22 December Sterling Green Group plc ( Sterling Green or the Company ) Half yearly results for the six month period CHAIRMAN S STATEMENT Introduction I present the Group s interim results for the six month period. Partial disposal of the Group s debt management book On 2 December it was announced that all of the conditions to the sale and purchase agreement referenced in the circular to shareholders dated 14 November had been satisfied. Gross proceeds amounting to approximately 957,000 relating to the partial disposal have since been received, with up to a maximum of a further 50,000 to be received which is subject to a retention clause. The retention monies are due to be released by 1 June 2012, being 6 months from the date of the completion of the partial disposal. On 28 September it was announced that the Group had entered into a non-binding agreement to dispose of a significant part of the Group s trading operations, the effect of which would be to considerably reduce the size of the ongoing debt management business. The Directors have reviewed the criteria given in IFRS5 in respect of reporting discontinued operations, and have concluded that this criteria was satisfied. Accordingly, the estimated amounts of debt management activity that have been disposed of have been excluded from the condensed consolidated statement of comprehensive income for the period on a line by line basis and, instead, have been replaced by a single line headed profit on discontinued operations. Comparative periods have also been restated on a similar basis. Results and dividend As a result, the Group generated a loss before and after taxation for the six month period of 190,000 (six months - 38,000 profit). The loss from continuing operations amounted to 408,000 while the profit from discontinued operations was 218,000. The loss for the six month period is stated after inclusion of a goodwill impairment charge amounting to 108,000 which has been attributed to discontinued operations. The loss per share for the six month period was 0.06p ( - 0.01p profit per share) and the Directors do not recommend the payment of a dividend. Disposals On 21 December the Group disposed of its entire shareholdings in Taxdebts Limited and Sterling Green (Mortgages) Limited for the sum of 205. In addition, on the same date, Taxdebts Limited acquired the remaining small debt management book for a cash consideration of 10,000 while also taking over the responsibility for the ongoing employment of 12 members of staff. Tariq Ali is remaining as a director of Taxdebts Limited and Sterling Green (Mortgages) Limited and Jason McClean will become a consultant to Taxdebts Limited. Under the AIM Rules for Companies, the sale of the remaining small debt management book is deemed to be a related party transaction, due to the involvement of Tariq Ali, a director of the Company. The independent directors of the Company, Michael Edelson, Philip Kanas and Ian Aspinall consider, having consulted with Merchant Securities Limited, that the terms of the transaction are fair and reasonable in so far as the Company s shareholders are concerned. Board Changes As a result of the completion of the disposal of all of the Company s trading business, Tariq Ali, Chief Executive, and Jason McClean, Operations Director, have resigned as directors of the Company, with immediate effect, to pursue their other business interests. Outlook Following completion of the partial disposal of the debt management book on 1 December and receipt of the disposal proceeds, the Group s borrowings have been repaid in full in order to
significantly reduce ongoing finance costs. While the Group has continued with its remaining debt management activities on a reduced scale, the Directors have sought to reduce operating costs significantly with a view to preserving cash resources. Since 1 December, Sterling Green Group plc has been classified as an investing company under Rule 15 of the AIM Rules for Companies. As such, it is obliged to make an acquisition which constitutes a reverse takeover or otherwise have substantially implemented its investing policy by 1 December 2012, being 12 months from the date of the partial disposal. The Board is currently reviewing a number of possible opportunities and any acquisition will be put to shareholders for their approval at the appropriate time. Michael Edelson Chairman 22 December Further Enquiries: Sterling Green Group plc Michael Edelson Tel: 0161 975 5757 Merchant Securities Limited Simon Clements/David Worlidge Tel: 020 7628 2200
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER (Unaudited) (Unaudited) (Audited) Continuing operations Revenue 288 360 726 Cost of sales (178) (158) (386) Gross profit 110 202 340 Administrative expenses (448) (490) (1,011) Loss from operations (338) (288) (671) Finance costs (70) (27) (88) Loss on ordinary activities before tax (408) (315) (759) Income tax charge - - - Loss from continuing operations (408) (315) (759) Profit from discontinued operations 218 353 791 (Loss)/Profit for the period and (loss)/profit attributable to equity holders of the parent (190) 38 32 (Loss)/Earnings per share - basic From continuing operations (0.13p) (0.10p) (0.25p) From discontinued operations 0.07p 0.11p 0.26p From continuing and discontinued operations (0.06p) 0.01p 0.01p (Loss)/Earnings per share - diluted From continuing operations (0.13p) (0.10p) (0.24p) From discontinued operations 0.07p 0.11p 0.25p From continuing and discontinued operations (0.06p) 0.01p 0.01p There were no other items of comprehensive income other than the loss for the period.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN TOTAL EQUITY FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER (Unaudited) (Unaudited) (Audited) Balance at the beginning of the period 719 687 687 Total comprehensive income for the period (Loss)/Profit for the period (190) 38 32 Balance at the end of the period 529 725 719
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION AS AT 30 SEPTEMBER As at As at As at (Unaudited) (Unaudited) (Audited) Non-current assets Goodwill - 1,115 1,115 Property, plant and equipment 79 89 89 Total non-current assets 79 1,204 1,204 Current assets Trade and other receivables 118 226 143 Cash and cash equivalents 7 76 44 Non-current assets held for sale 1,007 - - Total current assets 1,132 302 187 Total assets 1,211 1,506 1,391 Current liabilities Trade and other payables (225) (340) (243) Current tax liabilities - - - Borrowings (457) (24) (424) Total current liabilities (682) (364) (667) Net current assets/(liabilities) 450 (62) (480) Non-current liabilities Borrowings - (417) (5) Total non-current liabilities - (417) (5) Total liabilities (682) (781) (672) Net assets 529 725 719 Equity Share capital 304 304 304 Share premium account 1,794 1,794 1,794 Capital reserve 6 6 6 Other reserves 891 891 891 Accumulated losses (2,466) (2,270) (2,276) Total equity 529 725 719
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER (Unaudited) (Unaudited) (Audited) Cash flows from/(used in) operating activities (Loss)/Profit before tax (190) 38 32 Adjustments for: Impairment of goodwill on re-measurement 108 - - Depreciation of property, plant and equipment 29 31 62 Finance costs 70 27 88 Operating cash flows before movement in working capital 17 96 182 Decrease/(increase) in trade and other receivables 25 (118) (35) Decrease in trade and other payables (18) (21) (118) Corporation tax paid - (1) (1) Net cash from/(used in) operating activities 24 (44) 28 Cash flow used in investing activities Purchase of property, plant and equipment (19) (4) (35) Net cash used in investing activities (19) (4) (35) Cash flow (used in)/from financing activities Capital element of finance lease payments (12) (27) (39) Loans received 40 150 150 Finance costs (70) (27) (88) Net cash (used in)/from financing activities (42) 96 23 Net (decrease)/increase in cash and cash equivalents (37) 48 16 Cash and cash equivalents at the start of the period 44 28 28 Cash and cash equivalents at the end of the period 7 76 44
NOTES TO THE INTERIM RESULTS FOR THE SIX MONTH PERIOD ENDED 30 SEPTEMBER 1. Reporting entity Sterling Green Group plc (the Company ) is a company incorporated in the United Kingdom under the Companies Act 2006. The interim results of the Company for the six month period comprise the Company and its subsidiaries (together the Group ). The annual report and financial statements of the Group for the year are available upon request from the Company s registered office by writing to the Company Secretary, Sterling Green Group plc, Number 14, The Embankment, Vale Road, Heaton Mersey, Stockport SK4 3GN or can be obtained from the Company s website which is www.sterlinggreen.co.uk. 2. Statement of compliance These interim results have been prepared on the basis of the recognition and measurement requirements of IFRS anticipated to be in issue as either endorsed by the EU and effective (or available for early adoption) at 2012. These interim results should be read in conjunction with the annual report and financial statements of the Group for the year, which were approved for issue by the Directors on 11 November, as it provides an update on previously reported information. The comparative figures for the year are not the Group s statutory financial statements for the financial year. They are, however, derived from the statutory financial statements for that year which have been delivered to the Registrar of Companies. The auditors report to those financial statements did not contain statements under sections 498 (2) or (3) of the Companies Act 2006, but was modified by an Emphasis of Matter paragraph relating to the uncertainty that existed at the reporting date regarding the partial disposal and funding of the business. As disclosed elsewhere, the partial disposal was completed on 1 December. Following receipt of the proceeds of the partial disposal, and after taking into consideration future ongoing expenditure, the Directors have presented these interim results on a going concern basis. These interim results were approved by the Board on 22 December. The financial information contained therein for the six month period, and similarly the six month period, has neither been audited nor reviewed. 3. Significant accounting policies The accounting policies used in the presentation of these interim results are consistent with those used in the annual report and financial statements of the Group for the year 31 March. 4. Estimates The preparation of interim results requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates. In preparing these interim results, the significant judgements made by management in applying the Group s accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements of the Group for the year 31 March. 5. Operating segments The Group s business segments are its debt management division, its re-mortgaging operations and its head office operations. This is the basis on which the Group reports its primary segmental information. In the table below, all revenues are generated by sales to external parties.
Debt Management Remortgages Unallocated Group items Total Continuing operations Performance by activity: Revenue: - six months 30 Sept 235 53-288 - six months 30 Sept 296 64-360 - year 606 120-726 Operating profit/(loss): - six months 30 Sept (270) 8 (76) (338) - six months 30 Sept (220) 18 (86) (288) - year (529) 33 (175) (671) Total assets: - 1,192 12 7 1,211-1,494 5 7 1,506-1,375 11 5 1,391 The Group operates in a sector where no significant seasonal or cyclical variations in revenues and operating results are experienced during the financial year. 6. Discontinued operations The table below shows the estimated amounts of the discontinued operations for the 6 month period. (Unaudited) (Unaudited) (Audited) Revenue 913 962 2,075 Cost of sales and administrative costs (587) (609) (1,284) Operating profit 326 353 791 Finance costs - - - Profit before and after tax from discontinued operations 326 353 791 Impairment loss recognised on disposal (108) - - Profit from discontinued operations 218 353 791 Analysis of cash flow movements: Operating cash flows 326 353 791 7. Financial risk management The Group s financial risk management objectives and policies are consistent with those disclosed in the annual report and financial statements of the Group for the year 31 March.
8. (Loss)/Earnings per share The calculation of (loss)/earnings per share is based on the following: (Loss)/Earnings Loss for the year from continuing operations (408) (315) (759) Earnings for the year from discontinued operations 218 353 791 (Loss)/Earnings for the year from continuing and discontinued operations (190) 38 32 Number of shares Weighted average number of ordinary shares for the purpose of basic (loss)/earnings per share 303,675,390 303,675,390 303,675,390 Effect of dilutive potential ordinary shares share options - 12,227,723 12,567,280 Weighted average number of ordinary shares for the purpose of diluted (loss)/earnings per share 303,675,390 315,903,113 316,242,670 (Loss)/Earnings per share (pence) - Basic Loss per share from continuing operations (0.13) (0.10) (0.25) Earnings per share form discontinued operations 0.07 0.11 0.26 (Loss)/Earnings per share from continuing and discontinued operations (0.06) 0.01 0.01 (Loss)/Earnings per share (pence) - Diluted Loss per share from continuing operations (0.13) (0.10) (0.24) Earnings per share form discontinued operations 0.07 0.11 0.25 (Loss)/Earnings per share from continuing and discontinued operations (0.06) 0.01 0.01 The Company s potential ordinary shares, which consist of share options, would not be dilutive in the 6 month period due to the losses incurred. 9. Dividends No dividend is proposed for the six month period. No dividend was paid, in or proposed for, the year. 10. Related parties Key management receive compensation in the form of short term employee benefits, and they received the following amounts during the period:
Directors remuneration: Short term benefits 110 133 273 11. Analysis of cash and cash equivalents Bank balances 7 76 44