities relate to the assets acquired from SDIC as part of the agreement to terminate the Group's investment management agreement with that company. The Group continues to work to optimise the efficiency and profitability of these assets.

Speymill Contracts

Speymill Contracts has continued to show a gratifying improvement in results, with  turnover increasing by 112.0% to £12.67 million (2010: £5.98 million) and returned a reducing loss before tax of £0.13 million (2010: loss of £0.20 million).  We believe that this reflects the continued focus on risk management and disciplined approach implemented at Speymill Contracts. 

I can also confirm that with the orders already received by Speymill Contracts, we would expect the turnover for the year to be in the region of £30 million. We expect that this very positive upturn will not only result in a return to profitability but ensure a positive cash generation by this company for the Group.

Speymill Deutsche Immobilien Company plc

As part of the acquisition of GOAL and termination of the Investment Management Agreement, SDIC issued convertible loan notes ("Loan Notes") to Speymill in an aggregate amount of €2.088 million. The appointment of receivers to SDIC's property owning subsidiaries in December 2010, constituted an event of default under the terms of the Loan Notes and, therefore, the Loan Notes would ordinarily become immediately repayable, in cash. We considered the enforcement of these terms not to be in the best interests of Speymill shareholders and, as SDIC, itself, continues to trade, we have come to an arrangement regarding the loan notes. We monitor this situation closely to ensure that we will be able to gain the maximum value for Speymill shareholders.

Update on Far Eastern activities

The Group announced on 28 June 2010 that it had received notice from Speymill Macau Property Company plc ("Speymill Macau") to terminate the investment management agreement between Speymill Macau and SPG. The notice period for this investment management agreement expired on 28 June 2011 and the Group no longer provides any services to Speymill Macau.

Restructuring

I have stated in previous annual and interim reports that steps had been taken to downsize the operating costs at the Group's head office in the Isle of Man and at the Group's London based advisory function, Speymill Property Group (UK) Limited ("SPGUK").

The London based advisory function was closed earlier this year as part of the on-going rationalisation program and there has been a further reduction in headcount and overheads at our Isle of Man operation as the Group seeks to implement the most appropriate and efficient structure for its future activities.

Following the termination of the investment management agreement with Speymill Macau, the Group has closed its Far East operation, which was based in Hong Kong.

The Group will continue to seek the most cost effective and efficient structure for its activities and to this end we have already commenced a process to reorganise the remaining Group subsidiaries and proceed with the closure of any entities which are no longer required.

As reported in our annual report for 2010 and on 26 January 2011, the composition of the board of directors has also changed.  Bob MacDonald, the then Chief Executive Officer, and Sir James Mellon both resigned from the board of directors earlier in 2011 leaving myself as Executive Chairman, Denham Eke as Chief Executive Officer and Lincoln Forrest as a non-executive director.

Outlook

I and your board continue to consider a number of positive strategic options to create the maximum value for shareholders and we will provide further information as and when appropriate. 

Jim Mellon

Chairman

29 September 2011

Condensed consolidated interim income statement

For the six months ended 30 June 2011

Condensed consolidated interim statement of comprehensive income

For the six months ended 30 June 2011

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated interim statement of financial position

As at 30 June 2011

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated interim statement of changes in equity

For the six months ended 30 June 2011

The notes are an integral part of these condensed consolidated interim financial statements.

Condensed consolidated statement of cash flows

For the six months ended 30 June 2011

The notes are an integral part of these condensed consolidated interim financial statements.

Notes to the condensed consolidated interim financial statements

For the six months ended 30 June 2011

1    Reporting entity

Speymill plc is a public limited company incorporated and domiciled in the Isle of Man (referred to as the Company). The address of the Company's registered office is 1st Floor, Regent House, 16-18 Ridgeway Street, Douglas, Isle of Man, IM1 1EN.

The condensed consolidated interim financial statements of the Company as at and for the six months ended 30 June 2011 comprises the Company and its subsidiaries (together referred to as the "Group" and individually as "Group entities"). The Group is primarily involved in real estate investment and construction operations.

1.1 Basis of preparation

(a) Statement of compliance

The condensed consolidated interim financial statements have been prepared in accordance with IAS 34 "Interim Financial Reporting". They do not include all the information required for full annual financial statements and should be read in conjunction with the consolidated financial statements of the Group as at and for the year ended 31 December 2010.

The condensed consolidated interim financial statements were authorised for issuance on 29 September 2011.

(b) Basis of measurement and functional currency

The Group condensed consolidated interim financial statements are presented in Pounds Sterling, rounded to the nearest thousand. They have been prepared on the historical cost basis except where assets and liabilities are required to be stated at their fair value.

(c) Use of estimates and judgement

The preparation of Group consolidated interim financial statements in conformity with International Financial Reporting Standards (IFRS) requires management to make judgments, estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience, current and expected economic conditions, and in some cases actuarial techniques and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates.

The significant judgments made by management in applying the Group's accounting policies and key sources of estimation of uncertainty were the same as those that were applied to the consolidated financial statements as at and for the year ended 31 December 2010.

(d) Determination and presentation of operating segments

The Group determines and presents operating segments based on the information that internally is provided to the CEO, who is the Group's chief operating decision maker. This accounting policy reflects the Group's adoption of IFRS 8 Operating Segments which took effect from 1 January 2009.

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, including revenues and expenses that relate to transactions with any of the Group's other components. An operating segment's operating results are reviewed regularly by the CEO to make decisions about resources to be allocated to the segment and assess its performance, and for which discrete financial information is available.

Segment results that are reported to the CEO include items directly attributable to a segment as well as those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate assets (primarily the Company's headquarters) and office expenses.

Segment capital expenditure is the total cost incurred during the period to acquire property, plant and equipment, and intangible assets other than goodwill.

(e) Investment property

The investment properties were valued at their fair value at acquisition. The Directors review the carrying value of investment properties periodically taking into account factors such as the current economic environment. If it is felt appropriate an independent, external valuation will be sought to assist with this review.

(f) Non-current Assets Held for Sale and Discontinued Operations

The Group has adopted IFRS 5 Non-current Assets Held for Sale and Discontinued Operations to account for the presentation of discontinued operations. Disclosure has been made of the operating results of discontinued operations and continuing operations.

The prior period results to 30 June 2010 have been re-presented to reflect the revised continuing and discontinued operations basis adopted in the Annual Report for the year ended 31 December 2010, in order to provide a more meaningful comparison.

(g) Financial risk management

The Group's financial risk management objectives and policies are consistent with those disclosed in the financial statements as at 30 June 2011 and for the year ended 31 December 2010.

2   Segmental information - continuing operations

In respect of its continuing operations, the Group has three reportable segments, as described below, which are the Group's strategic business units. The strategic business units offer different products and services, and are managed separately because they require different technology and marketing strategies. The following summary describes the operations in each of the Group's reportable segments:

● United Kingdom construction and refurbishment

● Property investment

● Other - head office and group administration costs

3    Discontinued operations information

In the Interim Report for 30 June 2010, the Group determined that two lines of business met the criteria to be treated under IFRS 5 as Non-current assets held for sale or discontinued operations. These were the Group's property services business except for GOAL construction GmbH and that part of the Group's property fund management business which specifically related to the management of the property investment fund Speymill Deutsche Immobilien Company plc ("SDIC").

For the purposes of the Annual Report for 31 December 2010, this basis was revised due to further developments and circumstances at that date, and the business segments deemed to be continuing and discontinued were subsequently revised.

In order to provide a meaningful comparison, the prior period results to 30 June 2010 have been re-presented to align with the continuing and discontinued operations basis adopted in the Annual Report for 31 December 2010. The results of these lines of business are set out below under the heading discontinued operations. The Group's two business segments treated as discontinued operations are as follows:

·  Property services business

·  Property fund management business

Earnings per share (pence) (note 7)

4   Share-based payments

5   Net finance costs

6   Taxation

There are currently no tax charges on continuing operations. This results from the fact that either operations are conducted in tax jurisdictions with a 0% tax rate for companies or that operations did not generate any taxable profits during the period, taking into account any available allowances and brought forward tax losses.

7   (Loss)/earnings per ordinary share

8   Called up share capital

9   Interest bearing loans

The Group's interest-bearing loans are carried at amortised cost. As at 30 June 2011, the Group had two secured bank loan facilities amounting to £15.7m (31 December 2010: £14.9m). Each of the Group's interest-bearing loan facilities has been secured by charges on investments properties, rental income, bank accounts, other assets and undertakings within the related financing packages.

Deutsche Genossenschafts-Hypothekenbank AG is the sole lender for the two financing packages, as detailed below:

Horsfield Limited

The balance outstanding under this facility at the period-end was £8,545,648 (31 December 2010: £8,126,366). The facility amount at original drawdown was EUR 9,807,200. The interest rate is fixed at 4.615% per annum inclusive of margin. Interest is payable quarterly in arrears. The loan is currently amortising at 1.17% of the original loan amount per annum and is repayable on the repayment date of 31 December 2014.

Wyatt Limited

The balance outstanding under this facility at the period-end was £7,138,831 (31 December 2010: £6,788,573). The facility amount at original drawdown was EUR 8,192,700. The interest rate is fixed at 4.615% per annum inclusive of margin. Interest is payable quarterly in arrears. The loan is currently amortising at 1.17% of the original loan amount per annum and is repayable on the repayment date of 31 December 2014.

10   Guarantees and other financial commitments

As is normal within the construction sector, the Group has given Parent Company Guarantees in relation to work completed by Speymill Contracts and has provided performance bonds with a value of £765,117 (31 December 2010: £1,621,767). The Group had no capital commitments (31 December 2010: £nil).

The Group has guaranteed the overdrafts of its subsidiaries. As at 30 June 2011, the total commitment was £nil (31 December 2010: £988,919).

11   Related party transactions

Loan facility

As set out in the Annual Report for 31 December 2010 and announced on 27 June 2011, the Company secured further financing by way of a committed loan facility from one of its directors, Jim Mellon and Burnbrae Limited. The overall limit of the principal on the loan facility is £5m and it will expire on 30 June 2012. Further details were set out in the Annual Report. As at 30 June 2011, the total balance of the facility utilised was £3.39m including principal, facility fees and accrued interest.

12   Interim Report

Copies of the Interim Report for the six months to 30 June 2011 will be available from the Company's registered office once they have been posted to shareholders and on the Company's website, www.speymill.com.