Final Results

Accuma Group PLC 31 October 2006 Press Release 31 October 2006 Accuma Group Plc ('Accuma' or 'the Group') Preliminary Results Accuma Group Plc, a leading provider of consumer financial solutions, today announces its audited Preliminary Results for the year ended 31 July 2006. Highlights • Transformational year in which the Group has become a full consumer financial solutions provider thus de-risking and diversifying its earnings • Turnover increased 250% to £9.98m (2005: £2.85m) • Gross profit increased to £4.5m (2005: £0.6m) • Operating profit £1.9m (adjusted for goodwill amortisation) (2005: loss £463k) • Strong balance sheet with cash of £4.44m (2005: £2m) • EPS increased to 6.1p (adjusted fully diluted basis) (2005: basic loss per share of 2.28p) • £26m raised through placings for acquisitions and working capital • Formation of Assist Mortgages and Loans • IVA case numbers increased 245% to 2,537 (2005: 734) • Significant investment in IT infrastructure Commenting on the results, Charles Howson, Chief Executive of Accuma Group said: 'The 2006 financial year was transformational for us as we now have a full consumer financial solutions platform enabling us to provide best advice to people in financial difficulty. 'We are confident that referrals from third parties and intra-Group will increase call conversion from 4% to an anticipated 30%. This will enable us to fully capitalise on our marketing costs leading to more efficient client acquisition. 'The integration of acquisitions is progressing ahead of plan and financials are in-line with expectations. We are now able to clearly differentiate Accuma from our competitors.' - ends - For further information: Accuma Group Plc Charles Howson, Chief Executive Tel: +44 (0) 161 751 6787 charles.howson@accumagroup.com www.accumagroup.com Daniel Stewart & Company Plc Lindsay Mair Tel: +44 (0) 20 7776 6550 lindsay.mair@danielstewart.co.uk www.danielstewart.co.uk Media enquiries: Abchurch Chris Lane / Sarah Hollins Tel: +44 (0) 20 7398 7700 chris.lane@abchurch-group.com www.abchurch-group.com Chairman's Statement This is the second year of record growth since Accuma's flotation and is testament to the expertise and dedication of the Group's directors and employees. These results are in line with market expectations and we believe that we have the foundations in place to deliver substantial increases in revenues and profits in the years to come. The last year has again been exceptionally busy for the Group and we have made significant progress towards achieving our goal of building a full consumer financial solutions platform. To facilitate this transformation, the Group has made three important acquisitions being Loan Line Holdings Limited ('Loan Line '), Byrom & Keeley Financial Services Limited ('Byrom & Keeley') and Thomas Charles & Co Limited ('Thomas Charles'). Each acquisition is complementary to the Group's core business and were all earnings enhancing. The integration of these acquisitions is progressing ahead of plan and the businesses are performing in line with expectations. Accuma is positioned within a market that continues to grow at a significant rate, and with the full service platform that the Group now has, we are very excited and optimistic about the prospects of the Group moving forward. Accordingly we have significantly increased resource to accommodate the anticipated growth in demand for the Group's services and have relocated both Accuma and Wilson Phillips to new premises. Once again, I would like to thank my fellow directors and all our staff for their hard work and dedication throughout the year. I would like to welcome all the staff in our newly acquired companies together with Lesley Gregory who was appointed as Non Executive Director in August. In addition, I would like to thank all our shareholders for continuing to support the Group during this important stage of its development. The Board looks forward to future growth with confidence. Charles Taylor B.Comm.CA Non Executive Chairman Chief Executive's Statement Introduction The past financial year has seen the Group make significant progress on all fronts. I am delighted to report on financial results which show significant profitability and, as one of the leading providers in our industry, Accuma is well positioned to prosper from the economic climate, which is resulting in continued strong demand for our services. The Group has made four acquisitions since its admission to AIM in March 2005 which, together with the formation of Assist Mortgages and Loans, transforms our business and will accelerate our future growth and profitability. The Group is now able to provide Individual Voluntary Arrangements ('IVAs'), both through Accuma and Wilson Phillips; re-mortgages through Assist; consolidation loans through Loan Line; and informal debt solutions through Byrom & Keeley. The diversity of our product offering within the financial solutions industry significantly de-risks the business model and in addition all businesses are highly cash generative. This broadening of our service offering is in line with our strategy which has always been to provide a full consumer financial solutions platform, enabling us to ensure that the client is always provided with best advice and the right solution to their financial problems. This strategy also ensures that the Group maximises the benefit of its marketing expenditure by increasing the number of individuals we are able to provide assistance to directly. I believe this approach ultimately builds real affinity with our clients and as such we become their trusted advisor for other financial offerings. Best Advice Before commenting on our financial results, we believe it appropriate to refer to recent media coverage and finance industry commentary on the effects of possible increased regulation of the personal insolvency sector. The Group has always been mindful of fairness to creditors where debtors are unable to maintain their contractual payments. Accuma undertakes stringent verification procedures to ensure that where a repayment proposal is recommended, whether it is an IVA or an informal arrangement, it delivers the maximum return to creditors whilst being sustainable by the debtor. Formal insolvency proceedings such as IVAs are highly regulated and the Group currently employs eight licensed Insolvency Practitioners who are responsible for ensuring the suitability of each proposal recommended. Our commitment to best advice to the benefit of both the debtor and creditors is demonstrated by the fact that approximately only 4% of the individuals who contact us undertake an IVA. Earlier in the year, the Group was subject to a routine but comprehensive inspection by the Insolvency Practitioners Association. I am pleased to state that we received an excellent inspection report that praised our effectiveness and efficiency. Our significant investment in IT infrastructure and development ensures that we are well placed to provide appropriate advice and solutions whilst sustaining growth through changes in market sentiment, legislation or the regulatory environment. The Board would welcome any changes that ensure that debtors receive impartial advice based on their individual circumstances and protects both the debtor and their creditors. Financial Results These results demonstrate the Group's strong performance compared with the equivalent financial period last year. • Operating profit is £1.9 million (pre goodwill amortisation), which gives an operating margin of 19.5%; • Turnover increased 250% from £2.85 million to £9.98 million; • Gross profit margin doubled to 45%, from £0.6 million to £4.5 million; • Shareholders' funds increased to £14.2 million (2005: £3.4 million) including cash of £4.4 million (2005: £2.0 million). The increase in gross profit margin is derived principally from the increase in the 'bank' of live IVA cases being supervised. Each has an average case length of five years, giving excellent revenue visibility. The number of such cases now stands at 4,139 and supervisory revenue has grown 449% from £493k at 31 July 2005 to £2.7 million at 31 July 2006. We are particularly pleased with our financial performance given the significant operational changes that took place throughout the year. In August 2005, we acquired Wilson Phillips, a smaller competitor, and have since successfully integrated this business within the Group. During the year and immediately after the year end, the Group successfully completed three placings raising funds for the acquisition of Wilson Phillips, Loan Line and Byrom & Keeley, and for working capital. Institutional demand for these placings was excellent and each was significantly oversubscribed with the Group raising a total of £26 million. In addition, we acquired Thomas Charles & Co at the end of June 2006. The Group established a mortgage company (Assist Mortgages and Loans) in January 2006 and we expect to see the full benefit of this investment in the current financial year. In December 2005, the Group relocated Accuma's head office within Manchester and in May 2006 relocated Wilson Phillips. Both moves have resulted in significant opportunity for expansion to cope with anticipated future demand and have created more efficient working environments. In addition the Group has continued to invest in its IT infrastructure and systems, to increase operating efficiency and to streamline our case management processes. Investment was also made in Wilson Phillips with a roll out of new IT systems and procedures. The result for the year was marginally impacted by this investment in resource which we made in anticipation of an increase in business volumes which we expect to lead to significant benefits in the future. The Group became cash positive from June 2006 which was earlier than expected. Cash levels increased by £2.3 million to £4.44 million at the year end and the year ended with an increase in shareholder funds of 320% at £14.2 million. IVA Case Growth In our IVA business, continued growth in the IVA run rate has seen an increase of 245% in the number of new cases commenced during the period, from 734 in 2005 to 2,537 in 2006. The Group has always counted joint cases (husband and wife or partners) as one case as the increase in fee income is minimal. However for ease of comparison within the industry, should Accuma present joint cases as two the number of cases commenced in the year would have been 3,314. Based on historic conversion rates Accuma expects 330 IVA cases (434 counting joint cases as two) to be completed in the month of October 2006. During the period, client acquisition costs decreased from £1,015 in 2005 to £960 in 2006. With the impact of our continued investment in operational resource and processes, together with more efficient routes to market and the benefit of our full financial solutions platform, we are confident that this figure is sustainable and indeed would hope to see further reductions in the year ahead. Following a review in our operational processes, particularly in the area of research and drafting IVA proposals, we have introduced a new system which captures all data and relevant information of a debtor's financial circumstances. This has increased the average volume of cases that a drafter can complete by 66%, to circa 20 plus cases a month, with no detrimental impact on the quality of due diligence. This has increased our capacity significantly. The Group currently employs eight IPs which provides a capacity of approximately 560 cases per month. Acquisitions The acquisitions completed in the year and at the beginning of the current financial year have propelled the Group from being an IVA based business model to a full platform consumer financial solutions provider. This spreads risk while diversifying earning streams through the ability to offer a broader suite of financial solutions to indebted consumers. The Group is already benefiting from extensive cross referrals and integration of these acquisitions is proceeding well. The breadth of our platform has greatly increased our profile and is leading to significant strategic alliances. Each of the acquisitions has relatively few staff, effective management information systems based around key performance indicators and each management team is locked-in through their service contracts and earn-out incentives. People Following the acquisitions we announced the creation of an operational board which would include the operational management of all the subsidiaries. The Group today employs 200 people throughout the Group. On 21 August 2006, Lesley Gregory was appointed to the Board of Accuma as a Non-Executive Director. I would like to welcome Lesley to the Board and look forward to working with her. The Group has consistently sought to recruit and retain the best employees in our market, which has contributed to the success in developing our growth. To achieve our longer term strategy we will continue to implement this recruitment policy. Accuma offers all of its staff training relevant to their roles, which we believe has contributed to employee motivation and retention. Outlook We see the proposed introduction of Simple Voluntary Arrangements (SIVAs) and the possibility of further legislation that could enable approved suppliers of debt repayment plans that include an element of compulsion for creditors, as beneficial to the Group's prospects. In more general terms, unsecured consumer lending continues to increase, and with the recent moreover and further anticipated increases in interest rates the economic outlook provides significant growth potential for the Group. Having a full financial consumer solutions platform enables the Group to provide best advice available to consumers in financial difficulty. The acquisitions now clearly differentiate us from our competitors and with the continued energy and commitment of all our staff we believe the Group has the platform to capitalise on the opportunities available within the market. We are confident of achieving market expectations for 2007 and indeed of our prospects in future years. Charles Howson Chief Executive Accuma Group Plc CONSOLIDATED PROFIT AND LOSS ACCOUNT YEAR ENDED 31 JULY 2006 Period ended 31 July 31 July Note 2006 2005 £k £k TURNOVER Existing operations 7,313 2,846 Acquisitions 2,667 - 9,980 2,846 Cost of sales (5,500) (2,204) GROSS PROFIT 4,480 642 Administration expenses (2,787) (1,125) OPERATING PROFIT/(LOSS) Existing operations 1,050 (483) Acquisitions 643 - 1,693 (483) Interest receivable 124 40 Interest payable and similar charges (37) (30) PROFIT/(LOSS) ON ORDINARY ACTIVITIES 1,780 (473) BEFORE TAXATION Taxation 1 (482) 83 PROFIT/(LOSS) ON ORDINARY ACTIVITIES 1,298 (390) Earnings per share - basic 2 5.5p (2.28p) - diluted 5.4p - - adjusted diluted 6.1p - All the activities of the Group are classed as continuing. The Group has no recognised gains or losses other than the results of the year as set out above. Accuma Group Plc CONSOLIDATED BALANCE SHEET YEAR ENDED 31 JULY 2006 31 July 31 July 2006 2005 £k £k £k FIXED ASSETS Intangible assets 6,940 114 Tangible assets 726 111 7,666 225 CURRENT ASSETS Debtors 6,065 2,112 Cash at bank 4,441 2,041 10,506 4,153 CREDITORS : Amounts falling due within one year (2,121) (816) NET CURRENT ASSETS 8,385 3,337 TOTAL ASSETS LESS CURRENT LIABILITIES 16,051 3,562 CREDITORS : Amounts falling due after more than one year (329) (178) Provisions for Liabilities and Charges (1,503) - NET ASSETS 14,219 3,384 CAPITAL AND RESERVES Called-up equity share capital 2,573 2,042 Share premium account 11,720 3,213 Other reserve (763) (1,262) Profit & Loss 689 (609) EQUITY SHAREHOLDERS' FUNDS 14,219 3,384 Accuma Group Plc CONSOLIDATED CASH FLOW STATEMENT YEAR ENDED 31 JULY 2006 Period ended 31 July 31 July 2006 2005 £k £k NET CASH OUTFLOW FROM OPERATING ACTIVITIES (912) (1,529) RETURNS ON INVESTMENTS AND SERVICING OF FINANCE Interest received 124 40 Interest paid (26) (26) Interest element of finance lease rental payments (11) (4) NET CASH INFLOW FROM RETURNS ON INVESTMENTS 87 10 AND SERVICING OF FINANCE CAPITAL EXPENDITURE Payments to acquire tangible fixed assets (518) (110) Proceeds from sale of fixed assets 276 (242) - NET CASH OUTFLOW FROM CAPITAL EXPENDITURE (242) (110) TAXATION - - ACQUISITIONS (4,136) (24) FINANCING Issue of ordinary share capital 8,161 4,140 Issue costs charged to the share premium account (374) (495) Capital element of finance lease rental payments (41) (9) Repayment of loans (144) (6) NET CASH INFLOW FROM FINANCING 7,602 3,630 INCREASE IN CASH 2,399 1,977 RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW FROM OPERATING ACTIVITIES Period ended 31 July 31 July 2006 2005 £k £k Operating profit/(loss) 1,693 (483) Loss on disposal of fixed assets 12 - Amortisation 170 10 Depreciation 154 34 (Increase) in debtors (3,153) (1,392) Increase in creditors 212 302 Net cash outflow from operating activities (912) (1,529) CONSOLIDATED CASH FLOW STATEMENT (continued) YEAR ENDED 31 JULY 2006 RECONCILIATION OF NET CASH FLOW TO MOVEMENT IN NET FUNDS Period ended 31 July 31 July 2006 2005 £ £ Increase in cash in the year/period 2,399 1,977 Cash outflow from repayment of loans 143 6 Cash outflow from decrease in lease financing 42 8 Change in net debt resulting from cash flows 2,584 1,991 Loans and leases acquired with subsidiaries (154) - New finance leases (293) (7) Change in net funds 2,137 1,984 Net funds (debt) at 31 July 2005 1,779 (205) Net funds at 31 July 2006 3,916 1,779 NOTES TO THE FINANCIAL STATEMENTS YEAR ENDED 31 JULY 2006 1. TAXATION Period ended 31 July 31 July 2006 2005 £k £k Current Tax UK corporation tax based on the results for the year/period at 30%/ 353 - 19% Deferred taxation charge/(credit) - origination and reversal of timing differences 129 (16) - unrelieved tax losses - (67) Total tax charge/(credit) 482 (83) 2. EARNINGS PER SHARE The calculations of earnings per share are calculated by dividing the earnings attributable to ordinary shares by the weighted average number of shares in issue during the year/period. For fully diluted earnings per share the weighted average number of shares is adjusted to assume conversion of all dilutive potential ordinary shares. These represent share options granted to employees where the exercise price is less than the average market price of the company's ordinary shares over the year ended 31 July 2006. Period ended 31 July 31 July 2006 2005 £k £k Profit/(loss) for the year/period 1,298 (390) Adjusted profit for the period 1,456 - Basic weighted average number of shares 23,592,884 17,160,935 Share options 393,997 - Diluted weighed average number of shares 23,986,881 - For the period ended 31 July 2005, the share options in issue would have reduced the loss per share and were therefore anti-dilutive. 3. STATUS OF FINANCIAL INFORMATION The financial information set out in this report does not constitute the company's statutory accounts for the year ended 31 July 2006, but is derived from those accounts. Statutory accounts for the year ended 31 July 2006 will be delivered to the Registrar of Companies shortly. They will carry an unqualified audit report and no statements under section 237(2) or 237(3) of the Companies Act 1985. The annual report and accounts will be dispatched to shareholders as soon as practicable. 4. APPROVAL OF ACCCOUNTS These accounts were approved by the Board of Accuma on 30 October 2006. This information is provided by RNS The company news service from the London Stock Exchange

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