Final Results
Accuma Group PLC
20 March 2008
Accuma Group Plc
('Accuma' or 'the Group')
FINAL RESULTS FOR THE FIVE MONTH PERIOD TO 31 DECEMBER 2007
Chairman's Statement
As was reported to the market in the Group's trading update on 25 February 2008,
Accuma has experienced difficult trading conditions throughout the five month
period to 31 December 2007* particularly within its Insolvency division.
Although this division has been restructured and costs have been significantly
cut which has now stabilised its trading performance, the effects of these
trading conditions have had a significant impact on these results. This, in
conjunction with the well publicised 'credit crunch' affecting the performance
of the Loan Broking division, resulted in an EBITDA loss of £2.7 million for the
period.
Turnover at £5.5 million also reflects the significantly reduced levels of IVA
fees and the reduction in Loan Broking business during the period.
Gross profit for the period was £944,000, giving a gross profit margin of 17%.
The EBITDA loss for the period was £2.7 million and included significant staff
restructuring costs, a provision of £625,000 in respect of the lease commitment
on leaving one floor of Accuma's Manchester office and other restructuring costs
in the Division, and the losses incurred by the Loan Broking division.
Cash inflow from operations for the period to 31 December 2007 was £454,000 (31
July 2007: £1.6 million) and our Balance Sheet remained strong with £3.4 million
of cash (31 July 2007: £3.3 million), before provision for the imminent expected
earn out payments in respect of 2007 for Byrom Keeley and Loan Line.
As previously reported to shareholders in the Group's trading update, given the
on-going turbulence in the credit markets, the Board has prudently decided to
provide £11.8 million for the impairment on the carrying value of the Loan
Broking division's goodwill. This will lead to a loss after tax for the period
of £14.5 million (July 2007: £1.7 million profit).
On a divisional basis, Group revenues are as follows:
Turnover - £000s EBITDA - £000s
Insolvency division 2,029 (1,885)
Debt management 1,423 589
Loan broking 2,025 (375)
Referrals / other 70 (321)
Group overheads - (751)
Total 5,547 (2,743)
Operational review
The Group continues to provide a full platform of consumer financial solutions
from IVAs to informal debt management, consolidation loans and re-mortgaging.
Following the significant changes in the sector the Group undertook a full
review of the business which resulted in staff numbers reducing from 251 at the
end of 2006 to 196 at the end of 2007.
Debt management division
Byrom Keeley, the informal debt management solutions business, produced an
EBITDA of £589,000 in the period to December 2007, despite the seasonal effect
of changing the company year end.
The division continues to perform well, and as pressure on IVA acceptances
continues, and with the consolidation of unsecured debt no longer an option for
many consumers, debt management plans are often the only viable alternative to
the consumer.
Accordingly, the Board is confident of continued growth of this business during
the year ahead.
Insolvency division
As a result of previously reported reduced volumes and a significant reduction
in average IVA set-up fees from £2,700 to £1,700 this division has been
restructured in the period to 31 December 2007.
We incurred significant restructuring costs, as outlined above, and which led to
staff reduction and the relocation of new cases to the Group's Blackburn based
subsidiary, Wilson Phillips.
We have altered our business model for the division, positioning it to take
advantage of referrals from newly acquired businesses within the Group rather
than relying on costly advertising. I am pleased to say that this radical
surgery seems to have stemmed losses: the business is currently trading
profitably once again and continues to accept approximately 80 new cases per
month. Acceptance rates have also improved to 85% (at one point acceptance rates
had fallen to 78%),
The business has 5,906 live cases representing future contracted revenue pre
delinquency of £16.8 million, a substantial 'book' of business and a major asset
of the Group.
Loan broking division
In the period to 31st December 2007 the sub prime crisis in the USA and the
resulting 'credit crunch' impacted the general market for lending in the UK.
Loan Line, along with its competitors, was severely affected which resulted in
the division incurring an EBITDA loss for the period of £375,000.
The business was refocused during the period and has subsequently returned to
marginal profitability in January 2008. The Board has taken a prudent view and,
in the current circumstances and giving regard to the provisions of
International Financial Reporting Standards, provided for full impairment of the
goodwill which arose on the acquisition of Loan Line. This has resulted in a
provision for impairment charged to the profit & loss account of £11.8 million.
The Board continue to monitor the performance of Loan Line closely.
Outlook
Although these results are extremely disappointing, the Board is confident that
the early identification of problems and the radical restructuring will protect
the Group in the current financial year.
The Group is debt free, cash generative and at the end February had a cash
position (net of imminent earn out payments in respect of Byrom Keeley and Loan
Line) of £914,000.
Current macro economic conditions favour the Group's debt management division,
which is performing well, and the Board is confident of its future prospects. As
previously stated the Board has received some approaches which may lead to a
satisfactory offer for the Insolvency division: with the restructuring of this
business now completed, the Board believes that the realisable value of this
business alone considerably exceeds our existing market capitalisation.
We will continue to review all options to ensure the best outcome for the Group
and Shareholders.
Charles Taylor
Chairman
20 March 2008
*On 13th December 2007 the Group announced its intention to change its year end
to 31st December resulting in a 5 month period. The change will smooth the
effect of the seasonality of the debt solutions market on our results, which are
most active in the period from February to July, in future years. However the
effect of reporting a five month period to 31 December would tend to flatter the
first half results at the expense of the second half.
Enquiries to:
Charles Howson
Chief Executive
Accuma Group Plc Tel: 0845 202 6787
Lindsay Mair
Daniel Stewart & Company plc Tel: 0207 776 6550
Simon Rothschild, Oliver Winters
Bankside Consultants Tel: 0207 367 8888
CONSOLIDATED INCOME STATEMENT
PERIOD ENDED 31 DECEMBER 2007
5 months ended Year ended
31 December 2007 31 July 2007
£ £
REVENUE
Existing operations 5,546,953 20,450,479
Cost of sales (4,602,806) (12,278,928)
Gross profit 944,147 8,171,551
Administrative expenses (3,687,420) (5,746,716)
EARNINGS BEFORE INTEREST, TAX, DEPRECIATION,
AMORTISATION AND IMPAIRMENT LOSSES (2,743,273) 2,424,835
Depreciation (202,016) (374,224)
Amortisation (4,963) (13,865)
Provision for impairment losses (11,774,764) -
(LOSS)/PROFIT FROM OPERATIONS - Existing (14,725,016) 2,036,746
operations
Finance income 106,814 240,853
Finance costs (165,084) (129,548)
(LOSS)/PROFIT BEFORE TAX (14,783,286) 2,148,051
TAXATION 253,186 (435,903)
(LOSS)/PROFIT FOR THE PERIOD (14,530,100) 1,712,148
EARNINGS PER SHARE
(Loss)/earnings per share - Basic (44.43)p 5.30p
All of the activities of the Group are classed as continuing.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
PERIOD ENDED 31 DECEMBER 2007
Share Share Other Share Retained Total
capital premium reserve option earnings
reserve
£ £ £ £ £ £
Balance at 1 August 2,573,006 11,719,907 (762,595) - 688,555 14,218,873
2006
Prior period - - - 282,387 (282,387) -
adjustment
At 1 August 2006 as 2,573,006 11,719,907 (762,595) 282,387 406,168 14,218,873
restated
Changes in equity
for the year ended
31 July 2007
Profit for the year - - - - 1,712,148 1,712,148
Issue of share 696,667 - - - - 696,667
capital
Premium on share - 17,342,934 - - - 17,342,934
issue
Expenses of share - (654,964) - - - (654,964)
issue
Share capital to be - - (500,000) - - (500,000)
issued
Provision for share - - - 84,864 - 84,864
options
Balance at 31 July 3,269,673 28,407,877 (1,262,595) 367,251 2,118,316 32,900,522
2007
Changes in equity
for the 5 month
period ended 31
December 2007
Loss for the period - - - - (14,530,100) (14,530,100)
Provision for share - - - 28,977 - 28,977
options
Balance at 31
December 2007 3,269,673 28,407,877 (1,262,595) 396,228 (12,411,784) 18,399,399
Other reserve
The other reserve is a merger reserve created on the establishment of Accuma
Insolvency Practitioners Limited as a subsidiary of Accuma Group PLC.
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2007
31 December 2007 31 July 2007
ASSETS £ £ £ £
NON-CURRENT ASSETS
Intangible assets 15,560,940 27,609,659
Property, plant and equipment 789,630 855,546
Total non-current assets 16,350,570 28,465,205
CURRENT ASSETS
Trade and other receivables 6,637,148 8,876,714
Deferred tax asset 309,807 2,421
Cash and cash equivalents 3,367,340 3,331,502
Total current assets 10,314,295 12,210,637
TOTAL ASSETS 26,664,865 40,675,842
EQUITY AND LIABILITIES
CURRENT LIABILITIES
Trade and other payables 2,271,596 1,492,405
Financial liabilities 2,259,027 2,065,801
Provision for onerous lease 510,687 -
commitment
Current tax liabilities 246,709 616,220
Total current liabilities 5,288,019 4,174,426
NON-CURRENT LIABILITIES
Trade and other payables 2,898,536 3,500,000
Financial liabilities 78,911 100,894
Total non-current liabilities 2,977,447 3,600,894
Total liabilities 8,265,466 7,775,320
CAPITAL AND RESERVES - EQUITY
Share capital 3,269,673 3,269,673
Share premium account 28,407,877 28,407,877
Share option reserve 396,228 367,251
Retained earnings (12,411,784) 2,118,316
Other reserve (1,262,595) (1,262,595)
Total Equity 18,399,399 32,900,522
TOTAL EQUITY AND LIABILITIES 26,664,865 40,675,842
CONSOLIDATED CASHFLOW STATEMENT
PERIOD ENDED 31 DECEMBER 2007
5 months ended Year ended
31 December 31 July
2007 2007
OPERATING ACTIVITIES £ £
(Loss)/profit from operations (14,725,016) 2,036,746
Impairment provision 11,774,764 -
Depreciation 202,016 374,224
Amortisation 4,963 13,865
Loss on sale of fixed assets - 6,000
Decrease in trade and other receivables 1,901,165 (494,633)
Increase in trade and other payables 1,267,584 (422,416)
Provision for share options 28,977 84,864
Cash inflow from operations 454,453 1,598,650
Interest paid (73,216) (129,548)
Income taxes paid (110,000) (1,013,719)
Interest element of finance leases (8,113) (25,113)
Net cash inflow from operating activities 263,124 430,270
Payments to acquire property plant and (136,100) (452,570)
equipment
Interest received 106,814 240,853
Acquisition of subsidiaries - (16,496,016)
Net cash used in investing activitites (29,286) (16,707,733)
Cash flow from financing activities
Capital element of finance lease agreements (33,040) (20,120)
Proceeds from issue of ordinary shares - 18,039,601
Cash deposit in respect of loan notes issued (164,960) (1,941,806)
Expenses in connection with share capital - (654,964)
Repayment of bank loans - (254,554)
Net cash (used in)/received from financing (198,000) 15,168,157
activities
Net change in cash equivalents 35,838 (1,109,306)
Cash and cash equivalents at the beginning of 3,331,502 4,440,808
the year
Cash and cash equivalents at the end of the 3,367,340 3,331,502
year
CONSOLIDATED CASHFLOW STATEMENT
PERIOD ENDED 31 DECEMBER 2007
RECONCILIATION OF NET CASHFLOW TO MOVEMENT IN NET FUNDS
5 months ended Year ended 31
31 December 2007 July 2007
£ £
Net increase/(decrease) in cash and cash 35,838 (1,109,306)
equivalents
Repayment of lease financing 41,154 45,233
Repayment of loans - 254,554
Movement in net funds/(debt) during the 76,992 (809,519)
year
Net funds at beginning of the year 3,106,613 3,916,132
Net funds at the end of the year 3,183,605 3,106,613
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PERIOD ENDED 31 DECEMBER 2007
1. TRANSITION TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (IFRS)
The financial statements for the 5 month period ended 31 December 2007 are
presented under IFRS for the first time. The last financial statements under UK
GAAP related to the year ended 31 July 2007 and the date of transition to IFRS
was therefore 1 August 2006.
Key IFRS adjustments and their impact
The acquisitions of Byrom & Keeley Limited and LoanLine (Holdings) Limited
during the year ended 31 July 2007 were re-considered in order to identify
separable intangible assets, according to the criteria of IAS 38 Intangible
Assets. Some potential separable assets were identified, however, it was
concluded in each case that the asset was intrinsic to the business operation
and could not be viewed in isolation to other business components in terms of
its commercial impact, and, for the same reason, the asset could not be
independently valued. It was therefore concluded that intangibles acquired could
only be treated in the context of their combined impact, goodwill associated
with each business operation.
In accordance with the requirements of IAS 38, amortisation charges relating to
goodwill arising on these acquisitions has been reversed, increasing reported
profit for the year ended 31 July 2007 by £1,259,513.
Detailed reconciliation
The following note provides reconciliations and explanatory notes detailing how
the transition has impacted upon the reported performance and net assets
position previously stated under UK GAAP.
Reconciliation of equity at 1 August 2006 (date of transition to IFRS)
As reported Effect of As restated
under UK transition under IFRS
GAAP to IFRS
£ £ £
Non current assets
Property, plant and 726,450 - 726,450
equipment
Goodwill 6,842,053 - 6,842,053
Other intangible assets 97,409 - 97,409
7,665,912 - 7,665,912
Currents assets
Trade and other receivables 6,064,689 - 6,064,689
Cash and cash equivalents 4,440,808 - 4,440,808
10,505,497 - 10,505,497
Total assets 18,171,409 - 18,171,409
Current liabilities
Trade and other payables 1,075,962 - 1,075,962
Financial liabilities 195,971 - 195,971
Tax liabilities 493,749 - 493,749
Accruals and deferred income 355,227 - 355,227
2,120,909 - 2,120,909
Non current liabilities
Financial liabilities 1,828,705 - 1,828,705
Taxation liabilities 2,922 - 2,922
1,831,627 - 1,831,627
Total liabilities 3,952,536 - 3,952,536
Equity
Share capital 2,573,006 - 2,573,006
Share premium account 11,719,907 - 11,719,907
Share option reserve 282,387 - 282,387
Retained earnings 406,168 - 406,168
Other reserve (762,595) - (762,595)
14,218,873 - 14,218,873
Total liabilities and equity 18,171,409 - 18,171,409
Reconciliation of equity at 31 July 2007 (date of last UK GAAP financial
statements)
As reported Effect of As restated
under UK GAAP transition to under IFRS
£ IFRS
£ £
Non current assets
Property, plant and 855,546 - 855,546
equipment
Goodwill 26,266,602 1,259,513 27,526,115
Other intangible assets 83,544 - 83,544
27,205,692 1,259,513 28,465,205
Currents assets
Trade and other 8,876,714 - 8,876,714
receivables
Deferred tax asset 2,421 - 2,421
Cash and cash 3,331,502 - 3,331,502
equivalents
12,210,637 - 12,210,637
Total assets 39,416,329 1,259,513 40,675,842
Current liabilities
Trade and other payables 1,492,405 - 1,492,405
Financial liabilities 2,065,801 - 2,065,801
Current tax liabilities 616,220 - 616,220
4,174,426 - 4,174,426
Non current liabilities
Trade and other payables 3,500,000 - 3,500,000
Financial liabilities 100,894 - 100,894
3,600,894 - 3,600,894
Total liabilities 7,775,320 - 7,775,320
Equity
Share capital 3,269,673 - 3,269,673
Share premium account 28,407,877 - 28,407,877
Share option reserve 367,251 - 367,251
Retained earnings 858,803 1,259,513 2,118,316
Other reserve (1,262,595) - (1,262,595)
31,641,009 1,259,513 32,900,522
Total liabilities and 39,416,329 1,259,513 40,675,842
equity
Reconciliation of profit for the year ended 31 July 2007 (date of last UK GAAP
financial statements)
As reported Effect of As restated
under UK GAAP transition to under IFRS
IFRS
£ £ £
Revenue 20,450,479 - 20,450,479
Cost of sales (12,278,928) - (12,278,928)
Gross profit 8,171,551 - 8,171,551
Administrative (5,746,716) - (5,746,716)
expenses
EBITDA 2,424,835 2,424,835
Amortisation & (1,647,602) 1,259,513 (388,089)
depreciation
Profit from operations 777,233 1,259,513 2,036,746
Net finance income 111,305 111,305
Profit before taxation 888,538 1,259,513 2,148,051
Taxation expense (435,903) - (435,903)
Net profit 452,635 1,259,513 1,712,148
Reconciliation of cash flow at 31 July 2007 (date of latest UK GAAP financial
statements)
As reported Effect of As restated
under UK GAAP transition to under IFRS
IFRS
£ £ £
Profit from 777,233 1,259,513 2,036,746
operations
Depreciation 374,224 - 374,224
Amortisation 1,273,378 (1,259,513) 13,865
Loss on sale of 6,000 - 6,000
fixed assets
Decrease in trade (494,633) - (494,633)
and other
receivables
Increase in trade (422,416) - (422,416)
and other payables
Provision for share 84,864 - 84,864
options
Cash inflow from 1,598,650 - 1,598,650
operations
2 TAXATION
Period ended 31 Year ended 31
December 2007 July 2007
£
Current tax expense
UK corporation tax on income for the period (8,739) 340,858
Tax charge relating to prior periods 62,939 (16,371)
54,200 324,487
Deferred tax credit
Changes in deferred tax balances arising from:
Origination or reversal of timing differences (307,386) 111,416
Income tax (credit)/expense (253,186) 435,903
The charge for the period can be reconciled to the loss per the income
statement as follows;
Period ended 31 Year ended 31
December 2007 July 2007
£ £
(Loss)/profit before taxation (14,783,286) 2,148,051
(Loss)/profit on ordinary activities
multiplied by the rate of corporation
tax of 30% (2006: 30%) (4,434,986) 644,415
Adjusted for the effects of;
Impairment provision 3,532,429 -
Capital allowances in excess of 45,071 5,959
depreciation
Expenses not deductible for tax 116,637 43,308
purposes
Tax rate differences - (17,401)
Other timing differences 222,224 (224,007)
Unrelieved tax losses - -
Losses of overseas operations not available 202,500 -
for relief in UK
Adjustment to prior period tax charge 62,939 (16,371)
Current tax charge for the year (253,186) 435,903
3 EARNINGS PER SHARE
Earnings per share statistics disclosed are calculated by dividing the earnings
attributable to ordinary share holders by the weighted average number of shares
in issue during the year.
Period ended 31 Year ended 31
December July
Basic 2007 2007
£ £
(Loss) / profit for the year (14,530,100) 1,712,148
Weighted average number of shares 32,696,734 32,295,911
4 STATUS OF FINANCIAL INFORMATION
The financial information set out in this report does not constitute the
company's statutory accounts for the period ended 31 December 2007 but is
derived from those accounts. Statutory accounts for the period ended 31 December
2007 will be delivered to the Registrar of Companies shortly. The auditors have
reported on those accounts; their report was unqualified, did not include
reference to any matters to which the auditors drew attention by way of emphasis
without qualifying their report and did not contain statements under the
Companies Act 2006, s 498(2) or (3).
5 The Report and Financial Statements over the 5 month period ending 31 December
2007 will be sent to shareholders in due course.
This information is provided by RNS
The company news service from the London Stock Exchange
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