Embargoed until 07:00 13th March 2006
Ultimate Finance Group plc ("the Company" or "Ultimate Finance")
Interim results for the six months ended 31 December 2005
Highlights:
* Invoices assigned in the 6 month period amounted to a record �55.8m (2004 �
36.1m)
* Turnover for the period up 65% to �1,632,000 (2004: �992,000)
* Record Net Profit before tax for the 6 month period ended 31st December
2005 �112,000 (2004 loss of �37,000)
* Earnings per share of 0.68p compared to a loss per share of (0.18)p for Dec
2004
* Funds advanced increased by 71% to �12.0 million (2004: �7.0m)
* At the period end client numbers had increased to 209 (December 2004: 130)
an increase of 61%.
* Our impressive new business growth has continued with a further 21 new
clients added to the portfolio in January/February with a strong pipeline
building
* After the first year of profit in 2005, (�21,000 for the full year) the
profits continue to grow for the first half of 2005/06.
* Costs remain tightly controlled
* New finance director, Shane Horsell, an experienced FD who will strengthen
the management team.
* New northern client service office opened in Manchester, which will support
growth plans in the north of England.
* The directors are confident of further growth in the last 6 months of the
financial year ending 30th June 2006.
Brian Sumner, chief executive, commented:
"I am delighted with this set of results which represents excellent progress
for the group. We have increased our profits significantly, grown our client
base aggressively and have recently opened our northern client service office.
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
Results for the 6 month period ended 31 December 2005 show a profit before
taxation of �112,000, a significant improvement compared with a loss of �37,000
for the six months to 31 December 2004. Earnings per share of 0.68p for the
half year compared with a loss per share of (0.18)p for December 2004. In the
same period, turnover was �1,632,000 against �992,000 for the six months to 31
December 2004. Client turnover in the period amounted to �55.8 million (31
December 2004: �36.1 million).
The number of retained clients continues to grow, from 130 in December 2004 to
209 at the end of December 2005 an increase of 61%. Aggregate advances across
the portfolio at the end of the period reached �12.0 million (31 December 2004:
�7.0 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 �14 million debt facility from Lloyds TSB has provided the group with the
flexibility it promised over the last 18 months and has now been increased to �
18million. 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, �9.7 million (net) has been
utilised as at 31 December 2005 (31 December 2004: �5.1 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.
Darren Newman resigned as finance director in December 2005 and on the 10th
March 2006 the board announced the appointment of Shane Horsell as his
replacement. Shane has 19 years experience in various finance roles, latterly
as finance director of Blick UK Ltd the major subsidiary of Blick Plc (the
formerly FTSE listed company) and as group finance director for Advent
Publishing Systems Ltd.
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 2005 was �458,000, which
constituted less than 4% 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 looks forward to the future with confidence.
I would like to take this opportunity to thank our Chief Executive, Brian
Sumner and all his staff for their efforts and continued commitment to the
success of the group.
Clive R Garston
Chairman
Chief Executive's review
Introduction
The company was formed in 2002 by a highly experienced management team to
provide bespoke cash flow funding solutions to the SME market. Our excellent
progress since inception in 2002 continues.
Our turnover is spread both geographically over the whole of England and Wales
and over a wide range of market sectors. The ability of the experienced
Ultimate 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 significant client wins and proving difficult for
our competitors to match.
The renewal and increase in the Lloyds TSB Commercial Finance borrowing
facilities will enable Ultimate to continue to grow its book in the future.
The recent investment in our northern client service operation based at Cheadle
near Manchester will significantly assist growth plans in that part of the
country.
It is pleasing to announce that "Business Moneyfacts" magazine recently
short-listed Ultimate in the top six for "Best Factoring and Invoice
Discounting Provider".
People
I fully recognise that our staff are our greatest asset and we have been
fortunate to be able to assemble and build on such an excellent group of
professionals who are all behind our core strategy.
At this point I would like to welcome our new financial director, Shane
Horsell, to the business. Shane is an experienced FD who has already made a
difference to our company.
I would like to take this opportunity of thanking Richard Pepler and the sales
team and Jeremy Coombes, and the operations group, along with all our support
staff for the excellent contribution and delivery of our top line personal
service - one which our major competitors are unable to match, resulting in
significant client wins particularly over the last year or so.
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. The quality of our
staff together with the strength of our underwriting procedures continues to
reward us with a stable portfolio across England and Wales. The new state of
the art client management software which we introduced in May last year has now
settled down nicely and will shortly deliver significant productivity
improvements.
At 31 December 2005 total debts under management were �22.1 million (31
December 2004: �13.4 million), against which we had advanced a total of �12.0
million (31 December 2004: �7.0 million).
Our main target market has risen to 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.
Our products and the marketplace
At the end of last year our product range was supplemented by the addition of
our new Debtor Protection Facility. This has proved to be of great interest to
both new and existing clients and as at December 2005 the take up was 21
clients.
The market for factoring and invoice discounting products is far from saturated
with just over 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
With a growing market to attack, a determined and highly experienced management
team focussed on growth, 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 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 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 2005.
KPMG Audit Plc
Chartered Accountants
1 The Embankment
Neville Street
Leeds LS1 4DW
10 March 2006
Consolidated profit and loss account
Half year to Half year to Year to
31 Dec 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Turnover 1,632 992 2,310
Administrative expenses (1,247) (883) (1,948)
Operating profit 385 109 362
Other interest receivable and similar 3 3 5
income
Interest payable and similar charges (276) (149) (346)
Profit/(loss) before taxation 112 (37) 21
Tax on profit on ordinary activities 24 0 71
Profit/(loss) after taxation 136 (37) 92
Basic and fully diluted profit/(loss) 0.68p (0.18)p 0.46p
per share
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 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Fixed Assets 105 98 105
Current Assets
Debtors (see note 5) 12,241 7,088 10,209
Cash at bank 149 267 600
12,390 7,355 10,809
Current Liabilities
Amounts due in less than one year (10,319) (5,543) (8,874)
Net current assets 2,071 1,812 1,935
Net assets 2,176 1,910 2,040
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 (773) (1,039) (909)
Total shareholders' funds 2,176 1,910 2,040
Reconciliation of movements in shareholders' funds
Half year to Half year to Year to
31 Dec 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Opening shareholders' funds 2,040 1,947 1,948
Profit/(loss) for the period 136 (37) 92
Closing shareholders' funds 2,176 1,910 2,040
Consolidated cash flow statement
Half year to Half year to Year to
31 Dec 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Net cash flow from operating activities (1,449) (1,722) (4,375)
Returns on investments & servicing of (273) (146) (342)
finance
Capital expenditure (19) (69) (93)
Cash outflow before financing (1,741) (1,937) (4,810)
Financing
Increase in debt 1,435 1,877 5,167
(Decrease) / Increase in cash (306) (60) 357
Reconciliation of net cash flow to movement in net funds
Half year to Half year to Year to
31 Dec 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
(Decrease) / Increase in cash (306) (60) 357
Cash inflow from increase in debt (1,435) (1,877) (5,167)
Movement in net debt in the period (1,741) (1,937) (4,810)
Net debt at the beginning of the period (7,953) (3,143) (3,143)
Net debt at the end of the period (9,694) (5,080) (7,953)
Reconciliation of operating profit to net operating cash flows
Half year to Half year to Year to
31 Dec 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Operating profit 385 109 362
Depreciation charges 19 14 31
Decrease / (Increase) in debtors (2,008) (1,868) (4,917)
(Decrease) / Increase in creditors 155 23 149
Net cash outflow from operating (1,449) (1,722) (4,375)
activities
Notes to the interim report
1. The results for the half year to 31 December 2005 and the comparative six
month trading period to 31 December 2004 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 2005. The figures for the financial period ended 30 June 2005
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 profit per share has been calculated from the profit after
taxation of �136,401 and on the 19,997,018 ordinary shares in issue at 31
December 2005. The fully diluted earnings per share is also 0.68p, taking
into account the fair value of share options issued.
3. These interim financial statements were approved by the board of directors
on 10 March 2006.
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 05 31 Dec 04 30 Jun 05
�'000 �'000 �'000
Gross factored debts receivable 22,107 13,394 18,589
Due to clients on collection (10,080) (6,425) (8,634)
Client Commitments 12,027 6,969 9,955
Other debtors 129 32 111
Prepayments and accrued income 85 87 143
Debtors 12,241 7,088 10,209
6. Taxation
A deferred tax asset has been valued at �96,000 (Dec 2004 �0) at 31st Dec 2005,
as the directors believe it is more probable than not that it will be recovered
in the future. An amount of �146,921 (2004: �305,000) has not been recognised
as the directors have not concluded that it is more likely than not that there
will be sufficient taxable profits from which the future reversal of the
underlying timing differences can be deducted.
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.
END
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