Final Results
April 30 2007 - 3:01AM
UK Regulatory
RNS Number:7333V
Diamond Lifestyle Holdings PLC
30 April 2007
DIAMOND LIFESTYLE HOLDINGS plc
("Diamond" or the "Group")
Preliminary statement for the period to 31 December 2006
Diamond Lifestyle Holdings Plc, the financial and advisory intermediary,
specialising in the provision of mortgage broking and related services to the
sub-prime market under the Governments 'Right to Buy' scheme, announces its
maiden preliminary results for the period ended 31st December 2006.
Highlights:
* Operating profit, before tax and charges associated with goodwill, was
#1m. This represents a 13% increase on 2005.
* The reduction in turnover in 2006 over 2005 of 8% was expected given the
sales mix and management's focus on the cost base. The core elements of
which were:
* The mix of completions moved significantly from a Right To Buy:
Remortgage ratio of 86:14 to 63:37 from 2005 to 2006.
* Changing the financial model to improve margins against each
completion, either Right to Buy or Remortgage.
* Gross profit at #4m was 8% higher and 9 percentage points higher than
2005. The Company improved both its top line rate per completion and
improved core direct costs.
* Administrative overheads were 6% higher largely driven by increases to
headcount towards the end of 2006.
Chairman's Statement
It is with great pleasure that I present my first report on the Group since our
successful admittance to trading on the AIM market in December 2006.
Overall the period was one of solid trading performance and exciting trading
prospects in 2007. Excluding the exceptional costs associated with the reverse
acquisition the Group recorded an operating profit of #1 million in the period
to December 2006, which was broadly in line with management expectations and
represented a 13% increase on the previous year's performance.
To ensure optimum profitability and returns for shareholders, the Board has
concentrated in the short-term on management of the cost base and reorganisation
of the Diamond's process to improve operational efficiencies and increase
margins. This will have a material positive impact on trading and cash
generation in the current year. I am also pleased to confirm that the Group has
reduced gearing by 25% in the period after completion.
Conscious of the importance of robust and dynamic compliance systems within the
UK regulatory regime, the Board is confident that its compliance systems in fact
provide a competitive advantage, as evidenced by the Groups excellent
relationships with lenders and regulatory bodies.
I am confident the Group is well placed to build on its position in the UK
sector and the Board will proactively seek value enhancing acquisition
opportunities to further extend our competitive advantage. On behalf of the
Board, I would like to express our thanks to our staff, advisors and
shareholders for their on-going support.
Paul Hughes
30 April 2007
DIAMOND LIFESTYLE
Diamond, which was incorporated on 17 September 2001, is a financial
intermediary principally providing advice and brokering finance to tenants of
council houses in England and Wales under the 'Right to Buy' scheme, with a
focus in providing mortgages for the UK sub-prime or credit impaired sector. The
profile of Diamond has now broadened to include remortgages and second charge
loans. Diamond also advises upon and sells related insurance products to its
customer base. Diamond is authorised and regulated by the FSA.
The Group is not just a mortgage broker, but a packager and a branded lender.
This means that as well as being an intermediary who liaises with the customer
and the lender, as a packager it has been appointed as an outsourced
administration centre on behalf of the lenders to underwrite mortgage cases. The
Group operates a panel of 6 lenders at any one time. This provides the
flexibility to determine a mortgage that suits the financial circumstances of
individual clients.
As a packager it instructs the valuation on the property, it applies for
relevant references and it agrees the mortgage in principal rather than the
lender and this gives the Group overall control of all mortgage applications and
limits the number of potential 3rd party delays to completion of any
application.
Being a branded lender brings something quite unique. It has been given the
ability to design its own mortgage products and set its own mortgage rates,
which again gives it more control over the whole process.
As a mortgage company Diamond Lifestyle is one of the leading Right to Buy
Mortgage companies in the UK. Given the historic level of Right to Buy activity,
it is also building the number of Remortgages and 2nd Charge Loans in order to
achieve critical mass in those sectors. It is able to help those customers with
either a perfect credit history or those customers that have issues such as
CCJ's, defaults, mortgage or rent arrears, ex bankrupts and customers on various
State benefits.
Diamond Lifestyle offers a unique service whereby it sponsors clients on Right
to Buy and Remortgage Facilities. It pays all of the customer's upfront fees,
such as, solicitors, including disbursements, brokers, processing, referencing
and the valuation. These charges are only covered when the application completes
and the mortgage or loan provided to the client. In addition it acts for the
customer in dealings with all third parties including the local Council on a
Right to Buy.
Added to this unique service is the unrivalled customer service of handling the
whole process from beginning to end, even helping its customers apply for the
Right to Buy, appointing the company's in-house completions team and ensuring
that it holds the hand of each and every customer from beginning to end until
the mortgage completes.
In addition to securing the mortgage for any client the Group also offers a
range of other products for clients to consider. These include Accident,
Sickness and Unemployment Insurance, Life Insurance, Buildings and Contents
Insurance, Will preparation and Home Improvements. This range can be added to
over time but does provide some breadth to the product and service clients can
be offered.
Diamond predominately operates within the 'sub-prime' lending market. The
Directors view this market as comprising mortgages, secured loans and other
forms of finance that are designed for consumers who fall outside the standard
parameters of high street lenders.
BUSINESS STRATEGY
The Directors believe that the sub-prime lending market shows good prospects for continued growth and anticipate that
the Group will be well positioned to benefit from that growth. There remain around 2m properties and council house
tenants in the UK.
It will seek to expand the core activities and develop the range of products provided by Diamond to build its commercial
strength in the sector, which itself is expanding. Diamond will also focus on improving the efficiency of the completion
process as the business continues to develop.
In addition the Group may acquire other profitable businesses in the financial services sector, which compliment its
business model, in the short to medium term.
CONSOLIDATED INCOME STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
#'000 #'000
Revenue 6,751 7,346
Cost of sales (2,706) (3,590)
Gross profit 4,045 3,756
Investment revenue 38 11
Administrative expenses (3,079) (2,881)
Profit before exceptional items 1,004 886
Exceptional goodwill impairment (1,390) 0
(Loss) / Profit before tax (386) 886
Income tax (309) (267)
(LOSS) / PROFIT FOR THE YEAR (695) 619
EARNINGS PER SHARE (pence)
Issued shares as at 31 December 2006 126,650.8m
EPS (earnings after tax) (0.55) 0.49
Non GAAP EPS (earnings excluding goodwill impairment) 0.55 0.49
EARNINGS PER SHARE (pence)
Issued shares including Deferred Consideration shares and Convertible 178,150.8m
Loan Stock as at 31st December 2006
EPS (earnings after tax) (0.39) 0.35
Non GAAP EPS (earnings excluding goodwill impairment) 0.39 0.35
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2006
2006 2005
#'000 #'000
ASSETS
NON CURRENT ASSETS
Property, plant and equipment 188 151
Total non-current assets 188 151
CURRENT ASSETS
Trade, other receivables and prepayments 1,356 840
Cash and bank balances 1,022 817
Total current assets 2,378 1,657
TOTAL ASSETS 2,566 1,808
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Issued capital and capital to be issued 1,232 395
Convertible loan stock 55 -
Share premium 743 163
2,030 558
Reverse Acquisition Reserve (3,431) (557)
Retained earnings 74 1,269
Total equity (1,327) 1,270
NON CURRENT LIABILITIES
Borrowings 1,500 -
Deferred tax liabilities 28 28
Total non-current liabilities 1,528 28
CURRENT LIABILITIES
Trade and other payables 1,064 230
Borrowings 1,000 -
Current tax liabilities 301 280
Total current liabilities 2,365 510
TOTAL LIABILITIES 3,893 538
TOTAL EQUITY AND LIABILITIES 2,566 1,808
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED 31 DECEMBER 2006
2006 2005
#'000 #'000
(Loss) / profit for the year before tax (386) 886
Adjustments for non-cash and similar items 79 66
Movements in working capital 318 (270)
Income taxes paid (288) (96)
Net cash (outflow) / inflow from operating activities (277) 586
Investing activities (116) (61)
Financing Activities
Net proceeds from issue of shares 673 -
Notional issue of shares on reverse acquisition 425 -
Dividends paid (500) -
(Decrease) / Increase in cash and cash equivalents 205 525
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2006
Issued Capital, Reverse Acquisition Retained Earnings Total Equity
Share Premium and Reserve
Convertible
Loan Stock
#'000 #'000 #'000 #'000
Balance at 1 January 2006 558 (557) 1,269 1,270
Impaired gains recognised - - - -
in equity
Reverse acquisition capital - (2,874) - (2,874)
adjustment
Total expense for the year - (2,874) - (2,874)
recognised directly in
equity
Loss for the year - - (695) (695)
Total recognised expense - (2,874) (695) (3,569)
for the year
Issued share capital 1,550 - - 1,550
Other movements (costs of (78) - - (78)
placing shares)
Equity dividends - - (500) (500)
Balance at 31 December 2006 2,030 (3,431) 74 (1,327)
NOTES TO THE ACCOUNTS
1. Announcement based on draft accounts (unqualified audit report)
The abridged financial statements set out in the announcement do not constitute
the company's statutory accounts for the years ended 31st December 2006 or 2005.
The financial information for the year ended 31st December 2005 is derived from
the statutory accounts for that year, which have been delivered to the Registrar
of Companies. The auditors reported on those accounts; their report was
unqualified and did not contain a statement under s. 237 (2) or (3) of the
Companies Act 1985. The statutory accounts for the year ended 31st December 2006
will be finalised on the basis of the financial information presented by the
directors in this preliminary announcement and will be delivered to the
Registrar of Companies following the company's annual general meeting.
2. Basis of consolidation
On the 8th December 2006 the Company, then named Enterprise North plc, became
the legal parent of Diamond Lifestyle Limited. Due to the relative values of the
companies, the former Diamond Lifestyle Limited shareholders became the majority
shareholders with 79% of the enlarged share capital. Further, the Company's
continuing operations and executive management were those of Diamond Lifestyle
Limited. Accordingly, the substance of the combination was that Diamond
Lifestyle Limited acquired Enterprise North plc in a reverse acquisition. As
part of the business combination Enterprise North plc changed its name to
Diamond Lifestyle Holdings plc and changed its year end to 31st December.
As a consequence of applying reverse acquisition accounting the results for the
year ended 31st December 2006 comprise the results of Diamond Lifestyle Limited
for its year ended 31st December 2006 plus those of Enterprise North plc from
8th December 2006, the date of the reverse acquisition, to 31st December 2006.
The comparative figures are those of Diamond Lifestyle Limited for the twelve
months ended 31st December 2005. Goodwill amounting to #1,390,000 arose on the
cost of the business combination less the fair value of assets of Enterprise
North plc at the date of the reverse acquisition, calculated in accordance with
IFRS3. Full provision for impairment against the goodwill arising has been made
in the year ended 31st December 2006 because Enterprise North plc has no
continuing business and therefore the goodwill has no intrinsic value.
3. Basis of Preparation
The financial statements have been prepared in accordance with International
Financial Reporting Standards and Interpretations issues by the International
Accounting Standards Board as adopted by the European Union and those parts of
the Companies Act 1985 which apply to companies preparing their financial
statements under IFRS. Accounting policies have been applied consistently to all
the years presented.
4. Posting of accounts to shareholders
Diamond will shortly post its audited consolidated accounts to shareholders
along with the audited accounts for Diamond Lifestyle Holdings Plc for the
period from 31 March 2006 to 31 December 2006.
5. Cautionary Statement
Diamond Lifestyle Holdings plc has made forward looking statements in this
release, including statements about the market for and benefits of its products
and services, financial results and business strategies. These statements about
future events are subject to risks and uncertainties that could cause Diamond's
actual results to differ materially from those that might be inferred from the
forward-looking statements. Diamond can make no assurances that any
forward-looking statements will prove correct.
Contact:-
Paul Hughes, Chairman
Tel 01823 322 022
Liam Murray, Nominated Adviser
City Financial Associates Limited
Tel:020 7090 7800
Andrew Tan
Hansard Group
Tel:020 7245 1100
This information is provided by RNS
The company news service from the London Stock Exchange
END
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