Embargoed until 07:00 12th September 2006
Ultimate Finance Group plc ("the Company" or "Ultimate Finance")
Full year results for the year ended 30 June 2006
Highlights:
* Significant growth in profit on ordinary activities before taxation, �
290,494 compared with �20,581 last year.
* Turnover for the period up 52% to �3,500,594 (2005: �2,309,728)
* Client sales financed up 49% to �123m (2005:�82.5m)
* Earnings per share (excluding deferred tax) 1.45p compared to 0.10p for
2005.
* Basic earnings per share (including deferred tax) 1.98p (2005: 0.46p).
* New northern client service office opened in Manchester and a new sales
office opened in Leeds which will support growth plans in the north of
England.
* The directors are confident of further growth in the financial year ending
30th June 2007.
Brian Sumner, chief executive, commented:
"I am delighted with this set of results which represents significant growth in
both activity and profit. We have increased our profits significantly and are
continuing our controlled growth on schedule. Our target market offers
tremendous growth opportunities for the group, which we are well positioned to
maximise."
Enquiries:
Brian Sumner, Chief Executive Ultimate Finance Group plc 07976 406 474
Richard Pepler, Managing Ultimate Finance Group plc 07870 212 180
Director
Kris McGuire/Adam Reynolds Hansard Communications 0207 2451100
Chairman's statement
Results
I am pleased to be able to report, following last year's first period of
profitability Ultimate achieved a significant growth in profit before tax, for
the year ended 30 June 2006, as a result of considerable growth in client sales
financed and trading income in the period. It has also significantly expanded
its client base with the client portfolio at the year end numbering 230 as
against 171 at 30 June 2005.
Client sales financed in the year increased by 49 per cent to �123million from
the previous year (2005: �82.5 million). This increase has come not only from
the increased number of clients but also as a consequence of the growth
experienced by existing clients and the increase in size of transactions with
new clients.
Turnover for the period increased by 52 per cent to �3,500,594 (2005: �
2,309,728) with profit on ordinary activities before taxation being �290,494
compared to �20,581 in 2005. Profit on ordinary activities after taxation for
the year amounted to �395,544. Of the total turnover for the year, 80%
corresponds to factoring clients with the balance being attributable to
confidential invoice discounting arrangements.
Basic earnings per share for the year to 30 June 2006 amounted to 1.98p
compared to 0.46p for 2005. The after tax profit incorporates the recognition
of a deferred tax asset of �105,050 (2005: �71,743) relating to taxable losses
accumulated since the formation of the company. In order to more accurately
measure the earnings per share on the trading performance of the group, an
additional adjusted figure has been included in note 11, to reflect the
earnings before the impact of the deferred tax asset. On this basis, the
earnings per share amounted to 1.45p compared to 0.10p in 2005.
Taxation
A deferred tax asset has been recognised fully this year as the group has been
trading profitably since January 2005 and is expected to continue to generate
sufficient taxable profits to utilise the tax benefit derived from timing
differences and cumulative losses incurred to date.
Funding
The back to back receivables financing arrangement with Lloyds TSB Commercial
Finance has continued to prove to be a catalyst to drive the business forward
in terms of growth and increase in shareholder value. At the year end the group
had utilised �9.2 million of the �18 million facility, a gearing ratio of 4:1
(net of cash balances).
Management and employees
Since its inception an integral element of the success of Ultimate has been the
commitment and hard work of my colleagues on the board and employees of
Ultimate. It is they who have achieved these results. I would like to
acknowledge and thank them for their efforts.
Outlook
I am confident that the current year will be one of continued progress. Our
primary aim is to maximise the return to shareholders and the board is
committed to delivering growth in shareholder value. We are planning for the
future and look forward to it with confidence.
Clive R Garston
Chairman
Chief Executive's review
After another year of strong growth, it is with great pleasure that I am able
to announce significant growth in both activity and profit; with profit on
ordinary activities rising to �290,494 (2005: �20,581). It is most gratifying
to see the strategic ambition of the group deliver returns in line with
expectations.
Those ambitions have been forged on the four cornerstones of our strategy; a
strong service ethic, a wealth of experience applied to risk management and
underwriting criteria, a recognition that only the best staff developed to the
full through training and guidance can deliver on the `ultimate' promise and a
sound and secure product range capable of being tailored to meet the practical
needs of the client throughout the business cycle.
Over the last four years since inception, the performance of the group has
improved markedly year on year. From a standing start in June 2002, a healthy
portfolio of 230 clients has been created generating over �123 million in sales
financed in the year to 30 June 2006. Through factoring and invoice discounting
products and our debtor protection product, our revenues have risen 52% year on
year and with this growth we have experienced strong progress on profitability.
As the portfolio matures so we have naturally experienced a degree of client
losses, mostly smaller clients, often start up businesses that have failed
within their first two years of trading. Whilst unfortunate, client churn is
somewhat inevitable at the smaller end of our market. I am pleased to report,
however, that bad debts have been almost completely avoided in these
collect-out and recovery situations. Once again this is testimony to our risk
management procedures and the quality of our operations staff.
Market and products
We have recently opened a client service centre in Manchester and a new sales
office in Leeds covering Yorkshire and the North-East, both of which are
performing well. We now have sales offices in the Midlands based in Birmingham,
the North based in Manchester and Leeds, the South and Southwest based in
Bristol and the Southeast based in St Albans, all of which provides us with
national coverage of England and Wales.
The market for our products has continued to grow at about 12 per cent per
annum according to industry statistics. Clearly we are growing at a rate
considerably above this level, taking market share largely from the bank
factors and discounters and this will continue to be our strategy whatever
market conditions emerge over the next few years.
2006 saw a considerable growth in the take-up of our debtor protection scheme
offered in conjunction with and fully backed by our insurer AIG. No risk
accrues to Ultimate with this product. Thus far the product has been very well
received and take up both by new clients and existing clients has been very
positive. Clients are now able to offset customer insolvency risk through
Ultimate in conjunction with AIG.
The debtor protection scheme gives rise to improved margins and new marketing
opportunities.
People and systems
We have continued to strengthen all departments of the business to keep in step
with a growing business. Investments in offices, systems, equipment and staff
made over the last four years are now delivering profit growth which we
confidently expect to continue. Resource growth in the operations department is
anticipated to continue growing in line with the size of the portfolio.
2005/06 saw the bedding down of our new software system designed to provide
improvements in risk management, the efficiency of data processing and client
reporting leading to many productivity gains. The system is working well and
already delivering benefits to all stakeholders of the group.
Prospects
After four years in business I can confidently state that we have, thus far,
fulfilled all of the management team's expectations for the business in what is
still an exciting market full of opportunities.
With a well-trained and competent operations team safeguarding the funds
invested in the portfolio and an established and very experienced sales team
based across the country able and willing to provide appropriate, competitive
and speedy solutions to company cash flow problems, I am confident of continued
growth.
It remains for me to thank all the staff at Ultimate who have once again
demonstrated beyond expectations their commitment and passion for our business
by delivering exceptional growth with utmost attention to risk and service.
Brian Sumner
Chief Executive
Consolidated profit and loss account
for the year to 30 June 2006
Note 2006 2005
� �
Turnover 3,500,594 2,309,728
Administrative expenses (2,635,325) (1,947,615)
Operating profit 865,269 362,113
Other interest receivable and similar 4,391 5,339
income
Interest payable and similar charges (579,166) (346,871)
Profit on ordinary activities before 290,494 20,581
taxation
Tax on profit on ordinary activities 2 105,050 71,743
Profit on ordinary activities after 395,544 92,324
taxation
Earnings per share 11
Basic 1.98p 0.46p
Diluted 1.97p 0.46p
All amounts relate to continuing activities.
There are no recognised gains or losses in the current and previous periods
except those reported above.
Consolidated balance sheet
At 30 June 2006
Note 2006 2005
� �
Fixed assets
Tangible assets 116,695 104,963
Current assets
Debtors 3 12,170,505 10,208,569
Cash at bank and in hand 4 844 600,022
12,171,349 10,808,591
Creditors: amounts falling due 5 (9,852,627) (8,873,681)
within one year
Net current assets 2,318,722 1,934,910
Net assets 2,435,417 2,039,873
Capital and reserves
Called up share capital 6 999,851 999,851
Share premium account 7 1,949,390 1,949,390
Profit and loss account 7 (513,824) (909,368)
Shareholders' funds (all equity) 2,435,417 2,039,873
These financial statements were approved by the board of directors on 11
September 2006 and were signed on its behalf by:
Brian Sumner Shane Horsell
Director Director
Consolidated cash flow statement
for the year to 30 June 2006
Note 2006 2005
� �
Reconciliation of operating profit to
net cash flow from operating activities
Operating profit 865,269 362,113
Depreciation charges 45,545 31,065
Increase in debtors (1,856,886) (4,916,798)
Increase in creditors 290,574 148,656
Net cash outflow from operating (655,498) (4,374,964)
activities
Cash flow statement
Cash flow from operating activities (655,498) (4,374,964)
Returns on investments and servicing of 9 (574,775) (341,532)
finance
Capital expenditure 9 (57,277) (93,236)
Cash outflow before financing (1,287,550) (4,809,732)
Financing 9 688,372 5,166,399
(Decrease)/Increase in cash in the (599,178) 356,667
period
Reconciliation of net cash flow to
movement in net debt
(Decrease)/Increase in cash in the (599,178) 356,667
period
Cash inflow from debt in the period 10 (688,372) (5,166,399)
Movement in net debt in the period 10 (1,287,550) (4,809,732)
Net debt at the start of the period (7,953,001) (3,143,269)
Net debt at the end of the period 10 (9,240,551) (7,953,001)
Reconciliation of movements in shareholders' funds
for the year to 30 June 2006
2006 2005
� �
Profit for the period 395,544 92,324
Net addition to shareholders' funds 395,544 92,324
Opening shareholders' funds 2,039,873 1,947,549
Closing shareholders' funds 2,435,417 2,039,873
Notes to the preliminary statement
* Accounting policies
The following accounting policies have been applied consistently in dealing
with items which are considered material in relation to the group's financial
statements.
Basis of preparation
The financial statements have been prepared in accordance with applicable
accounting standards and under the historical cost accounting rules.
The directors have confirmed the company will provide financial support to
Ultimate Finance Limited in order to meet liabilities as they fall due.
The board is required to report as to whether it is appropriate for the
financial statements to be prepared on a going concern basis. The executive
directors have prepared a budget which demonstrates a good future for the
company and that the finances are sound. The board therefore continues to adopt
the going concern basis in preparing the financial statements.
* Taxation
*
2006 2005
� �
UK Corporation Tax at 30% (2005: 30%) - -
Total current tax charge - -
Deferred tax - origination and reversal of timing 105,050 71,743
differences
Total taxation on profit on ordinary activities 105,050 71,743
Factors affecting the tax charge for the current period
The current tax charge for the period is lower than the standard rate of
corporation tax in the UK (30%). The differences are explained below.
2006 2005
� �
Current tax reconciliation
Profit on ordinary activities before tax 290,494 20,581
Current tax at 30% 87,148 6,174
Effects of:
Expenses not deductible for tax purposes 12,624 11,039
Capital allowances for period in excess of 2,494 (2,003)
depreciation
Provisions not deductible for tax purposes (4,683) 7,908
Utilisation of tax losses (97,583) (23,118)
Total current tax charge (see above) Nil Nil
A further deferred tax asset of �105,050 has been recognised in the year (2005:
�71,743), as the directors believe it is more probable than not that it will be
recovered in the future.
* Debtors
*
2006 2005
� �
Gross factored debts receivable 22,640,689 18,589,303
Due to clients on collection (10,815,958) (8,634,165)
Client commitments 11,824,731 9,955,138
Deferred tax 176,793 71,743
Other debtors 28,685 38,438
Prepayments and accrued income 140,296 143,250
12,170,505 10,208,569
Of the deferred tax asset, an amount which we cannot quantify will be
recoverable after more than one year.
* Cash
The company, together with its subsidiary undertakings, is party to a back to
back receivables financing agreement with one of its bankers. This agreement
permits the bankers to set off and/or combine all bank accounts included
therein. The accounting disclosure of cash, loans and overdrafts adopted this
year reflects the substance of this agreement.
* Creditors: amounts falling due within one year
*
2006 2005
� �
Bank loans and overdrafts 9,241,395 8,553,023
Trade creditors 35,158 42,207
Taxation and social security 138,515 84,854
Other creditors 270,503 158,273
Accruals and deferred income 167,056 35,324
9,852,627 8,873,681
The group has a loan facility with Lloyds TSB Commercial Finance Ltd for a �18
million back-to-back receivables financing agreement the minimum period for
which expires on 30 June 2007.
The facility is secured against an all assets debenture given by Ultimate
Finance Limited and a deed of guarantee and indemnity has been given by
Ultimate Finance Group plc.
At the end of the year, the group utilised �9,213,516 of the facility (2005: �
8,310,341).
* Called up share capital
*
2006 2005
� �
Authorised
Equity: 40,000,000 (2005: 40,000,000) ordinary 2,000,000 2,000,000
shares of 5p each
Allotted, called up and fully paid
Equity: 19,997,018 ordinary shares of 5p each 999,851 999,851
* Share premium and reserves
*
Share Profit
premium and loss
account account
2006 2006
� �
At beginning of year 1,949,390 (909,368)
Retained profit for the period - 395,544
At end of year 1,949,390 (513,824)
* Provisions for liabilities and charges
Group Company Group Company
2006 2006 2005 2005
� � � �
Deferred tax asset at 71,743 71,743 - -
beginning of year
Deferred tax asset 105,050 (54,757) 71,743 71,743
recognised in the year
Deferred tax asset at 176,793 16,986 71,743 71,743
end of year
There is no unrecognised deferred tax asset at 30 June 2006, as calculated
under Financial Reporting Standard 19:
Group Unprovided Unprovided
2006 2005
� �
Difference between accumulated depreciation and - (14,304)
capital allowances
Other timing differences - 219,125
- 204,821
Company Unprovided Unprovided
2006 2005
� �
Difference between accumulated depreciation and - -
capital allowances
Other timing differences - -
- -
* Analysis of cash flows
*
2006 2005
� �
Returns on investment and servicing of finance
Interest received 4,391 5,339
Interest paid (579,166) (346,871)
(574,775) (341,532)
Capital expenditure
Purchase of tangible fixed assets (57,277) (93,236)
(57,277) (93,236)
Financing
Utilisation of credit facility/bank overdraft 688,372 5,166,399
688,372 5,166,399
* Analysis of net debt
*
At 30 At 30 June
Cash flow
June 2005 June 2006
� � �
Cash in hand, at bank (see note 4) 600,022 (599,178) 844
Utilisation of credit facility/ (8,553,023) (688,372) (9,241,395)
bank overdraft
Total (7,953,001) (1,287,550) (9,240,551)
* Earnings per share
The basic profit per share for the period to 30 June 2006 has been calculated
from the profit on ordinary activities after taxation of �395,544 (2005: �
92,324) and on the weighted average number of ordinary shares in issue during
the year (19,997,018) (2005: 19,997,018).
The company has dilutive potential ordinary shares in respect of the `Company
Share Option Plan.' The diluted earnings per share amounts to 1.97p (2005:
0.46p) and is based on profit on ordinary activities after taxation of �395,544
(2005: �92,324) and 20,054,325 ordinary shares being the weighted average of
the shares in issue during the year adjusted to assume conversion of all
dilutive potential ordinary shares (2005: 20,027,787).
Adjusted earnings per share figures have been calculated in addition to the
basic and diluted figures since, in the opinion of the directors, these provide
further information on the understanding of the group's performance. A
reconciliation of the different earnings per share figures is shown below.
2006 2005
Pence pence
Basic earnings per share 1.98 0.46
Adjustment for recognition of deferred tax asset (0.53) (0.36)
Earnings per share before recognition of deferred tax 1.45 0.10
asset
* Preliminary statement of results
This preliminary statement was approved by the Board on 11 September 2006. It
is not the company's statutory accounts.
The statutory accounts for the period ended 30 June 2006 have been audited and
have been approved by the Board of directors on 11 September 2006. Copies of
the Directors' Report and Consolidated Financial Statements will be sent to
shareholders shortly and will be available from the Group's Bristol office,
Bradley Pavilions, Pear Tree Road, Bradley Stoke, Bristol BS32 0BQ.
END
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