RNS Number:2732Q
Ultimate Finance Group PLC
29 September 2003
Ultimate Finance Group plc
29 September 2003
For immediate release
Preliminary Statement of Results for the period from 10 January 2002 to 30 June
2003
Ultimate Finance Group plc ("Ultimate Finance", "the company" or "the group")
was admitted on AIM in June 2002 as a newly formed business and commenced
trading at that time
The Group offers recourse factoring, bulk factoring, confidential invoice
discounting, credit insurance and trade finance services
Key points:
*The Board are pleased to be in a position to announce that the group's
first year objectives have been met.
* From a start-up position with no clients, a period of initial losses
was anticipated whilst establishing our core infrastructure.
* Turnover for the period was #485,000 and the operating loss, which was
in line with expectations, was #655,000. Overheads have been rigidly
controlled throughout the period.
* Client turnover factored or discounted during the period amounted to
#18.4m.
* As each new client is won, the contribution to overhead increases. The
#459,000 loss for the period to 31 December 2002 compares with a loss of
#196,000 for the six months to 30 June 2003.
* 95% of revenue has been derived from recourse factoring business with
approximately 5% generated from confidential invoice discounting.
* Risk management systems are operated by experienced and well-qualified
staff. No bad debts were incurred during the period.
* The group had gained a well spread portfolio of 59 clients at the
period end and, having established its position in the market place, the
directors view the group's future with confidence.
Press enquiries:
Brian Sumner, Chief Executive
Ultimate Finance Group plc +44 (0) 7976 406 474
Chairman's statement
Results
I am delighted to report that notwithstanding the difficult economic conditions
prevailing in the UK since the admission of your company's share capital to AIM
on 12 June 2002, Ultimate's business has performed well and delivered a solid
performance in line with our original expectations.
Since trading commenced, the company has secured a well spread portfolio of 59
clients. Our recourse factoring products accounted for 95% of the group's
turnover in the period with the remaining 5% being confidential invoice
discounting. The turnover for the period was #485,117 reflecting significant
growth in the last six months. Overheads were almost constant during the whole
period and amounted to #1,140,077. The loss on ordinary activities before
taxation was #663,083 and the loss per share was 5.91p. During the period the
company financed sales of #18.4m. At 30 June 2003 factored debt stood at #5.1m
against which #2.8m was advanced to clients. Of the total availability under the
Bank of Scotland revolving credit facility, #2.1m had been drawn down with #2.3m
being unutilised.
Staffing levels have increased during the period as the number of clients and
debtors have increased. At the end of the year, staff numbers totalled 13.
During the last six months of the period, the company increased its geographical
spread with the recruitment of a senior executive with responsibility for the
south-east of England. This together with the two offices operating in Bristol
and Greater Manchester leads me to believe that the business is well positioned
to achieve continued growth in its target markets.
Directors
During the course of the trading period Mark Harris joined the Board as a
non-executive director. He is a chartered accountant with a background in
corporate finance and banking. He is, currently, chief executive of Glenmore
Investments Limited one of the group's major shareholders. I welcome him to the
Board and am grateful to him for the knowledge and experience he brings to it.
Mark has also accepted the role as chairman of the audit committee.
Thanks
I am grateful to all my colleagues on the Board for their consistent support and
guidance throughout the year and to our chief executive, Brian Sumner, and his
executive team for successfully establishing the company's business on a firm
foundation. I would like to say thank you to all the employees of Ultimate for
their dedication, support and continuing efforts. Their professionalism and
quality will play a key role in the group's future success.
Finally, I would like to thank our shareholders for their patience. We are
dedicated to providing shareholder value.
Outlook
Notwithstanding the difficulty that many UK businesses are currently
experiencing as a result of an uncertain political and economic climate, the
market for factoring and discounting continues to grow. Ultimate Finance is
ideally placed to capitalise on this growth.
Clive R Garston
Chairman
Chief Executive's review
Introduction
Our factoring and invoice discounting services provide small and medium-sized
businesses with a highly flexible form of funding. Funds are not restricted (as
with a normal bank overdraft) by a formula based on the assets or net worth on
a balance sheet. This flexibility is driving the demand for factoring and
discounting products at the expense of the traditional bank overdraft. As a
result our target market is growing strongly, despite uncertain economic and
political conditions, affording significant business opportunities for the group
in the future, particularly given our flexible approach and commitment to
personal service.
The group's client portfolio is currently in line with expectations and reflects
a wide range of business activities, located throughout England and Wales,
served from the company's offices in Bristol and the Greater Manchester area.
Main products
Our recourse factoring products account for over 95% of the group's turnover.
Funding is provided, in most cases up to 80% of approved debts, on a continuing
basis together with debt collection and sales ledger management for the full
factoring service. If the prospect's internal credit control function is
considered effective and efficient our Bulk Factoring solution may be offered or
alternatively a service where the clients manage their own telephone chase up.
Confidential invoice discounting, currently some 5% of the book, offers cash
flow finance in a similar way to factoring. The differences are that the
arrangement is not disclosed to the debtors, the client continues to run its own
sales ledger as it is usually equipped to do so, and the client's balance sheet,
administration and financial management tend to be stronger than the average
factoring client.
Trade finance and debtor insurance are offered to our clients through close
partnerships with specialist providers. No risk accrues to the group through
theses activities.
Performance
As each new client is won, the accumulating client list results in increasing
turnover and cash generation. Turnover from a new client taken on towards the
end of a reporting period has little impact on the results for that period, but
makes a greater contribution to future results. The effect of this can be seen
by comparing the turnover and operating loss for the period from 12 June 2002,
when trading commenced, to 31 December 2002 with the results for the six months
to 30 June 2003:
For the period from 12 June 2002 For the period from 1 January 2003
to 31 December 2002 to 30 June 2003
#000 #000
Turnover 127 358
Operating Loss (459) (196)
The generation of income from existing clients for the whole of the next
reporting period, combined with the impact of net new clients' contribution for
part of it, gives the Board confidence that the end of the predicted early loss
making phase of your company's initial development is in sight.
People
Our commitment to a personal service ethic is setting us apart from our main
competitors. I fully recognise that our staff are our greatest asset and we have
been fortunate to be able to assemble an excellent team of industry
professionals. I would like to add my own thanks to them for all their hard work
and commitment since forming the group.
Risk management
Experienced and well-qualified staff, together with strong systems, processes
and procedures have been introduced throughout the business to ensure that risk
management benefits from the industry's best practice. Tried and tested
portfolio management techniques continue to be applied to reduce risk wherever
possible.
We have successfully managed risk during the period whilst continuing to provide
the top class service expected by our clients. No bad debts have been
experienced during the year.
We are continuing to build and develop our core infrastructure and systems to
cope successfully with the increasing demands made upon it.
Our target market is smaller sized businesses and to spread the risk our funds
are utilised across a diversified portfolio of clients. At 30 June 2003 total
debts under management were #5.1m, against which we had advanced a total of
#2.8m.
The future
We have now built a solid foundation on which to grow the group robustly in the
future. The market for factoring and discounting continues to grow giving us
increasing numbers of good quality opportunities to win business. We fully
expect to continue gaining business at the expense of some of our larger and
less flexible competitors through the combination of a well-structured solution
at a competitive price with the onus on high service levels.
Brian Sumner
Chief Executive
Consolidated profit and loss account
for the period from 10 January 2002 to 30 June 2003
2003
#
Turnover 485,117
Administrative expenses (1,140,077)
-------------
Operating loss (654,960)
Other interest receivable and similar income 22,722
Interest payable and similar charges (30,845)
-------------
Loss on ordinary activities before taxation (663,083)
Tax on profit on ordinary activities -
-------------
Loss on ordinary activities after taxation (663,083)
=============
Basic and fully diluted loss per share (note 5) (5.91)p
=============
All amounts relate to continuing activities.
Trading commenced on 12 June 2002 and the above results relate to the activities
carried out since that date. The company was dormant for the period from
incorporation on 10 January 2002 to 12 June 2002, being the date its shares were
admitted to AIM.
There are no recognised gains or losses in the period except those reported
above.
Consolidated balance sheet
At 30 June 2003
Note 2003
#
Fixed assets
Tangible assets 29,566
Current assets
Debtors 1 2,883,433
Cash at bank and in hand 404,130
-------------
3,287,563
Creditors: amounts falling due within one year 2 (2,202,381)
-------------
Net current assets 1,085,182
-------------
Net assets 1,114,748
=============
Capital and reserves
Called up share capital 3 561,169
Share premium account 1,216,662
Profit and loss account (663,083)
-------------
Shareholders' funds (all equity) 1,114,748
=============
These financial statements were approved by the Board of directors on 26
September 2003.
Consolidated cash flow statement
for the period from 10 January 2002 to 30 June 2003
Note 2003
#
Reconciliation of operating loss to net cash flow from
operating activities
Operating loss (654,960)
Depreciation charges 8,607
Increase in debtors (2,883,433)
Increase in creditors 120,753
-------------
Net cash outflow from operating activities (3,409,033)
=============
Cash flow statement
Cash flow from operating activities (3,409,033)
Returns on investments and servicing of finance 4 (8,123)
Capital expenditure 4 (38,173)
-------------
Cash outflow before financing (3,455,329)
Financing 4 3,827,831
-------------
Increase in cash in the period 372,502
=============
Reconciliation of net cash flow to movement in net debt
Increase in cash in the period 372,502
Cash inflow from debt in the period (2,050,000)
-------------
Movement in net debt in the period (1,677,498)
Net debt at the start of the period -
-------------
Net debt at the end of the period (1,677,498)
=============
Reconciliation of movements in shareholders' funds
for the period from 10 January 2002 to 30 June 2003
Group
2003
#
Loss for the period (663,083)
New share capital subscribed (net of issue costs) 1,777,831
----------------
Net addition to shareholders' funds 1,114,748
Opening shareholders' funds -
----------------
Closing shareholders' funds 1,114,748
================
On incorporation, the authorised share capital of the company was #50,000
divided into 50,000 ordinary shares of #1 each ("Old Shares") of which 2 were in
issue, fully paid or credited as fully paid.
On 28 May 2002, by or pursuant to resolutions of the company passed on that date
each of the Old Shares was sub-divided into 20 ordinary shares and the
authorised share capital of the company was increased from #50,000 to #1,000,000
by the creation of an additional 15,360,000 ordinary shares and 3,640,000
redeemable preference shares of 5p each (the "Redeemable Preference Shares")
On 28 May 2002, C R Garston, B R Sumner, R J Pepler, J H Coombes, D F Ashford
and R E M Lee were allotted 100,000, 1,000,000, 800,000, 700,000, 20,000 and
20,000 Redeemable Preference Shares respectively and W.H. Ireland Group plc and
Glenmore Investments Limited were allotted 918,850 and 81,150 Redeemable
Preference Shares respectively, in each case at 5p per share. On 11 June 2002
all the Redeemable Preference Shares were converted into and redesignated as
ordinary shares pursuant to the company's articles of association.
On 12 June 2002 11,223,372 ordinary shares were issued at 24p. In addition there
were outstanding options under the non-Inland Revenue share option scheme over
300,000 ordinary shares as detailed on page 8 of this report and warrants to
subscribe for 561,165 ordinary shares initially issuable as to 112,233 to
Dawnay, Day Corporate Finance Limited and as to 448,932 to W.H. Ireland Group
plc. Each warrant entitles the holder to subscribe for one ordinary share at
24p. The warrants are transferable and must be exercised between 11 June 2004
and 11 June 2009.
Notes
5 Debtors
Group
2003
#
Gross factored debts receivable 5,126,860
Due to clients on collection (2,309,101)
----------------
Client commitments 2,817,759
Other debtors 13,922
Prepayments and accrued income 51,752
----------------
2,883,433
================
6 Creditors: amounts falling due within one year
Group
2003
#
Bank loans and overdrafts 2,081,628
Trade creditors 31,612
Taxation and social security 34,037
Other creditors 39,687
Accruals and deferred income 15,417
----------------
2,202,381
================
7 Called up share capital
2003
#
Authorised
Equity: 20,000,000 ordinary shares of 5p each 1,000,000
================
Allotted, called up and fully paid
Equity: 11,223,372 ordinary shares of 5p each 561,169
================
8 Analysis of cash flows
2003
#
Returns on investment and servicing of finance
Interest received 22,722
Interest paid (30,845)
----------------
(8,123)
================
Capital expenditure and financial investment
Purchase of tangible fixed assets (38,173)
----------------
(38,173)
================
Financing
Issue of ordinary share capital 2,002,000
Expenses paid in connection with share issue (224,169)
Utilisation of revolving credit facility 2,050,000
----------------
3,827,831
================
9 Earnings per share
The basic loss per share for the period to 30 June 2003 has been calculated from
the loss on ordinary activities after taxation of #663,083 and on the 11,223,372
ordinary shares in issue at 30 June 2003.
The fully diluted loss per share for the period to 30 June 2003 is shown as the
same value as basic earnings per share, since the average market value of the
company's shares during the period is below the average option price and the
options are therefore not considered to have a diluting effect.
10 Preliminary statement
This preliminary statement was approved by the Board on 26 September 2003. It is
not the company's statutory accounts.
The statutory accounts for the period ended 30 June 2003 have been audited and
have been approved by the Board of directors on 26 September 2003. Copies of the
Directors' report and consolidated financial statements will be sent to all
shareholders shortly and will be available from the Group's Bristol office, 1st
Floor, Aztec Centre, Aztec West, Almondsbury, Bristol BS32 4TD.
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