TIDMUFG
RNS Number : 0815T
Ultimate Finance Group PLC
22 September 2010
22 September 2010
Ultimate Finance Group plc
Final Results
Ultimate Finance Group plc ("Ultimate"), the AIM-quoted factoring, invoice
discounting and financial solutions provider to the SME sector, announces its
Final Results for the year ended 30 June 2010.
Highlights
· Operating profit (excluding acquisition costs and trade finance start up
costs) increased by 37% to GBP553,000 (30 June 2009: GBP404,000)
· Turnover up 35% to GBP6,441,000 (30 June 2009: GBP4,757,000)
· Currently in advanced discussions on an acquisition which would be
considered a reverse takeover resulting in the ordinary shares being suspended
from 7.30 a.m. today
· Earnings per share on comparative basis (excluding acquisition costs and
trade finance start up costs) increased to 1.83p (30 June 2009: 1.60p)
· Agreement in principle for the back-to-back financing facility to be
increased to GBP30m and the minimum term extended to July 2013.
· Proposed final dividend of 0.30p (30 June 2009: 0.25p)
· Sales force continues to grow both in numbers and regional coverage
· A new trade finance business established during the year and an asset
finance business launched in July 2010.
Clive Garston, Chairman, said: "Whilst the economic climate remains tough,
demand for our services is growing and we will continue to take the necessary
steps to build solid sustainable shareholder value from the opportunities that
present themselves. The increase in the back to back financing facility will
assist expansion. The board therefore looks forward to the future with
confidence."
Further information:
Ultimate Finance Group plc:
+----------------------------------+----------------------------------+
| Richard Pepler, Chief Executive | +44 (0) 845 251 3030 |
| rpepler@ultimatefinance.co.uk | |
+----------------------------------+----------------------------------+
| Shane Horsell, Finance Director | +44 (0) 845 251 3030 |
| shorsell@ultimatefinance.co.uk | |
+----------------------------------+----------------------------------+
Media enquiries:
Allerton Communications
+-----------------------------------+----------------------------------+
| Peter Curtain | +44 (0) 20 3137 2500 |
| peter.curtain@allertoncomms.co.uk | |
+-----------------------------------+----------------------------------+
Nominated Adviser and Joint Broker:
Arbuthnot Securities
+----------------------------------+----------------------------------+
| Antonio Bossi | +44 (0) 20 7012 2000 |
| antoniobossi@arbuthnot.co.uk | |
+----------------------------------+----------------------------------+
| Paul Gillam | +44 (0) 20 7012 2000 |
| paulgillam@arbuthnot.co.uk | |
+----------------------------------+----------------------------------+
Joint Broker:
WH Ireland
+----------------------------------+----------------------------------+
| John Wakefield | +44 (0) 117 945 3471 |
| john.wakefield@wh-ireland.co.uk | |
| | |
+----------------------------------+----------------------------------+
| Richard Smith | +44 (0) 121 265 6304 |
| richard.smith@wh-ireland.co.uk | |
| | |
+----------------------------------+----------------------------------+
Chairman's Statement
Results
I am pleased to report that for the full year ended 30 June 2010 Ultimate made
an operating profit of GBP446,000 (30 June 2009: GBP404,000) a rise of 10%. The
operating profit includes the start up loss of c.GBP30,000 for the new Trade
Finance business and acquisition costs incurred in the period of GBP77,000.
These costs were incurred in connection with a possible acquisition which is at
an advanced stage. Without these fees and the start up loss the operating profit
of GBP553,000 was 37% up on the previous year, on a like for like basis.
Turnover for the full year was up 35% to GBP6,441,000 (30 June 2009:
GBP4,757,000) and client turnover financed for the year rose 47% to
GBP312,200,000 (30 June 2009: GBP212,600,000).
Basic earnings per share amounted to 1.33p (30 June 2009: 1.60p). Earnings per
share excluding acquisition costs and costs in relation to the establishment of
the trade finance business were 1.83p (30 June 2009:1.60p) (see note 10)
In the economic and trading environment which existed in the period, I believe
that this is a very strong performance and reflects the efforts which have been
made to grow the business whilst taking account of the increased risks of the
current situation. The Ultimate client base grew during the period, with a
substantial number of new clients being gained.
In March we established a new trade finance business, with an asset finance
business launched in July 2010.
Dividend
I am pleased to announce that the company is proposing to pay a final dividend
of 0.30p per share to be paid on 23 December 2010 to shareholders on the
register at the close of business on 26 November 2010.
The company will maintain a progressive dividend policy going forward and the
board has resolved that they intend to distribute to shareholders by way of
dividend a significant proportion of retained profits in each financial year,
subject to trading, profitability and the requirements of the business.
Funding
The company currently enjoys a strong relationship with Lloyds TSB Commercial
Finance and is financed with a GBP25 million back to back financing facility
with Lloyds TSB Commercial Finance, which is in place until July 2012.
I am pleased to be able to report that Lloyds TSB Commercial Finance have agreed
in principle to extend the facility to GBP30 million and the minimum term to
July 2013.
Risk Management
Risk management is crucial to the success of the Ultimate business and Ultimate
maintains high standards of underwriting and management of risk. The directors'
report and financial statements both discuss the risk management of the business
fully. The group's credit control staff are experienced in both client and risk
management. With the UK economy now emerging from recession there has
inevitably been a marked increase in the number of business failures. As a
result of this, Ultimate has had to be increasingly careful in guarding against
the risk of fraud and financial failure. It is selective in growing its client
numbers and it continually keeps its underwriting procedures under review. We
remain robust in our strict underwriting procedures and risk management during
these challenging times for the UK economy. In the longer term the market for
factoring, invoice discounting and complementary products continues to present
real growth opportunities and the recession has increased the level and quality
of enquiries and reduced the pressure on margins. Our client base continues to
represent an appropriate spread of risk in terms of size of investment, industry
type and geographical location. The single largest investment at 30 June 2010
was GBP1,199,000 (30 June 2009: GBP565,000), which constituted 5% (30 June 2009:
3%) of total funds advanced.
People
Our senior management have performed well during the period and we continue to
attract new recruits with a proven track record in the industry. The importance
of a well trained and dedicated workforce cannot be underestimated and the
success of Ultimate is entirely attributable to its committed team. I would
like to thank all my co directors and staff for their efforts in what have been
difficult economic conditions.
Outlook
Our strategy is to continue to provide the services to our clients that they
require to support their businesses.
Whilst the economic climate remains tough, demand for our services is growing
and we will continue to take the necessary steps to build solid sustainable
shareholder value from the opportunities that present themselves. The increase
in the back to back financing facility will assist expansion. The board
therefore looks forward to the future with confidence.
Clive R Garston
Chairman
Chief Executive's Review
Introduction
AIM-quoted Ultimate Finance Group plc provides bespoke invoice discounting and
factoring facilities as well as asset finance and trade finance to the small
medium enterprise ("SME") market. Our clients range from promising start-ups to
well established small and medium-sized businesses from a wide spectrum of
sectors. Every client has access to a decision-maker and benefits from a
personal approach from a team that understands the needs of SMEs in today's
challenging and uncertain climate. We deliver a flexible, responsive and
supportive service which is reflected in our excellent track record in retaining
clients and attracting new ones. Our service is underpinned by a robust IT
system which provides clients with internet-based access to their account
information in real time. The number of new client enquiries and wins together
with the feedback we have received from clients and intermediaries confirms our
view that we are carving an enviable niche for ourselves in a crowded
marketplace - and this trend is continuing.
Developments and Prospects
In March, we launched Ultimate Trade Finance Ltd ("UTF") under the leadership of
managing director Hugh Francis. He has a wealth of trade finance experience,
having founded and run two highly successful trade finance businesses over the
last 22 years. UTF provides trade finance to small and medium-sized businesses,
principally to existing invoice finance clients of Ultimate but also to good
quality stand-alone clients. Trade finance provides further cash flow assistance
to businesses in helping finance the purchase of goods from their suppliers. To
minimise risk to clients and UTF, funding is only provided for finished goods,
purchased against confirmed orders and from well rated customers.
In July, we launched Ultimate Asset Finance Ltd ("UAF") headed by managing
director Andrew Ribbins. Andrew was one of the founding directors of an
independent asset finance business which he helped run for over 20 years. UAF
provides hire purchase and leasing facilities to small and medium-sized
businesses, principally to existing invoice finance clients of Ultimate but also
to good quality stand alone clients, and assists with the purchase of typically
lower-cost items.
Trade finance and asset finance are both very complementary to our main invoice
finance products and give us greater sales opportunities and market presence.
Either stand-alone or combined with one of our invoice finance products they can
create more favourable growth conditions for our clients.
To demonstrate the diversity of products and services now available under one
roof, we have rebranded the Ultimate Finance Group, particularly the three
trading subsidiaries. This has enabled us to differentiate ourselves and begin
to develop clear identities for the different strands of the business.
Our presence in the South East and North West has strengthened considerably over
the last 12 months. In January, our Manchester office moved into larger offices
and is thriving under the leadership of Austin Thorp who joined the Company as
Commercial Director (North) in March and was promoted in September to Managing
Director (North). Our Tunbridge Wells team has also been doing extremely well
and in April, they too moved into larger premises within the town. This team is
led by Caroline Langron, our new Managing Director (South East), who ran
another, well-known, independent invoice finance business prior to joining
Ultimate Finance Group. Our headquarters in Bristol continues to thrive.
Our clients give us the opportunity to be a good barometer of the economic
climate and allow us to identify trends early. This enables us to react quickly
to change, which we have done successfully over the years. Recession has created
new opportunities: the reduction in lending by the banks and more recently, the
Enterprise Finance Guarantee Scheme, has driven even more SMEs to look for
alternative, more flexible solutions. By expanding our range of products and
services, strengthening our sales teams and senior management teams and
extending our geographical reach, we are continuing to build our reputation and
differentiate ourselves from our competitors.
We are also looking to open an office in Birmingham by Christmas. This will be
run by Paul Atkins, Managing Director (Midlands and South West).
Strategy
For the last three years, the SME sector has been affected by rising numbers of
business failures. We have protected the Company from the negative influences of
this by applying principles of prudent lending.
With banks continuing to keep a tight rein on lending and many more businesses
looking for alternative, flexible solutions, we have continued to see a rise in
the number of enquiries. However, we continue to be selective in taking on
clients, applying strict underwriting procedures and avoiding taking unnecessary
risks. Our approach has always been to focus on quality businesses with credible
management teams, building close relationships with them so that we are aware of
any important changes in circumstances at an early stage.
People
We are extremely pleased to be in a position to attract some of the industry's
best people and will continue to select the right talent to help take the
business forward. We have made a number of significant, senior-level
appointments and promotions this year, including new regional directors in many
parts of the UK. We are now able to offer our existing and prospective clients a
personal presence across an even greater geographical area and a much wider
range of services and products. Importantly, we are now able to attract very
high calibre sales people with a proven track record. There are further
important hires planned.
We are also committed to developing and maintaining close and mutually
beneficial relationships with our valued business introducers.
Conclusion
The difficult economic conditions are continuing to impact on our SME market.
However, we are ideally placed to support businesses encountering cash flow
difficulties as well as those which are struggling to raise the finance needed
to fulfil orders or fund growth. We remain optimistic that the Company is able
to capitalise on the challenges and opportunities ahead.
Our clients are loyal and long-standing. We expect steady client growth as we
continue to market our new products and services, expand our sales team still
further and open an office in the Midlands.
We believe we are ideally positioned as the economy recovers, bigger, stronger
and with an increased share of this competitive market.
Richard Pepler
Chief Executive
Consolidated Statement of Comprehensive Income
for year ended 30 June 2010
+-----------------------------------------------+------+---------+---------+
| | Note | 2010 | 2009 |
+-----------------------------------------------+------+---------+---------+
| | | GBP000 | GBP000 |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Revenue | | 6,441 | 4,757 |
+-----------------------------------------------+------+---------+---------+
| Cost of sales - finance costs | | (536) | (492) |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Gross profit | | 5,905 | 4,265 |
+-----------------------------------------------+------+---------+---------+
| Administrative expenses | | (5,382) | (3,861) |
+-----------------------------------------------+------+---------+---------+
| Acquisition Costs | | (77) | - |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Total administrative expenses | | (5,459) | (3,861) |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Operating profit | | 446 | 404 |
+-----------------------------------------------+------+---------+---------+
| Finance income | | - | 2 |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Profit before tax | | 446 | 406 |
+-----------------------------------------------+------+---------+---------+
| Taxation | 2 | (179) | (86) |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Profit for the year being total comprehensive | | 267 | 320 |
| income | | | |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| | | | |
+-----------------------------------------------+------+---------+---------+
| Earnings per share | 10 | | |
+-----------------------------------------------+------+---------+---------+
| Basic | | 1.33p | 1.60p |
+-----------------------------------------------+------+---------+---------+
| Diluted | | 1.29p | 1.60p |
+-----------------------------------------------+------+---------+---------+
All amounts are attributable to the owners of the parent.
Consolidated and Company statements of financial position
At 30 June 2010
Company number 04350565
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | Note | Group | | Company | |
+--------------------------+--------+----------+----------+---------+--------+
| | | 2010 | 2009 | 2010 | 2009 |
+--------------------------+--------+----------+----------+---------+--------+
| | | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------+--------+----------+----------+---------+--------+
| Non-current assets | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Investment in subsidiary | | - | - | 64 | 57 |
+--------------------------+--------+----------+----------+---------+--------+
| Property, plant and | | 222 | 72 | - | - |
| equipment | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Deferred tax assets | 8 | - | 12 | - | - |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | | 222 | 84 | 64 | 57 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Current assets | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Loans and other | 3 | 26,336 | 19,020 | 3,113 | 3,352 |
| receivables | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Cash and cash | 4 | 556 | 237 | 1 | 1 |
| equivalents | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | | 26,892 | 19,257 | 3,114 | 3,353 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Total assets | | 27,114 | 19,341 | 3,178 | 3,410 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Current liabilities | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Bank overdraft | 4 | (22,988) | (16,008) | - | - |
+--------------------------+--------+----------+----------+---------+--------+
| Trade and other payables | 5 | (887) | (303) | (9) | (1) |
+--------------------------+--------+----------+----------+---------+--------+
| Tax payable | | (160) | (123) | - | (10) |
+--------------------------+--------+----------+----------+---------+--------+
| Deferred tax | 8 | (8) | - | - | - |
| liability | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Total liabilities | | (24,043) | (16,434) | (9) | (11) |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Net assets | | 3,071 | 2,907 | 3,169 | 3,399 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Equity attributable to | | | | | |
| equity holders of the | | | | | |
| parent | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Share capital | 7 | 1,000 | 1,000 | 1,000 | 1,000 |
+--------------------------+--------+----------+----------+---------+--------+
| Share premium | 7 | 1,949 | 1,949 | 1,949 | 1,949 |
+--------------------------+--------+----------+----------+---------+--------+
| Retained earnings | 7 | 122 | (42) | 220 | 450 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
| Total equity | | 3,071 | 2,907 | 3,169 | 3,399 |
+--------------------------+--------+----------+----------+---------+--------+
| | | | | | |
+--------------------------+--------+----------+----------+---------+--------+
These financial statements were approved by the board of directors on 21
September 2010 and were signed on its behalf by:
Richard Pepler
Director
Consolidated and company statements of cash flows
for year ended 30 June 2010
+-------------------------------+---+----------+----------+---------+--------+
| | | Group | | Company | |
+-------------------------------+---+----------+----------+---------+--------+
| | | 2010 | 2009 | 2010 | 2009 |
+-------------------------------+---+----------+----------+---------+--------+
| | | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------+---+----------+----------+---------+--------+
| Cash flows from operating | | | | | |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Profit before tax for the | | 446 | 406 | (127) | 86 |
| year | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Adjustments for: | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Depreciation | | 49 | 70 | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Financial income | | - | (2) | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Financial expense | | - | - | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Equity settled share-based | | 7 | 12 | - | - |
| payment expenses | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | 502 | 486 | (127) | 86 |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| (Increase)/decrease in loans | | (7,316) | (5,113) | 239 | (42) |
| and other receivables | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Increase/(decrease) in trade | | 443 | 38 | 8 | - |
| and other payables | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| (Decrease)/increase in tax | | 37 | (23) | (10) | (44) |
| payable | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | (6,836) | (5,098) | 237 | (86) |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Tax paid | | (18) | (7) | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Net cash from operating | | (6,352) | (4,619) | 110 | - |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Cash flows from investing | | | | | |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Acquisition of property, | | (199) | (38) | - | - |
| plant and equipment | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Net cash from investing | | (199) | (38) | - | - |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Cash flows from financing | | | | | |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Financial income | | - | 2 | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Financial expense | | - | - | - | - |
+-------------------------------+---+----------+----------+---------+--------+
| Dividends paid | | (110) | - | (110) | - |
+-------------------------------+---+----------+----------+---------+--------+
| Net cash from financing | | (110) | 2 | (110) | - |
| activities | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Net (decrease)/increase in | | (6,661) | (4,655) | - | - |
| cash and cash equivalents | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Cash and cash equivalents at | | (15,771) | (11,116) | 1 | 1 |
| 1 July | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| Cash and cash equivalents at | | (22,432) | (15,771) | 1 | 1 |
| 30 June | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
| | | | | | |
+-------------------------------+---+----------+----------+---------+--------+
Notes
(forming part of the financial statements)
1 Accounting policies
Basis of preparation and statement of compliance
Ultimate Finance Group plc (the "company") is a company incorporated in the UK.
The group financial statements consolidate those of the company and its
subsidiaries (together referred to as the "group"). The financial statements
were approved by the board of directors on 21 September 2010.
The group and company financial statements have been prepared in accordance with
International Financial Reporting Standards as adopted in the European Union
("adopted IFRSs"), and its interpretations adopted by the International
Accounting Standards Board ("IASB") or the International Financial Reporting
Interpretations Committee ("IFRIC") of their predecessors, which had been
approved by the European Commission at 30 June 2010.
On publishing the parent company financial statements here together with the
group financial statements, the company is taking advantage of the exemption in
s408 of the Companies Act 2006 not to present its individual statement of
consolidated income and related notes that form a part of these approved
financial statements.
The financial statements are prepared on the historical cost basis and are
presented in Pounds Sterling, the group's functional and presentational
currency.
The preparation of these financial statements requires management to make
estimates and assumptions that affect the reported amounts of assets and
liabilities at the date of the financial statements and the reported amounts of
revenue during the reporting period. The estimates and associated assumptions
are based on historical experience and various other factors that are believed
to be reasonable under the circumstances, the results of which form the basis of
making the judgments about the carrying values of assets and liabilities that
are not readily apparent from other sources. Actual results could differ from
these estimates.
The estimates and underlying assumptions are reviewed on an ongoing basis.
Information about such judgments and estimates are discussed in note 2.
The directors have not adopted the following standards, which although endorsed
by the EU are not yet effective:
- Improvements to IFRSs 2009 (Amendment clarifying the
requirements of IFRSs), effective from 1 January 2010
- IAS24Related party businesses (Revised), effective from 1
January 2011
- Improvements to IFRSs2010 (Amendment clarifying the requirements
of IFRSs) effective from 1 January 2011
- IFRS9 Financial Instruments, effective from 1 January 2013
The accounting policies set out below have been applied consistently to all
periods presented in these consolidated financial statements.
Basis of consolidation
The financial information contained in the group financial statements represent
the results, cash flows, assets and liabilities of the company and its
subsidiaries made up to 30 June each year. Subsidiaries are entities controlled
by the group. Control exists when the group has the power, directly or
indirectly, to govern the financial and operating policies of an entity so as to
obtain benefits from its activities. In assessing control, potential voting
rights that are currently exercisable or convertible are taken into account. The
financial statements of subsidiaries are included in the consolidated financial
statements from the date that control commences until the date that control
ceases.
All income and expenses and unrealised gains and losses arising on transactions
between entities within the group, and balances between entities within the
group that exist at the balance sheet date, are eliminated on consolidation.
Going Concern
The company currently enjoys a strong relationship with Lloyds TSB Commercial
Finance and is financed with a GBP25,000,000 back to back financing facility
with Lloyds TSB Commercial Finance, which is in place until July 2012.
We are in negotiation with Lloyds TSB Commercial Finance and have an agreement
in principle to extend the facility to GBP30,000,000 and to extend the minimum
term to July 2013.
The availability of this facility and the access of funds from Lloyds TSB
Commercial Finance Ltd in the short to medium term supports the directors in
their opinion that the going concern basis of preparation is appropriate.
Revenue recognition
Revenue comprises fees for the provision of invoice financing services, net of
Value Added Tax, and is recognised as follows:
Interest Income
Interest income and set up fee income and associated directly attributable set
up costs are recognised in the income statement for all financial assets
measured at amortised cost using the effective interest method. The effective
interest method is a method of calculating the amortised cost of a financial
asset and allocating the interest income over the relevant period. The
effective interest rate (EIR) is the rate that exactly discounts estimated
future cash flows through the expected life, or contractual term if shorter, of
the financial asset to the net carrying amount of the financial asset. When
calculating the EIR, the company estimates cash flows considering all
contractual terms of the financial instruments, but does not include an
expectation for future credit losses. Interest income is calculated and applied
to clients' accounts on a daily basis.
Service fee income
The company charges its clients a factoring fee for managing their sales ledgers
which is based on the value of invoices assigned. The variable fee for each
particular assignment of invoices is then recognised as revenue on a straight
line basis over the average repayment period of the assigned invoices,
reflecting the provision of the management service over the life of those
invoices. On average this will be approximately 60 days.
Other Fee Income
Other fee income, which includes disbursements, is credited to the income
statement when the service has been provided or the disbursement expenditure
incurred.
Expenses
Operating lease payments
Leases are categorised as operating leases where the lessor retains
substantially all the risks and rewards of ownership of the leased asset. All
leased assets held by the group are categorised as operating leases.
Payments made under operating leases are recognised in the income statement on a
straight-line basis over the term of the lease. Lease incentives received are
recognised in the income statement as an integral part of the total lease
expense over the term of the lease.
Borrowing costs
Cost of sales represent borrowing costs in relation to the back-to-back
financing facility with Lloyds TSB Commercial Finance Ltd. The facility is used
to finance loans provided to clients and is backed by the underlying debts of
the clients.
Taxation
Income tax expense comprises current and deferred tax. Income tax expense is
recognised in the income statement except to the extent that it relates to items
recognised directly in equity, in which case it is recognised in equity.
Current tax is the expected tax payable on the taxable income for the year,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous years.
Deferred tax is provided using the balance sheet method, providing for temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for taxation purposes.
Deferred tax is not recognised for the temporary differences relating to
investments in subsidiaries to the extent that they probably will not reverse in
the foreseeable future. Deferred tax is measured at the tax rates that are
expected to be applied to the temporary differences when they reverse, based on
the laws that have been enacted or substantively enacted by the reporting date.
A deferred tax asset is recognised only to the extent that it is probable that
future taxable profits will be available against which the asset can be
utilized. Deferred tax assets are reviewed at each reporting date and are
reduced to the extent that it is no longer probable that the related tax benefit
will be realised.
Employee benefits
Defined contribution plans
Obligations for contributions to defined contribution pension plans are
recognised as an expense in the income statement as incurred.
Share-based payment transactions
The grant date fair value of options granted to employees is recognised as an
employee expense, with a corresponding increase recognised in retained earnings
within equity, over the period in which the employees become unconditionally
entitled to the options. The fair value of the options granted is measured at
grant date using an option valuation 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 due only to share prices not achieving the threshold
for vesting.
Where the Company grants options over its own shares to the employees of its
subsidiaries it recognises, in its individual financial statements, an increase
in the cost of investment in its subsidiaries equivalent to the equity-settled
share-based payment charge recognised in its consolidated financial statements
with the corresponding credit being recognised directly in equity.
Segmental reporting
Operating segments are reported in a manner consistent with the internal
reporting provided to the chief operating decision-maker. The chief operating
decision-maker has been identified as the management team including the Chief
Executive, Group Managing Director and Finance Director.
Property, plant and equipment
Property, plant and equipment are stated at cost less accumulated depreciation
and impairment losses.
Where parts of an item of property, plant and equipment have different useful
lives, they are accounted for as separate items of property, plant and
equipment.
Leases in which the group assumes substantially all the risks and rewards of
ownership of the leased asset are classified as finance leases. Where land and
buildings are held under leases the accounting treatment of the land is
considered separately from that of the buildings. Leased assets acquired by way
of finance lease are stated at an amount equal to the lower of their fair value
and the present value of the minimum lease payments at inception of the lease,
less accumulated depreciation and impairment losses.
Depreciation is charged to the income statement on a straight-line basis over
the estimated useful lives of each part of an item of property, plant and
equipment. The estimated useful lives are as follows:
? plant and equipment 3 years
? fixtures and fittings 2-5 years
Investments
Investments in subsidiaries are carried at cost less impairment.
Financial assets
Management determine the classification of the group's financial assets at
initial recognition into one of the following categories - loans and other
receivables, held-to-maturity financial assets, available-for-sale financial
assets and financial assets at fair value through profit or loss. The group has
not held any held-to-maturity, available for sale financial assets or financial
assets at fair value through profit or loss at any point during the year.
All financial assets are initially measured at fair value plus, in the case of
financial assets not classified as a fair value through income statement,
transaction costs that are directly attributable to their acquisition.
The group initially recognises advances to clients and deposits on the date that
they are originated. These balances are included in loans and other receivables
and are initially recognised at fair value and subsequently measured at
amortised cost less impairment losses.
The amortised cost of a financial asset is the amount at which the financial
asset is measured at initial recognition, minus principal repayments, plus the
cumulative amortisation using the effective interest method of any difference
between the initial amount recognised and the maturity amount, minus any
reduction for impairment.
The Group derecognises a financial asset when the contractual rights to the cash
flows from the asset expire, or it transfers the rights to receive the
contractual cash flows on the financial asset in a transaction in which
substantially all the risks and rewards of ownership of the financial asset are
transferred.
Impairment of loans & receivables
In respect of loans and receivables, the group assesses on an ongoing basis
whether there is objective evidence that an individual loan asset is impaired.
If any such indication exists, the assets' recoverable amount is estimated. An
impairment loss is recognised whenever the carrying amount of an asset exceeds
its recoverable amount. Impairment losses are recognised in the income
statement.
Impairment losses are reversed through the income statement if there is a change
in the estimates used to determine the recoverable amount.
Cash and cash equivalents
Cash and cash equivalents comprise cash balances and call deposits. The back to
back financing facility with Lloyds TSB Commercial Finance forms an integral
part of the group's cash management and as such is included as a component of
cash and cash equivalents for the purpose only of the statement of cash flows.
The borrowing on this back to back financing facility is shown as a current
liability in the balance sheet.
Foreign currency
Transactions in foreign currencies are translated at the foreign exchange rate
ruling at the date of the transaction. Monetary assets and liabilities
denominated in foreign currencies at the balance sheet date are translated at
the foreign exchange rate ruling at that date. Foreign exchange differences
arising on translation are recognised in the income statement. Non-monetary
assets and liabilities that are measured in terms of historical cost in a
foreign currency are translated using the exchange rate at the date of the
transaction.
2 Taxation
Recognised in the Statement of Comprehensive income
+-----------------------------------------------+----------+----------+
| | 2010 | 2009 |
+-----------------------------------------------+----------+----------+
| | GBP000 | GBP000 |
+-----------------------------------------------+----------+----------+
| Current tax expense | | |
+-----------------------------------------------+----------+----------+
| Current year | 159 | 18 |
+-----------------------------------------------+----------+----------+
| Adjustments for prior years | - | (47) |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| | 159 | (29) |
+-----------------------------------------------+----------+----------+
| Deferred tax expense | | |
+-----------------------------------------------+----------+----------+
| Origination and reversal of temporary | 23 | 107 |
| differences | | |
+-----------------------------------------------+----------+----------+
| Adjustment in respect of prior year | (3) | 8 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| | 20 | 115 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| Total tax in income statement | 179 | 86 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
Reconciliation of effective tax rate
+-----------------------------------------------+----------+----------+
| | 2010 | 2009 |
+-----------------------------------------------+----------+----------+
| | GBP000 | GBP000 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| Profit before tax | 446 | 406 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| Tax using the UK corporation tax rate of 28% | 125 | 114 |
| (2009:28 %) | | |
+-----------------------------------------------+----------+----------+
| Small companies tax rate allowance | - | (2) |
+-----------------------------------------------+----------+----------+
| Non-deductible expenses | 57 | 13 |
+-----------------------------------------------+----------+----------+
| Prior year adjustment | (3) | (39) |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| Total tax expense | 179 | 86 |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
| | | |
+-----------------------------------------------+----------+----------+
3 Loans and other receivables
+--------------------------+----------+----------+----------+----------+
| | Group | | Company | |
+--------------------------+----------+----------+----------+----------+
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+----------+----------+----------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| Loans and receivables | 25,780 | 18,658 | - | - |
+--------------------------+----------+----------+----------+----------+
| Prepayments | 437 | 337 | 159 | 7 |
+--------------------------+----------+----------+----------+----------+
| Inter company balances | - | - | 2,954 | 3,345 |
+--------------------------+----------+----------+----------+----------+
| Other Receivables | 119 | 25 | - | - |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| | 26,336 | 19,020 | 3,113 | 3,352 |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
4 Cash and cash equivalents/ bank borrowings
+--------------------------+----------+----------+----------+----------+
| | Group | | Company | |
+--------------------------+----------+----------+----------+----------+
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+----------+----------+----------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| Cash and cash | 556 | 237 | 1 | 1 |
| equivalents per balance | | | | |
| sheet | | | | |
+--------------------------+----------+----------+----------+----------+
| Bank borrowings | (22,988) | (16,008) | - | - |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| Cash and cash | (22,432) | (15,771) | 1 | 1 |
| equivalents per cash | | | | |
| flow statements | | | | |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
5 Trade and other payables
+--------------------------+----------+----------+----------+----------+
| | Group | | Company | |
+--------------------------+----------+----------+----------+----------+
| | 2010 | 2009 | 2010 | 2009 |
+--------------------------+----------+----------+----------+----------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| Trade payables | (413) | (40) | - | - |
+--------------------------+----------+----------+----------+----------+
| Non-trade payables and | (474) | (263) | (9) | (1) |
| accrued expenses | | | | |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
| | (887) | (303) | (9) | (1) |
+--------------------------+----------+----------+----------+----------+
| | | | | |
+--------------------------+----------+----------+----------+----------+
6 Share capital
+--------------------------------------------------------+----------+--------+
| | 2010 | 2009 |
+--------------------------------------------------------+----------+--------+
| | GBP000 | GBP000 |
+--------------------------------------------------------+----------+--------+
| Authorised | | |
+--------------------------------------------------------+----------+--------+
| 40,000,000 Ordinary shares of GBP0.05 each | 2,000 | 2,000 |
+--------------------------------------------------------+----------+--------+
| | | |
+--------------------------------------------------------+----------+--------+
| Allotted, called up and fully paid | | |
+--------------------------------------------------------+----------+--------+
| 19,997,018 Ordinary shares of GBP0.05 each | 1,000 | 1,000 |
+--------------------------------------------------------+----------+--------+
| | | |
+--------------------------------------------------------+----------+--------+
7 Capital and reserves
Reconciliation of movement in capital and reserves - Company
+-------------------------------------+---------+---------+----------+---------+
| | Share | Share | Retained | Total |
| | capital | Premium | earnings | parent |
| | | | | equity |
+-------------------------------------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| Balance at 1 July 2009 | 1,000 | 1,949 | 450 | 3,399 |
+-------------------------------------+---------+---------+----------+---------+
| Total comprehensive income | - | - | (127) | (127) |
+-------------------------------------+---------+---------+----------+---------+
| Dividends Paid | - | - | (110) | (110) |
+-------------------------------------+---------+---------+----------+---------+
| Capital contribution in respect of | - | - | 7 | 7 |
| share options | | | | |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| Balance at 30 June 2010 | 1,000 | 1,949 | 220 | 3,169 |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
Reconciliation of movement in capital and reserves - Group
+-------------------------------------+---------+---------+----------+---------+
| | Share | Share | Retained | Total |
| | capital | Premium | Earnings | Equity |
+-------------------------------------+---------+---------+----------+---------+
| | GBP000 | GBP000 | GBP000 | GBP000 |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| Balance at 1 July 2009 | 1,000 | 1,949 | (42) | 2,907 |
+-------------------------------------+---------+---------+----------+---------+
| Total comprehensive income | - | - | 267 | 267 |
+-------------------------------------+---------+---------+----------+---------+
| Dividends Paid | - | - | (110) | (110) |
+-------------------------------------+---------+---------+----------+---------+
| Equity-settled share based payment | - | - | 7 | 7 |
| transactions | | | | |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
| Balance at 30 June 2010 | 1,000 | 1,949 | 122 | 3,071 |
+-------------------------------------+---------+---------+----------+---------+
| | | | | |
+-------------------------------------+---------+---------+----------+---------+
8 Deferred tax assets and liabilities - Group
Recognised deferred tax assets and liabilities
Deferred tax assets and liabilities are attributable to the following:
+--------------------------------------------+------------+------------+
| | Assets |
+--------------------------------------------+-------------------------+
| | 2010 | 2009 |
+--------------------------------------------+------------+------------+
| | GBP000 | GBP000 |
+--------------------------------------------+------------+------------+
| | | |
+--------------------------------------------+------------+------------+
| Other timing differences | (8) | 12 |
+--------------------------------------------+------------+------------+
| | | |
+--------------------------------------------+------------+------------+
| Net tax assets | (8) | 12 |
+--------------------------------------------+------------+------------+
| | | |
+--------------------------------------------+------------+------------+
Movement in deferred tax during the year
+--------------------------------------------------------+------------+
| | |
+--------------------------------------------------------+------------+
| | GBP000 |
+--------------------------------------------------------+------------+
| | |
+--------------------------------------------------------+------------+
| Brought forward | 12 |
+--------------------------------------------------------+------------+
| Origination and reversal of timing differences | (20) |
+--------------------------------------------------------+------------+
| | |
+--------------------------------------------------------+------------+
| | (8) |
+--------------------------------------------------------+------------+
| | |
+--------------------------------------------------------+------------+
9 Preliminary Statement of Results
This preliminary statement was approved by the Board on 21 September 2010. It is
not the company's statutory accounts.
The statutory accounts for the year ended 30 June 2010 have been audited and
have been approved by the Board of directors on 21 September 2010. The audit
report issued is unqualified. Copies of the Directors' Report and Consolidated
Financial Statements will be available on the company's website
www.ultimatefinance.co.uk and from the Group's Bristol office, Bradley
Pavilions, Pear Tree Road, Bradley Stoke, Bristol BS32 0BQ and will shortly be
posted to those shareholders who have requested copies to be sent to them.
10Earnings per share
The basic earnings per share for the year to 30 June 2010 has been calculated
from the profit on ordinary activities after taxation of GBP267,000 (2009:
GBP320,000) and on the weighted average number of ordinary shares in issue
during the year of 19,997,018 (2009: 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 1.29p (2009:
1.60p) and is based on profit on ordinary activities after taxation of
GBP267,000 (2009: GBP320,000) and 20,724,743 ordinary shares being the weighted
average of the shares in issue during the year adjusted to assume conversion of
all dilutive potential ordinary shares (2009: 19,997,018).
The adjusted earnings per share for the year to 30 June 2010 has been calculated
from the profit on ordinary activities after taxation but before acquisition
costs of GBP77,000 and the start-up loss of trade finance of GBP30,000 of
GBP366,000 (2009: GBP320,000) and on the weighted average number of ordinary
shares in issue during the year of 19,997,018 (2009: 19,997,018).
+------------------------------------------------+----------+----------+
| | 2010 | 2009 |
| | Pence | Pence |
+------------------------------------------------+----------+----------+
| | | |
+------------------------------------------------+----------+----------+
| Basic earnings per share | 1.33 | 1.60 |
+------------------------------------------------+----------+----------+
| Diluted earnings per share | 1.29 | 1.60 |
+------------------------------------------------+----------+----------+
| Adjusted Basic Earnings per share | 1.83 | 1.60 |
+------------------------------------------------+----------+----------+
This information is provided by RNS
The company news service from the London Stock Exchange
END
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