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Share Name | Share Symbol | Market | Type | Share ISIN | Share Description |
---|---|---|---|---|---|
Ultimate Fin. | LSE:UFG | London | Ordinary Share | GB0031685414 | ORD 5P |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 25.00 | 0.00 | 01:00:00 |
Industry Sector | Turnover | Profit | EPS - Basic | PE Ratio | Market Cap |
---|---|---|---|---|---|
0 | 0 | N/A | 0 |
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 FR SEAEDFFSSEFU
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