Embargoed 07:00 12th March 2007
Ultimate Finance Group plc
("the Company" or "Ultimate Finance")
Interim results for the six months ended 31 December 2006
Highlights:
* Invoices assigned rose 31% to �73.3m (2005 �55.8m)
* Turnover up 19% to �1.9m (2005: �1.6m)
* Profit before tax up 25% to �132,000 (2005 �106,000 as restated)
* In the last six months there has been investment in new, larger premises in
the north-west and there are plans to invest in an office in the south-east
in the current year to enable access to the very high concentration of SME
activity in that region.
* The new business team is being expanded to take advantage of these
investments and the board looks forward to the future with confidence.
Brian Sumner, chief executive, commented:
"I am pleased with this set of results which represents progress for the group
in what have been difficult market conditions this year. We have increased our
profits, grown our client base and the amount of client sales financed is a
record. We have recently expanded our northern client service office and an
office in the south-east is our aim for 2007. Our target market is growing in
excess of 10% per annum and still offers excellent growth opportunities for the
group."
Enquiries:
Brian Sumner, Chief Executive Ultimate Finance Group plc 07976 406 474
Shane Horsell, Finance Director Ultimate Finance Group plc 07811 330828
Chris Roberts/Adam Reynolds Hansard Communications 0207 2451100
Chairman's statement
Results
I am pleased to be able to report that for the 6 month period ended 31 December
2006 Ultimate made a profit before taxation of �132,000, a 25% improvement
compared with �106,000 (as restated for the impact of FRS 20 share based
payments) for the same period last year and turnover for the period increased
from �1,632,000 to �1,939,000. Earnings per share amounted to 0.47p against
0.66p (as restated) in 2005. However in 2005 the earnings per share calculation
included the recognition of a deferred tax asset of �26,000 (as restated)
whereas in 2006 there was a tax charge of �38,000.
Client turnover financed in the period rose 31% to �73.3 million (31 December
2005: �55.8 million) and total debtors under management rose 13% to �25m (31
December 2005: �22.1m). Aggregate advances across the portfolio at the end of
the period reached �12.9 million (31 December 2005: �12.0 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 �18 million debt facility from Lloyds TSB continues to provide the group
with the flexibility to grow. 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, �
10.3 million (net) has been utilised as at 31 December 2006 (31 December 2005:
�9.7 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 and I would like to take this opportunity
to thank our Chief Executive, Brian Sumner, my co directors and all the staff
for their efforts and continued commitment to the success of the Ultimate.
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 appropriate spread of risk in
terms of size of investment, industry type and geographical location. The
single largest investment at the end of December 2006 was �442,000, which
constituted only 3.4% of total funds advanced.
Outlook
Current trading conditions are difficult but your board is taking all necessary
steps to build sustainable shareholder value. We are continuing to invest in
all aspects of the business, including the existing operations in Bristol and
the north-west. In 2007 we hope to open an office in the south-east of England
where there is a very high concentration of SME activity which we believe we
cannot access adequately without a physical presence. Notwithstanding current
conditions the board looks forward to the future with confidence.
Clive R Garston, Chairman Chief Executive's review
The company was formed in 2002 by a highly experienced management team to
provide bespoke cash flow funding solutions to the SME market.
Our client base is spread across England and Wales and over a wide range of
market sectors. In the last six months we have invested in new, larger premises
in Wilmslow, Cheshire for our expanding team in the north-west and we are also
looking to open an office in the south-east. The new business team is being
expanded to take advantage of these opportunities.
The company's unique selling points include the ability of the experienced
Ultimate new business team to structure deals quickly that work well for the
client and then to deliver a high quality personal service with full access to
the decision makers.
The Lloyds TSB Commercial Finance borrowing facilities continue to enable
Ultimate to grow its book in the future.
I fully recognise that our staff are our greatest asset and we have an
excellent team of experienced Invoice Finance professionals here at Ultimate.
I would like to take this opportunity of thanking Richard Pepler and the sales
team, Jeremy Coombes and the operations group, along with Shane Horsell and the
finance team for their excellent contribution and delivery of our top line
personal service - one which our major competitors are unable to match.
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 alongside the provision of a high quality service continues to
form the core element of business management within Ultimate. High standards of
selection for recruitment combined with continuous training programmes are
regarded as a corner stone of best practice. The state of the art client
management software has delivered significant productivity improvements,
particularly in the last few months.
Our main target market is businesses with an annual turnover of up to �10
million but ranges from quality, well thought out start ups to long
established, mature, medium sized businesses. The overall quality of our Client
portfolio has, in our view, never been better.
The SME marketplace has seen an increasing number of business failures over the
last twelve months, which in the short term has put pressure on client numbers.
However for the medium term the market for factoring and invoice discounting
products is far from saturated and we fully expect our growing new business
team to overcome these challenges.
The products which Ultimate offer are more and more accepted as part of the
financial scene and I believe the market in them will continue to grow at the
expense of the more traditional bank overdraft.
With a market still growing in excess of 10% per annum to attack, a determined
and highly experienced management team focussed on growing portfolio and
profits, along with 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 to Ultimate Finance Group plc
Introduction
We have been instructed by the company to review the financial information for
the six months ended 31 December 2006 which comprises the consolidated profit
and loss account, the consolidated balance sheet, reconciliation of movements
in shareholders' funds, the consolidated cashflow statement and the related
notes. 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.
Directors' 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 UK. A review consists principally of making
enquiries of 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 excludes audit procedures such as tests of controls and verification
of assets, liabilities and transactions. It is substantially less in scope than
an audit performed in accordance with International Standards on Auditing (UK
and Ireland) 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 2006.
KPMG Audit Plc
Chartered Accountants
Leeds
9 March 2007
Consolidated profit and loss account
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
(as restated) (as restated)
* *
Turnover 1,939 1,632 3,500
Administrative expenses (1,463) (1,253) (2,647)
Operating profit 476 379 853
Other interest receivable and similar 2 3 4
income
Interest payable and similar charges (346) (276) (579)
Profit before taxation 132 106 278
Tax on profit on ordinary activities (38) 26 109
Profit after taxation 94 132 387
Basic earnings per share 0.47p 0.66p 1.94p
Fully diluted earnings per share 0.47p 0.66p 1.93p
Statement of total recognised gains and losses
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
(as restated) (as restated)
* *
Profit for the financial period 94 1321 3872
Total gains and losses recognised in 132 387
the period
Prior year adjustment (see note 5) (14)3
Total gains and losses recognised
since last annual report 80
1 after having deducted �4,000 for the additional FRS 20 expense in the period
2 after having deducted �8,000 for the additional FRS 20 expense in the year
3 the cumulative additional FRS 20 expense in respect of prior periods, net of
deferred tax
*See note 5
Consolidated balance sheet
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
(as restated) (as
restated)
Fixed Assets 152 105 117
Current Assets
Debtors (see note 6) 13,166 12,245 12,176
Cash at bank 1 149 1
13,167 12,394 12,177
Current Liabilities
Amounts due in less than one year (10,778) (10,319) (9,853)
Net current assets 2,389 2,075 2,324
Total assets less current liabilities, 2,541 2,180 2,441
being net assets
Shareholders' funds
Called up share capital 1,000 1,000 1,000
Share premium account 1,949 1,949 1,949
Profit and loss account (408) (769) (508)
Total shareholders' funds 2,541 2,180 2,441
Reconciliation of movements in shareholders' funds
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
Opening shareholders' funds as 2,435
previously stated
Prior year adjustment (see note 5) 6
Opening shareholders' funds as restated 2,441 2,042 2,042
Profit for the period 94 132 387
Credit in relation to share based 6 6 12
payments
Closing shareholders' funds 2,541 2,180 2,441
Consolidated cash flow statement
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
Net cash flow from operating activities (615) (1,449) (655)
Returns on investments & servicing of (344) (273) (575)
finance
Capital expenditure (70) (19) (57)
Cash outflow before financing (1029) (1,741) (1,287)
Financing
Increase in debt 1,029 1,435 688
Decrease in cash - (306) (599)
Reconciliation of net cash flow to movement in net funds
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
Decrease in cash - (306) (599)
Cash inflow from increase in debt (1,029) (1,435) (688)
Movement in net debt in the period (1,029) (1,741) (1,287)
Net debt at the beginning of the period (9,240) (7,953) (7,953)
Net debt at the end of the period (10,269) (9,694) (9,240)
Reconciliation of operating profit to net operating cash flows
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
(as restated) (as
restated)
Operating profit 476 379 853
Depreciation charges 35 19 46
(Increase) in debtors (1,028) (2,008) (1,857)
(Decrease) / Increase in creditors (104) 155 291
Charge in respect of share-based 6 6 12
payments
Net cash outflow from operating (615) (1,449) (655)
activities
Notes to the interim report
1. The results for the half year to 31 December 2006 and the comparative six
month trading period to 31 December 2005 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 2006 except that FRS 20 Share-based payment has been adopted
for the first time.
The accounting policy under FRS 20 is set out below together with an indication
of the effects of its adoption.
The comparative figures for the financial year ended 30 June 2006 are not the
company's statutory accounts for that financial year. Those accounts have been
reported on by the company's auditors and delivered to the registrar of
companies. The report of the auditors was (i) unqualified, (ii) did not include
a reference to any matters to which the auditors drew attention by way of
emphasis without qualifying their report and (iii) did not contain a statement
under section 237(2) or (3) of the Companies Act 1985.
2. The basic earnings per share of 0.47p has been calculated from the profit
after taxation of �94,537 and on the 19,997,018 ordinary shares in issue at
31 December 2006. The fully diluted earnings per share is 0.47p, has been
calculated from the profit after taxation of �94,537 and on the 20,026,130
ordinary shares being the weighted average of the shares in issue during
the period adjusted to assume conversion of all dilutive potential ordinary
shares.
3. These interim financial statements were approved by the board of directors
on 9 March 2007.
4. Basis of Preparation
These unaudited financial statements do not constitute statutory accounts. They
have, however, been reviewed by the auditors whose report is included.
5. Prior year adjustment - Share based payments
The share option programme allows employees to acquire shares of the Company.
Following the adoption of FRS 20 Share-based Payment, the fair value of options
granted after 7 November 2002 and not yet vested as at 1 July 2006 is
recognised as an employee expense with a corresponding increase in equity. The
fair value is measured at grant date and spread over the period during which
the employees become unconditionally entitled to the options. The fair value of
the options granted is measured using an option pricing model, taking into
account the terms and conditions upon which the options were granted. The
amount recognised as an expense is adjusted to reflect the actual number of
share options that vest except where forfeiture is only due to share prices not
achieving the threshold for vesting.
The adoption of the standard has resulted in a prior year adjustment to the
comparative amounts reported in these financial statements in respect of the
share based payments charge and the deferred tax asset thereon. The effect of
the prior year adjustment has been to reduce the profit before tax for the
period to 31 December 2006 by �6,000 (31 December 2005: �6,000; 30 June 2006 �
12,000), reduce the tax charge for the period to 31 December 2006 by �2,000 (31
December 2005: �2,000; 30 June 2006 �4,000) and to increase shareholders' funds
brought forward at 1 July 2006 by �6,000. This comprises:
Additional FRS 20 charge (�20,000)
Deferred tax credit thereon �6,000
Credit to equity �20,000
6. Debtors
Half year to Half year to Year to
31 Dec 06 31 Dec 05 30 Jun 06
�'000 �'000 �'000
(as restated) (as
restated)
Gross factored debts receivable 24,998 22,107 22,641
Due to clients on collection (12,084) (10,080) (10,816)
Client Commitments 12,914 12,027 11,825
Other debtors 204 133 211
Prepayments and accrued income 48 85 140
Debtors 13,166 12,245 12,176
The restatement of the comparative amounts is described in note 5.
7. Taxation
A deferred tax asset included in other debtors (note 6) has been valued at �
145,297 at 31st Dec 2006 (Dec 2005 restated �96,000), as the directors believe
it is more probable than not that it will be recovered in the future. The
deferred tax asset was recognised in full on tax losses carried forward at 30
June 2006. The comparative amounts in respect of deferred tax assets have been
restated as described in note 5.
8. 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.
END
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