RNS Number:1503J
Ultimate Finance Group PLC
01 March 2005
Embargoed until 07:00 1st March 2005
Ultimate Finance Group plc ("the Company" or "Ultimate Finance")
Interim results for the six months ended 31 December 2004
Highlights:
* Turnover for the period up 79% to #992,000 (2003: #554,000)
* Funds advanced up almost 106% to #7.0 million (2003: #3.4m)
* 50 net new clients on board up 63% to 130 retained clients at period
end (2003: 80)
* A further 14 new clients added to the portfolio in January with strong
pipeline building
* Losses reduced significantly with a move into profit expected in the
current year
* Cost remain tightly controlled
* Sales capability strengthened with senior regional sales director
appointment
* Directors confident of further growth in 2005
Brian Sumner, chief executive, commented:
"I am delighted with this set of results which represents significant progress
for the group. We have reduced our losses, grown our client base and are well
positioned to move into profitability in the short term. Our target market
offers tremendous growth opportunities for the group and we are well positioned
to take maximum advantage."
Enquiries:
Brian Sumner, Chief Executive Ultimate Finance Group plc 07976 406 474
Richard Pepler, Managing Director Ultimate Finance Group plc 07870 212 180
Shane Dolan Biddicks 020 7448 1000
Chairman's statement
Results
Results for the period ended 31 December 2004 show a loss before taxation of
#37,000, a considerable improvement compared with a loss of #166,000 for the six
months to 31 December 2003. In the same period, turnover was #992,000 against
#554,000 for the six months to 31 December 2003. Client turnover in the period
amounted to #36.1 million (31 December 2003: #18.2 million).
44 new clients were taken on during the period and, after client losses, the
portfolio of clients stood at 130 clients at 31 December 2004 (31 December 2003:
80). Aggregate advances across the portfolio at the end of the period reached
#7.0 million (31 December 2003: #3.4 million).
The cost base continues to be contained with the sole justification for increase
being to meet the demands of a growing portfolio and expanding business.
Working Capital Facilities
The #14 million debt facility from Lloyds TSB has provided the group with the
flexibility it promised. Bigger investments, faster decision making and less
onerous administration has been a major contributor to the continued success of
Ultimate Finance.
Of the total funding facility available to us, #5.1 million (net) has been
utilised as at 31 December 2004 (31 December 2003: #2.4 million).
People
As always, the board recognise the importance of an experienced, well-trained
and dedicated workforce. The success of Ultimate Finance is entirely
attributable to this committed team.
In support of the increase in staff numbers, the head office, which was
previously located in serviced offices in Bristol moved to its own dedicated,
larger premises at the beginning of the financial year. The incremental cost of
these premises is negligible and I am pleased to report that the business will
benefit considerably from increasing economies of scale over the next two years.
Risk management
With high standards of underwriting, experienced client management and credit
control staff, risk management continues to be the primary focus for control in
the business. Our clients continue to offer an excellent spread of risk in terms
of size of investment, industry type and geographical location. The single
largest investment at the end of December 2004 was #322,000, which constituted
less than 7% of total funds advanced.
Outlook
These results demonstrate further evidence of the strength of Ultimate's offer
in a growing market place. Our commitment to building sustainable shareholder
value through investment in all facets of our business is delivering results in
accordance with our expectations. Current performance is in line with
expectations and the board look forward to the future with confidence.
I would like to take this opportunity to thank our Chief Executive, Brian Sumner
and his staff for their efforts and continued commitment to the success of the
group.
Clive R Garston
Chairman
Chief Executive's review
Introduction
At the end of the last financial year (30 June 2004), the portfolio had grown by
almost 80% from 59 at the end of June 2003 to 106 clients. In the first six
months of the current financial year a further 44 new clients were added to the
portfolio and after clients exiting, the total number of live clients at 31
December 2004 increased to 130. The increasing size of the portfolio reflects a
wide range of business activities, located throughout England and Wales.
The last year has been a breakthrough period for Ultimate Finance, one in which
I feel we have really cemented our position as a proactive finance house,
willing and able to meet the needs of today's SME with a level of personal
service that our competitors are finding it difficult to match.
The ability of our highly experienced new business team to structure deals
quickly that work well for the client and then deliver a high quality personal
service with full access to the decision makers is providing us with significant
client wins.
The additional funding raised in May of last year has provided the foundation
for continued, controlled growth of the portfolio and provide much greater
flexibility to write new and bigger business; this is the key to our future
growth potential.
People
In support of our growth ambition, we have recently recruited a third regional
sales director, Peter Stanton, who has taken responsibility for the Midlands
with effect from September 2004. Peter has a great deal of experience of
structuring factoring and invoice discounting deals, recently with IGF, and is
well known in the region. He has already established a new client base for us
and is currently performing well ahead of his targets.
Our client management team has been strengthened by the addition of three credit
controllers taking the operations department to 12 staff at the end of the
half-year (31 December 2003: 9). The total number of staff employed by the group
at the end of December 2004 was 22 (31 December 2003: 16).
I fully recognise that our staff are our greatest asset and we have been
fortunate to be able to assemble such an excellent group of professionals who
are all behind our core strategy. I would like to add my own thanks to my
co-directors and all our staff for their hard work and commitment since forming
the group.
Darren Newman, our excellent Financial Controller from day one of the business,
has now been appointed Finance Director of the group - a much-deserved
appointment.
I would also like to thank Clive Garston and our non-executive board directors
whose collective experience and encouragement is extremely valuable to us.
We are also greatly appreciative of all our introducers of business who range
from specialist brokers to accountants and business consultants.
Risk management
Risk management alongside the provision of a high quality service continues to
form the core element of business management within Ultimate Finance. High
standards of selection for recruitment combined with continuous training
programs are regarded as a corner stone of best practice. This applies to new
business staff as well as operations staff. The quality of our staff together
with the strength of our underwriting procedures continue to reward us with a
well spread and stable portfolio. Ongoing development of our core infrastructure
and systems enable us to successfully cope with the increasing demands made upon
it.
One thing is for sure, however, that as we grow, we are determined not to lose
the personal touch.
At 31 December 2004 total debts under management were #13.4 million (31 December
2003: #6.3 million), against which we had advanced a total of #7.0 million (31
December 2003: #3.4 million).
Our main target market is businesses with an annual turnover of up to #5 million
but ranges from quality, well thought out start ups to long established, mature,
medium sized businesses.
FDA
I am delighted to announce we were recently accepted as the latest member of the
trade association, the Factors and Discounters Association. It is very
gratifying to have gained acceptance by our peers.
Our products and the marketplace
Our product range is soon to be supplemented by the addition of our new debt
protection scheme, which I am sure, will be of great interest to many of our
clients and potential clients.
The market for factoring and invoice discounting products is far from saturated
with less than 40,000 companies using the products against an estimated
potential number in excess of 200,000. The products are more and more accepted
as part of the financial scene and we believe the market in them will continue
to grow at the expense of the more traditional bank overdraft.
Conclusion
The portfolio has been augmented by a further 14 clients (net of losses) in the
month of January 2005. It is our intention to further increase the sales team in
the near future assuring the business of continued growth.
With a growing market to attack, a determined management team focussed on
growth, and the strength of resource concentrated on risk management and high
levels of service, I am confident that the future of Ultimate Finance is secure.
Brian Sumner
Chief Executive
Independent Review Report by KPMG Audit Plc to Ultimate Finance Group plc
Introduction
We have been engaged by the company to review the financial information set out
in the consolidated profit and loss account, the consolidated balance sheet, the
reconciliation of movements in shareholders' funds, the consolidated cash flow
statement, the reconciliation of net cash flow to movement in net funds, the
reconciliation of operating profit / (loss) to net operating cash flows and the
notes to the interim report and 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.
This report is made solely to the company in accordance with the terms of our
engagement. Our review has been undertaken so that we might state to the company
those matters we are required to state to it in this report and for no other
purpose. To the fullest extent permitted by law, we do not accept or assume
responsibility to anyone other than the company for our review work, for this
report, or for the conclusions we have reached.
Director's 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 in accordance with the AIM
Rules which require that the interim report must be presented and prepared in a
form consistent with that which will be adopted in the company's annual accounts
having regard to the accounting standards applicable to such annual accounts.
Review work performed
We conducted our review having regard to the guidance contained in Bulletin 1999
/4: Review of interim financial information 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 is substantially less
in scope than an audit performed in accordance with 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 31 December 2004.
KPMG Audit Plc
Chartered Accountants
1 The Embankment
Neville Street
Leeds LS1 4DW
28 February 2005
Consolidated profit and loss account
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Turnover 992 554 1,184
Administrative expenses (883) (650) (1,357)
Operating Loss 109 (96) (173)
Other interest receivable and similar
income 3 2 5
Interest payable and similar charges (149) (72) (171)
Loss before and after taxation (37) (166) (339)
Basic and fully diluted loss per
share (0.18)p (1.48)p (2.72)p
There are no recognised gains and losses in the period other than those reported
in the profit and loss account.
Consolidated balance sheet
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Fixed Assets 98 30 43
Current Assets
Debtors (see note 5) 7,088 3,439 5,220
Cash at bank 267 580 327
7,355 4,019 5,547
Current Liabilities
Amounts due in less than one year (5,543) (3,100) (3,643)
Net current assets 1,812 919 1,904
Net assets 1,910 949 1,947
Shareholders' funds
Called up share capital 1,000 561 1,000
Share premium account 1,949 1,217 1,949
Profit and loss account (1,039) (829) (1,002)
Total shareholders' funds 1,910 949 1,947
Reconciliation of movements in shareholders' funds
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Opening shareholders' funds 1,947 1,115 1,115
New share capital subscribed (net of
issue costs) - - 1,171
Loss for the period (37) (166) (339)
Closing shareholders' funds 1,910 949 1,947
Consolidated cash flow statement
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Net cash flow from operating
activities (1,722) (616) (2,444)
Returns on investments & servicing of
finance (146) (70) (166)
Capital expenditure (69) (6) (27)
Cash outflow before financing (1,937) (692) (2,637)
Financing
Issue of shares - - 1,171
Increase in debt 1,877 900 1,094
(Decrease) / Increase in cash (60) 208 (372)
Reconciliation of net cash flow to movement in net funds
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
(Decrease) / Increase in cash (60) 208 (372)
Cash inflow from increase in debt (1,877) (900) (1,094)
Movement in net debt in the period (1,937) (692) (1,466)
Net debt at the beginning of the
period (3,143) (1,677) (1,677)
Net debt at the end of the period (5,080) (2,369) (3,143)
Reconciliation of operating profit / (loss) to net operating cash flows
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Operating profit / (loss) 109 (96) (173)
Depreciation charges 14 6 14
Increase in commitments to clients (1,877) (565) (2,274)
Decrease / (Increase) in sundry
debtors 9 10 (62)
Increase in provisions against client
commitments 26 31 17
(Decrease) / Increase in sundry
creditors (3) (2) 34
Net cash outflow from operating
activities (1,722) (616) (2,444)
Notes to the interim report
1. The results for the half year to 31 December 2004 and the comparative
six month trading period to 31 December 2003 are unaudited and have been
prepared using accounting policies consistent with those set out in the
Directors' Report and Consolidated Financial Statements for the period ended 30
June 2004. The figures for the financial period ended 30 June 2004 are taken
from the statutory accounts for that period, which have been delivered to the
Registrar of Companies and upon which an unqualified audit report was given.
2. The basic loss per share has been calculated from the loss after
taxation of #37,000 and on the 19,997,018 ordinary shares in issue at 31
December 2004. As the company has made a loss in the period the basic loss per
share is the same as the fully diluted loss per share, therefore, the
calculation does not take into consideration share options granted in the
period.
3. These interim financial statements were approved by the board of
directors on 28 February 2005.
4. Accounting policies
The following accounting policies have been applied consistently in dealing with
items which are considered material in relation to the company's financial
statements.
Basis of preparation
These unaudited financial statements do not constitute statutory accounts. They
have, however, been reviewed by the auditors whose report is included.
The financial statements have been prepared in accordance with applicable
accounting standards, and under the historical cost accounting rules.
Fixed assets and depreciation
Depreciation is provided to write-off the cost less the estimated residual value
of tangible fixed assets by equal instalments over their estimated useful
economic lives as follows:
Office equipment incl. network equipment - 5 years
Computer equipment excl. network equipment - 3 years.
Turnover
Turnover represents fees (excluding value added tax) and discount income. Fees
are recognised when service is provided and discount income is recognised on
funds advanced to clients as it becomes due.
Cash and liquid resources
Cash, for the purpose of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.
Introducer commissions
Commissions payable to the introducers of business are charged to the profit and
loss account over the minimum period of the service contract. In the event of
early termination, any commission not already charged to the profit and loss
account will be written off in full.
Net client commitments
Amounts due to clients under recourse factoring agreements are offset against
the related trade debtors. The resulting balance represents net client
commitments and is included in debtors.
5. Debtors
Half year to Half year to Year to
31 Dec 04 31 Dec 03 30 Jun 04
#'000 #'000 #'000
Gross factored debts receivable 13,394 6,342 8,974
Due to clients on collection (6,425) (2,959) (3,882)
Client Commitments 6,969 3,383 5,092
Other debtors 32 11 20
Prepayments and accrued income 87 45 108
Debtors 7,088 3,439 5,220
6. Taxation
No taxation arose due to the losses incurred in the period. The group has
accumulated tax losses available for offset against future profits of #1,055,000
(31 December 2003: #835,000).
A deferred tax asset of #305,000 (31 December 2003: #244,000) has not been
recognised as the directors do not believe that it is more probable than not
that it will recover a material amount in the next 12 months.
7. Interim Report
Copies of this report are being sent to shareholders. Additional copies may be
obtained from the Ultimate Finance Group plc registered office: Bradley
Pavilions, Pear Tree Road, Bradley Stoke, Bristol BS32 0BQ.
This information is provided by RNS
The company news service from the London Stock Exchange
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