TIDMUFG
RNS Number : 4056A
Ultimate Finance Group PLC
30 March 2012
30 March 2012
Embargoed until 07:00
Ultimate Finance Group plc
("Ultimate Finance", the "Company" or the "Group")
Interim Results
Strong organic growth in difficult markets
Ultimate Finance Group plc (AIM:UFG), a leading provider of
financial solutions to SMEs, is pleased to announce its Interim
Results for the half-year ended 31 December 2011.
Financial Highlights
-- Adj-Operating Profit* increased 44% to GBP802,000 (H1 2010: GBP558,000)
o Operating Profit increased 28% to 502,000 (H1 2010:
GBP391,000)
-- Turnover increased 25% to GBP5,395,000 (H1 2010: GBP4,321,000)
-- Interim dividend of 0.40p per share (H1 2010: 0.35p)
-- PBT remained broadly flat at GBP329,000 (H1 2010 GBP337,000)
due to amortisation associated with the acquisition of Ashley
Commercial Finance and group reorganisation costs
-- Adj-Earnings per share* of 1.06p (H1 2010: 1.28p)
-- GBP10.6m of headroom within GBP34m banking facility
-- Basic earnings per share* of 0.47p (H1 2010: 0.80p)
Operational Highlights
-- Average client size has increased by 5%** and continues to grow
-- Healthy level of enquiries, bolstered by acquisition of
Ashley Commercial Finance ("Ashley")
o Ashley successfully embedded and performing ahead of plan
-- Strong growth across Asset Finance division
o Increased external funding to total of GBP2m
-- Investment has been made into the business to support further growth
o Increased investment in the Head Office operational team
o The sales team has been strengthened and regional coverage
expanded
-- Over-subscribed fundraising successfully completed in January
2012 to raise GBP1m to support future growth
-- Bad debt levels remain at traditional lows of around 1%
* excluding acquisition, amortisation and group reorganisation
costs
** measured by average client turnover per annum
Jeremy Coombes, Chief Executive Officer of Ultimate Finance
Group plc, commented, "I am delighted that Ultimate Finance has
again delivered another set of strong financial results,
demonstrating good organic growth and the successful embedding of
the acquisition of Ashley Commercial Finance.
"There are many high quality small businesses who need a
flexible approach to financing and as the UK economy emerges from
recession there is an increasing demand for our expertise, products
and services."
For further information please contact:
Ultimate Finance Group plc Tel: +44 (0)845 251 3030
Jeremy Coombes, Chief Executive
Shane Horsell, Finance Director
WH Ireland Tel: +44 (0) 117 945 3470
(Nominated Adviser and Broker)
John Wakefield / Marc Davies
Threadneedle Communications Tel. +44 (0) 20 7653 9850
(Financial PR)
John Coles / Fiona Conroy
About Ultimate Finance Group plc
Ultimate Finance group is a leading provider of financial
solutions to SMEs across the UK. The Company is headquartered in
Bristol with regional offices in Manchester, Birmingham and
Tunbridge Wells. Through its invoice finance and asset finance
divisions it provides support to SMEs by funding their growth. As
bank lending to SMEs is increasingly restricted in the current
climate, the benefits of Ultimate Finance's flexible and
fast-moving solutions become even more compelling.
The Company acquired Ashley Commercial Finance, an invoice
finance company, in October 2010, which significantly broadened the
Company's target market. This, alongside the facility of GBP34
million from Lloyds TSB Commercial Finance, provides a strong
platform for growth.
The Company boasts an experienced management team coupled with a
diverse offering of products and services now available to its
clients, Ultimate Finance is well placed to capitalise on the
increasing demand for finance for SMEs.
Chairman's Statement
Results
I am pleased to report that for the half year ended 31 December
2011 Ultimate Finance has achieved a 44% rise in adjusted operating
profit (excluding group reorganisation, amortisation and
acquisition costs) to GBP802,000 (H1 2010: GBP558,000). Operating
profit grew 28% to GBP502,000 (H1 2010: GBP391,000).
Turnover for the half year was up 25% to GBP5,395,000 (2010:
GBP4,321,000). Profit before tax (after acquisition, amortisation
and group reorganisation costs) was broadly flat at GBP329,000 (H1
2010: GBP337,000) due to an increase in amortisation costs relating
to the Ashley acquisition and group restructuring costs of
GBP420,000 (H1 2010: GBP203,000)(see note 6).
Basic earnings per share amounted to 0.47p (H1 2010: 0.80p).
Adjusted earnings per share (excluding acquisition, amortisation
costs and group restructuring costs) amounted to 1.06p (H1
2010:1.28p).
Bad debt levels remain below 1%.
Despite the economic and trading environment, I believe that
this is a strong performance which reflects our approach to support
quality businesses within the UK SME sector and our dedication to
stringent risk management policies.
Dividend
I am pleased to announce that the Company is proposing to pay an
interim dividend of 0.40p per share to be paid on 23 May 2012 to
shareholders on the register at the close of business on 27 April
2012 with an ex-dividend date of 25 April 2012.
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
Ultimate Finance currently enjoys a strong relationship with
Lloyds TSB Commercial Finance who provide a GBP34 million
back-to-back financing facility, which has a minimum term to June
2014. The Company currently has GBP10.6m of headroom and therefore
has no need to increase its finance arrangement.
In January 2012, the Group was pleased to announce the
successful over-subscribed placing ofnew ordinary shares raising
GBP1m to support future growth. The placing also was undertaken to
strengthen the Group's's balance sheet and reduce the gearing
ratio.
Risk Management
Risk management is crucial to the success of the business and
Ultimate Finance maintains high standards of underwriting and
management of risk. The Company's credit control staff are highly
experienced in both client and risk management. Given the market
conditions there has inevitably been a marked increase in the
number of business failures across the UK.
As a result of this, Ultimate Finance has had to be increasingly
careful in guarding against the risk of fraud and financial
failure. We are selective in growing client numbers and continue to
prudently review underwriting procedures.
This is reflected in our very low level of bad debt.
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 of
enquiries.
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 31 December 2011 was
GBP1,601,000 (H1 2010: GBP1,458,000), which constituted 6% (H1
2010: 5%) of total funds advanced.
Board Changes
As has previously been announced I am today standing down after
10 years as Chairman of Ultimate Finance. I am delighted to have
seen the company established as one of the leading independent
providers of receivable finance in the UK and am sure that it will
continue to grow and prosper in the future.
I would like to welcome Roger McDowell and Matt Cooper to the
board and wish the new chairman Roger McDowell and the Company
every success in the years ahead.
The success of every company depends on its people and Ultimate
is no exception. I would like to thank the entire staff and my
board colleagues for their support and the contribution that they
have made.
Outlook
Although trading conditions remain challenging, demand for our
services remains strong. With the acquisition and successful
integration of Ashley Commercial Finance, Ultimate Finance is well
placed to continue to grow. The Group remains acquisitive, actively
seeking appropriate acquisition opportunities.
We will continue to take the necessary steps to build solid,
sustainable shareholder value from the opportunities that present
themselves, with our growth rate tempered by our strict
underwriting procedures and risk management.
There is evidence that some of our competitors are adopting
short term tactics to buy market share at the expense of
unacceptable risk. Ultimate Finance will not follow that path and
will continue to maintain high standards of underwriting and risk
management.
I have enjoyed my ten years as Chairman and am confident that
the re-shaped Board will provide excellent guidance as the Company
continues to progress with its growth strategy.
The Board is confident about the prospects for Ultimate
Finance.
Clive R Garston
Chairman
Chief Executive's Review
Introduction
Since co-founding Ultimate Finance Group in 2002 and working as
both Group Operations Director, and for the last four years as
Group Managing Director, this is my first report as Chief Executive
having been appointed in December 2011. I am delighted that
Ultimate Finance has delivered another set of strong financial
results.
Despite the challenging economic conditions it has been a good
six months for the Group. SMEs continue to find it difficult to
access funding through traditional means and there continues to be
a healthy demand for alternative funding options. We are receiving
an increasing number of enquiries as our flexible approach and
expertise prove an attractive offering. We remain cautious in our
underwriting practices and this is reflected in our very low bad
debt provision, which continues to be around 1% of average funds in
use.
The average turnover of our clients is GBP1.4m for Ultimate
Invoice Finance and GBP140,000 for Ashley Commercial Finance, which
we acquired in October 2010. On average we lend up to 52% of a
client's total ledger; this approach provides us with considerable
contingency reserve. The demand for funding solutions from our core
market is increasing and this is reflected by the 25% increase in
the Group's turnover year-on-year.
The quality of our service is confirmed by the outstanding
client retention we continue to achieve. We expect to continue our
record of steady client growth without changing the Group's risk
profile. We plan for the long term and will not lessen our strict
underwriting criteria for the sake of buying market share, which
some of our competitors appear to be doing.
Developments and Prospects
In November 2011 we agreed terms with Lloyds TSB, extending the
banking facility through to 30 June 2014. We also increased the
funding for our Asset Finance subsidiary by GBP1m, half of which is
provided by a new relationship with Hitachi Capital, as announced
in November 2011.
In July 2010 we launched Ultimate Asset Finance Limited to
provide SMEs with commercial hire purchase facilities. We are
pleased to report that it has grown ahead of management
expectations and now has total external funding of GBP2m.
As reported by the Chairman, there has been considerable change
to the Board, which we believe has strengthened the Group. As a
joint founder of Ultimate Finance and Board Director for 10 years,
I have a deep understanding of what drives our success. The quality
of our services and strict underwriting practices are key and will
continue to be maintained at the highest levels.
I believe Ultimate Finance is ideally placed to grow and benefit
as the economy starts to recover.
Strategy
Our strategy remains to focus on the UK SME sector, from good
quality start-up operations to more established businesses. As
economic conditions continue to result in tightening credit for
SMEs, our services become increasingly attractive - either to fund
their growth or to support them through challenging times. Even in
cases where traditional bank finance is available, many businesses
seek alternative solutions which provide more flexibility.
Our clients are loyal and long-standing. We expect steady client
growth as we continue to market our existing products and services,
expand our sales team still further, and look for opportunities to
develop additional complementary products to assist SMEs'
financing. We believe that with our increased sales team, greater
breadth of products and services and stronger market presence, we
are ideally positioned as the economy recovers.
We have continued to see a rise in the number of enquiries as
many more businesses are looking for alternative flexible
solutions, and banks remain restrictive on lending. 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.
Ultimate Finance is planning an increase in its marketing
activity for the remainder of this financial year, and in doing so
is also increasing the size and strength of its sales force. Our
aim is to increase the number of quality enquires received by the
Group, whilst continuing to develop the business across all
products to drive organic growth. We anticipate the relocation of
Group headquarters to larger premises in order to support our
expansion. Furthermore, we have been delighted by the success of
our acquisition of Ashley Commercial Finance, and continue to
pursue appropriate acquisition opportunities.
Jeremy Coombes
Chief Executive
Consolidated Statement of Comprehensive Income (unaudited)
for the six months ended 31 December 2011
Note Six months Six months Year ended
ended 31 ended 31 30 June
Dec Dec 2011
2011 2010
GBP000 GBP000 GBP000
Revenue 5,395 4,321 9,706
Cost of sales - finance costs (416) (364) (730)
Cost of sales - other (133) (214) (403)
------------ ------------ ------------
Total cost of sales (549) (578) (1,133)
------------ ------------ ------------
Gross profit 4,846 3,743 8,573
Administrative expenses (4,044) (3,185) (7,289)
Administrative expenses -
other
Acquisition costs - (111) (118)
Group reorganisation costs 6 (149) - (60)
Amortisation 6 (151) (56) (202)
------------ ------------ ------------
Total administrative expenses (4,344) (3,352) (7,669)
------------ ------------ ------------
Operating profit 502 391 904
Finance expense 6 (173) (54) (186)
------------ ------------ ------------
Profit before tax 329 337 718
Taxation (96) (94) (210)
------------ ------------ ------------
Profit for the year being
total comprehensive income 233 243 508
============ ============ ============
Earnings per share 3
Basic 0.47p 0.80p 1.20p
Diluted 0.46p 0.77p 1.18p
All amounts are attributable to the owners of the parent.
Consolidated statements of financial position (unaudited)
At 31 December 2011
Company number 04350565
Note 31 Dec 31 Dec 30 June
2011 2010 2011
(restated)
GBP000 GBP000 GBP000
Non-current assets
Intangible assets 5,849 6,090 6,000
Property, plant and equipment 428 352 499
---------- ------------- ----------
6,277 6,442 6,499
---------- ------------- ----------
Current assets
Loans and other receivables 29,415 32,143 34,656
Cash and cash equivalents 2,188 1,564 963
---------- ------------- ----------
31,603 33,707 35,619
---------- ------------- ----------
Total assets 37,880 40,149 42,118
========== ============= ==========
Current liabilities
Bank borrowings and overdrafts (23,408) (27,831) (27,937)
Trade and other payables (4,057) (1,767) (4,186)
Bank loans (400) (400) (400)
Tax payable (455) (401) (310)
---------- ------------- ----------
(28,320) (30,399) (32,833)
Non-current liabilities
Bank loans (1,101) (1,071) (1,288)
Contingent consideration (1,105) (1,053) (1,053)
Other payables (792) (1,326) (441)
Deferred tax liability (111) (8) (111)
---------- ------------- ----------
(3,109) (3,458) (2,893)
Total liabilities (31,429) (33,857) (35,726)
========== ============= ==========
Net assets 6,451 6,292 6,392
========== ============= ==========
Equity attributable to
owners of the parent
Share capital 2,479 2,479 2,479
Share premium 3,505 3,502 3,505
Retained earnings 467 311 408
---------- ------------- ----------
Total equity 6,451 6,292 6,392
========== ============= ==========
These financial statements were approved by the board of
directors on 29 March 2012
Consolidated Statement of Changes in Equity (unaudited)
for the six months ended 31 Dec 2011
Share Share
Capital Premium Retained Total
Earnings
GBP000 GBP000 GBP000 GBP000
Balance at 30 June 2010 1,000 1,949 122 3,071
Total comprehensive income - - 243 243
New shares issued 1,479 1,556 - 3,035
Equity-settled share based payment
transactions - - 6 6
Dividend Paid relating to prior year (60) (60)
Balance at 31 Dec 2010 2,479 3,505 311 6,295
Total comprehensive income - - 265 265
Equity-settled share based payment
transactions - - 6 6
Dividend Paid relating to prior year - - (174) (174)
Balance at 30 June 2011 2,479 3,505 408 6,392
Total comprehensive income - - 227 227
Equity-settled share based payment
transactions - - 6 6
Dividend Paid relating to prior year - - (174) (174)
---------- ---------- ----------- --------
Balance at 31 Dec 2011 2,479 3,505 467 6,451
Consolidated Statement of Cash Flows (unaudited)
for the six months ended 31 Dec 2011
To Six months Six
ended months Year ended
31 Dec ended 30 June
2011 31 Dec 2011
2010
GBP000 GBP000 GBP000
Cash flows from operating activities
Profit for the period before taxation 329 337 718
Adjustments for:
Depreciation 89 61 324
Financial income - - -
Financial expense 173 54 186
Loss on sale of plant, property and
equipment - (1) 1
Equity settled share-based payment
expenses 6 6 12
------------ ------------- -------------
597 457 1,241
(Increase)/decrease in loans and other
receivables 5,241 (1,702) (3,449)
Increase/(decrease) in trade and other
payables 217 142 1,223
(Decrease)/increase in tax payable 96 71 (18)
Tax (Paid)/Received 49 (80) (158)
------------ ------------- -------------
Net cash from operating activities 6,200 (1,112) (1,161)
Cash flows from investing activities
Acquisition of subsidiary net of cash
acquired - (6,524) (6,524)
Proceeds from sale of equipment - 4 5
Purchase of property, plant and equipment (18) (112) (336)
------------ ------------- -------------
Net cash from investing activities (18) (6,632) (6,855)
Cash flows from financing activities
Proceeds from issue of share capital - 2,750 2,750
Issue costs on issue of ordinary shares - (648) (648)
Financial expense (54) - (65)
Repayment of long term borrowings (200) - (200)
Proceeds from long term borrowings - 1,867 1,871
Dividends paid (174) (60) (234)
------------ ------------- -------------
Net cash from financing activities (428) 3,909 3,474
Net increase/(decrease) in cash and
cash equivalents 5,754 (3,835) (4,542)
Cash and cash equivalents at beginning
of period (26,974) (22,432) (22,432)
Cash and cash equivalents at end of
period (note 5) (21,220) (26,267) (26,974)
Notes to the half yearly report
1 Preparation of half yearly report
The financial information in the half yearly report has been
prepared using the recognition and measurement principles of
International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The principal
accounting policies used in preparing the half yearly report are
those the Group expects to apply in its financial statements for
the year ending 30 June 2012 and are unchanged from those disclosed
in the Group's Director's report and consolidated financial
statements for the year ended 30 June 2011. The financial
information for the year ended 30 June 2011 does not constitute the
Group's statutory financial statements for that period. It has,
however, been derived from the audited statutory financial
statements for that period. A copy of those statutory financial
statements has been delivered to the Registrar of Companies. The
auditors' report on those accounts was unqualified, did not include
references to any matters to which the auditors drew attention by
way of emphasis without qualifying their report and did not contain
a statement under section 498 (2) and (3) of the Companies Act
2006. While the financial figures included in this half-yearly
report have been computed in accordance with IFRSs applicable to
interim periods, this half-yearly report does not contain
sufficient information to constitute an interim financial report as
that term is defined in IAS 34.
2 Taxation
Taxation has been provided for at 28% (H1 2010: 28%).
3 Earnings per share
The basic earnings per share of 0.47p (31 Dec 2010: 0.80p) has
been calculated from the profit after taxation of GBP233,000 and on
the weighted average number of shares in issue during the reporting
period. The fully diluted earnings per share of 0.46p (31 Dec 2010:
0.77p), has been calculated from the profit after taxation of
GBP233,000 and on the weighted average number of the shares in
issue during the period adjusted for all dilutive potential
ordinary shares.
4 Dividends
Ordinary Shares 2011 2010
GBP000 GBP000
Final dividend paid for the
prior year of 0.35p (2010:
0.30p per share) 174 60
Proposed interim dividend of
0.40p (2010:0.35p) per share 232 174
The proposed interim dividend has not been accrued as the
dividend was declared after the balance sheet date.
5 Cash and Cash equivalents/Bank borrowings and overdrafts
H1 2011 H1 2010
GBP000 GBP000
Cash and cash equivalents 2,188 1,564
Bank borrowings and overdrafts (23,408) (27,831)
Total per Consolidated Statement
of Cash Flows (21,220) (26,267)
6 Amortisation, Financing and Acquisition Costs related to the
Ashley acquisition and Group Restructuring Costs
H1 2011 H1 2010
GBP000 GBP000
Amortisation of Ashley intangible
assets 151 56
Financing costs relating to
Ashley acquisition 120 36
Ashley Acquisition costs - 111
Group restructuring costs 149 -
420 203
7 Prior period adjustment
Subsequent to the prior period end, the directors reviewed the
classifications of bank loan balances and identified a proportion
that relate to current liabilities. These balances totalled GBP400k
and have been adjusted in the December 2010 period end
comparatives. The effect of this is to reduce non-current bank
loans payable by GBP400k and increase current bank loans payable by
GBP400k. The effect of these reclassifications on the income
statement is GBPnil.
8 Half Yearly Report
Copies of this report are available 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 or on the Company's website at
www.ultimatefinance.co.uk.
INDEPENDENT REVIEW REPORT TO ULTIMATE FINANCE GROUP PLC
Introduction
We have been engaged by the company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 31 December 2011 which comprises of the
consolidated statement of comprehensive income, the consolidated
statement of financial position, the statement of changes in equity
and the consolidated statement of cash flows.
We have read the other information contained in the half-yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Directors' responsibilities
The interim report, including the financial information
contained therein, is the responsibility of and has been approved
by the directors. The Directors are responsible for preparing the
interim report in accordance with the rules of the London Stock
Exchange for companies trading securities on AIM which require that
the half-yearly report 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.
Our responsibility
Our responsibility is to express to the Company a conclusion on
the condensed set of financial statements in the half-yearly
financial report based on our review.
Our report has been prepared in accordance with the terms of our
engagement to assist the Company in meeting the requirements of the
rules of the London Stock Exchange for companies trading securities
on AIM and for no other purpose. No person is entitled to rely on
this report unless such a person is a person entitled to rely upon
this report by virtue of and for the purpose of our terms of
engagement or has been expressly authorised to do so by our prior
written consent. Save as above, we do not accept responsibility for
this report to any other person or for any other purpose and we
hereby expressly disclaim any and all such liability.
Scope of review
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, "Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity", issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters and applying analytical and other
review procedures. A review is substantially less in scope than an
audit conducted in accordance with International Standards on
Auditing (UK and Ireland) and consequently does not enable us to
obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do
not express an audit opinion.
Conclusion
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 31
December 2011 is not prepared, in all material respects, in
accordance with the rules of the London Stock Exchange for
companies trading securities on AIM.
BDO LLP
Chartered Accountants and Statutory Auditors
Bristol
United Kingdom
29(th) March 2011
BDO LLP is a limited liability partnership registered in England
and Wales (with registered number OC305127).
Company information and advisers
Auditors Solicitors
BDO LLP Osborne Clarke
Fourth Floor 2 Temple Back East
One Victoria Street Temple Quay
Bristol Bristol
BS1 6AA BS1 6EG
Principal Bankers Hammonds
Lloyds TSB Bank plc 7 Devonshire Square
PO Box 112 Cutlers Gardens
Canons House London
Canons Way EC2M 4YH
Bristol
BS99 7LB
Registered Office
Nominated Adviser & Broker Bradley Pavilions
W.H. Ireland Limited Pear Tree Road
11 St James's Square Bradley Stoke
Manchester Bristol
M2 6WH BS32 0BQ
Registrars Company Offices
Neville Registrars Limited Bradley Pavilions
Neville House Pear Tree Road
18 Laurel Lane Bradley Stoke
Halesowen Bristol
West Midlands BS32 0BQ
B63 3DA
8th Floor, 80 Mosley Street
St Peter's Square
Manchester
M2 3FX
Calverley House
55 Calverley Road
Tunbridge Wells
Kent
TN1 2TU
43 Temple Row
Birmingham
B2 5LS
Website & Email Addresses
www.ultimatefinance.co.uk
info@ultimatefinance.co.uk
This information is provided by RNS
The company news service from the London Stock Exchange
END
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